USDOL/OALJ Reporter: ARB Decision Caselist - February 2013

SUMMARY AFFIRMANCE OF ALJ DECISION WHERE ALJ THOROUGHLY EXAMINED THE EVIDENCE AND MADE THOROUGH, WELL-REASONED LEGAL CONCLUSIONS

In Benniger v. Flight Safety International , ARB No. 11-064, ALJ No. 2009-AIR-22 (ARB Feb. 26, 2013), the ARB summarily affirmed the ALJ's decision denying the Complainant's AIR21 whistleblower complaint where the ALJ had thoroughly examined all of the Complainant's evidence and explained why it failed to establish that the Complainant's protected activity contributed to any unfavorable employment action; where the Respondent had presented evidence showing that the Complainant had engaged in actions that were serious violations of company policies, and evidence that other similar employees were either discharged or given the option of resigning; and the record supported the ALJ's thorough, well-reasoned legal conclusions.

The ARB dismissed the appeal after the Complainant failed to file an appellate brief, and did not respond to the ARB's order to show cause why the appeal should not be dismissed.

DISMISSAL FOR FAILURE TO PROSECUTE; WHERE ALJ DENIED COMPLAINANT S MOTION TO WITHDRAW HER ADMINISTRATIVE CLAIM IN FAVOR OF PURSUING THE CLAIM IN FEDERAL COURT (DUE TO PRIOR WAIVER OF SUCH RIGHT) AND COMPLAINANT THEN VOICED THE INTENTION NOT TO PARTICIPATE IN THE ALJ HEARING, ALJ DID NOT ABUSE HIS DISCRETION BY DISMISSING THE CASE; ARB DECLINED TO REVIEW ALJ S DENIAL OF MOTION TO INVALIDATE THE WAIVER AS INTERLOCUTORY

In Mara v. Sempra Energy Trading, LLC , ARB No. 12-090, ALJ No. 2009-SOX-18 (ARB Feb. 22, 2013), while the SOX case was pending before the ALJ, the Complainant moved to withdraw the claim under 29 C.F.R. § 1980.114, which permits a SOX complainant to bring an action in federal district court when the Secretary has not issued a final decision within 180 days after the complaint is filed. After further briefing by the parties, the ALJ held a telephone conference and denied the Complainant's motion to withdraw on the grounds that her prior counsel waived her right to proceed in federal court under 29 C.F.R. § 1980.114. During the conference, the Complainant stated to the ALJ that she would no longer litigate her administrative case before the ALJ. The ALJ then issued an order to show cause why the complaint should not be dismissed with prejudice due to abandonment and failure to prosecute. In response, the Complainant stated her intent not to move forward before the ALJ due to economic circumstances and the challenge of navigating the litigation pro se. The ALJ dismissed based on the Complainant's decision not to proceed in the DOL venue. On appeal, the ARB found that the ALJ was well within his discretion to dismiss the case for failure to prosecute. One member of the Board indicated in a concurring opinion that the Complainant had challenged the ALJ's denial of her motion to invalidate the waiver, but opined that because the case was dismissed for failure to prosecute, the ARB was within its discretion in declining to review the ALJ's interlocutory orders. The member noted that although interlocutory orders typically merge with final judgments for purposes of appellate review, when a case is dismissed for failure to prosecute or abandonment, the final judgment and merger rules may not apply.

The ARB also noted that the Complainant had moved the ARB to withdraw her case under 18 U.S.C. 1514A(b)(1)(B). The ARB, however, found that the statute does not require agency authority for such an action. Thus, [h]aving no ability to grant or deny a motion under 1514A(b)(1)(B), we thus decline to act on that issue. Slip op. at n.5.

BIFURCATION OF MERITS AND DAMAGES; ARB HAS POLICY AGAINST DECIDING PIECEMEAL APPEALS

In Peck v. Happy Trails, LLC , ARB No. 10-047, ALJ No. 2009-STA-32 (ARB Feb. 26, 2013), a case arising under since amended regulations that at the time provided for automatic review of ALJ recommended decisions in STAA whistleblower cases, the ALJ had found in favor of the Complainant and forwarded the matter to the ARB with a recommendation to remand for a hearing on damages if the decision was affirmed. The ARB noted that bifurcation of the merits and damages proceedings in this manner contravened the ARB's longstanding policy against deciding piecemeal appeals. The appeal, however, was dismissed due to the bankruptcy of the Respondent.

