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Seventh Circuit: Wrongful Termination Suit Has Issues

By Robyn Hagan Cain | Last updated on

Freedom Bank recruited Belinda Egan to serve as one of its vice presidents. Seven months later, Freedom dismissed Egan.

No, she wasn’t stealing from the company, yelling at clients, or doing anything considered bad business behavior. The bank claimed that it was reducing inefficiencies. Egan claimed she was penalized for rejecting sexual advances from a board member, and filed a wrongful termination suit.

Sounds like an issue for a jury to decide, right?

This week, the Seventh Circuit Court of Appeals reversed an Illinois district court's order of summary judgment in the case, finding that Egan and Freedom Bank had issues worthy of a jury trial.

Egan met the board member at the center of this controversy, during her first week on the job. Over the next two months, they had several business conversations over lunch and at the bank.

During a September 2007 dinner meeting, the board member told Egan that he had recommended that the board consider her to be the next Freedom Bank president. He also told her that he fantasized about her and wanted to take her to Vegas.

Whatever the board member had hoped to get out of this dinner - and we think it's clear what that was - things did not work out. Egan declined his advances and made an excuse to leave.

Egan secretly mentioned the incident to her friend, who happened to be the then-Freedom Bank President Grey Dempsey's wife. The incident did not remain a secret. Egan and Dempsey discussed what had happened, and Egan complained to Human Resources about the board member, who ultimately resigned. The vice president of Human Resources assured Egan that no adverse action or retaliation would be taken against her.

Bank leadership soon reshuffled and a new bank president, Dave Barajas, was named. In February 2008, Barajas wrote a letter to Egan telling her that he decided to eliminate her position. He gave no reason for the decision.

Egan filed a wrongful termination lawsuit alleging retaliation, a hostile work environment, and discrimination on the basis of her sex. The district court Freedom Bank's motion granted summary judgment.

Barajas testified in his deposition that Egan's tasks were duplicative, and that a business decision was made to eliminate Egan's position. Other bank executives offered similar testimony.

The Seventh Circuit Court of Appeals noted that the bank's explanation is plausible, but on summary judgment, the court's only task is to decide whether the record reflects any material fact that requires a trial.

Although a jury might agree that the bank eliminated Egan's position for operational reasons, there is also sufficient evidence in the record from which a reasonable jury could conclude that the bank instead fired Egan because she complained she had been sexually harassed by one of the bank's board members.

Employment law cases often progress to the appellate courts for similar reasons. When engaging a new client in a wrongful termination suit, be sure to advise your client about the probability of appeal.

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