CLEAR AND CONVINCING EVIDENCE; PLAINTIFF'S POOR PERFORMANCE; PLAINTIFF'S OWN ASSESSMENT OF HER PERFORMANCE IS INSUFFICIENT TO WITHSTAND SUMMARY JUDGEMENT BECAUSE IT IS THE EMPLOYER'S ASSESSMENT THAT CONTROLS
In Pardy v. Gray, 1:07-cv-06324-LAP (S.D.N.Y. July 15, 2008), the court found that the Defendants had established by clear and convincing evidence that the Plaintiff's termination was based on performance related issues unrelated to her protected activity, and therefore granted summary judgment in favor of the Defendants. The Defendants had supported their motion with evidence that the Plaintiff had been placed on probation in 2003, and though not terminated at that time, had been placed back on probation in 2005 when three different account groups within the employer's organization filed complaints indicating that they did not want to work with the Plaintiff again. The Plaintiff made an untimely response to the probation warning, and then did not argue that the criticisms attributed to her co-workers were fabricated but merely disagreed with their assessment of her performance. Although the Plaintiff pointed to e-mails from an earlier time period in which confidence in the Plaintiff had been expressed, the court found that isolated e-mails from that earlier period were insufficient to counter the 2005 complaints. Moreover, the court stated that "[a]s a legal matter, Plaintiff's own assessment of her performance is not cognizable on summary judgment; it is her employer's assessment that controls. SeeRicks v. Conde Nast Publications Inc., 6 Fed. Appx. 74, 78 (2d Cir.2001) (In a Title VII case, "an employee's disagreement with her employer's evaluation of her performance is insufficient to establish discriminatory intent."). Slip op. at 17. The court found that it was undisputed that the employer received complaints from co-workers about the Plaintiff's poor performance and relied upon those complaints in terminating her employment. The court found that the Plaintiff had presented no cognizable evidence that this reason was pretextual.
PLAINTIFF'S OWN CONCLUSIONS AND INTERPRETATION OF THE FACTS ARE INSUFFICIENT TO WITHSTAND A MOTION FOR SUMMARY DECISION WHERE THE DEFENDANT'S REASONS FOR TERMINATING THE PLAINTIFF'S EMPLOYMENT WERE CONVINCING AND WELL DOCUMENTED
Where the reasons advanced by the Defendant for terminating the Plaintiff's employment were convincingly unrelated to the Complainant's protected activity, where the Plaintiff's failure to perform up to the Defendant's standards was well documented, and where the Plaintiff failed to create a disputed issue of fact as to whether she would have been terminated regardless of her protected activity, the court in Johnson v. Stein Mart, Inc., No. 3:06-cv-00341 (M.D.Fla. June 20, 2007) (case below 2006-SOX-52), granted summary judgment in favor of the Defendant. The court found that the Plaintiff had only offered her own conclusions and interpretations of the facts of the case, which were insufficient to question the Defendant's personnel decision.
CLEAR AND CONVINCING EVIDENCE THAT RESPONDENT WOULD HAVE TAKEN UNFAVORABLE PERSONNEL ACTION IN ABSENCE OF PROTECTED ACTIVITY; LACK OF RELEVANCE OF GENERAL EMPLOYMENT DISCRIMINATION LAW CONCEPTS OF "NONDISCRIMINATORY REASONS" AND "PRETEXT"
In Collins v. Beazer Homes USA, Inc., __ F.Supp.2d __, 2004 WL 2023716 (N.D.Ga. Sept. 2, 2004), the Defendants had filed a motion for summary judgment. The court found that the Plaintiff's case was sufficient to withstand a summary judgment motion on the issues of protected activity, the Defendant's knowledge of the protected activity, whether the Plaintiff suffered an unfavorable personnel action and whether the circumstances suggested that the protected activity was a contributing facto to the unfavorable action. Thus, the court observed that the Defendants would only be entitled to summary judgment if they had established by clear and convincing evidence that they would have fired the Plaintiff absent her participation in protected activity under the SOX whistleblower provision. The court noted that the parties had framed their arguments in the language of general employment discrimination law discussing "non-discriminatory reasons" and "pretext." The court, however, emphasized that it would analyze the Defendants' argument under the clear and convincing evidence standard stated in 49 U.S.C. § 42121.
