In the

United States Court of Appeals

For the Seventh Circuit

No. 10-3388

AARON SMEIGH,

Plaintiff-Appellant,

v.

JOHNS MANVILLE, INC.,

Defendant-Appellee.

Appeal from the United States District Court

for the Southern District of Indiana, Indianapolis Division.

No. 1:09-cv-414-TWP—Tanya Walton Pratt, Judge.

ARGUED APRIL 6, 2011—DECIDED JUNE 29, 2011

Before FLAUM, EVANS, and TINDER, Circuit Judges.

TINDER, Circuit Judge. Aaron Smeigh brings this diversity suit against his former employer, Johns Manville (JM),

for retaliatory discharge and civil conversion under

Indiana law. He alleges that JM wrongfully terminated his

employment for filing a workers’ compensation claim and

unlawfully retained his personal property after his termination. JM moved for summary judgment on Smeigh’s

claims and the district court granted the motion. Smeigh

appeals.
2 No. 10-3388

We affirm. Smeigh has not presented sufficient evidence

upon which a reasonable jury could conclude that he was

fired in retaliation for filing workers’ compensation.

Although he was terminated shortly after his workplace

injury, the evidence shows that JM terminated him for his

post-accident statement that he might not pass a drug test

(he later passed the drug test) and subsequent refusal to

sign an agreement presented by JM requiring him to

undergo counseling and random drug testing (at Smeigh’s

expense) to retain his job. Smeigh made no showing that

JM’s proffered reason for terminating him was a lie to

cover up retaliation. 

Smeigh similarly has not presented evidence that JM

knowingly exerted unauthorized control over his property.

It was company protocol after termination to sort through

an employee’s belongings to separate personal property

from company property. Smeigh didn’t object when

Bernice Wilson, a JM employee and union secretary,

indicated she would clean out his locker and temporarily

take possession of his belongings. His property (tools) was

then stolen from Wilson’s office. Smeigh, however, never

informed JM that Wilson still had possession of his tools or

that he objected to her temporary possession of them. He

waived any claim to vicarious liability and without providing some evidence that JM had the requisite mens rea,

Smeigh’s claim fails as a matter of law.

I. Background

Smeigh started working for JM in 1994 and throughout

his employment belonged to a union. Smeigh was an

excellent, reliable, and tireless worker. He was considered
No. 10-3388 3

knowledgeable, had a spotless employment record, and

would often work overtime hours—50 to 60 hours a week.

On September 20, 2008, Smeigh suffered a workplace

injury—he severed the tip of his finger while moving a

fiberizer cart. While waiting for an ambulance in the

parking lot, he spoke to his direct supervisor, Bill Seamans.

JM enforced a policy that required workers injured on

the job to submit to drug testing. Smeigh testified as

follows:

Bill asked me if I would have any problems passing

a drug test. And I told him I should not have any

problems passing a drug test, because I do not use

drugs. And I said if by any chance that I was to

come up inconclusive or positive, it’s not because

I was on any drugs. And he asked me what I meant

by that. And I told him about a week prior I had

went into a room where some pot had been

smoked. And I did not know if it would show up

in my system as a positive result as, you know,

secondhand breathing. 

Acting plant manager Matt Weber arrived on the scene as

the ambulance took Smeigh to the hospital. Seamans

explained to Weber the nature of the injury and told Weber

that Smeigh might potentially fail a drug test. Weber did

not talk to Seamans about the incident after having this

conversation.

Weber went to the hospital with Smeigh. The parties

dispute the content of their conversation at the hospital.

Smeigh claims they did not talk about marijuana or drug

use. Weber claims that Smeigh told him that he (Smeigh)
4 No. 10-3388

Smeigh contends that JM had three different substance abuse 1

policies: one in the employee handbook (July 1998), one titled

“Uniform Substance-Free Workplace Policy,” and the one

quoted here dated July 2007. Smeigh didn’t properly authenticate the first two policies, and therefore, they aren’t admissible.

