Sweet v. International Services, Inc.,
Filing
112
MEMORANDUM OPINION AND ORDER signed by the Honorable Matthew F. Kennelly on 10/24/2018: For the reasons stated in the accompanying Memorandum Opinion and Order, the Court denies Sweet's motion for summary judgment [dkt. no. 66]; grants ISI' s cross-motion for summary judgment [dkt. no. 75] on the ADEA retaliation claim (count 2); and denies ISI's motion on the ADEA discrimination claim (count 1). The case is set for a status hearing on November 5, 2018 at 9:30 a.m. for the purpose of setting a trial date and discussing the possibility of settlement. (mk)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
KENNETH E. SWEET,
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)
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Plaintiff,
vs.
INTERNATIONAL SERVICES, INC.,
Defendant.
Case No. 16 C 8151
MEMORANDUM OPINION AND ORDER
MATTHEW F. KENNELLY, District Judge:
Kenneth Sweet has sued his former employer, International Services, Inc. (ISI),
for age discrimination and retaliation in violation of the Age Discrimination in
Employment Act (ADEA). Sweet worked as ISI's Executive Director of Consulting
Services and alleges that he was, at sixty-three years old, terminated and replaced by a
younger employee because of his age. He further alleges that ISI unlawfully
discontinued a referral relationship established after his firing between ISI and Sweet's
separate company in retaliation for his filing of an EEOC complaint and this lawsuit.
Sweet filed a motion for summary judgment on the issue of liability and ISI filed a crossmotion for summary judgment on all of Sweet's claims. For the reasons stated below,
the Court denies Sweet's motion in full, denies ISI's cross-motion regarding claim 1, and
grants ISI's cross-motion regarding claim 2.
Background
The following facts are undisputed except where otherwise indicated. Kenneth
Sweet was hired by International Services, Inc. (ISI)—then doing business under the
name International Profit Associates—in 1991. Initially, he served as a Senior Business
Consultant. He was promoted twice and became ISI's Executive Director of Consulting
Services in April 1992. In this role, Sweet oversaw the company's consulting services
division, one of the company's four segments. Relevant later, the consulting division
operates alongside the business coordination, sales, and survey divisions.
ISI thrived in the early 2000s. Its annual revenues peaked at over $200,000,000.
But the 2008 financial crisis hit the company hard. Its revenues fell by almost half, and
its workforce drastically contracted. Unsurprisingly, the annual consulting hours sold by
ISI also fell drastically. The parties appear to disagree about the primary cause, but
economic conditions seem to be an uncontested factor in the company's decline. To
address its shortfall, the company instituted across-the-board pay cuts and reduced
personnel.
In the years following the financial crisis, ISI did not fully regain its former glory.
The parties dispute the reasons behind this continued malaise, but they appear to agree
about the bottom line assessment: the company was in trouble. In 2015, ISI's owner,
John Burgess, decided to terminate Sweet from his leadership position. ISI alleges that
this decision was based principally on finances—the company was in dire straits and
needed to eliminate costs by cutting payroll. It further alleges that morale was low in the
consulting division, that Sweet had failed to competently lead the division, and that the
company's annual consulting hours fell precipitously in the time before Sweet's
termination. On this latter contention, ISI alleges that Sweet was primarily responsible
for the decline in billed hours. See Def.'s Br. in Supp. of Cross-Mot. for Summ. J., dkt.
2
no. 77, at 3 ("The Executive Director of Consulting is more responsible than anyone
else for generating quality consulting services for a reasonable fee.")
Sweet contests ISI's characterization of its motives. First, he alleges that several
contemporaneous statements made by Burgess suggest that was terminated because
of his age. For instance, ISI admits that, when Sweet asked why he was being fired,
Burgess told him: "It's time. You had a good run, but it's time." Def.'s Resp. to Pl.'s LR
56.1 Stat., dkt. no. 80, ¶ 45. Sweet also points to Burgess' statements that ISI needed
"new blood" in management and that "the smart thing for [Sweet] to do is retire." Pl.'s
Br. in Supp. of Mot. for Summ. J., dkt. no. 69, at 8.
