Harp v. Charter Communications, Inc.

TINDER, Circuit Judge,

dissenting.

My colleagues correctly identify the two contested areas in this case — whether the plaintiff engaged in protected activity and whether that activity was a contributing factor in the unfavorable personnel action she suffered. I have no quarrel with the legal parameters well laid out in the majority opinion. However, because there are several factual matters that are sufficiently contested to warrant, in my opinion, determination by a jury, I cannot join in the majority opinion.

This seems to me to be a very close case that vividly illustrates the dilemma facing an employee who thinks she may be able to stop a fraud from occurring. Employees who catch corporate misconduct in its formative stages are protected by the language and purpose of Sarbanes-Oxley (SOX). Yet, raising concerns before questionable practices are entirely resolved can be very awkward. An employee with a reasonable belief that she has detected corporate fraud as it is underway should not be discouraged from reporting it. Such a belief must be grounded in facts known to the employee, but the employer’s response to a disclosure of those facts may be suspicious enough to add support to a reasonable belief that fraud is afoot. The employee should not have to wait until the fraud has been accomplished to register a concern.

The majority concludes that Charter’s reduction-in-force demonstrates that Harp’s employment with Charter ended because of Charter’s financial woes, not because of her expressed concerns about the MSTA matter. At the outset, I agree that Harp’s view that the RIF was merely cover for retaliation against her appears, at least initially, highly implausible and perhaps, even, almost narcissistic. The notion that the firing of 49 other people and the elimination of an entire department was nothing more than an excuse for retaliation against Harp is difficult to swallow. But, despite the fact that the inference she asks us to adopt is at first blush implausible, she has offered enough evidence to be taken seriously. Charter may want us to assume that just because a RIF is sizeable, there is no way that retaliation could be concealed within it. However, as the facts about Harp’s complaint and the RIF are peeled back a bit, Harp’s assertion becomes more plausible, and merits the evaluation of a jury.

The evidence before us shows that the plaintiff was aware and upset about a very specific issue — that MSTA was apparently going to be paid after fraudulently over-billing her company. But after the plain*729tiff was terminated she became aware that the issue she had complained of was part of a larger scheme with more significant consequences than she realized at the time. It seems to me that Mary Harp, when confronted with what she perceived as fraud, took exactly the steps that SOX encourages. She submitted a formal complaint and several informal complaints about the decision by her supervisor to pay MSTA for work it had submitted under what Harp believed were fraudulent invoices.

The circumstances under which she submitted the complaint are important to consider. Charter’s HR manager, Brooke Wilson, strongly discouraged Harp from making a complaint and refused to accept a written form of the complaint. So, Harp read it to her. Brooke then told Harp that a formal complaint would cause trouble and intimated that despite the law, retaliation could be in the offing. According to Harp, Brooke said, “I mean, there is going to be an investigation, I mean, there is not supposed to be retaliation, but there is going to be an investigation and nobody is 100 percent, and it’s going to get ugly.” Harp testified that Brooke emphasized the word “supposed” and that she, Harp, inferred from that emphasis that she could be retaliated against for fifing the complaint.

Harp persevered with her complaint, however, alleging that the decision to pay MSTA was a fraud on the shareholders. There really is no dispute that when she submitted the complaint, Harp subjectively believed that she had identified fraud. She spent months documenting what she thought were approximately $500,000 worth of fraudulent bills. When a meeting was scheduled to discuss her findings, she was fully prepared to confront MSTA with her evidence. However, Barry Wilson abruptly truncated the meeting and directed Tom Baker to make the matter go away. When she discussed what Barry meant with Baker, he told Harp that he believed he was supposed to pay the accrued amount and that he had “accrued for that whole amount.”

My colleagues correctly point out that, for whatever reason, Harp has chosen to make her stand on her belief that she had been ordered to pay the full amount. But I don’t think this view is the death knell for her claim. Her complaint to management did mention a “negotiated settlement” and “speedy resolution” to MSTA’s claim. But Harp’s contemporaneous notes and deposition testimony indicate that she believed Baker (who, by the way, was inserted between Harp and Wilson’s direct supervision on January 7, just five days before the meeting at issue) had been ordered to pay the whole amount. Unlike my colleagues, I believe that the discrepancy between Harp’s complaint and her testimony is reconcilable.