Even if admissible, the evidence showed that the July 2007

policy was in effect at the time of the accident and this was the

policy Weber referenced.

had smoked marijuana over Labor Day weekend. Because

this case comes to us on JM’ s motion for summary judgment, we take the facts in the light most favorable to

Smeigh and assume that Smeigh never admitted to smoking marijuana. Smeigh took a drug screen at the hospital

that came back negative. He had surgery a few days later

and after the surgery, Weber visited Smeigh and requested

that he go into work that afternoon. Upon the advice of his

doctors, Smeigh declined. Smeigh didn’t discuss workers’

compensation with JM. Instead, JM took the initiative and

filed for workers’ compensation on Smeigh’s behalf.

Despite Smeigh’s negative drug results, Weber decided

to investigate whether Smeigh’s “admission” was a

violation of JM’s substance abuse policy. The relevant

policy in effect stated:1

[T]he use, sale, possession, purchase or transfer of

illegal drugs while on or off the job is prohibited

and will not be tolerated. The off-the-job use of

alcohol or drugs in any manner that adversely

affects job performance will also not be tolerated.

Violation of this policy will result in disciplinary
No. 10-3388 5

measures against the offender and may result in

termination of employment.

. . . If an employee voluntarily comes forward and

identifies a substance abuse problem prior to an

investigation commenced by the company, employee assistance will be provided on a one-time

basis with no impact on job status . . . .

Weber contacted JM’s Human Resource Manager Gail

Threet and she determined that Smeigh had breached the

substance abuse policy based on what Weber told her. She

attested: “From my conversation with Weber, I understood,

while waiting for the ambulance, Smeigh told his direct

supervisor [the he] would not pass a drug test. I further

understood Smeigh discussed his use of marijuana with

Weber while Weber was at the hospital after the accident.”

Threet concluded that “Smeigh had made an involuntary

admission of illegal drug use and violated JM’s Substance

Abuse Policy.”

 JM decided not to terminate Smeigh as long as he signed

a Stipulation of Understanding. Weber met with union

representatives to discuss the Stipulation. On September 24

(four days after his injury), Smeigh attended a meeting

with JM management and union representatives where he

was presented with the Stipulation, which provided:

(1) Mr. Smeigh will be required to meet with an

EAP [employee assistance program] counselor and

sign appropriate release of information forms . . . .

(2) Mr. Smeigh must comply with and complete all

counseling recommendations referring to mind
6 No. 10-3388

altering chemicals. Verification of completion is

required. 

(3) Mr. Smeigh must submit to eight (8) random

drug and alcohol detection tests or test for

cause within twelve (12) months of returning to

work . . . . Any confirmed positive results will

result in termination. 

(4) All expenses not covered by treatment programs will be the responsibility of Mr. Smeigh.

(5) Any violation of this agreement as determined

by the Company will result in immediate termination of Mr. Smeigh, regardless of any special

circumstances that might surround the violation. 

During the meeting, no one mentioned workers’ compensation. 

Smeigh refused to sign the Stipulation even though he

was aware that not signing would likely result in termination. He reasoned that he never violated the substance

abuse policy and didn’t think JM was following proper

disciplinary procedures given his negative drug test results

and flawless work record. He also thought it was illegal

for JM to require him to pay for the requested drug testing.

JM terminated Smeigh and sent him the official termination letter on September 25. The letter indicated he was terminated for refusing to sign the Stipulation. When asked

if this was an accurate reason for his termination, Smeigh

responded: “Because I refused to sign the stipulation and

understand it, yes, that’s an accurate reason why I

was fired.” Later in his deposition, Smeigh testified that he
No. 10-3388 7

believed he was terminated because he was injured on the

job and had a lost-time accident. He testified: “[T]he

equipment that I was injured on was immediately shut

down for the next 12 hours, both lines. So they had 24

hours worth of downtime where they moved the drivers

over that I got hurt on, which to me states that they were

negligent on the installation of the drivers and were trying

to cover their butts . . . from OSHA.”