Next, Sweet asserts that ISI's financial fortunes several years after the financial
crisis were more complicated than it suggests in this litigation. He alleges that, in any
case, those financial problems stemmed primarily from Burgess' own mismanagement,
not Sweet's, and did not support Burgess' decision to terminate Sweet. See, e.g., Pl.'s
Resp. to Def.'s LR 56.1 Stat., dkt. no. 88, at ¶¶ 5-6. Sweet also points to performance
awards he won in the years before his firing and to Burgess' public acknowledgement of
his contributions in his announcement of the termination as evidence that he was a
competent, successful leader. Id. ¶ 37. And Sweet cites deposition testimony that he
contends rebuts ISI's assertions about low morale in the consulting division. Id.
Finally, Sweet contends that declining consulting hours were outside of his
control and were instead caused by ISI's other divisions. See Pl.'s Resp. to Def.'s LR
56.1 Stat., dkt. no. 88, ¶ 5. Specifically, he asserts that "the primary reason ISI
revenues declined was the number of annual consulting jobs sold by the ISI sales and
survey department dropping." Id. Sweet alleges that "the average consulting hours
3
billed per job"—a metric for which Sweet says he was primarily responsible—actually
"increased from 105.6 in 2009 to 128.5 hours for 2014 and was 124.5 hours at the time
of [his] wrongful termination." Id. And he notes that the parties agree that overall
consulting hours had rebounded somewhat immediately before he was fired, increasing
by nearly thirty percent in the two preceding weeks. See Def.'s Resp. to Pl.'s LR 56.1
Stat, dkt. no. 80, ¶ 46.
In sum, Sweet alleges that the reasons ISI has offered for his firing are
inconsistent and that none is supported by undisputed record evidence.
Sweet was terminated on July 23, 2015. He was sixty-three years old. In
connection with his departure, Sweet negotiated a Settlement and Referral Agreement
with ISI whereby (1) Sweet would be paid $600,000 in monthly increments and (2) a
separate company owned by Sweet, RWI Wealth Management, would have the option
to receive business referrals from ISI for a set fee. Notably, the parties agree that the
agreement did not create an obligation for either RWI or ISI to refer business to the
other but rather simply designated a standard fee to be paid when a referral was made.
See Pl.'s Resp. to Def.'s LR 56.1 Stat, dkt. no. 88, ¶ 14. The agreement had potential to
benefit both companies because ISI was discontinuing certain services that RWI
planned to offer. And, in fact, during the following months two of ISI's employees who
had been part of the discontinued group, Dale Johnston and Roger Ferrante, left ISI and
joined RWI. ISI immediately began referring business to RWI.
Sweet was replaced as Executive Director of Consulting Services at ISI by Brent
Parsigian, a longtime ISI employee. Parsigian is fourteen years younger than Sweet
and does not have a college degree, which Sweet alleges rendered him unqualified for
4
the position. Pl.'s LR 56.1 Stat., dkt. no. 68, ¶¶ 26, 49. But see Def.'s Resp. to Pl.'s LR
56.1 Stat., dkt. no. 80, ¶¶ 26, 49 (disputing Sweet's allegation that there were set job
requirements for the Executive Director of Consulting Services position that included a
college degree).
Sweet filed an age-discrimination complaint against ISI with the EEOC in April
2016. The companies' referral relationship continued despite the EEOC complaint—but
not for long. Johnston and Ferrante testified that by May or June 2016, they were
aware that Sweet intended to escalate the dispute with ISI into litigation. Def.'s LR 56.1
Stat., Ex. G, dkt. no. 111, at 64:9-67:2; id., Ex. H, dkt. no. 76-7, ¶¶ 7-9. They met with
Brent Parsigian to discuss how their referral relationship with ISI could continue in light
of the impending litigation. Johnston and Ferrante further testify that in June, with
Sweet's blessing, they formed an independent company separate from RWI called
Ascend Business Services in order to continue the referral relationship with ISI.
Sweet filed this action on August 16, 2016. Although the parties dispute
precisely when ISI's referrals to RWI ceased, referrals to Ascend began in September
2016.
