HR Whistleblower's Acts were Protected but Employer Demonstrated Legitimate, Non-retaliatory Reason for Terminating Employee: Eighth Circuit

Practical Law Legal Update 2-524-2427 (Approx. 6 pages)

HR Whistleblower's Acts were Protected but Employer Demonstrated Legitimate, Non-retaliatory Reason for Terminating Employee: Eighth Circuit

by PLC Labor & Employment

Key Litigated Issues

In Jenna Wood v. SatCom Marketing, LLC, the key litigated issues were whether, in a whistleblower action bought by an employee:

The district court correctly found the employee's actions were unprotected as either:
- part of her job; or
- not made in good faith.
The employee succeeded in establishing a prima facie case of retaliation.
The district court nevertheless correctly granted summary judgment in favor of the employer because the employer had and could demonstrate a legitimate, non-retaliatory reason for terminating the employee.

Background

SatCom Marketing, LLC (SatCom) hired Jenna Wood as a part-time Verifier in 2008. It promoted her to Human Resources Clerk in 2008 and then to Human Resources Assistant in 2009. As Human Resources Assistant, Wood performed ordinary administrative and personnel-oriented tasks and conducted occasional, basic legal research for SatCom. During the time period relevant to this case (November 2009 - March 2010), SatCom was preparing for two important reviews:

In November 2009, SatCom's primary client announced its intention to conduct a compliance review of all vendors. The importance of this review prompted SatCom to hire Kimberly Roden as Vice President of Operations, to oversee preparations for the review.
SatCom sought self-regulated organization certification.

The success of both of these reviews relied on satisfactory maintenance and organization of personnel files, for which Wood was responsible. However, between November 2009 and March 2010, the following incidents occurred:

In December 2009, Wood told SatCom's management that SatCom's personnel files were in order. SatCom later discovered this statement was inaccurate and the personnel files were unorganized and out of date. Consequently, SatCom decided to:
- manage the human resources department more closely;
- impose daily filing mandates on Wood; and
- initiate a search to replace her supervisor.
On March 1, 2010, Roden held a meeting to discuss SatCom's new direct deposit policy. At the meeting, Wood raised concerns that requiring direct deposit as a condition of employment might be illegal. Roden stated that she would look into the matter and referred it to SatCom's legal team. That night, Wood conducted independent research on the issue.
On March 2, 2010, Roden advised Wood that she should devote time to cleaning her office and ensuring files were attended to. Later that day, Roden discovered Wood printing a copy of the Employer's Guide which she had requested during her independent research into the direct deposit policy. Roden confronted Wood, told her to stop wasting company time and resources and to let the issue go. Roden then met with Riemensnider, Wood's direct supervisor, to discuss Wood's pursuit of unassigned legal work at the expense of her job duties. Roden informed Riemensnider that Wood would be required to submit an hourly work summary each day.
On March 3, 2010, Wood failed to prepare certain personnel data for new hires as directed. Roden emailed Riemensnider, identifying this as the second example of Wood not performing her job.
On March 4, when Wood still had not completed the data entry, and her work contained errors, SatCom enlisted an employee from another department to finish Wood's assignment. Wood and the employee later exchanged words in SatCom's lobby regarding the data entry. Roden interrupted the exchange and reprimanded both employees for carrying out an inappropriate discussion in a public setting. The other employee apologized for the exchange but Wood did not. Roden wrote up Wood for the incident.
On March 4, 2010, Wood brought up the direct deposit policy again to Paul Mattson, a mid-level supervisor at SatCom. Mattson relayed Wood's concerns to SatCom's President, Dale Wunderlich, who stated he had already checked with legal counsel about the matter and determined the policy was lawful.
On March 5, 2010, Riemensnider and Roden placed Wood on a one-week unpaid suspension for:
- failing to complete assigned tasks;
- misusing company time and resources on unauthorized projects; and
- defying a lawful directive from management.
After the suspension, SatCom offered Wood the choice of returning to work provisionally on March 15 or accepting a severance package. Wood chose to return to work.
On March 15, 2010, Wood returned to work and was placed on an action plan which outlined the terms of a thirty-day probationary period. If Wood failed to abide by the terms of the probationary period, she would be terminated immediately.
On March 16, 2010, Wood ran into a supervisor while exiting the lobby. Wood, who was carrying a plant, remarked that she was removing her plant from a "hostile environment." The supervisor reported the incident to Roden.
On March 19, 2010, Wood arrived early for her shift and delivered a letter to Riemensnider:
- alleging that SatCom was violating the law through its direct deposit policy workplace practices that disparately impacted racial minorities, its handling of non-exempt employee time records, and its deduction of sales commissions for missed work; and
- further stating that Wood did "not want to break the law" and wished to "not be treated adversely, and put into a situation of enforcing the direct deposit policy or any other illegal policy at SatCom."
On receipt of the letter, Riemensnider warned Wood that complaining to him (rather than to Roden) violated her action plan. Wood acknowledged that she could be terminated for this violation. Riemensnider forwarded Wood's letter to Roden, who called a meeting within an hour.
At the meeting, Roden terminated Wood for violating her action plan by delivering a complaint directly to Riemensnider. Wood responded "I was hoping you would terminate me."

