Zhang v. American Gem Seafoods, Inc., No. 01-36130.

• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)
• Writing for the Court: D. Nelson
• Citation: 339 F.3d 1020
• Parties: Wei ZHANG, Plaintiff-Appellee, v. AMERICAN GEM SEAFOODS, INC., Delaware corporation; MCMI Food Company, a Texas corporation; Harry Lees, a natural person, Defendants-Appellants.
• Docket Number: No. 01-36130.
• Decision Date: 07 August 2003

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339 F.3d 1020 Wei ZHANG, Plaintiff-Appellee,
v.
AMERICAN GEM SEAFOODS, INC., Delaware corporation; MCMI Food Company, a Texas corporation; Harry Lees, a natural person, Defendants-Appellants. No. 01-36130. United States Court of Appeals, Ninth Circuit. Argued and Submitted April 10, 2003. Filed August 7, 2003.

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Katharine Cooper Franklin and Leigh Ann Collings Tift, Littler Mendelson, PC, Seattle, Washington, Janet Hugie Smith and Frederick

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Thaler, Ray Quinney & Nebeker, Salt Lake City, Utah, for the defendants-appellants.

Scott C.G. Blankenship, The Blankenship Law Firm, Seattle, Washington, for the plaintiff-appellee.

Appeal from the United States District Court for the Western District of Washington; Thomas S. Zilly, District Judge, Presiding. D.C. No. CV-99-01441-TSZ.

Before: Dorothy W. Nelson, Sidney R. Thomas, Circuit Judges, and Dean D. Pregerson,^* District Judge.

OPINION

D.W. NELSON, Senior Circuit Judge.

Appellee Zhang Wei ("Zhang")¹ asserted claims for employment discrimination and breach of contract, contending that he was retaliated against and ultimately fired due to his Chinese ethnicity and nationality. He sued his former employer, appellant American Gem Seafoods, Inc. ("American Gem"), American Gem's corporate parent, appellant MCMI Food Company ("MCMI" and, together with American Gem, the "corporate defendants"), and MCMI's president, appellant Harry Lees, in federal district court. A jury found the corporate defendants liable for discrimination under federal law, awarding both compensatory and punitive damages, and found the corporate defendants and Lees liable for breach of contract, awarding lost wages and wages willfully withheld. All of the defendants appealed. We affirm the district court's entry of judgment on the jury's verdict.

FACTUAL BACKGROUND

The factual recitation herein is taken from the evidence presented to the jury.

Zhang Wei, formerly a professor of business and a proponent of Western economic systems at Northeastern University in Dalian, China, came to the United States in 1990 due to the political crackdown following the Tiananmen Square massacre. After finishing his MBA at Delaware State University, he began working in the seafood industry, eventually becoming the vice president of SeaRich Seafoods and general manager of SeaRich West, based near Seattle.

In September 1997, MCMI formed American Gem as a subsidiary to take over SeaRich Seafoods and several other seafood companies. Zhang was hired to join American Gem after the takeover; according to his employment contract, which was signed by Al Reitzer, then president of American Gem, Zhang's position was vice president of American Gem and general manager of its Pacific Gem division. Zhang testified that although his division was integral to the new company's operations, he was initially offered a lower salary than the Caucasian vice presidents of the acquired companies. He held out for equal compensation, and eventually American Gem agreed. In October 1998, Zhang was promoted to president of the Pacific Gem division, and a 1998 American Gem publication listed Zhang as "responsible for all seafood procurement from China and other Asian countries."

In December 1997, appellant Harry Lees was hired as president and CEO of MCMI. Lees took a direct role in the management of American Gem, superseding Reitzer; Lees asked Reitzer to step aside as president of American Gem, and Reitzer appointed James Mullin as president in the spring of 1998. In November

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1998 Lees hired a new management team that included Clair Parker and Jim Bugbee. Mullin left American Gem shortly thereafter and Lees forced Reitzer to resign in December 1998. Parker then became president of American Gem, and Bugbee became a vice president. Also around this time, Jim Hilger was hired as the Chief Financial Officer of American Gem.

Zhang presented evidence that he was discriminated against by American Gem's management, especially the new management team. Witnesses testified that Lees told them that he distrusted Zhang because he was Chinese, that Lees did not like Chinese people and made derogatory comments about them, and that Lees suspected that Zhang was "looking out for his Chinese friends' interests at the expense of our company." Another Chinese employee, Parker Gao, testified that Zhang was generally treated worse than American Gem's white employees.

