Court Opinion

ID: 4649086
Source: CourtListenerOpinion
Date Created: 2021-01-05 17:00:19.03825+00
Date Added: 2024-06-11T08:01:21.066982
License: Public Domain

In the

    United States Court of Appeals
                 For the Seventh Circuit
                     ____________________
No. 20-1406
CHERYL KELLOGG,
                                                  Plaintiff-Appellant,
                                 v.

BALL STATE UNIVERSITY d/b/a INDIANA
ACADEMY FOR SCIENCE, MATHEMATICS
AND HUMANITIES,
                                                 Defendant-Appellee.
                     ____________________

         Appeal from the United States District Court for the
         Southern District of Indiana, Indianapolis Division.
         No. 18-cv-02564 — Tim A. Baker, Magistrate Judge.
                     ____________________

   ARGUED NOVEMBER 3, 2020 — DECIDED JANUARY 5, 2021
               ____________________

   Before KANNE, SCUDDER, and ST. EVE, Circuit Judges.
   KANNE, Circuit Judge. Many plaintiﬀs seeking to redress
discriminatory payment decisions cannot marshal evidence
of explicit misconduct. But the plaintiﬀ in this case, Cheryl
Kellogg, can and has. Kellogg testiﬁed that when the Indiana
Academy hired her as a teacher in 2006, its director, Dr. David
Williams, told her that she “didn’t need any more [starting
2                                                    No. 20-1406

salary], because he knew [her] husband worked.” Through-
out her twelve-year tenure at the Academy, Kellogg suﬀered
the eﬀects of this outdated and improper approach to her
starting pay. And in 2018, she sued the Academy for her un-
just compensation.
    Despite this evidence of unequivocal discrimination, the
district court granted summary judgment to the Academy be-
cause it proﬀered what the court believed were undisputed
gender-neutral explanations for Kellogg’s pay.
   This decision was not correct. Williams’s statement contra-
dicts the Academy’s explanations for Kellogg’s pay and puts
them in dispute. And for several reasons, it does not matter
that Williams uttered the statement so long ago, even well
outside the statute of limitations period. Under the paycheck
accrual rule, Williams’s statement can establish liability be-
cause it aﬀected paychecks that Kellogg received within the
limitations window. Plus, as an evidentiary matter, Kellogg
can rely on Williams’s statement to put the Academy’s expla-
nations in dispute. We thus reverse the decision of the district
court granting summary judgment to the Academy and re-
mand this case for further proceedings.
                        I. BACKGROUND
    The following facts are stated in the light most favorable
to Kellogg as the nonmoving party. The Indiana Academy for
Science, Mathematics and Humanities is a residential high
school on the campus of Ball State University. The Academy
hired Kellogg in 2006 as a life science teacher. Her starting sal-
ary was $32,000.
    Kellogg negotiated this ﬁgure with the Academy’s Execu-
tive Co-Director, Dr. David Williams. According to Kellogg,
No. 20-1406                                                     3

Williams told her during those negotiations that “he wouldn’t
pay [her] any more, because then [she] would be making as
much as his Ph.D instructors and … he offhandedly told [her]
that [she] didn’t need any more money, because he knew
[her] husband worked at Ball State, so [they] would have a
ﬁne salary.”
   Many years later, in 2017, Kellogg complained to the Dean
of Ball State’s Teacher’s College, which oversees the Acad-
emy, that she received less pay than her similarly situated
male colleagues. The Dean responded to this complaint by
writing to Kellogg that “[t]he issue [wa]s salary compression,
which means those who [we]re hired after [Kellogg] began at
a higher salary.” The Dean also noted that Kellogg’s salary
increased by 36.45% during her time at the Academy while
her colleagues’ salaries increased by less.
    Unsatisﬁed with this answer, Kellogg sued the Academy
in 2018 for violating Title VII and the Equal Pay Act by engag-
ing in sex-based pay discrimination. The Academy moved for
summary judgment on both claims. The district court granted
the motion because the Academy provided what the court be-
lieved were undisputed gender-neutral explanations—such
as salary compression and qualiﬁcation diﬀerences—for any
discrepancy between Kellogg’s salary and her colleagues’. In
reaching this conclusion, the court found that while Wil-
liams’s statement about Kellogg’s husband “is admissible for
purposes of providing background information on the factual
circumstances, it cannot establish liability, as these allegations
fall well outside the statute of limitations.” Kellogg now ap-
peals that decision.
4                                                     No. 20-1406

