Doris Keeton v. Morningstar, Incorp , 667 F.3d 877 ( 2012 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 11-2298
D ORIS K EETON,
Plaintiff-Appellant,
v.
M ORNINGSTAR, INC.,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 10-cv-05502—Amy J. St. Eve, Judge.
A RGUED D ECEMBER 8, 2011—D ECIDED JANUARY 13, 2012
Before M ANION, R OVNER and T INDER, Circuit Judges.
R OVNER, Circuit Judge. Doris Keeton filed an employ-
ment discrimination suit against her employer,
Morningstar, Inc., alleging race discrimination and re-
taliation in violation of 42 U.S.C. § 1981 and 42 U.S.C.
§ 2000e, et seq. Keeton failed to file a timely response
to Morningstar’s motion for summary judgment, and
the court granted judgment in favor of Morningstar.
Keeton contends that the court erred in refusing to ac-
cept her late filing of a response to Morningstar’s
2 No. 11-2298
motion, and that Morningstar was not entitled to sum-
mary judgment. We affirm.
I.
Because Keeton failed to file a response to
Morningstar’s Local Rule 56.1 statement of facts in the
district court, we credit Morningstar’s uncontroverted
version of the facts to the extent that it is supported by
evidence in the record. FTC v. Bay Area Business Council,
Inc., 423 F.3d 627, 634 (7th Cir. 2005) (when a party fails
to comply with the local rule requiring a response to a
statement of undisputed material facts, the court may
rely on the opposing party’s statement to the extent that
it is supported by citations to relevant evidence in
the record). Morningstar is a company that pro-
vides independent investment research. Keeton, who is
African-American, began working for the company in
August 2002 as a “Compliance Consultant” in the legal
department. The company also employed two other
Compliance Consultants, Lisa Derner and Rita
Bentzler, who are both white. All three reported to
Morningstar’s Chief Compliance Officer, Scott Schilling.
Each Compliance Consultant was assigned to one of
Morningstar’s three subsidiaries. Keeton was assigned to
Ibbotson Associates. As a Compliance Consultant, Keeton
was charged with ensuring that Ibbotson complied with
all federal securities laws.
When hiring new employees, Morningstar determines
its initial salary offers based on market factors, including
the availability of qualified candidates and their salary
No. 11-2298 3
requirements. The company does not have formal policies
in place for determining salaries of Compliance Consul-
tants, but generally does not factor seniority into salary
decisions. All three Compliance Consultants were
lateral hires with several years of experience at other
firms before coming to Morningstar. All three were
offered higher base salaries than they were making with
their former employers. Derner was the last of the three to
join Morningstar. At the time of Derner’s hiring in
April 2008, Keeton had a base salary of $68,000 and
Bentzler was earning $65,000. Derner, who earned $68,000
per year at her former employer, demanded a base
salary of $70,000, and Morningstar met the demand.
In February 2010, Morningstar’s General Counsel
sought Schilling’s input regarding potential salary in-
creases for the three Compliance Consultants. Based on
their 2009 performance evaluations, Schilling recom-
mended salary increases for all three women, but sug-
gested to the General Counsel that Keeton receive
the smallest increase because her performance review
identified several areas for improvement. As of July 2010,
Keeton’s base salary was raised to $70,000, Derner’s
salary was increased to $73,000 and Bentzler’s salary
was set at $70,150. Keeton thus went from the middle
of the group to the bottom by $150 per year.
In February 2010, Keeton and Bentzler each com-
plained to company management about the other. Keeton
first reported to Schilling and to Morningstar’s human
resources director, Cathi Rezy, that Bentzler was
watching her and keeping track of her activities on a
4 No. 11-2298
yellow notepad. Rezy investigated the complaint and
interviewed Bentzler but never found the notepad. Sub-
sequently, Bentzler complained that Keeton was
engaged in workplace misconduct. Rezy did not inter-
view Keeton regarding Bentzler’s allegations, but no
action was ever taken against Keeton because of
Bentzler’s complaint. Morningstar resolved the dispute
between the two employees by allowing them to work
away from each other, with personnel from their
assigned subsidiaries rather then with the compliance
team. Keeton believed that Morningstar’s manage-
ment displayed favoritism towards Bentzler during
these incidents by spending more time speaking with
her and consoling her. Keeton also found the work-
place more tense after these incidents.