Zhang was sidelined in the management of American Gem. Although Zhang was a vice president and had previously reported directly to the American Gem president, he was now required to report to the new management team, including CFO Hilger and fellow vice president Bugbee, and he was excluded from management meetings. He had previously been in charge of all Asian operations, but his new business card listed him as Vice President, China Operations. This new description apparently reflected a demotion. No one told him why.

Industry publications, which apparently got their information from American Gem, also omitted Zhang's name from lists of managers. One referred to six managers in American Gem's "new Seattle-based management team," including Parker, Bugbee, and Hilger, but not Zhang. Another publication, dated February 1, 1999, omitted Zhang from a list of officers, vice presidents, and managers of American Gem — a list that showed Bugbee as the Vice President for Asian Procurement — and stated that American Gem's "management has been completely replaced." Zhang testified that many of his suppliers were confused by this and called him to see whether he was still with the company.

Zhang presented evidence that he worked hard and that he brought in profits for American Gem. In addition to the Pacific Gem division, Zhang worked with an office in Dalian, China, Zhang's hometown. Zhang often worked from 6:30 a.m. until midnight to stay in contact with operations both on the East Coast and in China. Reitzer, Zhang's former supervisor, testified that Zhang was a dedicated and tireless worker.

Zhang's division, Pacific Gem, was the only profitable division in the company, and Zhang had the highest sales of any American Gem employee in 1998. Although he was entitled to a $25,000 bonus under his contract, he was never paid one for 1998. Lees testified that Zhang did not receive a bonus because although the Pacific Gem division was profitable, American Gem as a whole was not. Nonetheless, after Zhang was terminated, Bugbee, who is Caucasian, received a bonus for 1999 even though American Gem was unprofitable that year. Zhang also testified that the Dalian office's expenses were not paid by American Gem while he was in charge.

Zhang never received any antidiscrimination policy literature or training while he worked at American Gem and was not informed about how to make a discrimination complaint. Mullin, American Gem's president during 1998, testified that there was "no real [antidiscrimination] policy" during the time that American Gem was formed.

In February 1999, Zhang took a trip to Iceland along with two former American

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Gem employees. They met with people at Atlantic Coast Fisheries, and Zhang handed out his Pacific Gem business card. Zhang told the company that he was taking a personal vacation with his father — his first vacation since starting work at SeaRich Seafoods — and used his vacation time for the trip. Upon his return from Iceland on February 24, 1999, he was met by Parker and Hilger as he exited Customs at Boston's Logan Airport, and they told him in a loud voice that he was terminated. When he asked why, they told him that he could go back to Seattle to find out. No one asked him why he had gone to Iceland. Cynthia Diaz, an attorney who worked for MCMI's parent company, told Zhang that he was fired for going to Iceland with competitors. At trial, however, Lees testified that, at the time Zhang was terminated, no one knew why he had made the trip. Several months after he was terminated, and after repeatedly requesting an explanation, Zhang received a letter from Diaz stating that in addition to the Iceland trip, he was terminated because he violated a directive against extending credit, refused to provide documentation of transactions in China, and was insubordinate to Lees. None of these accusations was substantiated at trial.

Zhang also presented evidence that, in comparison to Caucasian employees who had been terminated, he was treated unfavorably during and after his termination. He was terminated publicly without any chance to respond to any allegations of wrongdoing and without so much as a word of explanation. His company car was immediately confiscated, and his personal effects were held by American Gem. After termination, he did not receive any salary, expense reimbursements, accrued vacation time, or medical benefits. Finally, American Gem sent letters, written in English and Chinese, to his suppliers in China stating that he no longer worked for them.

In contrast, other former employees of American Gem, all Caucasian, had not been fired immediately or publicly and in most cases had been allowed to resign. They had been given severance packages and had continued to receive salary and benefits after termination. One employee who had a company car was allowed to keep it for six weeks after termination. Some of these employees were terminated for cause, including two who were basically stealing from the company and one who allegedly exposed himself to his coworkers. None said that American Gem sent out letters to their business contacts notifying them of the termination.

When Zhang was fired, Bugbee came to the company's Seattle office and confiscated the keys of American Gem employees Parker Gao and Stacy Li, who are Chinese. Bugbee then assumed Zhang's former title and responsibilities as Vice President for Asian Procurement, although he was...