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DANIELS v. FEDERAL RESERVE BANK OF CHICAGO

March 3, 2004.

DENNIS DANIELS, et al., Plaintiff,
v.
FEDERAL RESERVE BANK OF CHICAGO Defendant



The opinion of the court was delivered by: WILLIAM J. HIBBLER, District Judge

MEMORANDUM OPINION AND ORDER

I. Facts Common To All Plaintiffs

Defendant, Federal Reserve Bank of Chicago ("Bank"), seeks summary judgment on Counts I and IV of the Amended Class Action Complaint ("Complaint") against certain plaintiffs, Dennis Daniels, Lorraine Matthews, Gerard Brice, Alice Dixon, and Charles Carson (collectively, "Plaintiffs"). Counts I and IV comprise Plaintiffs' only surviving claims against the Bank. The Bank has also filed several motions to strike certain exhibits and Rule 56.1 responses. Plaintiffs, together with seven other former employees of the Bank, were certified as a class on March 28 and May 30, 2000, but the Court decertified the class on May 2, 2002, and returned the case to the status of individual claims. Counts III and VI of the Complaint are class action claims that are no longer viable since the class was decertified. Counts II and V by their terms applied only to Cedell Johnson, who is no longer a party to the case, In addition, Counts VII and VIII by their terms only apply to plaintiff Eleanor Baylie, who is not implicated in the Bank's current summary judgment motions.

  Count I of the Complaint alleges that: Page 2

 
Federal Reserve intentionally subjected Plaintiffs to unequal and discriminatory treatment because of their race and color by: (a) Repeatedly denying them promotions and instead selecting less qualified white employees for those positions; (b) Steering Plaintiffs to low-level, dead-end positions while steering white employees to career path positions with opportunities for advancement; (c) Falsely representing that such low-level positions have growth potential; (d) Excluding Plaintiffs from officer, management, and supervisory level positions; (e) Denying Plaintiffs increases in Grade Level to reflect their performance and responsibilities; (f) Assigning higher grade levels to white employees who have the same or similar or lower level responsibilities as Plaintiffs; (g) Denying Plaintiffs training and mentoring opportunities; (h) Subjecting Plaintiffs to a higher level of scrutiny and to stricter standards than white employees; and (i) Paying Plaintiffs less than similarly situated and less qualified white employees.
Plaintiffs, who are each African-American, claim that these alleged actions by the Bank constitute racial discrimination in employment in violation of 42 U.S.C. § 1981. Count IV of the Complaint states that: "Federal Reserve intentionally subjected Plaintiffs D. Daniels, Baylie, Brice, Carson, Dixon, Johnson and Matthews to unequal and discriminatory treatment because of their race and color. Federal Reserve's employment practices have a disproportionate, adverse impact on plaintiffs and other African-Americans." Plaintiffs claim that these actions constitute race discrimination in violation of Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq.

  On February 17, 1998, Plaintiffs filed a charge of discrimination with the Equal Employment Opportunity Commission ("EEOC"). On February 25, 1998, Plaintiffs filed a complaint alleging that the Bank had discriminated against them on the basis of their race, African-American, in violation of 42 U.S.C. § 1981. Plaintiffs filed an amended complaint on June 18, 1998, adding additional plaintiffs and Count IV, the Title VII race discrimination claim. The legal issues in this case are substantially overlapping, so the Court will address each of the pending summary judgment motions in the same opinion. Page 3

 II. Facts Specific To Certain Plaintiffs

  A. Dennis Daniels

  Dennis Daniels was hired by the Bank on March 12, 1973, for the position of Interview and Personnel Assistant, grade ten, in the Human Resources Department. In March 1974, Daniels was promoted to Professional College Recruiter, Junior, grade eleven, and a year later, Daniels was promoted to Coordinator of Professional College Recruiting, grade twelve. In October 1977, Daniels was transferred laterally to the position of Internal Staff Coordinator, and in 1978, he was promoted to Senior Job Analyst, grade thirteen. In May 1982, the Bank's numbered grading system changed, and Daniels became an Administrator A, grade sixty. Three years later, Daniels was promoted to Compensation & Benefits Manager, grade sixty-one. In November 1986, Daniels was laterally transferred to the Office of the Secretariat as a grade sixty-one Manager. On January 20, 1995, the Bank's numbered grading system changed again, and Daniels' job grade was converted to grade fourteen. In October 1995, the Office of the Secretariat was reorganized and broken up into two different units: Communications and Information Services and Office of the Secretary. Daniels became Manager of Communications and Information Services and retained his fourteen job grade.

