Zhang et al v. Federal Home Loan Bank of Topeka et al
MEMORANDUM AND ORDER denying 90 Motion for Summary Judgment. Signed by U.S. District Senior Judge Sam A. Crow on 4/28/21. (msb)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
QINGHUA ZHANG, and
STEVEN CRAIG HEILAND,
Case No. 19-4073-SAC
FEDERAL HOME LOAN
BANK OF TOPEKA,
MEMORANDUM AND ORDER
The plaintiffs, Qinghua Zhang (“Zhang”) and Steven Craig Heiland
(“Heiland”), are former employees of Federal Home Loan Bank of Topeka (“FHLB”).
They bring claims of race-based discrimination and retaliation in violation of Title VII
of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e, et seq. (“Title VII”) and state
common-law retaliatory termination in violation of public policy. FHLB moves for
summary judgment (ECF# 90), and the parties have fully briefed the motion.
Both plaintiffs worked for FHLB for over a decade. An Asian-American
male, Zhang began working on January 16, 2007. When he was terminated on March
5, 2019, he held the position of Director of Quantitative Analysis. A white male,
Heiland began working on May 6, 1999. When he was terminated on April 29, 2019, he
held the position of Director of Market Risk Operations.
The employment problems at issue seem to have escalated from the
following. When Peg Schultz (“Schultz”), a Caucasian woman on working on Zhang’s
team, retired in September of 2018, she stated in her exit interview with Human
Resources (“HR”) that she believed Zhang had discriminated against women and
harbored a discriminatory attitude toward them. In response, HR interviewed a
Caucasian woman working in the same department but not on Zhang’s team. HR then
verbally counseled Zhang in November of 2018. After this disciplinary action, the
tension between the plaintiffs and FHLB’s management and HR escalated.
SUMMARY JUDGMENT STANDARDS
Summary judgment is appropriate “if the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(a). “Only disputes over facts that might affect the
outcome of the suit under the governing law will properly preclude the entry of
summary judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In
deciding the motion, the court’s role is “is not . . . to weigh the evidence and
determine the truth of the matter but to determine whether there is a genuine issue
for trial.” Id. at 249. The court may grant summary judgment for lack of a genuine
issue when the evidence is insufficient “for a jury to return a verdict,” when “the
evidence is merely colorable,” or when the evidence “is not significantly probative.”
Id. It follows then that a genuine issue for trial exists when “there is sufficient
evidence on each side so that a rational trier of fact could resolve the issue either
way.” Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998).
The moving party bears the initial burden of showing the absence of any
genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
The burden is met “by pointing out to the court a lack of evidence for the nonmovant
on an essential element of the nonmovant’s claim.” Adler, 144 F.3d at 671. The
burden then shifts to the nonmovant to “go beyond the pleadings and set forth
specific facts that would be admissible in evidence in the event of trial from which a
rational fact finder could find for the nonmovant.” Id. (internal quotation marks and
citations omitted). Such facts “must be identified by reference to affidavits,
deposition transcripts, or specific exhibits incorporated therein.” Id.
The court applies this standard drawing all inferences arising from the
record in the nonmovant’s favor. Stinnett v. Safeway, Inc., 337 F.3d 1213, 1216 (10th
Cir. 2003). The court does not make credibility determinations or weigh the evidence;
these are jury functions. Id. at 1216. The Tenth Circuit has counseled the following
for summary judgment proceedings in employment discrimination cases:
[I]n the context of employment discrimination, “[i]t is not the purpose of a
motion for summary judgment to force the judge to conduct a ‘mini trial’ to
determine the defendant's true state of mind.” Randle v. City of Aurora, 69
F.3d 441, 453 (10th Cir. 1995). Many of the highly fact-sensitive determinations
involved in these cases “are best left for trial and are within the province of
the jury.” Id.; see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251–52, 106
S.Ct. 2505, 91 L.Ed.2d 202 (1986) (“[T]he inquiry [at summary judgment is]
whether the evidence presents a sufficient disagreement to require submission
to a jury....”). Consequently, “in this Circuit . . . an employment
discrimination suit will always go to the jury so long as the evidence is
sufficient to allow the jury to disbelieve the employer's [explanation for the
alleged misconduct].” Beaird v. Seagate Tech., Inc., 145 F.3d 1159, 1177 (10th
Cir. 1998) (Tacha, J., concurring in part); see Randle, 69 F.3d at 452 (“[I]f . . .
inferential evidence is sufficient to allow a plaintiff to prevail at trial, it is
surely sufficient to permit a plaintiff to avoid summary judgment so that the
plaintiff can get to trial.”).
Lounds v. Lincare, Inc., 812 F.3d 1208, 1220-21 (10th Cir. 2015).
In the pretrial order, Zhang states his legal claim of Title VII race
discrimination as FHLB taking “materially adverse job actions against him because of
his race.” ECF# 89, p. 7. For his factual contentions, Zhang asserts Michael Surface
(“Surface”), supervisor for both him and Heiland, received repeated complaints in
2018 about Schultz treating Asian-minority employees in the Market Risk Analysis
(“MRA”) Department poorly. Surface counseled Schultz about her behavior but took
no further disciplinary action against her. Nor did FHLB investigate these allegations
of race discrimination against Schultz. It is also contended the plaintiffs complained
to Surface that Cathy Parcaro was promoted over an Asian employee who had been
promised a promotion. This discriminatory action was reported to HR, but it was not
investigated and did not result in any disciplinary action. It is further contended that
when Schultz complained of Zhang discriminating against women, HR failed to speak
to him, to investigate prior complaints against Schultz, and to interview other
witnesses before disciplining him.
The pretrial order reflects that Zhang contends he complained to
Surface and HR of their race discrimination in the handling and investigation of
Schultz’s allegations against him and in Surface’s threatening conduct toward Asians
and tolerance of Schultz’s actions toward Asians. Finally, Zhang contends he
complained when Cathy Parcaro was recognized for work that had been accomplished
by Zhang’s Asian team, but HR did not fairly investigate his complaints or take
disciplinary action. While including all these incidents as discrimination, the pretrial
order is not clear on what Zhang is asserting to be an adverse employment action for
this claim. Based on the parties’ summary judgment briefing on this claim, the court
understands Zhang’s termination to be the only adverse employment action. The
court, therefore, understands these factual contentions to be evidence in support of
his claim of racially discriminatory employment termination.
Zhang summarizes his Title VII retaliation claim as FHLB taking
materially adverse actions against him in retaliation for opposing discrimination
against Asian minority employees. Zhang contends FHLB terminated his “employment
in retaliation for his complaints of race discrimination.” ECF# 89, p. 5.
Zhang summarizes his state-law claim of retaliatory discharge for
whistle-blowing activities as FHLB terminated him in retaliation for reporting that
FHLB had violated its Anti-Fraud Policy, the Safety and Soundness Act, and SarbanesOxley Act. Zhang contends he reported to Surface in December of 2018 “a modeling
issue that would generate false reports” and to Enterprise Risk Management (“ERM”)
Department “suspicious model validation reports.” ECF# 89, p. 4. Zhang also contends
that in January of 2019 he reported to Surface “a serious modeling issue in the stresstesting process,” and that in March of 2019 he reported to Surface and Schlossman
“serious concerns about the PolyPath income simulation validation process.” Id. He
contends FHLB did not address his concerns about false reporting but terminated him
Heiland summarizes in the pretrial order his Title VII claim of retaliation
as FHLB taking materially adverse actions against him in retaliation for witnessing and
opposing upper management’s discrimination of Asian employees. He also contends in
the pretrial order that in November and December of 2018 Zhang listed him as a
witness to the discriminatory conduct of Schultz and Surface. Heiland also contends
that upon Zhang’s termination on March 5, 2019, he told Surface that he opposed the
termination as discriminatory and retaliatory. “On April 12, 2019, the day after Zhang
identified Heiland as witness and opponent of the action, FHLBank placed Heiland on
administrative leave, and Heiland notified FHLBank’s HR and Legal Department that
he opposed the discrimination and retaliation Zhang had been subjected to and he
supported the whistleblower claims concerning false reports.” ECF# 89, p. 5.
Heiland summarizes his state-law claim of retaliatory discharge for
whistle-blowing activities as his termination for reporting that FHLB had violated its
Anti-Fraud Policy, the Safety and Soundness Act, and Sarbanes-Oxley Act. In the
pretrial order, the contentions state that the “plaintiffs” reported the January 2019
modeling issue and the March 2019 serious concerns about the PolyPath income
simulation validation process. The contentions also include that Heiland reported to
Surface “a serious false report about pricing mortgage investments.” Id. at p. 4. He
too contends FHLB did not address his concerns about false reporting but terminated
him in retaliation.
Both plaintiffs also contend FHLB offered them severance agreements
that violated FHLB’s own written severance policy and Section 21F-17(a) of the
Securities Exchange Act of 1934 (15 U.S.C. § 78u-6).
