IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT _________________________________________ No. 03-10172 _________________________________________ RON L. PEGRAM, Plaintiff-Appellant, v. HONEYWELL, INC., Defendant-Appellee. ______________________________________________ On Appeal from the United States District Court for the Northern District of Texas ______________________________________________ Brief of the Equal Employment Opportunity Commission as Amicus Curiae on Behalf of Plaintiff-Appellant ______________________________________________ NICHOLAS M. INZEO Acting Deputy General Counsel PHILIP B. SKLOVER Associate General Counsel EQUAL EMPLOYMENT CAROLYN L. WHEELER OPPORTUNITY COMMISSION Assistant General Counsel Office of General Counsel 1801 L Street, N.W. JENNIFER S. GOLDSTEIN Washington, DC 20507 Attorney (202) 663-4733 TABLE OF CONTENTS TABLE OF AUTHORITIES ii STATEMENT OF INTEREST 1 STATEMENT OF THE ISSUE 2 STATEMENT OF FACTS 2 SUMMARY OF ARGUMENT 11 ARGUMENT THE DISTRICT COURT ERRED IN HOLDING AS A MATTER OF LAW THAT A SALES EMPLOYEE’S REASSIGNMENT WAS NOT AN ADVERSE EMPLOYMENT ACTION WHERE THERE WAS CONSIDERABLE EVIDENCE THAT THE EMPLOYEE WAS REASSIGNED FROM A MORE PRESTIGIOUS “QUARTERBACK” POSITION INTO WHAT MANAGEMENT OFFICIALS CONSIDERED TO BE A “GOOD LEARNING” POSITION 13 CONCLUSION 28 CERTIFICATE OF COMPLIANCE 28 CERTIFICATE OF SERVICE STATEMENT OF INTEREST The Equal Employment Opportunity Commission (“EEOC”) is the agency charged by Congress with the interpretation, administration, and enforcement of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. This race discrimination complaint did not arise under Title VII, but under the Texas Commission on Human Rights Act (“TCHRA”) and 42 U.S.C. § 1981. However, the district court relied almost exclusively on Title VII case law in reaching its decision, as is appropriate in cases under the TCHRA and § 1981. Wallace v. Methodist Hosp. Sys., 271 F.3d 212, 219 n.10 (5th Cir. 2001) (“TCHRA . . . claims are analyzed under our Title VII precedent”); Shackelford v. Deloitte & Touche, 190 F.3d 398, 403 n.2 (5th Cir. 1999) (law governing claims under TCHRA and Title VII “is identical”); LaPierre v. Benson Nissan, 86 F.3d 444, 448 n.2 (5th Cir. 1996) (§ 1981 claims governed by “same evidentiary framework” applicable to Title VII claims).1 Any decision by this Court therefore would have precedential import for subsequent cases arising under Title VII. At issue in this case is the district court’s holding that an employee’s involuntary transfer out of a job selling a company’s core product to new customers into what management officials termed a “good learning” job selling service contracts on the employer’s products to existing customers was not an adverse employment action subject to challenge under anti-discrimination law. In reaching its conclusion, the court looked only at the incentive pay plan for the two positions, deemed the plans “the same” because they were both incorporated into the same document, and held that the reassignment therefore was not “adverse.” In the Commission’s view, the district court’s truncated analysis of the adverse employment action standard is at odds with the anti-discrimination provision of the statute and with this Court’s precedent. We therefore offer our views to the Court. STATEMENT OF THE ISSUE2 Whether the district court erred in holding as a matter of law that a sales employee’s reassignment was not an adverse employment action where there was considerable evidence that the employee was reassigned from a more prestigious “quarterback” position into what management officials considered to be a “good learning” position. STATEMENT OF FACTS Plaintiff Ron Pegram, a sales employee for defendant Honeywell since 1991, was hired into a new position in August 2000 – Total Plant Account Manager (“TPAM”) selling to the power and petrochemical industries. R.29 App. 200.3 This position had the same job title as Pegram’s previous job at Honeywell, but it required selling products to a different customer group. Id. In addition, the new job entailed selling the entire range of Honeywell products, including complex “distributed control systems” for power and petrochemical plants. R.29 App. 57. Sales of these complex systems, referred to as “solutions sales,” can run into the millions of dollars. Id. In the Fall of 2000, Honeywell reorganized the sales territories for the power industry division. As a result of the reorganization, Pegram no longer reported to Neal Kilambi, the Regional Sales Manager who had hired Pegram into the new position, but instead to David Spencer, another Regional Sales Manager. R.29 App. 57. Spencer, in turn, reported to Guy Grumbles, the Solutions Sales Director for Honeywell’s eastern sales region. R.29 App. 56. Shortly after the territorial reorganization, Spencer, in consultation with Grumbles, decided to move Pegram, who was the only black sales employee in Spencer’s region, out of the TPAM position and replace him with a former Honeywell employee, Dick Watt, who is white. R.29 App. 114, 142-44. Spencer informed Pegram that he would be transferred out of his position in mid-December 2000. R.29 App. 59, 206. According to Honeywell, Spencer decided to transfer Pegram for non-discriminatory reasons. Honeywell was embarking on a “strategic initiative” to increase the level of sales to the power industry and, Honeywell contended, Spencer was concerned that Pegram lacked sufficient