Opinion
CAUSE NO. IP 02-0191-C-H/K
November 26, 2003
ENTRY ON MOTION FOR SUMMARY JUDGMENT
In this diversity action, plaintiff Thomson, Inc., formerly known as Thomson Multimedia, Inc., has sued former executive Don C. Vassel for breach of contract and unjust enrichment. Defendant Vassel counterclaimed alleging breach of contract; race discrimination in violation of 42 U.S.C. § 1981, Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seg., and New York law; as well as state law claims for conversion, "prima facie tort" under New York law, and intentional infliction of emotional distress.
Plaintiff Thomson has moved for partial summary judgment on its claim for breach of contract and most of defendant Vassel's counterclaims. The record shows two sharply diverging views of Mr. Vassel's actions and the reasons for Thomson's decision to fire him. Thomson contends that Mr. Vassel was a highly compensated executive who was dishonest in his financial dealings with the company relating to his expected relocation from Atlanta to New York City. Mr. Vassel contends that Thomson executives knew and approved of what he was doing in the challenged transactions, and that a couple of minor travel expense matters were simply careless mistakes. He further contends that he was targeted for firing because of his race, based on circumstantial evidence that Thomson carried out an unusual investigation of him and fired him for baseless reasons.
On the critical issues, the conflicting evidence and varying inferences it can support require that summary judgment be denied, for those issues must be resolved at trial. Thomson's motion for partial summary judgment is denied on the breach of contract claims and the race discrimination counterclaims. Summary judgment is granted, however, on Mr. Vassel's counterclaims for "prima facie tort" and intentional infliction of emotional distress.
Summary Judgment Standard
The purpose of summary judgment is to "pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). Summary judgment is appropriate where the pleadings, depositions, answers to interrogatories, affidavits, and other materials demonstrate that there exists "no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). Only genuine disputes over "material facts" can prevent a grant of summary judgment, and "material facts" are defined as those that might affect the outcome of the suit. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A genuine issue exists only if there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party. Id. On a motion for summary judgment, the moving party must first come forward and identify those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, which the party believes demonstrate the absence of a genuine issue of material fact. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).
As required when deciding a motion for summary judgment, the court considers those facts that are undisputed and views additional evidence, and all reasonable inferences drawn therefrom, in the light reasonably most favorable to Mr. Vassel, the nonmoving party. See Fed.R.Civ.P. 56(c); Anderson, 477 U.S. at 255; Celotex, 477 U.S. at 323; Baron v. City of Highland Park, 195 F.3d 333, 337-38 (7th Cir. 1999). However, the existence of some metaphysical doubt does not create a genuine issue of fact. "A party must present more than mere speculation or conjecture to defeat a summary judgment motion." Sybron Transition Corp. v. Security Ins. Co. of Hartford, 107 F.3d 1250, 1255 (7th Cir. 1997). The court should neither "look the other way" to ignore genuine issues of material fact, nor "strain to find" material factual issues where there are none. Mechnig v. Sears, Roebuck Co., 864 F.2d 1359, 1363-64 (7th Cir. 1988).
Where the moving party has met the threshold burden of supporting the motion, the opposing party must "set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). Local Rule 56.1 requires the party opposing a motion for summary judgment to identify specific and material factual disputes.
As in any case, courts weighing summary judgment motions in employment cases must take care not to invade the province of the fact finder. Employment cases are governed by the same rules that govern other summary judgment cases. They are equally amenable to summary disposition if there is no genuine dispute as to material facts. Gonzalez v. Ingersoll Milling Mach. Co., 133 F.3d 1025, 1031 (7th Cir. 1998), citing Giannopoulos v. Brack Brock Confections, Inc., 109 F.3d 406, 410 (7th Cir. 1997).
Undisputed Facts
With these standards in mind, the following facts are either undisputed or reflect the evidence in the light most favorable to the defendant, the nonmoving party. See, e.g., Schwartz v. State Farm Mut. Auto. Ins. Co., 174 F.3d 875, 878 (7th Cir. 1999). All reasonable inferences have been drawn in his favor; however, adverse facts established by Thomson beyond reasonable dispute are necessarily included in the narrative.Mr. Vassel began working for Thomson in March 2000. Thomson's headquarters are in Indianapolis, but Mr. Vassel resided in Atlanta and did not relocate to Indianapolis. The initial employment agreement between Thomson and Mr. Vassel was executed on February 15, 2000.
In 2001, Mr. Vassel was appointed CEO of Technicolor Cinema Advertising, a joint venture between Thomson and Carlton Communications. Vassel Aff. ¶ 3. The new assignment required him to relocate from Atlanta to New York. Thomson and Mr. Vassel executed a new employment agreement on May 30, 2001 to reflect his new position. According to that employment agreement, Thomson could terminate Mr. Vassel's employment for good cause at any time without notice. Good cause is defined in the agreement as, among other things, Mr. Vassel's misappropriation for his own purpose of any property or corporate opportunity belonging to Thomson or its affiliates, or his breach of any part of the agreement. P1. Ex. 35.