The court finds the following statement of facts to be uncontroverted
after considering the parties’ objections and citations and after closely reviewing the
actual exhibits submitted. The court will explain its findings and its rulings on any
objections only when they are central to the summary judgment decision. In all other
instances, the rulings and reasons should be evident from the statement’s particular
wording and inclusion. It should be apparent that the court was careful to rely on
what submitted exhibits show.
The court is also critical of the parties’ efforts at controverting the
other side’s statement of facts. This part of summary judgment briefing is not a freefor-all opportunity to argue or dispute inferences or conclusions or to do the same
under the pretense of evidentiary objections for relevance and materiality. Facts are
facts. They should be stated simply and specifically within their relevant contexts
fully supported by citations from the record. All other efforts are distracting and
contravene the spirit of the summary judgment process.
As the Director of Quantitative Analysis in the Market Risk Analysis
(“MRA”) Department, Zhang directed the highly technical and related support
activities for operation processes that generated analyses and reporting of FHLB’s
market risk measurement metrics. Heiland worked as the Director of Market Risk
Operations. Part of their duties as directors was supervising other employees. Both
plaintiffs had been promoted to Assistant Vice-President positions at FHLB
approximately a year before their terminations. Both plaintiffs were directly
supervised by Surface. Amanda Kiefer (“Kiefer”) is the HR Director at FHLB. Both
plaintiffs received training on the following FHLB’s policies: Anti-Fraud, Anti-Money
Laundering, and Anti-Harassment and Equal Employment.
In his deposition, Heiland said he exchanged many emails with Zhang
that were sarcastic and speculative about certain female employees, because they
were “trying to just follow” what was happening with their attendance and work
issues and with Surface’s final oversight of them. ECF# 91-2, p. 26-27. FHLB’s
statement of facts includes excerpts and summaries of certain emails discussed in
Heiland’s deposition, and these emails and others are part of the summary judgment
record. The court finds that FHLB’s statements about those emails are uncontroverted
to the extent that those excerpts can be found in the emails. The inferences to be
drawn from them is uncertain, if not disputed, because the emails lack context and
background and involve credibility determinations like that suggested in defendant’s
statements of fact ¶¶ 38 and 41. Similarly, the court does not accept as
uncontroverted the defendant’s characterization of Heiland’s testimony about his
problem with FHLB’s use of the diversity and inclusion initiatives to promote women.
Heiland’s full testimony on these topics could be read and understood differently.
This also involves credibility determinations not suited for summary judgment. In
short, the court does not find the defendant’s characterization of the plaintiffs’
emails as “inappropriate behavior toward females” to be a matter settled by this
summary judgment record. This is also the case with the defendant’s effort to
construe Heiland’s testimony to say that he and Zhang were always treated the same
despite their different races. The context for Heiland’s testimony is too uncertain to
be used as the defendant wants for summary judgment.
The defendant’s cited evidence does not support its statement at ¶ 46
that during his employment “Heiland never reported to FHLB that he witnessed any
violation of the Anti-Harassment policy or of witnessing racial discrimination.” (ECF#
99, FHLB Reply, pp. 15-16). In the cited testimony, Heiland was not asked about
reporting to “FHLB” but to “HRI.” ECF# 91-2, pp. 30-31. This was one of the
distinctions that Heiland was careful to make in his deposition testimony. Id. Thus,
this statement has been controverted.
Peg Schultz was an employee in the MRA Department under Zhang’s
supervision. He thought she was mean and rude. Surface testified that across the MRA
Department, Schultz’s strong personality was not received positively by others. When
Schultz retired, she said some things during her exit interview that led to a second
interview on September 13, 2018, with HR Director Kiefer. Kiefer testified that
Schultz said she thought it important for the organization to know of Zhang’s
“sentiment” and how he treated his female employees. ECF# 91-3, p. 7. Kiefer also
said Schultz shared that Zhang “devalued her work and contribution to the
organization,” that Zhang kept significant work from her, that Zhang had a pattern of
giving better work to men, and that any time a woman was promoted Zhang would say
“it’s only because of diversity and inclusion.” Id. at pp. 8, 11-12. Kiefer testified that
during the interview Schultz had complaints only against Zhang. The court finds that
the plaintiff’s statement of fact ¶ 132 on what Schultz told Kiefer during the
interview based on Zhang’s affidavit lacks a foundation for admissibility.
After the interview with Schultz, Kiefer spoke with Cathy Pacaro,
another woman working in the MRA Department. Pacaro told Kiefer that Zhang at
times had undermined her and made discriminatory remarks toward her.
Surface testified that he did not personally “observe the complaints
made by Peg Schultz against” Zhang. ECF# 98-7, p. 7. Kiefer testified she also spoke
with Surface about Schultz’s complaints against Zhang.
On November 14, 2018, FHLB issued a Verbal Counseling to Zhang based
on the interviews of Schultz and Pacaro. No one spoke with Zhang about Schultz’s exit
interview allegations before he received this Verbal Counseling document. When
presented with the document, Zhang was told by Surface that his “career would be
jeopardized” if he did not sign it. ECF# 98-2, ¶ 20. Zhang was not given the
opportunity to respond when it was presented. The form reflects, however, that he
signed the document on November 29, 2018, and that he attached five pages of his
“defense to this verbal counseling.” ECF# 91-4, p. 69.
The court does not accept as uncontroverted the defendant’s
characterization that Zhang’s written defense “was entirely focused on” Schultz and
her discriminatory treatment against other Asian-American coworkers. ECF# 99, p. 22.
Zhang’s written defense is dated November 20, 2018, and opens with these three
I am very offended by a verbal counseling given to me on November 14, 2018.
It was from nowhere and ready for me to sign. No any (sic) evidence was
presented. A minority is disciplined solely based on slanders/libels from a
white person. I, a minority, didn’t receive fair treatment and respect. I am
shocked and interpret it as race discrimination against me.
Below you will find many instances of the white person’s discriminations
against minorities including me. Most of them were much more serious than the
slanders/libels. I communicated most of those issues to my manager via emails.
I have never seen any verbal counseling was (sic) given to the white person. I
interpret it as race discrimination against minorities as well.
It has created a hostile work environment so that the good progress of several
critical and time sensitive projects I manage for the bank was slowed down.
Honestly, I just want to do my job and help the bank succeed. Unfortunately,
the white person just wants to attack me. I fought very hard for this chance to
say something that all minorities on the team have wanted to say and haven’t
said for years. I hope there is no retaliation against any of us in the future.
ECF# 91-4, p. 70. Zhang’s defense first alleges Schultz discriminated against minority
coworkers by being particularly rude to them, interrupting their presentations, openly
criticizing their work, claiming others’ work as done by her, becoming jealous and
retaliating against minority coworkers, and regularly engaging in insulting and
intimidating behavior. Id. at pp. 70-72. His defense also responds directly to the
allegations saying that he speaks favorably and fairly of minorities and women who
are promoted. He also accused Schultz of being “jealous of” his work performance
and being unable to “tolerate a minority as her manager” and working to have him
removed so she could get his job. Id. at p. 72. Zhang’s defense also points to his role
in denying Shultz’s pre-retirement request for working remotely about which “[s]he
was not happy for sure and retaliated against me.” Id. His defense also responds that
Schultz lied in saying she was not given challenging and substantive work. He noted
that Surface made the final decisions on assignments and that the evidence regarding
her actual assignments, licenses, and ownership of processes belie her allegations. He
also noted: “My team members are very excited about Peg’s retirement. The
productivity of the team has been improved greatly. We are doing just fine without
her. Feel free to interview any of my team members.” ECF# 91-4, p. 73. He concluded
with several observations, including this:
Whenever there are two side stories, one is from a white person and the other
is from a minority. Most likely, the story from the white person is believed by
the bank. The minority must work extremely hard to prove her/his story is
true. This verbal counseling is a good example. Two standards are always
ECF# 91-4, p. 74.
Zhang admitted in his deposition that the Verbal Counseling was the
main reason for complaining about Schultz when he did. The defendant’s statement
at ¶ 60 contains multiple propositions of fact with one or more of them effectively
controverted by the plaintiff. Zhang does not controvert that he did not tell Schultz
when she worked for him that he regarded her behavior as threatening, and that he
never directly reported her behavior to HR before November of 2018. Zhang
represents having reported discrimination against Asians when he completed an
anonymous bank employee survey in 2018.
In November of 2018, following the issuance of the Verbal Counseling,
Zhang’s employment was not terminated, his salary was not decreased, and he was
not demoted. Zhang avers that following his complaints of discrimination and
improper financial reporting from November 14, 2018 until March 5, 2019, Surface
“increased scrutiny” of Zhang, “disregarded” Zhang’s input on department issues, and
“disregarded” his “concerns about hiring decisions.” ECF# 98-2, ¶ 33. Surface testified
that he became aware of Zhang’s written defense, but that he was not involved in any
investigation into it and does not know if an investigation was done. ECF# 98-7, pp. 78. Surface also said that after the Verbal Counseling and Zhang’s written defense, his
conversation about this issue with Zhang ended.