On March 1, 2011, Wood filed suit against SatCom and Roden in the District of Minnesota, alleging she had been subjected to unlawful retaliation in violation of:

The Minnesota Whistleblower Act (MWA).
The Minnesota Human Rights Act (MHRA).
Common law wrongful termination.
The FLSA.

On February 22, 2012, the district court granted summary judgment in favor of SatCom and Roden, determining that:

Wood had failed to establish retaliation claims.
SatCom had presented a legitimate, non-discriminatory basis for Wood's termination.

Wood appealed the decision.

Outcome

On February 13, 2013, the US Court of Appeals for the Eighth Circuit issued an opinion in Wood v. SatCom Marketing, LLC, affirming the district court's grant of summary judgment in favor of SatCom on Wood's retaliation claims. The Eighth Circuit first rejected Wood's argument that the district court erred in concluding that she failed to provide direct evidence of retaliation. The Eighth Circuit, while conceding that Wood's complaints were linked to SatCom's actions and that termination constitutes an adverse employment action, found that:

Wood failed to demonstrate any link between the substance of her complaints and the adverse actions against her.
There was no evidence to suggest SatCom's actions against Wood related to anything more than the fact that she persisted in pursuing an already resolved legal issue at the expense of her own assigned work.

Because there was no direct evidence of retaliation the Eighth Circuit then proceeded to analyze Wood's claims under the McDonnell Douglas framework. Agreeing with the district court's analysis here, the Eighth Circuit stated that the good-faith requirement withdraws protection over Wood's March 19 complaint, as the March 19 complaint cannot be construed as a good faith attempt to expose an illegality.

Regarding the March 1 incident (performing legal research) and March 2 printer incident however, the Eighth Circuit disagreed with the district court's finding that these activities were not protected activities. The Eighth Circuit found that these activities were protected and not:

Part of her job.
Devoid of good faith.

However, the court held that the March 1 incident cannot fall within the definition of a retaliation claim because SatCom took no adverse action against Wood based on this activity.

With respect to the March 2 incident, the Eighth Circuit found that the activity at the printer was similarly protected. The court also found that Wood made a prima facie case of retaliation, because Wood was reprimanded and directed to submit a daily work summary as a result of that incident.

The Eighth Circuit also found that Wood's March 4 complaint was a protected activity, and supported a prima facie case of retaliation.

The Eighth Circuit therefore found that Wood succeeded in establishing a prima facie case of retaliation but still found that the district court was correct to grant summary judgment in favor of SatCom because SatCom had a legitimate, non-retaliatory reason for terminating Wood. In support of this conclusion, the Eighth Circuit noted the following:

As one of only two HR representatives, Wood was responsible for getting the personnel files in good order in time for the two pending reviews.
Roden's March 2 reprimand of Wood at the printer for wasting company time and resources was reasonable because:
- Wood was already told (on March 1) that her complaint regarding SatCom's direct deposit policy would be handled by SatCom's legal team;
- Roden instructed Wood to clean her office and ensure the personnel files were attended to and Roden discovered Wood at the printer that same afternoon, dedicating company time to a legal search she knew had already been referred to outside counsel; and
- Wood had previously misrepresented to SatCom the state of the personnel files.
On March 4, Wood raised the matter again to yet another supervisor but severely neglected a data entry assignment, requiring Roden to enlist another employee to complete it.
On March 5, Wood was late to work and did not submit the hour-by-hour work schedule she was required to complete each day.
At this point, Wood had repeatedly failed to perform her job duties and ignored explicit instructions.
The fact that SatCom offered Wood a severance package during her suspension suggests it was ready to end their working relationship well before Wood submitted her March 19 letter.
On Wood's first day on the action plan, she arrived without it, again showing her disregard for instructions.
Wood explicitly violated the action plan twice by telling her supervisor her plant was in a "hostile work environment" and delivering the March 19 letter to her supervisor.

The Eighth Circuit, for all these reasons, held that:

SatCom met its burden of showing that it had a legitimate, non-retaliatory reason for terminating Wood.
Wood failed to provide evidence to suggest the reason for her termination was pretextual.

Practical Implications

This decision clarifies that the Eighth Circuit does not strip an employee's arguable "whistleblower activity" of its protections because:

The employee periodically is charged with conducting legal research about the lawfulness of company policies.
There is an indication that the employee was not in good faith reporting suspected unlawful activity.

Employers that ask HR personnel to perform legal research and report possible unlawful policies may consider documenting that component of an employee's job to use that defense against retaliation claims by HR representatives. The case also confirms that thorough documenting of employees' poor performance may insulate employers from whistleblower retaliation liability even when other defenses fail.

Court Documents

Wood v. SatCom Marketing, LLC, No. 12-1712 (8th Cir. Feb. 13, 2013).

HR Whistleblower's Acts were Protected but Employer Demonstrated Legitimate, Non-retaliatory Reason for Terminating Employee: Eighth Circuit | Practical Law