Graham v. Hubbs Machine and Manufacturing, Inc. et al
MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that defendants motion for summary judgment [Doc. #103] is granted as to plaintiffs claim of retaliation under section 510 of ERISA in Count III. IT IS FURTHER ORDERED that the Clerk of Court shall remand the this action to the Twenty-Third Judicial Circuit Court of Missouri (Jefferson County), from which it was removed. A separate Judgment in accordance with this Memorandum and Order will be entered this same date. Signed by District Judge Carol E. Jackson on 5/19/2016. (KMS)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
HUBBS MACHINE AND
MANUFACTURING, INC., et al.,
Case No. 4:14-CV-419 (CEJ)
MEMORANDUM AND ORDER
This matter is before the Court on defendants’ motion for summary judgment
pursuant to Fed. R. Civ. P. 56(a).
Plaintiff has responded in opposition, and the
issues are fully briefed.
Plaintiff Tonya Graham was employed by defendant Hubbs Machine and
Manufacturing, Inc. from February 1996 until her termination in July 2013. From
July 2008 until her termination, Graham served as vice president of the company.
In the second amended complaint, Graham asserts a claim against Hubbs Machine
for wrongful termination in violation of Missouri public policy (Count I) 1 and a claim
against defendants Hubbs Machine, Rick Benward, and William Hubbs for retaliation
under section 510 of Employee Retirement Income Security Act of 1974 (ERISA),
29 U.S.C. § 1140 (Count III). Plaintiff alleges that she was terminated for reporting
To the extent that plaintiff’s state law claim of wrongful termination in Count I relied upon the
alleged violations of ERISA she reported, the Court found that claim to be expressly and completed
preempted by ERISA. 29 U.S.C. §§ 1132, 1144; [Doc. #51]. The Court also previously found that
plaintiff failed to plead sufficient facts demonstrating that Hubbs Machine violated the Missouri
statutes and regulations cited as a basis for her wrongful termination claim. [Doc. #52]. The sole
remaining basis of public policy for plaintiff’s wrongful termination claim in Count I, thus, is the alleged
violations of FINRA.
to her supervisor another employee’s violations of the Financial Industry Regulation
Authority (FINRA) rules, ethical codes and regulations governing conflicts of
interest, and ERISA, including 29 U.S.C. § 1106.
Rule 56(a) of the Federal Rules of Civil Procedure provides that summary
judgment shall be entered if the moving party shows “that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter
of law.” In ruling on a motion for summary judgment, the court is required to view
the facts in the light most favorable to the non-moving party, giving that party the
benefit of all reasonable inferences to be drawn from the underlying facts. AgriStor
Leasing v. Farrow, 826 F.2d 732, 734 (8th Cir. 1987). The moving party bears the
burden of showing both the absence of a genuine issue of material fact and its
entitlement to judgment as a matter of law. Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 252 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S.
574, 586–87 (1986). If the moving party meets its burden, the non-moving party
may not rest on the allegations of its pleadings, but must set forth specific facts, by
affidavit or other evidence, showing that a genuine issue of material fact exists.
Gannon Intern., Ltd. v. Blocker, 684 F.3d 785, 792 (8th Cir. 2012); Gibson v. Am.
Greetings Corp., 670 F.3d 844, 853 (8th Cir. 2012). “Where the record taken as a
whole could not lead a rational trier of fact to find for the nonmoving party, there is
no genuine issue for trial.” Ricci v. DeStefano, 557 U.S. 557, 586 (2009) (quoting
Matsushita Elec. Indus. Co.., 475 U.S. at 587).
The following facts are undisputed in the record.
Hubbs Machine and
Manufacturing, Inc. is owned by defendant William (Bill) Hubbs.
manufactures optical targeting for close tolerance noncontact survey systems,
which allow for measurements on aircraft tooling. Hubbs Dep. at 22:4–23:6 [Doc.
Hubbs Machine hired Graham in February 1996 to answer phones and
perform a variety of tasks. Graham Dep. at 15:21–16:7 [Doc. #104-1]. In 2004,
Graham became the office manager of Hubbs Machine.
In 2008, Graham was
named the vice president of Hubbs Machine. Graham Dep. at 73:4–12 [Doc. #1041]. She held this position until her discharge on July 31, 2013. Graham Dep. at
17:8–16 [Doc. #104-1].
In total, Graham worked at Hubbs Machine for over 17 years. Hubbs Dep. at
92:20–21 [Doc. #104-4]; Graham Dep. at 82:18–21 [Doc. #104-1].
president of the company, Graham handled the administrative side of the business,
including purchase orders and financial records.
76:11 [Doc. #104-3].
Hubbs Dep. at 73:2–9, 74:17–
She also managed employees, read corporate contracts,
negotiated sales, and did accounting work.
Graham Dep. at 17:20–18:10 [Doc.
#104-1]. Hubbs handled the mechanical or technical side of the business. Hubbs
Dep. at 75:3–15 [Doc. #104-3].
