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Schlicksup v. Caterpillar

July 13, 2010


The opinion of the court was delivered by: Michael M. Mihm United States District Judge


Now before the Court is Defendant Caterpillar, Inc.'s ("Caterpillar") Motion for Summary Judgment. For the reasons set forth below, the motion [#28] is DENIED.


This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 1331, as the claim asserted in the Complaint presents a federal question under the Sarbanes-Oxley Act, 18 U.S.C. § 1514(A).


Caterpillar has employed Daniel Schlicksup ("Plaintiff") since 1992. Plaintiff has a Bachelors degree in finance, a Juris Doctor, and an LL.M. in Taxation. During his time at Caterpillar, Plaintiff helped establish a European tax department, managed the corporate human resources division, and in March 2005, began working as a Global Tax Strategy Manager. Caterpillar ranks positions according to salary grades ("SG"). When Plaintiff's took the tax manager position, it was SG 30. Around August 2007, Caterpillar downgraded the tax manager position to SG 29, but Plaintiff entered into a two-year agreement with Caterpillar that allowed him to continue receiving SG 30 compensation for that period. On August 26, 2008, Plaintiff attended a meeting where Alice Barbour ("Barbour"), a human resource manager, offered him a new Information Technology ("IT") position with the Global Information Services Division ("GIS"). John Heller ("Heller"), the Chief Information Officer, also attended the meeting. Barbour told Plaintiff that he was reassigned and could not remain in his current position. Plaintiff transferred to the new position and received SG 30 compensation. Plaintiff asserts that on November 2, 2009, his supervisor informed him that he could not work in tax or finance.

In addition to using salary grades, Caterpillar ranks employees with performance ratings and potential assessments. Performance ratings are given on a scale from 1 to 5. 1 is the best rating. On this scale, an employee with a 2 rating performed notably. Under the Talent Management System ("TMS"), employees are assessed according to whether their potential indicates they should be transferred or promoted. The system has at least three categories: P, K, and L. P means that the employee should be promoted. K means that the employee is well placed in his or her current position. L means that a lateral transfer would benefit the employee. In both 2007 and 2008, Caterpillar gave Plaintiff a performance rating of 2. For both years, plaintiff also received a TMS assessment of L.

Based on their rankings, employees with salary grades of 26 or higher can receive stock option awards. These awards are determined by: "(1) the standard Black-Scholes equity award for the employee's salary grade and home country;" (2) a formula adjustment based on performance and TMS ratings; and (3) "an overall division adjustment factor." (Def's Mot. Summ. J. 6). The division adjustment factor prevents Caterpillar from awarding more stock options than are available. In 2007, Plaintiff received 2,104 nonqualified stock options and 526 restricted stock options. In 2008, Plaintiff received 2,263 non-qualified stock options and 556 restricted stock options. On March 2, 2009, Plaintiff received 3,252 stock appreciation rights and 813 restricted stock units.

Since 2006, Plaintiff's employment has been full of conflict. After researching the Economic Substance Doctrine for work in 2006, Plaintiff became concerned that one of Caterpillar's structures illegally avoided U.S. taxes. In 2007, Plaintiff informed Robin D. Beran ("Beran"), the Director of Global Tax and Trade in Caterpillar's GF&SSD, of his concerns. When Beran did not pursue the issue to Plaintiff's satisfaction, Plaintiff contacted David Burritt ("Burritt"), Caterpillar's Chief Financial Officer. Plaintiff also met with James Buda ("Buda"), Caterpillar's General Counsel, about this issue. Buda directed Plaintiff to the Ethics Office where Plaintiff filed a complaint. The Ethics Office later told Plaintiff that they had closed the matter and that there was no appeal. Plaintiff continued to discuss the transactions with Beran, but in 2008 contacted Officers Edward Rapp ("Rapp") and Douglass Oberhelman ("Oberhelman") in the hopes that they would be more receptive to his allegations. Rapp and Oberhelman did not respond to Plaintiff and turned his complaint over to the Ethics Office. Defendants do not dispute or affirm any of the allegations in the previous paragraph.


Summary judgment should be granted where the "pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issues as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). The moving party has the responsibility of informing the Court of portions of the record or affidavits that demonstrate the absence of a triable issue. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The moving party may meet its burden of showing an absence of material facts by demonstrating "that there is an absence of evidence to support the nonmoving party's case." Id. at 325. Any doubt as to the existence of a genuine issue for trial is resolved against the moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); Cain v. Lane, 857 F.2d 1139, 1142 (7th Cir. 1988).

If the moving party meets its burden, the nonmoving party then has the burden of presenting specific facts to show that there is a genuine issue of material fact. Matsushita Elec. Indus Co., Ltd. V. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986). Federal Rule of Civil Procedure 56(e) requires the nonmoving party to go beyond the pleadings and produce evidence of a genuine issue for trial. Celotex Corp., 477 U.S. at 324. Evidence "based on rumor or conjecture" cannot "ward off summary judgment." Palucki v. Sears, Roebuck & Co., 879 F.2d 1568, 1572 (7th Cir. 1989). This Court must then determine whether there is a need for trial- whether, in other words, there are any genuine factual issues that can properly be resolved only by a finder of fact because they may be reasonably resolved in favor of either party. Anderson, 477 U.S. at 249; Hedberg v. Indiana Bell Tel. Co., Inc., 47 F.3d 928, 931 (7th Cir. 1995). Finally, where a party bears the burden of proof on an issue, he or she must affirmatively demonstrate, by specific factual allegations, that there is a genuine issue of material fact requiring trial. Sarsha v. Sears, Roebuck & Co., 3 F.3d 1035, 1041 (7th Cir. 1993).

Plaintiff's Sarbanes-Oxley Transfer Claim

The Sarbanes-Oxley Act protects whistleblowers from employer retaliation. 18 U.S.C. § 1514A prohibits an employer from "discharge[ing], demot[ing], suspend[ing], threaten[ing], harass[ing], or in any other manner discriminat[ing] against an employee in the terms and conditions of employment." 18 U.S.C. § 1514A. Under the Sarbanes-Oxley Act, an employee can blow the whistle by lawfully providing information, causing information to be provided, or assisting an investigation regarding "any conduct which the employee reasonably believes constitutes' mail fraud, bank fraud, securities fraud, or a violation of any rule or regulation of the SEC, or any federal law relating to fraud against shareholders, when the information or assistance is provided to a person with investigatory authority." Harp v. Charter Communications, Inc., 558 F.3d 722, 723 (7th Cir. 2009) (citing 18 U.S.C. § 1514A(a)). In order to prevail under the Sarbanes-Oxley Act, the plaintiff must prove by a preponderance of the evidence that "(1) [he] engaged in protected activity; (2) the employer knew that [he] engaged in the protected activity; (3) [he] suffered an unfavorable personnel action; and (4) the protected activity was a contributing factor in the unfavorable action. . . ." Id. (citing Allen v. Administrative Review Board, 514 F.3d 468, 475-76 (5th Cir. 2008)). If the plaintiff satisfies the burden, then it shifts, and the employer must show by "clear and convincing evidence" that the employer would have taken the same action regardless of the plaintiff's "protected behavior." Id. ...

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