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SCHUTZ v. WESTERN PUB. CO.

May 29, 1985

JUDITH D. SCHUTZ, PLAINTIFF,
v.
WESTERN PUBLISHING COMPANY, DEFENDANT.



The opinion of the court was delivered by: Bua, District Judge.

    MEMORANDUM ORDER

The above-captioned matter came before the Court for trial on the merits of plaintiff's Complaint. The Court, having heard testimony on September 24, 25 and 26, 1985, and having reviewed exhibits and post-trial briefs submitted by the parties, does hereby enter the following findings of fact and conclusions of law pursuant to Rule 52(a) of the Federal Rules of Civil Procedure.

I. FINDINGS OF FACT

1. This case arises under Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e through 2000e-17, and the Equal Pay Act of 1963, 29 U.S.C. § 206(d). The plaintiff, Judith D. Schutz, seeks damages for alleged violations of these statutes.

2. Schutz is a woman residing in the Northern District of Illinois. The defendant, Western Publishing Company, Inc. ("Western"), is a Delaware corporation whose principal place of business is in Racine, Wisconsin. Western employs more than 200 persons and is engaged in an industry affecting commerce. Western, originally an independent national publishing company, was owned by Mattel, Inc., from 1979 through February 1984, and is presently owned by R.A.B. Holdings, Inc., a Delaware corporation owned by Richard A. Bernstein. Among other things, Western is engaged in the merchandising and selling of various publications.

3. Plaintiff was employed by Western from February 7, 1978, to February 9, 1983. She alleges in her complaint that during this period she was the victim of unlawful employment discrimination based on her sex. She specifically alleges that she was discriminated against in termination, promotions, and the payment of bonuses in violation of Title VII, and in compensation in violation of the Equal Pay Act.

4. Plaintiff was initially hired by Western in 1978 as a "Retail Specialist" in the Consumer Products Sales division. She held that position until February 1981. During this period, Western hired approximately equal numbers of men and women as Retail Specialists.

5. As a Retail Specialist, plaintiff was assigned to work primarily with accounts designated as "trade" accounts. Trade accounts, in Western's parlance, are generally bookstores or department stores with separate book departments. Their purchases from Western typically consist primarily of books priced over ninety-five cents.

6. Most, if not all, of the other Retail Specialists employed by Western during this period were assigned to work primarily with accounts designated as "field" or "consumer products" accounts. Field accounts included a wide range of department stores, toy stores, drug stores, discount stores, variety stores and chains that purchase from the full line of Western's consumer products, including games, puzzles, coloring books, activity products and inexpensive story books for children, as well as higher-priced books in some instances.

7. As a Retail Specialist assigned primarily to trade accounts, plaintiff was responsible for monitoring and maintaining the inventories of books sold by Western to certain trade customers in the Chicago area and for developing a small number of relatively small trade accounts in the Chicago area. Plaintiff's primary role as a Retail Specialist was to provide support service to other sales personnel, especially to Midwest Trade Supervisor Richard Nau.

8. Like all other Retail Specialists employed by Western, plaintiff received a base salary plus commissions on sales to her own accounts. Her base salary during 1978 was set at the annual rate of $8,000, the same as the base salaries of most other Retail Specialists, including both males and females. The only Retail Specialists with higher base salaries in 1978 were Brenda Barnett, a woman whose base salary was $8,400, and Robert Schmitz, a man whose base salary that year was $10,000. Schmitz' higher base salary reflected his greater length of service with the company; he had served Western for a number of years as a sales territory manager before being downgraded to the Retail Specialist position. Barnett's higher base salary apparently also was attributable to longer service with the company.

9. Plaintiff's base salary in 1979 was $11,000. This was as high as the base salary of any other Retail Specialist, male or female, except Schmitz, who again received a higher base ($12,000) reflecting his greater longevity with Western.

10. In 1980, plaintiff's last year as a Retail Specialist, she received a base salary of $12,000. The only Retail Specialist who received a higher base salary that year was Schmitz.