The union filed a grievance on behalf of Smeigh, but

didn’t arbitrate his case. Instead, the union called Smeigh

into a meeting in February 2009 to sign a Reinstatement

Agreement to settle the grievance. That agreement had

less onerous terms than the Stipulation. It required Smeigh

to submit to another drug screen upon withdrawal of his

grievance. If the test came back negative, JM would

reinstate Smeigh with full seniority, but not back pay. If

reinstated, Smeigh would be subject to a maximum of four

random drug tests over the next two years; JM agreed to

pay all costs of the drug tests. The union encouraged

Smeigh to sign, but Smeigh refused because he believed

that JM “had no grounds” to require him to sign the

agreement, and he did not want to blemish his work

record. (At oral argument, counsel for Smeigh also pointed

to the fact that the agreement didn’t provide back pay as a

basis for Smeigh’s refusal to sign. Of course, counsel’s

argument cannot be a substitute for record evidence). 

At the time of his termination, Bernice Wilson, as union

recording secretary, informed Smeigh that the union and

company would be cleaning out his lockers and toolboxes,

and that he would then get his personal property back.
8 No. 10-3388

Smeigh acknowledged that when employees are terminated, JM must separate their personal property from

company property. Smeigh did not raise the issue of his

personal property with JM because he “assumed that [he]

would be getting [his] job back after the grievance process,

after it went to arbitration.” Smeigh’s locker was cleaned

out and Wilson took possession of his property. Smeigh

later contacted Wilson about his property. He testified:

I had inquired about my tools with Bernice Wilson.

And she said that she had sent a few [personal]

items home . . . . But as far as my tools, she informed me that they were in her office, and that

she needed to go through them. Then about a week

later, she informed me that some of my tools had

been stolen out of her office, and that she would

have to replace them. And I’ve never heard from

her since on the issue of my tools. 

II. Discussion 

Smeigh asserts that the district court erred in granting

summary judgement to JM on his claims for retaliatory

discharge and conversion. We review a district court’s

grant of summary judgment de novo, construing all facts

and reasonable inferences in the light most favorable to

the non-moving party. Spivey v. Adaptive Mktg. LLC, 622

F.3d 816, 822 (7th Cir. 2010). Summary judgment is appropriate if “the movant shows that there is no genuine

dispute as to any material fact and the movant is entitled

to judgment as a matter of law.” Fed. R. Civ. P. 56(a).

Even construing the facts in favor of Smeigh, we agree with
No. 10-3388 9

the district court that he cannot succeed on either his

retaliation or conversion claim as a matter of law.

A. Retaliatory Discharge

Under Indiana law, “[g]enerally, employers may terminate employees for no cause whatsoever or for any cause

at all without incurring liability.” Hamann v. Gates Chevrolet, Inc., 910 F.2d 1417, 1418 (7th Cir. 1990). One exception

to this general rule is that an employee who has

been discharged in retaliation for filing a workers’ compensation claim may recover damages for wrongful termination. Frampton v. Cent. Ind. Gas Co., 297 N.E.2d 425, 428

(Ind. 1973) (holding that an employee who alleges he

was discharged in retaliation for filing a claim pursuant to

the Indiana Workmen’s Compensation Act has stated a

claim upon which relief can be granted). To survive

summary judgment on a Frampton claim, the plaintiff

must present evidence that would support a finding that

the discharge was caused by his filing for benefits. Goetzke

v. Ferro Corp., 280 F.3d 766, 774 (7th Cir. 2002). A successful

litigant must demonstrate that his discharge was solely

in retaliation for the exercise of a statutory right, meaning that any and all reasons for the discharge must be

unlawful in order to sustain a claim. Purdy v. Wright

Tree Serv., Inc., 835 N.E.2d 209, 212 (Ind. Ct. App. 2005).

Causation may not be inferred merely from evidence that

the employee filed for benefits and was fired. See

Hamann, 910 F.2d at 1420. Because Smeigh “does not have

direct evidence, he must rely on indirect evidence of

retaliatory motive, such as proximity in time between
10 No. 10-3388

the filing of the claim and the termination or evidence

that the employer’s asserted lawful reason for the discharge is pretext.” Hudson v. Wal-Mart Stores, Inc., 412 F.3d

781, 785 (7th Cir. 2005). “[T]iming evidence is rarely

sufficient in and of itself to create a jury issue on causation[,]” id. at 787, but “when considered with other circumstances, the temporal proximity between termination

and filing of the worker’s compensation claim may satisfy

the plaintiff’s burden in some cases[,]” Goetzke, 280 F.3d

at 774. 

A plaintiff bringing a retaliation claim must first prove,

by a preponderance of the evidence, his prima facie case.

