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Shea v. Kohl's Department Stores, Inc.

United States District Court, N.D. Alabama, Western Division

April 2, 2019

RYAN SHEA, Plaintiff,



         This cause is before the court on the motion for summary judgment filed March 30, 2018, by the defendant, Kohl's Department Stores, Inc. (“Kohl's” or “Defendant”). (Doc. 124). Defendant seeks dismissal of all of Ryan Shea's (“Plaintiff” or “Shea”) claims arising from the Defendant's alleged retaliation in violation of the Sarbanes-Oxley Act and defamation under Alabama state law. The motion has been fully briefed. A hearing on the motion was held on October 2, 2018. The parties consented to dispositive jurisdiction by a magistrate judge on September 28, 2016. (Doc. 22).


         Under Federal Rule of Civil Procedure 56(a), summary judgment is proper “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The party asking for summary judgment “always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of ‘the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any' which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 47 U.S. 317, 323 (1986) (quoting former Fed.R.Civ.P. 56(c)). The movant can meet this burden by presenting evidence showing there is no dispute of material fact or by showing that the nonmoving party has failed to present evidence in support of some element of its case on which it bears the ultimate burden of proof. Celotex, 477 U.S. at 322-23. There is no requirement, however, “that the moving party support its motion with affidavits or other similar materials negating the opponent's claim.” Id. at 323.

         Once the moving party has met its burden, Rule 56 “requires the nonmoving party to go beyond the pleadings and by her own affidavits, or by the ‘depositions, answers to interrogatories, and admissions on file,' designate ‘specific facts showing that there is a genuine issue for trial.'” Id. at 324 (quoting former Fed.R.Civ.P. 56(e)). The nonmoving party need not present evidence in a form necessary for admission at trial; however, he may not merely rest on his pleadings. Celotex, 477 U.S. at 324. “[T]he plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Id. at 322.

         After the plaintiff has properly responded to a proper motion for summary judgment, the court “shall” grant the motion if there is no genuine issue of material fact, and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). The substantive law will identify which facts are material and which are irrelevant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute is genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id. at 248. “[T]he judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial.” Id. at 246. His guide is the same standard necessary to direct a verdict: “whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Id. at 251-52; see also Bill Johnson's Restaurants, Inc. v. N.L.R.B., 461 U.S. 731, 745 n. 11 (1983).

         However, the nonmoving party “must do more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). The evidence supporting a claim must be “substantial, ” Marcus v. St. Paul Fire and Marine Ins. Co., 651 F.2d 379 (5th Cir., Unit B, 1981); a mere scintilla of evidence is not enough to create a genuine issue of fact. Young v. City of Palm Bay, 358 F.3d 859, 860 (11th Cir. 2004); Kesinger ex rel. Estate of Kesinger v. Herrington, 381 F.3d 1243, 1249-50 (11th Cir. 2004). If the non-movant's evidence is so thoroughly discredited by the rest of the record evidence that no reasonable jury could accept it, the evidence fails to establish the existence of a genuine issue of fact requiring a jury determination. See Scott v. Harris, 550 U.S. 372, 127 S.Ct. 1769, 1776, 167 L.Ed.2d 686 (2007) (“Respondent's version of events is so utterly discredited by the record that no reasonable jury could have believed him. The Court of Appeals should not have relied on such visible fiction; it should have reviewed the facts in the light depicted by the videotape.”); Lewis v. City of West Palm Beach, Fla., 561 F.3d 1288, 1290 n. 3 (11th Cir. 2009). If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted. Anderson, 477 U.S. at 249 (citations omitted); accord Spence v. Zimmerman, 873 F.2d 256 (11th Cir. 1989). Furthermore, the court must “view the evidence presented through the prism of the substantive evidentiary burden, ” so there must be sufficient evidence on which the jury could reasonably find for the plaintiff. Anderson, 477 U.S. at 255. The non-movant need not be given the benefit of every inference but only of every reasonable inference. Brown v. City of Clewiston, 848 F.2d 1534, 1540 n. 12 (11th Cir. 1988).


