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Heise v. Canon Solutions America, Inc.

United States District Court, N.D. Illinois, Eastern Division

July 23, 2018

SANDRA A. HEISE, Plaintiff,
v.
CANON SOLUTIONS AMERICA, INC., Defendant.

          MEMORANDUM OPINION AND ORDER

          MATTHEW F. KENNELLY UNITED STATES DISTRICT JUDGE

         Sandra Heise has sued her former employer, Canon Solutions America, Inc. (Canon), alleging discrimination, unequal pay, and retaliation in violation of Title VII of the Civil Rights Act of 1964 and unequal pay and retaliation in violation of federal and state equal-pay statutes. Canon has moved for summary judgment on all of Heise's claims, and Heise has cross-moved for summary judgment on her equal pay claims. For the reasons stated below, the Court grants summary judgment in favor of Canon on the retaliation claims and the Title VII termination claim but denies both sides' motions for summary judgment with respect to the state and federal Equal Pay Act and Title VII compensation claims.

         Background

         The following facts are taken from the parties' Local Rule 56.1 submissions, and they are undisputed unless otherwise noted.[1] Heise's original employer, Ambassador Business Solutions, became part of Canon Business Solutions after a series of reorganizations and mergers, and Canon Business Solutions, in turn, merged with Océ North America and Océ Imagistics (Océ) to form Canon Solutions America. Throughout this opinion, the Court will refer to Heise's employer as Canon. Canon sells and services a wide range of imaging, printing, and copying equipment.

         When Canon hired Heise as a sales manager in 2000, she had already had three years of industry experience from working in sales and marketing at Minolta. In February 2001, Heise was promoted from the position of sales manager to manager of named accounts. In January 2004, Peter Kowalczuk promoted Heise to the position of branch sales director for the Chicago Branch. When he promoted Heise to the branch sales director position in 2004, Kowalczuk tapped Doug Reuter to fill Heise's former position. Although Heise was only making $59, 000 in that role at the time of her promotion, Kowalczuk offered Reuter a starting salary of $70, 000.[2] By comparison, Heise's starting salary in her new role as the branch sales director was $80, 000. Heise contends that when she found out about Reuter's offer, she complained to Kowalczuk that it "would be unfair to pay [her] replacement far more than Canon ever paid [her] to do the job and only $10, 000 less than it was paying [her] to run the entire branch." Pl.'s SOF, Ex. 3 (Heise Decl.) ¶ 5. Kowalczuk testified during his deposition that he did not remember Heise objecting to these salary differences. See Pl.'s SOF, Ex. 4 (Kowalczuk Dep.) 199:4-200:7. Kowalczuk testified that he offered Reuter the $70, 000 salary because he had been with the company for over fifteen years at the time of his promotion, had a "long track record" as a "highly successful" salesperson, and was going to be taking a "heavy discount in total compensation" in his new role when the variable compensation he received as a sales representative was taken into account. Id. 197:23-198:5.

         At the end of 2006, two years after Heise's promotion to the Chicago branch sales director position, Canon posted a newly created position for a regional director, who would oversee the downtown and suburban Chicago sales branches, which included offices in Downers Grove and Schaumburg. Heise applied for the job, but Kowalczuk chose to hire Armand Lanera instead. Kowalczuk selected Lanera for the regional director position in 2006 despite (1) having received complaints years earlier about his inappropriate behavior toward women while he was the branch sales director for the Schaumburg office[3] and (2) having placed him on a corrective action plan in May 2003 based on the Schaumburg branch's "poor performance" and concerns about Lanera's leadership. Pl.'s SOF, Ex. 9 at CSA00002144. Kowalczuk testified during his deposition that he gave the position to Lanera because he had more industry experience.

         Lanera clashed with Heise after his promotion to regional director. In August 2007, Heise complained to Kowalczuk that Lanera told her he planned to demote her. According to Heise, Kowalczuk told her she was being a "silly girl" and that Lanera would not have said such a thing. Heise Decl. ¶ 17. In October 2007, Lanera placed her on a corrective action plan-an action that Heise believed was unjustified. The following month, Heise complained to HR about her problems with Lanera and her concern that Kowalczuk treated women differently from men. In March 2008, Lanera took Heise off the corrective action plan.