As part of the employment agreement, Thomson agreed to lend Mr. Vassel $300,000 to be used toward his relocation. P1. Ex. 35. Also according to the employment agreement, Thomson paid Mr. Vassel a lump sum in the amount of $67,000 for his relocation expenses. Vassel Dep. at 161-62. The $300,000 loan was a no-interest loan with a forgiveness repayment schedule that called for complete forgiveness of the loan if Mr. Vassel continued his employment with Thomson through April 30, 2004. Pl. Ex. 35. Mr. Vassel executed a promissory note for the loan on July 13, 2001. The note reflected the terms of the loan as detailed in the employment agreement, though with one arguably significant change in wording, discussed below. Pl. Ex. 36.
Mr. Vassel's mother had been living with him and his wife in Atlanta. Mr. Vassel used a portion of the $300,000 loan to purchase a home for his mother in Jamaica, West Indies, where she was from. Vassel Dep. at 155-56. Also, two days after the bulk of the loan proceeds were disbursed to Mr. Vassel, he donated $50,000 to his church in Atlanta. McNeil Decl. ¶ 3.
Mr. Vassel received the $67,000 relocation allowance provided under the employment agreement. After receiving that allowance, he also requested and received from Thomson reimbursement for travel expenses incurred on house-hunting trips to New York and other New York travel.
Mr. Vassel's jobs with Thomson required extensive travel. Vassel Dep. at 57. In a year and a half with Thomson, his travel expenses exceeded $225,000. In this case, Thomson has made an issue of portions of two particular items. On September 12 and 13, 2000, Mr. Vassel was in New York for a business trip. He stayed in a hotel on the night of September 12. He left New York on September 13 but returned on September 15. Mr. Vassel's wife was in New York on September 13 and 14 and, on the night of September 13, stayed at the hotel where Mr. Vassel had been. Viewing the evidence in the light reasonably most favorable to Mr. Vassel, his assistant submitted the entire hotel bill and Thomson paid for it, including at least one night that Mr. Vassel himself was not in New York. Thomson reimbursed Mr. Vassel for travel expenses related to that trip, including the New York hotel stay on the night of September 13. Vassel Dep. at 166-67.
At one point during his travels, Mr. Vassel was in Norfolk, Virginia, for one day for a meeting with a potential customer. The meeting had been arranged by Mr. Vassel's pastor, and he traveled with the pastor. He also rented a car for the trip. When Mr. Vassel left Norfolk, he left the rental car with his pastor, who used the car over the course of the next two days. Again, Mr. Vassel's assistant submitted the entire car rental bill for payment, and Thomson reimbursed Mr. Vassel for his travel expenses related to that trip, including the rental car expenses incurred by Mr. Vassel's pastor. Vassel Dep. at 170-71.
Thomson conducted an investigation of Mr. Vassel's financial dealings, and senior Thomson personnel arranged a meeting with Mr. Vassel in New York on November 14, 2001 to discuss his relocation and travel expenses. For Thompson, Olivier Barberot flew in from France for the meeting, and he was joined by Tracy Wagner and Richard Dyer. See Vassel Dep. at 136. During the meeting, Messrs. Barberot, Wagner and Dyer questioned Mr. Vassel about his use of the $300,000 loan, the $67,000 relocation allowance, and a number of travel expenses (beyond the two discussed above). At the end of the meeting, the Thomson officials relieved Mr. Vassel of his duties immediately and gave him a choice between resigning or being terminated for good cause. The day after this meeting, Mr. Wagner sent Mr. Vassel a letter to confirm that he was terminated effective December 15, 2001. The letter asserted that the termination was for good cause. PI. Ex. 37.
Pursuant to the agreement and promissory note, if Thomson terminated Mr. Vassel for good cause, he would be required to repay the balance of the $300,000 loan within 45 days of his termination, including interest and taxes due. If Mr. Vassel was terminated without good cause, the balance of the loan would be forgiven and Thomson would reimburse Mr. Vassel for any increase in taxes incurred as a result of the forgiveness of the loan. Additionally, Thomson would have to pay Mr. Vassel his full salary for a year and certain financial incentives that he would have received if he had not been terminated. Pl. Ex. 36.
Thomson filed its complaint in this action on February 1, 2002 seeking to recover the $300,000 loan, the $67,000 relocation allowance, and other funds. Mr. Vassel responded with his counterclaims. Other facts are noted below, viewing the evidence in the light reasonably most favorable to Mr. Vassel and giving him the benefit of all reasonable and favorable inferences from the evidence.
Discussion
I. The Breach of Contract Claims
Thomson claims that Mr. Vassel breached the employment agreement in three ways: (1) he did not use the $300,000 loan for its intended purpose; (2) he misused the relocation allowance; and (3) he was reimbursed for travel expenses that had actually been incurred by his wife and his pastor.