         Viewing the facts in the light most favorable to the nonmovant, in this case the plaintiff, the following facts are relevant to the motion for summary judgment.

         The plaintiff, Ryan Shea, began his employment with Kohl's on April 3, 2006. He worked as the District Manager for District 78, which consisted of a group of 16 stores in the Alabama and Georgia. Shea worked in that capacity until his termination on October 16, 2015. During the year 2015, Shea was the second-highest ranked District Manager for Kohl's nationwide, and the most highly ranked District Manager in the region.[1] In both his 2014 and 2015 performance reviews, Plaintiff was ranked as “Highly Effective” or “Satisfactory” in all categories by Regional Vice President Phil Smith. In April of 2015, Regional Vice President Roland Johnson (“Johnson”) became Shea's new supervisor.

         Shea had a history of being blunt and was considered “undiplomatic” in his relations with peers and subordinates. In 2010, Shea was counseled to communicate with his peers “in a more professional manner.” In 2011, he was advised to be more aware of the impact his actions have on others. And, in his 2013 performance review, Shea's supervisor, Regional Vice President Phil Smith, challenged him to “adapt [his] tone and style appropriately” to be less “direct [and] opinionated” and more diplomatic. Even so, Shea received performance evaluation ratings of either “Satisfactory” or “Highly Effective” in the areas of “Build Great Teams” and management skills.

         In the eleven months prior to his termination, Shea was disciplined for angry and intimidating treatment of other Kohl's employees on two more occasions. In November 2014, Shea was issued a verbal warning by his Regional Vice President, Phil Smith, for referring to a Kohl's co-worker as a “fucking moron” and “a fucking idiot.” Notwithstanding this verbal warning, Smith rated Shea “Highly Effective” in the area of “Build Great Teams” for the year 2014. In April 2015, Shea's new Regional Vice President, Roland Johnson, received a complaint that Shea had intimidated and belittled another employee, Tracey Phillips, at a dinner. After investigation, Johnson issued Shea a written warning on June 19, 2015, for mistreating Phillips, using abusive and offensive language directed at her, and for “improperly submitting travel expenses for reimbursement.”[2] Shea was explicitly warned by Johnson that further instances of misbehavior could result in the termination of Shea's employment.

         Kohl's keeps a record of the number of times customers apply for credit in each of its stores. One of the performance metrics by which stores are evaluated is the number of credit applications submitted each day. Daily credit-application goals are assigned to each store and, collectively, to each district, which are monitored by district managers in reports delivered three times each day. Whether the applications are accepted and credit is extended does not affect the evaluation. Occasionally, Kohl's will offer a small monetary incentive of around $1.00 per application to encourage the sales associates to ask each customer about opening a credit card account. Additionally, store manager bonuses are tied to the store's performance on the credit solicitation metrics.

         Executives, including store managers, district managers, and others, are able to view reports of the number of credit applications submitted by each of the stores. This allows executives to see the number of credit applications for a particular day and the outcome of the applications, whether approved, denied, unable to process, or pending. It is rare for the final outcome of a credit application to be “unable to process.” High numbers of credit applications that are not able to be processed may indicate a problem within the store. In addition to tracking the number of credit applications submitted at each store, Kohl's also keeps a record of the number of credit applications in relation to the dollar amount of sales at a given store in a given day. On average, Kohl's stores report one credit application for every $2, 500 to $3, 000 in sales. A low “sales-to-credit application” ratio can also indicate a problem at the store.

         During his tenure as District Manager, Kohl's conducted credit card application fraud investigations at four stores in Shea's district: Mobile, Alabama; Opelika, Alabama; Columbus, Georgia; and Albany, Georgia. As a result of an investigation in Opelika, Alabama, Shea terminated three employees for submitting fraudulent credit applications without the knowledge or consent of the customers in whose names the applications were made. This was not a problem exclusive to Shea's district; fraudulent credit card applications were a problem at Kohl's stores nationwide. Timothy Eger (“Eger”), the Assistant Manager of Credit Operations at the relevant time, stated that part of his job was to monitor the credit card applications submitted in the stores to determine if there was questionable activity. If questionable activity was detected, Eger would send an email to the District Loss Prevention Manager. From April 17, 2014, to December 1, 2015-a period of twenty months-70 such emails were sent to District Loss Prevention Managers to notify them of questionable applications at 48 stores. But the problem was growing worse. From February 11, 2016, to October 20, 2016-a period of only eight months-80 emails were sent regarding suspicious activity at 47 stores.[3]