Graham’s Emails from Her Work Account
During her tenure with Hubbs Machine, plaintiff divulged personal information
about Hubbs and personal conversations or disputes between herself and Hubbs,
using her company email account during work hours. Defs.’ Ex. 6 [Doc. #104-7];
Graham Dep. at 102:18–114:14 [Doc. #104-1].
Hubbs became aware of these
emails on June 8, 2013. Hubbs Dep. at 11:11–12:2 [Doc. #104-6]. For example,
on July 3, 2012, Graham sent an email to Deb Abbot, the wife of a customer of
Hubbs Machine, which divulged specifics of Hubbs’s relationship with his girlfriend,
Mary. Defs.’ Ex. 6 at 2–4 [Doc. #104-7]. On July 9, 2012, Graham sent an email
to Abbot, in which she called Hubbs a “fucking idiot” because he informed her that
he was engaged to be married. Defs.’ Ex. 6 at 1 [Doc. #104-7]; Graham Dep. at
30:10–31:8 [Doc. #104-1]; Hubbs Dep. at 36:9–19 [Doc. #104-3].
Additionally, Graham sent emails to Hubbs Machine’s distribution broker and
customer, Guiseppe Ganci, divulging and discussing Hubbs’s personal matters and
conversations between herself and Hubbs.
Defs.’ Ex. 6 [Doc. #104-7].
example, on July 16, 2012, Graham sent Ganci an email divulging information
regarding Hubbs’s personal relationship and Graham’s personal feelings about
Defs.’ Ex. 6 at 7 [Doc. #104-7] (“Yep engaged.
He will never
learn. No…she is not coming for I cannot stand her and have told him that I will
not being having relations with her. PERIOD!!!”). On February 28, 2013, Graham
divulged to Ganci a “heated conversation” between herself and Hubbs. Defs.’ Ex. 1
at 18 [Doc. #104-2]. On October 16, 2012, Grahams sent Ganci an email in which
she referred to Hubbs’s fiancée as “stupid.” Defs.’ Ex. 6 at 9 [Doc. #104-7]. On
March 21, 2013, Graham sent Ganci an email again divulging details of her personal
disputes with and feelings toward Hubbs. Defs.’ Ex. 6 at 28 [Doc. #104-7] (“I wish
. . . that the customers and business had not become SO much mine (within my
heart and soul) for I would walk away. I do not feel as though anyone, especially
one that has the energy to inflict so much disrespect and ignorance on me,
deserves my over dedication.”). On May 29, 2013, Graham sent an email to Ganci
stating, “Catch my hint . . . I know a REALLY BIG ASSHOLE!” Defs.’ Ex. 6 at 55
Graham also divulged information regarding her personal dispute with Hubbs
to one of Hubbs Machine’s largest customers, Hexagon.
See Defs.’ Ex. 6 at 25
[Doc. #104-7] (a March 14, 2013 email Graham sent to a Hexagon salesman, Lee
Steinbecker, stating: “Things have been quite rough around here. Bill and I have
gotten into a pretty full blown knockout. He has decided that since I do not care for
his wife, I am OUT!
He has said some pretty hurtful things and as I try to reel
myself in, I can’t help but wonder WHY I have dedicated myself to someone and
thing that could care less if I was here tomorrow.”).
Graham also divulged her personal dispute with Hubbs in multiple emails to
Michele O’Donnell, an employee of Boeing—Hubbs Machine’s largest customer. See
Defs.’ Ex. 6 at 39 [Doc. #104-7] (an April 15, 2013 email in which Graham stated
that because of events that occurred at Hubbs Machine, she may be looking for a
different job); Defs.’ Ex. 6 at 42 [Doc. #104-7] (“After 17 years of giving my LIFE .
. . I am a doormat to him and his new wife. I have served my purpose, made him
MILLIONS, and now I mean NOTHING! I am leaving and will be taking the rest of
the week of[f]!”); Defs.’ Ex. 6 at 68 [Doc. #104-7] (a June 26, 2013 email in which
“This is just a hiccup in my journey.
I will come out on top &
stronger . . . I just have to play my cards right!”).
Also on April 15, 2013, Graham wrote an email to another Boeing employee,
Brian Campbell, stating that there had been “some major turning of events within
Hubbs Machine and I may be looking for a different job.” Defs.’ Ex. 6 at 41 [Doc.
On April 19, 2013, Graham wrote an email to Joel Martin of Hexagon
Metrology, a customer of Hubbs Machine, stating that she was “often too scared to
allow Bill one on one time, for he often can speak about things, that I then need to
clean up.” Defs.’ Ex. 6 at 48 [Doc. #104-7]. On July 9, 2013, Graham sent an
email to John Visser of Boeing, stating “[l]ots of changes happening to our little
company!—It’s a wait and see thing around here. It’s funny how 18(+) years of
over dedication gets you thrown into a bonfire with no explanations and/or
answers!” Defs.’ Ex. 6 at 71 [Doc. #104-7].
