Bourbon, Kenneth v. Kmart Corporation

In the
United States Court of Appeals
For the Seventh Circuit
No. 98-2433
KENNETH BOURBON,
Plaintiff-Appellant,
v.
KMART CORPORATION,
Defendant-Appellee.
Appeal from the United States District Court
for the Southern District of Illinois.
No. 97 C 182--William D. Stiehl, Judge.
Submitted September 23, 1999--Decided August 4, 2000
Before POSNER, MANION and ROVNER, Circuit Judges.
ROVNER, Circuit Judge. Kenneth Bourbon sued his
employer, Kmart Corporation, under Illinois law
for retaliatory discharge, claiming Kmart fired
him after he complained that his supervisor was
engaged in dishonest and unethical behavior
towards customers. The district court granted
summary judgment in favor of Kmart because
Illinois law allows suits for retaliatory
discharge only under very limited circumstances,
and because Bourbon could not show that Kmart’s
stated reason for the discharge was pretextual.
We affirm.
I.
Bourbon began working as an automobile mechanic
at the Wood River, Illinois Kmart in January
1995. Bourbon had worked at two other Kmart
locations in 1994 without incident, but was fired
from the Wood River store after only one month.
According to Bourbon, he was terminated for
reporting to the personnel department on two
occasions that his supervisor had engaged in
dishonest and unethical conduct towards
customers. In particular, he reported that on one
occasion, he accidentally broke a part on a
customer’s car, and offered to pay for a
replacement part himself. Instead, his supervisor
charged the customer for the extra repair, and
used a junkyard part to effect the repair. On
another occasion, he reported that a customer was
charged for an unnecessary replacement of a rack
and pinion steering system when another mechanic
misdiagnosed a problem. Both customers were
eventually fully reimbursed by Kmart for these
overcharges. Shortly after reporting these
incidents, Bourbon’s supervisor approached him to
complain about his work performance and attitude.
A little more than a month after Bourbon began
his employment at the Wood River Kmart, he was
terminated. Kmart, of course, contended that
Bourbon was terminated for performance problems
and not in retaliation for bringing questionable
conduct to light.
Bourbon sued Kmart in Illinois state court and
the case was removed to the United States
District Court for the Southern District of
Illinois. Bourbon’s amended complaint in that
court charged only that Kmart fired him in
retaliation for reporting dishonest and unethical
behavior by his supervisor. At the close of
discovery, Kmart moved for summary judgment on
the ground that the Illinois tort of retaliatory
discharge did not protect employees who reported
dishonest or unethical conduct but rather
protected only employees who reported criminal
conduct or who filed workers’ compensation
claims. In response, Bourbon pointed out that his
supervisor’s conduct constituted theft by
deception under Illinois law, and therefore his
reporting of that conduct came within the purview
of the retaliatory discharge tort. The district
court employed the McDonnell-Douglas burden
shifting analysis to Bourbon’s claim and found
that Bourbon could not show that Kmart’s
legitimate, non-discriminatory reason for his
termination was pretextual. See McDonnell-Douglas
Corp. v. Green, 411 U.S. 792 (1973).
Alternatively, the district court found that even
if Bourbon met the standard under McDonnell-
Douglas, he could not show that his termination
was in violation of clear public policy because
he was reporting unethical, dishonest behavior
and not criminal behavior when he was fired. The
district court therefore granted summary judgment
in favor of Kmart. Bourbon appeals.
II.
On appeal, Bourbon takes issue with the
district court’s application of McDonnell-Douglas
to his claim for retaliation, arguing that burden
shifting is appropriate only at trial or in the
context of a motion for judgment notwithstanding
the verdict. Bourbon also argues that there was
a material dispute regarding the reason for his
termination that could be resolved only at trial.
Kmart, in turn, contends that Bourbon’s
termination does not come within the scope of the
retaliatory discharge tort because Bourbon claims
only that he was fired for reporting unethical
and dishonest conduct, and not for reporting any
criminal activity. Kmart also asserts that
Bourbon has no proof that he was performing
satisfactorily at the time he was fired, and that
he thus cannot make out a prima facie case under
McDonnell-Douglas.
