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Employer Liability: Mixed decision trims claims against Fidelity Investments

by Matthew H. Parker

In a March 22, 2018, memorandum and order, Judge John McConnell of the U.S. District Court for the District of Rhode Island granted summary judgment (i.e., dismissal without a trial) to Fidelity Investments on a female executive’s breach of contract and retaliation/discrimination claims associated with a temporary assignment, but her claims associated with a promotion she had been promised survived for trial.

It all started with a commission dispute

Jenn E. was a regional vice president at Fidelity whose primary responsibility was managing existing client relationships. Under a written “compensation plan,” she was entitled to certain commissions, bonuses, and other incentives.

In January 2012, Fidelity informed Jenn E. that it had “overpaid” her 2011 commissions by more than $60,000 and asked her to sign a “repayment letter.” (Generally, an employer cannot deduct or withhold alleged overpayments from an employee’s future paychecks without first obtaining her written permission.) Jenn E. refused to provide permission, but Fidelity unilaterally deducted 75 percent of the disputed amount from her paychecks anyway.

Promised promotion evaporates

In the summer of 2012, Jenn E.’s supervisor informed her that Fidelity intended to promote her by the end of the year. The new position would have come with a title change and a $50,000 raise. However, after Jenn E. informed management that she was pregnant and intended to take leave under the Family and Medical Leave Act (FMLA), her supervisor told her that the promotion and raise would no longer happen.

The supervisor claimed there would be no promotions because Fidelity was experiencing challenging market conditions, but a male employee—who had not given notice of his intention to take a medical leave—received a promotion to a position identical to the one promised to Jenn E.  Fidelity’s about-face occurred just “a few weeks” after ­Jenn E.’s pregnancy announcement.

New ‘interim’ assignment

Jenn E. subsequently did take FMLA leave, but shortly after she returned in the fall of 2013, Fidelity asked her to cover a vacancy in a senior vice president position while the company searched for a more permanent replacement. The position was two pay grades higher than Jenn E.’s current job, but it came with extra travel and increased work responsibilities. She agreed to take it, but she did not receive the associated raise (worth an additional $200,000 per year).

In the winter and spring of 2014, Jenn E. repeatedly informed her supervisors that she wanted to return to her original position because she considered her temporary job an “undue hardship.” However, Fidelity told her that her original job had been eliminated despite the fact that she had previously been assured that it was being held open for her. Jenn E. resigned in May 2014, claiming that Fidelity’s actions had amounted to a constructive discharge.

Serious accusations

Jenn E. filed her lawsuit against Fidelity on June 9, 2015. Her claims fell into three general categories:

(1)  Breach of contract (associated with Fidelity’s claw-back of her allegedly overpaid commissions);

(2)  Gender discrimination and FMLA retaliation (associated with Fidelity’s failure to promote her and the temporary assignment); and

(3)  Retaliation for her alleged opposition to illegal discriminatory practices.

Following discovery (the pretrial exchange of evidence), Fidelity filed a request for summary judgment. Fidelity argued that even viewing the facts in the light most favorable to Jenn E., it was entitled to judgment as a matter of law.  In other words, it contended that no reasonable jury could conclude that it had done anything illegal. Fidelity succeeded in getting several of the claims thrown out, but Jenn E.’s claims that the company discriminated and retaliated against her after she gave notice of her intention to take maternity leave survived.

Breach of contract or violation of state wage law?

Scrutinizing Jenn E.’s “breach of contract” claim, Judge McConnell concluded that it was time-barred. Although the statute of limitations for contract claims is 10 years, the court looked to the substance of Jenn E.’s claim and determined that it was more appropriately a claim under Rhode Island’s Payment of Wages Act. Contract claims are governed by state—not federal—law, and the Rhode Island Supreme Court has held that for purposes of determining the appropriate statute of limitations, trial courts should “look to the substance of a claim, rather than to the pleading’s nomenclature.”

Judge McConnell concluded there was “no doubt that the substance of Jenn E.’s claim for breach of contract [was] one for wages, and that her wages included commissions.” As such, the three-year statute of limitations under the Payment of Wages Act governed. Since Fidelity had started clawing back Jenn E.’s wages in January 2012, she filed her claim approximately five months late (in June 2015).

Discrimination and retaliation claims—McDonnell Douglas analysis

Turning to Jenn E.’s other claims, Judge McConnell reached a mixed decision. There was no evidence that Jenn E. had opposed illegal discriminatory practices, so he dismissed those retaliation claims, but her claims associated with the promised promotion and temporary assignment required a deeper dive.

Under the McDonnell Douglas burden-shifting framework, which governs courts’ analyses of discrimination and retaliation claims, Judge McConnell first had to consider whether Jenn E. had established a prima facie (minimally sufficient) case. Only if she had would the burden shift to Fidelity to articulate—though not prove—a legitimate explanation for its challenged conduct. If Fidelity did that, it would remain Jenn E.’s burden to prove that its proffered excuse was a pretext for discriminatory or retaliatory intent.

Prima facie case—discrimination

To establish a prima facie case of discrimination, Jenn E. needed to present evidence that (1) she is a member of a protected class (in this case, a pregnant woman), (2) her job performance was satisfactory, (3) Fidelity took some “adverse” employment action against her, and (4) during or after the adverse action, Fidelity continued to have her duties performed by a comparably qualified person.

