Erazo-Vazquez v. State Indus. Prods. Corp.
| Decision Date | 31 August 2021 |
| Docket Number | CIVIL 16-2709 (PAD) |
| Parties | EDGARDO ERAZO-VÁZQUEZ, Plaintiffs, v. STATE INDUSTRIAL PRODUCTS CORP., et al., Defendants. |
| Court | U.S. District Court — District of Puerto Rico |
Plaintiff Edgardo Erazo-Vázquez resigned from his employment as a sales representative in the State Chemical organization after the employer restructured its sales operation assigning territories and modifying the compensation arrangement with sales personnel. Claiming the changes were motivated by age and retaliatory animus and created a hostile work environment that led to his resignation, a resignation that he characterizes as a constructive discharge, he sued State Chemical Sales Company International, Inc. and State Chemical's parent company - State Industrial Products Corporation - complaining of age discrimination, retaliation unjust discharge, tortious behavior and constitutional violations under Federal and Puerto Rico law.[1] As explained below, some of the claims are time barred; there was no discrimination, hostile work environment or retaliation; the employer acted with legitimate, nondiscriminatory grounds in restructuring its sales operations and compensation formula to adjust to changes in the market; and plaintiff was not constructively discharged.[2] Therefore, the case must be, and is hereby dismissed under Fed.R.Civ.P. 56. To facilitate review a table of content is included as Appendix I.
On September 23, 2016, plaintiff filed the Complaint (Docket No. 1). On November 17, 2016, State Chemical answered the Complaint (Docket No. 13). On July 14, 2017, State Industrial answered the Complaint (Docket No. 48). After a contested discovery period, State Chemical and State Industrial moved for summary judgment (Docket Nos. 161 and 163), which plaintiff opposed (Docket Nos. 178 and 180). State Chemical and State Industrial replied (Docket Nos. 186 and 190), and plaintiff sur-replied (Docket No. 206). Meanwhile, on November 30, 2018, State Industrial and State Chemical moved for sanctions under Fed.R.Civ.P. 11 (Docket No. 200), and on December 28, 2018 asked the court to strike the sur-reply (Docket No. 208), both of which motions plaintiff opposed (Docket Nos. 210 and 213). On March 31, 2019, the court granted defendants' motions for summary judgment and denied the motions for sanctions and to strike plaintiff's sur-reply (Docket No. 229).
In the process of preparing the corresponding Opinion and Order, the court stayed the case because the plaintiff in the Companion Case, a former sales representative like plaintiff in the State Chemical organization with similar claims against the same defendants here, had appealed to the First Circuit the entry of summary judgment against him (Docket No. 233). Along that line, the court referred this case to mediation pursuant to the Civil Appeals Management Program, ordering the parties to appear before the First Circuit's settlement office (Docket No. 231). But no settlement was reached. And on November 10, 2020, the First Circuit affirmed the sister court's decision, entering judgment the same day. That being so, the stay is lifted. With the benefit of the First Circuit's decision, following are the grounds in support of summary judgment here.
Summary judgment is appropriate when “the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). A factual dispute is genuine “if the evidence is such that a reasonable jury could returned a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). It is “material” if it potentially affects the outcome of the suit under governing law. Id.
All reasonable factual inferences must be drawn in favor of the party against whom summary judgment is sought. See, Shafmaster v. U.S., 707 F.3d 130, 135 (1st Cir. 2013)(so noting). To resist summary judgment, however, the nonmovant must do more than show some metaphysical doubt as to a material fact. See, Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)(articulating proposition). Conclusory allegations, empty rhetoric, unsupported speculation, or evidence which, in the aggregate, is less than significantly probative, do “not suffice to ward off a properly supported summary judgment motion.” Nieves-Romero v. U.S., 715 F.3d 375, 378 (1st Cir. 2013).
Plaintiff was born on September 6, 1956. See, Docket No. 161-1, ¶ 11; Docket No. 180-1, ¶ 11. He began working as a sales representative at State Chemical on November 23, 1987. See, Docket No. 161-1, ¶ 2. He resigned in May 2015. Id. at ¶ 10.[4] State Chemical is a subsidiary of State Industrial. Id. at ¶ 1.[5] State Industrial manufactures and sells industrial maintenance and specialty chemical products. Id. State Chemical sells State Industrial's products in Puerto Rico. Id.
