LILLY v. NORFOLK SOUTHERN CORP (2021)

ORDER

Plaintiff, Richard Lilly, claims in this action that his former employer, Norfolk Southern Corp. (“NSC”), disciplined and ultimately fired him in retaliation for taking leave under the Family and Medical Leave Act, 29 U.S.C. § 2601 et seq. (the “FMLA”).

Pending is NSC's motion for summary judgment. (Doc. 24). The motion has been fully briefed, (Docs. 34, 35), and is ripe for decision. For the following reasons, I deny the motion.

Background

A. Basic Functioning of NSC's Sandusky Dock

Lilly became NSC's Chief Machinist at its Sandusky Dock in 2007. (Doc. 24-3, pgID 165). That dock served to transfer coal from train cars to ships, referred to as “lake freighters.” (Id., pgID 166).

NSC had about twelve employees at the dock, including a Superintendent, Chief Machinist, Chief Electrician, day and night shift Load Foremen, and a few machinists and electricians. (Doc. 26-2, pgID 642-43). It also employed a stevedoring firm as a contractor with approximately 42-43 employees on site, who operated the equipment. (Id., pgID 643-44, 645-46).

Each winter, NSC would shut down the facility for two to three months for maintenance. (Id., pgID 647). The NSC dock employees were responsible for maintenance and repair of its facilities and equipment and for capital investments. (Id., pgID 645).

The facility went into service eighty years ago and requires frequent maintenance and repair. (Doc. 26-2, pgID 639). During any period when mechanical breakdown prevented the dock from operating, NSC could lose about $2,500 per hour. (Id., pgID 649). NSC placed a premium on the reliability and operability of its facilities because failure to be ready for the reopening date or a subsequent mechanical breakdown would be costly to NSC and its customers. (Doc. 26-3, pgID 972).

Winter maintenance could be “pretty intense” and involve as much as $1,000,000 in cost. (Doc. 26-2., pgID 647). Nevertheless, NSC Director of Piers and Facilities, Ray Jones, testified that he did not recall any year when the dock had not been ready for the first ship to arrive after the winter shutdown. (Doc. 26-3, pgID 971-72).

Lilly, Chief Electrician, Mike Sanders, Daytime Loading Forman, Jeff Logan, and Superintendent Jerel Scott (collectively the “Dock Officers”) purchased equipment and services for repair and maintenance at the dock. (Doc. 26-2, pgID 700).

NSC had multiple methods for purchasing goods and services. Its preferred method for obtaining materials needed on a routine basis was for the Dock Officers to submit a purchase order to NSC's Sourcing Department. That department had the expertise to select the best vender and obtain the lowest price. (Id., pgID 697).

When vendors already had established accounts with NSC, NSC expected the Dock Officers to make purchases using an invoice submitted through its payment system. (Doc. 26-2, pgID 697). However, when immediate needs arose for parts or equipment not available in NSC's inventory or services needed on short notice, they were authorized to make purchases, within certain limits, on their company credit cards, referred to as “purchase cards.” (Id., pgID 702, 704-706).

Jones estimated that, if the purchasing system was working properly, credit card purchases would amount to no more than fifteen to twenty percent of total purchases. (Doc. 26-3, pgID 986). Superintendent Scott was responsible for reviewing and approving the other three Dock Officers’ monthly credit card statements. (Doc. 26-2, pgID 712).

B. NSC's Written Purchase Card Restrictions

NSC had a written policy regarding the use of purchase cards. The relevant provisions directed employees to handle purchases as follows:

PURCHASE OF MATERIAL $1,000 OR LESS

Local material purchases are those not initiated or approved by Sourcing. Local material purchases are restricted to purchases amounting to $1,000 or less per occurrence ․

․

PURCHASE OF MATERIAL OVER $1,000

All material purchases over $1,000 ․ must be processed through Sourcing using the appropriate computer systems determined by the Sourcing Department.

․

PURCHASE OF SERVICES AND LEASES $25,000.00 OR LESS

Users may procure services (contracts, leases, etc.) when the total dollar amount of the service is less than $25,000.00 for a single transaction or $25,000.00 annually for an on-going transaction. No contract/lease is required, nor must authority be obtained from Sourcing.

(Doc. 24-5, pgID 267-70).

To implement these provision the policy also contained the following prohibition:

Prohibited Practices

• Splitting Invoice Purchases

If the cost of a single transaction exceeds the cardholder's per-transaction limit, then the cardholder is prohibited from splitting the transaction into smaller-valued transactions to avoid exceeding the cardholder's per-transaction limit. The cardholder and approver are responsible to adequately plan purchases and to know the hierarchy of spending limits that will allow them to purchase the necessary materials in a timely and efficient manner.

(Doc. 24-5, pgID 254) (emphasis in original).

C. Lilly's FMLA Leave and Disciplinary History

Lilly began working for NSC at the dock in 2007. (Doc. 24-3, pgID 165). Before that, he worked for the subcontractor there. (Doc. 24-1, pgID 104). He asserts, and NSC does not deny, that he never received a negative review from NSC prior to 2018. (Doc. 26-1, pgID 383-84).

Scott became Dock Superintendent and Lilly's immediate supervisor in June 2017. (Doc. 26-2, pgID 633). A few weeks later, Lilly suffered a ruptured appendix and went on FMLA leave for about three months. (Doc. 26-1, pgID 327). Lilly has offered no complaint regarding that leave period. He returned to the same position at the same salary in September 2017. (Id., pgID 327-28).

Scott performed Lilly's annual review in December 2017. (Doc. 27-1, pgID 1149-52). Overall, he graded Lilly as “meets expectations,” which he considered to be a good review. (Doc. 26-2 at 62-63). That review contained a significant number of relatively lengthy complimentary statements for each of five categories: “Safety,” “Performance,” “Leadership,” “Communication,” and “Coaching & Development.” (Doc. 27-1, pgID 1146-47).

