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Carmack v. Commonwealth

United States District Court, W.D. Virginia, Abingdon Division

November 6, 2018

WILLIAMS D. CARMACK, Plaintiff,
v.
COMMONWEALTH OF VIRGINIA, et al.. Defendants.

          MEMORANDUM OPINION

          HON. MICHAEL F. URBANSKI CHIEF UNITED STATES DISTRICT JUDGE

         Plaintiff William D. Carmack filed his Complaint in the Circuit Court for the County of Washington in Abingdon, Virginia on May 30, 2018, alleging three claims related to his termination on January 4, 2018, as the Chief Financial Officer ("CFO") of the Southwest Virginia Higher Education Center. Count I alleges a violation of Virginia's Fraud and Abuse Whistle Blower Protection Act ("the Act"), Count II sets forth a cause of action for retaliation in violation of First Amendment protections afforded speech pursuant to 42 U.S.C. § 1983, and Count III alleges a state common law wrongful termination claim (Bowman claim) - against three defendants: (1) the Commonwealth of Virginia, (2) the Commonwealth of Virginia: Southwest Virginia Higher Education Center ("SWVHEC") (collectively "institutional defendants"), and (3) David N. Matlock, Executive Director of the SWVHEC, in his individual and official capacities. ECF Nos. 1-2. On July 9, 2018, defendants removed this case to the United States District Court for the Western District of Virginia pursuant to 28 U.S.C. § 1331. ECF Nos. 1-3.

         The matter before the court is defendants' motion to dismiss all three counts under Rule 12(b)(6) of the Federal Rules of Civil Procedure. ECF Nos. 8-9. With respect to Count I, defendants first allege that Carmack is not proper "whistleblower" as defined by the Act, and second, that he has failed to adequately plead a causal nexus between the filing of his complaint with the Office of the State Inspector General ("OSIG") and his termination from the SWVHEC. With respect to Count II, defendants concede that the record at this time is inadequate to conclude as a matter of law that Carmack's OSIG complaint is unprotected by the First Amendment. ECF No. 17, at 8. The court concurs, and therefore denies the motion as to Count II. Finally, defendants allege that Carmack has not pled an adequate statutory basis to state a Bowman claim in Count III and that the availability of alternative remedies precludes Carmack from bringing such a claim in the first place. On September 28, 2018, the court held a hearing regarding the motion to dismiss. On October 17, 2017, the court granted Carmack's voluntary motion to dismiss Count III without prejudice pursuant to Rule 41(a)(2) of the Federal Rules of Civil Procedure as to defendants Commonwealth of Virginia and the SWVHEC. ECF No. 13. Upon review of the record and for the reasons set forth herein, the court DENIES in part and GRANTS in part defendants' motion to dismiss. The court will provide Carmack with LEAVE TO AMEND his complaint pursuant to the court's opinion. Any amended complaint must be filed with 14 days of this opinion.

         I.

         Carmack was hired by and worked for the SWVHEC as its Chief Financial Officer ("CFO") on August 1, 2012, with responsibility for oversight of the center's financial affairs. The SWVHEC, located Abingdon, Virginia, is a multi-college and university institution in Virginia that partners with public and private colleges and universities to provide degree programs, certificates, and professional development courses. Carmack briefly served as its Interim Director from June 2015, when the previous Executive Director, Dr. Rachel Fowlkes, retired, to October 2015, when defendant David Matlock took over as Executive Director. For two years and three months, Carmack reported to Matlock. ECF No. 6, at 17.

