Date: 09-04-2015

Case Style: Jessica Brown v. Diversified Distribution

Case Number: 14-2685

Judge: Murphy

Court: United States Court of Appeals for the Eighth Circuit on appeal from the District of Minnesota (Hennepin County)

Plaintiff's Attorney: Tom Glennon

Defendant's Attorney: Jessica Roe and Pam Steinle

Description: Jessica Brown brought this action against her employer, Diversified
Distribution Systems, alleging that she was demoted and terminated in violation of
the Family and Medical Leave Act ("FMLA"), 29 U.S.C. §§ 2601–2654. She also
brought claims under two Minnesota employment statutes, Minn. Stat. § 181.933 and
Minn. Stat. § 181.961. The district court granted summary judgment for Diversified
on all claims. We affirm in part and reverse in part.
I.
Diversified is a supply chain company that acquires a variety of products for
commercial retailers and other businesses. In 2002 Brown began working for
Diversified as a customer service representative. She was later promoted to the
position of backup account executive. Such "backup" account executives support
account executives who are on sick leave or taking personal time. Unlike account
executives, backups rarely interact directly with retailers. Backup employees are not
assigned individual customer accounts, but they must develop familiarity with the
accounts and perform support roles including training and systems development.
Brown received excellent reviews as a backup account executive and displayed
particular aptitude for training other employees.
In 2009 Brown was promoted from her backup position to account executive.
Her promotion included three scheduled pay raises that were contingent on her
performance meeting expectations. In contrast to her strong performance in her
support role, Brown at first struggled as an account executive. Her performance
reviews show that she repeatedly made serious recordkeeping errors that embarrassed
Diversified and nearly caused major revenue loss. Because she was not meeting
expectations, one of her scheduled pay raises was delayed by six months.
Brown took twelve weeks of FMLA leave in 2010 after receiving a breast
cancer diagnosis. Her performance reviews noted that she had been unable to prove
she could succeed as an account executive before she went on leave, but her managers
wanted to give her another chance. Diversified provided Brown with additional
training after she returned from leave, and her reviews in 2011 noted improvement
in her work. In June 2011, Diversified was named "Vendor of the Year" by one of
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its clients, Urban Outfitters, and Brown was specifically congratulated for her work.
Brown's July 2011 performance review, the last one she received before going on
pregnancy leave, was positive, noting that she "knows the system well" and had
"identified the best way to work with each contact at each account." Although
Brown's reviews still identified areas for improvement, the company granted her the
delayed pay raise.
At the end of 2011 Diversified was purchased by a new owner, Jim Murphy.
Around the same time, Susan Kostecky became Brown's supervisor in the account
executive department. Murphy told his managers, including Kostecky, to rank their
employees and discharge the lowest performers. The summary judgment record
shows that on January 9, 2012, Kostecky met with Diversified's Human Resources
Director, Mary Louise Pirkl, to discuss employee performance and a proposed
reorganization of the account executive department. Kostecky and Pirkl determined
that Brown was underperforming as an account executive, and they discussed moving
her to a restructured backup account executive position. In contrast to the backup
role Brown had originally occupied, the new position included significant training
and account management responsibilities. It also offered pay and benefits equal to
those provided to account executives.
In late January 2012 before Kostecky had told Brown about the new backup
position, Brown informed Diversified that she was pregnant, that her pregnancy was
high risk, and that she needed to attend frequent medical appointments during the
work week. Diversified accommodated these appointments and allowed Brown to
work from home at night to make up time she missed, enabling her to avoid taking
FMLA leave before her child was born in June 2012. Given the high risk nature of
Brown's pregnancy, Pirkl claims to have told Kostecky that they should wait to tell
Brown about her reassignment until after she returned from leave to avoid causing
additional stress.
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In June 2012 Urban Outfitters again named Diversified its "Vendor of the
