Wood v. The Dow Chemical Company et al
Filing
24
Opinion and ORDER denying 14 Motion to Dismiss. Signed by District Judge Thomas L. Ludington. (SGam)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
NORTHERN DIVISION
KIMBERLY C. WOOD,
Plaintiff,
Case No. 14-cv-13049
v.
Honorable Thomas L. Ludington
THE DOW CHEMICAL COMPANY,
ANDREW LIVERIS, and CHARLES J. KALIL,
Defendants.
__________________________________________/
OPINION AND ORDER DENYING DEFENDANTS’ MOTION TO DISMISS
Plaintiff Kimberly C. Wood filed her complaint against Defendants Dow Chemical,
Andrew N. Liveris, Dow’s Chief Executive Officer, and Charles J. Kalil, Dow’s General
Counsel, on August 6, 2014. Wood alleges a single claim for relief: she contends that her
employment was terminated in retaliation for activity protected by the Sarbanes-Oxley Act of
2002. ECF No. 1, at 11. On October 6, 2014, Defendants filed a motion to dismiss, ECF No. 14,
claiming that Wood has failed to state a claim on which relief can be granted against any of the
three defendants. Because Wood sufficiently pleads a claim for relief against Defendants, their
motion to dismiss will be denied.
I.
Plaintiff Kimberly C. Wood is a former employee of Defendant Dow Chemical
Company. She worked at Dow for twenty-five years prior to her separation from the company in
October, 2013. ECF No. 1 at ¶ 8.
A.
Wood began her career with Dow “as a technologist in the Michigan Division Design
Latex and Research.” Id. at ¶ 13. From there she joined “International Accounting, where her
duties included ESPP, payroll, general ledger and consolidations.” Id. at ¶ 14. Eventually she
was transferred to the Corporate Controller’s Office. Id. at ¶ 15. She claims to be “the first
accountant Defendant Dow employed whose job duties were fully dedicated to corporate
treasury financial instruments.” Id. According to Wood, throughout her career her “job duties
also included working with financial instruments, interest rates, risk management, hedging, longterm debt, commercial papers, futures, and related financial schedules.” Id. at ¶ 16.
Wood also claims to have significant training and experience in fraud and accounting.
She holds a master’s degree in accounting from Central Michigan University and is a certified
fraud examiner and certified management accountant. Id. at ¶ 9-10. Wood also claims to have
been a “former Vice-Chairperson of the American Society of Industrial Security Economic
Crime Council.” Id. at ¶ 11. In addition, she “has spoken at two nation-wide fraud conferences
held by the Association of Certified Fraud Examiners.” Id. at ¶ 12.
Wood’s most recent position with Dow was as a fraud investigator. Id. at ¶ 26. She had
worked in that position since 2001. Id. Her job duties required her “to conduct internal
investigations and report her findings to her supervisors, including Defendant Dow’s Corporate
Auditor[.]” Id. She claims that she worked “with a group of individuals that operated under three
different titles: (1) Asset Protection and Recovery; (2) Fraud Investigative Services; and (3)
Corporate Investigations Group.” Id. at ¶ 27.
-2-
B.
While working as fraud investigator, Wood claims she “assisted in multiple investigation
[sic] into conduct that [she] reasonably believed to constitute violations of Securities and
Exchange Commission rules and regulations, Federal statutes relating to fraud against
shareholders, and Defendant Dow’s Code of Conduct and other policies.” Id. at ¶ 29. Wood
identifies seven specific instances of conduct which she investigated and on which she reported:
(1) a construction project for the H Hotel which exceeded budget by $13,000,000.00 and resulted
in the retaliatory termination of a Dow employee; (2) unreported personal expenditures made by
Dow for Mr. Liveris, which led to Mr. Liveris reimbursing Dow following her report; (3) further
personal expenses of Mr. Liveris that were paid by Dow but which went unreimbursed; (4)
payments by Dow, at Mr. Liveris’ direction, to The Hellenic Initiative (“THI”), Mr. Liveris’
charity and Prinkipos, a charity owned by the Greek Orthodox Church; (5) excessive use of the
Dow corporate jet and further involvement of Mr. Liveris’ and Dow’s funds with the Greek
Orthodox Church and Prinkipos; (6) improper accounting practices on the Olefins II project to
hide cost overruns; and (7) financial statement fraud with the Olefins II project. Id. at ¶ 30.1
1
Plaintiff’s complaint reads as follows:
(a)
That Plaintiff participated in an investigation, along with her supervisor, Simon
Solano, Director of Corporate Investigations Group, into and reported on Defendant Dow’s
expenses in the renovation project at the H Hotel, including discovering and reporting that the
project had exceeded the originally authorized budget by $13,000,000.00, the involvement of
Defendant LIVERIS’s wife and her friend, and the retaliation against a Dow employee, Michael
Hayes, who had taken efforts to limit Defendant LIVERIS’s wife involvement in the renovation,
which specifically included evidence that Defendant LIVERIS had instructed Defendant KALIL
that it was “time for retirement” for Mr. Hayes.
(b)
That Plaintiff reported to Doug Anderson, Corporate Auditor, and Mr. Solano
the findings of an investigation Plaintiff conducted into the personal expenses of Defendant
LIVERIS, entitled “Customer Events Compliance Investigation,” that revealed $719,000.00 worth
of unreported personal expenses by Defendant LIVERIS1 and, as a result, lead to further
investigations into Defendant LIVERIS’s expenses and the requirement that Defendant LIVERIS
reimburse those monies to Defendant Dow; following this report, Plaintiff was instructed “that
nothing from the CEO’s past was to be looked at again and the investigation was over.”
-3-
Wood claims that her reporting activity alerted her superiors to the possibility that
Defendant Dow was violating various federal securities laws and regulations. Id. at ¶ 32. Wood
further claims that her activity is protected under the Act but that despite this, her reporting upset
Dow employees including Defendants Liveris and Kalil who began a pattern of retaliatory
conduct which ended with the termination of her employment.
[Wood footnotes the preceding allegation with the following: “Examples of the
unreported personal entertainment expenses included: (1) a paid vacation for Defendant LIVERIS
and his family to attend a safari in Africa; (2) $218,938.00 in expenses for a trip for Defendant
LIVERIS and his family to the 2010 Super Bowl; (3) a paid trip to the 2010 World Cup in South
Africa for Defendant LIVERIS and his family; and (4) a paid trip to the 2010 Masters’
Tournament for Defendant LIVERIS and his family.”]
(c)
That Plaintiff conducted another investigation into Defendant LIVERIS’s
personal expenses and reported that Defendant Dow had paid for Defendant LIVERIS’s son’s
school’s intramural basketball jerseys; however, Defendant LIVERIS did not reimburse Defendant
Dow for the monies expended.