BANKRUPTCY; WHERE NEITHER PARTY RESPONDED TO ARB S ORDERS TO PROVIDE STATUS REPORT ON BANKRUPTCY PROCEEDING OR SUBSEQUENT ORDER TO SHOW CAUSE, AND PACER SHOWED THAT THE BANKRUPTCY MATTER WAS CLOSED, THE ARB CLOSED THE STAA CASE

In Peck v. Happy Trails, LLC , ARB No. 10-047, ALJ No. 2009-STA-32 (ARB Feb. 26, 2013), while the matter was on appeal before the ARB, the Respondent filed a Suggestion of Bankruptcy with the ARB and requested a stay of the administrative proceedings pursuant to 11 U.S.C. 362 (automatic stay provision). The ARB, finding it undisputed that the Complainant filed his STAA whistleblower complaint before the Respondent filed for bankruptcy, stayed the proceedings. In December 2012, the ARB ordered a status report, but neither party responded. The ARB issued an order to show cause why the case should not be dismissed, and neither party responded. The ARB reviewed PACER, which showed that the bankruptcy case was closed in September 2012. In view of these circumstances, the ARB dismissed the case.

Approval of settlement agreement.

ATTORNEY S FEES MAY BE RESOLVED THROUGH SETTLEMENT AGREEMENT

In Vernace v. Port Authority Trans-Hudson Corp. , ARB No. 12-003, ALJ No. 2010-FRS-18 (ARB Feb. 26, 2013), the Complainant filed a fee petition with the ARB seeking $22,025.25 in attorney's fees. The Respondent did not file an objection; however, the parties subsequently filed a settlement agreement regarding the attorney's fees for appellate work before the ARB in the amount of $17,319. The ARB approved the settlement agreement, finding that it was fair, adequate, and reasonable. The ARB noted that the Complainant had agreed that her signature on the settlement agreement constituted a request to withdraw the earlier fee petition.

PUNITIVE DAMAGES; HOW TO DETERMINE WHEN THEY ARE APPROPRIATE AND THE AMOUNT TO BE AWARDED

In Youngerman v. United Parcel Service, Inc. , ARB No. 11-056, ALJ No. 2010-STA-47 (ARB Feb. 27, 2013), the ALJ found that the Respondent violated the whistleblower provision of the STAA, and ordered reinstatement, back pay with interest ($2,122.12), emotional damages and other compensatory damages ($5,000), and punitive damages ($100,000). The Respondent appealed the punitive damage award. The ARB noted that the STAA provides for punitive damages not to exceed $250,000, but that neither the statute, the regulations, nor DOL caselaw provided much guidance on when punitive damages are warranted or how to determine the appropriate amount. Consequently, the ARB turned to Title VII caselaw for guidance. The Board relied on the U.S. Supreme Court decision in Kolstad v. American Dental Assoc. , 527 U.S. 526 (1999), a survey of federal court decisions interpreting Title VII punitive damages awards, and its own limited body of precedent.

1. Whether punitive damages are warranted

On appeal, the ARB's first task was to evaluate whether the ALJ properly determined that punitive damages were warranted. Applying the common law standard for when punitive damages are warranted, the Board noted that it has held that the award of punitive damages is warranted where there has been reckless or callous disregard for the plaintiff's rights, as well as intentional violations of federal law. USDOL/OALJ Report at 4-5 (footnote omitted). The ARB continued:

Employing language similar to that which later appeared in Title VII's provision for punitive damages, the Supreme Court concluded in Smith that "a jury may be permitted to assess punitive damages in an action under 1983 when the defendant's conduct is shown to be motivated by evil motive or intent, or when it involves reckless or callous indifference to the federally protected rights of others." As the Court subsequently explained in Kolstad, "While the Smith Court determined that it was unnecessary to show actual malice to qualify for a punitive award, . . . its intent standard, at a minimum, required recklessness in its subjective form."

