# RUDOLF v. AMERICAN INTERNATIONAL GROUP, INC.

> District Court, W.D. Pennsylvania · March 21, 2023

URL: https://www.frixlaw.com/law-library/cases/10418743

## Case

- **Court:** District Court, W.D. Pennsylvania
- **Decided:** March 21, 2023
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
JOHN RUDOLF, )
)
Plaintiff, ) Civil Action No. 19-1468
) Magistrate Judge Maureen P. Kelly
Vv. )
)
AMERICAN INTERNATIONAL GROUP, ) Re: ECF No. 177
INC., NATIONAL UNION FIRE )
INSURANCE COMPANY OF )
PITTSBURGH, PA and ALEXANDER )
BAUGH, )
)
Defendants. )

MEMORANDUM OPINION
Plaintiff John Rudolf (‘Rudolf’) initiated this action against Defendants American
International Group, Inc. (“AIG”), National Union Fire Insurance Company of Pittsburgh, PA
(“NUFIC”), and Alexander Baugh (“Baugh”) (collectively, “Defendants”) arising out of
allegations that he was unlawfully terminated from his employment in violation of the Sarbanes-
Oxley Act (“SOX”), the False Claims Act (“FCA”), the Age Discrimination in Employment Act
(“ADEA”), Title VII of the Civil Rights Act, and the Pennsylvania Human Relations Act
(“PHRA”). Rudolf also brings claims for Equal Pay Act violations, intentional interference with
contractual relations, fraud, wrongful discharge, and breach of contract. ECF No. 41.
Presently before the Court is Defendants’ Motion for Summary Judgment. ECF No. 177.
For the reasons below, the Motion for Summary Judgment is granted in part and denied in part.'
The Court grants summary judgment as to all claims, except (1) Rudolfs SOX whistleblower

accordance with the provisions of 28 U.S.C. § 636(c)(D, the parties voluntarily consented to having a United
States Magistrate Judge conduct all proceedings in this case, including the entry of a final judgment. ECF Nos. 15
and 16.

retaliation claim (Count I), and (2) his age discrimination claims under the ADEA and PHRA
(Counts III and VII) related to his alleged termination.
1. FACTUAL BACKGROUND
A. The Parties
Rudolf is a 58-year-old senior insurance executive who was formerly employed by AIG
and/or NUFIC? from 1994 until November 20, 2017. ECF No. 175 § 1; ECF No. 205 4 2. Rudolf

was based for a number of years in AIG’s New York office and later relocated to AIG’s offices in
Pittsburgh, Pennsylvania in 2006. ECF No. 175 { 11.
AIG is a publicly held corporation headquartered in New York, whose subsidiaries and
affiliates provide a wide range of property casualty insurance, life insurance, retirement products
and other financial services. ECF No. 175 ECF No. 47 § 2. In 2013, the Financial Stability
Oversight Council of the United States Treasury Department designated AIG as a systematically
important financial institution (“SIFT”). ECF No. 175 { 12. AIG’s SIFT status was removed in
September 2017. Id.
NUFIC is a subsidiary of AIG, which is incorporated in Pennsylvania. Id. 2; ECF No.
205 9 4. NUFIC’s financial information is included in AIG’s consolidated financial statements.
ECF No. 205 { 4.
Baugh began working for AIG in June 1983. ECF No. 175 4; ECF No. 22-1 4/3. Rudolf
claims that Baugh became his supervisor in November 2017.2. ECF No. 205 § 12. Shortly

2 The parties agree that Rudolf was employed by NUFIC. Defendants dispute Rudolf’s claim that he was also
employed by AIG. ECE No. 218 § 2. AIG maintains that it is a holding company with no employees. Id.; ECF No.

3 Defendants agree that Baugh was senior to Rudolf, but they dispute that he was Rudolf’s direct supervisor. ECF
No. 218 12. According to Baugh, he was Rudolf’s “second-line manager,” as Rudolf was part of “his team” but
reported directly to Stephen Grabek, who in turn reported to Baugh. ECF No. 22-1 7.

thereafter, he alleges that Baugh wrongfully terminated him for reporting wrongdoing and because
of his age.* ECF No. 218 § 12. Defendants contend that Rudolf was an unhappy employee who
resigned, and that Baugh simply accepted this resignation. ECF No. 185 at 12.5
B. AIG’s Code of Conduct/Employee Handbook
1. Reporting Misconduct
The AIG Code of Conduct requires employees to report allegations of fraud, including
accounting fraud. Failure to do so by any employee is subject to discipline, including termination.
ECF No. 209-8 at 5-8. Employees are instructed they “must not conduct [their] own investigation,”
rather, the employee must “retain any information (physical or electronic) relating to such
suspected fraud, and provide it to the appropriate investigative group.” Id. at 6, ECF No. 205
119.
As an employee, Rudolf was required to complete a Code of Conduct Certification
annually. ECF No. 184 § 70. He completed Code of Conduct Certifications from 2012 through
2016. In each of those years, Rudolf answered “no” to the following question: “Do you have any
violations of the Code of Conduct, AIG policy, law or regulation to report?” Id. He did not
complete a Code of Conduct Certification for 2017. Id.
AIG’s Code of Conduct includes a “Non-Retaliation Policy,” which prohibits retaliation
against any employee for making a good faith report of actual or suspected violations of the Code
of Conduct, other AIG Policy or applicable laws and regulations. ECF No. 205 § 172.

4 Rudolf also brings claims based on gender discrimination and unequal pay. However, he does not oppose
Defendants’ Motion for Summary Judgment as to those claims. ECF No. 206 at 17 n. 5 and 51-53.
5 While the parties dispute whether Rudolf was terminated or resigned, they agree that it was Baugh’s decision
whether to end Rudolf’s employment. ECF No. 218 5.
6 AIG’s Code of Conduct Certification states that “all officers and employees of AIG and its subsidiaries are subject
to the AIG Code of Conduct.” ECF No. 179-12 at 2.

2. At-Will Disclaimer
The AIG Employee Handbook for 2017 stated, “[y]our employment with AIG is ‘at-
will.’”? ECF No. 184 § 71-72. The Handbook included a disclaimer that it was “neither a contract
of employment, nor a legally binding agreement and does not create a contract for wages or any
other working conditions.” Id. 72.
C. Rudolf’s Work for the Loss Mitigation Unit (“LMU”)
Rudolf held several titles and roles throughout his employment, including President of the
Loss Mitigation Unit (“LMU”) from 1999 to 2006. ECF No. 205 § 14. The LMU was formed in
the 1990s, and it primarily marketed products involving retrospective elements, meaning that the
client paid a premium for coverage of a known, potential loss event. ECF No. 205 [ 14; ECF No.
209-6 at 48.
The LMU’s products included: (1) litigation buyouts (clients paid AIG to assume
anticipated or active litigation and cover any losses); (2) loss portfolio transfers (AIG insured a
book of incurred but unsettled loses); and (3) claims workouts (transactions involving negotiated
resolutions of claim disputed between AIG and its clients where, in some cases, AIG agreed to pay
the disputed claim in exchange for additional or above-market premiums on new or renewed
policies). ECF No. 205 § 15; ECF No. 209-6 at 8, 48.
1. Brightpoint Transaction
Shortly after Rudolf became President of the LMU, the Securities and Exchange
Commission (“SEC”) initiated an investigation of the LMU based on its 1998 transaction with
Brightpoint, Inc. (“Brightpoint”). ECF No. 205 § 21. The SEC found that AIG engaged in fraud

7 AIG’s employee handbook states that it applies to “American International Group, Inc. and all of its wholly-owned
subsidiaries.” ECF No. 179-8 at 4.

by marketing a purported “insurance” product that Brightpoint used to report false and misleading
information to the public, which the SEC characterized as follows.
AIG developed and marketed a so-called “non-traditional” insurance product for
the stated purpose of “income statement smoothing,” i.e., enabling a public
reporting company to spread the recognition of known and quantified one-time
losses over several future reporting periods. In this case, the key to achieving the
desired accounting result was to create the appearance of “insurance.” Specifically,
AIG agreed to make it appear that the “insured” (Brightpoint) was paying premiums
in return for an assumption of risk by AIG. In fact, Brightpoint was merely
depositing cash with AIG that AIG refunded to Brightpoint.
AIG issued the purported insurance policy to Brightpoint for the purpose of
assisting Brightpoint to conceal $11.9 million in losses that Brightpoint sustained
in 1998... As aresult of the transaction, Brightpoint’s 1998 financial statements
overstated Brightpoint’s actual net income before taxes by 61 percent.
ECF No. 208-4 at 49.
2. DOJ Independent Monitor
Based on its investigation findings, the SEC assessed a $10 million penalty against AIG in
2003. ECF No. 205 9 21-22. AIG entered into a deferred-prosecution agreement, which included
agreeing to retain an independent monitor to review certain transactions to which AIG was a party
since 2000. Id. 923. The Department of Justice (“DOJ”) appointed attorney James Cole (“Cole”)
as the independent monitor. Id. § 24.
Rudolf assisted Cole and his team from 2005 to 2007 in reviewing hundreds of complex
transactions involving clients and AIG’s internal record management controls. ECF No. 175 □□□

9-10; ECF No. 205 431. Cole told Rudolf that if he were ever to leave AIG under “questionable
circumstances,” he should contact AIG legal to set up an exit interview with the DOJ and SEC.
ECF No. 205 § 36.