(d)
That Plaintiff reported to Jeff Tate, Corporate Auditor, and Mr. Solano, through
a series of memoranda dated September 20, 2012, January 23, 2013, and August 2, 2013, that her
investigation revealed that it appeared that Defendant LIVERIS, through Defendant Dow, had
been funneling money by making payments and covering expenses for The Hellenic Initiative
(“THI”), Defendant LIVERIS’s charity, by falsely identifying those payments as routine business
expenses, and that the THI investigation had revealed a lack of integrity in financial records, a
conflict of interest between Defendant Dow and Defendant LIVERIS’s involvement with and the
donations to THI, concerns about due diligence in relation to Defendant Dow’s contracts with a
particular vendor, and Defendant Dow’s expenditures on THI and Prinkipos, a charity owned by
the Greek Orthodox Church, exceeded $120,000 and, therefore, Defendant Dow failed to comply
with 17 C.F.R. part 229, Item 404 Regulation S-K, and the mandated disclosure.
(e)
That Plaintiff further investigated the excessive use of Defendant Dow’s
corporate jet and the involvement of Defendant LIVERIS and Dow Assets with regards to the
Greek Orthodox Church and Prinkopos.
(f)
That Plaintiff investigated and reported to Jeff Tate, Corporate Auditor, and Mr.
Solano the findings of the Olefins II Project investigation, that revealed project managers were
purposefully moving expenses to capital to hide cost overruns with the approval of senior business
management, a cost accountant admitted to moving $3,800,000.00 from expenses to capital,
employees had intentionally changed purchase orders, and that the cumulative dollar value of the
movements could reach $34,000,000.00.
(g)
That on October 9, 2013, Plaintiff reported to her direct supervisor, Mr. Solano,
that the investigation into the Olefins II Project revealed that there was financial statement fraud.
ECF No. 1 at ¶ 30.
-4-
C.
According to Wood, following a number of her reports and investigations “Defendants
and their employees and/or agents made threatening and intimidating comments towards [her.]”
Id. at ¶ 33. Wood claims that these comments included being directed by supervisors away from
current investigations, at times permanently; learning that Defendant Kalil “wanted her fired”;
and being informed of her impending termination. Id.2
The culmination of this retaliatory behavior, according to Wood, was that she was
informed on October 10, 2013—the day after she reported an instance of financial statement
fraud—“that her employment with Defendant Dow would be terminated on October 31, 2013.”
Id. at ¶ 34. Wood claims that she protested her separation from Dow but that she was
nevertheless provided with a severance package. Id. at ¶ 35.3
2
Plaintiff’s complaint reads, in pertinent part:
(a)
That following Plaintiff’s reports on the Customers Events Compliance
Investigation, Plaintiff was instructed by a supervisor Greg Groholski “that nothing from the
CEO’s past was to be looked at again and that the investigation was over.”
(b)
That following Plaintiff’s third THI Report, dated August 2, 2013, Defendant
Kalil, told Plaintiff’s supervisor that he “wanted her fired.”
(c)
That another of Plaintiff’s supervisors, Jeff Tate, instructed Plaintiff to “back off
the investigation” pertaining to Defendant LIVERIS and that “nothing was going to be done” with
Plaintiff’s THI reports.
(d)
That the day after Plaintiff reported to her immediate supervisor, Mr. Solano,
that the Olefins II investigation revealed financial statement fraud, Plaintiff was informed that her
employment would end on October 31, 2013.
ECF No. 1 at ¶ 33.
3
It should be noted that nothing in Wood’s complaint, its attached exhibit, Defendants’ motion to dismiss,
or any subsequent briefing on the motion explain the exact circumstances of Wood’s separation from Dow. Wood
alleges in her complaint both actual and constructive discharge but nothing reflects whether her employment was
terminated as allegedly planned on October 31, 2013 or if, after hearing of her impending termination, she resigned.
-5-
D.
Defendant Dow Chemical Company is a Delaware Corporation with its principal place of
business located in Midland County, Michigan. Id. at ¶ 2. Dow “was and is a company with a
class of securities registered under section 12 of the Securities and Exchange Act of 1934[.]” Id.
at ¶ 45. Defendants Liveris and Kalil are both “officers, employees, and/or agent[s] of Defendant
Dow.” Id. at ¶ 46-47.
II.
A complaint is to be dismissed if it “fail[s] to state a claim upon which relief can be
granted.” FED. R. CIV. P. 12(b)(6). A pleading fails to state a claim if it does not contain
allegations that support recovery under any recognizable legal theory. Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009). In considering a Rule 12(b)(6) motion, the Court must construe the pleading in
the non-movant’s favor and accepts the allegations of facts therein as true. See Lambert v.
Hartman, 517 F.3d 433, 439 (6th Cir. 2008). The pleader need not have provided “detailed
factual allegations” to survive dismissal, but the “obligation to provide the ‘grounds’ of his
‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of
the elements of a cause of action will not do.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555
(2007). In essence, the pleading “must contain sufficient factual matter, accepted as true, to ‘state
a claim to relief that is plausible on its face.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S.
at 570).
This standard is forgiving: “a well-pleaded complaint may proceed even if it strikes a
savvy judge that actual proof of those facts is improbable, and that a recovery is very remote and
unlikely.” Id. (internal quotation marks and citations omitted). While both Iqbal and Twombly
demand a certain level of specificity in pleading, neither case fundamentally altered the basic
-6-
requirements for pleading a claim for relief. Although not explicitly provided for in the Federal
Rules of Civil Procedure, parties may plead on the basis of information and belief “where the
facts are peculiarly within the possession and control of the defendant or where the belief is
based on factual information that makes the inference of culpability plausible[.]” Arista Records,
LLC v. Doe 3, 604 F.3d 110, 120 (2d Cir. 2010) (internal citations omitted).
Importantly, “the 12(b)(6) motion does not attack the merits of the case. It merely
challenges the pleader’s failure to state a claim properly.” Moore v. Johnson, 826 F. Supp. 1106,
1108 (W.D. Mich. 1993) (citing 5c Fed. Prac. & Proc. Civ. § 1364 (3d ed.)). “Such motions
assume the truth of a pleading’s factual allegations and test only its legal sufficiency.” McCall v.
Pataki, 232 F.3d 321, 322 (2d Cir. 2000). A motion to dismiss “presents a pure legal question,
based on allegations contained within the four corners of the complaint[.]” Goldberg v. Danaher,
599 F.3d 181, 183 (2d Cir. 2010). So while the complaining party is permitted an opportunity to
respond to a motion to dismiss, the sufficiency of the complaint is a matter of law for the district
court to resolve. McCall, 232 F.3d at 322.