ADMINISTRATIVE REVIEW BOARD DECISIONS
CLEAR AND CONVINCING EVIDENCE; COMPLAINANT NEED NOT PROVE THAT REASONS GIVEN FOR DISCHARGE WERE FALSE
In Kalkunte v. DVI Financial Services, Inc., ARB Nos. 05-139, 05-140, ALJ No. 2004-SOX-56 (ARB Feb. 27, 2009), the Complainant, a contract attorney, had reported allegations of financial improprieties to the board of directors, the audit committee and other officials, and later made inquiries about the status of the investigation by an outside law firm. After being discharged, the Complainant filed a SOX whistleblower complaint. The ARB affirmed the ALJ's finding that this protected activity was a contributing factor in the Complainant's discharge. Thus, the Respondents could only avoid liability case by proving by "clear and convincing evidence" that they would have discharged the Complainant when they did, even if she had not engaged in protected activity. The ARB noted that much the same evidence reviewed in regard to the contributing factor element was relevant to the clear and convincing evidence element of the SOX whistleblower analysis.
The Complainant's employer was in financial trouble when it hired outside turnaround and restructuring specialists. Although the employer eliminated more than ninety employee positions on August 2003, the Complainant and four other in-house lawyers were not among them. After a bankruptcy filing, the Complainant had added responsibilities. Only one other employee besides the Complainant was discharged in September 2003, and that employee had requested to be laid off. None of the other in-house lawyers lost their jobs during the same time frame, and it was only after the Complainant started pressing the turnaround specialist/acting CEO for answers about the progress of the outside investigation into her report of financial irregularities that he began to question the Complainant's value to the organization. The ARB, however, stated that "what to [the CEO] was an irritant the law regards as protected activity." The ARB observed that all of the other in-house lawyers remained at least through April 2004, with the last leaving that October, and that the Complainant was alone among all of the employees subjected to a reduction in force to be unceremoniously escorted out of the building immediately after her discharge.
The ARB stated that the Complainant did not need to show that the reasons the CEO gave for the discharge were false, and observed that there may have been some truth to the need to downsize in view of the pending dissolution of the company, and that the Complainant may not have been a strong performer on the legal team. The ARB found that the record did not contain evidence of performance-related issues until the Complainant began her whistle blowing activity. In sum, the Respondents failed to prove by clear and convincing evidence that they would have discharged the Complainant when they did had she not engaged in protected activity.
One member of the ARB dissented, finding that the majority had applied too narrow a canvassing of the record, and that examination of the whole record revealed overwhelming evidence that supported findings contrary to the ALJ's.
CLEAR AND CONVINCING EVIDENCE THAT COMPLAINANT WOULD HAVE BEEN DISCHARGED IN THE ABSENCE OF PROTECTED ACTIVITY; COMPLAINANT'S DETERIORATING PERFORMANCE, INSUBORDINATION AND POOR TEAMWORK
In Giurovici v. Equinix, Inc., ARB No. 07-027, ALJ No. 2006-SOX-107 (ARB Sept. 30, 2008), the ARB found that even if the Complainant had met his burden of proof to establish that he had engaged in protected activity under SOX prior to his discharge (which he had not), the Respondent adduced clear and convincing evidence that it would have fired the Complainant because of his deteriorating performance, demonstrated insubordination, and refusal to participate in teamwork.
