Red flags showing a termination may be ‘wrongful’

Matthew Flanigan worked as the Director of Information Technology (IT) for Rheumatology Diagnostics Laboratory, Inc. (RDL) in Los Angeles, California. He discovered that tens of thousands of patients’ information were uploaded to the network, causing a privacy violation. He reported the violation to upper management but was ignored. Later, in a separate lawsuit among shareholders, he was asked by the majority shareholder to testify that the violation never happened. He refused and was later suspended.

The company then hired a new IT manager (who happened to be the spouse of the company’s compliance manager), purportedly to conduct an investigation into the violation. Flanigan was accused of logging into the company’s network to delete files, including the files he claimed were disclosed in violation of patient privacy. A third party computer forensics company not connected with RDL was brought in to investigate; it found that someone else used Flanigan’s log-in information to delete the files. Despite this, Flanigan was fired.

Flanigan sued the company, alleging wrongful termination on the basis of retaliation, among other things. Flanigan claimed that the new IT manager used Flanigan’s log-in information to delete the files to cover up the violations committed by his spouse (the compliance manager). The company then used the unauthorized disclosure and file deletions as a pretext to fire Flanigan in retaliation for reporting the violations in the first place, and for refusing to testify in favor of the majority shareholder.

The company denied retaliating against Flanigan and argued that Flanigan was terminated for several reasons, but primarily because he did not comply with his duties to the company.

Under California law, an employer may not terminate an employee for retaliatory reasons. Doing so may give rise to a wrongful termination claim. A termination is illegal or “wrongful” if it is based on discriminatory intent or is a violation of public policy. Discriminatory intent pertains to discrimination based on such protected characteristics as age, race, sex, color, religion, national origin, disability, medical condition, pregnancy, and even union affiliation.

A termination is also illegal if it violates public policy. This means that the termination is likely illegal if the employee was fired because:

• The employee refused to violate a statute (e.g., the employee refused to commit an illegal act)
• The employee performed a statutory obligation (e.g., the employee was absent in order to serve in a jury)
• The employee exercised a statutory right or privilege (e.g., the employee declined to take a polygraph examination)
• The employee reported a statutory violation for the public’s benefit (e.g., the employee reported legal violation internally within the company or to a government or law enforcement agency – this is also known as “whistleblowing”). Employees are protected if they truly believed the conduct they complained about was unlawful, even if it was not.

Flanigan’s case went to trial. The Daily Journal reports that the jury returned a verdict in Flanigan’s favor, awarding him $1,680,000 in damages (economic damages of $500,000; non-economic damages of $580,000; and punitive damages $600,000). The employer has filed an appeal.

The Law Offices of C. Joe Sayas, Jr. welcomes inquiries about this topic. All inquiries are confidential and at no-cost. You can contact the office at (818) 291-0088 or visit www.joesayaslaw.com. [For more than 25 years, C. Joe Sayas, Jr., Esq. successfully recovered wages and other monetary damages for thousands of employees and consumers. He was named Top Labor & Employment Attorney in California by the Daily Journal, consistently selected as Super Lawyer by the Los Angeles Magazine, and is a past Presidential Awardee for Outstanding Filipino Overseas.]