Sandell v. Taylor-Listug, Inc.

Facts

FEHA makes it unlawful for an employer to discharge an employee “because of” a physical disability or age. (Gov. Code, § 12940, subd. (a).) The statutory definitions are read broadly: the Legislature directed that “the definitions of physical disability and mental disability be construed so that applicants and employees are protected from discrimination due to an actual or perceived physical or mental impairment that is disabling, potentially disabling, or perceived as disabling or potentially disabling.” (Gov. Code, § 12926.1, subd. (b); Sandell, supra, 188 Cal.App.4th at pp. 309–310.) A “physical disability” exists where a physiological condition “[l]imits a major life activity” (Gov. Code, § 12926, subd. (k)(1)(B)), and “major life activities” include “walking … [and] speaking.” (Cal. Code Regs., tit. 2, § 7293.6, subd. (e)(1)(A)(2)(a); Sandell, supra, 188 Cal.App.4th at pp. 311–312.)

Taylor-Listug, Inc. — “also known as Taylor Guitars” — is a manufacturer and wholesaler of acoustic guitars. (Id. at p. 303.) Chief executive officer Kurt Listug met Robert Sandell, who “had 30 years’ experience in the music business,” at an industry convention in January 2004, and hired him as senior vice-president of sales, “at least in part, because Sandell had experience with territory management, a practice that Taylor-Listug wanted to implement.” (Ibid.) Sandell started in February 2004 and reported directly to Listug. (Ibid.)

In August 2004 — “[a]pproximately six months into his employment” — Sandell received a chiropractic adjustment from a chiropractor with whom the company contracted, and the following day suffered a stroke. (Id. at pp. 302, 303.) He “returned to work on a part-time basis in October 2004,” and “was working full time by December 2004.” (Id. at p. 303.) After the stroke, “Sandell had difficulty with his balance and strength, and also had difficulty talking,” so that “he required a cane to walk” and “[h]is speech was also noticeably slower than it had been prior to the stroke.” (Ibid.)

Two remarks framed the disability claim. Sandell testified that shortly after returning, Listug “came in my office … and closed the door and said that if I didn’t make a full recovery, that the company had the right to fire me or demote me and reduce my salary.” (Id. at p. 304.) And, “in the context of questioning the employee’s use of a cane,” Listug “asked me when I was going to get rid of the cane and when I was going to drop the dramatization.” (Ibid.)

The performance record was mixed and contested. Sandell received three annual reviews. The 2004 review rated him “meeting or exceeding requirements in all of the areas … with the exception of one area entitled ‘Results,’” where Listug noted “Must Improve” — but added he “[had] to say” that only “because sales had declined that year, for the first time in 20 years,” while crediting Sandell for entering a department “in some turmoil” and introducing “helpful new approaches.” (Id. at p. 305.) The 2005 review found him “meeting requirements across the board.” (Ibid.) The 2006 review was more critical on subjective measures — Listug wrote that Sandell “does not have the drive that this position requires” — yet concluded in the overall comments: “Robert’s a good man, and he’s contributed positively to the company.” (Id. at pp. 305–306.) It is undisputed that in 2004, “a year during which both Sandell and Listug spent significant periods of time not working — sales of Taylor-Listug guitars decreased for the first time in 20 years,” though sales rose again in 2005 and 2007. (Id. at p. 304.)

“Sandell turned 60 years old in October 2007. A few days later, on October 31, 2007, Taylor-Listug terminated Sandell’s employment,” a decision Listug made, citing his “primary frustration … [with] his lack of leadership in providing direction to the sales team and in producing satisfactory sales results.” (Id. at p. 306.) On the age claim, Sandell testified that company president Robert Taylor announced “in management meetings that he would rather fire old people and replace them with newer, younger people because it was cheaper,” and that Listug, over three years, told Sandell he was “old” and “getting up there.” (Id. at pp. 325–326.)

