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·· Case 1:94-cv-00336-KAJ Document 439-3 Filed O3/11/2005 Page 1 pig 2 cfg
119 Fcd.Appx. 774 Pago I
119 Fcd.Appx. 774, 2005 WL 221534 (6th Cir.(Tcrm.)), 2005 Fccl.App. 0075N
(Cite as: 119 Fcd.Appx. 774, 2005 WL 221534 {6th Cir.{`I`cnn.)))
responsibilities; and
Briefs and Other Related Documents _ (3) denial of default judgment and sanctions
sought by employee was not sm abuse of discretion.
This case was not selected for publication in thc Affirmed.
Federal Reporter.
West Hcadnotcs
NOT RECOMIMIENDED FOR FULL-TEXT
PUBLICATION [1] Federal Civil Procedure (7:*2498
l70Ak2498 Most Cited Cases
Sixth Circuit Rule 28(g) limits citation to specific Genuine issues of material fact as to whether
situations. Please scc Rule 28(g) bafom citing in a cmploycc was terminated in retaliation for her
proceeding in a court in thc Sixth Circuit. If cited, a efforts to have curtain software development
copy mustbcscrvcd on other parties and thc Court. employees classified as non-cxcmpt precluded
summary judgment against hc: on hor claim of
Please usc FIND to look at the applicable circuit rctaljatory discharge under the Fair Labor Standards
court rule before citing this opinion. Sixth Circuit Act (FLSA). Fair Labor Standards Act of 1933, §
Rule 28(g). {FIND CTA6 Rule 28.) 15(a)(3), 29 U,S.C.A. § 2l5(a}(3).
[2} Federal Civil Procedure €`F¤°2497.1
United States Court of Appeals, l70Ak2497.1 Most Cited Cases
Sixth Circuit. Genuine issues of material fact as to whether an
CarolMCDANIEL, Plaintiff-Appellant, cmploycc actually fuliillcd hcr recruitment
v. responsibilities precluded summary judgment
TRANSCENDER, LLC, and AI1¢B1P8.I1d€}’, against hor on hcr claim that sho was fired because
Defendants-AppcHccs. of hc: age, in violation of thc ADEA. Ago
Nu. 03-5599. Discrimination in Employment Act of 1967, § 2 ct
scq, 29 U.S.C.A. § 621 ct seq.
Jan. 31, 2005.
[3] Federal Civil Procedure (**1636.1
Background: Former employee sued employer l70AkI636.1 Most Cited Cases
and its principal, alleging rctaliatory discharge Denial of default judgment and sanctions sought by
nmdcr the Fair Labor Standards Act (FLSA) and age ` former employee claiming rctaliatoxy discharge
discrimination under thc Ago Discrimination in under thc Fai: Labor Standards Act (FLSA) and age
Employment Act (ADEA). The United States discrimination under thc Age Discrimination in
District Court for the Middle District of Tcnucsscc Employment Act (ADEA) was not an abuse of
gzmntcd summary judgment in favor of thc discretion, even if thc cmployc1·'s chief technical
defendants, and thc employee appealed. officer did not write a contested memorandum,
which allegedly outlined many of tho reasons for thc
Holdings: The Court of Appeals, Keith, Circuit comp:my's dissatisfaction with the cmployods work,
Judge, held that: as thc employee claimed would have been shown by
(1) genuine issues of material fact existed as to allegedly spoiled evidence. Fair Labor Standards
whether employee was terminated in retaliation for Act of 1938, § 15, 29 U.S.C.A. § 215; Ago
hor efforts to have certain software development Discrimination in Employment Act of 1967, § ?{`b),
employees c1assiHcd as non-exempt; 29 U.S.C.A. § 626(b).
(2) genuine issues of material fact existed as to *775 011 Appeal fiom thc United States District
whether omployoc actually fixlfiilcd hcr recruitment Court for thc Middle District of Tcrmcsscc,
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‘ Case 1:94-cv-00336-KAJ Document 439-3 Filed O3/11/2005 Page 2 page 3 0f8
119 Fed.Appx. 774 Page 2
119 Fed,Appx. 774, 2005 WL 221534 (6th Cir.(Tenn.)), 2005 Fed.App. 0075N
(Cite as: 119 Fed.Appx. 774, 2005 WL 221534 (6th Cir.(Tenn.)))
