Smeigh v. Johns Manville, Inc.

In the

United States Court of Appeals
For the Seventh Circuit

No. 10-3388

A ARON S MEIGH,
Plaintiff-Appellant,
v.

JOHNS M ANVILLE, INC.,
Defendant-Appellee.

Appeal from the United States District Court
for the Southern District of Indiana, Indianapolis Division.
No. 1:09-cv-414-TWP— Tanya Walton Pratt, Judge.

A RGUED A PRIL 6, 2011 — D ECIDED JUNE 29, 2011

Before F LAUM, E VANS, and T INDER, Circuit Judges.
T INDER, Circuit Judge. Aaron Smeigh brings this diver-
sity suit against his former employer, Johns Manville (JM),
for retaliatory discharge and civil conversion under
Indiana law. He alleges that JM wrongfully terminated his
employment for filing a workers’ compensation claim and
unlawfully retained his personal property after his termi-
nation. JM moved for summary judgment on Smeigh’s
claims and the district court granted the motion. Smeigh
appeals.
2 No. 10-3388

We affirm. Smeigh has not presented sufficient evidence
upon which a reasonable jury could conclude that he was
fired in retaliation for filing workers’ compensation.
Although he was terminated shortly after his workplace
injury, the evidence shows that JM terminated him for his
post-accident statement that he might not pass a drug test
(he later passed the drug test) and subsequent refusal to
sign an agreement presented by JM requiring him to
undergo counseling and random drug testing (at Smeigh’s
expense) to retain his job. Smeigh made no showing that
JM’s proffered reason for terminating him was a lie to
cover up retaliation.
Smeigh similarly has not presented evidence that JM
knowingly exerted unauthorized control over his property.
It was company protocol after termination to sort through
an employee’s belongings to separate personal property
from company property. Smeigh didn’t object when
Bernice Wilson, a JM employee and union secretary,
indicated she would clean out his locker and temporarily
take possession of his belongings. His property (tools) was
then stolen from Wilson’s office. Smeigh, however, never
informed JM that Wilson still had possession of his tools or
that he objected to her temporary possession of them. He
waived any claim to vicarious liability and without provid-
ing some evidence that JM had the requisite mens rea,
Smeigh’s claim fails as a matter of law.

I. Background
Smeigh started working for JM in 1994 and throughout
his employment belonged to a union. Smeigh was an
excellent, reliable, and tireless worker. He was considered
No. 10-3388 3

knowledgeable, had a spotless employment record, and
would often work overtime hours—50 to 60 hours a week.
On September 20, 2008, Smeigh suffered a workplace
injury—he severed the tip of his finger while moving a
fiberizer cart. While waiting for an ambulance in the
parking lot, he spoke to his direct supervisor, Bill Seamans.
JM enforced a policy that required workers injured on
the job to submit to drug testing. Smeigh testified as
follows:
Bill asked me if I would have any problems passing
a drug test. And I told him I should not have any
problems passing a drug test, because I do not use
drugs. And I said if by any chance that I was to
come up inconclusive or positive, it’s not because
I was on any drugs. And he asked me what I meant
by that. And I told him about a week prior I had
went into a room where some pot had been
smoked. And I did not know if it would show up
in my system as a positive result as, you know,
secondhand breathing.
Acting plant manager Matt Weber arrived on the scene as
the ambulance took Smeigh to the hospital. Seamans
explained to Weber the nature of the injury and told Weber
that Smeigh might potentially fail a drug test. Weber did
not talk to Seamans about the incident after having this
conversation.
Weber went to the hospital with Smeigh. The parties
dispute the content of their conversation at the hospital.
Smeigh claims they did not talk about marijuana or drug
use. Weber claims that Smeigh told him that he (Smeigh)
4 No. 10-3388

had smoked marijuana over Labor Day weekend. Because
this case comes to us on JM’ s motion for summary judg-
ment, we take the facts in the light most favorable to
Smeigh and assume that Smeigh never admitted to smok-
ing marijuana. Smeigh took a drug screen at the hospital
that came back negative. He had surgery a few days later
and after the surgery, Weber visited Smeigh and requested
that he go into work that afternoon. Upon the advice of his
doctors, Smeigh declined. Smeigh didn’t discuss workers’
compensation with JM. Instead, JM took the initiative and
filed for workers’ compensation on Smeigh’s behalf.
Despite Smeigh’s negative drug results, Weber decided
to investigate whether Smeigh’s “admission” was a
violation of JM’s substance abuse policy. The relevant
policy in effect stated:1
[T]he use, sale, possession, purchase or transfer of
illegal drugs while on or off the job is prohibited
and will not be tolerated. The off-the-job use of
alcohol or drugs in any manner that adversely
affects job performance will also not be tolerated.
Violation of this policy will result in disciplinary

