In the

United States Court of Appeals For the Seventh Circuit ____________________ No. 21-3158 KRISTIE A. ALLEY, Plaintiff-Appellant, v.

PENGUIN RANDOM HOUSE, Defendant-Appellee. ____________________

Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. 1:20-cv-00117-RLY-DLP — Richard L. Young, Judge; Doris L. Pryor, Magistrate Judge. ____________________

ARGUED SEPTEMBER 12, 2022 — DECIDED MARCH 9, 2023 ____________________

Before EASTERBROOK, KIRSCH, and JACKSON-AKIWUMI, Cir- cuit Judges. KIRSCH, Circuit Judge. Kristie Alley sued her former em- ployer, Penguin Random House, for retaliation under Ti- tle VII of the Civil Rights Act of 1964 and for breach of con- tract under Indiana law. Alley alleged that Penguin demoted her in retaliation for reporting sexual harassment and vio- lated Indiana law in doing so. The Title VII claim proceeded 2 No. 21-3158

to summary judgment, but the record demonstrated that Al- ley was demoted for her failure to report allegations as re- quired by Penguin policy and, therefore, she did not engage in statutorily protected activity. Accordingly, the court con- cluded that no reasonable juror could find that Alley was re- taliated against and granted Penguin’s motion for summary judgment on that claim. Alley now appeals that ruling, as well as the magistrate judge’s earlier dismissal of her state law breach of contract claim under Federal Rule of Civil Proce- dure 12(b)(6). We affirm both decisions. I Kristie Alley started working as a full-time order proces- sor at Penguin Random House’s shipping warehouse in Crawfordsville, Indiana in 2014. Within two years, Penguin promoted Alley to the management position of Group Leader. In that role, Alley monitored production and served as a liaison between supervisors and line employees. Penguin required Group Leaders (and all managers and supervisors) to report sexual harassment allegations when they learned of them and provided clear instructions on how to do so. The company’s Anti-Harassment and Reporting Pro- cedure instructed employees who believed they themselves or a coworker had been subject to harassment to promptly re- port to: (1) their manager; (2) a department or division head; or (3) a human resources representative. Alternatively, em- ployees may report violations anonymously by contacting the ombudsperson. Managers and supervisors were required to communicate any employee complaint—formal or infor- mal—to human resources and were subject to discipline for failing to report suspected harassment. Alley received a copy No. 21-3158 3

of this policy during her orientation and participated in train- ings that referred to it. On September 13, 2019, Penguin employee Marlene Guz- man informed Alley that Scott Lillard was sexually harassing her. Despite her duty to follow Penguin’s reporting proce- dure, Alley did not. Instead, she conducted her own inde- pendent investigation into the allegations. Alley asked Guz- man to provide a written statement detailing her allegations, which Guzman gave her a few days later. Megan Haines, Guzman’s then-coworker and roommate, submitted a corrob- orating statement as well. Alley also messaged via Facebook Ashley Pendleton, a former Penguin employee, to discuss her experience with Lillard at the facility. Pendleton had stopped showing up for work a few months prior, and Alley suspected it had something to do with Lillard. Alley also made one phone call to the ombudsperson, but no one answered. She did not contact anyone in management or human resources to report Guzman’s allegations. In the meantime, both Haines and another Penguin em- ployee, Emily Felix, came forward to HR on their own, report- ing that Lillard was sexually harassing Guzman. Penguin im- mediately launched an investigation into the allegations. Guzman submitted a statement detailing her harassment, and Haines submitted a corroborating statement. Penguin’s senior vice president and the facility’s HR direc- tor then met with Alley to learn if she had any further infor- mation. Alley admitted that she already knew of Guzman’s allegations and that she had reached out to Pendleton (the for- mer employee) hoping to obtain more information about Lillard. Following the meeting, Alley forwarded the state- ments Guzman and Haines had provided to her. 4 No. 21-3158