3. Other LMU Transactions
Along with Brightpoint, Rudolf claims that as President of the LMU he learned of other
problematic LMU transactions. In particular, senior managers engaged in multiple “rigged claim
workout deals,” in which AIG agreed to pay a disputed claim in exchange for an additional or
above-market premium on a new unlimited policy. ECF No. 41 33; ECF No. 205 54.
Rudolf alleges that such deals allowed both the insured and AIG to achieve unwarranted
accounting or financial reporting benefits—namely, AIG recouped some or all of the paid claim
by receiving additional insurance premiums that it accounted for as insurance revenue.
Meanwhile, the insured spread the effect of the prior loss by characterizing it as a premium and
expensing it over the term of its policy. ECF No. 41 4 34.
a. MedPartners Policy
As an example of an alleged “rigged claim workout deal,” Rudolf refers to a policy the
LMU issued to MedPartners, Inc. (“MedPartners”) in the 1990s (“MedPartners Policy”). ECF No.
205 945. After MedPartners was sued in a securities class action lawsuit (“MedPartners action”),
AIG agreed to pay the disputed claim in exchange for an additional premium on a new policy
where AIG’s risk was “unlimited” (in other words, it did not specify any maximum limit for
benefits to be paid under the policy). Id. {| 46-47.
Rudolf alleges that he heard from other AIG employees, including Mike Smith (“Smith”)
and Paul Lavelle (“Lavelle”), that AIG only agreed to this transaction because AIG employees had
colluded with the class action plaintiffs’ attorney to negotiate a settlement before issuing the
MedPartners Policy. Id. { 48.
According to Rudolf, “[a]t the time,” he reported the MedPartners transaction and
“unlimited rigged transactions” to his supervisors and other senior managers, including his

supervisor, John Doyle, Bill Jacobi (Head of Claims), Lavelle (Head of NUFIC Claims), and Kris
Moor (Head of Domestic Brokerage Group). Id. 60. But no action was taken. Id. {.61. Rudolf
did not report these transactions to the independent monitor. Id. { 65.
b. The CVS Litigation
In 2003, two putative class actions were filed against CVS Caremark Corporation (“CVS”),
as the successor to MedPartners (the “CVS Litigation”).’ ECF No. 205 § 49; ECF No. 184 § 68.
The CVS Litigation arose out of the settlement of the MedPartners action. ECF No. 184 68. In
the CVS Litigation, plaintiffs alleged that the judge approving the MedPartners Settlement was
misled as to the extent of available insurance coverage, and he would not have approved the
settlement had he known of the existence or unlimited nature of the MedPartners Policy. Id.; see
also CVS Caremark Corp. v. Lauriello, 175 So.3d 596 (Ala. 2014).
The court in the CVS litigation granted preliminary approval of a settlement on June 1,
2016, and final approval was granted on August 15, 2016. ECF No. 184 7 69. Rudolf learned of
the settlement on July 19, 2016 by email from a former AIG colleague, Steve Walsh (“Walsh”).
ECF No. 209-3 at 78, 81. Walsh forwarded notice of AIG’s recent settlement with the message,
“Ta|ny time I see this I think of you for some reason.” ECF No, 205 4 91.
After he received Walsh’s email, Rudolf testified that he approached his then supervisor,
Jeremy Johnson (“Johnson”), President of U.S. Commercial Insurance, in August 2016 suggesting
that the settlement might relate to “some of [his] LMU work,” that he had concerns about whether
the “true nature of... everything was disclosed,” and that he would “hate to see Steve Miller [the

8 This action was originally filed against Caremark Rx as a successor entity to MedPartners. This entity later
merged with CVS and became the CVS Caremark Corporation. See Lauriello, Brief of Appellees, 2013 WL
4397962 (Ala. July 12, 2013). The parties refer to this entity/litigation as CVS or Caremark. For simplicity, the
Court refers to this entity as CVS.

AIG Board Chairperson] or AIG commit a new fraud.” ECF No. 209-3 at 83. According to
Rudolf, Johnson “brushed [him] off,” saying he did not have any knowledge of those years. Id.
Rudolf testified that he also approached his then second-line supervisor Robert Schimek
(“Schimek”), former CEO of Commercial Insurance, in October 2016 with a copy of Walsh’s
email. Rudolf stated that he thought it was “related to LMU and related to CVS,” and that Rudolf
wanted to “make sure Steve Miller and the Board . . . were told the truth about the true nature of
the underlying CVS transaction where, you know, the transaction was rigged.” ECF No. 209-3 at
86; ECF No. 205 § 10. Schimek responded that he would “take care of it.” Id. Schimek recalled
Rudolf discussing “transactions that were not appropriately reported,” and that he mentioned the
CVS transaction. ECF No. 209-15 at 12, 14.
D. Compensation
At AIG, an employee’s compensation is made up of three parts: salary, short-term incentive

pay (“STI”) (cash bonus), and long-term incentive (“LTT”) award (non-cash deferred
compensation that vests over time). ECF No. 18417. Taken together, these components make

up an employee’s “total direct compensation” (“TDC”). Id.
Prior to 2013, AIG implemented a job grading system in which every type of job at AIG

was grouped, coded, and evaluated for its impact to the organization. Id. 20. Asa result of this

process, each type of job has a job code and job grade. Id.
Compensation is based, at least in part, on an employee’s job grade.” Id. § 19. For each
job grade, there is a corresponding range for base salary, target STI, target LTI, and target TDC.

° ‘The parties dispute whether Rudolf’s compensation as a managerial employee was also based on geographic
region, in addition to job grade. ECF No. 203 19.

Id. § 21. Roles that are job grade 27 and above, however, are market-priced and benchmarked
directly. Id. § 23.
In 2013, Rudolf was promoted from a job grade 24 to a job grade 26. ECF No. 175 { 13.
In 2016, AIG restructured and reduced its work force through the “Simplify AIG” initiative.
Rudolf received additional responsibilities, and he was named Head of Client Engagement, Asian
Client Solutions, and certain Industry Segments. ECF No. 205 4 70;'° ECF No. 184 7. However,
Rudolf’s base salary and job grade did not increase. He remained a job grade 26 until his
employment ended in November 2017. ECF No. 175 ¥ 13.
Rudolf was unhappy with his compensation and expressed his displeasure to multiple
people, including over the course of 2016 and 2017 to his supervisors Johnson and Schimek. ECF
No. 175 9 16-17; ECF No. 184 { 30. In September 2016, Nonna Shikhman (“Shikhman”) of AIG
Compensation analyzed Rudolf’s compensation at Johnson’s request. ECF No. 184 4 33. Rudolf
received an increase to his incentive compensation, resulting in an overall 15% increase in his

target TDC. ECF No. 184 § 33; ECF No. 203 § 33.
Several months after his target TDC was increased, in April 2017, Rudolf approached
Schimek and spoke with him about his continued dissatisfaction with his compensation. ECF No.
184 { 36. Based on this conversation, Schimek considered Rudolf to be “at risk” for leaving the
organization. Id. According to Rudolf, in March or April 2017, Schimek. directed HR to do a
salary and job grade review, which did not result in any adjustment to Rudolf’s TDC or job grade.

© Defendants dispute this fact, but the basis for this dispute is unclear. Defendants refer the Court to their own
description of Rudolf’s roles throughout his employment, but they agree that Rudolf held the role of Head of Client
Engagement (U.S. and Canada) as of 2013, and that he took on other responsibilities in 2016 that included
client/engagement distribution duties Rudolf has described as “Asian Corporate/Client Solutions” and “Head of
Industry” responsibilities. ECF No. 218 6, 70.

Id. Instead, he was offered a continuity award, to be paid out over three years. Id.; ECF No. 203
q 36.
Rudolf accepted the continuity award, but he stated that he considered it a “temporary
solution” and remained unsatisfied with his compensation. ECF No. 184 §{ 41-43. In his
September 2017 performance check-in conversation, he wrote, “[m]y biggest disappointment is
compensation and job grade.” Id. § 43.
Rudolf claims that he was undercompensated compared to his younger and female
counterparts as a result of discrimination.'' For example, he refers to evidence that a nine-year
younger direct report was making more than him. ECF No. 205 4/73. He also refers to a younger
female who was considered a peer and counterpart who received better compensation. Id. {fj 74-
75. As for this female employee, Rudolf claims that Johnson told him that no matter what Rudolf
did, she “was going to make more money [than him] for less responsibility.” Id. 76. Although
Rudolf generally raised complaints about his compensation, he did not specifically report to HR
that he was discriminated against based on his age or gender. ECF No. 184 { 44.
E. November 10, 2017 Conference Call
In early November 2017, Baugh became Rudolf’s supervisor. ECF No. 205 { 12. Baugh,
in turn, reported to the new CEO of Commercial Insurance, Peter Zaffino (“Zaffino”). Id. { 13.
On November 10, 2017, Zaffino and Baugh co-hosted a conference call with a large group
to introduce Baugh in his new position. ECF No. 184 § 77. During this call, it was announced
that AIG was creating a Global Head of Claims role, and that two former AIG executives were
candidates for the position. Rudolf was concerned that AIG was considering rehiring Smith or

11 However, Rudolf does not oppose summary judgment relative to this age and gender discrimination claims based
on unequal compensation. ECF No. 206 at 17 n. 5 and 51-53.
10

Lavelle—former employees whom Rudolf considered to be “bad actors” based on their alleged
involvement in policies like the MedPartners excess policy. Id.
F. November 12, 2017 Communications
1. Rudolf’s Communications with Baugh
On Sunday, November 12, 2017, Rudolf texted Baugh. ECF No. 175 7 18. He requested
a meeting with Baugh in New York City to discuss “some developments with me.” ECF No. 179-
22 at 2. Baugh responded that he was unavailable to meet on Monday in New York, but that he
could be available on Tuesday. Id. Citing “timing issues,” Rudolf requested a phone conversation,
to which Baugh agreed. Id. at 2-3.
That morning, Rudolf and Baugh spoke for about 15 minutes. ECF No. 184 82-83.
During the call, Rudolf said he wanted to talk for three reasons: (1) to reschedule his year-end
check-in conversation, which had been cancelled because of Johnson’s departure; (2) to discuss
Rudolf’s concern about “bad actors” returning to AIG; and (3) to explain why the “bad actors”
should not come back, he wanted to discuss frauds that had occurred. Id. § 83.
According to Rudolf, Baugh said he did not understand what Rudolf meant by “bad actors
returning.” Id. § 84. Rudolf responded that, in order to understand this concern, Baugh first had
to understand “[Rudolf’s] previous work with the Department of Justice and SEC, including...
unlimited rigged claim workout deals and CVS.” Id.
Baugh asked Rudolf to identify the “bad actors.” Rudolf named Smith and Lavelle, among
others. Id. After Baugh asked Rudolf to explain what Smith and Lavelle did, Rudolf said that
Smith and Lavelle were not “the ones that originated the fraud,” but that others had “rigged”
transactions. Id, He pointed to the MedPartners policy as an example, and he noted that it was

11

listed in AIG’s 10-K annual statement for over 10 years. Id. Rudolf told Baugh “that the unlimited
limits in CVS transactions were rigged.” Id.
Rudolf told Baugh that Smith, Lavelle, and others “discovered the frauds and were aware
of the frauds” and that “eventually . . . the AIG board was duped,” meaning that the true nature of
the MedPartners excess policy was covered up when settling the CVS action. Id.
Baugh told Rudolf he still did not understand the “frauds.” Id. Rudolf responded that if
the “bad actors” returned, then it “might be a sad day for the Rudolf family” because the “bad
actors” would “have another bite at the apple,” and Rudolf would have to consider leaving AIG.
Id. Rudolf said that he likely used the language “family first,” and he discussed with Baugh the
negative impacts that his job, such as the hours and travel, were having on his family and the toll
it took on him and his family to work this way. Id. Rudolf added that two employers, one on Long
Island and one in Pittsburgh, had shown interest in hiring him ifhe left AIG.
Rudolf also told Baugh that if he were to leave AIG under “questionable circumstances,”
he had agreed with Cole to contact AIG Legal, which would in turn put him in contact with the
DOJ/independent monitor. Id. Rudolf told Baugh this conversation “would be tough because he
would have to disclose new discovery/concerns with past transactions that could damage AIG.”
Id. Rudolf believed that “questionable circumstances” under which he would need to have an exit
interview would include the “bad actors” returning. Id.
At some point, Baugh and Rudolf discussed how Rudolf leaving AIG would impact the
variable parts of his compensation, such as his pension and LTI. Id. Baugh concluded the call by
suggesting Rudolf should contact HR to determine the impact on his compensation and other
variables if he were to consider leaving AIG. Id.
Following this call, Baugh texted Rudolf:

12

John —I sensed you were not satisfied with our conversation and that you are very
upset. I heard you say family first and | fully agree with that. I also sensed you are
telling me that your resignation will have grave consequences for AIG and while
trying not to appear thick, I really don’t follow. I think it’s terrible that you feel
you have 19 lost years. That only allows me to try to help you in the way you are
asking for help —to exit. It sounds to me like an on boarding session in Philadelphia
is not your most crucial issue right now. The offer to meet at 8:00 a.m. Tues. still
stands. Entirely at your discretion. Lex.
ECF No. 179-22 at 4.
In response, Rudolf agreed to meet Baugh in New York the following Tuesday, November
14, 2017, to continue their discussion. Id.
2. Rudolf Emails HR about Potential Resignation
After speaking with Baugh, Rudolf emailed Yogita Naik (“Naik”), Senior Human
Resources (“HR”) Business Partner, to ask what would happen to his non-qualified pension,
retention bonus (continuity award) and LTI “if [he] were to resign from AIG[.]” ECF No. 208-4
at 162-63. Naik responded that employees typically lose unvested compensation elements like
LTI, which are intended to be retention tools, but that HR would need to review the specific details
of his employment to fully respond. Id.
3. Baugh Internally Reports Rudolf’s “Resignation”
After he spoke with Rudolf, Baugh emailed his supervisor, Zaffino, explaining that Rudolf
had called to “render his resignation” and that Baugh was “inclined to accept it.” Baugh wrote:
John just called me to render his resignation. At the same time he is obliquely
referring to the fact that he is a Govt witness into the DOJ investigations, that he is
required to give them an exit interview and that there will be negative ramifications
for AIG from such an interview.
I offered to sit down with him again Tuesday morning at 8:00. Apparently he had
his own lawyer but would like AIG to reimburse his costs.
Regarding the resignation, I am inclined to accept it. John has not been happy for
many years. His current role is not going to survive and I suspect he will be even

13

less happy to do a pure client management role. He needs to be based in Pittsburgh
for personal reasons. I think we also have others who could step into that role.
Regarding the legal issues. I am a little in the dark. [Rudolf] was in the loss
mitigation/loss buy out group and this area was investigated by the SEC/DOJ. I did
go through a deposition while in Paris, but I was not close to what went on in the
US. Mike Leahy may be the AIG employee with the best knowledge here and I
plan to give him a call. John is telling me there was a cover up by Kris Moor, John
Doyle, Peter Eastwood, Mike Smith and Paul Lavelle and that they did not tell the
Board the truth. However he was all over the place on the call and I’m wondering
what he is really after.
ECF No. 179-24 at 3.
Following this email, Baugh also apprised the Deputy General Counsel and Head of
Litigation, Mike Leahy (“Leahy”), about his call with Rudolf, who in turn instructed Andrew
Curtin (“Curtin”), Senior Managing Director and Global Head of Investigations of the Global
Investigative Group (“GIG”), to contact Rudolf and investigate his allegations to Baugh. ECF No.
184 96; ECF No. 78-2 { 6.
G. November 13, 2017 Internal AIG Discussions
On November 13, 2017, Baugh, Naik and Ryan Merritt (“Merritt”), HR Business Partner,
had a phone call. ECF No. 205 § 155. After this call, Merritt emailed in-house counsel Annette
Bernstein (“Bernstein”) and Rick Joers (“Joers”), then AIG’s Head of Employee Relations,
Americas, stating that “[i]f John does not resign [during tomorrow’s in-person meeting with
Baugh,] [Baugh] will determine the risk of retaining [Rudolf] based on the conversation.” Id. □
156. Merritt also emailed Naik and Tracy McMillan (“McMillan”), then Head of HR, General
Insurance, relaying that “[Rudolf] spoke to [Baugh] via phone on Sunday and said he was
contemplating resigning and wanted to discuss the matter further in a face to face conversation
with [Baugh].” Id. 97 159-160.

14

H. GIG Investigation
Curtin contacted Rudolf by phone on Monday, November 13, 2017. ECF No. 175 {| 22.
On November 13, 2017 and November 14, 2017, Rudolf had six discussions by phone and in

person in New York with Curtin and other members of AIG’s GIG team, Kristen Lau and Greg
Lisa. Id. § 23; ECF No. 209-7 at 77-89.
1. Anti-Retaliation Policy
GIG members informed Rudolf over the phone on November 13, 2017, and again in person
on November 14, 2017, that AIG “has a strict anti-retaliation policy to protect anyone who reports
wrongdoing.” ECF No. 175 § 24. Rudolf acknowledged that he understood. ECF No. 184
112.'2 According to Rudolf, he cooperated in the GIG investigation in reliance on the promise that
he would not be subject to retaliation. ECF No. 205 4 171.
2. Rudolf’s Allegations of AIG Misconduct
In his conversations with the GIG team, Rudolf outlined his work for the LMU during the
SEC’s investigation arising out of the Brightpoint transaction. He discussed three types of LMU
transactions, including claim workout deals. ECF No. 209-1 933; ECF No. 205 {ff 175-76. Rudolf
also referred to six “unlimited” policies, including the MedPartners Policy. ECF No. 205 q 177.
Rudolf said that LMU management “wanted to do big premium with little risk,” and that “the guys
thought the transaction was so riskless and put up unlimited limits.” Id. {{] 177-78; ECF No. 209-
7 at 79. He also said AIG executives were “bid-rigging the claims settlements,” and “conspired
with claimants” to negotiate the settlement before “they put up the unlimited limits.” ECF No.
205 § 180; ECF No. 209-7 at 83. Rudolf said he did not believe the Board of Directors was
informed of the bid-rigging, and he discussed that the CVS Litigation may have been improperly

2 The Upjohn warning and notice of AIG’s anti-retaliation policy are included in a document that appears to have
been initialed by GIG members but not Rudolf. ECF No. 209-7 at 81.
15

removed from the 10-K. ECF No. 209-1 ¢ 39; ECF No. 205 ff 187, 190; ECF No. 83, 90. Rudolf
also states that he shared his concern that the “CVS/MedPartners fraudulent transaction constituted

a serious reputational risk and threatened its de-SIFI status.” ECF No..209-1 35.
According to Rudolf, he believed the “rigged claim workout deals” he identified were
improperly treated as insurance for accounting purposes instead of deposits in violation of
generally accepted accounting principles (“GAAP”), which in turn, constitutes a misleading or
inaccurate financial statement in violation of SEC rules and regulations, as well as inaccurate 10-
K and 10-Q statements. Id. { 26.
I. Rudolf’s Other November 14, 2017 Meetings in New York

a. Meeting with Baugh
While he was in New York, Rudolf also met with Baugh on Tuesday, November 14, 2017
around 8:00 a.m. ECF No. 175925. During this meeting, Baugh said he told Zaffino that Rudolf
had resigned. ECF No. 184 98. Rudolf denied that he had resigned. Id. Rather, he told Baugh
that he had “reported frauds and how [he] thought the AIG board was duped, including CVS, which

was in the 10-K restatement.” ECF No. 180-5 at 103-04. He also stated that he expressed concerns
about “ongoing frauds with the 10-K and SIFI status,” and that he provided a “resummary of what

we said on Sunday, in terms of CVS MedPartners being an unlimited limits rigged transaction that

was fraudulently reported in AIG’s 10-K.” Id. at 105.
b. Meeting with Joers
Later that same day, Rudolf met with Joers. ECF No. 175 § 26. Rudolf reiterated that he

did not resign. Rudolf claims that he told Joers that Baugh was in charge of the area where the
“fraud” originated, and Joers threatened Rudolf that he should “watch what [he] was saying.” ECF
No. 209-1 49-50.

16

After this meeting, Joers sent an email at 5:28 p.m. to Bernstein, Naik, and Merritt. Joers
explained that he told Rudolf he could lose his non-qualified retirement benefits. Joers also wrote
that:
[Rudolf] has become quite vocal that he never resigned. He’s calling it a
misunderstanding.
He also claims he has been fully cooperative with [Curtin].
I also talked to [Curtin]. He agrees that [Rudolf] answers every question, but has
not really provided anything new/ongoing that [Curtin] can investigate.
I left it that I would talk to him at some point tomorrow.
My impression is that he has become very concerned about how this is playing out.
He has a lot to lose here beside salary: STI, LTI, Continuation bonus, Non-qualified
pension. He understands that resignation would be costly.
ECF No. 179-6 at 4.
Naik forwarded Joers’ email to Baugh on November 14, 2017 at 7:57 p.m. and wrote, “[i]t
is now a business decision on how you would like to proceed with [Rudolf’s] resignation.” ECF
No. 184 § 102. Baugh also learned about the outcome of the GIG investigation in a meeting with
HR. ECF No. 209-10 at 66.
J. November 15, 2017 Communications
1. Baugh’s Decision about Rudolf’s Employment
Baugh, Bernstein and Naik had a call about Rudolfs employment on Wednesday,
November 15, 2017 at 11:00 am. ECF No. 205 § 248. During this call, Baugh said Rudolf had
talked about fraud and was referred to Leahy. Id. § 249. Baugh was asked if he wanted to retain
Rudolf, but he declined. Id. {{ 251-252. Baugh said that while Rudolf “has done good things for
the company,” he was “not super productive recently” and spends “most of his time on how
unhappy” he is. Id. 4 252.

17

After this call, Naik emailed McMillan and Merritt noting that Baugh “has decided to
accept John Rudolf’s resignation and offer a standard package to John, given his 20+ year tenure
at AIG without the continuity bonus.” Id. □ 259.
2. Rudolf’s Continued Dispute that He Resigned
On November 15, 2017, at 1:41 p.m., Rudolf emailed J oers and the two later spoke around
2:45 p.m. Joers told Rudolf that Baugh would like to meet with him on Friday, November 17,
2017 “to discuss where we are related to his resignation and benefits.” ECF No. 175 § 29; ECF
No. 209-7 at 100.
Following his conversation with Joers, Rudolf emailed Baugh on November 15, 2017 at
4:49 p.m. reiterating that he had not resigned. He also wrote that “[a}fter 24 years and all that I
have done to perform and protect AIG, I hope this is truly a misunderstanding. I did not resign,
nor do I plan to resign.” ECF No. 184 § 104. Baugh and Rudolf arranged to meet on Monday,
November 20, 2017. ECF No. 175 § 31.
Baugh did not respond to Rudolf about whether he resigned. Baugh wrote to Joers, “I see

no point in debating whether [Rudolf] resigned. I do find the position an odd one.” ECF No. 205
{| 267-68.
Joers emailed Baugh on Wednesday, November 15, 2017 at 5:59 p.m. and noted that he
talked to Rudolf and Curtin to clarify there was no impediment to work with Curtin’s team, and
that Curtin reminded Rudolf that he has not presented a current issue for the team to investigate.
Id. 269.
The next day, Thursday, November 16, 2017, Joers circulated draft talking points to Baugh,
Naik, Bernstein, Curtin and Merritt for Baugh’s upcoming conversation with Rudolf. ECF No.