experience as a TPAM selling to the power industry. R.29 App. 58. Spencer acknowledged in his deposition that he did not look at Pegram’s actual performance in the five months that Pegram worked as a TPAM selling to the power industry. Specifically, Spencer stated that he “never saw [Pegram’s] numbers,” that he “did not know what his sales volume was,” and that he did not speak with Kilambi about Pegram’s performance, except for a very general conversation in which Kilambi told Spencer that Pegram was doing “a fine job.” R.29 App. 138-40. Spencer stated that he did not know that Pegram’s sales for the five-month period he worked as a TPAM were $6,890,000 – roughly double the yearly quota of three to four million dollars. R.29 App. 139-40. Spencer stated that his decision to replace Pegram was based only on Pegram’s “background and experience level.” R.29 App. 138. The job into which Spencer transferred Pegram was that of a Service Account Manager (“SAM”). SAMs work with TPAMs, developing and maintaining the service aspect of the account generated by the TPAM. R.29 App. 169. A significant amount of a SAM’s work consists of the “expected” renewal of existing service contracts or selling training for Honeywell customers, whereas a TPAM’s work centers on generating new business. R.46 Supp. App. 3. And unlike a TPAM, a SAM does not sell the “entire portfolio” of Honeywell products but instead focuses on the service side of the sales business. R.29 App. 132-34. Pegram had no prior experience working as a SAM when Spencer decided to transfer him. R.29 App. 208. When asked whether he was concerned about placing an inexperienced person in the SAM position, Spencer replied that he was not because “the SAM role is . . . an easier role to assume and learn than a power TPAM role is.” R.29 App. 170; see also id. (SAM is “[a]n easier-to-learn job”). Spencer added that he “felt that [Pegram’s] role as a SAM would be – would better afford him to become a TPAM . . . a SAM role is a good role to start in to learn the accounts, to learn the solutions business.” Id.; see also R.29 App. 171 (SAM “is somewhat of a support role” to TPAM). Grumbles echoed Spencer’s view of the two jobs. When asked why he thought Pegram should be placed in a SAM role despite Pegram’s lack of service experience, Grumbles responded that he “felt like that is a good learning role. It was an opportunity to work in a team fashion to get up to that learning curve.” R.29 App. 122. Pegram stated that he found the reassignment “humiliating” and “a cold slap in the face” after he made sales of almost seven million dollars as a TPAM. R.29 App. 209. Pegram stated he was concerned with the reassignment because he felt his “career . . .was taking a step backwards.” R.29 App. 213. Pegram explained that a TPAM was like a “quarterback. . . . You develop the strategy, you make all the calls.” R.29 App. 202. By contrast, a SAM is there “to support” the TPAM. R.29 App. 208. Pegram stated that the reassignment to a SAM thus was a “demotion,” and one that was particularly humiliating because “the customer understands the Honeywell hierarchy, so he knows I’ve been demoted.” R.29 App. 208. Pegram also stated that he did not believe that it would be possible to earn the same amount of money as a SAM that he could earn as a TPAM. R.29 App. 208. The total salary of both a TPAM and a SAM consists of a base salary plus sales-based incentive pay. Pegram’s base salary did not change with the transfer, but the incentive pay plan did change. Under the pay plan in effect at the time Honeywell officials notified Pegram of his transfer, a TPAM received a 1.1% commission on orders up to $3.5 million; 2.25% on orders between $3.5 and $7 million; and 3.75% on orders above $7 million. R.46 Supp. App. 5. A SAM’s incentive pay was based on an assigned sales quota. A SAM earned incentive pay incrementally; for every percentage point of the sales quota a SAM earned $385. R.46 Supp. App. 6. If a SAM made sales totaling 100% of the assigned quota, the SAM would earn $38,500. Id. If a SAM exceeded the quota, the incentive pay increased to $1155 for every percentage point of sales above the quota. Id. Under this plan, a TPAM with $3.5 million in sales and a SAM who met the assigned quota would make the same amount in incentive pay – $38,500. The critical distinction between the two jobs lies in the potential to make more than $38,500. For a SAM, the potential to exceed the assigned sales quota appears limited, since a significant portion of a SAM’s sales are based on renewal of existing service contracts. R.46 Supp. App. 3. A SAM, moreover, is generally limited to selling a single product – service contracts. R.29 App. 134. A TPAM, by contrast, sells the whole portfolio of Honeywell products, and a TPAM’s sales consist primarily of new business. R.29 App. 132; R.46 Supp. App. 3. These distinctions indicate that while a TPAM will not necessarily earn more in incentive pay than a SAM, TPAMs possess the ability to generate very large sales and hence have the potential to earn higher amounts in incentive pay. Evidence in the record on individuals’ actual pay reflects this distinction. Spencer stated in his deposition that 2 SAMs and 12 TPAMs report to him. R.29 App. 132-34. Spencer stated that the 2001 incentive pay4 for his SAMs ranged from $5,000 to $40,000. R.29 App. 134. The highest incentive pay for Spencer’s TPAMs was more than double that of his SAMs; the range was $5,000 to $85,000. R.29 App. 133.5 Pegram filed suit alleging, inter alia, that his transfer constituted race discrimination in violation of the TCHRA and § 1981. Honeywell moved for summary judgment, arguing primarily that it transferred Pegram for legitimate, non-discriminatory reasons. In response, Pegram argued that the transfer from the TPAM position to the SAM position was a demotion to a support-type role, and that this demotion negatively affected Pegram’s pay. R.31 at 1-7. Pegram also argued that his reassignment out of the TPAM position was based upon his race. In support of his argument, Pegram pointed to several comments made by Grumbles that, Pegram argued, constituted evidence of racial bias.6 Pegram also provided evidence that Grumbles, who oversees Honeywell’s sales teams for the eastern half of the country, has no black TPAMs anywhere in his region. According to Grumbles, “[w]e have other minorities but no African.” R.32 App. 104. Additionally, Pegram pointed to evidence that there had been one other black TPAM in Grumbles’ region but that he, like Pegram, was reassigned to a SAM position in early 2001. R.31 at 12. Finally, Pegram questioned the veracity of Honeywell’s explanation for the reassignment by emphasizing that his large sales volume while a TPAM rendered its explanation implausible. After briefing on the summary judgment motion was completed, the district court ordered supplemental evidence and briefing on the reassignment’s effect on Pegram’s incentive pay. On February 5, 2003, the district court granted Honeywell’s motion for summary judgment. In its opinion, the district court stated that a Title VII plaintiff must establish, as part of a prima facie case, the existence of an adverse employment action. R.57 at 13. According to the court, whether an action is “adverse” is an objective determination. Id. When the action taken by the employer is a transfer, a “truly lateral” transfer, even if taken for discriminatory reasons, cannot be challenged. Id. The court thus held that a transfer may only be challenged under Title VII if it involves “‘a materially adverse change in the terms and conditions of employment [which] must be more disruptive than . . . an alteration of job responsibilities.’” R.57 at 14 (citation omitted). A transfer must amount to “‘a demotion evidenced by a decrease in wage or salary, a less distinguished title, a material loss of benefits, significantly diminished material responsibilities, or other indices that might be unique to a particular situation.’” Id. In seeking to answer whether the reassignment from the TPAM position to a SAM position was simply a lateral transfer or whether it was more like a demotion, the district court focused only on “whether the incentive pay for TPAMs was objectively better than the incentive pay for SAMs.” R.57 at 14-15; see also R.57 at 16 (plaintiff must raise fact issue “that he received a cut in his commission rate . . .”). In so assessing the incentive pay, the court determined that it would look not to the incentive pay rates for 2000, the year Honeywell officials informed Pegram of the reassignment, but instead to the pay rate for 2001, the year Pegram began working as a SAM. R.57 at 16. The court concluded that Pegram could not show he received a cut in his incentive pay rate under the 2001 plan. R.57 at 17. According to the court, the evidence in the record indicated that the “incentive compensation plan for 2001 for TPAMs and SAMs is the same.” Id. That Pegram believed the transfer to be a demotion did not render it an adverse employment action, the court added. Id. The court accordingly granted summary judgment to Honeywell. SUMMARY OF ARGUMENT At issue in this case is an allegedly discriminatory reassignment out of the TPAM position, the sales position responsible for generating new business for Honeywell by selling the company’s core product to new customers, and into the SAM position, the sales position responsible for selling and renewing service contracts to customers who already had purchased Honeywell products from the TPAM. Testimony by the two management officials who transferred Pegram indicates this reassignment was a step backwards for Pegram. The management officials highlighted the importance of the TPAM position by their very explanation for the reassignment – Pegram had to be moved out of the TPAM position, they said, because he was not experienced enough for the position identified as the one critical to Honeywell’s major “strategic initiative” to boost sales. The SAM position, by contrast, was not nearly so important: “a good role to start in to learn the accounts” and “a good learning role,” as the officials put it. And as Pegram put it, the two positions lie on different levels of the “Honeywell hierarchy,” thus rendering his transfer a “demotion.” The district court recognized that a demotion falls within the scope of anti-discrimination law, but the court held that this transfer was not a demotion because the incentive pay plan for TPAMs was “the same” as for SAMs. Two critical errors undermine the court’s holding. First, both the Supreme Court and this Court repeatedly have stressed that a transfer without a pay differential nevertheless may be encompassed within the scope of Title VII, because Title VII was designed to address inequities in employment opportunities, not simply inequities in pay. The district court’s adverse employment action analysis therefore should have taken into account