A factory worker, three incidents, and one word that quietly decided the whole case
One word from a worker's report just decided a federal harassment appeal – and handed her employer a win.
On May 27, 2026, the U.S. Court of Appeals for the Seventh Circuit affirmed summary judgment for El Milagro, Inc., a Chicago tortilla manufacturer, in a sexual harassment suit brought by a production worker named Alma Sanchez. The ruling is a clear-eyed lesson for HR teams about how the language an employee uses when reporting an incident can shape whether the company is legally on notice.
Sanchez sued under Title VII and the Illinois Human Rights Act, alleging a coworker, Francisco Gutierrez, touched her inappropriately on three occasions between 2019 and 2020. She also said El Milagro failed to investigate promptly after she reported the conduct to her supervisor, Arturo Brito, the second shift supervisor in the production department.
The court described the record as inconsistent. Sanchez gave conflicting accounts of when the incidents happened, how the touching occurred, and what she told Brito. Only the third incident, on August 29, 2020, was reported to HR in writing. After that report, HR interviewed both Sanchez and Gutierrez separately on September 2, 2020, concluded the events could not be substantiated, and on September 16 issued Gutierrez a call-of-attention letter directing him to change his behavior toward her. Sanchez agreed Gutierrez has not sexually harassed her since.
Writing for the majority, Circuit Judge Ripple accepted that a reasonable jury could find the alleged conduct severe enough to create a hostile work environment. The court characterized the inappropriate touching of intimate body parts as among the most severe forms of sexual harassment.
But that was not enough to save the claim. Because Gutierrez was a coworker, not a supervisor, El Milagro could only be liable if it was negligent in controlling working conditions. That meant Sanchez had to show the company had notice and failed to take prompt and appropriate corrective action.
This is where the case turned. The court accepted, for the purposes of summary judgment, that Sanchez had reported the first two incidents to Brito shortly after they happened. But the court focused on what she told him. In her own deposition, Sanchez described the second incident to Brito as a new accident involving Gutierrez. She also testified that, at the time of the first incident, she had wanted to see it as an accident.
The court held that this was not enough information to make a reasonable employer think there was some probability she was being sexually harassed. What Sanchez told Brito, the court said, led him to believe she was complaining of accidental touching that happened because the production lines on which she and Gutierrez worked had close quarters.
Once Sanchez made a written report to HR on August 30, 2020, the company moved quickly. HR interviewed both employees within days and closed the matter weeks later. The court described that response as the hallmark of a reasonable corrective action.
The panel split on the broader question. Circuit Judge Kirsch concurred in the result but disagreed that the conduct alleged was severe or pervasive enough to create a hostile work environment at all.
Circuit Judge Lee concurred in part and dissented in part. He argued that the first incident, which Sanchez alleged involved Gutierrez rubbing his genitals against her buttocks, was severe enough on its own to alter her working conditions, and that a jury should decide whether her reports to Brito put the company on notice.
For HR leaders, the lesson is direct. The wording of an internal complaint matters, and careful documentation of what an employee said in their own words can be decisive when a court asks whether the employer knew or should have known. The ruling also underscores the value of a written reporting policy that names specific people to whom complaints should go. El Milagro's employee handbook identified the immediate supervisor, HR, or any other member of management as appropriate recipients, and that policy put Brito's knowledge squarely in play.
