MEMORANDUM
To: Senior
Partner, T.S. Randall & Associates, P.C.
From: 119483
RE: Cameron
Langley v. Flagstaff Univ.
Date: November
30, 2012
______________________________________________________________________________
QUESTIONS PRESENTED
I.
Cameron Langley was demoted and transferred to another department after
an argument with his employer, Ms. McCauley, over his work performance and his
threats to report billing issues to the United States Attorney (U.S. Attorney).
Does Mr. Langley have a prima facie case
under the Whistleblowers’ Protection Act (WPA)?
II.
Ms. McCauley will likely show she transferred Mr. Langley because he was
“uncooperative and insubordinate.” Can Mr. Langley show that the reasons for the
employment discrimination are merely a pretext and not made in bad faith?
BRIEF ANSWERS
I. Yes. Mr. Langley can show he was
engaged in a protected activity (reporting billing issues to the U.S. Attorney),
he was discriminated against (his demotion and transfer to another department)
and a causal connection (the transfer and demotion are related in fact, not
merely in time).
II.
Yes. Mr. Langley can show
that his express threats to report coupled with his actual reports to Jay and
the U.S. Attorney’s office were before he learned about the adverse employment
action and are more than just a coincidence in time. Further, he can show that
since the report was before the adverse employment action, it was not done in
bad faith.
FACTS
Mr. Langley graduated from Michigan State University
(MSU) in 2001 and immediately started working at the university, first as a
budget analysis and later as a budget area manager. In 2009, he left MSU for an
opportunity to become the Assistant Director of Finance for the Information
Technology Department (ITD) at Flagstaff University. Mr. Langley was responsible
for all cash flows in the 200-person department.
Mr. Langley reports to Ms. McCauley, the Director of the
ITD Finance Department. Although she has an MBA, Mr. McCauley claims she does
not have any real higher-education experience; he also mentioned that she has a
high opinion of herself and does not respond well to other’s advice.
In 2011, Mr. Langley developed a new
“pass-through-financing” concept to bill the federal government for faculty
grants. The system went into effect in late 2011. While processing some data
for the departments, he noticed that some billing did not look right. For
example, he found charges for entertainment expenses and the grants were being
billed at the highest rate. After consulting with other departments, they
showed him the grant agreements that require government to be billed the lowest
rate the University charges for services.
In January 2012, he brought the billing issue to Ms.
McCauley. She told him that it was the lawyer’s job to review the agreements
and he should only worry about doing his job because the new “Numbersoft”
system was coming online soon. Mr. Langley let the billing issues go and began
working on the Numbersoft project for the next several months.
While working on the Numbersoft project in August, Mr.
Langley did not think he was getting enough vendor support. Despite Ms.
McCauley’s instructions otherwise, he contacted Numbersoft directly to complain
about the lack of vendor support. Ms. McCauley reprimanded Mr. Langley for
making the call because it undercut her efforts to establish good relations
with Numbersoft. Mr. Langley replied that she was not doing a good job because
they were not getting good support.
The relationship continued to be uncomfortable between
the two. At the end of September, Ms. McCauley gave Mr. Langley the minimum
raise and described him as “at times uncooperative and insubordinate.” Before
meeting with Ms. McCauley a couple weeks later regarding the evaluation, he
decided to “get his ducks in a row;” he made a list of things she failed to do on
the software and also checked the numbers on the pass-through reimbursement
again.
At
their meeting on October 8, Ms. McCauley criticized Mr. Langley’s performance;
he replied that she was one who was not doing her job because of poor
Numbersoft vendor support and she failed to fix the reimbursement issues. He
told her that she was the one headed for trouble and if she did not do
something about the grant charges, he would find someone who would. She
responded that she didn’t like threats.
After the meeting, Mr. Langley contacted Mary Washington,
the chief information officer, regarding the reimbursement issues; however, she
told him to take it up with Ms. McCauley. Since she was not responsive to the
issue, he decided to contact our firm and set up a meeting with Jay on October
18. Mr. Langley and Jay have already contacted the U.S. Attorney’s office. The
university has admitted to improper billing and is trying to negotiate a
reimbursement amount.
After the meeting on October 8, Ms. McCauley contacted
the human resources department to transfer him to the satellite office about 30
minutes away to work on budget matters for another assistant director. Mr.
Langley went to an annual conference in Chicago from October 15-18, but when he
returned to work on Friday morning, Ms. McCauley informed him he would be
working for another assistant director on budget matters for the telephone
department. She agreed that although he would receive the same pay, this was a
clearly a demotion; however, she insisted it was for the best because they
could no longer work together.