    Terms such as "malice," "reckless indifference," and "callous disregard" ultimately focus on the actor's state of mind. Construing Title VII's punitive damages provision, 42 U.S.C.A. 1981a(b)(1), in light of its common law origins as adopted in Smith , the Court in Kolstad rejected the notion that eligibility for punitive damages requires a showing of actual malice or egregious misconduct. The Court acknowledged that an employer's egregious misconduct may provide a means of satisfying a plaintiff's burden of demonstrating that the employer acted with reckless indifference or callous disregard of one's protected rights. However, the Court held, there is no requirement that an employer engage in conduct with some independent "egregious" quality before being liable in punitive damages. Applying this standard in the context of Title VII, the Court in Kolstad concluded that "an employer must at least discriminate in the face of a perceived risk that its actions will violate federal law to be liable in punitive damages."

USDOL/OALJ Reporter at 5 (footnotes omitted). In the instant case, the ARB affirmed the ALJ's conclusion that punitive damages were warranted, finding that substantial evidence fully supported the ALJ's determination that the Respondent acted with callous disregard for the Complainant's rights when it continuously instructed him to drive a vehicle in violation of the regulations based on misinformation that it was in fact not a violation to drive the truck in its condition. The ARB agreed with the ALJ that " At the very least, Respondent showed a complete disregard for the safety of Complainant and the public by continuously instructing Complainant to drive the truck after he repeatedly stated he did not feel it was legal or safe to do so. USDOL/OALJ Reporter at 8 (quoting ALJ decision) (footnote omitted).

2. Assessment of the amount of punitive damages to award

The ARB's second task was to determine whether the amount of the punitive damages award the ALJ assessed was reasonable.

Initially, the ARB noted that the Respondent's challenge to the ALJ's award was based largely upon the three factors developed by the Supreme Court in BMW of North America, Inc. v. Gore , 517 U.S. 559 (1996), for evaluating the reasonableness of a state court's award of punitive damages challenged as grossly excessive. The ARB found that the Gore test is not implicated in cases litigated under statutes that contain punitive damage caps or limits, such as the STAA. Thus, the ARB instead employed a fact-based inquiry into whether the ALJ's findings are supported by substantial evidence on the record considered as a whole. The ARB wrote: In assessing the evidence in support of the amount of damages awarded, the focus is on the character of the tortfeasor's conduct i.e., whether it is of the sort that calls for deterrence and punishment over and above that provided by compensatory awards. " USDOL/OALJ Reporter at 10 (footnote omitted).

The ARB noted the Respondent's argument that it should not be found to have acted recklessly given its commitment to company-wide safety policies, but found that it is not enough to have anti-retaliation policies in place: it is necessary to implement them. In the instant case, several managers entrusted to implement the company safety policies failed to follow them, and instead showed callous disregard for the Complainant's rights, compounding this recklessness by attempting to convince the Complainant through misinformation that he was not being asked to violate DOT regulations.

The Respondent next argued that the punitive damages award was disproportionate to the compensatory damages award. The ARB responded:

Consistent with Title VII case law, we decline to impose a bright-line ratio that a punitive damages award cannot exceed. The statutory limit on punitive damage awards strongly undermines the concerns that underlie the reluctance to award punitive damages where minimal or no compensatory damages have been awarded. "To the extent that courts worried about unleashing juries to award limitless punitive damages in cases where no harm had occurred, this concern is eliminated by the imposition of the statutory caps without proof of actual harm."