the evidence that Pegram was transferred into a less prestigious, support-type job. The district court’s second error was in its analysis of the two positions’ incentive pay plans. Under either the 2000 or 2001 plans, a SAM’s incentive pay is not “the same” as a TPAM’s incentive pay. SAMs and TPAMs sell very different products, and accordingly have different potential to earn a higher amount of incentive pay, as evidenced by Spencer’s testimony that his top-selling TPAM earned more than twice the amount of incentive pay as his top-selling SAM. The district court’s holding on the question of an adverse employment action therefore was flawed. ARGUMENT THE DISTRICT COURT ERRED IN HOLDING AS A MATTER OF LAW THAT A SALES EMPLOYEE’S REASSIGNMENT WAS NOT AN ADVERSE EMPLOYMENT ACTION WHERE THERE WAS CONSIDERABLE EVIDENCE THAT THE EMPLOYEE WAS REASSIGNED FROM A MORE PRESTIGIOUS “QUARTERBACK” POSITION INTO WHAT MANAGEMENT OFFICIALS CONSIDERED TO BE A “GOOD LEARNING” POSITION. Under Title VII, it is unlawful for an employer to discriminate on the basis of race with respect to an individual’s compensation or the terms, conditions, or privileges of his employment. 42 U.S.C. § 2000e-2(a)(1); see also TCHRA §21.051(1) (same). It is also unlawful, under Title VII, for an employer to limit, segregate, or classify employees in any way which would deprive an individual of employment opportunities or otherwise adversely affect his status as employee because of the individual’s race. 42 U.S.C. § 2000e-2(a)(2); see also TCHRA §21.051(2) (same). By its terms, then, Title VII is not limited only to discriminatory acts that decrease an individual’s pay, but instead is designed to encompass a broader range of discriminatory actions by an employer. Swint v. Pullman-Standard, 539 F.2d 77, 89 (5th Cir. 1976) (“a Title VII plaintiff does not have to show economic loss to prove discrimination”); see generally United States v. Hayes Int’l Corp. (“Hayes I”), 415 F.2d 1038, 1043 (5th Cir. 1968) (“Title VII . . . is not an equal pay provision but an equal opportunity to the full enjoyment of employment rights”). Notwithstanding this statutory design, the district court in this case effectively held that Pegram had to show a pay decrease to establish a statutory violation. The court, in determining whether the transfer was an adverse employment action, focused exclusively on whether the 2001 incentive pay rate for TPAMs was better than that for SAMs. The court ultimately concluded that the pay plans were “the same,” and therefore that it would deny Pegram’s discrimination claim. R.57 at 17. In focusing only on the pay plans and in concluding they were the same, the court erred.7 As a matter of law, this Court’s precedent indicates that a court should look to more than pay changes in determining whether an employer’s action is “adverse.” This Court has held that 42 U.S.C. § 2000e-2(a)(1) requires that a plaintiff establish that his or her employer made an “ultimate employment decision” in order to bring a claim under that provision. Mattern v. Eastman Kodak Co., 104 F.3d 702, 707-09 (5th Cir. 1997) (holding that breadth of Title VII’s anti-retaliation provision is equivalent to breadth of 42 U.S.C. § 2000e-2(a)(1); both are limited to ultimate employment decisions). In the context of a job reassignment, ultimate employment decisions are not limited only to those reassignments resulting in lower pay. Burger v. Cent. Apartment Mgmt., 168 F.3d 875, 879 (5th Cir. 1999) (in determining whether transfer is ultimate employment action, court should consider whether new position provides “same job title, benefits, duties, and responsibilities as the [old] position”); see also Swint, 539 F.2d at 89-93 (Title VII violated if departmental assignments made on basis of race, regardless of whether plaintiffs could prove “economic harm”); United States v. Hayes Int’l Corp. (“Hayes II”), 456 F.2d 112, 118 (5th Cir. 1972) (inability of blacks to transfer into jobs, even into jobs with generally lower wages, constituted a violation of Title VII, for “the Civil Rights Act provides for equal opportunity to select and compete for a job notwithstanding its lower pay or other disadvantages”); Hayes I, 415 F.2d at 1043 (in considering an employer’s transfer program, court “will not be misled by the ‘equal pay’ or ‘substantial pay’ test as indicating the absence of a violation of Title VII, for Title VII of the 1964 Civil Rights Act is not an equal pay provision but an equal opportunity to the full enjoyment of employment rights”). The Supreme Court has echoed this Court’s observation about the meaning of Title VII’s anti-discrimination provision. In International Brotherhood of Teamsters v. United States, 431 U.S. 324 (1977), for example, a case involving a challenge to the assignment practices of a trucking company, the Court noted that “[a]lthough line-driver jobs pay more than other jobs, and . . . [they are] ‘considered the most desirable of the driving jobs,’ it is by no means clear that all employees . . . would prefer to be line drivers. . . . Of course, Title VII provides for equal opportunity to compete for any job, whether it is thought better or worse than another.” Teamsters, 431 U.S. at 338 n.18 (citing Hayes II, 456 F.2d at 118); see also Rutan v. Republican Party of Ill., 497 U.S. 62, 73-75 & n.8 (1990) (§ 1983 case holding that denial of transfer to workplace closer to state employee’s home violates First Amendment where denial was