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Sheu v. Detroit 90/90

United States District Court, E.D. Michigan, Southern Division

May 6, 2015

JUSTINE SHEU and GABRIELA GUI, Plaintiffs,
v.
DETROIT 90/90, BOARD OF DIRECTORS of Detroit 90/90, A.I. CENTRAL, LLC, AXIOS INTERNATIONAL, INC., AXIOS INCORPORATED, BOARD OF DIRECTORS of Axios Incorporated, PUBLIC SCHOOL ACADEMIES OF DETROIT, and BOARD OF EDUCATION of the Public School Academies of Detroit, Defendants.

OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS PUBLIC SCHOOL ACADEMIES OF DETROIT'S AND BOARD OF EDUCATION OF PUBLIC SCHOOL ACADEMIES OF DETROIT'S MOTION TO DISMISS (DOC. #14) AND DENYING IN PART AND GRANTING IN PART PLAINTIFFS' MOTION TO AMEND (DOC. #29)

GEORGE CARAM STEEH, District Judge.

Plaintiffs Justine Sheu and Gabriela Gui bring an array of allegations against defendants related to their discharge from a Detroit charter school operated by defendants. Prominently, plaintiffs allege their discharge resulted from their criticism of the school's restructuring, was undertaken without due process or good cause, and involved violations of their privacy when defendants accessed their Gmail accounts without permission. Plaintiffs sued the Public School Academies of Detroit and the PSAD's Board of Education (collectively, the "PSAD"), as well as the management companies hired to operate and manage the schools. This opinion and order deals only with the claims against the PSAD.

Now before the court is the PSAD motion for partial dismissal (Doc. #14) and plaintiffs' motion to file an amended complaint (Doc. #29). For the reasons that follow, PSAD's motion to dismiss will be granted in part and denied in part, and plaintiff's motion to amend will be granted in part and denied in part.

I. BACKGROUND

The facts as alleged in the complaint follow.

The PSAD is a public school board, with ten board members, organized under Part 6C of the Revised School Code. See Mich. Comp. Laws §§ 380.521 et seq. Pursuant to statute and a charter agreement with Grand Valley State University, the PSAD operates a charter school comprised of three urban high school academy school districts in Detroit, Michigan. One of those school districts is at issue in this case-the University Preparatory Science and Math ("UPSM") school district.

Under the law and pursuant to its charter agreement, the PSAD has the authority to hire a management company to operate the school districts. To this end, the PSAD entered into an agreement with defendant New Urban Learning ("NUL"), which provided that NUL would be responsible for the management services, including the day-to-day operations, at the UPSM school district. Compl. ¶ 14. NUL in turn contracted with defendant A.I. Central LLC/Axios, Inc. ("A.I. Central/Axios"), [1] a professional employment organization, for assistance in providing management services at the schools. Id.

Plaintiff Gabriela Gui ("Gui") was hired by NUL as the first principal for the UPSM school district. Id. ¶ 15. Gui signed a five-year employment agreement with NUL for a term commencing on July 1, 2010 and ending on June 30, 2015. Doc. #1 at 60-62. The employment agreement stated that Gui was an at-will employee, but Gui contends that she was told that she had a five-year term that was not terminable at-will. Gui's duties as principal included developing and implementing instructional programs, as well as participating in cooperative efforts to develop and improve the curriculum. Id. at 60.

When Gui was hired, NUL was committed to site-based management at the UPSM district, and NUL reiterated its commitment to site-based management in Gui's employment agreement. Doc. 1 at 65. Site-based management means that "people closest to the work, at the school level, have control over: [1]) instructional programs; 2) staffing (hiring and firing); and 3) budgets, including grants." Compl. ¶ 19. Thus, Gui had the authority to hire staff members. She could "make contractual commitments on behalf of UPSM... to potential staff members...." Id. at 64.

