RENDERED: AUGUST 14, 2026; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2025-CA-0114-MR
STEVEN HERBERT APPELLANT
APPEAL FROM FRANKLIN CIRCUIT COURT v. HONORABLE PHILLIP J. SHEPHERD, JUDGE ACTION NO. 22-CI-00966
KENTUCKY PUBLIC PENSIONS AUTHORITY APPELLEE
OPINION
AFFIRMING
** ** ** ** **
BEFORE: ACREE, CALDWELL, AND CETRULO, JUDGES. CALDWELL, JUDGE: Steven Herbert (“Herbert”) appeals from an Order of the Franklin Circuit Court’s granting summary judgment to the Kentucky Public Pensions Authority (“KPPA”) on his whistleblowing claims and denying his “Motion to File Under Seal,” where he requested that certain emails be considered as evidence. We affirm.
BACKGROUND
On January 16, 2021, Herbert first began employment as the Chief Investment Officer (“CIO”) for KPPA.1 As CIO, Herbert oversaw the investment of approximately $20 billion dollars for state and county retirement systems. Herbert’s employment in this position continued for approximately eighteen months before he received correspondence, dated May 31, 2022, that notified him of his termination from KPPA.
On December 16, 2022, Herbert filed suit against KPPA in Franklin Circuit Court, alleging he had been wrongfully terminated. The Complaint asserted claims of violation of the Kentucky Whistleblower Act (“KWA”), KRS2 61.101 et seq., as well as for fraudulent inducement and wrongful discharge in violation of public policy.
In his Complaint, Herbert alleged that his termination was in retaliation for disclosures of waste, fraud, and abuse he had made concerning two central issues. The first related to allegations of missing funds from Kentucky Retirement Systems and KPPA in the form of unpaid dividends owed by Perimeter
1 Herbert was hired as CIO on January 16, 2021, by the Kentucky Retirement Systems. However, not long after Herbert was hired, the governance structure of the Kentucky Retirement Systems changed. On April 1, 2021, the Kentucky Public Pensions Authority (“KPPA”) was created, and Herbert held the position of CIO, with KPPA as his direct employer until his termination in late May 2022. 2 Kentucky Revised Statutes.
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Park West, Inc. (“PPW”). PPW is a real estate holding company responsible for buildings in Frankfort where KPPA staff worked.
Herbert’s Complaint alleged he had determined financial statements for PPW lacked appropriate supportive documentation. This led him to voice suspicion that the missing funds may have been misappropriated, diverted, or stolen. In response to his concerns, Herbert alleged an attorney from the legal department at KPPA informed him those funds had been embezzled by Crumbaugh Properties (“Crumbaugh”), a company that PPW had engaged for property management services. Herbert claimed he then began to advocate for the pursuit of legal action against Crumbaugh and recovery of the funds. He asserted that KPPA’s legal department had denied his suggestion and justified the decision by citing to “Crumbaugh’s connection with the Court system in Franklin County.” (Record on Appeal (“R.”) at p. 2).
The Complaint further alleged that Herbert continued to discover irregularities and deficits in PPW financial statements that totaled more than ten million dollars and “appear[ed] to be directly linked to the theft perpetrated by Crumbaugh Properties.” R. at 3. Herbert alleged his inquiries into the missing funds and why PPW’s books did not balance accordingly continued.
Subsequently, Herbert alleged, he “received an independent internal audit from 2019 that corroborated [his] concerns” and revealed “that Crumbaugh
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Properties had full access to write checks from the PPW operational bank account[,]” as well as “a lack of oversight by [Kentucky Retirement Systems]/KPPA staff.” Id. The Complaint alleged that, in response, Herbert had “requested that all cash in PPW’s account be returned to the [Kentucky Retirement Systems] Trust for Trustee oversight.” Id. However, “[t]he Directors of PPW refused and kept approximately five hundred thousand dollars ($500,000) in cash in the PPW bank account.” Id.
The Complaint further alleged that after new auditors were hired to address concerns about external auditing practices, subsequent audits confirmed irregularities in the handling of pension funds by PPW. Nevertheless, “[his] efforts to disclose this issue were repeatedly thwarted by those in authority at KPPA.” R. at 3.
The second issue alleged in the Complaint was disclosure related to Herbert’s response to a request by memorandum from the County Employee Retirement Systems (“CERS”) Investment Committee dated September 28, 2021. The memorandum requested that Herbert provide a written description and flow chart that detailed:
[a]ny cash flows dealing with contributions (employer/employee) and distributions concerning the CERS Plans with particular focus on any process that directs cashflows to external accounts not under the oversight of the CERS Board of Trustees. That being, any other account used to receive/hold assets that
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is not custodied at BNY Mellon, the Plans’ Custodian.
