Labor & Employment Law Daily Wrap Up, WHISTLEBLOWERS—E.D. Wash.: Retaliation suit under NDAA by non-renewed contractual employee does not advance to trial, (May 22, 2025)

By Nadine E. Roddy, J.D.

No reasonable jury could conclude that the disclosures were protected, or that they were contributing factors in the employer’s non-renewal decision.

A school employee’s whistleblower claim brought against the school district under the federal National Defense Authorization Act (NDAA) failed to raise material fact questions as to whether the employee’s disclosures of alleged misuse of federal grant funds were “protected disclosures,” a federal district court in Washington has ruled. Even if one of the disclosures was protected, the summary judgment evidence established that it could not have been a contributing factor in the adverse employment decision (Krzesni v. Wellpinit School District, No. 2:24-cv-00040-MKD (E.D. Wash. May 16, 2025)).

Use of grant funds. A school employee whose employment contract was not renewed sued his former employer, the Wellpinit School District (District) in Washington, asserting claims for (1) violation of whistleblower protections under the NDAA, and (2) wrongful discharge in violation of public policy. The District was located within the Spokane Indian Reservation, and most of its students were members of the Spokane Tribe. The District regularly received grants from the federal Department of Education (DOE) to help fund educational programs for Native American students within tribal communities.

The District contracted with the employee to serve as the Project Director of the District’s latest grant. His responsibilities included overseeing the grant funding and meeting the grant’s objectives. Prior to executing the contract, the District had planned for several students and staff to participate in a peer mediation training program in Hawaii. At the start of his employment, and before he knew that DOE would not allow grant funds to be used for the Hawaii trip, the employee signed a requisition form for these funds to be applied to the trip. He then submitted a revised budget to the District’s contact at DOE for review. She replied that the travel to Hawaii would not be approved because it was not included in the original grant application.

The employee relayed this information to the District’s Business Manager in an email, stating that “I think we’ll likely be able to get approval, but it’ll likely be after the trip’s already done. So, we definitely need to be careful about when we next draw down funds and what’s included.”

The week-long Hawaii trip went on as planned. Shortly thereafter, the Business Manager drew down the grant funds to pay for the trip. The employee did not learn of the draw-down, however, until he began preparing the Annual Performance Report (APR) for DOE. At that point, he reminded the Business Manager that the updated budget “was never entirely approved,” but he prepared and submitted the report anyway.

Discussions about renewal. Nearly contemporaneously, the employee’s supervisors began discussing among themselves whether to renew the employee’s contract, as concerns had arisen that he was not working well with the other grant administrators. On the very day that they reached a decision against renewal, the DOE contact said on a conference call with the employee and a Spokane Tribe representative that drawing down the grant funds without DOE approval constituted fraud. The District ultimately reimbursed DOE for the cost of the Hawaii trip in the amount of $51,827.68.

Although the precise date was disputed, the employee was informed within a few days of the conference call that his contract would not be renewed. After his contract expired some five months later, he brought suit.

Before the court was the District’s motion for summary judgment.

NDAA claim. The court noted that the NDAA protects an employee of a contractor who discloses information the employee “reasonably believes is evidence of” one of the following types of misconduct: (1) gross mismanagement of a federal contract or grant; (2) a gross waste of federal funds; (3) an abuse of authority relating to a federal contract or grant; (4) a substantial and specific danger to public health or safety; or (5) a violation of law, rule, or regulation related to a federal contract or grant. The employee in this case contended that he had made protected disclosures of misuse of federal grant funds in his APR and in the conference call with the DOE contact.

The court found, however, that the APR contained no disclosure of misconduct at all; it merely detailed the Hawaii trip and how it met certain grant objectives. Regarding the conference call, a material fact question was presented as to whether the employee had disclosed a misuse of grant funds in the draw-down without prior DOE approval of the Hawaii trip. But the employee could not show that this disclosure—even if protected—was a contributing factor in the District’s decision not to renew his contract. The evidence of record established that the non-renewal decision was made before or around the same time as the conference call, and before the District became aware that the employee had contacted anyone at DOE regarding the Hawaii trip.

Wrongful discharge claim. The court noted that under Washington common law, the tort of wrongful discharge in violation of public policy is generally limited to four scenarios, one of which is retaliation for whistleblowing. However, the Washington courts distinguish between a discharge and a contract nonrenewal for a certificated employee of a school district, holding that nonrenewal is not a discharge. Thus, non-renewal is not actionable as a wrongful discharge.

For these reasons, the court granted summary judgment for the District on both claims.

The case is No. 2:24-cv-00040-MKD.

Judge: Dimke, M.

Attorneys: Matthew Z. Crotty (Riverside NW Law Group) for David Krzesni. Michael E. McFarland, Jr. (Evans, Craven, & Lackie) for Wellpinit School District.

Companies: Wellpinit School District

Cases: Whistleblowers PublicEmployees Discharge WashingtonNews