On July 8, 2013, Graham sent an email to Maryse Leveille of Hexagon
Metrology, in which she wrote, “I have grown a company, that I have no stake or
interest in, to be a VERY successful business. However, the owner has now tak[en]
advantage of my over dedication, to stick daggers in my back every time I turn
around.” Defs.’ Ex. 6 at 76 [Doc. #104-7]. On July 9, 2013, Graham sent an email
to Linaka Robins of Boeing Optical Services, a unit of Boeing and customer of Hubbs
Machine, stating, “it just does not seem worth it to get up in the mornings to come
in to make someone SO much more money than the RESPECT he gives me in
return.” Defs.’ Ex. 6 at 74 [Doc. #104-7].
It is undisputed that Graham also divulged confidential personnel matters
and called the hiring of defendant Rick Benward as president of Hubbs Machine into
question with customers. Pl.’s Resp. ¶ 22 [Doc. #110]. On June 17, 2013, in an
email to Darelee Phillips of Boeing, Graham divulged that Hubbs Machine had hired
Benward as president and wrote that Benward had “NO knowledge of the industry,
company, or company protocol.” Defs.’ Ex. 6 at 63 [Doc. #104-7]. On June 24,
2013, in an email to Pam Brown, an employee of Geodetic Systems, Inc., a
customer of Hubbs Machine, Graham divulged that Hubbs Machine had hired
Benward as president and Benward had “pulled the wool over Bill’s eyes.” Defs.’
Ex. 6 at 66 [Doc. #104-7].
On July 10, 2013, Graham sent an email to Cornel
Ecaucion of Automated Precision, Inc., in which she stated, “We have now hired a
‘president’ for Hubbs Machine that has NO knowledge of our business/industry and
is going to help me get things in a ‘controlled’ order. Maybe this is just the first
step of truly trying to push me out . . . .” Defs.’ Ex. 6 at 79 [Doc. #104-7].
Benward’s Transition from New York Life to Hubbs
Benward was a registered representative with New York Life in Springfield,
Missouri, from 2006 to June 17, 2013. Benward Dep. at 15:21–16:5 [Doc. #1044]. As a captive agent for New York Life, Benward represented and sold securities
and insurance products that New York Life offered. Benward Dep. at 17:5–20:11
Around 2007, Benward approached Hubbs about working in the
sales and marketing arena at Hubbs Machine with Graham and her husband as a
three-person team, but Hubbs chose to not move in that direction. Benward Dep.
at 20:23–21:20 [Doc. #104-4]. Around 2008, Benward sold Hubbs some life
insurance and investment products. Benward Dep. at 17:11–19:23 [Doc. #104-4].
In 2009, Hubbs Machine moved their profit sharing account to New York Life, for
which Benward received an initial commission. Benward Dep. at 42:12–22 [Doc.
#104-5]. In or around 2010, Benward became the New York Life representative
overseeing Hubbs Machine’s profit sharing plan.
Benward Dep. at 19:11–20:7
Hubbs approached Benward regarding possible employment at Hubbs
Machine in 2013, citing the deteriorating relationship between himself and Graham
and the corporate structural weaknesses within Hubbs Machine. Benward Dep. at
20:21–22:19 [Doc. #104-4]; Hubbs Dep. at 18:17–25 [Doc. #104-6].
April 25, 2013, Benward contacted Todd Siler, New York Life’s senior agency
standards consultant, inquiring as to the possibility of providing consulting services
to Hubbs Machine while he retained his position as a licensed agent with New York
Defs.’ Ex. 7 at ¶¶ 3–5 [Doc. #104-8]; Benward Dep. at 52:24–54:2 [Doc.
#104-4]; Benward Dep. at 12:18–22 [Doc. #104-5]. Based on his understanding
of applicable industry standards, FINRA regulations, and New York Life’s policy,
Siler informed Benward that he could not maintain his contract with New York Life
while acting as a consultant for Hubbs Machine. Defs.’ Ex. 7 at ¶¶ 6–7 [Doc. #1048]; Benward Dep. at 53:22–54:4 [Doc. #104-4]; Benward Dep. at 12:18–13:17
[Doc. #104-5]. Specifically, Siler told Benward he could not receive compensation
from New York Life and Hubbs Machine at the same time. Defs.’ Ex. 7 at ¶ 8 [Doc.
On May 5, 2013, Benward and Hubbs negotiated and agreed to an offer of
terms and conditions of Benward’s employment with Hubbs Machine.
Dep. at 49:16–50:18 [Doc. #104-4]. On May 6, 2013, Benward began preparing
his agent succession plan for the placement of his New York Life customers.
Benward Dep. at 13:22–14:11 [Doc. #104-5]; Pl.’s Resp. ¶ 38 [Doc. #110].
Benward’s agent succession plan, he identified seven New York Life successor
representatives for his seven hundred clients. The plan was prepared online in a
software program that required each New York Life representative to approve the
assignment of the client.