Kiefer testified that HR reviewed Zhang’s written defense document and
determined not to take further steps related to Schultz’s behavior because Schultz
was now retired, because Schultz worked for Zhang and “there was no racial
discrimination” in that circumstance, and because there were no recent claims of
discrimination. ECF# 91-3, p. 20. Surface testified that he had received complaints
about Schultz’s behavior during her employment but that he was unaware of any
investigations into Schultz’s behavior.
Kiefer did meet with Zhang on November 29, 2018, during which Zhang
stated a claim of discrimination against Surface involving an interaction that
happened in 2014. Zhang avers the discriminatory interaction arose from his
complaint to Surface about manipulating modeling assumptions and with Surface then
yelling and threatening Zhang. ECF# 98-2, ¶ 3. Zhang’s email to Kiefers explains he
sent an email to Bloomberg which revealed that Surface had made a mistake. Surface
sent an email replying to Zhang and then met with Zhang and Heiland during which he
became mad for Zhang’s email to Bloomberg. Kiefer testified that she reviewed the
emails exchanged between Zhang and Surface finding “no indication of racial
animus.” ECF# 91-3, p. 23. Kiefer did not interview any third persons about this
In an email dated December 4, 2018, to HR, Zhang provided more
information about Cathy Pecaro struggling with her project noting:
Actually, Cathy started working on . . . process since the beginning of 2016. It
is still not done yet and doesn’t meet expectation for sure. However, Michael
[Surface] and Cathy find excuses to cover it up so that nobody notices she will
miss her deadline soon. We know Cathy is Michael’s favorite. Each person on
my team doesn’t feel comfortable to work with Cathy because if something
goes wrong, the person on my team will be blamed by Michael for sure. I guess
this issue (play favorites) is reflected in the MRA’s engagement survey result.
Feel free to interview any of my team members.
ECF# 91-3, p. 61. Zhang followed this with another email to HR dated December 12,
2018, providing more documentation:
By the way, thanks HRI for providing the anti-harassment training. I learned so
much from it. The third attachment includes a pushy email I received from
Cathy Parcaro. It is a textbook example of microaggression. Also, it includes a
potential weakness of Cathy’s process I brought to her and Michael’s attention
long time ago. They just ignore it. So, it is a textbook example of bias.
ECF# 91-3, p. 63. The attached email from Parcaro reads, “Hi Josh—We will definitely
need some help from your team in order to compile this data—who from your team
should we work with?” ECF# 91-2, p. 64. Kieferbee testified that Parcaro’s email was
not microaggression but was the type of communication they were encouraging in the
Surface testified that around this time period he noticed an
“increasing[ly] unsettled disposition in” Zhang. ECF# 91-5, p. 14. He noticed in their
daily meetings “a general aloofness” and “disengagement” in Zhang. ECF# 98-7, p.
23. Heiland avers that during this same period he “did not ever observe any
insubordinate behavior by Zhang to his superior Surface, and actually observed the
opposite where Zhang was very careful with his behavior toward Surface.” ECF# 98-4,
¶ 19. Surface discussed Zhang’s behavior with HR and forwarded to HR two email
chains that included emails from Zhang to Surface.
One email chain looks to have been initiated by Heiland expressing
concern and raising the possibility of an Operational Risk Event (“ORE”) based on
Pecaro’s recent update on her project that included significant functionality problems
in Heiland’s opinion. Surface responded that Pecaro had been “struggling” with
certain aspects but disagreed with the ORE concern. Zhang sent an email agreeing
with Heiland that this was an ORE concern due to the delay potential, but he also
suggested the operational risk group should be consulted. Surface replied questioning
whether this was an ORE situation based on prior experiences but conceded he could
be misunderstanding the situation as he had not yet done his ORE training. Zhang
replied again noting that the operational risk group makes the final call. After a
couple more short email exchanges, Surface sends an email on February 27 at 3:16 pm
still stating that he saw the current situation differently but, “If you like, please work
with Cathy, Ops Risk and others as needed to initiate the ORE and health status
review for the Poly project overall. Thanks again.” ECF# 91-4, p. 95. Zhang
immediately replied, “I am not sure I or Craig is the right person to do it. We just
share some thoughts for management. We are glad that management is open to
listen. Thanks again.” Id. Minutes later, Surface replied,
Got it. I guess I’m not sure why you or Craig don’t think you are the right ones
to do this. You are both leaders in the MRA group and have a voice. I
appreciate the feedback and yes, I’m open to listening to concerns or issues.
But I also expect you to be empowered with the ability to make judgment calls
as well even if everyone is not on the same page. Does that help?
ECF# 91-4, p. 94. Surface continued the email asking questions going to the
justification of ORE concerns and then said he would have Cathy pull together some
additional information. Zhang replied to Surface the next day in this way:
I know Cathy is complaining she doesn’t get much help from Amber or Stuart
. . . . However, I heard different story. Amber is complaining Cathy’s
management. Often times, Cathy complains how busy she is and could get
much done . . . . Amber said she does offer helps. Amber is very talented.
Unfortunately, Cathy doesn’t want to lose her leverage and she is afraid of
Amber’s threat to her position. Cathy doesn’t want Amber to touch . . . Amber
did talk to me to see whether she could move to my group.
Id. Heiland then sent a lengthy email a couple hours later that was critical of
Pecaro’s progress with the project and suggested Pecaro should file the ORE for the
reasons she has given. Early the next morning in an email to Surface and Heiland,
Zhang agreed with Heiland’s earlier email and then contrasted how he and Heiland
were providing quality that made Surface “look good” while Pecaro’s delays and
excuses with the project did not. He questioned Pecaro’s understanding of the
process based on her delay and his interactions with her. He also questioned her
management ability based on complaints from her team members and from his
observations about her behavior. While both told Surface that an ORE based on
Pecaro’s project was necessary and that Pecaro should prepare it, neither Zhang nor
Heiland worked with Pecaro to prepare an ORE.
The second email exchange shown to HR happened between Zhang and
Surface around the same time. Surface sent an email in the morning asking Zhang to
stop in. That afternoon, Zhang sent an email:
Thanks for the update, Michael! I haven’t got a promotion for several years
since last one. Everyone could see what I did for MRA/the bank. Not matter is
business knowledge, research/problem solving skills and management skill, I
could compete with any other candidates including Krish. From working with
him on validation, I could tell he doesn’t know much about our business and
why on any our modelling assumptions. Hopefully, he won’t be another Frank.
Probably, I have to teach him a lot to help him succeed. The other issue is that
Theo may not like to report to him and will probably leave the bank soon. If
Theo leaves, I will probably leave as well. Also, I don’t know how long Krish
could work for us and why he was let go (is in bottom 25% group). I could move
to quant research function and Theo will continue to report to me. I think Theo
will be ok with that change. Hajar and victor will report to Craig so that Craig
could get a promotion as well. Everyone will be very happy. Let’s talk about it
when we can.
ECF# 91-4, p. 91. In sum, Zhang’s email complained about Krish backfilling Schultz’s
position on his team and suggested there could be some fall out if his team members
don’t like working and reporting to Krish. Zhang avers that he shared his concern and
opposition to this hiring due to a conflict of interest because Krish was “a former
consultant FHLB had previously employed.” ECF# 98-2, ¶ 53.
Kiefer in HR testified that Zhang was terminated on March 5, 2019,
because of the insubordinate behavior toward Surface observed in the above emails.
Kiefer said the emails show Zhang did not exercise his power of filing an ORE, denied
it was his job to file one, and continued to blame others for the problems. Kiefer also
interpreted Zhang’s February 28th email as threatening Surface that he would leave if
Surface did not follow his recommendation. Kiefer opined that such behavior violated
the organization’s value of accountability. Zhang avers that he is not aware of any
non-Asian assistant vice president being terminated for disagreeing with a candidate
selection or for advising a supervisor that employment opportunities elsewhere could
be considered. ECF# 98-2, ¶¶ 53-54.
Zhang avers that following November 14, 2018, and up to his
termination, Surface treated him differently including disregarding his “input
regarding MRA Department issues and . . . [his] concerns about certain hiring decisions
which could create a conflict of interest.” ECF# 98-2, ¶ 33. Zhang further avers that,
“[o]n March 5, 2019, FHLB terminated my employment for ‘inconsistent
communications.’ At no time prior to my termination was I advised by any FHLB
management personnel that I was not performing my work satisfactorily.” ECF# 98-2,
¶ 51. Surface testified that following the November Verbal Counseling he was not
involved in any verbal counseling or disciplining of Zhang, (ECF # 98-7, p. 90), and
that he was not aware of any counseling done with Mr. Zhang for insubordination by
himself or HR, id. at p. 16. Surface in his deposition explained that “there was some
concern what if . . . [Zhang] left the bank, you know, we already were down, we
were already short a person with Peg. You know, I just didn’t think that we could
survive in Josh’s absence and I was very concerned about that.” Id. at p. 17. Surface
also testified that “over the years, . . . , [Zhang] had what I perceived and what he
told me was that he had opportunities elsewhere, which for a high performer, you
know, I was not surprised.” Id. at p. 29. While Surface could not call specifically
writing a memorandum to keep Zhang, Surface said he could presume “that it was
probably something about wanting a promotion or a raise, so I probably had to go to
bat in that regard.” Id. Zhang avers it was “common and encouraged practice in the
MRA Department of FHLB for staff to seek external job opportunities and use the
opportunity to leverage a promotion and/or establish their worth and value at FHLB.”