Scott gave Lilly an overall performance rating of “Solid Performer.” (Id., pgID 1147). In his explanation for that rating, he stated:

Rich puts safety first in all decisions for his employees and the operation here at Sandusky Dock. He has made several improvements on his RP-1 checks by spreading out the checks over the days of the week and covering several areas on evenings and nights with both crews thru all of 2017. Rich completed 526 checks with no violations found in 2017. Sandusky Dock is approaching 9 years injury free and Rich has constantly been contributing to the success of the work group.

Rich's background and knowledge of the equipment is excellent. Rich has been a corner stone of keeping the aging equipment here at Sandusky operating smoothly. He puts in the time necessary to handle breakdowns and failures on the equipment.

Rich's communication has improved since I arrived in June. This is something all parties have struggled with and I look forward to continued growth in 2018.

(Id.).

In August 2018, Lilly underwent surgery to repair an incisional hernia related to his prior appendix surgery. (Doc. 26-1, pgID 329-30). He took FMLA leave from late August until December 10 of that year. (Id., pgID 330).

One of the three other Dock Officers, Chief Electrician Mike Sanders, also took FMLA leave at about the same time for surgery on his right knee. (Doc. 26-4, pgID 1106). The two men's leaves overlapped from August to October. (Doc. 26-2, pgID 736-37). Scott testified that having the two officers absent on leave at the same time was a “big challenge.” (Id.).

Upon their return to work, both Sanders and Lilly learned that their coworkers believed that Scott thought they had intentionally planned their leaves at the same time to make Scott look bad. (Doc. 26-4, pgID 1122-23); (Doc. 26-1, pgID 27-30). After Sanders returned to work, while Lilly remained on leave, Scott spoke to Sanders about Lilly, “wonder[ing] if he really needed, you know, to be out.” (Doc. 26-4, pgID 1124).

Two days after Lilly returned to work from his FMLA leave, on December 12, 2018, he received his 2018 performance review from Scott (Doc. 26-1, pgID 371-73). Lilly testified that he did not have any issues with Scott regarding his performance before he went on that leave. (Id., pgID 375-76).

In marked contrast to his 2017 Lilly performance review, Scott graded Lilly as “needs improvement” in four of the five the listed categories: Safety, Performance, Leadership, and Coaching & Development. (Doc 27-1, pgID 1149-52). He rated Lilly as a “solid performer” in the remaining category; Communication. Scott's gave Lilly an overall rating of “improvement needed.” (Id., pgID 1151).

As a result of that rating, Lilly did not receive a bonus for 2018 as he had in the years before the poor review. (Doc. 26-1, pgID 381-83). He testified that when he tried to investigate why he did not receive a yearly bonus, Scott told him that he could not receive a bonus because of the negative review. (Doc. 26-1, pgID 383).

Scott also gave Sanders an “improvement needed” review for 2018. (Doc. 26-4, pgID 1112-13). It was the first time Sanders had received a poor review since he assumed his position in 2005. (Id. pgID 1106). Sanders testified that he did not believe his performance had changed in any way since 2017 when he had received a good review. (Id.).

After the review, Scott put both Lilly and Sanders on personal improvement programs. (“PIP”). (Doc. 26-1, pgID 380); (Doc. 26-4, pgID 1113). Jones testified that it was company policy to assign a PIP whenever an employee received an improvement-needed review. (Doc. 26-3, pgID 1008). Sanders testified, however, that he received a second improvement-needed review in 2019 from a new supervisor who had replaced Scott, but the new supervisor did not assign him a second PIP. (Doc. 26-4, pgID 1114).

Sanders remains the Chief Electrician at the dock. (Id., pgID 1097). He testified that the repercussions he and Lilly suffered led him to be hesitant to take FMLA leave again so that he postponed surgery that he needed on his other knee. (Id., pgId 1128).

Lilly successfully completed his PIP in May 2017. (Doc. 26-1, pgID 397).

i. The Fluid Concepts Charge

In early 2018, Daytime Loading Forman Jeff Logan approached Scott regarding two charges made on his purchase card in December 2017 to a company called Fluid Concepts, totaling $1,310.34. (Doc. 26-2, pgID 716-17). Both charges were for emergency after-hours service to troubleshoot and repair a device called a “reclaimer.” (Doc. 27-3, pgID 1470). The invoice copy in NSC's files included two credit card receipts; one for $1,000 on December 15, 2017, and one for $310.34 on December 21, 2017. (Id.).

Logan believed, based on these records, that someone had split the charge for the service call into two card payments. (Doc. 26-2, pgID 716-17). He asserted that he had not authorized the charges and did not know who had done so. (Id., pgID 716).

When Scott asked Lilly about the Fluid Concepts charge, Lilly stated that he had not authorized it. See (Doc. 26-1, pgID 460). Lilly testified that he did not have Logan's credit card number and that he would not have used Logan's card, in any event, without talking to him about it first. (Id. pgID 461).

Scott testified that he contacted Fluid Concepts’ and learned that Lilly had directed it to split the charges on Logan's card. Although he did not remember specifically, he thought he had spoken with the company's owner. (Doc. 26-2, pgID 719-20). NSC has not provided any contemporaneous documentation to support that testimony other than the fact Scott wrote it into a “counseling letter” he issued to Lilly. Scott testified that he could not recall if Lilly had denied making the split charges. (Id., pgID 721).

Scott issued the counseling letter to Lilly for splitting the Fluid Concepts charges, recording that he had committed an infraction. (Id., pgID 453-54). Lilly initially refused to sign the letter because he did not believe it was accurate. (Id., pgID 455-56).

Scott produced a second version of the counseling letter and again directed Lilly to sign it. (Id., pgID 457-58). Lilly signed the letter but noted his disagreement, writing on it that: “I did not instruct or authorize Fluid Concepts to split charges. Credit card was only used to secure services.” (Id., pgID 596).

As set out above, NSC's policy stated that employees could purchase services – as opposed to materials or equipment - on their company cards up to a limit of $25,000. (Doc. 24-5, pgID 268-69). Jones acknowledged that Lilly properly could purchase up to $25,000 in services in a single purchase card transaction. (Doc. 26-3 pgID 995-97). Moreover, he also acknowledged that, because the Fluid Concepts charge was an emergency service call, Lilly was permitted to charge over the $1,000 limit applicable to materials or equipment purchases. (Id., pgID 999-1002).

