Non-Profit Defeats Retaliation Suit by Its Former CEO

In a recent decision from the Southern District of New York in Liss v. Heritage Health & Housing, Inc. (Heritage), No. 1:19-cv-4797, Chief Judge Laura Taylor Swain granted summary judgment in favor of the defendant, dismissing retaliation claims brought by its former CEO, Jane Liss, under the federal False Claims Act (FCA) and the New York False Claims Act. Heritage is a non-profit organization that provides housing, health care, and social support services. Ms. Liss had alleged that Heritage, which receives government funds, unlawfully fired her in retaliation for her actions as a whistleblower in uncovering financial fraud.

Shortly after Ms. Liss was hired as CEO, Heritage staff began complaining about her behavior and comments in the workplace. From May to October 2018, five employees of varying positions accused the new CEO of speaking down to them in a derogatory way, making “incredibly insensitive” remarks about Heritage’s minority staff and patient base, and creating an overall uncomfortable culture of bullying and harassment. Among other things, their complaints included a video recording of Ms. Liss speaking to board member Adrienne Thomas in “a rude and aggressive manner.” In late September 2018, several board members (including Ms. Thomas) met to discuss these complaints.

During those same few months, in the course of Ms. Liss’s financial oversight duties, Heritage’s CFO brought to Ms. Liss’s attention some suspicious activity in Heritage’s accounts. That included checks made out to Heritage’s former CEO, each signed by one of two board members, and wire transfers sent to accounts bearing the name of one of those board members. At least one of the checks was signed by board member Ms. Thomas. According to Ms. Liss, she suspected that these transactions might be indicia of fraud.

Ms. Liss and Ms. Thomas each began preparing to present her findings to the board at a meeting scheduled for October 17, 2018.

At the board meeting, Ms. Liss reported on the financial irregularities, and the board unanimously agreed that she should bring the matter to law enforcement. Then, after Ms. Liss left, Ms. Thomas reported on the employees’ complaints and moved to terminate Ms. Liss’s employment. The board debated the issue over the next few days, and on October 30, 2018, it unanimously voted to fire Ms. Liss. Ms. Liss brought suit in May 2019.

On February 28, 2023, the court granted summary judgment in favor of Heritage. Judge Swain agreed with Ms. Liss that, on the evidence she presented, a reasonable factfinder could find that (1) she engaged in protected conduct and (2) Heritage was aware of that conduct — the first two elements of a successful FCA retaliation claim. But a plaintiff must also show that she would not have suffered the adverse employment action (here, the firing) but for engaging in the protected conduct. That is where the court agreed with Heritage. Even viewing the evidence in the light most favorable to Ms. Liss, Judge Swain held that a reasonable factfinder could conclude that Heritage had a legitimate, non-discriminatory reason to fire Ms. Liss and that no reasonable factfinder could find that Ms. Liss was fired because she alerted the board to financial irregularities. In other words, the staff complaints were not simply a pretext for retaliation.

The takeaway? Retaliation cases, to no one’s surprise, are extremely fact-specific. Here, the termination decisionmakers (the board members) — one of whom was herself a subject of the fraud allegations — fired an employee only thirteen days after the employee brought her allegations to the board’s attention. That sounds like a fact scenario that any plaintiff would emphasize in her retaliation claim. But the evidence going the other way, including a detailed and well-documented record of complaints by staff, was, in the court’s view, too strong for plaintiff to overcome, leading it to conclude that no reasonable juror could find that plaintiff’s allegations of fraud were the real reason for her termination. 

© Arnold & Porter Kaye Scholer LLP 2023 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.