Approximately one month later, in March 2010,
Keeton went on disability leave for a medical problem
unrelated to the lawsuit. In June 2010, Keeton filed a
complaint with the Equal Opportunity Employment
Commission (“EEOC”), alleging for the first time that
the company discriminated against her on the basis of
race by paying her less than a non-minority co-worker
who had less seniority and fewer qualifications. After
receiving her right-to-sue letter from the EEOC, Keeton
filed this lawsuit in August 2010. In her complaint,
Keeton alleged that Morningstar discriminated against
her by paying her less than similarly situated white
employees, and that the company retaliated against
her when she complained about being treated differently
than her white co-workers. In November 2010, Keeton
responded to a discovery request by producing docu-
No. 11-2298 5
ments to Morningstar. The documents included a
number of private, confidential emails among and
between other Morningstar employees, including attorney-
client privileged documents. Morningstar conducted an
investigation to determine how Keeton came to be in
possession of these documents. In January 2011,
in response to questions from an internal auditor at
Morningstar, Keeton stated that she came across the
emails while using Morningstar’s email surveillance
software for legitimate business purposes. Morningstar
concluded its investigation with a determination that,
although Keeton did not have the authority to access
the emails and had used poor judgment in her use of
the surveillance software, she had not intended to
violate company policy. Morningstar therefore took no
disciplinary action against Keeton on the basis of this
incident. Keeton amended her complaint after this
incident to add a count for retaliation based on
Morningstar’s actions in investigating the email matter.
On March 25, 2011, after the close of discovery,
Morningstar moved for summary judgment. The district
court set a briefing schedule that required Keeton to
respond to the motion by May 3, 2011, and Morningstar
to reply by May 17, 2011. The deadline that the court set
for Keeton’s response came and went with no acknowl-
edgement or action from Keeton. Nine days later, on
May 12, the district court contacted Keeton’s attorney
to determine whether Keeton intended to file a re-
sponse. Keeton’s attorney assured the court that a re-
sponse would be filed the following day, May 13.
No brief was filed on May 13. Ten days later, on May 23,
6 No. 11-2298
the district court entered judgment in favor of
Morningstar. Twenty-three minutes before the court
entered its order granting judgment, Keeton filed a
motion for leave to file her summary judgment re-
sponse instanter. Later that afternoon, the court denied
Keeton’s motion as moot. Keeton appeals.
II.
On appeal, Keeton contends that the district court
erred in denying as moot her motion for leave to file
her summary judgment response instanter. Keeton also
contests the court’s judgment on the merits.
A.
Keeton argues that the court clearly erred when it
ruled that her motion for leave to file her summary judg-
ment response was moot. She contends that a case is
moot only when there are no live issues. Her case was
not moot, she continues, because her motion was filed
before the court granted judgment in favor of Morning-
star. It is true that a case is moot when the issues
presented are no longer live or the parties lack a legally
cognizable interest in the outcome. United States Parole
Commission v. Geraghty, 445 U.S. 388, 396 (1980); Gates
v. City of Chicago, 623 F.3d 389, 413 (7th Cir. 2010). But
Keeton fundamentally misunderstands the district
court’s action and the meaning of the court’s words.
The court did not find that the case was moot in the
sense that it was non-justiciable or that the court lacked
No. 11-2298 7
jurisdiction over the claims. Indeed, the court decided
the case on the merits.
The court found instead that Keeton’s motion was
moot in the procedural sense because it came too late.
The court’s entry of the judgment and Keeton’s filing
of her motion occurred virtually simultaneously. The
docketing of the motion and the docketing of the
court’s judgment were separated by a mere twenty-
three minutes. Although there is no way to tell from
the docket whether the court became aware of Keeton’s
motion before or after the entry of the judgment, the
end result is the same. The parties agree that the
motion was filed before the judgment was entered.
