Court Opinion

ID: 9366472
Source: CourtListenerOpinion
Date Created: 2023-01-26 19:00:43.487151+00
Date Added: 2024-06-11T17:15:53.456389
License: Public Domain

Case: 21-50472      Document: 00516624105         Page: 1    Date Filed: 01/26/2023

              United States Court of Appeals
                   for the Fifth Circuit                              United States Court of Appeals
                                                                               Fifth Circuit

                                                                             FILED
                                                                       January 26, 2023
                                   No. 21-50472
                                                                        Lyle W. Cayce
                                                                             Clerk
   Kylee M. Paugh,

                                                            Plaintiff—Appellant,

                                       versus

   Lockheed Martin Corporation,

                                                            Defendant—Appellee.

                   Appeal from the United States District Court
                        for the Western District of Texas
                             USDC No. 3:20-CV-154

   Before Dennis, Elrod, and Duncan, Circuit Judges.
   Per Curiam:*
          Kylee Paugh appeals the summary judgment dismissing her
   employment discrimination claims against Lockheed Martin. We affirm in
   part and reverse in part.

          *
            Pursuant to 5th Circuit Rule 47.5, the court has determined that this
   opinion should not be published and is not precedent except under the limited
   circumstances set forth in 5th Circuit Rule 47.5.4.
Case: 21-50472         Document: 00516624105              Page: 2       Date Filed: 01/26/2023

                                          No. 21-50472

                                                I
           Before 2019, Raytheon serviced live-fire training facilities with digital
   feedback at the Army’s Fort Bliss. Raytheon subcontracted the servicing at
   one such facility—Range 66A&B—to Tapestry Solutions, who employed
   nine workers at the site. Among them was Appellant Kylee Paugh, the only
   woman.
           In March 2018, the Army awarded a follow-on service contract to
   Appellee Lockheed Martin that subsumed Raytheon’s servicing of several
   training facilities (including Range 66A&B) beginning January 1, 2019. At
   the time, Executive Order 13495 (“EO 13495”) required all follow-on
   government contractors, like Lockheed Martin here, to hire “qualified”
   incumbent employees displaced by the new contract.1
           To comply with EO 13495, Lockheed Martin established an
   “incumbent capture” plan, posted several job requisitions to its website,
   considered only those who applied for a job, and preferred incumbent
   applicants, like Paugh, for hiring. When more than one incumbent applied
   for a particular job, Lockheed Martin chose the best qualified incumbent
   applicant, defaulting to the longer service time when qualifications were
   identical. Lockheed Martin ultimately hired only incumbents for all available
   positions. But its contract allowed for fewer positions than the predecessor

           1
             See Exec. Order No. 13,495, Nondisplacement of Qualified Workers Under
   Service Contracts, 74 Fed. Reg. 6,103 (Jan. 30, 2009) (previously codified at 29 C.F.R. § 9),
   rescinded by Exec. Order No. 13,897, Improving Federal Contractor Operations by
   Revoking Executive Order 13495, 84 Fed. Reg. 59,709 (Oct. 31, 2019), revoked by Exec.
   Order No. 14,055, Nondisplacement of Qualified Workers Under Service Contracts, 86
   Fed. Reg. 66,397 (Nov. 18, 2021). See generally 41 U.S.C. §§ 6701–6707 (2012) (Service
   Contract Act).