1
Smeigh contends that JM had three different substance abuse
policies: one in the employee handbook (July 1998), one titled
“Uniform Substance-Free Workplace Policy,” and the one
quoted here dated July 2007. Smeigh didn’t properly authenti-
cate the first two policies, and therefore, they aren’t admissible.
Even if admissible, the evidence showed that the July 2007
policy was in effect at the time of the accident and this was the
policy Weber referenced.
No. 10-3388 5

measures against the offender and may result in
termination of employment.
. . . If an employee voluntarily comes forward and
identifies a substance abuse problem prior to an
investigation commenced by the company, em-
ployee assistance will be provided on a one-time
basis with no impact on job status . . . .
Weber contacted JM’s Human Resource Manager Gail
Threet and she determined that Smeigh had breached the
substance abuse policy based on what Weber told her. She
attested: “From my conversation with Weber, I understood,
while waiting for the ambulance, Smeigh told his direct
supervisor [the he] would not pass a drug test. I further
understood Smeigh discussed his use of marijuana with
Weber while Weber was at the hospital after the accident.”
Threet concluded that “Smeigh had made an involuntary
admission of illegal drug use and violated JM’s Substance
Abuse Policy.”
JM decided not to terminate Smeigh as long as he signed
a Stipulation of Understanding. Weber met with union
representatives to discuss the Stipulation. On September 24
(four days after his injury), Smeigh attended a meeting
with JM management and union representatives where he
was presented with the Stipulation, which provided:
(1) Mr. Smeigh will be required to meet with an
EAP [employee assistance program] counselor and
sign appropriate release of information forms . . . .
(2) Mr. Smeigh must comply with and complete all
counseling recommendations referring to mind
6 No. 10-3388

altering chemicals. Verification of completion is
required.
(3) Mr. Smeigh must submit to eight (8) random
drug and alcohol detection tests or test for
cause within twelve (12) months of returning to
work . . . . Any confirmed positive results will
result in termination.
(4) All expenses not covered by treatment pro-
grams will be the responsibility of Mr. Smeigh.
(5) Any violation of this agreement as determined
by the Company will result in immediate termina-
tion of Mr. Smeigh, regardless of any special
circumstances that might surround the violation.
During the meeting, no one mentioned workers’ compensa-
tion.
Smeigh refused to sign the Stipulation even though he
was aware that not signing would likely result in termina-
tion. He reasoned that he never violated the substance
abuse policy and didn’t think JM was following proper
disciplinary procedures given his negative drug test results
and flawless work record. He also thought it was illegal
for JM to require him to pay for the requested drug testing.
JM terminated Smeigh and sent him the official termina-
tion letter on September 25. The letter indicated he was ter-
minated for refusing to sign the Stipulation. When asked
if this was an accurate reason for his termination, Smeigh
responded: “Because I refused to sign the stipulation and
understand it, yes, that’s an accurate reason why I
was fired.” Later in his deposition, Smeigh testified that he
No. 10-3388 7

