Courts have applied the McDonnell Douglas burden-shifting method of proof to Title VII, § 1983 and other discrimination cases countless times since its inception in the 1970s. The test classically allows employees who lack direct proof that their employers discriminated against them to raise an inference of discrimination, indirectly, by disproving the other lawful reasons that the employer might have had for its decision. Many courts get this test wrong, but here the Seventh Circuit gets it on the nose and - as a bonus - corrects the district court's application of the "stray remarks" rule and the "same actor" inference.
Radentz v. Marion County, No. 10-1523 (7th Cir. Apr. 5, 2011): The facts of this §1983 case parallel those of another recent case involving the same employer, Marion County Coroner's Office v. EEOC, 612 F.3d 924 (7th Cir. 2010). The Coroner's office, an elected position, changed hands from a white predecessor to a new African-American office-holder (named Ackles). The following year (2005), Indiana University terminated a contract with the office to furnish forensic pathology services. The Chief Deputy Coroner at that time (named Linehan) contracted with a replacement service, a company called Forensic Pathology. That company's owners are the plaintiffs in this case.
Linehan (who is white) was then fired by the new Coroner and replaced by another deputy, Ballew (who is African-American). Ballew, citing budgetary concerns about the contract with Forensic Pathology, within a short time exercised a right of termination with six-months' notice. Their services were then replaced by a new doctor, also African-American, who the Coroner's office hired directly.
The owners of Forensic Pathology, who are white, claimed in their lawsuit that the decision to terminate their contract was racially motivated. The district court granted summary judgment to the defendants on the ground that the plaintiffs failed to establish that the Coroner's proffered, non-discriminatory budgetary reason was a pretext for race discrimination.
The Seventh Circuit reverses. Getting to the heart of the matter, the panel assumes that the budgetary consideration - specifically, the expense to the Coroner's office of allowing Forensic Pathology to use Marion County supplies to perform out-of-county autopsies - was a legitimate reason for the termination. But, the panel notes, "[t]he question remains whether the termination of the contract was based on those concerns." The panel holds that this question has to be tried to a jury, and cannot be decided as a matter of law.
First, the panel observes that the contract gave the Coroner's office another option - to terminate the company's right to use its facilities ("Provision K"). The panel holds that it is relevant to the pretext query why the office did not exercise this option:
"Here, the defendants consistently have maintained that they were pleased with the quality of the plaintiffs' services, and that they wished to retain the services of the plaintiffs, but that they could not do so because the out-of-county autopsies rendered the contract too expensive. They failed, however, to utilize the contract provision that would have directly met both of those professed desires-it would have eliminated the extra expense while retaining the services of the plaintiffs. . . . The failure to exercise the right under provision K to eliminate the troublesome expenses, and to instead terminate the contract, casts doubt on whether the expense was actually the reason for the termination."
Second, there was record evidence of a pattern (as with Linehan) to replace white employees with African-Americans, and express statements by the Coroner and his deputy that this was their intention. The district court treated the latter as "stray remarks," and held that any inference of discrimination here was dispelled by the fact that the same Coroner's office hired Forensic Pathology knowing the owners were white (i.e., the "same actor" inference). The panel dispels both points:
"The timing of the comments is relevant, and the court properly noted that after indicating the desire to hire an African-American forensic pathologist in January 2005, Ackles nevertheless entered into a contract with the defendants who are white in September 2005. That does not render the race-based statements 'stray comments,' however, given the urgency surrounding the initial contract with Forensic Pathology. . . . The need for a quick transition and the short duration of the Forensic Pathology contract allows for an inference that their hiring was merely as a placeholder while the defendants pursued the goal of hiring African-Americans. Therefore, the court erred in dismissing outright any consideration of the clear statement by Ackles that he wanted to replace white workers with African-Americans, and that he wanted to hire an African-American pathologist. Those statements provide some support for the plaintiffs' claim that their termination was race-based."
Finally, there was evidence that deputy Ballew analyzed the financial impact at the time of the decision and discovered that there would be cost-benefit to terminating the contract, thus undercutting the Coroner's sole rationale for the decision. Overall, then the panel finds that the record at least supported the plaintiffs' entitlement to a jury trial to decide the contested facts.