No. 08-16749 ____________________________________________ IN THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT ____________________________________________ EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff/Appellant, v. TIN, INC., Defendant/Appellee. _______________________________________________________ On Appeal from the United States District Court for the District of Arizona (No. 2:06-cv-1899-NVW) _______________________________________________________ REPLY BRIEF OF THE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION AS APPELLANT _______________________________________________________ RONALD S. COOPER General Counsel CAROLYN L. WHEELER Acting Associate General Counsel LORRAINE C. DAVIS Assistant General Counsel ELIZABETH E. THERAN Attorney U.S. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION Office of General Counsel 131 M St., N.E., Rm. 5SW18J Washington, D.C. 20507-0001 (202) 663-4720 elizabeth.theran@eeoc.gov TABLE OF CONTENTS TABLE OF AUTHORITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . ii INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ARGUMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 CONCLUSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 CERTIFICATE OF COMPLIANCE. . . . . . . . . . . . . . . . . . . . . . . . 28 CERTIFICATE OF SERVICE TABLE OF AUTHORITIES CASES Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986). . . . . . . . . . . . 10 Aragon v. Republic Silver State Disposal, Inc., 292 F.3d 654 (9th Cir. 2002). . . . . . . . . . . . . . . . . . . . . . .14, 15 Carras v. MGS 728 LEX Inc., No. 07-4480-cv, 2008 WL 5273278 (2d Cir. Dec. 19, 2008). . . . . . . . . 12-13 Chuang v. Univ. of Cal. Davis, Bd. of Trs., 225 F.3d 1115 (9th Cir. 2000). . 17 Coleman v. Quaker Oats Co., 232 F.3d 1271 (9th Cir. 2000). . . . . . . . 14, 18 Connecticut v. Teal, 457 U.S. 440 (1982). . . . . . . . . . . . . . . . . 10-11 Davis v. Con-Way Transp. Cent. Express, Inc., 368 F.3d 776 (7th Cir. 2004). .24 Davis v. Team Elec. Co., 520 F.3d 1080 (9th Cir. 2008). . . . . . . . . . . 13 Diaz v. Eagle Produce Ltd. P'ship, 521 F.3d 1201 (9th Cir. 2008). . . 13-14, 25 Dominguez-Curry v. Nev. Transp. Dep't, 424 F.3d 1027 (9th Cir. 2005). . . . 4 EEOC v. Wyoming, 460 U.S. 226 (1983). . . . . . . . . . . . . . . . . . . . . 6 Enlow v. Salem-Keizer Yellow Cab Co., 389 F.3d 802 (9th Cir. 2004). . . . . 2-3 Hazen Paper Co. v. Biggins, 507 U.S. 604 (1993). . . . . . . . . . . . . . . 6 Kelly v. Am. Std., Inc., 640 F.2d 974 (9th Cir. 1981). . . . . . . . . . . . 6 Kralman v. Ill. Dep't of Veterans' Affairs, 23 F.3d 150 (7th Cir. 1994). . . 4 Lindahl v. Air France, 930 F.2d 1434 (9th Cir. 1991). . . . . . . . . . . . 10 Lynn v. Regents of the Univ. of Cal., 656 F.2d 1337 (9th Cir. 1981). . . 14-15 Metoyer v. Chassman, 504 F.3d 919 (9th Cir. 2007). . . . . . . . . . . . passim Moran v. Selig, 447 F.3d 748 (9th Cir. 2006). . . . . . . . . . . . . . .16, 22 Nat'l R.R. Passenger Corp. v. Morgan, 536 U.S. 101 (2002). . . . . . . . . 23 Nesbit v. Pepsico, Inc., 994 F.2d 703 (9th Cir. 1993). . . . . . . . . . . . 11 Poland v. Chertoff, 494 F.3d 1174 (9th Cir. 2007). . . . . . . . . . . . . . 4 Pottenger v. Potlatch Co., 329 F.3d 740 (9th Cir. 2003). . . . . 12, 15, 16, 17 Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133 (2000). . . 10, 17, 18 Rowe v. The Marley Co., 233 F.3d 825 (4th Cir. 2000). . . . . . . . . . . . 4 Sellie v. Boeing Co., 253 Fed. Appx. 626 (9th Cir. 2007). . . . . . . . . 11-12 Smith v. Marsh, 194 F.3d 1045 (9th Cir. 1999). . . . . . . . . . . . . . . 24 Wallis v. J.R. Simplot Co., 26 F.3d 885 (9th Cir. 1994). . . . . . . . . . . 13 Woodman v. WWOR-TV, Inc., 411 F.3d 69 (2d Cir. 2005). . . . . . . . . . . . 25 RULES Fed. R. App. P. 32(a)(7)(B)(iii). . . . . . 28 Fed. R. App. P. 32(a)(7)(C). . . . . . . . 28 Fed. R. Evid. 803(6). . . . . . . . . . . . 24 Ninth Cir. R. 32-1. . . . . . . . . . . . 28 INTRODUCTION The Commission alleges that TIN, Inc. ("TIN") violated the Age Discrimination in Employment Act ("ADEA") when it fired David Neal, Cliff McGraw, and John Vanecko because of their ages. The district court granted summary judgment for TIN, holding the EEOC had failed either to establish that TIN's proffered justifications for each of its respective employment decisions were unworthy of credence or to produce credible evidence that a discriminatory reason more likely than not motivated TIN to terminate Neal, McGraw, and Vanecko. In our opening brief ("EEOC-Br."), we argued that the district court erred in granting summary judgment to TIN because there is sufficient evidence to support a jury finding that Neal, McGraw, and Vanecko were terminated because of their ages. We argued that the ageist remarks made by Birg Mishurda and Juan Ramon Garza, the decisionmakers in this case, constitute either direct or strong circumstantial evidence of age discrimination based on the law of this Court. We also highlighted other circumstantial evidence in the record that would support a reasonable jury finding of discrimination with respect to all three individuals. Finally, we pointed out that the district court, in numerous instances, usurped the role of the jury as trier of fact, refused to draw reasonable inferences favorable to the Commission, and credited evidence produced by TIN that a jury could choose not to believe. In its brief as Appellee ("TIN-Br."), TIN blatantly disregards the law of this Circuit and offers no cogent response to our arguments that the comments in question are either direct or strong circumstantial evidence of discrimination by the relevant decisionmakers. TIN also misrepresents the factual record and the Commission's arguments in several instances, and repeatedly fails to draw all reasonable factual inferences in favor of the Commission, as required on summary judgment. We submit this reply brief to clarify the factual record and to respond to TIN's legal arguments. ARGUMENT 1. As we explained in our opening brief (EEOC-Br.