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Smith v. Gavulic

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

January 13, 2017

WILLIAM D. SMITH, Plaintiff,



         Defendant Hurley Medical Center terminated the employment of Plaintiff William Smith, the hospital's general counsel, in January 2015. Hurley and its CEO, Defendant Melany Gavulic, say they terminated Smith because a breakdown in his relationship with Gavulic caused her to no longer be able to trust him or his advice. Smith contends that Hurley really discharged him because he is African American and because he complained about how Gavulic allegedly had discriminated against him. So Smith filed this action under Section 1983, Michigan's Whistleblowers' Protection Act, and Michigan's Elliott-Larsen Civil Rights Act, alleging unlawful employment discrimination and retaliation.

         Defendants have moved for summary judgment on all of Smith's claims. (R. 28.) The motion is fully briefed, and the Court heard oral argument on December 28, 2016. On this record, Smith has not shown that Gavulic's stated reasons for termination were pretexts for racial discrimination. Nor has he shown that his complaints against Gavulic amounted to protected speech for purposes of his Section 1983 First Amendment retaliation claim. Finally, Smith has also failed to establish that Gavulic knew of his purportedly protected activity or that such activity caused his termination for purposes of his state-law retaliation claims. So the Court will grant Defendants' motion.



         Plaintiff William Smith started working for Defendant Hurley Medical Center in September 1986. (R. 30-2, PID 1007.) He became general counsel in February 1988 and served in that role and as an executive vice president until Hurley fired him on January 13, 2015. (R. 30-2, PID 1007; R. 28-3, PID 649.) Defendant Melany Gavulic is Hurley's CEO, a role she has served in since February 2012. (R. 28-4, PID 651.)

         Hurley is a component unit of the city of Flint, Michigan. (R. 28-4, PID 652.) A 15-member Board of Managers governs Hurley. (R. 28-4, PID 652.) As the general counsel, Smith reported both to Gavulic and the Board. (R. 28-5, PID 740.) Only the Board had the ultimate authority to fire Smith. (R. 28-4, PID 652.)

         According to Smith, as general counsel, it was important for him to have a good relationship with the CEO and the Board. (R. 30-2, PID 1009.) Gavulic and Smith agree that when she became CEO, the two had a good working relationship. (R. 30-2, PID 1010; 28-5, PID 741.) But that was short-lived. Gavulic, who is White, eventually recommended for the Board to terminate Smith, who is African-American. Smith's case centers on several incidents that he claims strained his relationship with Gavulic and demonstrate her racial animus toward African Americans and her (and the Board's) retaliatory animus toward him.


         The first incident arose in November 2012, when a White father demanded that no Black nurses care for his baby, who was being treated in Hurley's neonatal intensive care unit. An October 2014 memo that Smith wrote to the Board chair (which will be discussed in further detail below) briefly described the situation as follows:

November 1, 2012-General Counsel (GC) tells Nursing administration that staff cannot be assigned/re-assigned based on race (NICU matter). (As you recall, a Black NICU nurse had been removed (re-assigned) from caring for a White NICU baby because the father requested that no Black nurses care for his baby). General Counsel was made aware of this (by Dr. Monga and Mary Osika) and told administration that it must stop immediately because assignments cannot be based on race.

         (R. 35-4, PID 1564.)

         Smith testified that his relationship with Gavulic started to change following that incident. (R. 30-2, PID 1024.) According to Smith, in January 2013, he “was told the Board didn't want me to be present for a discussion that was . . . probably about a retreat that had recently happened with the Board, and for some reason they didn't want me present.” (R. 30-2, PID 1024.) But instead of discussing a retreat, the Board decided at that meeting to remove some of Smith's duties by separating corporate compliance functions from the general counsel position. (R. 30-2, PID 1025.)

         Hurley has offered several reasons for this decision. For instance, the Board's resolution stated that splitting the duties was “in accordance with Board best practices and [Office of Inspector General] recommendations.” (R. 28-6, PID 800.) And according to Gavulic, outside investigators that Smith had previously hired for compliance issues expressed “concerns that [Smith] was biasing investigations by sharing with them his impressions before the investigations started.” (R. 28-5, PID 741.)

         In response to the Board's decision, in a January 28, 2013 letter, Smith wrote to then-Board chair, Charlotte Edwards, that “the stripping of the Corporate Compliance functions from me by the [B]oard” amounted to a “demotion” and “a termination.” (R. 28-8, PID 834.) After a series of heated emails, on February 7, 2013, Edwards determined that Smith had been insubordinate (Smith had instructed Hurley's human resources to remove a juris doctor requirement from a posted compliance position even though his compliance duties had been removed), so the Board placed him on administrative leave. (R. 28-9, PID 839; R. 28-7, PID 808.)

         Smith testified that, based on the timing of the events, he believes that his suspension and the removal of his compliance duties were at least indirectly related to the NICU incident-and in particular his advice that race-based nursing assignments had to stop. (R. 30-2, PID 1024-25.)