R. at 9.
After receiving the request, Herbert prepared a responsive document (the “Cash Flow Memo”), dated October 5, 2021. In the Cash Flow Memo, Herbert detailed that employee and employer contributions were received in one or more accounts at JP Morgan Chase Bank (“Chase”) as a Commonwealth depositor, rather than BNY Mellon. The Cash Flow Memo asserted that the use of depository accounts at the Commonwealth’s custodial bank, Chase, rather than BNY Mellon, the Kentucky Retirement Systems trust account, was a practice in noncompliance with applicable statutes.3 Additionally, the Cash Flow Memo asserted that placement of contributions and trust assets outside of the trust account resulted in the movement of funds “evading Board oversight.” R. at 13.
In response to his preparation of the Cash Flow Memo, the Complaint alleged, Herbert “received an email from KPPA Executive Director David Eager instructing [Herbert] not to inform the Trustees of this issue without clearing it with Eager.” R. at 4. It further alleged that Herbert was ordered to allow an investigation by Executive Director of Operations, Rebecca Adkins, to occur before informing the Trustees. Herbert alleged that the Finance Cabinet and an
3 The Cash Flow Memo asserts specifically that KPPA’s cash flow process was in violation of KRS 78.630; 78.782(13); and 61.660(2).
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internal audit by KPPA both agreed with his conclusions regarding noncompliance with statutory mandates. Nonetheless, Herbert alleged, the questions raised in his Cash Flow Memo remained unaddressed.
Herbert alleged that in March of 2022, Adkins asked that he remove the Cash Flow Memo from materials for an upcoming April meeting of the Joint Audit Committee. Herbert refused and following the meeting, after receiving the Cash Flow Memo, the Joint Audit Committee postponed the closing of the audit pending further investigation on the cash flow issue—according to the allegations in his Complaint.
The Complaint alleged that, on May 24, 2022, KPPA counsel Michael Board presented a memo to the Joint Audit Committee laying out grounds upon which he contended the use of the Chase account was in statutory compliance. Herbert, however, disagreed with this option and asserted it had been presented without his knowledge or input. On May 31, 2022, Herbert received a letter signed by Executive Director Eager indicating his employment with KPPA was terminated “without cause.” Herbert’s Complaint alleged his “efforts to clear up processes at KPPA were consistently slowed or blocked up to and including the highest level of KPPA’s organization.” R. at 5.
KPPA answered the Complaint on January 9, 2023.
Contemporaneously, KPPA moved for judgment on the pleadings as to Herbert’s
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claims of fraudulent inducement and wrongful discharge in violation of public policy, citing grounds which included sovereign immunity. On June 5, 2023, the circuit court dismissed those claims. Discovery proceeded on Herbert’s KWA claims.
In May of 2024, following discovery, KPPA filed a motion for summary judgment on the KWA claim. As grounds, KPPA argued that no reports by Herbert could be considered “protected disclosures” under the KWA because: (1) Herbert’s statements that formed the basis of his claims identified only well- known issues that were a matter of public record; (2) Herbert had not made the alleged disclosures to an “appropriate body”; and (3) Herbert’s alleged assertions or reports that money had been lost or stolen from Kentucky Retirement System’s trust accounts were contradicted by his own deposition testimony, as well as audit reports by Kristen Coffey of the Chase depository accounts. Additionally, KPPA asserted summary judgment was appropriate because it had terminated Plaintiff’s employment for non-retaliatory and compelling reasons, and that Herbert had provided no evidence that KPPA’s reasons were pretextual.
Regarding the two issues Herbert alleged his disclosures reported, KPPA argued that undisputed evidence established that both were unconcealed and known throughout the agency long before Herbert’s employment. As to the PPW issue, KPPA’s argument relied primarily on audit reports from March 2020 and
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September 2020, as well as the deposition testimony of Coffey. KPPA contended these reports demonstrated that any issues related to PPW had been audited, identified and corrected, all prior to Herbert being hired in January of 2021. KPPA argued that all evidence confirmed PPW had resumed paying dividends in June of 2020, prior to Herbert being hired, and that dividends had been paid consistently by PPW to Kentucky Retirement Systems on an annual basis throughout the period of Herbert’s employment. Furthermore, KPPA argued, neither its internal auditors nor any external auditors had identified any fraud, theft, misappropriation, or other illegal activity for the years of 2020-2022.
KPPA conceded that an initial internal audit by Coffey had “questioned costs paid by PPW for the three fiscal years reviewed” that totaled $419,084.00. However, KPPA argued, the same audit had defined “questioned costs” as merely “a payment made in possible violation of a contract, a cost not supported by adequate documentation, or a cost that appears unreasonable[,]” rather than any indication of actual theft or other criminal activity. R. at 548.
In regard to the Cash Flow Memo, KPPA argued that it was undisputed that the use of Chase depository accounts by Kentucky Retirement Systems was a matter of public record and had been for decades.
After KPPA filed its motion for summary judgment, Herbert submitted a “Motion to File Under Seal” requesting that certain emails exchanged
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between KPPA staff, including KPPA General Counsel Michael Board, be considered as evidence.
