NEW ORLEANS – A federal appeals court yesterday overturned a lower court ruling and ordered the lower court to hear a suit by a former collections manager at Greater New Orleans FCU who claims she was fired because she reported allegations of fraudulent loans to NCUA and the FBI.
The ruling by the U.S. Court of Appeals for the Fifth Circuit in favor of Mary Schroeder reversed a summary judgment by the lower court and held that a jury could now decide the whistleblower allegations by Schroeder against the credit union and its CEO, Janet Sanders. The appeals court also said that a jury could decide if Greater New Orleans FCU violated a Louisiana whistleblower protection law
In her suit, Schroeder alleges her Oct. 8, 2008, firing was in retaliation for her own investigation into the fraudulent loans and subsequent phone calls to NCUA and the FBI. She reported her concerns to the credit union’s supervisory committee. An internal audit later confirmed that some loans were made in violation of policy but without the knowledge of management.
In overturning the lower court’s ruling, the appeals court noted that federal law states “No insured credit union may discharge or otherwise discriminate against any employee with respect to compensation, terms, conditions, or privileges of employment because the employee (or any person acting pursuant to the request of the employee) provided information to the (NCUA) Board or the Attorney General regarding any possible violation of any law or regulation by the credit union or any director, officer, or employee of the credit union.”
The appeals court noted that Schroeder did not have any negative comments in her record before she complained about fraudulent loans and that the credit union followed no policy in first demoting her before her dismissal. The failure to follow a policy “cuts in Schroeder’s favor – particularly when considering that part of her poor reputation at work came from her persistence in repeatedly seeking help at all management levels with what she perceived to be fraud,” wrote the court.
Lawyers for the credit union were not immediately available for comment last night.
