## Facts

- Frank Mistretta and other former Sandia Corporation employees sued Sandia under the Age Discrimination in Employment Act (ADEA), alleging they were selected for layoff because of age.
- Sandia operated a scientific laboratory and primarily recruited employees on college campuses.
- About 90% of Sandia’s new hires were younger than 40, but the evidence showed this hiring pattern largely matched labor-market expectations, and there was no showing that applicants ages 40–65 faced unusual difficulty obtaining employment at Sandia compared with the broader applicant pool.
- In the early 1970s, Sandia faced budget problems that led to both voluntary and involuntary layoffs.
- In the involuntary layoffs at issue, employees ages 54–64 were about 15% of the workforce but comprised about 33% of those involuntarily terminated.
- Statistical evidence presented to the court indicated that age became an increasingly important factor in termination decisions beginning around age 52 and that employees ages 52–64 were adversely affected in a way that differed significantly from other employees.
- Evidence indicated that some Sandia managers and supervisors viewed older, nonsupervisory employees as less productive and less able to keep up with developing technologies.
- Sandia contended that job performance drove layoff selections.
- Sandia’s evidence included analysis indicating employees under age 40 tended to receive higher performance ratings.
- The record showed Sandia’s performance-rating process was highly subjective and not based on specific, objective criteria.
- The district court issued an order addressing the age-discrimination claims arising from Sandia’s layoff decisions.

## Issues

1. Whether Sandia’s involuntary layoff selections during its budget-driven layoffs violated the ADEA because age (particularly beginning around age 52) was a factor in choosing which employees to terminate.
2. Whether Sandia proved that the layoff selections were based on legitimate, non-age factors—such as job performance—rather than age.

## Decision

- The district court concluded that the evidence supported a finding that age was a factor in Sandia’s involuntary termination decisions, with adverse effects concentrated among employees roughly ages 52–64.
- The court relied on statistical disparities showing older employees (including those ages 54–64) were terminated at rates disproportionate to their representation in the workforce.
- The court credited evidence of age-related attitudes among some managers and supervisors as consistent with the statistical showing.
- The court found Sandia’s asserted performance-based explanation less persuasive given the highly subjective rating system and evidence that younger employees tended to receive higher ratings.
- The court treated the combined proof—statistics, attitudinal evidence, and the nature of the evaluation process—as sufficient to establish ADEA liability for the challenged termination decisions.

## Legal Principles

- In an ADEA reduction-in-force case, a plaintiff may prove discrimination through circumstantial evidence, including statistically significant disparities in termination outcomes by age.
- Statistical proof may be strengthened by evidence that decisionmakers held age-based views about older employees’ productivity or ability to keep up with technological change.
- An employer’s reliance on subjective performance ratings may be questioned when the ratings lack specific criteria and correlate with age, because such a process can allow age bias to affect outcomes.
- A budget-driven need to reduce headcount may justify conducting layoffs, but it does not permit selecting employees for involuntary termination based on age.
- Evidence that a workforce is generally younger because of ordinary recruiting patterns does not, by itself, defeat a claim that older workers were selected for discharge based on age.

## Conclusion

Mistretta v. Sandia Corp. addressed whether Sandia’s budget-related involuntary layoffs complied with the ADEA, and the district court concluded that the proof showed age affected termination selections, particularly for employees beginning around age 52. The court relied on statistical disparities, evidence of age-related views among some supervisors, and a subjective performance-rating system that tended to rate younger workers higher, and it held that Sandia’s termination decision process unlawfully considered age in selecting employees for discharge.


Mistretta v. Sandia Corp., 15 E.P.D. 7902 (1977)