The next week, Alley provided a statement alleging that she too had been sexually harassed by Lillard starting in 2015. Cole Golladay, her former supervisor and Group Leader, later revealed that Alley had reported the harassment to him in 2017, and that he did not report despite his obligation to do so. Golladay was not disciplined for his failure to report. In light of this information, Penguin terminated Lillard in late September 2019. Shortly after, Penguin’s senior vice pres- ident and another manager met with Alley to inform her that she was being demoted from Group Leader to forklift opera- tor. They told her that the demotion was due to her failure to report sexual harassment, thereby putting Penguin’s employ- ees at risk. Alley continued working at Penguin as a forklift operator until resigning in July 2020. II Alley appeals the district court’s grant of summary judg- ment on her retaliation claim and dismissal of her breach of contract claim. Under Rules 56 and 12(b), our review is de novo. Scaife v. U.S. Dep’t of Vet. Affairs, 49 F.4th 1109, 1114 (7th Cir. 2022); Adams v. City of Indianapolis, 742 F.3d 720, 727–28 (7th Cir. 2014). A To survive summary judgment on a Title VII retaliation claim, a plaintiff must produce evidence from which a reason- able juror could find that: (1) she engaged in a statutorily pro- tected activity; (2) she suffered an adverse employment ac- tion; and (3) there is a causal link between the two. Abrego v. Wilkie, 907 F.3d 1004, 1014 (7th Cir. 2018). “The key question is whether a reasonable juror could conclude that there was a causal link between the protected activity … and the adverse No. 21-3158 5

action.” Rozumalski v. W.F. Baird & Assocs., Ltd., 937 F.3d 919, 924 (7th Cir. 2019) (citing Ortiz v. Werner Enters. Inc., 834 F.3d 760, 765–66 (7th Cir. 2016)). Relevant evidence may include “suspicious timing, ambiguous statements of animus, evi- dence other employees were treated differently, or evidence the employer’s proffered reason for the adverse action was pretextual.” Rozumalski, 937 F.3d at 924 (citation omitted). We consider all of the evidence as a whole. Ortiz, 834 F.3d at 765. Alley alleges that Penguin demoted her in retaliation for reporting sexual harassment. She argues that she helped Guz- man report by encouraging her to put the allegations into writing and to collect a corroborating statement from Haines. According to Alley, she wanted to do this before taking the allegations to Penguin so that the company would be forced to investigate rather than cover them up. On appeal, she con- tends that these actions were protected under Title VII and that she was demoted because of them. Alley argues that: the timing of her demotion was suspicious, Penguin’s reason for demoting her was pretextual, the dissimilar treatment of Gol- laday is proof that she was not actually demoted for failing to report harassment, and edits made in her management jour- nal are further support of Penguin’s disingenuousness. To satisfy the first requirement of a retaliation claim, Alley argues that the steps she took to help Guzman report her al- legations are statutorily protected activity. But they are not. “An employee engages in a protected activity by either: (1) fil- ing a charge, testifying, assisting or participating in any man- ner in an investigation, proceeding or hearing under Title VII or other employment statutes; or (2) opposing an unlawful employment practice.” Northington v. H & M Int’l, 712 F.3d 1062, 1065 (7th Cir. 2013). Sexual harassment is indisputably 6 No. 21-3158

an unlawful employment practice and thus, reporting allega- tions is a recognized protected activity under Title VII. See e.g., Magyar v. Saint Joseph Reg’l Med. Ctr., 544 F.3d 766, 770–72 (7th Cir. 2008). But Alley did not actually report har- assment; she failed to report harassment. Failing to report is not a protected activity under Title VII. Whatever her motiva- tion in undertaking her own investigation instead of taking the report to HR, her conduct simply is not statutorily pro- tected activity. Thus, Alley cannot satisfy the first requirement of a retaliation claim. It is undisputed that Alley never reported Guzman’s sex- ual harassment allegations. Alley argues that she attempted to report when she called the ombudsperson, but her call went unanswered, and she never actually spoke with anyone. She admits that she never made another attempt to call the ombudsperson or to communicate the complaint to an HR representative as required by the reporting policy. Penguin management independently learned of the allegations and asked Alley if she knew anything. Only then did Alley come forward and admit that Guzman had reported these allega- tions to her as well. We also note that even if Alley did engage in a protected activity by attempting to help Guzman report, there is still in- sufficient evidence to reasonably conclude that Penguin retal- iated against her. Although suspicious timing “can sometimes raise an inference of a causal connection” between an em- ployee’s protected action and an adverse employment action, there is nothing suspicious about the timing of Alley’s demo- tion. Gracia v. SigmaTron Int’l, Inc., 842 F.3d 1010, 1021 (7th Cir. 2016). When “there are reasonable, non-suspicious explana- tions for the timing” of the defendant’s conduct, proximity in No. 21-3158 7