Discussion
Sweet and ISI have filed cross-motions for summary judgment. Sweet's motion
can be disposed of quickly. When a plaintiff who bears the burden of proof on his claim
moves for summary judgment, he may prevail only if he can "lay out the elements of the
claim, cite the facts which [he] believes satisfies these elements, and demonstrate why
the record is so one-sided as to rule out the prospect of a finding in favor of the nonmovant on the claim." Hotel 71 Mezz Lender LLC v. Nat'l Retirement Fund, 778 F.3d
5
593, 601 (7th Cir. 2015). Here, Sweet inverts the burden of proof by suggesting that the
defendant must produce affirmative evidence that it did not act with discriminatory
animus to survive summary judgment. Not so. See St. Mary's Honor Ctr. v. Hicks, 509
U.S. 502, 511 (1993) (collecting cases and reaffirming that, even under an employmentdiscrimination burden-shifting framework, the "plaintiff at all times bears the ultimate
burden of persuasion" (internal quotation marks omitted)). Because Sweet bears the
burden of proving liability under the ADEA and cannot demonstrate that the record is
sufficiently one-sided to support summary judgment in his favor, the Court denies his
motion for summary judgment on the issue of liability.
In support of its cross-motion, ISI contends that Sweet was terminated for several
legitimate, non-discriminatory reasons and that he has failed to produce evidence from
which a factfinder could reasonably infer age discrimination under either the "direct"
method of proof or the burden-shifting framework adapted from McDonnell Douglas
Corp. v. Green, 411 U.S. 792 (1973), sometimes referred to as the "indirect" method of
proof. See Ortiz v. Werner Enters., Inc., 834 F.3d 760, 766 (7th Cir. 2016).
Summary judgment is proper where there is no genuine dispute regarding any
material fact and the moving party is entitled to judgment as a matter of law. Fed. R.
Civ. P. 56(a); Nicholson v. City of Peoria, 860 F.3d 520, 522 (7th Cir. 2017). In
assessing a motion for summary judgment, a court views all facts in the light most
favorable to the nonmoving party and draws all reasonable inferences in that party's
favor. Carson v. Lake County, 865 F.3d 526, 532 (7th Cir. 2017). Courts must be
especially cautious in applying the summary judgment standard to employment
discrimination cases because such cases often turn on intent and credibility issues.
6
See Michas v. Health Cost Controls of Ill., Inc., 209 F.3d 687, 692 (7th Cir. 2000).
Nevertheless, "reasonable inferences" must be supported by more than "speculation
and conjecture." Brown v. Advocate S. Suburban Hosp., 700 F.3d 1101, 1104 (7th Cir.
2012) (citation omitted). "[A] genuine issue of material fact exists only if there is enough
evidence that a reasonable jury could return a verdict in favor of the nonmoving party."
Id.
A.
ADEA discrimination claim
The ADEA prohibits employers from discriminating against employees who are
forty years of age or older because of their age. 29 U.S.C. §§ 623(a)(1), 631(a);
Martino v. MCI Commc'ns Servs., Inc., 574 F.3d 447, 452 (7th Cir. 2009). To prove
discrimination, the plaintiff must demonstrate "but-for" causation—i.e., "that the
employer would not have made the adverse employment decision in question but for
[the employee's] membership in a protected class.” Cerutti v. BASF Corp., 349 F.3d
1055, 1061 (7th Cir. 2003), overruled on other grounds by Ortiz, 834 F.3d at 765.
In Ortiz, the Seventh Circuit clarified that the proper way for a court to assess an
employment discrimination claim on summary judgment is to ask whether the evidence,
considered as a whole "would permit a reasonable factfinder to conclude that the
plaintiff's [protected characteristic] caused the discharge or adverse employment
action." Ortiz, 834 F.3d at 765. The Seventh Circuit was careful, however, to note that
courts may still apply the McDonnell Douglas burden-shifting framework to evaluate
evidence of but-for causation in employment discrimination cases. Considering how the
parties arranged their arguments, the Court will structure its analysis according to the
McDonnell Douglas framework.
7
To survive summary judgment under McDonnell Douglas, "the plaintiff must first
establish a prima facie case by meeting the following elements: (1) he was a member
of a protected class; (2) he was meeting his employer's legitimate expectations; (3) he
suffered an adverse employment action; and (4) other similarly situated employees who
were not members of his protected class were treated more favorably." Davis v. ConWay Transp. Cent. Express, Inc., 368 F.3d 776, 784 (7th Cir. 2004). Once the
employee has established a prima facie case, the burden shifts to the employer to
articulate a "legitimate, nondiscriminatory reason" for the termination. Carson, 865 F.3d
at 533. The burden then shifts back to the plaintiff to point to evidence showing that the
employer's proffered explanations are pretextual. Id. Showing pretext requires
evidence that the proffered reasons are phony, not merely mistaken. Owens v. Chi. Bd.
of Educ., 867 F.3d 814, 815 (7th Cir. 2017). Notably, "the existence of a genuine issue
of triable fact with respect to some of the reasons for discharge proffered by the
employer is of no consequence as long as at least one reason is uncontested." Adreani
v. First Colonial Bankshares Corp., 154 F.3d 389, 399 (7th Cir. 1998).
