Zhou v. International Business Machines Corporation et al

Filing 34

ORDER denying 4 Pro Se Motion to Maintain Status Quo by Plaintiff Shaunpen Zhou. Signed by Chief Judge Linda R Reade on 12/01/15. (copy w/NEF mailed to Pltf) (jjh)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF IOWA
EASTERN DIVISION

SHAUNPEN ZHOU,
Plaintiff,

No. 15-CV-1027-LRR

vs.

ORDER

INTERNATIONAL BUSINESS
MACHINES CORPORATION and
ARTECH INFORMATION SYSTEMS,
LLC,
Defendants.
____________________
TABLE OF CONTENTS
I.

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

II.

PROCEDURAL HISTORY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

III.

FACTUAL BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

IV.

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

V.

ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
A.
B.
C.
D.
E.

VI.

Irreparable Harm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Balance of Harms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Likelihood of Success on the Merits . . . . . . . . . . . . . . . . . . . . . . 8
Public Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Balance of Equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

I. INTRODUCTION
The matter before the court is Plaintiff Shaunpen Zhou’s “Motion to Maintain Status
Quo When Lawsuit Pending for a Resolution” (“Motion”) (docket no. 4).
II. PROCEDURAL HISTORY
On August 17, 2015, Zhou filed a Pro Se Complaint (docket no. 1). Count I alleges
that Defendant International Business Machines Corporation (“IBM”) violated the Age
Discrimination in Employment Act (“ADEA”), 29 U.S.C. § 623, by failing to hire and
promote Zhou due to his age.

Count II alleges that Defendants IBM and Artech

Information Systems, LLC (“Artech”) violated the ADEA by subjecting Zhou to
discriminatory treatment due to his age. Count III alleges that IBM violated the ADEA by
deliberately underpaying Zhou due to his age. Count IV alleges that Defendants violated
the ADEA and the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 207, by failing to
properly document and pay overtime compensation. On October 16, 2015, IBM filed an
“Answer and Defenses to Plaintiff’s Complaint” (“IBM Answer”) (docket no. 9). On
October 26, 2015, Artech filed an “Answer and Defenses to Plaintiff’s Complaint”
(“Artech Answer”) (docket no. 14).
On October 2, 2015, Zhou filed the Motion. On November 2, 2015, Artech filed
a “Brief in Opposition to Plaintiff’s Motion to Maintain Status Quo” (“Artech Resistance”)
(docket no. 20). On November 3, 2015, IBM filed an “Opposition to Plaintiff’s Motion
to Maintain Status Quo” (“IBM Resistance”) (docket no. 25). On November 5, 2015,
Zhou filed a Reply (docket no. 27). No party has requested oral argument on the Motion,
and the court finds that oral argument is unnecessary. The Motion is fully submitted and
ready for decision.
III. FACTUAL BACKGROUND
Zhou is a employee of Artech and works in Dubuque, Iowa at the IBM Dubuque
Global Delivery Center (“Dubuque Center”). Zhou is sixty-two years of age. Artech is

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a third-party contractor for IBM. Zhou works as a system administrator and assists in
managing Amtrak’s UNIX computer servers. Zhou has been working with Amtrak’s
account since March 18, 2013.
On September 2, 2015, shortly after Zhou filed the Complaint, he received
notification that his regular and overtime wage rates were being modified for a period
running from September 5, 2015 through December 31, 2015.

Motion at 3, 9.

