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Carmack v. Commonwealth

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

April 5, 2019




         This matter before the court is a motion to dismiss plaintiff William D. Carmack's Amended Complaint. Carmack filed his original 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 of the Southwest Virginia Higher Education Center ("SWVHEC"). Count I alleged a violation of Virginia's Fraud and Abuse Whistle Blower Protection Act, Va. Code § 2.2-3009, et sea, (1950) ("Act"), Count II set forth a cause of action for retaliation in violation of First Amendment protections afforded speech brought pursuant to 42 U.S.C. § 1983, and Count III alleged 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 (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, the 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.[1] The court assumes familiarity with its previous Memorandum Opinion, ECF No. 31.

         The conduct undergirding Counts I through III is a July 2017 complaint Carmack made to Virginia's Fraud, Waste, and Abuse Hotline ("Hotline"), in which he alleged multiple instances of workplace misconduct by Matlock (and others) at the SWVHEC. Five months after filing this complaint, Carmack's employment as the Chief Financial Officer ("CFO") at the SWVHEC was terminated. On November 6, 2018, this court entered an order denying in part and granting in part the defendants' motion, providing Carmack with leave to amend.[2] ECF No. 32. Carmack timely filed his Amended Complaint on November 29, 2018, in which he attempted to remedy deficiencies identified by the court in his original Complaint. ECF No. 38. In addition to reasserting Counts I-III, Carmack added Count IV, asserting political affiliation retaliation in violation of the First and Fourteenth Amendments, brought pursuant to 42 U.S.C. § 1983. ECF No. 38. The matter before the court is defendants' motion to dismiss Carmack's Amended Complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure. ECF No. 38.

         In their renewed motion to dismiss, ECF No. 42, the defendants allege that Carmack again failed to plead facts sufficient to support a plausible inference of causation. More specifically, the defendants contend that Carmack neither proffered facts sufficient to bridge the temporal gap between the "protected activity" (OSIG complaint) and his termination nor adequately advanced a "sufficient explanation" for the gap. With respect to Count II, the defendants conceded previously that the record was inadequate to conclude as a matter of law that Carmack's OSIG complaint is unprotected by the First Amendment.[3] ECF No. 17, at 8. They have shown no indication of having changed their position vis-a-vis the propriety of disposing of Count II at this early stage in the litigation except to the extent the court finds that causation has not been adequately pled. ECF No. 41. Therefore, the court assumes the defendants stand by their earlier position and, accordingly, denies the motion as to Count II in light of its finding below regarding causation. The defendants next allege that Carmack has not pled an adequate statutory basis to state a Bowman claim in Count III and mat the availability of alternative remedies precludes Carmack from bringing such a claim in the first place. Lasdy, the defendants allege that Carmack's newly-asserted Count IV claim should fail for the same reason that Counts I-III should fail, namely a failure to adequately plead causation. Upon review of the record and for the reasons set forth herein, the court DENIES in part and GRANTS in part the defendants' motion to dismiss.


         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. ECF No. 38, at 2. The SWVHEC, located in Abingdon, Virginia and established in 1992, 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. Id. 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. Id. Carmack was paid 75% by the SWVHEC and 25% by the Southwest Virginia Higher Education Foundation ("Foundation"). Id.

         In 2016, Senior Assistant Attorney General Elizabeth Griffin designated the Foundation as a separate entity from the SWVHEC. Id. at 2. The Foundation managed all grants exceeding $25, 000, 000 and built the "Energy Center" at the request of the Virginia Tobacco Commission. Id. at 2-3. Carmack was the Chief Executive Officer ("CEO") of the Foundation. Id. at 3. Carmack alleges that he worked 40 or more hours each week for the SWVHEC, often on weekends and was recognized for his "superior performance," including being selected to attend the Virginia Executive Institution and being appointed by the governor to serve on the Virginia Solar Authority. Id. at 3. Carmack, a Democrat, claims that Matlock was selected for the Executive Director position because of the substantial political influence of Senator Bill Carrico, a fellow Republican and chairman of the Board of Trustees for the SWVHEC. Id. Carmack was allegedly told not to apply for the position by Senator Carrico in April 2015 because he was going to hire Matlock for the position, and that he was going to speak with the individuals who oversaw the hiring to see that Matlock was appointed. Id.