time is not enough to support a retaliation claim. Terry v. Gary Cmty. Sch. Corp., 910 F.3d 1000, 1008 (7th Cir. 2018). Here, there is a perfectly reasonable explanation for the timing of Alley’s demotion: Penguin learned of her failure to comply with her obligation to report sexual harassment allegations and demoted her eight days later, after concluding its investi- gation. Similarly, Alley failed to produce evidence of pretext. A showing of pretext would require evidence suggesting that Penguin lied about the real reason for Alley’s demotion. See O’Leary v. Accretive Health Inc., 657 F.3d 625, 635 (7th Cir. 2011). But the evidence shows that Penguin took the allega- tions against Lillard seriously and that it demoted Alley for failing to report them. After learning of the allegations, Pen- guin immediately launched an investigation, suspended Lillard just a day later, and terminated him the week after that. Alley argues that Penguin’s dissimilar treatment of Gol- laday, who in 2017 failed to report Alley’s own allegations against Lillard, casts doubt on Penguin’s motive. But a rea- sonable fact finder could not conclude that Golladay is a sim- ilarly situated employee. Similarly situated employees must be “directly comparable to the plaintiff in all material re- spects.” McDaniel v. Progress Rail Locomotive, Inc., 940 F.3d 360, 368 (7th Cir. 2019) (cleaned up); see also Lesiv v. Illinois Cent. R.R. Co., 39 F.4th 903, 919 (7th Cir. 2022) (“In a case challeng- ing disciplinary action, the plaintiff and comparator ordinar- ily must have dealt with the same supervisor, been subject to the same standards, and have engaged in similar conduct without such differentiating or mitigating circumstances as would distinguish their conduct or the employer’s treatment 8 No. 21-3158

of them.”) (cleaned up). Although Golladay also failed to re- port harassment allegations—in this case, Alley’s—Penguin did not learn of his failure until more than two years after the fact. In contrast, Penguin was already investigating Guzman’s allegations when it learned of Alley’s failure to report and was able to take immediate action. The law does not require em- ployers to discipline employees equally for behavior that hap- pened multiple years apart. Penguin’s decision to treat the two employees differently in this situation is not evidence of a retaliatory motive. Lastly, Alley argues that summary judgment is precluded because there is a disputed question of fact regarding changes made to entries in her management journal. But any dispute is immaterial. Even when asked about the relevancy of the journal at oral argument, counsel could not give an answer other than it was suspicious and that Penguin may have changed it to try to build a record against her. We fail to see how. The record shows that Alley was not demoted in retalia- tion for reporting sexual harassment allegations, but for her failure to report in a timely and appropriate manner. Thus, a reasonable juror could not find that her demotion was due to her engagement in a protected activity. Her retaliation claim fails. B We next turn to Alley’s state law breach of contract claim. Indiana follows the employment at will doctrine, which gen- erally permits both the employer and the employee to termi- nate the employment at any time for any reason, or for no rea- son at all. Meyers v. Meyers, 861 N.E.2d 704, 706 (Ind. 2007). No. 21-3158 9

Employers may also demote employees as they see fit. Never- theless, Alley alleges that Penguin’s employee Code of Con- duct created a unilateral contract containing binding mini- mum standards that Penguin employees are obligated to ad- here to and claims that Penguin can be held liable for failing to adhere to those standards. Specifically, she alleges that Pen- guin violated the handbook’s statement that “intimidation and retaliation against employees who in good faith provide reports of suspected or actual misconduct must not be toler- ated.” Alley frames this as a specific promise and argues that Penguin broke it by demoting her. This argument fails. First, for reasons discussed above, Penguin did not retaliate against her for reporting sexual har- assment. Second, Alley cannot recover because the Code of Conduct is not an enforceable unilateral contract. A unilateral contract arises when “one party makes an offer (or promise) which invites performance by another, and the performance constitutes both acceptance of that offer and consideration.” Orr v. Westminister Vill. N. Inc., 689 N.E.2d 712, 719 n.11 (Ind. 1997). It is unclear whether an employee handbook could ever constitute a unilateral contract and bind an employer under Indiana law. See Peters v. Gilead Scis., Inc., 533 F.3d 594, 599 (7th Cir. 2008) (citing Orr, 689 N.E.2d at 719–20). Even if it could, the handbook would have to contain a “promise clear enough that an employee would reasonably believe that an offer had been made.” Orr, 689 N.E.2d at 720 (citation omit- ted). Alley does not point to any provision in the handbook that is a secure promise of employment. The provision she cites is simply a personnel policy stating that certain behavior is intolerable. 10 No. 21-3158

