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Kwan v. Andalex Group LLC

United States Court of Appeals, Second Circuit

December 16, 2013

ZANN KWAN, Plaintiff-Appellant,
The ANDALEX GROUP LLC, Defendant-Appellee.

Argued March 7, 2013.

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Edward F. Westfield, Edward F. Westfield, P.C., for Plaintiff-Appellant Zann Kwann.

A. Michael Weber and Joseph E. Field, Littler Mendelson, P.C., for Defendant-Appellee The Andalex Group LLC.

Before: B.D. PARKER and LOHIER, Circuit Judges, and KOELTL, District Judge.[*]

JOHN G. KOELTL, District Judge:

The plaintiff, Zann Kwan, is a former employee of The Andalex Group LLC (" Andalex" ). She appeals from a judgment of the United States District Court for the Southern District of New York dismissing her complaint. The District Court (Forrest, J.), granted summary judgment dismissing the plaintiff's claims of discrimination, retaliation, and hostile work environment under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. (" Title VII" ); the New York State Human Rights Law (" NYSHRL" ), N.Y. Exec. Law § 296; and the New York City Human Rights Law (" NYCHRL" ), N.Y.C. Admin. Code § 8-107. [1] The District Court also dismissed the plaintiff's claim that Andalex violated the Employee Retirement Income Security Act of 1974 (" ERISA" ), 29 U.S.C. § 1001 et seq. by failing to notify her of her right to continuing health care coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (" COBRA" ), 29 U.S.C. § 1166 et seq.

On appeal, Kwan contends that she proffered sufficient evidence that she was subjected to a hostile work environment because of her gender and was retaliated against for complaining about gender discrimination. Kwan also alleges that the District Court abused its discretion by denying her statutory penalties under COBRA. For the reasons that follow, we affirm the judgment of the District Court except with respect to Kwan's retaliation claims, as to which there are genuine disputes as to material facts that preclude summary judgment.

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In reviewing the District Court's grant of summary judgment in favor of Andalex, " we construe the evidence in the light most favorable to the [plaintiff], drawing all reasonable inferences and resolving all ambiguities in [her] favor." CILP Assocs., L.P. v. PriceWaterhouse Coopers LLP, 735 F.3d 114, 118 (2d Cir.2013) (citation and internal quotation marks omitted).


Andalex is a small family-owned real estate management company specializing in large gaming and commercial properties. Allen Silverman is the founder and Chief Executive Officer. Allen's sons, Andrew and Alex, are the Chief Investment Officer and Chief Operations Officer respectively. Steven Marks is the Chief Financial Officer. During the relevant time period, April 2007 to September 2008, Andalex had approximately twenty to twenty-five employees.


On April 9, 2007, Andalex hired the plaintiff to be Vice President of Acquisitions. Kwan was an at— will employee and was provided a six-figure salary, two weeks paid vacation, health insurance, and was eligible for a year-end discretionary bonus. The plaintiff's primary duties at Andalex involved analyzing cash flows, preparing financial models and projections, and performing due diligence on investment properties. From April to August 2007, the plaintiff worked with Andrew Feder, the Managing Director of Acquisitions. Feder testified that Kwan's work product was " very good" and that he never had reason to criticize her competence or diligence. After Feder left Andalex in August 2007, Kwan reported directly to Steven Marks until she was terminated in September 2008. In November 2007, Andrew Silverman complimented Kwan's work and told her to " [k]eep up the good work." In December 2007, she received a bonus of $5,000.

On September 24, 2008, Andalex terminated Burton Garber, a male Andalex executive who had been with the company for several years. On September 25, 2008, Kwan left the office at 5:15 p.m., earlier than the standard departure time of 6:00 p.m. Andalex alleges that when Marks asked Kwan where she was going, she replied that she was leaving to play squash. Marks asked Kwan's status on a project and she said that she would work on it the following day and left the office. The plaintiff alleges that she received permission from Marks to leave early, that her leaving had no effect on her work, and that September 25 was the first time she had ever left the office before 6:00 p.m.

The next morning, September 26, 2008, Marks met with Kwan and reprimanded her for leaving work early without permission. Amy Piecoro, the Director of Human Resources at Andalex, was present at the meeting. Although Marks testified that he had previously told the plaintiff not to leave early without permission and not to take long lunch breaks, Kwan testified that the September 26 meeting was the first time she had learned that there were set working hours at Andalex. Amy Piecoro testified that prior to September 26, 2008, she had never been told that Kwan was arriving late, leaving early, or taking long lunches. Later that day, Andrew Silverman fired Kwan.


According to Kwan, she was terminated about three weeks after she had complained to Alex Silverman that she was being discriminated against because of her gender. She alleges that she was fired

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because of her recent complaint about discrimination. Kwan testified that on September 3, 2008, she asked Alex Silverman why she was being discriminated against and treated differently from the men in the office with respect to salary increases and bonuses. Alex allegedly told her that he and Andrew Silverman each speak with Allen Silverman about their " own men" and Allen then decides the increases and bonuses. About three weeks later, on September 26, 2008, Kwan was fired. Andalex claims that Andrew Silverman made the decision to terminate Kwan. [2] Alex Silverman denies that the September 3 conversation ever occurred.