Benward Dep. at 15:5–22 [Doc. #104-5]; Defs.’ Ex. 8
During the week of May 13, 2013, Benward notified New York Life senior
partner Don Angell, managing partner of New York Life in Overland Park, Kansas,
Troy Braswell, and Siler of his intent to leave New York Life to become the
president of Hubbs Machine. Benward Dep. at 14:18–15:4 [Doc. #104-5]; Defs.’
Ex. 7 at ¶ 9 [Doc. #104-8]; Pl.’s Resp. at ¶ 40 [Doc. #110]. On May 23, 2013,
Benward submitted his agent succession plan to New York Life so it could be
approved by each of the seven assigned agents, Braswell, and New York Life’s
home office in New York City. Benward Dep. at 16:16–17:9 [Doc. #104-5]. On
May 26 and 27, 2013, New York Life representatives approved their respective
designation or assignment as successor agents to service Benward’s clients. Defs.’
Ex. 8 at 3 [Doc. #104-9]. On May 31, 2013, Braswell approved Benward’s agent
succession plan, but the New York Life home office had not yet granted final
approval. Defs.’ Ex. 8 at 3 [Doc. #104-9]; Benward Dep. at 17:1–9 [Doc. #104-5].
Benward’s official hire date with Hubbs Machine was June 10, 2013.
Benward Dep. at 43:4–6 [Doc. #104-4].
That day, Benward was introduced to
Hubbs Machine employees as the president of Hubbs Machine.
Graham Dep. at
125:24–126:4, 150:11–15 [Doc. #104-1]; Pl.’s Resp. at ¶ 44[Doc. #110]. After
the meeting, Graham contacted Mike Mormino at New York Life and asked if there
had been a rep change for Hubbs Machine’s New York Life account. Mormino told
Graham there had not and instructed her to call compliance.
89:25–90:16, 125:24–126:9, 156:1–157:2 [Doc. #104-1].
Graham Dep. at
Graham called New
York Life’s compliance department in Kansas City that same day. They also stated
they had not heard of any rep change. Graham Dep. at 93:4–21, 126:10–11 [Doc.
During Benward’s first week of employment at Hubbs Machine, Graham first
mentioned to Benward that she believed there was a conflict of interest between
Benward’s employment with New York Life and Hubbs Machine. Graham Dep. at
133:9–22, 152:17–153:10 [Doc. #104-1]; Benward Dep. at 62:23–63:1 [Doc.
#104-4]; Benward Dep. at 17:10–18:18 [Doc. #104-5]. In this confrontation with
Benward, Graham asked him if he had all his “ducks in a row” with respect to his
former employment with New York Life. Graham Dep. at 133:9–134:14, 153:11–
17 [Doc. #104-1]. Benward replied that he was not conducting any business for
New York Life and was waiting for the New York Life home office’s final approval of
his agent succession plan. Benward Dep. at 18:19–19:1 [Doc. #104-5]; Graham
Dep. at 153:11–154:21 [Doc. #104-1].
Between June 11 and 17, Graham made several calls to New York Life
representatives to inquire about New York Life’s requirements.
96:6–16, 97:9–19, 156:23–160:2 [Doc. #104-1].
Graham Dep. at
Graham asked New York Life
representatives about the propriety of the manager of her company’s 401K
retirement plan becoming the president of that company. Graham Dep. at 95:5–
11, 160:3–14 [Doc. #104-1].
Graham did not provide Benward’s name or any
additional information during her inquiries. Graham Dep. at 95:12–20, 160:15–19
[Doc. #104-1]. A New York Life compliance department employee in New York City
told Graham that her described scenario constituted dual employment and would be
unethical under to their employee code.
127:10–19 [Doc. #104-1].
Graham Dep. at 94:5–18, 98:1–9,
When the New York Life representatives asked her
whether she wanted to make a complaint, Graham stated that she did not want to
open a case.
Graham Dep. at 94:17–18, 160:15–19 [Doc. #104-1].
never filed a formal complaint with New York Life or FINRA.
224:24–225:3, 226:1–2 [Doc. #104-1].
Graham Dep. at
Graham also did not file any official
complaints with the Missouri Insurance Board, the Securities and Exchange
Commission, NASDAQ, or any office associated with ERISA.
Graham Dep. at
224:24–225:20 [Doc. #104-1].
After speaking to New York Life representatives, Graham went back to
Benward and informed him that she had called New York Life in New York City and
they did not know about his transition to Hubbs Machine.
On June 17, 2013,
Benward informed Graham that she had spoken with the wrong people and
suggested she contact the New York Life office in Kansas City, Missouri. Graham
Dep. at 139:3–20 [Doc. #104-1]; Benward Dep. at 19:2–20:5 [Doc. #104-5].
Benward provided Graham with the names and phone numbers of three New York
Life management representatives he consulted regarding his transition—Siler,
Angell, and Braswell. Benward Dep. at 24:14–24 [Doc. #104-5]. Graham did not
contact any of the names Benward provided because she thought he “had already
sold his song to them” and she had her “contacts.” Graham Dep. at 128:16–21,
140:14–142:43, 149:15–150:9, 155:7–24 [Doc. #104-1]; Defs.’ Ex. 1 at 20 [Doc.
