Duste v. Chevron Products Co.

• Decision Date: 02 September 2010
• Docket Number: No. C 08-3980 MEJ,C 08-3980 MEJ
• Citation: 738 F.Supp.2d 1027
• Court: U.S. District Court — Northern District of California
• Parties: Richard A. DUSTE, Plaintiffs, v. CHEVRON PRODUCTS COMPANY, Defendant.

738 F.Supp.2d 1027

Richard A. DUSTE, Plaintiffs,

v.CHEVRON PRODUCTS COMPANY, Defendant.

No. C 08-3980 MEJ.

United States District Court, N.D. California.

Sept. 2, 2010.

Walston Cross, Gregory S. Walston, Gregory Scott Walston, The Walston Legal Group, San Francisco, CA, for Plaintiff.

Alejandro Angel Luis Ponce De Leon, Marcia Lynn Pope, Pillsbury Winthrop LLP, San Francisco, CA, for Defendants.

ORDER RE DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

MARIA-ELENA JAMES, United States Chief Magistrate Judge.

Pending before the Court is Defendant Chevron U.S.A. Inc.'s Motion for Summary Judgment or, in the Alternative, Partial Summary Judgment. (Dkt. # 22.) Plaintiff Richard Duste has filed an Opposition (Dkt. # 28), to which Defendant filed a Reply (Dkt. 33). On November 5, 2009, the Court held oral argument in this matter. After consideration of the parties' briefs and oral arguments, relevant legal authority, and good cause appearing, the Court GRANTS IN PART and DENIES IN PART Defendant's Motion as follows.

I. BACKGROUND

Plaintiff Richard Duste ("Plaintiff") began working for Defendant Chevron U.S.A., Inc. ("Defendant" or "Chevron") as the Southwestern Territory Manager on January 16, 1998. (Joint Statement of Undisputed Facts ("JSOF") 1, Dkt. # 26; Pl.'s Opp.'n at 2:2-3, Dkt. # 28.) In October 2001, Plaintiff was promoted to the position of sales manager. (JSOF 2, Dkt. # 26; Pl.'s Opp'n at 2:3-4, Dkt. # 28.) In this capacity, Plaintiff was responsible for directly managing a sales force of six territory managers for the Global Aviation Division's customers in the United States, the Caribbean, and Latin America. (JSOF ¶ 3, Dkt. # 26.) Additionally, as sales manager, Plaintiff was responsible for reviewing and approving expense reports submitted by his subordinates. (JSOF ¶ 4, Dkt. # 26.)

According to Plaintiff, he was also responsible for entertaining Defendant's clients. (Pl.'s Opp'n at 2:8, Dkt. # 28.) To this end, Plaintiff asserts that "he was frequently required to entertain executives from oil-consuming companies," and "as a practical matter, entertaining oil-company executives does not always involve trips to fancy tapas restaurants and nice wine bars." (Pl.'s Opp'n at 1:4-6, Dkt. # 28.) Thus, Plaintiff asserts that the clients often would ask to go to gentlemen's clubs, and he accommodated such requests and accompanied clients to gentlemen's clubs on five occasions. (JSOF ¶ 41, Dkt. # 26; Opp'n at 2:8-10, Dkt. # 28.) On two such occasions, he purchased "lap dances" for himself. (Pope Decl., Ex. A 133:12-135:4, Dkt. # 23.)

As a Chevron employee, Plaintiff was aware that he was expected to follow Defendant's policies and procedures. (JSOF ¶ 6, Dkt. # 26.) During Plaintiff's employment, Defendant had in place a Travel and Expense Accounting Policy ("TEA"), Policy 585. (JSOF ¶ 5, Dkt. # 26.) Plaintiff was aware of the TEA Policy. (JSOF ¶ 5, Dkt. # 26.) Further, as an expense reportapprover, Plaintiff understood that his responsibilities included: ensuring that employees understand the Corporate Travel policy; the business purpose for the trip; the need to exercise good judgment while traveling; reviewing expense reports for appropriateness and correctness; reviewing and promptly approving for reimbursement all reasonable and necessary expenses incurred by employees conducting business on Defendant's behalf; and ensuring that employees submit expense reports in a timely manner consistent with the expense reporting guidelines. (JSOF ¶ 7, Dkt. # 26.)

Plaintiff was also familiar with a variety of examples of misuse of the company travel policy, including submission of false expenses and inappropriate entertainment of clients. (JSOF ¶ 8, Dkt. # 26.) Plaintiff understood that, as a supervisor, he was responsible for satisfying himself that his subordinates' expense reports were accurate. (JSOF ¶ 9, Dkt. # 26.) Plaintiff was also responsible for reviewing his direct reports' expense reports, making inquiries when follow-up was required, and when appropriate, approving the expense reports submitted. (JSOF ¶ 10, Dkt. # 26.) Plaintiff understood that violation of Defendant's travel and expense reporting policy may subject the employee to disciplinary action that may include non-reimbursement of expenses, cancellation of credit card privileges, and disciplinary action up to and including termination. (JSOF ¶ 11, Dkt. # 26.) As part of its finance and auditing function, Defendant implements periodic spot checks in which employee expense reports are randomly selected for review. (JSOF ¶ 12, Dkt. # 26.) In early 2007, a routine spot check resulted in the random identification of expense reports submitted by an employee named Chris Browning. (JSOF ¶ 13, Dkt. # 26.) The expense reports pulled during the spot check were from a period in 2005 when Browning reported to Plaintiff, who was responsible for reviewing and approving reports that Browning submitted. (JSOF ¶ 14, Dkt. # 26.) The expense reports showed irregularities, and as a result, Doug Hinzie, president of Defendant's Global Aviation Division, and Astley Blair, Defendant's Division Finance Office for the Global Supply and Trading organization, initiated an investigation with Debra Taylor in Defendant's Corporate Security Department. (JSOF ¶ 15, Dkt. # 26; Taylor Decl., ¶¶ 1-2, Dkt. # 25.)