The circuit court granted KPPA’s motion for summary judgment and denied Herbert’s “Motion to File Under Seal” in a twenty-one-page Opinion and Order (“the Order”) entered on December 30, 2024. (Order, R. at 1725). The Order concluded that on multiple grounds Herbert’s claims failed, as a matter of law. The circuit court summarized the evidence submitted by KPPA as follows:
1. KPPA and the Cash Flow Process
KPPA is the administrative entity that is comprised of professional staff formerly known as the Kentucky Retirement Systems. It is governed by an eight-member board, consisting of four trustees from each of the CERS and [Kentucky Retirement Systems] Boards. KPPA professional staff is in charge of performing daily administrative activities that support the CERS, [Kentucky Retirement Systems], and the state police retirement plans. In this capacity, KPPA collects employer contributions from the Commonwealth of Kentucky as well as from county and city entities. KPPA is also responsible for paying certain administrative expenses such as legal fees, rent, and its employee payroll, without receiving appropriations from the General Assembly. Instead, the Finance and Administration Cabinet pays these expenses out of its own custodial bank using trust assets. KPPA issues checks signed by the Commonwealth’s Treasurer or Controller, who has always required KPPA to pay expenses from the Commonwealth’s custodial bank, which is currently JP Morgan Chase (Chase).
The retiree/employer contributions that KPPA collects from the Commonwealth and counties are deposited into
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Chase, the custodial bank for state government. The contributions are then moved to KPPA’s custodial bank, BNY Mellon. Funds are moved out of BNY Mellon and into Chase depository accounts for distribution and payment of KPPA expenses. This process of using Chase depository accounts for incoming and outgoing funds has been in place for over 20 years and is required by the Finance and Administration Cabinet.
Additionally, the use of the Commonwealth’s custodial bank, i.e., the Chase depository accounts, for incoming and outgoing funds, as described above, is a matter of public record and has been for decades. The existence of the Chase depository accounts and their balances are reported in KPPA’s public financial statements, which are publicly available on its website. Moreover, this same cash flow process is utilized by the retirement systems for Kentucky teachers, legislators, and judges
2. Perimeter Park West
Perimeter Park West, Inc. (PPW) is a real estate holding company that is allegedly separate from KPPA. [Kentucky Retirement Systems] is currently the sole shareholder of PPW, which is an asset held in the [Kentucky Retirement Systems]/CERS investment portfolio. PPW owns the buildings in which KPPA, [Kentucky Retirement Systems], and CERS staff work in Frankfort, Kentucky.
PPW has a separate board of directors, consisting of a member from CERS, [Kentucky Retirement Systems], and SPRS (state police retirement system). PPW was set up under IRC 501(c)(25) and remits all income, less expenses, to the shareholder, which is [Kentucky Retirement Systems], pursuant to its Dividend Policy and/or its Board’s decision.
PPW’s sole income is the rent paid by KPPA as the sole tenant of the buildings PPW owns. The money is
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returned to [Kentucky Retirement Systems] as dividends after expenses are paid; PPW also earns some interest on its bank accounts. PPW maintains that its funds are not public money or part of the [Kentucky Retirement Systems]. PPW maintains that its funds are not public money or part of the [Kentucky Retirement Systems]
trust, even though all funds of PPW come from a public entity which is funded by tax dollars and the contributions of public employees.
Order, p. 1-3.
Despite concluding that the factual background provided no support for Herbert’s KWA claims, the circuit court expressed alarm at the evidence which had been presented by KPPA:
Based on this recitation of facts by KPPA, the Court is deeply concerned that the legality of the entire underlying arrangement whereby a state agency (KPPA)
formed a private entity to own and control the real estate that comprises its office complex, whose sole income is the rent paid by the state agency. This arrangement appears to be in gross violation of KRS 56.800, which requires that the Finance and Administration Cabinet is “responsible for the lease of all real property rentals required for use by all departments, agencies and administrative bodies of state government.” By vesting the sole authority for the ownership and leasing of state owned facilities in the Finance and Administration Cabinet, the General Assembly has assured proper checks and balances, application of the Model Procurement Code in KRS Chapter 45A, and oversight from the Auditor of Public Accounts, among other safeguards. None of these safeguards appear to have been in place for the KPPA in its decision to form a corporate entity it controls to be its own landlord. While [this] unusual (perhaps, unprecedented) real estate deal raises disturbing questions of public accountability and
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compliance with the controlling statutes, it is not an issue that the Plaintiff raised in any way, shape, or form.