Here, by presenting no argument on the question, ISI apparently concedes that
Sweet can make out a prima facie case. See Def.'s Br. in Supp. of Cross-Mot. for
Summ. J., dkt. no. 77, at 10 (assuming "that Plaintiff can make out a prima facie case of
discrimination" and arguing that "he cannot point to evidence from which a reasonable
factfinder could find that ISI's proffered reason for terminating him was pretextual"). ISI
instead focuses its analysis on the issue of pretext. Although numbered differently
throughout ISI's papers, the proffered reasons for Sweet's termination boil down to: (1)
declining consulting hours purportedly attributable to poor performance by the
8
consulting division; (2) issues of Sweet's competence and allegedly resulting morale
problems in the group he led; and (3) economic and financial issues facing the company
as a whole. On declining consulting hours, ISI points to uncontested evidence that the
company's total billed consulting hours had been in decline at the time of Sweet's
termination. On Sweet's competence and low morale, it highlights deposition testimony
from Burgess, ISI's owner, and some of Sweet's colleagues that it asserts support its
contentions. On the company's financial issues, ISI points to evidence indicating that
the company had to restructure, reduce payroll drastically, and terminate several
employees in response to its lender demanding major changes, among other pressures.
Sweet has successfully identified genuine factual disputes on both of ISI's first
two justifications. First, he argues that declining consulting hours were outside of his
control. Pointing to admissible evidence in the record, he contends that it was the
survey division, not the consulting division, that controlled inflows of business, and that
the consulting division actually increased the number of hours billed per job in the years
preceding his termination. See Pl.'s Resp. to Def.'s LR 56.1 Stat., dkt. no. 88., ¶ 5. In
other words, there was a ceiling on how many hours the consulting division could bill,
which was a function of the performance of the company's other divisions. Second,
Sweet disputes ISI's characterizations of his competence and the division's morale. He
points to awards the company gave him for his performance in the years leading up to
his firing—and to Burgess' own public statements about his performance—to argue that
the company itself believed him to be competent. He also notes that the record
includes contradictory testimony relating to morale in the division. See, e.g., id. ¶¶ 37,
65 (highlighting testimony by two of Sweet's colleagues that support inferences that (1)
9
payroll delays may have been the primary cause of low morale and (2) Sweet was not
widely seen as responsible for low morale within the division).
This review of the parties' contentions reveals record evidence beyond mere
"speculation and conjecture" supporting Sweet's allegation that each of the first two
reasons offered for his firing is pretextual. Advocate S. Suburban Hosp., 700 F.3d at
1104. In view of this evidence, the Court concludes that Sweet has raised genuine
issues of material fact on each of the first two proffered reasons.
But only a single explanation need survive to permit summary judgment, see
Adreani, 154 F.3d at 399, and ISI's third proffered reason for the firing—that Sweet was
terminated as part of cutbacks precipitated by financial catastrophe—presents a closer
question. The parties focus their arguments on three relevant ways a plaintiff can show
pretext. First, where a defendant points to economic or financial motives for a
termination, the plaintiff can show pretext by offering evidence that "the company lied
about its financial concerns." Brown v. Bd. of Trs. of Univ. of Ill., 673 F. App'x 550, 553
(7th Cir. 2016); see also Davis, 368 F.3d at 785. Second, pretext may be shown by
evidence of remarks by decisionmakers that suggest unlawful motives. See, e.g.,
Henderson v. Shulkin, 720 F. App'x 776, 764 (7th Cir. 2017); see also Reeves v.
Sanderson Plumbing Prods., Inc., 530 U.S. 133, 146 (2000); Adams v. Ameritech
Servs., Inc., 231 F.3d 414, 428 (7th Cir. 2000) (describing Reeves as "a cautionary note
not to grant summary judgment too readily when facts are susceptible to two
interpretations, and not to dismiss as irrelevant damaging remarks" that suggest agerelated animus). Third, a jury may reasonably infer pretext from evidence of a
defendant's shifting and inconsistent justifications for a termination. See Zaccagnini v.
