Court Protects Whistleblower Report That Was Mandated by Employer

Earlier this month, the Mahoning County Court of Appeals reversed the dismissal of an attorney whistleblower complaint by the State Personnel Board of Review.  Desmond v. Mahoning Cty. Pros. Office, 2019-Ohio-4089.  The complaining attorney had been fired more than two months after being ordered to submit a memorandum detailing his prior allegations against a co-worker which he had failed to previously raise with his superiors and had already been the subject of a threatened lawsuit, but had shared with the attorney of an adverse party who drafted the lawsuit’s complaint.  The Court summarized that: “R.C. 124.341 contains no time frame for making a report, it contains no requirement that a supervisor be unaware of the conduct reported, and it does not specify that the protections of the statute will be lost if an employee is directed by his employer to make a report.  We also find that R.C. 124.341 does not except from whistleblower protection reports of attorney misconduct under the Ohio Rules of Professional Conduct.”   


According to the Court’s opinion, the complainant discovered that a co-worker who had taken over one of his cases was engaging in unprofessional behavior by, among other things, pursuing an indictment against a material witness for refusing to testify against an alleged murderer by invoking his fifth amendment privilege and by misrepresenting to the judge the witness’s stated intent to flee the state if released after the indictment was dismissed in order to keep that witness in jail.   Instead of sharing his concerns with management, he shared them with the witness’s attorney, who ultimately filed a complaint with civil rights charges and provided it to the employer.  He later texted his supervisor that the co-worker had mishandled the case and was directed to prepare a memorandum detailing his knowledge and concerns for the ongoing investigation into the allegations against the co-worker.  Despite agreeing to do so promptly, he required a reminder weeks later and a direct order more than a month later before he finally submitted the memorandum.  He was fired more than two months after that for, among other things, becoming an adverse witness to the employer through his communications to the witness’s attorney, failing to bring the concerns to management earlier and making false allegations against the co-worker, etc.  He appealed his termination to the SPBR, which dismissed for lack of jurisdiction on the grounds that his actions did not constitute protected whistleblowing under the statute.  The Court reversed. 


The Court agreed that the complainant’s text messages -- alleging that his co-worker “mishandled” the case and that some of the allegations against her were true – were not covered by the whistleblower statute because they were too ambiguous and did not allege illegal conduct.  However, the memorandum which he submitted was covered by the statute even though (1) he was ordered to submit it for face disciplinary action for insubordination and (2) covered issues of attorney professional conduct.   There is no exception in the statute for violations of the Rules of Professional Responsibility.  Further, the memorandum also implicated violations of federal civil rights laws and other prosecutorial misconduct. 


In addition, the Court determined that good faith was not absent merely because the complainant had been ordered to submit the memorandum to his employer which already knew the underlying allegations and was already investigating them.  

Turning to the good-faith requirement adopted by SPBR, R.C. 124.341 contains no express “good faith” requirement, except to the extent that it requires the employee “to make a reasonable effort to determine the accuracy of any information reported * * *.”  R.C. 124.341(C).  It provides no time frame for making a report, it contains no requirement that a supervisor be unaware of the conduct reported, and it does not specify that the protections of the statute will be lost if an employee is directed by his employer to make a report.  It was, therefore, not appropriate to deny jurisdiction on this basis.

Indeed, a whistleblower does not loose statutory protection merely because the covered written report was a mandatory duty as opposed to an independent offer.  Analogizing the situation to a sexual harassment complaint under Title VII as discussed in   Crawford v. Metropolitan Govt. of Nashville & Davidson Cty., Tenn., 555 U.S. 271, 277–78, 129 S.Ct. 846, 172 L.Ed.2d 650 (2009) :

The court concluded that “nothing in the statute requires a freakish rule protecting an employee who reports discrimination on her own initiative but not one who reports the same discrimination in the same words when her boss asks a question.”  Id. at 851.  We agree with this reasoning.  And we further emphasize, again, that if the legislature intended to protect only employees who identify violations independently—and not on the command of their employer—it could have expressly stated this in the statute.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Employee Breached Implied Duty of Confidentiality When Using Customer List

