Labor & Employment Law Daily Wrap Up, DISCRIMINATION—D.D.C.: Alleged comments about PCAOB senior employee’s ethnicity, politics support hostile environment claim, (Nov 5, 2026)

By Kathleen Kapusta, J.D.

The Public Company Accounting Oversight Board, however, was entitled to summary judgment on the employee’s discriminatory termination claims and it survived summary on two of its three counterclaims.

Although a senior employee of the Public Company Accounting Oversight Board failed to show her termination, purportedly for performance issues and her excessive travel, was actually due to her race, national origin, and political affiliation, her Title VII and DCHRA hostile work environment claims survived summary judgment. Despite noting evidence weighing heavily on her credibility, the federal court in the District of Columbia found the board chair’s alleged frequent negative comments about China, people of Chinese descent, and Democrats were sufficiently severe or pervasive. The court also granted summary judgment to the employee on PCAOB’s counterclaim of conversion but allowed its breach of fiduciary duty and unjust enrichment counterclaims to proceed to trial (Lee v. Public Co. Accounting Oversight Board, No. 21-1006 (CKK) (D.D.C. Nov. 4, 2026)).

Although the employee applied for the role of General Counsel for the PCAOB, a nonprofit corporation established by Congress to oversee the audits of public companies, some board members thought she did not have enough regulatory experience for the position and thus the Board did not approve her for the role. The board’s chair, however, supported her candidacy and hired her instead as Chief Risk Officer, which did not require board approval. He later promoted her to Chief Administrative Officer.

Alleged comments. According to the employee, the chair made frequent negative comments about her race and national origin, including that she was among the “good” kind of Chinese people because her family was from Taiwan, referred to COVID-19 as “kung flu” or “China flu,” and called China “backwards” and “a nation of a billion communists.” She also alleged that when he learned she was a Democrat, he frequently invited her to “come on over” to the Republican Party and to “take the red pill,” which she believed was a reference to becoming a conservative Republican. Though she claimed she reported the comments to HR, PCAOB contended there was no evidence of any such reports.

Initiative. During her tenure as Chief Administrative Officer, the employee worked on an initiative to consolidate its payroll, timekeeping, finance, and other functions onto a single platform. Due to complaints about the employee’s management style, the chief added two people to the project’s steering committee. A few days later, the employee held a meeting in which she made comments that some interpreted as threatening or potentially retaliatory. Her comments were later reported to the chair by the chief HR officer, and the CFO.

Travel. Around that same time, the CFO informed the chair that despite his mandatory no-travel policy imposed as a result of COVID, the employee had filed expense reports for more than 30 business trips to the Boston area where she was working at the time on identifying new office space for PCAOB’s staff.

Investigation and termination. An investigation subsequently determined that while her conduct in connection with the initiative was “not necessarily in violation of the Ethics Code or Anti-Retaliation Policy,” it “failed to reflect the spirit of” those policies and “failed to demonstrate responsible leadership, jeopardizing the timely and successful implementation of a key Board initiative.” It also found that she had taken 36 trips to the Boston area in a one-year period and there were “inconsistencies and/or misrepresentation in [her] expense justifications,” which appeared to be consistent with “a pattern of seeking personal benefit.” Based on the investigative report, the chair terminated her employment.

Discrimination. Suing under Title VII and the D.C. Human Rights Act, the employee alleged PCAOB fired her because of her ethnicity, national origin, and political identity. Because PCAOB proffered a nondiscriminatory reason for its decision—concerns about her handling of the initiative and her extensive travel to Boston—the court found it did not need to decide whether she made out a prima facie case of discrimination. It turned instead to evidence of pretext, and to her contention that PCAOB offered inconsistent and contradictory reasons for her termination.

Shifting explanations. In support, the employee argued that when the chair fired her, he mentioned only her 36 trips to Boston while PCAOB’s counsel later claimed that the issues surrounding the initiate played a central role in the termination decision. Disagreeing, the court found it undisputed that PCAOB discussed and investigated both her behavior during the project and her travel to Boston. The employee, said the court, disputed the inconsistent emphasis on the reasons for her termination and “any inconsistencies in emphasis are insufficient to demonstrate pretext.”

