The district court denied a challenge to a jury verdict finding the defendants took adverse employment action against the plaintiff in violation of the False Claims Act’s whistleblower protections. The court affirmed that the standard for protected activity is whether the potential relator reasonably believed fraud was or could be committed, not whether an actual FCA claim appeared, even in a case such as this where the fraud was not substantiated. The court also found it reasonable for the jury to conclude that the plaintiff’s activity exceeded the scope of her job duties, as she took her concerns to her organization’s board of directors, HUD OIG, and the FBI. The court also explained that whether the FBI initiated contact with the plaintiff had no bearing on whether her activity was protected.
Finally, the court found many of the defendants’ arguments undermined by the testimony of its own witness, the executive who terminated the plaintiff’s employment. The witness admitted that he was angry with the plaintiff for pursuing her concerns, acknowledged that he knew about her protected activity, and offered contradictory and not entirely plausible reasons for her termination. The court reasoned that the chain of events gave the jury ample reason to conclude that the reasons for the termination were pretextual and that retaliation had occurred.
Karen Miniex sued the Houston Housing Authority, alleging that she was fired as the authority’s general counsel in retaliation for investigating potential fraud in HHA’s housing voucher program. After a trial, a jury entered a verdict in Miniex’s favor and awarded her back pay and additional punitive damages and interest.
In this action, HHA sought judgment as a matter of law, a new trial, or remittitur. HHA argued no reasonable jury could find, based on the trial evidence and testimony, that Miniex proved three essential elements of her FCA retaliation claim—namely, that her reports were protected, went beyond her job duties, and were known of by HHA’s president, Tory Gunsolley. Alternatively, HHA argued that a new trial is warranted based on allegedly erroneous jury instructions and Miniex’s lack of evidence suggesting that her reports caused Gunsolley to discipline and terminate her.
HHA is a governmental entity that provides affordable housing to low-income individuals in the Houston areas, funded in part by the Departments of Housing and Urban Development and Veterans Affairs. Miniex was hired as HHA’s general counsel in 2012 and received positive employee reviews and pay raises over the next three years. As general counsel, Miniex oversaw investigations into employee and client fraud. Miniex submitted fraud reports to Gunsolley, who provided them to HHA’s governing board as appropriate.
In 2016, an investigation out of Miniex’s office uncovered possible fraud by two employees. One employee was terminated, but during the investigation of the second employee, the housing voucher office conducted its own investigation and concluded that many of the issues identified as possible fraud were instead administrative errors attributable to VA.
Miniex submitted her office’s investigation into employee Carmen Newland to Gunsolley and recommended Newland’s termination, as well as the termination of three managers for negligence. Miniex reasoned that the level of fraudulent activities suggested the managers knew or should have known of the fraud. Miniex also asked to present her report to HHA’s board and recommended that HHA hire a third party to determine whether the fraud was isolated to these employees or systemic.
In response, Gunsolley suggested there was not enough evidence to fire anyone, even though he admitted he had not read the attached exhibits. He also denied Miniex’s request to present the report to the board. After a meeting in Gunsolley’s office, Gunsolley asked Miniex to be a “team player,” if she was “happy working at HHA,” and to think about whether she wanted to be at HHA.
Later, Gunsolley agreed to recommend termination of Newland, but not her managers, and presented the issue to the board as a personnel matter, not a possible instance of systemic fraud. Miniex sent an email to Gunsolley stating that she found several of his statements threatening and contacted the board’s counsel to report that she did not believe Gunsolley had been forthright in his presentation of the Newland matter. Miniex then discussed her concerns with two board members and provided the report and exhibits. Soon after, Gunsolley learned that Miniex had gone to the board and started to avoid and ignore her. However, he acquiesced to the recommendation to hire a third-party investigator.
Later that summer, Miniex and her investigator attended a confidential, off-site meeting with HUD OIG and FBI agents, during which they turned over their reports on Newland’s fraud. After the meeting, the investigator told two attorneys working under Miniex about the meeting. In turn, those attorneys met with Gunsolley to discuss concerns with Miniex. Both stated Miniex had become completely disengaged from her job and was habitually absent and tardy. They submitted written reports on their concerns and a calendar purportedly showing Miniex’s tardiness and absences.
Soon after, Gunsolley issued Miniex a verbal written warning, citing the tardiness, unscheduled absences, and other issues, and telling Miniex to be a “team player.” Miniex filed a grievance against Gunsolley with the board, asserting that the warning was retaliation for her whistleblower activity.
Also in September, the third party investigator concluded that program management was not involved in the fraud and did not have actual knowledge of it, due to the failure of Newland’s supervisor to properly manage Newland. The investigator concluded the supervisor was not qualified for her job and that the program lacked enough checks and balances to prevent Newland’s fraud.
After a separate investigator reviewed Miniex’s grievance, Gunsolley suspended her with pay and without email access. The investigator concluded that the grievance was unfounded and that Gunsolley’s warning was appropriate. In December, Gunsolley terminated Miniex, citing the same issues. This lawsuit followed, in which Miniex asserted claims for FCA retaliation, deprivation of due process, and interference and retaliation with her rights under the Family and Medical Leave Act. While her other claims were dismissed, a jury found in favor of Miniex’s FCA retaliation claim.
In its motion for judgment as a matter of law, HHA argued that the contents of Miniex’s report were not protected by the FCA; that her activities were not protected because they were part of her job duties; and that HHA did not have notice of her allegedly protected activity. HHA argued that Miniex’s reports amounted to personnel matters and that there was no viable, non-speculative FCA claim. HHA also noted that Miniex’s reports ultimately involved unsubstantiated allegations of fraud.
