Smith, Rebecca C. v. Caterpillar Inc ( 2003 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 02-1076
REBECCA C. SMITH,
Plaintiff-Appellant,
v.
CATERPILLAR, INC.,
Defendant-Appellee.
____________
Appeal from the United States District Court
for the Central District of Illinois.
No. 99 C 1254—Michael M. Mihm, Judge.
____________
ARGUED MAY 30, 2002—DECIDED JULY 31, 2003
____________
Before FLAUM, Chief Judge, and HARLINGTON WOOD, JR.,
and MANION, Circuit Judges.
FLAUM, Chief Judge. In August 1999 Rebecca Smith
charged her former employer, Caterpillar, Inc., with gender
discrimination and retaliation in violation of Title VII, 42
U.S.C. § 2000e et seq. Smith’s allegations arise from conduct
that occurred in 1991 during her 60-day probationary
employment with Caterpillar as a fire inspector trainee.
After twice denying Caterpillar’s motion for summary
judgment, the district court granted its motion for recon-
sideration, finding that Caterpillar had presented a valid
laches defense to Smith’s charges. Smith moved for recon-
sideration, was denied, and now appeals. We affirm.
2 No. 02-1076
I. BACKGROUND
Rebecca Smith began working as a fire inspector at Cat-
erpillar’s East Peoria, Illinois, facility on January 6, 1991.
Under the applicable collective bargaining agreement, the
first 60 days of her employment were probationary. During
this time Smith received training and supervision from a
number of the company’s more experienced fire inspectors.
On two different occasions during her probationary period
Smith’s training coordinator, Gary Shilling, evaluated her
performance and reported deficiencies to the department’s
chief inspector, Ralph Allsop. After 60 days, on March 7,
1991, Allsop fired Smith for unsatisfactory performance.
Caterpillar’s East Peoria Facility personnel services direc-
tor, Robert Buchanan, approved Smith’s termination.
On March 20, 1991, Smith filed gender discrimination
charges with the Illinois Department of Human Rights
(“IDHR”), which were cross-filed with the Equal Employ-
ment Opportunity Commission (“EEOC”). Instead of
seeking a right-to-sue letter from the EEOC, which Smith
could have requested from the federal agency 180 days after
filing her charges, Smith chose instead to pursue her claims
through the Illinois state administrative process. IDHR
investigated Smith’s charges and twice issued findings of
lack of substantial evidence for her gender discrimination
and sexual harassment claims. Smith sought review of
IDHR’s findings with the Illinois Human Rights Commis-
sion (“IHRC”), and IDHR ultimately issued findings of
substantial evidence for Smith’s charges on August 16,
1996. Smith then filed a formal complaint with IHRC and
the parties commenced discovery. In January 1998, two
days before her scheduled evidentiary hearing with IHRC,
Smith moved to dismiss her state claims, stating that she
planned to obtain a right-to-sue letter from the EEOC and
pursue her claims in federal court.
Though Smith asserts that she requested a right-to-sue
letter from the EEOC in January 1998, the EEOC took no
No. 02-1076 3
action and Smith made no effort to follow-up on her request
for more than one year. In May 1999 Smith submitted a
second request and the EEOC issued her a right-to-sue
letter on May 19, 1999. On August 17, 1999, when her 90-
day period for bringing suit had nearly expired, Smith filed
a complaint in federal court, charging Caterpillar with
gender discrimination and retaliation in violation of Title
VII. Caterpillar filed its first motion for summary judgment,
raising the defense of laches as a bar to Smith’s claims.
Caterpillar claimed that it had suffered prejudice from
Smith’s delay in filing her lawsuit because witnesses’
memories had faded, records had been destroyed, and the
company had been exposed to disproportionate years of
back pay. The district court initially found no material
prejudice to Caterpillar, though it found Smith’s nearly
eight and one-half year delay in bringing suit inexcusable,
and gave Caterpillar leave to refile its summary judgment
motion upon presentation of new evidence of prejudice.
Caterpillar next filed its second motion for summary
judgment, asserting laches as a defense, reiterating its
earlier arguments about prejudice, and submitting new
evidence that key witnesses had died, retired, or moved out
of state. The district court denied this motion as well,
telling Caterpillar that it had to show not only that certain
witnesses could not be located or were retired from the
company, but also that they were unwilling to testify.
Caterpillar then filed a motion to reconsider, submitting
still more evidence of prejudice, such as affidavits of rele-
vant witnesses verifying their faded memories and out-of-
state residency and information concerning the missing or
destroyed personnel records. This time, the district court
granted Caterpillar’s motion to reconsider, holding that the
company had established a convincing laches defense which
entitled it to summary judgment on Smith’s claims. Smith
filed a motion to reconsider of her own, which was denied by
the district court, and she now appeals.
