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Professor’s Misuse of Grant Funds Justified His Termination

Most employers have internal policies and procedures that govern the workplace.  In the university setting, faculty discipline issues typically are addressed through fairly robust processes that may include a hearing before a faculty member’s peers.  Employers are wise to adhere to their internal policies and to make those policies clear to avoid having a decision overturned for a procedural technicality.  Fortunately for the University of Notre Dame, the Seventh Circuit recently upheld the termination of a faculty member after a lower court ruled in the employee’s favor because of a potential procedural error.  Collins v. University of Notre Dame du Lac, Nos. 18-2559 & 18-2579 (7th Cir. July 12, 2019).

In 2002 Oliver Collins received a grant of over $250,000 from the National Science Foundation (NSF) to purchase five pieces of “high speed, mixed signal test equipment” and a computer.  Notre Dame contributed matching funds.  NSF subsequently awarded Collins an additional $240,000, which Notre Dame also matched.

In 2009, the University suspected “Collins was abusing his grants by purchasing equipment different from that identified in his proposals and by using the equipment for personal purposes.”  The institution hired an outside investigator and informed NSF, which conducted its own investigation and suspended Collins’ grants, as well as referred the matter to the Department of Justice.  The University suspended Collins with pay.

In September 2009, the University advised Collins that it was going to terminate his employment for “serious and deliberate misconduct” because of his misuse of grant funds, failure to follow grant guidelines, used grant funds for personal purposes, and stored sexually explicit and pornographic images on University resources.  Two faculty members were tasked with attempting to informally resolve the situation with Collins, however, the informal process was not fruitful.

A faculty committee then determined after a hearing that Collins had “misused grant money by purchasing equipment other than that in his grant proposals and then using the equipment for personal purposes.”  The hearing committee included a faculty member who was part of the informal resolution process.  The committee voted unanimously that there was serious cause warranting dismissal. The dismissal was upheld throughout the termination appeal process, including by an appeal board made up of three different faculty members.  The school’s president upheld the dismissal and Collins later pled guilty to a federal felony charge regarding his conduct.

Collins sued Notre Dame alleging that the school breached his employment contract.  A federal district court granted summary judgment in Collins’ favor in 2012 prior to his guilty plea.  The court reasoned that Notre Dame breached the contract when it permitted a faculty member to participate in the informal mediation process and the hearing committee, because Collins’ contract required that a member of the committee “recuse himself or herself because of bias or interest, including participation in the informal resolution process . . . .”

In 2013, following Collins’ guilty plea, the University conducted new dismissal proceedings and dismissed Collins.  The district court nonetheless awarded Collins $501,367 in lost compensation from June 2, 2010 (the initial dismissal) to February 28, 2013 (the felony conviction).

On appeal, the Seventh Circuit reversed the district court’s summary judgment decision and the damages award because, “[t]he contract did not prohibit one faculty member from participating in informal mediation and then serving on the hearing committee.” The University, moreover, had “serious cause” to dismiss Collins.  The Seventh Circuit was not convinced that a procedural violation had occurred.  Regardless, the case is a reminder that employers should review their policies for clarity and follow procedural requirements to avoid the first outcome in Collinsin which an employee initially benefited even though there was overwhelming evidence of his misuse of grant funds.

 

 

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