Opinion
Civil Action No. SA-04-CA-1025-XR.
December 5, 2005
ORDER
On this date the Court considered Defendant Parks' motion for summary judgment (docket no. 48) and Plaintiff's motion for summary judgment (docket no. 49).
I. Background
Plaintiff was employed by the University of Texas at San Antonio ("UTSA") from 1987 until his termination on November 11, 2002. At the time of his termination, Plaintiff worked as a Business Development Specialist at the UTSA Minority Business Development Center ("UTSA-MBDC"), one of ten centers and programs composing the UTSA Institute for Economic Development. UTSA-MBDC was created and funded by a federal grant from the Minority Business Development Agency, a subdivision of the United States Department of Commerce. Plaintiff's position, as well as other MBDC employees, were dependent upon contract or grant funds.
The MBDC also received some limited assistance from UTSA. To receive grant fees from the Commerce Department the MBDC is required to also earn money through client fees. For every one dollar that the MBDC collects in fees, it may draw down two dollars from its Commerce Department grant.
In 2002, Defendant Fletcher Parks was the director of the UTSA-MBDC. Parks supervised Plaintiff and four other business development specialists. On or about September 11, 2002, Parks became aware that the UTSA-MBDC program was going to suffer a budget shortfall and that he would need to "adjust" personnel appointments accordingly.
Steven Matta, Luke Ortega, Gera Foster and Gloria Trevino.
In 2002 the Commerce Department provided a grant to the UTSA-MBDC. 67 percent of UTSA-MBDC's budget was provided through this grant. The remaining percentage of funds came from "program income" (fees collected from UTSA-MBDC clients).
The Minority Business Development Agency awarded an annual grant to the UTSA-MBDC. The UTSA-MBDC "drew down on the grant quarterly." The UTSA-MBDC would be able to draw down on the grant based on matching funds, "meaning that [UTSA-MBDC] would have to match program income with grant funds."
UTSA-MBDC provides assistance to minority entrepreneurs.
At some point in time, Parks met with Judy Ingalls (Director of the Small Business Development Center ("SBDC") Technology Center), Robert Guerrero (Associate Director of Finance and Contract Compliance) and Robert McKinley (Associate Vice President for the Institute of Economic Development) to discuss options in light of the projected shortfall.
Ms. Ingalls reported that she needed an employee with expertise in the area of construction contracting to teach a Contracting 101 course. Ms. Ingalls also indicated that she needed a marketing specialist and proposed that Plaintiff be transferred to the SBDC Technology Center. The SBDC Technology Center is funded, in part, by a grant from the Small Business Administration.
Unlike the MBDC, the SBDC does not charge clients a service fee.
On October 9, Ms. Ingalls sent an email to Mr. McKinley proposing that the MBDC will assist the SBDC Technology Center in increasing minority participation in contracting/procurement and technology. "Luke and Art will continue counseling with their normal [MBDC] clients, but without charging a fee. . . . Luke will assist with SWIFT Tour III event and represent our programs at meetings he attends. Art will assist with Contracting 101 program outreach and represent our programs at meetings he attends."
On October 10, 2002, Ms. Ingalls sent an email to Jorge F. Cardona of the Small Business Administration. She informed him that the MBDC was going to have to downsize two employees because of a budget shortfall, but that UTSA would like to use their talents to enhance the DETA project on a temporary basis. The next day, Mr. Cardona approved the request stating "just make sure that the minority-owned businesses involved work specifically with the [military] bases that are downsizing."
On October 18, 2002, Parks informed Plaintiff and Mr. Ortega that they would temporarily be reassigned. Mr. Ortega accepted the reassignment. According to Parks, Plaintiff did not want to accept the reassignment because he did not want to work for Ms. Ingalls, did not want two supervisors, and was concerned that he would have increased work responsibilities. Parks denies that Plaintiff ever reported to him that the proposed temporary reassignment was illegal or fraudulent.
Parks states that the first time he became aware that Plaintiff made any kind of complaint to the Commerce Department was in late December 2002.
