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Lewis v. Bay Industries, Inc.
Citations: 51 F. Supp. 3d 846; 2014 U.S. Dist. LEXIS 138700; 2014 WL 4925483Docket: Case No. 12-C-1204
Court: District Court, E.D. Wisconsin; September 30, 2014; Federal District Court
Timothy Lewis initiated legal action against Bay Industries, Inc. ("Bay") for unlawful retaliation under Title VII of the Civil Rights Act of 1964 and wrongful discharge under Wisconsin law. He also named AWS/gb Corporation and Schmidt Acquisition 114, Inc. as defendants, collectively referred to as "Bay." On November 1, 2013, Bay filed a motion for summary judgment, one day after Lewis sought to compel discovery related to emails and electronically stored information (ESI). The court stayed Lewis's response to the summary judgment until after the discovery was provided. Lewis later withdrew his motion to compel on January 23, 2014, and the summary judgment briefing concluded on April 23, 2014. On June 5, 2014, Lewis requested a stay on the summary judgment decision pending a motion for sanctions against Bay for deleting emails and spoliation of evidence. The court agreed to delay the summary judgment decision until after the sanctions motion was filed. Ultimately, the court decided to grant Bay's motion for summary judgment and deny Lewis’s motion for sanctions.
Background details reveal that Bay Industries, a family-run company selling building materials, was established in the 1970s by Arnold Schmidt and his wife. Arnold served as President until October 2010 when his son Dan took over. Lewis, a certified public accountant, was hired by Bay in May 1997. In early 2010, employee Kyla King reported to Lewis that she was the subject of rumors in the company following her promotion to Travel Manager. These rumors, spread by resentful colleagues, included unfounded claims about her relationship with Arnold Schmidt and comparisons to a former employee rumored to have had an affair with him.
King reported an incident to Lewis where manager Tim Pendley pulled her ponytail and referred to her as "Stupid" in his cellphone contacts. Lewis communicated this incident to Arnold and Dan Schmidt, asserting concerns about the implications of Pendley's behavior, which Pendley defended as playful. In June 2010, Lewis expressed to Arnold and Dan Schmidt concerns regarding HR Manager Carrie Mueller's performance, suggesting it could lead to potential claims from disgruntled employees. He indicated he would testify honestly if deposed.
In July 2013, King emailed several management members, including Mike McClain and Carrie Mueller, presenting documents to dispel rumors about her purchasing a car. Dan Schmidt responded negatively to King’s email, calling her "pathetic" and an "insecure child." Following this, Lewis urged Dan Schmidt to reassess whether Pendley’s actions constituted a hostile work environment.
In August 2010, Lewis reiterated his concerns about HR practices to Arnold and Dan Schmidt and confirmed his commitment to truthful testimony if needed. Subsequently, Arnold Schmidt decided to dissolve the Travel Department, leaving King unemployed. She accepted a $250,000 severance package, agreeing to destroy all electronic communications. Dan Schmidt later assumed the role of President and CEO and considered eliminating Lewis’s position, initially heeding Arnold's advice against it. However, six months later, Dan proceeded with the elimination, citing cost-saving measures due to an economic downturn. Bay offered Lewis a $200,000 severance package, which he declined, leading to the filing of his action.
Summary judgment is appropriate when the combined evidence from pleadings, depositions, interrogatories, and affidavits demonstrates no genuine issue of material fact exists, allowing the moving party to claim judgment as a matter of law, as outlined in Fed. R. Civ. P. 56(c). Supporting affidavits must be based on personal knowledge, contain admissible facts, and demonstrate the affiant's competence, per Fed. R. Civ. P. 56(c)(4). Personal knowledge can include factual inferences and opinions grounded in direct experience, but must not rely on speculation or unsubstantiated claims. A material fact is one that could affect the outcome of the case, and a genuine issue requires sufficient evidence that could allow a jury to favor the non-moving party. The burden lies with the moving party to prove the absence of supporting facts for the non-moving party's claims. Courts must view evidence favorably for the non-moving party when deciding on summary judgment, and a trial is unnecessary if no reasonable jury could rule in the non-moving party's favor.