Illinois law allows claims for retaliatory
discharge when an employee is terminated for
filing a workers’ compensation claim or because
the employee has reported the employer’s criminal
conduct, either to law enforcement personnel or
to the company itself. See Kelsay v. Motorola,
Inc., 384 N.E.2d 353 (Ill. 1978) (recognizing for
the first time the tort of retaliatory discharge
when an employee was terminated for asserting
rights under workers’ compensation law);
Palmateer v. International Harvester Co., 421
N.E.2d 876 (Ill. 1981) (expanding tort of
retaliatory discharge to encompass terminations
of employees who were fired because they reported
employer’s criminal conduct to law enforcement
authorities); Petrick v. Monarch Printing Corp.,
444 N.E.2d 588 (Ill. App. 1 Dist. 1982)
(recognizing retaliatory discharge when employee
reports criminal conduct to supervisors instead
of law enforcement personnel); Belline v. K-Mart
Corp., 940 F.2d 184, 187 (7th Cir. 1991)
(applying tort of retaliatory discharge where an
employee reports unlawful conduct to an
employer). A valid claim for retaliatory
discharge requires a showing that (1) an employee
has been discharged; (2) in retaliation for the
employee’s activities; and (3) that the discharge
violates a clear mandate of public policy.
Hartlein v. Illinois Power Co., 601 N.E.2d 720,
728 (Ill. 1992). "The element of causation is not
met if the employer has a valid basis, which is
not pretextual, for discharging the employee."
Id. No one disputes that Bourbon was discharged.
Kmart disputes that he was discharged because he
reported the customer overcharges, and also
maintains that firing an employee for reporting
unethical conduct falls outside the scope of the
tort of retaliatory discharge.
The question of whether Bourbon’s reporting of
his supervisor’s conduct is within the scope of
the tort is a close question. The fact that
Bourbon may have been wrong about whether the
conduct was criminal is irrelevant under Illinois
law. See Palmateer, 421 N.E.2d at 880; Belline,
940 F.2d at 188. The Illinois Supreme Court
explained that persons acting in good faith who
have probable cause to believe crimes have been
committed should not be deterred from reporting
them by the fear of being wrongfully discharged.
Palmateer, 421 N.E.2d at 880. Bourbon’s initial
characterization of his supervisor’s conduct as
dishonest and unethical does not change the fact
that, under Illinois law, Bourbon may have
reasonably believed that the conduct also meets
the definition of theft by deception. See 720
ILCS sec. 5/16-1. Bourbon’s firing in retaliation
for reporting that conduct would therefore likely
meet the standard set forth in Palmateer as being
in violation of a clear mandate of public policy,
a policy against theft. Indeed, in Palmateer, the
crime reported by the discharged employee was
theft of a $2 screwdriver, and the court
emphasized that it was not the magnitude of the
crime that mattered but whether the General
Assembly had decided that the crime should be
resolved by resort to the criminal justice
system. So too with the conduct Bourbon
complained about here. The Illinois General
Assembly has decided that depriving persons of
their property by means of deception is a crime
under Illinois law, and Bourbon’s reporting of
that conduct cannot be used as the reason for his
termination even though he is otherwise an at-
will employee. Nor is it determinative that Kmart
eventually reimbursed these customers or that the
Attorney General refused to pursue the matter.
For the purposes of Illinois law, all that
matters is that when Bourbon reported the
conduct, he reasonably believed his supervisor
was engaged in unlawful activity. Belline, 940
F.2d at 188.
Bourbon’s case, however, fails on the element
of causation, for he has insufficient evidence
demonstrating a link between reporting his
supervisor’s conduct and his termination. As we
mentioned above, the element of causation is not
met if the employer has a valid basis, which is
not pretextual, for discharging the employee.
