Court Opinion

ID: 4163988
Source: CourtListenerOpinion
Date Created: 2017-04-27 17:03:51.765891+00
Date Added: 2024-06-11T14:37:58.058320
License: Public Domain

FOR PUBLICATION

   UNITED STATES COURT OF APPEALS
        FOR THE NINTH CIRCUIT

 AILEEN RIZO,                                     No. 16-15372
                       Plaintiff-Appellee,
                                                    D.C. No.
                     v.                          1:14-cv-00423-
                                                      MJS
 JIM YOVINO, Fresno County
 Superintendent of Schools,
 Erroneously Sued Herein as Fresno                  OPINION
 County Office of Education,
                Defendant-Appellant.

        Appeal from the United States District Court
           for the Eastern District of California
        Michael J. Seng, Magistrate Judge, Presiding

          Argued and Submitted February 17, 2017
                 San Francisco, California

                      Filed April 27, 2017

   Before: A. Wallace Tashima and Andrew D. Hurwitz,
   Circuit Judges, and Lynn S. Adelman, * District Judge.

                  Opinion by Judge Adelman

    *
      The Honorable Lynn S. Adelman, United States District Judge for
the Eastern District of Wisconsin, sitting by designation.
2                        RIZO V. YOVINO

                          SUMMARY **

                          Equal Pay Act

    The panel vacated the district court’s order denying the
defendant employer’s motion for summary judgment on a
claim under the Equal Pay Act.

    The defendant conceded that it paid the female plaintiff
less than comparable male employees for the same work.
The defendant sought to establish the affirmative defense
that this pay differential was based on a “factor other than
sex” by showing that its pay structure was based on
employees’ prior salaries. The panel held that under Kouba
v. Allstate Ins. Co., 691 F.2d 873 (9th Cir. 1982), prior salary
alone can be a “factor other than sex” if the defendant shows
that its use of prior salary was reasonable and effectuated a
business policy. The panel remanded the case for further
proceedings, with instructions that the district court evaluate
the business reasons offered by the defendant and determine
whether the defendant used prior salary reasonably.

                            COUNSEL

Michael Gary Woods (argued) and Timothy J. Buchanan,
McCormick Barstow Sheppard Wayte & Carruth LLP,
Fresno, California, for Defendant-Appellant.

    **
       This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
                          RIZO V. YOVINO                              3

Daniel M. Siegel (argued) and Kevin Brunner, Siegel & Yee,
Oakland, California, for Plaintiff-Appellee.

Barbara L. Sloan (argued), Attorney; Margo Pave, Assistant
General Counsel; Jennifer S. Goldstein, Associate General
Counsel; P. David Lopez, General Counsel; Office of the
General Counsel, Washington, D.C.; as and for Amicus
Curiae Equal Employment Opportunity Commission.

                             OPINION

ADELMAN, District Judge:

    The plaintiff, Aileen Rizo, is an employee of the public
schools in Fresno County. After discovering that the County
pays her less than her male counterparts for the same work,
she brought this action under the Equal Pay Act, 29 U.S.C.
§ 206(d), Title VII of the Civil Rights Act of 1964, 42 U.S.C.
§ 2000e-5, and the California Fair Employment and Housing
Act, Cal. Gov. Code § 12940. When the County1 moved for
summary judgment, it conceded that it paid the plaintiff less
than comparable male employees for the same work.
However, it argued that this result was lawful because the
pay differential was “based on any other factor other than
sex,” an affirmative defense to a claim under the Equal Pay
Act. This other factor was prior salary, and the district court
concluded that when an employer bases a pay structure
“exclusively on prior wages,” any resulting pay differential
between men and women is not based on any other factor
other than sex. Rizo v. Yovino, No. 1:14-cv-0423-MJS, 2015

     1
       The defendant is Jim Yovino, the Fresno County Superintendent
of Schools. However, because Yovino is sued in his official capacity, in
this opinion we will refer to the defendant as the County.
4                     RIZO V. YOVINO

WL 9260587, at *9 (E.D. Cal. Dec. 18, 2015). Based on this
conclusion, the district court denied the County’s motion for
summary judgment.