Last week, the Franklin County Court of Appeals affirmed in part and reversed in part an $81k verdict against a former employee and his new business for misappropriating a client list – which his employer had earlier sold to the plaintiff -- to start his marketing campaign.  MNM & MAK Ents., L.L.C. v. HIIT FIT Club, L.L.C., 2019-Ohio-4017.  The Court found that the employee’s misappropriation of the password protected client information violated Ohio’s Trade Secret Act and that the taking was unlawful based solely on every Ohio employee’s implied fiduciary duty of loyalty.  Nonetheless, the Court remanded for a recalculation of damages because the award was improperly based on gross revenue and mistaken assumptions did not account for expenses for declining growth in new clients.


According to the Court’s opinion, the individual defendant was initially hired as an independent contractor subject to an agreement with a confidentiality clause protecting the employer’s proprietary information, as well an arbitration clause.  He was later hired as an employee, but had not employment agreement.  He was given access to all client contact information, which he eventually downloaded to help start his own competing business in August 2017 a year after the employer closed its New Albany facility.  He was unaware that the employer had sold in October 2016 the customer list to another entity, which clearly objected when those clients signed up with the defendant’s new competing business.   The employer and the buyer asserted claims for misappropriation against the former employee and his new company.  After a bench trial, the court awarded $81,777 in damages.  This appeal followed.


The Court found that the independent contractor agreement was relevant for the purpose of showing that the defendant employee knew that the customer information was confidential, but did not otherwise govern the dispute. “There is no public record of the list, and [the employer] never used the list in a public way or provided the list to any mailing company.”   


The Court rejected the employee’s argument that his downloading of the information was not unlawful misappropriation because he had lawful access to the information by his employer giving him the passwords and did not subject him to a confidentiality agreement. “[E]xpress consent to access trade secret information in the course of employment does not also confer express or implied consent to use the information for non-work, personal purposes.”  Employers are not required to enter into express confidentiality agreements with their employees to protect their trade secrets from misuse:

Employees owe a duty of good faith and loyalty regardless of whether they signed an employment agreement with their employer.   . . . The presence of an explicit, binding confidentiality or employment agreement is not required to find misappropriation of a trade secret.

Victorious plaintiffs are entitled to recover damages for the defendant’s unjust enrichment from the misappropriation. “Regardless of whether the damages calculation is based on a plaintiff's loss or a defendant's gain, the damages figure " 'cannot be based upon a gross revenue amount.'  . . . . Rather, "Ohio law 'requires that evidence of lost profits be based upon an analysis of lost 'net' profits after the deduction of all expenses impacting on the profitability of the business in question.'"  Yet, in this case, the Court found the trial court abused its discretion in awarding damages based the figure on defendants’ gross revenue and speculation tying it to the misappropriation:

Here, appellees requested damages in the amount of $81,776.77 based on their calculation of the membership fees and other revenue HIIT Fit allegedly received from individuals who were previously Knockout members — i.e. appellants' profits, rather than appellees' losses.  Appellees admittedly based their calculation on appellants' gross revenue . . .  The trial court never considered or discussed whether and how to reduce this proposed gross revenue figure by appellants' expenses to try to reach an amount representing appellants' net profits.  The trial court's failure to consider appellants' expenses and net profit was an abuse of discretion.

Further, the plaintiffs admitted that they calculated their damages by extrapolating the defendant’s revenue from its first five months – when it’s biggest month was only its first month – over an entire year even though records showed significant decline in new memberships over that year.   Plaintiff’s also mistakenly attributed non-customer revenue – from merchandise sales, etc. --  to their damages.


NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth Circuit Rejects Employer's Independent Investigation and Honest Belief Defenses and Finds Cat's Paw Theory

In June, the Sixth Circuit Court of Appeals reversed an employer’s summary judgment in a USERRA retaliation case on the grounds that the plaintiff produced sufficient direct evidence of discrimination, produced sufficient evidence to proceed under a cat’s paw theory and the employer’s explanation was clearly pretextual when the plaintiff had been fired, in part, for engaging in conduct that violated corporate policy as directed in a text message by his allegedly biased manager.  Hickle v. American Multi-Cinema, Inc., No. 18-4131 (6^th Cir. 2019).  The employer could not rely on an honest belief defense when the investigator did not interview witnesses to the biased threats to terminate the plaintiff for a pretexual reason on account of his military service and supported the termination of the plaintiff in part for violating a policy at the clear direction of his manager who was allegedly biased against him.   

According to the Court’s opinion, the plaintiff had been hired while in high school, joined the national guard, served overseas and was promoted to kitchen manager.  Over the years, his manager repeatedly complained about his military leave and he complained about this to the General Manager.  He was never denied military leave.   When he reported that he required military leave the weekend of a big Avengers movie release in April 2015, his manager indicated in front of another employee that he might be fired if he did not report to work.   He also heard from other employees that his manager was planning to set him up to get fired and he reported this to his manager, who texted him that he should obtain written statements about this before leaving for the day.   Apparently, investigating workplace misconduct is exclusively reserved for corporate employees and obtaining witness statements is considered to be impeding an investigation.  In the meantime, he was involved in a dispute with two subordinates that lead to their termination for trying to take home too many leftover chicken-fingers.  


A corporate investigation commenced and he reported to the investigator that his manager had openly resented his military leave and indicated that he could be fired for attending drill instead of the Avengers premiere.  The investigator also indicated that the General Manager thought he should be fired.  The investigator did not interview the employee who heard the manager threaten the plaintiff with termination.  In the end, the investigator found that the plaintiff had engaged in several instances of misconduct, and he was fired in April 2015 for the chicken finger episode and impeding an investigation, despite the written instruction from his manager.   


On appeal, the Court found that he had produced sufficient direct evidence of retaliation with (disputed) evidence of his manager’s comments to him and his repeated complaints about it to the General Manager and to the investigator even though the discriminatory comments were not made by the decisionmaker or investigator who made the recommendation.   The Court was influenced by the fact that the plaintiff had been terminated for violating a rule at the explicit direction of the manager who had threatened to have him fired for attending national guard drill that same month during the Avengers premiere.

The decisionmaker (Bradley) and those with direct input (Kalman and Melton-Miller) knew about Adler’s persistent, discriminatory comments. . . . In sum, the decisionmaker knew that Hickle was told to commit a fireable offense—gathering statements and thereby impeding an investigation—by someone Hickle had repeatedly said had made discriminatory comments threatening his job.  Yet the decisionmaker chose to fire Hickle.

The Court also found sufficient evidence to proceed to a jury with a cat’s-paw theory of liability.  As previously explained by the Supreme Court, ““if a supervisor performs an act motivated by antimilitary animus that is intended by the supervisor to cause an adverse employment action, and if that act is a proximate cause of the ultimate employment action, then the employer is liable under USERRA.”  The trial court did not find it to be a jury question whether the manager intended to cause the plaintiff to be fired when she directed him to obtain witness statements in violation of company policy even though she had very recently told him that he would be fired for a pretextual reason if he missed the Avengers premiere in order to attend military drill.   Drawing inferences in favor of the plaintiff could lead a jury to believe that the manager texted him order to set him up to be fired.


The Court indicated that it was also a question for the jury whether an independent investigation by corporate broke any chain of causation between the manager’s alleged animus and the decision to terminate the plaintiff’s employment.   On one hand, the plaintiff may have engaged in other misconduct as alleged by other employees involving the chicken-finger incident which was also cited as additional reasons for his termination, but on the other hand, the investigator weighted the “impeding the investigation” more heavily in her deposition testimony and failed to interview key employee witnesses who could have supported the plaintiff’s concerns with anti-military animus. “As best as we can tell, the investigation consisted mostly of gathering statements from a few employees, and was not necessarily thorough.” (But the deposition at issue admittedly was not clear).   Moreover, the investigator referred to the General Manager as her “partner” in the investigation.