-32-34), this Court has stated unequivocally that biased remarks made by the decisionmaker in an employment discrimination case may constitute direct evidence of discrimination even if they are not made to or about the employee or in connection with the challenged employment action. See, e.g., Metoyer v. Chassman, 504 F.3d 919, 937-38 (9th Cir. 2007) (observing that biased remarks about the class to which the employee belongs may be "several years old" and still constitute direct evidence of discrimination). The key is whether the evidence "may be viewed as directly reflecting the alleged discriminatory attitude . . . sufficient to permit the fact finder to infer that that attitude was more likely than not a motivating factor in the employer's decision." Enlow v. Salem-Keizer Yellow Cab Co., 389 F.3d 802, 812 (9th Cir. 2004) (emphasis in original). As we argued in our opening brief, a reasonable jury could find that the extensive age-biased remarks made by Mishurda and Garza in this case constitute direct evidence of age discrimination with respect to Neal, McGraw, and Vanecko, and are themselves sufficient to preclude summary judgment against the Commission. See EEOC-Br.-34. TIN offers several unavailing responses. First, TIN repeats, mantra-like, as it did before the district court, that Mishurda's and Garza's remarks are not connected to any of the class members' terminations and that they were not made sufficiently close in time to the terminations to constitute direct evidence of age discrimination. However, as just described, this Court has explicitly rejected these two criteria as prerequisites for direct evidence of discrimination, and TIN's persistence in reiterating them simply cannot change the law of this Court. TIN then attempts to argue that, although Mishurda and Garza are the undisputed decisionmakers with respect to Neal's termination, Garza acted completely alone in terminating McGraw and Vanecko. TIN-Br.-26-27. However, the factual record - even apart from TIN's contradictory interrogatory answer - does not bear out TIN's representation. Both Mishurda and Garza testified that Garza "consulted with" Mishurda regarding his decisions to terminate both McGraw and Vanecko. III-ER-419 (Mishurda's testimony), 431-32 (Garza's testimony). Given that they worked closely together, the fact that Garza would have "consulted with" Mishurda on these decisions is not at all surprising, and a reasonable jury could certainly credit their own testimony that they did so. As this Court has explained, even when a biased superior is not deemed the "ultimate decisionmaker," "'[w]here . . . the person who exhibited discriminatory animus influenced or participated in the decisionmaking process, a reasonable factfinder could conclude that the animus affected the employment decision.'" Metoyer, 504 F.3d at 938 (quoting Dominguez-Curry v. Nev. Transp. Dep't, 424 F.3d 1027, 1039-40 (9th Cir. 2005) (internal citation omitted)). Mishurda's and Garza's acknowledgment that they consulted on the terminations of McGraw and Vanecko also renders this case easily distinguishable from the out-of-circuit cases cited by TIN.<1> See Rowe v. The Marley Co., 233 F.3d 825, 831 (4th Cir. 2000) (where superior merely approved subordinate's discharge selections, superior's "somewhat inconsistent statement as to the factors he believed [the subordinate] considered is simply not probative of pretext"); Kralman v. Ill. Dep't of Veterans' Affairs, 23 F.3d 150, 157 n.9 (7th Cir. 1994) (superior not held to be actual decisionmaker where record showed that he "merely . . . 'rubber-stamped'" subordinate's recommendation and plaintiff pointed to no evidence in the record showing his awareness of subordinate's bias). Finally, TIN argues that Mishurda's and Garza's comments are not direct evidence of age discrimination because they are "not age-related." As we argued in our opening brief, many, if not all, of the comments at issue are explicitly age- related or were explicitly tied to age by either Mishurda or Garza.<2> EEOC-Br.-35- 37. Ironically, while TIN accuses the Commission of taking the various remarks out of "context," it is TIN who would have this Court analyze them in a vacuum, and incorrectly at that, simply listing them in its brief and stating categorically (and wrongly) that none of them are age-related - including "viejos," which is Spanish for "old," and "perro[s] viejos," Spanish for "old dogs." TIN-Br.-30-31. (In fact, Garza himself testified that he had heard the term "perro viejos" before in the context of "a saying in Mexico, . . . 'Old dog does not learn new tricks.'" III-ER- 427.) More significant, however, is TIN's failure to understand the difference between an epithet and a stereotype, and its failure to comprehend that both may constitute direct evidence of discrimination. As the Supreme Court has remarked on several occasions, and as AARP pointed out in its proffered amicus brief in this case, Congress enacted the ADEA because of its concern that older workers were being subjected to "inaccurate and stigmatizing stereotypes" and deprived of employment opportunities because of their ages rather than their actual abilities. See Hazen Paper Co. v. Biggins, 507 U.S. 604, 610 (1993) (observing that "[i]t is the very essence of age discrimination for an older employee to be fired because the employer believes that productivity and competence decline with old age"); EEOC v. Wyoming, 460 U.S. 226, 231 (1983) (observing that the Secretary of Labor's 1967 report to Congress on age discrimination noted, inter alia, that "[a]lthough age discrimination rarely was based on the sort of animus motivating some other forms of discrimination, it was based in large part on stereotypes unsupported by objective fact"); see also Kelly v. Am. Std., Inc., 640 F.2d 974, 980 n.9 (9th Cir. 1981) ("The ADEA is designed to eradicate both conscious and unconscious stereotypes about the abilities of older workers.") (internal citation and quotation marks omitted). The comments at issue in this case unmistakably reflect exactly the kind of stereotypes about older workers that the Supreme Court described in Hazen Paper and EEOC v. Wyoming: lower productivity, lack of energy, and lesser competence, all due to age. Indeed, although TIN attempts to brush aside all of the cases the Commission cites because the remarks in this case are "not even close" to the bigotry and egregiousness of the remarks in cases like Metoyer, TIN-Br.