## In the



# U n ited S ta tes Co urt o f Ap p ea ls

F o rth eS e v e n th C ir cu it
N o. 08
- 1390 D ONA LD A . B REG IN, P laint if f-A ppell ant, v. L IQUI DEBTS Y S T E MS, I NC . a nd S I RVA, I NC ., D efend a nts-A pp ellees.

A pp eal from the United S t ates Di strictC our t fo r the N o rthernDi stricto f Indian a, Fo rtWayne D ivisi on. No . 1:06- CV-23

—Th eres a L . Sp ri ngmann, Judg e.
A RG UE D S EP TE MBE R 25, 2008

— D ECIDED N OVE MBE R 19, 2008

Befo re P OSNER, F LA UM, a nd E VANS, C ircu it Judges . E VANS, Cir cu i tJudg e . After Donal d A
. Breg i n w as disc harg ed fro m hi s e m plo ym ent a t Li quidebt Sy ste m s, I nc. ( LSI ) he fi l ed thi s l aw sui t, co ntending that hi s di scharg e was i n re tal i ati on f orhi s r efusalto part i ci pate i n i l l eg ala cc o unt i ngpr ac ti ce s o r, a lte r na ti ve l y, f o rb eing a whist l e-bl ower, and that SI RVA , Inc. ( i n con sp ira cy w i th LSI ) to rt i ousl y inter fer ed w i th hi s e m plo ym ent. The distr ict co urt gr anted sum m ar y j ud gm ent forbo th2 N o. 08
- 1390
com panie s, and Breg i n app ea ls. Our r evi ew i s de novo . A lexa nd er v. Wis. D ep’t o f Heal th a nd Fa m ilyServs. , 26 3 F
. 3d 673 (7th Cir. 2001). SI RV A pr o v i de s r e l o c a t i o n a nd mo v i ngs e r v i c e s ; N or th A m er ica n V an L in es , In c . (N A V L ) is its su b sid iar y. U n til the l ate 19 90s Bregin w or ked atN A VL doi ng, pri m ar i l y, the c ol l ecting o fac c ou n ts re cei vabl e. H e than w as a su bc o nt r ac to rf o rLS Ia nd, l at er, he wor k ed as a c o nsu l tant f orS I RVA
. A t S I RVA hi s j ob w as to i denti fy ways SI RVA co uld i m prove i ts col l ecti ons proce du re s. N ear the e nd o fh i s t i me a s a c o ns ul t a nt, h e p r o v i de d a “ To

- Do List ” forS I RVA
. In p repari ng the l i st he r epor ted that i nter nal fi nanci al docum ents w er e i ncor re ct i n th at SI RVA i ncl ud ed, i n acco unts r ecei vabl e, m oneythat shoul d have be en r efund ed to custo m er s. A l so du ring thi s peri od N A VL deci ded to o utsour ce i ts col l ecti on e ff or ts. A t thi s poi nt LSIente re d the pi cture . I tne g o t i a t e d wi th NAVL t o p r o v i d e c o l l e c t i o n s e r v i c e s . As a co ns ultant to NA VL’ s par en t, S I RVA, Br eg i n was i nvol ved i n the nego ti ati ons that re sul ted in a c ontract between N A VL and LSI, wh i ch the parti es re ferto as th e L SI/SIR V A co n tr ac t. B re gin w a s a lso inv olv ed in det er m i ni ngthe b en ch m ar kf o re va l ua tingLS I ’ s per form ance under the c ontr act. LSIexpre sse d an i nter esti n hi ring Bre gin to o ver see the S I RV A a ccount. S I RVA l i ked the i dea bec ause of B re gin ’s fa m ilia r i t y w ith SIR V A an d its em p loy ee s. So it happ ened thatBreg i n beca m e LSI ’ s v i ce- pr esi dent of oper ati ons and was consi dered the proj ect m an ag er o n th e S I RVA ac co unt . He n o l o ng erha d a n e m pl o y m en t r e l a t i o ns hi p o fa nyk i nd wi th S I RV A o rNAVL.N o. 08
- 1390 3 A s p art of L SI ’s respon sib il ity for coll ectin g SI R V A ’s outst anding custo m eracc ounts, LSIem plo yee s were to conta ct S I RVA ’ s cust om er s a s soo n as an i nvoi ce was p ast d ue . Paym en ts w ere m ad e d irectly to SI R V A
. LSI wa s n o ti nv o l v e d in e i the rc a l c ul a t i ngS I RV A’ s a c counts orhandling r efund s a nd cr edi ts. To ev al uate LSI ’ s per f or m an ce, S I RVA m eas ured how qui ck lyr ec ei vabl es wer e co l l ec te d, r efer r ed to a s th e d ays sales bill ed ( D SB ). U nd er th e c o n t ract, LSI’s p erform ance goa l

