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Herrera v. Trabajamos Community Head Start, Inc.

United States District Court, S.D. New York

February 20, 2017

CARMEN HERRERA, Plaintiff,
v.
TRABAJAMOS COMMUNITY HEAD START; INC., Defendant.

          OPINION AND ORDER

          JED S. RAKOFF, U.S.D.J.

         Defendant Trabajamos Community Head Start, Inc. ("Trabajamos") received federal funds under the American Recovery and Reinvestment Act of 2009 ("ARRA"), the economic stimulus package enacted early in President Barack Obama's first term of office. Naomi Herrera-Castro ("Castro"), the former Executive Director of Trabajamos, claimed that she was fired for reporting a fraudulent scheme involving stimulus funds, and brought a one-claim "whistleblower" complaint against the defendant. Following discovery, Castro died, but her suit was taken over by her next-of-kin, Carmen Herrera. Trabajamos had meanwhile moved for summary judgment dismissing the suit. Having carefully considered the parties' arguments and submissions, the Court hereby denies the defendant's motion, save for one minor aspect of the motion that is granted.

         "Summary judgment is proper only 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.'" In re World Trade Ctr. Lower Manhattan Disaster Site Litig., 846 F.3d 58 (2d Cir. 2017) (quoting Fed.R.Civ.P. 56(a)). Courts "view the evidence in the light most favorable to the party opposing summary judgment, draw all reasonable inferences in favor of that party, and eschew credibility assessments." Smith v. Barnesandnoble.com, LLC, 839 F.3d 163, 166 (2d Cir. 2016) (alterations omitted).

         The pertinent facts, undisputed except where noted, are as follows. Trabajamos is a not-for-profit corporation that provides Head Start programming to low-income children in the Bronx. Defendant Trabajamos Community Head Start, Inc.'s Local Civil Rule 56.1 Statement of Undisputed Facts ("Def. 56.1"), ECF No. 18, ¶ 1; Plaintiff's Counter-Statement of Material Facts ("Pl. 56.1"), ECF No. 21, ¶ 1. Trabajamos receives federal funds administered by the New York City Administration for Children's Services ("ACS"), a Delegate Agency under the federal Head Start Program Performance Standards. Amended Complaint, ECF No. 33, ¶ 9; Defendant Trabajamos Community Head Start, Inc.'s Answer to Plaintiff's Amended Complaint, ECF No. 34, ¶ 9. In September 2012, Trabajamos's Board of Directors consisted of Sandra Martinez (Chairperson), Donald Antonetty, Stacey Andino (now Stacey Santiago), Paul Block, Vicky Gholson, Nilda Lont, and Monique Van Putten. Def. 56.1 ¶¶ 4, 17; Pl. 56.1 ¶¶ 4, 17. In December 2013, the Board consisted of Martinez (Chairperson), Block, Lont, and Gholson. Def. 56.1 ¶ 5; Pl. 56.1 ¶ 5.

         Antonetty, though no longer affiliated with Trabajamos, was a central figure in the organization for many years, having served on the Board for around twenty years, and as Chairman for around ten. Pl. 56.1. ¶¶ 119-20; Defendant Trabajamos Community Head Start, Inc.'s Reply to Plaintiff's Counterstatement of Material Facts ("Reply 56.1"), ECF No. 29, ¶¶ 119-20. He resigned as Chairman at some point in 2012, and resigned from the Board entirely on or about October 3, 2013. Pl. 56.1 ¶¶ 133-35; Reply 56.1 ¶¶ 133-35. The circumstances of his departure are somewhat disputed, but there is evidence that ACS, for which Antonetty also worked, forced him to resign because of a conflict of interest. Pl. 56.1 ¶¶ 132-35; Reply 56.1 ¶¶ 132-35. However, Antonetty continued to play a role in Trabajamos's affairs following his resignation, including advising Board member Nilda Lont on personnel matters (though the extent of his involvement is disputed). Pl. 56.1 ¶ 136; Reply 56.1 ¶ 136. Antonetty also allows Lont, a longtime friend, to live rent-free in a residence owned by Antonetty. Pl. 56.1 ¶ 128; Reply 56.1 ¶ 128.

         Castro began working for Trabajamos in January 1986 as a Records Clerk. Def. 56.1 ¶ 9; Pl. 56.1 ¶ 9. By March 2012, she had risen to the position of Acting Director of Trabajamos, and in September of that year, the Board appointed her Program (Executive) Director. Def. 56.1 ¶¶ 12, 14; Pl. 56.1 ¶¶ 12, 14. Castro, as Executive Director, was nominally responsible for managing the day-to-day operations of Trabajamos, Def. 56.1 ¶ 7; Pl. 56.1 ¶ 7, but the parties dispute the true distribution of authority within the organization. Trabajamos maintains that Castro reported to the entire Board, which jointly supervised Castro and oversaw the organization; according to Castro, she reported to Antonetty, who exercised complete and unilateral control over Trabajamos. Def. 56.1 ¶¶ 3, 13; Pl. 56.1 ¶¶ 3, 13, 121-129; Reply 56.1 ¶¶ 121-129.