based on employee’s political affiliation and noting that its ruling was consistent with Title VII, which makes it “a violation of federal law to discriminate in any way in state employment . . . on the basis of race. . . .”).8 The Supreme Court recently reinforced the principle that an “undesirable reassignment,” and not simply a pay decrease or demotion, is encompassed within Title VII’s prohibitions. In Burlington Industries v. Ellerth, 524 U.S. 742 (1998), the Court devised an agency principle to govern employer liability for a supervisor’s harassment of an employee, given that sexual harassment is not generally considered within the scope of the supervisor’s employment. The Court distinguished supervisory acts not obviously attributable to the employer from “tangible employment actions,” which “are the means by which the supervisor brings the official power of the enterprise to bear on subordinates.” Id. at 762. A tangible employment act “requires an official act of the enterprise, a company act. The decision in most cases is documented in official company records, and may be subject to review by higher level supervisors.”9 Id. Applying this definition, a reassignment documented in company records and reviewed by a higher level supervisor – as was true of Pegram’s reassignment – would be a tangible employment action, even if not, strictly speaking, a “demotion.” Burlington Indus., 524 U.S. at 765 (examples of tangible employment actions include “discharge, demotion, or undesirable reassignment”) (emphasis added); see also Faragher v. City of Boca Raton, 524 U.S. 775, 808 (1998) (same). It is an open question in this Court whether, and to what extent, the Supreme Court’s decisions in Faragher and Burlington Industries – harassment cases alleging violations of 42 U.S.C. §2000e-2(a)(1) – “lower[] the bar” for what comprises an “ultimate employment decision” for retaliation purposes. Zaffuto v. City of Hammond, 308 F.3d 485, 493 (5th Cir. 2002); see also Felton v. Polles, 315 F.3d 470 486-87 (5th Cir. 2002) (“Our court has . . . implied that the continuing vitality of the ‘ultimate employment decision’ doctrine is questionable in the light of [Faragher and Burlington Industries]”); Fierros v. Tex. Dep’t of Health, 274 F.3d 187, 192 n.2 (5th Cir. 2001) (in Faragher and Burlington Industries, “the Supreme Court sets out a relatively broad definition of ‘tangible employment action’”). In our view, this Court may, but need not, decide the issue in this case, for even under this Court’s ultimate employment decision standard, a discriminatory reassignment with a major change in responsibilities would violate 42 U.S.C. § 2000e-2(a)(1). See generally Mota v. Univ. of Tex. Houston Health Sci. Ctr., 261 F.3d 512, 520 & nn.15-16 (5th Cir. 2001).10 Of course, even if 42 U.S.C. § 2000e-2(a)(1) could somehow be read to require a showing of a pay decrease, this Court repeatedly has recognized that the adjacent provision, 42 U.S.C. § 2000e-2(a)(2), does not require such a showing to establish a violation of the statute. That provision states that an employer may not limit, segregate, or classify employees in “any way which would deprive . . . any individual of employment opportunities or otherwise adversely affect his status as an employee . . . .” 42 U.S.C. § 2000e-2(a)(2) (emphasis added); see generally EEOC Enforcement Guidance on Segregating, Limiting and Classifying Employees, § 618.1(d)(3); see also Guidance § 618.8 (“the Act is violated when the respondent assigns territories or accounts on the basis of race”). Beginning with Mattern, this Court has viewed 42 U.S.C. § 2000e-2(a)(2) as “reach[ing] much farther than [42 U.S.C. § 2000e-2(a)(1)].” Mattern, 104 F.3d at 709. As the Mattern Court put it after analyzing the two provisions’ different language, “the way in which the employee may be affected in this subpart [42 U.S.C. § 2000e-2(a)(2)] is much broader.” Mattern, 104 F.3d at 709; see also Shackelford, 190 F.3d at 406 (protection of 42 U.S.C. § 2000e-2 (a)(2) is “‘much broader’ and reaches activity which would ‘tend to’ adversely affect the employee”) (citing Mattern); Burger, 168 F.3d at 878-79 (same). Considering factors other than pay makes sense not only as a matter of law, but also as an economic or practical matter. It is generally recognized that a job’s value may lie not only in the wages it pays, but also in other factors, such as the conditions of the workplace, the predictability of the job’s hours, or the potential for advancement. As this has Court stated in holding that an individual could challenge a transfer to a higher-paying, but less desirable job: “Money alone . . . does not buy happiness.” Click v. Copeland, 970 F.2d 106, 110 (5th Cir. 1992) (former job more interesting and prestigious); Forsyth v. City of Dallas, 91 F.3d 769, 774 (5th Cir. 1996) (former position valuable because more prestigious, better working hours, more interesting); see also Richard A. Posner, Economic Analysis of Law 313 (1986) (postulating that male wages may be higher, on average, than female wages because “male wages [may] include a compensatory wage premium for the dirty, disagreeable, and strenuous jobs that men dominate”). The Supreme Court also has cautioned both against valuing jobs only on the basis of wages and against making assumptions about what aspects of a job an individual may value. Specifically, in Teamsters, the Court held it improper to assume that a higher-paying trucking job was