Reilly v. TXU Corp.

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT United States Court of Appeals

Fifth Circuit

FILED

March 17, 2008

No. 06-11119

Charles R. Fulbruge III

Clerk

JOHN GREGORY REILLY,

Plaintiff-Appellant,

v.

TXU CORPORATION and TXU BUSINESS SERVICES COMPANY,

Defendants-Appellees.

Appeal from the United States District Court

for the Northern District of Texas

No. 3:05-CV-81

Before HIGGINBOTHAM, SMITH, and OWEN, Circuit Judges.

PER CURIAM:*

John Reilly appeals a summary judgment in favor of TXU Corporation

(“TXU”) on his claim that he was denied a promotion because of his race, white,

*

Pursuant to 5TH CIR. R. 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 CIR.

R. 47.5.4.

No. 06-11119

in violation of 42 U.S.C. § 1981.1 We reverse and remand.

I.

Reilly began working for a predecessor to TXU in 1987 as a part-time cash-

ier. From 1989 through 2004, he worked in TXU Business Services Company’s’

Procurement Department, which was responsible for handling the procurement

activities for TXU’s subsidiaries. His duties included preparing requests for and

evaluating proposals and negotiating and drafting contracts. He received re-

peated raises, and his title changed from time to time.

In 1999, Debbie Dennis, Vice President of Procurement at TXU Business

Services Company, began restructuring the department to cut costs. To accom-

plish this, she decided to make the transition from “tactical procurement” to

“strategic sourcing.” She also flattened the organizational structure of the de-

partment by reducing the number of managers who did not report to her and by

creating seven manager positions who reported directly to her, four of whichSS

Corporate, Energy and Portfolio Procurement Management Manager, Nuclear

Procurement Manager, Electric Delivery Procurement Manager, and Fossil Gen-

eration and Mines Procurement ManagerSSwere responsible for purchasing for

specific lines of business.

The remaining direct-report positions were Technology Procurement Man-

ager, Strategic Sourcing Manager, and Vice President of Supplier and Workforce

Diversity. The Nuclear Procurement Manager and Vice President of Supplier

and Workforce Diversity were existing positions and were filled by Ramon Men-

dez, a Hispanic male, and Cheryl Stevens, a white female, respectively.

According to Dennis, the Technology Procurement Manager and Strategic

1

At all times relevant to this appeal, Reilly was employed by TXU Business Services

Company, which, until recently, was a wholly owned subsidiary of TXU, for whom it performed

shared services for other TXU subsidiaries. There is a dispute whether TXU was Reilly’s em-

ployer as defined by § 1981. We do not reach that question, because it was not before the dis-

trict court. For the sake of convenience, we refer to “TXU” as the employer.

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No. 06-11119

Sourcing Manager positions were established to support the other five direct re-

port managers. She left these positions unfilled so as to give the five other man-

agers input into the hiring decision. The parties dispute which of these two posi-

tions was filled first.

The Strategic Sourcing Manager position was first announced internally

and externally around March 26, 2002; the position carried different require-

ments depending on the applicant’s level of education. Because Reilly and Ayan-

na Clunis, the black external applicant who was ultimately hired, had graduate

business degrees, the only relevant requirement was that the candidate needed

“5 to 7 years of strategic sourcing related experience and supervision.”

The hiring procedure involved at most three levels. External candidates

who met the minimum requirements had a telephonic pre-screening interview

with Mary Gano of Human Resources; internal candidates were not pre-

screened. The second step for external candidates, and the first for internal can-

didates, was an interview with Dennis and/or a member of Human Resources.

The third and final step was an interview with a panel of Dennis, Geny-

nille Dillingham (Human Resources), Ben Ezzell (Corporate), Bob Gentry (Elec-

tric Delivery), Jim Breland (Fossil Production), Stevens, and Mendez. The panel

asked each candidate pre-selected questions on issues particular to each indivi-

dually and to the department as a whole. Panel members, including Dennis,

then gave each applicant a score. Dennis considered this input, but the final de-

cision remained with her.