-38, the Commission submits that, if the descriptor "African-American" in Metoyer were replaced with "old," the two scenarios would be strikingly similar as far as the direct evidence issue is concerned. In Metoyer, as we explained in our opening brief, EEOC-Br.-33-34, the decisionmaker indicated her agreement with statements that African-Americans were lazy and liked to party and eat rather than do their work, and herself stated that African-Americans "ought to be glad they have a job" and called them "lazy" and "malingerers," although she never addressed any of these statements to or made them about Metoyer, who was African-American. 504 F.3d at 937-38. This Court held that these statements by a decisionmaker - who may or may not have been the "ultimate" decisionmaker with respect to Metoyer's termination two years later - constituted direct evidence of race discrimination. Id. If TIN's reasoning were followed to its logical conclusion, however, Metoyer would have fared no better than the class members in this case, because the terms "lazy," "like to party," "malingerer," and "be grateful you have a job" are not explicitly racial, and are no more than legitimate business concerns of the employer in any case. Rather, the reason why the remarks in Metoyer are direct evidence of discrimination, just like the remarks in this case, is that they represent known stereotypes about statutorily protected groups - African-Americans in Metoyer, and older workers in this case. See EEOC-Br.-35-37. Neal testified that Mishurda specifically cautioned him against hiring McGraw because of concerns about McGraw's age and what that meant about McGraw's energy level, and that "this is a man who is at the end of his career, is he going to retire on the job." II-ER-240. Neal also testified at length about Mishurda's grilling him about the ages and physical conditions of himself and his entire management team, and comparing the older employees unfavorably to younger ones in explicit terms. II-ER-246-49, 268-69.<3> Both Neal and Ulrich testified about the incident in which Ulrich, in his fifties, applied for a position as a sales manager, and Mishurda questioned whether he would really be willing to go back to a "young man's game," stating that a younger candidate "would be hungry and maybe have more energy." II-ER-212, 227. And Salomon testified extensively about Mishurda's complaining to him about his team being older and "age getting in the way," wishing that his team was younger and in better shape, and preferring younger managers. III-ER-330, 350. Salomon also recalled both Mishurda and Garza using the term "viejos perros," or old dogs, to refer to older employees and the Phoenix team generally, and Mishurda's statement that "the older people should move on and learn new tricks." III-ER-341-42, 358.<4> In maintaining that these quintessential age stereotypes are somehow not "about age," TIN itself does exactly what it accuses the Commission of doing: putting its own "spin" on the various remarks, which it characterizes as "context," and insisting that none of them could have possibly referred to age. TIN-Br.-31- 35. While a jury could certainly listen to testimony about the various incidents and remarks in question and might even ultimately accept TIN's version, on summary judgment, TIN is not entitled to the benefit of the many factual inferences it draws in its own favor in so characterizing the record. See Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 151 (2000) ("[A]lthough the court should review the record as a whole, it must disregard all evidence favorable to the moving party that the jury is not required to believe."); Lindahl v. Air France, 930 F.2d 1434, 1437 (9th Cir. 1991) ("The evidence of the opposing party is to be believed, and all reasonable inferences that may be drawn from the facts placed before the court must be drawn in the light most favorable to the nonmoving party.") (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986)). Finally, we respond briefly to TIN's argument (TIN-Br.-36) that the Supreme Court's decision in Connecticut v. Teal, 457 U.S. 440 (1982), somehow supports the district court's decision in this case. As we explained in our opening brief (EEOC-Br.-37-38), Teal stands for exactly the opposite premise: favorable treatment of one member of a protected group, or even multiple members of a protected group, does not "give an employer license to discriminate against" other members of that group. Teal, 457 U.S. at 455. The language in Teal referring to proof of a nondiscriminatory "bottom line" or good-faith efforts to achieve a nondiscriminatory work force, 457 U.S. at 454, cannot be read to support the district court's conclusion in this case that evidence of hiring a single older worker means that no reasonable jury could have found that Mishurda and/or Garza could have intended to discriminate against other older workers. 2. As we argued in our opening brief, even if Mishurda's and Garza's remarks are not viewed as direct evidence, they are unquestionably very strong circumstantial evidence of age discrimination against Neal, McGraw, and Vanecko. TIN's only response to this point is to reiterate its argument that the remarks are not age-related and to introduce two brand-new categorical legal rules - that the remarks "must still be about the class member and the evidence must demonstrate that the remarks played a role in the class member's separations." TIN-Br.-40. Even then, according to TIN, the numerous remarks would only constitute "weak circumstantial evidence at best." Id. Unfortunately for TIN, these legal "rules" exist nowhere in this Court's law, including the cases TIN cites. In Nesbit v. Pepsico, Inc., 994 F.2d 703 (9th Cir. 1993), as we explained in our opening brief, the single comment at issue was found to be weak circumstantial evidence not only because it wasn't tied to the plaintiff's termination but also because it was uttered "in an ambivalent manner." In Sellie v. Boeing Co., 253 Fed. Appx. 626 (9th Cir. 2007), an unpublished per curiam disposition, the Court found, after analyzing the totality of the evidence with respect to the plaintiff's involvement in a RIF, that there was no evidence that allegedly discriminatory remarks made by his superiors in a 2001 retention exercise played any role in his termination as part of a 2002 layoff. These two cases announce no categorical rules of any sort about circumstantial evidence and bear no factual resemblance to this case. See EEOC-Br.