10
Chas. Levy Circulating Co., 338 F.3d 672, 678 (7th Cir. 2003); Schuster v. Lucent
Techs., Inc., 327 F.3d 569, 577 (7th Cir. 2003); Statler v. Wal-Mart Stores, Inc., 195
F.3d 285, 291 (7th Cir. 1999). "But the explanations must actually be shifting and
inconsistent to permit an inference of mendacity." Schuster, 327 F.3d at 577. If Sweet
can, using any of these three mechanisms, raise a genuine issue of material fact
regarding whether ISI's third proffered reason—its financial hardship—is a pretextual
attempt to hide age-related animus, the motion for summary judgment must fail.
Sweet first attempts to raise a genuine issue of material fact by disputing the
company's description of the financial hardship it faced at the time of his firing. In
response, ISI argues that "[i]n order to accept Plaintiff’s claim of pretext, this Court must
believe that Defendant intentionally reduced its revenue to the point of near catastrophic
levels, lowered employee morale, delayed payroll twice, paid penalties and interest to
the IRS for unpaid payroll taxes, risked losing its bank accounts, paid high interest on
commercial loans, terminated the president and numerous other employees, and cut
over six million dollars from its payroll on the pretense of economic hardship—just so it
could cover its tracks as part of an elaborate scheme to terminate Ken Sweet." Def.'s
Reply Br., dkt. no. 106, at 5-6. But ISI's argument is a red herring entirely unsupported
by its citation to Davis. In that case, the Seventh Circuit indeed rejected a plaintiff's
argument that "all the bluster about an economic downturn was a ruse." Davis, 368 at
785. But, unlike ISI apparently suggests, it reached that conclusion not because the
plaintiff failed to demonstrate that the defendant had intentionally sabotaged its
business to rationalize the disputed firing, but rather because "all of the evidence
point[ed] to a sincere belief that the economy was trending negatively and that
11
economic terminations were an appropriate business response." Id. In other words,
Davis did not hold—or even hint—that a plaintiff must demonstrate intentional selfsabotage on behalf of his employer to raise a genuine issue of material fact regarding
whether a financial explanation was pretextual.
But even applying the rule actually articulated in Davis, Sweet has failed to
demonstrate pretext on this theory. Although he cannot point to evidence undermining
the company's assertion that its bank demanded it make speedy, sweeping changes,
Sweet quibbles about how much the company reduced its payroll and total personnel
during 2015. While the exact amount of the payroll reduction is unclear, ISI's tax
information and supporting testimony suggest that between $4,000,000 and $6,300,000
was cut from the company's payroll between 2014 and 2015. Compare Def.'s LR 56.1
Stat., Ex. W, dkt. no. 80-1, at 56 (noting that payroll was reduced by "probably"
$4,500,000 to $5,000,000 and that ISI "may have gotten" to the $6,000,000 mark), with
id., Ex. X, dkt. no. 76-23, at 2-3 (indicating that payroll was reduced by about
$6,300,000). The record also suggests that the company had to delay payroll twice
during the same two years for lack of funds and that, in July 2015, BMO Harris Bank
began the process of terminating ISI's bank accounts. Id., Ex. S, dk.t no. 76-18.
Sweet's arguments about ISI's finances make clear that he believes firing him
was a bad financial decision. He argues that ISI's financial challenges were attributable
to Burgess's mismanagement rather than his own. But in determining the issue of
pretext, the Court does not review the wisdom of business decisions, "even if they are
wrong or bad." Boston v. U.S. Steel. Corp., 816 F.3d 455, 466 (7th Cir. 2016).
Furthermore, Sweet disputes some of the precise numbers, including the scale of
12
payroll reduction undertaken by ISI, but he points to no evidence that "the company lied
about its financial concerns." Davis, 368 F.3d at 784.
Nevertheless, the Court concludes that Sweet has pointed to evidence sufficient
to support a reasonable inference that ISI's proffered reasons were pretextual based on
remarks made by decisionmakers and on the company's shifting justifications for his
firing. See Henderson, 720 F. App'x at 784; Zaccagnini, 338 F.3d at 678.
