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Averett v. Chicago Patrolmen's Federal Credit Union

March 27, 2007


The opinion of the court was delivered by: Amy J. St. Eve, District Court Judge


Before the Court is Defendants' Motion to Dismiss Counts I and II of Plaintiff's Complaint pursuant to Rule 12(b)(6). For the following reasons, the Motion is granted in part and denied in part.


Plaintiff Tanya Averett's Complaint includes two retaliation claims against Defendants Chicago Patrolmen's Federal Credit Union ("CPFCU") and Scott Arney, Bryan Milligan, and Leslie Zalewski (collectively, the "individual defendants"): one under a federal statute, 12 U.S.C. § 1790b, providing whistleblower protection for credit union employees; and one under Illinois' Whistleblower Act, 740 ILCS 174/1 et seq. ("the Illinois statute"). In her prayer for relief, Plaintiff seeks punitive damages as well as other remedies.

The Illinois statute was enacted on August 18, 2003 with an effective date of January 1, 2004, and it prohibits "employers" from retaliating against "employees" "for disclosing information to a government or law enforcement agency, where the employee has reasonable cause to believe that the information discloses a violation of a State or federal law, rule, or regulation." 740 ILCS 174/15. It was passed against the backdrop of an Illinois common law retaliatory discharge cause of action allowing plaintiffs to recover against their employers if (1) the employee was discharged in retaliation for his or her activities; and (2) the discharge violated a clearly mandated public policy. Chicago Commons Assoc. v. Hancock, 804 N.E.2d 703, 705 (Ill. App. Ct. 2004). This action allowed for actions based on reports of improper activities to public officials. See, e.g., Lanning v. Morris Mobile Meals, Inc., 720 N.E.2d 1128, 1130 (Ill. App. Ct. 1999).

While a full recitation of the facts in the Complaint is unnecessary, Plaintiff's Complaint includes the following allegations, which, as discussed below, the Court accepts as true for the purpose of addressing this motion. On or about September 29, 2003, Defendant CPFCU hired Plaintiff as a Financial Planning Coordinator. (R. 1-1, Compl. ¶ 13.) In March 2004, she was promoted to the position of Internal Auditor, tasked with reviewing CPFCU's policies and procedures to ensure compliance with National Credit Union Administration ("NCUA") rules and regulations, performing operational and financial audits, documenting and monitoring CPFCU internal control systems, and issuing reports and recommendations. (Id. ¶ 14.) In March 2005, Plaintiff was again promoted -- to the position of manager over a CPFCU Compliance Officer -- while also retaining her responsibilities as Internal Auditor. (Id. ¶15.)

During Plaintiff's time at CPFCU, it formed two internal committees to monitor the activities of CPFCU's staff and members, and to curtail abuses and violations: (1) the Supervisory Committee, comprised of five retired or active City of Chicago Police Officers; and (2) the Employee Suspicious Activity Committee ("ESAC"), comprised of the Internal Auditor, the Treasurer, and the Human Resources Director. (Id. ¶ 17.)

Around May 2005, Plaintiff discovered that Nick Gregor -- the son of a Vice President at CPFCU external auditor Seldon Fox, Ltd. -- was working as a CPFCU Loan Officer in violation of § 715.9 of the NCUA Rules and Regulations. (Id. ¶ 18-20.) Plaintiff brought this information to the attention of both the Supervisory Committee and Defendant Milligan, CPFCU's Chief Financial Officer. (Id. ¶ 21.) The Supervisory Committee held a meeting on the matter, during which Defendant Arney admitted to hiring Gregor and promoting him to the position of Loan Officer, and during which both Arney and Milligan insisted that Seldon Fox remain CPFCU's external auditor. (Id. ¶ 22.) Plaintiff also met with Supervisory Committee Chairman James Riordan about the matter, and Riordan in turn sent a letter to the Regional Director of the NCUA, requesting an official opinion on Seldon Fox's independence in light of Gregor's employment at CPFCU. (Id. ¶¶ 23-24.)

On or about August 16, 2005, the Supervisory Committee resolved that Milligan could no longer attend their meetings without a specific invitation. (Id. ¶ 28.) Plaintiff alleges on information and belief that the Supervisory Committee reached this decision in response to Milligan's attempts to influence the Supervisory Committee's selection of a new external auditor to replace Seldon Fox. (Id.) On or about November 5, 2005, Plaintiff expressed her concerns about CPFCU senior management's attendance at Supervisory Committee meetings to NCUA examiner Cynthia Robinson. (Id. ¶ 30.) Robinson later visited CPFCU's offices to discuss this issue, concluding that it was improper for senior management to attend Supervisory Committee meetings of a federally insured credit union because it could undercut the independence of the Supervisory Committee. (Id. ¶ 37.)

On or about December 8, 2005, Defendant Milligan voiced vague concerns about Plaintiff's job performance to Plaintiff, and further told Plaintiff that it did not "make sense" for her to serve as CPFCU's contact with its new external auditor. (Id. ¶ 35.) In response, Plaintiff filed a "Suspicious Activity Report" regarding Milligan with CPFCU's Human Resources Department, which was directed by Defendant Zalewski. (Id. ¶ 36.) Plaintiff also eventually filed an official harassment complaint against Milligan, after which CPFCU suspended her employment. (Id. ¶ 42.) On or about January 25, 2006, Plaintiff spoke with NCUA representatives about her situation at CPFCU, explaining her belief that her interference with senior management's attempts to "sidestep" NCUA rules and regulations on external auditing firms instigated Milligan's harassment. (Id. ¶ 43.) Plaintiff was terminated from her employment at CPFCU on February 2, 2006. (Id. ¶ 44.)


A motion to dismiss pursuant to Rule 12(b)(6) tests the legal sufficiency of a complaint, not the merits of the case. Cler v. Illinois Educ. Ass'n, 423 F.3d 726, 729 (7th Cir. 2005). The Court will only grant a motion to dismiss if "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Centers v. Centennial Mortgage, Inc., 398 F.3d 930, 933 (7th Cir. 2005) (quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957)). The Court must assume the truth of the facts alleged in the pleadings, construe the allegations liberally, and view them in the light most favorable to the plaintiff. Centers, 398 F.3d at 933. "Federal complaints plead claims rather than facts." Kolupa v. Roselle Park Dist., 438 F.3d 713, 714 (7th Cir. 2006) (emphasis in original). As a result, "[i]t is enough to name the plaintiff and the defendant, state the nature of the grievance, and give a few tidbits (such as the date) that will let the defendant investigate," and a complaint need not "allege facts corresponding to each aspect of a 'prima facie case'" to survive a motion to dismiss. Id. Except for in cases involving the two claims addressed in Fed. R. Civ. P. 9(b), "[a]ny decision declaring 'this complaint is deficient because it does not allege X' is a candidate for summary reversal." Id. at 715.


I. Punitive ...

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