Boeing: A Public Body, Lawsuit Contends

November 21, 2011

Investigative Reports

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The NerveBoeing is a public body under South Carolina law because the aerospace giant has received “large sums of public money” from the Palmetto State, a former Boeing engineer contends in a wrongful discharge lawsuit pending in a Charleston federal court.

John Woods, a Charleston County resident who was fired last year by Boeing, is suing the company under the state whistleblower act, which allows public employees to file lawsuits against their employers when they are retaliated against for reporting wrongdoing.

Although Chicago-based Boeing is a publicly traded company, it is considered a public body under the whistleblower law because, according to the suit, it received public funding for locating its new 787 Dreamliner assembly plant in North Charleston.

Section 8-27-10 of the S.C. Code of Laws, which is cited as the basis of the suit, defines a public body, among other things, as a corporation “supported in whole or in part by public funds or expending public funds.”

Woods’ suit doesn’t specify how much taxpayer-supported funding Boeing has received, though The Nerve previously has estimated the public cost of the incentives over a 15-year period to be at least a half-billion dollars.

If Woods’ suit isn’t dismissed, Boeing could be required under civil procedure rules to reveal specifics of the state-approved incentives.

As part of a deal to receive $270 million in taxpayer-backed bonds, plus an unspecified amount of corporate income and sales tax breaks and other incentives, Boeing agreed to create at least 3,800 jobs and invest a minimum of $750 million within seven years. The Nerve previously reported, however, that there are plenty of loopholes in the state incentives agreement.

Much of the incentive package was approved unanimously by state lawmakers in a rare, special session in October 2009.

Woods’ attorney, Laura Waring of Charleston, declined comment when contacted last week by The Nerve.

Boeing is represented in the suit by the Columbia-based law firm of Nexsen Pruet, which played a key role in crafting the incentives package for Boeing. Cherie Blackburn, who works in the firm’s Charleston office and is listed as an attorney for Boeing in Woods’ suit, did not respond last week to a written request from The Nerve seeking comment.

Longtime Columbia attorney Lewis Cromer, who is not involved in the case but is known in the state’s legal community for bringing whistleblower suits against public agencies, told The Nerve last week that Woods’ suit, if successful, likely would establish a legal precedent in South Carolina.

But Cromer said he doesn’t believe a court will agree with Woods’ contention that Boeing is a public body under the state whistleblower law.

“I don’t believe it extends to anybody that gets money from the state or federal government,” he said, noting he’s not aware of any prior state court cases in which a private company that received public funding was determined to be a public body under the whistleblower law.

Even if Woods were successful, he would be awarded relatively little damages because of caps built into the state law, Cromer added. Currently, rewards for successful whistleblowers are capped at $2,000, as determined by the S.C. Budget and Control Board, even if millions of stolen or misused tax dollars are recovered.

If reporting employees are fired or demoted in retaliation, they can get their old jobs back, but actual damages are limited to $15,000, no matter what their salary was; and awards of attorney fees can’t exceed $10,000 for a trial or $5,000 for an appeal.

The Nerve reported earlier this year that state Sens. Jake Knotts, R-Lexington, and Vincent Sheheen, D-Kershaw, planned to introduce a bill to strengthen the whistleblower law. Under the bill (S. 864), which was filed on May 3, the caps would be changed as follows:

  • Rewards – 25 percent of the “estimated net savings resulting from the first year of implementation of the employee’s report”;
  • Actual damages, such as lost wages – No limits; and
  • Awards of attorney fees and court costs – “Reasonable,” as determined by a judge.

The bill never made it out of the Senate Judiciary Committee, chaired by Senate President Pro Tempore Glenn McConnell, R-Charleston and a main player in the Boeing incentives deal. Because the General Assembly, however, operates on a two-year session cycle, the bill won’t have to be reintroduced when lawmakers convene in January.

The Federal Aviation Administration is investigating a separate complaint filed by Woods under the federal whistleblower law, according to a letter from the agency to Woods that was included with the lawsuit.

In his suit, Woods, who noted he has about 20 years experience as an engineer, said he was hired by Boeing in 2009 to design and create repair templates for the 787 Dreamliner, which he described as the “first new commercial aircraft of the 21st century.”

Woods, who, according to court papers, was making $80,500 annually, contends in his suit that he was fired in September last year after he complained to company officials about “experiencing harassment and retaliation for his insistence on adhering to appropriate quality and safety standards.”

The suit was filed initially in September as a state case in Charleston County Circuit Court and was transferred last month at Boeing’s request to U.S. District Court in Charleston. No hearings have been scheduled on the suit, according to online court records.

Woods is seeking reinstatement to his position; unspecified lost wages and other actual damages, including medical bills; and attorney fees.

Reach Brundrett at (803) 254-4411 or rick@thenerve.org.