The parties have assumed, as does the court, that Indiana contract law controls the contract issues. Thomson and Mr. Vassel negotiated the employment agreement in Indiana (through in-person meetings, telephone calls, and e-mail exchanges). See Erie R. R. Co. v. Tompkins, 304 U.S. 64, 78, (1938) (unless there are federal issues in a case, the law to be applied is the law of the state); Bourke v. Dun Bradstreet Corp., 159 F.3d 1032, 1036 (7th Cir. 1998) (in a diversity case, the substantive law to be applied is the state law; contract law is substantive).
The elements of a breach of contract action are the existence of a contract, the defendant's material breach of that agreement, and damages. Wilson v. Lincoln Fed. Sav. Bank, 790 N.E.2d 1042, 1048 (Ind.App. 2003). Whether a party is in material breach of a contract is a question of fact contingent on several factors, including the willful, negligent or innocent behavior of the party failing to perform. Id. at 1048.
A. The $300,000 Relocation Loan
Whether Thomson had good cause to terminate Mr. Vassel is the central issue in this case. Thomson's argument that it had good cause to terminate Mr. Vassel hinges on its assertion that he was in breach of the employment agreement for misappropriating for his own use property of Thomson in direct violation of the agreement. The most important alleged cause was Mr. Vassel's use of some loan funds to buy a house in Jamaica for his mother. Viewing the evidence in the light reasonably most favorable to him, a reasonable jury could find that Mr. Vassel's use of the loan proceeds did not breach the employment agreement and/or that Thomson waived any objection it might have had to his use of the money.
According to Mr. Vassel, his "relocation" as defined by Thomson was all-encompassing, so that any expenses would include relocating his mother, who had been living with him in Atlanta. Mr. Vassel has offered evidence that Thomson was aware of his broad view and orally approved the use of the loan for that purpose before the parties signed the employment agreement. Vassel Aff. ¶¶ 3-6. Mr. Vassel also points to Ray Panza's deposition testimony as proof that Thomson knew before disbursing the loan proceeds that he was not purchasing a home in New York with the loan. Mr. Panza was the vice president of finance for Thomson. He testified that he knew before the money was issued to Mr. Vassel that he was not buying a home in New York with the money. Mr. Panza testified further that he expressed to Mr. Vassel his uncertainty about whether the loan could be used for another purpose. Mr. Vassel explained to him that the two men responsible for approving the loan, Jim Meyer and Lanny Raimondo, were aware that the loan was not being used to purchase a home in New York. Mr. Panza contacted David Adcock in Human Resources about delaying the release of the money until Mr. Panza could speak with Mr. Meyer and Mr. Raimondo about his concerns. Mr. Panza testified that Mr. Adcock was aware that Mr. Vassel was not going to use the money toward the purchase of a home in New York. Panza Dep. at 49-50. Subsequently, Mr. Panza spoke with Mr. Meyer and Mr. Raimondo, apparently to voice his concerns that the money was not being used to purchase a home in New York. Both acknowledged that they knew the "money was requested," but there were no objections by either about releasing the funds. Id. at 46-49.
Mr. Vassel also testified that after Thomson orally approved use of the loan to relocate his mother, he attempted to amend the employment agreement to reflect his desire to use the loan for more than just the purchase of a home in New York. His amendment would have read: "If you so elect, Thomson will make you a loan of up to $300,000 to be used in your transition to your new assignment in the New York metropolitan area" (emphasis added). He submitted this proposed amendment to Thomson, though the change was not made in the final version of the agreement, which read: "If you so elect, Thomson will make you a loan of up to $300,000 to be used toward the purchase of a home in the New York metropolitan area" (emphasis added). Vassel Aff. ¶¶ 3-5, Exs. 1-3. After noticing that his proposed amendment had not been included in the final version of the agreement, Mr. Vassel testified, he spoke with Randy Brown, head of Thomson's Human Resources Department in Indiana. Mr. Vassel testified that Mr. Brown told him he need not be concerned because Mr. Brown was aware of the purpose of the loan and "nobody is going to ask you how you used the funds." Id. ¶ 5.
Mr. Vassel and Thomson also amended the accompanying promissory note to reflect the understanding that the relocation loan could be used for broader purposes. Vassel Aff. ¶ 6. The promissory note stated: "Thomson has agreed to provide me with a loan in the amount of three hundred thousand dollars . . . to assist with my relocation and purchase of a home in New York." Mr. Vassel testified that he intentionally included the conjunctive "and" as a catch-all provision.
Thus, Mr. Vassel is not relying solely on his subjective interpretation of events and communications, but has come forward with evidence that supports his position that Thomson objectively manifested its agreement to his broader view of the permissible uses of the loan. One can easily understand how the use of funds to buy a house in Jamaica for his mother would raise eyebrows at Thomson, but summary judgment is not intended to become a substitute for a trial, and the court should not and has not attempted to evaluate the credibility of the conflicting evidence. Viewing the evidence in the light reasonably most favorable to Mr. Vassel, a reasonable jury could find that his use of the loan proceeds did not violate the employment agreement or the promissory note. This finding would dictate that Mr. Vassel's use of the loan did not constitute good cause for his termination. In the alternative, even if the employment agreement as written required that the loan proceeds be used only to purchase a home in New York, Mr. Vassel's evidence would support a finding that Thomson waived that requirement by authorizing him to use the loan in another manner. See Def. Br. at 18.