Investigation’s conclusions. The employee also argued that she did not “stake out a retaliatory posture” toward her coworkers on the initiate; that her travel to Boston was business-related; and that the “investigation was neither ‘thorough’ nor ‘balanced.’” But, here, the court observed, there was substantial evidence indicating PCAOB believed she had expensed a high level of travel in a one-year period with no reasonable explanation and that several of her initiative coworkers had raised concerns about her conduct. The investigation corroborated this evidence and the chair fired her after the investigation.

Alleged comparators. She next argued that two comparators were treated more favorably. The first comparator, a white male, was subject to complaints from subordinates for his management style. But those complaints, the court observed, predated by several years the tenure of chair or any PCAOB board members serving when the employee was terminated. As to a second alleged comparator, who was also subject to workplace complaints, he did not report directly to the chair. Nor was there any evidence either had used their positions to acquire material benefits similar to the employee’s extensive travel.

Same-actor defense. Finally, the court pointed out that the chair hired and promoted the employee and his support for her only changed when he learned about her extensive travel and conduct with the initiative team. Based on all this, the court granted summary judgment against her discrimination claims.

Hostile work environment. As to the employee’s hostile work environment claim, while PCAOB argued that her only support was her own uncorroborated testimony, the court found that sufficient to create a genuine dispute of material fact. Specifically, she testified that the chair referred to the COVID-19 pandemic as the “kung flu” and the “Chinese flu” in every discussion with her about it; he “spun conspiracy theories that China had ‘cooked up’ the virus”; he referred to the Chinese as “backwards” and called China “a nation of a billion communists”; and he told her she should “come on over” to the Republican party and “take the red pill.”

Though PCAOB argued that “[e]very witness who has testified has denied that [the chair] ever made disparaging remarks concerning [the employee’s], or anyone’s, race, ethnicity, national origin, or political affiliation,” she countered that he “made many racist and disparaging comments during one-on-one conversations.” Given the extent of their one-on-one conversations as senior employees, the court found it could not, at this juncture, say there was no genuine dispute as to whether he made these comments and subjected her to a hostile work environment. Thus, this claim survived summary judgment.

Conversion. Turning to PCAOB’s counterclaim for conversion alleging the employee improperly took personal trips to the Boston area at its expense by mischaracterizing the trips as work-related, the court found it failed to identify a “specific, identifiable fund of money” that she converted to her own use. Indeed, the employee argued that PCAOB “cannot identify the specific amount of money associated with travel that allegedly should not have occurred,” given that it conceded that some of her travel was for legitimate business.

In response, PCAOB argued that she also “took advantage of PCAOB American Airlines flight credits that she earned in her capacity as a PCAOB employee and later used for personal gain.” These flight credits, it contended, are the type of unique account or specific fund, much like a bank account, that can be recovered under a theory of conversion. Noting that several courts within the circuit have held that credit, including flight credit, is not subject to a conversion claim, the court, granting the employee’s motion for summary judgment, found no reason to depart from their reasoning.

Breach of fiduciary duty. PCAOB also argued that the employee’s alleged personal travel to Boston at its expense constituted a breach of a fiduciary duty. Here, said the court, a reasonable jury could find that a substantial portion for her travel to Boston was undertaken for personal reasons given the extent of her travel, the alleged inconsistencies in her reports, and the fact that she owned a home in Cambridge, Massachusetts. For example, there was evidence that for several trips, she arrived too late in the evening and left too early in the morning to conduct any PCAOB business that required her presence in Boston. There was also evidence that after traveling to Boston, she spent only a few minutes in the office. Accordingly, the court denied her motion as to this claim.

Unjust enrichment. Addressing, finally, PCAOB’s unjust enrichment counterclaim, the court found a reasonable jury could agree with PCAOB that the employee’s free trips to Boston, “where she owned a home, had extended family, enjoyed personal pursuits... certainly amounted to a benefit.” It could also conclude that, while PCAOB may have benefited from some of her travel, it obtained no benefit from the trips where there is little to no record of business activity and her travel records showed she had no time to conduct any PCAOB business. As a result, this claim also survived summary judgment.

The case is No. 21-1006 (CKK).

Judge: Kollar-Kotelly, C.

Attorneys: Linda Marie Correia (Correia & Puth) for Sue Lee. Michael J. Lorenger (Lorenger & Carnell) for Public Co. Accounting Oversight Board and William D. Duhnke, III.

Companies: Public Co. Accounting Oversight Board

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