Hague v. Thompson Distribution Co.

• Decision Date: 07 February 2006
• Docket Number: No. 05-1654.,05-1654.
• Citation: 436 F.3d 816
• Parties: Mark HAGUE, Cynthia Hague, Mark Brown, et al., Plaintiffs-Appellants, v. THOMPSON DISTRIBUTION COMPANY, d/b/a Mutual Pipe and Supply Company, Mutual Pipe and Supply Company, and John T. Thompson, Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

436 F.3d 816

Mark HAGUE, Cynthia Hague, Mark Brown, et al., Plaintiffs-Appellants, v. THOMPSON DISTRIBUTION COMPANY, d/b/a Mutual Pipe and Supply Company, Mutual Pipe and Supply Company, and John T. Thompson, Defendants-Appellees.

No. 05-1654.

United States Court of Appeals, Seventh Circuit.

Argued September 20, 2005.

Decided February 7, 2006.

COPYRIGHT MATERIAL OMITTED

Kevin W. Betz (argued), Betz & Associates, Indianapolis, IN, for Plaintiffs-Appellants.

R. Anthony Prather (argued), Barnes & Thornburg, Indianapolis, IN, for Defendants-Appellees.

Before EASTERBROOK, MANION, and SYKES, Circuit Judges.

MANION, Circuit Judge.

Thompson Distribution's owner, John Thompson, who is black, fired five white employees. Those employees, Mark Hague, Cynthia Hague, Mark Brown, Bernard Dubois, and Anna Perrey, then sued Thompson Distribution Co., alleging race discrimination in violation of 42 U.S.C. § 1981. The district court granted Thompson Distribution summary judgment. The plaintiffs appeal and we affirm.

I.

On November 26, 2001, John Thompson, who is black, purchased at a public sale the assets of Mutual Pipe & Supply Company, Inc., after Mutual Pipe defaulted on a bank loan. Prior to purchasing Mutual Pipe, Thompson had met with its Vice President and General Manager, Mark Hague. Hague had worked for Mutual Pipe for thirty-two years and his grandfather had started the business. Unfortunately for the Hague family, one of its major customers went bankrupt, and Mutual Pipe never recovered from the substantial financial hit it took as a result of its customer's bankruptcy. After several years of losing money, and finally defaulting on a bank loan, it became clear that Mutual Pipe could not remain in business.

Although Thompson originally considered buying Mutual Pipe, he realized that the asking price was significantly greater than its value and decided instead to wait until the company went into bankruptcy or the bank auctioned off its assets. In anticipation of the pending sale, Thompson established Thompson Distribution Company. If and when the bank auctioned off Mutual Pipe's assets, Thompson Distribution would attempt to acquire the assets. If successful, it would begin operations as a distributing company, distributing plumbing supplies and equipment to industrial, construction, and institutional firms.

In the months leading up to the public auction, Thompson met with Mark Hague several times to discuss Mutual Pipe's operations. Thompson also expressed interest in hiring Mark Hague and other Mutual Pipe employees, and he asked Mark Hague to make a list of the Mutual Pipe employees whom he should hire. On November 27, 2001, the day after he was the successful bidder for the assets of Mutual Pipe, Thompson met with all of the Mutual Pipe employees who had expressed an interest in continuing to work for Thompson Distribution, including those employees Hague had recommended.

Thompson Distribution eventually decided to hire about fourteen employees, of whom about twelve (the record is unclear on the exact number) had previously worked for Mutual Pipe. Thompson Distribution then began operations on November 28, 2001. Among those hired were plaintiffs Mark Hague and his wife, Cynthia Hague,¹ Mark Brown, Bernard Dubois, and Anna Perrey, all of whom were white. Thompson Distribution also hired Mary Coleman and Bob McClellan, both of whom were white, along with John's wife, Norma Thompson, David Bigsby, Jimmy Ford, and Dwayne Springfield, all of whom were black. The following week Thompson Distribution hired another black employee. Including Thompson himself, this made up Thompson Distribution's initial labor force.

These employees were all hired on an at-will basis. Additionally, in hiring the plaintiffs, Thompson Distribution provided the plaintiffs with an "Employee Handbook," which stated: "A ninety-day trial period is provided for new employees to evaluate the opportunities of continued service with the company and, likewise, for the company to evaluate the new employee for continued service with the company." Before the ninety-day period expired, Thompson Distribution fired the five plaintiffs.² Thompson Distribution fired Mark and Cynthia Hague on February 15, 2002. According to Mark Hague, in firing him, Thompson merely told him that his services were no longer needed in the future of Thompson Distribution. Similarly, Cynthia testified in her deposition that in firing her, Thompson simply said that she did not fit in the future of Thompson Distribution. Thompson Distribution fired Brown, Dubois, and Perrey on February 22, 2001, telling Brown and Perrey they did not fit in the company, and informing Dubois that Thompson Distribution is "moving ahead without you." Thompson Distribution replaced Mark Hague, Brown, and Perrey with three new employees, all of whom were black. Thompson's wife Norma (who is also black) took over Cynthia Hague's duties. Thompson Distribution did not replace Dubois.

