Mata v. Oregon Health Authority et al

Filing 86

OPINION AND ORDER: Magistrate Judge Coffin's Findings and Recommendation #79 is Rejected. Defendants' Motion for Summary Judgment #65 is Denied in Part and Granted in Part as follows: 1) DHS and Bevin Hansell are dismissed as defendants in this action. 2) Plaintiff's state law claims for whistle blowing and retaliation pursuant to ORS 659A.199, 659A.203, and 659A.230 against defendant OHA, and her 1st Amendment freedom of speech claims pursuant to 42 U.S.C. 1983 against individual defendants Kaufman and Wentz remain viable, and this case shall be set for trial after a new Scheduling Order has been agreed to by the parties or set by the Court. Signed on 8/31/2015 by Judge Michael J. McShane. (cp) Modified on 9/1/2015 (ljb).

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON

VICTORINA MATA,
Plaintiff,

Civ. No. 6:13-cv-485-TC

v.

OPINION and ORDER
OREGON HEALTH AUTHORITY, an
agency of the State of Oregon, OREGON
DEPARTMENT OF HUMAN SERVICES
an agency of the State of Oregon, CATHLEEN
KAUFMANN, PATRICIA WENTZ,
BEVIN HANSELL, and BRUCE GOLDBERG,
Defendants.

MCSHANE, Judge:
Magistrate Judge Thomas M. Coffin filed a Findings and Recommendation (ECF No. 79)
recommending that defendants' motion for summary judgment (ECF No. 65) should be granted,
resulting in the dismissal of plaintiffs action. The plaintifffiled objections to Judge Coffin's
Findings (ECF No. 83), and the defendants filed a response to plaintiffs objection (ECF No. 85).
1 -OPINION AND ORDER

The matter is now before this court. See 28 U.S.C. § 636(b)(l)(B), Fed. R. Civ. P. 72.
I reviewed the legal principles de novo. United States v. Bernhardt, 840 F.2d 1441, 1445 (9th
Cir. 1998). For the following reasons, I find error and reject the Findings and Recommendation.
Accordingly, defendants' motion for summary judgment (ECF No. 65) is DENIED in part and
GRANTED in part, and this case shall be set for trial after a new Scheduling Order has been
agreed to by the parties or set by the Court.

FACTUAL BACKGROUND
The factual background of this case has already been laid out in Judge Coffin's two
previous Findings & Recommendations (ECF No. 32 and 79), and this Court will try not to
belabor the point too much in the following brief rendition of events.
PlaintiffVictorina Mata began work as a public affairs specialist (PAS 3) in August of
2009 for OHA and DHS to promote the Healthy Kids program. Plaintiff alleges that the
individual defendants supervised her in their following capacities: Defendant Kaufman as the
OHA administrator of the Office of Healthy Kids and/or director ofOHA's transformation
center. Defendant Wentz as the manager of the OHA's communications department. And
defendant Hansell as Kaufman's subordinate and the OHA's Healthy Kids deputy administrator.
The Healthy Kids Program was funded by the Oregon Legislative Assembly in 2009 to
expand insurance emollment for Oregon children up to 300% of the federal poverty level and
sought to emoll 95% of the children in the State of Oregon in health insurance. Through the
program, federal funds would cover 60-70 percent of each eligible child depending on their
individual qualifications. These federal funds came as matching funds based upon the number of
children emolled through the program.
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In approximately November of2009, plaintiff began questioning the number of children
without insurance being reported by OHA to the public and to the federal government for
funding. Plaintiff asserts that as soon as she began questioning the numbers she became subject
to harassment and adverse employment actions until her employment ended in April of2012.
The defendants claim the plaintiff was simply laid-off due to budget cuts by the Oregon State
Legislature. The plaintiff claims her layoff was a pretextual act of retaliation for her
whistleblowing and was not necessitated by the legislature's funding cuts.
Plaintiff claims that her acts ofwhistleblowing included questioning the program's
enrollment numbers and voicing concerns over other issues including irregular accounting,
excess grants, and no bid contracts. Plaintiff alleges that she reasonably believed Defendants'
enrollment misrepresentations and accounting irregularities were violations of Federal or Oregon
law, rule or regulation. Plaintiff further alleges that these misrepresentations and irregularities
evidenced mismanagement, and/or were an abuse of the Agency's authority to use taxpayer
money in ways the Agency was not entitled. (ECF No. 42 at p.5).
Plaintiff alleges that beginning in September 201 0, she made these complaints and
concerns known to her managers and also reported them to other state agencies including the
Oregon Secretary of State's Audit Division, the Oregon Department of Justice' Fraud Unit,
individual State legislators, and to the media. (ECF No. 42 at p.5). In February 2012, plaintiff
filed a formal Complaint with the Oregon Bureau of Labor & Industries (BOLl) and the United
States Equal Employment Opportunity Commission (EEOC).
As noted in Judge Coffin's Findings & Recommendation, The Oregon Secretary of
State's Audit Division initiated an audit that began in October 2010 and concluded in September
2011, which found that in fiscal years 2009 and 2010, Oregon received $4.6 million more than
3 -OPINION AND ORDER