Procedural history

Sandell filed his complaint on May 29, 2008, alleging two FEHA causes of action — disability discrimination and age discrimination. (Sandell, supra, 188 Cal.App.4th at p. 306.) Taylor-Listug moved for summary judgment on February 20, 2009. (Ibid.) The trial court, Laura Whitcomb Halgren, Judge, issued a tentative ruling granting the motion in full, heard argument, and adopted the tentative as its final order; judgment was entered for Taylor-Listug on May 20, 2009. (Ibid.) Sandell filed a timely notice of appeal on July 9, 2009. (Ibid.)

The Court of Appeal, Fourth District, Division One, in a unanimous opinion by Justice Aaron, reversed and remanded for further proceedings. (Id. at pp. 302, 327.) A petition for rehearing was denied September 30, 2010, and the Supreme Court denied review on December 15, 2010. (Id. at p. 327.)

Issue

The dispositive question was whether the trial court correctly granted summary judgment — that is, whether Sandell, viewing the evidence in the light most favorable to him, had (1) established a prima facie case of disability and age discrimination, and (2) in response to Taylor-Listug’s proffer of legitimate, nondiscriminatory reasons, “presented sufficient evidence to raise a triable issue of fact as to whether the motivation for his termination was discriminatory.” (Sandell, supra, 188 Cal.App.4th at p. 302.) Embedded sub-issues were whether cane use and impaired speech qualify as a “disability” under FEHA, whether the employer knew of the disability, and whether Listug’s remarks could be disregarded as “stray.” (Id. at pp. 311–312, 319–320.)

Holding

Reasoning

The court began with the three-stage McDonnell Douglas frame, recast for summary judgment so the employer carries the burden. California “look[s] to pertinent federal precedent” and has adopted the burden-shifting test, under which the test “allows discrimination to be inferred from facts that create a reasonable likelihood of bias and are not satisfactorily explained.” (Sandell, supra, 188 Cal.App.4th at pp. 307–308, quoting Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 354.) Crucially, because McDonnell Douglas “was originally developed for use at trial … not in summary judgment proceedings,” the moving employer bears the burden “to negate the plaintiff’s right to prevail on a particular issue” — “[i]n other words, the burden is reversed.” (Id. at pp. 308–309, quoting Arteaga v. Brink’s, Inc. (2008) 163 Cal.App.4th 327, 343–344.) The court must “view the evidence in a light favorable to plaintiff as the losing party,” “strictly scrutinizing the defendants’ own showing.” (Id. at p. 308.)

On disability, the court held cane use alone “is clearly sufficient,” and rejected the federal “substantial limitation” gloss. Walking is a major life activity, and Sandell “presented abundant evidence that his ability to walk after his stroke was impaired,” requiring a cane throughout the relevant period. (Id. at pp. 311–312.) The court squarely held that “evidence that an individual requires a cane in order to walk is clearly sufficient to establish that a person is physically disabled under California law.” (Id. at p. 311.) Taylor-Listug’s reliance on the Ninth Circuit’s McDonald v. Coldwell Banker (9th Cir. 2008) 543 F.3d 498 was misplaced because that court “incorrectly relied on federal legal standards”: California law “requires only that the condition ‘limits’ a major life activity,” not the federal “substantial limitation.” (Id. at pp. 312–313, citing Colmenares v. Braemar Country Club, Inc. (2003) 29 Cal.4th 1019.) Sandell’s slowed speech independently supplied a second qualifying impairment. (Id. at p. 313.) The court also dispatched the trial court’s reasoning, which had wrongly imported failure-to-accommodate standards — whether Sandell “could perform his work at normal capacity is not relevant” to a disparate-treatment disability claim. (Id. at p. 312, fn. 6.)

The court found a triable issue on employer knowledge, the disputed third element. Against Listug’s declaration that he was “wholly unaware” of any disability, the court pointed to deposition testimony from both Listug and Taylor admitting they had seen Sandell use a cane — Listug conceding, “I often saw him using a cane” — and that Sandell “seemed a little bit slower” and spoke “more slowly” after the stroke. (Id. at pp. 313–314 & fn. 8.) “Viewing this evidence in the light most favorable to Sandell, a fact finder could reasonably conclude that Taylor-Listug was aware that Sandell was disabled within the meaning of FEHA.” (Id. at p. 314.)

