996 F.3d 499
8th Cir.2021Background
- Jonathan Scarborough was a Regional Marketing Manager at Federated (1998–2014) who reviewed and approved district managers’ expense reports.
- One subordinate, Frederick Johnston, submitted fraudulent expense invoices (including ~$700 in personal framing and ~ $5,000 in falsified Husch Blackwell meeting invoices); investigation revealed Scarborough had approved some claimed expenses.
- Scarborough reported his concerns to supervisors (Pennington, then Kerr), denied prior knowledge of Johnston’s fraud, and later warned and communicated about the investigation to other employees.
- Federated issued a warning, then demoted Scarborough (August 13, 2014) and terminated him (August 20, 2014), citing dishonesty about knowledge of fraud, improper personal charges on his company card, unprofessional communications, and spreading rumors.
- Scarborough sued under the Minnesota Whistleblower Act (MWA). After remand from this court to consider Friedlander, the district court again granted summary judgment for Federated; the Eighth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Scarborough engaged in protected activity under the MWA | Scarborough reported Johnston’s suspected law-violating expense fraud (July 7, 14, 30) and thus engaged in protected whistleblowing | Federated disputed scope/timing for some statements and emphasized Silva’s other misconduct was the basis for discipline | Court assumed Scarborough engaged in protected activity for analysis but found no genuine dispute on ultimate retaliation claim |
| Whether there is a causal link between protected activity and adverse actions | Scarborough argued discipline flowed from his reporting/denials and supervisors’ intent to scapegoat him | Federated said adverse actions responded to Scarborough’s alleged dishonesty, misconduct, unauthorized disclosures, and improper expenses | Court found Scarborough failed to produce evidence creating a reasonable inference that retaliation motivated demotion/termination |
| Whether Federated’s proffered non‑retaliatory reasons were pretextual | Scarborough contended the stated reasons were false or manufactured to cover others’ misconduct (e.g., Pennington) | Federated pointed to witness statements, observed conduct, and reasonable managerial beliefs supporting its actions | Court held Scarborough did not discredit employer’s honest belief in those reasons or show circumstances permitting inference of retaliation |
| Whether there was direct evidence of retaliation | Scarborough claimed he was punished for truthfully denying prior knowledge (direct evidence of retaliation) | Federated argued alleged evidence at most shows supervisors believed he lied, not that he was punished for protected reporting | Court rejected direct‑evidence theory — evidence showed belief he lied, not that he was punished for whistleblowing |
Key Cases Cited
- Pedersen v. Bio-Medical Applications of Minn., 775 F.3d 1049 (8th Cir. 2015) (summary judgment and McDonnell Douglas framework in whistleblower context)
- Friedlander v. Edwards Lifesciences, LLC, 900 N.W.2d 162 (Minn. 2017) (clarifying MWA good-faith reporting standard after statutory amendment)
- McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973) (burden-shifting framework for discrimination/retaliation claims)
- Mervine v. Plant Eng’g Servs., LLC, 859 F.3d 519 (8th Cir. 2017) (plaintiff must discredit employer’s stated reason; employer’s honest belief is key)
- Macias Soto v. Core-Mark Int’l, Inc., 521 F.3d 837 (8th Cir. 2008) (focus on whether employer believed misconduct occurred)
- Pulczinski v. Trinity Structural Towers, Inc., 691 F.3d 996 (8th Cir. 2012) (scope of internal investigations is business judgment not typically second‑guessed)