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Smith v. Chicago Bridge & Iron Co., N.V.

United States District Court, S.D. Texas, Houston Division

June 16, 2017

SEAN SMITH, Plaintiff,
v.
CHICAGO BRIDGE & IRON COMPANY, N.V., et al. Defendants.

          MEMORANDUM & ORDER

          KEITH P. ELLISON UNITED STATES DISTRICT JUDGE.

         Pending before the Court are Motions for Summary Judgment filed by Defendants Chicago Bridge & Iron Company, N.V. and Beth Bailey. (Doc. Nos. 31 & 32.) A hearing was held upon the matters on June 5, 2017. Upon consideration of the parties' arguments, and the relevant statutes and caselaw, the Court holds that it must deny summary judgment for CB&I, and grant summary judgment for Bailey.

         I. BACKGROUND

         Chicago Bridge & Iron Company, N.V. (“CB&I”) provides technology, engineering, and construction services in the energy industry. (Doc. No. 34-1 at 14.) CB&I has its own in-house staffing division, Global Staffing and Recruiting (GSR), which procures employees and contract workers to meet CB&I's staffing needs. (Doc. No. 33-2 at 5.) In 2011, Plaintiff Sean Smith, who was working in the Treasury Department of CB&I's Finance Department, accepted the position of Director of Finance and Business Administration of GSR. (Doc. No. 34-1 at 14.) Smith is a licensed CPA, and had previously worked as an external auditor at Arthur Anderson. In his new role at GSR, Smith worked closely with Human Resources (“HR”), and was in charge of billing CB&I divisions for the employees provided by GSR. (Doc. No. 33-2 at 5.) Smith reported directly to Wesley Stockton, the Vice President and Chief Accounting Officer of GSR. Stockton reported to Michael Taff, the Chief Financial Officer of GSR, who started in that role on April 1, 2015. (Id. at 4.) Smith also had a “dotted” reporting line to Thomas Anderson, who reported to Beth Bailey, the Executive Vice President and CAO of CB&I. (Id.) This meant that, although Anderson was not Smith's direct supervisor, Smith and Anderson often worked closely together. (Id.) Beth Bailey is the only individual named as a defendant in this case.

         CB&I claims that, in 2013, Anderson began to notice performance deficiencies in Smith's work. (Id.) In early 2014, Anderson told Stockton (Smith's direct supervisor) that Smith needed to be replaced. (Id. at 6.) Stockton agreed and said he would look for a replacement, but that did not happen quickly. (Id.) Around the same time, Smith also approached Stockton, stating that he wanted to move out of GSR. (Doc. No. 34-1 at 33.) Before April of 2015, it appeared as though Smith would move back to the Treasury Department in CB&I. (Doc. No. 33-2. at 7.) He even interviewed replacements for his position in GSR. (Id.)

         However, at the beginning of 2015, the Internal Audit Department of CB&I began conducting an audit of GSR. (Id. at 4.) According to Defendants, these audits are routine, with 80-100 being conducted within CB&I each year. In April 2015, the final audit report detailed errors in GSR's Finance Department (which Smith ran) and HR Department that created internal billing failures. (Doc. No. 33-2 at 7.) As a result of this audit, Taff, the CFO of GSR, decided to terminate Smith, instead of transferring him. He says that the audit revealed “fundamental problems in Smith's Finance department that were unrelated to GSR HR systems mistakes.” (Doc. Nos. 32-1 at 13; 33-2 at 116.) As a result, Taff did not think it was appropriate to transfer Smith to another division, and decided instead to terminate him. (Doc. No. 33-2 at 116.) In addition to Smith, the head of HR and five other individuals in HR were terminated, all on the same day. (Doc. No. 33-2 at 10.)

