Simas v. First Citizens' Federal Credit Union

• Decision Date: 08 December 1998
• Docket Number: No. 98-1450,98-1450
• Citation: 170 F.3d 37
• Parties: 14 IER Cases 1577 Victor E. SIMAS, Plaintiff, Appellant, v. FIRST CITIZENS' FEDERAL CREDIT UNION and Barbara M.W. Silva, Defendants, Appellees. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 37

170 F.3d 37

14 IER Cases 1577

Victor E. SIMAS, Plaintiff, Appellant, v. FIRST CITIZENS' FEDERAL CREDIT UNION and Barbara M.W. Silva,

Defendants, Appellees.

No. 98-1450.

United States Court of Appeals, First Circuit.

Heard Dec. 8, 1998.

Decided March 2, 1999.

Philip N. Beauregard, with whom Law Offices of Beauregard & Burke was on brief for appellant.

Michael P. Duffy, with whom Harvey Weiner and Peabody & Arnold LLP were on brief for appellees.

Before TORRUELLA, Chief Judge, ALDRICH and CYR, Senior Circuit Judges,

CYR, Senior Circuit Judge.

Victor E. Simas appeals the district court judgment which dismissed his complaint charging First Citizens' Federal Credit Union ("Citizens") and its president and CEO, Barbara M.W. Silva, with violating the "whistleblower" provisions of the Federal Credit Union Act, 12 U.S.C. § 1790b(a) (FCUA or "the Act"), by retaliating against him for having informed the National Credit Union Administration ("NCUA") that Citizens, notwithstanding its longstanding policy, had made a suspect commercial loan to a member of its board of directors. We vacate the district court judgment and remand for further proceedings.

I BACKGROUND

The district court opinion thoroughly explicates the factual background underlying the present claim. See Simas v. First Citizens' Fed. Credit Union, 996 F.Supp. 76 (D.Mass.1998). Accordingly, we restrict our opening recitation to the essentials.

At all relevant times, Simas was a vice-president under Silva's supervision, with primary responsibility for all delinquent loan collections. In September 1993, Simas learned that Silva's friend, Louis Xifiras, was about to default on an undersecured commercial loan with an outstanding balance approximating $831,000. Simas considered the circumstances surrounding the 1990 loan to Xifiras suspicious. For one thing, Silva herself had arranged the loan, the largest in Citizens' history, even though Xifiras was serving on the Citizens board of directors at the time and intended to use the proceeds to acquire commercial real estate. Citizens had a longstanding policy against making commercial loans. Moreover, several Board members expressed concern that the $1,030,000 real estate appraisal, prepared by an appraiser selected by Xifiras, was inflated. Furthermore, Xifiras and Lisa Grace, Silva's daughter and Citizens' senior vice-president for mortgage loans, were rumored to be involved in an extramarital affair. Finally, Ms. Grace personally presented the Xifiras loan application for Board approval.

Simas alerted Silva to his concerns, then asked Citizens' internal auditor to conduct an investigation. The auditor declined. When Simas persisted, the auditor complained to Silva. Simas thereafter informed the auditor that if she chose not to investigate internally, he might be forced to report his concerns to the NCUA or the press.

In October 1993, Silva sent Simas a memorandum advising that his repeated "irrational" and "aggressive" verbal harangues about the Xifiras loan were causing the internal auditor "emotional distress." She characterized Simas' announced intention to contact the NCUA or the press as "threats to the credit union," and his concerns about the Xifiras loan as totally unwarranted. She suggested that Simas was making trouble because he was unhappy with his own working conditions and she explicitly warned that he would be terminated immediately if the "verbal harassments [or] unwarranted charges or threats" occurred again. Shortly thereafter, Silva removed Simas from all responsibility for the Xifiras loan. Following this "final warning" from Silva, Simas was informed by Citizens' senior vice-president that he believed Silva should have fired Simas for "stirring [up]" the Xifiras matter.

After Xifiras defaulted on the Citizens loan and declared bankruptcy, the commercial real estate securing the loan was appraised at $538,000. As required by law, Silva reported the loss to the NCUA. Fearing for his job in the event he chose to pursue the Xifiras matter internally, Simas promptly reported his concerns to the FBI and NCUA.

Thereafter, Simas "experienced an abrupt and substantial change in the way that he was treated by [Citizens]." Coworkers shunned him, socially and professionally. Citizens disapproved his car loan application for the first time ever. Although Citizens ultimately approved his education loan application, it did so over Silva's active opposition. Simas was stripped of many work-related privileges consistently accorded him in the past; including (1) attending board of directors meetings, (2) supervising employees in the credit department, (3) approving credit-card applications, (4) personal access to the file vault, and (5) serving as Citizens' acting president in Silva's absence. Silva also refused to consider Simas' request for promotion to a vacant vice-presidency, removed him as network administrator, denied him permission to attend a business-related seminar, and refused his request for a cellular phone. These adverse employment actions were unprecedented.