4 No. 02-1076
II. DISCUSSION
The defense of laches bars an action when the plaintiff’s
delay in filing the claim (1) is unreasonable and inexcus-
able, and (2) materially prejudices the defendant. Jeffries v.
Chicago Transit Authority, 770 F.2d 676, 679 (7th Cir.
1985); Cook v. City of Chicago, 192 F.3d 693, 695 (defining
laches as “an unreasonable delay in pressing one’s rights
that prejudices the defendant”). Essentially the equitable
substitute for a statute of limitations, laches serves to pro-
tect defendants from prejudice caused by stale evidence,
prolonged uncertainty about legal rights and status, and
unlimited exposure to liability damages. See Cook, 192 F.3d
at 696. In this case Smith does not challenge the district
court’s determination that her eight and one-half year delay
in filing her Title VII claim was unreasonable and inexcus-
able; however, she insists that laches cannot bar her claim
because Caterpillar suffered no material prejudice as a
result of her delay. Smith also argues that her case cannot
be resolved on summary judgment because genuine issues
of material fact exist surrounding both her termination and
Caterpillar’s laches defense. But while laches often involves
questions of fact, see Cook, 192 F.3d at 696, it is neverthe-
less appropriate for summary judgment where, as here, the
facts necessary for determining whether the defendant
suffered material prejudice are not genuinely disputed,
Jeffries, 770 F.2d at 679. Since the trial court enjoys consid-
erable discretion in deciding whether to apply the equitable
doctrine of laches in the first instance, we will not disturb
the court’s decision unless we discover an abuse of that
discretion. Hot Wax, Inc. v. Turtle Wax, Inc., 191 F.3d 813,
819 (7th Cir. 1999).1
1
Of course, our review of the record for genuine issues of mate-
rial fact related to Smith’s Title VII claims remains de novo since
this case comes to us on summary judgment; it is only the district
(continued...)
No. 02-1076 5
In this case the district court’s ultimate decision to credit
Caterpillar’s laches defense and grant the company’s sum-
mary judgment motion was not an abuse of discretion. The
court cited several reasons for concluding that Caterpillar
had been materially prejudiced by Smith’s delay, most
notably that: (1) the testimony of several pertinent wit-
nesses would be difficult, if not impossible, for Caterpillar
to procure; (2) the witnesses’ memories have faded over the
several years and they would be unable to recollect specific
details of Smith’s employment with Caterpillar; (3) the
inadvertent loss, or even intentional destruction in the
course of business, of relevant personnel documents relating
to Smith’s employment would seriously impair Caterpillar’s
ability to present a defense to Smith’s claims; and (4)
the exposure of Caterpillar to liability for back pay has
accrued steadily during Smith’s delay in filing her lawsuit.
Before we look more closely at the district court’s reasons,
we note that in general the decision to apply the doctrine of
laches lies on a sliding scale: the longer the plaintiff delays
in filing her claim, the less prejudice the defendant must
show in order to defend on laches. Jeffries, 770 F.2d at 680;
Hot Wax, 191 F.3d at 361-62. Here, given Smith’s inexcus-
able eight and one-half year delay, we recognize that
Caterpillar need not present a mountain of evidence estab-
lishing prejudice in order to succeed on its laches defense.
Still, at minimum we require a showing of prejudice that is
material, meaning it affects the substantial rights of the
defendant to such a degree that it justifies the equitable
1
(...continued)
court’s application of the laches defense that we review for abuse
of discretion. See Hot Wax, 191 F.3d at 819; Cook, 192 F.3d at 696;
Cannon v. University of Health Sciences/The Chicago Medical
School, 710 F.2d 351, 359 (7th Cir. 1983).
6 No. 02-1076
relief of barring the plaintiff’s claims. See Jeffries, 770 F.2d
at 680 (requiring merely “some prejudicial change in the
condition or regulations of the . . . parties” to establish
material prejudice in private discrimination suit) (internal
quotations omitted). Based on the record before us and in
deference to the district court’s decision to credit Caterpil-
lar’s laches defense, we are convinced that Caterpillar has
produced enough evidence of material prejudice to bar
Smith’s Title VII claims against the company.