As an internal candidate, Reilly did not go through a pre-screening inter-

view but skipped to the initial interview. Dennis and Gano interviewed him on

May 3, 2002, after which Dennis invited him to interview before the entire panel

on May 15. Of all the applicants interviewed during this round, Reilly scored the

highest, with an average of 39.875. Dennis gave him a 38.

Clunis sent Dennis an email inquiry about employment opportunities on

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No. 06-11119

April 12. Dennis replied on May 14, a day before Reilly’s second interview, but

did not mention that the position was available, because she did not immediately

recognize Clunis as being qualified. Clunis emailed again on June 18, stating

that she was still interested in whatever positions might be available. Dennis

responded that she was not sure Clunis had “the specific skills that [were] re-

quired” but forwarded Clunis’s resume to Human Resources to be sure. Human

Resources determined that Clunis’s work history qualified her for the position

even though she had less than five years’ specific strategic sourcing experience.

Dennis and a member of Human Resources did a telephonic pre-screening

interview of Clunis on June 25. Unlike other applicants, Clunis did not go

through the usual first round interview and moved instead to the full panel, sans

Stevens. Dennis scored Clunis a 36, compared to the 38 she had given to Reilly.

On July 29, Reilly met with Ezzell, his former boss and a member of the

panel, who told Reilly that though the interview had gone well, he thought Den-

nis “ha[d] a diversity issue.” Particularly, Ezzell thought that because Dennis

was a member of the Workforce Diversity Program, it would be unseemly for her

to hire all white males for the positions that reported to her directly. Ezzell also

expressed surprise that Dennis had hired him, for the same reason.

Clunis assumed the Strategic Sourcing Manager position in August 2002,

then promoted Reilly to Strategic Sourcing Representative Senior. He served in

that position until 2004.

II.

Summary judgment is appropriate if “the pleadings, depositions, answers

to interrogatories, admissions, and affidavits, if any, show that there is no genu-

ine issue of material fact and that the moving party is entitled to a summary

judgment as a matter of law.” FED. R. CIV. P. 56(c). An issue is material if a rea-

sonable jury would be permitted to return a verdict for the non-moving party.

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No. 06-11119

Robertson v. Alltel Info. Servs., 373 F.3d 647, 651 (5th Cir. 2004). We review a

summary judgment de novo, applying the same standard as did the district

court. Alvarado v. Texas Rangers, 492 F.3d 605, 611 (5th Cir. 2007). All facts

are construed in favor of the non-movant. Id.

Section 1981 provides that all persons shall have the same rights “as [are]

enjoyed by white citizens.” 42 U.S.C. § 1981. Like title VII, § 1981 prohibits dis-

crimination in private employment against anyone, regardless of his race. Mc-

Donald v. Santa Fe Trail Transp. Co., 427 U.S. 273, 286-87 (1976). The fact that

Reilly is white is no bar to suing under § 1981. Id. “The elements of the claims

under Title VII and [Section 1981] are identical. We therefore evaluate both

claims using the same analysis.” Pratt v. City of Houston, 247 F.3d 601, 605 n.1

(5th Cir. 2001) (internal citations omitted).

To survive a motion for summary judgment, a plaintiff must present suffi-

cient evidence to create a genuine issue of material fact that his employer dis-

criminated because of race. The plaintiff may present direct or indirect evidence

of discrimination. Alvarado, 492 F.3d at 611.

A.

Direct evidence is evidence, which if believed, proves the fact in question

without inference or presumption.2 Jones v. Robinson Prop. Group, 427 F.3d

987, 992 (5th Cir. 2005). The presentation of credible direct evidence that dis-

crimination motivated or was a substantial factor in the adverse employment

action shifts the burden to the employer to show that, regardless of discrimina-

tion, the same decision would have been made. Id.