Year." According to the Urban Outfitters purchasing manager, Brown provided the
"highest level of service" in her role as account executive. Also around June of 2012
Chico's, one of Diversified's main retail clients, informed the company that it intended
to take its business elsewhere. As a result Murphy requested that his managers reduce
their payrolls by 10%. Kostecky sent Murphy a performance update on her team of
account executives which identified three underperforming employees: Brown, Zac
Litzow, and Muriel Otto. Management began discussing a number of options for
these underperforming employees, including termination, but they did not implement
a payroll reduction immediately.
Brown contacted Kostecky in August 2012 and asked to return to work early
from her FMLA leave. Because she had difficulty finding child care, she requested
permission to work from home for several weeks. Kostecky agreed and told Brown
for the first time that she was being reassigned to the new backup position. Brown
complained that she viewed the reassignment as a demotion. She returned to the
office in September 2012 after working from home for several weeks.
In early September 2012, Murphy sent an email to his managers asking them
to implement the 10% payroll reduction by the end of the month. Kostecky proposed
terminating Litzow and Otto, two of her three underperforming employees. Even
though Brown was also underperforming, her team had received an award for
exceptional customer service shortly before she took her maternity leave. Kostecky
proposed retaining Brown in the new backup role despite her underperformance as
an account executive.
On October 4, 2012 Brown complained to a human resources employee named
Rebecca Wolszon about her reassignment. She was also unhappy that the company
had asked her to stop working from home on Mondays, an arrangement she had
previously enjoyed. Wolszon testified in her deposition that she discussed Brown's
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FMLA rights with her and thereafter relayed Brown's concerns to Human Resources
Director Pirkl, who has denied knowledge of Brown's complaints. Brown also met
with Kostecky on October 4 or 5 and complained that she should have been returned
to her same job. Brown was fired on October 9, five days after complaining to
Wolszon. Kostecky later testified that she decided to fire Brown instead of Litzow
because he had a relationship with Talbots, an important retail client. According to
Kostecky, the Talbots connection only became apparent to her around the time that
Brown complained to human resources about her FMLA rights.
Later in October 2012, Brown submitted a written request to Diversified asking
for the "truthful reason for [her] termination" pursuant to Minn. Stat. § 181.933.
Brown thereafter received a letter from Diversified stating that she had been
terminated because the loss of the Chico's account had required the company to make
payroll reductions. Brown also submitted a written request for her personnel file
under Minn. Stat. § 181.961. All parties acknowledge that she then received at least
part of her personnel file, and no one disputes that she now has access to the complete
file.
In December 2012 Brown brought this action against Diversified alleging that
she had been demoted and terminated in violation of the FMLA. See 29 U.S.C.
§§ 2601–2654. She also alleged that Diversified had failed to provide her with the
truthful reason for her termination, in violation of Minn. Stat. § 181.933, and had
refused to turn over her complete personnel file within seven working days, in
violation of Minn. Stat. § 181.961. The district court granted summary judgment to
Diversified on all claims and denied Brown's request for permission to file a motion
for reconsideration.
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II.
We review a grant of summary judgment de novo. Woods v. DaimlerChrysler
Corp., 409 F.3d 984, 990 (8th Cir. 2005). Summary judgment is "appropriate if
viewing the record in the light most favorable to the nonmoving party, there are no
genuine issues of material fact and the moving party is entitled to judgment as a
matter of law." Id.
The FMLA "entitles an employee to twelve weeks of leave from work during
any twelve-month period if the employee meets certain statutory requirements."
Pulczinski v. Trinity Structural Towers, Inc., 691 F.3d 996, 1005 (8th Cir. 2012).
Two "subsections of the statute establish prohibited acts." Id. Section 2615(a)(1)
"makes it unlawful for an employer to 'interfere with, restrain, or deny the exercise
of or the attempt to exercise' rights provided under the FMLA," and section
2615(a)(2) "makes it unlawful for 'any employer to discharge or in any other manner