warranted in bonuses from the federal government for erroneous increases in medicaid
enrollment of children. While the audit did not uncover any intentional fraud, it did find error in
the process OHA used to apply for the bonus awards and it noted some areas where controls over
advertising and expenditures could be improved. The Oregon Department of Justice also
conducted a related investigation in 2010-2011. (ECF No. 79 at p.5). It is undisputed that the
plaintiff was at least partially responsible for the audit and investigations being initiated. It is
also undisputed that defendants Wentz and Kaufman discussed whether or not plaintiff was the
source of information that lead to the initiation of the audit and investigations. (See Deposition of
Patricia Wentz at p. 169).

PROCEDURAL BACKGROUND
Plaintiff Mata initiated this action in the Circuit Court of the State of Oregon for the
County of Marion on January 31, 2013 (see Marion County Circuit Court Case No. 13C11391).
Defendants removed the action to this court on March 21, 2013 (ECF No. 1).
The initial complaint (ECF No. 1) alleged claims for: (1) violations of Oregon's
whistleblowing laws against plaintiff's former employer defendants Oregon Health Authority
(OHA) and Oregon Department of Human services (DHS); (2) race and national origin
discrimination under Title VII against defendants OHA and DHS; (3) race and national origin
discrimination under state law against defendants OHA and DHS; and (4) violation of due
process, freedom of speech and equal protection under 42 U.S.C. § 1983 against defendants
Cathleen Kaufman, Patricia Wentz, Bruce Goldberg, and Bevin Hansell.
Plaintiff dropped her second and third claims (race and national origin discrimination) in
her First Amended Complaint (ECF No. 28). Plaintiff's due process and equal protection claims
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were dismissed with prejudice in Judge Coffin's Findings & Recommendation on defendants'
Motion to Dismiss (ECF No. 32), which this Court adopted in its entirety (ECF No. 37).
Dr. Bruce Goldberg was also dismissed as a defendant through Judge Coffin's Findings
& Recommendation on defendants' Motion to Dismiss (ECF No. 32), which this Court adopted

(ECF No. 3 7), after plaintiff failed to allege any section 1983 claims against him in plaintiffs
Second Amended Complaint (ECF No. 42).'
Plaintiffs remaining claims at issue here are: (1) violations of Oregon's state
whistleblowing laws against defendants OHA and DHS, pursuant to ORS §§ 659A.199,
659A.203, 659A.230; and (2) violation of freedom of speech against defendants Kaufman,
Wentz and Hansell, pursuant to 42 U.S.C. § 1983.

STANDARD OF REVIEW
The court must grant summary judgment if there are no genuine issues of material fact
and the moving party is entitled to judgment as a matter oflaw. Fed. R. Civ. P. 56( a). An issue
of fact is genuine "if the evidence is such that a reasonably jury could return a verdict for the
nonmoving party." Villiarimo v. Aloha Island Air., Inc., 281 F.3d 1054, 1061 (9th Cir. 2002)
_ (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242,248 (1986)). The Court should view the
evidence in the light most favorable to the non-moving party. Allen v. City of Los Angeles, 66
F.3d 1052, 1056 (9th Cir. 1995) (citing Jesinger v. Nevada Federal Credit Union, 24 F.3d 1127,
1130 (9th Cir. 1994)). If the moving party shows that there are no genuine issues of material
fact, the nonmoving party must go beyond the pleadings and designate facts showing an issue for
trial. Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986); see Fed. R. Civ. P (56)(c).