Mr. Langley talked with the university’s human resources
department. They informed him the transfer was exclusively Ms. McCauley’s
decision. Mr. Langley did not like this answer and wants to know if he has a
claim.
APPLICABLE STATUTE
An employer shall not discharge, threaten, or otherwise
discriminate against an employee regarding the employee's compensation, terms,
conditions, location, or privileges of employment because the employee, or a person
acting on behalf of the employee, reports or is about to report, verbally or in
writing, a violation or a suspected violation of a law or regulation or rule
promulgated pursuant to law of this state, a political subdivision of this
state, or the United States to a public body, unless the employee knows that
the report is false, or because an employee is requested by a public body to
participate in an investigation, hearing, or inquiry held by that public body,
or a court action.
Mich.
Comp. Laws Ann. § 15.362 (Westlaw, current through P.A. 346, 2012).
DISCUSSION
Mr.
Langley can likely establish a prima facie case under the WPA. Mr. Langley can
also show sufficient circumstantial evidence that his employer’s reasons for
the transfer are merely a pretext. He should also be able to prove that his
reports were in good faith.
The
WPA has three elements to establish the plaintiff’s a prima facie case: (1) the
plaintiff was engaged in a protected activity, (2) the plaintiff was discharged
or discriminated against, and (3) a causal connection exists between the
protected activity and the discharge or discrimination. Shallal v. Catholic Social Services of Wayne County, 455 Mich. 604,
610, 566 N.W.2d 571, 574 (1997). Mr.
Langley can prove each of these elements to establish his prima facie case.
The
WPA is the plaintiff’s exclusive remedy when an employee is discharged for
reporting violations of the law. Covell
v. Spengler, 141 Mich. App. 76, 85, 366 N.W.2d 76, 80 (1985). The WPA also
requires all claims to be brought within 90 days which acts as a statute of
limitations. Id. at 81, 366 N.W.2d at
79.
After
the plaintiff makes a prima facie case, the courts use the “burden-shifting
analysis” to determine if the employer has a legitimate reason for the
discriminatory action and if that reason is merely a pretext. Heckman v. Detroit Chief of Police, 267
Mich. App. 480, 497, 705 N.W.2d 689, 699 (2005). Mr. Langley can show enough
circumstantial evidence, from which a reasonable jury could infer, that any
legitimate business reasons for his transfer are merely a pretext.
I. Mr. Langley can establish all three
elements of a prima facie case under the WPA.
A.
Mr. Langley was about to report suspected violations to a public body
when he was demoted and transferred.
The
plaintiff must show they either reported or were about to report to a public
body. § 15.362. Although the courts are unwilling to protect an employee who
merely discusses reporting a violation with other employees or who makes
threats to their employer, Chandler v
Dowell Schlumberger Inc., 456 Mich. 395, 402, 572 N.W.2d 210, 214 (1998),
an express threat when coupled with other actions is more than enough to
establish the plaintiff was “about to report” element, Shallal, 455 Mich. 604, 621, 566 N.W.2d 571, 579 (1997).
For
example, in Lynd v. Adapt, Inc., 200
Mich. App. 305, 503 N.W.2d 766 (1993), although the plaintiff’s actual report
came after her termination, the court found the plaintiff’s prior reports to
her supervisors and the organization’s board of directors along with contacting
her state representative about where she could report the suspected violations
enough to satisfy the “about to report” element.
In
this case, Mr. Langley not only made express threats to his employer, he also
took other actions. Like the plaintiff in Lynd,
who made several attempts to address her suspected violations with her
supervisors and the organization’s directors, Mr. Langley attempted to address
the billing issues with his employer. In January 2012, after he talked with
other departments about the terms in the grant agreement, he brought up the
suspected billing issues to Ms. McCauley. Mr. Langley also took a second look
at the billing issues and brought it up with
Ms. McCauley at his performance review on October 8, 2012. At this meeting he
told her that if she did not do something he was going to find someone who
would. Later that same day, he brought the issues to the attention of Mary
Washington, the Chief Information Officer for the university, as well as contacted
Jay at our firm about reporting the violations to the government.
Although
Mr. Langley’s actual report to the U.S. Attorney’s office was after the alleged
retaliation, he can provide enough facts to show he was “about to report” the
suspected billing violations.
The
WPA also requires the report be made to a “public body,” which includes reports
to a “law enforcement agency.” § 15.361(d). In Ernstine, the court considered the federal Department of Education
(DOE) as a “law enforcement agency” within the meaning of the WPA. Ernsting v. Ave Maria College, 274 Mich.
App. 506, 519, 736 N.W.2d 574, 584 (2007). The court reasoned that the DOE had
specific powers to “detect and punish violations of the law.” Id. at 515, 736 N.W.2d at 581.