Specifically, his straight time, or regular pay, rate was being reduced from $40.00 per
hour to $37.89 per hour. Id. His overtime rate was being reduced from $60.00 per hour
to $37.89 per hour. Id. On September 4, 2015, Zhou received notification that he was
“required to reduce and take off for [eighty-eight] hours in [third quarter], 2015.” Id. at
11. On September 9, 2015, Zhou received a call from an Artech staff member requesting
that he acknowledge and accept the new pay rates and advising him that a failure to do so
would result in his termination. Id. at 3. Zhou “acknowledged receiving the notice, but
refused to accept the rate because it violates the law.” Id. On September 10, 2015, Zhou
receive a second notice, directing him to “ignore [the] previous email” and setting his new
rates at $37.89 per hour for straight time and $56.84 per hour for overtime. Id. at 3, 10.
IV. SUBJECT MATTER JURISDICTION
The court has original jurisdiction over the claims because they arise under the
ADEA and the FLSA. 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.”).
V. ANALYSIS
In the Motion, Zhou requests that the court “enter an [o]rder compelling Defendants
to reinstate Plaintiff’s pay rate, and directing [p]arties to maintain status quo when this case
[is] pending . . . resolution.” Motion at 1 (emphasis omitted). Zhou views the wage
reduction and required furlough as retaliation against him for filing the instant action. Id.

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He requests that the court direct Defendants to reinstate him to his previous rate of pay and
take no further discriminatory or retaliatory action against him. Id. at 7. IBM and Artech
construed the Motion as seeking a preliminary injunction under Federal Rule of Civil
Procedure 65(a). See IBM Resistance at 4 n.1; Artech Resistance at 1. However, Zhou
maintains that “[t]he Motion is not seeking [a] [p]reliminary [i]njunction or [t]emporary
[r]estraining [o]rder under Rule 65.” Reply at 1. Zhou asserts that a preliminary
injunction or restraining order must be aimed at the conduct of a specific party. Id. Zhou
argues that the Motion does not do so because he seeks to enjoin the conduct of all parties
to the dispute, including himself. Id.
Zhou does not provide, nor is the court aware of, any authority supporting either
the distinction for which Zhou argues or the existence of a “Motion to Maintain Status
Quo.” To the contrary, the substance of the Motion and the relief requested are indicative
of a motion seeking a preliminary injunction. “The primary function of a preliminary
injunction is to preserve the status quo until, upon final hearing, a court may grant full,
effective relief.” Kan. City S. Transp. Co., Inc. v. Teamsters Local Union #41, 126 F.3d
1059, 1066 (8th Cir. 1997) (emphasis added) (quoting Ferry-Morse Seed Co. v. Food
Corn, Inc., 729 F.2d 589, 593 (8th Cir. 1984)). This is exactly what Zhou seeks in the
Motion. See Motion at 7; Reply at 1. He seeks to prevent Defendants from taking further
adverse employment actions against him. The fact that the Motion also seeks to encompass
Zhou’s conduct does not change the court’s analysis. Zhou is appearing pro se, and pro
se pleadings must be construed to present claims within the proper legal framework. See
Stone v. Harry, 364 F.3d 912, 915 (8th Cir. 2004). Because a “Motion to Maintain Status
Quo” is not a cognizable motion, and because the Motion appears in substance to be a
motion for preliminary injunction, the court will consider the Motion within that
framework.

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“A preliminary injunction is an extraordinary remedy and the burden of establishing
the propriety of an injunction is on the movant.” Roudachevski v. All-Am. Care Ctrs.,
Inc., 648 F.3d 701, 705 (8th Cir. 2011). The court has considerable discretion in ruling
on a request for a preliminary injunction. See Sharpe Holdings, Inc. v. U.S. Dep’t of
Health & Human Servs., 801 F.3d 927, 936 (8th Cir. 2015). To determine whether to
grant a preliminary injunction, district courts should consider: “(1) the threat of irreparable
harm to the movant; (2) the balance between the potential harm and any harm that granting
the injunction will cause to other parties to the litigation; (3) the probability that the
movant will succeed on the merits; and (4) the public interest.” Sharpe Holdings, 801
F.3d at 937 (quoting Med. Shoppe Int’l, Inc. v. S.B.S. Pill Dr., Inc., 336 F.3d 801, 803
(8th Cir. 2003)). “No single factor is dispositive, as the district court must balance all
factors to determine whether the injunction should issue.” Lankford v. Sherman, 451 F.3d
496, 503 (8th Cir. 2006); see also Dataphase Sys., Inc. v. C L Sys., Inc., 640 F.2d 109,
113 (8th Cir. 1981) (“At base, the question is whether the balance of equities so favors the
movant that justice requires the court to intervene to preserve the status quo until the
merits are determined.”). The court will first consider each of these factors and then
determine whether the balance of equities supports issuing a preliminary injunction.
A. Irreparable Harm
“Irreparable harm occurs when a party has no adequate remedy at law, typically
because its injuries cannot be fully compensated through an award of damages.” Gen.
Motors Corp. v. Harry Brown’s, LLC, 563 F.3d 312, 319 (8th Cir. 2009). In order to
demonstrate such harm, the moving party must show “that the harm is certain and great
and of such imminence that there is a clear and present need for equitable relief.” Novus
Franchising, Inc. v. Dawson, 725 F.3d 885, 895 (8th Cir. 2013) (internal quotation marks
omitted) (quoting Iowa Utils. Bd. v. Fed. Commc’ns Comm’n, 109 F.3d 418, 425 (8th Cir.
1996)). Damages stemming from an adverse employment action must be “genuinely