After they were fired, the Hagues, Brown, Dubois and Perrey sued Thompson Distribution for race, age, and disability discrimination under Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e et seq.,³ 42 U.S.C. § 1981, the Age Discrimination in Employment Act, 29 U.S.C. §§ 621 et seq., and the Americans with Disabilities Act, 42 U.S.C. §§ 12101 et seq., and state law, and for interfering with their ability to attain health benefits in violation of the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001 et seq. The plaintiffs also sued Thompson, individually, for tortious interference with their contractual relationship with Thompson Distribution. The district court granted the defendants summary judgment on all counts. As to the § 1981 claims—the only claims challenged on appeal—the district court concluded either that the plaintiffs failed to establish that they were meeting Thompson Distribution's business expectations, or that they failed to present sufficient evidence of pretext. The plaintiffs appeal.

II.

The district court granted Thompson Distribution summary judgment on the plaintiffs' § 1981 race discrimination claims. This court reviews the grant of summary judgment de novo, viewing the evidence in the light most favorable to the non-moving party. Amadio v. Ford Motor Co., 238 F.3d 919, 924 (7th Cir.2001).

On appeal, the plaintiffs initially argue that the district court improperly disregarded evidence they presented in opposing summary judgment and did not consider the evidence in the light most favorable to their claims. To support this assertion, the plaintiffs point to a footnote in the district court's opinion in which the district court scolded the plaintiffs for including a "17 page narrative which is full of immaterial facts and citations to affidavit paragraphs which contain speculation, opinion, hearsay and conclusory statements." District Court Opinion at 3, n.2. The district court also reprimanded the plaintiffs for offering up factual "spin" and for "failing to specify what material facts are truly in dispute ...." Id. The plaintiffs maintain that this footnote shows that the district court seemingly adopted Thompson Distribution's factual assertions as though they had gone unrebutted. However, in their brief, the appellants do not identify any specific evidence the district court disregarded. In any event, since our review is de novo, whether the district court improperly ignored the plaintiffs' proffered evidence is irrelevant now. See Smith v. Cook County, 74 F.3d 829, 834 (7th Cir.1996) ("Since we have conducted a de novo review of the motion for summary judgment we need not tarry long over these objections.").

Moving on to the merits: To succeed on a race discrimination claim under § 1981, plaintiffs may proceed under either the direct or indirect method. Dandy v. United Parcel Serv. Inc., 388 F.3d 263, 272 (7th Cir.2004). Here, the plaintiffs did not present direct or circumstantial evidence of discrimination. Instead they rely on the McDonnell Douglas indirect burden-shifting method. McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973). This requires plaintiffs to first present evidence to establish a prima facie case of discrimination, namely: that they are members of a protected class; that they were meeting Thompson Distribution's business expectations; that they were fired; and that they were replaced by someone outside the protected class. Foster v. Arthur Andersen, LLP, 168 F.3d 1029, 1035 (7th Cir.1999).

This framing of the prima facie case makes the first element—that the plaintiffs are members of a protected class—in essence a non-issue, because everyone has a race (or sex, or national origin). See Steinhauer v. DeGolier, 359 F.3d 481, 484 (7th Cir.2004). However, in setting forth the prima facie case in several reverse discrimination suits, i.e., cases brought by a white plaintiff or a man, this court has required the white/male plaintiffs to "show `background circumstances' sufficient to demonstrate that the particular employer has `reason or inclination to discriminate invidiously against whites' [or men] or evidence that `there is something "fishy" about the facts at hand.'" See Ineichen v. Ameritech, 410 F.3d 956, 959 (7th Cir.2005) (quoting Phelan v. City of Chicago, 347 F.3d 679, 684 (7th Cir.2003)). See also Mills v. Health Care Serv. Corp., 171 F.3d 450, 457 (7th Cir.1999); Ballance v. City of Springfield, 424 F.3d 614, 617 (7th Cir.2005).

At first blush, it might seem that this line of cases altered the "member of the protected class" element of the prima facie case for white/male plaintiffs. However, that is not the case. Rather, this court adopted the background circumstances standard because in setting forth the indirect method in McDonnell Douglas, the Supreme Court stated that a prima facie case of racial discrimination required the plaintiff to show, "(i) that he belongs to a racial minority, (ii...