                           II. ANALYSIS
    We review the district court’s summary judgment order de
novo. Flexible Steel Lacing Co. v. Conveyor Accessories, Inc., 955
F.3d 632, 643 (7th Cir. 2020) (citing Ga.-Pac. Consumer Prods.
LP v. Kimberly-Clark Corp., 647 F.3d 723, 727 (7th Cir. 2011)).
“Summary judgment is appropriate when ‘there is no genu-
ine dispute as to any material fact and the movant is entitled
to judgment as a matter of law.’” Id. (quoting Fed. R. Civ. P.
56(a)). “We draw ‘all justiﬁable inferences’ in the favor of the
nonmoving party.” Id. (quoting Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 255 (1986)) (citing AutoZone, Inc. v. Strick, 543
F.3d 923, 929 (7th Cir. 2008)).
    Our review of the district court’s decision to grant sum-
mary judgment to the Academy comes down to one ques-
tion—are the Academy’s nondiscriminatory explanations for
Kellogg’s pay in dispute?
    We hold that they are because the Academy blatantly dis-
criminated against Kellogg by telling her that, because her
husband worked, she did not need any more starting pay.
Such clear discrimination calls the sincerity of the Academy’s
rationales into question.
    A. Title VII
     “Title VII makes it unlawful for an employer to ‘discrimi-
nate against any individual with respect to his compensation
... because of such individual’s ... sex.’” Lauderdale v. Ill. Dep't
of Human Servs., 876 F.3d 904, 909 (7th Cir. 2017) (alterations
in original) (quoting 42 U.S.C. § 2000e–2(a)(1)). Under this
statute, the plaintiﬀ bears the burden of establishing a prima
facie case of unlawful pay discrimination. Id. at 910 (citing
No. 20-1406                                                      5

Burks v. Wis. Dep’t of Transp., 464 F.3d 744, 750 (7th Cir. 2006)).
“If that burden is met, the employer must articulate a ‘legiti-
mate, nondiscriminatory reason’ for paying the plaintiﬀ less.”
Id. (quoting Burks, 464 F.3d at 751).
    Then, if the employer does so, the burden shifts back to the
plaintiﬀ to call the explanation into question as pretextual. Id.
(citing St. Mary’s Honor Ctr. v. Hicks, 509 U.S. 502, 507–08
(1993); Burks, 464 F.3d at 751). Our task in determining
whether a proﬀered explanation is pretextual is to ask if the
employer “honestly believed in the nondiscriminatory rea-
sons it oﬀered.” Merillat v. Metal Spinners, Inc., 470 F.3d 685,
693 (7th Cir. 2006) (quoting Jackson v. E.J. Brach Corp., 176 F.3d
971, 984 (7th Cir. 1999)) (citing Balderston v. Fairbanks Morse
Engine Div. of Coltec Indus., 328 F.3d 309, 323 (7th Cir. 2003)).
   Here, the parties agree for purposes of summary judgment
that Kellogg established a prima facie Title VII claim. Further,
the Academy has articulated potential gender-neutral expla-
nations, such as salary compression, for Kellogg’s pay. So, the
key summary judgment question is whether Kellogg has
brought forth evidence to “create a triable issue of fact with
respect to her burden of demonstrating that [the Academy’s
nondiscriminatory] reasons are pretextual.” Id. at 695.
    She has. Kellogg testified that Williams told her that she
“didn’t need any more [starting salary], because he knew
[her] husband worked.” That statement, which must be taken
as true, creates a dispute over whether the Academy “hon-
estly believed in the nondiscriminatory reasons” that it of-
fered. Id. at 693. According to Williams, the Academy didn’t
honestly believe in them; it paid Kellogg less because of her
husband’s employment. Indeed, the Academy has not even
6                                                  No. 20-1406

