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At first blush, implementing an employee hotline and
following-up on complaints might seem a simple endeavor. The recent $3.5
million federal jury award to an employee terminated after he reported illegal
conduct by a supervisor demonstrates that employers must not only have a
reporting mechanism in place but perhaps even more importantly must implement
sound processes for investigating employee concerns and protecting employees
September 2008 Letter to CEO Reporting Fraud
In 2008, Paul Blakeslee worked for Shaw Environment and
Infrastructure, a full-service contractor for environmental and infrastructure
projects worldwide. Blakeslee was managing over 40 employees working on
a $100+ million contract to maintain facilities at Fort Richardson and
Fort Wainwright in Alaska. When Blakeslee learned that Shaw's Alaska project
manager owned one-third of another private company that was leasing about $2
million in equipment to Shaw, often without competitive bidding, he decided to
write a letter to Shaw's CEO reporting what he believed to be fraud.
According to the lawsuit, Blakeslee said the project
manager found out about the planned letter Blakeslee was writing to the
company's CEO and threatened to lay him off. That exchange happened on a
Friday and the following Monday, the company terminated him, telling him they
were eliminating his position to save money.
A week or so after the project manager threatened to
terminate, Blakeslee sent the planned letter to the CEO. According to the
letter, Blakeslee decided to write the letter after he received a company email
"encouraging any employee to report any illegal or adverse practices
existing in the organization." Here is an excerpt from an affidavit
Blakeslee filed in the subsequent lawsuit providing further background on why
he wrote the letter:
"I wrote my letter dated September 19, 2008 because when
I learned that Mr. Lantz owned American Leasing, I immediately believed
that his ownership was illegal and a conflict of interest. I formed this
opinion in August 2008 after the purchasing agent Ron Babbs told me that Lantz
owned the company. I started working on my letter in August and I sent it on
September 19 after editing and revising the letter over several weeks."
Blakeslee's letter was stamped "Received" in the CEO's
office on September 23, 2008. A copy of the letter is attached here.
On the morning of October 6, 2008, Blakeslee was told his
position had been eliminated and he was asked to pack his personal
items and leave that day.
October 2009 Lawsuit & March 2013 $3.5
Million Jury Verdit
Shaw investigated the concerns raised in Blakeslee's
letter and ultimately terminated the project manager was terminated.
Despite this seeming validation of Blakeslee's concerns, however, Shaw refused
to reinstate Blakeslee. Blakeslee sued in October 2009 alleging age
discrimination, retaliation and wrongful termination. Click here to read
a copy of the Shaw
Shaw retained counsel and defended aggressively for 4+
years. The case finally went to trial in March 2013. After a
12-day trial, the federal jury in Alaska found in favor of Blakeslee concluding
that Shaw's firing of Blakeslee was illegal retaliation for his reporting of
the wrongdoing. The jury awarded Blakeslee $445,574 in lost wages and
$486,458 in non-economic damages for his emotional distress. After listening to
oral arguments from the attorneys on both sides, the jury also awarded
Blakeslee $2.5 million in punitive damages.
In arguing for an award of punitive damages, Blakeslee's
lawyer, Matt Singer, told the jury it was time to hold the company accountable.
"You get to stand up to the powerful. You get to stand up, not just for Mr.
Blakeslee, but for everybody and say this kind of conduct is not acceptable,"
Not surprisingly, Shaw's attorneys argued against an
award of damages telling the jury that the company should not be held liable
for the behavior of a "couple bad apples." They argued, "Shaw is a
company that has tried to do the right thing" and "does not need to be sent a
big message, 'You need to go out and change your ways.'"
Shaw will inevitably file post-verdict motions and an
In an interview with the Anchorage
Daily News, Blakeslee recognized that it is unlikely he will receive any
money from the award for many years but that vindication was what was most
important to him:
"I probably won't get it all, but I've got four kids. And
I'm 76 and my wife is 81. There's not enough time left for me to spend it,"
Blakeslee said. "Charity, my kids, you know. I'm not interested in money, I was
just interested in vindication." "I wouldn't have cared if I got a dollar.
It wouldn't have made any difference to me."
Lessons for Employers
Implementing an employee hotline or other mechanism for
employees to use to report concerns in the workplace is only the first step in
an effective compliance program. As important, if not more important, is
implementing a process to ensure that complaints are promptly, thoroughly and
impartially investigated. It is also critical, that employers take all
necessary steps to ensure that the employee who has made the complaint is
not retaliated against.
As this case demonstrates, prudent employers also should
ensure that any adverse employment actions against an employee who has made a
complaint are carefully reviewed to ensure such adverse action is being taken
for legitimate, non-discriminatory, non-retaliatory reasons. Prudent
employers also understand that where they decide after this review to go
forward with the adverse employment action that they will need to be prepared
to withstand third-party scrutiny.
more articles about managing workplace conflict at
Win-Win HR, a blog by Lorene Schaefer.
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