A Matter of Intention

A Matter of Intention

The whistleblower’s case turns on intention.  Did the company intend to violate the law?  Did it mean to punish its whistleblower for disclosing the possible wrong?

Jesse Eisinger’s The Chickenshit Club describes the federal government’s retreat from prosecuting big-time wrongdoers in favor of settlement agreements.  From recent news: Wells Fargo didn’t have to admit any allegations in its settlement with the Consumer Financial Protection Bureau.  That was despite hundreds of whistleblower complaints about the bank’s creation of more than 3 million fraudulent accounts[1].

Settlement agreements are an easy way out for prosecutors when their limited budgets leave them out-lawyered by the offending companies.  A core problem is the difficulty in proving intent – mens rea – in a criminal case.  Many-layered management and dispersed decision-making provide senior managers with plausible deniability.  Sometimes violations even occur accidentally on the way to meeting objectives.

HomeFirst’s CEO Jenny Niklaus and its board members did not plan to commit the ten legal violations that I alleged.  Even middle managers knew about only two[2] when they first occurred.  But Board members pushed back when I said the missteps fit a pattern.  I described a layperson’s idea of intentionality: where there is so much smoke there is probably a good fire underway.  The flame of misbehavior may begin in the organization’s culture[3], but by itself that sort of intention doesn’t prove guilt.

While responsibility for the original misdeed can be dispersed, the plan to retaliate against the whistleblower starts with just a few individuals.  Even then, organizations hope to conceal their scheme to get back at disloyal employees.

Defense attorneys declare their clients had no motive to retaliate because no wrong was done in the first place.  When it settled with the City of Los Angeles over the false accounts, Wells Fargo denied any guilt.  In its turn, HomeFirst claimed I might not have been right in all my complaints.  But standing up to the organization is usually reason enough to get rid of an employee. 

Companies say they have no desire to retaliate because they are committed to ethical behavior.  That is what HomeFirst’s board treasurer Gary Campanella said before he fired me and what its attorney wrote after.  Wells Fargo’s then-CEO John Stumpf averred the bank was victim, too.  Its prized values were violated by employees who opened the unauthorized accounts. 

The justice system supports such posturing.  A commitment to ethical behavior reduces penalties on those rare occasions when companies are convicted of wrongdoing.  Having compliance programs like those HomeFirst and Wells Fargo had counts.

When a wrongdoer delays firing its whistleblower, it further obscures the connection between her disclosure and the retaliation.  Judges are more sympathetic to the whistleblower when retaliation promptly follows her disclosure.  Their suspicions arise when her own misdeeds precede the termination[4].

How a company decides to retaliate is seldom as clear as it was in HomeFirst’s case.  At 9:16am on March 25, 2014, I told CEO Niklaus I had reported HomeFirst’s possible violations of California licensing laws and antitrust regulations.  Three minutes later Board Chair Suzanne St. John Crane replied to Niklaus, “not surprising.”  (For months I had complained internally about compliance violations.)  At 4:58pm Linda Chin, who was on the Board’s Executive Committee, announced to other Board members, my going outside “sounds like insubordination to me.”  Niklaus agreed.

The next morning, Niklaus began contacting potential interim CFOS.  St. John Crane told Bob “Shu” Shuman, an employment law attorney, “no one wants to work with him.”  Shu suggested they fire me immediately.  He would then prepare a settlement agreement.  But some Board members, including Mike Pope, a past Board Chair, suggested going more slowly. 

Early on the 27^th, Niklaus announced, “we all agree he needs to go.”  I sent her a copy of the insurance policy.  She worked out a possible settlement figure.  By the end of the day, they had decided on a plan, which Niklaus formalized in a transition plan she sent out on April 7.  Niklaus would build up a file to fire me in July for poor job performance, not insubordination.  If I sued, any cost would be covered by insurance.  I was not fired until June 3, but they decided in March after talks with their attorney and insurance broker.

Their intention to fire me because I disclosed violations to authorities seems clear to me.  Every fired whistleblower is sure she suffered retaliation, I guess. 

Maybe it’s not so clear.  The State of California has labored on my complaint for nearly three years.  As employers always do, HomeFirst came up with its business reasons.  I was rude and offensive, it said.  I cast aspersions instead of coming up with solutions.  I didn’t do my job and cried whistleblower to protect myself.  Examples were given.

The only way I could prove the connection between my whistleblowing and retaliation was with copies of emails I could access because of my position.  Without those emails, it would have been my whining against their righteous preening.  Their investment in compliance was as obvious as the good works they did in the community, they said.  They had not retaliated but paid close attention to my allegations.  They tried to fix any problems promptly.  They worked with me until I made it impossible.

Most whistleblowers do not have legitimate access to internal management communications.  My own attorney refused to consider the emails, which he advised would taint my case.  Unable to see the workings of the organization’s mind, judges are left with management's honeyed words and the awkward efforts of the whistleblower.  Usually the organization wins, and we lose. 

Dave Eggers’ novel, and the subsequent film, The Circle, describes a do-evil mega-company that may be brought down by transparency through technology.  Edward Snowden, Chelsea Manning, and others have used technology to document suspected wrongdoing.  Technology may also enable future whistleblowers to expose the intentions of the organizations that retaliate.

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[1] As of the September 8, 2016 CFPB agreement, just 1,534,280 unauthorized accounts had been identified.

[2] Chief Program Officer Hilary Barroga and Senior Manager Shelly Barbiera were aware of the master leasing violations, and Senior Manager Linda Jones was aware of the food handler card violations.  Still each woman would claim that she expected the violation to be waived eventually.

[3] Cf. Banerjee, Neela, David Barboza and Audrey Warren.  “ENRON'S MANY STRANDS: CORPORATE CULTURE; At Enron, Lavish Excess Often Came before Success.” New York Times.  February 25, 2002; Kish-Gephart, Jennifer J., David A. Harrison, and Linda Klebe Trevino. “Bad Apples, Bad Cases, and Bad Barrels: Meta-Analytic Evidence About Sources of Unethical Decisions at Work.” Journal of Applied Psychology. 95.1 (2010): 1-31; Campbell, Jamie-Lee and Anja S. Goritz. “Culture Corrupts! A Qualitative Study of Organizational Culture in Corrupt Organizations.” Journal of Business Ethics 120 (2014): 291–311;  Colvin, Geoff.  “Wells Fargo’s Plan to Fix Its Culture Post-Scandal.” Fortune. June 11, 2017.

[4] Examples from the State of California’s 2014 judgments on whistleblower complaints: Benitez v. Gazelle Transportation, Rand v. Terra Manor, Tatum v. Associated Residential Services, and Turner v. Yaron & Associates,.