Thomson has argued that Mr. Vassel waived the defense of waiver by not pleading it in his answer, as required by Fed.R.Civ.P. 8(c). The case is not at the trial stage, however, and Mr. Vassel is relying on essentially the same evidence to show waiver that he relies on to show there was no breach in the first place. Accordingly, the court uses its discretion under Fed.R.Civ.P. 15 to deem the pleadings amended to assert an affirmative defense of waiver on Thomson's contract claims.
As for Mr. Vassel's $50,000 gift to his church two days after receiving money from the loan, the court cannot, at the summary judgment stage, find as a matter of law that Mr. Vassel used the loan funds for that donation. The documentary evidence from Thomson could support an inference that Mr. Vassel used the loan proceeds for that donation, but a grant of summary judgment requires more than a permissible inference. A reasonable jury could find that Mr. Vassel, a highly compensated executive, had enough income and assets to make that donation without using the loan funds.
B. Travel Reimbursements Plus Relocation Allowance
Under the employment agreement, Mr. Vassel also received a lump sum payment of $67,000 to relocate to New York. Thomson claims that Mr. Vassel should have used that relocation allowance to pay for his trips to New York to look for a house and related purposes. Apart from that allowance, Mr. Vassel submitted and Thomson paid travel expenses for such trips, and Mr. Vassel never did move to New York. Thomson contends that the relocation allowance was intended to cover those travel expenses and that Mr. Vassel misappropriated Thomson money by requesting and receiving separate reimbursement of those travel expenses, which Thomson calls "double-dipping."
Misappropriation is the "application of another's property or money dishonestly to one's own use." Black's Law Dictionary 1013 (7th ed. 1999). In Indiana, misappropriation can be characterized as civil conversion. Civil conversion is the "appropriation of personal property by another for that party's own use and benefit in exclusion and defiance of the owner's rights." Shourek v. Stirling, 621 N.E.2d 1107, 1109 (Ind. 1993).
Taking the facts in the light most favorable to Mr. Vassel, a reasonable jury could find that he did not have the dishonest intent required for misappropriation of funds from Thomson, which might have given good cause for his termination. Thomson has not shown as a matter of law that any action by Mr. Vassel was accompanied by the requisite mind-set to constitute a material breach of the employment agreement.
Mr. Vassel had been submitting expense reports since the beginning of his tenure at Thomson. His jobs required extensive travel. Vassel Aff. ¶ 14. He understood Thomson's relocation policy to mean that the relocation allowance was for the cost of "incidentals" once he had actually moved to New York, not for the cost of travel between Atlanta and New York. Vassel Dep. at 161. He therefore continued to submit expense reports even for those New York trips that were house-hunting trips. That understanding of the relocation policy is not obviously inconsistent with the policy itself. The policy seems to classify the lump sum payment for pre-move expenses separately from the relocation allowance, which the employee is to use after he or she has moved for "incidental expenses associated with moving. . . ." Pl. Ex. 3 at 2-4. In its briefs, Thomson continuously uses "relocation allowance" and "lump sum payment" to refer to the $67,000 payment.
Further, Mr. Vassel has come forward with evidence that Thomson was aware that he continued to submit expense reports after he had received his relocation allowance. He argues that he is not liable to Thomson under the voluntary payment doctrine. He cites Time Warner Entertainment Company, L.P. v. Whiteman, 741 N.E.2d 1265 (Ind.App. 2001), for this proposition. The Indiana Court of Appeals in that case held that "a voluntary payment made under a mistake or in ignorance of law, but with a full knowledge of all the facts, and not induced by any fraud or improper conduct on the part of the payee, cannot be recovered back." Id. at 1270. However, Thomson is not arguing mistaken payment in the sense that it lacked knowledge that the reimbursements it issued to him were not required to be paid. Thomson argues that Mr. Vassel committed fraud to obtain the reimbursements. The voluntary payment issue is also an issue for trial.
David Adcock, a human resources employee with Thomson, testified that Thomson allowed employees to receive travel reimbursements after they had received a relocation allowance as long as they were still actually relocating. Adcock Dep. at 49. One can reasonably infer from this testimony that Mr. Vassel's continued requests for travel reimbursement did not even violate Thomson policy, at least as applied rather than as written. Thomson's argument that Mr. Adcock's deposition testimony ought not be accorded any weight is an argument for trial, not summary judgment.
A reasonable jury thus could find that Mr. Vassel's continued requests for reimbursement of expenses for travel to New York did not amount to misappropriation of funds from Thomson sufficient to show a material breach of the employment agreement. Mr. Vassel's evidence also would support a finding that Thomson waived any contractual prohibition on submitting expense reports for those trips.
C. Other Travel Expenses
Thomson also contends that Mr. Vassel misappropriated Thomson funds in violation of the employment agreement by improperly requesting reimbursement for expenses incurred by his wife when she stayed at a hotel in New York City, and for a bill for a rental car used in part by his pastor.