         Carmack alleges that during his time as the CFO, he discovered that Matlock and others were "wasting and misusing" SWVHEC funds and resources and engaging in other financial improprieties. Id. Carmack specifically alleges the following:

(1) On February 13, 2017, Matlock submitted an invoice for payment of $1, 250 to reimburse his son, Jason Matlock, a middle school principal, for travel by his students to a robotics competition at James Madison University. Carmack alleges this expense was neither approved by the SWVHEC foundation nor a budgeted item. When asked about the invoice, Matlock allegedly told Carmack that he offered this reimbursement to all schools in southwest Virginia. Carmack believes this is not true, claiming that it was improbable that only Jason Matlock accepted the offer. Id. at 18.
(2) Matlock told Carmack to "back off of a husband and wife "computer team" with control over a $50, 000 grant awarded by the Virginia Tobacco Commission and another $50, 000 to perform work for the SWVHEC who were "working in a questionable manner from home" and collecting overtime pay in a way that Carmack suspected was fraudulent. Carmack complained to Matlock and Jeff Webb, SWVHEC's information technology director, about the suspected fraud. Specifically, Carmack complained about 111 hours of overtime Webb approved for the wife between July and November 2016. In response, Matlock allegedly told Carmack that he no longer wanted the couple to report to or file their timesheets with him, despite the fact that that they were "supposed to have 'worked' for him." Id. at 18-19.
(3) Matlock failed, after repeated requests, to submit invoices in a timely manner for payment per SWVHEC policy. Id. at 19.
(4) Matlock allegedly hired a longtime friend, Joe Mitchell, on or about September 7, 2016, to work as a maintenance supervisor without first scheduling Mitchell for an interview by a selection committee as required by SWVHEC policy. When Carmack cautioned Matlock about pre-selecting employees for hiring in contravention of SWVHEC policy, Matiock allegedly told him not to worry about it because a state senator "had his back." Id. at 19.
(5) Shortly after Matiock took over as Executive Director in October 2015, he excluded the finance department from financial decisions, thereby making it impossible for Carmack, as CFO, to do his job. Matiock and others allegedly began to purchase non-budgeted items without the finance department's knowledge and failed to submit invoices in a timely manner. Matiock also allegedly organized a community golf tournament under the name of the Higher Education Center Foundation, but failed to account for receipts and expenditures associated with this and other events. Matiock also allegedly instructed SWVHEC employees not to speak with Carmack and began to conduct SWVHEC business in "secret." Id. at 19-20.
(6) In December 2016, Matiock allegedly had an art installation, produced at a cost of $9, 900 and dedicated to retired Executive Director, Dr. Fowlkes, removed. Carmack claims that despite repeated requests from members of SWVHEC's board of trustees and other employees to return the artwork, it remains missing. Id. at 20.
(7) Lastly, Carmack alleges that Matlock's reassignment of an information technology employee, Adam Tolbert, to human resources in December 2015, and decision to grant him access to confidential employee information, including social security numbers, salary information, and performance reviews, was improper and violated SWVHEC policy. Id. at 20-21.

         Matiock concedes that he and Carmack disagreed about the "boundaries" of Carmack's position as CFO specifically and the role of financial department generally. ECF No. 9, at 1. Matiock alleges that Carmack took it upon him to "probe" his financial decisions. Id. In February 2017, Carmack met with the ombudsman of the University of Virginia, which provides human resources and other oversight to the SWVHEC, to share his concerns about die foregoing. ECF No. 6, at 21. The ombudsman allegedly referred Carmack to the Commonwealth's Department of Human Resources Management ("DHRM"), which in turn suggested he contact the Commonwealth's Office of State Inspector General ("OSIG"). Id. Carmack alleges both the DHRM and OSIG assured him that he could not be terminated for making a complaint because he was protected by the "Whistle Blower Act." Id. Carmack claims to have relied on these assurances when he lodged his complaint with OSIG on or about July 31, 2017, disclosing the suspected wrongdoing and abuses alleged above. Id., Thereafter, on an unspecified date, the OSIG reportedly sent a letter to the Commonwealth's Secretary of Education stating that it had investigated a complaint and directing die SWVHEC to provide a response to its report and to explain the "corrective action(s)" it planned to take within 30 days. Id. Specifically, the complaint provides, verbatim, that the OSIG sent a letter with die "subject line 'Hotline Case # 16077' stating that it had conducted an investigation based on a complaint [made by plaintiff] to the State ...


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