On Tuesday, we learned that CalPERS’ former Chief Operating Investment Officer, Elisabeth Bourqui, who resigned suddenly in early January, attended the CalPERS offsite in Rohnert Park, with heavyweight employment lawyer Elisa Stewart of Stewart & Musell at her side in the morning (Bourqui’s husband joined her in the afternoon). Bourqui declined to speak to the press and public but was giving her card to interested board members.
Recall that Bourqui’s sudden departure didn’t smell right. CalPERS made no announcement; members of the press found out via employees leaking the e-mail sent by the new Chief Investment Officer, Ben Meng. As we wrote then:
The fact that Bourqui left without any transition or advance warning means it is well nigh certain that she had a dispute with Marcie Frost. Recall that the departures of the head of private equity, Real Desrochers, the former Chief Operating Investment Officer Wylie Tollette, and Chief Investment Officer Ted Eloupoulos were all announced in advance.
Initial reports indicated that Bourqui was well liked and well respected by employees, so it seems inconceivable that her performance was sub-par. It seems pretty clear what the real issue was. As one said:
There is no way this is not about private equity.
By contrast, when Bourqui’s predecessor, Wylie Tollette, left, CalPERS issued the usual sort of press release, explaining why he was leaving, describing his accomplishments, including CEO Marcie Frost heaping a full paragraph of praise on him. Even in less friendly departures, the norm for an executive is a press release, with a terse explanation of the reason for leaving (“for personal reasons” or “to spend time with their family” is code for a defenestration). The lack of any official statement whatsoever suggests the circumstances of the exodus were so ugly that the employer wasn’t willing to spend the time to negotiate a minimal statement. 1
Even though the Ben Meng e-mail of January 7 started, “Elisabeth Bourqui has submitted her resignation as CalPERS Chief Operating Investment Officer (COIO) effective today,” tellingly, CEO Marcie Frost was using a different formulation to stakeholders on Tuesday: “I didn’t fire her.”
Bourqui’s remarkable public appearance sends a strong message that she didn’t regard her departure as voluntary and intends to Do Something about that. And Frost’s statement is awfully convenient. It leaves open the question as to whether someone else fired Bourqui, or whether she technically wasn’t fired, but was “rejected on probation,” which the term of art for how California civil service employees who have not finished the one-year probationary period are terminated.2
Bourqui had been at CalPERS for only eight months. Since she was on probation, her protection from dismissal is limited. If she were to appeal to the State Personnel Board, she would have the burden of proof. Normally the grounds for contesting a release from probation are discrimination, fraud….and retaliation. A source told us that Bouqui had raised serious issues about the private equity plan, and via a second channel, we understand that Bourqui objected to Frost and other senior staff members about how they were pushing the board to adopt the plan.
Bourqui was one of three presenters on the private equity plan in closed board meeting in November:
As we mentioned earlier, not only did Bourqui supervise risk modeling at ABB Group, Zurich-based engineering powerhouse that by virtue of operating in 100 countries had extremely complex exposures, but she also headed the Canadian pension fund practice for Mercer, which means she would have been familiar with how Canadian pension funds had successfully built up their private equity capabilities. It isn’t hard to imagine that Bourqui would have used her scarce face time before the board to raise concerns about the scheme, and that that would have enraged Frost, who has been hell bent to get the plan approved without the board doing an adequate job of kicking the tires.
Reporter Randy Diamond has gotten intel similar to ours. From Chief Investment Officer:
CalPERS sources have questioned if Bourqui’s detailed presentations on the potential investment returns but also risks of CalPERS’s planned direct investment-style private program in closed session meetings upset Frost, a big advocate of the program.
Most CalPERS investment officials had been telling board members in closed sessions the advantages of the program in terms of helping the system’s investment returns. Boruqui did so too, but she also expressed what she felt some of the risks of the program are, including potential millions of dollars in start-up costs.