5

extraordinary” to warrant injunctive relief. Sampson v. Murray, 415 U.S. 61, 92 n.68
(1974). Generally, “[e]conomic loss, on its own, is not an irreparable injury so long as
the losses can be recovered.” DISH Network Serv. L.L.C. v. Laducer, 725 F.3d 877, 882
(8th Cir. 2013).
In the instant action, Zhou has an adequate remedy at law. The injuries of which
Zhou complains are the reduction in his pay rate and a perceived scheme by his employer
to force him to quit his job or manufacture cause to fire him. See Motion at 5-7. IBM
argues that “Zhou has an adequate remedy at law in the form of monetary recovery for his
alleged temporary loss of income.” IBM Resistance at 6; see also Artech Resistance at 4
(“Because legal remedies in the form of backpay and other monetary damages are
adequate, there is no irreparable harm present if the [c]ourt does not issue an injunction.”).
The court agrees. Though it appears that Zhou has suffered a pay reduction, even if that
reduction was a result of an illegal practice on the part of Defendants, Zhou can be made
whole with a proper award of back pay. See, e.g., Parrish v. Immanuel Med. Ctr., 92
F.3d 727, 735 (8th Cir. 1996) (“Once unlawful discrimination has been found, back pay
should usually be awarded in furtherance of the ADEA’s goal to ‘make whole’ persons
who suffer loss due to discrimination.”). Zhou’s pay reduction, whatever the motive, is
purely economic loss, which alone is insufficient to establish irreparable injury.
Zhou also fears that this pay reduction is merely the first step toward Defendants
“arbitrarily terminating his job.” Reply at 2. Zhou argues that this represents irreparable
injury because “older workers find themselves disadvantaged in their efforts to retain
employment, and especially to regain employment when displaced from jobs.” Id. (quoting
29 U.S.C. § 621(a)). IBM points out that Zhou has continued to work, suggesting his only
potential injury is the reduction in wages. IBM Resistance at 6. The court initially notes
that Zhou has not been discharged. Even if Zhou were to be terminated, and even
assuming an improper or illegal motive for such discharge, the court finds that such harm

