Summary
finding that a higher salary based on an employee's prior work experience is valid
Summary of this case from Pierson v. Columbus McKinnon CorporationOpinion
01 Civ.5471 (HB)
January 22, 2002
OPINION ORDER
Plaintiff, a female marketing employee for a gaming industry company, sued her employers for violations of the Equal Pay Act, 29 U.S.C. § 206 (d) ("EPA"), fraud and breach of contract. Plaintiff moves for partial summary judgment and defendants cross-move for summary judgment on all of plaintiffs claims. For the following reasons, plaintiffs motion is DENIED. The defendants' motion is GRANTED, in part, and DENIED, in part.
I. FACTS
First, a note as to the parties. Defendant Park Place Entertainment Corp. ("Park Place") is a gaming industry conglomerate that owns and operates casinos under such names as Caesars, Bally's and Hilton. Defendant Benco, Inc. ("Benco") is a wholly-owned subsidiary and a marketing branch of Park Place. The defendant Joseph Somma ("Somma") is the manager of Benco's New York office.
In September 1997, William Kliska ("Kliska"), the assistant vice-president of the Beverly Hills office for Park Place, hired plaintiff Barrie Shieldkret ("Shieldkret") at an annual salary of $30,000 to work in the marketing department, where she was employed until June 2000. While the full extent of her duties in the Beverly Hills office is disputed, the essential nature of Shieldkret's work apparently included telemarketing, booking reservations, "comping" players and acting as a liaison between the company and its customers.
Caesars World, Inc. ("CWI") was the company that actually hired Shieldkret in 1997. However, Park Place concedes that it assumed all liabilities of CWI when it acquired it in December 1999. For our purposes here, I only refer to Park Place as the plaintiffs employer for her work in Beverly Hills.
A few months after hiring Shieldkret, Kliska hired Geoffrey Gregory ("Gregory") at an annual salary of $50,000 to also work in the marketing department of the Beverly Hills office. The parties dispute the full extent of Gregory's responsibilities. Shieldkret asserts that Gregory performed substantially the same work as she, while the defendants contend he was responsible for considerably more. What is certain, however, is that Gregory and Shieldkret earned drastically different salaries. From 1997 to 2000, Gregory's salary increased from $50,000 to over $92,000 while Shieldkret's never exceeded $35,000.
After relocating to New York in the summer of 2000, defendant Somma hired Shieldkret in January 2001 to work in Benco's New York office, where she has continued to work until the present day. Somma initially hired Shieldkret to work in an administrative capacity but she apparently also performed marketing duties, the import of which seem to have increased over time. The parties dispute the circumstances surrounding Shieldkret's hire, however. Shieldkret claims that Somma made certain oral representations to her during her job interview that formed the basis of an employment contract, and held out promises of advancement. Failure to keep those promises form the plaintiffs claims for breach of contract and fraud.
Prior to Shieldkret's employment in the New York office, Benco hired John Dutton ("Dutton") in May 1999 and John Ciccone ("Ciccone") in October 2000, both at higher salaries than Shieldkret's. As with Gregory, Shieldkret asserts that her job, despite her lower pay, was substantially the same as that of Ciccone and Dutton.
In June 2001, Shieldkret brought this action in which she alleges the defendants violated the EPA when they paid Gregory, Ciccone and Dutton higher salaries for performing substantially equal work.
Plaintiff filed an amended complaint in August 2001. I refer herein to the amended complaint as the "complaint."
Plaintiff moves for partial summary judgment contending that (1) defendant Park Place violated the EPA during her employment in the Beverly Hills office, (2) defendant Park Place's violation of the EPA was willful, and (3) Park Place is plaintiff's employer as defined under the EPA during her employment in Benco's New York office. The defendants cross-move for summary judgment with respect to all claims. Oral argument was held on the motions December 21, 2001.
Shieldkret additionally seeks summary judgement that CWI was her employer under the EPA when she worked in the Beverly Hills office and that Park Place is liable for any of CWI's violations as a result of its acquisition of CWI in 1999. Park Place has since conceded these arguments, which are therefore not addressed here.
