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STATE OF MICHIGAN COURT OF APPEALS

JERI KAUPP, Plaintiff-Appellant, v MOURER-FOSTER, INC., Defendant-Appellee.

UNPUBLISHED July 14, 2009

No. 281578 Ingham Circuit Court LC No. 05-001441-NZ

Before: Bandstra, P.J., and Whitbeck and Shapiro, JJ. PER CURIAM. In this wrongful termination suit filed under the Whistleblowers' Protection Act (WPA), MCL 15.361 et seq., plaintiff appeals as of right the trial court's order granting summary disposition to defendant.1 The trial court concluded that the evidence did not create a question of fact whether plaintiff was fired for engaging in a protected activity under the WPA and that a reasonable fact-finder could only conclude that plaintiff's termination was not connected to activities protected under the WPA. We conclude that a reasonable fact-finder could find that plaintiff was terminated for engaging in protected activity and so reverse the grant of summary disposition and remand for trial. We review a trial court's decision on a motion for summary disposition de novo. West v Gen Motors Corp, 469 Mich 177, 183; 665 NW2d 468 (2003). A motion for summary disposition brought under MCR 2.116(C)(10) tests the factual sufficiency of a complaint and must be supported by affidavits, depositions, admissions, or other documentary evidence submitted in the light most favorable to the nonmoving party. MCR 2.116(G)(3)(b); Corley v Detroit Bd of Ed, 470 Mich 274, 278; 681 NW2d 342 (2004). A trial court properly grants the motion when the proffered evidence fails to establish any genuine issue of material fact and the moving party is entitled to judgment as a matter of law. West, supra at 183. "A genuine issue of material fact exists when the record, giving the benefit of reasonable doubt to the opposing party, leaves open an issue upon which reasonable minds might differ." Id.

For reasons that are not explained in the record, the summary disposition motion was not filed until after the deadline set by the trial court for such motions to be filed and heard.

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Under the WPA: An employer shall not discharge, threaten, or otherwise discriminate against an employee regarding the employee's compensation, terms, conditions, location, or privileges of employment because the employee, or a person acting on behalf of the employee, reports or is about to report, verbally or in writing, a violation or a suspected violation of a law or regulation or rule promulgated pursuant to law of this state, a political subdivision of this state, or the United States to a public body, unless the employee knows that the report is false, or because an employee is requested by a public body to participate in an investigation, hearing, or inquiry held by that public body, or a court action. [MCL 15.362.] To establish a prima facie case of violation of the WPA, a plaintiff must set forth evidence: "`(1) that plaintiff was engaged in protected activities as defined by the act; (2) that plaintiff was subsequently discharged, threatened, or otherwise discriminated against; and (3) that a causal connection existed between the plaintiff's protected activity and the discharge, threat, or discrimination.'" Heckmann v Detroit Chief of Police, 267 Mich App 480, 491; 705 NW2d 689 (2005), overruled in part on other grounds Brown v Mayor of Detroit, 478 Mich 589, 595; 734 NW2d 514 (2007), quoting Phinney v Verbrugge, 222 Mich App 513, 553; 564 NW2d 532 (1997). At trial, if a plaintiff can produce evidence as to these three elements, the burden then shifts to defendant to produce evidence of a legitimate business reason for plaintiff's discharge. Taylor v Modern Engineering, Inc, 252 Mich App 655, 659; 653 NW2d 625 (2002). If the defendant can produce such evidence, the burden then returns to the plaintiff to present evidence that the proffered legitimate business reason was a pretext for the discharge. Id. A plaintiff may demonstrate pretext in either of two ways. First, a plaintiff may do so directly, by demonstrating that a retaliatory reason more likely motivated the employer. Second, a plaintiff may do so indirectly, by showing that the legitimate business reason proffered by the defendant is unworthy of credence. Id. Defendant has conceded that plaintiff was engaged in a protected activity and that she was terminated shortly after her supervisor learned of the protected activity. Thus, it is not disputed that the first two prongs of the three prong test under the WPA have been met. This leaves us to determine only whether there is a question of fact as to the third prong of the test, i.e. that "a causal connection existed between the plaintiff's protected activity and the discharge, threat, or discrimination." Our Supreme Court has held that a person can demonstrate the requisite causal connection by "present[ing] evidence that his superior expressed clear displeasure with the protected activity engaged in by the plaintiff." Id. at 186-187. Accordingly, we will consider what evidence the parties have offered at this point in the litigation and determine (1) whether plaintiff has presented evidence of causation beyond a mere temporal relationship of the protected activity to the firing and if so, (2) whether defendant has presented evidence of a legitimate business reason for the firing and if so, (3) whether plaintiff has presented evidence that the asserted legitimate business reason was pretextual. -2-

I.