ECF# 98-2, ¶ 27.
In an email dated December 4, 2018, to HR, Zhang complained of
Surface giving preferential treatment to Pacaro which made Zhang’s team members
uncomfortable about working with Pacaro because Surface would blame them if
something went wrong. ECF# 91-3, p. 61. Zhang invited HR to interview his team.
Kiefer in HR testified they did not investigate Zhang’s claim about Surface’s
preferential treatment of Pacaro. Zhang and Hieland aver that “Surface historically
[and] frequently blamed and demeaned Asian-minority members of the MRA
Department for delays they did not cause and threatened termination of the Asianminorities which he did not do to the non-minorities.” ECF# 98-2, ¶ 52; ECF# 98-4, ¶
40. FHLB Anti-Harassment and EEO Policy prohibits in part abusive, demeaning or
derogatory comments and sets forth a philosophy of mutual respect.
During HR’s review of documentation related to Zhang’s EEOC claim, it
discovered that Heiland had been sending a significant number of emails to an
external email address, deleting his “sent” folder, then deleting his “deleted” folder.
As this was being done outside of FHLB, Heiland was put on administrative leave
starting April 12, 2019. Zhang avers he often worked remotely at home and developed
spreadsheets at home for FHLB’s use. Zhang also states that Surface knew of Zhang’s
practice and did not oppose it and that Zhang was never warned or disciplined for his
practice being in violation of company policy. Heiland also avers that he emailed
FHLB work to his “personal email address to efficiently work remotely from home
outside regular work hours or during vacation that typically involved very large
spreadsheets and other documents and Surface was well aware of and did not oppose
the practice.” ECF# 98-4, ¶ 26. His affidavit also states he was not warned about or
disciplined for this conduct being in violation of FHLB policy prior to his termination.
Id. Heiland further avers that IT through Surface had cautioned him about copying
personal flash drives at work but had never cautioned or disciplined him for sending
work emails to his personal email address to work from home as he had done for
Surface conducted Heiland’s annual performance review on April 3,
2019, making no complaints about his work performance and rewarding him an above
average raise effective on April 1, 2019. Heiland avers that when Kiefer came for this
unexpected meeting on April 12, 2019, to place him on administrative leave, he was
in the middle of drafting an email notifying the MRA department that it had made a
$12 million mistake. Heiland told Kiefer about this issue at the time. Kiefer asked no
questions about this but told Heiland, “the bank will be okay.” ECF# 98-4, ¶ 42.
Heiland avers this “$12 million mistake ultimately impacted the Bank’s quarterly
publicly reported financial information that was in process of being compiled at that
time and which needed to be corrected.” Id.
HR’s investigation into Zhang’s emails included those sent to Heiland.
Keifer testified this led HR into concluding that Zhang and Heiland:
were engaged in a years’ long campaign of rampant insubordination, absolute
violations of our anti-harassment policy and engaged in stalker-like behavior of
. . . female employees. And simply exchanged toxic discussions among
themselves about personal details of others’ lives within our organization. So
he [Heiland] was terminated.
ECF# 91-3, p. 39. Heiland avers that as directors in their department, he and Zhang
“were responsible for monitoring all MRA staff’s work performance, punctuality and
attendance and . . . had been trained accordingly.” ECF# 98-4, ¶ 4. Heiland avers he
was terminated on April 29, 2019, “for alleged violation of multiple policies, but I was
not informed of any specific policy violations.” ECF# 98-4, ¶ 27.
Heiland never made a complaint to the FHFA Office of Inspector
General until after his FHLB employment terminated. Heiland never completed an
internal fraud complaint to FHLB. He also never made a complaint to the Chief Audit
Executive or Chief Resources Officer or through the reporting system Ethics Point.
Five months after his termination, Heiland filed two complaints with the Securities
Exchange Commission (“SEC”), and his complaints concerned a methodology that
began in 2001 about which he never filed a prior SEC complaint. The defendant does
not cite evidence of record that supports the wording of its statements of fact at ¶¶
98 and 99.
Zhang made no complaints to the FHFA, FHFA OIC, or SEC until after his
termination. The defendant cites testimony from Zhang about exchanging emails
several years back with the chief risk officer over the issues of valuation but he “did
not say fraud explicitly.” ECF# 91-4, p. 52. Zhang avers reporting to management his
concerns with false and inaccurate financial reports and results in 2018 and 2019 and
even complained to Surface that Parcaro’s “income simulation validation was
fraudulent.” ECF# 98-2, ¶ 43. He also avers that during his employment he “reported
wrongdoing by FHLB personnel through the intervention of higher authorities inside
the company, including FVP Michael Surface, CEO Mark Yardley, HR Director Amanda
Kiefer and Corporate Counsel Sarah Morse.” ECF# 98-2, ¶ 60.
The defendant’s statement of fact at ¶ 104 that the plaintiffs’ FHFA
“cases” were closed with the FHFA “finding the allegations were ‘disproven or
unsubstantiated,’” is not supported by the cited evidence. Had the defendant stated
that one case was closed with the stated result of, “Referred or Outside Investigative
Jurisdiction,” along with an explanation, and one case was closed with the stated
result of “Allegation(s) Disproven or Unsubstantiated,” then the court would have
found the statement to be uncontroverted. ECF# 91-2, pp. 183-184. The defendant’s
reply rightly points out that the deposition exhibit speaks for itself, and so the exhibit
should be rightly described in any statement of fact. ECF# 99, p. 40. Nor does the
court accept the defendant’s statement of fact at ¶ 105 as uncontroverted.
Interpreting Zhang’s testimony during this argumentative line of questioning does not
fall within the proper scope of a summary judgment proceeding.
Both plaintiffs aver that they reported concerns over what they regarded
as wrongfully false or improper financial reporting to senior management and that
they considered these reported concerns to be potential violations “of the SarbanesOxley Act of 2002 (15 U.S.C. § 7201 et al.), FHLB’s Anti-Fraud Policy and the Safety &
Soundness Act (12 U.S.C. § 4501 et seq.) governing the Prudent Management and
Operation Standards for the FHLB.” ECF## 98-2, ¶¶ 49-50; 98-4, ¶¶ 29-30. Zhang and
Heiland both aver individually that FHLB did not “address with me any of the reported
concerns about false reporting about which I complained.” ECF## 98-2, ¶ 47; 98-4, ¶
Both plaintiffs also aver that Heiland observed Surface’s discriminatory
treatment of Asian-minorities and openly opposed it and took action to minimize
historical and future bias at FHLB. ECF## 98-2, ¶ 52; 98-4, ¶ 40. Zhang avers that on
April 3, 2019, he “provided FHLB with emails which included Heiland’s knowledge of
and opposition to race discrimination in the MRA Department and false financial
reporting in violation of FHLB’s Anti-Fraud Policy and the Safety and Soundness Act.”
ECF# 98-2, ¶ 57. Heiland’s affidavit states he was referred to as “Mother Hen” for
openly opposing discrimination and bias against the Asian minorities within the MRA
Department. ECF# 98-4, ¶ 41. He also avers that he received an anonymous lunch
basket gift of a rice bowl and chopsticks which he considered to be an act of bias
against which he opposed.
Heiland’s affidavit includes these two statements on his financial
reporting: “On April 11, 2019, I reported a serious issue to Surface regarding pricing
mortgage investments which I considered to be consistent with FHLB’s Anti-Fraud
Policy and to potentially violate the Safety and Soundness Act.” “More specifically, on
April 11, 2019, at 5:16 p.m., I reported to Surface a serious ongoing methodology
issue that was escalating to very alarming levels in pricing and valuing new mortgage
investments.” ECF# 98-4, ¶¶ 23-24. He also avers that during his employment he
“reported wrongdoing by FHLB personnel through the intervention of higher
authorities inside company including FVVP Michael Surface, HR and Legal.” Id. at ¶
It is uncontroverted that FHLB offered severance packages to both Zhang
and Heiland on the dates of their terminations and that both packages offered 6
months’ severance pay rather than the 3 months specified in FHLB’s severance policy.
The plaintiffs also point that FHLB’s severance policy provides that a business partner
is ineligible for severance pay when the partner is terminated for misconduct.