-40-41. Likewise, in its brief, TIN simply reiterates the same mistake the district court made with respect to Pottenger v. Potlatch Co., 329 F.3d 740 (9th Cir. 2003): treating it as if it announces a universal rule that remarks reflecting bias cannot be deemed direct evidence in the context of a case where a company undergoing financial difficulty decides a change in management is warranted. TIN-Br.-41. As we pointed out in our opening brief, no such rule exists, and while employers have significant latitude in deciding how to remedy their financial difficulties, they are not free to do so through illegal, discriminatory means. Pottenger, 329 F.3d at 746-49, simply makes the unremarkable and case-specific point that the evidence in that case, the sum total of three remarks referring to an "old management team," an "old business model," and "deadwood," did not "refute Potlatch's basic rationale for Pottenger's termination - that IPPD was losing money and the company lacked faith that Pottenger was the one to turn IPPD around." See also Carras v. MGS 728 LEX Inc., No. 07-4480-cv, 2008 WL 5273278 (2d Cir. Dec. 19, 2008) (unpublished) (in age discrimination case, observing that, "[a]lthough the record shows that MGS was in a difficult financial position and was attempting to cut costs, the District Court's repeated references to the company's financial situation reflect, in our view, an impermissible weighing of the evidence"). 3. TIN next argues that no reasonable jury could find in the Commission's favor with respect to any of the three class members based on the circumstantial evidence in the record. Beginning with Neal, TIN takes the position that the Commission failed even to establish a prima facie case of age discrimination. Simply put, this argument has no merit. The district court found that the Commission had established a prima facie case of age discrimination with respect to all three class members at issue in this appeal. I-ER-18-20. As the district court noted, this Court has held that "'[t]he requisite degree of proof necessary to establish a prima facie case for [discrimination] . . . claims on summary judgment is minimal and does not even need to rise to the level of a preponderance of the evidence.'" Davis v. Team Elec. Co., 520 F.3d 1080, 1089 (9th Cir. 2008) (quoting Wallis v. J.R. Simplot Co., 26 F.3d 885, 889 (9th Cir. 1994)). A prima facie case of disparate treatment under the ADEA consists of a showing that each class member "was (1) at least forty years old, (2) performing his job satisfactorily, (3) discharged, and (4) either replaced by substantially younger employees with equal or inferior qualifications or discharged under circumstances otherwise 'giving rise to an inference of age discrimination.'" Diaz v. Eagle Produce Ltd. P'ship, 521 F.3d 1201, 1207 (9th Cir. 2008) (quoting Coleman v. Quaker Oats Co., 232 F.3d 1271, 1281 (9th Cir. 2000)). Prongs (1) and (3) are not in dispute here: Neal was terminated at age 56. TIN takes the position that the Commission cannot establish prong (2) because TIN asserts that he was fired for performance-related reasons. TIN-Br.-42-43. TIN fundamentally misunderstands the difference between what it means to establish basic job qualifications and competence for purposes of a prima facie case and what it means ultimately to establish pretext. In Aragon v. Republic Silver State Disposal, Inc., 292 F.3d 654, 659 (9th Cir. 2002), this Court specifically rejected the notion that, at the prima facie case stage, the plaintiff is required to "show that he was doing his job well enough to eliminate the possibility that he was laid off for inadequate job performance." See also id. ("The district court's analysis seems to conflate the minimal inference needed to establish a prima facie case with the specific, substantial showing [required] at the third stage of the McDonnell Douglas inquiry to demonstrate that Republic's reasons for laying [Aragon] off were pretextual."); Lynn v. Regents of the Univ. of Cal., 656 F.2d 1337, 1344 (9th Cir. 1981) ("In our view, objective job qualifications are best treated at step one [of the prima facie case] and subjective criteria, along with any supporting evidence, are best treated at the later stages of the process. To do otherwise would . . . defeat the purpose underlying the McDonnell Douglas process."). The record evidence is more than adequate to support a reasonable jury finding that Neal was qualified for his job and was performing it satisfactorily for purposes of demonstrating a prima facie case of discrimination. As we pointed out in our opening brief, Neal testified that he had never received a negative performance review of any kind, nor had he been told that his job was in jeopardy due to his or the plant's performance. EEOC-Br.-8. In fact, Neal testified, Garza had told him that he was happy with how things were going. Id. This is enough to support a reasonable jury finding that Neal was performing his job adequately for purposes of prong (2) of the prima facie case. See Aragon, 292 F.3d at 660 (evidence that plaintiff had no disciplinary write-ups or formal write-ups for poor performance and plaintiff's own testimony that his performance was at a level comparable to that of his coworkers sufficient to survive summary judgment with respect to prong (2)); Pottenger, 329 F.3d at 740 (performance review grade that was "not outstanding, but indicated that [the plaintiff] was meeting the requirements of the job" satisfied prong (2) of prima facie case). TIN next argues that the Commission fails to establish prong (4) of its prima facie case with respect to Neal because it cannot show that he was either replaced by a similarly situated comparator or discharged under circumstances otherwise giving rise to an inference of age discrimination. This argument fares no better than the last. Neal was replaced as General Manager by 41-year-old Garza, who was fifteen years his junior. Although TIN argues that Garza cannot serve as a comparator for Neal as a General Manager because Garza was contemporaneously holding another position and "had previously been involved in saving two other unprofitable TIN plants," TIN-Br.