discriminate against any individual for opposing any practice made unlawful' by the
FMLA." Id. We have "recognized three types of claims arising under these two
subsections"—entitlement, discrimination, and retaliation claims—and Brown brings
all three types against Diversified. See id.
A.
Brown argues that Diversified denied her an entitlement under the FMLA by
failing to restore her to the account executive position she held before she went on
leave. An entitlement claim arises under § 2615(a)(1) when "an employer refuses to
authorize leave under the FMLA or takes other action to avoid responsibilities under
the Act." Pulczinski, 691 F.3d at 1005. An employee who takes FMLA leave "is
entitled, upon her return to work, to be restored to a position that is the same as, or
substantially equivalent to, the position that she occupied when the leave began."
Walker v. Trinity Marine Products, Inc., 721 F.3d 542, 544 (8th Cir. 2013); see 29
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U.S.C. § 2614(a)(1). When an employee claims the denial of a benefit to which she
is entitled under the FMLA, she "need not show that an employer acted with
discriminatory intent." Pulczinski, 691 F.3d at 1005.
Brown alleged that upon return from maternity leave she was not restored to
her position as account executive or to an equivalent position. Although Diversified
does not dispute for the purpose of its motion for summary judgment that Brown's
reassignment was "not equivalent" to her prior position, it argues that she does not
have an entitlement claim because she was not prohibited from taking FMLA leave.
Diversified misconceives Brown's claim. Brown does not claim that Diversified's
actions interfered with her ability to take maternity leave but rather that Diversified
failed to restore her to an "equivalent" position when she returned from leave. See
Walker, 721 F.3d at 544. Brown's claim that Diversified denied her an equivalent
position thus fits within the Pulczinski framework as a § 2615(a)(1) entitlement
claim. See 691 F.3d at 1005. Moreover, Brown's entitlement claim is distinct from
her discrimination claim, in which she alleges that Diversified took adverse action
against her because she took maternity leave. See id. at 1005–06. Based on the facts
in this record, we conclude that the district court erred in granting summary judgment
to Diversified on Brown's entitlement claim.
B.
Brown also argues that Diversified discriminated against her for exercising
FMLA rights when it demoted her to a backup position upon her return from leave.
Discrimination claims arise under § 2615(a)(1) "when an employer takes adverse
action against an employee because the employee exercises rights to which he is
entitled under the FMLA." Pulczinski, 691 F.3d at 1006. We have "considered
FMLA discrimination claims under the McDonnell Douglas burden-shifting
framework that is applied in Title VII cases." Id. at 1007. To establish a prima facie
case of FMLA discrimination, "an employee must show: (1) that he engaged in
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activity protected under the Act, (2) that he suffered a materially adverse employment
action, and (3) that a causal connection existed between the employee's action and the
adverse employment action." Id.
The parties agree that Brown engaged in protected activity by requesting
FMLA leave and that she suffered an adverse employment action when she was
moved to a backup role upon her return from leave. They do dispute whether a
"causal connection existed" between Brown's exercise of her right to take FMLA
leave and Diversified's decision to reassign her. Pulczinski, 691 F.3d at 1007. The
undisputed summary judgment record shows that Kostecky and Pirkl were
"contemplating the transfer before" Brown requested FMLA leave, which calls into
question any causal connection between the two. See Clark Cnty. Sch. Dist. v.
Breeden, 532 U.S. 268, 272 (2001) (per curiam). Brown argues, however, that she
can still show a causal connection because Kostecky and Pirkl had not made a final
decision to reassign her before she requested FMLA leave. Her argument fails
because the company's "proceeding along lines previously contemplated, though not
yet definitively determined, is no evidence whatever of causality." Id. We thus
conclude that this "record does not support a prima facie case of FMLA
discrimination." See Brown v. City of Jacksonville, 711 F.3d 883, 891–92 (8th Cir.
2013).
While Brown argues that Diversified has failed to produce any written business
records proving that Kostecky and Pirkl discussed transferring her before she
requested FMLA leave, she also has produced "no evidence to rebut" either Pirkl's