         When Carmack asked about an increase in pay for filling in as Interim Director, Senator Carrico told him to ask Matlock when he arrived, even though Matlock had not yet been hired for the position. Id. Matlock was allegedly chosen over three highly qualified candidates. Id. Carmack claims that although Matlock was scheduled to begin work as the Executive Director on October 1, 2015, he did not appear on the job until October 15, 2015. Id. Carmack claims that he was hired by Dr. Fowlkes, a Democrat, and that Carmack was her "pick" to be her successor as Executive Director. Id. at 3. Carmack claims that sometime after Matlock was hired, Matlock and others made comments to him that he "belonged to the wrong party" or "you belong to the other party," or "words to that effect." Id. Further, in November 2015, Matlock called Carmack into his office and relayed a story about "needling." Id. Matlock allegedly explained that "needling" is when a mother bird places sharp objects in her nest to encourage baby birds to leave the nest. Id. at 3-4. Matlock further stated that this was the way he got rid of employees he did not want. Id. at 4.

         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 to the Foundation 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 "favored" expense was neither approved by the 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, although he provided no evidence substantiating this claim. Carmack believes this is not true, claiming that it was improbable that only Jason Matlock accepted the offer.
(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." The couple were allegedly "close personal friends" of Webb. Carmack claims to have raised this issue with Matlock by letter dated January 31, 2017.
(3) Matlock failed, after repeated requests, to submit invoices in a timely manner on the 15th day of the month for payment per SWVHEC policy.
(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, Matlock allegedly told him not to worry about it because Senator Carrico "had his back." Carmack inquired "numerous times" with Matlock because Mitchell "would appear and disappear out of the payroll," but never received a response besides "leave it alone."
(5) Shortly after Matlock 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. Matlock and others allegedly began to purchase non-budgeted items without the finance department's knowledge and failed to submit invoices in a timely manner. Matlock also allegedly organized a community golf tournament under the name of the Foundation but failed to account for receipts and expenditures associated with this and other events.
(6) Matlock also allegedly instructed SWVHEC employees not to speak with Carmack and began to conduct SWVHEC business in "secret," apparently replacing a "door with a window" with a "solid wood door with no window." He also allegedly placed additional locks on his door so that he "could control access to his office."
(7) In December 2016, Matlock 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."
(8) 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.
(9) Lastly, proceeds related to a fundraiser hosted by Virginia Highlands Community College that Matlock was involved are allegedly missing.

Id. at 4-8.

         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 the foregoing. Id. at 8. 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. In mid-July, Carmack filed a complaint with the OSIG via their online website. Id. On or about July 21, 2017, the OSIG requested Carmack send supporting documentation to Shawn Cowardin, an OSIG Investigator. Id. In addition to filing a complaint via the Hotline, on or . about July 31, 2017, Carmack submitted a letter to the OSIG disclosing the suspected wrongdoing and abuses alleged above. Id. Carmack claims to have relied in "good faith" on the above-referenced assurances when he lodged his complaint with the OSIG. Id.

         Carmack also spoke with Cowardin in July 2017 about whether Carmack wished to remain anonymous. Id. Carmack and Cowardin agreed that because the information in the complaint would be known only to the CFO, i.e., Carmack, there was no reason to remain anonymous. Id. Cowardin allegedly assured Carmack that Matlock could not retaliate against him. Id. Cowardin also offered to notify Carmack prior to speaking with Matlock about Carmack's concerns. Id. In early October 2017, Carmack was notified that an investigator would be speaking with Matlock later that day. Id. at 8-9. That same day, Matlock called Kathy Heitala, Jeff Webb, Joyce Brooks, and Adam Tolbert into his office and reportedly slammed the door. Id. at 9. It was at this point that Carmack believes Matlock was contacted by the OSIG investigator. Id.

         Carmack alleges that before Matlock was notified of the OSIG complaint in October 2017, each department manager had a weekly meeting with Matlock. Id. However, after learning about Carmack's OSIG complaint, Matlock ceased meeting with Carmack on a weekly basis. Id. Further, Carmack alleges after Matlock learned of his OSIG complaint, he was no longer included in any financial "[b]usiness of the [c]enter." Id. Indeed, instead of relying on the CFO, Matlock allegedly sought advice from an unnamed former employee about the budget. Id. Carmack claims that he was essentially cut off from communication with the Department of Planning and Budgeting. Id. Carmack's emails to Senior Assistant Attorney General Elizabeth Griffin were also allegedly blocked. Id. Carmack claims that Griffin was left with the impression that Carmack was ignoring her. Id.

         Thereafter, an OSIG investigator came to the SWVHEC on or about October 29, 2017 to investigate a separate OSIG complaint filed by a former contract employee. Id. Carmack states, somewhat unclearly, that based on questions he was asked, it was clear that Matlock knew of his own complaint with the OSIG. Id. On November 17, 2017, the OSIG reportedly sent a letter to the Commonwealth's Secretary of Education (1) stating that it had investigated a complaint and (2) directing the SWVHEC to provide a response to its report and to explain the "corrective action(s)" it planned to take within 30 days. Id. The letter, featuring the "subject line 'Hotline Case # 16077, '" allegedly stated, verbatim, that the OSIG had conducted "an investigation based on a complaint to the State Fraud, Waste, and Abuse Hotline (Hotline)" regarding the SWVHEC. Id. Upon information and belief, Carmack asserts that Matlock knew that the recommendations made by the OSIG were based on his complaint. Id. at 10. Further, Carmack alleges mat on December 4, 2017, Joyce Brooks (who was in the closed-door meeting with Matlock described above) announced to a group of employees in the administrative hallway mat "David [Matlock] had taken care of the OSIG complaint. It was Duffy [Carmack] trying to cause trouble." Id.