“Final judgment necessarily denies pending motions[.]”
Dunn v. Truck World, Inc., 929 F.2d 311, 313 (7th Cir.
1991). Thus, Keeton’s motion to file a summary judg-
ment response was implicitly denied by the final judg-
ment. The court’s Memorandum Opinion and Order
may also be read as denying Keeton’s motion and dis-
posing of any pending motions. See Keeton v. Morningstar,
Inc., 2011 WL 1990448 (May 23, 2011) (hereafter “Opinion”).
The court granted Morningstar’s motion for summary
judgment and “dismisse[d] this lawsuit in its entirety.”
Opinion, at *1. Moreover, in a footnote, the court specified
that it would deem admitted the defendant’s Local
Rule 56.1(a)(3) statement of facts because Keeton had
failed to file a Local Rule 56.1(b)(3) response. Opinion, at *1
n.1. If any doubt remained that the court was denying
the pending motion, the minute order accompanying
the Opinion stated that “[a]ll pending dates and dead-
lines are stricken.” R. 45. In an apparent abundance
8 No. 11-2298
of caution, the court, later that afternoon, made an addi-
tional entry on the docket, denying Keeton’s motion to
file her summary judgment response instanter as “moot,”
and clarifying that the parties need not appear on June 1,
2011, the date specified in Keeton’s Notice of Motion.
R. 8. Given that the final judgment had already effected
the denial of Keeton’s motion, that final docket entry
accurately described the motion as procedurally moot.
The court’s final docket entry also confirms that the
result would be the same whether the court became
aware of Keeton’s motion before or after entering its
order on summary judgment. By adding to the docket
an express ruling on the motion, the court clarified for
the parties and for this court that the motion, filed so
close in time to the judgment, was not simply over-
looked but was denied on its merits.
The only question remaining is whether the district
court abused its discretion in denying Keeton’s motion
for leave to file her summary judgment response
instanter. See Raymond v. Ameritech Corp., 442 F.3d 600,
606 (7th Cir. 2006). Federal Rule of Civil Procedure 6(b)
gives courts discretion (with certain exceptions not ap-
plicable here) to grant extensions of time when deadlines
are missed because of excusable neglect. See Fed. R. Civ.
P. 6(b)(1)(B) (“When an act may or must be done within
a specified time, the court may, for good cause, extend
the time . . . on motion made after the time has expired
if the party failed to act because of excusable neglect.”);
Raymond, 442 F.3d at 606. In his motion for leave to file
Keeton’s summary judgment response instanter, Keeton’s
lawyer stated that he was “unable to file her Response
No. 11-2298 9
timely for the following reasons.” Counsel then listed
twenty-two dates between April 11 and May 16, 2011,
along with nothing more than case or client names and
courts. We presume he meant that his obligations in
these other matters kept him from complying with the
May 3, 2011 deadline in this case. But “it is widely
accepted that neglect due to a busy schedule is not excus-
able.” Harrington v. City of Chicago, 433 F.3d 542, 548
(7th Cir. 2006). Moreover, counsel does not explain why
he was unable to work on the response from March 3,
when Morningstar filed its motion, until April 11, when
counsel apparently became very busy with other cases.
The motion also references a medical emergency
counsel suffered on May 16, 2011, when, after ex-
periencing pain in his right arm, he was diagnosed with
a broken arm. Counsel explained that he is right-
handed and that his ability to type pleadings was
impaired during this time. Although a medical emergency
could cause excusable neglect, counsel failed to demon-
strate that his illness was of such a magnitude that he
could not, at a minimum, request an extension of time to
file his response. See Dickerson v. Board of Educ. of Ford
Heights, Ill., 32 F.3d 1114, 1118 (7th Cir. 1994) (severe
illness may constitute excusable neglect for failure to file
a timely appeal). Indeed, from the face of his motion,
it is apparent that he was actively representing other
clients until May 16. Moreover, when the court called
counsel on May 12 to inquire whether a response was
forthcoming, counsel gave no indication that anything
was amiss, and instead affirmatively represented that
the response would be filed the next day. When the
10 No. 11-2298
response was still not filed ten days later, the court
was well within its discretion to deny the motion for
leave to file the summary judgment response instanter.
