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Ortiz v. Werner Enterprises, Inc.

United States Court of Appeals, Seventh Circuit

August 19, 2016

Henry Ortiz, Plaintiff-Appellant,
Werner Enterprises, Inc., Defendant-Appellee.

          Argued February 8, 2016

         Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 13 C 8270- John W. Darrah, Judge.

          Before Posner, Easterbrook, and Hamilton, Circuit Judges.

          Easterbrook, Circuit Judge.

         Henry Ortiz worked as a freight broker for Werner Enterprises, Inc., for seven years until his discharge in 2012. Werner says that it fired Ortiz for falsifying business records. Ortiz says that Werner fired him because of his Mexican ethnicity, and he sued Werner under 42 U.S.C. §1981 and the Illinois Human Rights Act, 775 ILCS 5/1-101 to 5/10-104. He also claimed that Werner subjected him to a hostile work environment in violation of the state law.

         Werner is a shipping company that offers freight brokerage as one of its services; customers pay a fee and Werner finds transportation for their loads. Werner tracks its customers' loads through a proprietary records system. Loads that have not been matched with a carrier-a vehicle hired to transport the load-appear in the system, and for most of Ortiz's tenure at Werner any broker could locate a carrier for any load. After securing carriers, brokers update the system to confirm the transactions, the carrier's prices, and who gets credit for the deal. Werner's profit is the difference between what its customer pays and what it pays the carrier. Some loads produce a loss when the carrier charges more than the customer's payment. Werner compensates its brokers primarily through a base salary, but they can earn a commission of up to 4% for months in which they generate more than a specified profit. Ortiz usually received monthly commissions of around $1, 000.

         Permitting all brokers to book any load led to problems, as brokers cherry-picked the nation's most profitable loads. In 2012 Werner addressed this by assigning each broker a specific region. During Ortiz's final months with Werner the regional broker bore responsibility for matching every load in the region to a carrier whether the load would generate a profit or a loss. But the system did not automatically assign loads-brokers still needed to search for loads in their region and update the records.

         Werner assigned Ortiz the West region, apparently not a lucrative assignment during late spring when high demand for transporting produce drives carriers' rates up. (The par- ties don't explain why Werner failed to change its fees to match predictable cycles in the business.) During the first week of June 2012 Michael Krikava, the branch's assistant manager, booked or directed another broker to book six unprofitable loads in Ortiz's name. There was some variation in how Ortiz's name wound up on each load: Krikava booked several loads in his own name and swapped in Ortiz's name after the loads had been picked up, but others were booked early in the morning when Ortiz may have been out of the office. Krikava did not notify Ortiz of any of these losing transactions. By the time Ortiz realized that he had been assigned responsibility for the loads, it was too late for him to search for a cheaper carrier. Ortiz later changed the records to reflect that he had not booked the loads or to show lower rates that he thought the carriers had agreed to charge. He then left for a planned vacation. On his return Werner fired him. The parties agree on this much, but here their stories diverge. We recount Ortiz's version, because we must view the evidence in the light most favorable to the party opposing a motion for summary judgment.

         Ortiz contends that brokers and managers always notified one another when booking an unprofitable load in someone else's name, and that it was atypical for someone else to book so many unprofitable loads without so much as a courtesy email or phone call. He adds that Krikava assigned him unusually high losses. Ortiz repeatedly questioned Krikava about the unprofitable loads but he refused to answer until saying: "Why won't you just quit already?"

         Ortiz maintains that he updated three records to show that he had spoken to the carriers, which had agreed to accept a lower rate because they had not picked up the goods on time. Ortiz adds that he often tried to negotiate a lower rate after a late delivery and that carriers would sometimes oblige. Ortiz says that this represents standard practice in the industry; other brokers offered similar testimony.

         Ortiz justifies the removal of his name from three other loads with evidence that the branch's managers permitted brokers to delete their names from unprofitable loads. This practice allowed Werner to satisfy the needs of all of its customers without saddling brokers with undue losses, thus protecting each broker's commission. Removing a broker's name from a loss also moved the loss off the branch's books, increasing the branch's profits and the managers' bonuses, which are tied to branch performance. Other Werner brokers testified that this was called "spacing", as in sending the record of the unprofitable load into cyberspace. (The evidence does not reflect what division of Werner ultimately bore the loss or how Werner reconciled its books.) Because spacing was common practice, Ortiz says, he thought it permissible for him to remove his name from the money-losing loads.

         On his first morning back from vacation Ortiz met with Kip Lass, the branch manager. Lass told Ortiz that he had been fired for falsifying records. Ortiz argued that he had not falsified records but had corrected them by providing the rate that the tardy carriers had agreed to charge, and he offered to call the carriers to provide proof. Lass showed no interest in verifying Ortiz's allegations, noted "What's done is done, " and discharged Ortiz without further investigation.

         Ortiz also tells us that Krikava and Lass subjected him to a barrage of ethnic slurs. They frequently used epithets such as "beaner, " "taco eater, " "fucking beaner, " "taco, " "bean eater/' "dumb Mexican/' "stupid Puerto Rican, " "dumb Puerto Rican/' "fucking Puerto Rican/' "Puerto Rican/' and "dumb Jew" to refer to Ortiz. Ortiz contends that he encountered such slurs throughout his tenure at Werner and that they increased in frequency and intensity in the months leading up to his discharge.

         Werner asserts that the office did not regularly notify brokers of loads recorded under their names, and it contends that the losses assigned to Ortiz were not unusually high. It insists that its brokers do not have the authority to remove their names from unprofitable loads without a manager's permission. It also denies that it was customary to cut a carrier's rate for a late delivery-even if the carrier had consented to the lower rate. According to Werner, Ortiz improperly edited these three records as well. Finally, Werner denies that Lass and Krikava ever made derogatory remarks to Ortiz. But on all of these issues we must look at the evidence from Ortiz's perspective.

         The district court granted summary judgment to Werner. 2015 U.S. Dist. Lexis 82952 (N.D. Ill. June 25, 2015). It dismissed Ortiz's claim of a hostile work environment for failure to exhaust his administrative remedies, a ruling Ortiz does not contest on appeal. The judge looked at the evidence through the "direct" and "indirect" methods that courts often discuss in employment-discrimination cases. See, e.g., Andrews v. CBOCS West, Inc.,743 F.3d 230, 234 (7th Cir. 2014); Zaderaka v. Illinois Human Rights Commission, 131 Ill.2d 172, 178-79 (1989). Admissions of culpability and smoking-gun evidence were assigned to the "direct" method (the judge found no such evidence), while suspicious circumstances that might allow an inference ...

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