tried to argue that the statement does not impugn their prof-
fered explanations.
    The Academy instead argues that, for two reasons, we
should not consider Williams’s statement. First, it tries to
brush Williams’s statement aside by characterizing it as a
“stray remark” with no “real link” to Kellogg’s pay because
Kellogg described it—in an ironically offhanded way—as
“offhanded.” Id. at 694 (“[I]solated comments that are no
more than ‘stray remarks’ in the workplace are insufficient to
establish that a particular decision was motivated by discrim-
inatory animus.” (citing Cullen v. Olin Corp., 195 F.3d 317, 323
(7th Cir. 1999)). But Williams’s statement was not water-
cooler talk. It was a straightforward explanation by the Acad-
emy’s director, who had control over setting salaries, during
salary negotiations that Kellogg did not need any more
money “because” her husband worked at the University. Few
statements could more directly reveal the Academy’s motiva-
tions.
   Second, the Academy argues that we, like the district
court, should skirt Williams’s statement because it occurred
outside the statute of limitations period and thus “cannot es-
tablish liability.” We disagree for several reasons.
    To start, under the paycheck accrual rule, as codiﬁed by
the Lilly Ledbetter Fair Pay Act of 2009, Williams’s statement
can “establish liability.” Under the Ledbetter Act, an actiona-
ble “unlawful employment practice occurs, with respect to
discrimination in compensation … each time wages, beneﬁts,
or other compensation is paid, resulting in whole or in part
from such a decision or other practice.” 42 U.S.C. § 2000e–
5(e)(3)(A). In other words, “a new cause of action for pay dis-
crimination ar[ises] every time a plaintiﬀ receive[s] a
No. 20-1406                                                     7

paycheck resulting from an earlier discriminatory compensa-
tion practice”—even one that “occurr[ed] outside the statute
of limitations period.” Groesch v. City of Springﬁeld, 635 F.3d
1020, 1027 (7th Cir. 2011) (citing Reese v. Ice Cream Specialties,
Inc., 347 F.3d 1007, 1013–14 (7th Cir. 2003); Hildebrandt v. Ill.
Dep’t of Nat. Res., 347 F.3d 1014, 1028 (7th Cir. 2003)).
    Our application of this rule in Groesch is especially in-
formative. In that case, “the original adverse discrimination
decision,” which involved a seniority calculation, took place
outside the limitations window. Id. at 1023. The plaintiﬀs re-
lied on the paycheck accrual rule to argue that “each time they
received a paycheck, they received less than they would have
received if they had been treated” equally from the start. Id.
at 1024. We held that the seniority calculation was “precisely
the kind of decision covered by the Ledbetter Act” and re-
versed the district’s court order granting summary judgment
to the defendant. Id. at 1025.
    So too is Williams’s decision regarding Kellogg’s starting
salary “precisely the kind of decision covered by the Ledbet-
ter Act.” Id. All of Kellogg’s pay from the Academy resulted,
at least in part, from that decision because the Academy ad-
mittedly based Kellogg’s later pay on raises from her starting
salary. Lauderdale, 876 F.3d at 909 (“Basing pay on prior wages
could be discriminatory if sex discrimination led to the lower
prior wages … .”). Thus, each of Kellogg’s paychecks gave
rise to a new cause of action for pay discrimination. And like
the plaintiff in Groesch, Kellogg can rely on Williams’s initial
discriminatory statement, even though it occurred outside the
limitations period, to seek damages from any paychecks that
she received within the statute of limitations window.
8                                                     No. 20-1406

