United States Court of Appeals

For the Eighth Circuit

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No. 19-1918

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Jonathan Scarborough

lllllllllllllllllllllPlaintiff - Appellant

v.

Federated Mutual Insurance Company

lllllllllllllllllllllDefendant - Appellee

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Appeal from United States District Court 

for the District of Minnesota

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 Submitted: November 17, 2020

Filed: April 29, 2021

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Before COLLOTON, ARNOLD, and KELLY, Circuit Judges. 

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KELLY, Circuit Judge.

Jonathan Scarborough sued his former employer, Federated Mutual Insurance

Company (Federated), alleging that it retaliated against him in violation of the

Minnesota Whistleblower Act (MWA). See Minn. Stat. § 181.932. The district
court1

 granted summary judgment to Federated, and Scarborough appeals. Having

jurisdiction under 28 U.S.C. § 1291, we affirm.

I.

Federated is a property and casualty insurer that offers insurance primarily to

businesses and business owners. Scarborough worked for Federated from 1998 until

August 20, 2014, when Federated terminated his employment. From September 2012

until his termination, he worked as a Regional Marketing Manager (RMM),

overseeing the Central Region and supervising six District Marketing Managers

(DMMs). Among his various responsibilities as an RMM, Scarborough reviewed and

approved DMMs’ expense reports in accordance with Federated policy. His direct

supervisor was Michael Pennington.

One of Scarborough’s DMMs was Frederick Johnston. On July 2, 2014, a

Marketing Administration Manager, Rhonda Kath, noted an irregularity in Johnston’s

June 2014 expense report for his company credit card—Johnston had charged

$702.87 to the card to purchase customized framing for his personal photographs. 

When asked about the charges, Johnston lied and said they were for laminating

company documents and buying printer ink. After confirming that Johnston did not

in fact obtain these work-related services and materials, Kath raised the issue with her

supervisor, Martha Kearin. Kearin in turn raised it with Pennington.

On July 7, 2014, Pennington met with Scarborough to discuss Johnston’s

suspected misconduct. At the meeting, Scarborough discussed Johnston’s expense

reporting activities and told Pennington that Johnston seemed to enjoy “nice and

fancy” things, like holding meetings at the offices of the law firm Husch Blackwell

1The Honorable Donovan W. Frank, United States District Judge for the

District of Minnesota.

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even though a cheaper venue was likely available. Pennington expressed some

confusion and said that those meeting rooms were made available to Federated for

free. Scarborough explained that Johnston nevertheless had been submitting invoices

for reimbursement for those meetings. Later that same day, Pennington asked Kath

to review Scarborough’s June expense report, wanting to make sure that Scarborough

had not charged personal expenses to the company credit card during a recent family

vacation.

 Scarborough decided to follow up on the Husch Blackwell matter, and on

July 14, 2014, he confirmed that the law firm provided meeting rooms to Federated

at no charge. Scarborough updated Pennington, and they resolved to meet with

Johnston about his expense reporting activities. Meanwhile, Martha Kearin looked

into Johnston’s past expense reports as well as the invoices he submitted in support

of his out-of-pocket expenses. She discovered that for years Johnston had been

submitting falsified invoices for meetings held at Husch Blackwell’s offices, totaling

approximately $5,000. She also found that it was Scarborough who had approved the

claimed expenses.

Scarborough and Pennington met with Johnston on July 21, 2014. Before the

meeting, Pennington asked Scarborough if he had known that Johnston was falsifying

invoices. Scarborough denied having any prior knowledge. During the meeting,

Johnston admitted to lying about the $700 personal framing expenses and to

submitting fraudulent invoices and receiving payment for them. 

Several hours after the meeting, Johnston left a voicemail on Pennington’s cell

phone. In the message, he said that Scarborough had known all along that Husch

Blackwell provided meeting rooms to Federated for free and had knowingly approved

Johnston’s falsified expense reports. Johnston also said that Scarborough had

encouraged his other DMMs, including Johnston’s office mate Braxton Weaver, to

do the same thing.

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On July 24, 2014, Scarborough and Pennington met with Pennington’s direct

supervisor, Mike Kerr, to discuss Johnston’s misconduct. At the meeting, Kerr asked

Scarborough whether he had known that Johnston had been falsifying invoices, and

Scarborough again denied having any knowledge of the misconduct. On that same

day, Pennington also called Braxton Weaver. Weaver told Pennington that

Scarborough had known about Johnston’s invoicing practices all along and had in

fact recommended that Weaver contact Johnston for details on how to submit

fraudulent invoices to pocket extra money. 