First, the court found that HHA had forfeited several of its arguments because they were not raised during the original hearing. HHA did not argue at trial that what Miniex reported was not subject to the FCA’s protections, and that omission precluded the defendant from raising the issue here. Nonetheless, the court found the argument meritless, as the jury could reasonably have concluded that Miniex’s reports had the requisite nexus to a viable FCA claim and were not merely about personnel matters. Miniex’s report recommended that employees be terminated for engaging in or failing to uncover fraud. It also recommended HHA hire a third party investigator.
The court held the jury could reasonably have found that these two recommendations were aimed at matters that reasonably could lead to a viable claim under the FCA, even if no winning claim existed at the time she reported. Further, the jury could have concluded that Miniex, when she reported, had a good faith and objectively reasonable belief that staff at HHA could be continuing to commit fraud by misdirecting federal funds. While the independent investigation concluded there was no ongoing fraud, the jury still could have concluded Miniex was reasonably concerned about ongoing fraud. In fact, the investigator testified that it was reasonable for Miniex to recommend a third party investigation, and that other employees had the same concerns. The court held the jury also could have concluded the reports exceeded mere personnel recommendations, given that they were eventually provided to the board, HUD OIG, and the FBI. The court found that Miniex’s conduct strongly suggested she was motivated by a concern about fraud.
The court also found the jury could have reasonably concluded that Miniex’s reporting to the board and FBI were outside the scope of her job. While Miniex had contact with HUD OIG as part of her job duties, she did not regularly present to the board and had no dealings with the FBI. Further, Miniex reported her concerns to the board despite Gunsolley’s orders not to, which the jury could reasonably have interpreted as conduct outside her job duties. Her decision not to disclose her meeting with the FBI to Gunsolley also suggested the activity was outside the scope of her responsibilities.
HHA argued that Miniex’s meetings with HUD OIG and the FBI were confidential and therefore the company did not have knowledge of Miniex’s protected activity, but evidence at trial established that Gunsolley had been informed of the meetings and their content. Gunsolley admitted as much during his testimony.
HHA also argued that because HUD OIG and the FBI contacted Miniex to set up the meetings, Miniex’s fraud reporting was not protected activity. The court was not persuaded. HHA cited no authority to support a conclusion that reporting fraud at the request of an external entity prevents the action from being protected activity. Regardless of who initiated the meetings, Miniex still engaged in an effort to stop an FCA violation.
In its motion for a new trial, HHA argued the court erroneously instructed the jury on the essential elements of an FCA retaliation claim. Second, HHA argued the jury’s verdict was against the great weight of the evidence.
The court disagreed, finding the court properly instructed the jury. First, while the jury instructions did not state that Miniex could not prevail unless she acted outside the scope of her job duties, Question 2 in the verdict form asked whether the protected activities in which the jury found Miniex engaged were outside the scope of her job duties. The court found this question was straightforward and required no instruction. In any event, verdict forms are considered part of the jury instruction.
Second, the court clearly instructed the jury that it must find that Gunsolley took adverse employment action against Miniex because of her protected activity. Therefore, the jury knew that a verdict in favor of Miniex must be based on a finding that Gunsolley knew she had engaged in protected activity.
The court also held the jury was correctly instructed to consider whether Miniex’s activity was based on a reasonable belief that fraud was or could be committed against the United States, rejecting the defendant’s preferred instruction that an employee’s actions are protected only if they reasonably could lead to an FCA action.
Next, the court held that the jury’s conclusion was not against the great weight of the evidence. HHA argued that Miniex failed to rebut the non-retaliation reasons for her termination and that the only evidence of pretext is the close temporal proximity between Gunsolley’s discovery of her reporting and her discipline and termination, which is inadequate to support a jury finding of retaliation. HHA also argued that its adherence to internal procedures when disciplining and terminating Miniex reveal that its stated reasons for Miniex’s termination were not pretextual.
The court was unpersuaded. The court found it reasonable for the jury to conclude that Miniex had been retaliated against, based in part on Gunsolley’s own testimony. Gunsolley testified that he was angry when Miniex went to the board against his instructions and that he had drafted an email suggesting she terminate her employment, though he did not send it. Further, Gunsolley’s contract with HHA was being reevaluated during this period and HHA was being audited by HUD. Rather than relying solely on temporal proximity, the jury could have reasonably believed Gunsolley was upset because implications of fraud by HHA’s general counsel would be harmful to his contract renewal prospects. The jury also could have reasonably interpreted several of Gunsolley’s statements to Miniex as veiled threats to her employment.
Finally, the court noted that Gunsolley issued his first formal disciplinary action the day after his receipt of a memoranda stating that Miniex had discussed the internal investigations with the FBI. Prior to this warning, Miniex had four consecutive years of positive reviews and raises and HHA cited no negative comments by her superiors. The court found it reasonable for the jury to conclude that the conflicting evidence of Miniex’s supposed performance issues were evidence of pretext. Each side presented witnesses testifying to Miniex’s performance, and the jury was entitled to choose which side was more credible. Further, Gunsolley himself could not identify any work Miniex held up or that executives complained about. He also failed to provide any examples in his warning. The court held that omission undermined his assertion that the warning’s purpose was corrective.
Further, Gunsolley’s explanations supporting his decisions changed, which the court held can be evidence of pretext. His written warning noted unexcused absences that he did not complain about at the time they occurred. He also identified an absence as unexcused if Miniex gave less than 12 hours’ notice, even if the absence was approved. There was also no evidence Gunsolley previously told Miniex she could not take time off or that he monitored other HHA executives’ attendance. Further, the 12-hours’ notice policy did not apply to exempt employees like Miniex. He also did not consult with HHA’s human resources office regarding the missed time nor involve them in the disciplinary process. Taken together, the court found it reasonable for the jury to conclude that the reasons for Miniex’s termination were pretextual. Accordingly, the court held there was no basis for a new trial.