5 - OPINION AND ORDER

DISCUSSION
Claim 1- Whistleblowing (ORS §§ 659A.199, 659A.203. and 659A.230):
Plaintiff's 1st claim for relief is against defendants DHS and OHA for violations of
Oregon's state whistleblowinglaws, pursuant to ORS §§ 659A.199 (Count 1), 659A.203 (Count
2), and 659A.230 (Count 3).
As an initial matter, I agree that the claims against defendant DHS must be dismissed
because DHS split from OHA in 2011 and plaintiff no longer worked for DHS when her
employment ended (ECF No. 79 p. 7). This finding also seems to beconceded by plaintiff
through lack of argument in plaintiff's Objections (ECF No. 83). Therefore, all claims against
DHS are dismissed.
ORS § 659A.l99 prohibits an employer from discharging, demoting, suspending, or in
any manner discriminating or retaliating against an employee with regard to promotion,
compensation or other terms, conditions or privileges of employment for the reason that the
employee has in good faith reported information that the employee believes is evidence of a
violation of a state or federal law, rule or regulation.
ORS § 659A.203 prevents, among other things, employers from prohibiting employees
from discussing, in response to an official request, either specifically or generally with legislative
members, or elected auditors or threatening disciplinary action for disClosing violations of law,
or gross mismanagement.
ORS § 659A.230 prohibits employers from discharging, demoting, suspending or. in any
manner discriminating or retaliating against an employee with regard to promotion,
compensation or other terms, conditions or privileges of employment for the reason that the
6- OPINION AND ORDER

employee has in good faith reported criminal activity by any person, has in good faith caused a
complainant's information or complaint to be filed against any person, has in good faith
cooperated with any law enforcement agency conducting a criminal investigation, has in good
faith brought a civil proceeding against an employer or has testified in good faith at a civil
proceeding or criminal trial.
To establish a retaliation case under Oregon's whistleblowing statutes, Plaintiff must
show that (1) she was engaging in a protected activity, (2) she suffered an adverse employment
decision, and (3) there was a causal link between the protected activity and the adverse
employment decision." Ruggles v. Cal. Polytechnic State Univ., 797 F.2d 782, 785 (9th Cir.
1986).
As to the first element, I agree with Judge Coffin's findings that plaintiff has presented
evidence to support the conclusion that she was engaged in a protected activity when she made
internal and external reports of wrongdoing based on an objectively reasonable belief that a
violation oflaw had occurred. (ECF No. 79 at p. 10). I further agree with Judge Coffin's
finding that "The fact that plaintiff was laid -off does of course present an adverse employment
decision." (ECF No. 79 at p. 10). But I disagree and reject Judge Coffin's finding that,
"Ultimately, however, plaintiff cannot maintain any whistleblower claims as she has not suffered
actionable retaliation ... [because] the decision [to lay-off plaintiff] resulted from the Legislature's
decision to cut funding for the marketing program ... Thus, there is no link between plaintiff's
alleged protected activity and the decision to lay her off." (ECF No. 79 at pp. 10-11).
Whether or not the state legislature cut the entire marketing budget for the Healthy Kids
program remains a genuine issue of material fact and based on the standard of review for