On pretext, the court catalogued the “weaknesses, implausibilities, inconsistencies” in the employer’s subjective, after-the-fact complaints. Applying the Hersant standard that a plaintiff must show such defects in the proffered reasons “that a reasonable factfinder could rationally find them ‘unworthy of credence,’” the court found the record contradicted Taylor-Listug’s claim that “all of [Sandell’s] performance evaluations document multiple problems.” (Id. at pp. 314–315.) The reviews were largely positive, and the lone “Must Improve” in 2004 was tied to a company-wide sales decline during a year when both Sandell and Listug were repeatedly absent and the department was “in some turmoil.” (Id. at pp. 315–316.) The court emphasized that the declarations of sales staff complaining of Sandell’s “lack of leadership” were undercut by the same declarants’ deposition admissions that they “never” raised those complaints with Listug or Taylor while Sandell worked there — supporting an inference that the decisionmakers “did not have the kind of feedback … that they now suggest was the impetus for terminating his employment.” (Id. at pp. 316–318.) Because “the evidence is in conflict,” and a court may not “weigh conflicting evidence or … assess the credibility of witnesses,” summary judgment was improper. (Id. at pp. 318–319.)

The court refused to discard Listug’s remarks as “stray,” invoking the Supreme Court’s rejection of that doctrine in Reid. The “if I didn’t make a full recovery” threat was “as close to direct evidence of termination based on disability as one might find,” and the “drop the dramatization” comment created “a strong inference that Listug was annoyed with Sandell’s use of a cane” and “expected Sandell to conduct himself in a manner that would not evidence the existence of a disability.” (Id. at pp. 319–320.) The trial court’s “dismissive conclusion that these statements constitute mere ‘stray’ remarks” was error: under Reid v. Google, Inc. (2010) 50 Cal.4th 512, “California courts are not to apply the stray remarks doctrine because ‘its categorical exclusion of evidence might lead to unfair results.’” (Id. at p. 320.) The remarks “should be included in the mix of evidence to be presented to the trier of fact.” (Ibid.)

On the age claim, the court applied an objective competence standard and rejected the “same-actor” inference on these facts. To make a prima facie age case the plaintiff must be over 40, suffer an adverse action, be “performing satisfactorily,” and show circumstances giving rise to an inference of discrimination — typically replacement by someone “significantly younger.” (Id. at p. 321, citing Hersant.) The court held competence at the prima facie stage “should, to the extent possible, be based on objective, rather than subjective, criteria,” because allowing subjective evaluations to defeat the prima facie case “cannot be squared with the structure and purpose of the McDonnell Douglas framework.” (Id. at pp. 321–322.) On those objective measures — sales that fell less than the declining market, increased export and total revenue, and new programs implemented as hired — Sandell qualified. (Id. at p. 322.)

The court addressed two defense arguments on the inference of age bias. First, although Listug temporarily assumed Sandell’s duties, Taylor-Listug “ultimately replaced Sandell with a person in his ‘mid-forties’” about a year and a half later — a delay that, “in the context of … a specialized employment position at the highest levels of management,” did not preclude considering that the eventual replacement was significantly younger. (Id. at pp. 322–323.) Second, the court questioned the “same-actor” inference of Horn v. Cushman & Wakefield Western, Inc. (1999) 72 Cal.App.4th 798 — that hiring and firing by the same person within a short time implies no discriminatory motive — noting a critical intervening change: “after Sandell was hired, he suffered a stroke that caused him to appear to be significantly older than he may have appeared at the time he was hired.” (Id. at pp. 323–324.) In any event, “[a] strong inference is just that — an inference,” and that a juror “could reasonably draw a different inference is sufficient to preclude summary judgment.” (Id. at p. 324.)

