Johnson v. Zema Systems Corp.

Decision Date16 March 1999
Docket NumberNo. 98-1359,98-1359
Parties79 Fair Empl.Prac.Cas. (BNA) 584, 75 Empl. Prac. Dec. P 45,787 Leon JOHNSON, Plaintiff-Appellant, v. ZEMA SYSTEMS CORPORATION, a Delaware corporation, doing business as Chicago Beverage Systems, Inc., and Coors Distributing of Illinois, Defendants-Appellees.
CourtU.S. Court of Appeals — Seventh Circuit

Christopher T. Hurley, Mark McKenna (argued), Christopher T. Hurley & Associates, Chicago, IL, for Plaintiff-Appellant.

Christopher G. Walsh, Jr. (argued), Roger J. Guerin, Rothschild, Barry & Myers, Chicago, IL, for Defendants-Appellees.

Before CUMMINGS, ROVNER, and DIANE P. WOOD, Circuit Judges.

CUMMINGS, Circuit Judge.

Leon Johnson, a 44-year-old male African-American, was fired from his job as vice president of sales and marketing for Zema Systems Corporation ("Zema"), a beer distribution company. Johnson brought claims of racial discrimination, age discrimination, and retaliatory discharge against Zema. Magistrate Judge Ronald A. Guzman, to whom District Court Judge Nordberg referred the matter, recommended granting summary judgment to Zema on the grounds that Johnson had failed to provide sufficient evidence to sustain a prima facie case on any of the claims. Judge Nordberg adopted the magistrate judge's recommendations over Johnson's objections and granted summary judgment for Zema. In so doing, Judge Nordberg refused to consider Johnson's objections, believing them to lack the specificity required for objections to a magistrate judge's report.

On appeal, an initial question is whether Johnson's objections in the district court were insufficiently specific so as to constitute a waiver of his objections on appeal. We conclude that they were sufficient. Looking to the substance of the appeal, whether summary judgment on Johnson's three claims was appropriate, we affirm the grant of summary judgment on the claims of age discrimination and retaliatory discharge and reverse summary judgment on the claim of racial discrimination.


Defendant Zema distributes Miller Brewing Company products throughout the City of Chicago. Zema began its distribution business through the acquisition of a company which distributed Miller products on the north side of Chicago. Zema operated this north side distribution company under the name Chicago Beverage Systems ("CBS"). In 1985, Zema purchased the assets of another company which distributed Miller products on the west and south sides of Chicago under the name Illinois Beverage Inc. ("IBI").

CBS maintained a predominantly white work force; IBI had a predominantly African-American work force. In 1987, Zema moved IBI's operations to the same facility in which CBS was housed. The two companies maintained separate legal identities and different managements until a merger of the two companies in July 1991. The newly merged entity operated under the name Chicago Beverage Systems.

In April 1991, shortly before the merger, plaintiff Johnson was first contacted by Zema's president and majority owner, J. Christopher Reyes, about the possibility of joining Zema as Vice President of Sales and Marketing for IBI. At that time, Johnson worked for Miller Brewing Company, for whom he had been employed for eight years. For the preceding five years, Johnson had been an area sales manager for Miller, first in Corpus Christi, Texas and then in Chicago. As an area sales manager, Johnson had monitored and assisted Miller's distributors in marketing and selling Miller's beer products.

Johnson agreed to join Zema in June 1991 as Vice President of Sales and Marketing for IBI. At the time of his hire, Johnson was 41 years old. A month after Johnson was hired, Zema merged IBI with CBS. As noted above, the merged distributorship retained the name Chicago Beverage Systems. James Doney, who had held the position of Vice President of Sales and Marketing for the pre-merger Chicago Beverage Systems, assumed the title of Vice President and General Manager. Johnson became Vice President of Sales and Marketing for the newly merged entity.

At CBS, Johnson supervised a sales staff of approximately 35 employees in the distribution of around eight million cases of beer per year. He also designed and implemented marketing and promotional programs for Miller products in the Chicago area. After three years at CBS, Johnson was terminated in October 1994. The reasons for and the circumstances surrounding this termination are the subject of this dispute.