— or“be nchm ar k”

— w as to i m prove co l l ecti on ofS I RVA’s a cc o unt s r ec ei vabl e by1 0 per ce nt dur i ng2 00 3. The 2 00 3 DS B woul d b e co m par ed to the 20 02 DS B t o s ee whethe rLS I m etthe b en ch m ar k
. The m ax imum i nc en ti ve f o rLS It o e xc ee d the b en ch m ark w as a paym ent o f$1 50, 000; the m axim u m p en al ty f or f ai l i ng to m eeti t was al so $150 , 000. S I RVA r egul ar l y r ev i ewe d LS I ’ s per f o r m an ce . Duri ng th e s p r i n g a n d s u mme r o f 2 0 0 3 , L S I f a i l e d t o l o we r t he DS B , c a u s i n g o ffi c i a l s a t S I R V A t o e x p r e s s c o n c e r n a bo ut the j ob LSIwas doi ng. Breg i n bel i eve d t hat be cause of certa i n a cc o unt i ngpr ac ti ce s ( f o ri ns ta nc e, inc l udi ng cus to m ero ve r pay m en ts i n a cc o unt s r ec ei vabl e) , the D SB d i d n otac c u ra te ly re flec t L SI’s p er for m an c e. B re gin d id n ot thin k the nu m b ers for th e tw o years