         Credit applications by customers of Kohl's were submitted to a bank, Capital One, which provided the credit if the application was approved. Applications were transmitted from Kohl's to Capital One over the internet. In assessing each application, Capital One obtained a credit report for the applicant, which resulted in a “hard inquiry” or a “hit” on the customer's credit-report record.

         In September 2015, Shea began receiving reports from store managers within District 78 that certain stores were creating fraudulent credit applications to increase reported numbers. He became aware that the store in Albany, Georgia (“Albany Store”), particularly, was recording high numbers of credit applications tagged “unable to process.” This was a store added to Shea's district in April 2015, as the result of a corporate restructuring. The Albany Store also had a low sales-to-credit application ratio. At one point, the Albany Store reported one credit application for every $96.00 in sales, compared to the usual average of one application for every $2, 500 to $3, 500 in sales. The numbers concerned Shea, and he ultimately discovered that sales associates at the Albany Store were submitting fraudulent credit applications using the social security numbers of customers and other people without authorization. The intended purpose of the transactions was to increase the credit applications on Kohl's corporate measurements, thereby increasing the perceived performance of the store.

         Upon making this discovery, Shea sent an email to Paulette Williams (“Williams”), the manager of the Albany Store on September 18, 2015. He notified Williams of his concerns, noting that, in addition to the high number of credit applications and the low sales-to-credit application ratio, applications for credit were being submitted in “back-to-back” transactions. Shea asked Williams to investigate the issue and report back to him. Also on September 18, 2015, Shea notified Jason Deaton (“Deaton”), the District Loss Prevention Manager, of the situation at the Albany Store. Deaton informed Shea that the Kohl's Fraud Department was involved in the investigation, and he referred to the situation as “shady.” On September 24, 2015, Deaton also received an email from Eger notifying him of the questionable activity in the Albany store.

         Williams was “disturbed” by the email from Shea about the credit card applications and she forwarded it to her former district manager, Brent Emmett, on September 19, 2018. Emmett forwarded the email on that same date to Roland Johnson, the Regional Vice President over Shea's district. Johnson was thus aware that Shea was questioning the legitimacy of credit applications in the Albany store by no later than September 19. On September 28, 2015, Williams submitted a “statement of concern” to Johnson detailing her allegations against Shea, including the assertion that he made racial statements to her about the demographics of the Albany store.[4] Williams' “statement of concern” also complained that Shea was questioning her store's efforts to solicit credit applications. On September 29, 2015, Johnson communicated with Human Resources about issues with Shea including “credit integrity challenges” being raised by Shea, apparently with respect to the Albany store. On October 13, 2015 Roland Johnson met with Shea about Williams' allegations and informed Shea that there was an investigation into the matter. Shea reminded Johnson at that time of the ongoing fraud investigation of the Albany Store. Shea opined that Williams' complaint about him was an attempt to retaliate against him for a store visit he conducted five months earlier and because of the fraud investigation. Johnson instructed Shea to prepare a written memorandum about the fraud allegations, which he did that day. Shea's employment with Kohl's was terminated on October 16, 2015, by Roland Johnson, with input from Jolene Christensen and Tim McLarty.

         At the conclusion of the fraud investigation by Kohl's and Deaton, it was determined that fraud was, in fact, occurring in the Albany Store. While most fraudulent credit applications were rejected by Capital One, at least one such fraudulent application resulted in the issuance of credit on which a Kohl's customer reported being dunned for about $300.00 in debt and fees. In every instance, however, the fraudulent credit applications resulted in a “hard inquiry” or “hit” on the credit report of each customer, potentially impacting the customer's credit score. The two employees involved in the scheme were “counseled” about the ...

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