Federal Appeals Court Rules for Former SCJ Employee; RICO Lawsuit Moves Forward

Michael DeGuelle will be allowed to continue his case for wrongful termination against SC Johnson now that the Seventh Circuit Court of Appeals overturned a lower court's dismissal.

DeGuelle is suing the Racine-based manufacturer because he says the company was committing tax fraud and when he he contacted law enforcement agencies to report the crime, he was terminated. Using the Racketeer Influenced and Corrupt Organizations Act (RICO) under which to file his suit, DeGuelle says SCJ fired him as retaliation for reporting what he saw as criminal acts to law enforcement agencies, which is illegal.

"SC Johnson admitted to the reason they were firing me in my termination letter," he said. "But I only turned over confidential information to the agencies charged with enforcing laws, and that is a protected action. The appellate court agreed, and now my case can move forward."

What the appeals court ruling tells employees, DeGuelle added, is that their jobs will be protected for doing the right thing.

But Christopher Beard, a spokesperson for SC Johnson, said the matter has already been settled.

"The Seventh Circuit Court of Appeals held that Mr. DeGuelle’s complaint included enough unproven claims to start a lawsuit. However, Mr. DeGuelle’s federal court lawsuit essentially attempts to re-litigate the Racine County suit where that court decided in SC Johnson’s favor, dismissing all of DeGuelle’s claims and awarding SC Johnson damages on its claims," he said in a written statement. "Like the Racine county case, we believe we will prevail in the District Court and that the case will be dismissed."

DeGuelle was employed by SCJ from 1997 to 2009 in the tax department. His suit claims the company falsified tax documents to get $5.1 million in various credits and refunds. After being fired, SCJ sued DeGuelle to get their documents back, for defamation, and for breach of contract. A , awarding the company $50,000.

DeGuelle counter-sued for wrongful termination in federal court under the RICO Act, and the lower court in Milwaukee refused to hear the case. The Seventh Circuit Court judges wrote in their opinion that the lower court overlooked the link between DeGuelle's report to law enforcement agencies and his termination.

In the written opinion, Judge Kanne said, "Because we find that the acts are related under the Supreme Court’s 'continuity plus relationship' test, the judgment of the district court will be reversed."

DeGuelle said his attorney called him yesterday, Dec. 15, to tell him the news.

"I am thrilled with this decision because SC Johnson should be held accountable for their actions," DeGuelle said. "I will be able to do in federal court what I was not able to do in a state court and that is prove I have been telling the truth all along."