11. The commissions paid to plaintiff in 1978, 1979, and 1980 were determined in accordance with a standard schedule of percentage rates that were applied in the same way to all Retail Specialists. The actual dollar amounts of the commissions received by individual Retail Specialists varied only as a result of differences in their volume of sales in relation to their sales budgets.

13. Plaintiff alleges that sometime in 1980, while serving as a Retail Specialist, she was initially informed that she would be eligible to receive a certain bonus and then later was told that she would not receive it. There is no evidence, however, that any male classified as a Retail Specialist ever received such a bonus when the plaintiff did not.

14. Western's compensation system for Retail Specialists differed from its compensation system for sales employees classified as "Territory Managers." During the period from 1978 through 1980, Territory Managers received approximately the same base salaries as Retail Specialists with comparable years of service within their classification, but the Territory Managers received substantially greater commission payments and were eligible for certain bonuses and incentive payments that were not available to Retail Specialists. Western's compensation system for Territory Managers, however, was applied equally to both men and women working in the Territory Manager classification.

15. The overall duties and responsibilities of Territory Managers were substantially different from the overall duties and responsibilities of Retail Specialists. In particular, each Territory Manager was directly responsible for a much larger dollar volume of sales than was any Retail Specialist. For example, plaintiff testified that her own accounts in her final year as a Retail Specialist were budgeted at $112,600. In contrast, Territory Managers during the same period were responsible for budgets ranging from about $500,000 to $2,000,000. Although some Retail Specialists may, in some instances, have been delegated responsibilities for writing orders for accounts that were assigned to Territory Managers, the primary accountability for those sales remained with the Territory Managers. Thus, the overall level of responsibility borne by the Territory Managers was much greater than that borne by Retail Specialists.

16. The substance of the work of Territory Managers also differed significantly from that of Retail Specialists, and required different types of knowledge and skills. Territory Managers not only were required to spend a greater percentage of their time in direct selling activities, but also were required to sell to larger and more diverse accounts than Retail Specialists. The evidence establishes that selling to larger accounts requires substantially different skills and experience and a different level of responsibility on the part of the sales person than selling to smaller accounts.

17. During the period while plaintiff was serving as a Retail Specialist, two vacancies occurred in field territory manager positions in the Chicago area. One vacancy occurred when Cedric Turner, the Territory Manager for the "Chicago North" field territory, died. The Chicago North territory was one of the largest, if not the largest, field territory in the United States in terms of dollar volume with an annual budget of approximately 2 million dollars. It included several major wholesale accounts. To replace Turner, Western laterally transferred Mark Redrick, a male who had worked for the Company since 1971. Redrick was serving as a field Territory Manager in the Pittsburgh-Western Pennsylvania market at that time and was experienced in the handling of wholesale and chain accounts.

18. The other field territory manager position in the Chicago area that became vacant while plaintiff was working as a Retail Specialist was the "Chicago South" position, which was held by Dave Lewin until his retirement in 1978 or 1979. The Chicago South territory was budgeted at about $700,000. To replace Lewin, Western laterally transferred Jeff Jones, a male who had served as a field Territory Manager in the Rocky Mountain Region and was experienced in the handling of all types of accounts, including wholesalers and chain buying offices.

19. Redrick and Jones were clearly better qualified than plaintiff for the field Territory Manager positions in Chicago for which they were selected. Unlike both Redrick and Jones, plaintiff at that time had not yet ever served as a Territory Manager. Moreover, having worked primarily with trade accounts, plaintiff was not as experienced as Redrick and Jones in presenting Western's full consumer products line, as was required in the field territory managers' positions.

20. There is no evidence that plaintiff was ever considered, or ever asked to be considered, for any Territory Manager position outside the Chicago metropolitan area. Plaintiff had informed Western in writing on her employment application when she was hired that she was not willing to relocate to another geographic area, and at not time during her employment with Western did she ever notify the Company that her intentions in this regard had changed.

