O'leary v. Accretive Health Inc.

Decision Date13 October 2011
Docket NumberNo. 10–1418.,10–1418.
Citation94 Empl. Prac. Dec. P 44301,657 F.3d 625,113 Fair Empl.Prac.Cas. (BNA) 481
PartiesJoseph P. O'LEARY, Plaintiff–Appellant,v.ACCRETIVE HEALTH, INC., Defendant–Appellee.
CourtU.S. Court of Appeals — Seventh Circuit

OPINION TEXT STARTS HERE

Nancy A. Temple (argued), Attorney, Katten & Temple, Chicago, IL, for PlaintiffAppellant.Brenda H. Feis (argued), Attorney, Stowell & Friedman, Chicago, IL, for DefendantAppellee.

Before CUDAHY and ROVNER, Circuit Judges, and ADELMAN, District Judge.*ROVNER, Circuit Judge.

After he was terminated from his position as a senior vice-president for Accretive Health, Inc. (Accretive), Joseph P. O'Leary sued the company contending that he was fired in retaliation for opposing what he believed to be sexually and racially discriminatory conduct by one of Accretive's mid-level supervisors. Accretive contended that it fired O'Leary for inadequate work performance. The district court granted summary judgment to Accretive, concluding that O'Leary had not engaged in statutorily protected conduct by reporting two incidents of inappropriate behavior, and that in any event he had not established that Accretive's stated nondiscriminatory reasons for firing him were pretextual. O'Leary v. Accretive Health, Inc., No. 09 C 1428, 2010 WL 234869 (N.D.Ill. Jan. 19, 2010). We affirm.

I.

Accretive is a Chicago-based consulting firm that provides billing, collections, and other revenue-cycle services to hospitals around the country. O'Leary joined Accretive as a vice-president in February 2005, when the company was less than two years old. O'Leary was assigned to oversee revenue-cycle operations at four Michigan hospitals. He initially reported to executive vice-president Etienne Deffarges, and then later directly to CEO Mary Tolan. When he joined Accretive, O'Leary had little or no experience with the revenue-cycle process.

O'Leary received a positive review at the end of 2005, but Accretive avers that as 2006 progressed, it developed certain reservations regarding his performance which accelerated in the closing months of the year. Tolan, to whom O'Leary was now reporting directly, was complimentary of O'Leary in many respects, but would later testify that she was concerned about the revenue-cycle performance at certain of the hospitals under his supervision, as well as O'Leary's command of Accretive's operating model and pertinent data and his ability to implement improvements. To some extent, these issues were flagged in O'Leary's 2006 mid-year review as points that needed O'Leary's attention. O'Leary otherwise denies that any such criticisms were conveyed to him. Accretive also avers that beginning in mid–2006, it heard criticisms of O'Leary's performance from the chief financial officers at three of the hospitals for which he was responsible. Construing the record favorably to O'Leary, there is a dispute of fact as to whether two of these CFOs actually made the remarks that Accretive attributes to them. But what is undisputed is that in November 2006, Accretive replaced O'Leary with his predecessor at St. Mary's hospital in Saginaw, Michigan. Accretive represents that it made the change at the request of St. Mary's CFO, who had grown concerned about the growth of the hospital's accounts receivable and bad debt. O'Leary denies that St. Mary's requested his replacement, but as we discuss in detail below, he has presented no evidence calling into dispute Accretive's averment on this point. Deffarges would later testify that he and Tolan viewed their client's request to replace O'Leary as a “vote of no confidence in O'Leary's leadership on the ground.” R. 44–2 at 29 (Deffarges Dep. 166).

Meanwhile, in October 2006, O'Leary had learned that Rhonda Miller, the site director at one of the hospitals under his supervision, had made sexually charged remarks during a dinner that the director had hosted for four of her subordinates. Miller apparently had bragged about having sex with a number of Accretive employees as well as the CFO of her former employer. She had also told a young male employee at the dinner that she preferred dating men his age because they were more her speed.” R. 44–6 at 28 (O'Leary Dep. 134). That man, Blake Graves, later recounted the remarks to his supervisor, George Tsokolas, who in turn reported them to his own supervisor, O'Leary. Graves told Tsokolas that he did not feel that Miller had sexually harassed him; he would later say that he had mentioned Miller's remarks to Tsokolas as an amusing anecdote rather than as a complaint. When Tsokolas repeated the story to O'Leary, he told O'Leary that Graves did not feel harassed by Miller's conduct. (O'Leary disputes that Tsokolas told him this, but ineffectively; O'Leary's testimony at the cited pages of his deposition do not purport to deny this.) Indeed, Tsokolas did not believe that any additional action was required.

