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Perez v. Thorntons, Inc.

United States Court of Appeals, Seventh Circuit

September 30, 2013


Argued April 23, 2013

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 11 CV 01787 — Blanche M. Manning, Judge.

Before Ripple and Hamilton, Circuit Judges, and Stadtmueller, District Judge. [*]


All employees, not only perfect employees, are protected by Title VII. Plaintiff Norma Perez was in all likelihood far from a perfect employee. From 2005 until 2009 she worked for defendant Thorntons, Inc., a gasoline and convenience store chain. She was working as a retail store manager in November, 2009 when she deeply discounted about $127 worth of candy bars that she sold to herself for only $12. She was fired for failure to "control cash and/or inventory." But only a few months earlier, Perez's non- Hispanic male supervisor had committed a similar act and was merely warned, not fired.

Perez brought suit under Title VII of the Civil Rights Act of 1964 for gender and national origin discrimination. The district court granted summary judgment in Thorntons' favor. If Perez discounted the candy she "bought" without permission, her behavior was wrongful, and a jury might well find that her firing was not tainted by unlawful bias. In reviewing a grant of summary judgment, however, we must give Perez the benefit of conflicts in the evidence and any reasonable inferences in her favor. In that light, a jury could find that Perez's wrongdoing for which she was fired was comparable to the wrongdoing of her non-Hispanic male supervisor, and that the supervisor's animus against women and Hispanics tainted the decision to fire her. Based on this record, a jury must sort out the conflicting evidence and decide why Thorntons chose to treat arguably similar wrongdoing so differently. Accordingly, we reverse the district court's judgment and remand for further proceedings.

Facts for Summary Judgment

We assume that the following facts are true for purposes of summary judgment. Perez was hired by Thorntons in January, 2005 as a customer service representative in its store in Cicero, Illinois. Her job included stocking the shelves and operating the cash register. She was promoted a year later to retail store manager. Her duties then included supervising the customer service representatives at the store. In November 2008, she was transferred to a different store located in Summit, Illinois. Bill Darlington was Perez's regional manager. He made the original decision to hire her and then promoted her and transferred her. The Summit store was a "high volume" store, and Darlington believed that a transfer to the Summit store would broaden Perez's management experience.

At the Summit store, Perez's immediate supervisor was store general manager Donald Koziol. When Perez and Koziol met, Koziol told her that "he [didn't] want [her] in the store; that he [didn't] want to work with [a] woman." Perez informed Darlington about Koziol's comments, and informed him of her preference to remain at the Cicero location. Darlington refused to return Perez to the Cicero store, telling her that she either had to work where he had assigned her or would lose her job with Thorntons. Perez testified that later, in the summer of 2009, Koziol said to Perez, "this is the reason why I don't like to work with women, always have something to do with the kids or they have a period." He also told her that he "did not like" Hispanics. However, Perez did not disclose these later remarks to Darlington or anyone else at Thorntons.

Every month, each Thorntons store received a "Sales Planner" from the store support center that identified upcoming store promotions and items that would be specifically promoted for sale with discounted prices. Stores were required to follow these directives strictly. Every month each store conducted a "change over, " changing the manner in which particular products were priced as dictated by the Sales Planner.

During a store visit in October 2009, Darlington noticed that the candy inventory was low. When Darlington talked to Koziol and Perez about the store's candy bar sales, Darlington learned that the store's cashiers had deviated from the Sales Planner's directive. Cashiers had been allowing customers to pay sale prices for full-priced candy bars, using a sale-priced bar to scan the purchase of the full-priced bar into the register. Darlington warned both Koziol and Perez that they could not swap full-priced candy for discounted candy.

The November 2009 Sales Planner ordered that pre-priced versions of Nestle brand candy bars were to be sold at a price of two for $2.22. The Summit store was scheduled for change over on November 4, 2009. On the date of the change over, Perez rang up approximately 80 of these candy bars and sold them to herself. Her transactions were captured on store video and were recorded in the cash register's memory. Perez initially rang up the candy bars at the approved price—two for $2.22—but then performed a manual price override, ultimately charging herself only 15 cents for each candy bar.