Scott testified that, notwithstanding NSC's policy statement authorizing purchase card transactions for services of up to $25,000, he believed that the $1,000 limit applied to any purchase card transaction, including services purchases. (Doc. 26-2. pgID 722-23). He also testified, however, that Lilly could have paid the $1,310.34 charge on his card because it was for emergency service so long as he did so in a single transaction. (Id., pgID 729-30).

ii. The Motion Industries Charges

On February 19, 2019, Lilly was working to replace a bearing assembly on a device called the telescope. (Doc. 26-1, pgID 439-40). The assembly cost $737.66. (Id.).

Lilly ordered four bearing assemblies, putting the one he needed immediately on his card, while invoicing the remaining three. (Id., 437-42); (Doc. 24-5, pgID 233). Later in the day, Lilly discovered that another bearing assembly for the telescope also needed replacement. (Id., pgID 442, 452-53). He obtained the second bearing assembly by switching the charge from the invoice to immediate payment on his purchase card. See (Doc. 24-5, pgID 242-43); (Doc. 26-2, pgID 929-30).

In May 2019, Lilly had Motion Industries transfer another of the bearing assembly purchases to his card because NSC had not paid the invoice. (Doc. 26-2, pgID 929-30).

Scott contacted the vendor's employee by email and enquired whether Lilly had asked her to handle the charges in that manner. (Id.). She responded that: “I believe he did, but since this was originally from February, I can't be 100% sure.” (Id., pgID 929).

iii. Lilly's Termination

Scott testified that he discovered the Motion Industries charges in June 2019 and believed that Lilly had split the charges.¹ He contacted his superior, Jones, who instructed him to suspend Lilly pending further investigation. (Doc. 26-2, pgID 777).

When Scott informed Lilly that NSC was suspending him, he did not identify the charges that NSC was investigating or ask Lilly for his explanation of what had transpired. (Id., pgID 778). Instead, he merely “told him that it was about some issues with his purchasing card charges and that was all that I was a[t] liberty to tell him at that time ․” (Id.).

Jamie Williams, an “HR Manager” and Jones’ supervisor, gave the direction to suspend Lilly pending further investigation. (Doc. 26-3, pgID 1022). His investigation consisted solely of reviewing the relevant documents. (Doc. 24-6, pgID 281). There is no evidence that he offered Lilly an opportunity to respond to the allegations against him.

Williams communicated his recommendation that NSC fire Lilly to his superiors, who approved it. (Id., pgID 281). There is no evidence that they conducted any investigation of their own.

Williams then forwarded the documents he had reviewed to Human Resources Business Partner Domingo Gonzales. (Id., pgID 281). There is no evidence that Gonzales conducted any further investigation or offered Lilly an opportunity to respond to the allegations against him. Gonzales prepared a summary of Williams’ findings and submitted it to NSC's discipline committee. (Doc. 24-5, pgID 224, 227). That committee approved Lilly's termination. (Id., pgID 224).

Scott called Lilly to a meeting on June 25, 2019. (Doc. 26-1, pgID 418-19). He offered Lilly a choice between resigning or being terminated. (Id., pgID 420-21). Lilly testified that Scott did not explain to him why he was being terminated, show him the relevant documents, or offer him any opportunity to explain what had transpired. (Id., pgID 423-24).

Scott testified that he did not think that he ever had asked Lilly for his explanation of the Motion Industries charges. (Doc. 26-2, pgID 781). He explained that he “felt like we had a pretty clear cut-and-dry explanation as to what happened.” (Id.). Scott testified that he “believed that [he] talked to [Lilly] the day that we called him back in, and I think I showed him what happened.”(Id.). But, when questioned further, Scott could not recall if he showed Lilly the relevant documents. (Id., pgID 782).

NSC's “Purchase Card Guidelines and Instructions” contains a section entitled “Procedure for Handling Purchase Card Abuse.” (Doc. 24-5, pgID 262). It includes the direction that the purchasing employee's “[s]upervisor should review questionable charges with the employee (i.e., not an authorized charge, not for business purpose or indication of fraud). “If purchases appear improper,” the policy instructed the supervisor, inter alia, to report the event to his or her superior and to the Human Resources Department. (Id.).

Sanders office was located next to Scott's office. (Doc. 26-4, pgID 1104). Sanders testified that he overheard a speakerphone conversation between Scott and Jones in which Scott advocated for disciplining or firing Lilly. (Id., pgID 1127-28). He also testified that he heard Jones respond by saying “something about a process.” (Id., pgID 1127).

Scott testified that he did not recommend discipline for Lilly and did not agree with his firing. (Doc. 26-2, pgID 670-71). Jones testified that he did not know whether Scott favored Lilly's termination but that Scott had not expressed any reservations about it. (Id., pgID 959-60).

Jones began his NSC career in 1981 and joined management in 1999. (Doc. 26-3, pgID 967-68). He could recall only one other NSC employee who had been disciplined for purchase card misuse during those years. (Id., pgID 960-61). NSC disciplined her for making a purchase for personal use on her company card. (Id., pgID 961). NSC limited its discipline of that employee only to assigning her counseling, not by terminating her employment. (Id.).

Summary Judgment Standard

Summary judgment is appropriate under Fed. R. Civ. P. 56 where the opposing party fails to show the existence of an essential element for which that party bears the burden of proof. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

The movant must initially show the absence of a genuine issue of material fact. Id. at 323, 106 S.Ct. 2548. Once the movant carries its burden, the burden shifts to the nonmoving party to “set forth specific facts showing that there is a genuine issue for trial.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Rule 56 “requires the nonmoving party to go beyond the [unverified] pleadings” and submit admissible evidence supporting its position. Celotex, supra, 477 U.S. at 324, 106 S.Ct. 2548.

