O'Regan v. Arbitration Forums Inc.

Citation246 F.3d 975
Decision Date09 April 2001
Docket NumberNos. 99-4044,s. 99-4044
Parties(7th Cir. 2001) Mary A. O'Regan, Plaintiff-Appellant, v. Arbitration Forums, Inc., a New York not-for-profit corporation, and Yvonne Weaver, Defendants-Appellees. & 00-1306
CourtUnited States Courts of Appeals. United States Court of Appeals (7th Circuit)

Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. No. 95 C 6464--Harry D. Leinenweber, Judge. [Copyrighted Material Omitted]

[Copyrighted Material Omitted]

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] Before Manion, Kanne, and Diane P. Wood, Circuit Judges.

Manion, Circuit Judge.

Mary Ann O'Regan sued her former employer, Arbitration Forums (AF), alleging that AF terminated her because of her sex and age in violation of Title VII and the Age Discrimination in Employment Act (ADEA). The parties filed cross-motions for summary judgment, and the district court granted AF's motion, concluding that O'Regan failed to demonstrate that AF's legitimate, non-discriminatory reason for her termination (her failure to sign an employment agreement) was a pretext for discrimination, and that the employment agreement did not have a disparate impact on women. O'Regan appeals, arguing that the district court judge erroneously granted AF's summary judgment motion, erroneously refused to recuse himself from the case, and abused his discretion in granting AF's amended bill of costs. We affirm.

I.

Arbitration Forums (AF) is a non-profit corporation that provides arbitration services to insurance companies. AF hired Mary Ann O'Regan to the position of Illinois Administrator in April 1989, and promoted her to the Branch Manager position in August 1989. O'Regan resigned from AF in June 1990 to complete her Master's Degree in Management and to fulfill family responsibilities. AF rehired O'Regan in January 1991 to the position of Central Regional Manager on an at-will basis.

In 1992, AF was involved in a dispute with Resolute Systems, a competing company in the arbitration services market. AF claimed that Resolute had obtained confidential information from former AF employees. AF and Resolute resolved their dispute after Resolute agreed to modify its materials in 1993 to distinguish them from AF's documents.

After the dispute with Resolute arose, AF decided to require all of its 85 managers to sign an employment agreement that included a covenant not to compete. AF reviewed an initial draft of an employment agreement prepared by attorney John Cacciatore. But after consulting with another attorney, Thomas Steele, AF rejected Cacciatore's draft and adopted Steele's more comprehensive employment agreement, which contained a non- compete provision prohibiting AF employees from working for AF's competitors in the insurance arbitration industry for a two-year period anywhere throughout the United States. Steele also recommended that AF: require all managers to sign the employment agreement, refuse to negotiate the terms of the Agreement, and terminate employees who refused to sign the Agreement for cause. AF's President, Yvonne Weaver, followed Steele's advice. She distributed the employment agreement to all of AF's management and professional level employees, along with a memorandum stating that all employees were required to execute the Agreement within ten business days. She asserted that AF would not negotiate any modifications, and that employees who failed to sign the Agreement would be terminated for cause.

After receiving the memo and employment agreement, O'Regan consulted an employment law attorney. The attorney advised her that the Agreement violated Illinois public policy, was overly broad, draconian in scope, and lacked adequate consideration. Based on her attorney's opinion, O'Regan notified AF that she would not sign the employment agreement, but would be willing to negotiate a new one. Weaver consulted Steele about O'Regan's position, and Steele advised her to terminate O'Regan. AF terminated O'Regan on October 8, 1993. She was 47 years old at the time of her termination. Weaver replaced O'Regan with Terance Bryant, a 32-year-old male.

Out of the 85 management level and professional employees who received and were required to sign the employment agreement, four female middle managers (including O'Regan) refused to sign. AF terminated all four of them for the proffered reason that they refused to sign the employment agreement. All 15 of AF's male managers and management trainees signed the employment agreement.

After she was fired, O'Regan sued AF, alleging claims of breach of oral promise, promissory estoppel, breach of implied contract, retaliatory discharge, sex and age discrimination, tortious interference, Sherman Act violations, Illinois Antitrust Act violations, and conspiracy. Upon AF's motion to dismiss, the district court dismissed all of O'Regan's claims, and O'Regan appealed to this court. We affirmed the dismissal of all of O'Regan's claims except for her sex and age discrimination claims, stating that "[t]hese claims might fail on summary judgment, but at this point they should not be dismissed." O'Regan v. Arbitration Forums, Inc., 121 F.3d 1060, 1065 (7th Cir. 1997). The case was remanded to the district court before Judge Harry D. Leinenweber.