A few days later, Darlington conducted a routine review of the store's video surveillance and saw Perez buy a large number of candy bars at the approved price, void the transactions, manually override the price, and walk out of the store carrying the discounted candy bars she had purchased. Darlington reported what he had seen to Lori Roberts, the human resources manager for Thorntons' Northern Division. Darlington then went to the store to investigate. He met with Koziol and showed him the video footage of Perez buying the candy. He asked Koziol if he was aware that Perez had purchased the candy after performing the price overrides. Koziol denied having any knowledge of the incident or giving Perez permission to make the purchase. Darlington then called Perez at home. Darlington told her to report to the store immediately for a meeting. When she arrived, Darlington initiated a conference call with Roberts. Darlington, Roberts, and Perez were the only people on the call. Darlington showed Perez the video footage and asked her to explain the price overrides.

Perez's account diverges from Darlington's and Roberts' at this point, but of course, on summary judgment, we must accept Perez's version as true.[1] Perez testified that she told Darlington and Roberts that she had Koziol's permission to conduct the price overrides. Darlington suspended Perez until further notice. Perez departed and Darlington consulted with Roberts. Darlington told Roberts that he wanted to fire Perez. Roberts concurred with that decision, and Darlington and Roberts then notified their respective superiors of Perez's termination. Darlington notified the regional vice president, Sam Picone. Roberts notified the executive vice president of human resources, Brenda Stackhouse. Neither Picone nor Stackhouse objected to Darlington's decision.

On November 10, 2009, Roberts called Perez at home and told her she was being fired. The personnel action form noted failure "to control cash and/or inventory" as the reason for her termination. Thorntons later clarified that Perez was fired for her failure to adhere to prices stated in the November Sales Planner and for violating Thorntons' "Write-Off Policy." The Write-Off Policy prohibited managers from writing off more than $25 of merchandise without an auditor as a witness. Although the Write -Off Policy was in effect during Perez's employment, Thorntons has not pointed to evidence in the record showing that she knew of its existence, or that she knew the Write-Off Policy would trump permission from her immediate supervisor.

If that were the entire record, Perez would not have a viable claim for discrimination. But a few months before Darlington terminated Perez, store manager Koziol used his personal credit card to "buy" a large quantity of beer and wine from the store at full price. The store support center noticed the transaction and reported it to regional vice president Picone. Picone and Darlington confronted Koziol about his transaction. Koziol explained to both supervisors that he had discovered that beer and wine were missing from the Summit store. Koziol suspected that it had been stolen, but he did not know by whom. He attempted to cover up the missing inventory by making a dummy purchase on his own credit card so that the shortage would not be discovered during an upcoming corporate audit. He claimed that he wanted time and opportunity to identify the culprits on his own. His idea, he told his supervisors, was that if the theft went undetected, the thieves might return to try to steal more alcohol, giving Koziol the chance to catch them in the act. Koziol did not have Thorntons' permission to run his sting operation in the Summit store. In spite of the fact that, at best, Koziol had engaged in a cover-up and was risking additional theft, Picone issued a written reprimand and a warning to Koziol, but Koziol kept his job. Darlington testified that he was involved in Picone's "coaching" of Koziol.


Perez brought suit under Title VII of the Civil Rights Act of 1964 for national origin and gender discrimination. See 42 U.S.C. § 2000e–2. She contends that Thorntons fired her because she is Hispanic and a woman. Thorntons moved for summary judgment on her claims. The district court granted summary judgment in Thorntons' favor, and Perez has appealed. Summary judgment is proper if the "movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). We review de novo a ruling granting summary judgment. Arizanovska v. Wal-Mart Stores, Inc., 682 F.3d 698, 702 (7th Cir. 2012). Examining the evidence in the light most favorable to Perez, and construing all inferences in her favor, we will affirm summary judgment only if there are no genuine issues of material fact and Thorntons is entitled to judgment as a matter of law. Naficy v. Illinois Dep't of Human Servs., 697 F.3d 504, 509 (7th Cir. 2012).

