Jeff Hemphill v. Celanese Corp. , 430 F. App'x 341 ( 2011 )

Case: 10-10746 Document: 00511519534 Page: 1 Date Filed: 06/23/2011
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
June 23, 2011
No. 10-10746 Lyle W. Cayce
Clerk
JEFF HEMPHILL,
Plaintiff-Appellant
v.
CELANESE CORP.,
Defendant-Appellee
Appeal from the United States District Court
for the Northern District of Texas
USDC No. 3:08-CV-2131
Before DAVIS, CLEMENT, and ELROD, Circuit Judges.
PER CURIAM:*
Defendant-Appellee Celanese Corporation (“Celanese”) employed Plaintiff-
Appellant Jeff Hemphill as an auditor. Celanese terminated Hemphill’s
employment in 2007. Hemphill later sued under the whistleblower protection
provisions of the Sarbanes-Oxley Act (“SOX”), arguing that Celanese terminated
his employment on the basis of activity protected by that statute. The district
court granted Celanese’s motion for summary judgment, holding that Hemphill’s
protected activity was not a contributing factor in his termination and,
*
Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .
R. 47.5.4.
Case: 10-10746 Document: 00511519534 Page: 2 Date Filed: 06/23/2011
No. 10-10746
moreover, that Celanese demonstrated by clear and convincing evidence that it
would have terminated Hemphill regardless of his protected activity. We affirm.
I.
Celanese is a large, public corporation that manufactures and distributes
industrial chemicals. Celanese hired Hemphill as an internal audit manager in
2006.
In 2007, Hemphill began work on an internal audit of a Celanese
construction project in Ocotlan, Mexico. The team of auditors managed by
Hemphill identified several potential violations of law and company policy
regarding the Ocotlan project. Hemphill’s team explained these problems in an
audit report.1 Hemphill also reported these issues to his superiors, including
Donna Wegner, and requested that a forensic auditor be hired to determine if
any fraud had been committed in connection with these accounting problems.
Hemphill additionally raised the issues with Gary Rowan, a Celanese
compliance officer. According to Hemphill, Wegner became angry that Hemphill
had met with Rowan without her permission.
Hemphill participated in the further investigation of the accounting
problems at the Ocotlan project. The Celanese auditors eventually determined
that several Celanese employees had violated company policy, but not any laws,
and one employee was removed from the Ocotlan project.
Hemphill never reported these accounting problems to a governmental
authority while employed at Celanese. Celanese alleges that its investigation
of these practices revealed that no violation of the FCPA or other federal laws
1
The report identified a potential violation of the Foreign Corrupt Practices Act
(“FCPA”) involving possible payments of funds allocated for travel expenses to officials in the
Mexican city of Totolan in exchange for a right of way contract; a potential conflict of interest
between a Celanese employee whose brother was a municipal employee in another city from
which Celanese was attempting to acquire a right of way; and transfer of title of a company-
owned truck to a Mexican citizen.
2
Case: 10-10746 Document: 00511519534 Page: 3 Date Filed: 06/23/2011
No. 10-10746
occurred. The record indicates that no legal enforcement action was ever
initiated against Celanese on the basis of these accounting irregularities.
After the Ocotlan audit, Wegner told Hemphill that in order to create a
better working environment he should “not develop issues.” This conversation
occurred in June 2007.
Around this time, Hemphill also worked on another project reviewing the
travel and entertainment records for several Celanese employees. Hemphill and
his staff discovered certain violations of the company’s policies. Hemphill later
testified at deposition that in his view, these violations created the risk of a
“books and records violation” of Securities and Exchange Commission (“SEC”)
rules. Hemphill advised Wegner of the violations and asked to raise the issues
with Celanese’s audit committee. Wegner rebuffed this request.
In August 2007, Hemphill’s secretary, Shirley Hall, was making
arrangements to rent a boat for a corporate outing. According to Hall, for some
reason Hemphill emerged from his office and began yelling at her in an abusive
manner regarding her handling of the matter. Celanese employees John
Fotheringham and Tonya Donaldson, who both worked in a different department
of the company, witnessed the event. Fotheringham and Donaldson reported
Hemphill’s behavior to Alan Maxwell, Celanese’s director of human resources.
