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Zhou v. International Business Machines Corp.

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

March 31, 2017





         I. INTRODUCTION ....................................... 2

         II. RELEVANT PROCEDURAL HISTORY ........................ 2

         III. SUBJECT MATTER JURISDICTION ......................... 3

         IV. SUMMARY JUDGMENT STANDARD ......................... 4

         V. RELEVANT FACTUAL BACKGROUND ....................... 5

         A. Parties .......................................... 5

         B. IBM and the Amtrak Team ............................ 6

         C. Zhou's Employment ................................. 8

         1. Request for pay increase ......................... 9

         2. Overtime ................................... 10

         3. February 12, 2016 through Zhou's removal from IBM ..... 14

         VI. ANALYSIS .......................................... 16

         A. Age Discrimination ................................21

         1. Failure to hire ...............................23

         2. Zhou's assignments and workload ..................25

         3. Application for pay raise ........................30

         4. Underclaiming of hours .........................33

         B. FLSA Claim .....................................34

         1. Actual or constructive knowledge ...................36

         2. Just and reasonable inference .....................43

         3. Age discrimination ............................45

         C. Retaliation ......................................46

         VII. CONCLUSION ....................................... 53


         The matters before the court are Defendant International Business Machines Corporation's (“IBM”) Motion for Summary Judgment (“IBM Motion”) (docket no. 102) and Plaintiff Shaunpen Zhou's “Resistance to Defendant IBM's Motion for Summary Judgment” (“Resistance”) (docket no. 121), in which Zhou requests partial summary judgment.


         On April 8, 2016, Zhou filed an Amended Complaint (docket no. 52).[1] The Amended Complaint sets forth eleven claims: (1) Count I alleges that IBM violated the “Age Discrimination in Employment Act of 1967” (“ADEA”), 29 U.S.C. § 623, by failing to hire and promote Zhou; (2) Count II alleges that IBM and Artech Information Systems, LLC (“Artech”) violated the ADEA by treating Zhou differently than his younger coworkers; (3) Count III alleges that IBM violated the ADEA by deliberately under-rating and underpaying Zhou; (4) Count IV alleges that IBM and Artech violated the ADEA by prohibiting Zhou from claiming overtime for hours worked; (5) Count V asserts that IBM and Artech violated the “Fair Labor Standards Act” (“FLSA”), 29 U.S.C. § 2, by prohibiting Zhou from claiming overtime for hours worked; (6) Count VI asserts that IBM violated the ADEA by retaliating against him after he filed the instant action; (7) Count VII asserts that IBM violated the “Iowa Civil Rights Act” (“ICRA”), Iowa Code § 216.6, by failing to hire and promote Zhou; (8) Count VIII asserts that IBM and Artech violated the ICRA by treating Zhou differently than his younger coworkers; (9) Count IX asserts that IBM violated the ICRA by deliberately under-rating and underpaying Zhou; (10) Count X asserts that IBM and Artech violated the ICRA by prohibiting Zhou from claiming overtime for hours worked; and (11) Count XI asserts that IBM violated the ICRA by retaliating against him after he filed the instant action. On May 13, 2016, IBM filed an Amended Answer (docket no. 68), generally denying liability and setting forth affirmative defenses.

         On December 15, 2016, Artech moved for summary judgment. See generally Artech Motion for Summary Judgment (docket no. 99). On December 16, 2016, IBM filed the IBM Motion. On January 23, 2017, at Zhou's request, the court dismissed Artech from the instant action. See Jan. 23, 2017 Order (docket no. 122). On that same date, Zhou filed the Resistance, requesting summary judgment in his favor on Counts III, VI, IX and XI of the Amended Complaint. On January 26, 2017, IBM filed a Reply (“Reply”) (docket no.124). No party requests oral argument, and the court finds that oral argument is unnecessary. The Motions are fully submitted and ready for decision.


         The court has original jurisdiction over the ADEA and FLSA claims because they arise under the United States Code. See 28 U.S.C. § 1331 (“The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.”). The court has supplemental jurisdiction over the ICRA claims because they are so related to the claims within the court's original jurisdiction that they form part of the same case or controversy. See 28 U.S.C. § 1367(a) (“[T]he district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy . . . .”). In other words, “the federal-law claims and state-law claims in the case ‘derive from a common nucleus of operative fact' and are ‘such that [a plaintiff] would ordinarily be expected to try them all in one judicial proceeding.'” Kan. Pub. Emps. Ret. Sys. v. Reimer & Koger Assocs., Inc., 77 F.3d 1063, 1067 (8th Cir. 1996) (quoting Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 349 (1988)) (alteration in original) (quotation marks omitted).


         Summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “Summary judgment is proper ‘if the pleadings, the discovery and disclosure materials on file, and any affidavits show'” an absence of a genuine dispute as to a material fact. Torgerson v. City of Rochester, 643 F.3d 1031, 1042 (8th Cir. 2011) (en banc) (quoting Fed.R.Civ.P. 56(c)(2)). “A dispute is genuine if the evidence is such that it could cause a reasonable jury to return a verdict for either party; a fact is material if its resolution affects the outcome of the case.” Amini v. City of Minneapolis, 643 F.3d 1068, 1074 (8th Cir. 2011) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 252 (1986)). “The movant ‘bears the initial responsibility of informing the district court of the basis for its motion, ' and must identify ‘those portions of [the record] . . . which it believes demonstrate the absence of a genuine issue of material fact.'” Torgerson, 643 F.3d at 1042 (alterations in original) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)). Once the movant has done so, “the nonmovant must respond by submitting evidentiary materials that set out ‘specific facts showing that there is a genuine issue for trial.'” Id. (quoting Celotex Corp., 477 U.S. at 324).

         On a motion for summary judgment, the court must view the facts “in the light most favorable to the nonmoving party . . . .” Id. (quoting Ricci v. DeStefano, 557 U.S. 557, 586 (2009)). “Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial, ” and summary judgment is appropriate. Ricci, 557 U.S. at 586 (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). “The nonmovant ‘must do more than simply show that there is some metaphysical doubt as to the material facts' . . . .” Torgerson, 643 F.3d at 1042 (quoting Matsushita, 475 U.S. at 586). Instead, “[t]o survive a motion for summary judgment, the nonmoving party must substantiate his allegations with sufficient probative evidence [that] would permit a finding in [his] favor based on more than mere speculation, conjecture, or fantasy.” Barber v. C1 Truck Driver Training, LLC, 656 F.3d 782, 801 (8th Cir. 2011) (second and third alterations in original) (internal quotation marks omitted) (quoting Putman v. Unity Health Sys., 348 F.3d 732, 733-34 (8th Cir. 2003)). Mere “self-serving allegations and denials are insufficient to create a genuine issue of material fact.” Anuforo v. Comm'r of Internal Revenue, 614 F.3d 799, 807 (8th Cir. 2010).


         Viewing the evidence in the light most favorable to the nonmoving party and affording him all reasonable inferences, the uncontested material facts are as follows.

         A. Parties

         Zhou is an individual who resided in the State of Iowa at the time the instant action was initiated.[2] Amended Complaint ¶ 12. Zhou was jointly employed by IBM and Artech until his termination. See Id . ¶¶ 13-14. IBM is a corporation headquartered in Armok, New York. Id. ¶ 13. IBM operates a “Client Innovations Center” in Dubuque, Iowa. “IBM's Statement of Undisputed Material Facts in Support of its Motion for Summary Judgment” (“IBM Statement of Facts”) (docket no. 102-1) ¶ 1.

         B. IBM and the Amtrak Team

         Among IBM's various teams working from the Dubuque location is the Amtrak team. Id. ¶ 6. The Amtrak team is responsible for providing a variety of technical services for the passenger railroad service Amtrak, including “operating system software maintenance, operating system software trouble shooting and repair” as well as “ad-hoc end user and other miscellaneous questions.” See Id . ¶ 15. Systems administrators on the Amtrak team are tasked with server “patching, ” or “the installation of changes or upgrades to the server environment, including security and service-related changes.” Id. ¶ 16. Because the server must be taken offline to complete a patching assignment, so-called “change windows, ” a period of time “during which the change or patch could be applied, ” are generally scheduled over nights and weekends. Id. ¶¶ 16, 17. During the period relevant to his action, Zhou was a systems administrator on the Amtrak team, working at the Dubuque location. Id. ¶¶ 5, 6.

         Artech is one of several temporary staffing firms with whom IBM contracts, and the Amtrak team includes several members placed by Artech. See Id . ¶¶ 2, 4. Zhou was placed at IBM on the Amtrak team by Artech. Id. ¶¶ 5, 6. IBM would pay Artech for the use of temporary employee's services and, in turn, Artech would pay such employees' wages. Artech employed a Service Delivery Manager at the Dubuque facility, Sarah Lynch, to whom Zhou reported. Id.¶ 11.

         IBM technicians fall into one of several levels, which corresponds to the complexity of their job duties and their pay. “Rhythm” is the lowest technical level, “Blues” follows, and “Jazz” represents the highest level. See IBM Statement of Facts ¶¶ 19, 20; see also IBM Supplemental Appendix (docket no. 124-2) at 36-41. In early 2014, IBM received unfavorable feedback from Amtrak regarding the team's communication skills. See IBM Statement of Facts ¶ 36. In response, the IBM team leader assigned to Amtrak proposed the creation of new positions, “Subject Matter Experts” (“SME”). Id. Three such positions were posted in 2014, and were communicated to the Amtrak team on May 20, 2014. Id. ¶¶ 36, 38. According to IBM management, the ideal candidate for the SME position was “someone who could remain calm and professional when the customer was yelling, explain technical concepts so that people of varying levels of technical knowledge could understand, and could think and speak on their feet in stressful situations.” Id. ¶ 37. Two of these SME positions were eventually filled by Mikhail Matveyev, who had previously been a temporary employee like Zhou, and Brendan Lloyd. Id. ¶¶ 39-41.

