Meister v. Georgia-Pacific Corp.

• Citation: 43 F.3d 1154
• Decision Date: 09 March 1995
• Docket Number: GEORGIA-PACIFIC,No. 94-1386,94-1386
• Parties: Michael A. MEISTER and Edward F. Swartz, Plaintiffs-Appellants, v.CORPORATION and Mail-Well Envelope Company, Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 1154

43 F.3d 1154

Michael A. MEISTER and Edward F. Swartz, Plaintiffs-Appellants, v. GEORGIA-PACIFIC CORPORATION and Mail-Well Envelope Company Defendants-Appellees.

No. 94-1386.

United States Court of Appeals Seventh Circuit.

Argued Oct. 27, 1994.

Decided Jan. 3, 1995.

Rehearing and Suggestion for Rehearing En Banc Denied March 9, 1995.

Marilyn F. Longwell (argued), Heidi L. Widell, Robert P. Sheridan, Chicago, IL, for Michael A. Meister, and Edward F. Swartz.

John W. Noble, Jr., Rivkin, Radler & Kremer, Chicago, IL, Robert H. Buckler, Robert P. Riordan (argued), Alston & Bird, Atlanta, GA, Paul E. Freehling, D'Ancona & Pflaum, Chicago, IL, for Georgia-Pacific Corp. and Mail-Well Envelope Co.

Before POSNER, Chief Judge, ESCHBACH, and RIPPLE, Circuit Judges.

ESCHBACH, Circuit Judge.

Plaintiffs, Michael A. Meister ("Meister") and Edward F. Swartz ("Swartz"), brought this diversity action under Illinois law charging that their former employer, Georgia-Pacific Corporation ("G-P") and Mail-Well Envelope Company ("Mail-Well"), unlawfully terminated them in retaliation for reporting the alleged solicitation of a "kickback" from a vendor by a co-employee and a subsequent extortion attempt by the same employee. The district court granted summary judgment for G-P and Mail-Well and the plaintiffs appeal. We affirm.

I. BACKGROUND

G-P, a Georgia corporation, is engaged in the pulp, paper and building products industries throughout much of the United States. In March 1990, G-P acquired Great Northern Nekoosa Company, which owned Butler Paper Company ("Butler") and all of Butler's ownership interests, including Mail-Well. Thus, through this acquisition, G-P became the owner of Mail-Well, a company which operates several plants, including one in Chicago, Illinois, where envelopes are cut, folded and shipped.

Meister was the plant manager for Mail-Well's Chicago plant and Swartz was the production scheduler for the plant. As plant manager, Meister oversaw, among other things, the shipping department where "tariffs" or rates are negotiated with shipping companies. In this position, Meister was directly responsible for the shipping supervisor. Prior to the events in this case, Meister terminated the shipping supervisor, Roman Kuzmyn ("Kuzmyn"), in March 1990, in part because he had improperly negotiated a shipping tariff. After Kuzmyn's termination, the three shipping lead men, including Ronald Merker ("Merker"), were in charge of the shipping department under Meister's supervision. In February 1991, Dave Gerrasch ("Gerrasch"), the plant's general manager and Meister's direct supervisor, named Merker acting shipping supervisor.

A. Reporting The Alleged Kickback and Extortion Attempts

At the time of the incidents surrounding this case, Capitol Motor Service, Inc. ("Capitol") hauled a significant portion of the freight carried from Mail-Well's Chicago plant. Capitol was owned and operated by Richard Peluso ("Peluso"), a friend of Swartz who owned and trained race horses. Swartz had introduced Peluso to Merker in 1990 during a trip to Arlington Park race track. According to the plaintiffs, in July 1991, Merker approached Swartz and asked him to solicit kickbacks from Capitol. Swartz subsequently reported Merker's remarks to Meister. Although concerned, Meister decided not to report this incident to his superiors. Instead, he chose to carry out his own internal investigation by keeping a closer eye on the shipping department.

In June 1991, upon Meister's recommendation, Gerrasch promoted Merker from acting shipping supervisor to shipping supervisor. The notice of Merker's promotion was posted on July 17, 1991 and became effective on August 1, 1991. Meister, however, kept silent as to Swartz's allegations about Merker and allowed the promotion to proceed. Several pieces of information came to light after Merker's promotion. In the fall of 1991, Merker told Meister that he was training Peluso's race horses. In December 1991 Meister learned that Merker's training was in return for an ownership interest in Peluso's horses. Finally, in late December 1991, Swartz informed Meister that Merker had shipped a large volume of freight by Condor Air Freight Company ("Condor"). Swartz and Meister were suspicious due to the large cost entailed by an air freight shipment, especially with a carrier for whom there were no negotiated rates on file with the company. Merker, claiming to have had authorization to use Condor from the Sales Manager, accused Meister and Swartz of being overly concerned with his use of a carrier other than Capitol because they were accepting kickbacks from Capitol. The next day, December 27, 1991, Merker went to Clare Sill ("Sill"), the plant's human resources administrator, and reported his concerns that he was being "set up" by Meister and Swartz to look like he was taking kickbacks.