affidavit or Kostecky's deposition. See Stewart v. Rise, Inc., 791 F.3d 849, 862 (8th
Cir. 2015). Both of these witnesses stated that they had met to discuss Brown's
transfer on January 9, 2012, weeks before she requested FMLA leave. Brown claims
that the meeting never took place, relying on the testimony of two members of her
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account team, John Dodd and Rachel Jordahl. Both employees testified that they did
not know about the January 9th meeting, but both employees also testified that they
were not involved in the decision to reassign Brown. We conclude that their lack of
personal knowledge would prevent their testimony from establishing a triable issue
of fact. See, e.g., Camfield Tires, Inc. v. Michelin Tire Corp., 719 F.2d 1361, 1367
(8th Cir. 1983). The district court thus properly granted summary judgment to
Diversified on the discrimination claim.
C.
Brown also argues that Diversified retaliated against her by terminating her
five days after she had complained to human resources about whether her FMLA
rights had been violated. A retaliation claim arises under § 2615(a)(2) if an employer
takes "adverse action" against an employee who "opposes any practice made unlawful
under the FMLA—for example, if an employee complains about an employer's refusal
to comply with the statutory mandate to permit FMLA leave." Pulczinski, 691 F.3d
at 1005–06. Diversified admits that Brown has established a prima facie retaliation
case because she (1) engaged in protected activity when she complained that the
company had violated her FMLA rights by assigning her to a backup position when
she returned from leave, (2) suffered an adverse employment action when she was
terminated, and (3) established a causal connection between the protected activity and
the adverse employment action in that she was fired only five days after she
complained about FMLA violations. See Wierman v. Casey's Gen. Stores, 638 F.3d
984, 999 (8th Cir. 2011).
Since Brown has met her prima facie burden on her retaliation claim,
Diversified "must articulate a legitimate, non-retaliatory reason for its action."
Wierman, 638 F.3d at 999. Diversified asserts that it fired Brown because it had lost
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one of its biggest clients and needed to cut 10% of its payroll by terminating
underperforming employees. This "legitimate, non-retaliatory reason" causes the
burden to shift back to Brown to "identify evidence sufficient to create a genuine
issue of material fact" on whether Diversified's "proffered explanation is merely a
pretext for unlawful retaliation." Id. There are "at least two ways a plaintiff may
demonstrate a material question of fact regarding pretext." Torgerson v. City of
Rochester, 643 F.3d 1031, 1047 (8th Cir. 2011) (en banc). A plaintiff may show that
the employer's explanation is "unworthy of credence . . . because it has no basis in
fact," or "by persuading the court that a prohibited reason more likely motivated the
employer." Id.
Brown argues that the timing of her termination, which came just five days
after she had complained that her FMLA rights were violated, indicates that a
"prohibited reason more likely motivated" Diversified than a need to cut the payroll.
Torgerson, 643 F.3d at 1047. Although "temporal proximity standing alone" is
generally insufficient to establish pretext, viewed "within the context of the overall
record, [it] may directly support an inference of retaliation, and it may also affect the
reasonableness of inferences drawn from other evidence." Wallace v. DTG
Operations, Inc., 442 F.3d 1112, 1122 (8th Cir. 2006), abrogated on other grounds by
Torgerson, 643 F.3d at 1043, 1058; see Eliserio v. United Steelworkers of America
Local 310, 398 F.3d 1071, 1079–80 (8th Cir. 2005). Here, because only five days
elapsed between Brown's FMLA complaint and her termination, "temporal proximity
provides strong support for an inference of retaliatory intent." Wallace, 442 F.3d at
1122.
Brown also asserts that Diversified's stated reason for firing Brown instead of
Litzow was "unworthy of credence . . . because it has no basis in fact." Torgerson,
643 F.3d at 1047. Litzow had been scheduled for termination up until about the time
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Brown complained to Wolszon. Kostecky testified that she decided to fire Brown
instead of Litzow because he had a relationship with an important client, and that this
relationship only became apparent to her around the time that Brown met with human
resources. Brown nevertheless has identified evidence in the summary judgment
record indicating that Litzow had been removed from the Talbots account months
