Marshall Austin, a former federal prosecutor, served as a volunteer trustee on the Board of Charleston Day School, an independent school in South Carolina, from June 2021 to February 2022. His three children attended the School from 2019 through 2022. During his tenure, the School had received two forms of federal COVID-19 relief: (1) a $570,200 Paycheck Protection Program (PPP) loan, later fully forgiven, and (2) approximately $80,000 in services and reimbursements through the Emergency Assistance to Nonpublic Schools (EANS) program.
Austin became concerned about the School’s use of these funds. In late 2021, he accessed internal records via the Board’s online portal and raised questions with other trustees and the Head of School, Judith Arnstein. He requested archived meeting minutes and, in February 2022, contacted the U.S. Attorney’s Office to report possible misuse of federal funds. The day after he notified federal authorities, the School called a special Board meeting, where Austin was removed as a trustee by a 12-0 vote (with two abstentions), and the Board voted not to renew enrollment for his three children. These votes were made in accordance with the Board’s Bylaws.
The School cited several reasons for these actions, including Austin’s alleged breaches of confidentiality, disruptive conduct, threats of litigation, breach of fiduciary duties, and violation of parent conduct standards due to his wife’s contentious interactions with staff regarding COVID-19 policies.
The False Claim Act (FCA) is an anti-fraud statute that imposes liability on individuals or entities that submit false claims or false statements to the federal government. Austin filed suit under the FCA’s anti-retaliation or “whistleblower” provision (31 U.S.C. § 3730(h)), claiming that the School and two individual defendants—Board Chair Emmie Hershey and Head of School Arnstein—retaliated against him for attempting to expose federal funding misuse. This provision protects employees, contractors, or agents from retaliation for lawful efforts to prevent fraud against the federal government.
The Court’s decision addressed three central questions: (1) whether the individual defendants could be held liable under the FCA, (2) whether Austin qualified as an “employee, contractor, or agent” of the School, and (3) whether there was evidence of unlawful retaliation.
Regarding the first question, the Court ruled that the FCA does not allow claims against individuals who are not the claimant’s employer. Hershey and Arnstein were sued in their personal capacities, but Austin, as a fellow board member, was not subordinate to them. The Court relied on precedent holding that the whistleblower provision imposes liability only on an employer—not individual supervisors or peers—thus dismissing all claims against Hershey and Arnstein.
Austin next argued that he qualified as an “agent” of the School and was therefore protected by the FCA. The Court applied traditional agency law, which requires both a principal’s manifestation of authority and the principal’s control over the agent’s actions. Although Austin participated on committees and helped with fundraising, the Court found no evidence that the School Board—or any individual—exercised control over his work. To the contrary, the Court emphasized that the School’s Bylaws granted collective authority to the Board and made clear that no trustee, including Austin, had individual power to bind the School. Austin was not supervised, evaluated, or directed in any employee-like manner. The Court concluded he was a fiduciary board member, not an agent under the FCA, and therefore not entitled to protection under the statute.
Even if Austin had qualified as a covered party, the Court found his retaliation claim failed on the merits. First, there was no evidence that the Board knew about his protected activity, and specifically, his contact with the U.S. Attorney’s Office, when it voted to remove him or to exclude his children. Austin admitted he had not informed the full Board of his concerns and had raised the issue with only a few individuals, without mentioning litigation or whistleblower intent. The Court held that without such notice, there could be no causation.
Austin attempted to rely on the “cat’s paw” theory, which allows an employer to be held liable if a biased subordinate influences a neutral decision-maker to take adverse action. Austin argued that Hershey or other trustees who harbored animus toward him had manipulated the full Board into removing him as a trustee and denying re-enrollment to his children. But the Court found the Board acted independently after formal deliberation and majority vote, defeating any argument that a biased actor had manipulated the process.
Finally, the Court held that even if a prima facie case had been established, the School offered multiple legitimate, non-retaliatory reasons for Austin’s removal. These included concerns over his alleged breach of confidentiality, disruptive behavior, and inappropriate interactions with School staff. Austin failed to show these reasons were pretextual. His disagreement with the Board’s characterization of his conduct, the Court concluded, did not suffice to establish retaliation under federal law.
The Court granted summary judgment to all defendants and dismissed Austin’s claims in full.
Austin v. Charleston Day Sch. (D.S.C. June 25, 2025) 2025 U.S.Dist.LEXIS 120631.
Note: This case underscores the importance of clearly defining the roles and authority of board members and adhering to a school’s bylaws. Schools should ensure their governance documents establish a structure that minimizes ambiguity and supports transparent, collective decision-making.