FHLB in its reply brief repeatedly objects to the plaintiffs’ summary
judgment affidavits as improper sham affidavits. FHLB, however, does not support its
repeated objections with specific citations to deposition testimony directly
contradicted by the affidavits. “[A]n affidavit will be considered a sham only if it
contradicts the affiant's prior sworn testimony.” Middleton-Thomas v. Piat, Inc., 323
F. Supp. 3d 1218, 1239 n.12 (D. Kan. 2018) (citing Franks v. Nimmo, 796 F.2d 1230,
1237 (10th Cir. 1986)); see Knitter v. Corvias Military Living, LLC, 758 F.3d 1214,
1218 n. 3 (10th Cir. 2014) (“Sham affidavits, though ‘unusual,’ arise when a witness
submits an affidavit that contradicts the witness’s prior testimony.”). As in
Middleton-Thomas, the defendant here has not shown the court where and how the
plaintiffs’ affidavits contradict their deposition testimony. FHLB accuses the
plaintiffs of using their affidavits to manufacture disputes, but it fails to cite
deposition testimony that is specifically and directly contradicted by the plaintiffs’
averments. The defendant faults the plaintiffs for not raising the contents of their
affidavits during their depositions, but it fails to cite in the deposition when the
plaintiffs were asked to provide this content or even when they should have provided
this content. Short of a direct conflict between the affidavit and the deposition, there
is no need to address the other factors for deciding whether the plaintiffs were
attempting to create a sham fact issue. The defendant complains about the
conclusory statements found in the plaintiffs’ affidavits. Such statements do not
necessarily create a sham dispute. Nor does raising a “sham affidavit” objection open
the door to general credibility attacks at summary judgment. The defendant’s sham
affidavit objections are overruled.
Under Title VII, it is unlawful “to discharge any individual, or otherwise
to discriminate against any individual with respect to his compensation, terms,
conditions, or privileges of employment, because of such individual’s race, color,
religion, sex, or national origin.” 42 U.S.C. § 2000e-2(a)(1). “To survive summary
judgment on a Title VII claim of discrimination based on race, color, religion, sex, or
national origin, a plaintiff must present either direct evidence of discrimination or
indirect evidence that satisfies the burden-shifting framework of McDonnell Douglas
Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973).” Bekkem v.
Wilkie, 915 F.3d 1258, 1267 (10th Cir. 2019). Having no direct evidence of
discrimination, a plaintiff must follow the McDonnell Douglas framework. This means
the “plaintiff must first raise a genuine issue of material fact on each element of the
prima facie case, as modified to relate to differing factual situations.” Bekkem, 915
F.3d at 1267 (internal quotation marks and citation omitted). “The burden then shifts
to the employer to offer a legitimate nondiscriminatory reason for its employment
decision.” Id. “If the employer does so, the burden then reverts to the plaintiff to
show that there is a genuine dispute of material fact as to whether the employer’s
proffered reason for the challenged action is pretextual—i.e., unworthy of belief.” Id.
At this last stage, the court is to “consider the evidence of pretext in its totality.”
Fassbender v. Correct Care Solutions, LLC, 890 F.3d 875, 884 (10th Cir. 2018).
Zhang’s Title VII Discrimination Claim
FHLB seeks summary judgment on several grounds. On his prima facie
case, Zhang cannot prove he was doing satisfactory work and was treated less
favorably than others of a non-protected class. Zhang also cannot prove FHLB’s
articulated reason for terminating him is pretextual. Zhang directly responds pointing
to the evidence of record which creates genuine issues of material fact as to each
contention. Thus, the court understands that Zhang’s Title VII discrimination claim
alleges termination as the only adverse employment action taken for which relief is
sought. This determination is critical as it impacts the operative elements of a prima
facie case of discrimination.
The plaintiff bears the burden of making a prima facie case of
discrimination which “must consist of evidence that (1) the victim belongs to a
protected class; (2) the victim suffered an adverse employment action; and (3) the
challenged action took place under circumstances giving rise to an inference of
discrimination.” E.E.O.C. v. PVNF, L.L.C., 487 F.3d 790, 800 (10th Cir. 2007); see
Bennett v. Windstream Communications, Inc., 792 F.3d 1261, 1266 (10th Cir. 2015).
“While the elements of a prima face case ‘are neither rigid nor mechanistic, their
purpose is the establishment of an initial inference of unlawful discrimination
warranting a presumption of liability in plaintiff's favor.’” Bennett, 792 F.3d at 1266
(quoting Adamson v. Multi Community Diversified Services, Inc., 514 F.3d 1136, 1146
(10th Cir. 2008)). The burden of making a prima facie case “is not onerous,” “is one
of production, not persuasion,” and “involve[s] no credibility assessment.” Plotke v.
White, 405 F.3d 1092, 1099 (10th Cir. 2005) (internal quotation marks and citations
omitted). While the prima facie case serves primarily to eliminate “the most common
nondiscriminatory reasons” for the adverse employment action, it still must function
as a critical inquiry into “whether the plaintiff has demonstrated that the adverse
employment action occurred under circumstances which give rise to an inference of
unlawful discrimination.” Plotke, 405 F.3d at 1099-1100 (internal quotation marks and
citations omitted). Possible circumstances could include:
actions or remarks by decisionmakers that could be viewed as reflecting a
discriminatory animus, . . ., preferential treatment given to employees outside
the protected class . . . . A plaintiff might also rely . . . upon the timing or
sequence of events leading to plaintiff’s termination.
Id. at 1101. In the “canonical case” of a plaintiff employee’s discharge, the Tenth
Circuit has held the plaintiff must show the following for a prima facie case: “(1) he
belongs to a protected class; (2) he was qualified for his job; (3) despite his
qualifications, he was discharged; and (4) the job was not eliminated after his
discharge.” Singh v. Cordle, 936 F.3d 1022, 1037 (10th Cir. 2019) (internal quotation
marks and citation omitted).
FHLB uses a prima facie case which would require the plaintiff to prove
that he was performing “satisfactory” work and that he was treated “less favorably”
than other FHLB employees outside his protected group. The court accepts there is
case law within this district and circuit supporting FHLB’s elements. The court,
however, believes the Tenth Circuit is most consistent in recognizing that a prima
facie case varies with context and that in the “canonical case” of an employee’s
discharge, then the prima facie case in Singh, 936 F.3d at 1037, applies. Otherwise,
an employer would be able to insert its grounds of termination (insubordination) into
the prima facie case and require the plaintiff to disprove them. FHLB does not cite a
case in which the plaintiff had to show he was not insubordinate for his prima face
case. A quick review of Tenth Circuit decisions show that insubordination is evaluated
as the employer’s non-discriminatory business reason at the second and third stages
of the McDonnell Douglas analysis. See, e.g. Young v. City of Idabel, 721 Fed. Appx.
789, 795-96 (10th Cir. Jan. 26, 2018); Jaramillo v. Adams County School Dist. 14, 680
F.3d 1267, 1269 (10th Cir. 2012); E.E.O.C. v. BCI Coca-Cola Bottling Co. of Los
Angeles, 450 F.3d 476, 483 (10th Cir. 2006), cert. dismissed, 549 U.S. 1334 (2007);
Brown v. Parker-Hannifin Corp., 746 F.2d 1407, 1410 (10th Cir. 1984). This court in
2011 rejected an employer’s effort to have its business reasons considered at the
prima facie stage:
The defendant argues the plaintiff cannot prove this element based upon
her unsatisfactory job evaluations, her recent placement on a performance
improvement plan, employment history replete with numerous disciplinary
incidents and prior terminations, and her persistent problems with attendance,
insubordination and failure to discipline employees. The plaintiff points to the
fact that she had been employed there for more than thirty years, her own
opinion of her work performance, and the extended supervisory responsibilities
she held. As for the defendant's opinion about her job performance, the
plaintiff contends this should not be considered at the prima facie stage.
The Tenth Circuit has “held that a defendant cannot defeat a plaintiff's
prima facie case by articulating the reasons for the adverse employment action
because the plaintiff in such a situation would be denied the opportunity to
show that the reasons advanced by the defendant were pretextual.” E.E.O.C.
v. Horizon/CMS Healthcare Corp., 220 F.3d 1184, 1193 (10th Cir. 2000) (citing
MacDonald v. Eastern Wyoming Mental Health Center, 941 F.2d 1115, 1119–20
(10th Cir. 1991)). “[A] plaintiff is only required to raise an inference of
discrimination, not dispel the nondiscriminatory reasons subsequently proffered
by the defendant.” Orr v. City of Albuquerque, 417 F.3d 1144, 1149 (10th Cir.
2005). “A defendant's evidence regarding an employee's work performance
should not be considered when determining whether the employee has made a
prima facie case of employment discrimination.” Ellison v. Sandia Nat'l.
Laboratories, 60 Fed. Appx. 203, 205, 2003 WL 714849 at *2 (10th Cir.) (citing
in part MacDonald, 941 F.2d at 1119–20 and Horizon/CMS Healthcare Corp.,
220 F.3d at 1192–93), cert. denied, 540 U.S. 880 (2003). “In analyzing Plaintiff's
prima facie case, it is important not to conflate their claim of discrimination
with Defendants' proffered explanation.” Orr, 417 F.3d at 1149 (citation
omitted). The Tenth Circuit has held in such circumstances:
that a plaintiff may meet the second element of “a prima facie case of
discrimination in a discharge case by credible evidence that she
continued to possess the objective qualifications she held when she was
hired, or by her own testimony that her work was satisfactory, even
when disputed by her employer, or by evidence that she held her
position for a significant period of time.”