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   contract. As a result, several incumbent applicants, like Paugh, were left
   unemployed under the follow-on contract.
            Paugh had applied for nine jobs with Lockheed Martin. She first
   applied for General Maintenance Worker positions in March and September
   2018.      Hearing no response, Paugh attended a Lockheed Martin
   “familiarization event,” where she introduced herself to hiring manager
   Matthew Murphy and raised her pending applications. Paugh thought
   Murphy was “very uncomfortable” and “very fidgety” around her, unlike
   around her male colleagues. Murphy warned her that Lockheed Martin
   would hire fewer employees than the predecessor contractor, so not every
   current employee would get a job. But Murphy did not tell Paugh that the
   General Maintenance Worker positions could later be cancelled or encourage
   her to apply for other positions. At the same event, Murphy told Paugh’s
   then-supervisor Adam Granger that the Information Security Technician
   position he had applied for would be cancelled later. Murphy does not recall
   telling any workers to apply for specific jobs but believes he told General
   Maintenance Worker applicants to consider Computer Operator I and
   Electronic Technician I positions. Of the four women at the familiarization
   event, Lockheed Martin later hired three, but not Paugh.
            Paugh was not hired for either General Maintenance Worker position
   for which she applied in March and September 2018. Lockheed Martin
   cancelled the first position in July or August, citing changing needs. For the
   second, it hired another incumbent, Saul Padilla, by December 2018. Finally,
   also in December 2018, Paugh applied for seven other positions. Lockheed
   Martin cancelled six of them and hired another incumbent, Eddie
   Dominguez, for the seventh. By the new year, Lockheed Martin had hired
   male incumbent James Mendez to start and all eight of Paugh’s male
   Tapestry Solutions co-workers to resume work at Range 66A&B—but not
   Paugh.

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          Paugh timely filed an EEOC complaint against Lockheed Martin,
   obtained a right-to-sue letter, and sued for sex discrimination and retaliation
   under Title VII and the Texas Labor Code based on failure to hire and
   “discriminatory implementation” of EO 13495. These claims proceeded
   through discovery. Invoking the McDonnell Douglas framework, Lockheed
   Martin moved for summary judgment. See McDonnell Douglas Corp. v. Green,
   411 U.S. 792 (1973). The district court found Paugh’s EO-13495 claim
   cognizable only as a failure-to-hire claim but granted Lockheed Martin
   summary judgment as to that claim and Paugh’s remaining failure-to-hire
   claims. Paugh v. Lockheed Martin Corp., No. EP-20-CV-154-DB, 2021 WL
   1841644, at *7–10 (W.D. Tex. May 7, 2021). Paugh appealed.
                                         II
          We review a summary judgment de novo. Patel v. Tex. Tech Univ., 941
   F.3d 743, 747 (5th Cir. 2019). Summary judgment is appropriate “if the
   movant shows that there is no genuine dispute as to any material fact and the
   movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a).
   We view the evidence in the light most favorable to the non-movant. Renwick
   v. PNK Lake Charles, L.L.C., 901 F.3d 605, 611 (5th Cir. 2018).
                                        III
          The district court granted summary judgment as to Paugh’s claim
   based on EO 13495, treating it as a failure-to-hire claim. As explained below,
   we agree with the district court that two of Paugh’s failure-to-hire claims
   were properly dismissed on summary judgment, but we reverse as to the
   third. Paugh also continues to pursue her argument that the EO’s
   “Nondisplacement of Qualified Workers” clause afforded her something
   more—namely, a justiciable “right of first refusal” to a job with Lockheed
   Martin as a follow-on government contractor. We disagree.

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           Some district courts have accepted this argument. See Sorber v. Sec.
   Walls, LLC, No. A-18-CV-1088, 2020 WL 2850227, at *2, *11–12 (W.D.
   Tex. June 1, 2020) (finding implementation of EO 13495 could be the subject
   of a Title VII disparate impact suit and denying summary judgment because
   some plaintiffs were not offered a right of first refusal).2 Others have not. See
   Atterbury v. U.S. Marshals Serv., No. 12-CV-502-A, 2018 WL 2100600, at *11
   (W.D.N.Y. May 7, 2018) (rejecting argument that EO 13495 creates a
   justiciable due-process claim), rev’d and remanded on other grounds, 941 F.3d
   56 (2d Cir. 2019); McClellan v. Skytech Enters., Ltd., No. CIV-12-202-RAW,
   2012 WL 3156861, at *2 (E.D. Okla. Aug. 3, 2012) (rejecting argument that
   EO 13495 creates a justiciable “violation of public policy” claim). Agreeing
   with the latter group, we conclude EO 13495 does not create a stand-alone
   employment discrimination claim.
           Before its recission in 2019, EO 13495 required a nondisplacement
   clause in most follow-on government contracts, like the one here, ensuring
   those contractors hired employees otherwise displaced by the new service
   contract. 74 Fed. Reg. at 6,103; see 29 C.F.R. §§ 9.1 et seq. The clause, in
   turn, purported to create for those employees “a right of first refusal of
   employment under the contract in positions for which they are qualified.” 74
   Fed. Reg. at 6,103; see Adams & Assocs., Inc. v. NLRB, 871 F.3d 358, 365 (5th
   Cir. 2017) (noting EO 13495 “required the successor to issue employment
   offers no later than 10 days prior to the commencement of operations”).