believed he was terminated because he was injured on the
job and had a lost-time accident. He testified: “[T]he
equipment that I was injured on was immediately shut
down for the next 12 hours, both lines. So they had 24
hours worth of downtime where they moved the drivers
over that I got hurt on, which to me states that they were
negligent on the installation of the drivers and were trying
to cover their butts . . . from OSHA.”
The union filed a grievance on behalf of Smeigh, but
didn’t arbitrate his case. Instead, the union called Smeigh
into a meeting in February 2009 to sign a Reinstatement
Agreement to settle the grievance. That agreement had
less onerous terms than the Stipulation. It required Smeigh
to submit to another drug screen upon withdrawal of his
grievance. If the test came back negative, JM would
reinstate Smeigh with full seniority, but not back pay. If
reinstated, Smeigh would be subject to a maximum of four
random drug tests over the next two years; JM agreed to
pay all costs of the drug tests. The union encouraged
Smeigh to sign, but Smeigh refused because he believed
that JM “had no grounds” to require him to sign the
agreement, and he did not want to blemish his work
record. (At oral argument, counsel for Smeigh also pointed
to the fact that the agreement didn’t provide back pay as a
basis for Smeigh’s refusal to sign. Of course, counsel’s
argument cannot be a substitute for record evidence).
At the time of his termination, Bernice Wilson, as union
recording secretary, informed Smeigh that the union and
company would be cleaning out his lockers and toolboxes,
and that he would then get his personal property back.
8 No. 10-3388

Smeigh acknowledged that when employees are termi-
nated, JM must separate their personal property from
company property. Smeigh did not raise the issue of his
personal property with JM because he “assumed that [he]
would be getting [his] job back after the grievance process,
after it went to arbitration.” Smeigh’s locker was cleaned
out and Wilson took possession of his property. Smeigh
later contacted Wilson about his property. He testified:
I had inquired about my tools with Bernice Wilson.
And she said that she had sent a few [personal]
items home . . . . But as far as my tools, she in-
formed me that they were in her office, and that
she needed to go through them. Then about a week
later, she informed me that some of my tools had
been stolen out of her office, and that she would
have to replace them. And I’ve never heard from
her since on the issue of my tools.

II. Discussion
Smeigh asserts that the district court erred in granting
summary judgement to JM on his claims for retaliatory
discharge and conversion. We review a district court’s
grant of summary judgment de novo, construing all facts
and reasonable inferences in the light most favorable to
the non-moving party. Spivey v. Adaptive Mktg. LLC, 622
F.3d 816, 822 (7th Cir. 2010). Summary judgment is appro-
priate if “the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled
to judgment as a matter of law.” Fed. R. Civ. P. 56(a).
Even construing the facts in favor of Smeigh, we agree with
No. 10-3388 9

the district court that he cannot succeed on either his
retaliation or conversion claim as a matter of law.

A. Retaliatory Discharge
Under Indiana law, “[g]enerally, employers may termi-
nate employees for no cause whatsoever or for any cause
at all without incurring liability.” Hamann v. Gates Chevro-
let, Inc., 910 F.2d 1417, 1418 (7th Cir. 1990). One exception
to this general rule is that an employee who has
been discharged in retaliation for filing a workers’ compen-
sation claim may recover damages for wrongful termina-
tion. Frampton v. Cent. Ind. Gas Co., 297 N.E.2d 425, 428
(Ind. 1973) (holding that an employee who alleges he
was discharged in retaliation for filing a claim pursuant to
the Indiana Workmen’s Compensation Act has stated a
claim upon which relief can be granted). To survive
summary judgment on a Frampton claim, the plaintiff
must present evidence that would support a finding that
the discharge was caused by his filing for benefits. Goetzke
v. Ferro Corp., 280 F.3d 766, 774 (7th Cir. 2002). A successful
litigant must demonstrate that his discharge was solely
in retaliation for the exercise of a statutory right, mean-
ing that any and all reasons for the discharge must be
unlawful in order to sustain a claim. Purdy v. Wright
Tree Serv., Inc., 835 N.E.2d 209, 212 (Ind. Ct. App. 2005).
Causation may not be inferred merely from evidence that
the employee filed for benefits and was fired. See
Hamann, 910 F.2d at 1420. Because Smeigh “does not have
direct evidence, he must rely on indirect evidence of
retaliatory motive, such as proximity in time between
10 No. 10-3388