II. DISCUSSION
A. Summary Judgment Standard of Review
A motion for summary judgment may not be granted unless the Court determines there is no genuine issue of material fact to be tried. Fed.R.Civ.P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-52 (1986). The moving party has the burden of demonstrating the absence of any genuine issue of material fact. See Adickes v. S.H. Kress Co., 398 U.S. 144, 157 (1970). A fact is material "if it might affect the outcome of the suit under the governing law," while an issue of fact is genuine "where the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Giordano v. City of New York, 2001 WL 1637383, at *5 (2d Cir. 2001). Furthermore, the court must "draw all factual inferences in favor of the party whom summary judgment is sought." Cronin v. Aetna Life Ins. Co., 46 F.3d 196, 202 (2d Cir. 1995).
B. Liability under the EPA
To prove liability under the Equal Pay Act, "a plaintiff must show that (i) the employer pays different wages to employees of the opposite sex; (ii) the employees perform equal work on jobs requiring equal skill, effort, and responsibility; and (iii) the jobs are performed under similar working conditions." Lavin-McEleney v. Marist College, 239 F.3d 476, 480 (2d Cir. 2001) (internal quotations and citations omitted). With respect to the second prong, the plaintiff "need not demonstrate that her job is identical to a higher paid position, but only must show that the two positions are substantially equal in skill, effort and responsibility." Id. (internal quotations and citations omitted) (emphasis added).
Essentially, the EPA promotes equal pay for equal work regardless of gender. There are certain statutory affirmative defenses expressly permitted to an employer. An employer is permitted to pay different wages to its male and female employees when the wage differentials are the product of "(i) a merit system; (ii) a seniority system; (iii) a system which measures earnings by quantity or quality of production; (iv) a differential based on any other factor other than sex." 29 U.S.C. § 206 (d). Further, an employer must prove that a factor with respect to the fourth affirmative defense has a legitimate business purpose and is not a mere pretext for discrimination. See Aldrich v. Randolph Central School District, 963 F.2d 520, 526-27 (2d Cir. 1992).
i. The Beverly Hills Office
While Shieldkret argues that her marketing work and duties for the defendants in the Beverly Hills office were substantially similar to Gregory's, the defendants assert that Gregory was imbued with a higher degree of responsibility that included formulating marketing plans with Kliska (Gregory Dep. 10:8-17) and performing collection work. (Kliska Dep. 29:15-21). Gregory's collection activity required him to leave the office and drive to collect and safeguard payments of up to $50,000 in cash from customers who owed money to the casino. (Kliska Dep. 81:8-14).
Additionally, the defendants argue that, even if Shieldkret and Gregory were found to have performed substantially similar work, their pay differential was based on legitimate business reasons other than sex, which primarily included (1) Gregory's greater prior experience, and (2) Gregory's higher market value. Both reasons fall under the fourth affirmative defense to the EPA. An employee's prior work experience can typically lead to better job performance, or at the very least, provide an employer with a reasonable expectation of increased productivity to warrant a higher salary. See Engelmann v. Nat'l Broad. Co. Inc., 1996 WL 76107, at *10 (S.D.N.Y. 1996) (stating for purposes of the fourth affirmative defense under the EPA that "an employee's past experience in a position makes him better able to do it in the future, and understandably justifies a higher salary than might be paid to a newcomer") (citing Christiana v. Metropolitan Life Ins. Co., 839 F. Supp. 248, 253 (S.D.N Y 1993)). Likewise, salary matching — payment of a higher salary to equal or exceed that of a prior job, or a competing offer — is a reasonable business tactic to lure or retain employees and justify a wage differential. See Engelmann, 1996 WL 76107, at *10 (citing Davidson v. Board of Governors of State Colleges and Univs. for Western Illinois Univ., 920 F.2d 441, 444-45 (7th Cir. 1990)).
The defendants argue that Gregory's higher salary was justified by his prior experience often years as the Director of Sales at the Hollywood Racetrack, and as an Account Executive at Xerox Corporation. (Gregory Dep. 62:1-5). During his work for Xerox, Gregory earned a base salary of $50,000, apparently known by Kliska at the time he offered Gregory the Park Place job. Additionally, during his employment with the defendants in May 1999, Gregory was offered a job by a competing marketing company at a higher salary than the $65,000 he was earning at the time. (Gregory Dep. 54:4-13). To match the offer, the defendants claim they raised Gregory's salary to $85,000.