           2
              The district court cited Sorber with approval. To the extent the district court
   accepted the view that the EO creates a stand-alone cause of action, we disagree. At the
   same time, however, the district court construed such a cause of action to be essentially the
   same as a failure-to-hire claim. So, our possible disagreement with the district court on this
   point is ultimately immaterial.

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          But the EO never purported to displace or supplement
   antidiscrimination law. To the contrary, the EO did “not intend[] to, and
   d[id] not, create any right or benefit, substantive or procedural, enforceable
   at law or in equity by any party against the United States, its departments,
   agencies, or entities, its officers, employees, or agents, or any other person.”
   74 Fed. Reg. at 6,106. That included creating “no rights under the Contract
   Disputes Act.” Id. at 6,105. The EO’s enforcement was vested entirely in the
   Secretary of Labor, who was “responsible for investigating and obtaining
   compliance” and who could arbitrate disputes and “issue final orders
   prescribing appropriate sanctions and remedies” against noncompliant
   government contractors. Ibid. Government contractors could seek judicial
   review of the Secretary’s final decisions under the Administrative Procedure
   Act. See id. at 6,106; cf. Data Monitor Sys., Inc., 364 N.L.R.B. No. 4 (May 31,
   2016). By its own terms, then, the EO and the “Nondisplacement of
   Qualified Workers” clause do not afford Paugh a justiciable “right of first
   refusal” to a job with Lockheed Martin as a follow-on government
   contractor.
          As a result, we need not address Paugh’s arguments related to
   Lockheed Martin’s compliance with former EO 13495 or implementation of
   the terms of the follow-on contract.3 Whatever the thrust of EO 13495 today,
   it does not transform Paugh’s employment discrimination claim into
   anything more than a typical failure-to-hire suit. The district court correctly
   analyzed it as such, and we do the same here.

          3
            For the same reason, we decline to address whether Paugh has standing to sue
   under the follow-on contract.

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                                          No. 21-50472

                                               IV
           Paugh brought sex discrimination claims against Lockheed Martin
   under Title VII and the Texas Labor Code.4 Title VII prohibits employment
   discrimination based on a person’s “race, color, religion, sex, or national
   origin.” 42 U.S.C. § 2000e-2(a)(1). Paugh’s claims rest on circumstantial
   evidence, so we apply McDonnell Douglas. See Cicalese v. Univ. of Tex. Med.
   Branch, 924 F.3d 762, 766 (5th Cir. 2019). Under that familiar framework, a
   plaintiff must first establish a prima facie case of discrimination. McDonnell
   Douglas, 411 U.S. at 802. If she does, the burden of production shifts to the
   defendant “to articulate some legitimate, nondiscriminatory reason” for its
   action. Ibid. If the defendant provides reasons, the burden then shifts back to
   plaintiff to prove that each reason is pretextual. Id. at 804.
           To establish a prima facie case of discrimination, the plaintiff must
   establish that she “(1) is a member of a protected group; (2) was qualified for
   the position at issue; (3) was discharged or suffered some adverse
   employment action by the employer; and (4) was replaced by someone
   outside h[er] protected group or was treated less favorably than other
   similarly situated employees outside the protected group.” Morris v. Town of
   Independence, 827 F.3d 396, 400 (5th Cir. 2016) (quoting Willis v. Cleco Corp.,
   749 F.3d 314, 319–20 (5th Cir. 2014); and citing Raggs v. Miss. Power & Light
   Co., 278 F.3d 463, 468 (5th Cir. 2002)). The parties do not dispute that Paugh
   is a member of a protected class (a woman) and was qualified for available
   positions. The claims arise from a failure to hire Paugh (1) for a job at Range
   66A&B for which she did not apply, (2) for jobs for which she applied but
   were cancelled by Lockheed Martin, and (3) for jobs for which she applied

           4
            Under Texas law, both claims collapse into a Title VII inquiry. See Ross v. Judson
   Indep. Sch. Dist., 993 F.3d 315, 321 (5th Cir.) (citing Mission Consol. Indep. Sch. Dist. v.
   Garcia, 372 S.W.3d 629, 633–34 (Tex. 2012)), cert. denied, 142 S. Ct. 216 (2021).