18

184 § 106; ECF No. 179-27. Curtin responded that he “[did] not have any comments.” ECF No.
205 § 260; ECF No. 208-7 at 120.
K. Rudolf’s Termination
On Monday, November 20, 2017, Rudolf attended a meeting with Baugh and Merritt. ECF
No. 175 § 32. Baugh delivered the message that November 20, 2017 would be Rudolf’s last day
of employment, and that while Baugh had effectively accepted Rudolf’s resignation, he was being
offered an exit package to help him transition financially. ECF No. 184 4 107.
Baugh delivered the “talking points” that Joers circulated, noting that Rudolf had made
Baugh aware that he believed he needed to alert the organization about possible fraud issues.
Baugh shared that Curtin concluded Rudolf presented no evidence of ongoing fraud; rather, Rudolf
appeared to be focused on establishing a record of individuals he believed had put AIG at risk in
the past. Baugh reminded Rudolf of his reporting obligations, and he encouraged Rudolf to
continue to work with Curtin’s team. ECF No. 205 9] 272-274, 276.
Rudolf was also asked to sign a general release, including a release of any claims under
SOX. He refused to sign the release. ECF No. 175 ¢ 33; ECF No. 205 {§ 299-300.
Following Rudolf’s termination, Stephen Grabek assumed Plaintiffs duties on an interim
basis. ECF No. 205 § 304. Rudolf was later replaced by two younger employees: Michael Hayes,
who was 10 years younger, and John Gambale, who was 11 years younger. Id. { 302.
I. PROCEDURAL HISTORY
A. Pleadings/Legal Claims
Rudolf filed his original Complaint on November 11, 2019. ECF No. 1. Defendants moved
to transfer or, in the alternative, to dismiss, which the Court denied. ECF Nos. 20 and 36. Rudolf

19

then filed the operative Amended Complaint on October 29, 2020. ECF No. 41. Defendants filed

an Answer. ECF No. 47.
In the operative First Amended Complaint, Rudolf asserts fifteen claims: Count I:
Whistleblower Retaliation under SOX; Count II: False Claims Act Retaliation; Count IT]: ADEA

— Age Discrimination; Count IV: ADEA — Retaliation; Count V: Title VII - Gender
Discrimination; Count VI: Title VII — Retaliation; Count VII: PHRA — Gender and Age
Discrimination; Count VIII: PHRA — Retaliation; Count IX: Equal Pay Act Violation; Count X:
Equal Pay Act Retaliation Violation; Count XI: Intentional Interference with Contractual
Relationship; Count XII: Fraud; Count XIII: Wrongful Discharge; Count XIV: Breach of Contract;
and Count XV: Pennsylvania Whistleblower Law. ECF No. 41 {ff 233-367.
Counts IIL, IV, V, VI, [X, X and XV are only asserted against AIG and NUFIC. Count XI
is only asserted against Baugh.
B. Fact Discovery
The Court entered a Case Management Order, with fact discovery scheduled to conclude
by December 31, 2021. ECF No. 55. At the parties’ request, the Court extended the fact discovery
deadline until April 30, 2022. ECF Nos. 80 and 81. Fact discovery was completed.
C. Motion for Summary Judgment
After discovery closed, the parties filed a Joint Concise Statement of Material Facts. ECF
No. 175. Defendants then filed the instant Motion for Summary Judgment, Brief in Support, and

20

Concise Statement of Material Facts, ECF Nos. 177, 178, 181, 184, and 185, together with a
supporting Appendix, ECF Nos. 179, 180, 182 and 186.
Rudolf filed a Brief in Opposition to the Motion for Summary Judgment, a Response to
Defendants’ Concise Statement of Material Facts, a Statement of Additional Facts in Opposition
to Motion for Summary Judgment (“Statement of Additional Facts”), ECF Nos. 202, 203, 204,
205, 206, 207,!5 and supporting exhibits, ECF Nos. 208 and 209.'°
Defendants filed a Reply Memorandum of Law in Support of their Motion for Summary
Judgment, a Response to the Statement of Additional Facts, ECF Nos. 214, 217, 218 and 220,"”
and supplemental exhibits, ECF Nos. 215, 215 and 219.'8
Rudolf then filed a Sur-Reply, ECF Nos. 224 and 227,'° and supplemental exhibits, ECF
Nos. 226 and 227.
The Motion for Summary Judgment is ripe for consideration.
Il. LEGAL STANDARD
Under Federal Rule of Civil Procedure 56, “[t]he court shall grant summary judgment if
the movant shows that there is no genuine dispute as to any material fact and the movant is entitled

3 The Court granted the parties leave to file certain materials under seal. The documents filed at ECF No. 184
(Concise Statement of Material Facts) and ECF No. 185 (Brief in Support of Motion for Summary Judgment) are
filed under seal, while redacted versions of those documents are filed at ECF Nos. 178 and 181, respectively.
4 The exhibits filed at ECF Nos. 182 and 186 are under seal. The exhibits at ECF No. 180 are redacted.
'5 The documents at ECF No. 203 (Response to Concise Statement of Material Facts), ECF No. 205 (Statement of
Additional Facts), and ECF No. 207 (Brief in Opposition) are filed under seal, while redacted versions of those
documents are filed at ECF Nos. 202, 204, and 206, respectively.
‘6 The exhibits at ECF No. 209 are filed under seal and ECF No. 208 contains redacted exhibits.
17 The documents at ECF No. 218 (Response to Statement of Additional Facts) and ECF No. 220 (Reply Brief) are
filed under seal, while the redacted versions of those documents are filed at ECF Nos. 214 and 217, respectively.
18 The supplemental exhibits at ECF No. 219 are filed under seal, while the exhibits at ECF No. 216 ate redacted.
19 The Sur-Reply is filed under seal at ECF No. 225, and the redacted version is filed at ECF No. 224. The exhibits
at ECF No. 227 are filed under seal and the exhibits at ECF No. 226 are redacted.
21

to judgment as a matter of law.” Fed. R. Civ. P. 56(a). An issue of material fact is in genuine
dispute if the evidence is such that a reasonable jury could return a verdict for the nonmoving
party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Doe v. Abington Friends Sch.,
480 F.3d 252, 256 (3d Cir. 2007) (“A genuine issue is present when a reasonable trier of fact,
viewing all of the record evidence, could rationally find in favor of the non-moving party in light
of his burden of proof”). Thus, summary judgment is warranted where, “after adequate time for
discovery and upon motion . . . a party . . . fails to make a showing sufficient to establish the
existence of an element essential to that party’s case, and on which that party will bear the burden
of proof at trial.” Marten v. Godwin, 499 F.3d 290, 295 (3d Cir. 2007) (quoting Celotex Corp. v.
Catrett, 477 U.S. 317, 322-23 (1986)).
The moving party bears the initial burden of demonstrating to the Court that there is an
absence of evidence to support the non-moving party’s case. Celotex, 477 U.S. at 322; Conoshenti

v. Pub, Serv. Elec. & Gas Co., 364 F.3d 135, 140 (3d Cir. 2004). “[W]hen the moving party has
carried its burden under Rule 56(c), its opponent must do more than simply show that there is some
metaphysical doubt as to the material facts... Where the record taken as a whole could not lead a
rational trier of fact to find for the nonmoving party, there is no ‘genuine issue for trial.’” Scott v.
Harris, 550 U.S. 372, 380 (2007) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475
U.S. 574, 586-87 (1986)).
In deciding a summary judgment motion, a court must view the facts in the light most
favorable to the nonmoving party and must draw all reasonable inferences, and resolve all doubts
in favor of the nonmoving party. Matreale v. N.J. Dep’t of Mil. & Veterans Affairs, 487 F.3d 150,
152 (3d Cir. 2007); Woodside v. Sch. Dist. of Phila. Bd. of Educ., 248 F.3d 129, 130 (3d Cir.
2001).

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IV. DISCUSSION
A. SOX Whistleblower Retaliation Claim (Count I)
Defendants move for summary judgment as to Rudolf’s SOX whistleblower retaliation
claim in Count IJ. In Count I, Rudolf seeks relief pursuant to Section 806 of SOX, 18 U.S.C. §
1514A, “Civil Action to protect against retaliation in fraud cases,” which provides in relevant part:
(a) Whistleblower protection for employees of publicly traded companies.
No company with a class of securities registered under section 12 of the
Securities Exchange Act of 1934 (15 U.S.C. 781), or that is required to file
reports under section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C.
780(d)) including any subsidiary or affiliate whose financial information is
included in the consolidated financial statements of such company, or
nationally recognized statistical rating organization (as defined in section 3(a)
of the Securities Exchange Act of 1934 (15 U.S.C. 78c), or any officer,
employee, contractor, subcontractor, or agent of such company or nationally
recognized statistical rating organization, may discharge, demote, suspend,
threaten, harass, or in any other manner discriminate against an employee in
the terms and conditions of employment because of any lawful act done by
the employee--
(1) to provide information, cause information to be provided, or
otherwise assist in an investigation regarding any conduct which the
employee reasonably believes constitutes a violation of [18 U.S.C.]
section 1341[mail fraud], 1343 [wire fraud], 1344 [bank fraud], or 1348
[securities fraud], any rule or regulation of the Securities and Exchange
Commission, or any provision of Federal law relating to fraud against
shareholders, when the information or assistance is provided to or the
investigation is conducted by--
(A) a Federal regulatory or law enforcement agency;
(B) any Member of Congress or any committee of Congress; or
(C) a person with supervisory authority over the employee (or
such other person working for the employer who has the
authority to investigate, discover, or terminate misconduct); or
18 U.S.C. § 1514A.
In order to establish a prima facie case for retaliation in violation of SOX, Rudolf must
show that he “(1) engaged in a protected activity; (2) [t]he respondent knew or suspected that the

23

employee engaged in a protected activity; (3) [t]he employee suffered an adverse action; and (4)
[t]he circumstances were sufficient to raise the inference that the protected activity was a
contributing factor in the adverse action.” Wiest v. Lynch (“Wiest I”), 710 F.3d 121, 129 Gd Cir.
2013) (quoting 29 C.F.R. § 1980.104(e)(2)(i)-(iv)) (internal quotations omitted).
If Rudolf satisfies his burden to identify evidence in support of all four elements, the burden
then shifts to Defendants to demonstrate “by clear and convincing evidence that [they] would have
taken the same [adverse] action in the absence of [any protected activity].” Wiest v. Tyco Elec.
Corp. (“Wiest II”), 812 F.3d 319, 329 (3d Cir. 2016) (quoting 29 C.F.R. § 1980.109(b)).
1. Prima Facie Case
a. Protected activity
To establish that he participated in a protected activity, Rudolf must show that he
“provide[d] information” that he “reasonably believes constitutes a violation of” (1) federal
criminal law provisions prohibiting mail, wire, bank, or securities and commodities fraud; (2) any
rule or regulation of the SEC; or (3) any provision of federal law relating to fraud against
shareholders. 18 U.S.C. § 1514A(a)(1). Rudolf must have “both a subjective and an objective
belief that the conduct that is the subject of the communication relates to an existing or prospective
violation of one of the federal laws referenced in § 806.” Wiest I, 710 F.3d at 134.
“A belief is objectively reasonable when a reasonable person with the same training and
experience as the employee would believe that the conduct implicated in the employee’s
communication could rise to the level of a violation of one of the enumerated provisions in Section
806.” Id. at 132. Because this inquiry is fact-dependent, “[t]he issue of objective reasonableness
should be decided as a matter of law only when no reasonable person could have believed that the
facts [known to the employee] amounted to a violation or otherwise justified the employee’s belief