Under current law, there are two ways Perez may prove her claims: the "direct" and "indirect" methods of proof. Collins v. Amer. Red Cross, 715 F.3d 994, 999 (7th Cir. 2013). "Under the direct method, a plaintiff must provide either direct or circumstantial evidence that the employer had a discriminatory motivation. And under the indirect method, a plaintiff must satisfy the familiar requirements of McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973)." Id. (internal citations omitted). But we recognize and join the majority of active judges in this circuit who have opined that the time has come to jettison the "ossified direct/indirect paradigm" in favor of a simple analysis of whether a reasonable jury could infer prohibited discrimination. See Hitchcock v. Angel Corps., Inc., 718 F.3d 733, 737 (7th Cir. 2013), citing Coleman v. Donahoe, 667 F.3d 835, 863 (7th Cir. 2012) (Wood, J., concurring) ("By now, … the various tests that we insist lawyers use have lost their utility … . In order to defeat summary judgment, the plaintiff one way or the other must present evidence that she is in a class protected by the statute, that she suffered the requisite adverse action (depending on her theory), and that a rational jury could conclude that the employer took that adverse action on account of her protected class, not for any noninvidious reason. Put differently, it seems to me that the time has come to collapse all these tests into one."); Naficy, 697 F.3d at 514 (citing Coleman concurrence with approval); Good v. Univ. of Chi. Med. Ctr., 673 F.3d 670, 680 (7th Cir. 2012) ("the direct and indirect methods for proving and analyzing employment discrimination cases … have become too complex, too rigid, and too far removed from the statutory question of discriminatory causation"); and Harper v. C.R. England, Inc., 687 F.3d 297, 313–14 (7th Cir. 2012) (discussing Coleman concurrence and applying a more streamlined, collapsed version of the direct/indirect tests).

Perez contends that her claim survives under either the indirect or the direct methods. We conduct our analysis under those traditional tests, and we find, as explained below, that under each method Perez has raised issues of material fact that merit resolution by a jury. The similarity of the analysis helps show, however, that the differences between the methods are narrowing.

I. Indirect Method

Under the indirect method, a plaintiff must first establish a prima facie case by providing evidence "that (1) she is a member of the protected class; (2) she met her employer's legitimate job expectations; (3) she suffered an adverse employment action; and (4) similarly situated employees outside of the protected class were treated more favorably." Naficy, 697 F.3d at 511. In disparate punishment cases, like this one, the second and fourth prongs merge and are satisfied by a showing that a similarly situated employee outside the plaintiff's protected class committed a similar act but was subjected to less severe discipline. Elkhatib v. Dunkin Donuts, Inc., 493 F.3d 827, 831 (7th Cir. 2007). If the plaintiff makes this showing, the burden shifts to the employer "to introduce a legitimate, nondiscriminatory reason for the employment action." Naficy, 697 F.3d at 511. Then, if the employer meets that burden of production, the burden shifts back to the plaintiff to provide evidence that the employer's stated reason was pretextual. Id. at 511–12.

A. Similarly Situated Co-worker

The district court found that Perez failed to establish her prima facie case because she failed to demonstrate that a similarly situated employee outside of her protected class engaged in conduct similar to hers but was subjected to less severe discipline. "All things being equal, if an employer takes an action against one employee in a protected class but not another outside that class, one can infer discrimination . … The 'similarly situated' prong establishes whether all things are in fact equal." Filar v. Board of Educ. of City of Chicago, 526 F.3d 1054, 1061 (7th Cir. 2008) (internal citation omitted).

To satisfy this requirement, a plaintiff must identify at least one employee who is directly comparable to her in all material respects. See Coleman, 667 F.3d at 846. The purpose of the inquiry is to "eliminate other possible explanatory variables, 'such as differing roles, performance histories, or decision- making personnel, which helps isolate the critical independent variable'—discriminatory animus." Id., quoting Humphries v. CBOCS West, Inc., 474 F.3d 387, 405 (7th Cir. 2007), aff'd, 553 U.S. 442 (2008). The proposed comparator need not be identical in every conceivable way, however, and courts must conduct a "common-sense examination." Coleman, 667 F.3d at 846 (quotation omitted).

To satisfy this requirement, Perez argues that Koziol, her non-Hispanic male supervisor, committed an infraction comparable to hers but was not disciplined as severely as she was. Perez openly purchased candy bars at a marked down price with (we must assume) Koziol's permission. She was fired. Koziol covered up theft from the store and, without the consent of his supervisors, concocted a one-man sting operation that invited additional theft—yet he was merely warned. Thorntons argues that Koziol's conduct is not comparable to Perez's conduct because Thorntons suffered no actual economic harm as a result of Koziol's act. A jury might buy that explanation, but we cannot resolve that issue on summary judgment. Koziol's act covered up a much larger actual economic loss and put Thorntons at a high risk of future actual economic loss. Also, Koziol acted in secret, without the knowledge or permission of his supervisor. Perez, though, purchased the discounted candy bars openly and with, we must assume, Koziol's consent. At the end of the day, both of these infractions involved inventory control, and yet the employees were treated very differently by Thorntons' higher management. We believe it should be left to a jury to decide whether they were similar enough to support an inference of discrimination.