As of the January meeting, Harp had identified invoices filled out by bogus MSTA employees, fictitious addresses being audited, unnecessary audits done for existing customers and other practices she felt were improper (including, in one instance, a billing for purported audits of more houses than actually existed in one zip code.) She was certain that Charter was a victim of fraud and it was inexplicable to her that an officer of the company would offer to pay MSTA in the face of these practices. Subsequent events may or may not have disabused her of the notion but I would note that most of the overtures subsequent to the meeting suggesting further investigation of MSTA were made after Harp’s supervisors became aware of her complaint.

So, when she made her complaint, it appears to me that she reasonably believed, both subjectively and objectively, that she had been called off the hunt, that her documented findings of fraud were *730being swept under the rug, and that Barry Wilson had ordered MSTA to be paid in full.

As for the termination of Harp’s employment, several factors lead me to think that the jury could reasonably draw an inference of retaliation. First, the timing of Harp’s firing, while not dispositive, is close enough to her struggles with her supervisor and ensuing complaint to encourage a closer look at her claim. The RIF took place on February 25, 2004 — six weeks after the crucial meeting between Harp and MSTA. Charter admits that the RIF decision was made sometime in January 2004 but argues that it was made in response to an unexpected January 2004 budgetary shortfall.

Although it is undisputed that Charter faced a budgetary shortfall in January 2004, it is disputed whether the measures Charter took could have substantially ameliorated the shortfall. For instance, Charter executives testified that they needed to save $800,000 per month to make up the shortfall. Harp has offered evidence that the monthly salaries of those let go was just about $167,000 — and that the anticipated cost of discharge for the employees was almost $200,000 given their severance packages. Harp’s calculations show that the RIF, which Charter executives testified was the sole cost-savings measure undertaken in response to the budget shortfall, came nowhere near accomplishing its purported goal of saving $800,000 a month. In response, Charter merely offers Barry Wilson’s testimony that the company needed to save $800,000 per month as evidence that there were, in fact, cost savings sufficient to meet the asserted purpose of the RIF. Charter concedes that it has no evidence as to whether the RIF accomplished its apparent purpose.

It is also undisputed that as part of her termination, Harp received a severance form that indicated that she was not eligible for rehire. That designation alone sure doesn’t sound like a typical RIF. Charter argued (but did not support in the summary judgment record) that all RIF’d employees were eligible for rehire and that the designation of any of them as ineligible was simply a “mistake.” But Charter failed to present any evidence that the “mistake” was ever corrected, and certainly not as to Mary Harp. Furthermore, two months after the RIF, Charter began rehiring for the technical audit department (without rehiring Harp). The rehire was set in motion on March 17, 2004, seven days after Charter’s dispute with MSTA was settled.

Finally, Harp offered significant evidence that MSTA was a front company used by Charter to fulfill minority contracting requirements as part of its city-granted franchise in St. Louis’s cable market. In fact, Harp’s summary judgment submission includes an e-mail that shows her threats to pull the plug on MSTA triggered concerns within Charter that the St. Louis franchise might be lost because MSTA’s status as a front company would be exposed.

While my colleagues are correct that this last item is irrelevant to the issue of whether Harp’s complaint was SOX-protected activity, this evidence is very relevant to the retaliation prong of the inquiry. Specifically, the consequences of Harp’s aggressive posture to MSTA’s fraudulent billing could have resulted in the termination of Charter’s franchise in St. Louis and brought to an end a major source of revenue for the company. The gravity of these consequences makes the idea that Ms. Harp was included in a RIF because of her complaint a little more palatable. This is especially true when you consider that the RIF eliminated the entire Technical Audit Department, the pesky unit that would be likely to uncover such untidy problems with MSTA.

*731Ultimately, despite the fact that others were let go at the same time as Harp, the critical question is whether Harp has offered sufficient evidence to prove that her protected complaint contributed to her termination. I believe she has. The facts at the summary judgment stage lead me to three possible conclusions about Charter’s RIF — it was necessary to cut costs, it covered retaliation against Harp or it was designed to eliminate an entire department that had recently become troublesome. On the record before us, I think the facts can reasonably be construed to support any of those three motivations. Therefore, summary judgment was inappropriate.

I think that Harp has presented enough to allow a jury to find that she has proven the four elements required of a plaintiff under Section 1514A(a), and that Charter should be put to the test of proving by clear and convincing evidence that her termination would have occurred regardless of her MSTA complaint. I respectfully dissent.