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Caroline Gu Dellapenna v. Tredyffrin/Easttown School District

January 13, 2011

CAROLINE GU DELLAPENNA
v.
TREDYFFRIN/EASTTOWN SCHOOL DISTRICT, ET AL



The opinion of the court was delivered by: Savage, J.

MEMORANDUM OPINION

In this employment discrimination action,*fn1 the plaintiff Caroline Dellapenna claims she was terminated from her position as director of finance with the Tredyffrin/Easttown School District ("School District") on the basis of her race, gender, and national origin,*fn2 and because she had complained about discrimination. Dellapenna has named as defendants the School District, her former employer; Michael Azzara, her former supervisor; and Daniel Waters, the School District's superintendent.

Moving for summary judgment, the defendants contend that Dellapenna cannot make out a claim for employment discrimination because there is no evidence that the decision to fire her was pretext for discrimination. They also argue that she has not made out a claim of retaliation. According to the defendants, Dellapenna was fired for misfeasance and nonfeasance, creating a hostile working environment for her staff, and instructing her staff to use improper accounting methods in preparing the budget for the School District's annual financial report. Dellapenna filed her own motion for summary judgment, arguing that she is entitled to judgment on her retaliation claim.

Because Dellapenna has failed to produce sufficient evidence from which a jury could reasonably conclude that the School District's asserted non-discriminatory reasons were not the actual reasons for firing her, and instead it intentionally discriminated against her on the basis of race, gender or national origin, or subjected her to retaliation, the defendants' motion for summary judgment will be granted and Dellapenna's motion will be denied.

Background

Dellapenna was hired by the School District as Controller in 1996. She was promoted to Director of Finance in June of 2006, the position she held until her termination on January 26, 2007. Among her responsibilities was preparing the budget for the School District's annual financial report.

On June 30, 2006, after completing an annual audit, the School District's outside auditor, Rainer & Company ("Rainer"), reported that approximately $200,000 in accrued expenses were not supported by documentation, accrued expenses for 2005 had been overstated by $733,682.95, and accrued expenses for 2006 were overstated by $697,620.35. As a result of these overstatements, 2006 expenses were increased by $36,062.60.*fn3

In September of 2006, Michael Azzara, the School District's chief operations officer and Dellapenna's supervisor, was contacted by Lois Heist, the School District's director of personnel about complaints regarding Dellapenna. Heist reported that two employees working for Dellapenna, Debbie Dudzinski and Kim Tran, complained that Dellapenna treated her staff in an abusive manner and instructed them to use improper accounting methods. Tran told Heist that Dellapenna "asked her to carry out questionable accounting actions." Dudzinski explained that Dellapenna instructed her to use "unsupported accounts payable accruals to reduce the fund balance." Heist Report to Committee, January 18, 2007.

After meeting with Heist, Azzara interviewed staff members who had complained about Dellapenna. He documented each employees' statement.

On October 9, 2006, based upon the auditors' findings, the School District's solicitor, Kenneth Roos, recommended that the School District hire a forensic accountant to conduct an independent audit of the 2005 and 2006 audits. Roos Depo., pp. 38, 8-12; 39, 5-8. Roos made his recommendation because the unsupported accruals found by Rainer, coupled with Dellapenna's staff's allegations that "[s]he had told them to execute improper transactions," raised a suspicion of fraud. Roos Depo., pp. 42, 20-22; 48, 12-16. Acting on its solicitor's advice, the School District hired forensic accountant Elliot Roth to review the School District's 2005 and 2006 audits.

On October 19, 2006, Waters and Heist informed Dellapenna that members of her staff had raised questions about her accounting practices and mistreatment of them. They advised her they would discuss the allegations upon completion of the annual financial report.

In a November 1, 2006 email to Heist, Waters, and Azzara, Dellapenna requested documentation supporting the complaints against her. Two days later, Heist reiterated that the issues would be addressed upon completion of the 2006 annual financial report, at which time Dellapenna could respond to the allegations.

On November 21, 2006, in a memorandum to Waters, Dellapenna complained about statements accusing her of fraudulent conduct she had overheard Azzara make on a telephone call while she was getting water from a water cooler next to his office. She "believe[d]" Diana Wagner, the purchasing clerk, overheard the conversation. Dellapenna Depo., p. 228, 8-17. Dellapenna requested an "investigation be conducted into Mr. Azzara's conduct." Waters advised her that he had spoken to Azzara and would review her accusations after the annual financial report was completed.