-43, as the district court itself pointed out, Garza testified that the Imperial Valley plant had in fact never been profitable while he was its interim General Manager, and that plant did not become profitable until fourteen to sixteen months after Garza left the position. II-ER-59. Garza is, therefore, a valid comparator for Neal because the two are "similarly situated in all material respects." See Moran v. Selig, 447 F.3d 748, 755 (9th Cir. 2006). In any case, given the "minimal" degree of proof required to establish a prima facie case of age discrimination, the extensive evidence of discriminatory remarks already discussed is more than adequate to support a reasonable jury finding that Neal was discharged under circumstances giving rise to an inference of age discrimination. Next, TIN argues that the Commission failed to establish a genuine dispute of material fact with respect to whether the three reasons Mishurda gave for firing Neal were pretextual. TIN-Br.-44-48. As this Court explained in Pottenger, a plaintiff "may establish pretext through evidence showing that [the employer's] explanation is unworthy of belief or through evidence showing that discrimination more likely motivated its decision. [The plaintiff] need not rely on only one type of evidence . . . . " 329 F.3d at 746 (citing Reeves, 530 U.S. at 143, and Chuang v. Univ. of Cal. Davis, Bd. of Trs., 225 F.3d 1115, 1127 (9th Cir. 2000)). See also id. ("At the summary judgment stage, Pottenger's burden is not high. He must only show that a rational trier of fact could, on all the evidence, find that Potlatch's explanation was pretextual and that therefore its action was taken for impermissibly discriminatory reasons. If he does so, then summary judgment for Potlatch is inappropriate."). The Commission has taken both approaches in this case, adducing specific and substantial circumstantial evidence that is more than sufficient to support a jury finding, with respect to all of TIN's proffered reasons for terminating Neal, that they were either pretextual or that age discrimination was more likely the real reason. With respect to all three proffered reasons, as we explained in our opening brief and in this brief, the extensive, explicitly age-related stereotypes and remarks made by Mishurda and Garza - Neal's undisputed decisionmakers - are strong circumstantial evidence of age discrimination and an intention to replace older employees with younger ones. TIN responds to this argument essentially by rehashing the same old arguments that the remarks in question are not about age and do not pertain to these particular individuals - arguments that we have already addressed here and in our opening brief. With respect to Neal's alleged performance problems, TIN now argues that it is of no consequence whether Neal was in fact responsible for Phoenix's performance deficiencies, as TIN and Mishurda claim; rather all that "counts" is TIN's "good faith belief in its decision." TIN-Br.-44-45. While it is certainly true that the mere exercise of unwise business judgment, without more, does not constitute a violation of the ADEA, see Coleman, 232 F.3d at 1285, TIN's argument puts the proverbial cart before the horse. What is at issue here is the very heart of pretext analysis: Did TIN, in fact, have a good-faith belief in its professed opinion that Neal was solely responsible for Phoenix's performance problems, or could a reasonable jury conclude, based on the evidence in the record, including what TIN knew about the paper market in general and the Phoenix plant in particular, that TIN lacked such a good-faith belief? See Reeves, 530 U.S. at 147 ("Proof that the defendant's explanation is unworthy of credence is simply one form of circumstantial evidence that is probative of intentional discrimination, and it may be quite persuasive."). Based on the evidence discussed in our opening brief, EEOC-Br.-43-46, there was more than enough to support a reasonable jury finding that TIN was aware that many of Phoenix's problems with profitability were within its own control and the control of external market forces rather than Neal's; that neither Mishurda nor Garza had given Neal any indication that his job was in jeopardy; and that, in fact, not long after Neal was terminated, TIN changed its business model for Phoenix to one that no longer focused on profitability - the very failing for which Neal was ostensibly fired. TIN offers two primary factual responses to this argument. The first is that Neal and the Phoenix plant were essentially one and the same, so that Neal should have just automatically understood that any dissatisfaction TIN had with Phoenix was to be considered a problem with him and his performance. TIN-Br.