before Brown was fired, thus creating a dispute of fact. See Woods, 409 F.3d at 990.
We have previously concluded that where an employer has known about its
stated reason for taking adverse action against an employee "for an extended period
of time," but only acts after the employee engages in protected activity, the
employer's earlier inaction supports an inference of pretext. Wallace, 442 F.3d at
1122. Litzow's relationship with Talbots predated Kostecky's plan to fire him, and
Kostecky only offered Talbots as a reason for retaining Litzow after Brown had
complained to human resources. A "fact finder could reasonably infer" that if
Litzow's relationship with Talbots "alone had been the true motivation" for Brown's
termination, her discharge "would not have followed so closely on the heels" of her
FMLA complaint. Id. Brown has also pointed to evidence that calls into question the
credibility of Kostecky's testimony regarding the demotion and firing. We thus
conclude based on these factual disputes and the temporal proximity between Brown's
complaint and her termination that she has identified genuine issues of material fact
on whether "a prohibited reason, rather than the employer's stated reason, actually
motivated" her termination. Torgerson, 643 F.3d at 1047.
III.
Finally, Brown argues that the district court also erred in granting summary
judgment to Diversified on her two state law employment claims. She asserts that
Diversified violated Minn. Stat. § 181.961 by failing to provide her with a copy of her
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complete personnel record within seven days, but she does not appear to dispute that
she subsequently acquired the entire file. To avoid summary judgment on a
§ 181.961 claim, a plaintiff must produce some evidence of lack of compliance or
actual damages. See Carpenter v. Nelson, 101 N.W.2d 918, 921 (Minn. 1960); see
also Wilson v. Polaris, 1998 Minn. App. LEXIS 1220, at *3–6 (Minn. Ct. App. 1998).
Brown does not identify any records that have not been made available at this time.
Although Brown asserts she was damaged by forcing Diversified to comply with the
statute, she provides no evidence to support this claim. Under Minnesota law, "the
controlling principle governing actions for damages is that damages which are
speculative, remote, or conjectural are not recoverable." Leoni v. Bemis Co., 255
N.W.2d 824, 826 (Minn. 1977). Because the "record contains no proof beyond
speculation" that Brown was actually damaged by Diversified's § 181.961 violation,
the district court properly granted summary judgment to Diversified on this claim.
See Storage Tech. Corp. v. Cisco Sys., Inc., 395 F.3d 921, 928 (8th Cir. 2005).
Brown also maintains that Diversified violated Minn. Stat. § 181.933 because
it did not provide her with the truthful reason for her termination after she requested
it. Section 181.933 provides that an "employee who has been involuntarily
terminated may . . . request in writing that the employer inform the employee of the
reason for the termination." Minn. Stat. § 181.933. The employer must then "inform
the terminated employee in writing of the truthful reason for the termination." Id. An
employer is "only liable under § 181.933 to 'an employee injured by a violation of
section 181.932.'" Nichols v. Metro. Ctr. for Indep. Living, 50 F.3d 514, 517 (8th
Cir. 1995) (citing Minn. Stat. § 181.935). Since Brown never alleged a
"whistleblower retaliation claim" under § 181.932, see id. at 516, Diversified argues
that she also failed to prove a § 181.933 claim.
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Although Brown did not plead a § 181.932 claim, "a party may obtain relief on
a theory of recovery not expressly [pled] in the complaint but proved at trial, when
it is based on the same wrongful act that was [pled], and when the opposing party has
had fair notice." Morgan Distrib. Co. v. Unidynamic Corp., 868 F.2d 992, 995 (8th
Cir. 1989); see Oglala Sioux Tribe of Indians v. Andrus, 603 F.2d 707, 714 (8th Cir.
1979). The same act underlying Brown's FMLA retaliation claim would also support
a § 181.932 claim. The elements of a § 181.932 claim track the elements of an FMLA
retaliation claim, and "Minnesota courts apply the familiar three-part McDonnell
Douglas analysis in resolving claims of retaliatory discharge under § 181.932."
Nichols, 50 F.3d at 516. Furthermore, Brown pled a § 181.933 claim in her
complaint, so here the "opposing party has had fair notice." Morgan Distrib., 868
F.2d at 995. Given the similarity of FMLA retaliation and § 181.932 claims, we
conclude that a genuine issue of material fact exists on whether Brown's termination
letter provided the "truthful reason" for her discharge because a dispute similarly