Nashville Division. respectively.
James B. Johnson, Stites & Harbison, Nashville, ln 1998, Transcender hired a htunan resources
TN, for Plaintiff-Appellant. manager. Only one year after joining the company,
the human resources manager, who had been hired
David A. Gold, Arkovitz, Ingram St Gold, at the age of sixty-eight, notified the company, to its
Nashville, TN, for Defendants-Appellees. surprise, of his intent to retire.
Before KEITH and CLAY, Circuit Judges; In the fall of 1999, as Transcender began
OBERDORFER, District Judge. [FN*] conducting interviews for a new human resources
manager, Rose recommended that the company hire
FN* The Honorable Louis F. Oberdorfer, McDaniel to fill that position. At the time of her
United States District Court for the District interview, McDaniel was fifty years of age and did
of Columbia, sitting by designation. not have experience in the computer or software
development business. Despite Rose's
KEITH, Circuit Judge. recommendation to hire McDaniel, Pandey voiced
concerns about her being hired. Specifically,
**1 Plaintiff-Appellant Carol McDaniel Pandey asked Rose how long he thought she would a
A("McDaniel") appeals the district court's grant of a stay with the company, given the facts that (1) this
summary judgment in favor of potential new hire was "later in her career," and (2)
Defendants-Appellees Transcender, LLC the previous human resources manager, whom
("Transeender"), and Aneel Pandey ("Pandey") in Transcender also hired later in his career, retired
this employment discrimination action. McDaniel from the company shortly after he was hired.
alleges claims of retaliatory discharge tmder the Notwithstanding these concerns, Pandey agreed to
Fair Labor Standards Act ("FLSA"), 29 U.S.C. § hire McDaniel, who commenced her work at the
215, and of age discrimination under the Age company onDecernber 27, 1999.
Discrimination in Employment Act ("ADEA"), 29
U.S.C. § 626(b). McDaniel also challenges the At the time of McDaniel's hire, Transcender was
district courfs refusal to grant her a default experiencing difficulty finding enough qualified
judgment or to impose sanctions *776 upon employees ro meet its customers' demands and its
Transcender and Pandey for their allegedly willful growing business needs. McDaniel concedes that
spoliation of relevant evidence. For the reasons set "{i]t was made very clear" to her that recruiting new
forth below, we reverse the district court's grant of employees for software development was Pandey‘s
summary judgment with respect to McDaniel's chief concern and was to be her "number one
FLSA and ADEA claims, and afiirm the decision of priority." Tramcender, however, did not provide
the district court on the spoliation of evidence McDaniel with any specific recruitment guidelines
claim. nor with a numerical goal for recruiting new
employees. Rather, Pandey told her, "[w]e need to
I. BACKGROUND hire a lot of good people, and I'll let you know when
Founded by Pandey in September 1992, tostop."
Transcender develops and sells computer software.
In 1994, Pandey hired John Rose ("Rose") to serve **2 Pandey, Acerno, and Zhu made the {nal hiring
as Transcendefs President. After recruiting Rose, decisions for the software development department.
Pandey focused on developing software and After McDaniel screened applicants for positions hr
managing employees in the development that department, she would forward those
department, while Rose concentrated on supervising executives the resumes of applicants who she
employees in the marketing, sales, fulfillment, and thought were qualified. In turn, they would
administration departments. Two years after Rose interview and hire applicants from that pool.
joined the company, Transcender hired Ed Acerno During the first month of her employment, Acerno
("Acerno") and Richard Zhu ("Zhu") as Chief and Zhu took McDaniel to lunch to explain the
Technical Officer and Chief Information Officer, qualifications that they were seeking in software
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[19 Fed.Appx. 774 Page 3
119 Fed.Appx. 774, 2005 WIL 221534 (6th Cir.(Tenn.)}, 2005 Fed.App. 0075N
(Cite as: 119 Fed.Appx. 774, 2005 WL 221534 (6th Cir.(Tenn.))}
developers. Pandey, Acerno, and Zhu also civil penalties, and possibly individual liability by
discussed recruiting matters continually with owners ofthe company.