On July 30, 2014, Scarborough, Pennington, and Kerr met again. Scarborough

voiced his concern that Johnston’s practice of submitting falsified invoices violated

criminal and income tax laws. He also articulated his suspicion that, as a consequence of Johnston’s misconduct, Federated was violating employment tax laws. 

During this same meeting, Kerr accused Scarborough of engaging in his own

improper expense practices, including failing to use Federated’s travel team to

schedule work travel and misusing referral credits on a company cruise. 

On August 4, 2014, Scarborough and Pennington met with Johnston. 

Pennington informed Johnston that because of his unethical expense reporting,

Federated would not allow him to continue holding a marketing leadership position. 

Johnston’s options were either to accept a demotion or to resign from the company. 

After Johnston left the meeting, Pennington issued a warning letter to

Scarborough for continuing to deny knowledge of Johnston’s misconduct. 

Scarborough was allowed to stay in his RMM position, but he was warned:

“Federated will not tolerate any future circumstances that call into question your

integrity, violations of Federated policies, or acts of retaliation toward other

employees – no matter how minor. In other words, any future misconduct will likely

result in the termination of your employment with Federated.” 

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Also on August 4, after the meeting with Pennington, Scarborough contacted

Johnston’s supervisees, without authorization, and told them what had happened with

Johnston. Kerr found this to be “disappointing,” both given the warning and because

Johnston had not yet decided whether he would resign or remain with Federated. 

That same day, Pennington and Kerr also received a report from Kath concerning her

review of Scarborough’s June expense report. According to Kath, Scarborough had

in fact charged personal expenses to his company credit card and had only recently

expressed his desire to cut a check to Federated to cover those expenses retroactively. 

On August 13, 2014, Scarborough, Pennington, and Kerr met again. Kerr told

Scarborough he was being demoted, in part because of his “conduct, demeanor and

judgment” during and after the investigation of Johnston’s expense reporting

misconduct. The demotion was also based on his own suspicious expense reporting

practices and his overall behavior, which Pennington and Kerr agreed did not meet

Federated’s high standard for management. Given the option to either accept his

demotion or resign from the company, Scarborough decided to stay with Federated.

Five days later, Kerr learned that Scarborough had called Christopher Terry,

another RMM, to tell him that Federated might be looking to force him out of the

company. According to Kerr, this was the “straw that broke the camel’s back” and

a further example of Scarborough’s “gossiping,” “lack of professionalism, [and] lack

of integrity.” On August 20, 2014, Kerr called Scarborough and terminated his

employment with Federated.

Scarborough filed suit against Federated in Kansas state court on December 26,

2014, bringing claims for unjust enrichment and breach of an implied contract. 

Federated removed the case to the United States District Court for the District of

Kansas, which subsequently transferred the case to the United States District Court

for the District of Minnesota pursuant to a valid forum selection clause in

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Scarborough’s employment agreement. Scarborough amended his complaint to bring

a single claim that Federated violated the MWA. 

On February 1, 2017, the district court granted summary judgment in favor of

Federated, finding that Scarborough “failed to show that his statements to Federated

constituted a ‘report’ under the MWA” because they were not made with “the purpose

of exposing an illegality.” Scarborough v. Federated Mut. Ins. Co., No. 15-1633,

2017 WL 440244, at *4–5 (D. Minn. Feb. 1, 2017). On appeal, we vacated the

district court’s judgment and remanded for reconsideration in light of Friedlander v.

Edwards Lifesciences, LLC, 900 N.W.2d 162 (Minn. 2017), which recognized that

a 2013 amendment to the MWA “eliminated the judicially created requirement that

a putative whistleblower act with the purpose of exposing an illegality.” Scarborough

v. Federated Mut. Ins. Co., 894 F.3d 1277, 1278–79 (8th Cir. 2018) (quoting

Friedlander, 900 N.W.2d at 166). 

On March 29, 2019, the district court again granted summary judgment in favor

of Federated, concluding that “Scarborough ha[d] not pointed to sufficient evidence

that reasonably support[ed] a causal link between [his] reports [of Johnston’s

misconduct] and the adverse employment actions.” Scarborough v. Federated Mut.

