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Lenzi v. Systemax, Inc.

United States Court of Appeals, Second Circuit

December 6, 2019

DANIELLE LENZI, Plaintiff-Appellant,
v.
SYSTEMAX, INC., RICHARD LEEDS, Chairman and CEO (and in his individual capacity), LAWRENCE P. REINHOLD, Executive Vice- President and Chief Financial Officer (and in his individual capacity), Defendants-Appellees. [1]

          Argued: April 17, 2019

         Appeal from the United States District Court for the Eastern District of New York (Sandra J. Feuerstein, J.) granting summary judgment for Defendants- Appellees Systemax, Inc., Richard Leeds, and Lawrence Reinhold, and dismissing Plaintiff-Appellant Danielle Markou's (née Lenzi) claims under the Equal Pay Act of 1963, 29 U.S.C. §§ 206(d)(1), 215(a)(3), Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e-2(a)(1), 2000e-3(a), the Pregnancy Discrimination Act of 1978, id. § 2000e(k), the whistleblower protections of the Consumer Product Safety Improvement Act of 2008, 15 U.S.C. § 2087, and related provisions of the New York State Labor Law and New York State Human Rights Law.

         Markou claims, in sum and substance, that Defendants-Appellees paid her less than they would have if she were a man, retaliated against her when she raised concerns about her disparate pay and possible Consumer Product Safety Act violations, and fired her because she was pregnant. The district court held that Markou failed to establish a prima facie case for each of her claims. Because we conclude that there was sufficient evidence to support a prima facie case for Markou's Pregnancy Discrimination Act and Title VII claims, but insufficient evidence to support her Consumer Product Safety Improvement Act whistleblower retaliation claim, we vacate in part the judgment of the district court and remand for further proceedings. We write to clarify that, to establish a prima facie pay discrimination claim under Title VII, a plaintiff need not first establish an Equal Pay Act violation-that is, that she performed equal work but received unequal pay. Rather, all Title VII requires a plaintiff to prove is that her employer "discriminate[d] against [her] with respect to [her] compensation . . . because of [her] . . . sex." 42 U.S.C. § 2000e-2(a)(1). Moreover, we have not yet had occasion to determine what framework applies to Consumer Product Safety Improvement Act whistleblower retaliation claims and now adopt the framework applicable to Sarbanes-Oxley Act of 2002 whistleblower retaliation claims, 18 U.S.C. § 1514A(a).

         Affirmed in part, vacated in part, and remanded.

          PERRY S. FRIEDMAN, New York, N.Y., for Plaintiff- Appellant Danielle Markou.

          MARK S. MANCHER, Jackson Lewis P.C. (Collin O'Connor Udell, on the brief), Melville, N.Y., for Defendants-Appellees Systemax, Inc., Richard Leeds, and Lawrence P. Reinhold.

          BARBARA L. SLOAN, U.S. Equal Employment Opportunity Commission (James L. Lee, Deputy General Counsel, Jennifer S. Goldstein, Associate General Counsel, Anne W. King, on the brief), Washington, D.C., amicus curiae in support of Plaintiff- Appellant Danielle Markou.

          Before: KEARSE, POOLER, and WESLEY, Circuit Judges.

          POOLER, CIRCUIT JUDGE:

         Plaintiff-Appellant Danielle Markou (née Lenzi) appeals from the March 9, 2018, judgment of the United States District Court for the Eastern District of New York (Sandra J. Feuerstein, J.) granting summary judgment for Defendants- Appellees Systemax, Inc. ("Systemax"), Richard Leeds, and Lawrence Reinhold (collectively, "Defendants") and dismissing Markou's claims under the Equal Pay Act of 1963, 29 U.S.C. §§ 206(d)(1), 215(a)(3) (the "EPA"), Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e-2(a)(1), 2000e-3(a) ("Title VII"), the Pregnancy Discrimination Act of 1978, id. § 2000e(k) (the "PDA"), [2] the whistleblower protections of the Consumer Product Safety Improvement Act of 2008, 15 U.S.C. § 2087 (the "CPSIA"), and related provisions of the New York State Labor Law and New York State Human Rights Law ("NYSHRL").