In
this case, Mr. Langley and Jay reported billing violations to the U.S.
Attorney’s Office. Each U.S. Attorney is charged with “prosecut[ing] all
offenses against the United States.” 28 U.S.C.A. § 547 (Westlaw, current
through. P.L. 112-195 (excluding P.L. 112-140 and 112-141), 2012). If the court
in Ernsting, considered the DOE a law
enforcement agency whose ancillary role is to enforce regulations, the court
will likely find Mr. Langley’s report to the U.S. Attorney because their
primary duty is to prosecute for all offenses against the United States.
Since
Mr. Langley made an express threat and took other actions to report the
suspected billing violations to the U.S. Attorney, he can establish the first
element in his WPA claim.
B. Mr. Langley’s demotion and transfer to another
department was discriminatory.
The
WPA protects the whistleblowing employee against discrimination in the terms,
conditions, location, and privileges of their employment. § 15.362. The courts
consider things like a lower wage, a less distinguished title, or diminished
material responsibilities as “typical” adverse employment actions. Heckman, 267 Mich. App. at 492, 705
N.W.2d at 697.
The
courts use an objective standard and will consider the specific facts in each
case when deciding whether the employer discriminated in the terms of the
whistleblower’s employment. Heckman,
at 492, 705 N.W.2d at 697. In Heckman,
a government fiscal employee, after reporting violations, claimed he was
discriminated against because his employer reduced the number of accounts he managed
from about ten to four. Id. at 484,
705 N.W.2d at 692, 693.
The
court reasoned that although the number of his accounts were reduced, those
accounts were still substantial because they were between $65 million and $80
million. Id. at 484, 705 N.W.2d at
693. Since reasonable minds could differ on the factual terms of his
employment, the court decided that the plaintiff’s argument should survive
summary disposition and be decided by the jury. Id. at 493, 705 N.W.2d at 697.
In this case, Mr. Langley can claim protection under the
WPA because he was effectively demoted as well as transferred. Like the
plaintiff in Heckman who claimed a
reduction in the number of accounts he managed constituted discrimination, Mr.
Langley’s responsibilities have also been reduced. As the Assistant Director of
the IT Department’s Finance office, Mr. Langley reported to the Department Director. In this role, he was responsible
for all cash flows between his department and the rest of the university. In
his new position, rather than reporting to the Department Director, he now
reports directly to an Assistant Director – the exact title he previously
enjoyed. Also, his responsibilities were reduced from managing the cash flows
of the whole department to a subset of the department – the telephone
department. Not only does he have a less distinguished title, Mr. Langley
claimed this was a demotion and Ms. McCauley agreed. Further, this new
assignment is about 30 minutes away from Mr. Langley’s former work site. Since
the WPA protects the employee’s terms, conditions and locations, Mr. Langley
has enough facts to establish the WPA’s second element.
C.
There is a causal connection
between Mr. Langley’s express threat to report and the alleged discrimination.
To
prove a causal connection, the “[p]laintiff must show more than merely a
coincidence in time between [the] protected activity and [the] adverse
employment action.” West v. General
Motors Corp., 469 Mich. 177, 186, 665 N.W.2d 468, 473 (2003). The causal
connection can be established either by direct or circumstantial evidence. Shaw v. Encorse, 283 Mich. App. 1, 14,
15, 770 N.W.2d 31, 40 (2009). Direct evidence requires the conclusion that the
protected activity was at least a motivating factor for the discrimination. Id. at 14, 770 N.W.2d at 40. Circumstantial
evidence is such that a jury could draw reasonable inferences the discrimination
was motived by retaliation. Id. at
14, 15, 770 N.W.2d at 40, 41.
The
court, when determining if a causal connection exists, will consider reasonable
inferences from the circumstances surrounding the adverse employment action. Roulston v. Tendercare (Michigan), Inc.,
239 Mich. App. 270, 280, 608 N.W.2d 525, 530. In Roulston, the plaintiff, a social services director at a nursing
home, reported several instances of patient abuse to the state investigators. Id. at 272, 608 N.W.2d at 526. At the
plaintiff’s performance review, she was marked “average” in every area except
in “cooperation/teamwork” – where she was marked “poor” because of her confrontations
with other employees. Id. at 274, 608
N.W.2d at 527. During a confrontation with her employer regarding the
incidents, she was told she “needed to be like everybody else and start
thinking like they did.” Id. at 277,
608 N.W.2d at 528. She replied that she already reported the activity to the
state. Id. at 277, 608 N.W.2d at 528.