Hartlein, 601 N.E.2d at 728. Bourbon has
presented no direct evidence that the reason for
his termination was his reporting of the
overcharges. No one admitted to him, for example,
that he was being fired for that reason. Rather,
Kmart claims that it terminated Bourbon’s
employment because he was an incompetent
mechanic, and the company presented documentation
of the problems it had with Bourbon’s work.
Bourbon’s lack of direct evidence is not
determinative, however. Illinois retaliatory
discharge cases brought in federal court may be
analyzed using the burden-shifting method
presented in McDonnell-Douglas. See Hiatt v.
Rockwell Int’l Corp., 26 F.3d 761, 767 (7th Cir.
1994). To establish a prima facie case using this
method, Bourbon must show that he was in a
protected class, that he was performing his job
satisfactorily, that he was nevertheless the
subject of a materially adverse employment
action, and that others outside the class were
treated more favorably. Hiatt, 26 F.3d at 767-68.
If Bourbon can establish his prima facie case,
Kmart must then articulate a legitimate, non-
discriminatory reason for his termination. The
burden then shifts back to Bourbon to show that
Kmart’s proffered reason is nothing more than a
pretext for unlawful discrimination. Id.
Bourbon’s proof fails in at least two regards
using this method. First, he has no evidence
showing that he was performing his job to Kmart’s
satisfaction. All reports of his performance in
his short stay at the Wood River Kmart were
negative, detailing complaints by customers, co-
workers and supervisors regarding Bourbon’s work
performance and attitude. That Bourbon had
successfully, and briefly, worked at two other
Kmart locations before coming to the Wood River
store is irrelevant to his performance there. But
even if we were able to find that there was at
least a question as to his performance, he cannot
show that his employer’s stated reason for
terminating him is pretextual. Indeed, the only
evidence that he has to demonstrate pretext is
the close relation in time between his reporting
of the overcharges and his termination. We have
held that temporal proximity alone is not enough
to prove pretext. See Roberts v. Broski, 186 F.3d
990, 995 (7th Cir. 1999)./1 The district court
therefore correctly entered summary judgment in
favor of Kmart.
AFFIRMED.
/1 As we noted in Broski, chronology can sometimes
support an inference that a discharge is
discriminatory. For example, when an employee
receives praise one day and is confronted with a
laundry list of criticism the next, she may be
able to establish pretext where the only
intervening event was the disclosure that she is
disabled. Bourbon has no such claim here because
Kmart’s criticism of him was consistent
throughout his one month tenure at the store. See
Broski, 186 F.3d at 995 n.3.
Posner, Circuit Judge, concurring. I join the
panel’s opinion but write separately to flag for
future consideration an issue (ignored by the
parties, hence waived) that is implicit in the
following sentence in the opinion: "Illinois
retaliatory discharge cases brought in federal
court may be analyzed using the burden-shifting
method presented in McDonnell-Douglas [Corp. v.
Green, 411 U.S. 792 (1973)]" (emphasis added). In
support of this proposition, the opinion cites
Hiatt v. Rockwell Int’l Corp., 26 F.3d 761, 767
(7th Cir. 1994), which in turn cites McEwen v.
Delta Air Lines, Inc., 919 F.2d 58 (7th Cir.
1990). Neither case cites any authority for the
proposition other than Hiatt’s citation of
McEwen. The only reason given for the result is
a statement in McEwen that since the McDonnell-
Douglas standard regulates merely the order of
proof, it is procedural rather than substantive
within the meaning of the Erie doctrine and it
therefore governs diversity cases as well as
federal-question cases. So even though the
Supreme Court of Illinois expressly rejected the
application of McDonnell-Douglas to Illinois
retaliatory-discharge cases in Clemons v.
Mechanical Devices Co., 704 N.E.2d 403, 407-08
(Ill. 1998), should such a case wander into
federal court by virtue of the diversity
jurisdiction the court should apply McDonnell-
Douglas to it.
Our sister circuits have assumed, to the
contrary, that state law, not federal law,
governs the burden-shifting standard applicable
to cases in which the rule of decision is state
rather than federal. E.g., Perry v. Woodward, 199
F.3d 1126, 1141-42 (10th Cir. 1999); Norville v.
