United States District Court, D. Minnesota
H. Redden, Esq., and John A. Fabian, III, Esq., Fabian May
& Anderson, counsel for Plaintiff.
M. Gilbertson, Esq., Danielle W. Fitzsimmons, Esq., and
Gregory J. Stenmoe, Esq., Briggs & Morgan, PA, counsel
MEMORANDUM OPINION AND ORDER
DONOVAN W. FRANK UNITED STATES DISTRICT JUDGE
matter is before the Court on a Motion for Summary Judgment
brought by Defendant Federated Mutual Insurance Company
(generally, “Federated”). (Doc. No. 123.)
Plaintiff Jonathan Scarborough filed a claim against
Federated alleging that he was terminated in violation of
Minnesota's Whistleblower Act (“MWA”),
Minnesota Statute §§ 181.931-.932. For the reasons
set forth below, the Court grants Federated's motion.
facts of this case were previously set forth in an Order
dated February 1, 2017. (Doc. No. 88.) In that Order, the
Court granted Federated summary judgment on Scarborough's
MWA claim. Plaintiff appealed and the Eighth Circuit Court of
Appeals vacated and remanded the case for reconsideration in
light of the Minnesota Supreme Court's decision in
Friedlander v. Edwards Lifescis., LLC, 900 N.W.2d
162, 166 (Minn. 2017). (Doc. No. 113.)
is a national mutual insurance company that offers insurance
primarily to businesses and business owners. Scarborough was
a Regional Marketing Manager (“RMM”) for
Federated for the Central Region, which includes Kansas,
Missouri, and Nebraska. (Doc. No. 126 (“Fitzsimmons
Decl.”) ¶ 3, Ex. 1. (“Scarborough
Dep.”) at 12; id. ¶ 3, Ex. 9.) He had
held that position since 2012. Scarborough supervised six
District Marketing Managers (“DMM”) and his role
as RMM included reviewing and approving DMMs' expense
accounts. (Id. ¶ 3, Ex. 10, ¶ 16.)
Scarborough's DMMs was Frederick Johnston. On July 1,
2014, Johnston's assistant submitted Johnston's
expense report for his company credit card. (Id.
¶ 3, Ex. 16.) The report included a personal expense for
custom framing. (Id. ¶ 3, Ex. 15.) The next
day, the Marketing Administration Manager Rhonda Kath
e-mailed Johnston about the framing expense. (Id.
¶ 3, Ex. 15; id. ¶ 3, Ex. 4 (“Kath
Dep.”) at 28.) Johnston lied to Kath about the expense,
claiming that it was for laminating services and printer ink.
(Fitzsimmons Decl. ¶ 3, Ex. 15; Kath Dep. at 25-26.)
Unconvinced, Kath inquired directly with the store and
learned that the expense was for framing pictures of
Johnston's European vacation. (Fitzsimmons Decl.
¶ 3, Ex. 15; Kath Dep. at 35.)
the lie rooted out, Kath e-mailed her supervisor and General
Manager-Marketing Services, Martha Kearin, who brought in
Scarborough's supervisor Michael Pennington. (Fitzsimmons
Decl. ¶ 3, Ex. 17.) Pennington then updated Scarborough.
(Id. ¶ 3, Ex. 18.) On July 7, 2014, Pennington
and Scarborough met to discuss Johnston's expenses.
During this meeting, Scarborough mentioned that Johnston
liked “nice and fancy” things and added by way of
example that Johnston liked to hold meetings at the law
offices of Husch Blackwell, even though he could probably
find a less expensive venue. (Scarborough Dep. at 68-69.)
After hearing that, Pennington replied, “What are you
talking about? [Johnston] gets those meeting rooms for
free.” (Id.) Scarborough then explained that
Johnston had been submitting invoices for those meetings.
(Id.) Their conversation ended with Scarborough
telling Pennington that he would investigate the issue
further. (Id. at 52, 69.)
14, 2014, Scarborough exchanged e-mails with Husch Blackwell,
which confirmed that the meeting rooms were provided free of
charge. (Fitzsimmons Decl. ¶ 3, Ex. 20.) Scarborough
forwarded the e-mails to Pennington, and they agreed to talk
with Johnston about the invoices in addition to the framing
continued her investigation into Johnston's expense
reports from July 2012 to July 2014, along with invoices
Johnston submitted to support his out-of-pocket expenses.
