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GAUL v. ZEP MANUFACTURING COMPANY

May 25, 2004.

KAREN LEE GAUL
v.
ZEP MANUFACTURING COMPANY, et al.



The opinion of the court was delivered by: HERBERT HUTTON, District Judge

MEMORANDUM AND ORDER

Presently before the Court are Defendant Acuity Specialty Products Group, Inc.'s d/b/a Zep Manufacturing Company Motion for Summary Judgment (Docket No. 40) and Plaintiff Karen Lee Gaul's response thereto (Docket No. 51).

I. BACKGROUND*fn1

  This suit concerns the alleged discriminatory employment actions against Karen Lee Gaul ("Gaul") by Acuity Specialty Products Group, Inc. d/b/a Zep Manufacturing Company ("Zep") and National Service Industries, Inc. ("NSI").

 A. National Service Industries, Inc.

  NSI is a corporation formed in Delaware and maintains its principal place of business in Georgia. From the start of Gaul's employment with Zep in August of 1994 until 1996, NSI was qualified to do business in Pennsylvania and Zep was a wholly-owned subsidiary of NSI.

  In 1996 NSI was restructured. As part of its corporate restructuring, NSI withdrew as a corporation qualified to do business in Pennsylvania. It transferred all of its interest in Zep to a new subsidiary named National Service Industries, Inc., a company incorporated in Georgia with is principal place of business in Georgia ("NSI-Georgia"). As a result, Zep became a subsidiary of NSI-Georgia which in turn was a wholly owned subsidiary of NSI.

  In August 2001 NSI underwent another corporate restructuring. NSI spun off a number of companies, including Zep, into a new corporation known as Acuity Specialty Products Group, Inc. ("Acuity"). According to NSI, Zep is a wholly owned subsidiary of Acuity since September 1, 2001. Additionally, on November 15, 2001, NSI-Georgia ceased to exist and withdrew is qualification to do business in Pennsylvania.

 B. Gaul's Employment with Zep

  Zep is a manufacturer and supplier of industrial and institutional maintenance and sanitation products. On August 22, 1994, Gaul was hired as a sales representative for Zep's Philadelphia branch under the supervision of Joseph Rotondi ("Rotondi"). Gaul performed well during her first year and received the 1995 "Rookie of the Year" award for having the highest sales of any first-year representative in Zep's mid-Atlantic region. In April 1995 Gaul was given the additional responsibility of working as a Field Coach for other sales representative. In 1996 Gaul was promoted to Accelerated Field Sales Manager, a position which included both sales and management duties.

  Gaul made it to clear to her supervisors that she was interested in advancing to the position of Branch Sales Manager ("BSM"). According to Gaul, at the time of her eligibility to become a BSM, Rotondi repeatedly requested for Gaul to be promoted but those requests were denied by two of Zep's vice-presidents, Bill Buchman ("Buchman") and Alien Soden ("Soden"). In denying her the promotion, Soden allegedly stated that "women attract the wrong kind of candidates and will not make good managers." Joseph Rotondi Aff. ¶ 13 (Docket No. 52, Ex. 3). When Gaul asked Buchman why she was not being promoted, Buchman allegedly said, "When are you going to give up this craziness, and just get barefoot and pregnant?" Karen Gaul Aff. ¶ 58 (Docket No. 52, Ex. 2).

  In June 1998 Gaul was finally promoted to BSM of Zep's Philadelphia branch. As BSM Gaul's responsibilities included (1) hiring, training, retaining and developing new sales representatives; (2) working with and developing veteran sales representatives; (3) working with sales representatives in the field; (4) helping representatives increase their sales; and (5) developing the members of her team into future managers. Based on Gaul's performance as a BSM for fiscal year ("FY") 1999, she received the National Branch Sales Manager of the Year award.*fn2

  In the spring of 1999, Zep had an opening for a District Sales Manager ("DSM") for the mid-Atlantic District, which encompasses the Philadelphia and Washington, D.C. branches. Gaul expressed an interest in the position to Richard Reisig ("Reisig"), the Division Sales Manager for the Northeast Division. Reisig allegedly responded by asking her why she did not stay home and have kids and just be a sales representative without management responsibilities. Reisig interviewed male employees for the DSM position in an office setting. In contrast, he interviewed Gaul in a car while she drove him to New Jersey.

  In July 1999, Ethan Powers ("Powers") was promoted to the DSM position and became Gaul's direct supervisor. According to Powers, Gaul's primary responsibility was to grow the sales revenues of the Philadelphia branch by hiring, training, and developing new sales representatives, and helping veteran representatives grow their business. Gaul was also responsible for the performance of all the sales representatives in Philadelphia, including those who did not report directly to her.