the filing of the claim and the termination or evidence
that the employer’s asserted lawful reason for the dis-
charge is pretext.” Hudson v. Wal-Mart Stores, Inc., 412 F.3d
781, 785 (7th Cir. 2005). “[T]iming evidence is rarely
sufficient in and of itself to create a jury issue on causa-
tion[,]” id. at 787, but “when considered with other circum-
stances, the temporal proximity between termination
and filing of the worker’s compensation claim may satisfy
the plaintiff’s burden in some cases[,]” Goetzke, 280 F.3d
at 774.
A plaintiff bringing a retaliation claim must first prove,
by a preponderance of the evidence, his prima facie case.
Powdertech Inc. v. Joganic, 776 N.E.2d 1251, 1262 (Ind. Ct.
App. 2002). The burden then shifts to the employer
to articulate a legitimate, nondiscriminatory reason for the
discharge. Id. If the employer meets that burden, then the
employee has the opportunity to prove, again by a prepon-
derance of the evidence, that the reason offered by the
employer is pretextual. Id. Pretext can be shown by demon-
strating that the employer’s “explanation for the firing
was either dishonest or patently inconsistent with the
evidence before the court.” Hudson, 412 F.3d at 785 (quota-
tions omitted). To make this showing, an employee must
produce evidence showing that (1) the employer’s stated
reason has no basis in fact; (2) although based on fact, the
stated reason was not the actual reason for discharge; or
(3) the stated reason was insufficient to warrant the
discharge. Powdertech, 776 N.E.2d at 1262. The focus of
a pretext inquiry is whether the employer’s stated reason
was honest, not whether it was accurate, wise or
well-considered. See Purdy, 835 N.E.2d at 214 (“[T]he issue
No. 10-3388 11

of pretext does not concern the appropriateness of the
reasons offered by the employer for its employment
decisions[;] . . . the issue [is] whether the employer hon-
estly believes in the explanation it offers.”).
In Hudson, the plaintiff employee was punched by
another employee and taken to the hospital for injuries.
412 F.3d at 783-84. Wal-Mart investigated the accident and
determined that the plaintiff had provoked the fight.
Both employees were terminated pursuant to Wal-Mart’s
Workplace Violence Policy. After the incident, the plaintiff
inquired about filing for workers’ compensation. Id.
He returned to work about a week later, at which time
he was informed of his termination. Id. at 784. The plaintiff
subsequently filed for workers’ compensation. Id. at 785.
We found that Wal-Mart offered a legitimate,
non-retaliatory reason for firing the plaintiff—he was
involved in a physical altercation at work with a co-worker
after weeks of bickering—and the plaintiff’s argument that
he shouldn’t have been fired because he was an innocent
victim was “beside the point.” Id. at 786. We reasoned
that “[t]he judiciary is not a super-personnel department
that reexamines and reinvestigates employee disputes.”
Id. Our concern is whether the proffered reason given
by the employer is a lie to cover up for retaliation. Id.
The plaintiff in Hudson could not make this showing. Id.
We acknowledged that the plaintiff in Hudson was fired
shortly after he inquired about workers’ compensation, but
we stated that this alone was insufficient to defeat sum-
mary judgment. Id. at 786-87. We reasoned that the
“same underlying incident led to both Hudson’s termina-
12 No. 10-3388

tion (at least the stated reason for it, which Hudson [did]
not effectively undermine) and his workers’ compensation
claim, which ma[de] Hudson’s timing evidence a wash.”
Id. We held that the timing evidence was not sufficient,
in and of itself, to create a fact issue for the jury. Id. at
787. While other evidence of retaliation could make
the timing evidence stronger (allowing a reasonable jury
to find in the plaintiff’s favor), the plaintiff didn’t present
such evidence. Id. Instead, Wal-Mart offered a strong
credible reason for terminating the plaintiff, and thus,
we found it inappropriate to attach significant weight
to the plaintiff’s proximity evidence. Id.
Smeigh relies heavily on proximity evidence to support
his claim for retaliation. If timing was all that was needed
to create a reasonable inference of retaliation, Smeigh
would have a good case. He was terminated shortly
after his accident and the filing for workers’ compensation.
But as Hudson explains, timing evidence, by itself, is
rarely sufficient to create a jury question. That is especially
true here where there was an intervening event leading
to Smeigh’s termination and no evidence of pretext.
See Caskey v. Colgate-Palmolive Co., 535 F.3d 585, 594
(7th Cir. 2008) (finding the plaintiff unable to make a casual
connection even though she was disciplined and termi-
nated shortly after her injury where there were several
intervening events, including a series of unexercised
absences, leading to her termination); see also Purdy,
835 N.E.2d at 214 (finding employer’s reason for discharge
wasn’t a pretext for discrimination; rather, the cause of
Purdy’s discharge was his medical inability to return to
work at the conclusion of his FMLA leave period). The
No. 10-3388 13

