Bourbon v. Kmart Corp.

• Decision Date: 04 August 2000
• Docket Number: No. 98-2433,98-2433
• Citation: 223 F.3d 469
• Parties: (7th Cir. 2000) KENNETH BOURBON, Plaintiff-Appellant, v. KMART CORPORATION, Defendant-Appellee
• Court: U.S. Court of Appeals — Seventh Circuit

Page 469

223 F.3d 469 (7th Cir. 2000)

KENNETH BOURBON, Plaintiff-Appellant, v. KMART CORPORATION, Defendant-Appellee.

No. 98-2433

In the United States Court of Appeals For the Seventh Circuit

Submitted September 23, 1999

Decided August 4, 2000

Appeal from the United States District Court for the Southern District of Illinois. No. 97 C 182--William D. Stiehl, Judge.

Before POSNER, MANION and ROVNER, Circuit Judges.

ROVNER, Circuit Judge.

Kenneth Bourbon sued his employer, Kmart Corporation, under Illinois law for retaliatory discharge, claiming Kmart fired him after he complained that his supervisor was engaged in dishonest and unethical behavior towards customers. The district court granted summary judgment in favor of Kmart because Illinois law allows suits for retaliatory discharge only under very limited circumstances, and because Bourbon could not show that Kmart's stated reason for the discharge was pretextual. We affirm.

I.

Bourbon began working as an automobile mechanic at the Wood River, Illinois Kmart in January 1995. Bourbon had worked at two other Kmart locations in 1994 without incident, but was fired from the Wood River store after only one month. According to Bourbon, he was terminated for reporting to the personnel department on two occasions that his supervisor had engaged in dishonest and unethical conduct towards customers. In particular, he reported that on one occasion, he accidentally broke a part on a customer's car, and offered to pay for a replacement part himself. Instead, his supervisor charged the customer for the extra repair, and used a junkyard part to effect the repair. On another occasion, he reported that a customer was charged for an unnecessary replacement of a rack and pinion steering system when another mechanic misdiagnosed a problem. Both customers were eventually fully reimbursed by Kmart for these overcharges. Shortly after reporting these incidents, Bourbon's supervisor approached him to complain about his work performance and attitude. A little more than a month after Bourbon began his employment at the Wood River Kmart, he was terminated. Kmart, of course, contended that Bourbon was terminated for performance problems and not in retaliation for bringing questionable conduct to light.

Bourbon sued Kmart in Illinois state court and the case was removed to the United States District Court for the Southern District of Illinois. Bourbon's amended complaint in that court charged only that Kmart fired him in retaliation for reporting dishonest and unethical behavior by his supervisor. At the close of discovery, Kmart moved for summary judgment on the ground that the Illinois tort of retaliatory discharge did not protect employees who reported dishonest or unethical conduct but rather protected only employees who reported criminal conduct or who filed workers' compensation claims. In response, Bourbon pointed out that his supervisor's conduct constituted theft by deception under Illinois law, and therefore his reporting of that conduct came within the purview of the retaliatory discharge tort. The district court employed the McDonnell-Douglas burden shifting analysis to Bourbon's claim and found that Bourbon could not show that Kmart's legitimate, non-discriminatory reason for his termination was pretextual. See McDonnell-Douglas Corp. v. Green, 411 U.S. 792 (1973). Alternatively, the district court found that even if Bourbon met the standard under McDonnell- Douglas, he could not show that his termination was in violation of clear public policy because he was reporting unethical, dishonest behavior and not criminal behavior when he was fired. The district court therefore granted summary judgment in favor of Kmart. Bourbon appeals.

II.

On appeal, Bourbon takes issue with the district court's application of McDonnell-Douglas to his claim for retaliation, arguing that burden shifting is appropriate only at trial or in the context of a motion for judgment notwithstanding the verdict. Bourbon also argues that there was a material dispute regarding the reason for his termination that could be resolved only at trial. Kmart, in turn, contends that Bourbon's termination does not come within the scope of the retaliatory discharge tort because Bourbon claims only that he was fired for reporting unethical and dishonest conduct, and not for reporting any criminal activity. Kmart also asserts that Bourbon has no proof that he was performing satisfactorily at the time he was fired, and that he thus cannot make out a prima facie case under McDonnell-Douglas.

Illinois law allows claims for retaliatory discharge when an employee is terminated for filing a workers' compensation claim or because the employee has reported the employer's criminal conduct, either to law enforcement personnel or to the company itself. See Kelsay v. Motorola, Inc., 384 N.E.2d 353 (Ill. 1978) (recognizing for the first time the tort of retaliatory discharge when an employee was terminated for asserting rights under workers' compensation law); Palmateer v. International Harvester Co., 421 N.E.2d 876 (Ill. 1981) (expanding tort of retaliatory discharge to encompass terminations of employees who were fired because they reported employer's criminal conduct to law enforcement authorities); Petrick v. Monarch Printing Corp., 444 N.E.2d 588 (Ill. App. 1 Dist. 1982) (recognizing retaliatory discharge when employee reports criminal conduct to supervisors instead of law enforcement personnel); Belline v. K-Mart Corp., 940 F.2d 184, 187 (7th Cir. 1991) (applying tort of retaliatory discharge where an employee reports unlawful conduct to an employer). A valid claim for retaliatory discharge requires a showing that (1) an employee has been discharged; (2) in retaliation for the employee's activities; and (3) that the discharge violates a clear mandate of public policy. Hartlein v. Illinois Power Co., 601 N.E.2d 720, 728 (Ill. 1992). "The element of causation is not met if the employer has a valid basis, which is not pretextual, for discharging the employee." Id. No one disputes that Bourbon was discharged. Kmart disputes that he was discharged because he reported the customer overcharges, and also maintains that firing an employee for reporting unethical conduct falls outside the scope of the tort of retaliatory discharge.

The question of whether Bourbon's reporting of his supervisor's conduct is within the scope of the tort is a close question. The fact that Bourbon may have been wrong about whether the conduct was criminal is irrelevant under Illinois law. See Palmateer, 421 N.E.2d at 880; Belline, 940 F.2d at 188. The Illinois Supreme Court explained that persons acting in good faith who have probable cause to believe crimes have been committed should not be deterred from reporting them by the fear of being wrongfully discharged. Palmateer, 421 N.E.2d at 880. Bourbon's initial characterization of his supervisor's conduct as dishonest and unethical does not change the fact that, under Illinois law, Bourbon may have reasonably believed that the conduct also meets the definition of theft by deception. See 720 ILCS sec. 5/16-1. Bourbon's firing in retaliation for reporting that conduct would therefore likely meet the standard set forth in Palmateer as being in violation of a clear mandate of public policy, a policy against theft. Indeed, in Palmateer, the crime reported by the discharged employee was theft of a $2 screwdriver, and the court emphasized that it was not the magnitude of the crime that mattered but whether the General Assembly had decided that the crime should be resolved by resort to the criminal justice system. So too with the conduct Bourbon complained about here. The Illinois General Assembly has decided that depriving persons of their property by means of deception is a crime under Illinois law, and Bourbon's reporting of that conduct cannot be used as the reason for his termination even though he is otherwise an at- will employee. Nor is it determinative that Kmart eventually reimbursed these customers or that the Attorney General refused to pursue the matter. For the purposes of Illinois law, all that matters is that when Bourbon reported the conduct, he reasonably believed his supervisor was engaged in unlawful activity. Belline, 940 F.2d at 188.

Bourbon's case, however, fails on the element of causation, for he has insufficient evidence demonstrating a link between reporting his supervisor's conduct and his termination. As we mentioned above, the element of causation is not met if the employer has a valid basis, which is not pretextual, for discharging the employee. Hartlein, 601 N.E.2d at 728. Bourbon has presented no direct evidence that the reason for his termination was his reporting of the overcharges. No one admitted to him, for example, that he was being fired for that reason. Rather, Kmart claims that it terminated Bourbon's employment because he was an incompetent mechanic, and the company presented documentation of the problems it had with Bourbon's work. Bourbon's lack of direct evidence is not determinative, however. Illinois retaliatory discharge cases brought in federal court may be analyzed using the burden-shifting method presented in McDonnell-Douglas. See Hiatt v. Rockwell Int'l Corp., 26 F.3d 761, 767 (7th Cir. 1994). To establish a prima facie case using this method, Bourbon must show that he was in a protected class, that he was performing his job satisfactorily, that he was nevertheless the subject of a materially adverse employment action, and that others outside the class were treated more favorably. Hiatt, 26 F.3d at 767-68. If Bourbon can establish his prima facie case, Kmart must then articulate a legitimate, non- discriminatory reason for his termination. The burden then shifts back to Bourbon to show that Kmart's proffered reason is nothing more than a pretext for unlawful discrimination. Id.

Bourbon's proof fails in at least two regards using this method. Fi...