A few hours later, her employer met her in the office and abruptly told her, “[y]ou’re
through.” Id. at 277, 608 N.W.2d at
528. The employer also appeared very angry and stayed until she packed her
personal items and left. Id. at 277,
608 N.W.2d at 528-529.
Under these circumstances, the court found enough
circumstantial evidence to let the jury decide if there was a causal
connection. Id. at 278, 608 N.W.2d at
529. The court reasoned that although more than mere timing is needed to show a
causal connection between the protected activity and the discriminatory action,
there were other factors such as the employer’s demeanor and conflicting
evidence regarding the employee’s performance that made this a question for the
jury. Id. at 280-282, 608 N.W.2d at
530, 531.
Mr. Langley can establish through reasonable inferences
that he was transferred because of his protected activity. Like the plaintiff
in Roulston, there are two possible
explanations for Mr. Langley’s transfer – reporting suspected violations to the
authorities and inability to get along with co-workers. Like the plaintiff in Roulston who was fired just hours after
she notified her employer she reported the incidents, Ms. McCauley requested
Mr. Langley’s transfer the same he made his express threat to report. He should
be able to infer his transfer and demotion are causally related to the express
threats to report.
Since
Mr. Langley can establish a possible causal connection through circumstantial
evidence and reasonable inferences, he can establish the third, and final,
element in his prima facie WPA case.
II.
Mr. Langley can show his employer’s
reasons for discrimination are merely a pretext and not the result of bad faith.
The courts use the same “burden shifting analysis” used
in retaliatory discharge claims under the Civil Rights Act when analyzing
claims under the WPA. Brown v. Mayor of
Detroit, 271 Mich. App. 692, 709, 723 N.W.2d 464, 474 (2002). After the
plaintiff makes out a prima facie case under the WPA, the burden of proof
shifts to the employer to show a legitimate business reason for the
discrimination. Id. at 709, 723
N.W.2d at 474. The burden of proof then shifts back to the plaintiff to show
that the employer’s reason for discrimination is merely a pretext. Id. at 709, 723 N.W.2d at 474. The
plaintiff may show pretext either directly by showing a discriminatory reason
more likely than not motivated the employer or indirectly by showing the
employer’s explanation is not credible. Id.
at 710, 723 N.W.2d at 475.
A.
Mr. Langley can show his employer’s legitimate business reason for the demotion
and transfer are just a pretext.
The plaintiff can
use circumstantial evidence to establish inferences the employer’s legitimate
business reason for the discriminatory action is a pretext. Brown, 271 Mich. App. 692, 723 N.W.2d
464. In Brown, the plaintiff, a
deputy police chief, initiated investigations against the mayor as well as
fellow police officers. Id. at 695,
723 N.W.2d at 467. He submitted a report which detailed, among other things,
how some police officers spent their shift at a local bar and also
misrepresented actual hours worked. Id.
at 698, 723 N.W.2d at 469. The plaintiff also told the police chief he had
information regarding an altercation between the mayor’s wife and a nude dancer
at the mayor’s home; but, he did not include that information in the report. Id. at 698, 723 N.W.2d at 469. When the
mayor found out about the plaintiff’s report and investigations, he abruptly
decided to “unappoint” him because he did not have the required skill set. Id. at 701, 723 N.W.2d at 470.
The court held that the plaintiff satisfied his burden of
showing the employer’s legitimate business reason for the termination was just a
pretext. Id. at 718, 723 N.W.2d at
479. The court reasoned that the plaintiff’s previous performance evaluations
were satisfactory to rebut the mayor’s assertion that the plaintiff did not
have the “skill set” to perform. Id.
at 718, 723 N.W.2d at 479. Additionally, the mayor’s testimony was inconsistent
about when he learned of the plaintiff’s “unauthorized investigations” which
undermined the mayor’s credibility. Id.
at 719, 723 N.W.2d at 479, 480.
In
this case, Ms. McCauley will likely justify demoting and transferring Mr.
Langley to the other office because she is unable to work with him. Although we
do not have Ms. McCauley’s side of the story, it is patently clear there is
currently and has been tension between the two since she became the Director of
the ITD Finance Department in 2010. She will likely reference Mr. Langley’s
phone call to the Numbersoft vendor despite her instructions not to do so. Mr.
Langley mentioned that she “does not take advice from people” and she “has a
high opinion of herself.” Mr. Langley also mentioned that although she’s
relatively new and does not have any higher-education experience, she does have
an MBA, while Mr. Langley only has a bachelor’s degree. Ms. McCauley will
likely tell the court the real reason she reassigned Mr. Langley was because
she could not work with him anymore, which will satisfy her burden of proving a
legitimate business reason for the alleged discrimination.
