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Cunningham v. Penn National Holding Corp.


February 2, 2010


The opinion of the court was delivered by: Judge Conner


Plaintiff Myra Cunningham ("Cunningham") brings this action alleging that defendant Pennsylvania National Mutual Casualty Insurance Company*fn1 ("Penn National") discriminated against her on the basis of race while she served as one of the company's senior raters. Presently before the court is defendant's motion (Doc. 14) for summary judgment. For the reasons that follow, defendant's motion will be granted in part and denied in part.

I. Statement of Facts*fn2 and Procedural History

On November 8, 1999, Penn National hired Cunningham, an African-American female, as a commercial rater. (Doc. 16 ¶ 2; Doc. 25 ¶ 2; Doc. 1 ¶ 16; Doc. 3 ¶ 16). Cunningham was promoted to the position of senior rater in 2002. (Doc. 16 ¶ 5; Doc. 25 ¶ 5). Cunningham alleges that she is paid less than all of the other senior raters, who are Caucasian, and less than many of the raters, most of whom are Caucasian, (Doc. 1 ¶ 21), and she contends that she receives lower pay as a result of her race, (Doc. 1 ¶ 33). Penn National argues that Cunningham's earnings have been affected by performance issues*fn3 and by the fact that she had less than one year of industry experience before she began to work for Penn National. (See Doc. 15 at 17-18; see also Doc. 16 ¶ 3; Doc. 25 ¶ 3.)

In February 2007, Penn National posted an opening for a newly-created supervisory position, called Manager Centralized Audit & Agents Umbrella Processing. (Doc. 16 ¶¶ 50-51; Doc. 25 ¶¶ 50-51). Cunningham and other individuals applied for the position. (Doc. 16 ¶ 52; Doc. 25 ¶ 52). Penn National ultimately awarded the position to another individual, Michelle Hathaway ("Hathaway").

(Doc. 16 ¶¶ 52, 55; Doc. 25 ¶¶ 52, 55). Hathaway is Caucasian. (Doc. 1. ¶ 31; Doc. 3 ¶ 31). Cunningham claims that Penn National denied her the promotion on the basis of her race. (Doc. 1 ¶ 34).

Cunningham filed the present action on April 1, 2008. She claims that Penn National engaged in unlawful race-based discrimination, in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e to 2000e-17, and 42 U.S.C. § 1981. (See Doc. 1). Penn National filed a motion for summary judgment (Doc. 14) pursuant to Rule 56(c) of the Federal Rules of Civil Procedure. The parties have fully briefed these issues, which are ripe for disposition.

II. Standard of Review

Through summary adjudication the court may dispose of those claims that do not present a "genuine issue as to any material fact" and for which a jury trial would be an empty and unnecessary formality. See FED. R. CIV. P. 56(c). The burden of proof is upon the nonmoving party to come forth with "affirmative evidence, beyond the allegations of the pleadings," in support of its right to relief. Pappas v. City of Lebanon, 331 F. Supp. 2d 311, 315 (M.D. Pa. 2004); FED. R. CIV. P. 56(e); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). This evidence must be adequate, as a matter of law, to sustain a judgment in favor of the non-movant on the claims. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250-57 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-89 (1986); see also FED. R. CIV. P. 56(c), (e). Only if this threshold is met may the cause of action proceed. Pappas, 331 F. Supp. 2d at 315.

III. Discussion

Cunningham alleges that Penn National subjected her to discriminatory treatment because of her race, thereby violating Title VII*fn4 and 42 U.S.C. § 1981.*fn5 Federal courts use the three step burden-shifting analysis established in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802 (1973), to analyze claims brought under both statutes.*fn6 See Pamintuan, 192 F.3d at 385.

