Whistleblower lawsuit dismissal reversed by Fourth Circuit Court of Appeals

The Fourth Circuit Court of Appeals (which is the federal circuit that includes North Carolina) has allowed a Norfolk Southern Railway worker to proceed with a whistleblower action even after the same employee’s earlier filed discrimination action was dismissed by a federal district court.  The case, Lee v. Norfolk Southern Railway Co., 802 F.3d 626 (4th Cir. 2015), serves as an important reminder of an employer’s duty not to punish employees who report safety violations or other perceived unlawful actions.

The case was filed by Charles Lee, a rail carman for Norfolk Southern in North Carolina.  As a carman, Lee was responsible for inspecting rail cars for potential safety concerns.  In July of 2011, the company suspended Lee without pay for six months.  The company claimed that the suspension was because Lee drank a beer while on duty and then drove a company owned car in violation of company policy. 

Lee, however, claimed that his termination was actually due to two illegal factors: (1) his race (black) and (2) retaliation for federal rail safety whistleblowing activity.  

Lee filed two separate lawsuits at different times alleging these different theories.  The district court entered summary judgment for the defendant and dismissed the first lawsuit for alleged race discrimination under 42 U.S.C. § 1981.  Shortly thereafter, Lee filed a second lawsuit for damages under the Federal Railroad Safety Act’s whistleblower provision.  In this suit, Lee contended that Norfolk Southern suspended him in retaliation for his refusal to comply with the company’s attempts to limit the number of defective cars that he could identify as needing repairs.  In short, Lee argued that the company unlawfully punished him for blowing the whistle on safety violations.

Norfolk Southern argued that this second lawsuit was barred by an election of remedies restriction contained in the Federal Railroad Safety Act.  That provision states: “An employee may not seek protection under both this section and another provision of law for the same allegedly unlawful act of the railroad carrier.”  49 U.S.C. §20109(f).  The district court agreed with this position and granted summary judgment in the second suit as well.

In a heavily contested appeal, which featured appearances by government agencies and amicus filings by the Association of American Railroads, the Fourth Circuit Court of Appeals reversed.  In so doing, the Court agreed with Lee’s position that while his suspension was the challenged act in both lawsuits, the allegedly unlawful act was different in the two suits.  The first suit alleged discrimination as the unlawful act; the second suit alleged whistleblower retaliation. Because these are distinct causes of action with different proof requirements, the Court ruled that the election of remedies restriction did not bar the second whistleblower action.  

Procedurally, the case was quite complex.  The complexity was due to a number of factors, which included the rigorous administrative scheme that a railroad worker must first pursue before filing a whistleblower case in court.  The case demonstrates well, however, the basic danger that lurks whenever an employer takes adverse employment action against an employee who has reported or opposed safety violations or who has refused to comply with instructions or orders that violate federal safety standards.

Far from unique to the railroad setting, whistleblower protections exist in a myriad of settings, both blue collar and white collar.  Virtually any time an employee is punished for opposing work place safety concerns, whistleblower considerations arise.  Beyond the safety arena, employees are also protected from retaliation for opposing unlawful activities, such as employment discrimination or harassment.  

Another whistleblower protection that often comes in to play is the protection afforded to employees who report or oppose unlawful billing practices by employers who perform work under government contracts.  Both federal and state law provides protections to whistleblowers who report false claims for payment or reimbursements.  This blog post presents an excellent overview of some of the more common whistleblower statutory protections under federal law, but keep in mind that North Carolina law provides many others. 

It is also critical to remember that retaliation or whistleblower actions often prove more problematic to the employer than defending the underlying claim of unlawful conduct.  In this case, for example, the Fourth Circuit noted that  the “burden-shifting framework that is applicable to FRSA cases is much easier for a plaintiff to satisfy than the McDonnell Douglas standard” applicable to Section 1981 claims.

Fourth Circuit Affirms Jury Verdict in Racial Harassment and Retaliation Action Despite Erroneous Causation Instruction

In E.E.O.C. v. A.C. Widenhouse, Inc. (06/24/2014), the Fourth Circuit Court of Appeals affirmed a substantial plaintiffs’ jury verdict in a case featuring claims of a racially hostile work environment, racially discriminatory discharge, and retaliatory discharge.  The lawsuit was brought first by the United States Equal Employment Commission (“EEOC”) on behalf of two black employees, and also included additional claims brought by Contonious Gill, one of the affected employees, after he intervened in the action.

Gill had worked for A.C. Widenhouse as a truck driver from May of 2007 until his termination in June of 2008.  During his employment, Gill was subjected to racial epithets, which included use of the “N” word and the term “porch monkey.”  He also heard racially charged jokes and witnessed displays of objects such as nooses and confederate flags.  Gill testified that he repeatedly reported these incidents to superiors, who did nothing to remedy the problem.  Gill was terminated in June of 2008 when he was unable to complete a delivery due to illness.  Gill alleged that the termination was due to racial discrimination as well as retaliation for his reporting the harassment.

