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Oakes v. Weaver

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

July 25, 2018




         Plaintiff Stacy Erwin Oakes is the former Chief Legal Officer of the City of Flint. She was fired by Flint's mayor, Karen Weaver, after Weaver apparently lost confidence in Oakes's leadership of the City's legal department. Oakes has filed a complaint in this Court alleging that the true basis for her termination is retaliation for her comments on matters of public concern, and that the firing violated the First Amendment and Michigan's Whistleblowers' Protection Act, and was contrary to public policy under Michigan state law. The defendants filed a motion for summary judgment, contending, among other things, that Oakes has not identified any protected conduct to support her theories of retaliation. Oakes's statements - nine in all - each were made is her capacity as the City's chief legal officer, undertaken in the course of performing the duties of her job. As such, they are not protected by the First Amendment, and cannot support a retaliation claim. Nor can they support claims under state law. Therefore, the Court will grant the motion for summary judgment and dismiss the case.

         I. Facts

         A. Background

         The events in this case occurred among the tumult surrounding the City of Flint's receivership and municipal crisis over the contamination of the City's water system. Those events are well documented in other cases. See Michigan Dep't of Envtl. Quality v. City of Flint, 282 F.Supp.3d 1002, 1004-1007 (E.D. Mich.) (summarizing the history of the water crisis mismanagement), recon. denied, 296 F.Supp.3d 842 (E.D. Mich. 2017); Concerned Pastors for Soc. Action v. Khouri, 194 F.Supp.3d 589, 593-95 (E.D. Mich. 2016) (discussing the City's financial woes and the appointment of an emergency financial manager, and transition from receivership). It is enough to say here that in November 2011, Flint was put into receivership, and Michigan's governor appointed an emergency financial manager to run the city under the authority of the Local Government and School District Fiscal Accounting Act, Public Act 4 of 2011 (Public Act 4) (later rejected by Proposition 12-1, effective August 8, 2012). In an effort to save money, the emergency managers (there was a succession of four of them) began purchasing water from the Karegnondi Water Authority (KWA), a consortium of cities and counties in southeastern Michigan that was created to build a water pipeline that will provide water from Lake Huron to Flint and the surrounding areas, instead of the City's traditional source, the Detroit Water and Sewerage Department (DWSD).

         On March 25, 2013, Flint's City Council, while under receivership, voted to join the KWA. On April 17, 2013, Flint gave notice to Detroit that it would be terminating its contract and no longer purchasing water from Detroit beginning on April 17, 2014. The termination of the contract, however, occurred before the KWA pipeline was in place. Although Detroit offered to continue its supply of water to Flint, the City declined the offer, and decided to activate its own moth-balled water treatment facility, drawing water from the Flint River. That move proved disastrous for several reasons. For one, the City's public works department did not add the proper treatment chemicals to the water supply, which caused the corrosive Flint River water to damage water mains and service lines, and water contaminated by lead and copper was distributed throughout the system. During that time, serious public health risks associated with Flint's water supply were discovered. For another, the City was not forthcoming about the contamination and exposed many of its citizens to a tainted water supply without their knowledge.

         In April 2015, Governor Snyder appointed the City of Flint Receivership Transition Advisory Board (RTAB) to succeed the emergency managers under the Local Financial Stability and Choice Act 436 of 2012, Mich. Comp. Laws § 141.1563. However, the RTAB also was prohibited by law from “revis[ing] any Order that was implemented by the Emergency Manager during his or her term prior to one year after the termination of the receivership.” Eventually, Flint contracted with the Great Lakes Water Authority (GLWA), the successor to the DWSD, to furnish drinking water, and the City set about a plan, fomented in part by a lawsuit settlement and in part by a court judgment, to rectify the contaminated water infrastructure.