Under McDonnell Douglas, the first step requires a plaintiff to establish a prima facie case of discrimination by showing that (1) she is a member of a protected class, (2) she was qualified for the position he held or sought, (3) she suffered an adverse employment action, and (4) the circumstances of the adverse employment action give rise to an inference of discrimination.*fn7 Johnson v. Keebler-Sunshine Biscuits, Inc., 214 F. App'x 239, 241-42 (3d Cir. 2007); Connors v. Chrysler Fin. Corp., 160 F.3d 971, 974 (3d Cir. 1998). Once the prima facie case is established, the defendant bears a burden of production to articulate some "legitimate, nondiscriminatory reason" for the plaintiff's treatment. Iadimarco v. Runyon, 190 F.3d 151, 157 (3d Cir. 1999) (citing McDonnell Douglas, 411 U.S. at 802); Keller v. Orix Credit Alliance, 130 F.3d 1101, 1108 (3d Cir. 1997). If the defendant meets its burden, then the plaintiff must "prove by a preponderance of the evidence that the legitimate reasons offered by the defendant are merely a pretext for discrimination." Johnson, 214 F. App'x at 241-42. The court now inquires into the application of the above-described framework to the action sub judice.

A. Plaintiff's Prima Facie Case

The undisputed facts show that Cunningham is a member of a protected class based on her race. (Doc. 1 ¶ 16; Doc. 3 ¶ 16). In addition, Penn National does not dispute that Cunningham had the necessary qualifications for the position she held and the promotion she sought. (See Doc. 15 at 8-12; Doc. 27 at 3). Thus, Cunningham has met the first two prongs of the prima facie case. Penn National also concedes that it subjected Cunningham to an adverse employment action when it declined to select her for a promotion. Regarding Cunningham's claim of unequal pay, however, Penn National contends that Cunningham has not suffered an adverse employment action. The parties also dispute whether the circumstances of the instant case support an inference of discrimination. The court will address these issues seriatim.

1. Adverse Employment Action

With respect to her claim that Penn National wrongfully denied Cunningham a promotion when it hired another individual for the management position she sought, there is no doubt that Cunningham experienced an adverse employment action. It is textbook law that failure to promote constitutes an adverse employment action, see Burlington Indus. v. Ellerth, 524 U.S. 742, 761 (1998) ("A tangible employment action constitutes a significant change in employment status, such as . . . failing to promote . . . ."), and Penn National does not argue to the contrary, (see Doc. 15 at 13 n. 4).

Penn National contends, however, that Cunningham has failed to show an adverse employment action with regard to her claim that Penn National paid her less than it paid her colleagues. Apparently presuming that maintaining a disparity in pay is not an adverse employment action, Penn National presents no argument or authority on that point. Instead, Penn National argues that Cunningham cannot rely on her annual performance evaluations, because they do not constitute adverse employment actions. (Doc. 15 at 14-15). The court need not decide whether the evaluations qualify as adverse employment actions, however, because it concludes that "paying an individual a lower salary for discriminatory reasons can be an adverse employment action." Sherrod v. Phila. Gas Works, 57 F. App'x 68, 73 (3d Cir. 2003) (citing Stanziale v. Jaraowsky, 200 F.3d 101, 105 (3d Cir. 2000)). The court will therefore turn to the final element of plaintiff's prima facie case: whether the circumstances give rise to an inference of discrimination.

2. Inference of Discrimination

The "precise elements of a plaintiff's prima facie case may vary with the particular circumstances." Waldron v. SL Indus., 56 F.3d 491, 494 n.3 (3d Cir. 1995) (citing, inter alia, McDonnell Douglas, 411 U.S. at 802 n.14). Accordingly, a plaintiff can satisfy the fourth element of a prima facie case in a variety of ways.*fn8 A plaintiff could establish an inference of discrimination by showing "a rejection of plaintiff accompanied, or followed by, a filling of the job with a person not belonging to the protected category." Olson v. GE Astrospace, 101 F.3d 947, 951 (3d Cir. 1996). Cunningham has shown that she was rejected for the position of Manager Centralized Audit & Agents Umbrella Processing, and that Penn National filled the job with a Caucasian person. (Doc. 1 ¶¶ 29, 31; Doc. 3 ¶¶ 29, 31). Thus, she has established a prima facie case with respect to her complaint that Penn National failed to promote her to that position. This method of proof is inapposite to Cunningham's claim of unequal pay, however, and the court will therefore examine whether she can establish a prima facie case on that claim through another method.