Ins. Co., 379 F. Supp. 3d 772, 782 (D. Minn. 2019). In the alternative, the district

court reasoned that even assuming Scarborough could make out a prima facie case of

retaliation, he pointed to no evidence that created a genuine issue of fact for trial that

Federated’s proffered non-retaliatory reasons for warning, demoting, and terminating

him were pretextual. Id. at 782–83.

II.

“We review a district court’s grant of summary judgment de novo, viewing the

facts in the light most favorable to the nonmoving party and giving that party the

benefit of all reasonable inferences that can be drawn from the record.” Pedersen v.

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Bio-Medical Applications of Minn., 775 F.3d 1049, 1053 (8th Cir. 2015) (cleaned

up). “We will affirm if ‘there is no genuine dispute as to any material fact and the

movant is entitled to judgment as a matter of law.’” Naguib v. Trimark Hotel Corp.,

903 F.3d 806, 811 (8th Cir. 2018) (quoting Fed. R. Civ. P. 56(a)); see also Torgerson

v. City of Rochester, 643 F.3d 1031, 1042 (8th Cir. 2011) (en banc) (“The nonmovant

must do more than simply show that there is some metaphysical doubt as to the

material facts, and must come forward with specific facts showing that there is a

genuine issue for trial.” (cleaned up)); Wood v. SatCom Mktg., LLC, 705 F.3d 823,

828 (8th Cir. 2013) (“[A]lthough the burden of demonstrating the absence of any

genuine issue of material fact rests on the movant, a nonmovant may not rest upon

mere denials or allegations . . . .” (cleaned up)). 

The MWA provides in relevant part that “[a]n employer shall not discharge,

discipline, threaten, otherwise discriminate against, or penalize an employee” because

the employee, acting in good faith,2 “reports a violation, suspected violation, or

planned violation of any federal or state law or common law or rule adopted pursuant

to law to an employer.” Minn. Stat. § 181.932 subdiv. 1(1). A plaintiff may prove

a retaliation claim under the MWA “either by direct evidence or, in the absence of

such evidence, under the familiar McDonnell Douglas burden-shifting framework.” 

Pedersen, 775 F.3d at 1053–54 (cleaned up). 

Scarborough has failed to provide any direct evidence that he was retaliated

against for flagging Johnston’s expense reporting activities. “Direct evidence is

evidence showing a specific link between the alleged discriminatory animus and the

challenged decision, sufficient to support a finding by a reasonable fact finder that an

illegitimate criterion actually motivated the adverse employment action.” Id. at 1054

2

“[R]eports are made in ‘good faith’ as long as those reports are not knowingly

false or made with reckless disregard of the truth.” Friedlander, 900 N.W.2d at

165–66 (citing Minn. Stat. §§ 181.931 subdiv. 4, 181.932 subdiv. 3).

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(cleaned up); see also Sellner v. MAT Holdings, Inc., 859 F.3d 610, 614 (8th Cir.

2017) (“‘Direct’ refers to the causal strength of the proof, not whether it is circumstantial evidence.”). Scarborough’s purported direct evidence of retaliation is that

Pennington and Kerr punished him “for repeatedly and truthfully denying that he had

prior knowledge” of Johnston’s misconduct. Even assuming this characterization of

events were supported by the record, it would not amount to direct evidence of

retaliation because it does not support an inference that Scarborough was punished

because he reported Johnston’s suspected violations of law (i.e., that Scarborough

was retaliated against for participating in protected activity). Rather, it at most

supports a very different inference—that Scarborough was punished because

Pennington and Kerr mistakenly believed that he was lying about his prior knowledge

of Johnston’s expense reporting activities. This is a critical distinction, and the MWA

prohibits only the former inference and not the latter. 

Absent direct evidence, Scarborough must establish his retaliation claim using

the McDonnell Douglas burden-shifting framework. Under that framework, the

plaintiff has the initial burden to establish a prima facie case by showing (1) he

engaged in protected conduct, (2) he was subjected to an adverse employment action,

and (3) there was a causal connection between the protected conduct and the adverse

action. Naguib, 903 F.3d at 811. “If the plaintiff establishes a prima facie case, the

burden shifts to the employer to articulate a legitimate, non-retaliatory reason for the

action.” Id. (cleaned up). “If the employer does so, the burden shifts back to the

plaintiff to demonstrate that the stated reason is pretextual.” Id. “The ultimate

burden of proof then rests with the plaintiff to prove that the proffered reason is

merely a pretext and that retaliatory animus motivated the adverse action.” Pedersen,

775 F.3d at 1054.

The parties agree that Scarborough suffered an adverse employment action, see

Chavez-Lavagnino v. Motivation Educ. Training, Inc., 767 F.3d 744, 749 (8th Cir.

