In the

United States Court of Appeals
                For the Seventh Circuit

No. 08-3203

D AVID F ARR,
                                                 Plaintiff-Appellant,
                                 v.

S T. FRANCIS H OSPITAL AND H EALTH C ENTERS,

                                                Defendant-Appellee.


             Appeal from the United States District Court
     for the Southern District of Indiana, Indianapolis Division.
              No. 06 C 779—Sarah Evans Barker, Judge.



        A RGUED JUNE 1, 2009—D ECIDED JUNE 29, 2009




  Before E ASTERBROOK, Chief Judge, and B AUER and
E VANS, Circuit Judges.
   E VANS, Circuit Judge. David Farr contends that he was
fired from his employment at St. Francis Hospital and
Health Centers in Indianapolis because he is a man. He
filed this action alleging sex discrimination in employ-
ment, 42 U.S.C. § 2000e-2(a)(1), and, as relevant to
this appeal, he tacked on pendent state law claims for
defamation and breach of the covenant of fair dealing.
2                                               No. 08-3203

The state law claims were dismissed and, later, summary
judgment was granted on the discrimination claim. Both
decisions are subject to our de novo review on Farr’s
appeal. Village of DePue, Ill. v. Exxon Mobil Corp. 

(7th Cir. 2008); Jackson v. County of Racine, 

(7th Cir. 2007).
  In 2000, Connie Little, director of Respiratory Care
Services for St. Francis, hired Farr as a respiratory thera-
pist. Little became his supervisor. A few years later, Farr
transferred to a position as a respiratory therapist in the
Pulmonary Rehabilitation Department where Beverly
Smith became his immediate supervisor.
  At the time Farr’s employment was terminated, there
were seven respiratory therapists in his department. All
but Farr were women. The department also had a com-
puter, shared by all, and that eventually became a
problem, certainly it became a big problem, for Mr. Farr.
  Although all of the therapists in the department used a
single computer, each had an individual user name and
password. Hospital policy indicated that the therapists
should log off the computer when they finished using it,
but in practice, with a few exceptions, what ordinarily
happened is that the first person to log on each day
would stay logged on throughout the day and everyone
using the computer would then be using it under the
original log-in name. The computer was officially used
for writing various reports and letters to physicians and
sometimes for research regarding medical devices. Using
the computer for personal reasons was allowed so long
as it was not excessive or inappropriate.
No. 08-3203                                            3

  One day, a respiratory therapist asked Ms. Smith to
check out the computer. What Smith saw under “favorites”
were several “lurid” and “obscene” Web sites. Smith
determined that Farr was the person logged onto the
computer at the time the sites were accessed. She deleted
the names of the Web sites from the “favorites” list and
logged Farr off the computer. Smith informed Little of
what she had found and Little notified her supervisor,
who suggested that Little notify someone in human
resources, who, in turn, advised Little to inform Infor-
mation Services (IS) and to confront Farr.
  Farr was told that inappropriate Web sites had been
found; he assumed they were adult pornography sites.
He denied knowing how the sites had appeared under
his log-in name. Little informed him that the Hospital
would conduct an investigation. IS removed the computer
from the department. The hard drive was sent to Alverno,
the computer services division of the Hospital, to be
examined. After the examination the investigator wiped
the hard drive of all information and no copy was
made, although there was a printout of the activity
under Farr’s password.
  In the meantime, Farr went on unrelated medical leave.
The day after he left on leave, Karen Sagar, the director
of Recruitment and Retention, informed Little and Smith
that IS’s report summarizing its investigation was com-
pleted. The report concluded that inappropriate Internet
sites had been accessed, including a significant number
of “hacking” sites. The latter were of greater concern to
the Hospital than the pornographic material.
4                                               No. 08-3203

  As a result of this information, St. Francis continued the
investigation to determine if any other employees had
accessed inappropriate sites. IS found no evidence to
that effect. Little asked that work schedules, job assign-
ments, and time records be compared to usage of the
computer. The comparison showed that Farr was the
only employee who worked on a certain Saturday when
there was a substantial amount of computer activity
involving both pornography and hacking sites. Little
decided to terminate Farr’s employment.
  When Farr returned from medical leave he was
informed that the investigation uncovered evidence that
he had inappropriately used the computer. Again he
denied visiting inappropriate sites. Because of his denial,
Little decided to ask IS to look at the situation one more
time. Farr was placed on a five-day suspension. IS found
no inappropriate usage on the part of other employees.
When Farr returned he was accompanied by his attorneys,
which inspired Little to refer the matter to the Hospital’s
legal department. Ultimately, Farr was fired for “breach
of good conduct and inappropriate usage of the
Hospital’s electronic communications systems.”
  Farr filed a grievance and hired a computer expert to
provide a report. In the information Farr provided to
his expert, he admitted that he visited at least 17 of the 31
Web sites the Hospital was concerned about. He said he
was using the computer to look for a way to reinstall
Windows on his home computer and that during his
search one of the Web sites he visited must have loaded
No. 08-3203                                                  5