McDaniel in "an ongoing dialogue" about
Transcender's "recnriting needs," during which they Rose directed McDaniel to conduct an
made "attempts to be more specific on what investigation and re-classify employees where
experience [applicants] needed to have and that sort appropriate. He also instructed her to discuss the
of thing." According to McDaniel, she and Pandey project with Jamie Hearttield ("Heartfield"), who
had "a lot of discussions about recruiting" software served as outside legal counsel for Transcender. On
developers. the basis of written employee job descriptions,
McDaniel classified Transcendefs employees as
*777 In early June 2000, McDaniel completed an either exempt or non—exempt under the FLSA
employee self-appraisal. In it, she stated that her overtime provisions. After completing the project,
"recruiting efforts have been viewed by some as McDaniel then transmitted her proposed
inadequate." In particular, McDaniel believed that classifications and a draft memorandum to
Pandey held that view because he wanted Heartfield, who edited the memorandum but
development positions to be filled more quickly. In expressed no legal opinion on the classifications.
addition, McDaniel gleaned that Pandey, Acerno,
and Zhu may have been "unhappy with the **3 In October 2000, Rose informed McDaniel
candidates [she sent them] because they would not that the company wanted to implement her
even interview them" in many cases. proposed classifications by November 1, 2000. On
November l, McDaniel held a meeting with all of
As her immediate supervisor, Rose conducted the eornpany’s managers to explain the proposed
McDaniel's work evaluations throughout her classifications. Acerno complained about the
employment at Transcender. In an employee re-classification of most of his software developers,
appraisal on July 6, 2000, Rose rated McDaniel as insisting that most of the employees labeled
exceptional. He further indicated that McDaniel "technical editors," whom McDaniel proposed to
needed to -"[r]aise standards in I'CC1’UllZlI'1g—WBIfB classify as non-exempt, should have been classified
looking for best & brightest--people like you." At as exempt because-they were actually performing
the time of her evaluation, McDaniel received an the duties of software content developers. In light
increase is her salary, which was approved by of those concerns, Acerno and Zhu changed the job
Pandey. Despite these positive performance titles of all but one of the technical editors to
indicators, in the late summer or early fall of 2000, content developer. ·
Pandey informed McDaniel that he had decided to
absolve her of her development recruiting duties. McDaniel also distributed a memorandum to all
To this end, the company hired Nancy McCarthy employees that specified whether their various
("1v1cCarthy")inDocember 2000. positions were exempt or non-exempt. Soon
thereafter, she received several complaints from
In addition to recruiting employees, McDaniel's employees who were previously classified as
other human resources responsibilities included exempt but who now were classified as non~exempt.
ensuring that the company complied with all These employees were offended by their perception
employment laws. In early January 2000, shortly that Transcender viewed their work as less
after her start date, McDaniel discovered that all of important than work *778 done by exempt
Transcender's employees were classified as exempt employees. McDaniel later summarized the
under the FLSA overtime provisions. McDaniel meetingashostile and complained to Rose.
explained the FLSA' requirements to Rose and
advised him that Transcender needed to re-examine Given the differences of opinion that resulted from
its overtime compensation practices. McDaniel the reclassifications announced on November 1,
later advised Pandey that the potential penalties for 2000, Charles Arnold ("Arnold"), a technical editor
a violation of the FLSA included a civil action for and content developer for Transcender who also
damages by employees to recover unpaid overtime possesses a law license, interviewed certain
wages, attorneys' fees and court costs, criminal and employees and submitted a memorandum to Pandey
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· Case 1:94-cv-00336-KAJ Document 439-3 Filed O3/11/2005 Page 4 pfléc 5 Oleg
119 Fed.Appx. 774 Page 4
119 Fed.Appx. 774, 2005 WL 221534 (6th Cir.(Tenn.)), 2005 Fed.App. 0075N
(Cite as: 119 Fed.Appx. 774, 2005 WL 221534 (6th Cir.(Tenn.}})
concerning the classitication of those employees. that she was being terminated as a result of her
Amolcfs memorandum suggested that McDaniel's inefficiency in recruiting, ‘· mistakes in the FLSA
classifications were erroneous. Pandey provided employee classifications, and problems with
McDaniel with a copy of A1nold's memorandum on software development employees.