7 - OPINION AND ORDER

summary judgment as described above, the Court should view evidence in the light most
favorable to the non-moving party. In this case, plaintiff has presented evidence through the
committee notes of SB5701A, plaintiffs deposition, and defendant Kaufmann's deposition, that
only $1 million of the roughly $5.5 million marketing budget was cut, and that defendant
Kaufmann had the discretion to decide what and/or who to cut. Plaintiff further argues that "the
budget also had carryover funding" that could have protected positions from immediate cuts.
(ECF No. 83 at pp. 10-12).
The fact that the defendants laid-off the two people they admittedly suspected of leaking
information to state agencies and the press is enough for a reasonable juror to potentially draw a
link between the plaintiffs protected activities and the adverse employment decision to
constructively terminate her using a layoff as pretext.
I also reject Judge Coffin's finding that "an obvious means to termination was present"
(ECF No. 79 p. 11) (and the link between plaintiffs protected actiyity and defendants' adverse
employment action thus destroyed) when in September 2010 plaintiff brought a ceremonial
tomahawk to work and allegedly threatened to harm her coworkers with it. But this incident
took place before plaintiff went to the Secretary of State, the DOJ, or the media. It was
investigated and plaintiff was not fired, demoted, or docked pay. Nor did she face any criminal
charges, which would seemingly have been appropriate should any of her "threats" been deemed
actual or serious. As plaintiff argues in her Objections (ECF No. 83 at pp. 20-21 ), "this
particular argument [regarding the tomahawk incident] was not raised until Defendants' Reply
brief to which Plaintiff could not respond ... and Plaintiff has evidence from Richard Acevedo's
deposition showing that he had seen other state officials bring historical artifacts (an actual

8- OPINION AND ORDER

firearm) to work and openly display them. See Dec of Tyler Smith Ex. 13, (Dep. of Richard
Acevedo Add.) pp. 2:11-25-3:1-11."
Further, it seems undisputed that the tomahawk was "ceremonial" and that plaintiff is an
Alaska Native and an emolled member of the Central Council of the Tlingit & Haida Indians of
Alaska. (Decl. ofMata: ECF No. 74-1 at p. 2). Whether or not the tomahawk was functional
and/or dangerous and whether or not plaintiff made credible threats to harm her coworkers with
it is a question of fact that defendants are welcome to raise at trial, but this incident was not an
"obvious means to termimition" and does not disprove any possible link between plaintiff's
protected activity and defendants' adverse employment action. Therefore, plaintiff's retaliation
claims based on Oregon's whistleblowing statutes survive summary judgment.
I am in agreement with Judge Coffin that plaintiff's state law based whistle blowing and
retaliation claims are limited to her allegation of constructive termination as the only incident
that could be seen as constituting an actionable adverse employment action. In other words, I
agree that the other alleged acts of retaliation such as moving plaintiff's desk or excluding her
from meetings do not rise to the level of adverse employment actions worthy of separate and
additional retaliation claims. (ECF No. 79 p. 7). But I am in agreement :with the plaintiff's
analysis that these prior acts can be introduced at trial as relevant background evidence in
support oftheir claim. Amtrakv. Morgan, 536 U.S. 101, 113 (2002).

Claim 2- First Amendment Freedom of Speech (42 U.S.C. § 1983):

Plaintiff's 2nd claim for relief is against individual defendants Kaufman, Wentz, and
Hansell, for violation of plaintiff's freedom of speech pursuant to 42 U.S.C. § 1983. As Judge
9- OPINION AND ORDER

Coffin correctly states when framing the elements required to establish a First Amendment
claim, the court considers the following five factors:
(1) whether the plaintiff spoke on a matter of public concern; (2) whether the plaintiff spoke as a
private citizen or public employee; (3) whether the plaintiffs protected speech was a substantial
or motivating factor in the adverse employment action; (4) whether the state had an adequate
justification for treating the employee differently from other members of the general public; and
(5) whether the state would have taken the adverse employment aCtion even absent the protected
speech. Eng v. Cooley, 552 F.3d 1062, 1070 (9th Cir. 2009). (ECF No. 79 at pp. 11-12).
As an initial matter here, this Court finds that there is no support found in the record for
the idea that individual defendant Bevin Hansell knew plaintiff was blowing the whistle
externally. Therefore, all claims against Hansell are dismissed. Defendants Kaufman and Wentz
are another matter. As previously discussed, plaintiff has presented a genuine question of
material fact for a jury to decide as to whether defendants Kaufman and Wentz acted in
retaliation to plaintiffs protected speech.
Judge Coffin dismissed plaintiffs First Amendment claims based on the same premise
used for dismissing the whistleblowing claims. Namely, that the plaintiff did not suffer an
actionable adverse employment action. (ECF No. 79 at p. 12). This Court rejects that finding
for the same reason it did so in regards to the whistle blowing claims: plaintiff has shown enough
evidence to suggest that a genuine issue of material fact exists as to whether or not the legislature
cut the entire marketing budget for the Healthy Kids program, and whether or not the defendants
had discretion in how and when to make those budget cuts. See supra pp. 7-8.
Plaintiffs acts ofreporting no-bid contracts and possible wrongdoing and fraud to the
Secretary of State, DOJ, and the media, as well as leaking what she believed to be wrongfully
withheld public records to the media, were certainly not a part of her job duties and thus
constituted private speech. It follows that if the plaintiffs allegations are true, the defendants
10- OPINION AND ORDER