On October 23, 2002, Ms. Ingalls recapped the proposal to Parks stating, in part: "All clients [Plaintiff and Ortega] seen during the period of October 1, 2002 through December 31, 2002 will be considered SBDC clients. . . . No charges will be made by the MBDC for counseling during this period. . . . Essentially, Art and Luke are temporarily SBDC counselors for the months of October, November and December."
On October 24, 2002, Plaintiff was again informed that because of MBDC's financial position, Parks had accepted an agreement with the SBDC Technology Center to allow Plaintiff's position to be paid by the SBDC Technology Center. Plaintiff was informed that his "duties and responsibilities would remain the same as a construction/procurement specialist, and [he] would continue to report to [Parks] except that the Technology Center would receive credit for counseling hours as well as the economic impact of those services."
At some unknown date in October, Plaintiff alleges that he told Parks he would not transfer. "I would not do it because it could create fraud, and it would — and by creating fraud, you would be billing both Department of Commerce and the Small Business Administration, and I was not going to be a part of the — to do that just to recover the $70,000 [budget shortfall] loss." In addition, Plaintiff alleges that he called Raquel Suniga, a Small Business Administration employee, on a Commerce Department hotline. Plaintiff also alleges that he contacted various attorneys. Parks denies that he was aware of any contact by Plaintiff to any third party complaining of the proposed transfer. Plaintiff also testified that at some undisclosed point in time he told David Diaz and Dan Larson that "something fraudulent and illegal was going on."
Ms. Suniga has provided an affidavit stating, in part, that "sometime in the Fall of 2002, Mr. Elizondo called to tell me that he was not going to receive full pay benefits from the San Antonio MBDC. Mr. Elizondo also told me that he would be facing some sort of retaliation because he refused to go along with the San Antonio MBDC's plan. Although I cannot recall the specific date that Mr. Elizondo called me to report what was happening at the Center, I do recall that Mr. Elizondo told me that he was still working at the San Antonio MBDC." Ms. Suniga further testified that sometime near November 21, she received a telephone inquiry from the Office of the Inspector General that a complaint had been received regarding the San Antonio MBDC. Ms. Suniga states that on November 21, she sent Parks an email expressing concern that she was never informed that there was a staff vacancy.
On October 31, 2002, Parks sent a memorandum to Plaintiff repeating the above and reassuring Plaintiff that his concerns that the assignment would mean an increase in his work responsibilities was unfounded. Parks requested that Plaintiff inform him by November 1 if he would accept the new assignment or whether his "previous decision not to accept the assignment still stands." On November 1, Plaintiff responded that he needed "more time to review this matter with legal before I can respond to this important matter. I know that you would request the same, especially since this memo indicates that my job position is in jeopardy and other references made in this memo bring up several questions that need full responses and complete answers, so that my 15 years and 2 months, plus my retirement are not in jeopardy." Plaintiff also included a postscript referencing an anti-discrimination and anti-harassment policy dated October 24, 2002.
On November 11, 2002, Plaintiff was terminated from his employment because of his "failure to cooperate with supervisor, refusal to follow instructions and [his] refusal to perform [his] assigned duties."
After he was terminated Plaintiff spoke with David Diaz, a UTSA human resource professional. Mr. Diaz's notes reflect that Plaintiff believed that "reporting hours for doing same work, but crediting Tech is dishonest."
Plaintiff filed this lawsuit on November 10, 2004. On April 7, 2005, the Court granted in part and denied in part Defendants' motion to dismiss and the Court granted Defendants' motion for judgment on the pleading. As a result of that Order the only claims pending in this case are the 31 U.S.C. § 3730(h) claim against Parks and the 42 U.S.C. § 1983 (First Amendment retaliation) claim against Parks.