III.
Plaintiff Wood brings her sole claim under the whistleblower provision of SarbanesOxley. She claims that she was fired in retaliation for reporting suspected violations of federal
securities laws. Under Sarbanes-Oxley, publicly traded companies are prohibited from
discriminating or retaliating against employees who act as whistleblowers. The Act defines
whistleblowing as:
(1) to provide information, cause information to be provided, or otherwise assist
in an investigation regarding any conduct which the employee reasonably believes
constitutes a violation of section 1341, 1343, 1344, or 1348, any rule or regulation
of the Securities and Exchange Commission, or any provision of Federal law
relating to fraud against shareholders, when the information or assistance is
provided to or the investigation is conducted by—
-7-
(A) a Federal regulatory or law enforcement agency;
(B) any Member of Congress or any committee of Congress; or
(C) a person with supervisory authority over the employee (or such other
person working for the employer who has the authority to investigate,
discover, or terminate misconduct); or
(2) to file, cause to be filed, testify, participate in, or otherwise assist in a
proceeding filed or about to be filed (with any knowledge of the employer)
relating to an alleged violation of section 1341, 1343, 1344, or 1348, any rule or
regulation of the Securities and Exchange Commission, or any provision of
Federal law relating to fraud against shareholders.
18 U.S.C.A. § 1514A.
Defendants have filed a motion to dismiss, claiming that Wood has failed to state a claim
upon which relief may be granted under § 1514A of the Act.
To prevail on a claim of retaliation pursuant to § 1514A, the plaintiff must show
that: [“](1) he or she engaged in a protected activity; (2) the employer knew that
he or she engaged in the protected activity; (3) he or she suffered an unfavorable
personnel action; and (4) the protected activity was a contributing factor in the
unfavorable action.[”]
Nielsen v. AECOM Tech. Corp., 762 F.3d 214, 219 (2d Cir. 2014) (quoting Bechtel v. Admin.
Review Bd., U.S. Dep’t of Labor, 710 F.3d 443, 451 (2d Cir. 2013)). Defendants allege in their
motion to dismiss that Wood’s complaint fails to meet each one of these pleading requirements,
either with respect to Dow Chemical or the individually named defendants. ECF No. 14 at ii.
A.
The first requirement to plead a claim under the Act is that a plaintiff must allege that
“he or she engaged in a protected activity.” Nielsen, 762 F.3d at 219. Defendants claim that “the
allegations of the complaint are insufficient to plausibly allege that plaintiff had an ‘objectively
reasonable’ belief that she had reported a violation of any relevant statute[.]” ECF No. 14 at ii.
The Act itself explicitly protects “any lawful act done by [an] employee”:
-8-
. . . to provide information, cause information to be provided, or otherwise assist
in an investigation regarding any conduct which the employee reasonably believes
constitutes a violation of section 1341, 1343, 1344, or 1348, any rule or regulation
of the Securities and Exchange Commission, or any provision of Federal law
relating to fraud against shareholders[.]
18 U.S.C.A. § 1514A. Defendants read the statute as requiring that Wood’s reports be “related to
conduct that [she] reasonably believed to be a violation of a relevant securities law or regulation
specified in the statute.” ECF No. 14 at 17. But this reading ignores the statute’s phrasing that
“any provision of Federal law relating to fraud against shareholders” can form the basis of
protected activity. 18 U.S.C.A. § 1514A. Thus, as long as an individual alleging retaliatory
discharge under the Act can show a reasonable belief that “any provision of Federal law relating
to fraud against shareholders” was violated, he or she has stated a claim. Id.; see also Villanueva
v. U.S. Dep’t of Labor, 743 F.3d 103, 108-09 (5th Cir. 2014) (“Section 806 prohibits retaliation
only if the employee provides information regarding conduct that he or she reasonably believes
violates one of six enumerated categories of U.S. law.”).
For a plaintiff to prove, at the pleading stage, that he or she engaged in protected activity
the pleading must meet both a subjective and objective test. Nielsen, 762 F.3d at 221. “That is to
say, a plaintiff ‘must show not only that he believed that the conduct constituted a violation, but
also that a reasonable person in his position would have believed that the conduct constituted a
violation.’” Id. (quoting
Livingston v. Wyeth, Inc., 520 F.3d 344, 352 (4th Cir.2008)). A
“plaintiff's particular educational background and sophistication [is] relevant to the subjective
component.” Day v. Staples, Inc., 555 F.3d 42, 54 n.10 (1st Cir. 2009). Further, “[t]he employee
is not required to show that there was an actual violation of the provision involved.” Id. at 55.
Also, an employee need not “cite a code section he believes was violated.” Fraser v. Fiduciary
Trust Co. Int’l, 417 F. Supp. 2d 310, 322 (S.D.N.Y. 2006). “General inquiries” by an employee,
however, do not constitute protected activity. Id.
-9-
Defendants allege that Wood is unable “to plausibly allege a reasonable belief that the
conduct she reported was an actual or potential” fraud upon shareholders. ECF No. 14 at 18. The
Second Circuit, in Nielsen, confronted a claim that the plaintiff, Nielsen, could not meet the
reasonable objective belief standard under the Act. In Nielsen, the complaint alleged that the
plaintiff “reasonably believed that defendants were committing fraud upon [their] shareholders
and would likely continue violating the United States mail and wire fraud statutes by using
telephone lines and emails in furtherance of the fraud.” Nielsen, 762 F.3d at 222. Such an
allegation was not sufficient to state a claim under the Act that the plaintiff was engaged in
protected activity.
The Second Circuit noted that “Nielsen has not plausibly pled an objectively reasonable
belief that AECOM [(the defendant)] engaged in mail or wire fraud, as both require a scheme to
steal money or property—allegations that do not appear in the complaint.” Id. Further, Nielsen
did not show “that it was objectively reasonable to believe that the conduct he complained of
constituted shareholder fraud. In essence, Nielsen alleges that a single employee failed properly
to review fire safety designs.” Id. Nielsen did not plead that a federal statute or regulation
required the type of fire safety review that was not performed, that the defendant had submitted
the fire safety designs to an outside body for review, “or even that the allegedly inadequate fire
safety review posed any specified safety hazard.” Id. Thus, Nielsen could have overcome his
conclusory allegation that the defendants were committing fraud upon shareholders by alleging
some facts that support a reasonable belief of a specific instance of fraud. Nielsen’s failure to do
so was fatal to his complaint. The Nielsen court then proceeded to highlight examples of wellpleaded allegations of protected activity and those cases are instructive here.