Staten Island University Hospital, 196 F.3d 89,
95 (2d Cir. 1999); Payne v. Norwest Corp., 185
F.3d 1068, 1073-74 (9th Cir. 1999); Carpenter v.
Federal Nat’l Mortgage Ass’n, 165 F.3d 69, 72
(D.C. Cir. 1999); Mullin v. Raytheon Co., 164
F.3d 696, 699 (1st Cir. 1999); King v. Herbert J.
Thomas Memorial Hospital, 159 F.3d 192, 198 (4th
Cir. 1998); Lee v. State of Minnesota, Dept. of
Commerce, 157 F.3d 1130, 1133 (8th Cir. 1998);
Nichols v. Lewis Grocer, 138 F.3d 563, 565-66
(5th Cir. 1998); Olson v. General Electric
Astrospace, 101 F.3d 947, 956 (3d Cir. 1996);
Pierce v. Commonwealth Life Ins. Co., 40 F.3d
796, 802 n. 8 (6th Cir. 1994). These cases do not
discuss the choice of law issue; they merely take
for granted that the McDonnell-Douglas standard
is substantive for Erie purposes; nor have I
found any illuminating scholarly discussions of
the issue. But I am inclined to think that the
position (or better perhaps the instinct) of
these other circuits is correct.
To describe the McDonnell-Douglas standard as
merely prescribing the order of proof and the
allocation of burdens of production, though
common, see, e.g., Reeves v. Sanderson Plumbing
Products, Inc., 120 S. Ct. 2097, 2106 (2000), and
literally correct, is an invitation to
misunderstanding. Ordinarily, if all a plaintiff
in a discrimination case could show was that he
was qualified for a job (or promotion, or
retention) but was passed over in favor of a
person of a different race (sex, religion, etc.),
his opponent would be entitled to summary
judgment, because no reasonable jury could infer
from these bare facts that it was more likely
than not that the employer’s action was
invidious. Under McDonnell-Douglas, this bare
showing compels summary judgment for the
plaintiff unless the defendant produces evidence
of a noninvidious reason for the action
complained of. Applied to retaliation, the logic
of the McDonnell-Douglas standard would compel
summary judgment for the plaintiff who showed
that after lodging a complaint about
discrimination, he (but not any otherwise
similarly situated employee who did not complain)
was fired or otherwise subjected to an adverse
employment action even though he was performing
his job in a satisfactory manner, unless, again,
the defendant presented a noninvidious reason for
the action. Hiatt v. Rockwell Int’l Corp., supra,
26 F.3d at 767; McEwen v. Delta Air Lines, Inc.,
supra, 919 F.2d at 59. Without the boost given by
McDonnell-Douglas, the plaintiff in such a case
would have to establish, as part of his prima
facie case and thus before the defendant had any
burden of explanation, a causal connection
between the lodging of the complaint and his
being fired.
And so the Illinois court concluded in Clemons
that to follow McDonnell-Douglas in an Illinois
retaliatory-discharge case "would, in essence,
expand the tort of retaliatory discharge by
reducing plaintiff’s burden of proving the
elements of the tort. Because we refuse to expand
the tort of retaliatory discharge, we decline
plaintiff’s invitation to adopt the three-tier
allocation of proof method in retaliatory
discharge cases." 704 N.E.2d at 408. In like vein
the U.S. Supreme Court recently found
"substantive" a New York state law regulating
review of damages awards because while the
statute "contain[ed] a procedural instruction .
. . the State’s objective [wa]s manifestly
substantive." Gasperini v. Center for Humanities,
Inc., 518 U.S. 415, 429 (1996). In rejecting
McDonnell-Douglas for retaliation cases, the
objective of the Illinois court likewise was
"manifestly substantive," namely to avoid
"expand[ing] the tort of retaliatory discharge."
