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Wallace v. SMC Pneumatics

January 10, 1997






Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. 93 C 1664 Larry J. McKinney, Judge.

Before POSNER, Chief Judge, and EASTERBROOK and ROVNER, Circuit Judges.

POSNER, Chief Judge.



The plaintiff in a Title VII case, Robert Wallace, appeals from the grant of summary judgment to the defendant, his former employer, SMC Pneumatics, Inc. (we'll call it "SMC" for short). A manufacturer of door-opening systems and other industrial equipment, SMC is the American subsidiary of a Japanese corporation, and Wallace claims to be a victim of discrimination on the basis of his being an American rather than a Japanese. See 42 U.S.C. sec. 2000e-2(a)(1). SMC had hired Wallace in 1988 as its Engineering Manager. Two years later, when it won a contract to manufacture door openers for the rapid transit system being built for the city of Taipei (the capital of Taiwan), Wallace was put in charge of the project and temporarily relieved of his normal duties as Engineering Manager. The project was a flop. The projected profit of 30 percent per unit turned into a six percent loss. In 1992, after consulting with several individuals -- including the president of the Japanese parent and Fusao Takahashi, who was a director of SMC and Wallace's supervisor on the Taipei project -- David Robinson, SMC's general manager, fired Wallace for poor management of the project and also for refusal to adhere to the company's policy that its employees travel coach class even on overseas flights; Wallace had insisted on flying business class. According to Wallace's deposition, shortly before he was fired Takahashi told him that "all Americans are stupid." Takahashi denies having said this, but in the present posture of the case we must assume that he did. Wallace claims to have reported this conversation to Robinson. He also claims to have attended meetings at which Japanese was spoken without translation. And he notes that although Takahashi did not have direct authority over personnel decisions, he reported to the president of the Japanese parent rather than to Robinson and may have been conveying orders to Robinson to fire Wallace when he told Wallace -- and Wallace reported the statement to Robinson -- that all Americans are stupid. Wallace was not replaced as manager of the Taipei project. Instead his duties were divided among six employees of SMC, of whom four are American and two Japanese. Takahashi did "replace" him as Engineering Manager, but "replacement" isn't really the right word, since Wallace had vacated the job for the duration of the Taipei project. The district judge granted summary judgment for the company and dismissed the suit.

Summary judgment is proper only if there is no genuine (in the sense of reasonably contestable) issue of material (that is, potentially outcome-determinative) fact. Fed. R. Civ. P. 56. Language in some of our cases implies that because intent is a critical issue in employment discrimination cases, summary judgment is unlikely to be appropriate in such cases. Wolf v. Buss (America) Inc., 77 F.3d 914, 918 (7th Cir. 1996); Sarsha v. Sears, Roebuck & Co., 3 F.3d 1035, 1038, 1042 (7th Cir. 1993); Holland v. Jefferson National Life Ins. Co., 883 F.2d 1307, 1312-13 (7th Cir. 1989). But as there is not a separate rule of civil procedure governing summary judgment in employment discrimination cases, what the language we have referred to really means is just that courts should be careful in a discrimination case as in any case not to grant summary judgment if there is an issue of material fact that is genuinely contestable, which an issue of intent often though not always will be. In antitrust law, we note by way of analogy, early decisions pronouncing it a field inapt for summary judgment were later repudiated. Compare Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 473 (1962), with Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 595 (1986). Summary judgment is hardly unknown, or for that matter rare, in employment discrimination cases, more than 90 percent of which are resolved before trial, Administrative Office of the U.S. Courts, Judicial Business of the United States Courts: Report of the Director -- 1995, p. 163, many of them on the basis of summary judgment for the defendant. See, e.g., Visser v. Packer Engineering Associates, Inc., 924 F.2d 655, 659-60 (7th Cir. 1991) (en banc).

The expanding federal caseload has contributed to a drift in many areas of federal litigation toward substituting summary judgment for trial. Door Systems, Inc. v. Pro-Line Door Systems, Inc., 83 F.3d 169, 172 (7th Cir. 1996); Jackson v. Marion County, 66 F.3d 151, 153 (7th Cir. 1995); Samuel Issacharoff & George Loewenstein, "Second Thoughts About Summary Judgment," 100 Yale L.J. 73, 88-91 (1990). The drift is understandable, given caseload pressures that in combination with the Speedy Trial Act sometimes make it difficult to find time for civil trials in the busier federal districts. But it must be resisted unless and until Rule 56 is modified (so far as the Seventh Amendment permits) to bring federal practice closer to the practice in the legal systems of Continental Europe, where there is no hard and fast line between pretrial and trial and where procedure is more summary and informal than in the United States. We think that summary judgment was properly granted in this case, though our grounds differ from those given by the district judge; but we also think that the case pushes against the outer boundaries of the permissible use of summary judgment under current law.

There are two ways in which a plaintiff can avert summary judgment for the defendant in an employment discrimination case. The first, which is thoroughly conventional, is by putting in enough evidence, whether direct or, more commonly (see Troupe v. May Department Stores Co., 20 F.3d 734, 736 (7th Cir. 1994)), circumstantial, to create a triable issue of whether the adverse employment action of which he complains had a discriminatory motivation -- whether he was fired, or denied a promotion, or not hired, or paid less, because of the racial or other protected group to which he belongs. The second way of averting summary judgment in an employment discrimination suit, the McDonnell Douglas way (see McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802-03 (1973)), is by presenting evidence that he was qualified for the job in question and that he lost it to, or was otherwise treated less favorably than, a member of another race, sex, nationality, etc. -- or, in the case of age discrimination, a substantially younger worker -- and that the employer's stated reason for the adverse action is unworthy of belief, a mere pretext. If the employer presents no evidence that the plaintiff was not qualified or not treated less favorably, and offers no reason for the action taken against the plaintiff, then the plaintiff is entitled to judgment on the spot and so doesn't have to hazard a trial. The judge treated this case exclusively as a McDonnell Douglas case. Yet at the outset of his opinion the judge had noted that Wallace had presented evidence of discrimination -- Takahashi's statement that "all Americans are stupid." Wallace was not putting all his eggs in the McDonnell Douglas basket.

