7th Circuit Rules That Customs Manager Wasn't Wrongly Fired for Section 301 Tariff Stance

In the summer of 2019, Lam brought up a country-of-origin issue for certain fabrics Springs used that were supplied by a company called Teh Yor, according to Lam's opening brief. Lam said the country of origin of the fabrics was China and as such, the goods would be subject to the 25% Section 301 tariffs. However, Teh Yor said that the country of origin was actually Taiwan or Malaysia. Lam disagreed and was continuously "scolded" for her position.

Eventually, Lam was fired, leading her to file a whistleblower retaliation action under the False Claims Act. However, the U.S. District Court for the Western District of Wisconsin granted Springs' motion for judgment, dismissing the action. Lam brought her case to the 7th Circuit, where she unsuccessfully argued for a jury trial over her termination (see 2204280066).

The 7th Circuit affirmed the district court's ruling. The judges first addressed Lam's claim that the Springs executives retaliated to her tariff position by harassing her for her claims that the company needed to pay Section 301 duties. Looking at two different definitions of harassment under the False Claims Act as established by two different circuit courts, the judges ruled that Lam was not harassed under either definition.

"Even employing the more lenient test, under which Lam does not need to show a change to the terms and conditions of her employment, her generic descriptions of hostility are insufficient," the opinion said. "Lam stated only that [Springs' CEO Eric Jungbluth] appeared 'frustrated and visibly irritated,' that he 'berated' her, and that two other executives 'scolded' her. The Supreme Court has clarified that a 'simple lack of good manners' would not deter a reasonable worker from reporting." Yelling and unspecified intimidation would not bar a "reasonable employee" from reporting the tariff position, the court ruled.

The judges then addressed Lam's claims that she was fired in retaliation for her tariff stance, to which the judges ruled that the evidence is insufficient to substantiate such an argument. The court said that a jury could not infer that Jungbluth encouraged another executive to fire Lam over the tariff stance, nor is there evidence that the executive that fired Lam, chief financial officer Tim Oliver, knew of a disagreement between Jungbluth and Lam that led to the firing.

Lam also claimed that Oliver's comment saying that Lam would not be at Springs in five years suggested that Oliver had already decided to fire her -- three weeks before he placed her on a performance improvement plan that the company cites as one of the bases for her firing. "But without more context, a reasonable jury could not connect this vague statement to any retaliation based on her stance on the tariffs two months earlier," the opinion said. "Oliver’s comment could just as easily have related to her performance on the inventory problem, or his misgivings about her communication style."

Lam claimed that the reasons the company gave for her firing were insufficient to justify her firing. Springs said her inability to solve an inventory problem in time to stop an audit and her poor communication style led to Lam's firing. Lam, though, said that nobody expected her to resolve the inventory problem in time to stop the audit, that her illness was a legitimate reason to delay telling Oliver about the audit and that there is no evidence of the poor communication style.

"But none of this shows Oliver’s reasons were pretextual," the court said. "Lam had to present evidence suggesting that Oliver did not honestly believe his stated reasons for firing her. The question is not whether his reasons were inaccurate or unfair, but whether they are too implausible for a jury to believe."