Wednesday, April 10, 2013

Guest Post: Rutgers, Whistleblowers, and Extortion

By Stephanie Sautter
Ms. Sautter is a 2L at Catholic University and Lead Articles Editor of the Catholic University Law Review

Just about everyone has seen the video of recently fired Rutgers University basketball coach Mike Rice abusing his players, both physically and verbally. The video, which ESPN aired last week, showed clips of Rice throwing basketballs at his players, kicking them, and shoving them. Less than 24 hours after it aired, Rice had been fired. Eric Murdock, the former Director of Player Development, compiled the video footage. Murdock gained public sympathy when he said that he tried to take steps to end the abuse, but was fired for doing so on July 2, under the false pretense that his contract was not being renewed.

The Whistleblowing Claim

Given the allegations, it was not too surprising when Murdock filed a wrongful termination suit in state court on April 5 (complaint can be seen here). He names several defendants, including Rutgers University, the current and former presidents of the university, Mike Rice, and former Athletic Director Timothy Penetti.

Murdock is alleging that his employment with Rutgers was terminated in direct response to his complaints about Rice’s offensive behavior. Essentially, he is saying that the employment decision was a result of illegal retaliation. Murdock is suing under New Jersey’s Conscientious Employee Protection Act, which created a cause of action for retaliatory discharge. Terminating an employee in response to the filing of an internal complaint is actionable retaliatory discharge under the Act. Therefore, Murdock’s complaints about Rice are protected, and Rutgers may be held liable if its actions were taken in response to the complaints. The issue may come down to whether Murdock can establish that he filed a complaint before the decision about his contract was made. He says this is the case, but has not yet provided evidence (failing to provide evidence seems to be a consistent problem for Murdock – Rutgers says he also made allegations about NCAA violations, including paying players, but did not provide any supporting evidence).

Rutgers has stated that Murdock’s contract was simply not renewed, which Murdock claims is not true. Rather, Murdock claims that his contract was actually renewed (although there is no evidence of this) and Rutgers’ contract renewal explanation is merely pretext. So far, Rutgers has not offered much justification for their decision other than a dispute Murdock had with Rice regarding missing 35 minutes of basketball camp – but that reason seems pretty flimsy. Odds are, Rutgers has compiled a laundry list of Murdock’s misconduct that they will say influenced their employment decision, but the court may determine that it was actually retaliation.

Extortion Investigation

Soon after filing his suit, however, information surfaced that was far less sympathetic to Murdock: he may have tried to extort Rutgers out of almost one million dollars. This week, the media obtained a 2-page letter, dated December 27, 2012, from Murdock’s attorney, Barry A. Kozyra to Rutgers University’s attorney, John K. Bennett (entire letter can be seen here). The letter requested a $950,000 “settlement” of Murdock’s (not yet filed) wrongful termination claim. Murdock’s salary with Rutgers was $70,000 - less than a 1/10 of the “settlement offer.” I’m admittedly not well versed in the art of extortion, but I’m guessing “don’t send a signed and dated extortion letter” is pretty high on the list of things not to do if you want to get away with it. Unfortunately for Murdock, though, his “settlement offer” was signed and dated, which might explain why F.B.I. Special Agent James Tareco visited the Rutgers campus. Murdock’s lawyer called the extortion claim “nonsense,” and said that the letter was a standard request to settle before filing suit.

What’s more, Murdock compiled the 30-minute video by painstakingly editing hundreds of hours of video footage, which he obtained pursuant to New Jersey’s freedom of information statute. Obviously this video is horrible no matter what, but the way in which Murdock went about creating it, along with his leaking it to ESPN rather than just filing his wrongful termination suit, does make it look a bit like extortion.

The Impact of an Extortion Attempt on his Whistleblowing Claim

Although settlement offers are not usually admissible in trial, evidence of an FBI investigation may be. An extortion attempt does not necessarily change the legality of Rutgers’ employment decision, but may still be helpful to Rutgers in determining damages or a settlement amount. If Murdock was taking steps in preparation of an extortion attempt while he was still employed, Rutgers could use evidence of the misconduct to severely limit the relief available to Murdock. The “after-acquired evidence” doctrine allows relief to be limited to back-pay based on evidence obtained after the retaliatory action, if the evidence would have been a legitimate basis for terminating the employee had the employer known about it at the time.

This means that Rutgers could benefit by obtaining evidence that Murdock was taping practices or discussions with or of Rutgers officials that he then used to extort Rutgers. Murdock certainly would have been fired for any known preparation of an attempt to extort Rutgers.

Note from Phil Miles: First, I'd like to thank Ms. Sautter for contributing this post. I would like to offer a few counterpoints in defense of Mr. Murdock. It is not unusual for an ex-employee to make a settlement demand prior to filing suit and as someone who does a lot of defense work, ridiculously high settlement demands are likewise not that unusual. The media "leak" does cause a little concern though. I also wanted to note that he has only filed a complaint so the lack of evidence at this stage is not a problem - although it may be down the road. I'd love to get some feedback on the line between settlement demands and extortion - so drop a comment!

Image: Rutgers logo used in commentary on matter of public interest. Not official use.