malware 1 onto the Hospital computer, which in turn
automatically downloaded a list of links to pornographic
Web sites. He said he was unaware that this had hap-
pened. The expert’s report concluded that the list of
pornographic Web sites was placed on the computer by
malware without Farr’s knowledge. In response to this
report, Alverno created its own rebuttal report, which
differed somewhat from its original report. In the
grievance proceedings, Farr did not claim that the ter-
mination of his employment was based on gender dis-
crimination. The grievance committee unanimously
upheld the Hospital’s actions.
  Farr then filed the present lawsuit, claiming that he was
the victim of gender discrimination. In his charge before
the Equal Employment Opportunities Commission he
made the following claim:        “My attorney and our
computer expert immediately recognized the list as
having been secretly put on my computer by a virus and
not by any human. It seems to me that any fair-minded
person should instantly realize I didn’t create the list.”
During his deposition he was asked how he could reconcile
that statement with his admission that he visited 17 of the
sites. He again acknowledged that he visited the sites.
Nevertheless, his sex discrimination claim rests on his
view that the Hospital assumed he was guilty of looking


1
  “Malware,” in computer jargon, is a portmanteau from
malicious and software. It refers to software (a worm, a virus,
etc.) that infiltrates a computer system without the owner’s
knowledge.
6                                             No. 08-3203

at the pornography sites because he was the only man
working in the department.
  Farr also alleged that the Hospital breached an
implied covenant of fair dealing found in the employee
handbook. The alleged breach was based on his belief
that the Hospital immediately assumed he downloaded
the pornography because he was a male; he also claimed
that the investigation was not fair. As to the defamation
claim, he said that his superiors told employees who had
“no need to know, that [he] had accessed pornography
on his St. Francis computer.” He contends that the
Alverno report contained false and misleading state-
ments regarding his use of the computer and improperly
concluded that he used hacking and spyware tools to
gain access to the Hospital’s computer system.
  Farr argues that he can prove his sex-discrimination
claim through both the direct and the indirect methods.
He says he has circumstantial evidence which points,
under the direct method of proof, to a discriminatory
reason for the firing.
  Our cases say that in this situation, circumstantial
evidence can be of three types. The first consists of such
things as suspicious timing, ambiguous statements, or
other bits and pieces from which an inference of discrimi-
natory intent can be drawn. The second type is evidence
that employees similarly situated to the plaintiff (except
for the relevant characteristic, i.e., gender) received
better treatment than he. Third is evidence that the
plaintiff was qualified for the job but was passed over
in favor of a person (in this case a female), and the em-
No. 08-3203                                                  7

ployer’s stated reason for its action is unworthy of
belief—a pretext for discrimination. Hossack v. Floor
Covering Assocs. of Joliet, Inc., 

(7th Cir. 2007);
Troupe v. May Dep’t Stores Co., 

(7th Cir. 1994).
  To prove his case by the indirect method, Farr must
meet the test set out in McDonnell Douglas Corp. v. Green,

(1973)—or, because his is a reverse sex dis-
crimination case, a modified test. Under McDonnell-
Douglas, to establish a prima facie case a plaintiff must
show that he is a member of a protected class, that he
was meeting his employer’s legitimate expectations; that
he suffered an adverse employment action, and that
similarly situated individuals were treated more
favorably than he was. In addition, when a plaintiff is
a member of a “majority”—for instance, a male plaintiff
alleging gender discrimination—we have said he must
set out “background circumstances” that show that the
employer discriminates against the majority, or he must
show there is something “fishy” going on. Phelan v. City
of Chicago, 