  In July 1996, the Communications and Information Services unit was dissolved, and Daniels' position was eliminated. Daniels was consequently transferred to the newly created position of Electronic Communications Team Leader. Daniels retained the same job grade, salary, and benefits that he had before his transfer. In this position, Daniels was given primary responsibility for the strategic marketing direction of the Bank's new external Web site and internal Intranet (which involved internal electronic communications to employees). Daniels remained in this position for over fifteen months before resigning in September 1997. Page 4

 B. Lorraine Matthews

  Lorraine Matthews was hired by the Bank on June 9, 1969, as a Difference Clerk, grade four, in the Check Adjustment Department. Six months after joining the Bank, Matthews was promoted to Difference Clerk, grade five, and in June 1970, she was promoted to Difference Clerk, grade six. After the Bank's numbered grading system changed, Matthews became an Inquiry Specialist B, grade thirty-nine. In October 1982, Matthews was promoted to Inquiry Specialist A, grade forty-one, hi January 1995, after the grade numbering system changed again, Matthews became a Researcher B, grade seven. Matthews remained in this position until she was terminated in 1997.

  On February 20, 1997, Matthews was counseled by her supervisor, Lily Chin, regarding unplanned absences, and she was issued a written Unplanned Absence Disciplinary Action Notice, indicating that Matthews was being placed on counseling status for ninety days. Chin rated Matthews' monthly performance as "did not meet expectations" in February 1997. On March 18, 1997, Matthews was counseled by supervisor Cassandra Ramsey regarding unplanned absences and was issued another written Unplanned Absence Disciplinary Action Notice, this time indicating Matthews was being placed on warning status for ninety days. Once again, in March 1997, Chin rated Matthews as "did not meet expectations." On April 3, 1997, Matthews received a formal notice that she was not meeting her department's expectations on productivity, and she was placed on warning status for three months. At the end of the three months, Matthews was rated in her performance review by supervisor Sylvia Prickel as "did not meet expectations." In June 1997, Matthews' performance efficiency rating was 32%, while the expected performance of employees Page 5 in Matthews' department was 60%.*fn1 On November 17, 1997, Matthews was called into a meeting with supervisors Kathy Williams, Kathy Balice, and Cassandra Ramsey to discuss her performance. After a confrontation between Matthews and her supervisors in the meeting, Matthews was fired.

  C. Alice Dixon

  Alice Dixon was hired by the Bank in 1969 as a unit inscriber trainee, grade three, in the Check Department. Six months later, Dixon was promoted to unit inscriber, grade four, and two years later, she was promoted to block preparation clerk, grade five, In the 1980's, Dixon was promoted to sorter reader operator, grade six, and after about five years, she was promoted to reconciler and correspondent clerk, grade seven. After the Bank changed its numerical job grading scheme, Dixon's position was reclassified as grade thirty-nine, although her job title and duties remained the same. In 1989, Dixon's position was retitled reconcilement clerk A, grade thirty-nine, at which she remained until the Bank switched grading systems again in 1995, and Dixon became a grade five, In 1996, Dixon received a new title, processor B.

  Dixon received her Bachelor of Science degree in Management from DePaul University in June 1996. In October 1996, Dixon applied for a Customer Service Consultant ("CSC") position, which ranges from grades nine to eleven, but she was not selected for any of the open positions. In November 1996, Dixon was promoted to processor A, grade six. On January 6, 1997; April 10, 1997; and January 9, 1998; Dixon applied for a CSC position for a second, third, and fourth time, but she was not selected. Dixon also applied for several other positions for which she was not selected: (1) examiner trainee, October 1997; (2) assistant control specialist, December 23, 1997; Page 6 (3) analyst in the Check Administration Department, January 26, 1999; and (4) Special Operations Consulting Team, May 14, 1999. Dixon retired in July 2000, as a Processor A, grade six, in the Check Department.