In this lawsuit Plaintiff has retained the services of James K. Haugen, a certified public accountant. As indicated above, on October 10, 2002, Ms. Ingalls sought SBA approval for the proposed temporary transfers. Ms. Ingalls stated, in part, that "while on the SBDC program, [Plaintiff and Mr. Ortega] will provide counseling services free of charge and will record all counseling on our CATS [Client Activity Tracking System], in accordance with SBDC regulations and requirements." Mr. Haugen opines that when Mr. Ortega temporarily transferred from the MBDC to the SBDC Technology Center he thereafter "worked with clients and charged the time to MBDC. . . . I assume that the time was also charged to SBDC as [Ortega] was purportedly working for them. This is double charging and is not in conformance with the requirements of OMB Circular A21. . . . The SBDC made specific stipulations and promises to the SBA regarding the hiring of Mr. Elizondo and Mr. Ortega regarding their work and duty, including how clients would be served. If the stipulations had been followed, the agreement would have probably met the requirements of OMB Circular A21 as cited above. However, in my opinion, the actual practices of MBDC applicable to the agreement indicated an intent to operate status quo. That is, the records cited in paragraph 4 reveal an intent by the MBDC to have Mr. Elizondo and Mr. Ortega's wages paid by the SBDC (SBA grant) yet to have those employees continue to work on behalf of the MBDC (Commerce grant). That allowed the MBDC to mitigate the consequences of the budget shortfall by eliminating its biggest expense, the wages of two of its employees for three months. The MBDC could then shift that labor cost to the SBDC and its SBA grant. However, having Mr. Ortega continue to work and collect fees on behalf of the MBDC allowed the MBDC to essentially receive free labor."
II. Summary Judgment Standard
A summary judgment movant must show by affidavit or other evidence that there is no genuine issue regarding any material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). To establish that there is no genuine issue as to any material fact, the movant must either submit evidence that negates the existence of some material element of the nonmoving party's claim or defense, or, if the crucial issue is one for which the nonmoving party will bear the burden of proof at trial, merely point out that the evidence in the record is insufficient to support an essential element of the nonmovant's claim or defense. Lavespere v. Niagra Machine Tool Works, Inc., 910 F.2d 167, 178 (5th Cir. 1990), cert. denied, 510 U.S. 859 (1993). Once the movant carries its initial burden, the burden shifts to the nonmovant to show that summary judgment is inappropriate. See Fields v. City of South Houston, 922 F.2d 1183, 1187 (5th Cir. 1991).Summary judgment is required if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp., 477 U.S. at 322. In order for a court to conclude that there are no genuine issues of material fact, the court must be satisfied that no reasonable trier of fact could have found for the nonmovant, or, in other words, that the evidence favoring the nonmovant is insufficient to enable a reasonable jury to return a verdict for the nonmovant. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 n. 4 (1986). In making this determination, the court should review all the evidence in the record, giving credence to the evidence favoring the nonmovant as well as the "evidence supporting the moving party that is uncontradicted and unimpeached, at least to the extent that evidence comes from disinterested witnesses. . . ." Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 152 (2000).
III. Analysis
A. False Claims Act Retaliation Claim 31 U.S.C. § 3730(h) states:
Any employee who is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment by his or her employer because of lawful acts done by the employee on behalf of the employee or others in furtherance of an action under this section, including investigation for, initiation of, testimony for, or assistance in an action filed or to be filed under this section, shall be entitled to all relief necessary to make the employee whole. Such relief shall include reinstatement with the same seniority status such employee would have had but for the discrimination, 2 times the amount of back pay, interest on the back pay, and compensation for any special damages sustained as a result of the discrimination, including litigation costs and reasonable attorneys' fees. An employee may bring an action in the appropriate district court of the United States for the relief provided in this subsection.
Defendant seeks summary judgment on this claim arguing that Plaintiff took no protected action prior to his termination, and that if he did, Parks was unaware of any such protected activity, and that any such protected activity played no role in the decision to terminate Plaintiff.
The Fifth Circuit has held that "the whistleblower protection provision of the False Claims Act forbids discrimination against an employee who has made an intracorporate complaint about fraud against the government." Robertson v. Bell Helicopter Textron, Inc., 32 F.3d 948, 951 (5th Cir. 1994). However, "the legislative history makes clear that a `whistleblower must show the employer had knowledge the employee engaged in protected activity.' S.Rep. No. 345, 99th Cong., 2d Sess. 35 (1986), reprinted in, 1986 U.S.C.C.A.N. 5266, 5300." Id.