         Markou claims, in sum and substance, that Defendants paid her less than they would have if she were a man, retaliated against her when she raised concerns about her disparate pay and possible Consumer Product Safety Act violations, and fired her because she was pregnant. The district court held that Markou had failed to establish a prima facie case for each of her claims. Because we conclude that there was sufficient evidence to support a prima facie case for Markou's PDA and Title VII claims, but insufficient evidence to support her CPSIA whistleblower retaliation claim, we vacate in part the judgment of the district court and remand for further proceedings.[3] We write to clarify that, to establish a prima facie pay discrimination claim under Title VII, a plaintiff need not first establish an EPA violation-that is, that she performed equal work but received unequal pay. Rather, all Title VII requires a plaintiff to prove is that her employer "discriminate[d] against [her] with respect to [her] compensation . . . because of [her] . . . sex." 42 U.S.C. § 2000e-2(a)(1). Moreover, we have not yet had occasion to determine what framework applies to CPSIA whistleblower retaliation claims and now adopt the framework applicable to Sarbanes-Oxley Act of 2002 whistleblower retaliation claims, 18 U.S.C. § 1514A(a).

         BACKGROUND

         I. Factual Background

         We draw the following factual background from the summary judgment record viewed in the light most favorable to Markou, the non-moving party. See, e.g., Mitchell v. City of New York, 841 F.3d 72, 75 (2d Cir. 2016).

         A. Markou's Compensation

         On January 22, 2008, Markou accepted a position at Systemax as Director of Risk Management. At the beginning of 2011, Systemax promoted her to Vice President of Risk Management and raised her salary. In March of 2011, [4] Markou met with Reinhold-Systemax's CFO, to whom Markou reported directly-to discuss her new role and to ask about her raise. She was surprised to learn that the raise had already gone into effect because it was so modest that she had not noticed it in her paycheck. Markou told Reinhold that she "was concerned that [she] wasn't paid relative to [her] peers" and that she "wanted to be treated similarly to the males." App'x at 423. When Reinhold failed to follow up, Markou contacted Leeds, Systemax's chairman and CEO. In August of 2011, following Markou's conversation with Leeds, Systemax gave Markou a more substantial salary increase. Systemax subsequently raised Markou's salary again in 2012 and 2013.

         These pay raises notwithstanding, Systemax paid Markou significantly less than other, male department heads who reported to Reinhold. In fact, while Systemax (with limited exception) paid Markou's male executive-level peers salaries that exceeded the market rate for their respective positions, it paid Markou at a below-market rate.[5] For example, in 2013, Systemax paid Markou $191, 000, while the benchmark salary for her position was $218, 200-a $27, 200 difference. In contrast, Systemax paid Benjamin White, Vice President of Internal Audit, $262, 000-$32, 300 more than the $229, 700 benchmark salary for his position; it paid Thomas Axmacher, Vice President and Controller, $308, 000- $40, 700 more than the $267, 300 benchmark salary for his position; it paid Robert Baker, European Controller, $288, 000-$13, 100 more than the $274, 900 benchmark salary for his position.[6]

         Markou continued to raise concerns about pay disparity throughout her tenure at Systemax. For example, in January of 2013, she sent Reinhold an email outlining her achievements at the company and expressing her hope that they "put [her] on par with [her] peer group on the management team and that [her] pay [would be] commensurate." App'x at 130-31. More generally, according to Leeds, Markou "complained all the time" about her pay. App'x at 389.

         B. The Whistleblower Email

         On March 29, 2013, Markou sent an email to Leeds raising two relevant concerns. The first related to staffing issues that the resignation of another Systemax employee, Robert Wagner, had created. Systemax had hired Wagner to handle safety and workers' compensation matters, but Wagner left Systemax because the company began requiring him to also work on product compliance matters. Markou explained that, since Wagner resigned, there was no "product compliance since there is no one to man the function." App'x at 143. She further noted that, although Systemax had authorized her to hire two part-time employees at $70, 000 each to replace Wagner, that was an insufficient salary to attract prospective employees for the safety and product compliance positions.

         The second concern Markou raised in her email to Leeds related to her compensation-a concern that Markou felt Systemax was inadequately addressing. She wrote to Leeds, "Relative to my peer group as an executive, I would like to be an 'Executive Officer' under the SEC and paid similar to my peers in NY - Tom, Ben, Curt, etc. . . . More than the title, I would like my pay to be more comparable." App'x at 144.