An inference of discrimination will arise where the plaintiff was "treated differently than similarly-situated, non-protected employees." Johnson, 214 F. App'x at 242. Similarly-situated employees are those who "have dealt with the same supervisor, have been subject to the same standards and have engaged in the same conduct without such differentiating or mitigating circumstances that would distinguish their conduct or the employer's treatment of them for it." Ogden v. Keystone Residence, 226 F. Supp. 2d 588, 603 (M.D. Pa. 2002); see also Red v. Potter, No. 05-5256, 2006 WL 3349563, at *2 (3d Cir. 2006) (stating that "in order to show that an employee is 'similarly situated,' all of the relevant aspects of employment need to be nearly identical"). In the instant case, when viewing the evidence in the light most favorable to Cunningham, the nonmoving party, the evidence is sufficient to require a finder of fact to "resolve the parties' differing versions of the truth at trial." Anderson, 477 U.S. at 249 (quoting First Nat'l Bank v. Cities Serv. Co., 391 U.S. 253, 289 (1968)).

Specifically, the evidence shows that Cunningham's salary was lower than the salaries of most of Penn National's Caucasian raters and senior raters. Indeed, that fact is beyond dispute. (See Doc. 1 ¶¶ 22-28; Doc. 3 ¶¶ 22-28). Penn National argues that the higher-paid employees were not similarly situated to Cunningham.*fn9

Penn National asserts that the employees listed in the complaint, who had higher salaries than plaintiff, also had more prior experience in the insurance industry, a longer tenure with Penn National, higher merit ratings on their performance reviews, or a combination of these circumstances. (See Doc. 1 ¶¶ 23-28; Doc. 16 ¶¶ 42-46; Doc. 25 ¶¶ 42-46). Nevertheless, the court cannot find as a matter of law that these individuals are not similarly situated to Cunningham.

Although Cunningham's prior experience and merit ratings differed from those of the Caucasian employees named in the complaint, it is not clear that those differences are relevant to the pay disparity of which Cunningham complains. The record does not clearly establish what factors were determinative in setting each employee's salary. The salaries of the other employees in question may have been determined by factors which Cunningham shared in common with them, rather than by factors that distinguished them from Cunningham. Moreover, despite the differences noted above, Cunningham may be entitled to a comparable salary on the basis of other factors.*fn10 Therefore, there is a factual dispute as to whether any of the Caucasian employees who received higher wages from Penn National were similarly situated to Cunningham in all relevant aspects.*fn11 Granting summary judgment at step one of the McDonnell Douglas analysis would be inappropriate, and the court will therefore proceed with its review of steps two and three.

B. Defendant's Legitimate Reason

The defendant's burden to prove a legitimate non-discriminatory reason is "relatively light." Johnson, 214 F. App'x at 242-43. The defendant is only required to prove that its actions could have been motivated by the proffered legitimate, nondiscriminatory reason; proof of actual causation is not required. Iadimarco, 190 F.3d at 157. Penn National has satisfied this standard with respect to both of Cunningham's claims-failure to promote and discriminatory pay. Regarding its decision to promote another employee to the position Cunningham sought, Penn National argues that Hathaway, the individual selected for the position, was more qualified than Cunningham, because Hathaway had prior supervisory experience which Cunningham lacked. With regard to Cunningham's allegations of unequal pay, Penn National avers that it relies on a non-discriminatory system-the Hay Point System-to establish employee salaries. Under the Hay Point System, a specific salary range corresponds to each position. Penn National explains that "[w]here an employee falls within that range is determined by several factors including prior industry experience and job performance." (Doc. 15 at 17-18.) According to Penn National, Cunningham's low salary is attributable to the fact that she had relatively little industry experience when she was hired, and she has had performance issues during the course of her employment. These legitimate explanations for the defendant's employment actions suffice to shift the burden to plaintiff to show pretext.