(Id. ¶ 3, Ex. 22.) She forwarded the reports
and invoices to Pennington, who forwarded them to
Scarborough. (Id. ¶ 3, Exs. 23-24.) Her report
showed that Johnston had submitted, and Scarborough had
approved, over $5, 000 in out-of-pocket expenses related to
the Husch Blackwell meeting rooms in amounts ranging from
$250 to $350 per meeting. (Id. ¶ 3, Exs. 24-25;
Scarborough Dep. at 82-84.)
21, 2014, Scarborough and Pennington met with Johnston.
(Scarborough Dep. at 87-88; Fitzsimmons Decl. ¶ 3, Ex. 2
(“Pennington Dep.”) at 109.) Prior to the
meeting, Pennington asked if Scarborough had prior knowledge
about the false invoices, and Scarborough denied it.
(See Fitzsimmons Decl. ¶ 3, Ex. 26.) During the
meeting, Johnston admitted to submitting fraudulent invoices
and receiving payment for them. (Pennington Dep. at 109-111.)
Later that day, Johnston called Pennington to tell him that
Scarborough had known about Johnston's scheme and that
Scarborough had suggested to another DMM, Braxton Weaver,
that he do the same thing. (Fitzsimmons Decl. ¶ 3, Ex.
26; id. ¶ 3, Ex. 5 (“Johnston
Dep.”) at 170-72.)
24, 2014, Scarborough met with Pennington and
Pennington's supervisor, Mike Kerr. (Fitzsimmons Decl.
¶ 3, Ex. 26.) At the July 24 meeting, Kerr asked
Scarborough whether he had prior knowledge of Johnston's
invoicing practice. Again, Scarborough
“aggressively” denied having any prior knowledge.
and Kerr continued to investigate whether other DMMs had also
falsified invoices. For example, Pennington reached out to
Weaver to follow up on the claim that Scarborough knew about
Johnston's fraudulent expenses and recommended the
practice to other DMM's. (Id. ¶ 3, Ex. 26;
id. ¶ 3, Ex. 7 (“Weaver Dep.”) at
45-48.) When asked if Scarborough, Weaver's supervisor,
was aware that Johnston was submitting false Husch Blackwell
invoices, Weaver responded “yes.” (Weaver Dep. at
45-47, 52-53.) Weaver also answered “yes” when
asked if he told Pennington that Scarborough recommended to
him that he contact Johnston for “more details on how
to do the same with respect to submitting fraudulent
practices as an avenue to pocket money.” (Id.
30, 2014, Scarborough met with Kerr and Pennington.
(Fitzsimmons Decl. ¶ 3, Ex. 3 (“Kerr Dep.”)
at 70; Scarborough Dep. at 55.) At this meeting, Scarborough
stated that Johnston's actions may have been illegal.
Scarborough also allegedly told Pennington and Kerr that he
suspected that Johnston was violating tax law and that
Federated likely violated tax laws because it had not applied
the proper withholdings to the funds that Johnston had taken.
(Scarborough Dep. at 60.) Kerr and Pennington either deny or
do not remember that Scarborough brought up tax violations or
other illegalities related to Johnston's false invoices.
(Kerr Dep. at 86; Pennington Dep. at 165-66.) In addition, at
the meeting, Kerr confronted Scarborough about his failure to
use the company's travel team when scheduling work travel
and Scarborough's alleged misuse of referral credits on a
company cruise. (Scarborough Dep. at 55-58.)
August 4, 2014, Pennington, Scarborough, and Johnston met in
Kansas City. (Id. at 110; Pennington Dep. at 200,
206-07.) Pennington explained that due to the findings
regarding Johnston's unethical practices, he could not
continue in management at Federated. Ultimately, Johnston was
offered a choice of resigning or being demoted. After
Johnston left the meeting, Pennington then issued a warning
letter to Scarborough because Scarborough continued to deny
his prior knowledge of Johnston's fraudulent scheme. The
letter read in part:
Based upon conversations you and I had many months prior to
this matter arising, as well as other information I have
received during the investigation, I find that your abject
denials lack credibility and that you were not honest with
Mike and me - even though we allowed you multiple