Causal Relationship

Defendant concedes that plaintiff, an employee handling the company payroll, was engaged in activities protected by the WPA, specifically communication with the Michigan Department of Labor and Economic Growth (DLEG) and the United States Department of Labor (DOL) regarding defendant company's alleged unilateral refusal to pay overtime to its employees, alteration of time card records to disguise this denial of overtime pay, and other suspect payroll activities. Plaintiff was hired by defendant insurance agency in February 2005 as an accountant. Plaintiff originally handled accounts receivable and banking for defendant. However, shortly after plaintiff was hired, she was assigned to handle human resources duties and became responsible for administering defendant's payroll. Plaintiff's supervisor was Ed Tobin, a CPA who served as the company's comptroller. The co-owner of the company is John Foster. According to plaintiff's deposition testimony, shortly after she took over the payroll job, she began to notice "red flags all over the place" concerning a failure by the company to pay overtime. Plaintiff testified that she was not certain that the company was acting unlawfully and that "I just wanted to find out whether we were or not." For this reason, and because she had received no answers from her superiors when she asked them about the issue, she sent an e-mail on August 22, 2005, to the DLEG setting forth the company's overtime practices and asking if they were lawful. The practices she described in her email were that the employer refused to calculate overtime based on weekly hours and did so only based on bi-weekly hours, that she was directed not to pay for certain hours properly worked by employees, that overtime that had been approved by a supervisor was retroactively extinguished, and that the employer had made an unauthorized deduction from an employee's paycheck. She received an email back from a DLEG staffer advising her that these appeared to be improper activities on the part of the employer. Although plaintiff did not initially identify her company in the email there was a follow-up telephone conversation with a DOL investigator in which plaintiff identified the defendant company. These protected activities occurred in late August 2005. Plaintiff was fired by defendant approximately three weeks later on September 15, 2005. As already noted, this temporal relationship is not enough in and of itself to create a question of fact on the causal relationship of the two events. Such a temporal relationship, without any other evidence of linkage, may be merely fortuitous. However, plaintiff has presented substantial evidence that links her protected activity to the discharge such that a reasonable fact-finder could conclude that "a causal connection existed between the plaintiff's protected activity and the discharge." Heckman, supra. First, plaintiff testified that prior to making the contact with the DLEG and DOL she had on many occasions between February and August brought her concerns about unpaid overtime to the attention of her supervisor, Ed Tobin, the company's comptroller. According to her testimony, Tobin repeatedly assured her the matter would be addressed, but that, in fact, nothing changed and "I would never hear back from him." Plaintiff's testimony in this regard provided evidence from which it could be inferred that the company wanted to continue its questionable overtime practices regardless of their legality. Plaintiff also testified that she suggested to Tobin that they contact the DOL to determine what the law was so that the company could assure it was -3-

acting lawfully. She testified that after bringing the matter up on several occasions, Tobin and another payroll employee "started getting very, for lack of a better description, hostile with me" and that she told them "we can't continue violating the law, if we are." She stated that in response to her questions, she received an "indignant attitude" and that "no one would answer my questions." Thus, plaintiff's testimony provides an inference that the company was unhappy with her investigation into the overtime question and that the company ignored her suggestions that the DLEG and DOL be contacted to obtain clarification about the company's payroll responsibilities under the law. This is an inference of causation that goes beyond a mere temporal relationship. Second, on September 14, 2005, three weeks after her contacts with DLEG and DOL, plaintiff received an email from the company's co-owner relieving her of all payroll responsibilities and telling her, "do not become involved in any human resource issues." The email did not explain the reason for the removal of these responsibilities from plaintiff. An employer has the right to alter an employee's job responsibilities and is not required by law to explain or justify such changes. Plaintiff concedes that in her case, the removal of these responsibilities did not alter the "compensation, terms, conditions, location, or privileges of [her] employment" and so is not actionable. However, the fact that the defendant had the right to take a certain action does not make that action, or its context, irrelevant to the question of whether her subsequent termination was due to the company being displeased about her protected investigation.2 Thus, the company's action in taking away plaintiff's payroll responsibilities leads to an inference of causation that goes beyond a mere temporal relationship. Third, plaintiff testified that after getting an email response from the DLEG representative and speaking with the DOL investigator, she promptly made copies of her email and the response and gave them to Tobin and the other payroll worker and also told them of the information she had obtained by phone. She gave Tobin the name and phone number of the DOL investigator she spoke with so that he could follow up if he wished to do so. She testified, "I was really taken aback by their reaction. They were angry with me." She was then told by Tobin to do no additional work on the issue of legal compliance. She stated that she "was rebuffed and basically admonished for even contacting [DLEG and DOL]." According to plaintiff's testimony, after these events, she regularly asked Tobin what was being done and had "conversations regarding these issues every day, if not numerous times every day," but that the company's payroll practices did not change. This leads to an inference of causation that goes beyond a mere temporal relationship. Fourth, plaintiff testified that her supervisor, Tobin, "told me that he took my questions and my [DLEG] e-mail to John Foster [the company's owner]. . . . [Tobin] took my questions that I had written to the DOL up to John and talked to John about those."3 In addition, plaintiff

Defendant has proffered an affidavit from its owner that his removal of payroll responsibilities was not related to her protected activity. However, a jury is not obligated to accept the truth of this affidavit particularly where the affidavit does not set forth any alternative explanation for the action.
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2

These statements are not hearsay. MRE 801(d)(2).

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testified that she had had at least one direct conversation with Foster expressing her concerns about the legality of the company's payroll practices. Further, when asked in deposition whether Foster believed that his company's payroll practices were lawful, plaintiff testified that "John Foster's reply to me was that he doesn't care what a government agency tells him to do, nobody is going to tell him how to run a company that belongs to him." This leads to an inference of causation that goes beyond a mere temporal relationship. Thus, plaintiff has proffered some evidence that can lead to an inference "that [her] superior expressed clear displeasure with the protected activity engaged in by the plaintiff." Id. at 186-187. Given the evidence proffered by plaintiff, we conclude on de novo review, that plaintiff has presented sufficient circumstantial and direct evidence of a causal connection

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