         System administrators generally reported to team leads, including the UNIX and Intel Team Lead, to whom Zhou reported. During the relevant time period, the UNIX and Intel team leads were: Robert Howe from Zhou's hiring until the Fall of 2013; Heather Majerus from Fall of 2013 through April of 2015; and David Fawcett from April of 2015 through Zhou's removal from his IBM placement. See Id . ¶ 12; see also IBM Appendix I[3] at 55, 67. In turn, team leads reported to a First Line Manager. See IBM Statement of Facts ¶ 12. During Zhou's time with IBM, there were three First Line Managers: William Thompson from February of 2013 through February of 2014; Heather Chumbley from February 2014 through August of 2014; and Jeff Segerstrom from August of 2014 through February 22, 2016. Id. ¶ 11.

         At all relevant times, IBM maintained an official overtime policy that reads as follows: “All hours in excess of [forty] hours worked, exclusive of the employee meal breaks, during an employee's regular payroll workweek will be considered as weekly overtime hours. . . . Time and one-half (1.5x base hourly rate) will be paid for hours worked over [forty] for the week.” IBM Appendix II at 147-48. Zhou was aware of IBM's overtime policy and consulted IBM's overtime policy during his placement at IBM. See IBM Statement of Facts ¶¶ 61, 62. Similarly, Artech maintains an overtime policy that reads as follows: “The law says that you cannot waive overtime compensation. When you are authorized to work overtime-over [forty] hours per week-you will be paid time-and-a-half for work after forty hours.” IBM Appendix II at 156. As with IBM's policy, Zhou was aware of and read Artech's overtime policy. See IBM Statement of Facts ¶¶ 64, 65.

         Additionally, IBM managers receive training on the law surrounding overtime. In particular, managers are trained that the right to overtime is governed by state and federal law; overtime cannot be waived; even if an employee works overtime without permission, the employee is normally paid for such hours; and “if an employee's task takes him or her over scheduled hours, he or she should still record that time, and IBM will pay that employee for the time worked, even if prior authorization was not received.” See IBM Appendix I at 123-128, 153-158. IBM has an online tool for reporting overtime hours, which permanent employees and temporary employees like Zhou are directed to use. See IBM Statement of Facts ¶ 67.

         C. Zhou's Employment

         On November 26, 2012, Zhou and Artech entered into an employment agreement. Id. ¶ 3; see also IBM Appendix II at 124-132. The employment agreement with Artech set Zhou's regular compensation at $40.00 per hour and overtime compensation at $60.00 per hour. See IBM Appendix II at 130. In approximately March of 2013, Artech placed Zhou with IBM as a temporary employee at its Dubuque location. IBM Statement of Facts ¶ 5. Zhou was placed as a UNIX Systems Administrator with the Amtrak Team. Id. ¶ 6. Zhou was placed at IBM as the lowest level technician, equivalent to the “Rhythm” level for an IBM permanent employee. Id. ¶ 19. At IBM, Zhou primarily reported to the UNIX and Intel Team Lead. See Id . ¶ 12. He would receive assignments that had to be completed within certain change windows, but it was up to employees to finish the assignments within the forty regular hours allotted for the week, or request overtime to complete such assignments. See, e.g., IBM Appendix II at 89.

         At IBM, Zhou was one of the most technically skilled systems administrators on the team and was regularly assigned the most technically challenging assignments. See Zhou Affidavit (docket no. 121-3) ¶ 9. He was praised on several occasions for his technical prowess. See Zhou Statement of Facts (docket no. 121-2) ¶¶ 10-16. Shortly after joining the Amtrak team, Zhou uncovered a faulty practice in the way that IBM was patching Amtrak's servers. See Zhou Affidavit ¶ 11. For this reason, IBM assigned him the task of patching the Amtrak servers, resulting in heavy workloads and extreme hours to complete his assignments. See, e.g., id ¶¶ 20, 24, 25.

         1. Request for pay increase

         On or about February 24, 2014, Zhou contacted Lynch to formally request reclassification to a higher skill level and a pay increase. See IBM Statement of Facts ¶ 47. Zhou's request would increase Zhou's hourly cost to IBM by $8.76 for regular time and $14.16 for overtime. Id. ¶¶ 48-49. Such additional cost to IBM would then be reflected in Zhou's wages from Artech. Lynch passed Zhou's request on to Chumbley. Id. ¶ 47.

         On April 9, 2014, Chumbley emailed Kim Mattox, Chumbley's Senior Manager and Service Integration Leader, and stated:

Are you interested in bringing this forward to raise Shaunpen's rate in an effort to retain him? I can't afford to lose him now, but with his communication problems (coming across as argumentative with the customer on the line, with his team lead and me). I have been keeping him on patching with help from Brian on the ecab calls to keep him from communicating with Amtrak as much as possible.

         IBM Appendix II at 21; see also IBM Statement of Facts ¶ 50. Ultimately, on June 12, 2014, Chumbley replied to Lynch and another Artech representative and stated:

While Shaunpen does have some useful skills, my team leads and I continue to have trouble getting Shaunpen to take direction without significant argument. He frequently is argumentative when our client asks him to do things as well. For these reasons, I would not support an increase in rate for Shaunpen.

         IBM Appendix II at 27. Accordingly, Zhou was denied a pay increase.

         2. ...

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