         B. Plaintiff's Appointment and Her Duties

         In November 2015, amidst widespread public outrage over the City's economic and water safety problems, the citizens of the City of Flint elected defendant Dr. Karen Weaver, a political novice, as their new Mayor, based largely on her promises to take decisive action to solve the water crisis. See Plf.'s Resp., Ex. 3, “Flint Mayor, Ushered in to Fix Water Crisis, Now Faces Recall, ” New York Times (Nov. 6, 2017) (Pg ID 564).

         On March 28, 2016, Weaver appointed plaintiff Stacey E. Oakes as the City's Chief Legal Officer (CLO). The terms of her appointment stated Oakes's charge as follows: “Under the general supervision of the Mayor, the Chief Legal Officer shall provide any and all legal services and representation on behalf of the City of Flint as deemed necessary and appropriate to the requirements of [the Flint City Charter] §§ 4-602 through 4-606.” Ex. 5, Terms of Appointment (Pg ID 572). Section 4-601 of the City of Flint Charter sets forth the following Responsibilities and Duties of the Chief Legal Officer:

A. The individual appointed to the position of chief legal officer shall direct the legal affairs of the City and shall appoint all assistants. The assistants may be attorneys and other persons employed by the City and attorneys under contract to the City.
B. The chief legal officer shall be the attorney for the City and shall direct the management of all legal matters in which the City is interested.
C. The chief legal officer shall, either personally or through assistants, represent the interests of the City in all actions or proceedings by or against the City or its officers and employees.

         Ex. 7, Flint City Charter § 4-601 (Pg ID 581).

         Charter section 4-602 states that “[a]ll contracts, bonds or legal documents in which the City is concerned shall be prepared by or submitted to the chief legal officer for approval.” Section 4-605 states that “[u]pon the request of the Mayor, a member of the City Council or the head of any agency, the chief legal officer shall give legal advice and opinions.”

         A 2006 lawsuit between then CLO Trachelle Young and the City Council resulted in a judicial interpretation of the charter sections governing the limits of the CLO's authority over Flint's legal representation. In that case, the Flint City Council was at odds with the administration over an issue, and wanted to hire its own lawyer. The Michigan Court of Appeals held, however, that the city charter entrusted “management of all legal matters in which the City is interested” to the CLO. The court also held that the Flint Charter did not permit city council to hire its own lawyer. Instead, “[t]he CLO has sole authority to direct the legal affairs of the City, whether only one party to litigation is an entity within the City, or two entities within the City are adverse parties in litigation.” Young v. Flint City Council, No. 263310, 2006 WL 3826976, at *2-3 (Mich. Ct. App. Dec. 28, 2006) (citations omitted).

         C. Plaintiff's Speech

         The plaintiff asserts that she documented and conveyed to the Mayor and other public officials numerous concerns about illegal actions by the Mayor and various associates or advisors. She says that her repeated statements of opposition to the Mayor's actions exceeding her authority and putting the City at legal or financial risk led to her termination. She cites nine instances of speaking out, which of necessity are discussed below in detail, as they form the basis of the plaintiff's retaliation claims.

         1. Personal Service Contract for General Michael C. McDaniel

         Oakes believed that her reluctance to approve a personal service contract for Michael McDaniel was a factor in her termination.

         On October 14, 2016, Oakes sent a memorandum to “General Michael C. McDaniel, Esq., ” with a copy to Mayor Weaver, in which she spelled out concerns about the contract that McDaniel had proposed for the City to hire him as a consultant on the City's project to replace its lead water service lines. In her memo, Oakes stated that she was asked by the City's Interim Chief Financial Officer, David Sabuda, to discuss Sabuda's apprehension that McDaniel's primary employment as an Associate Dean at the Western Michigan University Thomas M. Cooley Law School made it important for the City to ensure that the terms of McDaniel's engagement would legally situate him as an independent contractor to the City and not a municipal employee. Oakes pointed out problematic language in McDaniel's draft contract which in her opinion would result in McDaniel being classified as a city employee by the IRS. She also recited the history of her email correspondence with McDaniel between October 5 and October 14, 2016 over iterations of the draft agreement. Finally, she stated that McDaniel's requests to eliminate an indemnification clause from the contract could not be accommodated, and she proposed revised language clarifying the independent contractor status and specifying the terms for indemnification and liability insurance to be provided by McDaniel.