According to Swartz, on Sunday, December 29, 1991, Merker called him at his home and told him he wanted $5000 from Capitol for freight business or he would accuse Swartz of taking kickbacks from Capitol. Swartz reported this extortion attempt to Meister the next day. Meister immediately called Gerrasch and reported Merker's statement. At that point, Meister also informed Gerrasch of the incident in July of 1991 and his ongoing investigation of Merker's activities. Gerrasch and Meister arranged to meet to further discuss the situation on January 2, 1992. In the meantime, Gerrasch arranged to have a conference call with Swartz and Sill, during which Swartz repeated his version of the conversation with Merker.

On January 2, 1992, Gerrasch and Meister met to discuss the allegations. Later that day, they confronted Merker with Swartz's statements and he responded by alleging that Meister and Swartz were themselves receiving kickbacks from Capitol. Finding himself at an impasse, Gerrasch resolved to make some organizational changes until the matter could be investigated further. After the meeting, Gerrasch removed the responsibility for the shipping department from Meister and put another individual, Jay Burman ("Burman"), in charge. Merker was ordered to report to Burman rather than Meister during this period. Gerrasch also directed Burman to audit the Capitol bills to determine if a problem existed.

A few weeks later, Meister traveled to a manager's meeting at Mail-Well's headquarters in Colorado, where he spoke with Timothy Sparks ("Sparks"), the Manager of Employee Relations for Butler and Mail-Well. Meister, under the impression that Gerrasch was going to contact the G-P investigator about the incidents, asked Sparks if he knew of any investigation being conducted in Chicago. Sparks was unaware of any investigation, but promised to make some inquiries. Upon checking with George Foster ("Foster"), the Director of Corporate Security at G-P, ¹ Sparks informed Meister that Foster knew of no such investigation being conducted at Chicago's Mail-Well plant. Meister expressed his disappointment that Gerrasch had not contacted Foster. Sparks informed Meister that he could make a "hotline" call, ² or speak directly with the President of Mail-Well, Jim Bostic ("Bostic"). Although Sparks reported that Meister was concerned that Gerrasch might endanger his job should he go over Gerrasch's head and report the matter to senior management, Meister agreed to speak with Bostic over the telephone. In his conversation with Bostic, which was put on speaker so that several other members of Mail-Well's senior management could participate, Meister first sought assurance that his job would not be endangered by reporting the information about Merker. Bostic told him that under the company's Code of Conduct policy, he would not face retaliation for reporting illegal or unethical conduct. Meister then proceeded to provide a detailed account of the events at the Chicago Mail-Well plant. After the call was completed, Bostic instructed Sparks to have the matter investigated. John Slattery ("Slattery"), Mail-Well's Vice-President and Gerrasch's immediate supervisor, called Gerrasch and told him that there would be an investigation by G-P and that he was to cooperate with the investigators.

B. G-P's Investigations

While Burman's audit of the Capitol bills was the first step in investigating the kickback allegations, G-P did not formally begin to investigate the matter until Sparks turned the matter over to Foster for an official investigation. In a memorandum dated January 30, 1992, Sparks advised Foster of the facts known to him, without revealing that Meister was the informant in this case. Foster then traveled to the Chicago plant to conduct his investigation on February 4 and 5, 1992. During the course of his investigation, Foster spoke with Gerrasch, and then interviewed Meister, Swartz and Merker. He also contacted Peluso of Capitol, who denied having first-hand knowledge of any kickback attempts. Faced with conflicting unsubstantiated allegations, Foster reported to G-P's Code of Conduct Committee that his investigation was inconclusive as to the existence of kickbacks. The Code of Conduct Committee, comprised of several managers of G-P, monitors reports of illegal or unethical conduct within G-P or its subsidiaries. Upon reviewing Foster's findings, the Committee determined that further investigation was necessary. Several members of the Committee expressed concern about a conflict of interest between some of the employees and Capitol and the possibility that this may have resulted in Capitol overcharging for its services.

In the interim after Foster left Chicago and before a new investigation was initiated, Gerrasch allegedly told Meister on February 7, 1992 that he was going to "get that asshole who called corporate" and that he had a pretty good idea of who made the call. ³ Gerrasch purportedly felt the investigation was a "black eye" for the Chicago Mail-Well plant and that corporate headquarters would question the abilities of all...