This is the work-place...everyone is passive aggressive to a degree. It's one of the first skills I picked up as an intern. It's also one of the first steps in conflict resolution. Or was is conflict avoidance?
Passive-aggressives do not do better work if threatened. They just become more passive-aggressive. It's all about not allowing anyone to control them. I had a boss who could just disappear--she would walk right by people and they wouldn't even see her. A couple times, she went on a week's vacation and didn't come back for two. When I called her on her cell phone at the CEO's, she said in her honeyed, smiling voice, "Oh no, I told you it was two weeks. I'm in [the mountains in another state] and can't come back. And cell phone reception isn't good."
I was "labeled" passive-aggressive. Some time passed, and then my employer was shocked, shocked! I tell you!, when I submitted my resignation. Soon after that, they realized that I was not incompetent.