— 20 02 a nd 2003

— w er e co m parabl e a nd bel i eve d that the m an n er i n w hi ch the 2003 fi gure s were cal cul ate d m ade i t i m possib le for L SI to im p ro ve its p er for m an c e. H e re p ea te d ly d isc u ss ed h is c on c er n s w ith Jam es D ro lsh ag en , th e p re sident and so l e s hare hol der o fLSI, and w i th Tom M cK enna, LSI ’ s di re cto r of cl i ent r el ati ons. Breg i n re quested4 N o. 08
- 1390 th a tS I R V A r e c a l c u l a t e th e D S B
. T h r o u g h o u tth i s t i me p er iod , S IR V A co n tin u ed to d ou b t w h et h er L SI co u ld m eetthe contra c t goal s, and Breg i n continued to b e l i e v e tha ti twa s S I RV A’ s a c c o un t i ngthat cr e a t e d a perce pti on that LSIwas not perf or m i ng adequately. I n the f all, it bec am e cl earto Drol shage n that LSIwas not m eeting its pe r fo r m an ce goals un d er Breg in’s l ead ershi p. H e ca l l ed i t a “m onum entalf ai l ure. ” But be cause B regin con tinu ed to blam e the prob lem on SI R V A ’s tr eat m ent o fi ts acco unts r ecei vabl e, Drol shage n ask ed M cK enna to i nd ep endentl y e val uate Bregin’s co m pla i nts. If M c K en n a fo u n d t h a t t h e c om p lain ts w er e w ellf ounded , Drol shage n i ntended to dem and rel i effro m the penal ty provi si ons i n the contr act. B ut, i nstea d, w hat M cK enna co ncl ud ed w as that LSI ’ s per f or m ance w as so poorthatthe com pany would be subj ect to a penal ty e v e n i fS I RV A mad e the c ha ng e s Br e g i n r e qu e s t e d. I n N ove m ber20 03, Drol shage n re m ove d Bregin fro m the SI RVA acco unt but kept hi m o n the payro l lat$1 10, 000 pery ea r . D ro l sh ag ent o l d Br eg i n tha t i f“ he c o ul d b r i ng inso m e c u st om er s fo r u s, th at w ou ld be a w ay of h im m ain ta in in g h is p os itio n .” B re gin failed to d ra w in n ew c lien ts , an d in D ec em b er h is e m p loy m en t w as te rm ina te d. LS Idi d no t m ee t th e be nc hm ar ki n 2 00 3 an d w as ass ess ed the $150 , 000 penal ty. Bregin fi l ed thi s l aw sui t und er I nd i ana l aw , co ntending, i n part, thatLSIte rm i nated hi s e m plo ym ent in re tal i ati on f orhi s r epor ti ng S I RVA ’ s i l l ega lfina n ci alprac ti ces, f orr efusi ng to enga ge i n thos e pr acti ces, or f orbeing a w h ist le-b low er . G ive n th e u n d isp u te d fac ts , t h e c laim m u st fail.N o. 08
- 1390 5 Re ce nt l y, the Indi an a S upr eme Co ur t r ea ffi r m ed th e I nd i ana em plo ym ent- at- w i l ldoctr i ne wh i ch “per m i ts bo ththe e m pl o y era nd the e m p loy ee t o t er m i na te the empl o y m en t ata ny t i m e f o ra ‘ g o o d re as o n, b ad r ea so n, orno re aso n at al l
. ’ ” M eyers v. M eyers , 861 N
. E.2 d 704, 70 6 ( I nd
. 20 07) , quoting M ontgom e ry v . Bd. of Tr us t e e s of Pur dueU ni v. , 8 49 N. E. 2d 11 20 , 1 12 8 ( I nd. 2 00 6)
. The co urts ta te d tha t o n “ r ar e o cc as i o ns , na r r o w exc ept i o ns have been re cogni zed. ” M ey ers , at70 6. On one “r ar e” o cc as i o n a “na r r o w” exc ept i o n w as f o und in M cCl anah an v. R em ington Freight Line s, Inc. , 517 N
. E
. 2d 390 (Ind
. 1988). M cCla nahan w as a tr uck dri verwh o w as perm i tte d to pur su e a ca us e o faction ag ains t ane m pl o y erwho fi re d him f orr efusi ng to haula lo ad that exceeded the wei ght l i m i ts on I l l i noi s hi ghw ays . H e co uld have been perso nal l y l i abl e f or a vi ol ati on. A nar ro w exce pti on to at- w i l lem plo ym en t w as r eco gni zed i n that case to avo i d encoura gi n g c ri m i nalco nd uct. A se cond excepti on i s se t o uti n Fram pt on v. Ce nt r al Indi ana Gas Co. , 29 7 N
. E.2 d 425 ( In d . 1 973). The co urt f ound a cause o fact i on f or r et al i at o r y di sc ha r ge bas ed o n e xpl i ci t l an g ua g e i n a sta tute

— th e I ndi an a W o r k er ’ s Compens at i o n Act
. The c o u r ts a i d tha t “u n d e ro r d i n a r y c i r c u ms t a n c e s , a n e mp loyee at w il l m ay be d ischa rged w ithou t c au se. H ow ever, when ane m pl oyee is di sc ha r g ed so l elyf o re xe r ci sing a s tatutor i l y c onfer re d ri ght a n ex c epti on t o the g ener al rul e m ust be r eco gni zed. ” A t 428. The nar ro w ness of th i s ex ce pti o n was made cl ea r, ho wev er, i n Wi orv. Anc hor Indust ri es, Inc. , 6 69 N. E. 2d 172 ( I nd. 1 99 6) , whenthe cour t r efused to al l ow a cl ai m br ought by a m anage r w ho w a s term inated f or refus ing to fol low a sup ervisor’s6 N o. 08
- 1390
or der t o fi re an e m plo yee wh o fi l ed a w or ker ’ s co m pensat i o n c l a i m. Bregin ack n ow led ges thathe ha s no st atuto rybas i s for hi s cl ai m ; he r el i es o n the e xc epti o n in M cCl anah an

