The discrimation lawsuit filed by former Sterling Bank CEO Heidi Stanley remains active in Spokane's County Superior Court.  Stanley is suing her former employer for wrongful termination, saying she lost her job after being diagnosed with breast cancer in spring 2009.

Sterling officials say the illness has nothing to do with Stanley leaving the company.

That departure or dismissal occurred right in the middle of Sterling's efforts to dig out of a deep financial pit. It ended up taking a huge investment through the TARP  (troubled assets relief program).

The recent legal development worth noting is a U.S. District Court ruling against Sterling, who had made a motion to dismiss the suit, arguing that the bank could not provide Stanley any compensation for her departure because of conditions imposed by virtue of the TARP money Sterling took from the feds.

But the court didn't buy the Sterling legal argument. The net result is that Stanley's wrongful termination suit can proceed.

Read to the next section to get a segment from the recent U.S. District Court ruling (the issue of TARP condition dragged this motion into federal court, while the termination action can be pursued at the state court level).

From the U.S. District Court opinion denying Sterling's motion to invalidate Stanley's suit. (NO. CV-12-214-EFS)

An  employee  who  is  fired  as  a  result  of  her  employer’s discriminatory conduct is not “departing” from the employer as that term is envisioned by the TARP laws.  This is because, but for the wrongful termination, the  employee  would  not  have  departed. 

Therefore,  any damages awarded to this wrongfully-terminated employee is not payment “made for the departure” or “contingent on” the employee’s departure, but rather  is  to  compensate  the  wrongfully-terminated  employee  for  being unable  to  continue  receiving  wages.    Similarly,  emotional  distress damages are not “made for the departure” or “contingent on the departure” but rather are contingent on the fact-finder finding that the employer’s wrongful termination caused the employee emotional distress.  

Further,  an  award  of  lost  wages  in  a  employment-discrimination lawsuit is essentially a payment for services performed.  Therefore, the Court’s interpretation of the TARP laws is supported by § 5221(a)(2)’s
exclusion for “payments for services performed or benefits accrued”; and the  applicable  regulations  contain  similar  exceptions.    12  C.F.R. § 359.0(b) (excluding payments pursuant to qualified retirement plans,
nonqualified  bona  fide  deferred  compensation  plans,  nondiscriminatory severance  pay  plans,  and  other  types  of  common  benefit  plans,  state statutes and death benefits); 31 C.F.R. § 30.1(2)(ii) (excluding “[a]ny
payment made by reason of the employee due to the employee’s death or disability”).

Accordingly,  the  TARP  laws’  language  supports  a  finding  that Congress did not intend to alter the right of a wrongfully-terminated senior executive officer “to recover actual damages for discrimination.”
Burchfiel  v.  Boeing  Corp.,  149  Wn.  App.  468,  485  (2009).    For  these reasons, the Court finds Mrs. Stanley, if she succeeds on her state-court discrimination claim, may recover lost wages, future wages, and emotional distress amages.

Case 2:12-cv-00214-EFS    Document 40    Filed 08/23/12

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