         Although Markou asked Leeds not to share her email with anyone, Leeds forwarded it to Eric Lerner, Systemax's General Counsel, who then forwarded it to Reinhold. In response, Reinhold called Markou in for a meeting on April 9, 2013. During that meeting, according to Markou, Reinhold then told her that she was "basically demoted, reporting to Lerner" instead of Reinhold, and that, "if [she] left the office for any reason, even to get a coffee, [she] had to take vacation time," which was "unlike any male peer in the company." App'x at 480. Reinhold memorialized this conversation in an email, which added the requirements that Markou be in the office from 8:00 a.m. to 6:30 p.m. each day and that she give Lerner and Reinhold advance notice if she were to contact Leeds again.

         C. The California Trip Expense Report

         From April 19 to April 24, 2013, Markou traveled to Los Angeles, California, to attend a risk management conference. The conference began on Sunday, April 21. Markou had originally planned to fly from New York to Los Angeles on Saturday, April 20. However, she later arranged to arrive a day earlier so she could meet with insurance brokers and carriers before the conference began. Reinhold personally approved both the original and revised itineraries. That was consistent with two previous trips Markou had made to California for which Reinhold had approved Markou to travel a day early.

         On May 20, 2013, Markou submitted her expense report for the trip. The next day, Reinhold instructed her to revise the expense report "to allocate hotel and rental car charges between personal (2 days) and business as RIMS [the risk management conference] did not start until Sunday night." App'x at 174. Markou responded by explaining to Reinhold that she had traveled a day early because she "was going to try to meet with people on Saturday night (brokers, carriers)," but that, because "many of [her] contacts flew in on Sat[urday] night or Sunday[, ] . . . it didn't work out." App'x at 174. When Reinhold told her that she should have therefore changed her travel plans, Markou further explained that it would not have been possible for her to do so.

         Reinhold responded on May 22, "I did not really want to forensically examine your expense report but there is only so much BS tha[t] I can deal with. This is the end of this email trail and this issue as far as I am concerned." App'x at 172. Reinhold did not believe Markou's assertion that she was not able to change her itinerary back to her original schedule. He also noted the 322 miles Markou had put on her rental car and opined that Markou must have taken a personal road trip during the weekend before the conference began. He concluded, "Bottom line - the first two days of hotel and rental car are personal. Adjust the report." App'x at 172.

         When Reinhold was unwilling to discuss the matter further in person, Markou met with Lerner. During that May 31, 2013, meeting, Markou also disclosed to Lerner that she was pregnant.

         On June 10, 2013, Markou made another attempt to persuade Reinhold to approve her expense report. She again reiterated that she "went a day earlier to accommodate" meetings with insurance brokers and carriers, that she told those brokers and carriers that she would be available to meet on Saturday and Sunday, and that the meetings did not happen "due to logistics of Los Angeles." App'x at 176. She added that the trip extension was not for personal reasons, explaining that she "would have rather have been home than traveling alone." App'x at 177. She also informed Reinhold that she was pregnant: "I also was sick with morning sickness and complete exhaustion from my first trimester of pregnancy. The last thing I cared about doing was extending a business trip." App'x at 177.

         In response, Reinhold told Markou that he would reconsider his decision if Markou provided "[c]ontemporaneous emails from brokers and carriers (that are not NYC-based) that set up specific meetings with you for business purposes on that Friday night or Saturday morning," as well as emails with those brokers and carriers showing that they had canceled those meetings shortly before they were scheduled to take place. App'x at 176. Reinhold also required Markou to submit contemporaneous emails with Systemax's travel agent showing that Markou "attempted to change [her] outbound flight immediately upon learning the meetings were canceled," but that no flights were available on Sunday. App'x at 176.

         Markou responded by providing what documentation she could gather to meet Reinhold's request. She also reiterated that, at the time of her trip, she was not feeling well because of her pregnancy and would have rather been home than traveling to California for business.

         D. Internal Audit and Termination

         Dissatisfied with Markou's response, on June 13, 2013, Reinhold asked White, Systemax's Vice President of Internal Audit, to conduct an internal audit of Markou's expense report. Such an audit into an expense report was the first of its kind at Systemax. Although the audit started with a circumscribed scope, White, for reasons the record does not reveal, expanded it to include a review of Markou's emails and an investigation into other possible violations of corporate policy.

         On or about June 18 and 19, 2013 and while the internal audit was underway, Lerner placed into Markou's personnel file several emails and a memorandum, which allegedly showed that Markou's job performance was subpar. Before ...


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