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Kassman v. KPMG LLP

United States District Court, S.D. New York

February 7, 2013

Donna KASSMAN et al., individually and on behalf of a class of similarly situated female employees, Plaintiffs,
KPMG LLP, Defendant.

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Janette Lynn Wipper, Sanford Wittels & Heisler, LLP, San Francisco, CA, Katherine M. Kimpel, David W. Sanford, Sanford, Wittels & Heisler, LLP, Washington, DC, Jeremy Heisler, Katherine E. Lamm, Katie Mueting, Siham Nurhussein, Deepika Bains, Sanford Heisler, LLP, New York, NY, for Plaintiffs.

Cheryl Marie Stanton, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., New York, NY, Colleen M. Kenney, John G. Levi, Sidley Austin LLP, Chicago, IL, Diane Marjorie Saunders, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Boston, MA, Peter O. Hughes, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Morristown, NJ, Steven W. Moore, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Denver, CO, Wendy M. Lazerson, Sidley Austin LLP, Palo Alto, CA, for Defendant.


JESSE M. FURMAN, District Judge:

Plaintiffs, five women, have brought this action on behalf of themselves and a putative class of current and former female professional employees of Defendant KPMG LLP, the U.S. member firm of global accounting firm KPMG International, alleging various forms of employment discrimination. Defendant has moved to dismiss, strike, or transfer most of Plaintiffs' claims, including all of their class claims. For the reasons discussed below, Defendant's motions are GRANTED in part and DENIED in part.


The Third Amended Complaint (" TAC" ) in this case is 120 pages long and contains over 550 paragraphs. For present purposes, it suffices to describe the five named plaintiffs— Donna Kassman, Linda O'Donnell, Sparkle Patterson, Jeanette Potter, and Ashwini Vasudeva— and to briefly summarize their claims. [1]

A. The Named Plaintiffs

Kassman began working at KPMG in 1993 and was steadily promoted until 1999, when she was made Senior Manager. (TAC ¶¶ 70-72). In 2003, while out on maternity leave, her pay was significantly cut without sufficient explanation and in spite of strong performance reviews. (TAC ¶¶ 74-78, 80-81). When Kassman returned from maternity leave in 2004, she

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began working on a flexible time schedule. (TAC ¶¶ 84, 106-7, 110). For the next six years, Kassman was repeatedly denied promotion to Managing Director despite her interest in such a promotion, a promise to promote her, and the promotion of less senior and equally or less qualified male colleagues. (TAC ¶¶ 88-91, 96). During this same period, she experienced baseless and gendered complaints from her colleagues that led to her removal from the promotion track. (TAC ¶¶ 92-97). For example, a fellow Senior Manager and one of his subordinates filed complaints about Kassman, claiming that she was " unapproachable" and " too direct," and later criticized her " tone." (TAC ¶¶ 92, 119). In April 2009, after these complaints began, Kassman filed discrimination complaints with KPMG's Office of Ethics and Compliance and Office of the General Counsel. (TAC ¶ 134). Shortly thereafter, Kassman began experiencing harassment and enhanced discrimination that led her to transfer, in October 2009, from the New York to the Stamford office. (TAC ¶ ¶ 118-31). Despite repeated complaints to KPMG human resources officials, nothing was done to remedy the discrimination and, in October 2010, Kassman felt compelled to resign. (TAC ¶¶ 132-50).

O'Donnell worked at KPMG from January 2003 until her termination in April 2009. (TAC ¶ 152). O'Donnell began her career in KPMG's Johannesburg, South Africa office, where she was promoted to Manager. (TAC ¶ 153). In September 2006, O'Donnell began a rotation in KPMG's Atlanta office, and transitioned to a permanent position there in February 2007. (TAC ¶¶ 154-55). As part of the rotation, KPMG demoted her to Senior Associate, ostensibly because all employees who transferred were demoted. (TAC ¶¶ 154, 160). Despite her demotion, O'Donnell continued performing Manager-level tasks. (TAC ¶¶ 164-70). In March 2008, O'Donnell informed her supervisors that she was pregnant, which resulted in a halt to her career progression. (TAC ¶ 173). She began receiving negative performance reviews for the first time and was denied a promotion to Manager, despite having held that title in South Africa, while others with less experience were promoted. (TAC ¶¶ 174-78). Moreover, after learning that O'Donnell was pregnant, her supervisor made several negative comments to her about pregnant women's abilities and a woman's role in an office and a family. (TAC ¶¶ 185-86). For example, he told her that he thought pregnant women were incapable of doing their jobs; that he did not see how, as a working mother, one could " tend to a child and work at KPMG at the same time" ; and that O'Donnell did not need to work when her husband was the " breadwinner" in the family. (TAC ¶ 185-86). On the day O'Donnell returned from maternity leave, KPMG fired her, allegedly because of the economy. (TAC ¶ 193).