- 10 -
The Third Circuit’s decision in Wiest v. Lynch provides instruction for understanding the
type of facts that must be pled to satisfy the objective belief standard. 710 F.3d 121 (3rd Cir.
2013). In Wiest, the plaintiff alleged five different reports that constituted protected activity
under the Act. Wiest alleged in his complaint that he “worked for approximately thirty-one years
in Tyco’s accounting department until his termination in April 2010.” Wiest, 710 F.3d at 124. He
also claimed that his office was being closely scrutinized as a result of a corporate scandal at his
employer’s parent company. Id. Leading up to his termination, and from “around 2007, Wiest
established a pattern of rejecting and questioning expenses that failed to satisfy accounting
standards or securities and tax laws.” Wiest, 710 F.3d at 124 (internal quotation marks omitted).
Wiest alleged that the defendants improperly handled the documentation and accounting
of three separate events: the Atlantis Resort Event, the Venetian Resort Event, and the
Wintegreen Resort Event. Id. at 135-36. He also alleged that he alerted his employer to the
improper expenses submitted by an employee and the associated tax consequences, and “that he
‘raised questions’ about proper accounting treatment of other events that occurred between late
2007 and September 2009[.]” Id. at 137. The Third Circuit analyzed each of these allegations
separately.
With respect to the Atlantis Resort event, the Third Circuit held that the complaint
properly pleaded allegations of protected activity because Wiest reasonably believed that
activities he reported constituted violations of the provisions enumerated in § 806 of the Act. Id.
at 135-37. Wiest had “refused to process a payment and sent an email to his supervisor regarding
an event that Tyco intended to hold at the Atlantis Resort in the Bahamas” because he
“belie[ved] that the costs were inappropriately charged entirely as advertising expenses” Id. at
124. The defendant’s management eventually determined that reimbursing the event as initially
- 11 -
charged would have resulted in a fraudulent tax filing and that the event would have to be
reported as income to its employees. Id. The Third Circuit wrote that “[a] reasonable person in
Wiest’s position who had seen the expense request for the extravagant Atlantis event could have
believed that treating the Atlantis event as a business expense violated a provision of Section
806[.]” Id. at 135.
As to the Venetian Resort event, Wiest’s activity involved directing a subordinate to send
an email to the employee who submitted the request to inform that employee that the request for
payment would not be processed without more information. Id. at 124. Eventually, the
information was provided and Tyco’s tax department decided that the expense request was a
related to a proper business purpose. Id. On these facts the Third Circuit concluded that
Even if the facts in the Complaint established that Wiest subjectively believed the
expense request for the Venetian event could have violated a provision in Section
806, . . . objectively, a reasonable person in Wiest’s position would not have
believed that the expense request that initially lacked a detailed agenda and
breakdown of expenses would constitute a violation of one of the provisions listed
in Section 806.
Wiest, 710 F.3d at 136. The lack of information attached to the expense request was insufficient
to substantiate an objectively reasonable belief of fraud until that information was known. Id.
The third event, at Wintergreen Resort, suffered from the same expense infirmities as the
first event and also failed to comply with Tyco’s internal control procedures because it was not
authorized by Tyco’s CEO. Id. at 125. According to the Wiest court
[t]he averments of the Complaint support an inference that Wiest subjectively
believed that the lack of the CEO’s approval, which contravened internal control
procedures, would violate one of the provisions enumerated in Section 806.
Furthermore, it is plausible that a reasonable person in Wiest’s position could
have believed that the event’s approval by an attendee of the event, who would
therefore directly benefit from that approval, instead of by the CEO as required by
internal control procedures, may have violated one of the provisions contained in
Section 806.
Wiest, 710 F.3d at 136.
- 12 -
The Third Circuit then addressed Wiest’s final two allegedly protected acts and found
that they did not meet the Act’s pleading standard because they merely alleged that Wiest “raised
questions” about the propriety of event expenditures. Id. at 137. Wiest failed to “specify anything
about the nature or content of his communications.” Id. “By itself, the allegation that Wiest
‘raised questions’ does not create a plausible inference that he or any reasonable person in his
position would believe that expenditures on the events rose to the level of a violation of a
provision in Section 806.” Id.
The Third Circuit then addressed whether Wiest had a subjectively reasonable belief that
fraud on shareholders was occurring. The court focused on two factors when deciding whether
Wiest stated a claim under the Act. First, the court considered his experience with the company
and the subject matter he was reporting upon. Second, the court examined the sufficiency of the
information he claimed he was provided at the time of each of his reports or inquiries. The Wiest
court did not demand strict adherence to the legal factors of the fraud Wiest believed to have
occurred. It also did not demand that he allege an existing or ongoing violation of an enumerated
provision. Id. at 137. Other circuits have similarly rejected a requirement of rigid formulism and
specifically worded invocations of illegality. See Lockheed Martin Corp. v. Admin. Review Bd.,
U.S. Dep’t of Labor, 717 F.3d 1121, 1132-33 (10th Cir. 2013) (holding that the complainant
sufficiently stated a claim under the Act because his “allegations clearly amounted to a claim that
[the Vice President of Communications] had converted company money to her own use” despite
never using the words “fraud” or “illegal” in his reports).
With Wood, as with Wiest, sufficient facts are presented in her complaint regarding her
subjective beliefs and her objective circumstances for it to survive. First, much like the facts
supporting Wiest’s subjective belief of fraud, Wood had a great deal of experience in accounting
- 13 -
and fraud detection. Wood, at the time she was separated from Dow, had been working for the
company for approximately twenty-five (25) years. ECF No. 1 at ¶ 8. She had an advanced
degree in accounting and was a certified fraud examiner and certified management accountant.
Id. at ¶ 9-10. During her time at Dow, Wood worked in the Corporate Controller’s Office and
alleges that she “was the first accountant Defendant Dow employed whose job duties were fully
dedicated to corporate treasury financial instruments.” Id. at ¶ 15. Further, “over her career,
[Wood’s] job duties also included working with financial instruments, interest rates, risk
management, hedging, long-term debt, commercial papers, futures, and related financial
schedules.” Id. at ¶ 16. Wood’s employment history is consistent with an employee who would
have had extensive experience with financial services fraud and the types of fraudulent activities
that could implicate a violation of federal law.