The Court also found that the plaintiff produced sufficient circumstantial evidence of retaliation, particularly from the employer’s failure to articulate a cogent explanation for why “impeding an investigation” was an dischargeable offense when his own allegedly biased manager directed him to do gather the witness statements at issue.   The Court did not find it to be a close question whether sufficient evidence had been produced merely because the employer had always granted the plaintiff’s military leave requests.

We do not find this fact to be determinative, as there could be numerous situations in which an employer would grant requests for military leave (albeit grudgingly) for years and nevertheless finally wrongfully terminate an employee for taking such leave.  Certainly, granting Hickle’s leave requests helps AMC’s case, but it does not insulate AMC from charges of retaliation.

While the district court found that the employer had satisfied its burden of proving that it would have terminated the plaintiff even if he had never served in the military because of the other incidents alleged by his subordinates, the Court found that this was a question for the jury because:

it remains an open question whether the decisionmaker relied solely on the chicken-finger incident in deciding to terminate Hickle, and whether she would have reached the same conclusion in the absence of the charges of impeding the investigation. 

  The Court distinguished a case where the investigator did not know about the potential discriminatory animus and conducted a more thorough investigation.  The Court also rejected the employer’s honest belief defense when the investigator was aware of the manager’s potentially biased motive in directing the plaintiff to violate corporate policy and obtain witness statements.

Here, [the investigator] knew of Hickle’s USERRA complaints and knew that Adler told Hickle to take action that would amount to impeding the investigation; nevertheless, Bradley seems to have considered the charge of impeding the investigation relevant to the decision.  Thus, the honest-belief rule does not help the defendant.  The “particularized facts that were before [the employer] at the time the decision was made,”  . . ., included Adler’s anti-military comments and her text to Hickle telling him to collect statements.  This was not a case in which the decisionmaker was acting on a clean record and in ignorance of lurking discriminatory motives.  The decisionmaker was fully aware of the facts suggesting that the “impeding the investigation” charge was pretextual.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Ohio Supreme Court Rejects Immunity From Allegedly False Light Statements About Plaintiff's Termination

In late June, a divided Ohio Supreme Court affirmed the rejection of Cuyahoga County’s political subdivision immunity defense on a false light claim brought by a former employee.  The Court found that former employees fit within the immunity statute’s exception when the claims arose out of the employment relationship and plaintiffs were not required to still be employed when filing the claim.  Further, the Court found that the public statements made about her termination were sufficiently related to her employment to be covered by the statutory exception to subdivision’s tort immunity.  Piazza v. Cuyahoga Cty., No. 2019-Ohio-2499.  “There is no temporal limitation in R.C. 2744.09(B) that requires an ongoing employment relationship, either at the time a plaintiff’s claim against a political-subdivision employer accrued or at the time the plaintiff filed the claim against her political-subdivision employer.  There must, however, be a causal connection between the claim and the plaintiff’s employment relationship, whether ongoing or terminated, with the political-subdivision employer.”

According to the Court’s opinion, the media had reported on alleged mismanagement and corruption in the department where the plaintiff had once worked. She was transferred two months later and then, along with two other former co-workers, was terminated seven months after that.   The County announced that their termination was related to a reorganization of her prior department.  The County later explained that it could not justify keeping the terminated employees in their new jobs in order to protect their job security and claimed that the former administration had reassigned rather than fired them.   The plaintiff filed suit against the County on the grounds that the reckless statements created the false inference that she was involved in the alleged corruption.  The County moved for summary judgment on the grounds of, among other things, that it was immune from her claims, which arose after her employment had been terminated.

The Court did not address the merits of the plaintiff’s substantive claims.  False light claims are actionable, even if the statements are not defamatory, when:

[O]ne who gives publicity to a matter concerning another that places the other before the public in a false light is subject to liability to the other for invasion of his privacy if (a) the false light in which the other was placed would be highly offensive to a reasonable person, and (b) the actor had knowledge of or acted in reckless disregard as to the falsity of the publicized matter and the false light in which the other would be placed.