Bolton v. Sprint/United Management Co., 220 Fed. Appx. 761, 767, 2007 WL
666339 at *4 (10th Cir.2007) (quoting MacDonald, 941 F.2d at 1121 (citations
omitted)); see Bowdish v. Federal Express Corp., 699 F.Supp.2d 1306, 1317–18
Bullard v. Goodyear Tire and Rubber Co., 09-4024-SAC, 2011 WL 4092192, at *13–*14
(D. Kan. Sept. 14, 2011). As for the defendant’s argued fourth element of showing the
plaintiff received less favorable disciplinary treatment than non-minority employees,
the court will not add that element in an employment discharge prima facie case
consistent with the Tenth Circuit’s decision in Kendrick v. Penske Transp. Services,
Inc., 220 F.3d 1220, 1228-29 (10th Cir. 2000). See Bronakowski v. Boulder Valley
School Dist., 549 F.Supp.2d 1269, 1279 (D. Colo. 2008), aff’d, 294 Fed. Appx. 408
(10th Cir. Sep. 24, 2008), cert. denied, 555 U.S. 1193 (2009).
The court is satisfied from the summary judgment record that the
plaintiff Zhang has made this simple prima facie case which eliminates the most
common reasons for a non-discriminatory discharge and gives rise to a simple
inference of discrimination. The evidence shows that Zhang continued to possess the
objective qualifications and that he objectively continued to perform at an
acceptable level, if not higher. Based on Zhang’s twelve years of working at FHLB and
his own testimony about his performance, the plaintiff has satisfied this element of
his prima facie case. Zhang argues even more circumstances supporting an inference
of discrimination which the court will address at the third stage. The balance of
FHLB’s arguments on this discrimination claim fall within its non-discriminatory
business reasons for the termination and the plaintiff’s efforts at proving pretext. See
Orr v. City of Albuqueque, 417 F.3d at 1149.
The burden of production now shifts to FHLB to articulate a
legitimate, nondiscriminatory or nonretaliatory reason for its actions. Bennett v.
Windstream Commc’ns, Inc., 792 F.3d 1261, 1266 (10th Cir. 2015). Zhang does not
contest that FHLB has come forward with its non-discriminatory reasons. Now the
burden shifts back to the plaintiff “to show that the defendant’s explanation was
merely pretextual.” Id. The court is mindful that “’a plaintiff’s prima facie case,
combined with sufficient evidence to find that the employer’s asserted justification is
false, may permit the trier of fact, to conclude that the employer unlawfully
discriminated.’” Id. (quoting Reeves v. Sanderson Plumbing Prods., Inc. 530 U.S. 133,
148 (2000)). The plaintiff’s burden at this stage has been summarized in this way:
A plaintiff can meet this burden to show pretext in either of two ways: (1) by
showing that the proffered reason is factually false or (2) by showing that
discrimination was a primary factor in the employer’s decision, which is often
by revealing “weaknesses, implausibilities, inconsistencies, incoherencies, or
contradictions in the employer’s proffered reason,” such that a reasonable
fact finder could deem the employer’s reason “unworthy of credence.”
Tabor v. Hilti, Inc., 703 F.3d 1206, 1218 (10th Cir. 2013) (quoting Garrett v. HewlettPackard Co., 305 F.3d 1210, 1217 (10th Cir. 2002)). “’[T]he evidence which a plaintiff
can present in an attempt to establish that a defendant's stated reasons are
pretextual may take a variety of forms,’ and ‘[a] plaintiff may not be forced to pursue
any particular means of demonstrating that a defendant's stated reasons are
pretextual.’” Frappied v. Affinity Gaming Black Hawk, LLC, 966 F.3d 1038, 1059 (10th
Cir. 2020) (quoting Kendrick, 220 F.3d at 1230). But, “[m]ere conjecture that the
employer’s explanation is a pretext for intentional discrimination is an insufficient
basis for denial of summary judgment.” Bekkem, 915 F.3d at 1268 (internal quotation
marks and citation omitted). Pretext is evaluated not by looking “at each piece of
evidence in isolation,” but by considering “the plaintiff’s evidence ‘in its totality.” Id.
at 1270 (quoting Orr v. City of Albuquerque, 531 F.3d 1210, 1215 (10th Cir. 2008)). At
the same time, the court evaluates evidence of pretext within this framework:
Although we may consider all of the foregoing matters, “[w]e may not second
guess the business judgment of the employer.” Dewitt v. Sw. Bell Tel. Co., 845
F.3d 1299, 1307 (10th Cir. 2017) (quotations omitted). Evidence that the
employer “should not have made the termination decision—for example, that
the employer was mistaken or used poor business judgment—is not sufficient to
show that the employer's explanation is unworthy of credibility.” Swackhammer
v. Sprint/United Mgmt. Co., 493 F.3d 1160, 1169-70 (10th Cir. 2007). “In
determining whether the proffered reason for a decision was pretextual, we
examine the facts as they appear to the person making the decision,” and “do
not look to the plaintiff's subjective evaluation of the situation.” C.R. England,
644 F.3d at 1044 (citations and quotations omitted). Instead of asking whether
the employer's reasons “were wise, fair or correct,” the relevant inquiry is
whether the employer “honestly believed those reasons and acted in good faith
upon those beliefs.” Swackhammer, 493 F.3d at 1170 (quotations omitted).
DePaula v. Easter Seals El Mirador, 859 F.3d 957, 970–71 (10th Cir. 2017).
FHLB’s argued reason for terminating Zhang is that he was not
performing satisfactorily following his Verbal Counseling, as he became increasingly
aloof, insubordinate, and critical of management. From the court’s discussion above
on the parties’ statements of fact, it should be quite clear that there are genuine
issues of material fact precluding summary judgment on pretext. Rather than
repeating each of those issues here, the court summarizes some of those argued in
the parties’ summary judgment memoranda. Zhang’s opening point is that FHLB
modified its reason for his termination from what it told him at the time,
“inconsistent communications,” to now defending that it was insubordinate behavior.
Adding to the implausibility and incoherency of this reason, Zhang notes that neither
Surface nor HR counseled, warned, or disciplined him about any such behavior before
his termination. Zhang argues the treatment of him contradicts FHLB’s promotion of
itself as an employer practicing mutual respect in the workplace and for having a
detailed and elaborate process for workplace discipline. There is also the arguable
inconsistency in terminating an employee with Zhang’s lengthy tenure and highperformance level for this kind of behavior without warning.
FHLB’s evidence of record does not show Zhang’s purported behavior to
be so insubordinate and disruptive of the workplace that a reasonable jury could not
deem FHLB’s reason as unworthy of credibility. FHLB primarily relies on two email
chains between Surface and Zhang as the supporting evidence of insubordinate
behavior. From its review of them, the court is not convinced they possess the quality
and clarity of evidence needed to sustain summary judgment at the pretext stage.
Nor will the court assume the role of factfinder to read the emails as FHLB advocates.
The emails in question do not plainly show, without other plausible readings, that
Zhang wrongly refused to exercise his authority to file an ORE under the
circumstances and that Zhang wrongly threatened to leave if Surface did not follow
his hiring recommendation. From the face of the emails, they can reasonably be read
as firmly worded rather than insubordinate. From Zhang’s other evidence, the
matters raised in them can reasonably be understood as deserving his attention based
on history and training. He also avers that non-Asian American vice presidents were
not terminated for expressing disagreement with supervisors over the selection of a
certain candidate for valid reasons or for advising a supervisor that other employment
opportunities were being considered under the circumstances. And then there is the
inconsistency of this being interpreted as an insubordinate threat justifying
termination when Surface testified that he very well could have written a past
memorandum in support of Zhang receiving a promotion or raise after being told that
other employment opportunities existed for Zhang.
Zhang was openly critical of the verbal counseling as unfair and
discriminatory, and he thereafter asked for his team members to be interviewed
regarding his complaints about the discriminatory behavior by Schultz and Surface.
The defendant took no steps to assure Zhang that these interviews or any related
investigation was occurring. As Zhang avers, following these complaints, Surface
increased his scrutiny of Zhang, disregarded Zhang’s input on department issues, and
disregarded Zhang’s expressed concerns over hiring decisions. There is also evidence
that Zhang complained about Surface’s preferential treatment of Pacaro in December
of 2018, who was the subject of the other email chain, and that HR never investigated
his claim before his termination. Instead, HR relied on Surface’s presentation and
interpretation of the email chains and communications with Zhang. Both Zhang and
Heiland also averred about Surface historically blaming and demeaning Asian-minority
members of the department for delays they did not cause and even threatening their
termination unlike his handling of other non-minority employees. Finally, Zhang points
to FHLB’s severance policy under which he would have been ineligible for severance
benefits if terminated for FHLB’s stated reasons. And yet, FHLB did offer him a
severance package. Considering Zhang’s evidence in its totality, the court concludes
there is enough evidence here for a reasonable jury to find FHLB’s primary factor for
terminating Zhang was discrimination and/or retaliation for complaining about
Zhang’s and Heiland’s Title VII Retaliation Claim
For a Title VII prima facie case of retaliation, the plaintiffs “must show
(1) that [he] engaged in protected opposition to discrimination, (2) that a reasonable
employee would have found the challenged action materially adverse, and (3) that a
causal connection existed between the protected activity and the materially adverse
action.” Bekkem, 915 F.3d at 1267 (quoting Khalik, 671 F.3d at 1193). FHLB argues
that Heiland cannot prove the first element of protected activity and that both
plaintiffs cannot prove the third element of a causal connection.