  D. Gerard Brice

  Gerard Brice was hired by the Bank in April of 1995 as a full-time Processor, grade seven, in the Customer Inquiry Unit of the Accounting Services Department. A year later, in April of 1996, Brice was promoted to the position of Accountant C, grade nine in the Accounting Documentation Unit. Between August and September 1997, Brice applied for, and was interviewed for, one of four posted Auditor positions, grade ten, available in the Audit Department. Brice was ultimately denied the position. In October of 1997, Brice was promoted to the position of Accountant B, grade nine in the General Ledger Unit of the Accounting Services Department. After his second promotion, Brice received a salary increase. Between August and September 1998, Brice applied for and received a promotion to Senior Analyst C, grade eleven, in the statistical and finance reporting area of the Bank's Research Department. Brice received a salary increase of over $4,000.

  At present, Brice works at the Bank as a Statistical Senior Analyst B, grade twelve, a position to which he was promoted in approximately February of 2003. His primary responsibilities include reviewing and analyzing bank holding companies' regulatory financial statement reports, identifying issues that arise in the reports, and then resolving such issues by communicating with various management personnel at the relevant bank.

  E. Charles Carson

  Charles Carson was hired by the Bank on February 12, 1990, as a Console Operator. In 1994, Carson was working as a Technical Specialist C at grade fifty-seven. In 1994 and 1995, Carson Page 7 twice asked to be promoted to grade fifty-eight, but the Bank did not promote him. In December 1995, the Bank revised its grading system, and Carson's title became Operations Technician A at grade level ten. Carson did not experience a pay reduction concurrent with the change in his title and grade. On August 25, 1997, Carson was promoted to grade eleven, In 2000, Carson applied for a grade fourteen or fifteen Server Group position. At the time, Carson was at a grade twelve position. The Server Group position was filled by Debbie Deema, who prior to filling the position was a grade thirteen supervisor.

  On August 27, 2001, Carson requested a Bank cellular phone and agreed (in writing) to use the phone for Bank business and to limit personal calls to emergencies. In the months of March, April and May 2002, Carson incurred phone bills for personal calls on the cellular phone of $3,174; $1,830; and $2,115; respectively. The Bank suspended Carson for three weeks in My 2002. On September 5, 2002, the Bank sent Carson a memorandum requesting that Carson review his phone records and reimburse the Bank for all non-emergency personal calls beyond $100. Carson was told to pay for these calls or make other arrangements with the Bank for the payment by October 15, 2002. On October 21, 2002, the Bank again sent Carson a memorandum asking him to pay for the phone calls by October 28, 2002. After Carson failed to respond to a third extension of the deadline to November 15, 2002, the Bank informed Carson on November 19, 2002, that he was being terminated for violation of Bank's Code of Conduct by failing to respond to the requests for the phone bill repayment.

 III. Summary Judgment Standard

  Rule 56(c) of the Federal Rules of Civil Procedure provides that a motion for summary judgment shall be granted "if the pleadings, depositions, answers to interrogatories, and admissions Page 8 on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). A genuine issue of material fact exists only if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The initial burden is on the moving party to demonstrate the absence of a genuine issue of material fact and that judgment as a matter of law should be granted in the moving party's favor. Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986); Larimer v. Dayton Hudson Corp., 137 F.3d 497 (7th Cir. 1998). A question of material fact is a question which will be outcome determinative of an issue in the case. Anderson, 477 U.S. at 248.