Powdertech Inc. v. Joganic, 776 N.E.2d 1251, 1262 (Ind. Ct.

App. 2002). The burden then shifts to the employer

to articulate a legitimate, nondiscriminatory reason for the

discharge. Id. If the employer meets that burden, then the

employee has the opportunity to prove, again by a preponderance of the evidence, that the reason offered by the

employer is pretextual. Id. Pretext can be shown by demonstrating that the employer’s “explanation for the firing

was either dishonest or patently inconsistent with the

evidence before the court.” Hudson, 412 F.3d at 785 (quotations omitted). To make this showing, an employee must

produce evidence showing that (1) the employer’s stated

reason has no basis in fact; (2) although based on fact, the

stated reason was not the actual reason for discharge; or

(3) the stated reason was insufficient to warrant the

discharge. Powdertech, 776 N.E.2d at 1262. The focus of

a pretext inquiry is whether the employer’s stated reason

was honest, not whether it was accurate, wise or

well-considered. See Purdy, 835 N.E.2d at 214 (“[T]he issue
No. 10-3388 11

of pretext does not concern the appropriateness of the

reasons offered by the employer for its employment

decisions[;] . . . the issue [is] whether the employer honestly believes in the explanation it offers.”).

In Hudson, the plaintiff employee was punched by

another employee and taken to the hospital for injuries.

412 F.3d at 783-84. Wal-Mart investigated the accident and

determined that the plaintiff had provoked the fight.

Both employees were terminated pursuant to Wal-Mart’s

Workplace Violence Policy. After the incident, the plaintiff

inquired about filing for workers’ compensation. Id.

He returned to work about a week later, at which time

he was informed of his termination. Id. at 784. The plaintiff

subsequently filed for workers’ compensation. Id. at 785.

We found that Wal-Mart offered a legitimate,

non-retaliatory reason for firing the plaintiff—he was

involved in a physical altercation at work with a co-worker

after weeks of bickering—and the plaintiff’s argument that

he shouldn’t have been fired because he was an innocent

victim was “beside the point.” Id. at 786. We reasoned

that “[t]he judiciary is not a super-personnel department

that reexamines and reinvestigates employee disputes.”

Id. Our concern is whether the proffered reason given

by the employer is a lie to cover up for retaliation. Id.

The plaintiff in Hudson could not make this showing. Id.

We acknowledged that the plaintiff in Hudson was fired

shortly after he inquired about workers’ compensation, but

we stated that this alone was insufficient to defeat summary judgment. Id. at 786-87. We reasoned that the

“same underlying incident led to both Hudson’s termina-
12 No. 10-3388

tion (at least the stated reason for it, which Hudson [did]

not effectively undermine) and his workers’ compensation

claim, which ma[de] Hudson’s timing evidence a wash.”

Id. We held that the timing evidence was not sufficient,

in and of itself, to create a fact issue for the jury. Id. at

787. While other evidence of retaliation could make

the timing evidence stronger (allowing a reasonable jury

to find in the plaintiff’s favor), the plaintiff didn’t present

such evidence. Id. Instead, Wal-Mart offered a strong

credible reason for terminating the plaintiff, and thus,

we found it inappropriate to attach significant weight

to the plaintiff’s proximity evidence. Id.

Smeigh relies heavily on proximity evidence to support

his claim for retaliation. If timing was all that was needed

to create a reasonable inference of retaliation, Smeigh

would have a good case. He was terminated shortly

after his accident and the filing for workers’ compensation.

But as Hudson explains, timing evidence, by itself, is

rarely sufficient to create a jury question. That is especially

true here where there was an intervening event leading

to Smeigh’s termination and no evidence of pretext.

See Caskey v. Colgate-Palmolive Co., 535 F.3d 585, 594

(7th Cir. 2008) (finding the plaintiff unable to make a casual

connection even though she was disciplined and terminated shortly after her injury where there were several

intervening events, including a series of unexercised

absences, leading to her termination); see also Purdy,

835 N.E.2d at 214 (finding employer’s reason for discharge

wasn’t a pretext for discrimination; rather, the cause of

Purdy’s discharge was his medical inability to return to

work at the conclusion of his FMLA leave period). The
No. 10-3388 13

facts show that Smeigh was terminated for his failure to

sign the Stipulation after he indicated he might not pass a

drug test. Smeigh has not presented sufficient evidence to

create a genuine issue of material fact that JM’s stated

reason for Smeigh’s discharge was pretextual.