-45. The only factual support TIN offers for this assertion, apart from the record testimony about the Phoenix plant's problems, is what TIN characterizes as Flores's testimony that he, as General Manager, was "responsible for Phoenix's performance" without regard to market forces. Id. However, TIN misrepresents Flores's testimony on this point. Flores did testify that, as General Manager, he and Mishurda "wanted that plant to become profitable," II-ER-278, that "it was my responsibility to try to move that plant towards profitability, which we did," II-ER- 280, and that "as the General Manager, the performance of the plant was within my responsibility," id. (emphases added). Flores never testified that he was singlehandedly responsible for all aspects of Phoenix's performance without regard to market forces; in fact, he testified that "the most important reason for the lack of profitability of [the Phoenix plant] was structural, was the market. . . . Too much competition, oversupply, so the prices were low." II-ER-280-81. A reasonable jury could easily find that any given General Manager of the Phoenix plant would not necessarily believe that, just because the historically unprofitable Phoenix plant was not turning the profits TIN senior management would have preferred, his own job performance was so deficient that he was at risk for immediate termination. Second, TIN characterizes the Commission's argument that TIN changed its business model for Phoenix after Neal left as a "vague assertion" and accuses the EEOC of "mislead[ing] the Court." Both accusations are totally baseless. As we explained in our opening brief, Vanecko, who was the Phoenix plant's Controller - the lead individual responsible for maintaining the plant's finances, II-ER-118 - testified that, at some point after Mishurda replaced Neal with Garza as General Manager, TIN switched its operating model for Phoenix from one that maximized profits to one that focused on mill capacity. EEOC-Br.-45. TIN concedes that this transition occurred, but claims that this new strategy did not begin until "years later," in 2005. TIN-Br.-46. However, Vanecko testified that, "[a]fter Dave [Neal] left, I started hearing, [] Temple-Inland is restructuring the paperboard and packaging group. I want to get it to the point where they have just enough box plants to use all the volume that can be produced by the mills." II-ER-172. Vanecko testified that he heard these rumors from other people within the Phoenix plant, including Garza himself, before 2005, and definitely as early as 2004, in connection with the preparation of the 2005 budget. II-ER-172-74. Indeed, a reasonable jury could find that an earlier time frame, consistent with Vanecko's testimony, is perfectly consistent with TIN's witnesses' testimony that the new operating model was not implemented until 2005, since it would have had to have been in the development and planning stages for some time before the changes were actually made. In any case, to the extent that other witnesses may dispute Vanecko's account, this type of factual dispute must be resolved in the Commission's favor on summary judgment. 4. TIN also argues, likewise unavailingly, that the Commission failed to adduce sufficient evidence of either a prima facie case of discrimination or pretext with respect to McGraw. Here, again, prongs (1) and (3) of the prima facie case are not in dispute: McGraw was terminated at age 62. To the extent that TIN implies that the EEOC cannot demonstrate a genuine dispute of material fact with respect to prong (2) due to McGraw's "not meeting Garza's expectations of a Production Manager," TIN-Br.-48, there are at least two problems with this argument. First, because, as TIN notes, this is a "termination case," for purposes of the Commission's prima facie case, the issue is whether McGraw was qualified for and/or satisfactorily performing the position of Logistics Manager, not Production Manager. TIN does not contend that McGraw's performance as Logistics Manager was unsatisfactory. II-ER-72. Second, to the extent McGraw's performance in the Production Manager position is relevant at this stage, the same argument made with respect to Neal, supra at 14-15, also applies here: McGraw testified that he had never received a negative performance evaluation and that Garza seemed satisfied with his performance. See EEOC-Br.-46. With respect to prong (4) of McGraw's prima facie case, TIN again improperly conflates the requisite showing for a prima facie case with the ultimate showing necessary for pretext and in the process ignores considerable evidence. The Commission adduced sufficient evidence to show that Juarez is an appropriate comparator for McGraw, as he is "similarly situated to [McGraw] in all material respects." Moran, 447 F.3d at 755. Juarez was 43 at the time he replaced 62-year- old McGraw as Production Manager. As we noted in our opening brief, whereas TIN demoted McGraw to Logistics Manager for performance reasons and ultimately fired him, its response to Juarez's undisputed, severe performance problems as Production Manager was to promote him to a potentially more lucrative staff engineer position in TIN's Mexican operations division.<5> EEOC- Br.-13. This is more than adequate evidence to support a reasonable jury finding of a prima facie case of age discrimination with respect to McGraw.<6> TIN further argues that there can be no inference of discrimination with respect to McGraw's termination because the decision to eliminate the Logistics Manager position was simply "business judgment." TIN also asserts, yet again, that none of the remarks made by Mishurda or Garza are relevant to McGraw's claim because none of them are age-biased and because Garza was the lone decisionmaker with respect to McGraw's termination. As already described above, the arguments with respect to the age-biased remarks are devoid of merit, and a reasonable jury could find that Garza and Mishurda both participated in the decision to terminate McGraw, supra at 3-4. The argument about "business judgment," on summary judgment, fares no better. As we explained in our opening brief, EEOC-Br. 46-47, even apart from the extensive age-biased remarks of Mishurda and Garza and the far better treatment Juarez received, there is evidence in the record<7> from which a reasonable jury could find TIN's proffered reason for its elimination of the Logistics Manager position into which it put McGraw - cost reduction - not credible. TIN's reliance on the Seventh Circuit's decision in Davis v. Con-Way Transportation Central Express, Inc., 368 F.3d 776 (7th Cir. 2004), to argue that such a finding would be "ridiculous," TIN-Br.-48, is misplaced. Davis stands in stark contrast to the facts of this case. See id. at 785 ("[W]e think it ridiculous to suggest that Con- Way would terminate nine other employees from Davis's facility, not to mention forty others from around the state of Indiana, on the pretense of economic hardship, just so it could cover its tracks with respect to Davis."). As we explained above with respect to Neal, this evidence goes to the heart of the pretext question - whether TIN's proffered explanation was in fact its true motivation for its ultimate termination of McGraw - and a reasonable jury could consider it, along with all the other evidence in the record, and conclude that age discrimination was TIN's real motivation. 