The United States Court of Appeals for the Seventh Circuit reversed a District Court's grant of summary judgment in an action alleging TIN Inc. ("TIN") violated the Family Medical Leave Act ("FMLA") by interfering with an employee's right to take leave and retaliating against that employee. The Seventh Circuit reversed the District Court's decision that TIN terminated Mr. Jeff Pagel's employment due to his poor performance rather than for his taking of FMLA protected leave. The Court determined that there were still genuine issues of material fact as to why Mr. Pagel was terminated. Therefore, the grant of summary judgment in TIN's favor was reversed and the case was remanded for further proceedings.
Jeff Pagel worked for TIN as an outside salesman from May 2000 until his termination in October 2006. Mr. Pagel produced at least $7 million dollars in sales for the company per year, earning a $180,000 annual salary. On January 1, 2006, TIN instituted a new policy that required outside salesmen to submit daily activity reports to their Regional Sales Manager. Salesmen then would be given a periodic evaluation that included an assessment of their compliance with this new reporting system.
In July 2006, Mr. Pagel experienced several health problems and disabilities including being diagnosed with septal wall ischemia (a blockage in a portion of his heart). Mr. Pagel's health problems caused him to take a medical leave of absence from work. On August 29, 2006, Mr. Pagel underwent an angioplasty and stent replacement, spent one day in the hospital and was advised to rest for several days following the operation. The next week Mr. Pagel's symptoms returned and he was admitted to the hospital for two nights. It was determined that Mr. Pagel also had an irregular mass in his left lung that was unrelated to his septal wall ischemia.
In the midst of Mr. Pagel's health issues, he was called into a meeting with his Plant Manager. In that meeting he was told that his performance had steadily decreased in the last two years, he submitted the fewest number of new customer packing designs and he made the least amount of sales calls compared to the other account managers. Mr. Pagel disputed the accuracy of this evaluation claiming that the Plant Manager was unaware of many of his sales. Mr. Pagel also indicated that many of the days included in the evaluation he was out receiving FMLA qualifying treatment for his health conditions. Although Mr. Pagel had never been warned about his performance or disciplined before, he received a written memo that if his performance did not improve he would be terminated.
Mr. Pagel's Regional Sales Manager contacted him while he was in a clinic to receive a PET scan and informed him he would be observed and evaluated the next day in a sales ride along. Due to the short notice, Mr. Pagel was only able to schedule one call that day and two other attempts were unsuccessful. Usually scheduling a sales call would require one-week notice to the prospective customer but Mr. Pagel was only given one day notice to schedule the calls for his ride along. Mr. Pagel's Regional Sales Manager called the ride along "disastrous" and considered it the final straw in Mr. Pagel's negative performance. On October 2, 2006, Mr. Pagel was terminated. His termination memo articulated the reason for his termination being poor performance and described his poor performance in the sales ride along and his failure to improve since the August 24, 2006 evaluation as contributing factors.
Mr. Pagel brought both an interference and retaliation claim under the FMLA. Under an FMLA interference claim, Mr. Pagel was required to prove that: 1) he was eligible for FMLA protections; 2) his employer was covered by the FMLA; 3) he was entitled to take leave under the FMLA; 4) he provided sufficient notice of his intent to take leave; and 5) his employer denied him FMLA benefits to which he was entitled. Makowski v. SmithAmundsen LLC, 662 F.3d 818, 825(7 th Cir. 2011)(quoting Goezler v. Sheboygan Cnty., Wis., 604 F.3d 987,993 (7th Cir. 2010)). The Court focused on only the last three elements since the first two were conceded by TIN.
The Court found that Mr. Pagel produced sufficient evidence to survive summary judgment on his interference claim under the FMLA. Mr. Pagel was entitled to take FMLA leave because his septal wall ischemia qualified as a serious health condition. In finding the element of entitlement was met, the Court also noted that Mr. Pagel's inpatient care on at least three (3) occasions further substantiated that his septal wall ischemia was a serious health condition. Mr. Pagel was also deemed to have provided sufficient notice of his intent to take FMLA leave. The employer's admission that they knew of Mr. Pagel's chest pains, that he was sick and that he was going to be in the hospital was enough to establish sufficient notice. However, the court did note the uncertainty in Mr. Pagel's testimony about his communications with his employer.
The Appellate Court rejected the district court's finding that Mr. Pagel's disastrous performance in the ride along with his regional sales manager was a legitimate, non-discriminatory reason for his termination. The court determined that because Mr. Pagel was given only one day to prepare for the ride along and it was customary for account managers to be given at least one week, a reasonable jury could interpret such evidence as Mr. Pagel being set up for failure. Additionally, the court rejected TIN 's argument that it had independent grounds to terminate Mr. Pagel due to his poor performance. For instance, TIN stated that Mr. Pagel's revenue and volume had declined. Mr. Pagel countered the accuracy of that contention by asserting that his commission-based salary remained stable and that his salary would have declined if the contention that his sales revenue and volume declined was actually true. The Court deemed such evidence sufficient for Mr. Pagel to survive summary judgment.
The Appellate Court also evaluated Mr. Pagel's retaliation FMLA claim under the direct method. In order for Mr. Pagel to prove a violation of the FMLA under the direct method retaliation claim, he was required to show a casual connection between the taking of FMLA protected leave and the adverse employment action. The court noted that such connection may be shown by a direct admission from TIN Inc. or "a convincing mosaic of circumstantial evidence." The court further explained that such a "convincing mosaic" may include suspicious timing, ambiguous statements from which a retaliatory intent can be drawn, evidence of similar employees being treated differently, or evidence that the employer offered a pretextual reason for the termination. Under the direct method, Mr. Pagel argued that TIN's claim that he was terminated due to poor performance was mere pretext and he was terminated in retaliation for taking FMLA protected leave. The court concluded that although poor performance can be an acceptable non-discriminatory basis for termination, a genuine issue of material fact existed as to whether poor performance was the reason for Mr. Pagel's termination.