exists on whether Diversified retaliated against her for exercising her FMLA rights.
See Minn. Stat. § 181.933. The district court thus erred in granting summary
judgment to Diversified on the § 181.933 claim.
IV.
For these reasons, we now
1. affirm the summary judgment granted to Diversified on Brown's
discrimination and Minn. Stat. § 181.961 claims,
2. reverse summary judgment in favor of Diversified on Brown's entitlement,
retaliation, and Minn. Stat. § 181.933 claims, and
3. remand for further proceedings not inconsistent with this opinion.
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BRIGHT, Circuit Judge, concurring.
I am pleased to concur in the majority opinion with brief comments for the
benefit of the district judge and the parties on further proceedings.
First, in my view, Brown’s supposed “discrimination” claim under the FMLA
was not properly raised on appeal. Brown provided perfunctory arguments regarding
a “discrimination” claim, but ultimately concluded her claim is properly construed as
an “entitlement” and not a “discrimination” claim. (App. Br. 39, 43-44, 47).
Therefore, I would affirm the district court’s dismissal of Brown’s discrimination
claim without further discussion. See Rotskoff v. Cooley, 438 F.3d 852, 854-55 (8th
Cir. 2006) (holding a failure to develop an issue in the briefs is equivalent to an
abandonment of the issue for failure to provide a reason for a contention).
Second, on remand, Brown’s “entitlement” claim is not governed by the
McDonnell Douglas burden-shifting framework. See, e.g., Smith v. Diffee Ford-
Lincoln-Mercury, Inc., 298 F.3d 955, 960 (8th Cir. 2002) (quoting King v. Preferred
Tech. Grp., 166 F.3d 887, 891 (7th Cir. 1999) (noting that when proving an
“entitlement” claim “ ‘[t]he intent of the employer is immaterial’ ”). Instead, Brown
is only required to show “she was entitled to the benefit denied”–here, restoration
following leave. See, e.g., Stallings v. Hussmann Corp., 447 F.3d 1041, 1050 (8th
Cir. 2006) (quoting Russell v. N. Broward Hosp., 346 F.3d 1335, 1340 (11th Cir.
2003). Here, when the facts are taken in the light most favorable to Brown, Brown
has shown a strong prima facie case.
Third, during the majority’s analysis of Brown’s “discrimination” claim, the
majority references an alleged discussion between Kostecky and Pirkl on January 9,
2012, asserting “[t]he undisputed summary judgment record shows that Kostecky and
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Pirkl were ‘contemplating the transfer before’ Brown requested FMLA leave.” (Maj.
Op. at 3, 8 (citation omitted)).
To the extent facts regarding the alleged January 9, 2012 discussion are
relevant to either Brown’s “entitlement” or “retaliation” claim, the testimony of both
Kostecky and Pirkl is subject to credibility findings by the jury as acknowledged by
the majority. (See id. at 11 (“Brown has also pointed to evidence that calls into
question the credibility of Kostecky’s testimony”); see also Torgerson v. City of
Rochester, 643 F.3d 1031, 1042 (8th Cir. 2011) (en banc) (quoting Reeves v.
Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150, 120 S. Ct. 2097, 147 L. Ed. 2d
105 (2000)) (“ ‘Credibility determinations, the weighing of evidence, and the drawing
of legitimate inferences from the facts are jury functions, not those of a judge.’ ”).
In particular, the following evidence undermines the credibility of both Kostecky and
Pirkl regarding the January 9, 2012 meeting:
1. Between January 9, 2012 and the date Brown informed Diversified she
would need FMLA leave, Brown was never told she would be moved to a
back-up position.
2. There is no written record that the January 9, 2012 meeting occurred, which
is uncommon for a company like Diversified.
3. It is unusual that Dodd (Brown’s “dotted-line” supervisor) and Jordahl
(Brown’s replacement) were not notified of Jordahl’s promotion prior to
Brown’s FMLA leave.
4. The evidence indicating Litzow was removed from the Talbots account
calls into question all of Kostecky’s testimony regarding the demotion and
firing of Brown.
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5. Urban Outfitter’s accolades indicating Brown provided the “highest level
of service” in her role as account executive undermines any indication that
in January 2012 Brown was “underperforming” as an account executive.

Outcome: For these reasons, we now
1. affirm the summary judgment granted to Diversified on Brown's
discrimination and Minn. Stat. § 181.961 claims,
2. reverse summary judgment in favor of Diversified on Brown's entitlement,
retaliation, and Minn. Stat. § 181.933 claims, and
3. remand for further proceedings not inconsistent with this opinion.

Plaintiff's Experts:

Defendant's Experts:

Comments: