Sandi Vaughan v. Carlock Nissan of Tupelo, Inc., e

Case: 12-60568 Document: 00512521493 Page: 1 Date Filed: 02/04/2014
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
February 4, 2014
No. 12-60568 Lyle W. Cayce
Clerk
SANDI HATHCOTE VAUGHAN,
Plaintiff-Appellant
v.
CARLOCK NISSAN OF TUPELO, INCORPORATED; CORBETT HILL,
Defendants-Appellees
Appeal from the United States District Court
for the Northern District of Mississippi
Before DeMOSS, DENNIS, and PRADO, Circuit Judges.
PER CURIAM:*
Sandi Vaughan (“Vaughan”) argues that after she reported allegedly
illegal activity at Carlock Nissan of Tupelo (“Carlock”), the car dealership where
Vaughan worked, she was terminated in violation of the illegal-acts exception
to Mississippi’s at-will employment doctrine. She further argues that Corbett
Hill (“Hill”), a supervisor at Carlock, tortiously interfered with her employment
at the dealership. She appeals the district court’s grant of summary judgment
*
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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.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.
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in favor of both Carlock and Hill. For the reasons that follow, we AFFIRM in
part and REVERSE and REMAND in part.
BACKGROUND
Vaughan was employed by Carlock to assist salespersons with contacting
potential customers. On April 2, 2009, Vaughan contacted Nissan USA
(“Nissan”), Carlock’s corporate parent, to report concerns she had about certain
practices at the dealership. Using a pseudonym, Vaughan reported that Carlock
had: (1) employed a “clean sweep” program under which customers could pay
between $400 and $800 to purchase a car with a sponsor and “repair” their credit
within four to six months even though the customer’s credit was never repaired
in the four-to-six-month time frame and the sponsor remained liable for the car
loan; (2) advertised and sold one car as having an air conditioner when it did not;
(3) changed certain financial documents to include additional charges to which
the customers had not agreed, including “gap insurance” and extended
warranties, and altered interest rates; and (4) advertised large prize giveaways
that Carlock either never awarded or awarded only as “small” prizes with little
to no monetary value.
Following Vaughan’s report, seven Carlock employees were fired. On June
11, 2009, Vaughan contacted Nissan again to complain that Hill knew of the
complained-of activities but had not been fired. On June 15, 2009, Hill learned
of Vaughan’s complaints and fired Vaughan. The parties do not dispute that
Vaughan’s reporting of Carlock’s practices to Nissan factored into Hill’s decision
to terminate her.
Vaughan brought suit against Carlock and Hill, claiming that she was
unlawfully terminated under Mississippi’s illegal-acts exception to its at-will
employment doctrine and asserting tortious interference with employment.
Carlock and Hill moved for summary judgment. The district granted summary
judgment for the defendants, observing that, to satisfy the illegal-acts exception,
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Vaughan was required to prove that that conduct she reported was in fact
illegal. The court determined that Vaughan had failed to properly support her
assertions that Carlock’s and Hill’s alleged acts and omissions constituted actual
illegal conduct under the illegal-acts exception or that Hill fired her in bad faith.
Vaughan timely appealed.
STANDARD OF REVIEW
We review the grant or denial of a motion for summary de novo. Smith v.
Am. Family Life Assur. Co. of Columbus, 584 F.3d 212, 215 (5th Cir. 2009).
Summary judgment is appropriate only if there is no genuine issue as to any
material fact and the moving party is entitled to judgment as a matter of law.
FED. R. CIV. P. 56(a). “[A] party seeking summary judgment . . . bears the initial
responsibility of informing the district court of the basis for its motion, and
identifying those portions of [the record] which it believes demonstrate the
absence of a genuine issue of material fact .” Celotex Corp. v. Catrett, 477 U.S.
317, 323 (1986). The burden then shifts to “the nonmoving party to go beyond
the pleadings and by her own affidavits, or by the ‘depositions, answers to
interrogatories, and admissions on file,’ designate ‘specific facts showing that
there is a genuine issue for trial.’” Id. at 324; see FED. R. CIV. P. 56(c)(1). “If a
party fails to properly support an assertion of fact . . . as required by Rule 56(c),
the court may[] . . . grant summary judgment if the motion and supporting
materials—including the facts considered undisputed—show that the movant is
entitled to it.” FED. R. CIV. P. 56(e)(3). “Credibility determinations, the weighing
of the evidence, and the drawing of legitimate inferences from the facts are jury
functions, not those of a judge, whether he is ruling on a motion for summary
judgment or for a directed verdict.” Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 255 (1986). Thus, “[t]he evidence of the non-movant is to be believed, and
all justifiable inferences are to be drawn in his favor.” Id.
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DISCUSSION
I.
Because this is a diversity suit, we apply state substantive law, in this
case, the law of Mississippi. See Krieser v. Hobbs, 166 F.3d 736, 739 (5th Cir.
1999). Mississippi is an at-will employment state, meaning that an employee
may generally be terminated with or without justification. See Buchanan v.
Ameristar Casino Vicksburg, Inc., 852 So. 2d 25, 26 (Miss. 2003). In McArn v.
Allied Bruce-Terminix Co., however, the Mississippi Supreme Court created an
exception to this rule based on public policy, which became known as the illegal-
acts exception and which provides that an employee may recover damages for
wrongful termination when he or she (1) refuses to participate in an illegal act
or (2) reports an illegal act, and this forms the basis for termination. 626 So. 2d
603, 607 (Miss. 1993).
“Applicability of the exception does not require that a crime has already
been committed but it does require that the acts complained of warrant the
imposition of criminal penalties, as opposed to mere civil penalties.” Hammons
v. Fleetwood Homes of Miss., Inc., 907 So. 2d 357, 360 (Miss. App. 2004) (citation
omitted) (citing Howell v. Operations Mgmt. Int’l, Inc., 161 F. Supp. 2d 713, 719
(N.D. Miss. 2001); Paracelsus Health Care Corp. v. Willard, 754 So. 2d 437, 443
(Miss. 1999)). However, Mississippi law provides that, to succeed under the
illegal-act exception, a terminated employee must have reported conduct that is
actually illegal. See Wheeler v. BL Dev. Corp., 415 F.3d 399, 401 (5th Cir. 2005).
A terminated employee’s “attempt to equate an employee’s ‘good faith effort’ in
reporting illegal activity, which is protected under the common law exception,
with a good faith belief that illegal activity is taking place is misplaced.” Id. In
other words, “[a] plaintiff’s subjective belief that the acts reported were illegal
does not satisfy McArn; instead, the alleged act must actually be illegal.”
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McGrath v. Empire Inv. Holdings, LLC, No. 1:11-CV-209-A-S, 2013 WL 85205,
at *4 (N.D. Miss. Jan. 7, 2013) (citing Wheeler, 415 F.3d at 403).
Carlock argued before the district court that there was no genuine issue
of material fact that the conduct Vaughan reported was not in fact illegal under
Mississippi law. Therefore, in the context of summary judgment, Vaughan was
required to “go beyond the pleadings and by her own affidavits, or by the
‘depositions, answers to interrogatories, and admissions on file,’ designate
‘specific facts showing that there is a genuine issue for trial,’” Celotex, 477 U.S.
at 324, and establish that the activities she reported were actually illegal.
Vaughan argues that she reported conduct that was actually illegal and
thus that she was protected from termination under McArn. Specifically,
Vaughan asserts that Carlock violated Mississippi law prohibiting (1) larceny,
(2) uttering a forgery, (3) fraud by mail, and (4) false pretense. In the absence
of adverse countervailing evidence in the record, Vaughan’s belief that the
activities were criminal and her mere conclusory assertions that the activities
were actually illegal, however, does not satisfy McArn’s standard. Accordingly,
and as discussed more fully below, we affirm the district court’s grant of
summary judgment on these claims.
A.
Mississippi’s grand larceny statute states that “[e]very person who shall
be convicted of taking and carrying away, feloniously, the personal property of
another, of the value of Five Hundred Dollars ($500.00) or more, shall be guilty
of grand larceny.” MISS. CODE ANN. § 97-17-41. Mississippi’s petit larceny
statute is violated when property valued under $500 has been stolen. Id. §
97-17-43.
Vaughan’s opening brief states only that “[s]tealing is illegal under
Mississippi law.” She does not identify what property was stolen or that it was
done with the requisite intent. More fundamentally, she failed to make this
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argument below. Before the district court, Vaughan did not cite either
Mississippi’s grand larceny statute or the state’s petit larceny statute. Nor did
she discuss any authority applying either statute to explain how the conduct she
reported was in fact a violation of Mississippi law. “Arguments not raised in the
district court cannot be asserted for the first time on appeal.” Greenberg v.
Crossroads Sys., Inc., 364 F.3d 657, 669 (5th Cir. 2004). Accordingly, we decline
to address Vaughan’s assertion that she reported larceny.
B.
Mississippi’s prohibition on uttering a forgery is embodied in section
97-21-59 of the Mississippi code, which provides:
Every person who shall be convicted of having uttered or published
as true, and with intent to defraud, any forged, altered, or
counterfeit instrument, or any counterfeit gold or silver coin, the
forgery, altering, or counterfeiting of which is declared by the
provisions of this chapter to be an offense, knowing such instrument
or coin to be forged, altered, or counterfeited, shall suffer the
punishment herein provided for forgery.
MISS. CODE ANN. § 97-21-59. In context of this appeal, Carlock employees
committed the crime of uttering a forgery if they (1) published as true, (2) a
forged or altered document, (3) knowing that the document was forged or
altered, and (4) had the intent to defraud. See id.
Vaughan asserts that Carlock employees committed the crime of uttering
a forgery when they altered financial documents to include extended warranties
and “gap” insurance coverage when the customer had not requested these things
and by increasing the interest rate to more than what the customer had agreed
to at the time of sale. Vaughan, however, has failed to adduce adverse
countervailing evidence to show that there is a genuine dispute as to any
material fact, offering instead only unsubstantiated assertions that documents
were altered and failing to provide evidence that any particular document was
altered with the intent to defraud Carlock customers, as required by Mississippi
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law. In particular, Vaughan does not specify which documents were altered.
Furthermore, and possibly because she was not part of the sales process between
Carlock and its customers, Vaughn did not adduce evidence, as required under
Rule 56(c), that she witnessed the sales transactions and therefore could testify
as to the parties’ communications and actions that culminated in the illegal acts
that Carlock employees allegedly committed. Accordingly, she lacks first-hand
knowledge of what customers agreed to and what the financial documents
particular to each transaction ultimately provided. She has therefore failed to
demonstrate a genuine issue of material fact that she reported conduct that was
actually illegal under Mississippi law governing uttering a forgery, and thus
summary judgment in Carlock’s favor, as permitted by Rule 56(e), was
appropriate.
C.
The Mississippi mail-fraud statute prohibits certain actions intentionally
taken for pecuniary advantage “by means of false or fraudulent pretenses,
representations, or promises.” MISS. CODE. ANN. § 97-19-83(1). Vaughan asserts
that Carlock committed fraud when it advertised, via U.S. mail, that customers
could win certain prizes, including a new car if the key that was mailed to the
potential customer unlocked the car in question. Vaughan reported that no
Carlock employee ever handed out any prize or, if someone did, the prizes were
small and of little monetary value, exceeded by the shipping and handling fees
prize recipients were required to pay.
Carlock, however, presented evidence that the winning key was placed in
the mail and that the dealership could not guarantee that the recipient would
actually present it and claim the prize. Moreover, Vaughan does not cite any
authority providing that giving a prize that has little to no monetary value runs
afoul of Mississippi’s mail-fraud statute. Further, because Vaughan has failed
to show by adducing appropriate adverse countervailing evidence that Carlock
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intended to defraud its customers by making false representations, she failed to
demonstrate a genuine issue of material fact regarding whether she reported
conduct that was actually illegal under the mail-fraud statute. Summary
judgment, as permitted by Rule 56(e), was therefore properly granted with
respect to this claim.
D.
Mississippi’s false-pretense law provides:
Every person, who with intent to cheat or defraud another, shall
designedly, by color of any false token or writing, or by another false
pretense, obtain the signature of any person to any written
instrument, or obtain from any person any money, personal
property, or valuable thing, with a value of Five Hundred Dollars
($500.00) or more, upon conviction thereof shall be guilty of a felony
and punished by imprisonment in the State Penitentiary not
exceeding ten (10) years, and by a fine not exceeding Ten Thousand
Dollars ($10,000.00).
MISS. CODE ANN. § 97-19-39(2). “The gravamen of the offense of false pretenses
is a false representation of a past or existing fact, made by [the] accused with
knowledge of its falsity and with intent to deceive, a reliance thereon, and the
obtaining of something of value thereby without compensation.” Patton v. State,
34 So. 3d 563, 573 (Miss. 2010).
Vaughan reported that Carlock had agreed to “repair” a customer’s credit
in the course of four to six months in exchange for $400 to $800 and a “sponsor”
to co-sign the car loan; and agreed that after the customer’s credit was repaired,
the sponsor would be relieved of his or her liability for the loan, the customer
would be solely responsible for it, and that the interest rate on the loan would
be reduced. Vaughan alleged that the credit scores of the customers availing
themselves of this “clean sweep” program were not repaired, that the sponsors
remained liable for the car loans, and that the customers’ interest rates were not
lowered. Vaughan also reported that Carlock agreed to pay off one customer’s
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traded-in vehicle but failed to do so. Finally, Vaughan alleged that one car had
been advertised and sold as having air conditioning when in fact it did not.
However, Vaughan did not properly support her assertions of these facts,
or address Carlock’s contrary assertions of fact, as required by Rule 56(c), and
the district court properly granted summary judgment in favor of Carlock as
permitted under these circumstances by Rule 56(e). Although Vaughn argues
that Carlock “falsely” represented that the program would repair customers’
credit scores, she points to no evidence that this was Carlock’s plan, intention,
or expectation when it contracted with a particular customer. Nor did Vaughn
provide any support for her assertions that Carlock intentionally failed to pay
off the debt on traded-in cars. The same is true of Vaughan’s allegation that one
car was falsely sold as having air conditioning because Vaughn failed to support
her assertion of fact that the car was represented to have air conditioning by
Carlock with the intent to defraud the customer. In fact, Hill stated in his
deposition that this was an honest mistake that was later corrrected, and
Vaughan failed to address Hill’s contrary assertion as required by Rule 56(c).
Because Vaughan failed to properly support or address facts constituting the
elements of the crime of false pretenses, the district did not err in granting
Carlock summary judgment on these issues.
II.
Vaughan asserts that Hill committed the Mississippi tort of tortious
interference with employment when he terminated her employment, allegedly
in bad faith. Specifically, she alleged that Hill knew that she had reported
conduct to Nissan and that he fired her because of what she reported. Hill, in
contrast, contends that although he was aware that Vaughan had complained
to Nissan, he did not know that he was a subject of Vaughan’s complaints and
thus could not have fired Vaughan in bad faith. Hill, the moving party, has
adduced record evidence—namely, his deposition—to demonstrate what he
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claims is the absence of a genuine issue of material fact regarding whether he
knew the contents of Vaughan’s complaints to Nissan and therefore could have
terminated her in bad faith. Accordingly, it was incumbent on Vaughan to “go
beyond the pleadings and by her own affidavits, or by the ‘depositions, answers
to interrogatories, and admissions on file,’ designate ‘specific facts showing that
there is a genuine issue for trial.’” Celotex, 477 U.S. at 324. We conclude that
Vaughan has done this. Because she has demonstrated the existence of a
genuine issue of material fact with respect to whether Hill terminated her in bad
faith, summary judgment was not warranted.
A.
“One who intentionally and improperly interferes with the performance
of a contract between another and a third person by inducing or otherwise
causing the third person not to perform the contract, is subject to liability to the
other for pecuniary loss resulting to the other from the failure of the third person
to perform the contract.” Shaw v. Burchfield, 481 So. 2d 247, 254-55 (Miss.
1985). To support her tortious interference with employment claim, Vaughan
must establish that her termination was (1) intentional and willful; (2)
calculated to cause her damage; (3) done with the unlawful purpose of causing
damage and loss, without right or justifiable cause on the part of the defendant;
and (4) resulted in actual damage and loss. McClinton v. Delta Pride Catfish,
Inc., 792 So. 2d 968, 976 (Miss. 2001).
The Mississippi Supreme Court has recognized that “a claim for tortious
interference with at-will contracts of employment is viable in [Missisippi].”
Levens v. Campbell, 733 So. 2d 753, 760 (Miss. 1999). However, “one occupying
a position of responsibility on behalf of another is privileged, within the scope of
that responsibility and absent bad faith, to interfere with his principal’s
contractual relationship with a third person.” Shaw, 481 So. 2d at 255. Hill
occupied a position of responsibility, acting on behalf of Carlock, and thus was
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privileged to interfere with Vaughan’s employment unless he did so in bad faith
or outside the scope of his employment. See id. Consequently, we must consider
whether Vaughan has demonstrated a genuine issue of material fact regarding
whether Hill interfered with her employment in bad faith. Vaughan may satisfy
this “bad faith exception” by showing that Hill acted with malice, in other words,
that he terminated Vaughan “without right or good cause.” Morrison v. Miss.
Enter. for Tech., 798 So. 2d 567, 575 (Miss. App. 2001).
B.
Vaughan presented evidence, in the form of her affidavit, that on or about
April 2, 2009 she reported the conduct that she believed to be illegal to Nissan
but, out of concern for her job, used a pseudonym to do so. Roughly three weeks
later, seven Carlock employees, all of whom, according to Vaughan, were
involved in the reported activities, were terminated. However, Hill was not
among them. On or about April 30, 2009, Vaughan again called Nissan, stating,
“you did not get them all,” and specifically named Hill. It seems that Vaughan
again used a pseudonym. It was not until June 11, 2009, when Vaughan again
called Nissan, that she identified herself. Four day later, she was terminated.
