Jottings By An Employer's Lawyer

Sunday, April 10, 2005

North Carolina: Home of National Champs and Latest MDV

Last Monday night the Tarheels of N.C. were cutting down the nets, the traditional spoils for the NCAA basketball champions. Late Friday afternoon in Durham, just a dozen miles away from the Tarheels Chapel Hill campus, a federal court jury took less than 1 ½ hours to award a whistleblower $1.59 million. John Stevenson of the Herald-Sun covered the trial and had the story headlined, Ex-city worker awarded $1.5M.

Based on Stevenson's stories during the coverage of the trial (see links below), Ava Hinton was a 17 year employee in the City Housing Department. She claimed she had reported problems with the City's small business loan department. Apparently the program began in 1999, and under it the city :

lent $828,000 in federal money to 24 businesses in an attempt to spark entrepreneurial activity in low- and moderate-income areas of the community. But some recipients gave false addresses and then disappeared, while others repaid little or nothing.

The program was ended in July, 2001.

Hinton was not fired until July, 2003. The City claimed she was fired for wrongfully approviing $1,280.50 to be used on weatherizing improvements owned by her and her mother. Hinton admitted that it was a "mistake" but testified that it had been approved by her supervisor.

In looking at the evidence as reported in the Herald-Sun, it is easy to see why the City spokesperson said after the trial:

"We are shocked by the verdict. We don't believe it is supported by the evidence in any way. We are looking at all our options, including the option of appeal.

From the stories it appeared -
  • the City learned about the problems with the small business loan program from a federal audit, not just Hinton;
  • the program had been eliminated for more than 2 years before Hinton was fired;
  • the problem with the weatherization authorization by Hinton was uncovered because of an inquiry by a federal agency which prompted an audit of files;
  • when the issue was discovered, Hinton was put on administrative leave and then terminated following the completion of the investigation.

On the other hand (and when there is a large verdict, there is always another view):

  • Hinton claimed the Housing Director who fired her had her own conflict of interests, based on the employment of the Mayor and a personal relationship with an independent agency which was involved in the controversy over the program;
  • there was testimony from a terminated (and one would assume disgruntled) employee that the the Housing Director said she "finally had a reason" to terminate Hinton (a statement denied by the Housing Director); and
  • 2 employees of an agency (but not under City supervision) had committed a similar violation to Hinton's and not been terminated; and
  • at a grievance hearing, the hearing examiner suggested that Hinton should be reinstated.

In a post-trial statement, Hinton's counsel said he had offered to settle the case for $15,000 and reinstatement, which obviously sounds a lot more reasonable now. It also would seem to mean that the case ended up playing out a lot stronger than he thought it would.

The good news for the City, besides that this is a long way from the end of the process, the federal judge threw out the claim for punitive damages. The bulk of this award, $1.5 million was for mental anguish. Think what it could have been.

To check out the day by day description of the trial from Stevenson's reporting see his stories of April 7, April 6, April 5, and April 4.

Even from the little information that can be gleaned from the newspaper reporting, this case is a good reminder that when you enter a court room literally anything, and I do mean anything, can happen.


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