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Eastern District Dismisses Suit by Former CEO of Head Start

Published by on June 14, 2010

The U.S. District Court of for the Eastern District of Virginia recently granted summary judgment on all counts on a wrongful termination/defamation suit brought by the former President and CEO of the National Head Start Association (the “NHSA”).  A copy of the order can be found here.  More after the break. The NHSA Board terminated […]

The U.S. District Court of for the Eastern District of Virginia recently granted summary judgment on all counts on a wrongful termination/defamation suit brought by the former President and CEO of the National Head Start Association (the “NHSA”).  A copy of the order can be found here.  More after the break.

The NHSA Board terminated the CEO for revenue problems and financial irregularities, including two “bonus checks” written to the CEO from NHSA’s operating account, which the CEO claimed were for bonuses that had been Board-approved.  The CEO claimed that she was terminated not because of insufficient performance and suspicious bonus checks, but instead because she had become involved in an NHSA board of directors election dispute.  She claimed the termination was a breach of her employment contract, and was retaliation for her comments about the Board elections.  The CEO also claimed that she had been defamed, because the board chairman told the head of a state Head Start association that she had been discharged for improperly diverting NHSA funds to herself.

First, the court rejected the CEO’s argument that she was not an at-will employee because her Employment Agreement allowed for her termination only for unsatisfactory performance.  The CEO argued that this provision constituted a “just cause provision,” making her an employee for a fixed duration.  The court instead found the language to be permissive and established a completely subjective standard.  This contrasted with the language required to rebut the at-will presumption, which must unconditionally establish that termination and only be for just cause.  Even absent the CEO’s at-will status, the court found no breach of the employment contract, citing the Board’s “systematic process” in evaluating the CEO’s leadership and performance.

There was no defamation, because comments by the board chair to a state Head Start official were protected by a common interest qualified privilege.  The Chairman and state official shared an interest in the leadership changes at the national organization, and the court did not find any malice on the part of the Chairman, which would have removed the qualified privilege.

The court granted summary judgment on the remaining claims for a variety of reasons.  There is no implied covenant of good faith and fair dealing in Virginia in the at-will employment context, and the CEO’s claim for retaliatory discharge in violation of public policy was defeated because she cited to one statute for which she was not a member of the protected class, and another that expressed no public policy at all.

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