  In December of 2000, Gaul received her performance review for FY 2000. Gaul received a rating of "Exceeds Expectations" for achieving the sales representatives headcount goal, "Meets Expectations" for increasing revenue by 6% for the second six months of the fiscal year, and "Below Expectations" for not meeting the Branch sales revenue goals. Overall, Gaul was rated as "Meets Expectations." As a result, Powers gave Gaul a 3% raise. According to Zep, Gaul's performance weakened in the following months. Specifically, sales revenues for the Branch were below target every month and Gaul was not hiring additional sales representatives nor spending enough time in the field with the representatives. Powers contends that he met with Gaul several times during the spring of 2001 to discuss the Philadelphia branch's lagging revenues and the lack of new sales representative hired. Gaul then allegedly inquired about returning to a sales representative position because she felt it would allow her to spend more time with her terminally ill husband.

  According to Gaul, in the spring of 2001, Powers told her to hold off on hiring new sales representatives until July because of budget concerns. Gaul also disputes that she received any verbal warning about her performance and maintains that Powers in fact assured Gaul that she was doing well. Moreover, Gaul contends that she merely inquired about the possibility of taking on a different job in the event she needed to work fewer hours. Gaul denies that she told Powers she wanted to return to the sales representative position. At the same time, Gaul spoke with James Logan ("Logan"), Direction of Human Resources and Labor Relations, to relate her concerns that Reisig may be treating her differently because she was a woman.

  Gaul was demoted on August 29, 2001 to the position of Field Sales Manager ("FSM"). William Aimis ("Aimis") replaced Gaul in the BSM position. According to Zep, Powers decided to demote Gaul based on (1) her failure to meet the Philadelphia Branch's sales revenue and profitability targets for two consecutive fiscal years and (2) Gaul's failure to fulfill expectations with respect to hiring, retaining, and developing new sales representatives. On August 30, 2001, Gaul received a memorandum from Powers in which he stated that the reason for her demotion was because of the sales results for fiscal year 2001. No other factors were mentioned.

  Gaul believes that the decision to demote her was made jointly by Powers, Reisig, Logan, James Piva, Northeast Division Operations Manager, and Sam Daniels, the most senior sales executive at the time. Gaul notes that while Zep had a policy of warning employees about their poor performance prior to taking an adverse action, Gaul was demoted without warning and without a chance to improve.

  On September 6, 2001, Gaul turned down the FSM position and asked to be reclassified as a sales representative. On September 12, 2001, Gaul received a memorandum from Powers regarding her compensation for the sales representative position. Unlike the initial offer of employment for the FSM position, the memorandum specifically required Gaul to sign a release waiving any claims arising out of her employment with Zep. Gaul refused to sign the release after consulting with her attorney. On September 27, 2001, Gaul received a letter from Logan. The letter stated that if Gaul failed to report to work on October 1, 2001, Zep will take the position that Gaul no longer wished to work for the company. Gaul reported to work on that day but was told to return home after she refused to sign the September 12, 2001 employment agreement.

  From September 2001 to November 2001, Gaul believed she was no longer employed by Zep and was therefore entitled to three months of severance pay according to her 1998 BSM Employment Agreement. She also filed for unemployment compensation. Zep initially maintained that Gaul was not entitled to the severance pay because she was demoted, and not terminated. Zep later revised its position and paid Gaul the three months' severance pay. Additionally, after learning that Gaul filed for unemployment compensation, Logan wrote to the Unemployment Bureau accusing Gaul of fraud. He later stated that he had been "overzealous. " Gaul in turn withdrew her claim for unemployment once she was paid.

  On November 26, 2001, Gaul filed a charge of gender discrimination with the Pennsylvania Human Rights Commission ("PHRC").

  On December 1, 2001, Gaul signed a Sales Representative's Exclusive Account Agreement with Zep and returned to work as a sales representative in the Philadelphia branch on December 10. The Agreement required Gaul to sell $50,000 after six months, $75,000 after nine months, and $100,000 after one year in exchange for receiving a minimum monthly compensation of $6400 for one year. In comparison, other new representatives at Zep were required to sell $28,000 in their first six months. During the next few months, Gaul failed to meet her established sales goals. Gaul alleges that she did not receive any business leads or book of business, even though substantial business was given to male employees who had been demoted. Gaul also alleges that she did not receive any sales support from Aimis, her supervisor. On August 26, 2002, Powers decided to stop paying Gaul her minimum monthly ...


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