Zema and Johnson present sharply contrasting views of Johnson's tenure at Zema. Johnson alleges that throughout his time at CBS he consistently met or exceeded his employer's expectations. He relies principally on his 1993 and 1994 performance reviews, each of which spoke in superlatives about the quality of Johnson's work. Johnson also relies on a letter of recommendation President Reyes prepared for Johnson upon his termination in which Reyes called Johnson "a serious and dedicated worker" whose "reliability and integrity are above question." In deposition testimony, Vice President and General Manager Doney indirectly testified to Johnson's satisfactory performance in disavowing Johnson's poor performance as the reason for his termination.

This favorable performance, Johnson alleges, occurred despite the racial segregation of the CBS work force and the generally unfavorable treatment African-Americans received at the company relative to their white peers. At CBS, African-American salespersons served predominantly African-American accounts and white salespersons served accounts owned or frequented by whites. As a result, African-Americans received comparably lower pay. Until the spring of 1995, African-American and white salespersons were segregated into separate rooms at Zema's corporate offices. African-American employees were the first to be laid off or fired and the last to be re-hired and were subject to racial epithets. In deposition testimony, former Zema employees testified that the company's warehouse manager and the company's comptroller regularly referred to African-American employees and job applicants as "niggers." On one occasion, an African-American receptionist complained that a Zema employee referred to her as a "nigger." A meeting was convened, Johnson alleges, but no disciplinary action was taken.

The supervisorial responsibilities accorded to Johnson, he alleges, mirrored this racial segregation of the work force. In his deposition, Johnson testified that he complained to Reyes and others about the racial disparities at Zema, but for the most part no action was taken. Johnson testified that he reported to Reyes that white employees were using the word "nigger" in the plant and that he objected to the difference in salaries between African-American and white employees. He also complained on those occasions when African-American employees were terminated without justification. When Johnson was initially hired, Zema provided company cars to its two white sales managers and not to its three African-American sales managers. Reyes did heed Johnson's complaint on this account, Johnson notes, providing company cars shortly thereafter to the African-American sales managers.

Johnson was fired in October 1994. At the time, neither President Reyes nor Vice President and General Manager Doney provided Johnson with a reason for his termination. In his deposition testimony, Doney stated that Johnson's performance was not the reason for his termination. Neither Reyes nor Doney knew at the time of Johnson's firing whether sales were up or down at Zema. The real reason for his termination, Johnson argues, was his race, his age, and his having complained that others in the company were being mistreated.

After Johnson's termination, Vice President Doney, who is white, assumed Johnson's duties. Zema assigned Mark Nolan, also white, as Sales Administrator to assist Doney with paperwork. Two years later, Zema hired Patrick Collins, a 30-year-old African-American to assume some of Johnson's former duties. Collins, however, was limited to supervising African-American salespersons. Doney retained supervisory authority over white salespersons and customers.

Zema presents a different picture of Johnson's tenure and eventual termination. Zema argues that Johnson's performance failed to meet its expectations and that his termination is attributable to a desire to flatten its management structure. Though Zema concedes Johnson received favorable annual employment reviews, Zema argues that Johnson's work was marred by his inability to divide his time equally among the sales managers he supervised. In June 1994, President Reyes told Johnson that he should divide his time as supervisor more equally between the sales managers under his watch. Johnson was particularly criticized for spending too much time with Richard Rampich, a sales manager on the north side of Chicago. In deposition testimony, another sales manager testified he had only received three visits to his sales territory during the three-year period in which Johnson was employed as his supervisor. At the time of his termination, Zema argues, Johnson's work performance was unsatisfactory.

Zema attributes the segregation of its work force to the historical contingency that the company Johnson worked for resulted from the merger of CBS, which had a predominantly white work force, and IBI, which had a predominantly African-American work force. After the merger, Zema argues, the sales personnel who had worked for IBI remained in the offices built for them on one side of the building and the pre-merger CBS sales force remained on its side of the building. The segregation was not complete, Zema notes, because at least one white sales supervisor, Mike Campagna, was on the IBI side. In 1995, one year after Johnson's termination, when Miller Brewing Company reduced the amount of warehouse space needed for...

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