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Sixth Circuit Finds That Employee Fired For Internal Email Is Not Protected By ERISA Whistleblower Provisions

The Sixth Circuit Court of Appeals recently tightened the definition of who could be considered an employee whistleblower in Sexton v. Panel Processing, Inc.

designing-on-a-tablet-1361061-m.jpgThe case involved Brian Sexton, who worked as a general manager for Panel Processing in its Coldwater, Michigan facility, as well as trustee for the company’s employee retirement program. In 2011, Sexton and one of the other trustees campaigned on behalf of two employees who were running for Panel Processing’s board of directors. Though these employees won election, the board refused to seat them because it would violate the company’s bylaws, which placed a limit on the number of inside directors. The board also removed Sexton and the other trustee from the retirement plan trusteeship.

Sexton responded by sending an email to the chairman of the board. In it, he complained that the board’s actions were violations of both ERISA and the state’s Corporations Business Act, as well as other state and federal laws. Sexton stated that he intended to bring these violations to the attention of the federal Department of Labor and the state Department of Licensing and Regulatory Affairs unless they were corrected immediately.

The chairman never responded to the email, and six months later, Sexton was fired from his job as general manager. Sexton then brought a claim against Panel Processing under his state’s Whistleblower Protection Act. Although Sexton resides in Michigan, the case arrived in federal court due to ERISA, whose civil enforcement provisions preempted state law claims. A federal district court then granted summary judgment in favor of Panel Processing. Sexton appealed to the Sixth Circuit.

In his appeal, Sexton argued that the company violated ERISA by firing him after he sent the email. The relevant language states: “It shall be unlawful for any person to discharge, fine, suspend, expel, or discriminate against any person because he has given information or has testified or is about to testify in any inquiry or proceeding relating to the Act.”

The Sixth Circuit took issue with Sexton’s interpretation of the email, noting that the email was not sent in the context of a “proceeding” and that it did not amount to “testimony.” The issue was whether it amounted to giving information in an inquiry. While the Court found that Sexton was giving information, it noted that it needed to be for a specific investigation or request for information. Anything else would be misreading Congress’s intent when it enacted the statute, which was to protect individuals during an official inquiry.

The Sixth Circuit therefore affirmed the lower court’s decision. The Court was divided on this ruling, with the dissent arguing that the Act’s language did apply to information passed on voluntarily by an employee. The dissent noted that the Fifth, Seventh, and Ninth Circuits have ruled differently on this issue, finding that they interpreted the language to protect an employee’s “unsolicited complaint.” They also pointed out that the United States Supreme Court’s recent rulings on whistleblowers broadened their protections. It is likely that this issue will eventually come before the Supreme Court as well.

Miller & Falkner is an Indiana and Kentucky plaintiffs law firm serving residents of Kentucky and Indiana. Located in Louisville, Kentucky, the firm provides representation in the areas of personal injury and employment law. If you need a Kentucky or Indiana employment law attorney, contact us today for a free consultation.

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