certainly would not have taken the adverse employment action of constructively terminating the
plaintiff absent her engaging in her speech that she made externally as a private citizen.
Therefore, plaintiffhas satisfied all the threshold elements required for stating a First
Amendment freedom of speech claim pursuant to 42 U.S.C. § 1983 against defendants Kaufman
and Wentz.
After-Acquired Evidence:

The Supreme Court has rejected the unclean hands defense "where a private suit serves
important public purposes." lvfcKennon v. Nashville Banner Publ. Co., 513 U.S. 352, 361
(1995). Similarly, in O'Day v. McDonnell Douglas Helicopter Co., the Court stated that "if an
employer discharges an employee for a discriminatory reason, later discovered evidence that the
employee could have been discharged for a legitimate reason does not immunize the employer
from liability." O'Day v. 1\.fcDonnell Douglas Helicopter Co., 79 F.3d 756, 761 (1996).
The defendants attempted use ofthis doctrine at the summary judgment stage of this case
is premature because it is not a complete bar to recovery and defendants have not yet proven by
preponderance of the evidence that it would have fired the plaintiff for her misconduct. Genuine
issues of material fact still exist and need to be determined later at trial. As cited by Judge
Coffin in his findings, "the proper boundaries of remedial relief must be addressed by the judicial
system in the ordinary course of further decisions, for the factual permutations and the equitable
considerations they raise will vary from case to case." Rivera v. NIBCO, Inc., 364 F.3d 1057,
1071 (9th Cir. Cal. 2004 ). Therefore, any limits to remedies should only be determined by the
Court after a trial has settled all the issues of material fact.

11 -OPINION AND ORDER

Qualified Immunity:
Whether a governinent official is entitled to qualified immunity involves a two-step
inquiry: (1) Was the law governing the official's conduct clearly established? and (2) Given a
clearly established standard, could a reasonable official believe that his or her conduct was
lawful? Act Up!/Portland v. Bagley, 988 F.2d at 873 (9th Cir 1993). Here, a deprivation of a
constitutional right that was clearly established and known at th~ time of the defendants' alleged
misconduct has been alleged by the plaintiff. And as plaintiff correctly states, when genuine
issues of fact remain, the case must proceed to trial, because whether or not the defendants did
indeed violate the established constitutional rights of the Plaintiff is an issue to be determined by
the trier of fact. (ECF No. 83 at pp. 28-30).

CONCLUSION
THEREFORE, IT IS HEREBY ORDERED that, Magistrate Judge Coffin's Findings and
Recommendation (ECF No. 79) is REJECTED. Defendants' motion for summary judgment
(ECF No. 65) is DENIED in part and GRANTED in part as follows:
(1) DHS and Bevin Hansell are dismissed as defendants in this action.
(2) Plaintiffs state law claims for whistleblowing and retaliation pursuant to ORS §§
659A.199, 659A.203, and 659A.230 against defendant OHA, and her 1st Amendment
freedom of speech claims pursuant to 42 U.S.C. § 1983 against individual defendants
Kaufman and Wentz remain viable, and this case shall be set for trial after a new
Scheduling Order has been agreed to by the parties or set by the Court.

12- OPINION AND ORDER

IT IS SO ORDERED.

DATED this 31st day of August, 2015.

\

t
Michael J. McShane
United States District Judge

13 -OPINION AND ORDER