The County’s motion for summary judgment on immunity grounds was denied and affirmed by the Supreme Court on the grounds that the false light claims arose in connection with the plaintiff’s employment and, thus, fit within a statutory exception to the County’s subdivision immunity.

As explained by the Court, the Political Subdivision Tort Liability Act at R.C. 2744

initially sets out a broad, general rule that a political subdivision is not liable in damages in civil actions for injury, death or loss to person or property caused by an act or omission in connection with a governmental or proprietary function.

But it also contains a number of statutory exceptions, including one for claims arising out of employment at R.C. 2744.09(B), which provides that the Act

does not apply to, and shall not be construed to apply to * * * [c]ivil actions by an employee * * * against his political subdivision relative to any matter that arises out of the employment relationship between the employee and the political subdivision.

The Court agreed to address the following questions: 

whether R.C. 2744.09(B) requires an ongoing employment relationship between the plaintiff and the political-subdivision employer, either at the time the plaintiff’s claim accrued or at the time the plaintiff filed her complaint—and a factual question—whether Piazza’s false-light claim is relative to a matter that arises out of her employment relationship with the county.  

The County argued that “because the alleged tortious conduct—the statement by FitzGerald—occurred after the county terminated Piazza’s employment, her claim does not arise out of her employment relationship with the county.”  The Court rejected the County’s argument because the statute does not limit the exception to claims that arose during the course of the employee’s employment and thus, could apply to “any claim” of a former employee that “arises out of the employment relationship.” 

A claim “ ‘arises out of the employment relationship’ ” between an employee and a political-subdivision employer “ ‘if there is a causal connection or a causal relationship between the claims raised by the employee and the employment relationship.’ . . . The test under R.C. 2744.09(B) is one of causal connection, not of timing. 

. . . . because the phrase “arises out of” refers to the existence of a causal connection, the phrase, read in the context of the entire statute, requires only that there have been a causal connection between the claim and the employment relationship, whether or not the employment relationship was continuing or had terminated.  We conclude that R.C. 2744.09(B) does not require that the alleged tortious conduct underlying a claim against a political subdivision have occurred during the plaintiff’s employment by the political subdivision.

The Court found more plausible the County’s argument that the lawsuit must be filed by a current employee, but ultimately found the statute to be ambiguous on that point.  No court had ever construed the statute to require the employee to still be employed before filing suit.  Moreover, again, the General Assembly’s failed to explicitly require the lawsuit to be filed while the employees was still employed.  The County’s argument would lead to inequitable results when the General Assembly had commanded that the Act be construed to lead to “just and reasonable” results.

Reading the word “employee” in R.C. 2744.09(B) as requiring an ongoing employment relationship at the time a plaintiff files an employment-related claim against her political-subdivision employer would give rise to an unreasonable result.  As the Eleventh District has astutely noted, such a reading “would encourage employers to terminate employees to avoid potential liability when an incident has occurred.”  Fleming at ¶ 31.  It is unreasonable to presume that the General Assembly intended to incentivize an employer to terminate an employee who may have an employment-related claim to preserve its entitlement to political subdivision immunity.

Accordingly, the Court held “that R.C. 2744.09(B) does not require that a plaintiff have been employed by the political subdivision employer at the time she filed her lawsuit.” 

The plaintiff’s claims related to statements about the termination of her employment and connected her to a scandal relating to her former employment.  “Termination of employment is a matter that arises out of the employment relationship.”  Indeed, the only relationship between her and the speaker was an employment relationship.

The statement attributed to FitzGerald was directly related to Piazza’s performance, her employment with the county, and the county’s termination of her employment.  Neither Piazza’s termination nor FitzGerald’s statement explaining why she was terminated could have occurred absent an employment relationship between Piazza and the county.   . . .  Piazza’s claim is relative to a matter that arises out of her employment relationship with the county.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth Circuit Revives Hostile Work Environment Claim Against Local Judge

In August, the federal Court of Appeals affirmed in most part the dismissal of an employment retaliation and harassment complaint filed against five local municipal court judges and a court employee on the grounds that the allegations were too vague to support an actionable claim, but reversed the dismissal of the hostile work environment allegations made against one of the judges because sufficiently specific allegations had been made against him.  Boxill v. O’Grady, No. 18-3385 (6^th Cir. Aug 16, 2019).  To survive dismissal at this early stage, the complaint must state more than conclusory allegations against the defendant as a group and must allege that any alleged retaliation was based on personal knowledge of the protected conduct.