The jury found Widenhouse liable on each claim and awarded Gill $105,000.00 in damages.  The judge, in turn, awarded Gill an additional $88,509 in back pay and prejudgment interest. The judge also ordered Widenhouse to pay $139,000 in attorneys’ fees and costs.

In its appeal to the Fourth Circuit Court of Appeals, Widenhouse contended that the trial court erred by instructing the jury on the law applicable to the claim of retaliation.  On this point, the trial judge instructed the jury that it should find Widenhouse liable for violating Title VII's retaliation prohibition if the jury found that retaliation for Gill's protected activity of reporting racial discrimination was a motivating factor in his termination.  This instruction was contrary to recent United States Supreme Court precedent holding that a retaliation plaintiff must prove that the plaintiff’s protected conduct (here, Gill’s complaints of harassment) must have been the “but-for” cause of the retaliatory action.  

While acknowledging the erroneous instruction, the Court of Appeals nevertheless affirmed the verdict because Widenhouse failed to show that the erroneous instruction affected the outcome of the retaliation claim.  In its analysis on this point, the Court found significant the jury’s verdict sheet, which noted the jury’s finding that the termination was “because of” his opposition to unlawful harassment.  The Court also found that the jury’s finding of liability for the same conduct under a companion Section 1981 federal law theory to demonstrate further a lack of prejudice from the erroneous instruction.

In affirming the jury verdict despite the erroneous jury instruction, the opinion also demonstrates that the Supreme Court’s recent pronouncement of a “but-for” causation requirement really is not the significant change in the law that employers initially believed.  Other recent cases decided by other courts have previously noted that there can be more than one “but-for” cause, and the opinion here seems to confirm the point.  Other commentators have discussed how the traditional analytical framework for retaliation claims appears to have been altered little by the distinction between “motivating factor” and “but-for” causation. We tend to agree that the but-for causation requirement is unlikely to dramatically alter the danger presented by retaliation claims when termination decisions closely follow an employee’s complaints of work place discrimination or harassment.

North Carolina District Court Denies Discrimination Plaintiff’s Attempt to Compel Production of Defendant’s Net Worth Evidence

A ruling from the United States District Court for the Eastern District of North Carolina has denied an employment discrimination plaintiff’s motion to compel production of an individual defendant’s net worth information.  In so doing, the court aligned itself with other federal court rulings that have held that a plaintiff may obtain discovery of net worth information only after first establishing an actual prima facie entitlement to a punitive damages award.

The case, Jackson-Heard v. Elizabeth City State University, is an employment discrimination action brought by Mary Jackson-Heard, a former professor of accounting with the defendant school.  Claiming she was unlawfully terminated, the plaintiff asserted claims of race discrimination, age discrimination, and gender discrimination.  In addition to suing the University, the plaintiff also sued the Dean of the School of Business under 42 U.S.C. Section 1981. Among other relief, the plaintiff sought an award of punitive damages.

The plaintiff served discovery requests seeking detailed information and financial documents relating to the individual defendant’s personal net worth.  The plaintiff claimed that such information was discoverable in order to explore and develop her claim for punitive damages.  The defendant, however, objected to the requests on grounds that they were overbroad, unduly burdensome, and not reasonably calculated to lead to the discovery of admissible evidence.  The plaintiff filed a motion to compel production of the requested information.

In its ruling, the court acknowledged the intended broad scope of discovery.  The court also quoted the language of Rule 26 stating that relevant information, for discovery purposes, need not be admissible at trial so long as it is reasonably calculated to lead to the discovery of admissible information.  At the same time, the court noted the trial court’s broad discretion in determining relevance for discovery purposes.

Turning then to the specific issue at hand, the court acknowledged that a defendant’s financial position is relevant to the issue of punitive damages.  At the same time, however, the court pointed to several federal court decisions that have held that a plaintiff must establish a prima facie case of actual entitlement to punitive damages before requiring production of sensitive financial information.  The court determined that the plaintiff had not yet shown an entitlement to punitive damages and, also, found that the information the defendant had provided was sufficient in any event.  For the reasons, the motion to compel was denied.

The ruling provides defendants with some hope for limiting harassing discovery requests.  Under this ruling and the precedents cited, a plaintiff cannot pry into a defendant’s sensitive financial status by merely asserting a claim for punitive damages.  Instead, the plaintiff must establish that the punitive damages claim has actual merit.

The ruling represents a notable difference in philosophy between federal and state courts in North Carolina.  Frequently, North Carolina’s state court judges take much more liberal views on the permissible scope of discovery in civil lawsuits.  Many times, plaintiffs in North Carolina actions pursue punitive damages claims and promptly serve discovery requests seeking similar documents and information.  Although the scope of discovery standard is theoretically the same under both federal and state rules of civil procedure, state court judges are traditionally far more accommodating to requests for net worth information.

City of Greensboro Moves for Summary Judgment in Discrimination Case filed by Former Police Chief, David Wray

Former City Manager, Mitchell Johnson and former Police Chief, David Wray.  Photo credit: News-Record.com.