During the 2011-2012 school year, the PSAD replaced NUL with another management company, defendant Detroit 90/90, LLC ("Detroit 90/90"). Compl. ¶ 27. Detroit 90/90 and the PSAD entered into an independent contract agreement providing that Detroit 90/90 manage the UPSM district and the PSAD's other two districts. Doc. 14-2 at 1-21. Detroit 90/90 subsequently entered into an agreement with A.I. Central/Axios under which A.I. Central/Axios assumed certain human resources duties and became a joint-employer of employees assigned to the UPSM district. Compl. ¶ 27.

After the change, Detroit 90/90 and A.I. Central/Axios entered into an employment agreement with Gui. Doc. 1 at 69-72. The contract was substantially similar to Gui's prior contract with NUL. It provided that GUI would be principal for the UPSM district for a term commencing July 1, 2012 and ending June 30, 2015. Compl. ¶ 28.

As explained, because the UPSM district used site-based management, Gui had input in determining the necessary staff. One of the staff members Gui hired was plaintiff Justine Sheu ("Sheu"). Sheu was hired through Detroit 90/90, but she did not have a written employment agreement.

Sheu was hired in the winter of 2013 "to assist students (especially juniors) in preparing for the ACT test to be given in the spring of 2013." Id. ¶ 34. Sheu excelled at her position; "[t]he students related to her exuberance and youthfulness; the parents highly valued the information she provided and were overjoyed that their children spoke so positively and enthusiastically about Sheu's classes." Id. ¶ 35. When Gui decided that there needed to be a position for a College and Career Readiness Advisor, it was Sheu who filled this position. Id. ¶ 37.

The UPSM district achieved much success using the site-based management technique. Nevertheless, in the summer of 2013, the new CEO of Detroit 90/90, Mark Ornstein, announced that he would "not honor the commitment to site-based management at any of the [school districts]." Id. ¶ 38. Ornstein also alluded to unifying the UPSM school district and one of the PSAD's other school districts, the University Preparatory Academy ("UPA"). Id. As part of this restructuring plan, Ornstein created the "Central Office, " which centralized the staff base in charge of both the UPSM and UPA districts. Id. ¶ 39. Essentially, instead of Gui having as much input under the site-based management structure, the Central Office was given more authority.

Ornstein revealed his restructuring plan to the UPSM staff in August 2013. Id. ¶ 40. The plan was met with resistence. Staff and parents alike complained about the restructuring. Id.

The restructuring effectively stripped Gui of her ability to conduct site-based management, including "hiring, evaluating and dismissing staff; managing the school's budget, and; implementing curriculum and instructional practices." Id. ¶ 41. This change immediately affected Sheu's position as College and Career Readiness Advisor. Ornstein appointed Venus Crosby ("Crosby") as Director of College Counseling, placing her in charge of Sheu. Id. ¶ 4. Sheu was reassigned to the Central Office as a "College Success Advisor" for both the UPSM and UPA districts. Id. This caused Sheu's caseload to double.

Gui and Sheu were unhappy with the restructuring and expressed their concerns to Ornstein and other staff. Id. ¶ 48. The parents of students in the UPSM district began noticing the changes, leading Gui and Sheu to meet with them to explain the changes brought about by the restructuring. Id. ¶ 50. In addition, the parent-teacher-student association ("PTSA") at UPSM sent a letter to parents informing them of the structural changes that were occurring in the district. Id. ¶ 59.

Gui continued to complain about the restructuring. Ornstein held a meeting with the Central Office staff to address the issue. At this meeting, Ornstein dismissed Gui's concerns and told her "to cease voicing her opinions about what she believed about Central Office's decisions." Id. ¶ 51. Subsequently, on October 3, 2013, Ornstein held another meeting with Gui and her supervisor, Danielle Jackson, which was memorialized in a memorandum. Id. ¶ 52. Ornstein "insisted that Gui support the restructuring in discussions with her school staff and parents." Id. On multiple occasions, Ornstein told Gui that she should be "controlling the parents, " and that it was Gui's fault the parents were attending meetings expressing concerns about the restructuring. Id.