Summary judgment is proper where “in light of the evidence viewed in the light most favorable to the [nonmovant], no reasonable juror could fail to return a verdict for the [movant].” Benison v. Ross, 765 F.3d 649, 658 (6th Cir. 2014).

FMLA Retaliation Standard

FMLA retaliation claims based upon indirect evidence are analyzed under the traditional McDonnell Douglas Corp. v. Green burden-shifting framework. Skrjanc v. Great Lakes Power Serv. Co., 272 F.3d 309, 315 (6th Cir. 2001) (citing McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973)).

This means that a plaintiff must first prove a prima facie case of retaliation, and the burden then shifts to the defendant to provide a legitimate, non-discriminatory reason for the plaintiff's termination․ If the defendant sets forth such a reason, the plaintiff must show that the nondiscriminatory reason is pretext.

Algie v. N. Kentucky Univ., No. 08-109-DLB, 2013 WL 624396, at *6 (E.D. Ky.).

In Nguyen v. City of Cleveland, 229 F.3d 559, 563 (6th Cir. 2000), the Sixth Circuit summarized the legal standard for a prima facie FMLA retaliation case as follows:

[T]o establish a prima facie case of retaliation, a plaintiff must establish that: (1) he engaged in activity protected by [the civil rights laws]2; (2) the exercise of his civil rights was known to the defendant; (3) thereafter, the defendant took an employment action adverse to the plaintiff; and (4) there was a causal connection between the protected activity and the adverse employment action.

“The burden of establishing a prima facie case in a retaliation action is not onerous, but one easily met.” Id.

Lilly bases his case on the “cat's paw” theory of retaliation. “ ‘In the employment discrimination context, ‘cat's paw’ refers to a situation in which a biased subordinate, who lacks decisionmaking power, uses the formal decisionmaker as a dupe in a deliberate scheme to trigger a discriminatory employment action.’ ” Algie, supra, 2013 WL 624396, at *6 (quoting EEOC v. BCI Coca-Cola Bottling Co., 450 F.3d 476, 484 (10th Cir. 2006)).

The primary rationale for the cat's paw theory of liability is that, because a company's organizational chart does not always accurately reflect its decisionmaking process, an employee of lower rank may have significant influence over the decisionmaker. The ultimate decisionmaker may be detached from day-to-day operations, and consequently apt to defer to the judgment of the [person] on the spot and at risk of being the conduit of [the lower-level decisionmaker's] prejudice. As a result, a biased low-level supervisor with no disciplinary authority might effectuate the termination of an employee from a protected class by recommending discharge or by selectively reporting or even fabricating information in communications with the formal decisionmaker.

Marshall v. The Rawlings Co. LLC, 854 F.3d 368, 378 (6th Cir. 2017) (alteration in original) (internal citations and quotation marks omitted).

In response, NCS argues that Lilly's conduct in splitting the charges violated its written policies, that Scott was not the decisionmaker, and that the decisionmakers conducted an independent review before deciding to fire him.

Discussion

A. Prima Facie Case

There is no dispute about the first and third elements of the prima facie case: Lilly engaged in a protected activity by taking FMLA leave, and his termination was an adverse employment action.

NSC disputes the second element of the test, asserting that Williams and the other decisionmakers were not aware of Lilly's prior FMLA leaves at the time they decided to terminate his employment. Under the cat's paw theory, however, those ultimate decisionmaker's knowledge is not the issue; the issue is the knowledge of the person who allegedly led them to make the decision by providing false or discriminatory information. Marshall, supra, 854 F.3d at 380.

As to the third element, there is no dispute that Scott knew of Lilly's two FMLA leaves.

NSC primarily disputes the fourth element of the test – whether there was a causal connection between Lilly's FMLA leaves and his termination. To carry his burden on the causation element, “the plaintiff must produce sufficient evidence from which one could draw an inference that the employer would not have taken the adverse action against the plaintiff had the plaintiff not engaged in [the protected] activity ․” Abbott v. Crown Motor Co., 348 F.3d 537, 543 (6th Cir. 2003). “A plaintiff's burden to demonstrate a causal connection ‘between an employee's FMLA leave and termination is ‘minimal,’ and courts are expected to ‘draw reasonable inferences from any credible evidence’ that the plaintiff puts forth.” Mueller v. J.P. Morgan Chase & Co., No. 1:05CV560, 2007 WL 915160, at *17 (N.D. Ohio) (Oliver, J.) (quoting Dage v. Time Warner Cable, 395 F. Supp. 2d 668, 675 (S.D. Ohio 2005)).

Proximity in time between the employee's exercise of his or her statutory rights and materially adverse employment action is an important factor in determining whether a plaintiff has established causation for purposes of the prima facie standard.

Where an adverse employment action occurs very close in time after an employer learns of a protected activity, such temporal proximity between the events is significant enough to constitute evidence of a causal connection for the purposes of satisfying a prima facie case of retaliation. But where some time elapses between when the employer learns of a protected activity and the subsequent adverse employment action, the employee must couple temporal proximity with other evidence of retaliatory conduct to establish causality.

Mickey v. Zeidler Tool & Die Co., 516 F.3d 516, 523 (6th Cir. 2008).

NSC argues that any proximity between Lilly's discipline and his second FMLA leave does not raise an inference of discrimination because it was normal practice to issue yearly performance reviews in December. Lilly argues in response that before he went on leave in August 2018, Scott had not had any performance issues with him. (Doc. 26-1, pgID 376).

These arguments only serve to raise a jury issue. For the purposes of a prima facie case, the test is whether the employee has “ ‘produce[d] sufficient evidence from which an inference could be drawn hat the adverse action would not have been taken in the absence of the protected conduct.’ ” McBroom v. Barnes & Noble Booksellers, Inc., 747 F. Supp. 2d 906, 918 (N.D. Ohio 2010) (Lioi, J.) (emphasis added) (quoting Lamer v. Metaldyne Co. LLC, 240 F. App'x. 22, 29 (6th Cir. 2007)). Thus, an employee does not need to show that the preponderance of the evidence supports the inference.