Taylor's investigation included a review of Browning's expense reports for 2005 and into 2006, a review of email messages automatically generated by Defendant's travel and expense reporting system to Browning and Plaintiff, and witness interviews. (JSOF ¶ 16, Dkt. # 26.) Taylor concluded as a result of her investigation that Browning had engaged in a pattern of systematic fraudulent expense reporting, which included submitting claims for reimbursement for airline tickets where flights were not actually taken, and for which Browning had received reimbursement from the airline as well; submitting claims for excessive entertainment expenses; and submitting claims for entertainment expenses at questionable establishments, such as strip clubs. (JSOF ¶ 17, Dkt. # 26.) In all, Browning submitted over $28,000 in fraudulent expenses that were approved by Plaintiff. (JSOF ¶ 18, Dkt. # 26.)

While investigating Browning, Taylor found at least ten travel and expense reporting system notifications itemizing delinquent and irregular expense report items that Browning had incurred on his corporate credit card from mid-2005 to early 2006. (JSOF ¶ 19, Dkt. # 26.) Plaintiff was copied on these email messages, in his capacity as Browning's manager. (JSOF ¶ 20, Dkt. # 26.) However, Plaintiff had no conversations with Browningabout the delinquent or excessive charges referenced on the emails he received. (JSOF ¶ 21, Dkt. # 26.) Plaintiff states that he considered any charge over $500 for entertainment and meals as something he would have wanted to look into. (JSOF ¶ 22, Dkt. # 26.)

Given the magnitude of Browning's fraudulent submissions, Taylor arranged for an interview with Plaintiff in August 2007. (JSOF ¶ 23, Dkt. # 26.) The interview lasted for about three hours, during which time Taylor reviewed spreadsheets of Browning's charges with Plaintiff and asked him about the conduct for which Browning had been terminated. (JSOF ¶ 24, Dkt. # 26.) During the interview, Plaintiff was also given the opportunity to respond to questions and to explain his side of the story. (JSOF ¶ 25, Dkt. # 26.) In his deposition, Plaintiff stated that, although Browning's expenses were "kind of obvious" on the spreadsheet presented by Taylor, Browning "hid" them in a "sea of charges," making it "not obvious" to him while reviewing the expense reports. (Pope Decl., Ex. A 163:5-18, Dkt. # 23.) At the conclusion of the interview, there was nothing that Plaintiff had wanted to say, but was prevented from doing so. (Pope Decl., Ex. A 171:25-172:3, Dkt. # 23.)

After conducting her investigation, Taylor concluded that Plaintiff had approved a large number of inappropriate charges, including strip club entertainment with clients, airfare charges where trips were not taken, and high dollar cash expenses from June 2005 to February 2006. (JSOF ¶ 26, Dkt. # 26.) Other than quibbling with whether "strip club" charges are appropriate, Plaintiff admits that he approved a large number of inappropriate charges, as detailed above. (JSOF ¶ 27, Dkt. # 26.) After carefully considering the results of Taylor's investigation, Doug Hinzie made the decision to terminate Plaintiff's employment. (JSOF ¶ 28, Dkt. # 26.) Hinzie decided to terminate Plaintiff because, based on his approval of Browning's fraudulent expense reports, he concluded that Plaintiff had abdicated his responsibility as a manager: his conduct was at best grossly negligent, or at worst, intentional misconduct. (JSOF ¶ 29, Dkt. # 26.)

Hinzie met with Plaintiff on October 12, 2007 and advised him that his employment was terminated. (JSOF ¶ 30, Dkt. # 26.) During the meeting, Plaintiff repeated the same information and explanations that he had provided to Taylor during his interview with her. (JSOF ¶ 32, Dkt. # 26.) During his deposition, Plaintiff stated that he did not believe that his termination by Defendant violated any company policies or procedures. (JSOF ¶ 51, Dkt. # 26.) He also understood during the course of his employment at Chevron that his employment was terminable "at will." (JSOF ¶ 50, Dkt. # 26.)

According to Hinzie, the information about the decision to terminate Plaintiff was communicated within Chevron to only a handful of individuals, on a confidential basis, whom Hinzie felt had a business need to know. (JSOF ¶ 31, Dkt. # 26.) However, it is undisputed that Chevron officials learned that Plaintiff had "frequented" gentlemen's clubs and "brothels" from fellow Chevron employee Tim Black, who made those allegations against Plaintiff during his participation in an official Chevron investigation into travel expense irregularities. (JSOF ¶ 38, Dkt. # 26.)

Tim Black was a...