Penguin’s employee Code of Conduct did not convert Al- ley’s at will employment into a contractual relationship. Thus, she cannot bring a claim for breach of contract. AFFIRMED No. 21-3158 11

JACKSON-AKIWUMI, Circuit Judge, dissenting. While I agree with the majority opinion on the breach of contract claim, I part ways with its evaluation of Alley’s effort to report Guz- man’s harassment allegation and Alley’s subsequent demo- tion. There are sufficient material and disputed facts in the record for Alley’s retaliation claim to go to a jury. The majority opinion concludes Alley’s retaliation claim fails for two reasons: (1) Alley never reported Guzman’s alle- gations; and (2) there is insufficient evidence to “reasonably conclude” Penguin retaliated, particularly because Cole Gol- laday, who failed to report Alley’s own allegation of harass- ment two years prior and was not disciplined, is an improper comparator. In my view, these objections misread the circum- stances of the case. A. Alley’s effort to report I begin with undisputed facts of Alley’s effort to report Lillard’s harassment. Alley was first told by Marlene Guzman of Lillard’s harassment on September 13, 2019. Lillard was a fellow group leader at the plant who, at the time, was working alongside Alley in splitting the duties of a supervisor who was on leave. Because of Guzman’s fears of continuing to work under Lillard, and apparent indifference by manage- ment to previous complaints about Lillard from six other workers, 1 Guzman and Alley decided to make a report to the ombudsperson as detailed in Section 4.4. of Penguin’s Code of Conduct.

1 Penguin contends that these previous complaints about Lillard were

focused on his management style and did not hint at sexual harassment or gender-based bullying. 12 No. 21-3158

On September 16 or 17, Alley received a written statement from Guzman. On September 17, she called several numbers listed in Penguin documents seeking to speak with the om- budsperson. She eventually spoke for seven minutes with an employee of Penguin who had trouble finding the appropri- ate number. Alley then independently found the number for the ombudsperson and left a message. Meanwhile, on Sep- tember 18 and 19, another employee reported Lillard for har- assing Guzman, and a roommate of Guzman submitted a cor- roborating statement. On September 19 or 20, 2 Alley was called into a meeting with two Human Resources managers, HR Director Bonnie Mann and Senior Vice President Lori DeReza. Mann and De- Reza asked Alley if there was anything wrong with her as she had been acting unusually. In that meeting, Alley was the first to disclose that she had received Guzman’s statement about harassment by Lillard. Alley was subsequently demoted from her group leader position in a meeting on September 27, os- tensibly because she failed to report Lillard’s harassment. Penguin’s anti-harassment policy requires managers to report violations to HR, but also includes a procedure where em- ployees can report to the ombudsperson. Alley’s theory of retaliation is that she was demoted for disclosing to HR that Guzman was being harassed by Lillard. A retaliation claim can survive summary judgment if the plaintiff produces enough evidence for a reasonable jury to