24

that illegal conduct was occurring.” Rhinehimer v. U.S. Bancorp Investments, Inc., 787 F.3d 797,
812 (6th Cir. 2015) (internal citations and quotations omitted).
In support of this claim, Rudolf asserts that SEC Rule 10b-5 prohibits filing false or
misleading financial statements, and the SEC regulations require financial statements to be
prepared in accordance with generally accepted accounting principles (“GAAP”). ECF No. 207
at 19 (citing 17 C.F.R. § 240.10b-5; 15 U.S.C. § 78); Inre Campbell Soup Co. Sec. Litig., 145 F.
Supp. 2d 574, 592 (D.N.J. 2001) (“Financial statements filed with the Commission which are not
prepared in accordance with generally accepted accounting principles will be presumed misleading
or inaccurate.”)). Under GAAP, he argues, if a purported insurance policy “does not involve risk
transfer, GAAP treats it as a financing arrangement, with all premiums to be accounted for as
deposits.” Id. (quoting In re Am. Int’l, Grp., Inc., No. 3-11254, 2003 WL 22469910, at *5
(S.D.N.Y. Sept. 11, 2003)).
Against this backdrop, Rudolf argues that he engaged in protected activity under SOX
when he reported that AIG engaged in six rigged “claim workout” deals involving “unlimited
limits.” AIG executives allegedly pre-negotiated or “bid-rigged” litigation settlements before
entering into “finite insurance” contracts in which AIG agreed to cover any liabilities up to an
“unlimited” amount in exchange for high premiums. Because there was no actual risk transfer, he

argues, under GAAP these transactions had to be accounted for as “deposits,” and not “insurance.”
By improperly accounting for these transactions as “insurance,” AIG was able to realize the
premiums as income supporting its stock price, while the client could spread out its losses over a
number of years. Based on this, Rudolf contends he reported violations of GAAP that were
prohibited under SEC rules and regulations. Id. at 18-24.

25

In support of the Motion for Summary Judgment, Defendants dispute that Rudolf engaged
in any protected activity, arguing that Rudolf cannot show he had any subjective or objective belief
that he reported violations of any SOX-enumerated law. Defendants argue there is no evidence
Rudolf actually believed that AIG violated Rule 10-b5 or Regulation § 210.4-01 by failing to
comply with GAAP in SEC filings. Defendants argue that Rudolf never even mentioned GAAP
in previously reporting the alleged misconduct, did not report this conduct to the independent
monitor, took no action on this issue for over 17 years, and repeatedly certified that he had no AIG
Code of Conduct violations to report. ECF No. 185 at 21-31; ECF No. 220 at 11-13.
Upon review, construed in the light most favorable to Rudolf as the non-moving party, the
facts support a plausible inference that Rudolf reasonably believed AIG’s conduct violated one of
the provisions of Section 806. Rudolf reported concerns over “rigged claim workout deals.”
According to Rudolf, he believed that AIG improperly treated the claim workout deals as insurance
instead of deposits in violation of GAAP, which constitutes a misleading or inaccurate financial
statement in violation of SEC rules.
There is also evidence to support an inference that Rudolf’s belief was objectively
reasonable. Although Rudolf did not refer to GAAP in his communications, “[t]he communication
itself need not reveal all the facts that would cause a reasonable person with the whistleblower’s
training and background to conclude that a referenced federal law has been or will be violated.”
Wiest 1, 710 F.3d at 134. Rather, the “determination should be based upon all the attendant
circumstances, and not limited to the facts conveyed by a whistleblower to the employer.” Id.
Here, a jury could find that a person with Rudolf’s training and experience, including Rudolf’
prior work with the DOJ/independent monitor involving analogous accounting issues, could have

an objectively reasonable belief that a violation of a SOX-enumerated law had occurred. Thus,

26

Rudolf proffers sufficient evidence to satisfy the first element of a prima facie case of retaliation
in violation of SOX.
b. Respondent’s Knowledge of Protected Activity
As for the second prong of the prima facie case—that the employer knew or suspected that
the plaintiff engaged in protected activity—the United States Court of Appeals for the Third
Circuit has held that “in order for an employer to know or suspect that the whistleblower-plaintiff
is engaged in protected conduct . . . the plaintiff's intra-corporate communications must relate in

an understandable way to one of the stated provisions of federal law in Section 806.” Wiest I, 710
F.3d at 134.
In support of the Motion for Summary Judgment, Defendants argue that Baugh, the
decisionmaker, had no reason to believe that Rudolf reported a violation of any SOX-enumerated
law. Defendants argue that Baugh had only two short conversations with Rudolf on this issue, did
not know anything Rudolf reported to GIG, and did not understand to what Rudolf was referring
let alone that he was allegedly raising a SOX violation. ECF No. 185 at 31-32.
In response, Rudolf disputes that only his reporting to Baugh is relevant to establish that
he engaged in protected activity. Rudolf also argues that a jury could reject Baugh’s claim that he
did not understand the reported misconduct. Rudolf points out that Baugh contacted AIG’s legal
department and advised that Rudolf had reported frauds, triggering the GIG investigation. ECF
No. 207 at 33-34.
Upon review, there is also sufficient evidence to withstand summary judgment as to
whether Defendants knew or suspected that Rudolf engaged in protected activity. As Rudolf points
out, his reports triggered an investigation into potential wrongdoing. Based on Rudolf’s
allegations, including his discussion of the rigged claim workout deals in the context of those deals

27

being “riskless” and the nature of his previous work with the DOJ/independent monitor, a jury
could find that his reports related to a SOX violation in an “understandable” way to Defendants.
Accordingly, Rudolf can establish the second prong of his prima facie claim.
c. Adverse Action

The third prong of a prima facie claim requires Rudolf to show that he suffered an adverse
action. There is no dispute that Rudolf’s alleged termination satisfies this element.
d. Causation
As for the fourth prong, the causation element of a prima facie case requires allegations
that “<[t]he circumstances were sufficient to raise the inference that the protected activity was a
contributing factor in the adverse action.” Wiest_I, 710 F.3d at 129 (citing 29 CFR.
§ 1980.104(e)(2)(iv)). Further, the Third Circuit has held that:
a contributing factor [is] any factor, which alone or in combination with other
factors, tends to affect in any way the outcome of the decision. A plaintiffneed not
provide direct evidence to satisfy this element; rather, circumstantial evidence may
be sufficient. To that end, temporal proximity between the protected activity and
the adverse action is a significant factor in considering a circumstantial showing of
causation.
Wiest I, 812 F.3d at 330 (internal citations and quotation marks omitted).
In support of the Motion for Summary Judgment, Defendants argue that Rudolf cannot
establish causation because Baugh believed that Rudolf resigned, and he had legitimate reasons
for accepting Rudolf’s resignation that were unrelated to any vague reports of wrongdoing. ECF
No. 185 at 33-34.
In response, Rudolf argues the close timing of his protected activity and his alleged
termination support an inference of causation. Before this, he argues, he was a highly regarded
and well-liked senior insurance executive who had been with AIG for 23 years. Rudolf also argues
that he never resigned—a fact that he repeatedly denied. ECF No. 207 at 36-38.

28

Upon review, the circumstances are enough to raise an inference that Rudolf’s protected
activity was a contributing factor in his termination. Rudolf claims, among other things, that he
notified Baugh of alleged misconduct, and that he was terminated within just a few days after his
reports and the GIG investigation. The close temporal proximity between Rudolf’s protected
conduct and the alleged termination is noted. While Defendants argue that Baugh understood
Rudolf to have resigned, this is a disputed question of fact. Rudolf claims that he never resigned,
and he repeatedly disputed that he resigned to Baugh and others in the days before his alleged
termination. Thus, Rudolf also proffers sufficient evidence to establish the fourth prong of a prima
facie claim.
2. Whether Defendants Would Have Taken the Same Action
Having satisfied his burden to identify evidence in support of all four elements ofa prima □

facie case of retaliation in violation of SOX, the burden now shifts to Defendants to demonstrate
“by clear and convincing evidence that [they] would have taken the same [adverse] action in the
absence of [any protected activity].” Wiest II, 812 F.3d at 329.
While Defendants contend that they would have taken the same action regardless of any
protected activity because Rudolf resigned, this conclusion involves disputed questions of material
fact. Summary judgment is therefore improper on this basis. For these reasons, the request for

summary judgment as to Count I is denied.
B. False Claims Act Retaliation (Count II)
Rudolf also brings a claim under the FCA in Count Il. The purpose of the FCA is “to
protect the funds and property of the Government from fraudulent claims[.]” Rainwater v. United
States, 356 U.S. 590, 592 (1958). “The FCA prohibits any person from, inter alia, knowingly
presenting a ‘false or fraudulent claim for payment or approval’ to the United States government.”

29

United States ex rel. Ascolese v. Shoemaker Constr. Co., 55 F.4th 188, 190 Gd Cir. 2022) (quoting
31 U.S.C. § 3729(a)(1)(A)). “It extends to all false claims resulting in the receipt of funds from
the United States Treasury.” Id. (citing Hutchins v. Wilentz, Goldman & Spitzer, 253 F.3d 176,
185 (3d Cir. 2001)).
Under the FCA, “[a] false or fraudulent claim may be either factually false or legally false.”
United States ex rel, Greenfield v. Medco Health Solutions, Inc., 880 F.3d 89, 94 (3d Cir. 2018).
A claim is factually false if the claimant misrepresents what goods or services it provided to the
Government. Id. It is legally false if the claimant “lies about its compliance with a statutory,
regulatory, or contractual requirement.” Id. (quotations and citations omitted).
If a plaintiff alleges that defendant’s claim is legally false, he must also prove the
defendant’s misrepresentation about its compliance with a legal requirement is “material to the
Government’s payment decision.” Id. (citing Universal Health Servs., Inc. v. United States ex rel.
Escobar, 136 S. Ct. 1989, 1996 (2016)).
Through its anti-retaliation provision, the FCA “also shields whistleblowers from
retaliation “because of conduct protected by the FCA.” Ascolese, 55 F.4th at 191 (citing 31 U.S.C.
§ 3730(h)). To establish a claim for retaliation under the FCA, plaintiff must show that “(1) he
engaged in protected conduct in furtherance of an [FCA] action . . . or other efforts to stop 1 or

more violations of [the FCA], and (2) that he was discriminated against because of his protected
conduct.” Id. at 194; 31 U.S.C. § 3730(h). If plaintiff meets this standard, “the burden shifts to
the employer to prove the employee would have been terminated even if he had not engaged in the
protected conduct.” Hutchins, 253 F.3d at 186.