In the case at hand, Lewis alleges his termination was pretextual and retaliatory under Title VII, asserting he was fired for opposing sexual harassment. He also contends wrongful termination under Wisconsin law for stating he would testify truthfully about potential liabilities facing Bay. Before addressing these claims, the court will consider Bay's motion to strike Lewis and Goddard's declarations due to non-compliance with 28 U.S.C. 1746(2). Bay argues that the original declarations did not include the required language affirming the truthfulness under penalty of perjury. Lewis subsequently filed revised declarations that meet the statutory requirements, stating they are based on personal knowledge and affirming their truth under penalty of perjury.
Bay opposes Lewis's motion on the grounds that he has not shown "excusable neglect" for his delayed filing of declarations compliant with 28 U.S.C. § 1746. The Court, referencing Federal Rule of Civil Procedure 6(b)(1), determines that "excusable neglect" is not applicable since Lewis's failure does not pertain to non-compliance with the Federal Rules. Bay's motion to strike Lewis's affidavits is based on their alleged insufficiency, invoking Fed. R.Civ. P. 56(e), which allows courts to grant opportunities to properly support assertions of fact. The Court finds it appropriate to grant Lewis’s motion for leave to file supplemental declarations, noting that striking them would be excessively harsh and that Bay has not been prejudiced since it could still respond effectively. The declarations are identical in substance, and Lewis acted promptly. Therefore, the motion for leave is granted, and the Clerk is instructed to file the relevant documents.
Bay also seeks to strike portions of the Lewis and Goddard declarations for containing hearsay, but the Court notes that local rules discourage such motions in the context of summary judgment and emphasizes that arguments should be made in memoranda. Consequently, Bay's motion to strike will be denied, with the Court reserving the right to consider evidence admissibility as warranted.
The document then transitions to addressing the merits of Lewis's retaliation claims under Title VII. It outlines that Title VII prohibits discrimination against employees for opposing unlawful practices or participating in related investigations. Lewis may prove retaliatory discharge using either the direct or indirect method, with specific requirements for each. The direct method requires establishing a protected activity, an adverse employer action, and a causal connection, while the indirect method necessitates showing engagement in protected activity, meeting job expectations, suffering adverse action, and being treated less favorably than non-protected peers. The analysis begins with the determination of whether Lewis engaged in protected activity.
Lewis did not engage in protected activity under Title VII regarding claims of sexual harassment. For a claim to be actionable, the harassment must be "so severe or pervasive" that it alters employment conditions and creates an abusive environment. The plaintiff must demonstrate that the conduct was discriminatory based on sex, and Title VII does not address benign differences in interactions between genders or mere expressions of animosity not related to sex. Complaints of harassment qualify as protected activity only if they specifically relate to discrimination based on a protected class. General complaints without such a connection are insufficient for protection. However, complaints may still qualify as protected activity if the employee has a reasonable and good faith belief that the conduct violates Title VII, even if it does not.
The parties dispute whether Lewis's reports about the harassment experienced by King constituted protected activity. Bay argues that the reported incidents—rumors of an affair and a hair-pulling incident—were not based on King's gender but rather on skepticism regarding her promotion and management style. Bay also points out that Arnold Schmidt, a male, was similarly targeted by the affair rumors, and the hair-pulling incident lacked a sexual nature. Conversely, Lewis contends that he believed the harassment was gender-based and that the behavior directed at King would not have occurred if a male were in her position.
Lewis argues that his belief regarding the harassment he witnessed was objectively reasonable based on Bay's anti-discrimination policy, which defines sexual harassment to include suggestive comments, inappropriate jokes, and unwelcome physical contact. He draws parallels between the current incidents and previous allegations against Daniel Schmidt, where a former employee claimed Schmidt had made crude remarks and treated her with less respect than male colleagues. However, Lewis's Title VII claim is deemed to fail because his belief that the harassment faced by King was gender-based is considered objectively unreasonable.
