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Vice president not entitled to commissions

Where a company placed its vice president for enterprise sales on unpaid administrative leave, it was not required to pay her salary and commissions. She was not providing any “services” to the company as she had unilaterally taken unauthorized PTO.

Background

Zeta Global Corporation employed Melissa Racklin as Vice President, Enterprise Sales from Nov. 12, 2018, until Jan. 21, 2022, when she resigned to begin a new job. 

Zeta has filed a motion for summary judgment on Racklin’s claims for: (1) fraud in the inducement; breach of contract/unjust enrichment; breach of contract, unjust enrichment and Virginia Wage Payment Act, or VWPA, 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; discrimination and hostile work environment in violation of Title VII and retaliation and constructive discharge in violation of Title VII.

Fraud

The statute of limitations for fraud actions in Virginia is two years “after the cause of action accrues.” The record shows that by July 2019, at the absolute latest, Racklin knew, or should have known, that she would not receive the accounts that Zeta purportedly promised during the recruitment process. Because Racklin commenced her lawsuit more than two years after July 2019, the fraud in the inducement claim is time barred.

Pay claims

Racklin alleges that Zeta breached the 2019 plan by refusing to pay her five percent commissions on a Verizon deal. But the deal did not close until March 2020, after the restructuring of the Verizon account and the appointment of Chad Miller to be the sole lead on the Verizon account. Accordingly, Miller was credited with closing that deal and under the terms of the 2019 plan, Racklin was not entitled to any Verizon commission payments.

Racklin’s five percent commission claim also fails in light of the 2019 amendment, which provides for Racklin to receive a three percent commission on any deals that any Zeta sales representative closed with Verizon, for a period of up to three years. Although Racklin contends that the 2019 amendment as well as the 2020 plan are invalid because she executed those agreements under duress, she failed to carry her heavy burden of showing that she executed these agreements under duress.

Racklin next argues that even if the 2020 and 2021 plans are valid, they nevertheless constitute improper, unenforceable amendments to the 2019 amendment. But the 2019 amendment includes no prohibition against further amendments. The 2020 and 2021 plans are therefore valid and controlling.

Racklin next claims that Zeta breached the offer letter and 2021 plan, and violated the VWPA, by failing to pay Racklin her salary and commission payments from July 29, 2021 (the date Zeta placed Racklin on unpaid administrative leave) until Jan. 21, 2022 (the date Racklin informed Zeta of her resignation). The court finds that Zeta did not breach the offer letter by placing Racklin on unpaid administrative leave and refusing to pay her salary after July 29, 2021, because she was not providing any “services” to Zeta as she had unilaterally taken unauthorized PTO.

Relatedly, Racklin’s VWPA claim fails because the statute only covers “earned wages,” and does not apply if the “failure to pay was because of a bona fide dispute between the employer and its employee.” Moreover, Racklin did not render any services to Zeta after going on PTO on July 9 and, thus, did not earn any wages.

The undisputed facts show that by July 6, 2021, Zeta had decided to formally place Racklin on a performance improvement plan. Because the 2021 plan provides that Racklin must be “in good standing on the date that the [commissions] are paid by Zeta Global,” Racklin was subject to “performance management” as of the time her June 2021 commission payments were due, and her violation of the PTO policy subjected her to disciplinary action. Zeta is granted summary judgment on Counts Four-Seven.

Employment claims

Racklin claims Zeta discriminated against her on the basis of gender. Because one alleged comparator (Miller) is not similarly situated and other comparators did not receive more favorable treatment or had materially different compensation systems, Racklin fails to state a prima facie case for wage discrimination under Title VII.

Regarding Racklin’s hostile work environment claim, while the evidence shows that Racklin perceived harassment on the basis for her sex, and the comments made to her were disrespectful and demeaning, the evidence presented is insufficient as a matter of law to allow a reasonable juror to find that Racklin’s treatment was because of her sex. And the evidence is insufficient to allow a reasonable fact finder to conclude that the environment was sufficiently severe or pervasive.

Turning to Racklin’s retaliation claim, Zeta is entitled to summary judgment because it has provided legitimate non-retaliatory reasons for its decision to place Racklin on unpaid leave (that Racklin violated the company PTO policy and had made clear she had no intention of returning to work), and Racklin has failed to present sufficient evidence that Zeta’s explanations are a pretext for retaliation. Finally, because Zeta (1) never prevented Racklin from returning to work and (2) promptly investigated Racklin’s complaints, Racklin fails as a matter of law to offer evidence that would allow a factfinder to find that she was constructively discharged.

Defendant’s motion for summary judgment granted.

Racklin v. Zeta Global Corp., Case No. 1:21-cv-1035, Sept. 14, 2022. EDVA at Alexandria (Trenga). VLW 022-3-405. 47 pp.