Finally, the court folded the same pretext evidence into the age claim and credited Taylor’s cost-cutting remark. The pretext evidence supporting the disability claim “also supports” the age claim. (Id. at pp. 324–325.) Beyond it, Taylor’s alleged statements that he “would rather fire old people and replace them with newer, younger people because it was cheaper” supported a reasonable inference of age-based motive by one of “the two major decision makers,” and Fagan’s testimony that “older people that were over 50 seemed to be leaving the company” reinforced it. (Id. at pp. 325–326.) The court was candid that the age evidence “appears to be weaker than” the disability evidence, but at summary judgment that comparative weakness was immaterial. (Id. at p. 325, fn. 16.) Notably, the court declined to credit certain items — Listug’s asking everyone’s age at a 2006 meeting and his birthday call — as not reasonably supporting an inference of age motive, while holding the remaining evidence sufficient. (Id. at pp. 326–327.)

Significance

Sandell is among the most-cited Court of Appeal applications of Guz’s and Reid’s teaching to a disability-and-age summary judgment, and it underwrites the discrimination instructions practitioners work from — CACI Nos. 2540 (disability), 2570 (age), and the general 2500-series disparate-treatment framework. Its first contribution is doctrinal clarity on the disability threshold: by holding that cane use “is clearly sufficient” and rejecting McDonald’s federal “substantial limitation” gloss, the court reaffirmed Colmenares’s “limits, not substantial limits” rule and made plain that a disparate-treatment plaintiff need not prove the condition impaired his ability to work — only that it limited any major life activity. (Sandell, supra, 188 Cal.App.4th at pp. 311–313 & fn. 6.)

Its second contribution is methodological. The opinion is a sustained illustration of how subjective, after-the-fact employer complaints — leadership, “drive,” enthusiasm — are vulnerable on summary judgment when the contemporaneous record (positive reviews, no complaints actually raised to decisionmakers, sales that beat a declining market) contradicts them. The court’s use of the declarant-deposition contradictions to infer the decisionmakers lacked the feedback they now invoke is a transferable template for any pretext showing. (Id. at pp. 316–318.)

Third, Sandell applies Reid’s abolition of the stray-remarks doctrine to concrete facts, treating a decisionmaker’s disability-tinged comments as potentially “particularly significant” direct evidence rather than disregardable noise. (Id. at p. 320.) And its skeptical treatment of the Horn same-actor inference — distinguished by the supervening stroke that made the plaintiff “appear … older” — gives plaintiffs a ready answer where an intervening event changes how a worker is perceived. (Id. at pp. 323–324.) The holding’s limits are explicit: the court “express[ed] no view” on how a jury should weigh the evidence and decided only that triable issues existed. (Id. at p. 310, fn. 3.)

Key quotes

“At a minimum, evidence that an individual requires a cane in order to walk is clearly sufficient to establish that a person is physically disabled under California law.” (Sandell, supra, 188 Cal.App.4th at pp. 311–312.)

“We reject the trial court’s dismissive conclusion that these statements constitute mere ‘stray’ remarks, such that they may be disregarded and considered to be of no legal consequence. … [T]he Supreme Court recently clarified that California courts are not to apply the stray remarks doctrine because ‘its categorical exclusion of evidence might lead to unfair results.’” (Id. at p. 320.)

“A strong inference is just that — an inference. The fact that a juror could reasonably draw a different inference is sufficient to preclude summary judgment.” (Id. at p. 324.)

Read the full opinion (free full text · Justia)→

Practice pointer

Open questions

The court reserved several issues. Because Taylor-Listug did not dispute that Sandell could perform the essential functions of the job, the court “d[id] not address the evidence related to that element” of the disability prima facie case. (Sandell, supra, 188 Cal.App.4th at p. 311, fn. 4.) Following Hersant, the court also declined to resolve whether a FEHA age plaintiff “must actually show that someone significantly younger … replaced him” at the prima facie stage, instead presuming the requirement applied because Sandell satisfied it. (Id. at pp. 321–322 & fn. 12.)

Most significantly, the court repeatedly disclaimed any view on the merits: “We do not intend to suggest that, at trial, a fact finder should or will weigh this evidence and draw the same inferences that we raise in this opinion. Rather, we simply conclude that a fact finder could reasonably draw such inferences.” (Id. at p. 310, fn. 3.) Whether Taylor-Listug’s stated performance reasons were genuine or pretextual, and whether Listug and Taylor in fact made the attributed remarks, were left for the trier of fact on remand. (Id. at pp. 320, 325–326.)