Labor & Employment Law Daily Wrap Up, WHISTLEBLOWERS—D. Or.: Power company employee suspended after complaint about racial equity workshop advances whistleblower claim, (Jan 9, 2025)

By Kathleen Kapusta, J.D.

The employee complained about a presentation at a workshop by an energy coalition regarding “racial equity, racial equity tool kit, and systemic racism.”

Finding fact issues as to whether a senior engineer for an energy service provider engaged in protected activity when he complained through the company’s hotline about a nonprofit organization’s presentation on racial equity and systemic racism, and whether his hotline report was a factor in his subsequent suspension, a federal court in Oregon denied both parties’ motions for summary judgment on his state-law whistleblower claim. And while he could not proceed to trial on his False Claims Act allegations, the court also found fact issues precluding summary judgment in part on his breach of contract claim (Rosenstein v. PacifiCorp, No. 3:23-cv-00136-HZ (D. Or. Jan. 3, 2025)).

As a senior engineer in the company’s asset management group, the employee oversaw equipment in certain substations, transformers, and distribution lines in Oregon. In 2019, the Oregon Public Utility Commission (PUC) sought to develop a “regulatory planning process for electrical utility distribution system operations and investments.”

Guidelines. In December 2020, it issued distribution system planning (DSP) guidelines setting forth requirements for utilities to submit a plan concerning their distribution systems. The guidelines required utilities to consider equity-related goals in developing their plans, hold workshops with stakeholders, and develop and submit a community engagement plan.

Workshop. In May 2021, the employee joined a team of employees to help prepare his company’s DSP plan. In June, he and his coworkers attended a workshop at which an energy coalition presented about “racial equity, racial equity tool kit, and systemic racism.” The next day, the employee emailed HR complaining that the workshop was political and violated the company’s code of conduct because it covered racial equity and systemic racism.

Hotline report. He also emailed his DSP project leader and when she did not timely respond, he filed a report with the company’s ethics hotline, complaining that the workshop covered a topic entirely irrelevant to DSP and that the coalition was trying to commit fraud against the employer.

Around this same time, he emailed DSP team members about contracting with a think tank to facilitate stakeholder meetings, asking about the company’s due diligence before contracting with the think tank. The next day, he sent a team-wide email expressing additional concerns about the think tank, including that it had offices in Colorado, Washington D.C., and China, and was connected to the Sea Change Foundation.

Second workshop. He discussed many of these same concerns with his supervisor, emphasizing his belief that trainings were biased and focused on political issues. On July 14, he and the DSP team attended another workshop at which two community based partners presented on racial equity. During the workshop, he sent numerous messages on the workshop chat questioning the presentation and stating, among other things, that “this is way beyond the scope of an electrical utility.” At one point, he was asked to hold off on further messages and others complained to HR about his actions. One of the presenters described the meeting as “violent, very toxic and harmful space.”

Suspended. The next day, he was suspended pending an investigation into his conduct. He resigned immediately.

Whistleblower claim. The employee sued for retaliation under Oregon’s whistleblower law, Or. Rev. Stat. § 659A.199, which makes it an unlawful employment practice for an employer to take an adverse action against an employee who has “in good faith reported information that the employee believes is evidence of a violation of a state or federal law, rule or regulation.” Finding a fact dispute as to whether he engaged in protected activity, the court noted that most of his reports, including the emails to HR and the DSP team leader after the June 9 meeting, his emails regarding the energy coalition, and his discussion with his supervisor did not concern violations of a federal law, rule, or regulation.

Rather, he complained about unethical conduct and concerns about political activities in violation of the company’s code of ethics related to the June 9 presentation. As to the July workshop, he only appeared to question the relevancy of the presentation, said the court, noting that his reports regarding violations of internal policies were not protected under the whistleblower statute.

Good faith belief. A reasonable jury, however, could find his hotline report protected, said the court, noting that he stated that he believed a political nonprofit organization was attempting to fraudulently influence his employer; claimed that the organization was funded by wealthy individuals, including one who benefits from the sale of renewable energy systems; and alleged that the group was trying to “push through a scheme” that the individual might benefit from, concluding “that’s fraud.” He also asserted that it was a conflict of interest for the coalition to present to the DSP team given that it would benefit financially from renewable energy. Taken together, the court found a fact issue as to whether the employee had a good faith belief he was reporting a violation of state or federal law.

Adverse action. And even though the employee resigned, the court found a fact issue as to whether he was subject to an adverse action as immediately before his resignation he was told he could no longer participate in external meetings and was suspended pending an investigation into his behavior.

Causal connection. A jury, said the court, must also decide whether there was a causal connection between the employee’s hotline report and the alleged adverse action. While the employer claimed he was fired for his behavior during and after the last workshop, the decisionmakers in his suspension, who were aware of his hotline complaint, referenced the hotline call in their outline that they drafted prior to their meeting suspending the employee. Accordingly, the court denied cross-motions for summary judgment as to this claim.

FCA clam. Granting summary judgment against the employee’s FCA claim, however, the court found he failed to show he engaged in a protected activity under that statute. He did not report any activities by hisemployer that he believed were fraudulent, said the court, noting his hotline report concerned alleged fraud against his employer by the energy coalition. Other reports concerned possible violations of the company’s code of conduct for inviting different nonprofits to give presentations on systemic racism and inequality.

And while he may have in good faith believed some level of fraud was being committed, the court found he “failed to show that a reasonable employee in the same or similar circumstances might believe that a few presentations from nonprofit entities are evidence Defendant was possibly committing fraud against the federal government to fund renewable energy projects and weaken American energy independence.”

Breach of contract. Regarding his breach of contract claim, the court noted that the issue was whether either the company’s code of ethics or its certificate of compliance, which the employee purportedly signed during onboarding affirming he had read the code of conduct, created or were part of a contract with the company. Regarding the certificate, the employee argued that it contained a promise that the company would not retaliate against him, which the company breached when it suspended him.

Finding a fact issue, the court noted that the employer argued that the certificate was part of the code of conduct, which contained an express disclaimer that it did not constitute a contract, and that both the code and certificate are given to all employees when they are hired. To the court, it was unclear whether the employee received a copy of the code at the time he was hired and whether he signed the certificate. Though he was “a little evasive in his testimony on this point,” viewed in the light most favorable to him, the court found summary judgment was inappropriate as to whether the certificate constituted a contract.

Although there were similar problems with the code of ethics, including whether it was given to the employee when he started his employment or whether he accessed it from the intranet, the court found the evidence insufficient to show there was a “meeting of the minds” with regard to the code. Accordingly, the court granted summary judgment against the employee’s claim based on the code of ethics.

The case is No. 3:23-cv-00136-HZ.

Judge: Hernandez, M.

Attorneys: Karen E. Ford (Ford & Associates) for Adam Rosenstein. Naomi Levelle Haslitt (Miller Nash) for PacifiCorp.

Companies: PacifiCorp

Cases: Whistleblowers Retaliation StateLawClaims ContractClaims OregonNews