— that he w as fi r e d fo rr e fus i ngt o c o mm i ta n i l l e g a la c tf or w hi ch he c oul d be per sonal l y r es p on sible
. H e s eem s t o conte nd thatS I RVA ’ s a ccounti ng pra cti ces w er e i l l ega l an d th at h e c ou ld n otlaw fu lly st ay silen t a b ou t t h em . In an affid av it, h e re fer s t o “ fin an c ial m ism an ag e m en t,” “ov er sta ti ng i ncom e, ” and “ f ai l ure to pay cust om er refun d s and overp aym en ts.” Bu t he d o e s not offer sp ecifics . A n d h e d oe s n otid en tify an y ille ga l ac t w h ich h e is b ein g a sk ed t o c om m it

— orf orthatm att erto co nd one. W hat he say s i s that [ t] here ar e num er ous l aw s g ove rni ng ta x re turns, s e c ur i t i e s , b a nk i ng, c o ns pi r a c y, a nd ab a nd o ne d p r o per ty th at SIR V A m ay h av e v iola te d . A p p ella n t d ire c tly orind i re ctl y, would have been f aci l i tat i ng the se acts i n hi s r ol e a t LSIand, thus, per sonal l y l i abl e. H is m aj or com p lai nt i nv olves the w ay th e ben ch m ark d at a w as ca l c u lat ed . B u t t h e b en c h m ar k d at a is sp ec ific to the c ontr act, and Bregi n does not expla i n how thes e cal cul ati ons h ave si gni fi cance to, sa y, ta x orse curi ti es l aw s. Fur ther m or e, he a dm i tte d i n hi s deposi ti on that he was nev er in a posi ti on wh er e he w as re quir ed to authenti cate o r ver i fy any of SI RVA ’ s fi nanci alst ate m ents. Gi ve n Indi an a’ s r eluct an ce t o a l l o w f o re ve n r ar e an d na r r o w exc ept i o ns , we woul d b e f aro uto fl i ne t o fi nd th at som e sp ecu lative ac c o u nt ing viol ation on SI R V A ’s p art, for w hich Breg in had no resp ons ibi li ty, cou ld q ua li fy as an exce pti on to I nd i ana’ s em plo ym ent- at- w i l ldoctr i ne.N o. 08
- 1390 7 Und e t e r r e d, Br e g i n a l s o urg e s u s t o fi nd a n e w e xc e pti on. H e sa ys thathe i s a “whist l e bl ower” and that “ as a
‘ w hi stl e bl ow er ’ under 18 U
. S. C. § 1 514A [the S arbanesOx l ey A ct] , he was aff or ded certa in pro tect i ons aga i nst w ro ngful disc harg ed [ si c] und er sta te l aw . ” I n a foo tnot e he expl ain s that he did notfi l e a cl ai m under S arbanesOxl eya nd i s no t cl ai m i ng tha t he i s pr o te ct ed unde rthe a d mi n i s t r a t i v e s c h e me s e to u ti n th e A c t . W ha t h e c l a i ms is th at h e “ n ev e r t h ele ss is p ro te c te d u n d er th e W h ist le Blo w erA ct a s a per so n t h at cannot be r eta l i ate d against und erst ate l aw . ” On the othe r hand , h e als o says , qui te cor re ctly, th at in In d ian a w h ist le-b low er s “ ar e n otinc lu ded inth e p u b lic p olic y ex c ep tio n to at -w ill ter m in at ion s . . . . ” H i s a rgum ent i s that they “ shoul d be. ” Thi s ca se, he s ays , sh o ul d e st ab l i shs uchpr o te ct i o n. W e ca nnot a gr ee . A s we j ust di scusse d, Bregin does not p in p oint any l aw thathas been vi ol ate d. H e s ays because S I RVA was i n the proce ss ofi ssui ng an i ni ti al p ub li c o ffer i ng( I PO) , the c o m pan y di d no t wanta ny i rr egul ar i ti es to com e t o l i ght. But, agai n, the i rr egul ar i ti es he i s t al ki ng ab out ar e v ague. W e ca nnot co ncl ud e that, c on tr ar y t o w h at th e In d ian a c o u rt s h av e re p ea te d ly s a i d, the y wo ul d n o w de c i de