6

is not irreparable, nor is the danger of its occurrence clear or imminent. If Zhou is
discharged and prevails on the merits, reinstatement is the preferred remedy for unlawful
employment discrimination resulting in discharge. See, e.g., Salitros v. Chrysler Corp.,
306 F.3d 562, 572 (8th Cir. 2002). Even where reinstatement is impracticable, Zhou’s
damages may be mitigated by an award of front pay. Id. While reinstatement and front
pay are equitable remedies, rather than remedies at law, the court finds that the specter of
discharge is insufficient to establish irreparable injury where adequate remedies exist to
compensate Zhou for any harm visited upon him. Furthermore, Zhou has advanced no
evidence, aside from his own speculation, that his discharge is imminent or even probable.
Such speculative damages are insufficient to support granting a preliminary injunction—the
mere possibility of remote injury cannot constitute irreparable harm. See Rogers v. Scurr,
676 F.2d 1211, 1214 (8th Cir. 1982) (“The court must determine that a cognizable danger
of future violation exists and that danger must be more than a mere possibility.”).
Accordingly, the court finds that Zhou has not met his burden to demonstrate that he will
suffer irreparable harm absent a preliminary injunction. This, by itself, is enough to defeat
the Motion. See Laducer, 725 F.3d at 882 (noting that “the absence of irreparable injury
is by itself sufficient to defeat a motion for a preliminary injunction”). However, the court
will proceed to consider the other factors.
B. Balance of Harms
The balance of harms factor has been described as “the state of the balance between
this harm and the injury that granting the injunction will inflict on other parties.”
Roudachevski, 648 F.3d at 705. Zhou argues that “[g]ranting th[e] Motion will not hurt
any party” because IBM is such a large corporation that reinstating just one employee’s
pay rate would have no effect on its cost-saving measures as a whole. Reply at 6. IBM
argues that “injunctive relief against IBM could disrupt its cost-reduction efforts or, at a
minimum, negatively affect workplace morale.” IBM Resistance at 6. Zhou argues that

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“no one believes it will positively affect workplace morale [to] cut[] workers’ wages.”
Reply at 6.
The harm that Zhou faces in the instant action is clear—reduced wages from $40.00
to $37.89 per hour for regular pay and $60.00 to $56.84 per hour for overtime pay and
the possibility of discharge. The harm that Defendants face is, as IBM argues, potential
disruption of cost-reduction efforts. Whether reinstating Zhou’s individual pay rate would
cripple Defendants’ cost-saving strategy is immaterial. If the court were to grant injunctive
relief, it would still undermine Defendants’ legitimate cost-saving efforts, a harm in and
of itself. It stretches the imagination to accept that compelling Defendant to reinstate
Zhou’s higher pay rate would negatively impact workplace morale. Both parties’ harms
are financial and both are concerning. However, neither is clearly or necessarily more
grievous in magnitude than the other. Accordingly, the court finds that this factor does
not weigh strongly in favor of either party.
C. Likelihood of Success on the Merits
In the instant action, the court must consider whether Zhou has a “fair chance of
prevailing” on the merits. See Planned Parenthood Minn., N.D., S.D. v. Rounds, 530
F.3d 724, 732 (8th Cir. 2008). This element does not “require in every case that the party
seeking preliminary relief prove a greater than fifty [percent] likelihood that he will prevail
on the merits.” Dataphase Sys., Inc. v. C L Sys., Inc., 640 F.2d 109, 113 (8th Cir. 1981).
Instead, “[t]he very nature of the inquiry on petition for preliminary relief militates against
a wooden application of the probability test,” and “an effort to apply the probability
language to all cases with mathematical precision is misplaced.” Id. “It follows that the
court ordinarily is not required at an early stage to draw the fine line between a
mathematical probability and a substantial possibility of success.” Id. Only where “there
is no chance of success on the merits” will this factor be dispositive and completely bar
preliminary relief. Mid-Am. Real Estate Co. v. Iowa Realty Co., Inc., 406 F.3d 969, 972