Referencing the case Pasqua v. Metro. Life Ins. Co., the court noted that harassment not specifically tied to gender—where both male and female employees experience similar treatment—is not actionable under Title VII. The Seventh Circuit upheld the district court's summary judgment, emphasizing that Pasqua could not prove the harassment was sex-based, as the allegations of favoritism and rumors were not exclusive to one gender. The court observed that gossip often arises for various reasons unrelated to gender discrimination, indicating that the context of the rumors in Pasqua's case did not support a claim of sexual harassment.
Pasqua’s harassment claim was dismissed because he did not demonstrate that the alleged harassment was based on his sex, a necessary requirement in this circuit. Regarding his retaliation claim, the court evaluated whether Pasqua had a "reasonable belief" that a Title VII violation occurred when he initially complained about the rumors. While the district court found that Pasqua believed the rumors constituted sexual harassment, the Court of Appeals deemed his subjective belief irrelevant, stating that he needed to show a reasonable belief that the rumors were sex-based harassment. The court found no evidence that the rumors about Vukanic and Pasqua were motivated by gender considerations.
In a related context, Lewis argued that King faced disproportionate hostility compared to Arnold Schmidt regarding rumors of an affair, asserting that King was demeaned in ways Schmidt was not. The court clarified that the rumors about King suggested she was unqualified for her position due to her relationship with the boss, Arnold Schmidt, who was the company owner. The criticisms directed at King were not inherently gendered, and the hostility stemmed from perceptions of her qualifications rather than her sex. The court concluded that the disparities in treatment arose from King and Arnold Schmidt's differing positions in the company, with Arnold being insulated from the same level of scrutiny because of his authority.
Evidence indicates that Lewis had reasonable grounds to believe King faced bullying and harassment but lacked a reasonable basis to assert she experienced sex-based discrimination. Similar to the case of Pasqua, Lewis's comments regarding rumors of an affair do not constitute protected activity. The Court also finds that the hair-pulling incident does not meet the threshold for actionable harassment under Title VII, as not every instance of unwanted touching is covered. The Seventh Circuit's ruling in Adusumilli v. City of Chicago supports this, where claims of a hostile work environment were dismissed due to the nature and frequency of the alleged conduct, which was deemed too mild to constitute discrimination based on sex.
In Lewis's case, the behavior he reported included Pendley calling King "Stupid" and pulling her hair, which was a singular act of non-sexual unwanted touching. Lewis described the hair-pulling as unwelcome and potentially threatening but did not categorize it as sexual harassment. He reported the incidents to Arnold and Dan Schmidt as "harassment" and "bullying," explicitly avoiding terms like "sexual harassment." The fact that hair was involved does not inherently render the act sexual; the context indicates it was juvenile provocation.
Lewis referenced Holland v. Jefferson Nat. Life Ins. Co. to argue for a reasonable belief in unlawful harassment, but the circumstances in Holland involved clear sex-based harassment, contrasting sharply with Lewis's claims, which do not support a reasonable belief of sex discrimination. Thus, the Court concludes that the conduct reported by Lewis is too disconnected from actionable sexual harassment to substantiate his claims.
Emails from executives allegedly disparaging King based on her sex were cited by Lewis, with remarks characterizing her as a "Queen Bee" and questioning her emotional responses. However, these emails were not known to Lewis or King prior to the discovery phase of the lawsuit, negating any basis for Lewis's claims of a "reasonable belief" in sexual harassment. The court determined that Lewis did not provide sufficient evidence for a reasonable jury to conclude he engaged in protected activity under Title VII, as the reported incidents were isolated and did not constitute sex-based harassment. Consequently, Lewis's Title VII retaliation claim was deemed legally insufficient.
Additionally, Lewis claimed he was wrongfully discharged for expressing intent to testify about potential misconduct related to wage, tax, and antitrust issues at Bay. He alleged improper payments aimed at influencing a convicted employee, evidence of price-fixing, and unearned wages paid to the son of an executive. Under Wisconsin law, specifically the public policy exception established in Brockmeyer v. Dun & Bradstreet, a wrongful discharge claim must be grounded in a clear public policy violation. The burden lies with the plaintiff to identify this policy and demonstrate that their termination contravened it. The exception does not cover cases where employees are fired for not refusing to violate a law or constitutional provision. Thus, the legal framework indicates that Lewis's claims of wrongful discharge lack sufficient grounds unless he can show a refusal to violate public policy.