State Chemical sales representatives are paid on a salary or straight commission basis. See, SUMF (Docket No. 161-1) ¶ 5.[6] Salaried representatives receive a basic salary of $25, 000 per year, monthly bonuses of 5% commissions subject to the representative's meeting established monthly goals, vacations, expense reimbursements, and participation in benefit plans. See, Docket No. 180-1, ¶ 5; Docket No. 173-9, pp. 1-2. Commission payments are based on the volume of sales and whether clients are given a discount. See, Docket No. 186-1, ¶ 216. Plaintiff was paid on a commission basis. See, Docket No. 180-1, ¶ 215; Docket No. 186-1, ¶ 215.[7] Under that arrangement, he also received expense reimbursements, vacations, and fringe benefits. See, Docket No. 161-27, p. 26. In a letter dated March 11, 2013, he was offered the option of being compensated on a salary-basis. See, Docket No. 161-1, ¶ 6; Docket No. 180-1, ¶ 6; Docket No. 173-1, pp. 1-2. But he did not accept this offer because for him, being paid on commissions was more beneficial than being paid on salary. See, Docket No. 161-1, ¶ 7; Docket No. 180-1, ¶ 8.
State Chemical sales representatives do not receive holiday pay. See, Docket No. 161-1, ¶ 53; Docket No. 180-1, ¶ 53. In 2012, however, the Company mistakenly made a holiday payment to commissioned salespersons, including plaintiff, based on some wording included in the Sales Associate Handbook. See, Docket No. 161-1, ¶ 50.[8] On January 31, 2013, State Chemical sent plaintiff a letter informing him of the error and that the Company was suspending the validity of any Employee Handbook containing the provision on holiday pay. See, Docket No. 161-1, ¶ 51; Docket No. 180-1, ¶ 51; Docket No. 161-22, p. 1. The Sales Associate Handbook was changed accordingly in 2013. See, Docket No. 161-1) ¶ 52.[9] Since then, no State Chemical employee receives holiday pay. See, Docket No. 161-1, ¶ 53; Docket No. 180-1, ¶ 53.
One of plaintiff's accounts was that of Caribbean Cinemas, which he handled for about 26 years. See, Docket No. 180-1, ¶ 157; Docket No. 186-1, ¶ 157. Around 2012, another company - Ecolab - offered Caribbean Cinemas its services. See, Docket No. 180-1, ¶ 158; Docket No. 186-1, ¶ 158. Because State Chemical was about to lose the account to the competitor, to retain the account it had to lower its prices. See, Docket No. 195, ¶ 159. So, it entered into a negotiation process with Caribbean Cinemas, which culminated in an agreement in August 2012, by which State Chemical offered its products at reduced prices; gave Caribbean Cinemas a $20, 000.00 credit; and assigned two technicians to serve Caribbean Cinemas' locations. See, Docket No. 180-1, ¶¶ 160, 162; Docket No. 186-1, ¶¶ 160; 162; Docket No. 173-1, p. 1; Docket No. 195-6, p. 18. At the same time, it added ten more products to the account, that is, products that Caribbean Cinemas had not been buying prior to the agreement. See, Docket No. 195-6, p. 13.
The strategy was successful, leading to retention of the account to the benefit of both plaintiff and State Chemical, albeit the discount carried a reduction in plaintiff's commission rate. See, Docket No. 180-1, ¶ 175; Docket No. 186-1, ¶ 175. Prior to the adjustment, depending on the product, plaintiff received a 20% or 25% commission. See, Docket No. 195-6, p. 12. With the adjustment, he received a 16% commission for sales on all products regardless of discounts plus 4% of reimbursable expenses based on the billing, an arrangement with which plaintiff agreed. See, Docket No. 195, ¶ 173; Docket No. 173-9, p. 1. In January 2013, the Company informed plaintiff of the new arrangement, confirming it in writing on March 11, 2013. See, Docket No. 173-9, p. 1.[10] Overall, plaintiff's total compensation in 2012 was $54, 023; in 2013, $58, 385; and in 2014, $58, 093. See, Docket No. 161-27, p. 26. Even though, as mentioned earlier, he resigned in May 2015, his annualized compensation for that year was $77, 760. Id.[11]
E. Assigned Sales Territory (“AST”) Program 1. Program Announcement
In April 2013, State Chemical made a presentation to its sales force entitled “The Future of State.” See, Docket No. 161-1, ¶ 17; Docket No. 180-1 ¶ 17. During that presentation, the Company expressed that it wanted to focus on key client accounts that purchased more than $2, 500 a year by establishing relationships with decision-makers at client companies and offering price protection agreements. See, Docket No. 161-1, ¶ 18; Docket No. 180-1, ¶ 18. Historically, State Chemical's point of sale was with the client...
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