On December 15, 2006, Dellapenna again complained to Waters that Azzara made inappropriate statements about her. She reported that the previous day she overheard another Azzara telephone conversation regarding overstated accruals. Dellapenna was offended that he would make these statements with his office door open. She testified that two staff members, Clair Zetts and Wagner, were close enough to overhear Azzara's conversation. However, she did not know if they did overhear it. Dellapenna Depo., p. 242, 9-11.

On December 19, 2006, the School District submitted a representation letter to Rainer confirming that its "financial statements present fairly . . . the respective financial position of . . . the Tredyffrin Easttown School District." Management Rep. Ltr. ("Representation Letter"). An earlier draft of the Representation Letter had included a representation that the School District's management had "no knowledge of any fraud or suspected fraud affecting the School District." As a result of the overstated accrued expenses, the letter was modified to limit the scope of the School District's representations concerning fraud. The revised Representation Letter stated that, "[o]ther than errors . . . pertaining to Accounts Payable, [w]e have no knowledge of any fraud or suspected fraud affecting the School District."

On December 20, 2006, Waters and Heist met with Dellapenna to report the allegations made by her staff about both her accounting practices and her mistreatment of staff. She was advised that her staff complained of "demeaning and humiliating treatment" and feared "retaliation." Heist Report to Committee, January 18, 2007.

The next day, Dellapenna emailed Roos and Azzara, pointing out that the revision to the Representation Letter "suggests there were fraud allegations regarding the accounts payable error." She requested that for "purpose of clarity" an additional sentence be included, "indicating that . . . fraud allegations . . . have been investigated and found groundless." Solicitor Roos responded by email the same day, stating that he did "not read the qualifications" the way she did. He concluded that the "qualifiers are appropriate" until completion of the forensic review.

In his forensic accounting report dated January 4, 2007, Roth concluded that there was no fraud in the overstatement of accrued expenses. But, he found that the accounting department's procedures to determine accrued expenses were not "in conformity with generally accepted accounting principles" and that Dellapenna was "aware" of it. Roth reported that Dellapenna rationalized the use of faulty procedures by, among other things, stating that "she would prefer that the financial statements overstated liabilities and understated the fund balance than the opposite."

Roth described the accounting department as "dysfunctional." He found "poor communication" between Dellapenna and her staff, and "personality conflict issues related to Ms. Dellapenna's functioning as supervisor in the accounting department." Roth recommended that these conflicts be "addressed and resolved in order for the Accounting Department and the School District to move ahead and correct the dysfunctional attributes that currently exist."

The following day, January 5, 2007, Dellapenna complained to Waters that she had not received any documentation supporting the claims made by her staff. She also complained that she was subjected to a hostile work environment and was mistreated because of her "age, gender, race, and/or ethnic background."*fn4 She wrote as follows:

[t]he raising of an entirely new set of allegations at our December 20th meeting after the initial fraud allegations were not substantiated appears to be a "fishing expedition" -- an attempt to come up with new allegations when the old ones do not work out. This pattern of mistreatment, coupled with the failure to grant me a raise to my base pay when every other district administrators [sic] received one last June, has created a hostile work environment for me. I can only conclude that the way I have been treated over those baseless allegations is because of my age, gender, race, and/or ethnic background.

In accordance with School Board policy,*fn5 Roos referred her discrimination complaints to an ad hoc committee consisting of two School District board members, Deborah Rollins and Peter Motel, appointed by the School Board's President, Kevin Mahoney. They were charged with reviewing both Roth and Heist's reports concerning Dellapenna's discrimination claims and the allegations made against her by her staff.*fn6 Roos instructed Dellapenna to provide any information she had regarding her discrimination claims to him or the committee.

On January 16, 2007, in a memorandum to Motel, Rollins and Roos, Dellapenna claimed that changes made to the Representation Letter limiting the scope of the School District's representation concerning fraud, "demonstrate[ ] Mr. Azzara's insistence on the fraud allegation against me after they were proven groundless." She complained that she was not provided any documentation to support her staff's claims, and she reiterated her concern over Azzara's telephone conversations. She offered no evidence of discrimination.

In her presentation to the committee on January 18, 2007, Heist reported that Dellapenna's "treatment of her employees created an uncomfortable, compromised work environment, and that an atmosphere of fear and hostility exists frequently within the department." She concluded that "[t]here is no indication that what current employees reported ...


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