## Facts

- Leanna Krause worked as an account analyst for the City of La Crosse’s finance department from 1989 to 1999 under supervisors Gene Pfaff and Wayne Delagrave.
- As a non-union employee, she was subject to a merit pay plan tied to annual performance evaluations and committee-approved salary adjustments.
- From 1994 through 1998, Krause’s performance ratings were consistently below the average of other city employees, and she received no merit raises during that period.
- Krause and coworkers worked in a front office handling counter and telephone duties; coworkers stated Krause routinely refused those tasks, which Krause disputed.
- Krause repeatedly requested to move from the front office to a less visible back office space.
- On February 23, 1998, after being told she would not receive a merit-based raise, Krause complained to Delagrave that she was denied merit increases because she is a woman.
- On March 6, 1998, Delagrave moved Krause to the back office, citing tension in the front office; Krause later described the space as dim, cluttered, and unclean and claimed the move was retaliatory.
- The City maintained the move reduced workplace conflict and did not change Krause’s pay, benefits, title, or formal responsibilities.
- Krause sought to rely on an alleged statement by a former assistant police chief, relayed through the City’s outside investigator, that the move was disciplinary and the space was unsuitable.

## Issues

1. Whether Krause showed an adverse employment action for retaliation under Title VII and the Equal Pay Act based on (a) continued denial of merit raises and (b) relocation from the front office to a back office.
2. Whether Krause produced sufficient evidence that any alleged adverse action was caused by her complaint of sex discrimination.
3. Whether the alleged statement by the former assistant police chief was admissible against the City under Federal Rule of Evidence 801(d)(2) as a party-opponent admission or agent statement.

## Decision

- The Seventh Circuit affirmed summary judgment for the City and individual defendants.
- The court held Krause failed to establish a prima facie retaliation case because she did not show a materially adverse employment action and did not show causation.
- The court upheld exclusion of the former assistant police chief’s statement as inadmissible hearsay not qualifying under Rule 801(d)(2).

## Legal Principles

- Retaliation under Title VII and the Equal Pay Act requires proof of protected activity, a materially adverse employment action, and a causal connection between the two.
- An adverse employment action requires a material change in the terms or conditions of employment; a mere inconvenience or subjective dissatisfaction with a reassignment is insufficient absent significant changes in pay, benefits, title, or responsibilities.
- Where challenged pay outcomes track a pre-complaint history of evaluations and pay decisions, a plaintiff must produce evidence supporting an inference that the post-complaint continuation was caused by protected activity rather than ongoing performance-based practice.
- For Rule 801(d)(2)(C)–(D), a statement is non-hearsay only if made by an authorized speaker or an agent on a matter within the scope of that agency during the relationship; statements by persons lacking relevant authority do not bind the employer.

## Conclusion

The court concluded that moving Krause to a back office—especially after her repeated requests and without any reduction in pay, status, or duties—and the continued denial of merit raises consistent with her preexisting evaluation history did not amount to materially adverse actions or show retaliatory causation; it also rejected reliance on an excluded hearsay statement that did not qualify as an admission by the City.


Krause v. City of La Crosse, 246 F.3d 995 (7th Cir. 2001)