The disposition of these cross motions for summary judgment turns on whether a fact issue exists to support an inference that Plaintiff engaged in a protected activity prior to his discharge. As noted above, Plaintiff alleges that he told Parks he would not transfer — "I would not do it because it could create fraud, and it would — and by creating fraud, you would be billing both Department of Commerce and the Small Business Administration, and I was not going to be a part of the — to do that just to recover the $70,000 [budget shortfall] loss." Accordingly, a fact issue does exist as to whether Plaintiff made an intracorporate complaint of fraud against the government.
In addition, Plaintiff alleges that he called Raquel Suniga, a Small Business Administration employee, on a Commerce Department hotline. However, Plaintiff presents no evidence that Parks was aware of any such call or complaint. Plaintiff also alleges at some undisclosed point in time he told Dan Larson that "something fraudulent and illegal was going on." Again, however, Plaintiff presents no evidence that Larson was a managerial agent of UTSA or that Parks was aware of that complaint. Plaintiff also alleges that his November 1 memorandum to Parks evidences a complaint. In that memo, Plaintiff responded that he needed "more time to review this matter with legal before I can respond to this important matter. I know that you would request the same, especially since this memo indicates that my job position is in jeopardy and other references made in this memo bring up several questions that need full responses and complete answers, so that my 15 years and 2 months, plus my retirement are not in jeopardy." Plaintiff also included a postscript referencing an anti-discrimination and anti-harassment policy dated October 24, 2002. However, even under the most liberal interpretation of that memo, the Court cannot find that such a memorandum reported a complaint of fraud. Plaintiff also relies upon a post-termination conversation he had with David Diaz, a UTSA human resource professional. Mr. Diaz's notes reflect that Plaintiff believed that "reporting hours for doing same work, but crediting Tech is dishonest." However, such a conversation took place after he was terminated and accordingly his complaint at that time could not have been the cause of his discharge.
Alternatively, relying upon Miller v. Bunce, 60 F.Supp.2d 620 (S.D. Tex. 1999), aff'd, 220 F.3d 584 (5th Cir. 2000), Parks also seeks summary judgment on this claim arguing that he is not an employer for purposes of the statute. "Plaintiff's claims against Defendants [University faculty members and Department Chair] as individuals must be dismissed as Defendants do not fall within the definition of `employer,' as required by the statute, while acting in their individual capacities." Miller v. Bunce, 60 F.Supp.2d at 624. The Fifth Circuit affirmed Miller v. Bunce without a written opinion. Nevertheless, the Court agrees that individual supervisors, such as Parks, cannot he held liable under the statute. See U.S. ex rel. Golden v. Arkansas Game Fish Com'n, 333 F.3d 867 (8th Cir. 2003), cert. denied, 540 U.S. 1108 (2004) (Members of state game and fish commission, in their individual capacities, were not "employers" of commission employee); U.S. ex rel. Siewick v. Jamieson Science and Engineering, Inc., 322 F.3d 738 (D.C. Cir. 2003) (President and chief executive officer (CEO) of government contractor was not an "employer" within meaning of the False Claims Act (FCA), and thus could not be held liable in his individual capacity under FCA's retaliation provision, notwithstanding that CEO owned 85 percent of the shares of the company, served as the president and chairman of the board of directors, ran day-to-day operations, set salaries, and made hiring and firing decisions.); Yesudian ex rel. U.S. v. Howard Univ., 270 F.3d 969 (D.C. Cir. 2001) (Private university employee's former supervisor was not "employer" under False Claims Act, and thus could not be liable in his individual capacity under Act's retaliation provision).
Defendant's motion for summary judgment on this claim is GRANTED. Plaintiff's motion for summary judgment seeking to bar Parks' claim for qualified immunity is dismissed as moot.
B. 42 U.S.C. § 1983 (First Amendment retaliation) claim
Plaintiff alleges that he engaged in protected free speech by complaining that his proposed transfer would constitute fraud. A First Amendment retaliation claim requires showing: the employee suffered an adverse employment action; his speech involved a matter of public concern; his interest in commenting on such matters outweighs the defendant's interest in promoting efficiency; and the speech motivated the adverse employment action. Martinez v. Tex. Dep't of Criminal Justice, 300 F.3d 567 (5th Cir. 2003).