For the purposes of its summary judgment motion, Fidelity admitted that Jenn E. had established a prima facie case of discrimination associated with her failure to get the 2012 promotion, but it disputed that its subsequent placement of her in a temporary position was an adverse action. Even though the position involved increased responsibility and more travel—for a new mother caring for an infant—all without the raise that typically came with it, Fidelity argued that Jenn E. had voluntarily accepted the assignment and that it provided her a valuable opportunity to try out for the permanent replacement position. Judge McConnell agreed.

Reminding the parties that “whether an employee has suffered a materially adverse employment action capable of supporting claims under Title VII [of the Civil Rights Act of 1964]” is typically a “question of law” that is “gauged by an objective standard,” Judge McConnell denied Jenn E.’s claims associated with the temporary position based on the fact that she had voluntarily “accepted the interim position on the spot.” Since there was “no evidence of any coercion, intimidation, or threat by the employer,” Judge McConnell concluded that ­Jenn E. had failed to establish a prima facie case of discrimination associated with the temporary assignment.

Prima facie case—FMLA retaliation

To establish a prima facie case of retaliation, Jenn E. needed to show that (1) she engaged in protected conduct (i.e., she requested or took FMLA leave), (2) she experienced an adverse employment action, and (3) there was a causal connection between the protected conduct and the adverse employment action.

Fidelity attacked Jenn E.’s FMLA retaliation claim based on the third requirement: a causal connection. Fidelity asserted there was no evidence that Jenn E.’s provision of notice to her supervisor that she intended to take FMLA leave was associated with her failure to receive the promised promotion. This time, Judge ­McConnell ruled for Jenn E..

Looking to the “temporal proximity” (the closeness in time) between Jenn E.’s notification that she was taking leave and her failure to receive the promotion—which were just “a few weeks” apart—Judge McConnell concluded there was sufficient evidence to allow a reasonable jury to decide there was a causal connection between her protected conduct and the adverse employment action.

Nondiscriminatory reason

At the second step of the McDonnell Douglas analysis, Fidelity pointed to deposition testimony from a senior vice president who claimed that the company was experiencing a “difficult time” with business in late 2012, which was associated with historically low interest rates. As such, Fidelity claimed that “business conditions did not support promotions at that time.”

Concluding that an “economic reason for not promoting someone is a legitimate reason that fulfills the second prong of the McDonnell Douglas analysis,” Judge McConnell turned to the final stage of the analytical framework.

Pretext?

Observing that the “final step of the McDonnell Douglas framework requires the [employee] to prove that the [employer’s] reason for the adverse employment action was merely pretext for discriminatory animus,” Judge McConnell considered evidence that Jenn E. offered for her contention that she was treated differently than similarly situated employees outside her protected class. Specifically, she claimed that Fidelity promoted a similarly situated male coworker at the same time it denied her the promised promotion. Both he and ­Jenn E. had been regional vice presidents, and they both reported to the same supervisor.

Fidelity argued that the male employee identified by Jenn E. was not similarly situated to her. Among other things, he had worked in a different business line, which Fidelity contended was more profitable; he had been “basically covering twice the amount of clients and territory as other people,” and he had been given the promotion by a different supervisor than the supervisor who had promised a promotion to Jenn E.

Citing binding case law standing for the proposition that “where [an employee] in a discrimination case makes out a prima facie case and the issue becomes whether the employer’s stated nondiscriminatory reason is a pretext for discrimination, courts must be particularly cautious about granting the employer’s motion for summary judgment,” Judge McConnell held that—although it was a “close call”—Jenn E. had put forth sufficient evidence for a jury to find that Fidelity’s reason for denying her the promotion was merely a pretext for discriminatory animus.

It is possible that a jury could determine that ­Jenn E. and the allegedly “similarly situated” male employee are close enough comparators to conclude that the only explanation for why she was denied a promotion is the fact that she is a woman who told her employer that she was pregnant and intended to exercise her FMLA rights. As such, Judge McConnell declined Fidelity’s invitation to throw out Jenn E.’s claims associated with its decision not to promote her at the end of 2012.

Constructive discharge

In considering Jenn E.’s “constructive discharge” claim, Judge McConnell reminded the parties that to succeed under that theory, an employee “must show that the conditions imposed by the employer had become so onerous, abusive, or unpleasant that a reasonable person in the employee’s position would have felt compelled to resign.” It is an objective standard, ­meaning an employee’s subjective perceptions do not govern.

Although Fidelity told Jenn E. that her original position had been eliminated, Judge McConnell noted that there was “no evidence” that there would not have been another suitable position for her once the temporary position ended. Because she made a “voluntary decision to resign” without first engaging in any kind of conversation with Fidelity about other future opportunities, Judge McConnell concluded that her resignation did not amount to a constructive discharge.

Arguably, this preserves an opportunity for Fidelity to contend at trial that—even if it is found liable for not promoting Jenn E.—her damages need to be limited to back pay associated with the difference between what she was making in the temporary position and what she would have made in the more senior position for the limited amount of time before she quit.

Takeaway for employers

Judge McConnell’s decision illustrates how difficult it is for employers defending discrimination and retaliation claims to prevail on summary judgment. Legal technicalities such as statutes of limitations can help trim away certain claims, but if there is a dispute over any material fact, the case will generally go to the jury. Employers should take note: If you find yourself quibbling over how similarly situated one employee is to the employee who filed the lawsuit, you had better put your best case forward and still be prepared for a disappointing result.

To discuss this issue further with Matt Parker please contact him directly at 401-270-4500 or mparker@whelancorrente.com.

 

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