See Raymond, 442 F.3d at 604 (district courts are entitled
to expect strict compliance with Local Rule 56.1).
Clearly, the court did not draft its well-reasoned, eleven-
page Opinion and the accompanying judgment in the
twenty-three minutes after Keeton filed her motion. The
court had already gone through the effort of analyzing
the case and drafting its summary judgment Opinion
before Keeton’s lawyer attempted to file a late response.
The court had allowed Keeton more than two months
to respond to the motion, and had given counsel a gen-
erous second chance to comply with the court’s dead-
line. Counsel had already failed to appear at a status
hearing and also failed to complete discovery within
the allotted time. Instead, after Morningstar moved for
summary judgment and more than a month after the
close of discovery, counsel moved to reopen dis-
covery and readjust all deadlines. District courts have
considerable discretion to manage their dockets and to
require compliance with deadlines. Gonzalez v. Ingersoll
Milling Mach. Co., 133 F.3d 1025, 1030 (7th Cir. 1998);
Reales v. Consolidated Rail Corp., 84 F.3d 993, 996 (7th
Cir. 1996). Under the circumstances, the court was well
within its discretion to refuse to allow Keeton’s late
filing of her response to Morningstar’s motion for sum-
mary judgment.
No. 11-2298 11
B.
We turn to the merits of the court’s summary judgment
ruling, which we review de novo. Norman-Nunnery v.
Madison Area Technical Coll., 625 F.3d 422, 428 (7th Cir.
2010). As we noted above, because Keeton failed to
timely respond to Morningstar’s Local Rule 56.1 state-
ment of uncontested facts, we deem those facts admitted
to the extent that Morningstar’s statement is supported
by evidence in the record. Bay Area Business Council,
423 F.3d at 634; Raymond, 442 F.3d at 608. “However,
a nonmovant’s failure to respond to a summary
judgment motion, or failure to comply with Local Rule
56.1, does not, of course, automatically result in judg-
ment for the movant.” Raymond, 442 F.3d at 608; Reales,
84 F.3d at 997. Morningstar must still demonstrate that
it is entitled to judgment as a matter of law. Raymond,
442 F.3d at 608. Although Keeton has not provided her
own version of the facts, we still view all of the facts
asserted by Morningstar in the light most favorable to
Keeton, the nonmoving party, and we draw all rea-
sonable inferences in her favor. Adams v. Wal-Mart
Stores, Inc., 324 F.3d 935, 937 (7th Cir. 2003); Curran v.
Kwon, 153 F.3d 481, 485-86 (7th Cir. 1998).
Our review of the record reveals that there is no
direct evidence of discrimination or retaliation. We there-
fore will employ the burden-shifting analysis set forth
in McDonnell-Douglas Corp. v. Green, 411 U.S. 792 (1973).
Under the burden-shifting analysis, a plaintiff must
first establish a prima facie case of discrimination by
demonstrating that (1) she is a member of a protected
12 No. 11-2298
class; (2) she met her employer’s legitimate job expecta-
tions; (3) she suffered an adverse employment action;
and (4) similarly situated employees outside of the pro-
tected class received more favorable treatment. Everroad
v. Scott Truck Systems, Inc., 604 F.3d 471, 477 (7th Cir.
2010); Lucas v. PyraMax Bank, FSB, 539 F.3d 661, 666
(7th Cir. 2008). If the plaintiff establishes a prima facie
case of discrimination, the burden then shifts to the
employer to offer a non-discriminatory reason for the
adverse employment action. Everroad, 604 F.3d at 477. If
the employer does so, the burden shifts back to the
plaintiff to submit evidence demonstrating that the em-
ployer’s explanation is a pretext. Everroad, 604 F.3d at
477; Gates v. Caterpillar, Inc., 513 F.3d 680, 690 (7th Cir.