In Plaintiff's affidavit he states that prior to his discharge he met with Parks and Parks explained that "he had come [up] with a plan. Mr. Parks stated that my and Mr. Ortega's salaries would be paid out of grant monies awarded to the Small Business Development Center — Technology Center. . . . Mr. Parks explained to me that Judy Ingalls . . . had informed him that the SBDC-TC's budget contained excess funds that had not been used. Mr. Parks told me that these excess funds would be lost as all unused excess federal grant funds had to be returned to the granting federal agency (SBA). . . . In short, Mr. Parks proposed utilizing these SBA funds to pay my salary and Mr. Ortega's salary so we could continue to work on behalf of the MBDC, which was funded by the MBDA. . . . Upon hearing this plan I immediately informed Mr. Parks that such a commingling of funds from two separate federal grants was illegal and fraudulent."
Defendant argues that Plaintiff has failed to establish that he engaged in protected speech. As indicated above, however, a fact issue exists on this point.
Alternatively, Defendant argues that Plaintiff fails to establish that the protected speech was a substantial or motivating factor in the adverse employment decision. Further, Defendant argues that because of the budget constraints it would have made the same employment decision regardless of the protected speech. It is clear from the summary judgment evidence that the department faced budgetary issues (the cause of those problems, however, are hotly debated). It is not clear, however, from the summary judgment evidence that Plaintiff's position (as opposed to some other employee) was required to be terminated to resolve the budget shortfall issue. Defendant's summary judgment on these two issues are DENIED. Further, because fact issues exist, Plaintiff's motion for summary judgment arguing that as a matter of law Plaintiff's speech motivated the discharge is DENIED.
Defendant finally argues that this section 1983 claim is barred by the two-year limitations period. Defendant argues that Plaintiff was aware as of October 18, 2002 that he was going to be discharged and accordingly limitations begins to run effective that date. As stated above, Plaintiff did not file this suit until November 10, 2004. A district court may "grant summary judgment on the basis of any facts shown by competent evidence in the record." United States v. Houston Pipeline Co., 37 F.3d 224, 227 (5th Cir. 1994) (citation omitted). A summary judgment ruling may be based on arguments presented for the first time in a reply brief, so long as the non-movant has adequate opportunity to respond. Vais Arms, Inc. v. Vais, 383 F.3d 287, 292 (5th Cir. 2004) (citing Southwestern Bell Tel. Co. v. City of El Paso, 346 F.3d 541, 545 (5th Cir. 2003)). Plaintiff was aware that this issue was pending inasmuch as it was addressed by the Court in the April 7, 2005 Order. Further, Plaintiff responds to this issue in his motion for summary judgment. The issue is accordingly ripe for the Court's consideration.
Defendant advances this new argument in its October 17, 2005 response to Plaintiff's motion for summary judgment at p. 13.
In Delaware State College v. Ricks, 449 U.S. 250 (1980), the Supreme Court held that a cause of action for unlawful dismissal accrued when the plaintiff was informed that his employment would be terminated rather than the actual date of termination.
Plaintiff argues that he was not informed that he was going to be discharged until the day of his discharge — November 11, 2002. Relying upon Park's deposition testimony, Plaintiff notes that Parks states that November 11 was the first day that Plaintiff was notified he was discharged and Parks subsequently states that Plaintiff discharged himself on that date because of his refusal to transfer. Although, as stated above, it is clear that Plaintiff and others in the department were aware of the budget shortfall and the proposal to transfer Plaintiff and Mr. Ortega, the record is not clear that Plaintiff was informed, prior to November 11, that if he refused the transfer he was going to be discharged. Defendant's motion for summary judgment of the section 1983 claim on the basis of limitations is DENIED. The Court, however, will not strike the defense of limitations as requested by Plaintiff in his motion for summary judgment. The Court merely finds that fact issues exist as to whether Plaintiff was aware that he was going to be terminated prior to November 11, 2002.