According to FHLB, Heiland never complained about or filed any report
of discrimination against Zhang or any other minority employees within the
department. FHLB further denies that Heiland’s asserted activities amount to
protected activity or consist of something more than active, consistent behavior in
Title VII makes it an unlawful employment practice to discriminate
against an employee “because he has opposed any practice made an unlawful
employment practice.” 42 U.S.C. § 2000e-3(a). The Tenth Circuit has summarized:
The Supreme Court has defined “oppose” in this context by looking to its
ordinary meaning: “to resist or antagonize; to contend against; to confront;
resist; withstand, ... to be hostile or adverse to, as in opinion.” Crawford v.
Metro. Gov't of Nashville & Davidson Cty., 555 U.S. 271, 276, 129 S.Ct. 846,
172 L.Ed.2d 650 (2009) (citations and ellipsis omitted). Under this broad
definition, “[w]hen an employee communicates to her employer a belief that
the employer has engaged in a form of employment discrimination, that
communication virtually always constitutes the employee’s opposition to the
activity.” Id. (quotation marks, ellipsis, emphasis, and citation omitted); see
also Hertz v. Luzenac Am., Inc., 370 F.3d 1014, 1015 (10th Cir. 2004)
(“Protected opposition can range from filing formal charges to voicing informal
complaints to superiors.”).
Hansen v. SkyWest Airlines, 844 F.3d 914, 925–26 (10th Cir. 2016). The Supreme Court
in Crawford v. Metropolitan Government of Nashville and Davidson County, Tenn.,
555 U.S. 271, 277-78 (2009), also said,
“Oppose” goes beyond “active, consistent” behavior in ordinary discourse,
where we would naturally use the word to speak of someone who has taken no
action at all to advance a position beyond disclosing it. Countless people were
known to “oppose” slavery before Emancipation, or are said to “oppose”
capital punishment today, without writing public letters, taking to the streets,
or resisting the government. . . . There is, then, no reason to doubt that a
person can “oppose” by responding to someone else's question just as surely as
by provoking the discussion, and 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.
555 U.S. at 277–78. Courts have held that, “simply being listed as a witness on an
internal complaint form, without actively volunteering to serve as a witness or
offering some indication of the nature of the proposed testimony does not constitute
‘opposition under Title VII.” Thampi v. Manatee County Board of Com’rs, 384 Fed.
Appx. 983, 990 (11th Cir. 2010), cert. denied, 562 U.S. 1219 (2011); see Wimbley v.
Doyon Security Services, LLC, 2014 WL 4376148, at *6-*8 (S.D. Fla. Sep. 4, 2014)(Not
protected activity to be listed as a witness willing to testify as truthfully and neutrally
in a co-employee’s case, the plaintiff must allege he would have opposed the
defendant’s unlawful practice and his opinion must have been disclosed to the
The affidavits of Heiland and Zhang are sufficient to establish the first
element of the prima facie case, and FHLB has not shown these averments to conflict
with their deposition testimony. On April 3, 2019, following his termination, Zhang
provided emails to FHLB in support of his allegations of discrimination and retaliation.
ECF# 91-3, pp. 71-74. These emails reference Heiland’s knowledge and opposition to
race discrimination in the MRA Department as both a witness and email participant.
This happened after Heiland had complained to Surface on the day of Zhang’s
termination, March 5, 2019, that the termination was discriminatory and retaliatory.
Heiland further avers that on April 12, 2109, when he was placed on administrative
leave, he told FHLB’s HR and Legal Departments that he opposed the discrimination
and retaliation against Zhang. The range of protected opposition includes “voicing
informal complaints to superiors.” Hertz v. Luzenac America, Inc., 370 F.3d 1014,
1015 (10th Cir. 2004) (citation omitted). “[N]o magic words are required” to
constitute protected activity so long as the employee conveys to the employer a
“concern that the employer has engaged in a” practice that is unlawful. Hinds v.
Sprint/United Management Co., 523 F.3d 1187, 1203 (10th Cir. 2008). Heiland further
avers he was given a workplace nickname and an anonymous gift intended to mock
him for supporting the Asian minorities in this department. At this juncture, the court
cannot rule out that Heiland engaged in protected opposition, when considered
together, by being known for opposing Asian discrimination, by openly opposing
Zhang’s termination as discriminatory to superiors and management, and then by
letting himself be mentioned as a witness of Zhang’s discrimination. The court is
satisfied this is enough to meet the first element of the prima facie case.
FHLB next contends neither plaintiff can prove the third element of a
causal nexus between their protected activity and terminations. Against Zhang, FHLB
emphasizes that he admitted making his discriminatory allegations in response to
Schultz’s complaint against him, that it investigated his allegations made in his
response to the Verbal Counseling, and that he was terminated four months later for
reasons unrelated to his complaint. Because this four-month gap does not create a
rebuttable inference of retaliatory intent, Zhang must come forward with more
evidence of record. FHLB argues Zhang has none. Against Heiland, FHLB also denies
any temporal proximity between his participation and his termination in April of 2019.
Zhang denies FHLB’s credibility attack that he only voiced concerns over
Asian discrimination after Schultz alleged he sexually discriminated against her. His
affidavit refers to prior instances when he complained to Surface about Schultz’s rude
treatment of Asian employees and complained to Surface for not promoting the Asian
employees on his team. As the statement of facts shows, in a written document dated
November 20, 2018, Zhang responded to his Verbal Counseling addressing not only
Schultz’s allegations and discriminatory behavior but also FHLB’s handling of her
complaint and its discipline of him as discriminatory. ECF# 91-4, pp. 70-74. Despite
his tenure and position, he was never interviewed about Schultz’s allegations before
the Verbal Counseling. Zhang also complained to Surface that the Verbal Counseling
was race discrimination against him, as shown by his prior assertions of race
discrimination were ignored but an allegation from a single white female employee
was handled so differently. Zhang emphasizes that FHLB’s investigation of Schultz’s
allegations involved interviewing only two white female employees without
interviewing, as he requested, the employees who would have been witnesses to any
such discrimination, including the Asian employees working in the same department
who were treated discriminatorily by Schultz.
Zhang notes his protected activity extends beyond his written defense to
the Verbal Counseling. At the end of November of 2018, Zhang complained to HR
about Surface discriminating against him. In December of 2018, Zhang complained to
HR about Surface favoring Pecaro, a white woman, over his Asian team members. As
Zhang avers, after these allegations of discrimination, Surface increased scrutiny of
Zhang, disregarded Zhang’s input on department issues, and disregarded his concerns
over hiring decisions that created a conflict of interest. Surface went to HR stating
that Zhang’s conduct was becoming aloof and disengaged, and yet, he never
counseled or disciplined Zhang about such conduct. Zhang continued to send emails
critical of Pecaro’s recent work and critical of Surface’s recent hiring decision despite
Zhang’s expressed concerns. Instead of discussing these emails further with Zhang,
Surface took them to HR, and Zhang was terminated less than a week later.
Heiland points to the close temporal proximity between his protected
activity on March 5 and April 12 opposing racial discrimination in Zhang’s termination
and his own termination on April 29. He also points to Zhang’s communications on
April 3 and 11 identifying him as a witness and opponent of racial discrimination.
To show a causal connection, the plaintiffs “must present ‘evidence of
circumstances that justify an inference of retaliatory motive.’” Ward v. Jewell, 772
F.3d 1199, 1203 (10th Cir. 2014) (quoting Williams v. W.D. Sports, N.M., Inc., 497
F.3d 1079, 1091 (10th Cir. 2007)). Courts may “infer retaliatory motive from a close
temporal proximity between an employee's protected conduct and an employer's
adverse employment action.” Hinds v. Sprint/United Mgt. Co., 523 F.3d 1187, 1204
(10th Cir. 2008). On what is a close temporal proximity, the Tenth Circuit has said
that, “unless the termination is very close in time indeed to the protected activity,”
the plaintiff must have more evidence to establish causation, and that “a one-and-ahalf-month period may suffice to establish causation on a prima facie basis, but a
three-month period, standing alone, will not suffice.” Id. (citing in part Anderson v.
Coors Brewing Co., 181 F.3d 1171, 1179 (10th Cir. 1999)). “Thus, where a gap of three
months or longer has occurred, a plaintiff must present other evidence—more than
mere speculation, conjecture, or surmise—to establish that her protected activity was
a but-for cause of the adverse employment action.” Bekkem, 915 F.3d at 1271
(internal quotation marks and citations omitted).