         In 2009, Canon began to organize its sales force by zone. Heise's branch fell within the Central Zone. From 2009 through 2012, the Central Zone comprised three regions: the Chicago Region, the Southwest Region, and the Midwest Region. As part of the 2009 restructuring, Canon created two new regional sales vice president positions within the Central Zone, one for the Midwest Region and one for the Southwest Region. These vice presidents of sales reported to Kowalczuk, who was the vice president of sales for the entire Central Zone. Canon hired Dan Verley as the new regional sales vice president for the Midwest Region at a starting salary of $175, 000, and it hired Dusty Peck as the regional sales vice president for the Southwest Region at a starting salary of $145, 000. Canon did not post either of the openings. Heise says that Kowalczuk told her she needed more experience as a branch sales director before she would be ready for regional management. See Heise Decl. ¶ 22.

         In 2010, Verley became the regional sales vice president for the Chicago Region. Once again, Canon did not post the position. Around this time, Canon reclassified the regional sales vice president positions as regional senior director of sales positions.[4]When Heise discovered that Canon had given Verley this position, she complained to Kowalczuk. Kowalczuk testified during his deposition that he understood at the time he transferred Verley to the Chicago regional management position that Heise was interested in a promotion but he did not promote her because "[s]he did not have the experience of running multiple branches" and a major account team. Kowalczuk Dep. 92:11-92:24.

         Due to Verley's transfer to the Chicago Region, the senior director of sales position for the Midwest Region opened up in early 2010. Canon did not post the opening; instead, Kowalczuk promoted Mark Messner, who had been working for Canon for less than a year as the Detroit branch sales director. Kowalczuk testified that he offered the job to Messner because he had a lot of prior industry experience, had proven himself in a short time, and had deep roots in Michigan.

         In July 2010, Messner resigned. Heise states that she asked Kowalczuk to tap her as Messner's replacement, just as he had tapped Messner and Verley for their regional management positions, but Kowalczuk posted the position, so she had to compete for it. Nonetheless, in September 2010, Kowalczuk selected Heise for the Midwest Region senior sales director position. On September 15, 2010, Kowalczuk sent an e-mail to Jayme Arendt, then the director of human resources for the Central Zone, asking her to forward Messner's offer letter to him. In her response, Arendt stated the following:

         Messner's offer was for 140k, the original is attached.

For a reference point -
Peck - 150, 927
Verley - 178, 461

         Although entirely different experience levels, which you already know. Def.'s Statement of Facts (Def.'s SOF), Ex. W. That same day, Kowalczuk sent an email to Arendt and Canon's vice president of human resources, Nelson Remetz, with Heise's draft $140, 000 offer. He stated, "I want to be careful that the offer is in line with the other Sr Directors since Sandra would be the only woman in this role." Def.'s SOF, Ex. X at CSA00211351.

         Remetz approved the proposed $140, 000 starting salary for Heise, as did Canon's president Tod Pike. Kowalczuk offered Heise a starting salary of $140, 000 and four months of guaranteed bonus income. Heise countered by asking for $150, 000 and six months' guaranteed bonus income. Kowalczuk refused Heise's request for a higher starting salary. In a September 28 e-mail, Kowalczuk assured Heise, "The salary is not at the minimum as you thought yesterday it is above the medium [sic] and its is [sic] ¶ 34% increase over current which is why the offer took so long to get approved by CUSA (it is above the standard as we discussed)." Def.'s SOF, Ex. T at CSA00300487. On September 29, Heise accepted the final offer of $140, 000 and seven months of guaranteed bonus income. Messner's $140, 000 offer, by contrast, did not include any income guarantee.