30

1. Claim against Baugh
Defendants argue that the FCA retaliation claim should be dismissed as to Baugh. ECF
No. 185 n. 12. Because it is undisputed that there is no individual liability under the FCA, the
Court grants the Motion for Summary Judgment relative to Count II as to Baugh. Davis v. Point
Park Univ., No. 10-1157, 2010 WL 4929104, at *4-5 (W.D. Pa. Nov. 30, 2010).
2. Claims against AIG and NUFIC
As for AIG and NUFIC, Rudolf contends that his report to Baugh plausibly put his
employer on notice that he was attempting to stop an FCA violation. Rudolf argues that he
believed the failure to disclose the true nature of the fraudulent unlimited limits policies could
jeopardize AIG’s de-SIFI status, and it constituted possible fraud in the government’s SIFI
oversight of AIG. ECF No. 207 at 45-47; ECF No. 225 at 24.
In support of the Motion for Summary Judgment, Defendants argue that Rudolf cannot
establish an FCA claim because his report had nothing to do with any false claim for payment to
the U.S. government. As for Rudolf’s assertion that he reported concerns over AIG’s SIFI status,
Defendants also argue that Baugh could not have reasonably understood this from Rudolf’s report,
so he cannot show causation. ECF No. 185 at 37; ECF No. 217 at 24.
Upon review, Rudolf did not report any conduct that the FCA protects. The only alleged
false claim that Rudolf points to is AIG’s reporting on the nature of its unlimited limits
transactions. However, there is no evidence this occurred relative to any payment received from
the government—let alone that it was material to the government’s payment decision.
Accordingly, the Motion for Summary Judgment is granted as to Count II.

31

C. Age Discrimination under the ADEA and PHRA (Counts ITT and VIT)
Defendants also move for summary judgment with respect to Rudolf’s age discrimination
claims alleging violations of the ADEA and the PHRA.*® In an ADEA lawsuit lacking direct
evidence of discrimination, as here, the order of proof mirrors that of a Title VII discrimination
action, as described in McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973). Smith v. City of
Allentown, 589 F.3d 684, 691 (3d Cir. 2009). First, plaintiff must establish a prima facie case of

age discrimination by proving the following: (1) he was over the age of 40; (2) he was qualified
for the position he held; (3) he suffered an adverse employment action; and (4) the adverse action
took place under conditions giving rise to an inference of discrimination. Williams v. Temple
Univ. Hosp., Inc., 345 F. Supp. 3d 590, 596-97 (E.D. Pa. 2018) (citing Sarullo v. U.S. Postal Serv.,
352 F.3d 789, 797-98 (3d Cir. 2003); Pivirotto v. Innovative Sys., Inc., 191 F.3d 344, 556-57 (3d
Cir. 2009)). Proof of these facts raises an inference of discrimination, which is given the force and
effect of a rebuttable presumption. Texas Dep’t of Cmty. Affairs v. Burdine, 450 U.S. 248, 254
(1981).
Once a prima facie case is established, the burden shifts to the employer, who must
articulate a legitimate, nondiscriminatory reason for the adverse employment action. Id.; Santiago
v. Brooks Range Cont. Servs., 618 F. App’x 52, 54-55 (3d Cir. 2015). “This burden is ‘relatively
light’ and is satisfied if the employer provides evidence, which, if true, would permit a conclusion
that it took the adverse employment action for a non-discriminatory reason.” Burton v. Teleflex
Inc., 707 F.3d 417, 426 (3d Cir. 2013) (citing Tomasso v. Boeing Co., 445 F.3d 702, 706 (3d Cir.

20 The United States Court of Appeals for the Third Circuit has held that “[t]he same analysis used for ADEA is also
applied to PHRA claims.” Prewitt v. Walgreens Co., 92 F. Supp. 3d 292, 305 n. 4 (E.D. Pa. 2015) (citing Fasgold v.
Justice, 409 F.3d 178, 183-84) (3d Cir. 2005).
32

2006)). At this stage, the employer is not required to prove this reason actually motivated its
conduct. Id.
After the employer has met its relatively light burden of articulating a legitimate
nondiscriminatory reason for the adverse employment decision, the burden shifts back to the
plaintiff to show by a preponderance of the evidence that the employer’s proffered explanation is
pretextual. Id. The plaintiff may meet this burden either directly, by persuading the court that the
employer’s action was more likely motivated by a discriminatory reason, or indirectly, by showing
that the employer’s proffered explanation is unworthy of credence. See McDonnell Douglas, 411
US. at 804-05.
Throughout this burden-shifting analysis, the ultimate burden of proving intentional
discrimination rests with plaintiff. See Burdine, 450 U.S. at 253-57. A plaintiff meets this burden
if his “prima facie case, combined with sufficient evidence to find that the employer’s asserted
justification is false, may permit the trier of fact to conclude that the employer unlawfully
discriminated.” Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 148 (2000).
In his Amended Complaint, Rudolf appears to claim that he suffered age-related
discrimination based on his (1) unequal compensation and (2) termination. ECF No. 41 §{f 250-
258. Defendants move for summary judgment as to both potential claims, and Rudolf only opposes
summary judgment on the basis of his termination. ECF No. 185 at 43-52.
Thus, the Court finds that summary judgment should be granted to the extent that Rudolf’s
claim is based on his unequal compensation, and it limits the following discussion to Rudolf’s
ADEA claim based on his alleged termination. For the reasons that follow, that Court will deny
the Motion for Summary Judgment as to the age discrimination claims related to Rudolf’s
termination.

33

1. Prima Facie Case
In support of the Motion for Summary Judgment, Defendants only challenge the fourth
element of Rudolf’s prima facie case. ECF No. 185 at 50-51. Defendants contend that Rudolf
cannot show his separation occurred under circumstances that give rise to an inference of
discrimination given that Baugh (the decisionmaker) was three years older than Rudolf, and that
Rudolf was immediately replaced by Grabek, who was four years older. Id. at 51.
In response, Rudolf argues that although he was temporarily replaced by Grabek, he was
ultimately replaced by younger employees, Michael Hayes (10 years younger) and John Gambale
(11 years younger), which is sufficient to permit an inference of age discrimination. ECF No. 225
at 26.
Upon review, the Court finds that Rudolf can establish a prima facie case of age
discrimination. There is no dispute that Rudolf can establish the first three elements of a prima
facie case. First, as a fifty-three year old employee at the time of his separation, he was a member
of an age-protected class. Second, based on Rudolf’s years of experience in the insurance industry,
there is no dispute that he was qualified for his position. And third, Defendants do not contest that
Rudolf can proffer evidence of an adverse employment action based on his alleged termination.
As for the fourth element, the record also supports a finding that Rudolf was ultimately
replaced by employees sufficiently younger to support an inference of discriminatory animus. See,
e.g., Sempier v. John & Higgins, 45 F.3d 724, 729-30 (3d Cir. 1995) (ten-year age difference
sufficient to support prima facie case). While Grabek temporarily assumed Rudolfs duties for a
period of months, this does not necessarily defeat his claim. See, ¢.g., Burkholder v. State Chem.
Mfg. Co., No. 86-2042, 1988 WL 149234, at *4 (W.D. Pa. Dec. 5, 1988) (evidence that defendant

never intended older replacement to be permanent and ultimate replacement was younger created

34

disputed issue of material fact on age claim). Therefore, based on consideration of the evidence
presented, the Court finds that Rudolf has presented sufficient evidence to present a reasonable
trier of fact to find that Rudolf has made requisite showing of a prima facie case in violation of the
ADEA.
2. Proffered Nondiscriminatory Reason
Rudolf does not dispute that Defendants have proffered a legitimate nondiscriminatory
reason for his separation — that he resigned. ECF No. 207 at 52. As a result, the burden shifts
back to Rudolf to show that Defendants’ reason is pretextual.
3. Pretext
In order to establish pretext, Rudolf must “point to some evidence, direct or circumstantial,
from which a fact-finder could reasonably either (1) disbelieve the employer’s articulated
legitimate reasons; Or (2) believe that an invidious discriminatory reason was more likely that not
a motivating or determinative cause of the employer’s action.” Fuentes v. Perskie, 32 F.3d 759,
764 (3d Cir. 1994).
As Rudolf points out, the record contains substantial evidence that would allow a jury to
disbelieve Defendants’ claim that he resigned. Most significantly, Rudolf repeatedly told Baugh
and others that he did not resign in the days between his telephone call with Baugh on November
12, 2017 and his termination on November 20, 2017. Accordingly, construing the evidence in the
light most favorable to Rudolf, as the Court must, there is sufficient evidence to withstand the
request for summary judgment. Therefore, the Court will deny the Motion for Summary Judgment
as to Rudolf’s ADEA and PHRA age discrimination claims in Counts III and VIL, except for his
claims based on unequal compensation.

35

D. Retaliation Claims under the ADEA, Title VII, PHRA, and EPA (Counts IV, VI
VIII and X)
Defendants move for summary judgment on Rudolf’s claims of retaliation under the
ADEA, Title VII and the PHRA. ECF No. 185 at 54-56. Rudolf responds that he does not oppose
the dismissal of Counts IV, VI and VIII, ECF No. 207 at 17 n. 5, and he does not address Count X
in his Response. For these reasons, the Motion for Summary Judgment is granted as to Rudolf’s
retaliation claims in Counts IV, VI, VIII and X.
E. Gender Discrimination Claims under Title VII, the PHRA, and EPA (Counts V,
VII and IX)
Defendants also move for summary judgment as to Rudolf’s gender discrimination claims □
in Counts V, VII and IX. Because Rudolf does not oppose the dismissal of these claims, ECF No.
207 at 17 n. 5, the Motion for Summary Judgment is granted as to Counts V and IX, and as to
Count VIL in part, to the extent it includes a gender discrimination claim under the PHRA.
F. Intentional Interference with Contractual Relationship (Count XI)
In Count XI of the Amended Complaint, Rudolf brings a claim of intentional interference
with contractual relationship only against Baugh. ECF No. 41 312-19. Rudolf alleges that
Baugh interfered with Rudolf’s employment relationship by falsely telling his employer that he
had resigned his position on November 12, 2017. In addition, Rudolf claims that Baugh, an AIG
employee, was not privileged to act in this manner. Id. He makes no mention in the Amended
Complaint of interference with any continuing award or specific compensation plan. Id.
To state a claim for intentional interference with a contractual relationship under
Pennsylvania law, Rudolf must show: “(1) the existence of a contractual, or prospective contractual
relation between the complainant and a third party; (2) purposeful action on the part of the
defendant, specifically intended to harm the existing relation, or to prevent a prospective relation