In determining whether Lilly has presented sufficient evidence to raise such an inference, I am to consider the totality of the circumstances. Underwood v. Dynamic Sec., Inc., No. 18-00017, 2020 WL 5836550, at *8 (E.D. Tenn.) (citing Vereecke v. Huron Valley Sch. Dist., 609 F.3d 392, 400-01 (6th Cir. 2010)). I am to focus on “whether the alleged adverse action ‘was taken at least in part because of the exercise of the protected conduct.’ ” Buddenberg v. Weisdack, 939 F.3d 732, 741 (6th Cir. 2019) (quoting Holzemer v. City of Memphis, 621 F.3d 512, 525 (6th Cir. 2010)). Here, Lilly has satisfied his prima facie burden.

Lilly has established that NSC took adverse action against him two days after he returned from FMLA leave when, for the first time in his long NSC career, he received a negative performance review. That negative performance review precluded him from receiving his normal yearly bonus. (Doc. 26-1, pgID 381-83). That loss is a sufficiently material adverse action to support a claim. See Chattman v. Toho Tenax Am., Inc., 686 F.3d 339, 348 (6th Cir. 2012) (discipline that rendered employee ineligible for any possible promotion for one year was materially adverse employment action).

Moreover, even apart from the lost bonus, although a negative review alone is insufficient to establish a prima facie case, it may be sufficient if it leads to further discipline. See id. at 918 (employee established prima facie causation where he demonstrated “the negative appraisals and performance plans supplied the necessary foundation for [his] eventual separation”); Jeffries v. Wal-Mart Stores, Inc., 15 F. App'x 252, 261 (6th Cir. 2001) (employee established prima facie discrimination based on a “sequence of events” including “retaliatory harassment combined with actual adverse employment actions”).

This is especially the case when a negative review or performance plan is part of an employer's multi-step disciplinary procedure. See Green v. Wal-Mart Stores, E., L.P., No. 3:11-CV-440, 2013 WL 3223629, at *8 (S.D. Ohio); see also Young v. City of Philadelphia Police Dep't, 651 F. App'x 90, 98 (3d Cir. 2016) (series of disciplinary episodes and disparate treatment); Turner v. Gonzales, 421 F.3d 688, 697 (8th Cir. 2005) (poor review “was the first step in the paper trail required to impose an involuntary transfer on an FBI employee”).

Here, Lilly received his first negative review in his long career at NSC on December 12, 2019 - two days after he returned from FMLA leave. See Hunter v. Gen. Motors LLC, No. 17-10314, 2019 WL 1436847, at *12 (E.D. Mich.), aff'd, 807 F. App'x 540 (6th Cir. 2020) (fact employee received her first negative review in sixteen years shortly after engaging in protected activity was evidence of causation).

As a result, Lilly then was assigned a PIP, which he completed in May 2019.³

NSC suspended Lilly in June 2019 based on purchase transactions with Motion Industries most of which occurred in late February 2019, and therefore presumably appeared previously on Lilly's March 2019 card statement.

Finally, NSC terminated Lilly's employment on June 25, 2019 on the ground that he had committed a repeat offense. As discussed below, at the least, whether the Fluid Concepts-related discipline was proper is debatable. As also discussed below, Lilly has submitted evidence that others committed what appear to be similar charge-splitting conduct without receiving discipline.⁴

In addition, the facts that Jones was only aware of one other case of charge-splitting discipline many years at NSC, that it was for charging personal purchases on an NSC purchase card, and that the offender received only counseling as discipline is highly suggestive of disparate treatment.

The totality of these circumstances is more than adequate to establish causation for prima facie purposes.

B. Legitimate Non-Discriminatory Reason for Discipline

NSC's articulated reason for disciplining Lilly and ultimately terminating his employment is that he violated its written purchase card policy. Lilly does not contest that this reason is sufficient for the second prong of the McDonnell-Douglas test. NSC attempts to collapse the McDonnell-Douglas analysis into a single step, arguing that because it identified what it considers to be a technical violation of its policy, it cannot be liable. That is not what the caselaw requires. Instead, the question comes down to whether Lilly has presented sufficient evidence to raise a genuine factual issue regarding whether that reason was pretextual.

C. Pretext

The Sixth Circuit recently summarized the manners in which a plaintiff can establish that an employer's stated reason for adverse employment action is pretextual:

A plaintiff may establish pretext “by a direct showing that a discriminatory reason more likely motivated the employer or by an indirect showing that the employer's explanation is not credible”. This burden is not heavy, though, as summary judgment is warranted only if no reasonable juror could conclude that the employer's offered reason was pretextual.

George v. Youngstown State Univ., 966 F.3d 446, 462 (6th Cir. 2020).

More specifically, “[a] plaintiff can demonstrate pretext by showing that the proffered reason (1) has no basis in fact, (2) did not actually motivate the defendant's challenged conduct, or (3) was insufficient to warrant the challenged conduct.” Dews v. A.B. Dick Co., 231 F.3d 1016, 1021 (6th Cir. 2000).

Lilly has, at the least, established a genuine factual dispute that his discipline and ultimate termination had no basis in fact and that any policy violation he may have committed was insufficient to warrant the discipline NSC imposed.

Scott testified that Lilly's $1,310.34 Fluid Concepts purchase would have been proper if only Lilly had paid it in a single card payment rather than two. (Doc. 26-2, pgID 729-30). He also believed that NSC's policy limited credit card purchases to $1,000 even if they were for services. (Doc. 26-2. pgID 722-23).

Jones testified that purchases of services were authorized up to $25,000, (Doc. 26-3 pgID 995-97), and that, because the Fluid Concepts charge was an emergency service call, Lilly permissibly could have charged over the $1,000 limit applicable to materials or equipment purchases, (id., pgID 999-1002). NSC's written policy supports Jones’ position. (Doc. 24-5, pgID 268-69).

Thus, Lilly has established a genuine issue regarding whether NSC had a factual basis for disciplining him over the Fluid Concepts transaction. Moreover, because NSC terminated Lilly on the ground that the Motion Industries transaction was a repeat offense, a lack of factual basis for the Fluid Concepts-related discipline would mean that the termination lacked a factual basis as well.