Patterson worked as an Associate at KPMG from June 2007 until November 2010. (TAC ¶¶ 196, 218). Through 2009, Patterson received strong performance reviews and several performance awards. (TAC ¶¶ 199-204). Moreover, Patterson regularly performed tasks done by Senior Associates, but was never compensated or promoted, despite working as an Associate for longer than the standard two-year promotion timeframe. (TAC ¶¶ 207-08, 218-21). While Patterson was out on maternity leave, her supervisors asked her to reduce her role at KPMG. (TAC ¶ 224). When she returned from maternity leave, Patterson was intentionally intimidated and harassed by her supervisors and given negative performance reviews. (TAC ¶ 225). In addition, her largest client was taken away from her and, despite repeated requests, she was not provided with alternative

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work, resulting in a failure to meet her billable work goals. (TAC ¶¶ 232, 244). Patterson complained about the alleged discrimination and retaliation through various channels, but her complaints were ignored. (TAC ¶¶ 250-59). In November 2010, she felt compelled to resign because of the treatment, KPMG's failure to address her complaints, and a belief that there was no future for her at the company. (TAC ¶¶ 261-66).

Potter was employed at KPMG for eleven years, from July 1995 to July 2006. (TAC ¶ 268). Potter was hired as a Manager and received strong performance reviews during her entire tenure at KPMG. (TAC ¶¶ 269, 271-72). Despite those reviews, Potter had her pay frozen when similarly situated male colleagues did not. (TAC ¶¶ 280-87). Potter was also induced to decline attractive employment offers from other accounting firms with the promise of a promotion, but was ultimately passed over for that promotion in favor of less qualified male colleagues, allegedly because she did not engage in hostile and degrading social activities. (TAC ¶¶ 292-304). For example, in May 2002 Potter was removed from the track for a promotion she had been promised because she did not " schmooze" enough at Friday happy hours. (TAC ¶ 298). Potter declined to attend these happy hours for religious reasons and because male partners regularly engaged in overtly sexual conduct toward female employees at the events, including doing " body shots" (licking salt or sugar off of another person's body while consuming alcohol) off of female employees. (TAC ¶¶ 298-99). In July 2006, Potter felt compelled to resign from KPMG based on the lack of possible advancement, hostile and harassing comments from her supervisors, and the company's failure to address any of the discriminatory and harassing treatment she received. (TAC ¶¶ 306-12).

Vasudeva began her career at KPMG as an Intern, but was ultimately promoted to Senior Associate based on her strong performance, which was reflected in the positive reviews and numerous performance awards she received. (TAC ¶¶ 313-17). Vasudeva's career at KPMG stalled, however, when she informed her supervisors that she was pregnant and planned to take maternity leave. (TAC ¶ 328). Thereafter, she was passed over for promotions in favor of less qualified male employees, removed from her biggest client, reassigned to a client located far from her office, not invited to " client-building" events when male employees were, denied adequate support staff to meet her supervisors' expectations, began receiving negative performance reviews for irrelevant skills, and steered toward a flexible time schedule despite the fact that she was working full-time hours. (TAC ¶¶ 327-54). She was also subjected to sexual harassment and other degrading treatment by senior managers. (TAC ¶ 361). For example, in July 2009, one of Vasudeva's former supervisors suggested that, for women, the flavor of certain Indian food was similar to semen " in their mouth[s]." (TAC ¶ 361). In June 2009, Vasudeva complained about her treatment to senior management, human resources personnel, and ethics and compliance personnel. (TAC ¶¶ 355, 367). Nevertheless, KPMG failed to respond. (TAC ¶ 367). In September 2009, Vasudeva felt compelled to resign. (TAC ¶ 368).

B. Summary of Claims

The TAC includes nineteen counts of employment discrimination under various statutes and on behalf of different combinations of named and putative class plaintiffs. Specifically, it includes counts alleging: (1) individual and class claims for pay discrimination, promotion discrimination, and pregnancy and caregiving discrimination

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in violation of Title VII, the New York State Human Rights Law (" NYSHRL" ), and the New York City Human Rights Law (" NYCHRL" ) on behalf of Kassman, Patterson, and all members of the putative class (Counts I-III, V-VI, VII-X); (2) claims for the denial of equal pay for equal work under the federal and New York State Equal Pay Acts (" EPA" and " NYSEPA," respectively) on behalf of Kassman, O'Donnell, Patterson, Vasudeva and similarly situated claimants with respect to the EPA, and on behalf of all individual plaintiffs and putative class plaintiffs with respect to the NYSEPA (Counts IV, XI); (3) individual claims for retaliation under Title VII on behalf of Kassman and Patterson; under the NYSHRL and NYCHRL on behalf of Kassman; under the EPA on behalf of Kassman, O'Donnell, Patterson, and Vasudeva; under the NYSEPA on behalf of Kassman and Potter; and under the Family and Medical Leave Act (" FMLA" ) on behalf of O'Donnell, Patterson, and Vasudeva (Counts XII-XVI, XVIII); (4) individual claims for violations of the FMLA on behalf of O'Donnell, Patterson, and Vasudeva (Count XVII); and (5) an individual claim for race discrimination in violation of Title 42, United States Code, Section 1981 on behalf of Patterson (Count XIX).