Or as we put it in S.A. Healy Co. v. Milwaukee
Metropolitan Sewerage Dist., 60 F.3d 305, 310
(7th Cir. 1995), "the state’s goals are
substantive--designed to shape conduct outside
the courtroom and not just improve the accuracy
or lower the cost of the judicial process--though
the means are procedural."
A practical way to decide whether a rule of
state law is substantive or procedural for
purposes of the Erie doctrine is to ask whether
the rule is limited to a particular substantive
area or whether it applies across the board. If
the former, it is likely to reflect substantive
policy, to which the federal court should defer,
and if the latter to be a product of purely
procedural concerns that properly may differ
between federal and state courts. E.g., Herremans
v. Carrera Designs, Inc., 157 F.3d 1118, 1123
(7th Cir. 1998); S.A. Healy Co. v. Milwaukee
Metropolitan Sewerage Dist., supra, 60 F.3d at
310. It was on this basis that we suggested in
Harbor Ins. Co. v. Continental Bank Corp., 922
F.2d 357, 364 (7th Cir. 1990), that the doctrine
of "mend the hold," a type of estoppel, was
substantive for Erie purposes insofar as it was
limited to contract cases, just like the parol
evidence rule, which might otherwise be thought
a rule of procedure. "Rules of contract
interpretation, such as the parol evidence and
four-corners rules, are deemed substantive,
because of their effect on the conduct of
contracting parties outside the courtroom, even
though the rules operate through limiting the
kinds of evidence that are admissible." AM Int’l,
Inc. v. Graphic Management Associates, Inc., 44
F.3d 572, 576 (7th Cir. 1995). The McDonnell-
Douglas rule, unlike for example the rule that a
motion for summary judgment need not be supported
by evidence, Celotex Corp. v. Catrett, 477 U.S.
317, 322-24 (1986), is not a general rule of
federal procedure; it is tailored for and limited
to discrimination cases, as we emphasized in Diaz
v. Fort Wayne Foundry Corp., 131 F.3d 711 (7th
Cir. 1997). It is part of the law of
discrimination, which is substantive.
But there is a rather considerable complication.
The McDonnell-Douglas standard that we apply in
most of our retaliation cases is not really the
McDonnell-Douglas standard. The logical
adaptation of McDonnell-Douglas to retaliation,
the adaptation we assumed in Hiatt and McEwen and
that may have led the Supreme Court of Illinois
to reject its use in cases under the Illinois law
of retaliatory discharge, is, as I have
suggested, to entitle the plaintiff to summary
judgment if he shows that after lodging a
complaint about discrimination, only he, not
otherwise similarly situated employees who did
not complain, was subjected to an adverse
employment action even though he was performing
his job in a satisfactory manner. But most cases
in this and other circuits hold that the prima
facie case of retaliation under McDonnell-Douglas
requires more--requires proof of a "causal link"
between the protected expression in which the
plaintiff engaged (as by filing a complaint about
an unlawful act by his employer) and the adverse
employment action of which he is complaining.
E.g., Miller v. American Family Mutual Ins. Co.,
203 F.3d 997, 1007 (7th Cir. 2000); Sauzek v.
Exxon Coal USA, Inc., 202 F.3d 913, 918 (7th Cir.
2000); Byers v. Dallas Morning News, Inc., 209
F.3d 419, 427 (5th Cir. 2000); Jones v.
Washington Metropolitan Area Transit Authority,
205 F.3d 428, 433 (D.C. Cir. 2000).
If this means that the plaintiff must present
evidence that his protected expression caused the
defendant to retaliate, then McDonnell-Douglas
really does regulate just the order of proof and
the allocation of burdens of production and has
no substantive implications, since the plaintiff
would have to prove as much in a retaliation case
if McDonnell-Douglas had never been heard of. But
it would be better then to drop reference to
McDonnell-Douglas altogether, because cases such
as Miller and Sauzek go on to say, very
confusingly as it seems to me, that after the
plaintiff has made his prima facie case, the
defendant can defeat it by producing evidence
that the motive for the adverse employment action
was not retaliatory, unless the plaintiff is able
to come back and show that the alleged
nonretaliatory motive was actually pretextual.