Lilly also has raised a genuine issue as to NSC's purported basis for discipline for the Motion Industries transaction. As discussed above, Lilly initially purchased one assembly bearing with his card because NSC needed it for an immediate repair. He also purchased three more assemblies to replenish NSC's inventory through the standard invoice process. He then found that he needed a second bearing assembly to complete the repair, so he transferred a second bearing assembly to his credit card.

Scott testified that in the case of an emergency, in order to keep the dock functioning, the Dock Officers could exceed the $1,000 limit. (Doc. 26-2, pgID 843). Jones agreed. (Doc. 26-3, pgID 999-1000). Scott estimated that for every hour the Dock was not functioning, NSC lost approximately $2,500. (Doc. 26-2, pgID 649).

This testimony raises a genuine factual regarding whether Lilly's emergency purchases of the two bearing assemblies from Motion Industry actually violated NSC's policy.

In May 2019, Lilly transferred another of the bearing assemblies to his card because NSC still had not paid the February invoice for the remaining assemblies. (Doc. 26-2, pgID 929-30). That action is more problematic because Lilly has not presented evidence that it involved an emergency.

Nevertheless, Lilly has presented sufficient evidence that NSC's application of its purchase card policies at the Sandusky dock was inconsistent and idiosyncratic at best. This makes it difficult to determine whether any particular purchase violated NSC's policies or not.

Lilly has identified nine transactions that, on their face, appear to violate NSC's written policy. (See Doc. 34. pgID 1865-68). Scott and/or Jones admitted that at least seven of them either were or appeared to be examples of splitting charges. See (id. at 1868-70, (including transcript citations)). None of those transactions led to discipline of the purchasing officer. See (Doc. 26-3, pgID 960-61)

Another of those transaction – one that Scott himself made – involved two purchases of the same part from the same vendor on the same day. Scott acknowledged that those charges appeared to present at least a “grey area.” (Doc. 26-2, pgID 855). He then explained: “I think we had a breakdown or something going on where we had to have these or I wouldn't have put them on my card.” (Id., pgID 855-56). The same justification arguably applies to both of Lilly's challenged transactions.

Scott stated that the transaction did not violate NSC's policy based on the fact he authorized one charge in the morning and the second in the afternoon. (Id., pgID 856). He said that it was a situation where they needed one item in the morning and then discovered that they required another of the same item later in the day. (Id., pgID 855). It appears that explanation would be applicable equally to the Motion Industries transaction for which he reported Lilly for discipline.

Moreover, as to five of the charges Lilly's counsel inquired about at Scott's deposition, Scott stated that, when he reviewed the documents, he would have spoken with the Dock Officer who made the purchases to determine what actually had transpired. (Id. pgID 826-41). Scott did not contest Lilly's testimony that Scott never discussed the Motion Industries charges with him. (Id., pgID 143); (Doc. 26-1, pgID 422-24). That failure was not consistent with NSC's policy that supervisor's should discuss questionable purchases with the employee who made them. (Doc. 24-5, pgID 262). An employer's failure to follow its own disciplinary policies may be evidence of pretext and animus. Beair v. Summit Polymers, No. 5:11-420-KKC, 2013 WL 4099196, at *11 (E.D. Ky.) (noting employer's failure to follow its disciplinary policies as part of its pretext analysis).

In addition, NSC's policy appears to have been so ambiguous in practice that Scott and Jones had a number of significant differences as to what the policy required. Most notably, as to the Fluid Concepts transaction, as discussed above, Scott remained adamant that the $1,000 limit applied and that Lilly violated it. In contrast, Jones testified that the limit for services transactions was $25,000 and that Lilly could justify the second purchase regardless because it was for an emergency repair.

Scott also justified a number of transactions with unwritten exceptions to the written purchase card policy that limited purchases to $1,000, including when: purchasing different parts from the same vendor on the same day, (Doc. 26-2, pgID 88-89);⁵ when the charges were identified by separate codes reflecting whether they were for electrical material, mechanical, or other types of purchases, (id., 838-40); when the Dock Officers purchased several of the same products from the same vendor for a combined price greater than $1,000, if he spread the purchases over several days,⁶ (id., pgID 834-35); and if two pieces of equipment required repair by the vendor on the same day, (id., pgID 845-46).⁷

It is within NSC's discretion to operate on ambiguous policies applied by its Dock Superintendent on a case-by-case basis. Indeed, the exigencies of keeping the dock operating at all times arguably necessitated doing so. Having chosen to do so, however, NSC cannot argue persuasively that, on the one occasion that it chose to enforce the policy through termination, there is no genuine factual issue regarding pretext.

Sanctioning one employee for conduct that the employer regularly tolerates from other employees is hallmark evidence of pretext. See, e.g., Beair, 2013 WL 4099196, at *11 (“The third way to show pretext ‘ordinarily, consists of evidence that other employees ․ were not fired even though they engaged in substantially identical conduct ․’ ”) (quoting Manzer v. Diamond Shamrock Chems. Co., 29 F.3d 1078, 1084 (6th Cir. 1994), abrogated on other grounds, Gross v. FBL Financial Servs., Inc., 557 U.S. 167, 178 n.4, 129 S.Ct. 2343, 174 L.Ed.2d 119 (2009)).

When NSC's malleable purchase card rules and inconsistent disciplinary practices are added to: the factual questions regarding whether Lilly's conduct actually violated NSC policy in either of the transactions for which NSC sanctioned him; Scott's questioning to Sanders whether Lilly really needed to be on leave; and Sanders’ testimony that Scott told Jones that he wanted Lilly disciplined or terminated, Lilly has more than established a genuine issue regarding pretext.

D. NSC's “Honest Belief” Defense

NSC contends that it cannot be held liable because Williams made the ultimate decision to terminate Lilly, and he had an honest belief that Lilly had violated NSC's policy twice.