In addition to Wood’s job experience, her employment responsibilities are similarly
reflective of someone who would be familiar with fraudulent activity and the federal law
governing that activity. Wood alleges that she was “required to submit periodic reports to the
Securities and Exchange Commission” and “to establish an Audit Committee with various
responsibilities, including but not limited to establishing procedures for the reporting of audits,
financial reporting, and the hiring of public accounting firms[.]” ECF No. 1 at ¶ 20-21. The
Audit Committee with which Wood was involved was “also obligated to establish procedures for
receiving and treating complaints regarding accounting, internal accounting control and auditing
matters.” ECF No. 1 Wood was also tasked with “conduct[ing] internal investigations and
report[ing] her findings to her supervisors, including Defendant Dow’s Corporate Auditor, who
in turn had statutory and regulatory obligations to report such information to the federal
government.” ECF No. 1 at ¶ 26. Wood alleges that on multiple occasions during the course of
- 14 -
her employment she was a part of investigating conduct she reasonably believed constituted
violations of federal law. ECF No. 1 at ¶ 29.
While Wood’s employment responsibilities and experience tend to corroborate her
allegation that she had a subjective belief that the conduct which she was investigating violated
federal law, her complaint will be dismissed if she fails to specifically identify that conduct and
establish that it was objectively reasonable for her to believe that conduct violated federal law. In
her complaint, Wood outlines a number of incidents the investigation of which constituted
protected activity: (1) a construction project which exceeded budget by $13,000,000.00 and
resulted in the retaliatory termination of a Dow employee; (2) unreported personal expenditures
made on Mr. Liveris’ behalf by Dow which led to Mr. Liveris reimbursing Dow following the
investigation; (3) further personal expenses of Mr. Liveris that were paid by Dow but which went
unreimbursed; (4) payments by Mr. Liveris, through Dow, to The Hellenic Initiative (“THI”),
Mr. Liveris’ charity and Prinkipos, a charity owned by the Greek Orthodox Church; (5)
excessive use of the Dow corporate jet and further involvement of Mr. Liveris’ and Dow’s funds
with the Greek Orthodox Church and Prinkipos; (6) improper accounting practices on the Olefins
II project to mask cost overruns; and (7) financial statement fraud with the Olefins II project.
ECF No. 1 at ¶ 30.
Once again, Wiest is instructive. Wood’s conduct, as alleged in the complaint, goes
beyond merely “raising questions” and sufficiently alleges activity that an objectively reasonable
person would believe to be a violation of federal law. It is true that some allegedly protected
activity can be so innocuous or trivial and as a result, its relationship to shareholder interests is so
attenuated, that even if it is reasonably believed to be a violation of federal law it is not protected
activity under the Act. See Nielsen, 762 F.3d at 222 (citing Sylvester v. Parexel Int'l LLC, ARB
- 15 -
No. 07–123, 2011 WL 2165854, at *19 (ARB May 25, 2011). These allegations, however,
include more than mere trivia or general inquiries.
Some of the allegations by Wood directly implicate activity that a reasonable person,
knowing the result of her reporting, would believe constituted protected activity. For example,
her report regarding Mr. Liveris’ personal expenses that resulted in Mr. Liveris reimbursing Dow
and publicly disclosing the reimbursement would lead a reasonably objective individual to
believe the reported activity might implicate fraud against shareholders. The same can be said of
her reporting on the Olefins II project. There, Wood found that $3,800,000.00 had been
improperly accounted for in order to “hide cost overruns” and was done “with the approval of
senior business management.” ECF No. 1 at ¶ 30. As a result of these discoveries she informed
her supervisor that she believed there to be financial services fraud occurring. Id. A reasonably
objective individual would not describe such discrepancies as trivial and could believe those
practices to be inconsistent with shareholder interests.
According to Defendants, Nielsen is persuasive authority in analyzing Wood’s complaint.
In Nielsen, the plaintiff’s complaint was dismissed for stating that he “reasonably believed that
defendants were committing fraud upon [their] shareholders and would likely continue violating
the United States mail and wire fraud statutes by using telephone lines and emails in furtherance
of the fraud.” Nielsen, 762 F.3d at 222. Defendants are correct that this sort of allegation is
precisely the type of bare, conclusory claim that the Twombly and Iqbal decisions caution
against. But that is not true with respect to Wood’s case. Wood alleges specific instances of
conduct she believed could reasonably constitute a violation of the provisions in the Act. These
assertions are supported by a factual explanation that a reasonable person of Wood’s training and
experience could likewise conclude that malfeasance was implicated.
- 16 -
Defendants do not specify exactly how Wood’s allegations fail as a general matter to
state a claim under the Act. Defendants state only that Wood fails “to tie the alleged conduct she
reported to any of the enumerated statutes, relying instead on the generic, conclusory allegation
that she reported ‘suspected fraudulent and unlawful actions.’” ECF No. 14 at 19. But, as
outlined above, Wood need not specifically allege violations of the enumerated provisions under
the Act.
Defendants’ more specific attacks on the activity which Wood allegedly believed to be
fraudulent are similarly without merit. With respect to Wood’s claims of improper personal
expenditures and improper charitable contributions, Defendants claim her allegations fail to state
a claim under the Act because they fail to state a claim under any of the enumerated provisions
of federal law found in the Act. ECF No. 14 at 20-22. But the pleading standard under the Act is
not so demanding. Wood need only allege that she reasonably believed the activity to have
violated an enumerated provision, not that a violation actually occurred. Day v. Staples, Inc., 555
F.3d 42, 55 (1st Cir. 2009). Defendants claim that if the elements of the enumerated statute are
not met it is unreasonable for an individual to believe that a violation of the statute has occurred.
But this argument attempts an end-around of the relaxed pleading standards for showing
protected activity under the Act.
With respect to the Olefins II allegation by Wood, Defendants assert that the activities are
not significant enough to be cognizable under the Act. They claim that “not every alleged
incident of fraudulent behavior within a corporation can form the basis for . . . a claim [under the
Act].” ECF No. 14 at 25. Defendants cite a case from the District of New Jersey supporting the
position that the Act should not be applied to all incidents of fraudulent activity that result in
accounting misstatements. See Safarian v. Am. DG Energy Inc., No. CIV. 10-6082, 2014 WL
- 17 -
1744989 (D.N.J. Apr. 29, 2014). But the facts of Safarian are inapposite. In Safarian, the
plaintiff was an engineer who threatened to expose “overbilling, improper construction, and
failure to obtain permits.” Id. at *1. Plaintiff merely alleged, to substantiate a reasonable belief of
a violation of one of the Act’s enumerated provisions, that “overbilling might eventually lead to
incorrect accounting records and tax submissions.” Id. at *4. Safarian, however, had no contact
with the accounting department and no knowledge of the actual accounting for the allegedly
improper billing procedures.