CLEAR AND CONVINCING EVIDENCE THAT THE COMPLAINANT WAS TERMINATED FOR POOR WORK PERFORMANCE AND BEHAVIOR IN RELATION TO HER SUPERVISOR AND CO-WORKERS
In Taylor v. Wells Fargo Bank, NA, ARB No. 05-062, ALJ No. 2004-SOX-43 (ARB June 28, 2007), the ARB affirmed the ALJ's finding that the Complainant had failed to demonstrate that her protected activity (complaining about the backdating of letters of credit) was a contributing factor in her firing. The ARB also affirmed the ALJ's finding that, even assuming the Complainant's complaints contributed to the adverse action taken against her, the Respondent had produced clear and convincing evidence that the Complainant was terminated because of her work performance and deteriorating relationships with her supervisor and other employees, and for a series of unprofessional and contentions actions, culminating in an argument with her supervisor.
CLEAR AND CONVINCING EVIDENCE; RESPONDENT PROVED THAT THE COMPLAINANT FAILED TO INTEGRATE INTO THE WORKFORCE AND TO PERFORM UP TO EXPECTATIONS
In Halloum v. Intel Corp., ARB No. 04-068, 2003-SOX-7 (ARB Jan. 31, 2006), the ARB concurred with the ALJ's determination that the Respondent's decision to modify a Corrective Action Plan (CAP) pertaining to the Complainant was motivated in part by the Complainant's protected activity. The ARB also concurred, however, with the ALJ's determination that the Respondent had proved, by clear and convincing evidence, that it would have taken the same unfavorable personnel action against the Complainant even in the absence of his protected activity. The Respondent established that the Complainant had failed to integrate himself into the Respondent's workforce and failed to perform up to expectations. The ARB pointed to evidence in the record of the Complainant's missing of meetings, absences from work, failure to understand the Respondent's business operations, failing to meet job expectations for his grade, and failure to comprehend the Respondent's accounting system. The ARB also pointed out the decision to shift the Complainant's work to other group leaders, and concluded that these were sufficient, non-discriminatory reasons to seek the Complainant's termination as an employee.
Because of the clear and convincing evidence that the CAP would have been modified in the absence of the protected activity, the ARB declined to consider the Complainant's argument that he had been constructively discharged because the CAP established unobtainable goals.
ADMINISTRATIVE LAW JUDGE DECISIONS
DISCHARGE REGARDLESS OF PROTECTED ACTIVITY; SUMMARY DECISION WHERE COMPLAINANT ADMITTED INCIDENT LEADING TO DISCHARGE TOOK PLACE, AND DID NOT PRESENT ANY EVIDENCE TO RAISE DISPUTED MATERIAL FACTS ABOUT THE JOB ACTION
In Frederickson v. The Home Depot, U.S.A., Inc., 2007-SOX-13 (ALJ July 10, 2007), the ALJ granted summary decision based on the Respondent's contention that the Complainant was discharged for an incident in which he struck a vendor's representative in the groin, and that the Complainant would have been discharged regardless of his alleged protected activity. The ALJ observed that the Complainant did not dispute that he was involved in the incident, although the circumstances and gravity of the conduct was disputed, and that the vendor's representative refused to speak with him after the incident. The Respondent presented evidence that other employees had been discharged for conduct reasons, and had a written policy. The Complainant presented no evidence to establish disputed material facts related to the job action or disparity in its application. Moreover, the Complainant presented no evidence to support a finding that the managers involved in the discharge had knowledge of the protected activity.
CLEAR AND CONVINCING EVIDENCE OF LEGITIMATE, NON-DISCRIMINATORY REASON FOR ADVERSE ACTION AND SHOWING THAT THERE WOULD HAVE TAKEN THE ACTION EVEN IN THE ABSENCE OF PROTECTED ACTIVITY; COMPANY'S TERMINATION OF SEVERAL HIGHLY PAID EMPLOYEES TO AMELIORATE DIRE FINANCIAL CIRCUMSTANCES
In Bechtel v. Competitive Technologies, Inc., 2005-SOX-33 (ALJ Oct. 5, 2005), the Respondent, a company that specializes in marketing of technologies, contended that none of the Complainant's activities contributed in any way to his discharge. The ALJ, however, disagreed. Taking into consideration the CEO's expression of admiration for loyalty, his denial of conversations involving serious accusations concerning his character, and the fact that he brought people of his choice to the company after the Complainant was terminated, the ALJ found that the Complainant's vocal objections to the Respondent's asserted lack of authority to represent technology, and his continued concerns regarding disclosure of information, were sufficient to establish the inference of a causal nexus. The ALJ therefore concluded that the burden shifted to the Respondent to present clear and convincing evidence of a legitimate, non-discriminatory business reason for its decision, and to show that it would have taken the same unfavorable action in the absence of the Complainant's protected activity. The ALJ found that the Respondent carried that burden.