Our dissenting colleague disagrees, noting as we often have that "we do not sit as a super-personnel department to determine which employment infractions deserve greater punishment. It is enough that the misconduct that led to the adverse job action in question is sufficiently distinct to render the proposed comparators not similarly situated." Post at [32] (emphasis added), quoting Harris v. Warrick County Sheriff's Dep't, 666 F.3d 444, 449 (7th Cir. 2012). On this basis, the dissent accepts Thorntons' stated explanation for firing Perez but not Koziol—that Perez's conduct caused "actual loss to the company" while Koziol's "had no such effect." Post at 32.

At first glance that is true, but the picture for purposes of summary judgment is more complex. Koziol's conduct was deceptive, done secretly and without the consent of a supervisor. Perez, by contrast, acted openly and with the consent of her supervisor. In addition, Koziol's act caused no actual loss to the company only because he was improperly covering up a real theft. Moreover, he concocted an "investigation" that would have risked additional loss if he had not been caught. Ultimately, the crux of the issue is whether Perez's and Koziol's misdeeds were "sufficiently distinct" to distinguish meaningfully between them at summary judgment, or whether a jury could reasonably find they were comparable. We believe that the arguable differences between causing modest actual economic loss with the consent of a supervisor and covering up a significant theft and risking additional economic loss without the consent of a supervisor are too fine to make as a matter of law on summary judgment. Whether Perez's and Koziol's misconduct was comparable is a genuinely disputed issue of material fact.

Thorntons argues further, however, that whether or not Perez had Koziol's consent is immaterial because even with his consent, Perez's purchase still violated Thorntons' Write -Off Policy. That policy prohibits any write-offs of more than $25 by any employee except with the express permission of a corporate auditor. Thorntons presented evidence that the Write-Off Policy was in place while Perez was employed with Thorntons, but it has not pointed us to evidence that Perez knew of its existence or that she would have had any other reason to believe that Koziol's permission was insufficient to bless her action. Also, at the time of Perez's firing, Thorntons' stated reason for its decision was her failure to "control cash and/or inventory, " and Koziol's infraction would also certainly qualify for that description.

Thorntons also argues that Koziol is not comparable to Perez because they were disciplined by different decision makers—Koziol by Picone and Perez by Darlington. This argument is belied outright by Darlington's deposition testimony that was the basis of Thorntons' motion for summary judgment. Darlington testified that he was present when Picone confronted Koziol and was involved in the decision to warn but not terminate Koziol. He also testified that he advised Picone of Perez's infraction, and that Picone assented to Darlington's decision to fire Perez. Darlington and Picone were both sufficiently involved in both Koziol's and Perez's discipline to undermine Thorntons' argument, at least as a matter of law.

Our dissenting colleague believes that we should not consider the evidence of Darlington's involvement in Koziol's discipline because Perez "admitted" in response to Thorntons' Local Rule 56.1 statements that Picone played no role in Darlington's decision to discharge Perez and "Darlington played no role in Picone's discipline decision regarding Koziol's June and July 2009 beer purchase." Post at 28, citing Dkt. 59, ¶¶ 41, 45 (Thorntons' Local Rule 56.1 Statement of Undisputed Facts) and Dkt. 62, ¶¶ 41, 45 (Perez's Response). The point is an important one because of the procedures that district courts use to clarify and sharpen the issues to be decided on a summary judgment motion. And Perez did not respond in the district court as clearly as she should have.

The problem, though, is that Thorntons' same paragraphs of supposedly undisputed facts and its evidence offered to support its Local Rule 56.1 Statement contradict its assertions that Darlington played no role in Picone's decision to discipline but not fire Koziol and that Picone played no role in the decision to fire Perez. Where the moving party has undermined its own Local Rule 56.1 assertion through the presentation of contradictory assertions and evidence, a non- movant's "admission" of the movant's assertion is not decisive.

To find otherwise would serve only to reward parties who successfully obfuscate the record and engage in ...

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