necessarily more desirable to each and every black truck driver because each individual driver might value certain aspects of the lower-paying trucking job. See Teamsters, 431 U.S. at 369-70 & n.55 (holding that even though trucking company’s “line drivers” generally earned more than its “city drivers,” it would not assume that every city driver actually was discriminatorily deterred from applying for the line driver position because city drivers “have regular working hours, are not required to spend extended periods away from home and family, and do not face the hazards of long-distance driving at high speeds”). The Court accordingly required proof of each individual’s personal preferences before relief could be awarded. Id. at 369 (Government must show which city drivers “actually wanted” the line driver job).11 In light of this authority, it is apparent that the district court erred in considering only the relative pay of TPAMs and SAMs. The record in this case contains considerable evidence – other than evidence about pay rates – that the reassignment to the SAM position was, objectively speaking, a step backwards in a Honeywell salesperson’s career advancement. The district court did not factor this evidence into its assessment, except to the extent that it discounted Pegram’s own belief that the transfer amounted to a demotion. R.57 at 17. Specifically, the district court did not consider the statements of Spencer himself, who effectively acknowledged that the reassignment was a step backwards when he stated that Pegram’s “role as a SAM would be – would better afford him to become a TPAM . . . a SAM role is a good role to start in to learn the accounts, to learn the solutions business.” R.29 App. 170. Grumbles echoed this view in his deposition. Grumbles stated that he saw the SAM job as a learning position, from which Pegram could move up. As Grumbles put it, the SAM position would be, for Pegram, “a good learning role. It was an opportunity to work in a team fashion to get up to that learning curve.” R.29 App. 122.12 The nature of the two jobs also supports an inference that the SAM position was generally considered less important or prestigious. The evidence in the record shows that what a TPAM sells is Honeywell’s core product: complex distributed control systems. When Honeywell embarked on a major “strategic initiative” to boost sales, its initiative was focused on the products sold by TPAMs. Moreover, it is the TPAMs who generate new business for the company. SAMs, by contrast, sell service contracts primarily to established customers who have already purchased Honeywell’s core product. Much of those service contract sales consists of renewals, not new service business. The actions of Grumbles and Spencer indicate that they plainly considered the TPAM position to be the more critical one: they decided to transfer Pegram out of the TPAM position, where he had built up five months of experience and had performed well, because of his “lack of experience” and into the SAM position, where he had zero experience. The evidence about the different nature of the two jobs also supports Pegram’s characterization of the SAMs as playing a supporting role to the TPAMs, who function more like the “quarterback.” R.29 App. 202. It supports his characterization of the reassignment as a “step backwards” in his career at Honeywell. R.29 App. 213. It supports his statement that, even outside Honeywell, the SAM position was generally considered to be less prestigious. As he put it, “the customer understands the Honeywell hierarchy, so he knows I’ve been demoted.” R.29 App. 208. Most significantly, this evidence supports a conclusion that the reassignment of Pegram – from a more prestigious, “quarterback” sales position to a “learning” sales position lower down on the Honeywell career ladder – falls within the scope of both 42 U.S.C. § 2000e-2(a)(1) and 42 U.S.C. § 2000e-2(a)(2), irrespective of whether the reassignment led to a decrease in pay. The district court therefore erred in considering only evidence of the pay plans in assessing whether Pegram was effectively demoted. Finally, even if Pegram’s pay were the critical factor in determining whether the allegedly discriminatory transfer was actionable, the district court made several errors in its analysis of the incentive pay plans for the two positions. First, the court mistakenly looked to the pay plan for 2001 – the year “Pegram’s transfer took effect” (R.57 at 16) – when it considered whether any actionable discrimination had occurred. It was undisputed that Spencer unequivocally informed Pegram that he was being transferred out of the TPAM position in mid-December 2000 though, because of scheduled vacation time, Pegram did not actually start working as a SAM until January 2001. R.29 App. 237-38. Under well-settled Supreme Court precedent, the district court should have focused on December 2000, when the allegedly discriminatory decision was made and communicated, and not on 2001, when the effects of that decision were felt. As the Supreme Court emphasized in Delaware State College v. Ricks, 449 U.S. 250 (1980), “‘[t]he proper focus is upon the time of the discriminatory acts, not upon the time at which the consequences of the acts become most painful.’” Id. at 258 (citation omitted); see also id. (“the only alleged discrimination occurred . . . at the time the tenure decision was made and communicated to Ricks . . . even though one of the effects