Maxwell assigned investigation of the incident to Zarinah Curry, a human
resources employee who had no prior knowledge about Hemphill. Maxwell
notified Hemphill’s superior, Wegner, about the investigation.
Curry interviewed Hall, Donaldson, Fotheringham, another employee
named Miniki Peacock, and Hemphill. Hall and the employee witnesses said
that Hemphill had acted in an aggressive and unprofessional manner.
Fotheringham described the incident in the following terms: “outrageously rude
and completely unprofessional”; “atrocious”; “a one-sided rant by Mr. Hemphill
. . . she was spoken to like a dog.” Donaldson used the words “aggressive” and
3
Case: 10-10746 Document: 00511519534 Page: 4 Date Filed: 06/23/2011
No. 10-10746
“abusive” to describe the incident. Hemphill denied yelling or otherwise
engaging in unprofessional behavior.
After concluding the investigation, Curry recommended that Hemphill be
terminated due to his “lying during a formal investigation, harassment of an
employee, and creating a negative work environment for the team and those
around him.” Maxwell agreed, as did Joseph Fox, Celanese vice president of
human resources and employment law. Curry communicated these
recommendations to Hemphill’s supervisor, Wegner. Wegner testified at
deposition that she was initially reluctant to accept the termination
recommendation, but that Fox told her that other employees had been fired
under similar circumstances. Wegner, who had the final authority to make
employment decisions concerning Hemphill, then accepted the termination
recommendation.
Celanese terminated Hemphill on September 4, 2007. Hemphill filed this
suit on December 2, 2008, claiming that he was terminated in violation of the
whistleblower protection provisions of SOX because of the reports he made
regarding the Ocotlan audit and the travel and expenses audit. Celanese moved
for summary judgment. The district court granted the motion, concluding that
Hemphill failed to establish the last prima facie element of his claim: that his
protected activity was a “contributing factor” to his termination. The district
court also determined that, even assuming Hemphill established his prima facie
claim, Celanese rebutted the claim with clear and convincing evidence that
Celanese would have terminated Hemphill regardless of his protected activity.
Hemphill now appeals.
II.
A district court’s ruling on summary judgment is reviewed de novo,
applying the same standards as the district court. Bolton v. City of Dallas, 472
F.3d 261, 263 (5th Cir. 2006). Summary judgment should be granted “if the
4
Case: 10-10746 Document: 00511519534 Page: 5 Date Filed: 06/23/2011
No. 10-10746
movant shows that there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” F ED. R. C IV. P. 56(a) (2011).
The court must view the record in the light most favorable to the non-moving
party. Am. Int’l Specialty Lines Ins. Co. v. Canal Indem. Co., 352 F.3d 254, 260
(5th Cir. 2003).
III.
Hemphill’s claim arises under the whistleblower protection provisions of
SOX, codified at 18 U.S.C. § 1514A.2 This court thoroughly explained the
elements of a SOX whistleblower claim under § 1514A in Allen v. Administrative
Review Board, 514 F.3d 468 (5th Cir. 2008). To establish a prima facie claim, a
plaintiff must show by a preponderance of the evidence that “(1) []he engaged in
protected activity; (2) the employer knew []he engaged in the protected activity;
(3) []he suffered an unfavorable personnel action; and (4) the protected activity
was a contributing factor in the unfavorable action.” Id. at 475-76. Then, “[i]f
the employee establishes these four elements, the employer may avoid liability
if it can prove by clear and convincing evidence that it would have taken the
same unfavorable personnel action in the absence of that protected behavior.”
Id. (internal quotations and citations omitted).
2
Section 1514A(a) states in pertinent part:
No [publicly-traded company] . . . may discharge, demote, suspend, threaten,
harass, or in any other manner discriminate against an employee in the terms
and conditions of employment because of any lawful act done by the
employee--(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 1341[mail fraud], 1343 [wire
fraud], 1344 [bank fraud], or 1348 [securities fraud], 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--(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) . . .
5
Case: 10-10746 Document: 00511519534 Page: 6 Date Filed: 06/23/2011
No. 10-10746
Assuming that Hemphill has raised genuine issues of fact regarding the
first three elements of his prima facie claim,3 we focus on the fourth and final
element: whether his protected activity was a “contributing factor” in Celanese’s
decision to terminate his employment.