         At the time Heise accepted the offer, $140, 000 was the lowest salary being paid to any regional senior director of sales. As of April 2010, the median salary for Canon's eight regional managers was $159, 548. And according to Canon's own confidential pay tables for 2009, although the minimum salary for someone in the relevant pay band (E3) was $125, 300, the median salary ("midpoint" salary) was $172, 055. See Pl.'s SOF, Ex. 25 at CSA01083310. Canon's Rule 30(b)(6) deponent, Juanita Nash-Dahlen, the HR director of employee relations and compliance, testified that the criteria the company used to set the starting salary of regional managers included: (1) job knowledge, (2) industry experience, (3) tenure with Canon, (4) product knowledge, (5) business acumen, (6) sales skill, (7) people skills, (8) prior job performance, and (9) prior salary. Both Kowalczuk and Arendt have stated that, at the time Heise was promoted to regional senior director of sales, they believed both Peck and Verley had much more experience than Heise.[5] See dkt. no. 134-46 (Kowalczuk Decl.) ¶ 20; dkt. no. 134-43 (Arendt. Decl.) ¶ 10.

         Kowalczuk had never hired a female regional manager prior to Heise, and he has not had one since. Heise testified during her deposition that when she was promoted to the position, Kowalczuk told her that he had concerns about a single woman traveling in the marketplace and that his wife encouraged him to "give her a chance." See dkt. no. 134-51 (Heise Dep.) 182:16-182:20. Kowalczuk, for his part, testified that he did not recall expressing concern about women traveling alone and that he does not and did not have any such concerns. He also testified that he did not believe he told Heise that his wife told him to give her a chance.

         When Heise began as senior director of sales for the Midwest Region in 2010, the region had five branches, thirteen sales teams, and an annual sales quota of $27.9 million. The Southwest Region managed by Peck consisted of three branches and ten sales teams and had an annual quota of $25.4 million in 2010. Nonetheless, as previously mentioned, Peck was paid more than Heise. In January 2011, Heise received a salary increase of $5, 000 as part of the standardization of senior director incentives, but she remained the lowest paid regional manager at Canon.

         In early 2012, Heise learned from Peck that she was paid less than both Peck and Verley. Heise contends that she complained to Arendt that she thought she was being paid unfairly as the only woman in regional management. See Heise Decl. ¶ 41. Arendt testified during her deposition that she recalled Heise coming to her with the concern that her base salary was low. In response, Arendt testified that she "looked at [Heise's] experience, her resume, and her background," looked at the salary range, "looked at the former offer of the employee who held the same role previously, and . . . looked at her peers and their experience level." Pl.'s SOF, Ex. 75 (Arendt Dep.) 170:14-170:20. When asked why she believed Peck's higher salary was justified, Arendt stated that it was because he ran a dealership prior to joining Canon, was in a larger market, and had more years of senior director-level experience. Ultimately, Arendt told Heise that she "did not believe [Heise's] salary to be low based on her experience and time in her job." Id. 170:21-170:22. Arendt also testified that she spoke to Kowalczuk about Heise's concerns and her conclusion that Heise's salary was appropriate. Canon did not increase Heise's salary at that time.

         In mid- to late-2012, Kowalczuk and the rest of the Canon management team began the process of restructuring the Central Zone to integrate personnel from Océ, which Canon had recently acquired, into Canon's sales force. Ultimately, Canon reorganized the Central Zone into four regions: the Midwest Region, the Greater Chicago Region, the Southwest Region, and the Ohio Valley Region. Jim Stocker, from Océ, became the senior director of sales for the new Ohio Valley Region. Stocker's starting salary in this role was just over $133, 000, which is what he had been making at Océ. As part of this reorganization, Canon shifted two branches, Milwaukee and St. Louis, into Heise's region. Milwaukee had been Verley's worst performing branch in 2012, and St. Louis had been Peck's worst performing branch in 2012. Around the same time Canon announced these changes, Kowalczuk became the national head of sales. He selected Verley to fill his former position without posting it. Steve Greiman, who was previously a vice president at Océ, took over Verley's position as senior director of sales for the Chicago region.