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   but other candidates were selected. See Southard v. Tex. Bd. of Crim. Just.,
   114 F.3d 539, 555 (5th Cir. 1997) (observing that “[a]dverse employment
   actions include . . . refusals to hire” (citations omitted)). We apply the
   McDonnell Douglas framework to each in turn.
                                         A
          Paugh claims she was treated less favorably than male candidates
   because Lockheed Martin hired Mendez for the follow-on of her Tapestry
   Solutions job at Range 66A&B despite her ostensible contractual right of first
   refusal. We disagree.
          Our precedent teaches that a plaintiff asserting adverse employment
   action based on a failure-to-hire must show that she “actually applied for”
   the position sought. Thomas v. Tregre, 913 F.3d 458, 463 (5th Cir. 2019).
   When a plaintiff does not apply, she must show “an application would have
   been a futile gesture.” Id. at 464 n.6 (quoting Jenkins v. La. Workforce
   Comm’n, 713 F. App’x 242, 245 (5th Cir. 2017) (per curiam)).
          Paugh concededly did not apply for the position, and argues that, had
   she applied, she would have been hired because her experience made her
   clearly more qualified than Mendez. Lockheed Martin confirmed that it
   would have hired her “in a heartbeat.” It is therefore beyond dispute that
   her application would not have been an exercise in futility. And even
   assuming Paugh applied for similar jobs, Lockheed Martin had no duty to
   consider her other applications for this particular job. See McClaine v. Boeing
   Co., 544 F. App’x 474, 477 (5th Cir. 2013) (per curiam) (recognizing Title
   VII imposes no duty on employers to consider applicants for positions similar
   to the position for which they applied). Paugh thus faced no adverse
   employment action and has failed to present a prima facie case of sex
   discrimination on this basis.

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                                     No. 21-50472

                                          B
          Paugh separately claims that, unlike her male colleagues, she was kept
   in the dark about which positions Lockheed Martin actually intended to fill,
   with the result that she applied for seven positions that Lockheed Martin
   ultimately cancelled. We reverse the district court on this claim, holding that
   Paugh has created a genuine issue of material fact as to whether critical hiring
   information was meted out discriminatorily in violation of Title VII.
          Paugh’s case presents a particular factual scenario, one that does not
   fit the ordinary mold of employment discrimination cases. With such cases,
   it is important to recall that the McDonnell Douglas framework for
   establishing a prima facie case of discrimination “was not intended to be an
   inflexible rule.” Furnco Constr. Corp. v. Waters, 438 U.S. 567, 575 (1978).
   Indeed, “[t]he facts necessarily . . . vary in Title VII cases,” and the elements
   of the prima facie case are “not necessarily applicable in every respect to
   differing factual situations.” McDonnell Douglas, 411 U.S. at 802 n.13.
          The point of the McDonnell Douglas framework is to require Title VII
   plaintiffs to demonstrate that the complained-of adverse employment action
   “did not result from the two most common legitimate reasons on which an
   employer might rely to reject a job applicant: an absolute or relative lack of
   qualifications or the absence of a vacancy in the job sought.” Int’l Bhd. of
   Teamsters v. United States, 431 U.S. 324, 358 n.44 (1977). Neither of these
   legitimate reasons dooms Paugh’s claim as to the cancelled positions for
   which she applied: She was qualified, and there were vacant positions to
   which she, as an incumbent, was entitled to preference pursuant to EO
   13495—but Paugh, unlike her male counterparts, simply did not know which
   vacancies were real and which were illusory. This, she suggests, was the fruit
   of sex discrimination in the hiring system. As our sister circuits have done in

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                                            No. 21-50472

   comparable situations5, we hold that Paugh has establish a prima facie case of
   employment discrimination even though she did not apply for an “available”
   position.
           Lockheed Martin contends that it had a neutral, non-discriminatory
   reason for its cancellation of job postings: changed staffing needs. But Paugh
   carried her burden to raise the inference that this reason was pretextual: She
   alleged (and deposition testimony confirms) that Lockheed Martin’s hiring