Mr. Langley will then have to show Ms. McCauley’s
legitimate business reason is merely a pretext. Like the plaintiff in Brown, who was able to show that the
mayor’s reason was merely a pretext because he had previously received good
performance evaluations, Mr. Langley can show he had nothing but positive
reviews in his file prior to his transfer and demotion. Although Ms. McCauley
told Mr. Langley he “had the wrong attitude” and “was headed for trouble” were
in the context of him calling the
Numbersoft vendor, one reasonable inference is that those statements were, at
least in part, related to his prior report about the suspect billing practices.
Like the controversy in Brown, this case has two
sides. In Brown, the plaintiff was
either fired because he lacked the required skill set or because he reported the
illicit activity; here, Mr. Langley was either transferred because he reported billing
issues or because Ms. McCauley did not get along with him anymore. Since the
court in Brown decided the jury could
draw reasonable inferences from the facts to decide the employer’s reasons were
a mere pretext for his termination, the court will likely allow this case to go
the jury because there are reasonable inferences that Ms. McCauley transferred
and demoted Mr. Langley, not because she could not work with him, but because
he reported the billing issues. Since there are two sides to the story, Mr.
Langley’s case should survive a directed verdict and make it to the jury on the
pretext issue.
B.
Mr. Langley can show his report was not in bad faith.
The plaintiff’s bad faith may act as bar to recovery
under the WPA. Shallal, 455 Mich.
604, 566 N.W.2d 571. In Shallal, the
plaintiff, an adoption department supervisor, talked with other employees about
reporting her supervisor for misusing agency funds and keeping alcohol in his
office. Id. at 606, 566 N.W.2d at
573. However, during the course of the next four years, she never reported the
activity because she did not want to put her job in jeopardy. Id. at 606, 607, 566 N.W.2d at 573. It
was not until the Department of Social Services (DSS) investigated her that she
told her boss she would report him if he did not “straighten up.” Id. at 607, 608, 566 N.W.2d at 573. Later,
the employer fired the plaintiff, citing the DSS report as justification. Id. at 608, 566 N.W.2d at 573.
The court held that a plaintiff cannot rely on the WPA to
extort an employer not to fire her. Id.
at 622, 566 N.W.2d at 579. The court reasoned that to hold otherwise would
allow the plaintiff to use the WPA as a shield whenever it is most advantageous
for them to do so. Id. at 622, 566
N.W.2d at 579. The court also noted there was no indication the Michigan
Legislature intended the WPA to be used offensively. Id. at 622, 566 N.W.2d at 579.
Although the bad faith exception was settled law in
Michigan for 15 years, the Michigan Supreme Court recently granted an appeal,
instructing the parties to brief, “whether Shallal
… correctly held that the primary motivation of an employee pursuing a
whistleblower claim must be a desire to inform the public on matters of public
concern, as opposed to personal vindictiveness.” Whitman v. City of Burton, 491 Mich. 913, 811 N.W.2d 490.
The court had the parties brief if the prior case law was
“correct” rather than if those facts were analogous to the case before the
court. I think this indicates the court
will likely overturn the bad faith exception. But, even if the court keeps the
bad faith exception, Mr. Langley can show the exception does not apply to him. On
October 8, he made an express threat to Ms. McCauley at the performance review
meeting that he would report the billing issues if she did not do something; he
followed this up the same day with calls to both Ms. Washington and our firm.
Since Mr. Langley did not know about his reassignment until over a week later,
on October 19, he can show that he is unlike the plaintiff in Shallal who only threatened to report
because she knew her termination was imminent. Although by no means conclusive,
this should be enough to create a question of fact about his motive to get his
case to the jury.
Mr. Langley can show through circumstantial evidence that
any legitimate business reason his employer gives for the transfer and demotion
is merely a pretext. Mr. Langley can also show, if still required when this
goes to trial, that he did not make the report in bad faith. Therefore, Mr.
Langley’s case will likely survive the “burden shifting analysis” and make it
to jury to determine the facts.
CONCLUSION
Mr. Langley can prove all the elements of a prima facie
case under the WPA: he threatened to report a suspected violation; he was demoted
and transferred to another department; and he has at least one plausible
explanation to show his threat caused his transfer. Mr. Langley can also draw
reasonable inferences from circumstantial evidence that Ms. McCauley’s
legitimate business reasons for transferring him are merely a pretext. Further,
even if the court still follows the “bad faith” exception when this goes to
trial, Mr. Langley can likely show it does not apply to his facts. For these
reasons I believe Mr. Langley has a case that can survive a directed verdict so
a jury can determine the facts.
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