         On October 18 and 30, 2016, McDaniel followed up with emails to Oakes stating that he had procured the required liability insurance and providing a revised draft contract which he believed would resolve all of Oakes's concerns. On November 9, 2016, McDaniel again emailed Oakes and requested, “[in accordance with] the Mayor's directive to resolve this today, ” that Oakes make certain final changes to the draft contract and approve it for execution by the City, so that payments on invoices previously submitted by McDaniel could be issued by the City. Oakes replied, with copies to Mayor Weaver, Aonie Gilcreast (the Mayor's advisor), Steve Branch (the Mayor's Chief of Staff), and several other City staffers, stating that if “someone in Administration can reply all to this communication confirming the Mayor's directive, ” then she would “ensure the changes are made.” Branch soon replied to Oakes stating that “the Mayor's directive is to get this done, ” and directing Oakes to “do all things necessary to get the contract in place today.”

         Oakes testified at her deposition that she ultimately signed off on the contract “at the direction of the Mayor, ” and that she believed her reluctance to approve the contract was a factor in her discharge because she had “received a phone call from Richard Baird [Senior Advisor and Head of Transformation to Governor Rick Snyder], ” and also had a “meeting with the Mayor, ” in which Weaver was “very upset that [she] would not approve the contract, ” and where Oakes informed Weaver that she had raised her objections due to “several communications from the finance department [from] individuals who [wfere] concerned about their job and ethics and duty to do what was right on behalf of the City.” Oakes testified that a predecessor CLO, Anthony Chubb, also had objected to terms of the contract, which McDaniel had been attempting to have the City execute since around February 2016. She stated that the contract called for McDaniel to be paid $10, 000 per month for his services, despite the fact that “City Council was of the belief that he was a volunteer, ” and that McDaniel also “wanted the contract to be retroactive, to hav[e] a parking space, to be paid [for] travel, all of which represented that he was an employee and not an independent contractor.”

         2. Employment Status of Al Mooney

         Oakes also spoke out on October 18, 2016 in an email to City CFO David Sabuda about another contract, this one with Al Mooney, who recently had retired from his position with the City and entered into a contract to provide certain personal services. Oakes wrote that she was responding to “concerns the Finance Department has raised in response to IRS findings, ” and that, based on her review of Mooney's contract, the City would need to either pay Mooney as an employee or revise his contract to establish his status as an independent contractor. Sabuda replied, stating his understanding that the contract called for hourly pay for a limited scope of work, and that the same form of contract had been determined to embody an independent contractor arrangement by the City of Grand Rapids legal department. Sabuda also stated that the contract had been reviewed by the City's law department earlier in the year, “with no exceptions noted, ” and he invited Oakes to meet with him in person to discuss the language of the contract and “iron out any differences.”

         Oakes testified at her deposition that she was concerned that, after Mooney had retired and purportedly entered into a contract with the City, he was “still operating as a City employee, and that he was using City resources, had a City ID, all of which were issues pointed out by the IRS in recent findings against the City of Flint.” Oakes believed that her objections to Mooney's contract and her insistence that it be redrafted also contributed to the decision to terminate her, because the issues with his contract “occurred during the November, December [2016] time period.”

