ITT Wins Retaliation Claim Thanks to Hookahs and Arby's - U.S. Seventh Circuit
U.S. Seventh Circuit - The FindLaw 7th Circuit Court of Appeals Opinion Summaries Blog

ITT Wins Retaliation Claim Thanks to Hookahs and Arby's

A whistleblower who isn’t fired for whistle-blowing can’t win a wrongful termination lawsuit, according to the Seventh Circuit Court of Appeals.

Plaintiff Jason Halasa was the College Director of ITT Technical Institutes’ Lathrop, California Campus for six months. ITT says that Halasa was fired for exhibiting poor management skills and delivering inadequate results; Halasa alleges that he was fired in violation of the False Claims Act after identifying and reporting irregularities in ITT practices.

Halasa claimed that, when he started, ITT student recruiters were paid on an incentive basis, which is expressly prohibited by the Department of Education’s Program Participant Agreement (PPA). He alleged that other ITT employees were pressured to change the entrance exam scores of prospective students, to alter the grades of students to improve their job prospects, and to misreport the employment statistics of graduates.

Halasa supposedly reported all these observations to his direct supervisor, Jeff Ortega, and reported some of them to Valory Hemphill, ITT’s Regional Director of Recruitment, and Chris Carpentier, its Director of Compliance.

ITT had its fair share of complaints against Halasa, as well. Halasa allegedly:

  • Smoked a hookah pipe in the campus parking during a student orientation event.
  • Referred to himself as the “King” and his colleagues as the “Mafia.”
  • Planned to close all of the campus restrooms simultaneously, and direct employees to a nearby Arby’s when nature called.

Beyond the more colorful examples of his failures, ITT claimed that the Lathrop campus was performing below expectations during Halasa’s tenure. Several vice presidents and the CEO decided to terminate Halasa’s employment in September 2009.

Halasa filed a retaliation claim against ITT, arguing that ITT ended their relationship because he had identified and reported violations of ITT’s legal obligations under the PPA. The district court granted summary judgment in favor of ITT.

To win, Halasa had to prove that he engaged in protected conduct and that he was fired “because of” that conduct. The Seventh Circuit was satisfied that Halasa’s evidence regarding recruiting and misreporting would permit a trier of fact to find that he engaged in conduct protected by the False Claims Act, but he failed to clear a second legal hurdle: Halasa didn’t show that his protected conduct was connected to ITT’s decision to fire him.

The Seventh Circuit Court of Appeals noted, “The law is clear that it is the decisionmakers’ knowledge that is crucial … [C]ompanies are not liable under the False Claims Act for every scrap of information that someone in or outside the chain of responsibility might have.” Since there was no evidence that people who decided to fire Halasa even knew about the protected conduct, the appellate court affirmed the district court’s summary judgment decision.

Hookahs. Arby’s. Institutional downfall. The decisionmakers clearly had cause to fire Halasa. Now for the requisite conspiracy theory speculation: Did ITT really fire Halasa for performance issues, or was it just a pretext?

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