    The district court candidly recognized that its decision
potentially conflicted with this court’s decision in Kouba v.
Allstate Insurance Co., in which we held that prior salary can
be a factor other than sex, provided that the employer shows
that prior salary “effectuate[s] some business policy” and the
employer uses prior salary “reasonably in light of [its] stated
purpose as well as its other practices,” 691 F.2d 873, 876–
77 (9th Cir. 1982), and thus certified its decision for
interlocutory appeal under 28 U.S.C. § 1292(b). We
permitted that appeal and authorized the County to appeal
from the order denying summary judgment.

    We conclude that this case is controlled by Kouba. We
therefore vacate the district court’s order and remand with
instructions to reconsider the County’s motion for summary
judgment.

                              I.

    In 2009, the County hired the plaintiff as a math
consultant, a position it classifies as management-level.
When the County hired Rizo, it used a salary schedule
known as “Standard Operation Procedure 1440” to
determine the starting salaries of management-level
employees. This schedule consists of twelve “levels,” each
of which has progressive “steps” within it. New math
consultants receive starting salaries within Level 1, which
has ten steps, with pay ranging from $62,133 at Step 1 to
$81,461 at Step 10. To determine the step within Level 1 on
which the new employee will begin, the County considers
the employee’s most recent prior salary and places the
                       RIZO V. YOVINO                         5

employee on the step that corresponds to his or her prior
salary, increased by 5%.

    Prior to being hired by Fresno County, the plaintiff
worked as a math teacher at a middle school in Arizona.
When she left that position, she was receiving a salary of
$50,630 per year, plus an annual stipend of $1,200 for her
master’s degree. Adding 5% to the plaintiff’s prior
compensation resulted in a salary lower than Fresno
County’s Level 1, Step 1 salary. Thus, under Standard
Operation Procedure 1440, the plaintiff’s starting salary was
set at the minimum Level 1 salary: $62,133. However, the
County also paid the plaintiff a $600 stipend for her master’s
degree, so her total starting pay was $62,733 per year.

    In July 2012, the plaintiff was having lunch with her
colleagues when a male math consultant who had recently
been hired informed her that he started on Step 9 of Level 1.
The plaintiff subsequently learned that the other math
consultants, all of whom were male, were paid more than she
was. The plaintiff complained to the County about this
disparity, but the County informed her that all salaries had
been properly set under Standard Operation Procedure 1440.

     Dissatisfied with the County’s response, the plaintiff
initiated this suit. The County moved for summary
judgment, arguing that the plaintiff’s salary, though less than
her male colleagues’, was based on “any other factor other
than sex,” namely, prior salary.           The district court
determined that, under the Equal Pay Act, prior salary alone
can never qualify as a factor other than sex, reasoning that
“a pay structure based exclusively on prior wages is so
inherently fraught with the risk . . . that it will perpetuate a
discriminatory wage disparity between men and women that
it cannot stand, even if motivated by a legitimate non-
discriminatory business purpose.” Rizo, 2015 WL 9260587,
6                           RIZO V. YOVINO

at *9. The court therefore denied the County’s motion for
summary judgment.

                                    II.

    Under the Equal Pay Act, the plaintiff has the burden of
establishing a prima facie case of discrimination. Stanley v.
Univ. of S. Cal., 178 F.3d 1069, 1073–74 (9th Cir. 1999).
“The Equal Pay Act creates a type of strict liability; no intent
to discriminate need be shown.” Maxwell v. City of Tucson,
803 F.2d 444, 446 (9th Cir. 1986) (internal quotation marks
and citation omitted). Thus, to make out a prima facie case,
the plaintiff must show only that he or she is receiving
different wages for equal work. Hein v. Or. Coll. of Educ.,
718 F.2d 910, 916 (9th Cir. 1983).

     “Once the plaintiff establishes a prima facie case, the
burden of persuasion shifts to the employer to show that the
wage disparity is permitted by one of the four statutory
exceptions to the Equal Pay Act: ‘(i) a seniority system;
(ii) a merit system; (iii) a system which measures earnings
by quantity or quality of production; or (iv) a differential
based on any other factor other than sex.’” Maxwell,
803 F.2d at 446 (quoting 29 U.S.C. § 2069(d)(1)). “These
exceptions are affirmative defenses which the employer
must plead and prove.” Kouba, 691 F.2d at 875. 2

    2
        The plaintiff also alleges claims under Title VII and the California
Fair Employment and Housing Act. “When a Title VII claimant
contends that she has been denied equal pay for substantially equal work,
. . . Equal Pay Act standards apply.” Maxwell, 803 F.2d at 446; see also
Kouba, 691 F.2d at 875. For this reason, we do not separately discuss
the plaintiff’s Title VII claim. Because the parties do not assert that there
are differences between federal law and the California Fair Employment
and Housing Act, we also do not separately discuss California law.
                       RIZO V. YOVINO                          7