facts show that Smeigh was terminated for his failure to
sign the Stipulation after he indicated he might not pass a
drug test. Smeigh has not presented sufficient evidence to
create a genuine issue of material fact that JM’s stated
reason for Smeigh’s discharge was pretextual.
It is undisputed that at the time of his injury Smeigh
indicated to his supervisor that there was a possibility that
he might not pass a drug test—not because he was a drug
user, but because he had been around marijuana smoke.
This admission, however, was reason for JM to investigate
and take efforts to ensure that Smeigh was not a drug
user. JM has a workplace policy against offsite drug
use and JM had reason to believe Smeigh violated this
policy even though he tested negative for drugs. “It is well-
established that an employee can be terminated for viola-
tions of valid work rules that apply to all employees . . . .”
Powdertech, 776 N.E.2d at 1262. Smeigh argues that
JM violated its internal substance abuse policy for someone
who voluntarily admits to drug use, and JM’s failure
to follow its own policy constitutes evidence of pretext.
See e.g., Rudin v. Lincoln Land Cmty. Coll., 420 F.3d 712,
727 (7th Cir. 2005) (“[A]n employer’s failure to follow its
own internal employment procedures can consti-
tute evidence of pretext.”). Sm eigh, however,
wasn’t terminated until he refused to sign the Stipulation,
so his argument boils down to this: JM sought to retaliate
against him for filing a workers’ compensation claim
by presenting him with the Stipulation in violation of its
internal policy. This argument makes little sense. First, JM
filed for workers’ compensation on Smeigh’s behalf
and second, if Smeigh had signed the Stipulation, he
14 No. 10-3388

would have retained his job. The terms of the Stipulation
certainly weren’t so onerous as to result in constructive
discharge, Baker v. Tremco, Inc., 917 N.E.2d 650, 655 (Ind.
2009) (stating that a cause of action for constructive
retaliatory discharge exists for an employee who can show
that he has been forced to resign as a result of exercising
this statutorily conferred right), nor does Smeigh make this
argument. The record shows that JM wanted Smeigh to
sign the Stipulation and retain his job. Given these inter-
vening facts between his injury and discharge, Smeigh’s
argument that he was fired in retaliation for obtaining
workers’ compensation falls flat.
Further, Threet’s conclusion that Smeigh made an
involuntary admission of illegal drug use was not so
“patently inconsistent with the evidence” to “suggests that
retaliation was afoot.” Hudson, 412 F.3d at 786. JM could
conclude that Smeigh’s statement about possibly not
passing a drug test, made only after he was aware he’d
have to submit to one, was not voluntary within the
meaning of JM’s substance abuse policy. His explanation
about being in a room with marijuana smoke was certainly
curious. Even if he had made a voluntary admission within
the parameters of the substance abuse policy, despite
Smeigh’s contentions to the contrary, he was offered
employee assistance and the ability to retain his job.
It is not for us to decide whether Smeigh should have
been required to sign the Stipulation. See e.g, O’Regan
v. Arbitration Forums, Inc., 246 F.3d 975, 984 (7th Cir. 2001)
(finding no pretext under Title VII and ADEA where
the employee was required to sign an employment agree-
No. 10-3388 15

ment that she claimed was unlawful; “the fact that the
Agreement may have been unnecessary, ineffective or
unenforceable would, at most, indicate that [the employer]
made a bad business decision,” but it didn’t demonstrate
that the employer implemented the Agreement to justify
the firing of older women). The only question before us
is whether requiring Smeigh to sign the Stipulation to keep
his job was pretext for retaliatory motive. There is nothing
to show that it was. The fact that JM was willing to
allow Smeigh to sign a Reinstatement Agreement (with
less onerous terms) further supports a conclusion that
JM’s reasons for termination weren’t pretextual and that
JM was legitimately concerned that Smeigh was using
(or had used) illegal drugs. Smeigh points to nothing in
the record to show that JM’s decision to terminate him
had anything to with workers’ compensation.
Smeigh cites to Markley Enterp., Inc. v. Grover, 716 N.E.2d
559 (Ind. Ct. App. 1999) and Dale v. J.G. Bowers,
Inc., 709 N.E.2d 366 (Ind. Ct. App. 1999), in support of
his claim, but in both those cases there was evidence
of pretext. In Markley, the court held that a jury could find
pretext because there was evidence that the employer had
disciplined the plaintiff on a prior occasion for allegedly
attempting to file a false workers’ compensation claim.
716 N.E.2d at 566. Further, “[a]n internal Company memo
disclose[d] an extremely hostile attitude against [the
plaintiff] for having attempted to file the previous [work-
ers’ compensation] claim and stated that [the plaintiff’s]
employment would be terminated immediately in
the event of ‘any repeat violations.”’ Id. The court found
those facts sufficient to raise an issue of whether the
16 No. 10-3388