Mr. Vassel asserts that these two incidents were not within the terms of the most recent employment agreement. This argument misses the point. Mr. Vassel's first employment agreement was signed February 15, 2000, so that at the time of these expenses, he was subject to an employment agreement with Thomson, even if not the most recent employment agreement. He was obligated to comply with the terms of the employment agreement in effect at the time of the alleged misdeeds.
On the merits, Mr. Vassel argues that his expense requests that included his wife's hotel stay and his pastor's use of a rental car were minor and honest mistakes on his part, and that the expenses were small and were part of travel bills that were properly reimbursable. Evidence supports that view. The hotel expense in question was for one night of a hotel stay for which Mr. Vassel was properly reimbursed for two other nights. Also, Mr. Vassel was properly reimbursed for a portion of the car rental expense, though not after he turned the car over to his pastor. Mr. Vassel also submitted evidence to show that he handed receipts from his business trips to his secretary without further thought for them, or she would retrieve his credit card bill. She submitted his expense reports from his receipts and his bill. Vassel Aff. ¶ 14; Vassel Dep. at 172-73. Especially since at least portions of the hotel bill and car rental bill were properly reimbursable, a reasonable jury could easily find that these were simply honest mistakes. Also, Mr. Vassel points to evidence that Thomson's usual practice when an employee has been erroneously over-reimbursed was to ask the employee to repay that amount, Brown Dep. at 29, rather than to fire him. Considering the fact that Mr. Vassel was reimbursed for more than $225,000 in travel expenses in ayear and a half, a jury could easily find that the questionable expenses of about $600 showed nothing worse than carelessness rather than deliberate fraud. The evidence presents a genuine issue as to whether Mr. Vassel's actions constituted a material breach of the employment agreement. Viewing the facts most favorably toward Mr. Vassel, they do not.
The court understands Thomson's view that some of Mr. Vassel's other travel expenses might have been unnecessarily extravagant, but there is a critical difference here between extravagant and dishonest. Extravagance would present a management issue, not the more pointed issues presented in this lawsuit.
II. Mr. Vassel's Race Discrimination Counterclaims
Mr. Vassel alleges in his counterclaims that Thomson discriminated against him on the basis of race by firing him and by refusing to provide severance benefits. Thomson denies those allegations and has moved for summary judgment on them. The court finds that Mr. Vassel has come forward with circumstantial evidence that would permit a reasonable jury to find that Thomson acted on the basis of race. The issue must be decided at trial rather than on summary judgment.
A. The McDonnell Douglas Framework
Under Title VII it is unlawful for an employer to discriminate against an employee because of the employee's race or national origin. 42 U.S.C. § 2000e-2(a)(1). A claimant must prove that the employer intentionally discriminated against him under a disparate treatment analysis. St. Mary's Honor Center v. Hicks, 509 U.S. 502 (1993). A Title VII plaintiff can satisfy his burden of proof in one of two ways: (1) by presenting direct evidence of discriminatory intent or, because of the difficulty in directly proving discrimination, (2) he may rely on circumstantial evidence by using the indirect, burden-shifting procedure set forth in McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973). Pasqua v. Metropolitan Life Ins. Co., 101 F.3d 514, 516 (7th Cir. 1996). Mr. Vassel does not have direct evidence of racial discrimination by Thomson. Therefore, he relies on the McDonnell Douglas burden-shifting analysis.
The same standards governing liability under Title VII apply to 42 U.S.C. § 1981 so that if there is no direct proof of discrimination, the court must operate under the McDonnell Douglas analysis. Trans World Airlines, Inc. v. Thurston, 469 U.S. 111, 121 (1985); Rush v. McDonald's Corp., 966 F.2d 1104, 1114 n. 34 (7th Cir. 1992); Yarbrough v. Tower Oldsmobile, Inc., 789 F.2d 508, 511 (7th Cir. 1986). The same is true under the New York State Human Rights Law, N.Y. Exec. Law § 297. Cruz v. Coach Stores, Inc., 202 F.3d 560, 565 n. 1 (2d Cir. 2000).
1. Termination — Prima Facie Case
Under the McDonnell Doullas burden-shifting approach, Mr. Vassel must initially establish a prima facie case of racial discrimination by a preponderance of the evidence. Pasqua, 101 F.3d at 516. To establish a prima facie case of racial discrimination, Mr. Vassel must come forward with evidence that: (1) he was a member of a protected class; (2) he was performing his job satisfactorily; (3) he was the subject of an adverse employment action; and (4) similarly situated employees outside of the protected class were treated more favorably. Brummett v. Lee Enterprises, Inc., 284 F.3d 742, 744 (7th Cir. 2002). Once he comes forward with evidence sufficient to support findings on these elements of a prima facie case, the burden shifts to Thomson to "articulate some legitimate, nondiscriminatory reason" for its action. Williams v. Seniff, 342 F.3d 774, 788 (7th Cir. 2003).