    In the district court, the County conceded that the
plaintiff had established a prima facie case under the Equal
Pay Act, but asserted the affirmative defense that the pay
differential was “based on any other factor other than sex.”
Because the County sought summary judgment on the basis
of an affirmative defense on which it would bear the burden
of proof at trial, it must show at the summary-judgment stage
that “no reasonable trier of fact” could fail to find that it had
proved that defense. Soremekun v. Thrifty Payless, Inc., 509
F.3d 978, 984 (9th Cir. 2007). However, the issue that
prompted this interlocutory appeal is purely one of law:
whether the district court’s conclusion that prior salary alone
can never be a “factor other than sex” is correct.

    In Kouba, the employer, Allstate Insurance, “compute[d]
the minimum salary guaranteed to a new sales agent on the
basis of ability, education, experience, and prior salary.”
691 F.2d at 874. As result of this practice, on average,
female agents made less than male agents. Id. at 875. The
plaintiff alleged that Allstate’s “use of prior salary caused
the wage differential,” and that therefore the differential
violated the Equal Pay Act. Id. Allstate argued that, to the
extent its use of prior salary “caused the wage differential,”
“prior salary constitute[d] a factor other than sex.” Id. The
district court rejected this argument, reasoning that
(1) because so many employers paid discriminatory salaries
in the past, the court would presume that a female agent’s
prior salary was based on her gender unless the employer
presented evidence to rebut that presumption, and (2) absent
such a showing, prior salary is not a factor other than sex.
Id.

    On appeal, we rejected the district court’s interpretation
of the Equal Pay Act. Id. at 876. We held that “the Equal
Pay Act does not impose a strict prohibition against the use
8                     RIZO V. YOVINO

of prior salary,” even though an employer could “manipulate
its use of prior salary to underpay female employees.” Id. at
878.     However, we did not hold that prior salary
automatically qualifies as a factor other than sex. Rather, we
held that an employer could maintain a pay differential based
on prior salary (or based on any other facially gender-neutral
factor) only if it showed that the factor “effectuate[s] some
business policy” and that the employer “use[s] the factor
reasonably in light of the employer’s stated purpose as well
as its other practices.” Id. at 876–77. We then noted that
Allstate had offered “two business reasons for its use of prior
salary” and directed the district court to evaluate those
reasons on remand. Id. at 877.

    The County has offered four business reasons for using
Standard Operation Procedure 1440, under which starting
salaries are based primarily on prior salary: (1) the policy is
objective, in the sense that no subjective opinions as to the
new employee’s value enters into the starting-salary
calculus; (2) the policy encourages candidates to leave their
current jobs for jobs at the County, because they will always
receive a 5% pay increase over their current salary; (3) the
policy prevents favoritism and ensures consistency in
application; and (4) the policy is a judicious use of taxpayer
dollars. But, the district court did not evaluate whether these
reasons effectuate a business policy or determine whether
the County used prior salary “reasonably,” as required by
Kouba. Rather, the district court determined that, even
though in Kouba we held that the Equal Pay Act does not
impose a strict prohibition against the use of prior salary,
Kouba does not preclude a finding that an employer may not
use prior salary “as the only factor.” Rizo, 2015 WL
9260587, at *7. According to the district court, “[t]he Ninth
Circuit in Kouba was not called upon to, and did not, rule on
the question of whether a salary differential based solely on
                      RIZO V. YOVINO                         9

prior earnings would violate the [Equal Pay Act], even if
motivated by legitimate, non-discriminatory business
reasons.” Id. at *8. The district court then followed cases
from other circuits holding that prior salary alone cannot
justify a pay disparity. Id. at *8–9 (citing, among other
cases, Angove v. Williams-Sonoma, Inc., 70 F. App’x 500,
508 (10th Cir. 2003); Irby v. Bittick, 44 F.3d 949, 954 (11th
Cir. 1995); Price v. Lockheed Space Operations Co.,
856 F.2d 1503, 1506 (11th Cir. 1988); Glenn v. Gen. Motors
Corp., 841 F.2d 1567, 1570–71 (11th Cir. 1988)).