Here, by contrast, Wood has alleged multiple instances of actual accounting
misstatement, one of which was associated with the Olefins II project. According to her
complaint “project managers were purposefully moving expenses to capital to hide cost overruns
with the approval of senior business management.” ECF No. 1 at ¶ 30. Again, these are
allegations made by an experienced fraud investigator with accounting experience, not a product
engineer. Defendants’ reliance on Safarian is misplaced.
In light of the foregoing, Wood’s complaint does not fail to allege protected activity upon
which she may state a claim for relief under the Act.
B.
Defendants also attack the second prong of Wood’s prima facie case under the Act.
Wood claims that Defendants Liveris and Kalil, in their individual capacities, directed her
termination in retaliation for her protected activity. In this respect, Defendants contest only the
knowledge Defendants Liveris and Kalil had of Wood’s allegedly protected activity. ECF No. 14
at ii. At this stage, Defendants do not claim that Dow, the incorporated entity, was unaware of
her allegedly protected acts. With respect to this element, Defendants claim that Wood “fails to
- 18 -
plausibly allege that either individual knew of her allegedly protected activity or participated in
any adverse employment action against her.” Id.
When alleging that a named individual defendant engaged in retaliatory conduct under
the Act, a plaintiff must allege that the individual defendant had knowledge of plaintiff’s
protected activity. See Wiest v. Lynch, No. 10-3288, 2014 WL 1490250, at *16 (E.D. Pa. Apr.
16, 2014). To draw such a connection, there must be sufficient facts outlined in the complaint to
justify an inference that the individual defendants knew of plaintiff’s protected activity and
directed her termination. Id. Where a complaint lacks sufficient facts to justify such an inference,
circumstantial evidence of knowledge on the part of individual defendants will not sustain the
complaint against a motion to dismiss. Id. at *17.
Wood’s allegations against Mr. Liveris meet this standard. Her claims are reducible to the
allegation that Mr. Liveris is Dow’s CEO and that she conducted investigations of Mr. Liveris’
activities, particularly activities involving his family, and that he reasonably knew of her conduct
and directed her termination. Wood does not allege Mr. Liveris had actual knowledge of Wood’s
activities. But the pleading standard under the Federal Rules of Civil Procedure are not so
demanding.
For Wood’s claims against Mr. Liveris to survive, Wood need only allege sufficient facts
in her complaint from which it could be inferred that Mr. Liveris had knowledge of her protected
activities and played a role in the adverse employment action taken against her. See Iqbal, 556
U.S. at 678 (“A claim has facial plausibility when the plaintiff pleads factual content that allows
the court to draw the reasonable inference that the defendant is liable for the misconduct
alleged.”) “Asking for plausible grounds to infer [knowledge on the part of Mr. Liveris] does not
impose a probability requirement at the pleading stage; it simply calls for enough fact to raise a
- 19 -
reasonable expectation that discovery will reveal evidence of [knowledge.]” Twombly, 550 U.S.
at 556. Wood’s investigations were not just focused on the conduct of some mid-level managers
that may or may not have been brought to the attention of upper management. They were
focused on the Chief Executive Officer himself. Most notably, one of Wood’s investigations
allegedly led to Mr. Liveris reimbursing Dow for monies the company had expended on matters
deemed personal. The reimbursement was publicly reported to Dow’s shareholders. The
complaint contains sufficient facts to permit the plausible inference that discovery could lead to
evidence of wrongdoing on the part of Mr. Liveris. His motion to dismiss will be denied.
Wood’s allegations concerning Defendant Kalil’s knowledge of her activities and
participation in the adverse employment actions she suffered in large part mirror those made
against Mr. Liveris. Moreover, Wood alleges that her “reporting relationships” were reorganized
and resulted in her reporting to the legal department, headed by Mr. Kalil. ECF No. 1 at ¶ 39.
Furthermore, she specifically alleges that “Defendant Kalil . . . told Plaintiff’s supervisor that he
‘wanted her fired.’” ECF No. 1 at ¶ 33. As with the claims against Mr. Liveris, the facts Wood
alleges regarding her reorganized reporting relationships are sufficient to permit an inference of
plausibility that Mr. Kalil had knowledge of her activities. Plaintiff’s allegations about Mr.
Kalil’s comment expressing his desire for Wood’s termination bolsters this inference. Mr. Kalil’s
motion to dismiss will also be denied.
C.
Defendants’ second claim in their motion to dismiss is that Wood’s “allegations
regarding alleged harassment and constructive discharge are insufficient to establish an ‘adverse
employment action’ under [the Act.]” ECF No. 14 at ii. Wood, in response, claims that she does
not allege merely constructive discharge. Rather, she claims that she has:
- 20 -
. . . identified four materially adverse actions: (1) threatening and harassing
statements regarding Plaintiff’s investigations; (2) reassignment from an ongoing
investigation, THI; (3) reorganizing Plaintiff’s reporting relationship, requiring
her to report her investigations to Kara Gordon of the Legal Department, who
directly reported to Defendant Kalil; and (4) actual and/or constructive discharge.
ECF No. 19 at 25.4 In reply, Defendants retain their focus on Wood’s alleged constructive
discharge. ECF No. 23 at 6. Thus, Defendants’ motion will be construed literally: as relating
only to Wood’s claim that her constructive discharge is sufficient to state a claim for retaliation
under the Act and not addressing Wood’s other claims of adverse employment action, including
actual discharge.
The test for constructive discharge in the Sarbanes-Oxley context was addressed by the
Tenth Circuit in Lockheed Martin: “Constructive discharge occurs when an employer unlawfully
creates working conditions so intolerable that a reasonable person in the employee’s position
would feel forced to resign. The plaintiff’s burden is substantial.” Lockheed Martin, 717 F.3d at
1133; see also Pennsylvania State Police v. Suders, 542 U.S. 129, 146-150 (2004) (applying
same intolerableness standard in Title VII context). The Sixth Circuit employs an identical
constructive discharge standard in other contexts. See McKelvey v. Sec’y of U.S. Army, 450 F.
App’x 532, 535 (6th Cir. 2011) (applying same intolerableness standard in Rehabilitation Act
context). In the Sixth Circuit the question of constructive discharge is at least partly one of law
and also involves “some inquiry into the employer’s intent and the reasonably foreseeable impact
of its conduct on the employee.” Wheeler v. Southland Corp., 875 F.2d 1246, 1249 (6th Cir.
1989) (quoting Yates v. Avco Corp., 819 F.2d 630, 636-37 (6th Cir. 1987)). A court must
consider the totality of the circumstances when determining whether a constructive discharge
occurred. Lockheed Martin, 717 F.3d at 1133.
4
Importantly, the circumstances surrounding Wood’s separation from Dow are not entirely clear.