  Once the moving party has met the initial burden, the opposing party must "go beyond the pleadings" and "designate specific facts showing that there is a genuine [material] issue for trial." Id. A party will be successful in opposing summary judgment only if it presents "definite, competent evidence to rebut the motion." E.E.O. C. v. Sears, Roebuck& Co., 233 F.3d 432, 437 (7th Cir. 2000). The non-moving party cannot create an issue of fact with speculation or conjecture. Borcky v. Maytag, 248 F.3d 691, 695 (7th Cir. 2001). A court is "not required to evaluate every conceivable inference which can be drawn from evidentiary matter, but only reasonable ones." Little v. Cox's Supermarkets, 71 F.3d 637, 643 (7th Cir. 1995). During its summary judgment analysis, the court must construe the facts and draw all reasonable inferences in the light most favorable to the nonmoving party. Bombard v. Fort Wayne Newspapers, Inc., 92 F.3d 560 (7th Cir. 1996).

 IV. Untimely Allegations Of Discrimination

  Each Plaintiff, except Brice, alleges certain acts of discrimination that occurred outside the time period of the relevant statutes of limitations. Discrete discriminatory acts that occurred outside Page 9 the relevant time period, however, are time-barred. Nat'l R. R. Passenger Corp. v. Morgan, 536 U.S. 101, 109 (2002). These alleged untimely discriminatory acts may only be considered for background purposes. Id.

  A. Title VII

  Title VII sets forth the relevant time for filing charges as follows:
. . . in a case of an unlawful employment practice with respect to which the person aggrieved has initially instituted proceedings with a State or local agency with authority to grant or seek relief from such practice or to institute criminal proceedings with respect thereto upon receiving notice thereof, such charge shall be filed by or on behalf of the person aggrieved within three hundred days after the alleged unlawful employment practice occurred. . . .
42 U.S.C.A. § 2000e-5(e)(1). A claim is time-barred if it is not filed within these time limits. Morgan, 536 U.S. at 109. "According to statute, a plaintiff in a deferral state such as Illinois must file a charge of discrimination with the EEOC or equivalent state agency within 300 days after the alleged unlawful employment practice. The 300-day limit . . . begins to run when the defendant has taken the action that injures the plaintiff and when the plaintiff knows she has been injured, see, not when [the plaintiff] determines that the injury was unlawful." Sharp v. United Airlines, Inc., 236 F.3d 368, 372 (7th Cir. 2001) (internal citations omitted). Discrete acts that fall within the statutory time period do not make timely acts that fall outside the time period. Morgan, 536 U.S. at 112. The Supreme Court held that: First, discrete discriminatory acts are not actionable if time-barred, even when they are related to acts alleged in timely filed charges. Each discrete discriminatory act starts a new clock for filing charges alleging that act. The charge, therefore, must be filed within the 180-or 300-day time period after the discrete discriminatory act occurred. The existence of past acts and the employee's prior knowledge of their occurrence, however, does not bar employees from filing charges about related discrete acts so long as the acts are independently discriminatory and charges addressing those acts are themselves timely filed.

 Page 10 Id. at 113. Discrete discriminatory acts include acts such as termination, failure to promote, denial of transfer, or refusal to hire. Id. at 114. Title VII does not "bar an employee from using the prior acts as background evidence in support of a timely claim." Id.

  In this case, Plaintiffs filed their EEOC charges on February 17, 1998. Therefore, discrete discriminatory acts that allegedly occurred before April 24, 1997, 300 days before the charges were filed, are not actionable under Title VII. Plaintiffs may, however, use alleged prior acts as background evidence in support of their timely claims,
B. Section 1981
  Likewise, any alleged adverse action that occurred more than two years before Plaintiffs' complaint was filed is time-barred under § 1981. The Seventh Circuit has held that to bring a claim under § 1981, a plaintiff must file a complaint within two years after the alleged discriminatory conduct occurred. Walker v. Abbott Lab.s, 340 F.3d 471, 474 (7th Cir. 2003). See also Jones v. R.R. Donnelley & Sons Co., 305 F.3d 717, 728 (7th Cir. 2002), cert. granted, ___U.S.__ 123 S.Ct. 2074 (2003). In determining the statute of limitations for § 1981 claims, the court held that the most analogous statute of limitations was the two-year personal injury statute of Illinois, the forum state, rather than 28 U.S.C.A. § 1658, the four-year statute of limitations for federal civil actions arising under acts of Congress enacted after December 1, 1990. Jones, 305 F.3d at 728. Therefore, Plaintiffs are barred from raising claims of discrimination under § 1981 for alleged discriminatory acts occurring before February 25, 1996, two years before Plaintiffs filed their first complaint.