2014) (“[A] retaliatory action is materially adverse if it would likely dissuade a

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reasonable worker from engaging in protected conduct.”), but they disagree on

whether he established the other elements of his prima facie case.3 We need not

resolve the disagreement, as we assume Scarborough established a prima facie case

of retaliation and proceed to determine whether he has presented a genuine issue of

fact for trial on his claim by demonstrating that Federated’s proffered non-retaliatory

reasons for demoting and terminating him were pretextual. See Wood, 705 F.3d at

827 (“We may affirm a district court’s grant of summary judgment on any basis

supported by the record.” (quoting Menz v. New Holland N. Am., Inc., 507 F.3d

1107, 1110 (8th Cir. 2007))); see also Johnson v. Ready Mixed Concrete Co., 424

F.3d 806, 810 (8th Cir. 2005) (“Because the record was fully developed in connection

with the motion for summary judgment, we need not analyze each step of the burdenshifting framework on appeal, but instead may turn directly to whether there is a

genuine issue for trial on the question of [retaliation] vel non.”). 

Once an employer has articulated a legitimate reason for taking an adverse

action, “the plaintiff shoulders the ultimate burden of establishing a whistleblower

3As to whether he engaged in protected conduct, Scarborough contends he

made three reports, each of which he argues amounts to protected conduct under the

MWA: (1) on July 7, 2014, when he told Pennington that Johnston submitted expense

reports seeking reimbursement for meetings held at Husch Blackwell; (2) on July 14,

2014, when he forwarded his email correspondence with Husch Blackwell to

Pennington, confirming that the law firm provided meeting rooms to Federated free

of charge; and (3) on July 30, 2014, when he suggested to Pennington and Kerr that

Johnston’s conduct likely violated criminal and tax laws and potentially caused

Federated to be in violation of tax laws. Whether the July 7 statement amounts to

protected conduct is a close call. At the time, Scarborough did not know the

information he was providing about Johnston implicated a violation of any law. The

July 14 and July 30 statements, however, were more than “mere report[s] of behavior

that [wa]s problematic or even reprehensible,” Kratzer v. Welsh Cos., 771 N.W.2d

14, 22 (Minn. 2009), because Scarborough by that time unquestionably suspected that

Johnston’s conduct violated criminal or tax laws. See Minn. Stat. § 181.932 subdiv.

1(1). 

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violation by demonstrating that the employer’s reason is merely a pretext and that

retaliatory animus motivated the adverse action.” Pedersen, 775 F.3d at 1055

(quoting Hilt v. St. Jude Med. S.C., Inc., 687 F.3d 375, 378 (8th Cir. 2012)). “An

employee’s attempt to prove pretext requires more substantial evidence than it takes

to make a prima facie case because unlike evidence establishing a prima facie case,

evidence of pretext and retaliation is viewed in light of the employer’s justification.” 

Id. (quoting Logan v. Liberty Healthcare Corp., 416 F.3d 877, 881 (8th Cir. 2005)). 

“To prove pretext in a retaliation case, the plaintiff ‘must both discredit the asserted

reason for the adverse action and show the circumstances permit drawing a

reasonable inference that the real reason for the adverse action was retaliation.’” Id.

(cleaned up) (quoting Gilbert v. Des Moines Area Cmty. Coll., 495 F.3d 906, 918

(8th Cir. 2007)). 

Federated offers several reasons for demoting and terminating Scarborough:

he knew of and approved Johnston’s invoicing practices, encouraged Braxton Weaver

to do the same, and lied about both; without authorization, he contacted Johnston’s

supervisees and told them about the disciplinary action taken against Johnston; he

engaged in unethical practices, including belatedly repaying Federated for personal

expenses improperly charged to his company credit card and collecting cruise referral

credits; and he spread a rumor to Christopher Terry that Federated was likely to force

him out of his position. To Federated, these actions demonstrated Scarborough’s lack

of professionalism and integrity, and undermined his suitability to remain in the

position of RMM. 