In contrast to Gregory, Shieldkret claims her prior experience is derived from a Bachelors Degree in Hotel Management from the University of Nevada, Las Vegas and points to her studies in both marketing and the casino business. She additionally notes a previous job at the Mirage, another gaming facility in Las Vegas, where she marketed guests and hosted special events, and other various jobs in the casino industry, ranging from secretarial and administrative work to marketing duties.
While it may seem that Gregory and Shieldkret were in different stages of their respective careers, the full extent of their relevant past experiences, and the role it played in the defendants' determination of their respective salaries, presents a genuine issue of fact. Similarly, the parties' factual disputes as to the nature and similarities of the work performed by Gregory and Shieldkret, the productivity of each, and whether Gregory's collection work contributed to a substantial difference between their jobs, precludes summary judgment.
Since I find that a genuine issue of fact precludes a determination as to liability under the EPA, I need not reach the issue of whether the defendants acted willfully.
ii. The New York Office
The nature of Shieldkret's job in the New York office, as with her work in Beverly Hills, is similarly contested. The defendants claim that Shieldkret's job in the New York office was focused mostly on telemarketing, while Ciccone and Dutton worked more with customer development. The record, however, shows that all three were involved with telemarketing duties to some degree, although the extent of those duties is disputed.
The defendants additionally assert that Dutton and Ciccone had more extensive experience prior to their hire with Benco. The role that their prior experience played in Benco's determination of salaries is a genuine issue of fact, as is the similarity of their jobs with that of Shieldkret. I deny summary judgment with respect to plaintiffs EPA claims in the New York office.
iii. Park Place as Shieldkret's Employer
For purposes of the EPA, an employer includes "any person acting directly or indirectly in the interest of an employer in relation to an employee . . . ." 29 U.S.C. § 203(d).
The Second Circuit has adopted an "economic reality" test to determine who the employer is under the statute. See Carter v. Duchess Community College, 735 F.2d 8, 12 (2d. Cir. 1984). Under the economic reality test, an employer is one that has the power to (1) hire and fire the employees, (2) supervise and control employee work schedules or conditions of employment, (3) determine the rate and method of payment, and (4) maintain employment records. See Id. (noting that not one factor is dispositive). Additionally, these factors are considered under the "totality of circumstances." See Brock v. Superior Care, Inc., 840 F.2d 1054, 1059 (2d Cir. 1988).
Shieldkret claims that Park Place, during her employment in the New York office, exercised the power to hire and fire employees. She incorrectly points to the fact that Joseph Watson, who she names as a Park Place employee but who is actually, as defendants point out, a Benco employee, had such authority. Additionally, Shieldkret points to the fact that, upon her hire, she completed an employment application that asks "Can Park Place Entertainment contact your present employer," and contains other language — in the context of a boilerplate release form — that refers to Park Place as employer. (Shieldkret Dec. Ex. 1, PP00001-03). Further, Shieldkret notes that on other employment forms or documents she received, Park Place is also referenced, including (1) a memorandum that directed her to inform the lab at which she was to take her mandatory drug test that she was a "Park Place Entertainment new employee," (Shieldkret Dec. Ex. 1, PP00042), (2) a "Park Place Entertainment Corporation Ethics Statement," (Shieldkret Dec. Ex. 1, PP00032-39) and (3) a Park Place workplace harassment pamphlet. (Shieldkret Dec. Ex. 1, PP00043-44).
In response, Park Place explains that its name appears on certain employment forms and memoranda because its human resources department contributes administrative support to Benco in the context of(1) processing new hires on payroll systems and benefit programs, (2) providing new hires with employment policies and procedures, and (3) processing terminations. With respect to the more substantive and relevant decisions of employment, Park Place contends, and it seems clear from the record, that it maintains no involvement as to (1) establishing and classifying jobs at Benco, (2) selecting or hiring of Benco's staff (3) providing title changes, promotions, salary changes, or (4) terminating Benco employees. According to Park Place, Benco solely determines salaries and bonuses, and additionally the hiring and firing, of Benco employees, such as Shieldkret, who are below the level of assistant vice president.