It is undisputed that at the time of his injury Smeigh

indicated to his supervisor that there was a possibility that

he might not pass a drug test—not because he was a drug

user, but because he had been around marijuana smoke.

This admission, however, was reason for JM to investigate

and take efforts to ensure that Smeigh was not a drug

user. JM has a workplace policy against offsite drug

use and JM had reason to believe Smeigh violated this

policy even though he tested negative for drugs. “It is wellestablished that an employee can be terminated for violations of valid work rules that apply to all employees . . . .”

Powdertech, 776 N.E.2d at 1262. Smeigh argues that

JM violated its internal substance abuse policy for someone

who voluntarily admits to drug use, and JM’s failure

to follow its own policy constitutes evidence of pretext.

See e.g., Rudin v. Lincoln Land Cmty. Coll., 420 F.3d 712,

727 (7th Cir. 2005) (“[A]n employer’s failure to follow its

own internal employment procedures can constitute evidence of pretext.”). Smeigh, however,

wasn’t terminated until he refused to sign the Stipulation,

so his argument boils down to this: JM sought to retaliate

against him for filing a workers’ compensation claim

by presenting him with the Stipulation in violation of its

internal policy. This argument makes little sense. First, JM

filed for workers’ compensation on Smeigh’s behalf

and second, if Smeigh had signed the Stipulation, he
14 No. 10-3388

would have retained his job. The terms of the Stipulation

certainly weren’t so onerous as to result in constructive

discharge, Baker v. Tremco, Inc., 917 N.E.2d 650, 655 (Ind.

2009) (stating that a cause of action for constructive

retaliatory discharge exists for an employee who can show

that he has been forced to resign as a result of exercising

this statutorily conferred right), nor does Smeigh make this

argument. The record shows that JM wanted Smeigh to

sign the Stipulation and retain his job. Given these intervening facts between his injury and discharge, Smeigh’s

argument that he was fired in retaliation for obtaining

workers’ compensation falls flat. 

Further, Threet’s conclusion that Smeigh made an

involuntary admission of illegal drug use was not so

“patently inconsistent with the evidence” to “suggests that

retaliation was afoot.” Hudson, 412 F.3d at 786. JM could

conclude that Smeigh’s statement about possibly not

passing a drug test, made only after he was aware he’d

have to submit to one, was not voluntary within the

meaning of JM’s substance abuse policy. His explanation

about being in a room with marijuana smoke was certainly

curious. Even if he had made a voluntary admission within

the parameters of the substance abuse policy, despite

Smeigh’s contentions to the contrary, he was offered

employee assistance and the ability to retain his job.

It is not for us to decide whether Smeigh should have

been required to sign the Stipulation. See e.g, O’Regan

v. Arbitration Forums, Inc., 246 F.3d 975, 984 (7th Cir. 2001)

(finding no pretext under Title VII and ADEA where

the employee was required to sign an employment agree-
No. 10-3388 15

ment that she claimed was unlawful; “the fact that the

Agreement may have been unnecessary, ineffective or

unenforceable would, at most, indicate that [the employer]

made a bad business decision,” but it didn’t demonstrate

that the employer implemented the Agreement to justify

the firing of older women). The only question before us

is whether requiring Smeigh to sign the Stipulation to keep

his job was pretext for retaliatory motive. There is nothing

to show that it was. The fact that JM was willing to

allow Smeigh to sign a Reinstatement Agreement (with

less onerous terms) further supports a conclusion that

JM’s reasons for termination weren’t pretextual and that

JM was legitimately concerned that Smeigh was using

(or had used) illegal drugs. Smeigh points to nothing in

the record to show that JM’s decision to terminate him

had anything to with workers’ compensation. 