5. Finally, TIN argues that the Commission failed to adduce sufficient evidence of either a prima facie case of discrimination or of pretext to survive summary judgment with respect to Vanecko. Here, prongs (1), (2), and (3) of the prima facie case are not in dispute: Vanecko was terminated at age 60, and TIN has never contended that his performance was deficient. Rather, TIN argues that Vanecko's prima facie case fails because Cervantes is not a valid comparator and because the Commission cannot show that he was otherwise terminated under circumstances giving rise to an inference of discrimination. Once again, this argument fails. Vanecko was passed over at age 60 for the Regional Controller position in favor of 36-year-old Cervantes.<8> As we explained in our opening brief, both Vanecko and Flores testified that Vanecko was more qualified for the Regional Controller position than Cervantes, that many of the qualifications Garza identified as supposedly favoring Cervantes were not real prerequisites for the job, and that Cervantes in fact proved to be unable to handle the job and resigned within a year.<9> EEOC-Br.-16-18. At the prima facie case stage of the McDonnell Douglas analysis, this is more than enough evidence to allow a reasonable jury to conclude that Vanecko was replaced by a younger candidate with equal or inferior qualifications. TIN's pretext argument with respect to Vanecko is essentially that none of the remarks made by Mishurda or Garza are relevant because none of them are age-biased or related to his separation and because Garza was the lone decisionmaker with respect to Vanecko's termination. As already described above, the arguments with respect to the age-biased remarks and the requirement that they be related to the termination are meritless, and a reasonable jury could find that Garza and Mishurda both participated in the decision to terminate Vanecko, supra at 3-4. We also note that, as we argued in our opening brief, the evidence of Vanecko's superior qualifications for the job, as described by Flores - the General Manager who worked with him directly and was able to detail the specific qualities he had that would have made him better able to perform the job - constitutes evidence of pretext, particularly when viewed in conjunction with the testimony that speaking Spanish and knowledge of Mexican tax law were not real prerequisites for the consolidated position. See EEOC-Br.-48-49. CONCLUSION For the foregoing reasons and the reasons stated in the EEOC's opening brief, the judgment of the district court should be reversed and the case remanded for further proceedings. Respectfully submitted, RONALD S. COOPER General Counsel CAROLYN L. WHEELER Acting Associate General Counsel LORRAINE C. DAVIS Assistant General Counsel s/ELIZABETH E. THERAN Attorney U.S. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION Office of General Counsel 131 M St., N.E., Rm. 5SW18J Washington, D.C. 20507-0001 (202) 663-4720 elizabeth.theran@eeoc.gov CERTIFICATE OF COMPLIANCE I certify that, pursuant to Fed. R. App. P. 32(a)(7)(C) and Ninth Circuit Rule 32-1, the attached reply brief is proportionately spaced, has a typeface of 14 points or more and contains 6,957 words, excluding the parts of the brief exempted by Fed. R. App. P. 32(a)(7)(B)(iii). s/Elizabeth E. Theran Attorney U.S. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION Office of General Counsel 131 M St., N.E., Rm. 5SW18J Washington, D.C. 20507-0001 (202) 663-4720 elizabeth.theran@eeoc.gov Dated: January 12, 2009 CERTIFICATE OF SERVICE I, Elizabeth E. Theran, hereby certify that on January 12, 2009, I electronically filed the foregoing brief with the Clerk of Court for the United States Court of Appeals for the Ninth Circuit by using the appellate CM/ECF system. I certify that all participants in the case who are registered CM/ECF users will be served by the appellate CM/ECF system. I further certify that, pursuant to an agreement with lead counsel for Appellee TIN dated January 5, 2009, the parties have agreed that EEOC will not serve TIN's co-counsel who are not registered CM/ECF users with hard copies of the briefs in this case. s/Elizabeth E. Theran Attorney U.S. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION Office of General Counsel 131 M St., N.E., Rm. 5SW18J Washington, D.C. 20507-0001 (202) 663-4720 elizabeth.theran@eeoc.gov *********************************************************************** <> <1> Poland v. Chertoff, 494 F.3d 1174 (9th Cir. 2007), which discusses this Court's standard for "cat's paw" liability, has no apparent relevance to this issue. <2> At TIN-Br.-20, TIN states that the Commission "concedes" that the alleged remarks "were not age-related." This statement is totally false. Nor has the Commission ever conceded that the comments were "not made by the decision- maker," as TIN also states on the same page. <3> TIN suggests that Neal "concedes" that Mishurda never actually said any of these things at their first meeting, but that they were only his perception of what Mishurda was saying. TIN-Br.-32 n.7. Neal conceded nothing of the sort. In his deposition, Neal specifically distinguished between his recollection of what Mishurda actually said to him and his own perceptions and reactions. Compare, e.g., II-ER-248 ("he told me about his dream team and he told me about examples of the dream team" . . . . "he used 'young lions.' Whether he used 'tigers,' I don't recall that, but he used 'young lions'"), with II-ER-249 ("And I was shocked. In fact, I was more than shocked. I went home and told my wife, . . . 'You wouldn't believe what this guy told me.'"). <4> TIN significantly mischaracterizes Salomon's testimony as well. At TIN-Br.