She claims that on the day she was fired, Hill told her that she had “no right to
report these things to Nissan.”
The evidence in the record also includes deposition testimony from Hill
stating that, at the time he terminated Vaughan, he knew that she had made a
complaint of some sort to Nissan regarding Carlock. However, he claimed that
he did not know the contents of the complaint. He explained that he first learned
about Vaughan’s call to Nissan when somebody told him about it. That person
had apparently received some sort of report from Nissan. On learning of
Vaughan’s call to Nissan, Hill confronted Vaughan and asked her if she had
indeed complained to Nissan, and, according to Hill, she denied doing so. Hill
said that he was later handed “the actual complaint” and he again confronted
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Vaughan, at which point she confirmed that she had called Nissan.1 Hill
asserted that he never read the full complaint but instead, after receiving it, saw
that it had Vaughan’s name at the very top and at that point, he purposefully
stopped reading it and confronted Vaughan and terminated her employment
immediately.
C.
The district court determined that summary judgment in Hill’s favor was
warranted because Vaughan had failed to adduce evidence that Hill knew that
Vaughan had complained to Nissan specifically about him. However, Mississippi
law does not require this level of proof, and neither the district court nor Hill
cited any case law in support of that assertion. Rather, we conclude that
Vaughan, relying on appropriate evidence as required by Rule 56(c), has created
a genuine issue of material fact regarding whether Hill terminated her in bad
faith—in other words, that Hill terminated Vaughan “without right or good
cause”—which is all that Mississippi law requires. See, e.g., Morrison, 798 So.
2d at 575.
It is undisputed that Vaughan’s reports to Nissan were a factor in Hill’s
decision to fire her (Hill explained as much in his deposition). Hill offered
additional explanations for his decision, including cost cutting due to economic
downturn,2 that Vaughan complained to Nissan rather than raising her concerns
with Hill first,3 and that Vaughan, when first confronted about her call to
1
The record reflects that the complaint Hill received and the call log, describing
Vaughan’s complaints to Nissan, are distinct. For instance, the call log does not identify
Vaughan by name, whereas Hill testified that the complaint he received was a typewritten
document from Nissan with Vaughan’s name written at the very top.
2
Hill stated that only two employees, Vaughan and her immediate supervisor, Jeff
Adams, were terminated due to financial reasons. He further testified that Adams was
subsequently rehired.
3
Although Hill described a company policy directing employees to raise concerns first
with their immediate supervisor and second with the company vice president (Hill), Vaughan
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Nissan, initially denied it. Nevertheless, it is undisputed that Vaughan’s
termination occurred four days after she called Nissan, identified herself, and
specifically named Hill, as she explained in her affidavit. Furthermore,
Vaughan specifically alleged in her affidavit that Hill, when terminating her,
told her that she had “no right to report these things to Nissan.” Whether to
credit his alternative explanations—and, for that matter, whether to credit his
assertion that he was unaware of the contents of Vaughan’s complaints because
he did not read the document he was handed and that listed Vaughan’s name at
the top—as “good causes” within the meaning of Mississippi’s bad-faith exception
involves credibility determinations inappropriate for summary judgment. See
Reaves Brokerage Co. v. Sunbelt Fruit & Vegetable Co., 336 F.3d 410, 412 (5th
Cir. 2003) (noting that we “must review all of the evidence in the record, but
make no credibility determinations or weigh any evidence”). “In reviewing all
the evidence, the court must disregard all evidence favorable to the moving party
that the jury is not required to believe, and should give credence to the evidence
favoring the nonmoving party as well as evidence supporting the moving party
that is uncontradicted and unimpeached.” Id. at 413. Reading the record in the
light most favorable to Vaughan, we conclude that she has presented sufficient
evidence to create a genuine issue of material fact with respect to whether Hill
fired her for exposing allegedly illegal activities at the dealership, which we
think suffices as bad faith termination under Mississippi law. Ultimately, of
course, it is up to the trier of fact to decide whose version of events should be
believed.
testified that she had never received a copy of the employee handbook. Furthermore, Hill
admitted that there was no policy in the handbook prohibiting employees from calling Nissan
directly.
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CONCLUSION
For the foregoing reasons, we AFFIRM the district court’s grant of
summary judgment in favor of Carlock with respect to Vaughan’s claim that she
satisfied Mississippi’s illegal-acts exception. However, we REVERSE the district
court’s grant of summary judgment in favor of Hill with respect to Vaughan’s
tortious interference with employment claim and REMAND the case to the
district court for further proceedings not inconsistent with this opinion.
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