In January 1994, the NCUA conducted its annual audit of Citizens, devoting an "unusual" amount of time to consultations with Simas. Its audit report noted "the presence of adverse conditions and trends [which] [i]f left unresolved ... will jeopardize the financial condition and/or operations of [Citizens]." The NCUA found that the Xifiras loan had been made "without the support of a comprehensive written Member Business Loan program" and that it was improperly preferential in its terms and conditions to a compensated member of the board of directors. The NCUA cited Citizens for allowing Xifiras to engage his own appraiser, directed Citizens to cease making business loans to its members, and ordered that it notify its surety bond carrier of all regulatory violations. Citizens' board of directors accepted the NCUA report. Thereafter, the NCUA requested that several Citizens' directors resign, including Silva.

In March 1994, Citizens' new internal auditor recommended that Simas start looking for another job. After locating a lesser paying job at another bank, on May 2 Simas submitted his resignation to Citizens, effective May 13. Silva, however, made the resignation effective immediately, and directed that Simas be escorted from the credit union premises in full view of his coworkers, several of whom questioned him about the reason for the unprecedented treatment. In reporting Simas' accelerated "resignation" to the NCUA, Silva characterized Simas as "a disgruntled employee" with access to confidential information. Later, she defined the term "disgruntled employee" as including one who might come into work and shoot his fellow workers.

In due course Simas brought suit against Citizens and Silva in federal district court, alleging violations of the FCUA "whistleblower" provisions, see 12 U.S.C. § 1790b(a), together with several pendent state-law claims, including wrongful termination, defamation, and tortious interference with an advantageous relationship. Following discovery, both defendants moved for summary judgment on all claims.

The district court granted summary judgment on the FCUA claim, concluding that Simas had not generated a trialworthy dispute as to whether the treatment accorded him after September 1993 was sufficiently adverse to constitute either a "constructive discharge" or "discriminat[ion] ... with respect to compensation, terms, conditions, or privileges of employment," within the meaning of section 1790b(a). Finally, the pendent state-law claims were dismissed for lack of supplemental jurisdiction. See 28 U.S.C. § 1367(c)(3).

II DISCUSSION ¹

A. The Statutory Framework

One of several federal "whistleblower" statutes, the FCUA provides in pertinent part:

No insured credit union may discharge or otherwise discriminate against any employee with respect to compensation, terms, conditions, or privileges of employment because the employee (or any person acting pursuant to the request of the employee) provided information to the [National Credit Union] Board or the Attorney General regarding any possible violation of any law or regulation by the credit union or any director, officer, or employee of the credit union.

12 U.S.C. § 1790b(a)(1). Should a federal credit union violate section 1790b, the aggrieved employee may bring suit for compensatory damages and "other appropriate actions to remedy any past discrimination." Id. § 1790b(c). ²

In according safeguards against retaliation to credit union employees who report potential irregularities, Congress intended to "enhance the regulatory enforcement powers of the depository institution regulatory agencies to protect against fraud, waste and insider abuse." H.R.Rep. No. 101-54(I), at 308 (1989), reprinted in 1989 U.S.C.C.A.N. 86, 103-04. Since the case law interpreting section 1790b itself is extremely sparse, however, the courts have looked to case law construing comparably-phrased anti-retaliation provisions in other federal employment-discrimination statutes, such as Title VII, 42 U.S.C. § 2000e et seq., the Americans with Disabilities Act (ADA), id. § 12101 et seq., and the Age Discrimination in Employment Act (ADEA), 29 U.S.C. § 621 et seq., as well as other federal whistleblower statutes, such as the False Claims Act (FCA), 31 U.S.C. § 3730(h), the Safety Transportation Assistance Act (STAA), 49 U.S.C. §§ 31105(a)(1)(A), and FIRREA § 1831j(a)(1) (providing § 1790b-type coverage to employees of all "insured depository institutions" "with respect to ... the terms, conditions, or privileges of employment"). We follow their lead. See LaRou v. Ridlon, 98 F.3d 659, 663 n. 6 (1st Cir.1996).

B. Burdens of Proof

Many of these federal anti-retaliation statutes require the claimant to make a three-part prima facie showing that: (1) the claimant engaged in the protected activity (e.g., filed a complaint or reported information to the government); (2) ...