First, drawing all reasonable inferences in favor of the non-moving party,
Burgess' statements that (1) management needed "new blood"; (2) Sweet "had a good
run," but it was time for him to go; and (3) "the smart thing for [Sweet] to do [was] retire,"
support a conclusion that the reason for Sweet's termination was his age. Def.'s Resp.
to Pl.'s LR 56.1 Stat., dkt. no 80, ¶¶ 44-45, 70. ISI's argument that these comments
were the sort of "stray remarks" that have been deemed insufficient to support an
inference of pretext is mistaken. See Hemsworth v. Quotesmith.com, Inc., 476 F.3d
487, 491 (7th Cir. 2007), overruled on other grounds by Ortiz, 834 F.3d at 765 (noting
that damaging remarks are probative if they were (1) made by the decision maker, (2)
around the time of the decision, and (3) in reference to the adverse employment action);
see also Adams, 231 F.3d at 428 (admonishing courts not to carelessly "dismiss as
irrelevant damaging remarks" that suggest age-related animus). Because the
comments were made by Burgess, a prime decisionmaker, at or near the time of the
firing decision and in conversations related to the firing, they were not irrelevant "stray
remarks."
Second, as Sweet notes, a reasonable fact finder could conclude that ISI
changed its explanation for the firing after its initial representations. It started with
13
Burgess' statements during the firing meeting. Then, it pivoted to emphasizing that poor
morale in the consulting division as the motivating factor. Finally, during prosecution of
this lawsuit, ISI began to emphasize its purported financial motivation for Sweet's
termination, characterizing his firing as part of a broader reduction in force. As in
Zaccagnini, ISI's repeatedly shifting justifications provide a sufficient basis for a
reasonable jury to conclude the company's proffered motivations for terminating Sweet
were pretextual.
The Court must view all facts in the light most favorable to the nonmoving party
and draw all reasonable inferences in that party's favor. Carson, 865 F.3d at 532.
Viewed through that forgiving lens, Sweet has produced evidence that "would permit a
reasonable factfinder to conclude that [his age] caused [his] discharge . . . ." Ortiz, 834
at 765. The cross-motion for summary judgment on his ADEA discrimination claim
therefore fails.
B.
ADEA retaliation claim
Sweet next alleges that ISI unlawfully retaliated against him in violation of the
ADEA for filing his EEOC age discrimination complaint and this lawsuit. The alleged
retaliatory acts centered around a referral relationship that Sweet established after his
termination between ISI and RWI Wealth Management, a separate company that Sweet
owned.
The ADEA prohibits an employer from retaliating against an employee "because
such individual . . . has opposed any practice made unlawful by this section, or because
such individual . . . has made a charge, testified, assisted, or participated in any manner
in an investigation, proceeding, or litigation under this chapter.” 29 U.S.C. § 623(d).
14
"To establish a prima facie case of retaliation, plaintiffs must show evidence from which
a reasonable jury could find that (1) plaintiffs engaged in statutorily protected activity; (2)
they suffered an adverse employment action; and (3) there is a causal connection
between plaintiffs' protected activity and [the adverse action]." Sauzek v. Exxon Coal
USA, Inc., 202 F.3d 913, 918 (7th Cir. 2000).
The parties focus their arguments on the second element, disputing whether ISI's
decision to discontinue post-termination referrals to Sweet's business, RWI, constituted
an adverse action. Both cite the definition of an adverse action from the analogous Title
VII context: to qualify, "the employer's challenged action must be one that a reasonable
employee would find to be materially adverse such that the employee would be
dissuaded from engaging in the protected activity." Roney v. Ill. Dep't. of Transp., 474
F.3d 455, 461 (7th Cir. 2007) (citing Burlington N. & Santa Fe Ry. Co. v. White, 548
U.S. 53, 68 (2006)). Adverse actions "are not limited to those that affect the terms and
conditions of one's employment," id., and former employees may challenge an alleged
act of "retaliation that impinges on their future employment prospects or otherwise has a
nexus to employment," Veprinsky v. Fluor Daniel, Inc., 87 F.3d 881, 891 (7th Cir. 1996).
For instance, opposition to a former employee's application for unemployment benefits
may, in some circumstances, amount to actionable adverse employment action. See,
e.g., Benjamin v. Katten Muchin & Zavis, 10 F. App'x 346, 354 (7th Cir. 2001).
But there are limits. "[A]n adverse employment action does not include an
employer's refusal to grant an employee a discretionary benefit to which she is not
automatically entitled[.]" Hottenroth v. Village of Slinger, 388 F.3d 1015, 1033 (7th Cir.