That is McDonnell-Douglas-speak, all right, but
it is out of place. If the plaintiff has produced
evidence that he was fired because of his
protected expression, he has gone beyond
McDonnell-Douglas by producing actual evidence of
unlawful conduct, and that should be enough to
get him to a jury. McDonnell-Douglas is designed
to give the plaintiff a boost when he has no
actual evidence of discrimination (or
retaliation) but just some suspicious
circumstances. If he can prove retaliation with
evidence that his protected expression was in
fact the cause of his being fired, he doesn’t
need McDonnell-Douglas and it gives him nothing.
Further complicating the picture, however, is
disagreement--or maybe sheer muddle--as to what
"causal link" means. If it means, as I have
assumed thus far, and as we held in King v.
Preferred Technical Group, 166 F.3d 887, 892 (7th
Cir. 1999); Johnson v. City of Fort Wayne, 91
F.3d 922, 939 (7th Cir. 1996), and Klein v.
Trustees of Indiana University, 766 F.2d 275, 280
(7th Cir. 1985), that the plaintiff must present
evidence that had it not been for his protected
expression, he would not have been fired (or
suffered whatever other adverse action of which
he complains), then the situation is as I have
described it: McDonnell-Douglas has no proper
role to play in a federal retaliation suit. But
the Fifth and Eleventh Circuits have held that
all that "causal link" signifies in this context
is that the protected expression and the adverse
action "were not wholly unrelated," and that this
means that something less than proof that the
plaintiff wouldn’t have been fired (or suffered
other adverse action) had he not engaged in the
protected expression--less than proof, that is,
of "but for" causation (what philosophers call a
necessary condition)--will suffice to complete
the prima facie case. Long v. Eastfield College,
88 F.3d 300, 305 n. 4 (5th Cir. 1996); Simmons v.
Camden County Board of Education, 757 F.2d 1187,
1189 (11th Cir. 1985). And some of our cases
accept this definition, e.g., Sauzek v. Exxon
Coal USA, Inc., supra, 202 F.3d at 918; Hunt-
Golliday v. Metropolitan Water Reclamation
District, 104 F.3d 1004, 1014 (7th Cir. 1997)--
yet without attempting to distinguish King,
Johnson, and Klein or to explain what "not wholly
unrelated" means. In Sauzek and Hunt-Golliday, we
actually required (despite our "not wholly
unrelated" language) proof of a causal relation,
202 F.3d at 918-19; 104 F.3d at 1014-15, while
Johnson, a case that recites the stricter test,
accepts a mere coincidence in timing--expressly
rejected by Sauzek as sufficient to prove that
the protected expression and the adverse
employment action were "not wholly unrelated,"
202 F.3d at 919--as proof of the required causal
link! 91 F.3d at 939.
Someday we’ll have to decide what the prima
facie case of retaliation is in the Seventh
Circuit. But whatever it is has no relation to
McDonnell-Douglas, which is not about the meaning
of "causal link." The Erie issue, however, may
turn on that meaning. If the requirement of
proving cause is so attenuated as to give the
plaintiff a boost toward winning his case that he
would not have under ordinary rules of pleading
and production, then there is a conflict with
substantive state law, and what the federal
courts inaptly call the McDonnell-Douglas
standard for proving retaliation must give way in
any retaliation case governed by state law. If
the prima facie case of retaliation under federal
law is instead what I am calling the logical
adaptation of McDonnell-Douglas, requiring no
evidence of causation at all, then even more
clearly it must give way in a case governed by
state law. In either event Hiatt and McEwen would
have to be reexamined. Only if the prima facie
case of retaliation under federal law requires
proof of a causal relation in the usual sense,
without attenuation, is there no conflict between
state and federal law, at least in Illinois,
which requires such proof. Only then would the
"McDonnell-Douglas" standard, though thoroughly
misnamed when interpreted to require (unlike
McDonnell-Dougas) proof of causation to make out
a prima facie case, properly apply to state
retaliation cases litigated in federal courts.