21. In the period from 1977 through 1981, approximately 32 men and 32 women served in the Retail Specialist classification at Western. Of the men, approximately 23 were promoted within an average time of about 10.3 months after they began working as Retail Specialists. Of the women, approximately 10 were promoted within an average time of about 29.4 months after they began as Retail Specialists. The Company explained the difference in these promotion rates by pointing out that the men, on the whole, were much more willing (or able) to relocate in order to accept promotions when Territory Manager positions in other geographic areas became available. Of the 23 men promoted, at least 16 moved to other territories to accept their new positions. The women, on the other hand, were generally unwilling (or unable) to relocate; therefore, they had to await vacancies in the Territory Manager positions in their own geographic territories before they could be promoted. In fact, every one of the women promoted to Territory Manager remained in the same territory where she had worked as a Retail Specialist. At trial, the Company was able to identify at least 12 women Retail Specialists who had either declined offers of promotion that would have required relocation or had otherwise specifically informed the Company of their unwillingness (or inability) to relocate.

22. Effective in February 1981, Western created a separate Trade Division within its Consumer Products Sales division. On February 9, 1981, plaintiff was promoted to the position of Trade Territory Manager. Her territory encompassed the Chicago area and certain portions of Indiana and Wisconsin, although she did not have responsibility for all of the accounts within her geographic territory.

23. During her first year as a Trade Territory Manager, plaintiff reported to Richard Nau, the Regional Supervisor of the new Trade Division. In addition to the accounts she had serviced as a Retail Specialist, she was assigned responsibility for the Hapco account in Wisconsin and several substantial accounts in the Chicago area, consisting of Kroch's & Brentanos, Marshall Field, and Carson Pirie Scott.

24. In her first year as a Trade Territory Manager (Western's fiscal year 1982),*fn1 plaintiff achieved only 66 percent of her sales budget and made only $307,208 in sales. Plaintiff and another Trade Territory Manager (Rebecca Furr, whose budget percentage was also 66 percent) achieved the lowest budget percentages in the Trade division in fiscal 1982. Peter Prewitt, with whom plaintiff has sought to compare herself, achieved 104 percent of his budget during fiscal 1982 and made $3,511,006 in sales, thereby attaining the highest budget percentage and the highest total sales in the Trade division.

25. Prior to February 1982, Western maintained a separate School and Library (S & L) sales unit within its Consumer Products Sales division. The S & L unit was headed by a National Sales Manager, Thomas Kaiser. Reporting to Kaiser were six Regional Managers, each of whom was responsible for sales of Western products to schools, libraries and "teacher stores" throughout a region of the United States. Each S & L Regional Manager handled certain accounts directly and also supervised a staff of seven or eight independent agents who contracted to serve as sales representatives for Western in specific localities within the region. The S & L unit sold Goldencraft products (special hard-cover editions of Western books made with durable bindings for use in schools and libraries) in addition to the general Western line of books and products.

26. Effective on February 1, 1982 (the beginning of fiscal year 1983), Western, in a move to reduce personnel and overhead costs, merged the School and Library sales division with the Trade division. As this merger was implemented, the existing administrative structure of the S & L unit was preserved (with some modifications) and superimposed over the existing Trade sales force. Thus, Kaiser became the head of the new, combined Trade S & L division, and four of the former S & L Regional Managers were named Regional Managers of Trade/School and Library.*fn2 As such, they took over responsibility for supervising the Trade Territory Managers within their respective regions, as well as continuing to service their own direct accounts and to supervise from 7 to 14 independent agents who serviced other S & L accounts within their regions.

27. Pursuant to this merger, A. Fred Klein, the former Midwest Regional Manager in the separate S & L division, took over responsibility for supervising the three Trade Territory Managers located within the Midwest Region — i.e., plaintiff in Chicago, Sandra Fiarman in Detroit, and Patricia Stirnkorb in Cincinnati. Klein also continued performing his existing S & L sales and managerial duties. At the time of this merger, Klein was already serving as a Regional Manager with responsibilities covering the entire Midwestern region; he was experienced in supervising other sales people; and he was familiar with the Goldencraft line, as well as Western's other books and products. In contrast, the Territory Managers' experience was limited to much smaller geographic areas; they had not been responsible for supervising other sales representatives; and they had less experience in selling Goldencraft products, and puzzles, games and other nontrade products.