The McDonnell Douglastest is not a rigid one. Collier v. Budd Co., 66 F.3d 886, 890 (7th Cir. 1995). The claimant can satisfy the test by providing evidence of a "convincing mosaic of discrimination." Troupe v. May Dep't Stores Co., 20 F.3d 734, 737 (7th Cir. 1994). As the Seventh Circuit stated, "it is not true that to get over the hurdle of summary judgment a [claimant] must produce the equivalent of an admission of guilt by the [employer]." Id. A claimant must provide only evidence from which one can infer that the employer took adverse action against him on the basis of a "statutorily proscribed criterion." Bellaver v. Quanex Corp./Nichols-Homeshield, 200 F.3d 485, 493 (7th Cir. 2000).
If Thomson meets its burden of merely articulating a legitimate, nondiscriminatory reason for its termination of Mr. Vassel, the burden then shifts back to him to show that the stated reason was a false pretext hiding some other motive. McDonnell Douglas, 411 U.S. at 804. The ultimate burden of proof remains with Mr. Vassel at all times. Gonzalez, 133 F.3d at 1031-32. Thus showing pretext alone may not guarantee a win for Mr. Vassel on his racial discrimination claims at trial, but it is sufficient to permit an inference that the real reason for the employer's action was unlawful. Pilditch v. Board of Education, 3 F.3d 1113, 1116 (7th Cir. 1993).
Mr. Vassel satisfies the first and third prongs of the prima facie case for racial discrimination. As an African American, he is a member of a protected class. The adverse employment action he suffered was the termination of his position with Thomson. See Crady v. Liberty Nat'l Bank Trust Co., 993 F.2d 132, 136 (7th Cir. 1993) (materially adverse employment action indicated by termination of employment). Thomson argues that Mr. Vassel cannot meet the second and fourth prongs of the prima facie discrimination case: satisfactory job performance and more favorable treatment to similarly situated individuals. The court finds that Mr. Vassel has come forward with evidence to support a prima facie case of racial discrimination with respect to his termination.
Thomson argues that Mr. Vassel did not perform his job satisfactorily because of the alleged financial wrongs detailed above. As articulated previously, however, when the evidence is construed in the light reasonably most favorable to Mr. Vassel, a jury could find that he did nothing wrong. As to the fourth prong of the prima facie case, if the employee alleging discrimination was replaced by a person of a different race, he has satisfied that prong. Pilditch, 3 F.3d at 1116. Mr. Vassel's replacement was white. Vassel Aff. ¶ 23.
2. Pretext for the Termination
The financial wrongs alleged by Thomson are sufficient to carry Thomson's burden of articulating legitimate, nondiscriminatory reasons for Mr. Vassel's termination. The burden shifts back to Mr. Vassel to present evidence that would permit a finding that the proffered reasons are false pretexts.
The issue here is not whether Thomson might have been honestly mistaken in its accusations. To meet the burden of showing pretext at the summary judgment stage, Mr. Vassel must come forward with specific evidence that places in doubt the honesty of Thomson's explanation for his termination. Zaccagnini v. Chas. Levy Circulating Co., 338 F.3d 672, 676 (7th Cir. 2003). He must show evidence that Thomson did not believe in its reasons for terminating his employment. Wade v. Lerner N.Y., Inc., 243 F.3d 319, 323 (7th Cir. 2001). Mr. Vassel does not have direct evidence of pretext here, so he can establish pretext by showing any of the following things: (1) Thomson's explanation of his discharge had no basis in fact, or (2) the explanation was not the "real" reason, or (3) the reasons stated were insufficient to warrant his discharge. Lenoir v. Roll Coater, Inc., 13 F.3d 1130, 1133 (7th Cir. 1994). "Because a fact-finder may infer intentional discrimination from an employer's untruthfulness, evidence that calls truthfulness into question precludes a summary judgment." Zaccagnini, 338 F.3d at 676.
The task for this court is not to "sit as a super-personnel department that reexamines an entity's business decisions," but to determine whether the employer honestly explained its reasons for the termination. Dale v. Chicago Tribune Co., 797 F.2d 458, 464 (7th Cir. 1986). "Thus, the issue of pretext does not address the correctness or desirability of reasons offered for employment decisions. Rather, it addresses the issue of whether the employer honestly believes in the reasons it offers." Powdertech, Inc. v. Joganic, 776 N.E.2d 1251, 1260 (Ind.App. 2002).
Mr. Vassel argues that Thomson's explanation for his termination is pretext because it is not the "real" reason. Mr. Vassel asserts that the Thomson leaders involved in his firing had not wanted him as CEO of the joint venture in the first place, and that those leaders pursued a highly unusual investigation designed to generate a reason to get rid of him after his mentor or patron left the company.