2 The record is unclear as to when this meeting happened. Alley said

it was September 20 in her complaint and deposition. However, in the summary judgment and appeal briefs, Alley says it was September 19. Penguin also says the meeting was September 19. No. 21-3158 13

conclude (1) they engaged in protected activity; (2) defend- ants took materially adverse action against them; and (3) there was a but-for causal connection between the two. Nicholson v. City of Peoria, 860 F.3d 520, 523 (7th Cir. 2017). Protected activ- ity for the purposes of a Title VII retaliation claim is “some step in opposition to a form of discrimination that the statute prohibits.” Ferrill v. Oak Creek-Franklin Joint Sch. Dist., 860 F.3d 494, 501 (7th Cir. 2017) (citing O'Leary v. Accretive Health, Inc., 657 F.3d 625, 631 (7th Cir. 2011)). This only requires an em- ployee to have a “good-faith and reasonable belief” that they are opposing unlawful conduct. Id. (emphasis in original). Al- ley’s behavior meets this standard: she listened to Guzman, agreed with her desire to report to the ombudsperson, took a statement from her, and made an honest attempt to contact the ombudsperson. She then told HR about Guzman’s state- ment at the meeting on September 19 or 20. These are enough facts for a reasonable jury to conclude that Alley engaged in protected activity for the purposes of her retaliation claim. B. Evidence of retaliation This takes us to the question of whether Alley presented evidence of a “but-for” causal connection between her report and her demotion. Alley can meet this standard using circum- stantial evidence such as “suspicious timing, ambiguous statements of animus, evidence other employees were treated differently, or evidence the employer’s proffered reason for the adverse action was pretextual.” Rozumalski v. W.F. Baird & Assocs., Ltd., 937 F.3d 919, 924 (7th Cir. 2019) (citing Greengrass v. Int’l Monetary Sys. Ltd., 776 F.3d 481, 486 (7th Cir. 2015)). 14 No. 21-3158

1. Penguin’s treatment of Golladay Alley contends that retaliation against her is evidenced in part by the treatment of Golladay, who received her report about Lillard’s sexual harassment in 2017 but did not follow up on the report and yet was not disciplined by Penguin. (The record suggests that Penguin did not even investigate Gol- laday’s failure to report.) Indeed, Golladay did not report the harassment upwards until two years later, on September 25, 2019, in an email to his manager, Mike Brock. This is several days after Alley attempted to call the ombudsperson about Lillard’s harassment of Guzman, after two other employees reported the same, and after Alley’s meeting with HR during which she also reported the same. Penguin—and the majority opinion—view Golladay’s conduct as irrelevant because Penguin did not discover Gol- laday’s failure to report until two years after the fact. The ma- jority opinion concludes that this time gap justified Penguin’s different treatment of Alley and Golladay. This supposition not only fails to view the facts in the light most favorable to Alley as the non-moving party, it also assumes that Alley’s comparison to Golladay is an attempt to use the McDonnell Douglas burden shifting framework.3 However, Alley is

3 Even if Alley was proceeding under the McDonnell Douglas frame-

work, we have reminded that comparisons between employees may not be drawn too narrowly. See Dunlevy v. Langfelder, 52 F.4th 349, 354 (7th Cir. 2022) (“If a comparator engaged in equivalent or more egregious conduct than the plaintiff but received a lighter punishment, or none at all, that satisfies the inquiry. The parties agree that [the compared employees] had the same supervisor and were subject to the same standards. Thus, the only question is whether the two men’s conduct was of ‘comparable seri- ousness,’ i.e., did they engage in ‘similar—not identical—conduct to qual- ify as similarly situated.’”). Likewise, where disciplinary actions are No. 21-3158 15

proceeding under the Ortiz framework and referencing Gol- laday as circumstantial evidence to show causation. See Ortiz v. Werner Enters., Inc., 834 F. 3d 760, 766 (7th Cir. 2016) (hold- ing “all evidence belongs in a single pile and must be evalu- ated as a whole.”); Runkel v. City of Springfield, 51 F.4th 736, 742 (7th Cir. 2022) (“[O]ur decision in Ortiz v. Werner Enter- prises rejected the distinction between direct and indirect evi- dence and the corresponding methods of proof … . [W]e and district courts should consider all available evidence and, when deciding a motion for summary judgment, should ask whether a reasonable jury could find that the relevant deci- sion was motivated in part by an unlawful criterion.”); see also Rozumalski, 937 F.3d at 924 (holding “evidence other employ- ees were treated differently” can be used to show a causal link for a retaliation claim). The fact that Penguin chose to demote Alley but let Gol- laday escape any form of discipline (and perhaps even inves- tigation) is particularly noteworthy given the difference in the level of egregiousness. Alley’s purported delay in reporting to HR was mere days; Golladay took over two years and waited until after the secret of Lillard’s harassment was out of the bag and the company’s internal processes had begun. The majority opinion places substantial weight on Penguin’s ex- planation that Golladay’s infraction was stale, making it less urgent to act upon than Alley’s. However, a jury is entitled to read such an explanation as an ex-post justification for Alley’s

