Smith v. Potter

• Decision Date: 02 May 2006
• Docket Number: No. 04-3531.,04-3531.
• Citation: 445 F.3d 1000
• Parties: Kathy J. SMITH, Plaintiff-Appellant, v. John E. POTTER, Postmaster General of the United States, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

445 F.3d 1000

Kathy J. SMITH, Plaintiff-Appellant, v. John E. POTTER, Postmaster General of the United States, Defendant-Appellee.

No. 04-3531.

United States Court of Appeals, Seventh Circuit.

Argued September 12, 2005.

Decided May 2, 2006.

Kevin W. Betz, Sandra L. Blevins (argued), Betz & Associates, Indianapolis, IN, for Plaintiff-Appellant.

Thomas E. Kieper, Debra G. Richards (argued), Office of The United States Attorney, Indianapolis, IN, for Defendant-Appellee.

Before COFFEY, EASTERBROOK and EVANS, Circuit Judges.

COFFEY, Circuit Judge.

On November 27, 1998, Kathy Smith was removed from her position as a mail clerk for the United States Postal Service ("USPS" or "Postal Service") due to "unacceptable misconduct". Shortly thereafter, Smith filed a grievance with her union, the American Postal Workers Union ("APWU"), claiming that the decision to dismiss her was based on the color of her skin rather than the quality of her work. After a number of adverse decisions and related appeals, Smith and the APWU submitted their dispute to arbitration, which was concluded in favor of the USPS. Not satisfied with this, Smith filed a complaint with the USPS Office of Equal Employment Opportunity ("EEO") on June 11, 2001, which was denied as untimely. While her appeal of the EEO decision was pending with the Equal Employment Opportunity Commission ("EEOC"),¹ Smith filed a complaint in the United States District Court for the Southern District of Indiana under Title VII of the Civil Rights Act of 1964, alleging that her termination from the USPS was a result of sex and/or race discrimination. See 42 U.S.C. §§ 2000e et seq. In response the USPS filed a motion to dismiss, which the district court converted into a motion for summary judgment and granted, holding that Smith had failed to exhaust her administrative remedies. We affirm.

I. BACKGROUND

At approximately 5:40 on the evening of October 4, 1998, two postal workers witnessed a co-worker, Kathy Smith, "throwing large chunks of concrete at the windshield of a 1997 Ford Expedition" parked in the employee parking lot of the Indianapolis Post Office. The attack on the vehicle continued until the two onlookers shouted at Smith, imploring her to stop. At that point, Smith "jumped in her car" and sped away. Smith, a mail clerk at the Indianapolis Post Office ("post office") and twelve-year veteran of the Postal Service, was on-duty at the time of the incident.

The target of Smith's ire was later identified as a motor vehicle belonging to Karen Hill, Smith's supervisor at the post office. According to Smith, the attack on Hill's motor vehicle was precipitated by a series of confrontations (some violent) between the two women in the preceding months.² Specifically, Smith told her superiors at the Postal Service that less than two weeks earlier, on September 24, 1998, Hill had suffered a dislocated shoulder during a physical altercation between the two women at a work-related birthday celebration. In addition, Smith alleged that Hill had vandalized her automobile two months earlier and that Hill had been placing harassing "hang-up" telephone calls to her sister. As further proffered justification for her actions, Smith also admitted that she had been suffering from an "alcohol problem," and even stated that she had been drinking at work on October 4th.

Immediately following the October 4, 1998 attack on Hill's car, Smith was suspended pending a Postal Service investigation into the incident. Approximately three weeks later, on October 22, 1998, the Postal Service sent Smith a letter informing her that she had been terminated from her employment, effective November 27, 1998. In support of its decision, the Postal Service cited Smith's breach of two sections of the employee code of conduct³ and two recent incidents of absenteeism.⁴ The letter also informed Smith that, as a APWU member, she had the right to file a grievance challenging her termination in accordance with the collective bargaining agreement that was in effect at the time.

Prior to even the prospective date of her termination, Smith filed a union grievance — called a "Step 1" grievance — attributing her unacceptable conduct on October 4th to her alcoholism. The union summarily rejected this explanation, upholding her dismissal and finding that management had "just cause" to take disciplinary action. Smith timely appealed, filing what is known as a "Step 2" grievance, and the union once again ruled against her. On appeal, not only did the union once again find that there was "just cause for the disciplinary action"; they also concluded that Smith's removal would "promote the efficiency of the Postal Service and enable the agency to provide a safe work place." After a final unsuccessful appeal — referred to as "Step 3" in the grievance process — Smith pursued her contractual right to have an arbitrator decide whether or not she had been discharged for just cause. The arbitrator affirmed the union's previous decisions in an award dated June 6, 2001, concluding that just cause existed to terminate Smith, primarily due to the fact that "[t]he risk of a similar violent outburst [would be] too great" and Smith's "vandalism jeopardized the safety of the workplace and impacted Management's ability to provide a secure work environment."