2004). For example, Hottenroth held that an employer's refusal to recommend an
15
employee for a certification—which ultimately resulted in the employee's firing—was
within the employer's discretion "and thus did not constitute an adverse employment
action." 388 F.3d at 1030. Likewise, an employer's decision to withhold a discretionary
bonus payment typically does not amount to adverse action because most bonuses are
"wholly discretionary on the part of the employer." Farrell v. Butler Univ., 421 F.3d 609,
614 (7th Cir. 2005) (citation omitted); see also Maclin v. SBC Ameritech, 510 F.3d 781,
788 (7th Cir. 2008); Hunt v. City of Markham, 219 F.3d 649, 654 (7th Cir. 2000). District
courts in this Circuit have applied this logic to employers' decisions to condition other
kinds of benefits on terminated employees' release of legal claims against their former
employer. For instance, severance payments and extra insurance coverage withheld by
employers were deemed discretionary where a former employee refused to sign a
release. See, e.g., Keen v. Teva Sales & Mktg., Inc., 303 F. Supp. 3d 690, 720 (N.D. Ill.
2018) (insurance benefits), appeal filed, No. 18-1769 (7th Cir. 2018); Sicher v. Merrill
Lynch, No. 09 C 1825, 2011 WL 892746, *4 (N.D. Ill. Mar. 9, 2011) (severance pay);
see also EEOC v. Sundance Rehab. Corp., 466 F.3d 490, 502 (6th Cir. 2006) (holding
that failure to award severance pay after an employee refused to sign a waiver of
liability was not an adverse employment action). Because they were deemed
discretionary, withholding of such post-termination benefits did not constitute adverse
action.
Sweet contends that ISI's decision to discontinue its referral relationship with
RWI constituted unlawful retaliation against him for making his EEOC complaint and
filing this lawsuit. He also argues that ISI intentionally lured the two employees who had
transitioned from ISI to RWI, Johnston and Ferrante, away from RWI in further
16
retaliation. He likens ISI's actions to the interference with unemployment benefits at
issue in Benjamin, 10 F. App'x at 354, arguing that a sufficient nexus to employment
exists to satisfy the Seventh Circuit's standard for post-employment adverse action, see
Veprinsky, 87 F.3d at 890.
ISI counters that its decision to discontinue its referral relationship with RWI did
not constitute an adverse employment action within the meaning of the ADEA because
the relationship with entirely discretionary. And, indeed, the parties agree that the
Settlement and Referral Agreement Sweet signed during his termination did not create
an obligation for either RWI or ISI to refer business to the other. Pl.'s Resp. to Def.'s LR
56.1 Stat, dkt. no. 88, ¶ 14. Rather, it created a standard fee that would be owed when
and if such referrals were made. ISI also notes that it continued paying Sweet the
$600,000 of severance pay to which he was entitled under the agreement even after it
discontinued the voluntary referral relationship. And, on Sweet's contention that ISI
lured Johnston and Ferrante away from RWI, the company cites evidence suggesting
that Sweet himself encouraged Johnston and Ferrante to pursue other employment
when he began moving toward litigation against ISI precisely because he anticipated
that a lawsuit would disrupt the referral relationship.
The Court is persuaded that the logic of Hottenroth and related discretionarybenefit cases applies here. Because ISI and RWI did not oblige themselves to maintain
a referral relationship perpetually or even for a set term, ISI had discretion to end the
relationship. That is, Sweet was not "automatically entitled" to the relationship's
continuance. Hottenroth, 388 F.3d at 1033. No reasonable jury could find that the
prospect of a cutoff, in the future, of a post-termination business-referral relationship
17
would deter an employee from engaging in protected activity such as filing an EEOC
charge. The Court therefore grants summary judgment in favor of ISI on Sweet's
retaliation claim.
Conclusion
For the foregoing reasons, the Court denies Sweet's motion for summary
judgment [dkt. no. 66]; grants ISI's cross-motion for summary judgment [dkt. no. 75] on
the ADEA retaliation claim (count 2); and denies ISI's motion on the ADEA
discrimination claim (count 1). The case is set for a status hearing on November 5,
2018 at 9:30 a.m. for the purpose of setting a trial date and discussing the possibility of
settlement.
________________________________
MATTHEW F. KENNELLY
United States District Judge
Date: October 24, 2018
18
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