         Heise did not receive a year-end performance review from Kowalczuk for 2012. Canon has produced a draft 2012 performance review for Heise that is labeled "Cancelled/Archived" and "Not Submitted." Pl.'s SOF, Ex. 40 at EEOC 153. This cancelled review, which appears to have been authored by Kowalczuk but is not signed, describes Heise as a "Marginal Performer" overall. Id. at EEOC 159. Both Peck and Verley received 2012 performance reviews from Kowalczuk; he rated Peck as a "Successful Contributor" and Verley as a "High Contributor." Pl.'s SOF, Ex. 38 at CSA00002208; Pl.'s SOF, Ex. 37 at CSA00001554. Kowalczuk gave Peck a merit increase in salary for 2012, but he did not give one to Heise.

         At the beginning of 2013, Heise once again began reporting to Verley. According to Heise, from January to April 2013, Verley undermined her and treated her disrespectfully in front of subordinates and peers. For example, Heise alleges that Verley entered her office while she was on a conference call with her branch directors and screamed at her for using the speaker on her iPhone rather than the landline. Heise contends that Verley did not behave the same way toward the male regional managers; Canon has submitted declarations from current and former employees that say Verley treated male employees the same way. See dkt. no. 134-44 (Dillon Decl.) ¶ 9; dkt. no. 134-45 (Farrow Decl.) ¶ 5.

         In April 2013, Heise complained to Arendt about Verley's behavior toward her and told Arendt that she was considering taking a leave of absence. Heise contends that she "explained in detail how Mr. Verley was harassing [her], specifically using the word harassment, and made it clear [she] believed he was treating [her] that way because [she] was a woman." Heise Decl. ¶ 59. She has also stated that she told Arendt she was concerned that Verley would retaliate against her and that she still did not believe she was being paid fairly in relation to the male regional managers. Arendt testified during her deposition that although Heise complained about Verley yelling at her, she "never claimed to me hostile work environment, or harassment, or discrimination." Arendt Dep. 163:2-163:7. Accordingly, Arendt never told Verley or Kowalczuk that Heise had complained of discrimination or harassment. Kowalczuk has stated that, "[o]ther than her issues with Mr. Lanera which happened years before, [he] had no knowledge that Ms. Heise had any concern or complaint about harassment or discrimination until she made such allegations after her employment had ended." Kowalczuk Decl. ¶ 31.

         According to Heise, Verley's treatment of her worsened after she made the complaint. Based on the perceived change in Verley's behavior-and the fact that Heise believed Arendt and Verley were having an affair[6] based on statements Arendt made to her the previous fall-Heise believes that Arendt had informed Verley of her complaints. Around August 2013, Heise confronted Verley about sharing certain information with one of her branch sales directors about potential changes to the branch without informing her first. According to Heise, Verley angrily responded, "None of my guys act the way you do." Heise Decl. ¶ 58. Verley testified that he did not remember using those words, but he did remember the conversation and believed that Heise "took an unusual amount of offense" to a situation that happens frequently. Pl.'s SOF, Ex. 15 (Verley Dep.) 229:1-231:11.

         On December 27, 2013, Verley informed Heise that she was terminated, effective immediately. She was escorted out of the building after being given an opportunity to gather her personal belongings.

         Verley testified during his deposition that Canon did not terminate Heise for performance reasons. Canon contends that after losing a substantial amount of money in 2013, the company determined that it needed to cut costs and increase profitability. According to Canon, it made the decision to terminate Heise, along with Jim Blair, the senior director of service for the Midwest Region, as part of a restructuring of the Central Zone regions. Specifically, Canon reduced the number of regions within the Central Zone from four to three by folding the branches that made up the Midwest Region into the remaining regions and eliminating the Midwest Region sales and service management positions. At this time, the regional senior directors for the Central Zone were:

• Sandra Heise (Midwest Region)
• Steve Greiman (Greater Chicago Region)
• Jim Stocker (Ohio Valley Region)
• Dusty Peck (Southwest Region)

         According to Canon, the idea to collapse the Midwest Region into the other regions originated with Steven Lukaszewski, who goes by Steve Lukas. Lukas was the vice president of service for the Central Zone (Verley's counterpart) during this time. After Lukas discussed the idea with Verley and Arendt, Lukas and Verley raised the idea with their respective bosses, Kowalczuk and Art McGinn, Canon's national head of service. As early as September 20, 2013, Arendt was considering the cost of severance for Heise and Blair if their positions were eliminated as part of ...


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