36

from occurring; (3) the absence of privilege or justification on the part of the defendant; and (4)
the occasioning of actual legal damage as a result of the defendant’s conduct.” Crivelli v. Gen.
Motors Corp., 215 F.3d 386, 394 (3d Cir. 2000).
In support of the Motion for Summary Judgment, Defendants make three arguments. First,
they argue there was no contractual relationship because Rudolf was an at-will employee. ECF
No. 185 at 60. Second, Defendants argue that Rudolf cannot show that Baugh acted with specific
intent to harm his employment relationship because Rudolf approached Baugh for help on
November 12, 2017 -- not the other way around. Id. Third, Defendants assert that, as Rudolf’s
supervisor, Baugh had privilege to report his understanding that Rudolf resigned, and he is not
considered a “third party” for purposes of this claim. Id. at 61- 62.
In his Brief in Opposition, Rudolf argues there is a split in authority as to whether a claim
for intentional interference with a contractual relation lies where the employment relationship is
terminable at will. ECF No. 207 at 53 (citing Mason v. Range Res.-Appalachia, LLC, No. 12-369,
2012 WL 2116969, at *6 (W.D. Pa. May 9, 2012), report & recommendation adopted, 2012 WL
2116949 (W.D. Pa. June 11, 2012); In re Foamex Int'l, Inc., 491 B.R. 100, 106-07 (Bankr. D. Del.
2013); Dowling v. Pa. Psychiatric Inst., No. 473 MDA 2014, 2015 WL 7016337 (Pa. Super.
2015)). Second, Rudolf also argues that Baugh was a third party because he did not act for AIG’s
benefit, and that his actions motivated by personal animus were not privileged. Id. at 5471
In their Reply, Defendants note Rudolf’s acknowledgement of the split of authority on this
issue. ECF No. 220 at 30. Defendants then point to the recent decision of the Pennsylvania
Superior Court finding that Pennsylvania law does not recognize a claim for intentional
interference with an existing at-will employment relationship. Salsberg v. Mann, 262 A.3d 1267,

21 Rudolf does not respond to Defendants’ argument that he cannot prove that Baugh acted with intent to harm
because Rudolf initiated this series of incidents by calling Baugh.
37

1270 (Pa. Super. Ct. 2021). Further, Defendants argue that even if Rudolf could state a claim, he
must show interference in the performance of a contract between Rudolf and a third party. In this
case, Defendants argue, there are no third parties because Baugh was Rudolf’s supervisor and
controlled his employment. ECF No. 220 at 30-31.
In his Sur-reply, Rudolf expands upon his assertion of interference in Count XI of the
Amended Complaint. Rudolf claims that Baugh interfered with Rudolf’s employment relationship
with AIG and NUFIC when Baugh falsely claimed that Rudolf resigned on November 12, 2017.
ECF No. 225 at 27. Rudolf now contends that in May 2017, Rudolf and AIG entered into a
Continuity Award in which AIG agreed to pay Rudolf a six-figure cash award in three parts if he
remained employed through April 2020 in the next three years in exchange for Rudolf’s continued
employment and agreements of non-disclosure and non-solicitation. Id. As such, Rudolf claims
that Baugh and others involved in Rudolf’s termination were aware of and interfered with his
Continuity Award. Id.
In considering the Motion for Summary Judgment as to the intentional interference claim,
it is clear that Rudolf’s claim is a tort claim based on state court common law. As such, the Court
must first look to the common law of the Commonwealth of Pennsylvania. Of particular
significance, the recent en banc decision of the Pennsylvania Superior Court in Salsberg is directly
applicable here. In Salsberg, the Superior Court held that claims for intentional interference of a
contractual relationship do not apply when the plaintiff was an at-will employee.” Salsberg, 262
A.3d at 1271-72.

22 The Court notes that the decision in Salsberg has been appealed, and that the Pennsylvania Supreme Court agreed
to consider the issue of “whether Pennsylvania should apply the Restatement (Second) of Torts § 766 to an
intentional interference claim by an employee at will against a superior who acted against that employee, not as an
agent on behalf of her employer, but ultra vires and pursuant to personal animus.” As of the date of this filing,
however, no decision has been issued on appeal.
38

In this case, it is undisputed that Rudolf did not have a formal written employment contract.
As such, he is an employee at will, who could be terminated at any time for any reason. Therefore,
in accordance with the holding in Salsberg, Rudolf, as an at-will employee, cannot make out a
claim for intentional interference with contractual relations against Baugh. The entry of summary
judgment on Count XI is granted.”
G. Fraud (Count XT)
In Count XII of the Amended Complaint, Rudolf claims that Baugh told him to contact HR
about the status of his compensation and awards if he were to leave and take a job elsewhere. ECF
No. 41 9 322. Based on this directive, Rudolf emailed HR on November 12, 2017 to ask what
would happen to his compensation and awards if he were to leave. Id. {| 323. In the November
20, 2017 termination meeting, Defendants relied on Rudolf’s email to HR, which he sent at the
direction of Baugh, to falsely and negligently claim that he resigned his employment. Id. {| 324.
Rudolf claims that Defendants “tricked” him into sending this email, and they misrepresented that
he resigned. Id. § 325. Based on this conduct, Rudolf claims that Defendants are liable for fraud.
To state a claim for fraud, Rudolf must show that there was: (1) a representation; (2)
material to the transaction at hand; (3) made falsely, with knowledge of its falsity or recklessness
as to whether it is true or false; (4) with the intent of misleading another into relying on it; (5)
justifiable reliance on the misrepresentation; and (6) the resulting injury was proximately caused
by the reliance. Gibbs v. Ernst, 647 A.2d 882, 889 (Pa. 1994).
In support of the Motion for Summary Judgment, Defendants argue that Rudolf cannot
satisfy these elements because: (1) a directive to contact someone (in this case, HR) is not a
“material representation”; and (2) Rudolf cannot show that he justifiably relied on Baugh’s

23 In light of this ruling as to Count XI, the Court need not address Rudolf’s attempt to expand this claim in his sur-
reply to relate to the Continuity Award, as that award relates to his compensation as an at-will employee.
39

statement; instead, he claims that Defendants relied on Rudolf’s inquiry to HR to falsely claim that
Rudolf resigned. ECF No. 185 at 57.
In response, Rudolf makes two arguments. First, he argues that Curtin made a false
representation that Rudolf would not suffer retaliation, which Rudolf relied on by cooperating in
the GIG investigation. He argues that a jury could find Rudolf’s termination resulted from
reporting these frauds to management, and that Curtin knew his statement was false when he made
it. ECF No. 207 at 56; ECF No. 225 at 29. Second, Rudolf argues that the contrived resignation
was fraud by omission or silence. ECF No. 207 at 57. Rudolf argues that he asked various HR
professionals, including Naik, what would happen if he resigned, and “they basically said they
would find out.” Rudolf claims he relied on the “important inference that this was an ongoing
process rather than a complete resignation.” Id.
In their Reply, Defendants assert that Rudolf advances two different theories of fraud that
he did not raise in the Amended Complaint. ECF No. 220 at 27. Defendants also argue there is

no evidence Curtin knew his statement was false or used it to induce Rudolf’s cooperation, and
that breaching a promise to do something cannot establish fraud. Id. As for Naik’s statement,
Defendants argue that Rudolf relied on his own inference, rather than any alleged
misrepresentation about the status of his resignation. Id.
Upon review, neither of the two alleged misrepresentations that Rudolf now relies on—
Curtin’s anti-retaliation statement or the theory of fraud by omission—is the basis for his claim as
set forth in Count XII of the Amended Complaint. Because Count XII sounds in fraud, Rudolf
needed to “satisfy the ‘stringent’ Rule 9(b) requirements for particularity.” Travelers Indem. Co.

v. Cephalon, Inc., 620 F. App’x 82, 85 (3d Cir. 2015). Under Rule 9(b), “[i]n alleging fraud or
mistake, a party must state with particularity the circumstances constituting fraud or mistake.

40

Malice, intent, knowledge and other conditions of a person’s mind may be alleged generally.” Fed.
R. Civ. P. 9(b). To satisfy this requirement, plaintiff must identify “who made a misrepresentation
to whom and the general content of the misrepresentation.” Travelers Indem. Co., 620 F. App’x
at 85 (quoting Lum v. Bank of Am., 361 F.3d 217, 224 (3d Cir. 2004)).
As Defendants point out, Rudolf did not plead either of these two alleged
misrepresentations in Count XII of the Amended Complaint. He newly advances this theory of
fraud at the summary judgment stage. Simply put, plaintiff is the “master of [his] complaint,” and
he chooses which claims and theories of recovery to plead. Summy-Long v. Pa. State Univ., 226
F. Supp. 3d 371, 387-88 (M.D. Pa. 2016), aff'd, 715 F. App’x 179 (3d Cir. 2017). Rudolf “may
not defeat summary judgment by asserting a claim [he] did not include in the Complaint.” Id.
(quoting Spengler v. Worthington Cylinders, 514 F. Supp. 2d 1011, 1017 (S.D. Ohio 2007)).
“Rather, ‘[a]t the summary judgment stage, the proper procedure for plaintiffs to assert a new claim
is to amend the complaint in accordance with Rule 15(a).” Id. (quoting Tucker v. Union of
Needletrades, Indus. & Textile Employees, 407 F.3d 784, 788 (6th Cir. 2005)). Because Plaintiff
did not plead either of these alleged statements (or omissions) in support of the fraud claim in his
Amended Complaint, he cannot now rely on them to defeat summary judgment. Accordingly, the
Motion for Summary Judgment is granted as to Count XII.
H. Wrongful Discharge (Count XIII)
Defendants move for summary judgment as to Rudolf’s wrongful discharge claim in Count
XIII. ECF No. 185 at 57. Because Rudolf does not oppose the dismissal of this claim, ECF No.
207 at 17 n. 5, the Motion for Summary Judgment is granted as to Count XIII.