, 684 (7th Cir. 2003) (quoting
Harding v. Gray, 

, 153 (D.C. Cir. 1993)); see also
Gore v. Indiana Univ., 

, 592 (7th Cir. 2005). Once
a prima facie case is established, the employer must
provide a nondiscriminatory reason for the employment
action; if it does, the plaintiff then must show that the
reason is pretextual.
  The goal of these tests is to determine whether dis-
crimination is afoot. In this case, neither test reveals
discrimination. It is not even entirely clear that Farr’s
claim alleges sex discrimination in the adverse employ-
ment action; that is, that he was fired because he was a
8                                               No. 08-3203

male. His primary complaint seems to be that he was
the first person investigated because there were adult
pornography sites involved and he was the only man in
the department. That complaint would have more force
if it were not also true that he was the person logged on
to the computer at the time the sites were visited. It seems
quite sensible (and hardly discriminatory) to begin an
investigation with the person who officially was logged
on to the computer. But the fact remains that even if the
Hospital had, without any basis, turned to him first, that
action would not establish discrimination—that he was
fired because of his gender. It is pretty clear that he was
fired because the investigation convinced the employer
that he was the one accessing the inappropriate Web
sites. In fact, he admitted it. Such activities provide a
nondiscriminatory basis for the employer’s action. Farr
does not show in any way that the employer’s belief was
pretextual.
  Other failures of proof include a lack of suspicious
timing or ambiguous statements. He fails to show that,
for instance, a woman accessing inappropriate Web sites
was not fired or that the stated reason for his being fired
is pretextual. He has not shown anything “fishy” about
the facts. Neither did the Hospital simply rely on the
fact that he was the person logged on to the computer
when the Web sites were accessed; rather, the Hospital
went out of its way to be sure that, in fact, he was the
one using it at the time. He also complains that the in-
vestigation stopped once the Hospital determined that
he had accessed the sites. Not only would that not be
No. 08-3203                                              9

discriminatory, it is not true. At the initial meeting with
Farr, when he denied accessing the sites, the Hospital
proceeded to investigate further and ultimately looked
to see whether anyone else had accessed inappropriate
sites. Even had the investigation stopped once the
Hospital believed it had found the culprit, that would not
have indicated that Farr was fired because he was a male.
  The bottom line is that Farr admits that he visited some
of the inappropriate Web sites. The Hospital says that is
why he was fired, and he has done nothing to show
otherwise.
  In addition, Farr’s state law claims were properly
dismissed. He claims the employee handbook gave him the
right to be treated fairly, but that he wasn’t—in breach of
the covenant of fair dealing. Indiana, however, adheres to
the employment-at-will doctrine, and Farr was an at-will
employee. Evaluated under Indiana law, the Hospital’s
employee handbook does not change the nature of
Farr’s employment. As we recognized in Peters v. Gilead
Sciences, Inc., 

(7th Cir. 2008), the Indiana
Supreme Court has entertained a challenge to the at-will
doctrine based on an employee handbook, but rejected
the challenge and concluded:
   We re-affirm the vitality of the employment-at-will
   doctrine in Indiana and the general rule that adequate
   independent consideration is necessary to convert an
   at-will relationship into an employment relationship
   requiring an employer to discharge an employee
   for good cause. We decline plaintiffs’ invitation to
   construe employee handbooks as unilateral contracts
10                                                No. 08-3203

     and to adopt a broad new exception to the at-will
     doctrine for such handbooks.
Orr v. Westminster Vill. North, Inc., 

, 722 (Ind.
1997). As we noted in Workman v. United Parcel Serv., Inc.,

, 1001 (7th Cir. 2000), “Employment at will
is the norm in the United States.”
  The court in Orr also made clear that even were it to find
an exception to the at-will doctrine (and it did not), there
would, nevertheless, be no implied contract when the
handbook itself states it is not a contract. In Orr, the
handbook contained a “prominent disclaimer.” In the case
before us, the Hospital handbook also contains a dis-
claimer:
     [The handbook] is presented as a matter of information
     only. This handbook is not part of a contract, and
     employees of the hospital have no contractual right
     to matters set forth.
Farr’s claim based on the handbook was properly dis-
missed.
  Lastly, Farr claims that the Alverno report is defamatory.
The problem is, however, that the report was used during
the grievance proceedings that Farr initiated and in
response to a report Farr submitted. In such a situation,
statements made by the company to explain its actions
are privileged. In fact, the employer has a duty to
explain its actions. See Ernst v. Indiana Bell Tel. Co., 

(Ind. Ct. App. 1985). Relying on Bals v. Verduzco,

(Ind. 1992), Farr argues that the privilege
is qualified, not absolute. We need not decide what sort
No. 08-3203                                             11

of privilege applies. In this case, the nature of the
privilege is not dispositive; Farr’s claim is properly dis-
missed under either standard.
 The judgment of the district court is A FFIRMED.




                          6-29-09