Another meeting was held on October 17, 2013 with the PTSA, parents, Ornstein, and Margaret Trimer-Harley, the then-Chief External Relations Officer in the Central Office. Id. ¶ 60. The parents at the meeting "were highly critical of Ornstein and his restructuring." Id. ¶ 61. In addition, "[t]he parents wanted Ornstein to restore Sheu... to [her] original position[] and allow Dr. Gui to resume site-based management in its entirety." Id. Ornstein was upset with Gui after the meeting, "express[ing] his belief that Gui was fueling the parents' dissatisfaction with his restructuring of the district." Id. Following the meeting, Ornstein removed Sheu from being a college advisor, restricting her to ACT preparation only, and told her to "stay out of politics." Id. ¶ 62-63.

On October 29, 2013, the PTSA and parents met with the PSAD board, Ornstein and Detroit 90/90 staff to express their concern about the restructuring. Id. ¶ 65. Among the chief concerns, the parents cited the changes to Sheu's position as an example of the detrimental effect of the restructuring efforts. Id.

Sheu alleges that she suffered retaliation for voicing her concerns about the restructuring of the school districts. For example, on one occasion, Sheu was ill with food poisoning. Despite calling in sick, Crosby issued Sheu a written reprimand for failing "to perform the required functions of your position by not communicating your absence in a timely manner, and/or providing adequate resources to reassign tasks." Id. ¶ 53-54. This reprimand was not placed in Sheu's file until she later filed an unfair labor practice charge against Detroit 90/90. Id. ¶ 58.

In May 2014, Sheu delivered a presentation to seniors in the UPA district about the transition from high school to college. Id. ¶ 71. In her presentation, Sheu "told an anecdote about when she received her first D' grade in college." Id. In the anecdote, Sheu told the students that she was shocked she received a "D" because she had relied on her Asian heritage and the legendary intellectual "prowess" of Asian persons. Id. Speaking about alcohol and drug use, Sheu advised the students not to engage in such behavior. Id. But, acknowledging that some students would nonetheless drink and use drugs, Sheu warned students never to consume anything they had not personally prepared or witnessed being prepared. Id. Finally, in speaking about joining a fraternity or sorority during freshman year of college, Sheu told students not to because they would likely "be getting their asses beat" every night. Id.

A few days after the presentation, Detroit 90/90 and A.I. Central/Axios employees met with Sheu and suspended her pending an investigation. Id. ¶ 73. Sheu was informed that students complained that her jokes about her Asian heritage "were racially insensitive and offensive"; her message about drugs and alcohol encouraged students to abuse substances; and her use of the word "asses" was "profane and inappropriate." Id. These reasons were cited in a May 21, 2014 letter sent to Sheu terminating her employment with Detroit 90/90. Id. ¶ 83. Sheu alleges that the decision to terminate her was a joint decision by Detroit 90/90, A.I. Central/Axios, and the PSAD. Id. ¶ 86-88. Prior to being fired, Sheu did not have an opportunity to review any of the alleged complaints filed against her, and she did not receive a hearing or otherwise have an opportunity to dispute the allegations. Id. ¶ 85.

After Sheu's discharge, Ornstein wanted Gui to "show the staff [at the school districts] that she supported the process and the decision to discharge... Sheu." Id. ¶ 92. Specifically, Ornstein wanted Gui to attend a staff meeting "in order to silence the dissenting voices of the staff and parents who were extremely upset with the defendants' suspension and termination of... Sheu." Id. ¶ 93. Because Gui "could not approve the alleged process" used in firing Sheu, she told Ornstein that "she had a doctor's appointment the next morning and would not be able to attend the meeting." Id. ¶ 92. The meeting occurred, without Gui in attendance, and the "staff was adamant in supporting Sheu. The staff questioned the process used to terminate Sheu." Id. ¶ 93.