           5
              See, e.g., Williams v. Giant Food Inc., 370 F.3d 423, 431 (4th Cir. 2004) (“[I]f the
   employer fails to make its employees aware of vacancies, the application requirement may
   be relaxed and the employee treated as if she had actually applied for a specific position.”);
   Mauro v. S. New England Telecomms., Inc., 208 F.3d 384, 387 (2d Cir. 2000) (holding the
   application requirement inapplicable when the plaintiff was “unaware of specific available
   positions because the employer never posted them”); E.E.O.C. v. Metal Serv. Co., 892 F.2d
   341, 349 (3d Cir. 1990) (“A relaxation of the application element of the prima facie case is
   especially appropriate when the hiring process itself, rather than just the decision-making
   behind the process, is implicated in the discrimination claim or is otherwise suspect.”);
   Roberts v. Gadsden Mem’l Hosp., 835 F.2d 793, 797 (11th Cir. 1988), opinion amended on
   reh’g, 850 F.2d 1549 (11th Cir. 1988) (holding that “a plaintiff may raise an inference of
   intentional, racially-disparate treatment without proving that he technically applied for,
   and failed to obtain, the promotion” because of an “informal, secretive selection
   process”); Box v. A & P Tea Co., 772 F.2d 1372, 1377 (7th Cir. 1985) (“When an employer
   uses a promotion system in which employees do not apply for promotions but rather are
   sought out by managers, the application requirement of the prima facie case is loosened
   somewhat. . . . In this situation, the plaintiff can establish the application element of a prima
   facie case by showing that, had she known of an assistant manager opening, she would have
   applied.”); Grant v. Bethlehem Steel Corp., 635 F.2d 1007, 1017 (2d Cir. 1980) (holding that
   “[r]ejection of appellants’ claims because they failed to apply often enough or at the correct
   times ma[de] little sense . . . , in view of the [employer’s] admitted practice of hiring . . .
   before openings formally became available and were announced, which rendered futile the
   making of applications for [those] jobs . . . .”); Rich v. Martin Marietta Corp., 522 F.2d 333,
   347 (10th Cir. 1975) (rejecting a “highly literal interpretation” of McDonnell Douglas where
   “substantial factual variances” suggested “no necessity” for the plaintiffs “to point to a
   specific [job] opening” because they sufficiently “raised an inference of discrimination” in
   the employer’s system of promotion); cf. Coleman v. Schneider Elec. USA, Inc., 755 F. App’x
   247, 249 (4th Cir. 2019) (unpublished) (“A plaintiff cannot establish a prima facie case if
   the employer eliminates the position that the plaintiff applied for without other evidence of
   discriminatory intent.” (emphasis added)).

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   manager, Matthew Murphy, told her male colleague and team leader, Adam
   Granger, that his position was going to be cancelled.6 Paugh says that, unlike
   Granger, she never got the helpful tip-off that any specific position would be
   cancelled such that she could apply to positions that Lockheed Martin would
   actually keep rather than cut. Rather, when she told Murphy at the event
   that she “was a Tapestry Solutions employee who had applied for a General
   Maintenance Worker position,” he allegedly made the broad (and ominous)
   statement that “Lockheed Martin was going to be making cuts and that not
   everybody would get their job [sic].” Paugh later compared notes with her
   other male coworkers and discovered that Murphy “did not tell [them] that
   Lockheed Martin was going to be making cuts and that not everybody would
   get their job.” And they all—without exception—received offers.
           Seven of the nine positions for which Paugh applied were cancelled,
   and the circumstantial evidence that Paugh presents suggests sex
   discrimination as a plausible explanation. Lockheed Martin has not rebutted
   Paugh’s plausible allegation of pretext. Even if changed circumstances
   required a workforce reduction, the company failed to explain why she was
   left in the dark about which job postings would be on the chopping block.
   This theory and the evidence that Paugh offers is enough to get her claim
   before a jury. We accordingly vacate the district court’s order dismissing it
   and remand for further proceedings.