Smeigh cites to Markley Enterp., Inc. v. Grover, 716 N.E.2d

559 (Ind. Ct. App. 1999) and Dale v. J.G. Bowers,

Inc., 709 N.E.2d 366 (Ind. Ct. App. 1999), in support of

his claim, but in both those cases there was evidence

of pretext. In Markley, the court held that a jury could find

pretext because there was evidence that the employer had

disciplined the plaintiff on a prior occasion for allegedly

attempting to file a false workers’ compensation claim.

716 N.E.2d at 566. Further, “[a]n internal Company memo

disclose[d] an extremely hostile attitude against [the

plaintiff] for having attempted to file the previous [workers’ compensation] claim and stated that [the plaintiff’s]

employment would be terminated immediately in

the event of ‘any repeat violations.”’ Id. The court found

those facts sufficient to raise an issue of whether the
16 No. 10-3388

employer’s true motive for terminating the plaintiff’s

employment was his filing of the workers’ compensation

claim. Id. Similarly, in Dale, 709 N.E.2d at 369-70, the court

found that a jury could infer pretext where the employer’s

stated reason for termination—that employee’s medical

restrictions rendered him unable to fulfill his job duties—was inconsistent with evidence that his job restrictions were temporary and where the employee was

discharged just two days after returning to work and one

day after receiving an impairment rating. The outcome in

Dale was based not on suspicious timing alone, but on

suspicious timing combined with strong evidence

of pretext. Smeigh hasn’t shown similar evidence of

pretext. 

Our concern is whether JM’s proffered reason for terminating Smeigh was a lie to cover up retaliation. As in

Hudson, Smeigh did not make this showing and no reasonable jury could find in his favor based on the evidence

presented. 

B. Criminal Conversion 

Smeigh also brings a claim for criminal conversion

against JM. To succeed, Smeigh has to show that JM

“knowingly or intentionally exert[ed] unauthorized

control” over his property. Ind. Code § 35-43-4-3(a). “A

person engages in conduct ‘knowingly’ if, when he engages

in the conduct, he is aware of a high probability that he is

doing so.” Id. § 35-41-2-2(b). A person’s control over

property of another person is “unauthorized” if it

is exerted “in a manner or to an extent other than
No. 10-3388 17

Mens rea, however, is not an element of tortious conversion. 2

Computers Unlimited, Inc. v. Midwest Data Sys., Inc., 657 N.E.2d

165, 171 (Ind. Ct. App. 1995). Smeigh did not bring a claim for

(continued...)

that to which the other person has consented.” Id.

§ 35-43-4-1(b)(2). A person who has suffered a pecuniary

loss as a result of a criminal conversion may bring a

civil action to recover the loss. JET Credit Union v.

Loudermilk, 879 N.E.2d 594, 597 (Ind. Ct. App. 2008).

A claimant in a civil action must only show that

the defendant committed the criminal act by a preponderance of the evidence. French-Tex Cleaners, Inc. v. Cafaro Co.,

893 N.E.2d 1156, 1166 (Ind. Ct. App. 2008). 

Smeigh must prove all the elements of the alleged

criminal act. Id. at 1166. Criminal intent is an essential

element of criminal conversion. Id. “It is this mens rea

requirement that differentiates criminal conversion from

a more innocent breach of contract or failure to pay a

debt, which situations the criminal conversion statute

was not intended to cover.” Id. at 1168 (finding no conversion where the defendant acted in accordance with reasonable interpretation of an ambiguous contract); NationsCredit

Commercial Corp. v. Grauel Enters., Inc., 703 N.E.2d 1072,

1079 (Ind. Ct. App. 1998) (same). A defendant’s reasonable

belief that she controlled or continued to control property

with the owner’s consent defeats the mens rea element

of conversion. Whitlock v. Brown, 596 F.3d 406, 413 (7th Cir.

2010). If the mens rea element exists, even a temporary

deprivation of property is sufficient to succeed under

the statute. Id.2
18 No. 10-3388

(...continued) 2

tortious conversion, which “consists either of the appropriation

of the personal property of another to the party’s own use and

benefit, or in its destruction, or in exercising dominion over it,

in exclusion and defiance of the rights of the owner or lawful

possessor, or in withholding it from his possession, under a

claim and title inconsistent with the owner’s.” Id.; see also

Schrenker v. State, 919 N.E. 2d 1188, 1194 (Ind. Ct. App. 2010)

(explaining the difference between criminal and tortious

conversion). 