#104-2]; Benward Dep. at 19:2–20:5 [Doc. #104-5].
Graham also informed Hubbs that she had contacted New York Life and they
did not have knowledge of Benward’s transition to Hubbs Machine. Hubbs Dep. at
112:23–115:23 [Doc. #104-3].
Hubbs told Graham that he was satisfied with
Benward’s actions and that he did not believe anything was done incorrectly.
Hubbs Dep. at 117:21–118:19 [Doc. #104-3].
Hubbs became irritated by
Graham’s repeated complaints of Benward and her refusal to contact supervisors to
whom Benward directly reported at New York Life. Hubbs Dep. at 118:10–19 [Doc.
#104-3]; see also Graham Dep. at 126:23–127:4 [Doc. #104-1] (testifying that
she told Hubbs “there could be some concern as to Benward’s dual roles” and there
“might be some violation of some rules and federal requirements” and Hubbs
responded “don’t fucking pay him then”).
On June 17, 2013, Benward contacted his direct chain of command at New
York Life and was instructed to submit his resignation. That same day, Benward
submitted his resignation to New York Life. Graham Dep. at 139:3–20 [Doc. #1041]; Benward Dep. at 20:8–11 [Doc. #104-4]; Defs.’ Ex. 10 [Doc. #104-11]. On
June 18, 2013, Braswell officially accepted Benward’s resignation. Benward Dep. at
20:16–21 [Doc. #104-5]; Defs.’ Ex. 9 [Doc. #104-10]. Upon resignation from New
York Life, Benward automatically resigned his registered representative status with
FINRA. Benward Dep. at 89:17–90:5 [Doc. #104-4].
On October 11, 2013, Gloriann Marchio, a director at New York Life,
contacted Hubbs via a letter.
Marchio contacted Hubbs because Benward’s
employment with Hubbs Machine and his role as a New York Life representative
potentially raised issues under ERISA and the rules promulgated by the Department
of Labor. Pl.’s Ex. 18 [Doc. #110-23]; Hubbs Dep. 128:22–130:23 [Doc. #104-3].
New York Life determined that there was a brief period after Benward became
employed by Hubbs Machine where Benward “may have” received compensation in
connection with the sale of securities to Hubbs Machine’s profit sharing plan. Pl.’s
Ex. 39 [Doc. #110-44].
Thus, “to avoid any possible inference of impropriety,”
compensation paid to New York Life Securities LLC and the commission paid to
Benward as a New York Life agent between May and June 2013. Pl.’s Ex. 39 [Doc.
Benward’s Requests for Customer Information and
On June 11, 2013, Benward asked Graham for all passwords and other
Benward made this request so Graham was not the only
person in possession of all of Hubbs Machine’s customer information, banking
information, employee policies and procedures, job descriptions, audits and other
company and customer information.
Graham Dep. at 127:4–8, 130:7–10 [Doc.
#104-1]; Benward Dep. at 76:9–19 [Doc. #104-4]; Defs.’ Ex. 1 at 27 [Doc. #1042]. In an email response that same day, Graham provided some of the requested
passwords and customer information off the top of her head, even though she kept
a written record of passwords with written instructions on how to log in to particular
programs or accounts.
Graham Dep. at 184:4–12, 212:18–213:10 [Doc. #104-1].
Graham provided additional passwords two days later. Graham Dep. at 213:8–17
She provided two other passwords on June 18 or 19, 2013.
Graham Dep. at 130:9–15, 184:4–12 [Doc. #104-1]; Benward Dep. at 76:17–77:5
[Doc. #104-4]; Benward Dep. at 52:14–54:18 [Doc. #104-5]; Defs.’ Ex. 1 at 28–
29 [Doc. #104-2]. Some of the passwords Graham provided were inoperative or
were the same passwords Graham had previously provided to Benward. Graham
Dep. at 130:16–21 [Doc. #104-1]; Benward Dep. at 76:17–25 [Doc. #104-4];
Benward Dep. at 52:20–53:21 [Doc. #104-5].
In a letter dated July 29, 2013, Benward again requested that Graham
provide him all information related to ID’s and passwords connected to the conduct
of Hubbs Machine. Graham Dep. at 193:18–194:11 [Doc. #104-1]. Benward also
requested that Graham provide all information required for order processing with all
buying groups and that Graham identify all accounts requiring security screenings
and the process for submitting applications.
Defs.’ Ex. 1 at 36 [Doc. #104-2].
Benward asked Graham for a complete response to his request for information
numerous times. Benward Dep. at 76:2–12 [Doc. #104-4]. After her termination,
Graham provided four ID’s and passwords, two of which were repeats and one of
which was obsolete. Defs.’ Ex. 1 at 31 [Doc. #104-2]; Hubbs Dep. at 102:3–12
July 2013 Industry Conference in San Diego
In July 2013, Benward, Graham, and Hubbs attended an industry conference
in San Diego, representing Hubbs Machine.