USDOL/OALJ Reporter at 11 (footnotes omitted). The Respondent also argued that a comparison of punitive damage awards in similar cases supported reversal of the ALJ's award. The ARB, however, noted that the statutory provision allowing for punitive damage awards in STAA cases was relatively new and that there was not yet a body of caselaw from which to glean comparable awards. The ARB nonetheless pointed to a FRSA case in which the ALJ awarded $100,000 in punitive damages under similar circumstances. The ARB also noted that the award was similar to those common in civil rights litigation. The ARB summarized:

   Ultimately, punitive damages are awarded to accomplish the twin aims of punishment and deterrence. As the Supreme Court instructs, "society has an interest in deterring and punishing all intentional or reckless invasions of the rights of others, even though it sometimes chooses not to impose any liability for lesser degrees of fault." To that end, we find that the ALJ's punitive damage assessment of $100,000 is sufficient in size to deter a company such as UPS from similar conduct without being grossly excessive. Although a respondent's wealth alone cannot provide a basis for an otherwise unwarranted punitive damage award, it may be considered in determining the size of a suitable award. Particularly where compensatory damages are not large, a relatively high punitive damage award may serve the purpose of deterring respondents unaffected by a small compensatory award. A substantial punitive damage award also serves the public interest by encouraging enforcement of anti-retaliation laws even against respondents with the resources to mount aggressive defenses. Given that the ALJ's punitive damage award in the amount of $100,000 falls within the mid-range of the statutory amount deemed appropriate where violations of STAA are found to warrant an assessment of punitive damages, we are of the opinion that the ALJ's award is supported by substantial evidence of record and is in accord with applicable law, and thus should be sustained.

USDOL/OALJ Reporter at 12 (footnotes omitted).

DISMISSAL FOR FAILURE TO STATE A CLAIM UPON WHICH RELIEF CAN BE GRANTED; ADMINISTRATIVE COMPLAINT IS AN INFORMAL DOCUMENT AND IS ADEQUATE IF IT MEETS THE FAIR NOTICE STANDARD ENNUCIATED IN EVANS

In Johnson v. The Wellpoint Companies, Inc. , ARB No. 11-035, ALJ No. 2010-SOX-38 (ARB Feb. 25, 2013), the ALJ granted the Respondent's motion to dismiss for failure to state a claim upon which relief may be granted. The Respondent argued that the Complainant's complaints did not constitute protected activity under SOX. Before ruling on the motion, the ALJ issued an order allowing the Complainant to correct deficiencies in her complaint and to show that her communications to her supervisor expressed definitive and special concern, based on the Complainant's reasonable belief, that the Respondent was violating one the six protected areas enumerated in SOX. The ALJ found based on the complaint, the amended complaint, and documents attached to or referenced in the complaint, that the Complainant failed to set forth any alleged fact to show that her alleged concern over mail and/or wire fraud had been communicated to the Respondent, and that the first mention of mail fraud came only after the Complainant's employment had been terminated. The ALJ also found that the Complainant did not imply violations of federal security law and regulations until the filing of the amended complaint. On appeal, the ARB held that it was error for the ALJ to grant the motion to dismiss:

   Federal Rule of Civil Procedure 12(b)(6) allows a party to move for dismissal of a case for "failure to state a claim upon which relief can be granted." However, because "federal litigation materially differs from administrative whistleblower litigation within the Department of Labor . . . a different legal standard for stating a claim" is required in cases pending before the agency. Evans v. EPA , ARB No. 08-059, ALJ No. 2008-CAA-003, slip op. at 6 (ARB July 31, 2012), citing Sylvester , ARB No. 07-123, slip op. at 12-13. To survive a motion to dismiss in this administrative proceeding, Johnson's complaint is reviewed to determine whether it provides "fair notice of [her] claim." Evans , ARB No. 08-059, slip op. at 9. In Evans , we explained that "fair notice" for purposes of surviving a motion to dismiss requires a showing that the complaint contains: "(1) some facts about the protected activity and alleging that the facts relate to the laws and regulations of one of the statues in the [DOL's] jurisdiction; (2) some facts about the adverse action; (3) an assertion of causation, and (4) a description of the relief that is sought." Id. Johnson's complaint clearly satisfies this threshold.