         At some point between May and September 2013, Santiago, Trabajamos's Fiscal Officer and Castro's niece, brought to Castro's attention certain invoices and payments Santiago suspected were fraudulent. Def. 56.1 ¶¶ 17, 99; Pl. 56.1 ¶¶ 17, 99, 137; Reply 56.1 ¶ 137. The precise details of the supposed fraud are unclear, but there is evidence that Antonetty had submitted invoices totaling around $9, 000 under the names Victor Martinez and Luis Castillo.[1] Def. 56.1 ¶¶ 97-104; Pl. 56.1 ¶¶ 97-104, 138; Reply 56.1 ¶ 138. Castro had approved these invoices for payment when they were submitted, and had known that some of them sought payment for work that had not been performed by the person named in the invoice. Def. 56.1 ¶¶ 100, 102-04; Pl. 56.1 ¶¶ 100, 102-04.

         According to Castro, at some point in August or September 2013, she confronted Antonetty about a check made out to Luis Castillo, and he became argumentative and repeatedly told her that he "need[ed] that check." Pl. 56.1 ¶¶ 140-41. At that time, Antonetty was still on the Board of Directors. Santiago testified that she also questioned Antonetty about the Castillo check, and Antonetty told her that he needed the check and that he was not otherwise able to pay himself for the work he did. Pl. 56.1 ¶ 139. Antonetty denies these conversations took place. Reply 56.1 ¶¶ 139-41. Castro took no further action on the fraudulent invoices at that time.

         Antonetty resigned from the Board on or about October 3, 2013. Pl. 56.1 ¶ 135; Reply 56.1 ¶ 135. Around the same time, the Board began to report deficiencies in Castro's performance. For example, according to the minutes of an October 3, 2013 Board meeting, Castro's reports were mislabeled and incorrect, and there were security concerns at certain Trabajamos facilities. Def. 56.1 ¶¶ 36-41. Castro was present at this meeting, but denies that the concerns reflected in the minutes were in fact discussed. Pl. 56.1 ¶¶ 36-41.

         At some point after the October 3 Board meeting, Antonetty, Lont, and Castro met to discuss Castro's employment with Trabajamos. The circumstances of this meeting are disputed. Castro testified that Antonetty and Lont came to her office after working hours and demanded that she step down as Executive Director; she refused, but eventually agreed to a leave of absence. Def. 56.1 ¶¶ 44-45; Pl. 56.1 ¶¶ 44-45, 147, 149. According to Castro, Antonetty was motivated by his belief that she had disclosed his conflict of interest to ACS, which had forced him to resign from the Trabajamos Board. Pl. 56.1 ¶ 148. For his part, Antonetty testified that Castro arranged the meeting at her house in order to confess her own misconduct (she allegedly had rented a car for personal use with Trabajamos funds) and requested a leave of absence. Def. 56.1 ¶¶ 46-47; Reply 56.1 ¶¶ 147-49.

         While all of this remains the subject of competing contentions, it is at least undisputed that after that meeting, Castro sent a letter to the Board requesting a leave of absence, which was granted within a few days. Def. 56.1 ¶¶ 52, 58; Pl. 56.1 ¶¶ 52, 58. According to Trabajamos, while Castro was on leave, Board member Lont discovered other indications of possible misconduct by Castro, including excessive petty cash receipts, payments to Castro's boyfriend Enrique Rivera for maintenance work, and disrespectful conduct toward staff. Castro, however, denies all misconduct and performance issues, claiming in particular that Antonetty had approved the decision to hire Rivera. Def. 56.1 ¶¶ 60-61; Pl. 56.1 ¶¶ 60-61. On November 12, 2013, Martinez sent Castro a letter stating that the Board had extended her leave for an additional two weeks. Def. 56.1 ¶ 62; Pl. 56.1 ¶ 62. On November 18, 2013, Castro requested a meeting with the Board, and Martinez responded that the Board would promptly hold one. Def. 56.1 ¶¶ 63-64; Pl. 56.1 ¶¶ 63-64.

         According to Castro, at some point between November 18 and December 5, 2013, Castro had a telephone conversation with Block (another member of the Board) in which Castro told Block that Castro had evidence of fraud at Trabajamos. Pl. 56.1 ¶ 142. There is no other evidence of this call, and no evidence that Castro gave Block any details of the supposed fraud.

         On December 2, 2013, the Board met to discuss Castro's performance.[2] Def. 56.1 ¶ 69. According to minutes of that meeting, Trabajamos "reviewed the issues of the Executive Director's performance" and "came to consensus that a decision was needed as to Ms. Castro continuing as the Executive Director and possibly being asked to step down, " though no final decision was made. Def. 56.1 ¶¶ 70-71, 73; Ex. 36 to Rotenberg Decl.

         Thereafter, on December 5, 2013, the Board (Martinez, Lont, and Block in attendance) held a special meeting with Castro and Santiago. Def. 56.1 ¶¶ 77-78; Pl. 56.1 ¶¶ 77-78. The circumstances of this meeting are disputed, but, in broad strokes, Castro and Santiago testified that Castro presented the fraudulent Victor Martinez and Luis Castillo invoices to the Board, which refused to discuss them, whereas Lont and Block testified that they remembered no such allegations of fraud. Def. 56.1 ¶¶ 77-82, 85; Pl. 56.1 ¶¶ 77-82, 85, 144-46; Reply 56.1 ¶ 144-46; Santiago Deposition, Ex. C to Clark Decl., at 104-05. The Board voted to fire Castro after she left. Def. 56.1 ¶ 84; Pl. 56.1 ¶ 84. According to the minutes of the meeting, Castro was terminated for a number of performance-related reasons, such as her failure to seek Board approval before hiring Santiago (her niece), her failure to seek Board approval of contracts over $5, 000, and her ...


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