2008). Although the question of pretext normally arises
only after the plaintiff has established a prima facie case
of discrimination and the employer has countered with
a legitimate non-discriminatory reason for the adverse
action, we may skip over the initial burden-shifting of
the indirect method and focus on the question of pre-
text. Everroad, 604 F.3d at 478; Bodenstab v. County of Cook,
569 F.3d 651, 657 (7th Cir. 2009), cert. denied, 130 S. Ct. 1059
(2010).
Morningstar presented evidence of legitimate, non-
discriminatory reasons for any salary differences
among the Compliance Consultants. In particular,
Morningstar asserted that Keeton’s base salary was
lower than one of her white co-workers (recall
that initially Keeton earned more than one of her
white counterparts and less than the other) because
Morningstar set initial salaries based on market forces.
No. 11-2298 13
That is, Morningstar offered all three Compliance Con-
sultants more than they had been earning at their
prior positions in order to induce them to come to
Morningstar. Market forces are a legitimate, non-dis-
criminatory reason for differences in base salary for ex-
perienced, lateral hires. See Cullen v. Indiana Univ. Bd. of
Trs., 338 F.3d 693, 703 (7th Cir. 2003). When Morningstar
increased the salaries of the three Compliance
Consultants, it did so based on performance reviews,
another legitimate, non-discriminatory reason for the
differences in pay. To demonstrate pretext, Keeton must
show that her employer did not honestly believe in the
reasons it gave for setting salaries. Everroad, 604 F.3d at
478-79. But Keeton has no evidence that any of
Morningstar’s explanations are a pretext for race dis-
crimination. Her discrimination claim therefore fails
as a matter of law.
There is no direct evidence of retaliation and so we
turn to the indirect proof analysis for those claims as
well. In order to make out a claim for retaliation, Keeton
must demonstrate that she engaged in statutorily
protected activity, performed her job to her employer’s
legitimate expectations, suffered an adverse employ-
ment action, and was treated less favorably than
similarly situated employees who did not engage in that
protected activity. Everroad, 604 F.3d at 481; Dear v.
Shinseki, 578 F.3d 605, 610-11 (7th Cir. 2009). Keeton’s
retaliation claims fail because she is unable to establish
a prima facie case. For her claim of retaliation that
occurred before she filed suit against Morningstar, she
has produced no evidence that she engaged in protected
14 No. 11-2298
activity. For her claim of retaliation that occurred after
she sued Morningstar, Keeton has offered no evidence
that she suffered any adverse employment action. In the
first incident, Keeton complained that a co-worker was
taking notes about her activities. But when she reported
this incident, she never alerted her employer that
this incident was related to race. And when the same
employee complained about Keeton, Morningstar in-
vestigated the claims, determined that they were un-
founded and did not take any action against Keeton
based on the accusations. Keeton never complained to
her employer that any actions taken against her by co-
workers or by anyone at Morningstar were related to
race and nothing about the incidents themselves gave
any hint that race was at issue. Thus, Keeton cannot
show that she engaged in protected activity.
Keeton also alleges that the company retaliated against
her when it investigated her for misuse of Morningstar’s
email surveillance software. In this instance, though,
Keeton has no evidence that the investigation was
anything other than a legitimate attempt to discover
whether Keeton had misused the software. More impor-
tantly, no adverse action of any kind was taken against
Keeton as a result of the investigation and the investiga-
tion itself was not an adverse action. The district court
was therefore correct to grant judgment in favor of
Morningstar on Keeton’s retaliation claims.
III.
In sum, the district court did not abuse its discretion
when it denied Keeton’s motion for leave to file a late
No. 11-2298 15
response to Morningstar’s motion for summary judg-
ment. The court correctly granted judgment in favor on
Morningstar on Keeton’s claim of discrimination
because she failed to produce any evidence calling into
question Morningstar’s legitimate, non-discriminatory
reasons for any salary differential between Keeton and
her white co-workers. Finally, the court correctly
granted judgment in favor of Morningstar on Keeton’s
retaliations claims for the reasons stated above.
A FFIRMED.
1-13-12