         At the next Board meeting, held on February 27, Edwards gave Smith the opportunity to appear and address his concerns. (R. 28-9, PID 839.) At that meeting, the Board accepted Gavulic's recommendation to reinstate Smith (but with compliance duties remaining separate from his position). (R. 28-4, PID 653-54.)


         The next incident surrounded Gavulic's decision to pass on hiring an African-American candidate for a “staff attorney” who would report to Smith, then the sole in-house attorney at Hurley.

         By way of background, in April 2013, shortly after Smith's reinstatement, an anonymous corporate compliance complaint was filed against Smith for purportedly running up expenses by unnecessarily outsourcing his own legal workload, allegedly to secure kickbacks. (See R. 35-5, PID 1577; see also R. 28-4, PID 657.) In June 2013, the attorney that Hurley hired to investigate the situation issued a report finding no wrongdoing on Smith's part, but the report recommended for Hurley to explore the possibility of hiring another in-house attorney to reduce outside counsel fees. (R. 35-5, PID 1579-80.) So after the investigation, in September 2013, the Board's governance and compliance committee asked Smith and Gavulic to explore whether Hurley could reduce outside counsel fees by, among other things, hiring another attorney. (R. 28-4, PID 658.)

         Once Hurley posted this “staff attorney” position, Smith narrowed the applicants to two candidates: Larry Justice and Teri Dennings. (R. 30-2, PID 1041.) Though Smith had typically interviewed and hired his own staff, he and Gavulic agreed that they would each interview the two candidates. (R. 30-2, PID 1040.) Smith pushed for Dennings (who was Black) over Justice (who was White). (R. 30-2, PID 1041, 1045.) Smith thought that Dennings was “uniquely” qualified for the position because of her labor and employment law experience. (R. 35-3, PID 1541.)

         But based on her interview with Dennings, Gavulic did not want to hire her. Gavulic had several concerns, which the Court will address in detail later. For now it suffices to say that Gavulic was concerned that Dennings lacked the relevant legal experience and that she asked only one question during the job interview: what the hours would be. (R. 28-5, PID 751.) By contrast, Gavulic liked Justice because he currently held a position of “general counsel, ” i.e., a position with more responsibility than “staff attorney.” (See R. 30-3, PID 1161-62.) So Gavulic told Smith that she thought Justice was the better choice. (R. 30-2, PID 1041.)

         In the end, the parties' rift over whom to hire became moot: Dennings ultimately withdrew her candidacy (R. 30-2, 1049), Gavulic and Smith passed on Justice too, and Hurley did not hire anyone to fill the position. (R. 28-5, PID 752.)

         After Dennings withdrew, Gavulic personally contacted two other prior candidates who had interviewed with Smith but had withdrawn their applications. (R. 28-4, PID 659.) She says she learned that both applicants withdrew “because of Smith's attitude to them in the interviews.” (R. 28-4, PID 659.) Smith told Gavulic that he was “shocked” that she contacted these individuals behind his back. (R. 35-3, PID 1534.) And according to Smith, Gavulic got angry whenever they spoke about the Dennings matter. (R. 35-3, PID 1531.)


         The third incident involves a complaint that Smith filed, which summed up his problems with Gavulic. More specifically, on October 7, 2014, Smith submitted to then-Board chair Carl Bekofske a memo “under Hurley's Executive Employee Relations Policy.” (See R. 28, PID 377; R. 35, PID 1482; R. 28-10; R. 30-2, PID 1017.) This was the proper procedure for executives to raise employment disputes that could not be resolved by the CEO. (R. 30-2, PID 1017; R. 30-3, PID 1114.)

         The memo's “regarding” line reads: “Employment Related Concerns/Executive Employee Relations Policy.” (R. 28-10, PID 840.) The memo (addressed to Bekofske) states that its purpose was “to inform you of a pattern of practices (including, but not limited to, undermining and harassing General Counsel, interfering with General Counsel's ability to do his job, isolating General Counsel and, basically removing General Counsel/Risk Manager's job duties/responsibilities) that have been engaged in by the President & CEO . . . for a protracted period of time.” (R. 28-10, PID 840.) The 12-page memo goes on to describe the NICU incident, the removal of Smith's compliance duties, Smith's placement on administrative leave, the compliance complaint filed against him, the investigation's findings, the staff attorney hiring process, and a host of other issues that Smith does not focus on for purposes of this litigation. Toward the end of the memo, and after remarking that he was the only African-American executive at the hospital, Smith wrote, “I am sorry that I have to make this request but I really have no other option in order to, hopefully, rectify the situation, stop this harassing, discriminatory and retaliatory behavior/conduct[.]” (R. 28-10, PID 850.)

         Smith acknowledged in his testimony that he had written many drafts of the memo before sending it to Bekofske. (R. 30-2, PID 1081.) As he polished the memo, he removed express references to “racial discrimination.” (R. 30-2, PID 1081-82.) For instance, an earlier draft's “regarding” line said “Race Discrimination and retaliation complaint, ” instead of “Employment Related Concerns/Executive Employee Relations Policy.” (R. 28-11, PID 853.) The prior draft also asked to “stop this harassing, racial discriminatory and retaliatory behavior/conduct, ” instead of simply “harassing, discriminatory and retaliatory behavior/conduct.” (R. 28-11, PID 862.)