Sometime after Sheu's termination, her work laptop was confiscated. Detroit 90/90's Director of Information Technology ("IT"), Nicole Cummings ("Cummings"), "found on Sheu's laptop computer a document listing Sheu's passwords to her online bank account and to her personal email account on the Gmail server[.]" Id. ¶ 97. Cummings used Sheu's Gmail password to access her personal email account. She searched for messages between Gui and Sheu and between Sheu and Grady Jones, another staff member at the UPSM district. Id. ¶ 100. Cummings accessed multiple messages that were sent between Sheu, Jones and Gui during the time that Sheu was suspended and eventually terminated. In the messages, "Gui and Jones (1) had advised Sheu regarding her appeal to staff for support after her suspension and (2) had suggested possible responses to accusations Sheu had received from [Central Office staff] throughout the year." Id. Cummings printed the messages and gave them to Breanna Watson ("Watson"), Ornstein's secretary. Id. After receiving the messages, Watson allegedly responded, "That's what they are looking for!" Compl. ¶¶ 97-100. Plaintiffs contend that the "they" Watson was referencing was the PSAD.

In addition to obtaining access to Sheu's Gmail account, Cummings found photographs of Sheu in lingerie on the work laptop. Id. ¶ 98. She showed the photographs to her husband. Id.

The buzz surrounding Sheu's termination was not all that happened. Concern about the restructuring efforts continued after Sheu's termination. In June 2014, UPSM staff held a meeting "regarding the staff's strenuous objections to Ornstein's restructuring, the dictatorship of the Central Office, Sheu's discharge, the lack of due process involved [in Sheu's discharge], the need to form a union, and other issues." Id. ¶ 112. The PTSA and UPSM students unsuccessfully petitioned to reinstate Sheu to her position. Id. ¶ 113.

The PSAD held a meeting on June 24, 2014. Ed Parks ("Parks"), the chairman of the PSAD board, allegedly referencing the emails between Gui and Sheu described above, stated to multiple parents after the meeting: "I have an email from someone high up[] in UPSM. It amounts to fucking insubordination. We are going to do something to handle this. You may not like the results." Id. ¶ 114. Three days after the meeting, Gui, among others, was discharged. Id. ¶ 115. Gui was told by Ornstein that the discharge was "not necessarily about performance; it's that we are going in a different direction... The board feels it's necessary to go in a different direction." Id.

Gui contends she was fired without cause as a joint decision by the PSAD, Detroit 90/90 and A.I. Central/Axios in response to her speaking out against the restructuring plans. Subsequent to terminating Gui, "the defendants terminated the employment of all the remaining members of the administrative cabinet who served with Dr. Gui at UPSM." Id. ¶ 122.

As principal, Gui met all expectations and requirements in her employment agreement with Detroit 90/90. Under her tenure, graduation rates improved, ACT scores increased, and the rate of college admissions went up. Id. ¶ 31-32. Three years in a row, UPSM received an A rating from the Excellent Schools of Detroit organization. Id. ¶ 32.

Gui and Sheu filed this action against the PSAD, its board, Detroit 90/90, and A.I. Central/Axios. The complaint is in 17 counts, phrased by plaintiffs as follows:

Count I 42 USC Section 1983, Deprivation Of Justine Sheu's Right To Freedom Of Speech Under The 1st Amendment - Sheu As To All Defendants
Count II 42 USC Section 1983, Deprivation Of Gabriela Gui's Right To Freedom Of Speech Under The 1st Amendment - Gui As To All Defendants
Count III 42 USC Section 1983, Deprivation Of Property Without Due Process - Gabriel[a] Gui As To All Defendants
Count IV Breach Of Express And Implied Employment Contract - Gabriel[a] Gui As To Detroit 90/90 And Axios
Count V Discharge Violating Reasonable Expectation Of Just-Cause Employment - Gabrial[a] Gui As ...

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