           6
              This occurred in the context of a Lockheed Martin meet-and-greet, at which
   Murphy met Tapestry Solutions employees and advised them about the Lockheed Martin
   hiring process. Murphy testified that at Lockheed Martin’s “familiarization event” he
   sought to “make sure that [Tapestry Solutions employees] kn[e]w that they may have to
   kind of expand their horizons a little bit with regard to what they applied to, because we
   were going to have incumbents that weren’t going to be hired.” He claimed that he was
   “telling anyone that identified themselves as a general maintenance worker that they ought
   to try to take a look at computer operator I and electronic technician I positions.”

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                                               C
           For the jobs filled by male candidates, the district court found Paugh
   had presented a prima facie case but had not shown pretext because Paugh
   was not “clearly better qualified” than Padilla or Dominguez. Paugh, 2021
   WL 1841644, at *8 (quoting Moss, 610 F.3d at 922–23). On appeal, Paugh
   challenges only her qualifications relative to Padilla, so she has waived her
   arguments with respect to Dominguez. See Rutherford, 197 F.3d at 193.
           Paugh applied for two jobs that were filled by men.7 Relevant here, on
   September 4, 2018, Paugh applied to be a General Maintenance Worker.
   Lockheed Martin instead hired Saul Padilla, believing him to be the more
   qualified candidate—a legitimate, nondiscriminatory reason.                         Paugh
   contends she had clearly better qualifications and a longer service tenure than
   Padilla, so his qualifications are merely pretext for discrimination. We
   disagree.
           A plaintiff may demonstrate pretext by “showing that the employer’s
   proffered explanation is false or unworthy of credence.” Laxton v. Gap Inc.,
   333 F.3d 572, 578 (5th Cir. 2003) (cleaned up). Alternatively, a “fact finder
   can infer pretext if it finds that the employee was ‘clearly better qualified’ (as
   opposed to merely better or as qualified) than the employees who are
   selected.” EEOC v. La. Off. of Cmty. Servs., 47 F.3d 1438, 1444 (5th Cir.
   1995) (collecting cases). Superior qualifications are probative of pretext when
   “no reasonable person, in the exercise of impartial judgment, could have
   chosen the candidate selected over the plaintiff for the job in question.” Moss,

           7
            Paugh suggests there was another job she applied for but lost out to a man, Hector
   Villalobos. That is factually incorrect, as she relies on the same job requisition for which
   Lockheed Martin hired Dominguez.

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   610 F.3d at 923 (quoting Deines v. Tex. Dep’t of Protective & Regul. Servs., 164
   F.3d 277, 280–81 (5th Cir. 1999)). That is not the case before us.
          Both Paugh and Padilla had been General Maintenance Workers
   under the Raytheon contract, but Paugh worked in her position for eight
   months—a mere month longer than Padilla. Paugh also ignores that, before
   her arrival, Padilla worked an additional stint with Lockheed Martin on an
   earlier contract at Fort Bliss. Regardless, an employee’s “better education,
   work experience, and longer tenure with the company do not establish that
   he is clearly better qualified.” Price v. Fed. Express Corp., 283 F.3d 715, 723
   (5th Cir. 2002); see also McDaniel v. Nat’l R.R. Passenger Corp., 705 F. App’x
   240, 246 (5th Cir. 2017) (per curiam) (observing “this court has repeatedly
   stated that an attempt to equate years served with qualifications is
   unpersuasive” (cleaned up)). Paugh has failed to raise a genuine dispute of
   material fact as to whether she was clearly more qualified than Padilla. She
   therefore has failed to rebut as pretextual Lockheed Martin’s legitimate,
   nondiscriminatory reason for hiring Padilla over her.
                                          V
          For the foregoing reasons, we AFFIRM the district court’s dismissal
   of Paugh’s failure to hire claims based on positions for which she did not
   apply and positions for which she did apply but for which she was not
   selected. We REVERSE the district court’s grant of summary judgment in
   favor of Defendant as to Paugh’s failure to hire claim based on the positions
   for which she applied but were cancelled by Lockheed Martin, and we
   REMAND for further proceedings not inconsistent with this opinion.
   AFFIRMED IN PART AND REVERSED AND REMANDED IN
   PART.

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