employer’s true motive for terminating the plaintiff’s
employment was his filing of the workers’ compensation
claim. Id. Similarly, in Dale, 709 N.E.2d at 369-70, the court
found that a jury could infer pretext where the employer’s
stated reason for termination—that employee’s medical
restrictions rendered him unable to fulfill his job du-
ties—was inconsistent with evidence that his job restric-
tions were temporary and where the employee was
discharged just two days after returning to work and one
day after receiving an impairment rating. The outcome in
Dale was based not on suspicious timing alone, but on
suspicious timing combined with strong evidence
of pretext. Smeigh hasn’t shown similar evidence of
pretext.
Our concern is whether JM’s proffered reason for termi-
nating Smeigh was a lie to cover up retaliation. As in
Hudson, Smeigh did not make this showing and no reason-
able jury could find in his favor based on the evidence
presented.

B. Criminal Conversion
Smeigh also brings a claim for criminal conversion
against JM. To succeed, Smeigh has to show that JM
“knowingly or intentionally exert[ed] unauthorized
control” over his property. Ind. Code § 35-43-4-3(a). “A
person engages in conduct ‘knowingly’ if, when he engages
in the conduct, he is aware of a high probability that he is
doing so.” Id. § 35-41-2-2(b). A person’s control over
property of another person is “unauthorized” if it
is exerted “in a manner or to an extent other than
No. 10-3388 17

that to which the other person has consented.” Id.
§ 35-43-4-1(b)(2). A person who has suffered a pecuniary
loss as a result of a criminal conversion may bring a
civil action to recover the loss. JET Credit Union v.
Loudermilk, 879 N.E.2d 594, 597 (Ind. Ct. App. 2008).
A claimant in a civil action must only show that
the defendant committed the criminal act by a preponder-
ance of the evidence. French-Tex Cleaners, Inc. v. Cafaro Co.,
893 N.E.2d 1156, 1166 (Ind. Ct. App. 2008).
Smeigh must prove all the elements of the alleged
criminal act. Id. at 1166. Criminal intent is an essential
element of criminal conversion. Id. “It is this mens rea
requirement that differentiates criminal conversion from
a more innocent breach of contract or failure to pay a
debt, which situations the criminal conversion statute
was not intended to cover.” Id. at 1168 (finding no conver-
sion where the defendant acted in accordance with reason-
able interpretation of an ambiguous contract); NationsCredit
Commercial Corp. v. Grauel Enters., Inc., 703 N.E.2d 1072,
1079 (Ind. Ct. App. 1998) (same). A defendant’s reasonable
belief that she controlled or continued to control property
with the owner’s consent defeats the mens rea element
of conversion. Whitlock v. Brown, 596 F.3d 406, 413 (7th Cir.
2010). If the mens rea element exists, even a temporary
deprivation of property is sufficient to succeed under
the statute. Id.2

2
Mens rea, however, is not an element of tortious conversion.
Computers Unlimited, Inc. v. Midwest Data Sys., Inc., 657 N.E.2d
165, 171 (Ind. Ct. App. 1995). Smeigh did not bring a claim for
(continued...)
18 No. 10-3388

There is no evidence in the record that Wilson’s control
over Smeigh’s property was unauthorized or even if
it was unauthorized, that she was aware of a high probabil-
ity that her control was unauthorized. Smeigh acknowl-
edged that it was company protocol to sort through
a terminated employee’s belongings to separate personal
property from company property. He was aware that
Wilson was going to take his property and separate
his tools from JM’s tools; yet, he never objected. Smeigh
inquired about his property, and Wilson told him that
she still needed to go through his tools. The record doesn’t
suggest that Smeigh demanded the immediate return of
his tools 3 or gave Wilson any indication that her temporary
possession of them was unauthorized. A week later,
Wilson informed Smeigh that they had been stolen from
her office. She offered to replace them, but then Smeigh