         3. Mayor's Advisor Aoine Gilcreast

         Oakes's interactions with Aoine Gilcreast also caused some friction with the administration. Gilcreast testified at his deposition that he advised Mayor Weaver on political matters, and that he “sat in” on discussions about the Flint Water Crisis. Weaver testified that Gilcreast was a “volunteer” who worked “as many [hours] as necessary” each week, but at least “40 [hours per week] for sure.” Weaver stated that she and Gilcreast would “meet about a lot of different things, ” and that she would “equate [his position with] Rich Baird's role with the Governor.” When Baird was asked how often Gilcreast was present when he met with Weaver, he testified that he was “not sure [he] ever met with the mayor without [Gilcreast] being present.” Oakes testified that she was concerned that Gilcreast “was acting on behalf of the City of Flint, ” by representing the Mayor and “asking questions” at important meetings, but that he had not executed a confidentiality agreement, despite the fact that the City's policy required all volunteers to sign one. According to Oakes, “the City Council consistently voiced concern about Mr. Gilcreast being present and acting on behalf of the City of Flint without going through the human resource department.”

         When Oakes was asked at her deposition if she had any “written complaints or any documentation” comprising reports of her concerns about Gilcreast, Oakes answered, “not in my possession, ” but she asserted that “[m]any of those were submitted to the legal department, ” “[m]any of those were submitted by City Council members to other outlets, ” and “[i]t's very public and very known.” Weaver admitted at her deposition that she tried to arrange funding to pay for Gilcreast to be hired as a staffer and paid $120, 000 per year, and that “the State offered to pay him.” That arrangement, however, apparently never was concluded. Oakes contends that the efforts to hire Gilcreast “[c]learly [were] a waste of taxpayer and other resources for a Mayor who is apparently unable to function independently, ” but she has not pointed to any evidence in the record suggesting that she communicated that concern to anyone before her termination.

         Oakes testified that, on December 22, 2016, she informed Weaver, along with David Sabuda, Steve Branch, and Gilcreast himself that she “refus[ed] to take directives from Gilcreast.” She also points to testimony by William Kim, one of the lawyers who worked for her in the CLO office, who attested that Oakes relayed concerns about Gilcreast to him “a number of times, ” including her apprehensions that “he was overly involved, that we wouldn't be covered, that privilege wouldn't be covered [sic] by discussions involving him, that his role in City government was undefined, [and] that there was uncertainty about his authority.”

         4. Payments to Barry Wolf

         On December 22, 2016, Oakes sent a letter to the “Receivership Transition Advisory Board, c/o Chairperson, Frederick Headen, Legal Advisor to Michigan State Treasurer, ” regarding “Flint City Council Resolution #160547.” Oakes wrote as follows:

This letter is intended to inform you and the Receivership Transition Advisory Board (RTAB) of my concerns regarding Flint City Council Resolution #160547, which has [been] or will be submitted to the RTAB for approval at its January 2017 meeting. This resolution was enacted by the Flint City Council on December 12, 2016. It purports to authorize the payment of $35, 000 to attorney Barry A. Wolf, and to accept reimbursement from the State of Michigan in the amount of $35, 000.
A resolution to this effect was presented to me for approval as to form. My department's standard practice, when reviewing proposed City Council resolutions authorizing financial expenditures, is to first determine whether the Finance Department has certified that funds are available by approving the resolution as to Finance. The resolution presented to me had already been signed by the interim Chief Financial Officer, David Sabuda, signifying approval as to Finance and certifying that the necessary funds were available. However, when I later reviewed the final documents as approved by City Council, it came to my attention that the Council-approved resolution lacked the signatures of myself and interim Chief Financial Officer Sabuda.
As a result, I requested additional information regarding this matter and inquired into the routing of this resolution. Unfortunately, I was unable to determine what happened to the resolution with the signatures attesting to approval as to Form and Finance, or why different paperwork lacking these signatures was submitted to the City Council. However, this additional inquiry has also brought to light two significant legal concerns that I call to the RTAB's attention.
Resolution #160547 purports to authorize the payment of $35, 000 from Budget Line Item #101-101.100-801.500. A review of the Revenue and Expenditure Report for the City of Flint, dated 12/19/2016, indicates that Budget Line Item #101-101.100-801.500 represents the funds allocated to the “General Fund, City Council, Legal Services” line item. The report clearly indicates that the 801.500 “Legal Services” line item had $0 ...

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