- 21 -
“The test deliberately ‘sets a high bar,’ as the law generally expects employees to remain
on the job while pursuing relief from harassment.” McKelvey v. Sec’y of U.S. Army, 450 F.
App’x 532, 535 (6th Cir. 2011) (quoting Porter v. Erie Foods, Int’l, 576 F.3d 629, 639–40 (7th
Cir. 2009). The Sixth Circuit has outlined seven factors to consider when determining whether a
reasonable person would have felt compelled to resign under the circumstances:
(1) demotion; (2) reduction in salary; (3) reduction in job responsibilities; (4)
reassignment to menial or degrading work; (5) reassignment to work under a
younger supervisor; (6) badgering, harassment, or humiliation by the employer
calculated to encourage the employee’s resignation; or (7) offers of early
retirement or continued employment on terms less favorable than the employee’s
former status.
Logan v. Denny’s, Inc., 259 F.3d 558, 569 (6th Cir. 2001).
Defendants claim that Wood fails to plead sufficient facts to meet this standard. In
Wood’s reply to Defendants motion she focuses on a number of adverse employment actions
which she includes in her complaint. Important for current purposes is whether any of those
actions, independently or together, meet the standard of constructive discharge.5 Wood claims
that the aggregate effect of the “unfavorable personnel actions” she suffered, including being told
that she was to be terminated, amounted to constructive discharge. ECF No. 14 at 13. She alleges
that she was subject to “numerous threatening and/or harassing statements”, reassignment “away
from ongoing investigations”, and reorganization of her “reporting relationships by requiring
[her] to report her investigatory activities to the legal department”. Id. These allegations are,
however, wholly conclusory and without sufficient factual substance to support her claims. The
5
It should be noted here that Wood also alleges actual discharge, but the complaint and Defendants’
motion to dismiss are curiously bereft of information sufficient to determine the exact nature of her separation from
Dow. Both parties refer to her departure alternatively as separation, termination, and retirement. It is not disputed
that Wood was informed on October 10, 2013 that her employment would be terminated by October 31, 2013. What
the parties’ papers do not indicate is what the nature of her separation was between those two dates. There is some
evidence that Wood was offered a severance package but it is not clear whether she eventually accepted it or not.
Furthermore, it is not clear whether her separation was styled as retirement, discharge, or voluntary separation.
- 22 -
only allegation supported by specific factual information is her claim that she was subject to
threatening and harassing statements.
Wood offers four specific instances of threats and harassment to which she was
subjected:
(a)
That following Plaintiff’s reports on the Customers Events Compliance
Investigation, Plaintiff was instructed by a supervisor Greg Groholski
“that nothing from the CEO’s past was to be looked at again and that the
investigation was over.”
(b)
That following Plaintiff’s third THI Report, dated August 2, 2013,
Defendant Kalil, told Plaintiff’s supervisor that he “wanted her fired.”
(c)
That another of Plaintiff’s supervisors, Jeff Tate, instructed Plaintiff to
“back off the investigation” pertaining to Defendant LIVERIS and that
“nothing was going to be done” with Plaintiff’s THI reports.
(d)
That the day after Plaintiff reported to her immediate supervisor, Mr.
Solano, that the Olefins II investigation revealed financial statement fraud,
Plaintiff was informed that her employment would end on October 31,
2013.
ECF No. 1 at 9. Reasonable jurors could not differ as to whether Wood was constructively
discharged on the basis of the first three allegations. Incidents (a) and (c) do not appear to be any
more than instruction from supervisors as to the scope and conduct of her job responsibilities.
Without any further indications of threatening or harassing behavior, two comments from
supervisors, without any temporal context, does not meet the high bar for constructive discharge.
Similarly, incident (b) does not allege enough factual information to determine that it rises to the
level of discharge. While Wood does claim that her job reporting was redirected through the
legal department, she does not allege that Defendant Kalil possessed the authority to terminate
her employment. Absent such an allegation, incident (b) is no more than a hortatory directive by
an individual with no power over Wood’s employment.
- 23 -
This leaves incident (d). Wood claims that being informed she is to be terminated creates
the type of intolerable working condition that the constructive discharge doctrine is designed to
guard against. At least one court disagrees. See Hill v. St. Louis Univ., 923 F. Supp. 1199, 1209
(E.D. Mo. 1996) (“It is clear that it was not her working conditions that “forced” plaintiff to
resign, but rather being informed that she was being terminated from her employment.
Consequently, merely being informed of termination cannot constitute a ‘constructive
discharge’.”) The court in Hill noted that the plaintiff “offer[ed] no legal support for her
contention that notice of termination and choosing to resign instead is a ‘constructive
discharge’.” Id. This Court is likewise aware of no such authority. Hill, however, is unpersuasive
in light of the Sixth Circuit’s test for constructive discharge and the factors to be considered
under that test. Being informed of impending termination two days after making a significant
report of fraud could create conditions intolerable to a reasonable employee.
Wood reported on October 8, 2013 that Dow had engaged in accounting practices related
to the Olefins project that made “it appear that the project had not gone over budget.” ECF No. 1,
Ex. A at 18. Two days after this report Wood was told that her employment will end on October
31, 2013. Id. In the period after she was informed of her impending termination she was told on
numerous occasions by her supervisor that she “asked for a [severance] package” despite making
clear that she made no such request. Id. “Over her protest, [Wood] was provided a severance
package.” Id. The claims that her supervisors continually informed her that she would be
provided a severance package, despite her informing them she did not desire severance or a
package, could suggest Dow intended to terminate Wood and sought to incent a voluntary
termination. Taken together, the alleged conduct is sufficient to state a claim of constructive
discharge.
- 24 -
D.
Defendants next claim that Wood’s “complaint fails to allege a plausible causal
connection between [her] allegedly protected activity and her separation from the Dow Chemical
Company[.]” ECF No. 14 at ii. To state a claim for relief under the Act, a plaintiff must allege
that “the protected activity was a contributing factor in the unfavorable [employment] action”
suffered by the plaintiff. Nielsen, 762 F.3d at 219. A “contributing factor” “mean[s] any factor
which, alone or in connection with other factors, tends to affect in any way the outcome of the
decision.” Marano v. Dep’t of Justice, 2 F.3d 1137, 1140 (Fed. Cir. 1993) (quoting 135 Cong.
Rec. 5033 (1989) (Explanatory Statement on S. 20)). “This test is specifically intended to
overrule existing case law, which requires a whistleblower to prove that his protected conduct
was a ‘significant’, ‘motivating’, ‘substantial’, or ‘predominant’ factor in a personnel action in
order to overturn that action[.]” Id. “This element is broad and forgiving[.]” Lockheed Martin,
717 F.3d at 1136.
To show a “causal connection” a plaintiff, at the pleading stage must allege sufficient
facts “to raise the inference that the protected activity was a contributing factor in the
unfavorable action.” Wiest v. Lynch, 710 F.3d 121, 129 (3d Cir. 2013) (citing 29 C.F.R.