C. Parks' claim of qualified immunity regarding the section 1983 claim
When a defendant pleads qualified immunity, the plaintiff has the burden "to rebut this defense by establishing that the official's allegedly wrongful conduct violated clearly established law." Salas v. Carpenter, 980 F.2d 299, 306 (5th Cir. 1992). The first inquiry for the Court is whether the plaintiff has "failed to allege the violation of a clearly established constitutional right." Siegert v. Gilley, 500 U.S. 226, 231 (1991). "If plaintiffs have stated valid claims, they bear the burden of demonstrating that the [defendant's] actions violated clearly established law." Salas, 980 F.2d at 306. Only after the plaintiff has met this burden does the Court examine the objective reasonableness of the defendant official's conduct. Id. The plaintiff's showing of a violation of a clearly established constitutional right is a `prerequisite' to overcoming the qualified immunity defense; failure to do so obviates the need to address the second step of the analysis." Nunez v. Simms, 341 F.3d 385, 387 (5th Cir. 2003) citing Martinez v. Tex. Dep't of Criminal Justice, 300 F.3d 567, 576-77 (5th Cir. 2002). The qualified immunity standard "gives ample room for mistaken judgments" by protecting "all but the plainly incompetent or those who knowingly violate the law." Hunter v. Bryant, 502 U.S. 224, 229 (1991) citing Malley v. Briggs, 475 U.S. 335, 343, 341 (1986).
The doctrine of qualified immunity shields a state official from personal liability when the state official, exercising his or her discretionary authority, deprives another of a right secured by federal law. Pierce v. Smith, 117 F.3d 866, 871 (5th Cir. 1997). A claim of immunity is conceptually distinct from the merits of the plaintiff's claims and is a question of law. Mitchell v. Forsyth, 472 U.S. 511, 527 (1985).
If the allegations of fraud are true, such allegations are matters of public concern and outweigh the government's interest in efficiency. See Teague v. City of Flower Mound, 179 F.3d 377, 381 (5th Cir. 1999). Thus, Plaintiff meets the first step of the qualified immunity analysis.
The second step of the qualified immunity analysis looks at the state official's conduct and asks whether the official's conduct was objectively reasonable. Here, Parks' action allegedly dismissing Plaintiff because he complained that the transfer would amount to fraud is not objectively reasonable. Despite Parks' argument that he thought the transfer was okay because the concept had been approved by other UTSA officials, no reasonable public official could assume that he could retaliate against an employee because of the employee's allegations of fraud. See Branton v. City of Dallas, Tex., 272 F.3d 730, 740 (5th Cir. 2001). Thus, qualified immunity does not apply to Defendant Parks based on Plaintiff's First Amendment retaliation claim.
IV. Conclusion
Plaintiff has sued his former employer, UTSA, and his former supervisor, Parks, under the anti-retaliation provision of the False Claims Act, 31 U.S.C. § 3730(h), and under 42 U.S.C. § 1983 for violations of his First Amendment rights. Plaintiff asserts that he was fired for complaining of fraudulent activity involving federal programs and monies administered by UTSA-Minority Business Development Center, where Plaintiff was employed. The Court in its Order dated April 7, 2005, concluded that UTSA could not be sued under § 3730(h) because of immunity. The Court now concludes that an individual supervisor, such as Parks, is not an "employer" under § 3730(h).
In its Order dated April 7, 2005, the Court also dismissed Plaintiff's claim under the Texas Whistleblower Act.
The Court also previously held that as to the § 1983 claim, the claim for First Amendment retaliation against UTSA was barred. The Court now denies Defendant Park's motion for summary judgment on this claim. The Court further denies the claim of Parks as to qualified immunity.
For the reasons stated above, Plaintiff's motion for summary judgment is DENIED (docket no. 49) and Defendant's motion for summary judgment is GRANTED in part and DENIED in part (docket no. 48). Accordingly, the only remaining claim in this case is Plaintiff's 42 U.S.C. § 1983 claim for violation of his First Amendment rights brought against Mr. Parks in his individual capacity.