USDOL/OALJ Reporter at 7. The ARB then detailed the portions of the Complainant's complaint that met the Evans fair notice elements, and found that the ALJ had granted the motion to dismiss Johnson's complaint applying standards not required for review of a complaint filed in an administrative proceeding under SOX. As we explained in Evans, [a]dministrative complaints filed with DOL are informal documents that initiate an investigation into allegations of unlawful retaliation. ARB No. 08-059, slip op. at 7. In this case, there was sufficient information contained in Johnson's complaint to satisfy the threshold requirements to survive a motion to dismiss under the standard enunciated in Evans . USDOL/OALJ Reporter at 7 (footnote omitted). The ARB also noted that the ALJ had employed the 'specifically and definitively standard rejected by the ARB in Sylvester v. Paraxel Int'l , ARB No. 07-123, ALJ Nos. 2007-SOX-039, -042, slip op. at 17 (ARB May 25, 2011).

MOTION FOR SUMMARY DECISION; COMPLAINANT NEED NOT PROVE VIOLATION OF SECURITIES FRAUD WITH WITHSTAND MOTION, BUT ONLY A REASONABLE BELIEF OF A VIOLATION FALLING WITHIN THE SCOPE OF SOX

In Johnson v. The Wellpoint Companies, Inc. , ARB No. 11-035, ALJ No. 2010-SOX-38 (ARB Feb. 25, 2013), the ALJ granted the Respondent's motion for summary decision under 29 C.F.R. § 18.40(d). The ALJ found, based on the pleadings and documentary evidence, that the Complainant did not establish that she communicated to the Respondent that fraudulent activity within the scope of SOX had occurred or was ongoing; that she engaged in protected activity; or that the company knew that her activity would be protected under SOX. On appeal, the ARB held that the ALJ's grant of summary decision was error.

The ARB found that the ALJ too narrowly construed the meaning of protected activity under SOX by requiring the Complainant to prove elements of securities fraud. This level of proof was not consistent with the ARB's decisions in Sylvester v. Paraxel Int'l , ARB No. 07-123, ALJ Nos. 2007-SOX-039, -042 (ARB May 25, 2011) and Zinn v. Am. Commercial Lines, Inc. , ARB No. 10-029, ALJ No. 2009-SOX-025 (ARB Mar. 28, 2012). Rather than prove an actual violation of shareholder fraud to withstand a motion for summary decision under SOX, the Complainant must instead show a "reasonable belief" of a violation of law that falls within the scope of SOX. The ARB found that the record showed that there was a genuine issue of material fact whether the Complainant had such a reasonable belief. Specifically, the Complainant stated that she discussed the fraudulent implications of a correspondence backlog and inadequate internal controls during monthly meetings with the Respondent's Vice President of Consumer Operations, while that Vice President stated in deposition that no such discussions occurred. The ARB found that whether the Complainant engaged in protected activity under SOX would turn on credibility. Thus, the conflicting evidence raised a genuine dispute of material fact regarding protected activity that must be resolved by the ALJ.

Approval of settlement agreement.

UNTIMELY RESPONSE TO ORDER TO SHOW CAUSE WHY CASE SHOULD NOT BE DISMISSED AS PREMATURE OR UNTIMELY; ARB HOLDS THAT ABSENT A WARNING TO THE PRO SE COMPLAINANT THAT FAILURE TO TIMELY RESPOND TO SHOW CAUSE ORDER COULD RESULT IN DISMISSAL OF THE APPEAL, THE ALJ ABUSED HIS DISCRETION IN DISMISSING THE CASE BASED ON THE UNTIMELY RESPONSE

In Yabot v. Board of Education of Prince George's County , ARB No. 12-012, ALJ No. 2011-LCA-59 (ARB Feb. 21, 2013), the Respondent moved to strike the Complainant's untimely response to the ALJ's order to show cause why her hearing request should not be dismissed as either premature or untimely. It had not been clear whether the Complainant was seeking a hearing on a retaliation complaint (which appeared to be premature as the Wage and Hour Division had not rendered a decision on that complaint) or a hearing on the WHD's separate finding that the Respondent had violated the H-1B regulations (on which the Complainant appeared not to have timely filed her appeal). The Complainant's response was postmarked after the due date for the response, and included an explanation that she had sprained a foot as a result of an earthquake. The ALJ granted the motion to strike because the earthquake had actually occurred the day after the date claimed by the Complainant and because there was no medical documentation or other corroboration of the claimed injury. On appeal, the ARB stated that a judge must warn pro se parties, in advance, of the potential consequences of failing to timely respond to an order to show cause. Because there was no evidence suggesting that the ALJ gave the Complainant such a warning, and because there was no history of obstructive or non-compliant behavior by the Complainant, the ALJ abused his discretion in dismissing the complaint based on the untimely response to the show cause order.