An employee acting in accordance with public policy is simply complying with the law, and such conduct is merely commendable. Lewis has not provided evidence of being instructed to violate any statutes he cites, nor has he adequately developed his legal argument. He references the case Strozinsky v. Sch. Dist. of Brown Deer, where the court recognized federal tax policy as a significant public policy. However, unlike the plaintiff in Strozinsky, Lewis does not claim he was dismissed for refusing to falsify documents. His assertion of being terminated for expressing intent to "testify truthfully" lacks a clear public policy mandate against such dismissal, leading to the conclusion that his wrongful discharge claim fails legally.
Regarding Lewis's motion for sanctions, he alleges that Bay destroyed or concealed emails after receiving a litigation-hold notice. He seeks court sanctions to deny Bay's summary judgment motion and to establish that his termination was due to his opposition to discrimination and corrupt practices. However, Lewis is not entitled to sanctions under Rule 37, as it applies only under specific circumstances not met in this case. No discovery order was violated, and while Lewis filed a motion to compel, he withdrew it after resolving disputes with Bay. Bay has responded to Lewis's discovery requests, and the contention centers around the completeness of email production, as highlighted in Lewis's request for specific responsive emails.
Bay objected to Lewis's discovery request, arguing it was vague and asserting that Lewis could compare the compilations as easily as Bay could. Lewis claimed Bay had not produced certain emails and requested further responses. To comply, Bay provided Lewis's expert with a mirror image of its email server for independent searching. Lewis's expert found several non-privileged emails that Bay had not previously disclosed. Bay had created two copies of the server after receiving a litigation-hold letter and hired an outside firm to conduct searches. The discrepancy in findings arose because Lewis's expert searched the entire server, while Bay's search was limited to five specified accounts and used different forensic tools.
Lewis failed to demonstrate that Bay violated any court order or intentionally destroyed relevant evidence. Although some emails were deleted from one account, they were recoverable from others, indicating they were not destroyed. The timing of deletions concerning the litigation-hold letter was unclear. Notably, the emails found by Lewis's expert did not support his claims of retaliation related to sex discrimination or corruption. Many emails were irrelevant or only tangentially related to his claims. Lewis mistakenly assumed that emails containing his search terms were automatically discoverable, but relevance and discoverability still adhere to Rule 26(b)(1), which defines the scope of discovery based on relevance to claims or defenses.
The court concluded that Lewis presented insufficient evidence for a jury to find he engaged in protected activity or was instructed by his employer to breach public policy, leading to the failure of his claims. Emails, while potentially useful for establishing motives, were not necessary to prove he engaged in protected activity. Consequently, Lewis’s broad request for emails was seen as an unnecessary fishing expedition.
The court determined that the Bay did not intentionally violate its discovery obligations or destroy relevant evidence concerning Lewis's request for emails, leading to the denial of Lewis's motion for Rule 37 sanctions and adverse inference. Lewis's subsequent motion to supplement the record included a 2010 letter from an attorney representing Bay's former human resources director regarding a severance package linked to a potential sexual harassment claim. However, the court found that this information, while it should have been disclosed, was not directly relevant to Lewis's claim of wrongful termination for objecting to sexual harassment involving Ms. King. Lewis had not suggested that Ms. Mueller, who he identified as a harasser, was being discriminated against or harassed herself; rather, he criticized her for not adequately addressing workplace issues. Consequently, the court ruled that the newly submitted evidence did not affect the summary judgment in favor of Bay. Therefore, Lewis's motion for sanctions and adverse inference was denied, and the defendants' motion for summary judgment was granted, resulting in the dismissal of all of Lewis's claims. Additionally, Lewis's request to file a reply exhibit was denied, and the Clerk was instructed to enter judgment favoring the defendant. The court also clarified its interpretation of the procedural reference related to declarations executed within the United States.