“[W]hen an employer reasonably and honestly relies on particularized facts in making an employment decision, it is entitled to summary judgment on pretext even if its conclusion is later shown to be mistaken, foolish, trivial, or baseless.” Chen v. Dow Chem. Co., 580 F.3d 394, 401 (6th Cir. 2009) (internal quotation marks omitted). The key inquiry in assessing whether an employer holds such an honest belief is “whether the employer made a reasonably informed and considered decision before taking” the complained-of action. Smith v. Chrysler Corp., 155 F.3d 799, 807 (6th Cir. 1998).

On this record, NSC's honest belief argument is meritless.

Lilly is alleging that Scott used Williams and other NSC senior personnel as a cat's paw to accomplish his desire to terminate Lilly's employment.

A plaintiff alleging liability under the cat's paw theory seeks “to hold his employer liable for the animus of a supervisor who was not charged with making the ultimate employment decision.” Staub v. Proctor Hosp., 562 U.S. 411, 415, 131 S.Ct. 1186, 179 L.Ed.2d 144 (2011). “Under these circumstances, the decisionmaker's intent does not matter, and consequently the honesty of the decisionmaker's belief does not matter.” Marshall, supra, 854 F.3d at 380.

An employer can overcome a cat's paw claim by establishing that the decisionmaker had an informed and honest belief in its proffered nondiscriminatory reason for the adverse employment action. Id. “A supervisor who conducts an in-depth and truly independent investigation is not being manipulated by biased lower-level supervisors, but rather making a decision based on an independent evaluation of the situation.” Id.

That evaluation, however, may not “ ‘rel[y] on facts provided by the biased supervisor.’ ” Chattman, supra, 686 F.3d at 352 (quoting Staub v. Proctor Hosp., 562 U.S. 411, 420, 131 S.Ct. 1186, 179 L.Ed.2d 144 (2011)). Indeed, if the decisionmaker consults with the biased supervisor or another higher-level employee who has consulted that supervisor, that conduct “would only serve to exacerbate, not purge, the alleged retaliatory taint.” Bishop v. Ohio Dep't of Rehab. & Corr., 529 F. App'x 685, 697 (6th Cir. 2013).

Bishop presents an apt example of Lilly's theory of this case in action. There, two correctional officers sued the Ohio Department of Rehabilitation and Correction (“the Department”), alleging that their supervisor, a lieutenant, discriminated against them based on gender. Id. at 687-88. The lieutenant had issued them negative performance reviews, and the Warden had terminated their employment. Id. at 690-91

After finding that the officers had established a genuine factual issue as to whether the lieutenant had discriminated against them, the court rejected the argument on summary judgment that the Warden had conducted a sufficient independent investigation to entitle the corrections department to summary judgment on an honest belief defense. Id. The court held that a genuine issue remained as to whether the warden's decision was “independent of any input from” the lieutenant. Id.

Similarly, in Madden v. Chattanooga City Wide Serv. Dep't, 549 F.3d 666, 678 (6th Cir. 2008), the court upheld a plaintiff's judgment, rejecting an honest belief defense. The court held that the argument failed because the decisionmaker relied on a “discriminatory information flow” in which a supervisor reported an African-American's conduct to the decisionmaker but not similar conduct by white employees. Id.

Here, there is, at the least, a genuine factual issue regarding whether Williams or any of the other senior NSC decisionmakers conducted an independent investigation sufficient to establish an honest belief defense.

Williams investigation was limited to reviewing documents provided to him based on Jones’ report to him that Lilly had violated the purchase card policy for a second time. See (Doc. 24-6, pgID 280-81). He made the decision to terminate Lilly and communicated the decision to his superiors who agreed with it. (Id. pgID 281).

Williams then communicated the decision to human resources for review. That review, however, apparently only involved reviewing the documents that Williams had reviewed. (Id., pgID 282). And, it apparently occurred after NSC already had decided to terminate Lilly. See Beair, 2013 WL 4099196, at *13 (where employer drew up termination paperwork before speaking with employee and without further investigating employee's denials, could lead a jury reasonably to conclude that the employer's stated justification was pretextual).

Lilly has presented evidence that, at no time in this process, did any NSC personnel show the relevant documents to him or ask for his explanation of the circumstances that led him to split the charges. This is particularly significant because, as discussed above, both Scott's and Jones’ testimony demonstrate that there were any number of circumstances that they considered justifiable reasons for splitting charges. Indeed, when questioned about transactions that appeared to violate the purchase card policy, Scott repeatedly stated that he would need to ask the person who made the purchase before determining whether the transaction violated NSC policy.

Failure to afford an employee the opportunity to respond to the allegations against him or her, while not necessarily decisive, is evidence undermining an honest-belief defense. See Archer v. Mesaba Aviation Inc., 210 F.3d 371 (6th Cir. 2000) (finding honest-belief defense was “all the more questionable in light of the fact that Plaintiff was never informed of the allegations of which he was accused and Plaintiff's termination letter was prepared before he was ever given the opportunity to respond to the allegations”); Shaw v. Danley, No. 98-6579, 2000 WL 64945 (6th Cir.) (failure to question employee or other witnesses “might inspire a reasonable person to conclude that Defendants were uninterested in the veracity of the complaints”); c.f. Hale v. Mercy Health Partners, 20 F. Supp. 3d 620, 633–34 (S.D. Ohio 2014), (distinguishing Archer because the employer gave the employee an opportunity to respond to allegations), aff'd, 617 F. App'x 395 (6th Cir. 2015).

Further, Jones testified that purchases of services for emergency after-hours repairs, were permissible up to $25,000. That testimony and NSC's written policy all but establish that Lilly acted appropriately in the Fluid Concepts transaction that served as the first of two incidents on which NSC relied in terminating Lilly's employment.

The record is devoid of evidence regarding whether Williams knew of the purchase card practices at the Dock. Certainly evidence that Scott and the other Dock Officers regularly bent the purchase rules as they deemed necessary to keep the Dock operating would have been relevant to William's decision.