  C. Continuing violation

  Dixon argues that alleged acts of discrimination occurring before April 24, 1997 (the cut-off date for Title VII claims), and before February 25, 1996 (the cut-off date for § 1981 claims), are not Page 11 time-barred because they are part of a "continuing violation" by the Bank. A continuing violation is one whose discriminatory character did not become clear until it was repeated during the limitations period. Dixon claims that a continuing violation is demonstrated by each of Plaintiffs' allegations that the Bank had a long-held "pattern and practice" of racial discrimination against African-Americans and that the Bank's alleged discriminatory acts were similar, repetitive, and continuous. Dixon's argument, however, is misplaced. First, when a plaintiff files an individual claim, rather than a class action, the plaintiffs "evidence of a pattern and practice can only be collateral to evidence of specific discrimination against the actual plaintiff." Gilty v. Village of Oak Park, 919 F.2d 1247, 1252 (7th Cir. 1990) (internal citations omitted).

  Second, the continuing violation doctrine does not apply to discrete acts of discrimination that can be pinpointed to a particular day. Thompson v. White, No. 02-3891, 2003 WL 21212681, at *2 (7th Cir. 2003) (citing Morgan, 536 U.S. 101). Plaintiffs' allegations of discriminatory acts that occurred before the relevant time periods consist only of discrete acts under Morgan. Plaintiffs point to specific dates when they felt discriminated against, including primarily failure to promote claims. See Morgan, 536 U.S. at 114 (discrete discriminatory acts include failure to promote).

  In Tinner v. United Ins. Co. of Am., however, decided before Thompson but four months after Morgan, the Seventh Circuit held that a continuing violation could be proven where discrete acts of discrimination are part of an ongoing pattern and at least one of the discrete acts occurred within the relevant limitations period.*fn2 308 F.3d 697, 707 (7th Cir. 2002). Contrary to Dixon's and the other Plaintiffs' evidence, however, this ongoing pattern must be shown through their individual claims Page 12 of discrimination, not through other employees' claims and not through a general pattern or practice. Gilty, 919 F.2d at 1252. To justify treating separate violations as an ongoing pattern, each individual plaintiff must show that it would have been unreasonable to expect them to sue separately on each alleged violation before the statute ran on the conduct. Tinner, 308 F.3d at 707-08. "[I]f the employee knew, or with the exercise of reasonable diligence should have known, that each act, once completed, was discriminatory, the employee must sue upon that act within the relevant statutory period." Id. at 708.

  In making this determination, the court considers; (1) whether the alleged acts against the plaintiff involve the same subject matter; (2) the frequency with which the acts occur; and (3) the degree of permanence of the alleged acts of discrimination that should trigger an employee's awareness and duty to assert his rights. Id. In Tinner, the Seventh Circuit held that each incident — including a job transfer, an admonishment by a manager regarding the way Tinner treated a fellow employee, and a dress code violation — represented a discrete act that became actionable when they occurred because Tinner felt discriminated against after each incident. Id. at 709. In addition, the incidents were not frequent enough to show a pattern because there was a six-year, three-year and two-year gap between each discrete act. Id. Moreover, the court held that the degree of permanence surrounding Tinner's route transfer should have made Tinner aware of the need to protect his rights. Id. Therefore, the court found that the employer's alleged discriminatory acts did not constitute a continuing violation. Id.

  Similarly, in Selan v. Kiley, the Seventh Circuit held that the alleged discriminatory acts — including a transfer and a demotion — were too permanent to constitute a continuing violation, in that they separately and permanently removed managerial duties from the plaintiff. 969 F.2d 560, 567 Page 13 (7th Cir. 1992). Because of their permanent nature, each discrete act should have triggered the plaintiffs awareness of the need to assert or else waive her rights. Id. Furthermore, a two-year gap between allegedly discriminatory acts could not support a continuing violation claim. Id.