§ 1980.104(e)(2)(i)–(iv)). The facts necessary to substantiate an inference of contribution “does
not impose a probability requirement at the pleading stage; it simply calls for enough fact to raise
a reasonable expectation that discovery will reveal evidence” of a causal connection. Twombly,
550 U.S. at 556. “Temporal proximity between the protected activity and adverse employment
action may alone be sufficient to satisfy the contributing factor test.” Lockheed Martin, 717 F.3d
at 1136 (citing Van Asdale v. Int’l Game Tech., 577 F.3d 989, 1003 (9th Cir.2009); Marx v.
Schnuck Mkts., Inc., 76 F.3d 324, 329 (10th Cir.1996)) (holding mere temporal proximity
- 25 -
sufficient on direct review of Administrative Review Board decision in case brought under
Sarbanes-Oxley’s whistleblower provision); compare Latosky v. Morrison-Knudsen Corp., 103
F.3d 129 (6th Cir. 1996) (holding “the mere fact that adverse employment actions occurred after
plaintiff engaged in protected activity is insufficient to support an inference of retaliation” at the
summary judgment stage of ADEA action), Cooper v. City of N. Olmsted, 795 F.2d 1265, 127273 (6th Cir. 1986) (holding temporal proximity insufficient on review of district court judgment
in Title VII action). “But temporal proximity alone is usually insufficient to constitute evidence
that would prove that an employer retaliated against an employee for engaging in alleged
protected activity.” Riddle v. First Tennessee Bank, Nat. Ass’n, 497 F. App’x 588, 596 (6th Cir.
2012) (hearing case on appeal from summary judgment) (emphasis added).
According to Defendants, Wood’s “allegations fail to raise a plausible inference that her
reporting activity was the cause of any adverse employment action.” ECF No. 14 at 10. But this
statement is not the standard by which Wood’s complaint is tested on this issue. Wood need only
plead sufficient facts, taken as true, that support the inference that her whistleblowing activity
“tended to affect [her] termination in at least some way.” Feldman v. Law Enforcement
Associates Corp., 752 F.3d 339, 348-49 (4th Cir. 2014). Put another way, Wood need only show
that her protected activity “played a role in” her dismissal. Marano v. Dep’t of Justice, 2 F.3d
1137, 1140-41 (Fed. Cir. 1993)
In Wood’s complaint she alleges that “following several of [her] reports and
investigations, Defendants and their employees and/or agents made threatening and intimidating
comments towards [her.]” ECF No. 1 at ¶ 33. Furthermore, she alleges that “following [her]
reporting of financial statement fraud of October 9, 2013 . . . on the next day October 10, 2013,
[she] was informed that her employment with Defendant Dow would be terminated on October
- 26 -
31, 2013.” Id. at ¶ 34. Defendants find these allegations unpersuasive. First, Defendants claim
that a number of the reports referenced by Wood formed a part of reporting activity that “began
four years before her separation from Dow.” ECF No. 14 at 11. Specifically, Defendants aver
that Wood’s report on Mr. Liveris’s personal expenses “was issued . . . almost three and a half
years before” her adverse employment action and her reporting related to The Hellenic Initiative
and the Greek Orthodox Church took place “in September 2012, still more than a year before her
alleged termination.” Id.
According to Defendants, this temporal proximity is too attenuated to substantiate the
fourth prong of a retaliation claim under the Act. Defendants state that “courts in this Circuit and
elsewhere have routinely held that temporal separations far shorter than the four years at issue
here are too attenuated to support an inference of causation.” Id. While this is correct, Wood
does not allege a temporal gap of four years. She alleges that her protected activity began on that
date, but continued up until the day she contends her employment was terminated. See ECF No.
1, Ex. A at 7-18. Courts have found periods of time similar to many of those in Wood’s
complaint as sufficient to meet the contributing factor requirement under the Act. See Wiest, 710
F.3d 121 (3d Cir. 2013) (approving of a series of protected activities initiated three years before
termination). Taking Wood’s allegations as true, as this Court must, her complaint meets the
requirements of establishing a sufficiently close temporal proximity between her protected
activity and her constructive termination to state a claim for relief. While many of Wood’s
allegedly protected acts occurred in advance of her termination, at least one allegedly occurred
the day before she was told her employment was at an end.
But Defendants are not satisfied with this allegation, either. According to Defendants
“Plaintiff’s complaint contains no allegations to explain how a report submitted to her direct
- 27 -
supervisor was somehow communicated up the chain and resulted in a corporate decision by
Dow, its CEO, and its General Counsel to terminate her in under twenty-four hours.” ECF
No. 14 at 12. Defendants believe that Wood “asks the Court to simultaneously accept two
contradictory propositions:” that her termination was both long in the making and the result of
swift and immediate action. Id. at 12-13. But at the pleading stage Wood need not allege how the
report reached individuals with the authority to terminate her employment and that they chose to
do so. She need only allege facts sufficient for a plausible inference to be drawn that her
reporting contributed to her termination. This, she has done. Courts have found that a one day
gap between a protected activity and termination is not too short a time period from which to
infer a causal connection between the two. See, e.g., Kalkunte v. DVI Financial Services, INC.
and AP Services, LLC, No. 2004-SOX-00056, 2005 WL 4889006, at *46 (U.S. Dept. of Labor
SAROX July 18, 2005) (one week); Halloum v. Intel Corporation, No. 2003-SOX-0007, 2004
WL 5032613, at *16 (U.S. Dept. of Labor SAROX March 4, 2004) (citing instances where
inferences of causation were drawn from anywhere between two days and one year). It is not
implausible that discovery could lead to information that tends to prove the communication of
Wood’s report to the Defendants and that a decision to terminate her employment was made
within a twenty-four hour period.
IV.
Accordingly, it is ORDERED that Defendants Dow Chemical Company, Andrew N.
Liveris, and Charles J. Kalil’s Motion to Dismiss, ECF No. 14, is DENIED.
Dated: December 15, 2014
s/Thomas L. Ludington
THOMAS L. LUDINGTON
United States District Judge
- 28 -
PROOF OF SERVICE
The undersigned certifies that a copy of the foregoing order was served
upon each attorney or party of record herein by electronic means or first
class U.S. mail on December 15, 2014.
s/Tracy A. Jacobs
TRACY A. JACOBS
- 29 -
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?