Key Points

  • The Fourth Circuit affirmed summary judgment for Charleston Day School on a former trustee's False Claims Act retaliation claim under 31 U.S.C. 3730(h).
  • The court held the trustee was not an 'employee, contractor, or agent' of the school because, under the Restatement of Agency, he had no actual or apparent authority to bind it.
  • Being asked by board leaders to fundraise and recruit families did not create apparent authority because the school made no manifestation of his authority to third parties.
  • Committee service did not create actual authority because the bylaws gave those committees no power to bind the board.
  • The panel did not reach the district court's alternative ruling that the trustee could not show the school knew of his protected activity or removed him because of it.

A former federal prosecutor who was voted off the board of a private school in Charleston, South Carolina, after looking into its use of federal Covid-19 relief money cannot sue the school under the False Claims Act's anti-retaliation provision, a federal appeals court ruled Monday, because an individual trustee is not the school's agent.

A three-judge panel of the U.S. Court of Appeals for the Fourth Circuit unanimously affirmed summary judgment for Charleston Day School against Marshall Austin, its former trustee. Judge Wilkinson wrote the published opinion, which Judges King and Rushing joined.

The False Claims Act lets anyone bring a qui tam suit against a private party that has defrauded the government, but its retaliation provision is "much narrower," the court wrote. It protects only an "employee, contractor, or agent" punished for trying to stop fraud. The panel held that a board member becomes an agent only if the institution gives him power to bind it, and that being asked to raise money and recruit families does not do so.

The court did not decide whether the school removed Austin to punish his inquiries. The statute's text, Wilkinson wrote, "keeps us from second-guessing the board's judgment of the qualifications of its own members."

Austin, who had handled white-collar and false-claims matters as a federal prosecutor, joined the school's board in June 2021. Before he arrived, the school had received money from two federal pandemic programs, the Paycheck Protection Program and Emergency Assistance to Nonpublic Schools, and the board had voted to seek forgiveness of its PPP loans. Forgiveness left a surplus of almost $700,000, which the board voted in 2021 to move into the endowment.

Austin and his wife, Francie Austin, also objected strongly to the school's mask requirements, and she emailed school employees, including Head of School Judith Arnstein and Board Chair Emmie Hershey, to complain.

On Dec. 20, 2021, Austin logged into a board portal and saw a strategic financial plan that contemplated scenarios with or without PPP funds. Later that day he found that Hershey had cut off his access. After learning on Feb. 3, 2022, that the board's Executive Committee planned to seek his removal, he contacted at least four board members and two current or former assistant U.S. attorneys about possible misuse of the Covid funds. On Feb. 6 he accused Hershey and Arnstein of retaliation in a text message.

The board removed him at a special meeting on Feb. 11, 2022. The motion faulted him for failing to act in the school's best interests and cited his efforts "to cause disruption to school operations, to question authority of the head of school and the executive committee of the board of trustees, to threaten legal action against board members and school employees."

Austin sued the school, Arnstein and Hershey in June 2023. In June 2025, U.S. District Judge Joseph Dawson, III, of the District of South Carolina granted the school's motion for summary judgment. He dismissed the claims against Arnstein and Hershey, finding the act authorizes no individual supervisor liability, and ruled for the school because Austin was not an employee, contractor or agent and could not show the school knew of his protected activity or acted because of it. Austin appealed only the ruling for the school.

On appeal, Austin did not claim to be an employee or contractor, and he agreed that common-law agency principles, as set out in the Restatement of Agency, define the term "agent." Wilkinson wrote that the Restatement "negates his position, and so resolves this case." The record, he wrote, "simply provides no evidence of Austin's ability to bind CDS, to affect or alter the legal rights and duties of the school."

Austin argued that when Hershey and another trustee asked him to fundraise and recruit families, he acquired apparent authority, the power to bind a principal that arises when outsiders reasonably believe an actor speaks for it because of the principal's own conduct. The panel found the school made no such manifestation to anyone. "Nor would any reasonable prospective donor even think to make a legally binding agreement with but a single board member," Wilkinson wrote, adding that Austin "gives no example of any poor bamboozled parent or donor who thought Austin had such power."

The opinion offered a contrasting hypothetical: a prominent school sign inviting families to ask board members about discounted tuition, followed by Austin signing a scholarship contract with a family. Such a sign would be a manifestation of authority "made to third parties, and traceable to CDS," the court wrote. "Nothing of the sort happened here."

The panel added that the facts would not establish actual authority, meaning power delegated directly by the principal, because the bylaws gave Austin's committees no power to bind the board.

Wilkinson wrote that Austin's reading "would disrupt trustee-guided institutions across the nation," because outreach to donors and families is core trustee work. If such outreach made trustees agents, the opinion said, they could make binding promises or expose their institutions to tort liability without any vote. "An institution would be at the mercy of individual trustees," he wrote.

The opinion cast the result as a defense of majority rule on governing boards, which it called "the American way of doing things." "Solo flights, however well-intentioned, do not grant one member the power to claim a board's collective authority as his own," Wilkinson wrote.

The court said it had no need to take sides in the board dispute but said it could not depart from the statute's text "in a manner that would permit many of the manifold disagreements within a board to sow the seeds for a False Claims retaliation suit."

Hannah Rogers Metcalfe of Metcalfe & Atkinson LLC argued for Austin. Alice F. Paylor of Saxton & Stump LLC argued for the school.

The decision leaves the judgment for the school in place. Because the panel ruled on the agency question alone, it did not reach the district court's separate finding that Austin could not show the school knew of his protected activity or removed him because of it.