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October 16, 1991

CHARLES A. SELBY, Plaintiff,
PEPSICO, INC., Defendant. WILLIAM L. NESBIT, Plaintiff, v. PEPSICO, INC., Defendant.

The opinion of the court was delivered by: CHARLES A. LEGGE

 These cases are presently before the court on defendant's motions for summary judgment. After discovery was concluded, defendant filed these motions. At the oral argument, this court vacated the trial date and gave plaintiffs additional time to oppose the summary judgment motions. Additional oppositions were filed. The motions were then submitted to this court for decision. Because the factual and legal issues in these cases are substantially similar, both are addressed in this order. The court has reviewed the moving and opposing papers, the record of the case, and the applicable authorities, and concludes that there are no genuine issues of material fact on the matters discussed below, and that summary judgment should be entered in favor of defendant in both actions.


 Plaintiffs Nesbit and Selby allege that defendant Pepsico: (1) breached their employment agreements and (2) discharged plaintiffs because of their age in violation of California Government Code § 12900, et seq.1 Plaintiff Nesbit also asserts a claim for discrimination based on his alleged physical disability.


 Plaintiffs were employees of New Century Beverage Co. ("NCB"), a soft drink bottler. On December 29, 1986 Pepsico acquired NCB and merged NCB's operations into its own bottling operations. At the time of acquisition, plaintiff Selby (age 59) was NCB's Assistant Operations Manager and plaintiff Nesbit (age 49) was a Chain Account Manager. Pepsico terminated plaintiffs and seventeen other salaried employees on May 6, 1987, as part of an alleged "reduction in force" ("RIF") and general restructuring of NCB's operations. Of the nineteen employees terminated, ten were younger and nine were older than forty years of age.

 Prior to Pepsico's acquisition of NCB, 262 salaried employees worked at NCB. By December 1987, six months after the RIF began, Pepsico employed 233 salaried workers, an approximate 10% reduction. *fn2" In December 1988, one year later, three salaried positions had been added, for a total of 236 employees. Thus, a reduction of approximately 10% of the salaried work force was made and maintained over an eighteen month period.


 Plaintiffs allege that their discharge resulted from discrimination on the basis of their age, in violation of California's Fair Employment and Housing Act ("FEHA"). Cal. Govt. Code § 12900 et seq. This court, exercising its diversity jurisdiction, applies the substantive law of the state. However, the California courts have noted that:

 California courts have adopted the U.S. Supreme Court's approach in discrimination cases with respect to the presumptions and the shifting of burdens, as set forth in Texas Dept. of Community Affairs v. Burdine, 450 U.S. 248, 67 L. Ed. 2d 207 , 101 S. Ct. 1089 (1980); Sischo-Nownejad v. Merced Comm. College District, 934 F.2d 1104 (9th Cir. 1991). To establish a prima facie case of age discrimination, and thereby shift the burden of proof to defendant, as in Title VII cases, plaintiffs must produce enough evidence to permit the trier of fact to infer the fact of age discrimination. Texas, 450 U.S; at 254 n.7.

 A plaintiff alleging age discrimination may proceed under either of two theories of liability: disparate treatment or disparate impact. Rose v. Wells Fargo, 902 F.2d 1417 (9th Cir. 1990). Plaintiffs' claims fall within the disparate treatment theory. Proof of disparate treatment requires a showing that the employer treated some people less favorably than others because of their age. An employee may establish a prima facie case of age discrimination under the disparate treatment theory by showing that he: (1) was a member of the protected class, age 40-70; (2) was performing his job in a satisfactory manner; (3) was discharged; and (4) was replaced by a substantially younger employee with equal or inferior qualifications. Rose, 902 F.2d at 1421. *fn3" The failure to prove the fourth element is not necessarily fatal if the discharge results from a general reduction in the work farce due to business conditions. Id. However, in RIF cases, plaintiff must show "through circumstantial, statistical, or direct evidence that the discharge occurred under circumstances giving rise to an inference of age discrimination." Id. And:

 in a reduction-in-force case, there is no adverse inference to be drawn from an employee's discharge if his position and duties are completely eliminated . . . If [the discharged employee] cannot show that [his employer] had some continuing need for his skills and services in that his various duties were still being performed, then the basis of his claim collapses.

 Id. (citing Leichihman v. Pickwick Int'l, 814 F.2d 1263, 1270 (8th Cir.), cert. denied, 484 U.S. 855 (1987)). Defendant argues that plaintiffs have failed to meet the fourth element of the test by establishing that they were "replaced."

 Establishment of a prima facie case operates to shift the burden to defendant to produce some evidence that it had legitimate, nondiscriminatory reasons for the employment decision. Watson v. Fort Worth Bank & Trust, 487 U.S. 977c, 101 L. Ed. 2d 827 , 108 S. Ct. 2777 (1988). Defendant contends that plaintiffs' positions were eliminated as part of the RIF and that plaintiffs' former duties were reassigned to those employees who were retained.

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