The class claims (Counts I-XI) are brought on behalf of a putative class composed of " female exempt Client Service and Support Professionals, including but not limited to female Associates, Senior Associates, Managers, Senior Managers and Managing Directors." (TAC at 1). Plaintiffs allege that this class suffers from " a pattern and practice of gender discrimination, and employment policies and practices." (TAC ¶ 371). Such policies and practices include

(a) assigning female Professionals to lower titles and classifications than their male counterparts; (b) paying female Professionals less than their male counterparts; (c) denying female Professionals promotion and advancement opportunities in favor of male employees; (d) treating pregnant employees and mothers differently from non-pregnant employees, male employees, and noncaregivers; and (e) failing to prevent, respond to, adequately investigate, and/or appropriately resolve instances of gender discrimination and pregnancy/caregiver discrimination in the workplace.

(TAC ¶ 371). Plaintiffs allege that problems resulting from these practices were " systemic and Company-wide, because ... all stem from flawed policies, practices and procedures which emanate from the Company's New York headquarters." (TAC ¶ 374). They identify as problematic Defendant's " assignment, development, promotion, advancement, compensation and performance evaluation policies, practices and procedures." (TAC ¶ 372). Plaintiffs allege that these policies " all suffer from a lack of transparency, adequate quality standards and controls; sufficient implementation metrics; upper management/HR review; and opportunities for redress or challenge." (TAC ¶ 372). " As a result," they contend, " employees are assigned, evaluated, compensated, developed, and promoted within a system that is insufficiently designed, articulated, explained or implemented to consistently, reliably or fairly manage or reward employees." (TAC ¶ 372).

With respect to their claims under the EPA, Plaintiffs allege a putative Collective Action class composed of all future, current, and former female Professionals during the liability period, including female Professionals who " (a) were not compensated equally to males who had substantially similar job classifications, functions, families, titles and/or duties, (b) were not

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compensated equally to males who performed substantially similar work, and (c) who were denied promotion and advancement opportunities that would result in great compensation in favor of lesser qualified male employees." (TAC ¶ 418). Putative class members are required to " opt-in" to the Collective Action class pursuant to Title 29, United States Code, Section 216(b). (TAC ¶ 420).


A. Rule 12(b)(6)

Defendant moves to dismiss many of Plaintiffs' claims pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. To survive a Rule 12(b)(6) motion, a plaintiff must generally plead sufficient facts " to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A claim is facially plausible " when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Twombly, 550 U.S. at 556, 127 S.Ct. 1955). More specifically, the plaintiff must allege sufficient facts to show " more than a sheer possibility that a defendant has acted unlawfully." Id. A complaint that offers only " labels and conclusions" or " a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555, 127 S.Ct. 1955. Further, if the plaintiff has not " nudged [his or her] claims across the line from conceivable to plausible, [the] complaint must be dismissed." Id. at 570, 127 S.Ct. 1955.

Twombly and Iqbal notwithstanding, the Supreme Court has held that, to survive a motion to dismiss, " a complaint in an employment discrimination lawsuit [need] not contain specific facts establishing a prima facie case of discrimination under the framework set forth in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973)." Id. at 569, 127 S.Ct. 1955 (quoting Swierkiewicz v. Sorema N.A., 534 U.S. 506, 508, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002)) (internal quotation marks omitted).[2] Nevertheless, the elements of a prima facie case " provide an outline of what is necessary to render [a plaintiff's employment discrimination] claims for relief plausible." Sommersett v. City of N.Y., No. 09 Civ. 5916(LTS)(KNF), 2011 WL 2565301, at *5 (S.D.N.Y. June 28, 2011). Accordingly, " courts consider these elements in determining whether there is sufficient factual matter in the complaint which, if true, gives Defendant a fair notice of Plaintiff's claim and the grounds on which it rests." Murphy v. Suffolk Cnty. Cmty. Coll., No. 10-CV-0251 (LDW)(AKT), 2011 WL 5976082, at *5 (E.D.N.Y. Nov. 29, 2011).

B. Rule 23(d)(1)(D)

Defendant also moves to strike some of Plaintiffs' class ...

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