While the case was pending with Judge Leinenweber, O'Regan learned from a newspaper article that Judge Leinenweber's wife, former U.S. Labor Secretary Lynn Martin, accepted a position with Mitsubishi as a consultant to review the adequacy of Mitsubishi's policies governing sex discrimination at its Normal, Illinois plant. According to the consulting contracts, Mitsubishi agreed to pay Martin over $2 million from 1996 through 1998. O'Regan also learned that Mitsubishi was a major client of the law firm of Keck, Mahin & Cate (KMC), which was the same law firm that represented AF in this case.

Based on these facts, O'Regan filed a motion to disqualify Judge Leinenweber, alleging that he made favorable rulings for AF (KMC's client) and against O'Regan to repay KMC for the firm's assistance in securing Martin's consulting contracts with Mitsubishi. The district court denied O'Regan's motion. O'Regan filed a mandamus petition with this court, which was denied without opinion on December 8, 1997. O'Regan next filed an amended mandamus petition and requested a rehearing en banc, which this court denied on January 20, 1998.

O'Regan then filed a motion for default against Weaver, AF's former president (who was terminated in 1995 but was named as a defendant in her corporate capacity) for failing to file her answer to O'Regan's Second Amended Complaint. The district court denied the motion. O'Regan subsequently filed a motion for reconsideration, which was denied as well. O'Regan then filed another mandamus petition, arguing that Judge Leinenweber's denial of the default motion, and his conduct at the motion hearing, further demonstrated the judge's bias. Another panel of this court denied O'Regan's second mandamus petition without opinion on May 11, 1998.

Back with the district court, AF and O'Regan filed cross-motions for summary judgment on O'Regan's remaining sex and age discrimination claims. Both parties also filed motions to strike in response to Local Rule 12(M) and (N) submissions. On August 30, 1999, the district court granted AF's summary judgment motion, concluding that O'Regan failed to establish that AF's reason for her termination (her failure to sign the employment agreement) was a pretext for discrimination, or that the employment agreement had an illegal disparate impact on women. O'Regan v. Arbitration Forums, Inc., No. 95 C 6464, 1999 WL 731775 (N.D. Ill., Aug. 30, 1999). The district court also granted in part AF's motion to strike portions of affidavits by O'Regan and Nancy Trussel (AF's Director of Human Resources), and denied O'Regan's motion to strike AF's reply to O'Regan's 12(N) statement of additional facts in support of her motion for summary judgment.

O'Regan appeals, arguing that Judge Leinenweber erroneously granted AF's motion for summary judgment, granted in part AF's motion to strike, and denied O'Regan's motion to strike. O'Regan also contends that because of KMC's alleged assistance in securing Martin's contract with Mitsubishi, Judge Leinenweber erred in failing to recuse himself from the case as required by the spousal financial interest provision of 28 U.S.C. sec. 455 (b)(4), and other disqualification provisions. On February 2, 2000, O'Regan filed a subsequent appeal of the district court's decision to grant AF's amended bill of costs, arguing that the district court abused its discretion in granting the bill of costs because it was untimely and misleading. We consolidate the appeals.

II.
A. Summary Judgment

O'Regan argues on appeal that the district court erred in granting summary judgment for AF on O'Regan's sex and age discrimination claims. "We conduct de novo review of a district court's decision involving cross-motions for summary judgment," viewing all of the facts, and drawing all reasonable inferences from those facts, in favor of the nonmoving party. Ozlowski v. Henderson, 237 F.3d 837, 839 (7th Cir. 2001) (quoting Hendricks-Robinson v. Excel Corp., 154 F.3d 685, 692 (7th Cir. 1998)). Summary judgment is proper if the record demonstrates that "there is no genuine issue as to any material fact and that [a] moving party is entitled to judgment as a matter of law." Id. (quoting Fed. R. Civ. P. 56(c)). "With cross-motions, our review of the record requires that we construe all inferences in favor of the party against whom the motion under consideration is made." Hendricks-Robinson, 154 F.3d at 692.

1. Disparate treatment claim.

On appeal, O'Regan argues that AF's President, Yvonne Weaver, favored AF's younger, male, management trainees over AF's older female managers, and that Weaver used the employment agreement as a pretext to...

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