As an aside, notice that CalPERS employees are reporting on closed session discussions to Diamond. Even though close session discussions are held in secret and supposed to remain secret, staff members see fit to publicize them without getting the required authorization on a regular basis. Here we see dissident staff members leaking. Yet CalPERS routinely tries to blame these unwelcome disclosures on board member who are not part of the power faction, when Diamond makes crystal clear his sources were employees, not board members.
But…you might be saying….what if Bourqui really did resign? It’s not so clear cut. California recognizes that there is such a thing as resigning under duress, which in California is called “constructive dismissal” and is categorized in the California Civil Jury instructions as a sub-set of the law on “wrongful termination”. A primer from Shouse Law Group gives an overview. Key sections:
The law of wrongful constructive termination (also known as wrongful constructive discharge) in California provides that you can sue an employer for wrongful termination even if you resigned rather than being fired.
In order to successfully sue an employer for wrongful constructive termination, you need to be able to show two things:
1. Your employer, through acts of workplace retaliation, intentionally or knowingly created working conditions for you that were intolerable, so that you would have no choice but to resign; and
2. Your employer did not have the right to fire you outright–and so if s/he had, you would have had a valid wrongful termination case against him/her.
From an attorney who spent his entire career working for California government bodies:
The law is pretty well-established, although it can often be challenging to prove-up. Employers have always used the strategy of forcing employees to quit, rather than firing them, in hopes of avoiding a wrongful termination suit. However, the courts have long recognized that if an employer knowingly and intentionally subjects an employee to working conditions that a reasonable person would consider to be so intolerable that they would resign, it is effectively a dismissal of the employee.
An important, although not essential, element of proof would be that the intolerable working conditions were imposed as retaliation for conduct of the employee, especially whistle-blowing. Evidence of favorable performance reviews leading up to the imposition of retaliatory intolerable working conditions also makes a stronger case. Intolerable working conditions can include imposing hours where an employee can no longer pick her children up from school, or placing a senior manager in a menial position. It’s simply a “reasonable person” standard and can include, demotion, failure to promote, threats to report an employee to ICE, refusal to provide professional development and training, denial of time-off, or denial of access to resources necessary to the performance of one’s job (like access to databases or records).
The grounds for Wrongful Termination go beyond whistle-blowing, and can include Wrongful Termination in Violation of Public Policy — such as refusing to perform an illegal act, performing an obligation required by law (such as jury service), exercising a legal right or privilege (like insisting on a lunch break), or reporting a violation of law (other than whistle-blowing).
I suspect that Bourqui is going to have quite a good case, because while Marcie Frost and Matt Jacobs are a couple of bullies, they appear to lack knowledge and experience of the subtleties of employment law. Her lawyer has quite a successful practice, and it’s doubtful that she would make a move like showing up at the off-site if she didn’t think that she has a very strong hand.
Another factor that would give Bourqui leverage is that if she were to file a State Personnel Board appeal, that document is a public record, and her hearing would also be public.
As I read the hearing procedures, if the two parties do not reach an agreement in a settlement conference, they are then scheduled for an evidentiary hearing. Bourqui would be able to do discovery and subpoena witnesses and documents. If Bourqui believes her stance on the private equity scheme was the reason she was pushed out, she would wind up reviewing her objections and why she felt she had a professional and potentially a fiduciary duty to make those views heard. Bourqui could also seek to depose board members and have the judge consider any relevant closed session information under seal. It’s hard to imagine that Frost would want this controversy to go public. If she has any sense, CalPERS will settle pronto. But selfishly, I’d love to see this go a few rounds. It’s time Frost took some body blows for her incompetence and vengefulness.
1 One employee e-mailed us to report that “She was ‘walked’ out of the building early this morning.” If that is true, that would be gratuitously nasty as well as consistent with the idea that Bourqui was fired.
2 To be more precise, the probationary period for Bourqui’s position was one year. However, but some lower level civil service positions have a 6 month probationary periods.