    Next, apart from the paycheck accrual rule, Kellogg can
rely on Williams’s statement to show that the Academy’s ex-
planations are pretextual because “time-barred acts [are al-
lowed] as support for a timely claim.” Fischer v. Avanade, Inc.,
519 F.3d 393, 401 (7th Cir. 2008) (alteration in original) (citing
West v. Ortho–McNeil Pharm. Corp., 405 F.3d 578, 581 (7th Cir.
2005); Nat’l R.R. Passenger Corp. v. Morgan, 536 U.S. 101, 113
(2002)).
    For example, in Davis v. Con-Way Transportation Central Ex-
press, Inc., the district court concluded that “because certain
events cited by [the plaintiﬀ] occurred outside” the statute of
limitations window, “they could not be relied upon as evi-
dence of pretext.” 368 F.3d 776, 786 (7th Cir. 2004). We disap-
proved of this decision because when a plaintiﬀ “timely al-
leges a discrete discriminatory act,” “acts outside of the stat-
utory time frame may be used to support that claim.” Id. (cit-
ing Morgan, 536 U.S. at 102 (“Nor does the statute bar an em-
ployee from using the prior acts as background evidence in
support of a timely claim.”)). And we have extended this prin-
ciple to, at the least, all title VII claims. West, 405 F.3d at 581.
    In this case, the Academy admits that Kellogg has timely
alleged discrete discriminatory acts (that she received dis-
criminatory paychecks within the limitations window). As a
result, “acts outside of the statutory time frame,” like Wil-
liams’s statement, “may be used to support that claim” and
show that the Academy’s explanations were pretextual. Davis,
368 F.3d at 786 (citing Morgan, 536 U.S. at 102).
    B. The Equal Pay Act
  Much like Title VII, the Equal Pay Act (“EPA”) “prohibits
employers from paying employees diﬀerent wages based on
No. 20-1406                                                     9

gender.” Warren v. Solo Cup Co., 516 F.3d 627, 629 (7th Cir.
2008) (citing 29 U.S.C. § 206(d); Varner v. Ill. State Univ., 226
F.3d 927, 932 (7th Cir. 2000)). And as with Title VII claims, the
plaintiﬀ bears the initial burden of establishing a prima facie
case that pay discrimination occurred. Id. (citing Stopka v. All.
of Am. Insurers, 141 F.3d 681, 685 (7th Cir.1998)). But as op-
posed to the framework of Title VII claims, if the plaintiﬀ
meets that initial burden, the burden then shifts to the defend-
ant “to establish one of four statutory defenses.” Merillat, 470
F.3d at 697 (citing Cullen v. Ind. Univ. Bd. of Trustees, 338 F.3d
693, 702 (7th Cir. 2003)). One of those defenses, which is a
catch-all provision relevant to this case, is that the pay dis-
crepancy is “based on any factor other than sex.” 29 U.S.C.
§ 206(d)(1).
    Just as with Kellogg’s Title VII claim, the parties agree for
summary judgment purposes that Kellogg has established a
prima facie EPA claim. The Academy, therefore, must prove
that Kellogg’s pay was “based on any factor other than sex.”
Id. The Academy again seeks to do this by pointing to various
nondiscriminatory explanations for Kellogg’s pay. So, once
more, the key question is whether Kellogg has “put forth evi-
dence to place the facts surrounding these stated rationales in
dispute.” Merillat, 470 F.3d at 698.
   And, once more, Kellogg has. While the Academy says
that Kellogg’s pay was based on factors other than sex, Wil-
liams’s discriminatory statement—which, as explained, we
cannot overlook—shows otherwise.
   That said, under the EPA, the Academy has one extra ar-
gument up its sleeve—that the paycheck accrual rule does not
apply because the Ledbetter Act explicitly amended four stat-
utes, none of which is the EPA.
10                                                   No. 20-1406

   This argument is unsuccessful because, above all, the
paycheck accrual rule does not need to apply for Kellogg to
survive summary judgment. As an evidentiary matter, Kel-
logg can use Williams’s statement to put the sincerity of the
Academy’s purported nondiscriminatory explanations in dis-
pute. Fischer, 519 F.3d at 401 (citing West, 405 F.3d at 581; Mor-
gan, 536 U.S. at 113) (“[T]ime-barred acts [are allowed] as sup-
port for a timely claim.” (second alteration in original)).
    Even so, we take this opportunity to clarify that the
paycheck accrual rule does apply to EPA claims. “We need
not repeat the well-known history of the [Ledbetter Act].”
Poullard v. McDonald, 829 F.3d 844, 853 (7th Cir. 2016) (citing
Groesch, 635 F.3d at 1024). Instead, we will just cut right to our
prior holding in Groesch that because the Ledbetter Act legis-
latively reversed the Supreme Court’s decision eschewing the
paycheck accrual rule in Ledbetter v. Goodyear Tire & Rubber
Co., Inc., 550 U.S. 618 (2007), it removed “the Ledbetter decision
as an obstacle to following our earlier precedents, which rec-
ognized the paycheck accrual rule for all allegations of unlaw-
ful discrimination in employee compensation.” 635 F.3d at
1028 (emphasis added).
    That means what it says, and we follow and apply our
holding in Groesch here. So the paycheck accrual rule applies
to “allegations of unlawful discrimination in employee com-
pensation” under the EPA, just as we have held that it applies
to such allegations under 42 U.S.C. § 1983 (even though that
too is not listed in the Ledbetter Act). Id. “We see no reason …
why we would treat a paycheck as a ‘discrete discriminatory
act’ that triggers a new limitations period under Title VII but
not under [the EPA] for the purpose of pay discrimination
claims.” Id. at 1027.
No. 20-1406                                                              11

