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Whistle-blower credit union worker can pursue retaliation suit: Appeals court

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NEW ORLEANS—A credit union worker who alleged she was fired because she was a whistle-blower can pursue her retaliation claim, a federal appeals court ruled in overturning a lower court's dismissal of the case.

According to Monday's ruling by 5th U.S. Circuit Court of Appeals in Mary Evelyn Schroeder vs. Greater New Orleans Federal Credit Union, Ms. Schroeder began working as a collections manager for the union in May 2006. In July 2007, she was promoted and given an $8,000 raise.

But in December 2007, Ms. Schroeder communicated the first of a number of complaints about potential fraud at the credit union. Less than a month later, the credit union's CEO began to complain that Ms. Schroder was not competently managing her three departments.

In June 2008, Ms. Schroeder was stripped of most of her managerial duties. Less than two weeks later, phone records confirmed she made calls to the Alexandria, Va.-based National Credit Union Administration, the federal agency that supervises credit unions. She also called the FBI.

On Aug. 8, 2008, her salary was reduced to her pre-promotion level. She was terminated on Oct. 8.

Ms. Schroeder sent letters dated two days before her termination to the NCUA and the FBI detailing what she viewed as fraudulent lending, although the NCUA did not record receipt of her letter until Oct. 21, 2008, making it “unclear whether Schroeder sent this letter before or after her termination,” according to the decision.

A subsequent investigation by the NCUA confirmed that while there was fraud among mortgage applicants, it “found no evidence of wrongdoing among employees or management.”

Ms. Schroeder sued the credit union, alleging retaliation under a range of federal and state statutes based on her whistle-blower activities. A district court judge granted summary judgment for the credit union and dismissed her claims in November 2010.

In its opinion, the appeals court said that while some evidence supports the district court's and the credit union's suspicion that Ms. Schroeder sent the NCUA letter after her termination, “other evidence supports Schroeder's version of events,” including the June 2008 NCUA calls.

“Taking the facts in a light most favorable to Schroeder, we find that the evidence and testimony presented could have allowed a reasonable jury to find that Schroeder had engaged in a protected activity in both June and October 2008,” the three-judge appeals court panel ruled unanimously. “The district court therefore erred in concluding otherwise.”

The court said, however, that the record “weighs neutrally” on the issue of whether there was a causal link between these protected activities and her demotion, pay decrease and termination.

“A jury could draw either inference; which inference it will draw, and how it will answer questions on knowledge are for the jury to decide,” said the appeals court, which remanded the case for further proceedings.