challenged, such as in a case the majority opinion references, see supra 7-8 (citing Lesiv v. Illinois Cent. R.R. Co., 39 F.4th 903 (7th Cir. 2022)), we have stated that the “congruence” between the conduct of both employees “need not be perfect.” Lesiv, 39 F.4th at 919. 16 No. 21-3158

demotion. An employer “who advances a fishy reason [for adverse action] takes the risk that disbelief of the reason will support an inference that it is a pretext for discrimination.” Loudermilk v. Best Pallet Co., LLC, 636 F.3d 312, 315 (7th Cir. 2011). To be sure, evidence that other employees reported Lillard’s harassment and did not receive discipline cuts against Alley. But this merely shows that there is competing evidence a jury must evaluate, not that the record compels a ruling as a matter of law against Alley. Flowers v. Renfro, 46 F.4th 631, 636 (7th Cir. 2022) (“At summary judgment, the dis- trict court could not weigh credibility, balance the relative weight of conflicting evidence, choose between competing in- ferences, or resolve swearing contests. It had one task only— to determine whether there were any disputes of material fact that required a trial and upon which a reasonable jury might rely to return a verdict for the nonmoving party.”). 2. Penguin’s changes to Alley’s employment record In addition to Golladay as a comparator suggesting retali- ation, Alley has presented evidence of changes made to her management journal. Two days after her September 27 demo- tion, Alley checked her management journal and saw that her work performance ratings for March 4, August 19, and Au- gust 23 had changed from “N”—for “neutral”—to “B”—for “bad.” The explanations from Penguin’s management as to how and why these changes were made are confusing and contradictory. HR Director Bonnie Mann testified that she spoke with Mike Brock, who managed Alley at the time and authored the August 19 entry. According to Mann, Brock told her that “he No. 21-3158 17

might have put N for not good versus B for bad or vice versa.” Mann then testified that “[Brock] noticed that [Zach Link, an- other superior] had done the same thing … . And then [Brock] brought it to [Link’s] attention. And [Link] went in and up- dated it and made the correction.” Link, however, testified that he never made any changes to Alley’s journal entries, nor was he ever contacted to make such changes. These explanations from management are inconsistent. The majority opinion dismisses the issue by calling the dis- pute “immaterial.” In doing so, it notes that counsel for Alley at oral argument was only able to state that the changed rec- ords were suspicious because they suggested Penguin was trying to build a record against Alley. But poorly substanti- ated and explained downward changes to an employee’s rat- ings after the employee engages in protected activity are ex- actly the kind of circumstantial evidence a plaintiff is allowed to rely on to show a causal link for a retaliation claim. Rozu- malski, 937 F.3d at 924. 3. Penguin’s justification for demoting Alley A final piece of evidence worth discussing is Penguin’s justification for demoting Alley: that she failed to report har- assment. Alley has presented sufficient evidence to raise a jury question about whether this reason is pretextual because a reasonable jury could conclude her actions did not consti- tute a “failure” to report in the first place. Alley has presented evidence of working with Guzman to make a report to the ombudsperson, which Penguin’s anti- harassment procedure specifically contemplates. Alley heard from Guzman on September 13, and attempted to report to the ombudsperson on September 17. Just two or three days 18 No. 21-3158

later, Alley disclosed Guzman’s allegations to HR managers Mann and DeReza and detailed the work she had done to help Guzman file her complaint. In short, there are disputed mate- rial facts about the nature of Alley’s activity (failure to report versus an attempt to report to the ombudsperson and an ac- tual report to HR) that preclude summary judgment. Dunn v. Menard, Inc., 880 F.3d 899, 905 (7th Cir. 2018) (“A genuine dis- pute of material fact exists if ‘the evidence is such that a rea- sonable jury could return a verdict for the nonmoving party.’”). For these reasons, I respectfully dissent in part.