Lenzi v. Systemax, Inc., No. 18‐979 (2d Cir. Dec. 6, 2019)

By Paul Mollica

Here’s another case of a judge not thinking like a juror: most fair-minded people would consider it evidence of pregnancy discrimination that a manager launched an audit and started putting negative reports in an employee’s file literally days after she announced her pregnancy. The district court judge did not get this, but the Second Circuit reverses and sends the case back for trial. The panel also addresses the standard for proving sex discrimination in pay under Title VII, outside of the “equal work” framework.

Lenzi v. Systemax, Inc., No. 18‐979 (2d Cir. Dec. 6, 2019): In 2011, Lenzi (also referred to as Markou in the opinion) was promoted to Vice President of Risk Management. She learned that while her salary was set at $27,200 below the benchmark for her title, several men were earning salaries at tens of thousands of dollars above benchmark.

She raised the issue of her pay in emails and meetings with management; one executive groused that she “complained all the time” about her pay. In 2013, after emailing an executive raising the issue once again, she was functionally demoted (reporting lower in the organization) and placed on a stricter attendance policy than her male peers.

Things came to a head in mid-2013, when Lenzi was challenged over a travel expense and ordered to repay some of her hotel and car rental bills, allegedly because she overstayed her trip. The following week, the plaintiff announced to her direct supervisor named Lerner that she was pregnant. She also explained to her bosses on June 10, 2013 that she was dealing with “morning sickness and complete exhaustion from [her] first trimester of pregnancy” during that trip, which caused her delay.

Three days later, on June 13, 2013, one of her bosses directed Systemax’s Vice President of Internal Audit to conduct an internal audit into Lenzi’s expense account. “Such an audit into an expense report was the first of its kind at Systemax.” Then “[o]n 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.” Her prior performance record had been solid. She was placed on administrative leave June 21, 2013. On June 26, 2013, plaintiff was fired, owing to the results of the audit.

Plaintiff filed suit alleging violations of the Equal Pay Act, Title VII, and New York and NYC law for pay discrimination; Title VII, state and city law for pregnancy discrimination and retaliation; and the Consumer Product Safety Improvement Act of 2008 (CPSIA), 15 U.S.C. § 2087, for whistleblowing. The district court granted summary judgment on all claims.

The Second Circuit reverses on the Title VII, state and local law claims. Regarding the pregnancy discrimination claim, the panel holds that there was enough evidence of temporal proximity between plaintiff announcing her pregnancy and her termination to imply a discriminatory motive: in the space of one month after disclosing her pregnancy, plaintiff was audited (which the company had never done before), she had negative write-ups placed in her personnel file, she was placed on leave and then fired.

The panel also holds, on the pay discrimination claim, that the district court erred in requiring the plaintiff to present under Title VII (and local law) the same prima facie case as she would under the Equal Pay Act, i.e., same establishment and jobs involving “equal skill, effort, and responsibility … performed under similar working conditions.” The court clarifies – despite contrary dicta in some prior cases – that “a Title VII plaintiff alleging a discriminatory compensation practice need not establish that she performed equal work for unequal pay.” It is enough to show that the employer set the employee’s pay because of sex, regardless of whether the employee can point to any comparable employees of a different sex.

Considering the entire record, the panel holds that Lenzi raises an inference that her salary was set because of sex. “Systemax paid Markou at a rate that was below market for her position. At the same time, it paid nearly all of Markou’s male executive peers above market rate for their respective positions” and these “differences permit an inference of discrimination.”

Adding to the raw difference in salary, one of the executives responsible for setting plaintiff’s pay – the Chief Financial Officer – allegedly made pervasive “graphic comments about his dating and sex life, made disparaging remarks about his ex‐wife, and ‘would comment on women’s bodies,'” including commenting on the way plaintiff (but not her male counterparts) dressed. The comments are deemed by the panel more than merely “stray remarks.”

The panel also holds that the plaintiff presented a genuine dispute of material fact on her Title VII (and local law) retaliation claim. The district court held that the plaintiff did not put the employer on notice that she was complaining about sex discrimination in pay. The panel holds that while her emailed memo merely complained about low pay relative to her “peers,” which might not have put the employer fully on notice of her complaint, plaintiff testified in meetings with the same executives, she verbally told them that she was specifically paid less than male executives. Thus, they were arguably on notice about discrimination covered by Title VII.

One other claim by plaintiff, though, fails on appeal. The CPSIA whistleblowing claim falls short on the prima facie case, because (the panel holds) she failed to show either a protected activity or that the employer had notice of such activity. Plaintiff sent an email to management complaining about the lack of a safety compliance person, yet nothing in her email “suggests that she was raising a concern that Systemax was violating any law at all.” Nor did her email “cite any particular consumer product safety law or regulation that Systemax was violating or even risked violating ….”