Andalex has denied that it retaliated against the plaintiff. Indeed it has denied that the alleged complaint of gender discrimination ever occurred. Its explanations for the plaintiff's firing have, however, evolved over time. Andalex initially contended that its change in business focus to international investments made the plaintiff's skill set obsolete. Subsequently, it shifted to an explanation that the plaintiff's poor performance and bad behavior were the reasons for the termination.

In a letter dated November 19, 2008, Andalex's counsel explained that both Kwan and Garber were terminated because the business focus at Andalex had changed from domestic real estate to international gaming and hospitality:

[Kwan's] skill set no longer matche[d] what Andalex need[ed] from her position.... As Andalex's business shifted from U.S.— based office properties to Latin American hospitality and gaming interests, Ms. Kwan's skill set became increasingly obsolete.... Ms. Kwan has no experience in the hospitality or gaming industry ... which Andalex deems necessary for the direction its business is headed. Notably, only weeks ago, Andalex terminated a senior portfolio manager who is male, [Burton Garber,] because it similarly concluded that his skill set was not a good match for the company going forward.

The letter also claimed that Kwan was terminated because " she repeatedly took long lunches, arrived to the office late, left early, and generally made little effort to make herself valuable to the company as its business focus changed."

After Kwan filed a complaint with the Equal Employment Opportunity Commission (" EEOC" ), Andalex filed its Position Statement (the " Position Statement" ) on April 7, 2009. The introduction to the Position Statement explained that over the course of Kwan's employment, Andalex's " business changed dramatically." Andalex switched its focus from " the acquisition, development and management of commercial, retail and residential properties in the United States," at the time 31 Kwan was hired, to " investments in Latin America and the Caribbean" and a " business plan abroad." The Position Statement argued that " the termination of Ms. Kwan's employment [was] for reasons having nothing to do with her gender or national origin. Rather, her skill set no longer matched the needs of either Andalex or its foreign hospitality and gaming division." The introduction did not allege that Kwan's poor

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performance or behavioral problems contributed to the decision to terminate her.

The body of the Position Statement also focused almost exclusively on Andalex's change in business focus. Andalex represented that although it had attempted to " integrate Ms. Kwan into its foreign hospitality and gaming division, as domestic acquisitions came to a complete halt," Kwan was not suited to working on such transactions because she did not speak Spanish and lacked experience in this new area of business focus. Andalex represented that Kwan was unable to adapt to the change in business focus and that both she and Burton Garber had been terminated because of the change in business focus:

While Ms. Kwan's performance in the context of the domestic real estate aspect of the operation was acceptable, she had failed and had been unable to make the transition to the foreign hospitality and gaming aspect of the business operation. In this context, ... her employment was terminated.... During the same time frame, Burton Garber, a male, who is not of Asian nationality, was also notified of his termination based upon the disposition of Andalex's domestic real estate portfolio and the growing focus on foreign business.

Andalex reiterated that " both Ms. Kwan's and Mr. Garber's employments were severed as a consequence of the company's shift from domestic real estate ownership and management to the foreign hospitality and gaming business." Andalex repeated this position:

As noted above, the company's emphasis shifted from real estate in the United States to hospitality and gaming in Latin America and the Caribbean. Ms. Kwan did not have experience in hospitality or gaming acquisitions. She also did not speak Spanish. Her skills simply no longer fit in with the business of the company.... Ms. Kwan was never singled out for disparate treatment. Ms. Kwan conveniently fails to note that Mr. Garber's employment had been terminated around the same time that her employment had been terminated. His termination was for the same basic reasons as was Ms. Kwan.

In the argument section of its Position Statement, Andalex framed the dispute between the parties as " begin[ning] with whether Ms. Kwan was qualified to perform in the aftermath of the corporate changes in operations." The argument proceeded to tie Kwan and Garber together and claim that the change in business focus was the reason for their terminations:

Andalex asserts that Ms. Kwan did not have the needed qualifications and abilities to transition with the changes in corporate focus. Ms. Kwan and Mr. Garber were both laid off at around the same time for the same business reasons. Andalex has presented a facially valid, independent and non-discriminatory basis for the actions taken.

Andalex's Position Statement also made brief reference to Kwan's performance in response to her claims that her performance was excellent, that she had always carried out her responsibilities, and that she had never received written or oral performance warnings. Andalex alleged there were " several instances in which Ms. Kwan's work product contained significant errors," including " at least one case [where her performance] adversely affected a transaction being negotiated with a global financial institution."

Andalex also alleged that Kwan's behavior contributed to its decision to terminate her. Andalex alleged that on at least two occasions Kwan had behaved inappropriately by taking photographs of Steven Marks despite his repeated requests that

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she stop. Andalex also claimed that " [t]oward the end of her employment, Ms. Kwan was taking long lunches and leaving the office early," and referred to her ...

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