Crumbaugh Properties is a property management company that formerly contracted with PPW to manage and maintain the PPW facilities. At some point, a PPW representative observed that snow removal charges from Crumbaugh Properties were higher than expected and reported this to PPW management and [Kentucky Retirement Systems] then asked Kristen Coffey, KPPA’s internal auditor, to perform an internal audit of transactions between PPW and Crumbaugh Properties. Ms. Coffey performed an audit [and] issued a report dated March 12, 2020, in which she stated that she looked at all transactions between PPW and Crumbaugh Properties for a three-year period. Her report contained no findings of fraud or any other illegal activity. Ms. Coffey did “question” certain costs paid by PPW for the three fiscal years reviewed, which she defined as “payment made in possible violation of a contract, a cost not supported by adequate documentation, or a cost that appears unreasonable.” In short, the total amount of questioned costs for the three-year period calculated by Ms. Coffey were $419,084, although Crumbaugh and the snow removal vendor disputed some of the questioned costs. When PPW confronted Crumbaugh with the questioned costs, Crumbaugh immediately resigned.
The immediate resignation of the property manager after these questions were raised begs the question, why was there no follow up to the question of whether public funds were misappropriated? Clearly, an outside agency such as the Attorney General or the Auditor of Public Accounts, or the State Comptroller should have been notified. The matter should have been reviewed by an appropriate public investigatory agency that is not controlled by the KPPA. However, not only did the KPPA fail to obtain such an outside review; the Plaintiff never reported his alleged concerns to any outside
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investigatory agency. The Plaintiff’s failure to make a specific report of his alleged concerns within the agency to anyone with the authority to correct the problem, or any report of such concerns to an investigatory agency outside the KPPA, completely undermines his allegations that his vague and undocumented concerns about PPW can provide grounds for relief under the Whistleblower Act.
Order, p. 3-5 (emphasis in original).
While KPPA asserted that all issues concerning PPW had been addressed and remedied through its internal audit process, the circuit court expressed skepticism regarding the corrective actions recommended for identified issues in the initial audit:
The PPW audit further noted that PPW had reported a net loss for two of the fiscal years reviewed and that no income had been remitted to the shareholder, [Kentucky Retirement Systems]. The audit determined that the loss of income should be remedied by increasing the rent by $12.50 per square foot and that corrective action had been taken as on December 5, 2019, a request was made to and approved by the shareholder to raise the monthly rental to $12.50 per square foot. In other words, KPPA “remedied” the problem by raising its own rent, a “solution” that was borne entirely by the taxpayers and the public employees who are beneficiaries of the system.
Id. at 5.
The circuit court’s skepticism was not assuaged by the findings of a subsequent internal audit:
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Ms. Coffey performed a follow-up audit and issued a second report dated September 1, 2020, which tested the corrective actions and controls that had been implemented as a result of the earlier audit. This report stated that internal controls had been established and were working as intended. Nevertheless, even though the Plaintiff did not make any actionable report of these issues within the agency or outside of it, the record in this case demonstrates that the KPPA should itself request review of these issues by the Attorney General and the Auditor of Public Accounts.
Id.
Turning to the allegations of Herbert, the circuit court determined that the information he reported, and which formed the basis for his KWA claims, “was either (or both) 1) public information or 2) otherwise widely known within the KPPA.” Order, p. 19 (citing Harper v. Univ. of Louisville, 559 S.W.3d 796, 802 (Ky. 2018)). As a result, the Order concluded, summary judgment on the KWA claims was appropriate. Furthermore, the circuit court concluded, summary judgment was also appropriate because the alleged disclosures were not made to an appropriate body but reported only internally to KPPA and the alleged disclosures were merely an expression of a policy disagreement based upon Herbert’s subjective opinion, rather than any previously unknown waste, fraud, and abuse.
Finally, the circuit court concluded that, even if Herbert had made a protected disclosure, he failed to produce any evidence that the alleged protected disclosure was a contributing factor to KPPA’s decision to terminate his
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employment. The court determined that KPPA had demonstrated legitimate reasons it had to terminate Herbert’s employment, “including that he was rude, condescending, and abrupt with KPPA staff, did not cooperate with other departments, did not follow instructions and avoided accountability, and was deficient in performing the CIO’s duties.” Order, p. 20. The Order concluded that these reasons for Herbert’s termination, rather than retaliation for any alleged protected disclosure, were supported by unrefuted deposition testimony and that Herbert had failed to present sufficient evidence to rebut the showing by KPPA.
Herbert filed a timely appeal. Further facts will be discussed as needed in our analysis.
STANDARD OF REVIEW
Herbert appeals an order granting summary judgment. We review a circuit court’s grant of summary judgment de novo. Patton v. Bickford, 529 S.W.3d 717, 723 (Ky. 2016); Wolfe v. Kimmel, 681 S.W.3d 7, 12 (Ky. 2023).
Summary judgment is appropriate when “there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” CR4 56.03; Hill v. State Farm Mut. Auto. Ins. Co., 709 S.W.3d 232, 236- 37 (Ky. 2025). Because summary judgment involves no fact-finding, we afford no
4 Kentucky Rules of Civil Procedure.
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deference to the circuit court’s legal conclusions. State Auto Prop. & Cas. Co. v. Greenville Cumberland Presbyterian Church, 706 S.W.3d 35, 43 (Ky. 2024).