of the denial of tenure – the eventual loss of a teaching position – did not occur until later”). The Supreme Court recently reiterated this point in National Railroad Passenger Corp. v. Morgan, 122 S.Ct. 2061, 2070 (2002), when the Court declared that a “discrete . . . discriminatory act ‘occurred’ on the day that it ‘happened.’” The pay plans in effect in December 2000 therefore should have been the basis for comparison between the incentive pay of TPAMs and SAMs.13 Under those 2000 pay plans, the incentive pay plainly was not “the same,” the district court stated, because SAMs’ incentive pay was linked to an assigned sales quota while TPAMs’ incentive pay was not linked to any sales quota. In any event, regardless of whether the 2000 or 2001 pay plans are considered, the incentive pay for TPAMs and SAMs is not “the same.” It is true that both TPAMs and SAMs are paid a base salary plus incentive pay, and that the 2001 incentive pay plan for both was listed in a single document. But the incentive pay plans for the two sales positions are not the same, primarily because TPAMs and SAMs sell very different items. A TPAM generates new business by selling Honeywell’s core product, and thus presumably has the potential to earn a considerable amount of incentive pay, if successful. R.29 App. 57. A SAM generally sells to existing customers, and a considerable part of a SAM’s sales consists of the expected renewal of existing service contracts. R.46 Supp. App. 3. The potential for a SAM to earn very large amounts of incentive pay therefore appears somewhat limited. Spencer’s testimony supports this conclusion. He stated that, in 2001, his top performing SAM earned $40,000 in incentive pay. R.29 App. 134. His top performing TPAM, by comparison, earned $85,000 in incentive pay. R.29 App. 133. Moreover, under the 2001 pay plan, the method of calculating incentive pay varied depending on what item was being sold. In general, a TPAM would earn either 1.1% or 2.25% commission on an order, depending on how high his or her sales were for that year. R.46 Supp. App. 7. By contrast, a SAM received 0.55% of the annual value of a renewed service contract, plus 2.0% on any increase in the contract value. Id. The incentive pay plan for TPAMs and SAMs, while encompassed in a single document, nevertheless are not the same. Even Honeywell’s Financial Analyst, Vickie Pickering, recognized that the incentive compensation for TPAMs and SAMs was not “the same.” Her affidavit explains that “SAMs and TPAMs perform different functions [and] . . . call on different accounts. . . . For example, a SAM’s sales quota typically includes a significant amount for expected renewal of existing service contracts, whereas a TPAM’s quota typically is comprised entirely of new business.” R.46 Supp. App. 3. Pickering accordingly concluded: “These variables make it difficult to draw direct comparisons of the compensation for TPAMs and SAMs.” Id. The district court therefore erred in holding that Pegram’s reassignment was not an adverse employment action because the incentive compensation for both positions was the same. CONCLUSION We urge this Court to hold that the district court erred in holding as a matter of law that Pegram’s reassignment was not actionable under anti-discrimination law. Respectfully submitted, NICHOLAS M. INZEO Acting Deputy General Counsel PHILIP B. SKLOVER Associate General Counsel CAROLYN L. WHEELER Assistant General Counsel ___________________________ JENNIFER S. GOLDSTEIN Attorney EQUAL EMPLOYMENT OPPORTUNITY COMMISSION CERTIFICATE OF COMPLIANCE I certify that this brief complies with the type-volume limitation set forth in FRAP 32(a)(7)(B). This brief contains 6,879 words. ____________________________ JENNIFER S. GOLDSTEIN CERTIFICATE OF SERVICE I hereby certify that two paper copies of this brief and one electronic version of the brief were mailed, first class, postage prepaid, on this 30th day of May, 2003, to the following: Dorothy Elizabeth Masterson Kilgore & Kilgore 3109 Carlisle Dallas, TX 75204 Stephen C. Schoettmer Carolyn Ritchie Thompson & Knight 1700 Pacific Avenue Suite 3300 Dallas, TX 75201 ____________________________ JENNIFER S. GOLDSTEIN Attorney EQUAL EMPLOYMENT OPPORTUNITY COMMISSION Office of General Counsel 1801 L Street, N.W. Washington, DC 20507 (202) 663-4733 May 30, 2003 1. The Commission accordingly will refer only to Title VII in discussing this case and the relevant legal standards. See Shackelford, 190 F.3d at 403 n.2 ("this court shall refer only to Title VII in this opinion"). 2. The Commission takes no position on any other issue raised in this appeal. 3. "R.*" refers to the record entry number in the district court docket sheet. 4. In June 2001, Honeywell modified its incentive pay plan for 2001. R.46 Supp. App. 7. However, the critical distinction between TPAMs and SAMs - namely, that they sell different things - did not change. 5. After the close of discovery, and in response to a district court order for supplemental briefing, Honeywell submitted a table purportedly showing the incentive pay for each SAM and TPAM assigned to Spencer's region in 2001. R.46 Supp. App. 12. The table appears to be incomplete, however, because it lists 3 SAMs and only 7 TPAMs. The accompanying declaration of the Honeywell official supplying the data does not explain why only 7 of Spencer's 12 TPAMs were listed. R.46 Supp. App. 1-4. In addition, the dollar amounts of TPAM incentive pay provided in the table do not correspond to the dollar amounts described in Spencer's testimony on his TPAMs' incentive pay. This discrepancy also is not explained in the declaration. 