Employee Who Engaged in Protected Activity Failed to Assert Viable Retaliation Claim Where Employee Terminated for Operating a Competing Company in Violation of Employer’s Conflict-of-Interest Policy

On April 24, 2018, the Tenth Circuit affirmed summary judgment in favor of an employer  where an employee alleged retaliatory discharge in violation of Title VII of the Civil Rights Act of 1964 because the employee failed to present evidence of a causal relation between her alleged protected activity and the termination of her employment.

The employer operated a telecommunications company.

In June 2012, the employee told her supervisor and human resources partner that she observed a manager treat an employee in an allegedly discriminatory manner.

The employee also contends that in August 2013 she made additional comments to management about the same manager engaging in discriminatory conduct towards the same employee.

In October 2013, the employer terminated a different employee for violating its conflict of interest policy. The terminated employee told a human resources partner that the plaintiff employee had a similar conflict.

Thereafter, the plaintiff employee’s supervisor asked the employee to disclose any potential conflicts that she had. The employee disclosed that her domestic partner and two uncles owned telecommunications businesses that were used by the employer’s customers.

On November 6, 2013, the human resources manager directed the human resources partner to conduct an investigation into the employee’s potential conflicts. The investigation revealed that the employee owned and operated a telecommunications business with her partner.

The human resources partner, submitted a report in December 2013 to the employer’s vice president of human resources who determined that the employee had a conflict of interest. The human resources partner told the employee’s supervisor that the employee had a conflict of interest because she had access to the employer’s current and prospective customer lists and could refer the employer’s customers to her own business.

On December 16, 2013, the human resources partner recommended that the employee be terminated because she owned, operated, and financially benefited from a telecommunications company that competes with the employer.

Thereafter the fired employee sued the employer alleging that she was terminated, in violation of Title VII, for engaging in protected activity, which protected activity consisted of her reporting the alleged discriminatory conduct referenced above, in June 2012 and August 2013.

In affirming the summary judgment dismissal in favor of the employer, the appeals court noted that: “a vague reference to discrimination and harassment without any indication that this misconduct was motivated by criteria prohibited by Title VII does not constitute protected activity and will not support a retaliation claim.” Nonetheless the court noted that the district court assumed that the employee had engaged in protected activity in August 2013.

The district court ruled that the employee failed to establish any causal connection between her alleged protected activity in August 2013 and her termination in December 2013.

The court found that asking the employee to disclose her potential conflicts in October 2013 does not qualify as a retaliatory action, nor does the employer’s commencement of an internal investigation of potential wrongdoing in November 2013. The court cited 10th Circuit caselaw holding that as to a First Amendment retaliation claim, courts do not consider standard workplace investigations to be materially adverse employment actions.

In sum, an employee assumed to have engaged in protected activity roughly four months before she was terminated for a conflict of interest, which conflict was created by the employee operating a competing business, failed to present sufficient evidence to establish a prima facie case of retaliatory discharge under Title VII.

See Nealis v. Coxcom, 2018 U.S. App. LEXIS 10302 (10th Cir. April 24, 2018)


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