According to the Court’s opinion, the plaintiff alleged that the defendants formed a conspiracy in 2007 to intimidate complaining female employees, but that she did not suffer any abusive treatment until one of the judges made hostile comments to her in 2011 which she indicated were racist and sexist.  She claimed to have reported his “harassment” to several of the defendants through 2013, but no action was taken and in 2013 one of her male subordinates was given a substantial raise (that impliedly she did not similarly receive).  


In 2014, the plaintiff alleged that another judge took up her cause and drafted a letter expressing concerns with the behavior of the judge who she claimed was behaving inappropriately to her.   Her supervisor revised the letter, which indicated that the judge’s behavior could result in litigation and lead to potential liability for hostile work environment.  Importantly, there was no allegation that the allegedly hostile judge knew about the letter or that the plaintiff was the source of the allegations.  Nonetheless, a week later, she was demoted and she alleged that the allegedly hostile judge recruited other judges to monitor her and her staff and they began bypassing her to go directly to her staff.  She resigned in 2014.  She filed suit seeking relief under §§ 1981 and 1983 for hostile work environment and retaliation, but not Title VII or state law.


With respect to her retaliation claims (under the First Amendment and §1981/1983), the Court found that her complaints of discrimination were matters of public concern, although it did not address the issue that her complaints were about her own personal situation.  It also found that her demotion and reduction in responsibilities would deter a reasonable person from exercising their protected rights.  However, her claims against four of the defendants failed because she failed to make any allegations that they were aware of her complaints or individually took any adverse action against her.  “Summary reference to a single, five-headed “Defendants” does not support a reasonable inference that each Defendant is liable for retaliation.”  While her allegations against the fifth judge were more detailed about his adverse actions against her, she never alleged that he was aware of her complaints against him.  Accordingly, the retaliation claims were properly dismissed.


With respect to her §1983 civil conspiracy claims, she similarly failed to make any individual allegations against four of the defendants that they participated in the alleged conspiracy, shared a conspiratorial objective, or committed any specific acts to further the alleged conspiracy.  Her reliance on the awareness of two of the defendants of the draft letter and revising the letter was misplaced because “letter’s open recognition of concerns about” the allegedly hostile judge  “undercut the claim that [they]  worked to conceal complaints against him.” While her complaints against the allegedly hostile judge were specific, she failed to allege that he knew about any of her complaints against him. He “could not have conspired to retaliate against [her] on the basis of complaints he knew nothing about.”


With respect to her hostile work environment claim, she again failed to allege that four of the defendants knew anything about her complaints and failed to take action.  On the contrary, the fact that the letter about the fifth judge’s behavior was being circulated and discussed, show that they were taking proactive steps to address the situation.  Nonetheless, her “vague reference to the Defendants’ “facilitati[on]” of “a continuing hostile work environment”  . . .  is not enough to state a plausible claim against any of these Defendants.  Nor is [her] conclusory allegation that [the fifth judge] was “hostile and intimidating to [her] personally.”  Accordingly, those allegations against four of the defendants were similarly dismissed.


The Court reversed dismissal of the hostile work environment claim against the fifth judge because the allegations against him were sufficient to proceed to the discovery phase of the litigation.  The plaintiff alleged “that shortly after his election to the bench in 2011, ‘[he] began making hostile comments’ that ‘mirrored sexist and racist allusions [he] had directed at [her] when he had been Bailiff’ at the same courthouse in the past.”  She had complained that he was interfering with her ability to work and the other judges recognized that his behavior had become enough of a problem that they felt the need to document their concerns.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can be changed or amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.