It was undisputed that Respondent's financial condition was poor and that the new CEO's focus was on bringing revenue to the company. The company employed about one dozen people and used consultants for specific projects that were designed to produce revenue. The Complainant's primary responsibility was to generate revenue, and had not been as successful with his projects as hoped; on one promising project the Respondent realized a only a small amount of retained earnings against substantial costs. The CEO had been critical of some of the Complainant's ideas and faulted the Complainant for failing to secure customers to license technologies for which he was responsible. The company faced imminent bankruptcy, and the Board of Directors approved the CEO's proposal for reducing costs to keep the company afloat through payroll savings and the elimination of cash bonuses, plus other cost savings. The CEO targeted the Complainant for discharge because he considered his contribution to the company limited. Two other employees were also terminated, and the company took other actions such as negotiating a reduction in its rent, reducing consulting costs, and -- in order to generate revenue -- selling the future value of expected litigation proceeds at a discount. The company relied upon consultants to produce revenue, which they successfully did. Ultimately the company survived.
The ALJ found that the Complainant failed to show that the Respondent's reasons were pretextual. The company's actions were designed to keep the company alive and out of bankruptcy until revenue could be realized. One of those actions included, inter alia, eliminating the salaries and personnel costs of three highly paid individuals. The fact that the company made a quick turn-around did not establish pretext. Moreover, it was known that the Complainant repeatedly raised issues regarding SEC disclosures, but prior to the termination the Respondent had continued to solicit his opinions, continued to give him work assignments and fostered his projects.
CLEAR AND CONVINCING EVIDENCE; SUMMARY DECISION APPROPRIATE WHERE UNDISPUTED PROOF ESTABLISHED THAT THE COMPLAINANT WAS FIRED FOR THE NON-INVIDIOUS REASON OF INSUBORDINATION
In Gallagher v. Granada Entertainment USA, 2004-SOX-74 (ALJ Apr. 1, 2005), the ALJ granted summary decision in favor of the Respondent where, inter alia, it was undisputed that the Complainant had refused to report to a new Senior Vice President following a reorganization resulting from a merger, which the ALJ concluded was "clear and convincing" evidence that the Complainant would have been fired for the non-invidious reason of insubordination. The ALJ wrote: "A trial would simply be fruitless; the only possible outcome on this record is the dismissal of [the Complainant's] claim for protection under the Act." Slip op. at 14.