— es pec i al l y b as ed o n the f ac ts b efo r e us

— that w hi stl e-bl owing i s a n excepti on t o th e e m p loy m en t-a t-w ill d oc tr in e. T h at th e y w ou ld n otis c l e a rfr o m Cam pb e l l v. EliLi l ly & Co. , 4 1 3 N. E. 2 d 1 0 5 4 ( I nd
. A pp . 19 80)
. In that case the cour t r ej ecte d a cl ai m by an em plo yee wh o w as ter m i nated afterco m p lain i ng to hi s s up er i or s about a drug m anufa cture r’ s f ai l u re to ac kn ow led ge th at its p ro d u c ts c au se d a d ve rs e re ac tio n s. A len gt hy di sse nt vi gor ousl y s ets f or th the cas e for8 N o. 08
- 1390 allo w i n g a n e x c e p t i o n t o th e e m p loy m en t-a t-w ill d oc tr i ne f orwh i stl e-bl owers. But that vi ew di d not car rythe day . A t th i s t i m e, wh i stl e-bl owing si m plydoes not f or m the basi s foran e xcep tio n t o I nd i ana’ s e m plo ym ent- at- w i l ldoctr i ne. Bregin a lso cl ai m s that S I RVA to rt i ousl y inter fer ed w ith his em p loym en t at L SI. H e says SI R V A and LSI conspir ed to te rm i nate hi m bec ause ofhi s co nstant re port i ng tha t the S I RVA acc ounti ng pra cti ces w er e i l l egal
. W e wil lbeg i n our dis cussi on w i th the few thi ngs that ar e c lea r ab ou t t h is c laim : on e is th e ele m en ts o f th e c laim un d er Ind iana law
. Th ey are ( 1) the e xi st en ce o fa v al i d r el at i o nshi p; ( 2) the de fen da nt ’ s kno wl e dg e o fthe e xi ste nc e o fthe r e l a t i o ns hi p; ( 3) the defendant’s i ntenti onali nter fer ence w i th th a tr e l a t i o n s h i p ; ( 4 ) th e ab s e n c e o fj u s t i fi c a t i o n ; a nd ( 5) da m ag es r es ul tingfr o m de fen dant’s wro ng ful i nt e r fe r e nc e wi th the r e l a t i o ns hi p. B radley v. Hall , 720 N
. E.2 d 747, 75 0 ( I nd
. A pp . 19 99)
. A l so, un d er Ind iana law a party to a contra ct can cons p ire w i th ano therto to rt i ousl y inter fer e wit h the contr actual re lat ion sh ip
. Winkle r v. V.G
. Reed & Sons, Inc. , 63 8 N
. E.2 d 1228, 1 23 4 (I nd
. 19 94)
. I t i s cl earthatBreg i n m eet s th e fi r s tt wo e l e me n t s o fa t o r t i o u s i n t e r fe r e n c e c l a i m. He ha d a n e m pl o y m en t r el at i o ns hi p w ith LS I, a nd S I RVA kn ew it. B ey on d th at, i t i s d ifficu lt t o a rt icu lat e e x ac tly w ha t B regin is cla im in g a nd even m ore diffi cu lt to d eterm ine ex actly w ha t evid en ce he is relyi ng on t o su p p ort h i s c l a i m. H e s eem s t o saythat a fterh e w as r emov ed fr o m the SIR V A ac c ou n t, SIR V A p re ss u re d L SI to te rm in at e h isN o. 08
- 1390 9
em plo ym ent t o “si l ence” h im
. S I RVA al l ege dlywanted him sil en ced so th at he w ou ld not som eh ow j inx SIR V A ’s IP O . B u t, as w e h a v e sa id , i t is en tir ely u n c lea r ex ac tly whatBr eg i n kne w tha t woul d have an e ffec t o n the I PO. F ur th er m o r e, i t i s ha r d t o s ee ho w te r m i na ting hi s e m plo ym ent woul d si l ence hi m . It coul d have qui te th e o ppo si te e ffec t. N ei th ercani t be s ai d tha t te r m i na ting hi s e m p l oym ent woul d cut hi m o fffro m i nfo rm ati on ab ou t w h at w as g o i n g o n atSIR V A . H e w as , afte r all, al re ady o ffthe SI RVA acc ount. Br eg i n a l so sees s he na ni g an s so m eh o w i nv o l ve d i n the $1 50 ,00 0 p e n alt y a n d th e w ay it w as p aid