2
(...continued)
tortious conversion, which “consists either of the appropriation
of the personal property of another to the party’s own use and
benefit, or in its destruction, or in exercising dominion over it,
in exclusion and defiance of the rights of the owner or lawful
possessor, or in withholding it from his possession, under a
claim and title inconsistent with the owner’s.” Id.; see also
Schrenker v. State, 919 N.E. 2d 1188, 1194 (Ind. Ct. App. 2010)
(explaining the difference between criminal and tortious
conversion).
3
Smeigh contends that JM continued to possess his tools
despite his repeated requests for them. There are no record
citations for these factual contentions and they are contradicted
by the record. We therefore do not consider such facts. See Fed.
R. App. P. 28(a)(9)(A) (requiring citations to the record).
No. 10-3388 19

never heard from her. Although a demand for return “is
not itself an element of criminal conversion,” Lambert v.
Yellowbird, Inc., 496 N.E.2d 406, 409-10 (Ind. Ct. App. 1986),
Smeigh had to present evidence to raise a reasonable
inference that Wilson was aware that her possession was
unauthorized. He failed to do so.
More importantly, there is no evidence that JM was
aware that Wilson still had Smeigh’s tools or that
her continued possession of them was unauthorized.
Wilson is not part of JM management; she is an
hourly employee. Smeigh testified that he didn’t raise
the issue of his personal property when he was terminated
because he “assumed that [he] would be getting [his] job
back after the grievance process, after it went to arbitra-
tion.” After that day, Smeigh never inquired with a JM
manager about the return of his property.
An employer can be held liable for conversion as a result
of its employee’s actions under the doctrine of respondeat
superior. A company “may be convicted of an offense . . .
if it is proved that the offense was committed by its agent
acting within the scope of his authority.” Ind. Code § 35-41-
2-3. This section creates “a statutory version of respondeat
superior” pursuant to which principals are liable
for offenses committed by an agent acting within the scope
of his authority. Tippecanoe Beverages, Inc. v. S.A. El
Aguila Brewing Co., 833 F.2d 633, 637 (7th Cir. 1987).
Oddly, Smeigh didn’t raise an argument of vicarious
liability at the district court, even though it was addressed
by JM in its summary judgment brief. At oral argument,
Smeigh acknowledged that he didn’t raise vicarious
20 No. 10-3388

liability below and wasn’t raising it on appeal. Smeigh
therefore has waived this argument. As the district court
stated, “Without a vicarious liability hook or evidence
to establish criminal intent, Smeigh’s conversion claim
fails.” Smeigh v. Johns Manville, Inc., No. 1:09-cv-0414,
2010 WL 3781492, at *10 (S.D. Ind. Sept. 2, 2010).
We similarly conclude that Smeigh, who arguably may
have had a claim arising in negligence for the loss of his
property, see Kottlowski v. Bridgestone/Firestone, Inc.,
670 N.E.2d 78, 82-84 (Ind. Ct. App. 1996) (finding genuine
issue of material fact on bailment claim where employees
left their tools at employer’s premises and they were
stolen), cannot make out a claim for criminal conversion.
JM contends that Smeigh’s conversion claim is frivolous
and seeks sanctions pursuant to Rule 38 of the Federal
Rules of Appellate Procedure. We agree that his claim
is frivolous, but for the reasons stated below, we decline
to award monetary damages to JM. Rule 38 states: “If
a court of appeals determines that an appeal is frivolous, it
may, after a separately filed motion or notice from the
court and reasonable opportunity to respond, award
just damages and single or double costs to the appellee.”
Fed. R. App. P. 38.4 Under Rule 38, we must first determine