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(8th Cir. 2005). The Eighth Circuit Court of Appeals has indicated that this factor is the
most significant factor in the analysis. See Home Instead, Inc. v. Florance, 721 F.3d 494,
497 (8th Cir. 2013).
Retaliation claims arising under the ADEA that rely on circumstantial, rather than
direct, evidence are analyzed under the familiar McDonnell Douglas burden-shifting
framework. See Stewart v. Indep. School Dist. No. 196, 481 F.3d 1034, 1042-43 (8th Cir.
2007); see also McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973). Zhou has not
advanced direct evidence of retaliation at this stage of the proceedings. Thus, the
McDonnell Douglas analysis is appropriate. “Under this framework, the initial burden is
on the plaintiff to establish a prima facie case” of retaliation. Stewart, 481 F.3d at 1043.
Therefore, Zhou must demonstrate: (1) that he participated in a protected activity; (2) that
his employer took an adverse employment action against him; and (3) that a causal
connection exists between the two. See Calder v. TCI Cablevision of Mo., Inc., 298 F.3d
723, 731 (8th Cir. 2002). An “adverse employment action is a tangible change in working
conditions that produces a material employment disadvantage.” Thomas v. Corwin, 483
F.3d 516, 528 (8th Cir. 2007) (quoting Wedow v. City of Kan. City, Mo., 442 F.3d 661,
671 (8th Cir. 2006)). Once the plaintiff establishes a prima facie case, the burden of
production shifts to the employer to articulate a legitimate, non-retaliatory reason for its
action. Stewart, 481 F.3d at 1043. If the employer does so, the burden shifts back to the
plaintiff to demonstrate that the employer’s explanations are pretextual and point to
evidence that creates a reasonable inference that the employer acted in retaliation. Id.
Defendants argue that Zhou’s pay reduction was not retaliatory, but was enacted as
part of a company-wide effort to reduce costs. See IBM Resistance at 7; Artech Resistance
at 2. IBM argues that “all . . . third-party contractors, including Artech and many others,
are subject to the same rate-reduction and furlough programs that Zhou seeks to enjoin.”
IBM Resistance at 7. It contends that, “as even Zhou acknowledges in his Complaint, pay-

9

rate reductions and furloughs are nothing new for IBM, having been used in past years
long before Zhou filed his [C]omplaint in this action.” Id. It maintains that “Zhou
provides zero evidence . . . that IBM’s company-wide cost reduction efforts in its . . .
business were undertaken in retaliation against Zhou rather than to reduce costs.” Id.
Artech’s arguments are similar, contending that Zhou “was never singled out and retaliated
against for filing this lawsuit.” Artech Resistance at 2.
Zhou recognizes that pay-rate reductions and furloughs have been instituted in the
past, but argues that, in each of those instances he had been exempted from the reduction
or furlough, or the reduction or furlough had been rescinded before it went into effect.
Reply at 5. He suggests that Artech informing him that he would be terminated if he did
not acknowledge and accept the reduced pay rate constituted a threat. Reply at 3. He also
states that, during his furlough time, he was still required to work on the weekends and
was unable to tell customers that he was on furlough. Id.
The Eighth Circuit has stated that,
if an employer has articulated a legitimate reason for its
actions, it is permissible for courts to presume the existence of
a prima facie case and move directly to the issue of pretext and
the determinative issue of causation when bypassing the prima
facie case analysis leads to clarity in framing the issues under
review.
Stewart, 481 F.3d at 1043. The court shall bypass the prima facie case analysis in this
instance. Artech and IBM have advanced legitimate, non-retaliatory reasons for their
actions—legitimate cost-saving efforts. Accordingly, the court will assume that Zhou has
established a prima facie case and will address the issues of pretext and causation.
The court finds that Zhou’s chance of demonstrating pretext and causation is
exceedingly low. IBM has provided the Declaration of Mark Evancho, an IBM employee
who “manag[es] the relationships between IBM and the many third-party contractors who
supply temporary workers to IBM.” Exhibit 1 (docket no. 25-1) at 2. On August 27,
10