First, Caterpillar submits that several key employ-
ees—persons who participated directly in the hiring, super-
vising, training, and firing of Smith—are either deceased,
out of the court’s jurisdiction, or retired and out of contact
with the company. Caterpillar maintains that Title VII
cases are highly fact-dependent and that the credibility of
pertinent witnesses is necessary to obtaining a favorable
verdict. Although Smith argues that the unavailability of
any particular witness is neither sufficient to establish
prejudice nor the result of any delay on her part, the fact
that Caterpillar “faces the hardship of locating the former
employees and procuring their testimony” years after the
company no longer has any reason to stay in contact with
them demonstrates prejudice to Caterpillar. Jeffries, 770
F.2d at 681. In particular contention between the parties is
the availability of Ralph Allsop, the principal decision-
maker in Smith’s termination. At the time of the district
court’s decision to grant summary judgment to Caterpillar,
neither party had made contact with Allsop and both
believed he was living with his son in Texas; subsequently,
Smith located Allsop in a campground in East Peoria,
Illinois. Smith argues that her ability to find Allsop within
the jurisdiction means he is not unavailable as a witness,
while Caterpillar maintains (by sworn declaration of Allsop)
that Allsop’s presence at the campground was temporary
and that he intended to leave the state soon and had no
plans to return. Interesting as this issue may be, we need
No. 02-1076 7
not resolve it, for the law does not require Caterpillar to
prove the absolute unavailability of key witnesses as a
prerequisite for laches. Jeffries, 770 F.2d at 681. The
company has established that Allsop and other important
witnesses are difficult, if not entirely impossible, to locate,
and we believe that fact suggests material prejudice.
Second, Caterpillar argues that the memories of its key
witnesses have faded so that they can no longer recall the
relevant facts of Smith’s employment. The company asserts
that this loss of memory will significantly detract from their
credibility as witnesses for the defense. We have said that
in order to show prejudice from failed memories, a defen-
dant must show both that the memories have faded and
that the inability to recall information was caused by the
plaintiff ’s delay. EEOC v. Massey-Ferguson, 622 F.2d 271,
275 (7th Cir. 1980). Smith contends that Caterpillar has not
made a showing that her delay caused any loss of memory,
but Caterpillar submitted the affidavits of four key wit-
nesses who say they cannot now remember the specific
details of Smith’s employment with the company. Though
Caterpillar has not proven that this loss of memory is due
entirely to Smith’s delay, we are confident that the passage
of eight and one-half years is a contributing factor to their
failed memories, particularly in light of the brief period of
time (60 days) Smith worked at the company and the num-
ber of trainees (from 25 to hundreds) hired, supervised, and
fired by these particular witnesses during their employment
with Caterpillar.2
2
We pause to note that in making this determination we are not
resolving any genuine issue of material fact with respect to the
witnesses’ actual memories or the content of their testimony;
rather, we are deciding only that this particular factor, as one of
several underlying the district court’s decision to apply the doc-
trine of laches, has reasonable factual support in the record.
8 No. 02-1076
Third, Caterpillar admits that relevant performance
reviews, as well as attendance records and materials from
training seminars on sexual harassment, have been inad-
vertently lost or intentionally destroyed as part of routine
record maintenance. Caterpillar claims that without this
evidence its ability to present a defense to Smith’s Title VII
charges will be seriously compromised. As a matter of law,
Caterpillar does not have an obligation to maintain its
employee records indefinitely after the filing of a charge
with the EEOC. Jeffries, 770 F.2d at 681. However, Smith
argues that Caterpillar has not proven that it did not
purposefully destroy these documents during the time it
was required to keep them. As we found the case to be with
the unavailability of certain key witnesses, we find that the
passage of so many years due to Smith’s delay in bringing
charges undoubtedly contributed to the unavailability of
critical physical evidence. Additionally, we find that the
lack of both kinds of evidence hurts Caterpillar’s ability to
mount a defense and adds to the prejudice suffered by the
company.
Finally, Caterpillar asserts that its potential liability for
back pay has increased each day as this suit has lingered
on. We have recognized that exposure to disproportionately
high back pay due to plaintiff’s delay is “the kind of palpa-
ble prejudice that . . . can justify a finding of laches.” Cook,
192 F.3d at 696. Smith argues that this factor does not
necessarily result in material prejudice because back pay is
an equitable remedy within the discretion of the court. The
district court acknowledges as much in its decision, stating
that while “it would be within the Court’s power to fashion
some sort of equitable limitation on any back pay award to
mitigate the effects of the delay, this possibility does not
eliminate the availability of the laches defense.” We not
only agree with this particular point, but find that the
district court’s application of the doctrine of laches to this
case was in no way an abuse of discretion. Moreover, our
No. 02-1076 9
conviction is bolstered, not weakened, by the fact that the
district court twice denied Caterpillar’s motion for summary
judgment; to us this shows that the court’s ultimate
decision to bar Smith’s claims on laches grounds was not
made without careful and full consideration of the facts and
circumstances before the court.
III. CONCLUSION
Caterpillar established a valid defense of laches by prov-
ing it had suffered material prejudice as a result of Smith’s
unreasonably lengthy delay in filing her Title VII claim
against the company. We therefore conclude that Smith’s
claims are barred by laches and affirm the district court’s
grant of summary judgment in favor of Caterpillar.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—7-31-03