In Allen, we noted that “[a] contributing factor is any factor, which alone
or in combination with other factors, tends to affect in any way the outcome of
the decision.” Id. 3d at 476 n.3 (quotations and citations omitted). Hemphill has
failed to create a genuine issue of fact regarding this element of his claim
because Celanese has presented substantial evidence that it conducted an
investigation of Hemphill’s verbal abuse of Hall and that Celanese terminated
Hemphill on this basis alone. We agree with the district court that no genuine
dispute of material fact exists on which a jury could conclude that Hemphill’s
protected activity was a contributing factor in Celanese’s decision.
Even if we assume arguendo that Hemphill can establish a factual dispute
as to whether his protected activity was a contributing factor in Celanese’s
termination decision, Celanese may still avoid liability by presenting “clear and
convincing evidence that it would have taken the same unfavorable personnel
action in the absence of that protected behavior.” Id. at 476. The district court
3
To qualify as protected activity under § 1514A(a)(1)(C), an employee must seek to
“provide information, cause information to be provided, or otherwise assist in an investigation
regarding any conduct which the employee reasonably believes constitutes” mail fraud, wire
fraud, bank fraud, securities fraud, a violation of any rule or regulation of the SEC, or a
violation of any provision of federal law relating to fraud against shareholders. Hemphill
testified in his deposition that he had a reasonable belief that the accounting issues he
discovered may have constituted violations of 15 U.S.C. § 78m(b)(5), which provides that “[n]o
person shall knowingly circumvent or knowingly fail to implement a system of internal
accounting controls or knowingly falsify any book, record, or account . . . .” Thus, viewed in
a favorable light, the facts show that Hemphill engaged in protected activity to the knowledge
of Celanese, satisfying the first two prima facie elements of Hemphill’s claim. Hemphill’s
termination was, of course, an unfavorable personnel action, satisfying the third prima facie
element.
6
Case: 10-10746 Document: 00511519534 Page: 7 Date Filed: 06/23/2011
No. 10-10746
held that Celanese has met this standard, and we agree that no genuine dispute
of material fact exists regarding this issue.
Celanese has shown that its human resources department conducted a
thorough investigation of the incident involving Hemphill’s verbal abuse of Hall.
The primary human resources employee conducting the investigation, Curry,
had no prior knowledge of Hemphill’s auditing activities. Curry interviewed
several employees who witnessed the incident and reported Hemphill’s behavior.
These employees worked in a different department of the company than
Hemphill and had no material interest in Hemphill’s auditing activities. Two
of the witnesses described Hemphill’s behavior toward Hall as “aggressive,”
“unprofessional,” “abusive,” and “atrocious.” Curry also interviewed Hemphill
and concluded that he lied about his behavior.
No evidence suggests that the two executives who contributed to the
decision to fire Hemphill—the human resources director, Maxwell, and vice
president of human resources, Fox—had any particular knowledge of or interest
in Hemphill’s auditing work. The only executive participating in the
termination decision who worked with Hemphill on the audits and knew of his
discovery of accounting irregularities was Wegner, Hemphill’s supervisor. The
undisputed evidence indicates, however, that Wegner simply accepted the
unanimous termination recommendation provided to her by Curry, Maxwell, and
Fox.
This evidence clearly and convincingly shows that Celanese terminated
Hemphill because Celanese concluded that he mistreated Hall. We reject
Hemphill’s contention that Celanese’s investigation was unreliable because
Curry did not interview additional employees who may have witnessed the
incident. Hemphill vaguely asserts that if Curry had interviewed other
witnesses, they would have exculpated him of the charge that he mistreated
Hall. However, Hemphill has produced no affidavit, sworn statement, or any
7
Case: 10-10746 Document: 00511519534 Page: 8 Date Filed: 06/23/2011
No. 10-10746
other admissible evidence beyond his own testimony demonstrating that these
other witnesses would have testified in his favor, much less absolved him. In
short, Hemphill has produced no evidence casting doubt on the integrity of the
investigation.
Thus, the district court was correct that Celanese has established by clear
and convincing evidence that Celanese would have terminated Hemphill
regardless of any protected activity. No genuine dispute of material fact exists
regarding this issue.
For the foregoing reasons and those given by the district court, we
AFFIRM the district court’s order of summary judgment.
8