Scarborough seeks to discredit Federated’s stated reasons as pretextual on the

grounds that they ignore the truth. See Mervine v. Plant Eng’g Servs., LLC, 859 F.3d

519, 527 (8th Cir. 2017) (noting that a plaintiff may demonstrate pretext by showing

that the employer’s stated reason had “no basis in fact”). According to Scarborough,

he truthfully denied having prior knowledge of Johnston’s misconduct, and the rest

of the proffered reasons are simply not true. However, “[i]n determining whether a

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plaintiff has produced sufficient evidence of pretext, the key question is not whether

the stated basis for termination actually occurred, but whether the defendant believed

it to have occurred.”4 Id. (quoting Macias Soto v. Core-Mark Int’l, Inc, 521 F.3d 837,

842 (8th Cir. 2008)). Scarborough has offered no plausible evidence to show that

Pennington and Kerr did not in good faith believe that he lied about whether he knew

of Johnston’s misconduct or independently engaged in unethical behavior. Both

Johnston and Braxton Weaver said that Scarborough knowingly approved Johnston’s

falsified expense reports, and Pennington and Kerr observed Scarborough engage in

what they deemed to be inappropriate conduct for an RMM. 

Scarborough insists that the real reason he was investigated, demoted, and then

terminated is that Pennington was trying to cover up his own misdeeds by

scapegoating Scarborough. He points to two sets of fraudulent reimbursement

requests by Johnston for meetings held at Husch Blackwell in April and July 2012. 

These requests were presumably approved by Pennington, who was Johnston’s RMM

at that time, before Scarborough replaced him in September 2012. Scarborough

contends that Pennington limited the temporal scope of the investigation into

Johnston’s expense reporting activity in a purposeful effort to direct attention away

from his own wrongdoing. But the evidence shows that Pennington asked Martha

Kearin to get Johnston’s “receipts for the last couple years,” a time span that would

have included a portion of Pennington’s tenure as Johnston’s RMM. It was Kearin,

not Pennington, who then narrowed the temporal scope to provide receipts dating

back to June 2013. See id. at 528 (“The appropriate scope of an internal investigation

. . . is a business judgment, and we do not review the rationale behind such a

4Scarborough maintains that this “honest belief doctrine” does not apply here

because the stated grounds for disciplining him are “inextricably intertwined with the

protected conduct at issue.” Pye v. Nu Aire, Inc., 641 F.3d 1011, 1022 (8th Cir.

2011). We disagree because, as discussed below, Federated’s proffered nonretaliatory reasons are related to Scarborough’s personal misconduct and unrelated

to his alleged protected activity. See id. at 1022–23. 

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decision.” (quoting Pulczinski v. Trinity Structural Towers, Inc., 691 F.3d 996, 1005

(8th Cir. 2012))). Scarborough does not claim that Martha Kearin had an ulterior

motive, and the fact that nothing prevented Pennington from asking for receipts from

previous years does not create a genuine dispute of fact for trial that “[Federated’s]

investigation was a sham or that [Pennington] engineered or manipulated the process

or the results to retaliate against [Scarborough].” Id.

Scarborough also contends that pretext may be inferred because he was treated

less favorably than another RMM (MJ) who was demoted to a DMM position for

engaging in expense reporting fraud. MJ was disciplined for using the company

credit card for personal expenses that he misclassified as legitimate business

expenses, directing other DMMs to do the same, and using Federated’s communication tools to engage in unprofessional communications. While there is some overlap

in the type of conduct alleged, Scarborough was also accused of endorsing and

covering up a DMM’s misconduct, improperly communicating with a co-worker’s

supervisees, and spreading rumors to another RMM about his possible termination. 

The record evidence shows that Scarborough and MJ “did not engage in misconduct

of ‘comparable seriousness,’” id., and their varied treatment does not establish

pretext.

Ultimately, Scarborough’s arguments fail because they do not “permit drawing

a reasonable inference that the real reason for [the adverse actions] was retaliation.” 

Pedersen, 775 F.3d at 1055. Federated claims that Scarborough was disciplined for

lying about his knowledge of Johnston’s invoicing practices, improper expense

reporting, and unprofessional behavior during Federated’s internal investigation. Put

simply, Federated claims that it disciplined Scarborough for his own misconduct. In

attempting to rebut these proffered reasons, Scarborough does not argue and provides

no evidence that he was disciplined because he reported Johnston’s suspected

violations of law, that is, for engaging in protected activity. Scarborough has not

established a genuine issue of material fact as to whether Federated retaliated against

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him for blowing the whistle on Johnston, and the district court did not err by granting

summary judgment on Scarborough’s MWA retaliation claim.

III.

We affirm the district court’s grant of summary judgment.

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