Reilly characterizes as direct evidence the statement made to him by Ezzel

that Dennis “ha[d] a diversity issue.” For such a remark to constitute direct evi-

2

If we must draw inferences from the evidence, it is circumstantial, not direct.

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No. 06-11119

dence of racial discrimination, it must meet the four-factor test in Auguster v.

Vermilion Parish School Board, 249 F.3d 400, 405 (5th Cir. 2001): The state-

ment must be (1) related to the protected class of persons of which the plaintiff

is a member, (2) proximate in time to the employment decision, (3) made by an

individual with authority over the employment decision at issue, and (4) related

to the employment decision at issue. The parties dispute only the applicability

of the third factor.

In our analysis of the third factor, we have said that the evidence of racial

animus on the part of someone with decision-making authority can be direct evi-

dence. Jones, 427 F.3d at 992. Reilly argues that because Ezzell was a member

of the interview panel, and therefore had some decision-making authority, his

statement is direct evidence of discrimination. This argument fails, because the

person making the statement must either be expressing his own racial animus,

and not someone else’s, or have an objective basis for believing it.

Reilly relies on Jones to support his contention that Ezzell’s statement is

direct evidence. In Jones, the plaintiff applied for but was denied a job at a casi-

no. He presented the testimony of Lesley Mims and Sam Thomas to demon-

strate that race was the reason. Mims testified that either Ken Lambert, the

manager of the poker room, or Lambert’s assistant had said that “good old white

boys don’t want blacks touching their cards in their face.” Jones, 427 F.3d at

993. Thomas testified that Lambert said he had “been told not to hire too many

blacks in the poker room.” Id. The district court granted summary judgment for

the employer on the basis that this testimony required too many inferences to

qualify as direct evidence. We reversed: Because Lambert had the authority to

hire Jones, and his assistant had input in that decision, the testimony, taken in

the light most favorable to Jones, required no inference to establish that race

played a role in the hiring decision.

Reilly’s case is distinguishable. If Ezzell had been speaking for himself

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No. 06-11119

and was giving his reasons for giving the input into the decision, or there was

evidence that he had an objective reason to believe Dennis actually thought she

had a diversity problem, the outcome would be controlled by Jones.3 Reilly, how-

ever, presented no evidence that such was the case; instead we are asked to con-

strue Ezzell’s hunch as to Dennis’s motives as direct evidence of racial animus

in the hiring decision.

This process requires an inference that is improper in the direct evidence

context. If Ezzell had instead said Dennis hired Clunis because on the day of the

latter’s interview, Dennis, eating a carrot, became enamored with the letter “c”

and wanted to hire someone whose name began with that letter, we would not

credit the testimony unless there was other evidence to support it. The reason

for this is that such evidence produces an insoluble epistemological problem. We

do not presume that anyone has access to the interior motives of another. With-

out some evidence that Ezzell’s hunch had a basis in something Dennis did or

said, we cannot, without presuming, impute to her the motive Ezzell alleged she

had. Nor can we say it expresses Ezzell’s own discriminatory views. Accord-

ingly, the statement cannot constitute direct evidence.

B.

If direct evidence is not present or is unavailing, a plaintiff may use cir-

cumstantial evidence to demonstrate discrimination. Alvarado, 492 F.3d at 611.

We analyze such cases using the framework in McDonnell Douglas Corp. v.

Green, 411 U.S. 792 (1973), id., which establishes a burden-shifting methodology

3

Contrary to the assertion of the district court, remarks by the decision-maker are not

the only way to satisfy our direct evidence requirements. As Jones makes pellucid, the re-

quired inference need only show race was a basis of the decision. Id. A statement by someone

with appropriate input into the decision, even if not the decision-maker, can satisfy that re-

quirement. Accordingly, Ezzell’s participation in the panel interview, and his input into the

decision, even though capable of being overridden by Dennis, would be sufficient to satisfy the

third factor if the evidence could be read to demonstrate that he had been speaking for himself.