For both plaintiffs, some of their protected activities occurred within
three months of their terminations as to satisfy this element. The court is also
satisfied that the plaintiffs have forward with additional evidence in combination with
the temporal proximity from which a reasonable jury could infer a retaliatory motive.
For the reasons stated earlier, the court here too concludes there is enough evidence
here for a reasonable jury to find FHLB’s stated reasons for terminating Zhang were a
pretext for retaliating against him. The court will not address this third-stage
question as to the plaintiff Heiland, because FHLB’s original brief did not advance any
substantial argument on it.
State-Law Claim of Retaliatory Discharge for Whistle-Blowing Activities
FHLB seeks summary judgment arguing the plaintiffs cannot make a
prima facie case. The plaintiffs’ complaints to reporting bodies occurred after their
terminations and, therefore, the FLHB did not know of any reporting activity or the
likelihood of the same prior to their termination. As for what the plaintiffs may have
told company management before their terminations, the plaintiffs have not
identified any specific laws, rules or regulations they reported as having been
violated. Their complaints over the delay in implementing a modeling program are no
more than opinions or beliefs which are not entitled to common law protection.
Lastly, FHLB challenges the plaintiffs’ ability to prove good faith in complaining about
the delay, because Surface encouraged them to report this by filing an Operational
Risk Event (“ORE”) which they chose not to do.
As reflected in the pretrial order, Zhang claims he was terminated in
retaliation for reporting violations of the Anti-Fraud Policy, the Safety and Soundness
Act, and Sarbanes-Oxley Act. Specifically, Zhang alleges that he told Surface in
December of 2018 of “a modeling issue that would generate false reports” and that he
also told Enterprise Risk Management (“ERM”) Department of “suspicious model
validation reports.” ECF# 89, p. 4. He avers having complained to Surface, HR and the
Legal Department that “modeling issues with Cathy Parcaro’s work . . . would
generate false reports in violation of FHLB policies and the Safety and Soundness
Act.” ECF# 98-2, ¶ 40. He also avers reporting to ERM that Parcaro’s reports “for
model validation didn’t make sense and are very suspicious” and “potentially violated
the Safety and Soundness Act.” ECF# 98-2, ¶ 41. Zhang also alleges that in January of
2019 he reported to Surface “a serious modeling issue in the stress-testing process,”
and that in March of 2019 he reported to Surface and Schlossman “serious concerns
about the PolyPath income simulation validation process.” ECF# 89, p. 4. Zhang
further avers that in January he protested the Bank’s stress testing process “led to
significant inaccuracy in the reports submitted to FHFA and disclosed to public.” ECF#
98-2, ¶. 42. Finally, he avers that he pointed out on March 1, 2019, that “Parcaro’s
PolyPath income simulation validation was fraudulent” and had not been
“implemented” as planned and so “should be reported as an ORE according to
operation risk management procedures.” ECF# 998-2, ¶ 43.
Heiland’s alleged and averred whistle-blowing activities are that he and
Zhang protested to Surface about significant inaccuracies in the Bank’s stress testing
process on January 9, 2019, that he and Zhang on March 1, 2019, complained to
Surface that Parcaro’s PolyPath income simulation validation was fraudulent and
should be reported according to operation risk management procedures process, and
that on April 11, 2019, he reported to Surface serious ongoing methodology issues
with pricing mortgage investments in potential violation of the Safety and Soundness
In the absence of direct evidence, to establish a retaliatory discharge
claim under the whistleblower exception to the at-will employment doctrine, the
plaintiff employee must make first a prima face by clear and convincing evidence
“1) a reasonably prudent person would have concluded that the employer or a
coworker was engaged in activities that violated rules, regulations, or the law
pertaining to public health and safety and the general welfare; (2) the
employer had knowledge that the employee had knowledge that the employee
reported the violation prior to his or her discharge; and (3) the employee was
discharged in retaliation for making the report.”
Lykins v. CertainTeed Corp., 555 Fed. Appx. 791, 794 (10th Cir. Feb. 12, 2014)
(quoting Shaw v. Sw. Kan. Groundwater Mgmt. Dist. Three, 42 Kan.App.2d 994, 219
P.3d 857, 862 (2009)(citing Goodman v. Wesley Med. Ctr., L.L.C., 276 Kan. 586, 78
P.3d 817, 821 (2003)), rev. denied, 291 Kan. 913 (Oct. 7, 2010)). “’Proximity in time
between the claim and discharge is a typical beginning point for proof of causal
connection.’” Bergersen v. Shelter Mut. Ins. Co., 229 Fed. Appx. 750, 753–54 (10th
Cir. 2007) (quoting Rebarchek v. Farmers Co–op. Elevator, 272 Kan. 546, 35 P.3d 892,
“The employer must know of the employee's reporting such violation
before termination and must have made the termination decision in retaliation for the
report.” DeHart v. Bd. of County Commissioners of Riley County, Kansas, 463 F. Supp.
3d 1219, 1233 (D. Kan. 2020) (citation omitted). Contrary to the defendant’s motion,
this does not appear to be an issue as the plaintiffs’ claims are not for complaining to
outside reporting bodies after their terminations but for reporting concerns and
potential violations with company management prior to their terminations. “[I]nternal
whistleblowing is recognized as an actionable tort in Kansas at least in some
instances.” Shaw, 42 Kan. App. 2d at 1000. To be actionable, the reporting activity
must seek “to stop unlawful conduct pertaining to public health and safety and the
general welfare by a coworker or an employer through the intervention of a higher
authority inside the company.” Id. at 1002. At the summary judgment stage, absent
evidence that establishes a reasonably prudent person would not think the reported
activity is a safety hazard, i.e. a violation, the court is to resolve the facts and
inferences in favor of the plaintiff by accepting his testimony that it was a safety
hazard for purposes of the motion. Id. at 1003.
FHLB does not cite case law supporting its proposition that the plaintiffs’
burden includes identifying specific provisions of law or regulation which FHLB
allegedly violated and which they reported to management prior to terminations.
FHLB says its not enough for the plaintiffs to point generally to the Safety and
Soundness Act, FHFA regulations and Sarbanes-Oxley Act as possible violations based
on what they reported to Surface and others. The plaintiffs counter that their
complaints over the modeling issues were that the generated reports would be false,
very suspicious, and significantly inaccurate. These reports were to be generated,
relied upon, and given to other federal entities and then would become public
The plaintiffs position their reporting of these concerns to upper
management as consistent with FHLB’s own Anti-Fraud Policy. They also put forward
that such false reporting would violate the Sarbanes-Oxley Act and the Safety and
Soundness Act which govern FHLB’s prudent management and operation standards. It
is uncontroverted that FHLB is highly regulated and subject to extensive oversight
from auditors and other governmental bodies. The court fails to find any dispute over
the general notions that FHLB engaging in or allowing false financial reporting would
not only contradict its operational standards but would trigger requirements for it to
be reported, and both of which directly impact FHLB’s role as a federally chartered
corporation providing reliable liquidity and funding to its members. Certainly, these
are matters implicating the general welfare as to fall within public policy. This case
does not resemble Goodman where the public policy lacked a clear mandate and was
too indefinite for a reasonably prudent person to conclude that the employer was
engaged in activities that violated public policy. 276 Kan. at 592-93. Instead, this case
resembles Shaw where the law and regulations are clear and fixed, and the plaintiffs
personally observed matters within the scope of their knowledge that lead them to
report their conclusions about significant errors happening that would result or have
resulted in false reports. 42 Kan. App. 2d at 1003-1004. The court also rejects the
defendant’s summary judgment argument that it is uncontroverted the plaintiffs were
merely reporting their personal opinions about FHLB’s operating practices. The
plaintiff’s testimony and averments over what they reported show them to be more
than subjective feelings or opinions over how FHLB should operate.
Finally, the court does not find the plaintiffs’ good faith to be an issue
appropriate for summary judgment. Kansas law requires the plaintiff employee to
“prove that any whistleblowing was done in good faith based on a concern regarding
the wrongful activity reported rather than for a corrupt motive like malice, spite,
jealousy, or personal gain.” Goodman, 276 Kan. at 590 (citation omitted). The record
is replete with evidence of past emails and efforts by the plaintiffs to insure their
department yielded accurate and reliable financial reporting results. The plaintiffs
also have evidence of their good faith in reporting these most recent concerns.
Consequently, the emails exchanged between Surface and the plaintiffs over the OREs
and the subsequent agency findings do not show that the plaintiffs are unable to
prove good faith. The inferences argued by FHLB do not overwhelm the plaintiffs’
averments of good faith or the other inferences that could be drawn from these same
circumstances. Viewing the evidence in the light most favorable to plaintiffs, a jury
could reasonably conclude that they reported their concerns in good faith.
In sum, the defendant’s arguments and cited facts do not persuade the
court that the plaintiffs are unable to present prima facie cases of retaliatory
discharge under Kansas law.
IT IS THEREFORE ORDERED that the defendant FHLB’s motion for
summary judgment (ECF# 90) is denied.
Dated this 28th day of April, 2021, Topeka, Kansas.
s/Sam A. Crow
Sam A. Crow, U.S. District Senior Judge
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