         While Smith initially testified that this memo to Bekofske was his sole report of “racial” discrimination (see R. 30-2, PID 1011-12, 1047), on his second day of testimony, he claimed that he orally reported his racial discrimination claim to Bekofske when discussing the memo and to the Board in a November 2014 meeting that would ultimately lead to his termination, (R. 30-2, PID 1073, 1076). But Smith never expressly told Gavulic that she had discriminated against him on the basis of race. (R. 30-2, PID 1012.)

         Bekofske forwarded Smith's memo to the interim human resources director, Tyree Walker, who met with Smith on October 13, 2014. (R. 29-1, PID 942.) Walker and Smith recall differently whether they discussed racial discrimination specifically. Walker claims that Smith never mentioned anything about race, so Walker understood the complaint to amount to a workplace disagreement. (R. 29-1, PID 943.) But Smith testified that he “probably” discussed racial discrimination with Walker. (R. 30-2, PID 1073.)

         Walker met with Gavulic to discuss Smith's concerns on October 15, 2014. But he did not give her a copy of Smith's memo. (R. 29-1, PID 943; R. 35, PID 1483; R. 28, PID 378.) Gavulic never directly saw the memo until after this suit was filed. (R. 28-5, PID 743.) Walker then wrote a report for Bekofske to summarize Smith's concerns. (R. 29-1, PID 944.) Gavulic filled in her responses to some of Smith's concerns and sent the document back to Walker. (R. 28-5, PID 758; R. 35-9.)

         Walker concluded that Smith's complaints had no merit. (R. 29-1, PID 943-44.) He made two recommendations: for Gavulic and Smith to keep summaries of their weekly meetings and to amend Hurley's policies to allow employees' requests for outside legal services to be approved by the Department of Legal Services and the CEO. (R. 29-1, PID 944-45.) As for Smith and Gavulic's weekly meetings, Walker also discussed with Gavulic the possibility of having the Board's administrative assistant or Gavulic's secretary sit in to take notes and serve as a witness, as each were already aware of the confidential information discussed during high-level meetings. (R. 29-1, PID 945.)

         Walker's recommendations did not work, and Gavulic soon concluded that she could no longer work with Smith and that having someone sit in on meetings with Smith was impractical. (R. 35-8, PID 1593.) According to Gavulic, she came to realize that Smith lacked “institutional credibility, ” which hurt Hurley's ability to function. (R. 28-4, PID 654.) Additionally, she “found [herself] increasingly acting as a buffer between Mr. Smith and the rest of the senior management team who were losing confidence in him.” (R. 28-4, PID 656.) She also noted that she did not have to have anyone sit in and document her one-on-one meetings with other executives, “because I had no concerns any other executives would mischaracterize communications.” (R. 28-4, PID 660.) Smith acknowledged in his testimony that needing someone to sit in and monitor their meetings “unquestionably” suggested a relationship problem. (R. 30-2, PID 1063.)

         Gavulic sought a special Board meeting on November 20, 2014, at which point she recommended splitting the general counsel's duties into two separate positions: Smith would continue as the general counsel to the Board, but she would hire her own general counsel for “operations.” (R. 28-5, PID 746.) In other words, she did not recommend his termination at first. The Board adopted her recommendation. (R. 28-4, PID 662.)

         But at the Board's next regularly scheduled meeting a few days later, things changed. After the Board's discussions with Smith at that meeting, the Board concluded that it made no financial or organizational sense to have two general counsels. (R. 28-4, PID 663.) The Board thus asked Gavulic if she would recommend Smith's termination. (Id.) With the dual general counsel proposal no longer on the table, Gavulic recommended Smith's termination. (Id.)

         The Board voted to place Smith on administrative leave. (R. 29-3.) The hope was to reach an amicable resolution by agreeing to a separation package for Smith. (R. 29, PID 874, 885; R. 30-2, PID 1079.) But no resolution was reached, and at a January 2015 meeting, the Board unanimously decided to terminate Smith's employment effective January 13, 2015. (R. 28-3, PID 649.) The Board's resolution read as follows:

On the recommendation of the Hurley Medical Center CEO and having determined that there are irreconcilable differences between the CEO and the General Counsel that impair the operations of the medical center, it is resolved that the employment of the Medical Center General Counsel, William Smith, is terminated effective January 13, 2015.

         (R. 28-3, PID 649.)

         Smith testified that he did not believe that anyone on the Board had a retaliatory motive. (R. 30-2, PID 1080.) Rather, he believed that Gavulic had such a motive and “she was directing the Board and their actions.” (R. 30-2, PID 1080.) For her part, Gavulic was not present when Smith claimed racial discrimination before the Board, and she was not aware that Smith had made such a claim until he filed suit-something he admits. (R. 28-4, PID 663; R. 28, PID 382- 83; R. 35, PID 1484.) As for the Board itself, then-chair Bekofske testified that ...

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