See Hubbs Dep. at 59:13–19 [Doc.
#104-3] (referred to in the record as “CMSC,” the Coordinate Metrology Systems
Hubbs brought Benward to the conference to introduce him to the
Graham Dep. at 191:13–19 [Doc. #104-1].
Hubbs and Benward
expected Graham to introduce Benward to Hubbs Machine’s customers as her
superior, but she ignored him and refused to introduce him. Hubbs Dep. at 132:9–
16, 134:6–135:16 [Doc. #104-3]; Benward Dep. at 69:1–11 [Doc. #104-4].
Benward instead introduced himself to customers and handed out business cards.
Graham Dep. at 191:13–192:17 [Doc. #104-1]; Hubbs Dep. at 132:9–16 [Doc.
#104-3]; Benward Dep. at 68:7–18 [Doc. #104-4].
Benward discussed with Graham the importance of presenting a “united
front” to the customer base at the conference. Defs.’ Ex. 1 at 36 [Doc. #104-2];
Hubbs Dep. at 134:6–11 [Doc. #104-3].
According to Graham, Hubbs and
Benward did not have many contacts to converse with at the conference and
blamed her for not introducing them to Hubbs Machine’s customers. Graham Dep.
at 191:20–192:2 [Doc. #104-1] (“Rick and Bill, because Bill has been so detached,
did not have many contacts to converse with, and then it was somehow my fault
that they were going to come to the booth and belittle me and scream and yell at
me that I did not parade them around and introduce them, that I went about the
business of Hubbs Machine and talking to our customers about business.”).
Hubbs and Benward testified that Graham became upset when Benward
began introducing himself to customers, because she thought it was improper and
Hubbs Dep. at 132:5–16 [Doc. #104-3]; Benward Dep. at 68:13–18
[Doc. #104-4]; see Graham Dep. at 192:6–17 [Doc. #104-1] (“Nobody in the
industry, and Bill knows this, wants a business card of someone they can’t get an
answer from. . . . So Rick Benward was handing his cards out . . . but didn’t have
an answer to nothing. He had only been there two weeks. He knew nothing about
our facility but yet he’s going to jump me about it at the booth.”). After returning
from the conference, Benward sent Graham a letter dated July 29, 2013 that stated
that Graham’s conduct at the conference was disrespectful and unprofessional, and
that the conference was the wrong time or place for “such a display of poor
behavior.” Defs.’ Ex. 1 at 36 [Doc. #104-2]. The letter noted that Graham had
stated she would not recognize Benward’s position as president of the company and
that she considered him “dead weight” and a financial liability to Hubbs Machine.
On July 30, 2013, Benward and Hubbs met with Graham in-person to discuss
and obtain the requested information regarding Hubbs Machine’s business. During
the meeting, Graham asked Benward a series of questions related to his credentials
to serve as president of Hubbs Machine.
Benward Dep. at 71:22–72:25 [Doc.
#104-4]; see Defs.’ Ex. 1 at 51 [Doc. #104-2].
That same day, Hubbs issued
Graham a letter requesting her to explain her “side of the story” with respect to the
“disloyal, reckless, unprofessional, and at times malicious statements” Graham
made to Hubbs Machine’s customers regarding her relationship with Hubbs, Hubbs’s
personal relationships, and alleged disputes she had with Hubbs Machine.
Ex. 1 at 37 [Doc. #104-2]. The letter informed Graham that conversing with Hubbs
Machine’s customers about any discussions she had with Hubbs or other company
employees was “inappropriate and a complete violation of the [c]ompany’s
reasonable standards and expectations.”
Defs.’ Ex. 1 at 37 [Doc. #104-2]. The
next day, Graham drafted a written response, stating that she considered many of
Hubbs Machine’s customers to be her personal friends with whom she shared
stories of personal events and that “[t]hese types of relationships only benefit
Hubbs Machine and its revenue.” Defs.’ Ex. 1 at 38 [Doc. #104-2]; Hubbs Dep.
at 140:16–142:11 [Doc. #104-3]. Hubbs and Benward considered her response to
Hubbs Dep. at 141:4–142:11 [Doc. #104-3]; Benward Dep. at
81:12–19 [Doc. #104-4].
On July 31, 2013, Graham’s employment at Hubbs Machine was terminated.
Her termination letter stated that she had refused to cooperate with Hubbs and
Benward by failing to provide a written statement of her side of the story,
referenced her behavior at the San Diego trade show, and noted that she had
continually refused to provide all keys, access codes, passwords, and materials
related to the business. Defs.’ Ex. 1 at 39 [Doc. #104-2].
Retaliation in Violation of Section 510 of ERISA
Graham alleges that the defendants’ termination of her employment was in
retaliation for her complaints regarding Benward’s unlawful activities in violation of
ERISA section 510. In relevant part to the allegations in the complaint, section 510
of ERISA makes it unlawful for an employer to discharge an employee “because
[s]he has given information or has testified or is about to testify in any inquiry or
proceeding relating to this chapter.” 29 U.S.C. § 1140. An ERISA-based retaliation
claim can be established through direct evidence, or in the absence of direct
evidence, through the McDonnell Douglas three-part burden-shifting framework
common to Title VII cases. Manning v. Am. Republic Ins. Co., 604 F.3d 1030, 1042
(8th Cir. 2010) (citing McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973)).