C. Plaintiff's Evidence of Pretext

The plaintiff may demonstrate pretext by presenting evidence from which a reasonable factfinder could "either (1) disbelieve the employer's articulated legitimate reasons; or (2) believe that an invidious discriminatory reason was more likely than not a motivating or determinative cause of the employer's action."

Keller, 130 F.3d at 1108. In the case sub judice, Cunningham has failed to show pretext in relation to her claim of unequal pay, but she has supported her failure to promote claim with evidence that could establish pretext.

In support of her claim of discriminatory pay, Cunningham relies on her supervisor's admission that she exercised discretion in determining whether or not a mistake would count against an employee as an error and in setting the size of the raise an employee would receive within the Hay Point System's range. This evidence, without more, is inadequate to create a genuine issue of material fact as to whether Penn National paid Cunningham a lower salary because of her race. To conclude otherwise would dramatically "diminish traditional management prerogatives," which Title VII was not intended to do. See Tex. Dep't of Cmty. Affairs v. Burdine, 450 U.S. 248, 259 (1981) (quoting Steelworkers v. Weber, 443 U.S. 193, 207 (1979)). It is Cunningham's burden to present affirmative evidence that would be sufficient to sustain a judgment in her favor, and her evidence of supervisor discretion falls short of this standard. Therefore, Penn National is entitled to summary judgment on Cunningham's claim of unequal pay.

Cunningham has presented additional evidence which precludes summary judgment on her failure to promote claim. Specifically, she testified that Warren Dutka ("Dutka"), one of the individuals who conducted interviews for the management position she sought, informed her that she received the highest score*fn12 in nine out of ten categories upon which she was rated. (See Doc. 24 at 2, 6; Doc. 25, Ex. B at 84). She further contends that Dutka stated that Hathaway, the individual who ultimately filled the position, received the highest score in only one category. (Doc. 25, Ex. B at 84). Although the record contains evidence to the contrary,*fn13 the court must view the evidence in the light most favorable to Cunningham at this juncture. Under this standard, Cunningham's evidence is adequate to avoid summary judgment, because it creates a genuine dispute of fact as to whether Cunningham received the high ratings she claims to have received. If a reasonable jury found that she did, then it might further conclude that Penn National's stated reasons for awarding the position to Hathaway were pretextual. Even though the disputed fact does not conclusively demonstrate pretext,*fn14 it renders summary judgment inappropriate. The Supreme Court has held:

[T]he issue of material fact required by Rule 56(c) to be present to entitle a party to proceed to trial is not required to be resolved conclusively in favor of the party asserting its existence; rather, all that is required is that sufficient evidence supporting the claimed factual dispute be shown to require a jury or judge to resolve the parties' differing versions of the truth at trial.

Anderson, 477 U.S. at 248-49 (quoting First Nat'l Bank v. Cities Serv. Co., 391 U.S. 253, 288-89 (1968). The existence of this genuine dispute of fact prevents the court from granting summary judgment on Cunningham's failure to promote claim.

IV. Conclusion

Cunningham has come forward with sufficient evidence to make out a prima facie case of racial discrimination. She has also presented evidence from which a reasonable jury could conclude that Penn National's stated reasons for failing to promote her were pretextual. However, her evidence is inadequate to demonstrate that Penn National's system for setting employee wages are a pretext for discrimination. The court will therefore deny summary judgment on Cunningham's failure to promote claim, but it will grant summary judgment in Penn National's favor on her claim of discriminatory pay.

An appropriate order follows.


AND NOW, this 2nd day of February, 2010, upon consideration of defendant's motion for summary judgment (Doc. 14), and for the reasons set forth in the accompanying memorandum, it is hereby ORDERED that:

1. The motion for summary judgment (Doc. 14) is GRANTED in part and DENIED in part as follows:

a. The motion is GRANTED insofar as it seeks dismissal of plaintiff's claim of discriminatory pay.

b. The motion is DENIED in all other respects.

2. A revised pretrial and trial schedule shall issue by future order of court.

CHRISTOPHER C. CONNER United States District Judge

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