Had NSC's Human Relations Department or any of its officers given Lilly any opportunity to explain his alleged conduct, they would have learned about that practice. Without knowing how Scott and the other Dock Officers actually applied the purchase card rules, it is questionable whether Williams was in an informed position to decide Lilly's fate.

In addition, it is telling that Jones testified that, in his many years at NSC, he was aware of only one employee who had been disciplined for improper purchase card use. (Doc. 26-3, pgID 960). That person, Jones admitted, was “essentially stealing” from NSC by charging personal expenses to it. (Id., pgID 961). Nevertheless, she was only counseled, not terminated. (Id.).

Thus, there is at least a genuine issue regarding whether Williams’ reliance on documents alone without any inquiry into the circumstances or the dock's practices and without offering Lilly a chance to explain his conduct was sufficient to support an honest-belief defense.

NSC is free to operate in an inconsistent manner and to make exceptions to its rules on a case-by-case basis as needed to keep the coal ships running. Having done so, however, it cannot rely solely on the fact an employee's conduct violated those rules to obtain summary judgment. The inconsistency raises a genuine question whether the employer fired the employee based on a violation of the letter of those rules.

Moreover, NSC has failed to establish the lack of a genuine factual issue regarding whether Scott used Williams as a cat's paw by feeding him selective and biased information or even false information. The evidence discussed above could support a finding that Scott reported Lilly's conduct for discipline while accepting similar conduct from others and, indeed, engaging in it himself.

As the court in Chattman explained:

[I]f the intermediate supervisor makes a biased report to the ultimate decisionmaker, it may be a causal factor in the adverse action if the independent investigation by the employer “takes it into account without determining that the adverse action was, apart from the supervisor's recommendation, entirely justified.” Id. Also, if “the independent investigation relies on facts provided by the biased supervisor,” id., then the investigation was not, in actuality, independent and the employer is liable.

686 F.3d at 352 (quoting Staub, supra, 562 U.S. at 411, 131 S.Ct. 1186).

NSC has not shown that Williams investigation was “independent of any input from” Scott. Bishop, supra, 529 F. App'x at 690-91. He appears to be the only person at NSC who communicated with the vendors regarding the challenged transactions. Although there was a written email exchange regarding the Motion Industries transaction, it provided only a recollection that the vendor's employee stated was uncertain. (Doc. 26-2, pgID 929). Moreover, there is no evidence regarding what, if any, oral communications Scott may have had with that vendor.

As for the Fluid Concepts transaction, Scott was the only person who spoke with the vendor, and NSC has not provided documentation for that communication.

Scott was the person to decide to refer Lilly but not others for discipline. He also was the person who interpreted the documents for his superiors as a rules violation, apparently without mentioning that he frequently disregarded or approved similar purchase card practices by others.

Lilly has presented evidence on which a jury reasonably could find that Scott harbored an animus against him because he took FMLA leave twice in the relatively short time they worked together. The second time he took leave at the same time as Sanders, leaving Scott without two of the four Dock Officers.

Sanders testified that Scott made a statement to him, shortly after Sanders returned from his leave, questioning whether Lilly really needed to be on FMLA leave. A jury reasonably could view that statement as evidence of pretext. See Hurnevich v. ArvinMeritor, Inc., No. 10-10278, 2012 WL 4475603, at *3 (E.D. Mich.) (employer's statement that it was not a good time for employee to take leave was evidence of discriminatory animus). Sanders also testified that he heard Scott talking to Jones on the speakerphone, demanding that Lilly be fired or disciplined.⁸

Lilly also has presented evidence from which a jury reasonably could conclude that the Dock Officers regularly made exceptions to and liberally interpreted the purchase card rules in order to minimize the times when breakdowns idled the dock. Lilly's explanations for the challenged transactions suggest that he also acted to minimize the dock's downtime. Nevertheless, the evidence reflects that Lilly was the only person who Scott reported for discipline for violating the anti-charge-splitting rules.

Thus, Lilly has established a genuine issue whether Scott treated him differently than others because of his protected actions. Under a cat's paw theory, “the honesty of the decisionmaker's [Williams’] belief does not matter.” Marshall, supra, 854 F.3d at 380.

Accordingly, for the reasons state above, it is ORDERED THAT:

1. NSC's motion (Doc. 24) be, and the same hereby is, denied; and

2. The Clerk of Court shall schedule a status conference in this case forthwith.

So ordered.

FOOTNOTES

1.   Scott did not provide an explanation of why he did not discover the February Motion Industries charges in reviewing the invoice and credit card statement for February.

2.   Although Nguyen was a Title VII retaliation case, the same standard applies to FMLA retaliation claims. See Hunter v. Valley View Local Sch., 579 F.3d 688, 691-92 (6th Cir. 2009).

3.   Scott did not explain the delay from the December 12, 2018 negative review until he assigned the PIP in May, but he did testify that it was standard practice to impose a PIP after a needs-improvement review. (Doc. 26-2, pgID 755).

4.   NSC asserts that Lilly's 2018 performance review is irrelevant because Williams avers that he did not consider it in deciding to terminate Lilly's employment. On this record, however, it has not established that claim beyond a genuine factual issue. A reasonable jury could view Lilly's negative 2018 review as part of Scott's efforts to rid himself of Lilly.

5.   Jones testified that such transactions should be invoiced rather than placed on a card. (Doc. 26-3, pgID 62-64).

6.   Jones disagreed, testifying that buying the same item purchased “multiple days behind each other, a couple days in a row or something like that” would violate NSC's policy. (Doc. 26-3, pgID 997-98).

7.   The Fluid Concepts transaction would appear to fit within this exception.

8.   NSC argues that Sanders’ testimony is inadmissible hearsay. That argument fails because “Rule 801(d)(2) excludes from the rule against hearsay those statements that are ‘offered against an opposing party’ and that were either made ‘by the party,’ made ‘by a person whom the party authorized to make a statement on the subject,’ or made ‘by the party's agent․’ ” Gjokaj v. United States Steel Corp., 700 F. App'x 494, 502 (6th Cir. 2017).

James G. Carr, Sr. United States District Judge