Racklin v. Zeta Glob. Corp.
| Decision Date | 14 September 2022 |
| Docket Number | 1:21-cv-1035 (AJT/JFA) |
| Parties | MELISSA RACKLIN, Plaintiff, v. ZETA GLOBAL CORP., Defendant. |
| Court | U.S. District Court — Eastern District of Virginia |
In this employment dispute, Defendant Zeta Global Corp. (“Zeta”) has filed a Motion for Summary Judgment [Doc. No. 135] as to all of Plaintiff Melissa Racklin's claims, which include Fraud in the Inducement (Count I) Breach of Contract/Unjust Enrichment relating to Verizon commission payments (Counts II-III); Breach of Contract/Unjust Enrichment and Virginia Wage Payment Act relating to Racklin's placement on unpaid administrative leave, beginning July 29, 2021, and Zeta's decision not to pay Racklin her commissions or salary (Counts IV-VII) Discrimination and Hostile Work Environment in violation of Title VII (Count VIII); and Retaliation and Constructive Discharge in violation of Title VII (Count IX) (“the Motion”).[1] For the reasons stated below, the Motion is GRANTED as to all Counts and this case is DISMISSED.[2]
The following facts are undisputed unless otherwise noted.
Zeta Global Corporation is a digital marketing and marketing technology company. [Doc. No. 137] (Defendant's Statement of Undisputed Facts (hereinafter “SUF”)), ¶ 1. Zeta employed Melissa Racklin as Vice President, Enterprise Sales from November 12, 2018 until January 21, 2022, when she resigned to begin a new job. [SUF], ¶¶ 2, 100. Racklin's main responsibility at Zeta was to sell the company's proprietary ZX product, which provides digital media solutions to assist companies in acquiring new customers. [SUF], ¶ 3.
Zeta hired Donald Steele in March 2017 to serve as the company's first ever Chief Revenue Officer (“CRO”). [SUF], ¶ 4. Sometime thereafter in 2017, Zeta, through the efforts of Donald Steele, began recruiting Racklin to join Zeta. [SUF], ¶ 11; [Stoler Decl.], Ex. 1 (Racklin Dep. Tr.) at 490:13-491:18.[4] At that time, she was employed at Epsilon Data Management, LLC (“Epsilon”); and Steele had known Racklin since 2011 when he hired her to work at Epsilon. [SUF], ¶ 12; [Stoler Decl.], Ex. 1 (Racklin Dep. Tr.) at 91:8-11, 94:3-10.
On October 10, 2018, Racklin interviewed for a position at Zeta with several people, including Steele and the company's Chief Operating Officer, Steven Gerber. [SUF], ¶ 13. During those interviews, according to Racklin, Gerber and Steele promised Racklin that she would be assigned and/or lead the T-Mobile, Sprint, and Verizon client accounts if she joined Zeta. [SUF], ¶¶ 14-15; [Doc. No. 149] (Plaintiff's Response to Zeta's Statement of Undisputed Facts (hereinafter “RSUF”)), ¶ 14. Gerber and Steele deny making those promises. [SUF], ¶ 16. Racklin does not claim that any other Zeta employees made any statements and/or promises to her regarding the Verizon, Sprint, or T-Mobile accounts during her recruitment, [SUF], ¶ 17; and, besides Racklin's recollections, the record does not contain any other evidence that Steele and Gerber made such promises to Racklin. [SUF], ¶ 18; [RSUF], ¶ 18.
At the time Gerber and Steele made the alleged promises, the promised accounts were assigned to Chad Miller, who at all relevant times, served as Senior Vice President, Brand Development, [SUF], ¶ 6; and during her recruitment process, Racklin learned that Sprint and Verizon's mobile phone division, Verizon Wireless (“VW”), were already assigned to Miller. [SUF], ¶ 21; [RSUF], ¶ 21. Zeta considered Miller a very successful salesperson and one of Zeta's most important employees. [SUF], ¶ 6. By way of example, upon assuming the CRO position at Zeta, Steele terminated every member of the Enterprise Sales team-the internal group exclusively responsible for bringing in new clients, oftentimes referred to as “new logos”-except Chad Miller. [SUF], ¶¶ 4-5.
On October 12, 2018, Zeta sent Racklin an offer letter for the position of Vice President, Enterprise Sales. [SUF], ¶ 22. Racklin understood that she would be responsible for bringing in new logos for Zeta. [SUF], ¶ 22. The offer letter did not identify specific clients or accounts that Racklin would lead or work on. [SUF], ¶ 23. Racklin carefully and completely reviewed the offer letter and understood its terms before signing the letter on October 16, 2018, thereby accepting Zeta's offer of employment. [SUF], ¶ 24. The offer letter did not mention the assignment of any particular accounts to her and by signing the offer letter, Racklin agreed to “comply with and be bound by the operating policies, procedures and practices of the Company.” [SUF], ¶¶ 23, 25. The offer letter also stated that “[t]his offer letter sets forth the entire agreement and understanding between the Company and you relating to your offer of employment and supersedes all prior verbal discussions between us.” [SUF], ¶ 25.
