Labor & Employment Law Daily DC healthcare exec’s favorable verdict on stigma-plus due process claim affirmed
Monday, July 9, 2018

DC healthcare exec’s favorable verdict on stigma-plus due process claim affirmed

By Brandi O. Brown, J.D.

A favorable jury verdict on due process claims of a former healthcare executive for the District of Columbia, who alleged that she was tried and convicted in the press as the result of leaks to the press by her employer, and then fired without due process, will not be disturbed by the D.C. Circuit. Because the District failed at trial to make its legal argument against the exec’s stigma-plus claim in its Rule 50(a) motions, it could not “renew” it on a Rule 50(b) motion. The court also rejected the employer’s contention that a two-year gap in employment was categorically insufficient to establish that the executive was deprived of her liberty interest. The appeals court affirmed the district court’s judgment refusing to set aside the verdict (Campbell v. District of Columbia, June 29, 2018, Griffith, T.).

Reports of steering bids. In 2010, in response to the Patient Protection and Affordable Care Act, the District of Columbia’s Department of Health Care Finance formed the Health Care Reform and Innovation Administration. The executive, who had held several high-level positions in the industry prior to that time, was made director of the Administration but was later promoted to chief operating officer for the whole Department. Subsequently the Administration was told that the COO had been violating normal bidding procedures by steering contracts to particular contractors. The Department Director spoke to one such contractor and was told the COO had contacted the contractor without solicitation and then urged it to partner on a bid with another, politically connected contractor. The Director told his chief of staff, the Mayor, and HR.

Leaks to the news. HR put the COO on leave but would not answer her questions about what allegations had been made against her. She asked for, but was denied, an opportunity to refute any allegations. Just a few days later, the Mayor’s staff allowed a reporter to review the Director’s emails to the Mayor’s office regarding the investigation, and the Director subsequently provided the reporter with additional background. The next morning the paper published a story about it, with the headline “Health Care Finance COO Fired over Contract Steering Allegations.” The first time the employee became aware of the specific allegations against her was when reading that article—later on the same day she was fired. The Director later shared the emails with the Washington Post, which published a story with the headline “D.C. Official Is Fired over Contract Allegations.”

Jury verdict. The COO, sued alleging violations of her Fifth Amendment due-process rights based on unlawful termination of her employment and the employer’s leak of untrue allegations about her to the press. She was only able to secure a full-time job within her chosen field nearly two years after she was fired. She pursued both “reputation-plus” and “stigma-plus” due process claims. A reputation-plus claim is based on the government taking adverse actions and defaming an employee, while a stigma-plus claim is based on the government taking certain adverse actions—like the termination here—and those actions create a stigma or disability foreclosing the employee’s ability to enjoy other employment opportunities. The district court denied Rule 50(a) motions made by the District during the five-day jury trial, and the employer then made a renewed motion under Rule 50(b) after the jury returned a verdict in the exec’s favor on the stigma-plus claim. The district court denied the motion and the District appealed.

“Speech argument” not made in prior motions. On appeal the District put all of its weight behind one argument—that the COO’s stigma-plus claim should fail as a matter of law because it was based on the government’s speech, rather than its termination action, and, thus, that it was a reputation-plus claim in disguise. Because the jury had rejected a reputation-plus claim, the employer reasoned, this claim should fail as well. However, the appeals court explained that it did not need to resolve this particular argument, which it referred to as the “speech argument,” because the District never brought it up before the Rule 50(b) motion; it was raised only in the Rule 50(b) argument after the verdict, but by then it was too late.

The District’s attempts to “sidestep” this problem, by arguing that it was preserved by other arguments it had made, were unpersuasive. Moreover, the appeals court noted that the jury instructions were “flatly inconsistent” with the speech argument now being advanced by the District, yet it had never objected to those instructions. If it “had been advancing the speech argument,” as it claimed now that it was, “one might expect” the District to have objected to those instructions because they allowed the jury to find a stigma-plus claim based on discharge of the COO “in conjunction with its ‘speech.’” However, the District did not object.

No categorical rule. In addition, the District repeated an argument that it had made in its Rule 50(a) motions—that the COO had not been foreclosed from working in her chosen profession because she found full-time work within two years of her discharge. The District argued then, and again on appeal, that two years of unemployment are categorically insufficient to establish deprivation of her liberty interest based on government action with the “broad effect of largely precluding [her] from pursuing her chosen career.”

As had the district court, the appeals court rejected this argument. In the two years the executive had applied for over 30 jobs and was only able to obtain two temporary jobs, both outside of her chosen profession. Evidence indicated that her difficulty finding work was related to the negative publicity around her discharge. Moreover, the District failed to cite any binding or persuasive authority supporting its “two-year rule.” In fact, the appeals court noted, some precedent suggested that fewer than two years could be sufficient. Even if a categorical approach were appropriate, the court asked, why should it be set at two years rather than one, or some other, higher number? The court affirmed.

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