For those of you who live in the Triad area of North Carolina, you may recall that in 2005, the City of Greensboro police department was fraught with allegations of internal racial discrimination.  The police chief at the time was David Wray.  Allegedly, Mr. Wray used an internal affairs unit to secretly investigate numerous black officers for alleged misconduct.  Furthermore, it was reported that a binder known as the “Black Book” allegedly contained photographs of black police officers.  As reported by NPR, there were rumors that crime suspects were sometimes promised more lenient treatment if they could identify black officers in the “Black Book” for misconduct.    

According to reports by the Greensboro News and Record, the former City Manager, Mitchell Johnson, met with Mr. Wray and the human resources director on January 6, 2006.  During that meeting, Mr. Johnson informed Mr. Wray that he had reviewed two internal reports detailing how Mr. Wray’s administration had investigated its own officers.  According to news articles, Mr. Johnson then informed Mr. Wray that he was being placed on administrative leave.  Mr. Wray subsequently tendered his resignation on January 9, 2006.

Mr. Wray filed a discrimination lawsuit against the City of Greensboro in 2009.  Mr. Wray alleges that the City of Greensboro violated his rights under the Civil Rights Acts of 1866 and 1870, 42 U.S.C. § 1981.  In short, Mr. Wray alleges the city discriminated against him based on his race (white) in an effort to appease a segment of the African American community by publicly stripping him of his authority and forcing him out of office.  A copy of the complaint can be viewed by clicking here.

Section 1981 prohibits all forms of intentional employment discrimination based on race which are considered “disparate treatment”.  The prohibition against disparate treatment applies to hiring, firing, demotion, and failure to promote decisions, as well as to unequal pay and hostile work environment claims.  Proving a Section 1981 claim can be difficult.  A Section 1981 plaintiff alleging discrimination based upon a protected trait must produce sufficient evidence from which one could determine that the protected trait (race) actually motivated the employer’s decision.  See, e.g., Hill v. Lockheed Martin Logistics Mgmt., Inc., 354 F.3d 277, 286 (4^th Cir. 2004).   

More than four years after the complaint was first filed (and nearly four years after the Court ruled on the City's earlier motion to dismiss), the City has moved for summary judgment.  The City of Greensboro is asking the Court to summarily rule that Mr. Wray cannot prove that he was placed on administrative leave because he is white or that former police chief Tim Bellamy was selected as Mr. Wray’s replacement because he is black.  Instead, the City of Greensboro contends that the evidence demonstrates that Mr. Johnson placed Mr. Wray on administrative leave because of concerns over Mr. Wray’s truthfulness and leadership decisions.   

In defense of its actions against Mr. Wray, the City of Greensboro relies on a decision by the Fourth Circuit Court of Appeals (the Circuit with jurisdiction over North Carolina's federal courts) holding that an employee's dishonesty is a legitimate, non-discriminatory reason for termination.  See Curry v. Alamance Health Services, 1994 WL 242288 (M.D.N.C. Apr. 11, 1994), aff'd 54 F.3d 772 (4th Cir. 1995).    

In support of its motion for summary judgment, the City has included a transcript of the closed door January, 2006 meeting between Mr. Wray and Mr. Johnson.  A copy of the transcript on file with the court can be viewed by clicking here.   The City of Greensboro emphasizes that during the meeting, Mr. Johnson informed Mr. Wray that he was placing him on administrative leave pending further investigation and that Mr. Wray agreed that appointing then Assistant Chief Tim Bellamy as Acting Chief was an appropriate choice.  

This case demonstrates how even corrective personnel actions can sometimes lead to discrimination complaints, regardless of the plaintiff's race.  The case and its long timeline are also good examples of how protracted and expensive employment discrimination cases can become.  A review of the docket shows some 52 filings over the course of 4 years, which likely has generated prodigious legal fees for the City of Greensboro.  

Similarly, the plaintiff's counsel has likely incurred substantial fees over the course of this protracted litigation.  If the plaintiff were to prevail in the case, these fees would present an additional exposure to the City that could very well prove greater than the plaintiff's damages.  This is so because courts routinely award prevailing plaintiff's their attorney's fees as part of the final judgment in employment discrimination actions.  Whether this plaintiff ultimately prevails or not, it seems clear that the City of Greensboro will have paid substantial, costly attorney's fees and expenses over the course of a litigation that has already consumed more than four years of time.  The importance of experienced counsel capable of streamlining litigation and achieving timely and economical results in employment litigation matters cannot be understated.

Mr. Wray will have an opportunity to file a brief in opposition to the City of Greensboro’s motion, but has not yet done so.  We will discuss issues raised by Mr. Wray’s response once his brief is available, so please check back.  In the meantime, please feel free to contact me directly at (336) 333-6375 to discuss this post or other North Carolina employment law matters.  For more information about my Greensboro law firm of Sharpless &Stavola, please visit our website at www.sharpless-stavola.com.