Smith responded to the adverse arbitration decision with the filing of a formal complaint⁵ with the USPS's EEO office ("EEO"). In her complaint, Smith alleged that her termination was not only unwarranted but was also discriminatory in nature. The EEO complaint alleged that Smith had been discriminated against on the basis of her race when she, a white female, was fired for vandalizing Hill's vehicle while Hill, a black female, had not been disciplined for: (a) vandalizing her (Smith's) vehicle on July 7, 1998; (b) placing harassing phone calls to Smith's family; and (c) assaulting Smith and dislocating her shoulder on September 24, 1998.⁶ See supra p. 1002.

On August 23, 2001, the USPS EEO office issued a "Final Agency Decision" dismissing Smith's complaint for failure to comply with the Agency's 45-day time limit for lodging a discrimination complaint. See 29 C.F.R. § 1614.105(a)(1). In support of its decision, the EEO cited the fact that Smith was "or should have been aware of the time limit for contacting an EEO Counselor, as posters, including the 45-day time limit were clearly on display at the post office where [she] had worked." Citing Reeb v. Economic Opportunity of Atlanta, Inc., 516 F.2d 924, 931 (5th Cir. 1975), the EEO pointed out that "the 45-day limitation period begins to run when a person with reasonably prudent regard for his/her rights knew or should have known that s(he) was being discriminated against," and Smith had not filed a complaint with the EEO until well after the 45-day regulatory time limit had expired.⁷

Undeterred, Smith filed a timely administrative appeal of the EEO determination with the EEOC on September 13, 2001. On appeal, Smith claimed for the first time that in October of 1998, she telephoned the USPS's EEO office and was informed by an EEO counselor⁸ that she was required to conclude the union grievance process she had initiated before pursuing any action for discrimination or harassment through the EEO. In the alternative, Smith also argued that although her dismissal from employment was effective as of November 27, 1998, she was not actually removed from the USPS payroll until June 8, 2001 — after the union grievance process was concluded.⁹ Accordingly, Smith's position was that she had complied with the 45-day time limit of 29 C.F.R. § 1614.105(a)(1) when she filed a complaint with the EEO within four days of the final disposition of the grievance process (on June 11, 2001), and that, due to the fact that she was misled by the USPS's EEO office, the Postal Service should be estopped from arguing otherwise.

While her EEOC appeal was pending, however, Smith short-circuited the administrative process by filing this action in the United States District Court for the Southern District of Indiana on June 3, 2002, claiming that she had been discriminated against by the USPS on the basis of her race, in violation of 42 U.S.C. § 2000e. Pursuant to 29 C.F.R. § 1614.409, once Smith filed her complaint in federal court the EEOC, by operation of law, lost any authority to proceed with her appeal. See § 1614.409 (stating that: "Filing a civil action under § 1614.408 or § 1614.409 shall terminate Commission processing of the appeal"). Indeed, beginning on June 3, 2002, the EEOC lacked authority over Smith's appeal and was barred from deciding or otherwise adjudicating the appeal. See, e.g., Harris v. Dep't of Veterans Affairs, EEOC Appeal No. 01A51717 (2005); Olson v. Dep't. of Treasury, EEOC Appeal No. 01983200 (2001). Nonetheless, the EEOC, in an unusual and unexplained breach of regulations, proceeded with the appeal and issued an opinion on September 12, 2002, reversing its earlier determination and concluding that Smith's original EEO complaint was, in fact, timely under 29 C.F.R. § 1614.105(a)(1).¹⁰ This prompted Smith to file a motion to withdraw her federal action, which the district court summarily denied.

The defendant filed a motion to dismiss, or in the alternative, motion for summary judgment for the first time on September 16, 2002, arguing that Smith had failed to exhaust her administrative remedies.¹¹ That motion was denied without prejudice while the district court ascertained whether any parallel administrative proceedings were erroneously taking place. In addition, the court issued a stay of the proceedings.¹² Once the district court was satisfied that all agency proceedings had been terminated in accordance with 29 C.F.R. § 1614.409, the court lifted the stay and the defendants renewed their motion to dismiss, or in the alternative, moved for summary judgment.

On August 27, 2004, the district court granted the defendant's...