November 15, 2000, and asked her to respond to
the proposed revisions of her classifications, McDaniel iiled this action on May 25, 2001,
McDaniel, in turn, forwarded the memorandum to alleging retaliatory discharge under § 215 of the
Heartfield for a legal opinion about the accuracy of Fair Labor Standards Act (FLSA), 29 U.S.C. § 201
the proposed revisions. Heartiield opined that the et seq. Transcender moved for summary judgment
employees should be classified as exempt if on the FLSA claim on the basis that McDaniel did
Amold's description of their duties was correct, but not engage in activity protected under § 215(a.)(3)
he refused to render a legal opinion without first of the Act. In response, McDaniel asserted that she
conducting his own investigation of the empl0yees's engaged in protected activity when she opposed
duties. Following additional discussions with Transcendcfs assertion that the tive employees in
McDaniel and Hearttield, Pandey concluded that the development department were exempt from
A1nold’s suggested revisions were correct. [FNI] overtime under the FLSA. McDaniel moved to
amend her complaint to add (1) other defendants,
FN1. During the same period, Pandey sold (2) a sex discrimination claim under Title VII of the
Transcender to Information Holdings. Civil Rights Act of 1964 ("Title VII"), 42‘U.S.C, §
Pandey remained CEO and President. At 2000 et seq., and (3) an age discrimination claim
Information Ho1di11g's insistence, however, under the ADEA, 29 U.S.C. § 626(I:). On March
Rose left the company. Thus Pandey 21, 2002, the *779 district court denied
became McDaniel's immediate supervisor. Transcendefs motion for summary judgment and
Besides Rose, information Holding granted McDaniel's motion to amend the complaint.
retained all of Transcendefs employees. Following discovery, Transcender ftled a motion
for summary judgment on the Title VH and ADEA
Transcender asserts that Pandey and Acerno claims and a renewed motion on the FLSA claims.
discussed employee complaints about McDaniel in The district court granted Transcendefs motion for
relation to the FLSA classifications on several summary judgment on all three claims. McDaniel
occasions in November and December 2000. By timely appealed the district courts grant of
the end of December, Pandey consider firing summary judgment on the ADEAandFLSA claims.
_ McDaniel and asked Acerno to summarize any
concerns about McDaniel's work or demeanor. In H. ANALYSIS
response, on January 2;*2001, Acemo submitted a A. Standard of Review
memorandum, which included copies of written
complaints from software development employees. This court conducts a de novo review of a district
In the memorandum, Acemo stated his belief that c0u.\“t’s grant of summary judgment. Holloway v.
· McDaniel (1) had embarrassed those employees by Brush, 220 F.3d $*67, 772 (6th Ci.r.2000). Summary
reclassifying them, (2) was defensive and judgment is proper only where no genuine issue of
condescending when confronted with complaints by material fact exists and the moving party is entitled
them, and (3) had done "irrevocable damage" to her to judgment as a matter of law. FecLR.Civ.P. 56(c).
relationship with them. Acerno concluded the In considering such a motion, the court views the
memorandum by stating, "I do not think she is a evidence in the light most favorable to the
good fit to lead and cultivate Transcendefs HR non-moving party and draws all reasonable
department for the iitture." McDaniel contests the inferences in favor of the non-moving party,
veracity of this memorandum because Acerno has Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
admitted that he does not recall preparing or 475 U.S. 574, 587, 106 S,Ct. 1348, 89 L.Ed.2d 538
submitting this document. _ (1986). To defeat a properly supported motion for
summary judgment, an adverse party "must set forth
**4 On January 5, 2001, Pandey and Zhu met with specific facts showing that there is a genuine issue
McDaniel. At that meeting, Pandey told McDaniel for trial."Fed.R,Civ.P. 56(e).
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