28. Following the merger of the Trade and S & L divisions in February 1982, Klein and Kaiser worked closely with plaintiff and offered her advice and criticism in an effort to improve her sales performance. Among other things, they instructed plaintiff concerning the effective routing of calls on accounts; urged her to handle her major accounts more effectively by calling on them more often, following through on orders, using the cooperative advertising program to stimulate sales, and simplifying certain accounts; and advised her to plan sales calls more effectively (including calling ahead for appointments), make more sales each week, and make at least 15 to 20 sales calls each week. In addition, Klein and Kaiser urged plaintiff to make up for the business failure of one of her larger accounts (Hapco) by selling to Hapco's former accounts in her territory and by developing existing accounts in her territory.

30. When Klein and Kaiser traveled with plaintiff during her calls on accounts (as they did periodically with each Trade Territory Manager under their supervision), they often found that she had failed to set up enough appointments in advance or otherwise to prepare adequately to make efficient use of the available time. In one instance, for example, Kaiser accompanied plaintiff on a sales trip to Milwaukee and found that she had set up only one appointment for that day and had no specific plans for the balance of their time. Kaiser then discovered that plaintiff's list of active accounts failed to include a number of Milwaukee bookstores that had been Western Trade customers in the past or were potential new customers, and that plaintiff was unfamiliar with many of those stores.

31. The next time Kaiser accompanied plaintiff on a sales trip to Milwaukee, she ran out of catalogs by early afternoon after making only a few sales calls, thereby precluding any further calls that day. This was the only occasion Kaiser could recall in his career when a sales person had failed to bring along enough catalogs on a scheduled sales trip to get through a single day of selling.

32. Klein, in his travels with plaintiff on sales calls, observed that she often failed to plan her time efficiently and that, during sales calls, she frequently spent too much time in social conversation with the customers' representatives and did not move quickly enough into discussions related directly to business.

33. Despite the advice and criticism provided by Klein and Kaiser, plaintiff's performance failed to show any significant improvement. Finally, in September 1982, Klein met with plaintiff specifically to discuss the problems with her performance. Even after that meeting, however, plaintiff did not consistently make the required minimum of 15 sales calls per week during the remainder of September and October 1982.

34. On November 3, 1982, Klein wrote to plaintiff setting forth a number of specific concerns about her performance and commenting that he had "not seen any improvement in your territory" since their meeting on September 16, 1982, and that "it is apparent to me that you are continuing in a downward slide." Plaintiff responded by letter on November 6, 1982. In that letter, plaintiff took issue with some of Klein's criticisms and offered excuses or attempted explanations for other problems Klein had mentioned. In a number of respects, however, plaintiff admitted the validity of Klein's complaints. Thus, among other things, plaintiff acknowledged that her reporting needed "vast improvement;" that she had "been sporatic [sic] in my Monday call-ins;" and that some of her accounts did "need more work to bring their dollars up." Defendant's Exhibit 12. Plaintiff also stated that she had "a great deal of difficulty dealing with" Klein's insistence that she undertake "more effective preplanning of sales calls and calling ahead for appointments." Id. See also defendant's Exhibit 11. Plaintiff also acknowledged that she "should have been able to compensate for the dollars" lost when her Hapco account went out of business. Id. Later that month, in discussing the contents of these letters with plaintiff, Klein specifically warned her that her job was in jeopardy.

35. In December 1982, plaintiff met with Kaiser at his office to discuss the problems referenced in the letters that had been exchanged between her and Klein. In that meeting, Kaiser reviewed plaintiff's performance over the year and pointed out areas in which he was disappointed; also, he specifically confirmed her belief that her job was in jeopardy.

36. Because of his concerns about plaintiff's performance earlier in 1982, Kaiser had approached Western's personnel department around May or June to discuss the possibility of terminating plaintiff's employment. He was advised to hold off initiating any such action at that time. Plans were then being developed for a general reorganization of the Trade/S & L division which could be expected to result in the elimination of plaintiff's position. Kaiser was told that termination as a result of a reduction in force would provide plaintiff with severance benefits that ...


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