In rejecting Wallace's McDonnell Douglas argument, the judge first said that SMC had not replaced Wallace because Wallace's duties on the Taipei project had been parceled out among six employees (two of them Japanese -- and we cannot think it critical that not all, or a majority, were), with each of the six picking up on average one-sixth of Wallace's duties. An employer must not be allowed to get around Title VII, or the McDonnell Douglas formula, by fractionating an employee's job. Smith v. F.W. Morse & Co., 76 F.3d 413, 423 (1st Cir. 1996); cf. Collier v. Budd Co., 66 F.3d 886, 890 (7th Cir. 1995); Shager v. Upjohn Co., 913 F.2d 398, 400 (7th Cir. 1990). We do not consider Lilley v. BTM Corp., 958 F.2d 746 (6th Cir. 1992), inconsistent with this principle, despite the statement in the opinion that "spreading the former duties of a terminated employee among the remaining employees does not constitute replacement." Id. at 752. That was a case in which the employer's workforce was shrinking for reasons unrelated to discrimination. The plaintiff's services were no longer required; he was not replaced. That is different from a situation in which A is fired, B and C are assigned each to do half the work formerly done by A, and D is hired to do the work of B and C that they must give up to do A's work. That is replacement, even though A's duties have been split among two (or more) employees.

Wallace made no effort to show that this was such a case, as distinct from a Lilley case. But an employer who fires an employee because of his membership in one of the protected groups does not purchase immunity from the statute, or, again, from the McDonnell Douglas formula, by not replacing the employee. Collier v. Budd Co., supra, 66 F.3d at 890-91; Shager v. Upjohn Co., supra, 913 F.2d at 400; Smith v. F.W. Morse & Co., supra, 76 F.3d at 423; Barnes v. GenCorp Inc., 896 F.2d 1457, 1465 and n. 10 (6th Cir. 1990). Of course if the reason he isn't replaced is that he isn't needed, and if that rather than his race or national origin or other protected status is the reason he was fired, he has no claim. Id. at 1465; Suttell v. Manufacturers Hanover Trust Co., 793 F. Supp. 70, 74 (S.D.N.Y. 1992). But he has no claim because there is no discrimination in such a case, not because he wasn't replaced.

What is true is that if a plaintiff has only the McDonnell Douglas formula to stave off summary judgment -- if he has no other evidence of discrimination -- he must show that another, and similarly situated, employee, in this case an employee of a different national origin, was treated more favorably than he. McDonnell Douglas Corp. v. Green, supra, 411 U.S. at 802; Wolf v. Buss (America) Inc., supra, 77 F.3d at 919; Barnes v. GenCorp Inc., supra, 896 F.2d at 1465 n. 9. That at least is the usual predicate of a McDonnell Douglas argument. In O'Connor v. Consolidated Coin Caterers Corp., 116 S. Ct. 1307 (1996), an age-discrimination case, the Supreme Court held that the more favorably treated employee may himself be a member of a protected class, namely another person age 40 or older. We gave an example in Carson v. Bethlehem Steel Corp., 82 F.3d 157, 158 (7th Cir. 1996) (per curiam), of how that principle might apply in a race case; but no argument based upon it is made here.

The qualification "similarly situated" is important. Otherwise all Wallace would have to do to survive summary judgment would be to point to one Japanese employee whom SMC had not fired. Wallace failed to show that any similarly situated Japanese employee was treated better than he. The six who picked up pieces of his job, or Takahashi who took over the job he had vacated, could not be thought similarly situated per se, that is, without evidence of similarity, of which Wallace presented none. It is not as if there had been another project, like the Taipei project, that flopped but whose manager, a Japanese, was nevertheless retained.

But the judge was wrong to think that evidence either of replacement or of more favorable treatment of a similarly situated employee was essential to Wallace's case. It was essential to Wallace's McDonnell Douglas approach but it is not an ingredient of the statute. If an American employee is mistreated because he is American, the fact that Japanese employees are also treated badly would not be a defense. The Americans might be better employees, yet, because of discrimination, treated no better. That would be actionable discrimination.

With the McDonnell Douglas route closed to Wallace, it becomes necessary to consider his evidence of discrimination; and virtually the only evidence is Takahashi's alleged comment, "all Americans are stupid." The failure to translate from Japanese into English at meetings at which Wallace was present is subject to too many alternative explanations to discrimination (such as the unavailability of a translator, or the inadvertence -- which we cannot believe could be thought, without more, significant evidence of national-origin discrimination -- that often results in a bilingual speaker's lapsing into his native language despite the presence of monolingual foreigners) to be considered any better than makeweight evidence of discrimination. And likewise the fact that Wallace received generally favorable employee evaluations till shortly before he was fired. Such evaluations have little significance in a case in which there is so dramatic a discrepancy between evaluation and performance (we refer to the failure of the Taipei project) as there was here. Employee evaluations, like school report cards, serve a variety of purposes, only one of which is objective evaluation. They are also morale-builders and motivators. When as is common the evaluation is by the person who hired the employee being evaluated, the evaluator may have an incentive to give the employee a high rating in order to confirm the wisdom of the hiring decision. The practical test for summary judgment is whether if the evidence gathered in the summary judgment proceeding were presented at trial the party ...

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