KWA
The essential elements of a whistleblower violation are set forth in KRS 61.102(1). Harper, 559 S.W.3d at 801. In pertinent part, KRS 61.102(1) provides:
No employer shall subject to reprisal, or directly or indirectly use, or threaten to use, any official authority or influence, in any manner whatsoever, which tends to discourage, restrain, depress, dissuade, deter, prevent, interfere with, coerce, or discriminate against any employee who in good faith reports, discloses, divulges, or otherwise brings to the attention of the Kentucky Legislative Ethics Commission, the Attorney General, the Auditor of Public Accounts, the Executive Branch Ethics Commission, the General Assembly of the Commonwealth of Kentucky or any of its members or employees, the Legislative Research Commission or any of its committees, members or employees, the judiciary or any member or employee of the judiciary, any law enforcement agency or its employees, or any other appropriate body or authority, any facts or information relative to an actual or suspected violation of any law, statute, executive order, administrative regulation, mandate, rule, or ordinance of the United States, the Commonwealth of Kentucky, or any of its political subdivisions, or any facts or information relative to actual or suspected mismanagement, waste, fraud, abuse of authority, or a substantial and specific danger to public health or safety.
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In short, the four elements an employee must demonstrate to establish a violation of the KWA under KRS 61.102 may be summarized as follows: (1) the employer is an officer or entity of the state; (2) the employee is employed by the state; (3) the employee made or attempted to make a good-faith report or disclosure of a suspected violation of state or local law to an appropriate body or authority; and (4) the employer took action or threatened to take action to discourage the employee from making such a disclosure or to punish the employee for making it. Davidson v. Commonwealth, Dep’t of Mil. Affs., 152 S.W.3d 247, 251 (Ky. App. 2004).
The purpose of the KWA is to protect employees who possess knowledge of wrongdoing that is concealed or not publicly known, and who step forward to help uncover and disclose that information. Administrative Office of Courts v. Miller, 468 S.W.3d 323 (Ky. 2015). In order to serve this remedial purpose, the KWA must be liberally construed. Harper, 559 S.W.3d at 801. Nonetheless, specific limitations on what constitutes protected whistleblowing activity to satisfy the third element have been articulated in precedent.
In Harper, our Supreme Court “summarize[d] several principles also useful for determining whether [plaintiff’s] communications are protected whistleblower disclosures which may survive summary judgment.” Kearney v. Univ. of Kentucky, 638 S.W.3d 385, 399 (Ky. 2022). Four qualifications for the
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applicability of KWA protection to an employee disclosure were set out in Harper as follows:
First, the “disclosure” of information which is public information or otherwise already widely known within the organization cannot qualify as a whistleblower disclosure. The statute protects the whistleblower who exposes information not generally known. Moss v.
Kentucky State University, 465 S.W.3d 457 (Ky. App.
2014).
Second, complaints by an employee directly to her supervisor concerning the supervisor’s own wrongful conduct generally cannot qualify as a whistleblower disclosure. Pennyrile Allied Community Services, Inc. v.
Rogers, 459 S.W.3d 339, 345 (Ky. 2015).
Third, the disclosure must be made to one of the specific qualifying authorities identified within the statute, or to “any other appropriate body or authority.” “The list of entities in KRS 61.102(1) is not limited to those with investigatory authority. Instead, the list encompasses those who may have authority to remedy or report perceived misconduct in a particular situation.”
[Workforce Dev. Cabinet v. Gaines, 276 S.W.3d 789, 793 (Ky. 2008).] “[A]ny other appropriate body or authority”
means any public body or authority with the power to remedy or report the perceived misconduct. This interpretation serves the goals of liberally construing the Whistleblower Act in favor of its remedial purpose, and of giving words their plain meaning. Generally, the most obvious public body with the power to remedy perceived misconduct is the employee’s own agency (or the larger department or cabinet). Id.
Finally, the nature of the information disclosed cannot simply be an expression of a policy disagreement based upon the whistleblower’s subjective opinion; it must objectively meet the criteria for the kinds of misconduct
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described in the KWA, such as actual or suspected conduct that violates a law or administrative regulation or conduct that objectively viewed constitutes waste or fraud.
559 S.W.3d at 802-03.
ANALYSIS
On appeal, Herbert presents three arguments: 1) that he submitted protected disclosures pursuant to the KWA; 2) the circuit court committed error in its application of Workforce Dev. Cabinet v. Gaines, 276 S.W.3d 789 (Ky. 2008); and 3) that the circuit court “erred in allowing KPPA to Cherry Pick documents from the Sealed Envelope in the Record, and did not consider the entire filing, to be unsealed and used as evidence.” Appellant brief, p. 4.
KPPA argues that the Order of the circuit court contains no instances of error. Each of the specific arguments offered by Herbert, KPPA contends, is unsupported by the record and/or represent misapplications of relevant law. Additionally, however, KPPA argues that the Appellant brief is so deficient on its face that our analysis of Herbert’s specific arguments is unnecessary.