         Smith presents evidence, however, that he had requested the very audit that was then used as a basis to terminate him. He states that in November 2014, he complained to Anderson about concerns he had with GSR's ability to produce accurate billings “and the ramifications on CB&I as a whole.” (Doc. Nos. 34 at 4; 34-1 at 85.) Smith contends that errors in inputting the proper pay rates for employees, which was the HR Department's responsibility, made it impossible for the Finance Department to produce an accurate bill. Smith states that, when nothing changed after complaining to Anderson, he went to Todd Freeman, the head of Internal Audit at CB&I, and asked for an audit. (Doc. No. 34-1 at 32.) Freeman does not deny this, but states that he had also conducted a routine survey of the top executives at CB&I to determine which departments should be audited. (Doc. No. 33-2 at 39-40.) According to these surveys, GSR was ranked first, which is why it was audited-not because of Smith's complaints. (Doc. No. 33-2 at 40.)

         Once the initial audit reports came out, Beth Bailey, who oversaw the HR Department, assigned someone to help fix the problems stemming from the HR Department. (Doc. No. 33-2 at 18.) A few weeks later, she sent around “Management Action Plans” with responses to the problems identified in the audit, indicating that the problems had all been “fixed” and detailing that process. (Id. at 19.) Smith apparently complained to his team, Stockton, and Anderson that these responses were fabricated, and that the problems exposed in the audit persisted. (Doc. No. 34-1 at 173, 323.) He argues that his termination was the result of his requesting the audit and complaining about the allegedly fabricated “fixes” from HR. (Doc. No. 34 at 18.) His termination occurred two days after the final audit report was released, and one day after he complained about the “fixes.” (Id.)

         II. SUMMARY JUDGMENT STANDARD

         A motion for summary judgment under Federal Rule of Civil Procedure 56 requires the Court to determine whether the moving party is entitled to judgment as a matter of law based on the evidence presented. Fed.R.Civ.P. 56(c). Summary judgment is proper “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Kee v. City of Rowlett, 247 F.3d 206, 210 (5th Cir.2001) (quotations omitted). A genuine issue of material fact exists if a reasonable jury could enter a verdict for the non-moving party. Crawford v. Formosa Plastics Corp., 234 F.3d 899, 902 (5th Cir.2000). The Court views all evidence in the light most favorable to the non-moving party and draws all reasonable inferences in that party's favor. Id. Hearsay, conclusory allegations, unsubstantiated assertions, and unsupported speculation are not competent summary judgment evidence. F.R.C.P. 56(e)(1); See, e.g., Eason v. Thaler, 73 F.3d 1322, 1325 (5th Cir.1996), McIntosh v. Partridge, 540 F.3d 315, 322 (5th Cir.2008); see also Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994) (noting that a non-movant's burden is “not satisfied with ‘some metaphysical doubt as to the material facts' ”) (citing Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

         III. SARBANES-OXLEY ACT

         Section 806 of the Sarbanes-Oxley Act (“SOX”) creates a private cause of action for employees of publicly-traded companies that are retaliated against for engaging in protected activity. 18 U.S.C. § 1514A. The statute states, in relevant 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 [18 U.S.C] section 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) . . . .

18 U.S.C. § 1514A(a)(1)(C). In order to establish a claim, an employee must prove by a preponderance of the evidence (1) that he engaged in protected activity; (2) his employer knew he engaged in that activity; (3) he suffered an unfavorable personnel action; and (4) the protected activity was a contributing factor in the unfavorable action. Allen v. Administrative Review Bd., 514 F.3d 468 (5th Cir.2008) (citing Collins v. Beazer Homes USA, Inc., 334 F.Supp.2d 1365, 1379 (N.D.Ga.2004)). If the employee establishes these four elements, the employer may still avoid liability by proving, by clear and convincing evidence, that it would have taken the same unfavorable personnel action in the absence of the protected behavior. Id.

         Smith alleges that he engaged in protected activity by requesting the audit in the first place, and by subsequently complaining about the allegedly fabricated “fixes” from HR. Defendant Bailey argues that she had no knowledge of Smith's alleged protected activity, and that, even if she did, she did not make the decision to terminate Smith. (Doc. No. 31-1 at 4-5.) Defendant CB&I argues that Smith did not engage in protected activity, that Taff, who made the decision to terminate Plaintiff, did not know of Smith's alleged protected activity, and that accordingly, the decision was not causally related to Plaintiff's activity. (Doc. No. 32-1 at 6.) ...


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