In California, a panel of judges has granted a victory to a former employee of Recology who is claiming that he was improperly fired in retaliation for calling attention to fraud at the waste and recycling company.
On Jan. 31, a California appeals court partially reversed a decision by the San Francisco Superior Court to effectively dismiss a lawsuit brought by Brian McVeigh, a former employee of Recology, against his past employer. The suit brought by McViegh claims that he was illegally fired and seeks redress under a California law meant to protect employees who report potential fraud being committed against the state.
According to the background section in the opinion issued by the three-judge panel, McVeigh began working at Recology in 2000 and, between 2004 and 2005, he became operations supervisor at one of the company’s recycling centers in San Francisco that redeemed beverage containers under the state’s bottle bill.
In 2005, McVeigh was asked to investigate a report of “tag inflation,” a type of fraud that occurs when an attendant records a larger weight of recyclables for redemption than is actually brought in, resulting in an overpayment to the customer and a potential kickback to the employee. McVeigh confirmed that tag inflation was occurring and was directed to call the police, who arrested the employees involved.
Later that year, McVeigh was transferred to Recology’s Tunnel Road facility in Brisbane, where he was assigned to supervise the materials recovery facility. According to a court document, McVeigh attempted to report another instance of fraud, but his concerns were rebuffed. He was also counseled about his dealings with others. According to the document, employees complained that McVeigh was overly aggressive in his management style.
Two years later, he was put in charge of the Tunnel Road redemption center, where he was instructed to “straighten out the facility.” During this time, McVeigh suspected that tag inflation was occurring and that management was involved. He reported his concerns to the police and was later denied a bonus or a raise following a lackluster performance review. McVeigh claimed that his bad performance review and denial of a bonus or raise were retaliatory.
McVeigh increased his oversight of the weigh-in station and gave closer scrutiny to its records, the court document states. As a result, the average daily payout at the center dropped from $13,000 to $7,000 between Nov. 15 through Nov. 24, 2007. Video equipment was also installed during this time period, resulting in McVeigh obtaining video evidence of an employee engaging in tag inflation. However, the ruling states that the employee was not fired nor were criminal charges pressed against him. It also states that the Brisbane Police Department offered to investigate the situation if Recology agreed to press charges. The document states that Recology turned down the offer.
McVeigh continued to raise concerns about fraud. According to the court ruling, he was called into a supply room by a supervisor who locked the door and threatened to fire him if he continued to push the issue.
According to the document, McVeigh made many other allegations regarding sordid activity at Recology, such as employees threatening each other, stealing processed material, throwing material in an unsafe way and showing pornography to each other. McVeigh also complained to Jackson that large quantities of marijuana were dumped regularly and load drivers complained that employees scavenged the controlled substance, creating a potential safety hazard.
In May of 2008, a human resources manager at Recology prepared a report recommending that McVeigh be terminated, according to a court document. The report described McVeigh as combative and uncooperative and did not support his allegations against the company. He was terminated later that month.
In 2009, McVeigh sued Recology, alleging that the company violated the state’s whistle-blower-protection law, as well as similar protections in the state’s labor law, while also relying on other legal arguments.
The appeals court ruling reverses enough of the decision made by the lower court to give the lawsuit new life and allow it to go to trial.
David Anton, McVeigh’s attorney, described the ruling as a “dramatic victory.”
“The company didn’t look into the fraud, they looked into him and fired him,” says Anton. “The company decided he was disruptive because he didn’t take the hint from his managers.”
Anton says that the Recology must now consider whether or not to appeal to California Supreme Court. If they don’t, he expects a trial within a year that could put Recology on “the hook for big-time dollars,” possibly in the millions.
Recology spokesperson Adam Alberti says that no fraud occurred and the court did not confirm any wrongdoing by the company. He said that there will be no appeal, and next step will be a trial.
“[McVeigh] was terminated entirely on his performance and not on the allegations of fraud that never took place,” he says.