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California court overturns $3.8M verdict in wrongful termination case

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California court overturns $3.8M verdict in wrongful termination case

A California appeals court overturned a $3.8 million jury verdict awarded to a former Countrywide Financial Corp. human resources executive who claimed he was wrongfully terminated when Bank of America Corp. took over Countrywide in part because of his whistle-blowing activities.

According to Tuesday's ruling by the California Court of Appeals in Los Angeles Michael Winston v. Countrywide Financial Corp. et al., Mr. Winston was hired by Countrywide to assist the firm in its executive leadership development and succession planning in 2005.

Mr. Winston said in July 2006, he and several other employees in his work area experienced a burning sensation in their lungs and other symptoms. An investigation failed to identify the source of the problem, and the next month, after no further action was taken, he reported the incident to the California Division of Occupational Safety and Health. “Winston testified that immediately following his complaint ... many of his programs were canceled or put on hold,” said the ruling.

Mr. Winston testified also that he later refused a request by Countrywide president Dick Sambol to provide misleading information in response to an audit by New York-based rating agency Moody's Investors Services Inc. Mr. Winston said these were factors in Charlotte, N.C.-based Bank of America's decision not to hire him after it acquired Countrywide in 2008.

However, Brian Fishel, Bank of America's senior vice president of enterprise executive development, testified he did not hire Mr. Winston because his own position was equivalent to Mr. Winston's; Mr. Winston's salary was higher than his own; and he found Mr. Winston to be arrogant during his interview. Mr. Fishel said he alone made the decision not to offer Mr. Winston a position at Bank of America.

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Mr. Winston, who was terminated in June 2008, received a severance package valued at $877,100, although he has been unable to find another job, according to the ruling. Mr. Winston filed suit and in February 2011, a jury awarded him $3.8 million in past and future economic damages, but did not issue an award for emotional distress or punitive damages.

Appeal process

Countrywide and Bank of America appealed. A three-judge appellate panel held that “although a jury verdict is entitled to broad deference, Winston's evidence was insufficient to establish Bank of America declined to offer him a job based on impermissible motives.”

“There is no evidence, either documentary or testimonial, linking Bank of America's decision not to hire Winston” to the reporting of the safety violation or in his response to the Moody's audit, said the ruling. “The decision not to hire Winston was made on behalf of Bank of America by Fishel. That Fishel's stated reasons for not hiring Winston were legitimate and nonretaliatory is disputable,” said the ruling.

“Bank of America's acquisition of Countywide did not revolve around Winston or his colleagues in the human resources division. Bank of America (in a move it certainly came to regret) carried Countrywide for its loan portfolio, not its subsidiary functions. … In short, having scoured the record for evidence supporting the jury's verdict on the issue of causation, we have found none,” said the appellate court, in reversing the judgment.