KPPA notes that Herbert appears to have abandoned any KWA claim concerning the issues related to PPW on appeal, as he presents no argument disputing the circuit court’s findings and conclusions regarding that issue. Furthermore, KPPA contends that Appellant’s brief fails entirely to meaningfully address a number of critical determinations in the Order. These include the circuit
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court’s conclusions that Herbert’s reports or disclosures consisted solely of information that was already publicly known and that they concerned only Herbert’s subjective legal opinions, rather than objective evidence of actual wrongdoing, waste or loss of funds. Furthermore, KPPA contends, Herbert nowhere addresses the circuit court’s conclusion that he failed to present sufficient evidence for a jury to decide that his termination was the result of retaliation for any alleged protected disclosure rather than for legitimate reasons.
Herbert filed no Reply brief to rebut the arguments of KPPA.
At the onset of our analysis, we note our agreement with KPPA that Herbert presents no discernible argument that he made any protected disclosures with regard to the PPW issue. Consequently, we must focus on the circuit court’s decision regarding the Cash Flow Memo and related communications by Herbert.
The Circuit Court Did Not Err by Determining Herbert Made No Disclosures Subject to KWA Protection.
Herbert’s brief argues that statements made by Eager during his deposition testimony “establish beyond cavil that Herbert made protected disclosures which fall squarely under the KWA” in regard to the Cash Flow Memo. The testimony which Herbert focuses upon and cites specifically, primarily concerns whether the use of the Chase account was out of compliance with applicable statutes. Herbert contends Eager essentially conceded that the Cash Flow Memo and statements Herbert made in relation to it correctly concluded
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that the placement of funds in the Chase bank account was in violation of applicable statutes.
Regarding the Cash Flow Memo, the circuit court determined that Herbert’s statements therein “did not actually reveal any secret or hidden problems that were previously unknown to KPPA.” Rather, the circuit court determined that “KPPA’s cash flow process has been in use for many years and is a matter of public record. The existence and balances of the Chase Bank depository accounts have been reported in the public financial statements of KPPA for over 20 years.”
Herbert’s initial argument is terse. In it, as well as the remainder of his Appellant brief, he presents no identifiable argument that the circuit court erred in its conclusion that he had disclosed no information that was concealed or not already publicly known. And yet, binding precedent establishes that the KWA extends protection to employees who expose governmental wrongdoing that has been concealed or, at least, not generally known. Harper, 559 S.W.3d at 802; citing Moss, 465 S.W.3d 457. On the other hand, “the ‘disclosure’ of information which is public information or otherwise already widely known within the organization cannot qualify as a whistleblower disclosure.” Harper at 802.
This is consistent with the KWA’s “remedial purpose of protecting ‘employees who possess knowledge of wrongdoing that is concealed or not publicly known, and who step forward to help uncover and disclose that
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information.’” Id. at 801 (quoting Davidson, 152 S.W.3d at 255). And precedent has found that summary judgment is appropriate where it is undisputed that the alleged disclosure fails to reveal concealed wrongdoing. Miller, 468 S.W.3d at 330 (citing Davidson, 152 S.W.3d at 255). Furthermore, where an allegedly illegal policy and the statute making it illegal are both available to the public, KWA protection will not apply. Id. (citing Helbig v. City of Bowling Green, 371 S.W.3d 740, 743 (Ky. App. 2011)).
On appeal, Herbert never disputes that the use of the Chase account was a publicly known policy of government. And it appears that, in his deposition, Herbert conceded that the use of the account was not a secret and was in no way concealed. The focus of his arguments here, as well as before the circuit court, is upon the validity of this policy. Herbert emphasizes his allegation that the policy he challenged was in violation of Kentucky statutory law.
This Court faced the issue of disclosures concerning publicly known policy a KWA plaintiff had perceived to be in violation of statutory law in Helbig, 371 S.W.3d 740. There, a police officer had filed a grievance and argued that a new overtime policy was in violation of KRS 95.495. Id. at 741. The grievance was eventually denied, and the officer was demoted from his position as acting captain to that of a sergeant. Id. This Court noted that the new overtime policy had been publicly disclosed and was widely known. Id. at 743. Recognizing that
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disclosure of information known to or available to the public was not protected disclosure under the KWA, we determined that police officer’s disclosure that the overtime policy was illegal was not subject to KWA protection. Id.
This Court concluded in Helbig that the KWA was:
not needed to encourage employees to disclose the illegality of a city commission’s publicly enacted policy.
That policy is already public; the public is presumed to know the law; and, any alleged illegality with regard to that policy is readily redressable by means of a declaratory action.
Id.
Here, much like the police officer in Helbig, Herbert alleges that he was subject to adverse employment consequences due to his disclosure of a publicly known policy being in violation of state statutes. Helbig establishes that an employee’s complaint as to the legality of a publicly known policy does not qualify as a protected disclosure. Id. at 743.
