Diamond v. T. Rowe Price Associates, Inc.

• Citation: 852 F. Supp. 372
• Decision Date: 28 April 1994
• Docket Number: No. L-92-1071.,L-92-1071.
• Parties: Debra J. DIAMOND v. T. ROWE PRICE ASSOCIATES, INC.
• Court: U.S. District Court — District of Maryland

852 F. Supp. 372

Debra J. DIAMOND v. T. ROWE PRICE ASSOCIATES, INC.

No. L-92-1071.

United States District Court, D. Maryland.

April 28, 1994.

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Marcy M. Hallock and Elizabeth G. Jacobs, Baltimore, MD, for plaintiff.

Robert B. Barnhouse, Richard J. Hafets and Emmett F. McGee, Jr., of Baltimore, MD, for defendant.

MEMORANDUM

LEGG, District Judge.

I. INTRODUCTION

Pending before the Court are cross-motions for summary judgment filed by both parties to this employment discrimination case. Plaintiff, Debra J. Diamond, is a portfolio manager and financial analyst who worked for defendant, T. Rowe Price Associates, Inc. ("T. Rowe Price"), from 1977 until 1992. Headquartered in Baltimore, T. Rowe Price is an investment management firm that is known nationally for its large, publicly held mutual funds. Alleging gender and religious discrimination,¹ Diamond sued her former employer under the Equal Pay Act of 1963 and Title VII of the Civil Rights Act of 1964.²

This Court's earlier rulings narrowed Diamond's complaint, as amended, to three claims. They are:

(1) that she received unequal pay for the three years ending April 16, 1992, the day her suit was filed;

(2) that she was constructively discharged on March 24, 1992, her last day of work; and

(3) that T. Rowe Price, animated by discrimination, failed to promote her to the position of Managing Director.

T. Rowe Price responded to the suit by denying the charges and by filing a counterclaim. Divided into six counts, the counterclaim, as amended, generally alleges that Diamond misappropriated T. Rowe Price's confidential documents and trade secrets when she left work and that she has refused to repay loans and advances.

Following extensive discovery, both sides filed motions for summary judgment. T. Rowe Price moved for summary judgment on all claims in Diamond's amended complaint and also on Count VI³ of its amended counterclaim. Diamond opposed the motions and also moved for summary judgment on all counts of the amended counterclaim.

The issues were thoroughly briefed; the memoranda and supporting exhibits on file run over 1000 pages. On November 24 and 29, 1993, the Court heard oral argument on the motions relating to Diamond's amended complaint. Under D.Md.R. 105.6, the Court shall dispense with argument on the motions relating to the counterclaim.

Because of the large number of issues involved and the length of this Memorandum, the Court will briefly summarize its reasoning and conclusions. First, as to the compensation discrimination claim, Diamond must establish that she was paid less than male fund managers because of her gender or her religion. This she cannot do. During the relevant time, Diamond's pay at T. Rowe Price was directly tied to the objective success of the two funds she managed. As detailed in two successive employment contracts, one for each fund, Diamond's compensation was composed of a fixed base salary and incentive bonuses tied both to the funds' absolute growth and to their performance relative to a stock market index. The contracts, which were negotiated at arm's length through counsel,⁴ specify that T. Rowe Price had no obligation to award Diamond annual bonuses, stock options, or other sums not provided for in the agreements.

Thus, under these contracts, Diamond's compensation fluctuated with the success of her funds. The first fund, New Frontier Fund I, was highly profitable. Upon its liquidation in 1989, Diamond received her annual salary of $100,000 plus almost $1 million in bonuses. Annualized over the fund's life (1985-1989), Diamond's compensation averaged approximately $325,000 per year.⁵ The second fund, New Frontier Fund II ("NFFII"), lost money, however. From 1990-1992, Diamond's annualized compensation amounted to little more than her base salary of $130,000.

As a matter of law, an employee's compensation discrimination claim fails if the employee is paid according to a system that pegs earnings to quality or quantity of production or any factor other than sex.⁶ The Court concludes that Diamond's employment contracts established such a system. Accordingly, the Court shall grant T. Rowe Price's Motion for Summary Judgment as to Diamond's compensation discrimination claim.

Second, Diamond, who left work on March 24, 1992, contends that T. Rowe Price constructively discharged her by eroding her management authority as to the second fund and by encouraging the fund's investors to withdraw their money. Through these actions, Diamond claims, T. Rowe Price forced her to resign.

