Doris Keeton v. Morningstar, Incorp

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