Herbert points to no affirmative evidence indicating any genuine issue of material fact as to whether the use of Chase for depositing funds was concealed or not, or in fact, widely known within the agency. See Steelvest, Inc. v. Scansteel Service Center, Inc., 807 S.W.2d 476, 482 (Ky. 1991) (“[A] party opposing a properly supported summary judgment motion cannot defeat it without presenting at least some affirmative evidence showing that there is a genuine issue of material fact for trial.”). Consequently, and based upon the same reasoning as Helbig, we
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must conclude that Herbert’s disclosures in the Cash Flow Memo were not subject to KWA protection and that the circuit court properly awarded summary judgment to KPPA.
The Circuit Court’s Rejection of Herbert’s Arguments Regarding Workforce Dev. Cabinet v. Gaines Does Not Require Reversal of the Award Of Summary Judgment.
To the circuit court, Herbert argued the Cash Flow Memo and his related statements were protected disclosures of the same nature as the internal disclosures in Workforce Dev. Cabinet v. Gaines, 276 S.W.3d 789.
In Gaines, our Supreme Court “held that the phrase in KRS 61.102, ‘any other appropriate body or authority,’ means a body or authority with the power to remedy or report the perceived misconduct.” Pennyrile Allied Cmty. Servs., Inc. v. Rogers, 459 S.W.3d 339, 345-46 (Ky. 2015) (citing Gaines, 276 S.W.3d at 793). And, as Herbert correctly points out, the Gaines Court held that the KWA may remain applicable even where the “appropriate authority” was within the same agency where the wrongdoing was occurring. Gaines, 276 S.W.3d at 793.
However, Herbert does not address precedent from our Supreme Court which revisited and further clarified this holding. Importantly, the disclosure in Gaines was not made to alleged wrongdoers within the same agency. Pennyrile, 459 S.W.3d at 346. The distinction is critical and “Pennyrile holds that an
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employee’s direct complaint to his supervisor concerning the supervisor’s own wrongful conduct generally cannot qualify as a whistleblower disclosure.” Kearney, 638 S.W.3d at 407.
Herbert contends that he reported his concerns to Merl Hackbart, Chairman of CERS Investment Committee and the Kentucky Retirement Systems Board of Trustees. Herbert asserts that “CERS and [Kentucky Retirement Systems] Board of Trustees members” serve to “oversee KPPA.” He argues both are separate legal entities from KPPA. Furthermore, he argues, these were entities who could have addressed his concerns. Accordingly, Herbert asserts, his Cash Flow Memo and related statements were disclosures made to an appropriate body or authority with the power to remedy the perceived misconduct.
However, KPPA points out that Herbert does not address the circuit court’s finding that these were also entities whom he had contended were engaged in the very alleged wrongdoing he was reporting. The CERS and Kentucky Retirement Systems Boards of Trustees, KPPA contends, are the same entities that Herbert alleges were improperly keeping funds at Chase. Despite his opportunity to file a Reply brief, Herbert did not do so and leaves this assertion unrebutted.
In Herbert’s argument on this point in his Appellant brief, he offers several abbreviated quotations from the Order in the context of the Cash Flow Memo issue:
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The Court stated, “he [Herbert] concluded that the cash flow process contained discrepancies and suspected waste as it did not match the plan documents. . . .” It should be noted that the “plan documents” are the statutes that govern KPPA. The Court further stated that had Herbert had made a request for an investigation to law enforcement, “the Court might view this matter differently.” The Court’s additional requirement that Herbert make additional reporting is not necessary, pursuant to Gaines, supra and Harper, supra, nor required by KRS 61.102(1). Herbert had “a reasonable belief that a law, rule, or regulation had been violated” (Harper citing Pedeleose v. Department of Defense, 343 Fed. Appx. 605, 609, (Fed. Cir. 2009)).
The Court erred when it stated, “the Plaintiff never reported his alleged concerns to any outside investigatory agency.” The Court’s Opinion improperly faults Mr.
Herbert for failing to report his concerns to a number of investigating agencies. The Court states, “Moreover, he [Herbert] has offered no explanation of why he failed or refused to share these concerns with any investigatory or oversight agencies outside of KPPA . . . .”
Appellant brief, p. 11.
With regard to the PPW issue, the circuit court detailed its reasoning as to why it had determined that Herbert had made those “disclosures” only to persons or entities he alleged were engaged in the alleged misconduct he reported. Examination of the Order demonstrates that each quotation in the above passage occurred in this context, with the circuit court specifically discussing the PPW issue. This is certainly the case with both quotations regarding the failure to report to an “outside” agency; one of which may be viewed within context in the Background section of this Opinion above.
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It is also the case with the abbreviated quotation concerning whether, “the Court might view this matter differently[,]” had such a report occurred. That language appears in the final sentence of the following passage:
Not only was the PPW issue public knowledge, but there is no evidence that Mr. Herbert attempted to disclose this information to the proper authorities, such as law enforcement or anyone other than KPPA itself. Here, Mr. Herbert’s allegation is that Crumbaugh Properties had full access to write checks from the PPW operational bank account and that there was a lack of oversight by KPPA staff. (Compl. ¶ 19.) Essentially, Mr. Herbert alleges that KPPA was complicit in PPW’s ability to embezzle money from it. The case law is clear that to be a proper disclosure under the KWA, it must be made to someone other than the alleged wrongdoer. Workforce Dev. Cabinet v. Gaines, 276 S.W.3d 789, 793 (Ky.
