Scarborough v. Federated Mut. Ins. Co., 379 F. Supp. 3d 772

Background

Scarborough was a Regional Marketing Manager who supervised District Marketing Managers, including Johnston, who submitted expense reports for meeting rooms that were later shown to be provided free of charge.
Scarborough investigated Johnston's expenses, forwarded a July 14, 2014 email confirming the rooms were free, and on July 30 raised to supervisors that Johnston's invoicing might be illegal and possibly implicate tax issues.
Federated confronted Johnston (who admitted fraudulent invoices) and issued Scarborough a warning on August 4, 2014 for allegedly lacking credibility about prior knowledge; Scarborough was demoted August 13 and terminated August 20, 2014, with Federated citing multiple misconducts (dishonesty, improper personal charges, misuse of referral credits, and spreading rumors).
Scarborough sued under the Minnesota Whistleblower Act (MWA); the district court initially granted summary judgment to Federated, the Eighth Circuit vacated and remanded in light of Friedlander (MN), and the case returned to this court for reconsideration.
Applying Friedlander (which limited the MWA "good faith" inquiry to truthfulness), the court concluded Scarborough made protected reports on July 14 and July 30 but nevertheless granted summary judgment for Federated because Scarborough failed to prove causation or pretext.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Scarborough engaged in a protected "report" under MWA	Scarborough says his July 14 email forwarding confirmation and July 30 statements about illegality were reports made in good faith	Federated argued earlier statements were not reports and some communications were not made in good faith or did not communicate an actual/suspected violation	Court: July 14 and July 30 communications qualify as MWA "reports" post-Friedlander; July 7 comment did not qualify
Causation between report and adverse actions	Scarborough contends warnings, demotion, and termination followed his reports closely and decision-makers knew of his reports	Federated points to intervening facts (belief Scarborough was complicit, discovery of Scarborough's own misconduct, rumor-spreading) breaking causal link	Court: No sufficient evidence of causal nexus; temporal proximity alone insufficient and intervening misconduct undermines inference
Whether Federated's stated reasons were pretextual	Scarborough argues the discipline was manufactured and inconsistent with policies; investigatory focus on his reports shows retaliatory animus	Federated asserts multiple legitimate, nondiscriminatory reasons supported its actions (dishonesty, personal charges, misuse of credits, spreading false rumors)	Court: Federated's reasons are credible; Scarborough failed to raise genuine issue of pretext
Existence of direct evidence of retaliation	Scarborough points to warning and testimony suggesting animus tied to his denials and reports	Federated contends adverse actions were based on belief Scarborough lied and engaged in misconduct, not on protected reporting	Court: No direct evidence—discipline targeted alleged complicity/lying, not reporting; thus direct-evidence claim fails

Key Cases Cited

Friedlander v. Edwards Lifescis., LLC, 900 N.W.2d 162 (Minn. 2017) (clarifying MWA "good faith" focuses on truthfulness, not reporter's purpose)
Wood v. SatCom Mktg., LLC, 705 F.3d 823 (8th Cir. 2013) (McDonnell Douglas framework applies to MWA claims)
McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973) (burden-shifting framework for discrimination/retaliation claims)
Freeman v. Ace Tel. Ass'n, 467 F.3d 695 (8th Cir. 2006) (report element can be decided as a matter of law)
Buytendorp v. Extendicare Health Servs., Inc., 498 F.3d 826 (8th Cir. 2007) (pretext standard for termination decisions)
Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (summary judgment standard)
Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) (summary judgment and burden to show genuine issues of material fact)