  As in Tinner and Selan, the discriminatory acts alleged by Plaintiffs that occurred before the relevant statutory period were too discrete, too permanent, and too far apart in time to support the contention that the acts were continuous. Dixon, for example, alleges that she was denied promotions for discriminatory reasons in November 1992, October 1994, and January 1995. The first two denials of promotions occurred two years apart, and are too far apart in time to constitute a continuing violation. In addition, each of the alleged incidents were too permanent and distinct in nature to constitute a continuing violation, as Dixon testified that at the time she was denied the promotions she believed she was more qualified than the successful candidates for the position and thus discriminated against. Each Plaintiff similarly alleged untimely failure to promote or disparate pay claims that they felt were discriminatory at the time the acts occurred. Therefore, Dixon and the other Plaintiffs were not reasonable in waiting until 1998 to file their charges alleging racial discrimination for time-barred acts.

 V. Section 1981 And At-Will Employees

  For certain Plaintiffs (Brice, Matthews, and Dixon), the Bank claims that it is entitled to summary judgment on their § 1981 claims because they were at-will employees. The parties do not dispute that Plaintiffs were at-will employees and that, therefore, either party to the employment relationship could terminate the relationship at any time. The Bank argues that as at-will employees, Plaintiffs had no contractual relationship with the Bank and thus could not bring a claim under § 1981. While it is true that proof of a contractual relationship is necessary to establish a § 1981 Page 14 claim, at-will employment relationships are sufficiently contractual in nature to maintain a § 1981 action for discrimination, at least with regard to issues of promotion and pay. Walker, 340 F.3d at 475, 478. At-will employees are capable of losing or quitting their employment at any time, but they still maintain the enforceable contractual rights of wages, benefits, duties, and working conditions. Id. at 476. Therefore, although at-will employees may not be able to raise § 1981 claims with respect to termination or lay-off, they may maintain § 1981 claims for issues of wages, benefits (including promotions), duties, and working conditions. This Court need not reach the issue whether at-will employees may raise § 1981 claims with respect to termination because each Plaintiff has failed to state a prima facie case of discrimination.*fn3

 VI. Prima Fade Case Of Discrimination

  The Bank claims that summary judgment is also proper against each of the Plaintiffs on their timely allegations of discrimination because they fail to establish a prima facie case of discrimination under both Title VII and § 1981. Under § 1981, "[a]ll persons within the jurisdiction of the United States shall have the same right . . . to the full and equal benefit of all laws . . . as is enjoyed by white citizens." 42 U.S.C. § 1981. Under Title VII, it is unlawful for an employer "to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, . . . or to segregate, or classify his employees or applicants for employment in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect Page 15 his status as an employee because of such individual's race, color, religion, sex, or national origin." 42 U.S.C. § 2000e-2(a)(l-2).

  When a plaintiff alleges intentional discrimination, as in this case, Title VII and § 1981 actions have the same liability standards, and they are analyzed in the same manner. Eiland v. Trinity Hosp., 150 F.3d 747, 750 (7th Cir. 1998); Friedel v. City of Madison, 832 F.2d 965, 971-72 (7th Cir. 1987). A plaintiff alleging race discrimination must prove his or her claims using direct or indirect evidence. "[D]irect evidence essentially requires an admission by the decision-maker that his actions were based upon the prohibited animus." Cerutti v. BASF Corp., 349 F.3d 1055, 1060-61 (7th Cir. 2003). A plaintiff can also prevail under the direct method by presenting circumstantial evidence that points directly to a discriminatory reason for the employer's action. Id. Plaintiffs have not alleged direct evidence of discrimination. Therefore, they must prove their claims under the McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973), indirect burden-shifting method of proof.

  Under the indirect method, a plaintiff must first establish a prima facie case of discrimination. A. prima facie case of discrimination requires a showing that: (1) the plaintiff is a member of a protected class; (2) the plaintiff was qualified for the job or was meeting the employer's legitimate expectations; (3) the plaintiff suffered an adverse employment action; and (4) the employer treated similarly situated employees outside of the protected class more favorably. Foster v. Arthur Andersen, LLP, 168 F.3d 1029, 1035 (7th Cir. 1999). The Bank does not dispute that ...


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