Shieldkret's collection of circumstantial evidence, largely ministerial in nature, does little to refute Park Place's argument. While some of the Park Place documents that Shieldkret cites make reference to grounds for termination (e.g. for violation of the Park Place drug policy), the record strongly suggests that it was Benco that housed the discretion to make such decisions.
Therefore, while Park Place seems to maintain the employment records for Benco — thus satisfying the fourth prong of the economic reality test — Park Place's role as employer falls short under the other three factors of the analysis. The totality of circumstances shows that as a matter of economic reality, Park Place is not liable as an employer under the EPA with respect to Shieldkret's work in the New York Office. Summary judgment is granted for the defendants as to Count One of the complaint for defendant Park Place's violation of the EPA in New York. The defendant Benco, however, is not similarly insulated from liability for plaintiff's EPA claims with respect to the New York office.
C. The Fraud and Breach of Contract Claims
Shieldkret asserts claims in breach of contract and fraud in relation to oral representations allegedly made by defendant Somma at the outset of her employment in Benco's New York office. According to Shieldkret, Somma told her that (1) she would eventually move away from her administrative duties and become a full Marketing Executive, and (2) she would receive Dutton's list of customers and his office when he eventually left his job. Shieldkret claims that these promises were never kept.
To succeed in her fraud claim, Shieldkret must prove that (1) Somma made a representation, (2) as to a material fact, (3) which was false, (4) and known to be false by Somma, (5) that it was made for the purpose of inducing Shieldkret to rely upon it, (6) that Shieldkret rightfully did so rely upon it, (7) in ignorance of its falsity (8) to her injury.See Murray v. Xerox Corp. 811 F.2d 118, 121 (2d Cir. 1987) (citing Brown v. Lockwood, 432 N.Y.S.2d 186, 193 (2d Dep't. 1980)).
Notably, Shieldkret fails to allege an injury with respect to her fraud claim. She merely states that "Somma's false statements [caused] Plaintiff damages to be determined at trial." (Compl. ¶ 42). While Shieldkret may have relied on Somma's alleged misrepresentations when she accepted her job, or stayed in her position (Compl. ¶ 12), there is no indication that it was to her detriment — that she ever had a more attractive alternative. Shieldkret's failure to allege an injury naturally leads to a similar failure to show causation. In other words, there is no suggestion that, if not for Somma's representations, Shieldkret would not have accepted the Benco job. See Kaye v. Grossman, 202 F.2d 611, 614 (2d Cir. 2000) (noting that a fraud claim "may not rest on allegations of speculative or remote injury to the plaintiff; rather, the plaintiff must have suffered losses as a 'direct, immediate, and proximate result' of the defendant's misrepresentation").
Additionally, the record fails to indicate a sufficient ground to conclude that Somma possessed the requisite scienter. Shieldkret claims that Somma's fraudulent intent at the time of his alleged promises is demonstrated by the fact that "he knew . . . that he did not have the company's authority to make those promises." (Plts. Opp. Brf. at 24). Without more, plaintiffs assertion appears redundant vis a vis her breach of contract claim. See Telecom Int'l. America, Ltd., v. ATT Corp., 2000 WL 33650021, at *16 (2d Cir. 2000) ("[S]imply dressing up a breach of contract claim by further alleging that the promisor had no intention, at the time of the contract's making, to perform its obligations thereunder, is insufficient to state an independent tort claim.").
Summary judgment is granted for defendants on the plaintiffs fraud claim.
Summary judgment is denied however, there being a genuine issue of material fact with respect to Shieldkret's breach of contract claim. A determination of the extent and subject of her conversations with Somma presents the classic "he-said-she-said" scenario better left to the jury.
III. CONCLUSION
For the foregoing reasons, the plaintiffs motion is DENIED, and the defendants' motion is GRANTED as to Count One for violation of the EPA by Park Place in the New York Office, and Count Four for fraud. The defendants' motion is DENIED with respect to all other claims. The trial of this matter is set for February 21, 2002. The pretrial order, motions in limine, including any exhibit or deposition disputes, will be fully briefed with courtesy copies to chambers by February 15, 2002. Jury selection will begin at 9:30 a.m. on February 21, 2002, oral argument on any motions will follow.