-34, TIN states that Salomon testified that "age was not the issue" with respect to Dick Cumby, the broker in his seventies as to whom Garza stated he was "too old" to do his job, citing SER-19. Salomon did not make this statement; in fact, he testified specifically on this very page that comments were in fact made that Cumby was too old to do his job, "[t]here is no doubt." Salomon did also testify, as we explained in our opening brief, that other comments were made about Cumby as well, including the fact that his physical abilities were limited and that he was no longer worth compensating. EEOC-Br.-7 n.2; SER-19. Likewise, at TIN-Br.-35, TIN states that Salomon "admitted" that a host of explicitly age-related remarks made by Mishurda and/or Garza "reflected Mishurda's and/or Garza's attempts to alter unsuccessful business strategies for poor performing plants, or comments relating to Phoenix's own poor performance." It is unclear exactly what TIN means by this statement. To the extent that TIN simply means that the comments were not made directly in connection with the terminations of the class members, as we explained above, this has no bearing on whether they constitute direct evidence of age discrimination. See, e.g., Metoyer, 504 F.3d at 937-38. To the extent that TIN means, on the other hand, that Salomon meant by his testimony that these remarks were not age-related at all, this is a blatant mischaracterization. See, e.g., III-ER-318-19 (Salomon relating Mishurda's statements that "Mr. Lavalle [] was old, was old fashioned, old, he lacked energy. He lacked the vision that was needed for the new plants. . . . [T]here was a new plant being built. . . . And so the new plant was in context, but Mr. Lavalle was qualified as older by himself. . . . It was an absolute. It was not related to anything else."); III-ER-330 ("Mr. Mishurda mention[ed] that he . . . wished that his team was younger and in better shape, and taking better care of themselves, and age was getting in the way."); III-ER-341 (comments that the Phoenix team was lacking "juice, youth, and action"). <5> TIN terms this EEOC's "speculation" and states categorically that "positions in Mexico paid less than those in the United States." TIN-Br.-50. However, it was Mishurda who testified that the staff engineer position was a promotion from Production Manager, and it was Mishurda who also testified that Juarez's staff engineer position "could" pay more than the Production Manager position. II-ER- 93. <6> TIN's suggestion to the contrary notwithstanding, TIN-Br.-48 n.11, TIN's treatment of McGraw throughout his tenure, including his demotion from the Production Manager position, is relevant to the issue of whether his termination was discriminatory. Cf. Nat'l R.R. Passenger Corp. v. Morgan, 536 U.S. 101, 113 (2002) (observing that even time-barred discrete acts of discrimination may be used "as background evidence in support of a timely claim."). <7> TIN argues that its own 2004 budget projection is inadmissible hearsay because it is "unauthenticated." TIN-Br.-49 n.12. However, TIN waived this argument by failing to raise it appropriately in the district court. TIN attempted to raise this point, among a long list of other objections, for the first time in a "Response to Plaintiff EEOC's Statement of Facts in Opposition to Defendant's Motion for Summary Judgment." See III-ER-456 (docket entry number 129). As the docket reflects, the district court struck this document in its entirety. TIN did not raise the authentication issue in its Reply in Support of its Motion for Summary Judgment, nor did TIN enter a cross-appeal in this case from the district court's order striking its Response to Plaintiff EEOC's Statement of Facts. Accordingly, the issue is waived, and this court should decline to consider it. See Smith v. Marsh, 194 F.3d 1045, 1052 (9th Cir. 1999) ("As a general rule, we will not consider arguments that are raised for the first time on appeal."). In any case, we note that TIN does not contest the authenticity of this document, and in fact this document easily meets all the requirements of Fed. R. Evid. 803(6), as it is a record kept in the course of TIN's regularly conducted business activity. <8> TIN argues that Mishurda and Garza did not know the ages of Vanecko or Cervantes at the time Garza made the decision to consolidate the two Controller positions and eliminate Vanecko's position. TIN-Br.-51. Garza testified that he did not know how old Cervantes and Vanecko were, II-ER-74, 76, but he admitted that he knew Cervantes was younger than Vanecko, II-ER-77. In any case, given that Garza worked with both individuals directly and that there was a 24-year age difference between them, a reasonable jury could easily infer that Garza knew that Vanecko was significantly older than Cervantes. See Diaz, 521 F.3d at 1210 (observing that inference of age discrimination draws support from decisionmaker's on-the-job observation of individuals whose precise ages he did not know); Woodman v. WWOR-TV, Inc., 411 F.3d 69, 80 (2d Cir. 2005) (noting that "defendant employer's knowledge of . . . employees' relative ages from personal on-the-job contact . . . easily support[s] an inference of employer knowledge"). <9> TIN states that Vanecko "admits he did not have Cervantes' qualifications and that he should not have been Regional Controller." TIN-Br.-52. This statement is misleading. Vanecko and Flores testified extensively that, while Vanecko did not speak Spanish or have Cervantes's knowledge of Mexican tax law, neither of these skills were in fact required for the Regional Controller job. See EEOC-Br.-16-17. Moreover, as Vanecko explained in his Declaration, "I testified during my deposition that I do not think I should have been Regional Controller because, in my opinion, if cost reduction really was the sole motivation as alleged by TIN, I believe a much greater cost reduction could have been achieved by eliminating the regional controller positions and the regional structure and possibly the Group structure." II-ER-210. It is abundantly clear from the totality of Vanecko's testimony in this case that both he and Flores believed that he was qualified to be Regional Controller, and certainly more so than Cervantes.