CLEAR AND CONVINCING EVIDENCE BURDEN ON RESPONDENT; REFUSAL OF COMPLAINT TO MEET WITH AUDIT COMMITTEE INVESTIGATORS WITHOUT HIS PERSONAL ATTORNEY
In Welch v. Cardinal Bankshares Corp., 2003-SOX-15 (ALJ Jan. 28, 2004), the Respondent argued that the Complainant (who was the Respondent's Chief Financial Officer) was fired because he refused to meet with Audit Committee investigators (including the Respondent's outside counsel) without his personal attorney present to discuss various concerns the Complainant had raised about the Respondent's accounting practices. The Respondent contended that the no-attorney requirement was justified because the presence of the attorney would destroy the confidentiality of the meeting and prevent attorney-client privilege from attaching to communications at the meeting. The Respondent also contended that the presence of the attorney would have changed the meeting from a fact-finding investigation into an adversarial process oriented toward the Complainant's desire for a severance package. The ALJ, however, found that the purpose of the meeting was not to conduct a legitimate inquiry into the Complainant's concerns, but to create a situation where the Complainant would not attend the meeting thereby creating a justification for terminating his employment. The ALJ also held that the Respondent, under the exigent circumstances, had no reasonable expectation that the information to be discussed was confidential, making the attorney-client privilege inapplicable. Moreover, the ALJ concluded that, as an officer, the Complainant could have waived the privilege. The ALJ wrote:
Welch, as Cardinal's CFO, was a corporate officer of Respondent. As such, he had a fiduciary duty to Cardinal and its shareholders to ensure, inter alia, that Respondent complied with all applicable laws and regulations governing the administration of financial institutions such as Cardinal, and to disclose any failure of Cardinal to do so. In furtherance of those duties, he raised a number of issues regarding various events which occurred at Cardinal during the Summer and early Fall of 2002, which events he reasonably believed constituted violations of Federal law. Each of the issues raised by Welch concerned matters under the direct auspices of the CFO and involved a variety of documents and information to which he had legitimate access.
Clearly, the disclosure of perceived financial improprieties is in the best interests of a corporation's shareholders so they may ensure that the corporation's officers and directors are complying with, inter alia, their duties of due care, good faith, and loyalty. Furthermore, Sarbanes-Oxley was expressly enacted by Congress to foster the disclosure of corporate wrongdoing and to protect from retaliation those employees, officers, and directors who make such disclosures. When ordered by Moore to meet with Densmore and Larrowe to discuss the issues he had raised, Welch was clearly acting in furtherance of his fiduciary duty to disclose possible wrongdoing. Allowing him to have his own counsel present during the meeting would not only promote Welch's fulfillment of that duty, it would further the purposes of Sarbanes-Oxley by protecting Welch from retaliation for disclosing improprieties governed by the Act. As an officer of Cardinal, it thus was within his power to waive the attorney-client privilege consistent with his fiduciary duty to act in the best interests of Respondent. Commodity Futures Trading Comm'n v. Weintraub, 471 U.S. at 348-49.
DUAL MOTIVE; CLEAR AND CONVINCING EVIDENCE BURDEN ON RESPONDENT; SECRET TAPING IN VIOLATION OF ESTABLISHED COMPANY POLICY
In Halloum v. Intel Corp., 2003-SOX-7 (ALJ Mar. 4, 2004), the ALJ concluded that the Complainant had established that protected activity was a contributing factor in the Respondent's decision to modify a Corrective Action Plan (CAP) to impose unreasonable assignments on the Complainant. Turning to dual motive analysis, the ALJ noted that the Respondent's burden was to prove by clear and convincing evidence that the CAP modifications would have been the same even if the Complainant had not engaged in the protected activity.
The Respondent presented evidence that it believed that the Complainant recorded conversations at work in violation of explicit company policy of which the Complainant was aware. The Respondent presented evidence that tape recording was anathematic to its corporate culture, which sought not to chill employee self-expression. The ALJ found that the Respondent's evidence on this point was consistent, undisputed, and provided clear and convincing evidence -- that it was within the Respondent's prerogative to enforce this policy by modifying the CAP as it did, even if it was a rather ham-fisted way of doing so.
In addition, the ALJ found that the Respondent provided clear and convincing evidence that it had removed the Complainant's supervisory responsibilities in the modified CAP based on the Complainant's attempt to coerce his staff to give only positive evaluations of his performance rather than on the basis of any whistleblowing activity. Finally, the ALJ found that the Respondent established that the Complainant was on his way out anyway, and that the protected activity was not a factor that brought matters to a tipping point. The ALJ noted that it was an open question whether an employer's policy against secret tape recording might allow an employee to escape discipline if the tape gave direct evidence of invidious discrimination, but that where is does not, a violation of company policy in this regard serves as a legitimate, non-discriminatory basis for discharge. Deiters v. Home Depot USA, Inc., 842 F.Supp. 1023 & n.2 (M.D. Tenn. 1993).