Smeigh contends that JM continued to possess his tools 3

despite his repeated requests for them. There are no record

citations for these factual contentions and they are contradicted

by the record. We therefore do not consider such facts. See Fed.

R. App. P. 28(a)(9)(A) (requiring citations to the record).

There is no evidence in the record that Wilson’s control

over Smeigh’s property was unauthorized or even if

it was unauthorized, that she was aware of a high probability that her control was unauthorized. Smeigh acknowledged that it was company protocol to sort through

a terminated employee’s belongings to separate personal

property from company property. He was aware that

Wilson was going to take his property and separate

his tools from JM’s tools; yet, he never objected. Smeigh

inquired about his property, and Wilson told him that

she still needed to go through his tools. The record doesn’t

suggest that Smeigh demanded the immediate return of

his tools or gave Wilson any indication that her temporary 3

possession of them was unauthorized. A week later,

Wilson informed Smeigh that they had been stolen from

her office. She offered to replace them, but then Smeigh
No. 10-3388 19

never heard from her. Although a demand for return “is

not itself an element of criminal conversion,” Lambert v.

Yellowbird, Inc., 496 N.E.2d 406, 409-10 (Ind. Ct. App. 1986),

Smeigh had to present evidence to raise a reasonable

inference that Wilson was aware that her possession was

unauthorized. He failed to do so. 

 More importantly, there is no evidence that JM was

aware that Wilson still had Smeigh’s tools or that

her continued possession of them was unauthorized.

Wilson is not part of JM management; she is an

hourly employee. Smeigh testified that he didn’t raise

the issue of his personal property when he was terminated

because he “assumed that [he] would be getting [his] job

back after the grievance process, after it went to arbitration.” After that day, Smeigh never inquired with a JM

manager about the return of his property.

An employer can be held liable for conversion as a result

of its employee’s actions under the doctrine of respondeat

superior. A company “may be convicted of an offense . . .

if it is proved that the offense was committed by its agent

acting within the scope of his authority.” Ind. Code § 35-41-

2-3. This section creates “a statutory version of respondeat

superior” pursuant to which principals are liable

for offenses committed by an agent acting within the scope

of his authority. Tippecanoe Beverages, Inc. v. S.A. El

Aguila Brewing Co., 833 F.2d 633, 637 (7th Cir. 1987).

Oddly, Smeigh didn’t raise an argument of vicarious

liability at the district court, even though it was addressed

by JM in its summary judgment brief. At oral argument,

Smeigh acknowledged that he didn’t raise vicarious
20 No. 10-3388

Rule 38 requires either a separately filed motion or that we 4

give notice we are considering sanctions. Greviskes v. Univ.

Research Ass’n, Inc., 417 F.3d 752, 761 (7th Cir. 2005). We have

stated that “a statement inserted in a party’s brief that the party

moves for sanctions is not sufficient notice.” Id.; see also Fed. R.

App. P. 38 advisory comm. notes (1994 amendments) (“Requests

(continued...)

liability below and wasn’t raising it on appeal. Smeigh

therefore has waived this argument. As the district court

stated, “Without a vicarious liability hook or evidence

to establish criminal intent, Smeigh’s conversion claim

fails.” Smeigh v. Johns Manville, Inc., No. 1:09-cv-0414,

2010 WL 3781492, at *10 (S.D. Ind. Sept. 2, 2010).

We similarly conclude that Smeigh, who arguably may

have had a claim arising in negligence for the loss of his

property, see Kottlowski v. Bridgestone/Firestone, Inc.,

670 N.E.2d 78, 82-84 (Ind. Ct. App. 1996) (finding genuine

issue of material fact on bailment claim where employees

left their tools at employer’s premises and they were

stolen), cannot make out a claim for criminal conversion. 

JM contends that Smeigh’s conversion claim is frivolous

and seeks sanctions pursuant to Rule 38 of the Federal

Rules of Appellate Procedure. We agree that his claim

is frivolous, but for the reasons stated below, we decline

to award monetary damages to JM. Rule 38 states: “If

a court of appeals determines that an appeal is frivolous, it

may, after a separately filed motion or notice from the

court and reasonable opportunity to respond, award

just damages and single or double costs to the appellee.”