Mr. Vassel further argues that Thomson has offered conflicting accounts of how the investigation into his spending practices got started. Mr. Vassel points to the deposition of Richard Dyer, the lead investigator for Thomson. Mr. Dyer testified that Mr. Vassel's travel expenses were brought to his attention by Cindy Heston, the manager of travel and living; Ray Panza, the controller of Mr. Vassel's group; and by one other person. Dyer Dep. at 13. However, both Ms. Heston and Mr. Panza, in their deposition testimony, denied initiating conversation with Mr. Dyer about Mr. Vassel. See Def. Br. at 30. Ms. Heston testified that she did not express concerns about Mr. Vassel's travel expenditures to Mr. Dyer. In fact, she testified that Mr. Dyer actually approached her and asked her to provide him information about an investigation that he was already pursuing into Mr. Vassel's spending habits. Heston Dep. at 46-48. Mr. Panza testified similarly that he did not approach Mr. Dyer to complain about Mr. Vassel's travel or relocation expenses and that Mr. Dyer approached him around the time that Mr. Vassel was terminated and asked Mr. Panza for information about Mr. Vassel's travel expenses. Panza Dep. at 27-29.
In addition, Mr. Vassel has offered evidence that would allow a jury to find that the investigation was not a fair one, in that Mr. Dyer failed to look for evidence that other Thomson officials were aware of his practices and even failed to follow up on evidence that others in fact knew of those practices.
A significant inconsistency in an employer's explanation for an employment decision can support an inference that the employer is not being truthful in its explanation. See Zaccagnini, 338 F.3d at 677 ("the consistency of the explanation provided by an employer at the time of an employment decision and in an administrative proceeding is evidence of the veracity of the employer's explanation at summary judgment"). At this point in the case, Thomson gives as its reasons for Mr. Vassel's termination his handling of the relocation loan and relocation allowance and the issues relating to his travel expenses. Pl. Br. at 18. Mr. Dyer testified that the investigation that led to Thomson's decision to terminate Mr. Vassel was initiated because of other Thomson employees' reports. The findings from that investigation are what Thomson claims warranted Mr. Vassel's termination. A reasonable jury could infer from the inconsistencies in the Thomson testimony described above that Thomson's proffered reasons for terminating Mr. Vassel are pretextual.
In addition, the evidence of differences between written policies and actual practices, such as with Adcock's testimony to the effect that a person could properly receive a relocation allowance and still be reimbursed for related travel, could also support a finding of pretext. In this respect, the case bears some important similarities to Gordon v. United Airlines, Inc., 246 F.3d 878, 890-91 (7th Cir. 2001) (reversing summary judgment in race/age discrimination case; employer's confusion and inconsistency regarding its own policies relied upon to justify termination of plaintiff supported inference of pretext).
Additionally, Mr. Vassel argues that the manner in which Thomson concluded its investigation was not consistent with usual Thomson policy. Mr. Dyer has been working in a security capacity for 20 years. Dyer Dep. at 85. He testified that normally he would meet with an employee who has been under investigation to inform the employee of what had been found. Dyer Dep. at 79. Mr. Vassel argues that this case was different and that Thomson had decided to terminate his employment prior to the November 14, 2001 meeting. Mr. Panza testified that he had been informed days prior to the November 14 meeting that Mr. Vassel would be terminated. Panza Dep. at 54-55. This evidence adds to the potentially pretextual nature of Thomson's proffered reasons for terminating Mr. Vassel.
A claimant who has established a prima facie case for racial discrimination and has rebutted the employer's proffered reason for the adverse employment action need not produce more evidence to prevail on his discrimination claim. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 147 (2000). Accordingly, summary judgment is denied with respect to Mr. Vassel's claims that he was terminated because of his race.
Summary judgment must also be denied on his claim that he was denied severance benefits for racial reasons. Thomson argues that Mr. Vassel has failed to show that he was treated worse than a white employee who was similarly situated. To show that another employee was similarly situated, Mr. Vassel must show that there is someone who is comparable to him in all material respects. To determine whether two employees are similarly situated, the court considers all relevant factors. Mr. Vassel must show that he was no different from his white counterparts with respect to performance, qualifications, or conduct. Durkin v. City of Chicago, 341 F.3d 606, 613-14 (7th Cir. 2003). Thomson argues that there is no evidence that the comparator, the white male whom Mr. Vassel replaced, left Thomson amid allegations of financial wrongdoing. As discussed above, however, a reasonable jury could find that those allegations were both wrong and dishonest. If Thomson was dishonest about those reasons for firing Mr. Vassel, those allegations could not defeat Mr. Vassel's prima facie case, and a finding of pretext could easily apply to the closely related denial of severance benefits as well as to termination. Accordingly, the court denies Thomson's motion for summary judgment on Mr. Vassel's counterclaims for racial discrimination.
III. Intentional Tort Claims Under State Law
A federal court hearing a case under diversity jurisdiction must apply the substantive law of the state in which it sits. Erie Railroad Co. v. Tompkins, 304 U.S. 64, 78 (1938). If the laws of more than one jurisdiction arguably are in issue, Erie principles also require a federal court to apply the forum state's choice of law rules. Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 496-97 (1941); Horn v. Transcon Lines, Inc., 7 F.3d 1305, 1307 (7th Cir. 1993). In Hubbard Manufacturing Co. v. Greeson, 515 N.E.2d 1071 (Ind. 1987), the Indiana Supreme Court adopted a modified version of the "most significant contacts" choice of law test for tort cases. As the court noted in Hubbard, in those cases in which the place of the tort is significant and the place with the most contacts, that is the law to be applied. Id. at 1073; see also Jean v. Dugan, 20 F.3d 255, 261 (7th Cir. 1994). In this case, that place is New York for the tort claims arising from the firing in New York.