6. For example, Pegram described a job interview he conducted with Grumbles. Grumbles allegedly told the job candidate: "'This is a working sales manager's job, and if we don't make this work you will be sleeping under a bridge next to a black man.'" Pegram inferred that he was the black man to whom Grumbles was referring. R.29 App. 257-58. 7. The district court stated that "[t]he thrust of Plaintiff's argument is that the transfer . . . constituted an adverse employment action because the incentive compensation structure for SAMs was less than that for TPAMs." R.57 at 14. In fact, in the initial briefing on summary judgment, plaintiff made a broader argument. See R.31 at 7 (arguing that transfer amounted to demotion not only because SAM position pays less but also because "[i]n the SAM position, Pegram's role was to support the TPAM position from which Pegram had just been removed"). In any event, it appears that it was the district court who narrowed the parties' focus to the incentive pay plans. In the initial briefing, Honeywell did not make an adverse employment action argument, except for one sentence stating that there was no such action. R.28 at 11. When the district court ordered supplemental briefing on September 19, 2002, the court's order apparently was confined to the question of the pay plans. According to Honeywell, the district court "directed the parties to provide evidence and briefing on the TPAM/SAM reassignment's effect on Pegram's incentive compensation." R.51 at 2 (emphasis added). 8. This Court has noted that "[t]he definition of 'adverse employment action' . . . may be different under title VII from its definition under § 1983" because, at least in the context of retaliation cases, the phrase "adverse employment action" is limited to "ultimate employment decisions." Sharp v. City of Houston, 164 F.3d 923, 933 n.21 (5th Cir. 1999). Regardless, even under the narrower "ultimate employment decision" standard, a transfer may be challenged when it amounts to a demotion. Id. at 933. To be equivalent to a demotion under § 1983 case law, "a transfer need not result in a decrease in pay, title, or grade; it can be a demotion if the new position proves objectively worse - such as being less prestigious or less interesting or providing less room for advancement." Id.; see also Forsyth v. City of Dallas, 91 F.3d 769, 774 (5th Cir. 1996) (transfer may be challenged under § 1983 where employees suffered no reduction in pay but former positions were "more prestigious, had better working hours, and were more interesting"); Vojvodich v. Lopez, 48 F.3d 879, 887 (5th Cir. 1995) (transfer "to a less interesting, less prestigious position could implicate the First Amendment, even if the transfer did not result in a decrease in pay"); Click v. Copeland, 970 F.2d 106, 110 (5th Cir. 1992) (transfer in which employee received a pay increase may still be considered a demotion where new job was "not as interesting or prestigious" as former job). 9. The Court went on to hold that an employer would always be potentially liable for tangible employment actions taken by a supervisor, whereas the employer would have an affirmative defense when no tangible employment action is taken. Burlington Indus., 524 U.S. at 765. And in Faragher v. City of Boca Raton, 524 U.S. 775 (1998), the Court reiterated that holding and emphasized in particular that the scope of 42 U.S.C. § 2000e-2(a)(1) "'is not limited to "economic" or "tangible" discrimination,' and that it covers more than '"terms" and "conditions" in the narrow contractual sense.'" Faragher, 524 U.S. at 786 (citations omitted). 10. The Commission has argued to this Court that the decisions in Faragher and Burlington Industries do cast doubt on the holding in Mattern. See Brief of EEOC in Gustafson, Inc. v. Bunch, No. 99-11289 (5th Cir.). More generally, the Commission has taken the position in Guidance that the practices or actions that may be challenged under 42 U.S.C. § 2000e-2(a)(1) "involve situations in which women or minorities are assigned to less desirable jobs or duties, receive stereotyped assignments or duties, or receive assignments or duties based upon factors prohibited by Title VII." EEOC Enforcement Guidance on Terms, Conditions, and Privileges of Employment, § 613.5(a); see also EEOC Compliance Manual, "Threshold Issues," No. 915.003 (found at http://www.eeoc.gov/docs/threshold.html) at 2-17 ("EEOC's coverage in this area [of job decisions, employment practices, and other terms, conditions, and privileges of employment] is broad" and includes "Undesirable reassignment"). 11. To be consistent with Teamsters, then, any "objective" adverse employment action test must be tailored to the affected individual. Such a test would take into account the fact that an individual may have a personal preference for a job because certain aspects of the job are more valuable to that individual. 12. The statements of Grumbles and Spencer are contained in deposition transcript pages specifically cited in a brief filed with the district court. See R.28 at 4, 5. 13. The 2001 pay plan is not irrelevant. If Pegram were to establish that the 2000 transfer constituted unlawful discrimination, any relief to which he would be entitled would be governed by the 2001 and any subsequent pay plans.