                              ***
   Williams’s alleged discriminatory statement casts doubt
on the Academy’s nondiscriminatory explanations for Kel-
logg’s salary, and Kellogg can rely on the statement even
though Williams uttered it outside the limitations window.
The district court’s decision to set aside Williams’s statement
thus requires remand.1
    Because we remand this case based on Williams’s state-
ment, we will not address at length any other parts of the dis-
trict court’s order. But we do want to clarify a ﬁnal point. In
granting summary judgment to the Academy, the district
court found that Kellogg could rely on the treatment of just
one comparator employee, Leslie McSparrin, to prove her
claims. This was so, according to the district court, because
Kellogg testiﬁed during a deposition that when she com-
plained to the Dean of the Teacher’s College in 2017, she “was
only looking at Mr. McSparrin’s” salary and because Kel-
logg’s amended complaint did not identify other compara-
tors.
   This ruling was not correct. To start, the notice pleading
standard set forth in Federal Rule of Civil Procedure 8, as

    1  We recognize that our decision today regarding Title VII conﬂicts
with our decision in Dasgupta v. University of Wisconsin Board of Regents,
121 F.3d 1138, 1140 (7th Cir. 1997) (“[A]n untimely Title VII suit cannot be
revived by pointing to eﬀects within the limitations period of unlawful
acts that occurred earlier.”). Dasgupta aligned with the Ledbetter decision.
Ledbetter, 550 U.S. at 637 (“[A]n employer violates Title VII and triggers a
new charging period whenever the employer issues paychecks using a
discriminatory pay structure.”). So, like Ledbetter, Dasgupta was also par-
tially overruled by the Ledbetter Act.
12                                                    No. 20-1406

deﬁned by the Supreme Court in Ashcroft v. Iqbal, 556 U.S. 662
(2009), and Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007),
does not require plaintiﬀs like Kellogg to identify all possible
comparators in a complaint. And even if it did, Kellogg’s com-
plaint consistently refers to multiple “comparators” and
“male employees,” indicating her suit did not focus on
McSparrin alone.
    Next, Kellogg did not cast aside all other comparators at
her deposition. True, “parties cannot thwart the purposes of
Rule 56 by creating ‘sham’ issues of fact with aﬃdavits that
contradict their prior depositions.” Ineichen v. Ameritech, 410
F.3d 956, 963 (7th Cir. 2005) (quoting Bank of Ill. v. Allied Signal
Safety Restraint Sys., 75 F.3d 1162, 1168 (7th Cir. 1996)). But
Kellogg is not “contradicting” herself by relying on other
comparators. At her deposition, Kellogg stated that when she
complained to the Dean in 2017, she “was only looking” at
McSparrin’s salary. She did not relinquish her ability to bring
up other comparators later, and it would be myopic to divine
that intention from her answer.
   Last, we are not concerned that the Academy will suﬀer
any unfair surprise from Kellogg’s reliance on other compar-
ators. The Dean initially pointed out other comparators when
responding to Kellogg’s 2017 inquiry. And the Academy’s
counsel brought up the additional comparators and asked
questions about them during Kellogg’s deposition. So the
Academy had clear notice of other comparators that Kellogg
may rely on.
                        III. CONCLUSION
    We REVERSE the district court’s decision and REMAND
this case for further proceedings consistent with this opinion.