To establish a prima facie case of ERISA retaliation, plaintiff must prove:
“(1) she participated in a statutorily protected activity; (2) an adverse employment
action was taken against her; and (3) a causal connection existed between her
participation in a statutorily protected activity and an adverse employment action.”
Manning, 604 F.3d at 1043. If a claimant is able to establish a prima facie case of
a section 510 violation, the burden then shifts to the employer to articulate a
legitimate, nondiscriminatory reason for its action. Id. at 1042. If the employer
meets its burden of production, “then the burden shifts back to the claimant to
prove that the proffered reason is pretextual.” Id. at 1042.
Defendants contend that Graham cannot establish the first element of a
prima facie case of retaliation, because she has not and cannot establish that an
“inquiry or proceeding” was taking place within the meaning of section 510. “It is
an open issue in [the Eighth] Circuit whether § 510 protects informal complaints or
protests relating to [actions] a participant reasonably believes to be illegal [under
ERISA].” Langlie v. Onan Corp., 192 F.3d 1137, 1141 (8th Cir. 1999); see Shrable
v. Eaton Corp., 695 F.3d 768, 771 (8th Cir. 2012) (“We have not decided whether
informal complaints are covered by § 510 of ERISA, but we need not reach that
issue here.” (citing Langlie)).2 For purposes of the resolution of the instant motion
for summary judgment, the Court will assume, without deciding, that section 510 of
ERISA provides a claim for retaliation based on plaintiff’s informal complaints and
Even assuming plaintiff has established a prima facie case under section 510
of ERISA, however, defendants have articulated legitimate nondiscriminatory
reasons for Graham’s termination that she has failed to show were pretext for
interfering with her rights under ERISA. First, Graham sent numerous emails from
her work account disparaging Hubbs and Benward on a personal and professional
level to clients of Hubbs Machine and third parties who had a business relationship
The courts of appeals in other circuits are divided on the issue. Compare George v. Junior
Achievement of Cent. Ind., Inc., 694 F.3d 812, 814–17 (7th Cir. 2012) (finding that section 510 of
ERISA covers informal, unsolicited employee inquiries), Anderson v. Elec. Data Sys. Corp., 11 F.3d
1311, 1314–15 (5th Cir. 1994) (finding that plaintiff’s claim involving unsolicited, informal complaints
“falls squarely within the ambit of ERISA § 510”), and Hashimoto v. Bank of Hawaii, 999 F.2d 408,
411 (9th Cir. 1993) (“[Section 1140 of ERISA] is clearly meant to protect whistleblowers. It may be
fairly construed to protect a person in [plaintiff]’s position if, in fact, she was fired because she was
protesting a violation of law in connection with an ERISA plan. The normal first step in giving
information or testifying in any way that might tempt an employer to discharge one would be to
present the problem first to the responsible managers of the ERISA plan. If one is then discharged for
raising the problem, the process of giving information or testifying is interrupted at its start: the
anticipatory discharge discourages the whistle blower before the whistle is blown.”), with Sexton v.
Panel Processing, Inc., 754 F.3d 332, 335–42 (6th Cir. 2014) (finding that § 1140 does not cover an
employee’s informal, unsolicited complaints and noting that “[i]n ERISA, of all statutes, we should
hesitate to add a provision the statute does not contain (a clause protecting any employee who
opposes allegedly unlawful practices) and to eliminate a limitation that the statute does contain (‘in
any inquiry or proceeding’)”), Edwards v. A.H. Cornell & Son, Inc., 610 F.3d 217, 222–24 (3d Cir.
2010) (“The Secretary of Labor argues, in its brief as amicus curiae, that ‘[b]roadly but naturally
construed, “any inquiry or proceeding” encompasses plan participants’ complaints to management or
plan officials about wrongdoing, and the process by which that information is considered, however
informal.’ We disagree.” (internal citation omitted)), and King v. Marriott Intern. Inc., 337 F.3d 421,
426–28 (4th Cir. 2003) (“[T]he use of the phrase ‘testified or is about to testify’  suggest[s] that the
phrase ‘inquir[ies] or proceeding[s]’ referenced in section 510 is limited to the legal or administrative,
or at least to something more formal than written or oral complaints made to a supervisor.”). See
also Nicolaou v. Horizon Media, Inc., 402 F.3d 325, 328–29 (2d Cir. 2005) (finding that the “informal
gathering of information” falls within the plain meaning of “inquiry” and is protected by Section 510,
as long as the employee’s complaint was made in response to a “request for information”).
with Hubbs Machine. She also failed to cooperate fully in providing Benward with
information he requested on more than one occasion concerning passwords and
Furthermore, at an industry conference in July 2013,
Graham acted disrespectful to Hubbs and Benward in front of customers and other
third parties in attendance.