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No. 06-11119

whereby the plaintiff is first required to present a prima facie case of discrimina-

tion. The burden of production, not persuasion, then shifts to the employer and

requires it “to articulate a legitimate, nondiscriminatory reason for its actions.”

Id. If the employer meets its burden, the prima facie case dissolves, and the

plaintiff must establish that the employer’s reason was either (1) a pretext for

discrimination or (2) incomplete in that race was still a factor in the decision.

Id. We call this second approach the “mixed-motive” method. Id.

1.

To establish a prima facie case, Reilly must present evidence that (1) he

is within a protected class, (2) he was qualified for the position, (3) he was not

selected, and (4) the position was filled by a person not in the protected class.

Burrell v. Dr. Pepper/Seven Up Bottling Group, Inc., 482 F.3d 408, 412 (5th Cir.

2007). TXU does not dispute that Reilly has satisfied that burden.

2.

Because Reilly has made a prima facie case of discrimination, the burden

of production shifts to TXU to produce evidence indicating non-discriminatory

reasons for its decision. Alvarado, 492 F.3d at 615-16. TXU repeats the reasons

the district court relied on, namely that Dennis hired Clunis because she

(1) had a superior educational background; (2) had a more well

rounded and relevant work experience; (3) had work experience

involving strategic planning and working with analytical techniques

and tools, whereas Reilly’s experience related more to transactional

and tactical procurement activities; (4) had significant experience

with strategic sourcing, which Reilly did not have; (5) had experi-

ence with implementing strategic sourcing at large corporations as

a consultant, which Reilly had not done; (6) had consulting experi-

ence that provided her with valuable experience leading strategic

sourcing efforts evaluating processes, spend [sic] categories, and

finding opportunities to reduce the total cost of ownership, which

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No. 06-11119

Reilly did not have; (7) had done significant financial modeling,

which Reilly had not; (8) had supervisory and management experi-

ence, which Reilly did not have; (10) had demonstrated through her

previous employment that drive and initiative were strengths, and

Reilly had not; (11) had interpersonal, team building, and leader-

ship skills that Reilly did not have, including bringing people to-

gether with different interests to achieve a desirable end result for

the company; and (12) was a good fit for the Strategic Sourcing

Manager position.

Additionally, during her deposition Dennis testified that she “anticipated hiring

one or more persons outside the organization with strategic sourcing experi-

ence.” Clunis, according to Dennis, met both requirements.

3.

Reilly has presented some evidence that race was a factor in the decision-

making process. Ezzell’s remark, while not direct evidence, is circumstantial

evidence of a racial motive. In contrast to direct evidence, we may indulge in-

ferences when reviewing circumstantial evidence. Ezzell’s statement need not

be true on its own terms for it to carry some weight. Even if Dennis did not

think she had a diversity issue, it is reasonable to presume that Ezzell, as a

member of the panel, thought she did. From this, it would not be improper for

a jury to conclude that Ezzell’s belief might have, at the very least, influenced

his own assent to hiring Clunis.4

Nor can we with confidence foreclose the possibility that Ezzell’s percep-

tion of Dennis’s motives was correct. Perception extends further than words.

The record does indicate that, as a panel member, Ezzell was aware that TXU

had diversity goals, which Dennis would have had a hand in crafting. It does not

require an improper inference to believe that the panel might have had that goal

hanging over its head during deliberations. A jury might infer that this explains

4

We need not go so far as to suggest that other panel members held similar views.

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No. 06-11119

the panel’s unanimity in choosing a candidate to whom it did not give the high-

est rating.

For the foregoing reasons, Reilly has presented some evidence that race

was a motive in choosing to hire Clunis instead of him for the position. We ac-

cordingly do not address whether Reilly was in fact “clearly better qualified” or

whether a mixed motive was at work in this case.

The summary judgment is REVERSED, and this matter is REMANDED

for further proceedings.

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