The Fourth Circuit has cautioned that constructive discharge claims must be "carefully cabined" because they are "open to abuse by those who leave employment of their own accord."⁷ An employee must show that his or her employer deliberately made working conditions so intolerable that any reasonable person would have resigned.⁸ Diamond cannot make such a showing.

Diamond admits that no one at T. Rowe Price was hostile, personally abusive, or discourteous to her. Indeed, the persons she accuses of discrimination are the very same persons who worked with her amicably for over a decade. Diamond also concedes that two top-echelon managers at T. Rowe Price indicated that she had a place at the firm despite the poor performance of the second fund. While her long term future at T. Rowe Price was unclear, Diamond left before she and the firm had an opportunity to explore a mutually satisfactory job assignment after the liquidation of NFFII. Given Diamond's high base salary and the non-hostile work environment at T. Rowe Price, the Court concludes that no reasonable person would have felt compelled to resign when Diamond did. Accordingly, the Court shall grant T. Rowe Price's Motion for Summary Judgment on Diamond's constructive discharge claim.

Finally, Diamond's claim for failure to be designated a Managing Director also fails. The term "Managing Director" is largely an honorary title given to a relative handful of T. Rowe Price's senior management employees in recognition of their exceptional responsibility within the firm. Generally speaking, Managing Directors either run entire departments or manage funds valued in the hundreds of millions or even billions of dollars. Diamond, in comparison, managed two successive limited partnerships, each valued at approximately $20 million, and supervised two employees. Diamond's responsibility within the firm, while substantial, simply did not approach the managing director level. Additionally, T. Rowe Price demonstrated that a male portfolio manager with a more successful investment record and more responsibility than Diamond has also not been named Managing Director.

The Court concludes, therefore, that no reasonable jury could find that Diamond had the objective qualifications to merit the title of Managing Director. Accordingly, the Court shall grant T. Rowe Price's Motion for Summary Judgment on Diamond's promotion claim.

The Court also disposes of all six counts of T. Rowe Price's amended counterclaim. The first five counts involve Diamond's alleged refusal to return a large number of T. Rowe Price files that Diamond maintained in her office at home or took with her when she left the firm. T. Rowe Price's claims fail. Diamond has now returned the files. T. Rowe Price has proffered no evidence that Diamond misused them or that the firm suffered any damage from their temporary absence. Thus, the Court shall grant Diamond's Motion for Summary Judgment as to Counts IV of the amended counterclaim.

Count VI involves Diamond's alleged failure to repay T. Rowe Price loans and advances associated with the two funds she managed. The sums involved total $110,085. Of this figure, $35,000 represents a demand note that is now due and payable, and the Court shall grant T. Rowe Price's Motion for Summary Judgment in that amount.

The remaining $75,085 represents cash distributions that the NFFII partnership allegedly dispersed to Diamond in error. This Court lacks subject matter jurisdiction over this controversy, however. The documents governing NFFII provide that any disputes over the second fund will be resolved in the courts, and according to the laws, of the Netherlands Antilles. Thus, the Court shall dismiss the $75,085 claim for lack of subject matter jurisdiction.

In sum, after careful consideration of these issues, the Court shall, by separate order,

(1) GRANT T. Rowe Price's motion for summary judgment on all counts of the second amended complaint;

(2) GRANT Diamond's motion for summary judgment on Counts I-V of the amended counterclaim;

(3) GRANT T. Rowe Price's motion for summary judgment on Count VI of the amended counterclaim as it relates to a $35,000 loan to Diamond that she has not repaid; and

(4) DISMISS, because of lack of subject matter jurisdiction, that part of Count VI of the amended counterclaim relating to $75,085 that T. Rowe Price allegedly overpaid Diamond.

II. FACTS

In 1977, T. Rowe Price hired Debra J. Diamond as a research analyst. After a three-month probationary period, she was assigned to the New Horizons Fund ("New Horizons"), a mutual fund invested primarily in the common stock of small, rapidly growing companies. Specializing in health care and service companies, Diamond compiled a solid record and advanced within the company. Within several years, she had become a member of the Advisory and Investment Committees of New Horizons as well as a Vice President of T. Rowe Price.

By the mid 1980s, Diamond wished to be placed in charge of a fund. She alleges that she was passed over for such responsibility in favor of males with lesser performance records. Her solution, Diamond contends, was to create a fund of her own.

In 1985, through the efforts of Diamond, T. Rowe Price, and Drexel Burnham Lambert, New Frontier Fund I ("NFFI") was created.⁹ An investment limited partnership, NFFI was capitalized...