Fed. R. App. P. 38. Under Rule 38, we must first determine 4
No. 10-3388 21

(...continued) 4

in briefs for sanctions have become so commonplace that it is

unrealistic to expect careful responses to such requests without

any indication that the court is actually contemplating such

measures.”). JM didn’t file a separate motion for sanctions; it

argued for sanctions in its brief and Smeigh failed to respond to

JM’s request (Smeigh didn’t file a reply brief). Smeigh was then

given the opportunity to address sanctions during oral argument. Because we decline to issue monetary sanctions, we do not

need to consider whether notice to Smeigh under these circumstances is sufficient under Rule 38. 

if the appeal is frivolous, and if we find it is, we have

discretion to award sanctions or decline to do so.

In re Bagdade, 334 F.3d 568, 581 (7th Cir. 2003). “An appeal

is frivolous when the result is obvious or when the appellant’s argument is wholly without merit.” Grove

Fresh Distribs., Inc. v. John Labatt, Ltd., 299 F.3d 635, 642

(7th Cir. 2002) (quotations omitted). “Pursuing a frivolous

appeal invites sanctions, including just damages, which we

may impose in our considered discretion.” Id. “Sanctions

are appropriate if the appellant merely restates arguments

properly rejected by the district court that are unsupported

by a reasoned colorable argument for altering the district

court’s judgment.” Perry v. Pogemiller, 16 F.3d 138, 140

(7th Cir. 1993). We have held that “the combination of

frivolous legal arguments . . . and frivolous factual arguments” may warrant sanctions. In re Bagdade, 334 F.3d at

581 (citation omitted).

Smeigh did not address any of the district court’s wellreasoned explanations for dismissing his conversion claim.

His argument at the district court and on appeal spans less
22 No. 10-3388

than one page and is wholly undeveloped. Rather than

restructuring his argument to demonstrate that the district

court’s decision was in error, he instead cut and pasted his

summary judgment argument into his appellate brief—“a

tactic which could not hope to succeed on appeal.”

See Bagdade, 334 F.3d at 582. The district court pointed out

a significant flaw in Smeigh’s claim—he didn’t make any

argument that JM could be held liable for the actions of its

employee. The district court also noted that Smeigh’s

factual assertion that he had demanded the return of his

property from JM was unsupported by the record. Even

though the district court pointed out that his claim

was hopeless, Smeigh persisted in pursuing it on appeal,

making the same (nearly verbatim) frivolous arguments.

See e.g., Perry, 16 F.3d at 140 (issuing sanctions when

appellant “offered no valid legal support for his position

on appeal other than that properly rejected by the district

court”).

Smeigh’s counsel responded at oral argument that our

review is de novo and he can raise the same arguments to

this court as below and isn’t permitted to raise new

arguments. Although true, he certainly could have explained why the district court’s decision was erroneous—for example, he could have explained how Smeigh

can succeed without asserting vicarious liability—or, if

he has no explanation, he could have decided not to appeal

his conversion claim.

“Rule 38 is permissive”; we may “decline to impose

sanctions even if the appeal is frivolous.” Indep. Lift Truck

Builders Union v. Nacco Materials Handling Group,
No. 10-3388 23

202 F.3d 965, 969 (7th Cir. 2000) (quotations omitted).

“How we exercise [our] discretion may turn on our perception of whether an appellant acted in bad faith.”

Berwick Grain Co., Inc. v. Ill. Dep’t of Agric., 217 F.3d 502,

505 (7th Cir. 2000). We find that this case is too close to

the line to warrant monetary sanctions. See Ross v. RJM

Acquisitions Funding LLC, 480 F.3d 493, 499 (7th Cir. 2007)

(sanctions not imposed but attorney warned that he was

“skating near the edge of his pond”). Smeigh raised a nonfrivolous argument (retaliatory discharge) on appeal, and

JM had to expend only minimal effort in responding

to Smeigh’s frivolous conversion claim. We nonetheless

admonish counsel for appellant, Joel S. Paul, that this

portion of his appeal does not meet our standards for

presenting and developing arguments on appeal. 

III. Conclusion

For the reasons set forth above, the judgment of the

district court is AFFIRMED. 

6-29-11