Finally, before terminating her employment, Hubbs
gave Graham the opportunity to provide an explanation for her conduct, but her
response did not address all of the issues raised. Undisputed facts in the record
support each of these proffered reasons for plaintiff’s termination.
Graham has not set forth affirmative evidence disputing that she sent
inappropriate and embarrassing emails about Hubbs to company customers, that
she failed to fully provide all of the passwords and account information Benward
requested, or that she refused to introduce Benward at an industry conference.
Instead, she simply claimed to Hubbs that many of the customer contacts she
emailed were her friends with whom she shared stories of personal events to the
benefit of Hubbs Machine.
Graham also points to evidence in the record of the
company’s profit success at the time of her termination and the “global outcry”
from clients after her termination.
These assertions are simply an attempt to
minimize the importance of defendants’ justifications for terminating her and attack
the defendants’ business judgment, rather than demonstrating pretext. Graham’s
difference of opinion as to the seriousness of her attitude and conduct does not
create a genuine issue of material fact regarding pretext. See Ostertag v. Historic
Theater Grp., Ltd., No. 99-2737, 2000 WL 726490, at *1–2 (8th Cir. June 7, 2000)
(finding that plaintiff’s assertion that he rendered excellent services and his
occasional temperamental episodes should not disqualify him from employment
“relates to a business judgment—which is the prerogative of the employer to
make”—and did not provide sufficient evidence to refute the validity of the
defendant’s proffered reason for the adverse employment action).
Moreover, the “core question in a retaliation case does not, ultimately,
concern the veracity of the facts underlying an employer’s legitimate nondiscriminatory reason for discharging its employee, but rather concerns whether
‘the employment decision was based upon intentional discrimination.’”
Gen. Motors Corp., 217 F.3d 621, 637 (8th Cir. 2000) (quoting Ryther v. KARE 11,
108 F.3d 832, 837–38 (8th Cir. 1997)). “The wisdom of a company’s decision to
terminate its employee for what [a court] may regard as a frivolous reason is not
an issue in a [retaliation] case.”
Instead, the court’s “inquiry is limited to
whether the employer gave an honest explanation of its behavior.” Krenik v. Cnty.
of Le Sueur, 47 F.3d 953, 960 (8th Cir. 1995). The Court finds that defendants did
Defendants thus are entitled to summary judgment on plaintiff’s claim of
retaliation under ERISA, because she failed to present evidence to support a finding
that the defendants’ proffered reasons for her termination were pretextual.
Remaining State Law Claim
The only claim that remains is Graham’s state law-based claim of wrongful
termination in violation of public policy. “A federal district court has discretionary
power to decline the exercise of supplemental jurisdiction where the court has
‘dismissed all claims over which it has original jurisdiction.’” Wilson v. Miller, No.
15-1415, 2016 WL 1621952, at *6 (8th Cir. Apr. 25, 2016) (quoting 28 U.S.C. §
1367(c)(3)). The factors a court should consider in deciding whether to exercise
jurisdiction over pendent state law claims are “judicial economy, convenience,
fairness, and comity.” Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 350 (1988).
“[I]n the usual case in which all federal-law claims are eliminated before trial, the
balance of factors to be considered . . . will point toward declining to exercise
jurisdiction over the remaining state-law claims.”
Id. at 350 n.7; see also id.
(stating that the factors to be considered under the pendent jurisdiction doctrine
“usually will favor a decision to relinquish jurisdiction when ‘state issues
substantially predominate, whether in terms of proof, of the scope of the issues
raised, or the comprehensiveness of the remedy sought’” (quoting United Mine
Workers of Am. v. Gibbs, 383 U.S. 715, 726 (1966))). When declining to exercise
supplemental jurisdiction under § 1367(c), the court can decide to dismiss the
remaining claims without prejudice or remand those claims to state court. Lindsey
v. Dillard’s, Inc., 306 F.3d 596, 599 (8th Cir. 2002); St. John v. Int’l Ass’n of
Machinists & Aerospace Workers, 139 F.3d 1214, 1217 (8th Cir. 1998).
This case was initiated in a state court, and resolution of the remaining claim
depends solely on interpretation of state law and public policy. The Court declines
to exercise supplemental jurisdiction over plaintiff’s pendent state law claim and
will exercise its discretion to remand the case to the state court.
For the reasons set forth above,
IT IS HEREBY ORDERED that defendants’ motion for summary judgment
[Doc. #103] is granted as to plaintiff’s claim of retaliation under section 510 of
ERISA in Count III.
IT IS FURTHER ORDERED that the Clerk of Court shall remand the this
action to the Twenty-Third Judicial Circuit Court of Missouri (Jefferson County),
from which it was removed.
A separate Judgment in accordance with this Memorandum and Order will be
entered this same date.
CAROL E. JACKSON
UNITED STATES DISTRICT JUDGE
Dated this 19th day of May, 2016.
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