2008). If there was potentially criminal activity involved in the PPW/Crumbaugh arrangement prior to Crumbaugh’s resignation as property manager, then that is a matter that should be considered by the Attorney General. KPPA believed the issue had been resolved by imposing additional controls recommended by its auditors. If Plaintiff disagreed with this conclusion, it is still an internal disagreement over policy, not a whistleblower report. If Plaintiff had made a request for investigation of PPW to law enforcement, the Court might view this matter differently.
Order, p. 19 (emphasis added).
Herbert’s characterization and presentation of the substance of the Order is questionable. Nonetheless, with regard to the Cash Flow Memo issue, the Order did determine that Herbert had failed to create an issue of fact as to whether he made the disclosure to appropriate authorities, albeit without any specific
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citation to Gaines in that discussion. Nonetheless, we discern the primary basis for the circuit court’s award of summary judgment as to the Cash Flow Memo issue to be for failure to report information that had been concealed or was not generally known within the organization. And as we determined above that the award of summary judgment was appropriate on this basis alone, any alleged error in the circuit court’s application of Gaines was harmless error pursuant to CR 61.02.
The Circuit Court’s Denial of Herbert’s “Motion To File Under Seal”
Does Not Provide an Avenue for the Reversal of the Order Granting Summary Judgment.
Herbert argues that by filing a “Motion to File Under Seal,”
requesting that certain emails be used as evidence, he submitted to the circuit court email exchanges which demonstrated that KPPA General Counsel Michael Board had advised Eager that Herbert was correct in his assertion that KPPA was out of compliance with statute, and that the Board had also agreed with Herbert’s assertion.
KPPA contends that Herbert misconstrues and misrepresents the content of these emails, arguing that KPPA’s General Counsel did not express any agreement with Herbert’s statutory interpretation in them. However, even if Herbert’s characterization of the emails were correct, KPPA insists, his argument provides no basis for reversal. KPPA contends that Herbert fails to address the basis of the circuit court’s decision to deny his motion and does not allege any
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legal error in the circuit court’s denial of his motion. Furthermore, KPPA argues that Herbert offers no explanation as to how these emails might have served to negate the circuit court’s conclusion that he had failed to satisfy multiple elements of his KWA claim.
KPPA argued to the circuit court that the emails contain communications from its General Counsel conveying legal opinions and advice to members of the organization he represents, citing St. Luke Hosp. v. Kopowski, 160 S.W.3d 771, 776 (Ky. 2005). To this Court, KPPA points out that Herbert’s Appellant brief does not challenge the applicability of the attorney-client privilege, at all, or contain any argument to rebut the applicability of the privilege. Consequently, KPPA argues, Herbert’s failure to actually dispute the application of privilege to these emails on appeal constitutes a waiver of the issue and precludes reversal.
Even if it were the case that Herbert preserved a discernible legal challenge to the circuit court’s denial of his motion, he makes no assertion these emails might have established he made any disclosure of concealed or non-public information. Miller, 468 S.W.3d at 331. For this reason, we cannot say the circuit court erred by granting summary judgment to KPPA and any argument concerning Herbert’s “Motion to File Under Seal” is moot.
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We Decline to Address Whether the Cash Flow Memo was a Contributing Factor to Herbert’s Termination.
The circuit court determined that, as it had “concluded that Mr.
Herbert’s allegations do not constitute “protected disclosures” for purposes of the KWA, the Court need not reach the issue of whether they were a “contributing factor” in the negative personnel action[.]” Order, p. 20. Nonetheless, the circuit court went on to analyze the issue and to conclude that “even if [Herbert] had made a protected disclosure, he has pointed to no evidence that such matters were a ‘contributing factor’ to his termination.” Id.
We have concluded, in agreement with the circuit court, that Herbert’s Cash Flow Memo and related communications were not protected disclosures. Accordingly, as a matter of law, he cannot prevail on his KWA claims. Consequently, as pointed out by the circuit court, it is unnecessary to reach the issue in order to determine that summary judgment was appropriate. We decline to address as unnecessary any arguments concerning whether the alleged disclosures were a contributing factor in Herbert’s termination.
CONCLUSION
For the foregoing reasons, we affirm the Franklin Circuit Court’s Order granting summary judgment to KPPA and dismissing Herbert’s Complaint with prejudice.
ALL CONCUR.
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BRIEF FOR APPELLANT: BRIEF FOR APPELLEE:
Thomas E. Clay Jason P. Renzelmann Louisville, Kentucky Kathleen B. Wright Irina V. Strelkova
Peter M. Cummins
Louisville, Kentucky