2015, Evancho transmitted a memorandum informing many third-party contractors,
including Artech, that IBM “was requiring a temporary reduction in the bill rates of their
employees for certain work authorizations in IBM’s . . . lines of business.” Id. at 2, 5-7.
Artech was authorized to designate certain exclusions and exceptions from the bill rate
reduction “based on its business needs.” Id. at 3. IBM also provided the Declaration of
Andrew Sherman, an IBM employee working as the site manager at the Dubuque Center.
Sherman Declaration (docket no. 30) at 1. Sherman states that “the pay-rate reduction
applies to all contractors who supply temporary workers to IBM[] . . . . Thousands of
temporary workers are affected by this action—not just those working at Dubuque, and not
just those supplied by Artech.” Id. at 2. As for the furlough program, Sherman states that
furlough “can vary among locations, teams, and individuals, depending on IBM’s business
needs at the time.” Id. Sherman views Zhou’s allegations of retaliation as “false” and
considers “Zhou’s assertion that he is being singled out for retaliation [to be] baseless.”
Id. at 3.
Zhou has advanced no evidence directly supporting his claim for retaliation. He has
provided a variety of emails from the past wherein Artech exempted him from pay-rate
reductions and furlough requirements. See Reply Exhibits (docket no. 27-1). But simply
demonstrating that he has been exempted from these types of actions in the past does not
establish that Defendants’ proffered explanations are pretextual. Instead, in order to
demonstrate a causal connection between Zhou’s protected activity and the employer’s
adverse action, Zhou must demonstrate that his filing of the suit was the “but for” cause
of the pay reduction and furlough. See Porter v. City of Lake Lotawana, 651 F.3d 894,
898 (8th Cir. 2011) (“[U]nder federal [age discrimination] law, [a plaintiff] can recover
only if [his or] her complaint of discrimination was ‘the reason’ for . . . [the adverse
employment action].” (emphasis added)). It does not appear from the current record that
Zhou’s filing of the Complaint was the but for cause of his pay reduction or furlough. It

11

is true that the pay reduction and furlough occurred soon after Zhou filed the Complaint,
which is a consideration that courts may consider as evidence of causation in retaliation
cases.

See Lors v. Dean, 746 F.3d 857, 865-66 (8th Cir. 2014).

However, the

memorandum from IBM directing Artech and other third-party contractors to reduce bill
rates was not issued until after the Complaint was filed. See Exhibit A (docket no. 25-1)
at 5-7. Zhou may have been exempted from such cost-saving measures in the past, but the
mere fact that he was not exempted from this specific directive in this specific time period
is not sufficient to establish retaliation. Without further evidence that Zhou is being
singled-out in any way, the court finds that Zhou has failed to demonstrate a strong
likelihood of success on the merits weighing in favor of preliminary relief. To the
contrary, the court finds that Zhou has a somewhat less than fair chance to succeed on the
merits. However, because the court does not find that Zhou has no chance of success on
the merits, the court will not completely foreclose the possibility of relief if the other
factors weigh strongly in favor of granting it. See Mid-Am. Real Estate, 406 F.3d at 972.
Accordingly, the court finds that this factor weighs strongly against granting preliminary
relief.
D. Public Interest
IBM argues that “considerations of the public interest do not support Zhou, a wellpaid computer professional whose alleged grievance exists only in his own mind.” IBM
Resistance at 6. Zhou does not address the public interest factor in the Motion or Reply.
He generally asserts that injunctive relief is appropriate because it would serve the policy
considerations underlying the ADEA. See, e.g., Reply at 2. However, the burden
remains on Zhou to demonstrate that injunctive relief is proper. Zhou does not address
this factor in the Motion or Reply. The court declines to give great weight to IBM’s
conclusory assertion that the public interest does not favor Zhou. Accordingly, the court
finds that this factor does not weigh strongly in favor of either party.

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E. Balance of Equities
After considering each factor, the court finds that the balance of equities does not
favor granting preliminary relief. See Dataphase, 640 F.2d at 113. Zhou will not suffer
any irreparable injury if the court declines to enter a preliminary injunction and he appears
unlikely to succeed on the merits. Additionally, neither the balance of harms nor the
public interest weighs strongly in his favor.

The court, guided by the notion that

preliminary injunctions are an extraordinary remedy, finds that a preliminary injunction
is not warranted in the instant action.
VI. CONCLUSION
For the foregoing reasons, the Motion (docket no. 4) is DENIED.
IT IS SO ORDERED.
DATED this 1st day of December, 2015.

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