         In addition to freezing Carmack out of SWVHEC business, Matlock allegedly took it upon himself to report the SWVHEC's financial information at the SWVHEC Board of Directors meeting in December 2017, instead of allowing Carmack to do so as was the norm given his position as CFO. Id. This same month, "in an effort to ... undermine [Carmack's] authority and impair his ability to do his job," Matlock scolded one of Carmack's subordinate employees, Paula Moad, for requesting that human resources at the University of Virginia post a position which Matlock ultimately "gave" to the daughter of his administrative assistance, Kathy Heitala. Id. at 10, 12. Matlock further instructed Moad not to speak with Carmack. Id. at 10. Carmack wrote a letter (dated December 1, 2017) to the members of the Board of Trustees of SWVHEC informing the Board of his concerns and the reporting process with the OSIG. Id. In this letter, Carmack also informed the Board of the DHRM's suggestion that the SWVHEC utilize a third-party mediator to resolve the issues noted in Carmack's OSIG complaint. Id. at 11. Just before the December 2017 Board meeting started, at which time Carmack's concerns were to be addressed, Senator Bill Carrico allegedly pulled Carmack aside and stated, "What is your issue? This matter will not be brought up at the meeting today! Do you understand?," or words to that effect. Id. At the meeting, Board member Steve Cochran made a motion for the Board to go into "Executive Session" to discuss Carmack's letter. Id. Under the advice of Senior Assistant Attorney General Elizabeth Griffin and Senator Carrico, the motion to discuss Carmack's letter was reportedly denied. Id.

         On January 4, 2018, approximately five months after the OSIG complaint was filed, Matlock terminated Carmack without a specific allegation of misconduct. Id. at 21-22. Matlock first denied knowing Carmack was the one who made the OSIG complaint but then admitted knowing Carmack was the complainant. Id. Matlock also told Carmack that the decision to terminate Carmack was his alone. Id. at 12. Later, Matlock stated that he had discussed his decision with the Board and the Board agreed with Matlock's decision. Id. In later conversations with Board members, two members told Carmack that they were unaware of Matlock's decision to fire Carmack. Id. However, the Board members did say they knew Carmack was the OSIG complainant. Id.


         The purpose of a Rule 12(b)(6) motion to dismiss is to test the legal sufficiency of the complaint. Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Or. 1999). To survive a motion to dismiss, plaintiff must plead sufficient facts "to raise a right to relief above the speculative level" and "state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007). A complaint is "facially plausible" when the facts alleged "allow[] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. This "standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. In making this assessment, a court must "draw on its judicial experience and common sense" to determine whether the pleader has stated a plausible claim for relief. Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009).

         When ruling on a motion to dismiss, the court must "accept the well-pled allegations of the complaint as true" and "construe the facts and reasonable inferences derived therefrom in the light most favorable to the plaintiff." Ibarra v. United States, 120 F.3d 472, 474 (4th Cir. 1997). However, the same is not true for legal conclusions. "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 556 U.S. at 678; see also Wag More Dogs. LLC v. Cozart, 680 F.3d 359, 365 (4th Cir. 2012) ("[T]hough we are constrained to take the facts in the light most favorable to the plaintiff, we need not accept legal conclusions couched as facts or unwarranted inferences, unreasonable conclusions, or arguments." (internal quotation marks omitted)). In considering a motion to dismiss, the court is "generally limited to a review of the allegations of the complaint itself." Goines v. Valley Cmty. Servs. Bd, 822 F.3d 159, 165-66 (4th Cir. 2016). If, after accepting all well-pleaded allegations in plaintiffs favor, it appears that plaintiff cannot prove any set of facts in support of his claim entitling him to relief, a motion to dismiss under Rule 12(b)(6) should be granted. Edwards, 178 F.3d at 244.


         The gravamen of the defendants' averments concerning Count I is that Carmack has again failed to sufficiently plead causation between his complaint to the OSIG on or about July 31, 2017 and his termination as CFO of the SWVHEC on January 4, 2018. The defendants claim both that there are not enough facts to buttress Carmack's allegation of causation and that the five-month delay between these events indicates that the termination was made without consideration of the protected activity in question, namely Carmack's OSIG complaint. The defendants further claim ...

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