— o rn o tp a i d. H er e i s Br eg i n’ s ar g um en t o n thi s po i nt

— wo r d- f o r - wo r d, bra cket

-by-bra cket : U nd erthe Contrac t, A pp el l ant has pre sente d ev i den ce i n s up po r t o fhi s ar g um en t th atS I RVA co ns pi r ed wi thL SI “ underthe g ui se o fe nf o r cingthe penal ty cl ause of the contr act and thro u gh m ani pu l ati o n o fthe numbe r s an d s ch eme b y S I RVA allegi ng p oor per fo rm an ce w hile actu all y rew ard ing L SI w i th addit i onalcas h eve rym onth in fees ”. [ R. 92 ] S. A pp . 2. Br eg i n c o nt en ds th atDr o l sh ag enter m i na te d f o ur othe r em plo yees as a cos t s avi ng m eas ure to off set th e penal ty. The te rm i nati ons save d i n exces s o f $3 50 , 00 0 an d thus wer e no t ne ce ss ary t o pa y the pen al ty, a nd wer e si m pl y a “ per p etua t[ i o n] o fthe conspi ra cy. ” [ R. 92] S
. A pp . 2 . Th e incre ase co ntra ct fees w ere rec e ived five ( 5) day s later, after Bregin’s re m ov al s h ow s SIR V A ’s in flu en c e o ve r L S I t o te rm inate Bregin’s em plo ym ent.10 N o. 08
- 1390 W e m ust a dm i t that we ar e n ot sure what Breg i n m eans. D oe s B re g incla im th at L SI fired fou r em p loy ee s in add i ti on t o hi m t o fac il i tat e the co nspir acy? I fso , wh at i s the pro of ? W e hav e no thi ng but B re gin’s conj ectur e. N ot for th e fi rst tim e, w e d ecline to con stru c t a p a rty’s ar gu m en t. See Spath v. Hayes Whee ls Int’l -Indiana, Inc. , 211 F.3d 392 (7th C ir. 2000). T h e o n e s alie n t fa c t in th e re c or d rel e v a n t t o th e c laim o ft o r t i o u s i n te r fe r e n c e i s th a tD r o l s h a g e n ( wh o , we r epe at, i s LS I ’ s pr es i den t) t es ti fi ed th atno o ne a t S I RVA re quested thatBreg i n be re m ove d fr om i ts acco unt, m uch l ess thathe b e fi re d. Drol shage n sai d that he , an d only he , m a d e the de cision to term inate B regin’s em plo ym ent. F i na l l y, e ve n tho ug h Br eg i n h as sh own th atS I RVA co m pl aine d abo uthi m t o LS I, he c anno t sh o w tha t th e com pl a i nt wa s unj us t i fi e d. I nd i a na c o ur t s l o o k t o a nu m ber of f acto rs to det erm ine w h e t he r a defen d an t’s con d uc t is ju s t ified, one of w hich i s the de fend an t’s m o t i ve . Wink ler, 6 3 8 N. E. 2 d a t1 2 3 5
. He r e , the e v i de nc e sh ow s t h at L SI w as n otm ee tin g t h e e st ab lish ed goa ls un d er the con tract. SI R V A had conc erns abo ut LSI’s at te nt i ve ne ss , l ac kof le ade r sh i p, po o rwor kpr o duct, a nd unpro fes si o na lc o nduc t. F o ri ns ta nc e, S I RVA’s Anne Lo e s c h, wh o wa s ma na g e ro fthe S I RV A/ LS Ir e l a t i o ns hi p, had tro u b l e g ett i ng i nfo rm ati on a nd r esponse s fro m Br e g i n. Br e g i n hi mse l fund e r s t o o d tha tLo e s c h’ s p e r c e pti on was thatLSI m anage rs di d not hav e a se nse o f urge ncy about the a ccount. A co m pla i nt to LSIunder tho s e c i r c ums t a nc e s wo ul d b e j us t i fi e d. F o ra l lthe se r e a s o ns , the c l a i m o ft o r t i o us i nt e r fe r e nc e c a nn o ts t a nd
.N o. 08
- 1390 11 A c c or d in gly , th e d ec isio n of t h e d ist ric t c ou rt is A FFI RMED .

11- 19- 08