Although O'Leary by his own admission had no reason to believe that Graves felt sexually harassed by Miller's remarks, R. 54–1 at 17 (O'Leary Dep. 138), and O'Leary himself was agnostic on the question of whether Miller's remarks amounted to sexual harassment, R. 54–1 at 17, 18 (O'Leary Dep. 135, 138), he nonetheless thought it prudent to report the incident to senior management. On October 23, 2006, after first speaking with Deffarges, O'Leary informed CEO Tolan that Miller “had made comments in front of a staff person that she had had sexual relations with four other employees at Accretive Health” and that she liked younger men.” R. 44–10 at 21–22 (Tolan Dep. 256–57). O'Leary wrote an email to Tolan and Deffarges later that same day memorializing his conversation with Tolan.

At Tolan's direction, Accretive's human resources director looked into the matter. His investigation concluded that although Miller “exercised very poor judgment in sharing intimate details about her personal life, especially with younger co-workers and direct reports[,] ... [her] behavior is not in violation of any current Accretive Health policy or practice.” R. 44–7 at 9 (O'Leary Dep. Ex. 11 at 2). Miller was nonetheless reprimanded and warned that another instance of inappropriate conduct could result in her termination.

When he reported Miller's conduct at the dinner to Tolan, O'Leary also mentioned that he believed Miller was “riding ... really hard” a subordinate employee by the name of Seline Nichols, who is African American. R. 44–6 at 33 (O'Leary Dep. 142). Part of what prompted O'Leary to express this concern was the harsh manner in which Miller treated Nichols in one particular meeting in which O'Leary had participated. Nothing that Miller said during that meeting had racial overtones; and O'Leary knew that Miller had a reputation of being a “taskmaster” who “ruled with a bit of an iron fist” and himself considered her to be “a bit of a bully.” R. 44–6 at 11, 16 (O'Leary Dep. 76, 106). But as we discuss below, O'Leary had other reasons to believe that Miller's adverse treatment of Nichols was based on Nichols' race, and O'Leary testified in his deposition that he expressed his concern to Tolan as one about racial discrimination. O'Leary did not say anything in his follow-up email to Tolan about this concern. He would later characterize that omission as an oversight.

Shortly before the 2006 Christmas holiday, Tolan and Deffarges made the decision to terminate O'Leary. Deffarges would later testify that they believed that he had never developed a constructive relationship with the CFO at St. Mary's hospital, had failed to deal effectively with the revenue-cycle issues at St. Mary's which ultimately led the CFO at that hospital to request his replacement, had not demonstrated leadership at a second hospital, and had not improved on the already-strong results at a third hospital. Tolan added that O'Leary had never immersed himself in details of the revenue-cycle business and, as a manager, did not know who under his supervision was and was not performing up to snuff, and lacked the ability to coach his subordinates to achieve better results. O'Leary was informed of the termination decision after January 1, 2007.

Following his termination, O'Leary sued Accretive, contending that he was discharged in retaliation for opposing acts of sex and race discrimination at the company, in violation of Title VII of the Civil Rights Act of 1964 (Title VII), 42 U.S.C. § 2000e–3(a), and section one of the Civil Rights Act of 1866, 42 U.S.C. § 1981 (section 1981). He also asserted a claim under Illinois law for a bonus that he had allegedly earned but not received for 2006.

The district court granted summary judgment to Accretive on O'Leary's retaliation claims. 2010 WL 234869. The court noted that in order to establish retaliation in violation of either Title VII or section 1981, O'Leary was first required to show that he engaged in activity protected by those statutes, i.e., that he had complained to Accretive of conduct that he reasonably and in good faith believed to be unlawful discrimination. Id. at *4 (citing Tate v. Exec. Mgmt. Servs., Inc., 546 F.3d 528, 532–33 (7th Cir.2008)). O'Leary's report of Miller's conduct at the October 2006 dinner did not qualify as protected activity, the court determined, because Miller's behavior on that one occasion, although unprofessional, constituted an isolated incident that no one could reasonably believe to be severe or hostile enough to constitute actionable sexual harassment. Id. Indeed, O'Leary knew that Graves, who was present at the dinner and had reported the incident to his supervisor, himself did not feel sexually harassed. Id. Although O'Leary contended that his report was not confined to the dinner, but also included his concern that Miller was treating Nichols in a racially discriminatory fashion, the court believed that O'Leary provided “no evidentiary support” for his assertion. Id. at *5. The record...

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