During Racklin's employment at Zeta, she was paid a base salary and could earn commissions on any deal with any client she brought to Zeta and the amount of commissions she could earn each month was unlimited. [SUF], ¶ 33. Racklin, like other Zeta salespeople, received a new commission plan every calendar year. [SUF], ¶ 29. Racklin signed her first commission plan on March 10, 2019 (the “2019 Plan”), [SUF], ¶ 30. Under the 2019 Plan, Racklin would be eligible to receive commissions in the amount of 5% of Gross Recognized Revenue (“GRR”) on ZX deals she brought to Zeta. [SUF], ¶ 32. Zeta reserved the right to modify the 2019 Plan as well as interpret the plan's terms. [SUF], ¶ 31.
On February 7, 2019, Racklin notified Gerber, Steele, and her direct manager at the time, Sean Welsh, that her contact at Verizon Fios (“VF”), Anne Hogan, was interested in doing business with Zeta. [SUF], ¶ 36. Racklin insisted that the VF opportunity was distinct from the work Chad Miller was performing for Verizon Wireless through his Verizon contact, John Edwards. [SUF], ¶ 36. Gerber authorized Racklin to pursue a “pilot” (short-term initial test contract) with VF. [SUF], ¶ 37; [RSUF], ¶ 37.
In mid-May 2019, Verizon restructured and collapsed VF into its existing VW business unit. [SUF], ¶ 38. Verizon told Zeta that it wished to negotiate and deal with only one Zeta team going forward. [SUF], ¶ 39; [RSUF], ¶ 39. As a result of this internal restructuring, Verizon assigned John Edwards-Miller's Verizon contact-to manage Verizon's overall Zeta relationship, [SUF], ¶ 39; [RSUF], ¶ 39; and Gerber decided Miller would be exclusively responsible for the VW account. [SUF], ¶ 40; [RSUF], ¶ 39. In or around July 2019, John Edwards informed Zeta that Verizon would not move forward with the VF pilot that Racklin had been pursuing;[5] and Racklin had no further contact with Verizon after July 2019. [SUF], ¶¶ 41-42.
Pursuant to the 2019 Plan, Racklin was not entitled to earn commissions on any Verizon deals that she did not bring to Zeta. [SUF], ¶ 43. Gerber offered to amend Racklin's 2019 Plan to make her eligible for commissions amounting to 3% of the GRR over the “run rate”[6] on ZX deals that any Zeta sales representative closed with Verizon “for a period of up to three years” (the “2019 Amendment”). [SUF], ¶ 44. This compensation structure was “highly unusual” and a departure from Zeta's compensation policy and standard practice. [SUF], ¶ 45. Racklin signed the 2019 Amendment on June 25, 2019, and returned a copy to Zeta on July 1, 2019. [SUF], ¶ 46. As discussed below, Racklin disputes the validity of the 2019 Amendment, stating that she “repeatedly and adamantly objected to Zeta's decision to remove her from the Verizon account and reduce her Verizon commission to 3%,” and only “signed the 2019 Amendment . . . under duress,” pointing to her emergency room visit the day after she signed the 2019 Amendment as evidence of her duress. [RSUF], ¶ 46. In March 2020, Miller closed the Verizon deal, which was intended to run for 36 months. [SUF], ¶ 48. Absent the 2019 Amendment, Racklin would not have been entitled to commissions on any VW deal that Miller closed. [SUF], ¶ 47.
In March 2020, Gerber removed Steele as CRO, dissolved the Enterprise Sales team, and terminated every Enterprise Sales team member except Racklin, Welsh, Mary Schlafly, and Jay Rogers. [SUF], ¶ 50. Gerber did not terminate Racklin in March 2020 because he still believed in Racklin's ability to generate revenue. [SUF], ¶ 53. Gerber assigned Welsh, Schlafly, and Racklin to a new ZX sales team reporting to Matt Martella, who Zeta hired as President of ZX in January 2020. [SUF], ¶ 51. Although Miller reported to Martella for a short period of time, he was subsequently assigned to report to Tom Walsh, Zeta's head of strategic partnerships. [SUF], ¶ 54.
On April 9, 2020, Zeta presented Racklin with a copy of her proposed 2020 commission plan (“Proposed Plan”). [SUF], ¶ 55. The Proposed Plan eliminated the “run rate” concept for her Verizon commissions. [SUF], ¶ 55. Instead, the Proposed Plan made Racklin eligible for commissions on all Verizon business at a rate of 1% of the GRR collected from Verizon for 2020. [SUF], ¶ 55. Zeta sought to amend the commission calculation because the final terms of the VW deal were materially different than what had been originally anticipated, rendering the run rate difficult to apply. [SUF], ¶ 56. Nevertheless, Zeta contends, and Racklin disputes, that this commission structure was closely equivalent in value to the 3% commissions over the run rate that Racklin received under the 2019 Amendment. [SUF], ¶ 56; [RSUF], ¶ 56.
Racklin initially refused to sign the Proposed Plan. [SUF], ¶ 57. Over the...
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