4
Rule 38 requires either a separately filed motion or that we
give notice we are considering sanctions. Greviskes v. Univ.
Research Ass’n, Inc., 417 F.3d 752, 761 (7th Cir. 2005). We have
stated that “a statement inserted in a party’s brief that the party
moves for sanctions is not sufficient notice.” Id.; see also Fed. R.
App. P. 38 advisory comm. notes (1994 amendments) (“Requests
(continued...)
No. 10-3388 21

if the appeal is frivolous, and if we find it is, we have
discretion to award sanctions or decline to do so.
In re Bagdade, 334 F.3d 568, 581 (7th Cir. 2003). “An appeal
is frivolous when the result is obvious or when the appel-
lant’s argument is wholly without merit.” Grove
Fresh Distribs., Inc. v. John Labatt, Ltd., 299 F.3d 635, 642
(7th Cir. 2002) (quotations omitted). “Pursuing a frivolous
appeal invites sanctions, including just damages, which we
may impose in our considered discretion.” Id. “Sanctions
are appropriate if the appellant merely restates arguments
properly rejected by the district court that are unsupported
by a reasoned colorable argument for altering the district
court’s judgment.” Perry v. Pogemiller, 16 F.3d 138, 140
(7th Cir. 1993). We have held that “the combination of
frivolous legal arguments . . . and frivolous factual argu-
ments” may warrant sanctions. In re Bagdade, 334 F.3d at
581 (citation omitted).
Smeigh did not address any of the district court’s well-
reasoned explanations for dismissing his conversion claim.
His argument at the district court and on appeal spans less

4
(...continued)
in briefs for sanctions have become so commonplace that it is
unrealistic to expect careful responses to such requests without
any indication that the court is actually contemplating such
measures.”). JM didn’t file a separate motion for sanctions; it
argued for sanctions in its brief and Smeigh failed to respond to
JM’s request (Smeigh didn’t file a reply brief). Smeigh was then
given the opportunity to address sanctions during oral argu-
ment. Because we decline to issue monetary sanctions, we do not
need to consider whether notice to Smeigh under these circum-
stances is sufficient under Rule 38.
22 No. 10-3388

than one page and is wholly undeveloped. Rather than
restructuring his argument to demonstrate that the district
court’s decision was in error, he instead cut and pasted his
summary judgment argument into his appellate brief—“a
tactic which could not hope to succeed on appeal.”
See Bagdade, 334 F.3d at 582. The district court pointed out
a significant flaw in Smeigh’s claim—he didn’t make any
argument that JM could be held liable for the actions of its
employee. The district court also noted that Smeigh’s
factual assertion that he had demanded the return of his
property from JM was unsupported by the record. Even
though the district court pointed out that his claim
was hopeless, Smeigh persisted in pursuing it on appeal,
making the same (nearly verbatim) frivolous arguments.
See e.g., Perry, 16 F.3d at 140 (issuing sanctions when
appellant “offered no valid legal support for his position
on appeal other than that properly rejected by the district
court”).
Smeigh’s counsel responded at oral argument that our
review is de novo and he can raise the same arguments to
this court as below and isn’t permitted to raise new
arguments. Although true, he certainly could have ex-
plained why the district court’s decision was errone-
ous—for example, he could have explained how Smeigh
can succeed without asserting vicarious liability—or, if
he has no explanation, he could have decided not to appeal
his conversion claim.
“Rule 38 is permissive”; we may “decline to impose
sanctions even if the appeal is frivolous.” Indep. Lift Truck
Builders Union v. Nacco Materials Handling Group,
No. 10-3388 23

202 F.3d 965, 969 (7th Cir. 2000) (quotations omitted).
“How we exercise [our] discretion may turn on our percep-
tion of whether an appellant acted in bad faith.”
Berwick Grain Co., Inc. v. Ill. Dep’t of Agric., 217 F.3d 502,
505 (7th Cir. 2000). We find that this case is too close to
the line to warrant monetary sanctions. See Ross v. RJM
Acquisitions Funding LLC, 480 F.3d 493, 499 (7th Cir. 2007)
(sanctions not imposed but attorney warned that he was
“skating near the edge of his pond”). Smeigh raised a non-
frivolous argument (retaliatory discharge) on appeal, and
JM had to expend only minimal effort in responding
to Smeigh’s frivolous conversion claim. We nonetheless
admonish counsel for appellant, Joel S. Paul, that this
portion of his appeal does not meet our standards for
presenting and developing arguments on appeal.

III. Conclusion
For the reasons set forth above, the judgment of the
district court is A FFIRMED.

6-29-11