REMAND BASED ON ALJ PROCEDURAL ERROR NOT REQUIRED WHERE IT WOULD AMOUNT TO AN EMPTY EXERCISE

In Yabot v. Board of Education of Prince George's County , ARB No. 12-012, ALJ No. 2011-LCA-59 (ARB Feb. 21, 2013), the ARB held that the ALJ had abused his discretion in dismissing the pro se Complainant's case for failure to timely respond to the ALJ's order to show cause. The ALJ's error was failure to warn that failure to timely respond could result in dismissal of the case. The ARB, however, found that a remand was unnecessary because it was able to determine as a matter of law that the Complainant's response to the show cause order compelled dismissal of her complaint. The ARB cited Myers v. AMS/Breckenridge/Equity Grp. Leasing One, ARB No. 10-144, ALJ Nos. 2010-STA-007, -008; slip op. at 12 n.29 (ARB Aug. 3, 2012). Accord Dantran v. U.S. Dep't of Labor, 171 F.3d 58, 73 (1st Cir. 1999)("when a reviewing court discovers a serious infirmity . . . the ordinary course is to remand[,] . . . [b]ut such a course is not essential if remand will amount to no more than an empty exercise") (internal citations omitted).

TIMELINESS OF HEARING REQUEST; EQUITABLE TOLLING NOT WARRANTED WHERE WAGE AND HOUR DIVISION GAVE ACCURATE ADVICE TO COMPLAINANT ABOUT THE NEED TO APPEAL, EVEN IF THERE WAS A MISUNDERSTANDING OF THE NATURE OF ATTER THE COMPLAINANT WAS SEEKING TO APPEAL

In Yabot v. Board of Education of Prince George's County , ARB No. 12-012, ALJ No. 2011-LCA-59 (ARB Feb. 21, 2013), it was not clear whether the Complainant was seeking a hearing on a retaliation complaint (which appeared to be premature as the Wage and Hour Division (WHD) had not rendered a decision on that complaint) or a hearing on the WHD's separate finding that the Respondent had violated the H-1B regulations in regard to the employment of nonimmigrant school teachers (on which the Complainant appeared not to have timely filed her appeal). In response, the Complainant argued that she had been told by a person at the WHD that it was not necessary to appeal the WHD finding that the Respondent violated the H-1B regulations since the Complainant agreed or was amenable to the DOL's determination. The Complainant explained that her case had been separate or difference from the other schoolteachers, and stated that she had refrained from appealing to the ALJ because the advice from the WHD. The ARB found that even viewing the Complainant's statements in the light most favorable to her, they did not compel tolling of the limitations period. The advice from the WHD had been accurate, and while there may have been a misunderstanding as to the nature of the Complainant's complaint, the WHD district office that gave the advice did not and could not, in any way, have prevented [the Complainant] from filing a timely hearing request with the Chief Administrative Law Judge, as did six other Prince George's County teachers.

ATTORNEY FEE PETITION MUST BE REVIEWED, EVEN IF UNOPPOSED

In Ferguson v. New Prime, Inc. , ARB No. 12-053, ALJ No. 2009-STA-47 (ARB Feb. 14, 2013), the Complainant filed an unopposed attorney fee petition. The ARB noted that even though the petition was unopposed, it had an obligation to ensure that it follows applicable standards. Finding that the petition adequately described the legal services, that the number of hours was reasonable in view of the issues in the case, and that the petition provided evidence that the attorney and non-attorney hourly rates were in line with fees prevailing in the community, the ARB awarded against the Respondent, Complainant's counsel's fees and costs in the amount of $3,051.15.

The ARB had granted the Administrator of the Wage and Hour Division an enlargement of time to file an appeal the ALJ's SCA decision. Several months later, having received no petition for review or other communication from the Administrator, the ARB closed the matter.