A. Prima Facie Tort Under New York Law
The New York doctrine of a "prima facie tort" is patterned after the Restatement (Second) of Torts § 870:
One who intentionally causes injury to another is subject to liability to the other for that injury, if his conduct is generally culpable and not justifiable under the circumstances. This liability may be imposed although the actor's conduct does not come within a traditional category of tort liability.
To prove a claim for prima facie tort, Mr. Vassel must show: (1) the intentional infliction of harm, (2) which results in special damages, (3) without any excuse or justification, and (4) by an act that would otherwise be lawful. Freihofer v. Hearst Corp., 480 N.E.2d 349, 355 (N.Y. 1985); Bums Jackson Miller Summit Spitzer v. Lindner, 451 N.E.2d 459, 467 (N.Y. 1983). The doctrine of a prima facie tort was "designed to provide a remedy for intentional and malicious actions that cause harm and for which no traditional tort provides a remedy, and not to provide a 'catch-all' alternative for every cause of action which cannot stand on its legs." Bassim v. Hassett, 585 N.Y.S.2d 566, 568 (N.Y.App. 1992). Mr. Vassel must prove that malevolence was the sole motive for Thomson's "otherwise lawful act." Smukler v. 12 Lofts Realty, Inc., 548 N.Y.S.2d 437, 438 (N.Y.App.Div. 1989). Mr. Vassel must also show that Thomson acted from "disinterested malevolence." Lynch v. McQueen, 765 N.Y.S.2d 645, 648 (N.Y.App.Div. 2003); Burns, 451 N.E.2d at 468, quoting American Bank Trust Co. v. Federal Bank, 256 U.S. 350, 358 (1921).
Mr. Vassel argues that he has submitted sufficient evidence to prove that Thomson's reasons for terminating him were pretextual so that Thomson does not now have a credible excuse for terminating him. In the absence of a credible excuse, Mr. Vassel argues, disinterested malevolence must have been the actual reason for his termination. This court is not prepared to make that logical leap. Pretext is not equivalent to disinterested malevolence. It is not enough for Mr. Vassel to show that Thomson's proffered reasons for terminating him could have been pretextual. On this record, a reasonable jury could not find that the sole motivating factor for Mr. Vassel's termination was Thomson's disinterested malevolence.
B. Intentional Infliction of Emotional Distress
To prove intentional infliction of emotional distress under New York law, Mr. Vassel must prove: (1) Thomson's extreme and outrageous conduct; (2) Thomson's intent to cause, or disregard of a substantial probability of causing, severe emotional distress; (3) a causal connection between the conduct and injury; and (4) severe emotional distress. "The first element — outrageous conduct — serves the dual function of filtering out petty and trivial complaints that do not belong in court, and assuring that plaintiffs claim of severe emotional distress is genuine." Howell v. New York Post Co., 612 N.E.2d 699, 702 (N.Y. 1993).
Intentional infliction of emotional distress is unlike other intentional torts in that it does not prohibit a specific conduct, which would alert a potential actor to tort liability consequences of his behavior. Instead, liability is assessed based on "after-the-fact judgments about the actor's behavior." Id. As a result of this, the New York Court of Appeals has written that the "requirements of the rule are rigorous, and difficult to satisfy." Id., quoting Prosser and Keeton, Torts § 12, at 60-61 [5th ed]. The Howell court also noted that although the tort had been recognized in theory, New York's highest court had never found that the rigorous requirement of "outrageous" conduct had actually been satisfied. Id. For the actor's behavior to satisfy the first prong of the intentional infliction of emotional distress test, the behavior must have been "so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community." Murphy v. Am. Home Products Corp., 448 N.E.2d 86, 90 (N.Y. 1983), quoting Restatement (Second) of Torts § 46 cmt. d.
Even viewing the facts in the light most favorable to him, Mr. Vassel has not alleged facts sufficient to support a finding that Thomson's behavior was so outrageous as to offend the senses of a "civilized community."
Conclusion
For the foregoing reasons, plaintiff Thomson's motion for partial summary judgment is granted as to Mr. Vassel's counterclaims for a "prima facie tort" and intentional infliction of emotional distress but denied as to its own and Mr. Vassel's breach of contract claims, and Mr. Vassel's racial discrimination counterclaims pursuant to Title VII, 42 U.S.C. § 1981, and N.Y. Exec. Law § 297. The remaining claims present issues of conflicting evidence and credibility that must be resolved at trial. The court will hold a scheduling conference on Friday, December 12, 2003, at noon in Room 330, Birch Bayh U.S. Courthouse, Indianapolis, Indiana, to set a new trial date.
So ordered.