41

I. Breach of Contract (Count XIV)
In Count XIV, Rudolf claims that Defendants promised they would not retaliate against
him for reporting financial wrongdoing in their employee handbook and similar manuals, and that
this promise was repeated orally and in writing to Rudolf at the outset of the GIG investigation
along with Curtin’s Upjohn warning. ECF No. 41 {ff 333-38.
In support of the Motion for Summary Judgment, Defendants argue that Rudolf was an at-
will employee, who could be terminated for any reason. ECF No. 185 at 58-59. As for AIG’s
handbooks and manuals, Defendants assert that AIG’s handbook explicitly stated that it is not a
contract, and that there was no meeting of the minds sufficient to overcome the presumption of
will employment relative to Curtin’s Upjohn warning. Id. at 59-60. Defendants also argue there
is no basis for individual liability as to Baugh because none of the alleged contractual relationships
were between Rudolf and Baugh. Id. at 58 n. 27; ECF No. 220 at 29-30.
In response, Rudolf does not dispute the handbooks/manuals did not create any contract.
Instead, he argues that Defendants later entered into an implied contract whereby if Rudolf agreed
to cooperate in the GIG investigation, AIG would ensure that he was not retaliated against for his
good-faith participation. ECF No. 207 at 54. This contract was supported by consideration in the
form of Rudolf’s cooperation in the fraud investigation. Id. at 54. Rudolf claims that Defendants
breached this duty when they terminated him in retaliation and without cause. Id. at 54-55. Rudolf
also argues that Defendants violated the doctrine of promissory estoppel. Id. at 55-56.
a. Baugh
Upon review, it is undisputed that Baugh was not a party to any contract. Therefore, the
Motion for Summary Judgment is granted relative to Count XIV against Baugh. Nicholas v. Pa.
State Univ., 227 F.3d 133, 145 (d Cir. 2000) (under Pennsylvania law, a supervisor cannot be

42

liable for breach of contract when there is no contractual relationship between the plaintiff and
supervisor).
b. AIG and NUFIC
Under Pennsylvania law, in order to establish a breach of contract claim, Rudolf must
show: “(1) the existence of a contract, including its essential terms; (2) a breach of duty imposed
by the contract, and (3) resultant damages.” Perlberger L. Assocs, P.C. v. Wells Fargo Bank, N.A.,
552 F. Supp. 3d 490, 498 (E.D. Pa. 2021) (quotations and citations omitted).
“Pennsylvania presumes employment to be at will, meaning that either an employer or
employee may terminate employment at any time, for any or no reason.” Keich v. Worldwide
Express Holdings, LLC, No. 5:19-cv-02764, 2020 WL 6262189, at *5 (E.D. Pa. Oct. 23, 2020).
To rebut this presumption, Rudolf must show one of the following: “(1) an agreement for a definite
duration; (2) an agreement specifying that the employee will be discharged for just cause only; (3)
sufficient additional consideration; or (4) an applicable recognized public policy exception.” Id.
(citations omitted).
Upon review, Rudolf does not establish the existence of any contract not to retaliate against
him. Rudolf does not dispute that the anti-retaliation policies in the AIG employee handbook do
not form any contract. While he relies on Curtin/the GIG team’s statement that “AIG has a strict
anti-retaliation policy to protect anyone who reports wrongdoing,” this statement simply refers to
AIG’s existing anti-retaliation policy, which Rudolf admits is not a contract. Thus, no contract

was created.
The evidence also does not support Rudolf’s claim that the at-will presumption was
amended based on the exchange of “sufficient additional consideration.” Courts find “additional
consideration” exists when an employee “affords his employer a substantial benefit other than the

43

services which the employer is hired to perform, or when the employee undergoes a substantial
hardship other than the services which he is hired to perform.” Geiger v. AT&T Corp., 962 F.
Supp. 637, 649 (E.D. Pa. 1997) (quoting Darlington v. Gen. Elec., 504 A.2d 306, 315 (Pa. Super
Ct. 1986, overruled on other grounds, Krajsa_v. Keypunch, Inc., 622 A.2d 355, 360 (Pa. Super.
Ct. 1993)). Because there is no dispute that Rudolf was obligated under AIG’s Code of Conduct
to participate in the GIG investigation, he does not show that he provided a substantial benefit
other than services he was hired to perform.” For these reasons, the Motion for Summary
Judgment is granted to Rudolf’s breach of contract claim, Count XIV.
J. Pennsylvania Whistleblower Law (Count XV)
Rudolf brings a claim against AIG and NUFIC in Count XV under the Pennsylvania
Whistleblower Law (“PWL”). The PWL prohibits employers from retaliating against an employee
who reports “to the employer or appropriate authority an instance of wrongdoing or waste by a
public body or an instance of waste by any other employer as defined in this act.” 43 Pa. C.S. §
1423(a).
“Wrongdoing” is defined as “[a] violation . . . of a Federal or State statute or regulation, of

a political subdivision ordinance or regulation[,] or of a code of conduct or ethics designed to
protect the interest of the public or the employer.” Id. § 1422. “Waste” is “[a]n employer’s conduct
or omissions which result in substantial abuse, misuse, destruction or loss of funds or resources
belonging to or derived from” Pennsylvania or its political subdivisions. Id.

24 Rudolf also argues that he establishes a claim for promissory estoppel, but he does not plead this claim in his
Amended Complaint. Further, “Pennsylvania does not recognize a cause of action for promissory estoppel as an
exception to the employment at-will doctrine.” Falcone v. WiredLogic, Inc., No. 06-800, 2006 WL 8459813, at *17
(E.D. Pa. Oct. 26, 2006). Therefore, this does not provide a basis for the Court to deny the Motion for Summary
Judgment as to this claim.
44

In support of the Motion for Summary Judgment, Defendants argue that only NUFIC, not
AIG, is an “employer” subject to the PWL. Defendants also argue that NUFIC is not a “public
body” under the statute, so it can only be held liable if Rudolf reported “waste’—not
“wrongdoing.” Because Rudolf did not report any loss incurred by the Commonwealth of
Pennsylvania, Defendants contend that he did not report waste and thus cannot prove this claim.
ECF No. 185 at 37-38; ECF No. 220 at 24-25.
In his response in opposition, Rudolf contends that NUFIC is a public body because it is a
government contractor, which provides insurance services to the Commonwealth and its agencies
in exchange for Commonwealth funding. Thus, NUFIC can be held liable based on retaliating
against Rudolf for reporting “wrongdoing,” which he did.”> Rudolf also argues that AIG can be
held liable because it is a single employer/integrated enterprise with NUFIC. ECF No. 225 at 24-
25; ECF No. 207 at 47-50.
Upon review, the Court finds that summary judgment should be granted as to Count XV.
The Court first considers whether NUFIC is a “public body.” Under the PWL, a “public
body” includes any entity “which is funded in any amount by or through” Pennsylvania or its
political subdivisions. 43 Pa. C.S. § 1423(a).
Rudolf argues that NUFIC is a “public body” because it receives funding from the
Commonwealth for providing insurance services. ECF No. 225 at 25. But the United States Court
of Appeals for the Third Circuit has found that “a private entity does not qualify as a public body
merely because it receives state funds through contracts with public programs or government
agencies.” Lomaskin v. Siemens Med. Solutions USA, Inc., 820 F. App’x 138, 141 (3d Cir. 2020).

25 Tn particular, Rudolf argues that he believed AIG improperly treated the rigged claim workout deals as insurance
instead of deposits in violation of GAAP, which in turn, constitutes a misleading or inaccurate financial statement in
violation of the SEC rules, and that he also believed the transactions violated Pennsylvania law, including the Unfair
Insurance Practices Act and Unfair Trade Practices and Consumer Protection Law. ECF No. 206 at 49.
45

Rather, the phrase “funded by or through” in the PWL refers to money “specifically appropriated
by a governmental unit.” Id. (quoting Grim v. May Grant Assocs., No. 18-2231, 2019 WL 358520,
at *4 (E.D. Pa. Jan. 29, 2019)). Because there is no evidence that NUFIC received appropriations
from the Commonwealth or any of its political subdivisions, NUFIC does not qualify as a public
body under the PWL.
Because NUFIC is not a public body, it can only be held liable as an employer if Rudolf
reported “waste.” “Waste” is defined as “[a]n employer’s conduct or omissions which result in
substantial misuse, destruction, or loss of funds or resources belonging to or derived from”
Pennsylvania or its political subdivisions. 43 Pa. C.S. § 1422. It is undisputed that Rudolf reported
no such conduct. Based on the evidence, Rudolf cannot establish this claim against NUFIC.
As for AIG, it is undisputed that AIG does not independently qualify as an “employer” or
“public body” subject to the PWL. Rudolf only argues that AIG is liable because it acted as a
single employer/integrated enterprise with NUFIC. Given that Rudolf cannot establish this claim
against NUFIC, summary judgment is also proper as to AIG. Accordingly, the Motion for
Summary Judgment is granted as to Count XV.
K. AIG’s Liability
Finally, Defendants argue summary judgment should be granted in AIG’s favor because it
was not Rudolf’s employer. Defendants contend that AIG is holding company, which does not
have any employees, and it cannot be held liable simply because it is the parent company of its
subsidiary, NUFIC. ECF No. 185 at 61; ECF No. 220 at 31.
In response, Rudolf argues that AIG may be held directly liable and/or as an integrated
employer for retaliation under SOX, and that it may be held liable based on a common law agency
theory and for age discrimination under the ADEA/PHRA pursuant to the “integrated enterprise”

46

test. In support, Rudolf points to evidence that: Rudolf believed he worked for AIG; all his
supervisors worked for AIG, including Baugh; AIG provides services to NUFIC, including HR,
legal and compliance, operation and systems, audit, administration, enterprise risk management
and finance; all of the HR, employee relations and GIG employees involved in this case were
employed by AIG; AIG owns 100% of NUIFC; and AIG includes NUFIC’s financial statement
within its own consolidated financial statement. ECF No. 207 at 58-59.
Upon review, the Motion for Summary Judgment is denied. While a parent corporation
generally is not liable for the wrongful acts of its subsidiaries simply because the parent wholly
owns the subsidiary, Rudolf does not merely rely on AIG’s ownership of NUFIC to ascribe
liability. Instead, he points to a multitude of indicia of AIG’s control over Rudolf’s employment
and NUFIC’s operations, such that there are questions of fact relative to AIG’s liability.
Accordingly, the Motion for Summary Judgment is denied as to Rudolf’s remaining claims against
AIG.
V. CONCLUSION
For the foregoing reasons, the Motion for Summary Judgment, ECF No. 177, is granted in
part and denied in part. The Motion for Summary Judgment is granted as to these claims:
1. FCA retaliation claim (Count IJ);
2. Age discrimination under ADEA and PHRA (Counts III and VID, but only to the extent
those claims arise out of unequal compensation;
3. Retaliation claims under the ADEA, Title VII, PHRA and EPA (Counts IV, VI, VII
and X);
4. Gender discrimination claims under Title VII, the PHRA, and the EPA (Counts V, VII
and IX); □
5. Intentional interference with contractual relationship (Count X]);
6. Fraud (Count XID;

47

7. Wrongful discharge (Count XIII);
8. Breach of contract (Count XIV); and
9. PWL claim (Count XV).
The Motion for Summary Judgment is denied in all other respects, so that the following
claims remain to proceed to trial:
1. Rudolf’s SOX whistleblower retaliation claim (Count I); and
2. Age discrimination under ADEA and PHRA (Counts II and VID), but only to the extent
those claims arise out of Rudolf’s alleged termination.
AIG will remain a defendant along with NUFIC as to the claims remaining for trial. An
appropriate Order will be entered.

Dated: March &/_, 2023 BY THE COURT,
ty og om P f
LO bee ep thd
MAUREEN P. KEELY
UNITED-STATES MAGISTRATE JUDGE

cc: All counsel of record via CM/ECF.

48

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10418743. Public record. Not legal advice.