    We do not agree with the district court that Kouba left
open the question of whether a salary differential based
solely on prior earnings violates the Equal Pay Act. To the
contrary, that was exactly the question presented and
answered in Kouba. The plaintiff in Kouba alleged that
Allstate’s “use of prior salary caused the wage differential.”
691 F.2d at 875 (emphasis added). Although noting that
Allstate “question[ed]” whether its use of prior salary caused
the differential, we left the question of causation for the
district court to resolve on remand. Id. at 875 n.5. It is true
that Allstate, in setting an employee’s pay, considered
factors other than prior salary, including “ability, education,
[and] experience.” Id. at 874. However, we did not attribute
any significance to Allstate’s use of these other factors.
Rather, we focused on prior salary alone and determined that
it would be a “factor other than sex” within the meaning of
the Equal Pay Act, provided that Allstate could show on
remand that its use of prior salary was reasonable and
effectuated some business policy. Id. at 876–78.

    The plaintiff and the EEOC, as amicus curiae, argue that
prior salary alone cannot be a factor other than sex because
when an employer sets pay by considering only its
employees’ prior salaries, it perpetuates existing pay
10                       RIZO V. YOVINO

disparities and thus undermines the purpose of the Equal Pay
Act. But this argument was presented in Kouba, and the
result we reached was to allow an employer to base a pay
differential on prior salary so long as it showed that its use
of prior salary effectuated some business policy and that the
employer used the factor reasonably in light of its stated
purpose and its other practices. Id. We did not draw any
distinction between using prior salary “alone” and using it in
combination with other factors.

    Moreover, we do not see how the employer’s
consideration of other factors would prevent the
perpetuation of existing pay disparities if, as we assumed in
Kouba and as is the allegation here, prior salary is the only
factor that causes the current disparity. For example, assume
that a male and a female employee have the same education
and number of years’ experience as each other, but the male
employee was paid a higher prior salary than the female
employee. The current employer sets salary by considering
the employee’s education, years of experience, and prior
salary. Using these factors, the employer gives both
employees the same salary credit for their identical
education and experience, but the employer pays the male
employee a higher salary than the female employee because
of his higher prior salary. In this example, it is prior salary
alone that accounts for the pay differential, even though the
employer also considered other factors when setting pay. If
prior salary alone is responsible for the disparity, requiring
an employer to consider factors in addition to prior salary
cannot resolve the problem that the EEOC and the plaintiff
have identified. 3

     We also note that, if an employer’s use of prior salary alone were
     3

unacceptable under the Equal Pay Act, but the employer’s mere
                            RIZO V. YOVINO                               11

                                    III.

    Because Kouba holds that a pay differential based on the
employer’s use of prior salary can be “a differential based on
any other factor other than sex,” we vacate the district
court’s order denying the County’s motion for summary
judgment and remand for further proceedings. On remand,
the district court must evaluate the four business reasons
offered by the County and determine whether the County
used prior salary “reasonably in light of [its] stated
purpose[s] as well as its other practices.” Kouba, 691 F.2d
at 876–77. We emphasize that because these matters relate
to the County’s affirmative defense rather than to the
elements of the plaintiff’s claim, the County has the burden
of persuasion. See Maxwell, 803 F.2d at 446. Thus, unlike
in a typical case under Title VII involving the burden-
shifting method of McDonnell Douglas Corp. v. Green,
411 U.S. 792 (1973), the plaintiff does not have to present
evidence that the County’s explanation for the pay
differential is a pretext for intentional gender discrimination.
Rather, it is up to the employer to persuade the trier of fact
that its stated “factor other than sex” actually caused the
salary differential, that the stated factor “effectuate[s] some
business policy,” and that the employer used the factor
“reasonably in light of [its] stated purpose as well as its other
practices.” Kouba, 691 F.2d at 876–77. Of course, the
plaintiff is free to introduce evidence of pretext (or any other

consideration of some other factor in addition to prior salary (other than
sex) cured the problem, then in the present case the County’s pay
structure would be lawful. That is because, in addition to prior salary,
the County considers a new hire’s education when setting pay, as
reflected in the “stipend” that the plaintiff received for holding a master’s
degree.
12                   RIZO V. YOVINO

matter that casts doubt on the employer’s affirmative
defense) if it chooses to do so. Maxwell, 803 F.2d at 446.

     VACATED and REMANDED. Each party shall bear
its own costs.