Administrative Review Board Decisions

The following case summaries were created by the Administrative Review Board staff.

Kreb v. Integra Aviation, LLC, ARB No. 2024-0004, ALJ No. 2023-AIR-00008 (ARB Nov. 28, 2023) (Order of Non-Acceptance of Untimely Petition for Interlocutory Review)

NON-ACCEPTANCE OF INTERLOCUTORY APPEAL; INTERLOCUTORY APPEAL NOT ACCEPTED BECAUSE IT WAS UNTIMELY

In Kreb v. Integra Aviation, LLC, ARB No. 2024-0004, ALJ No. 2023-AIR-00008 (ARB Nov. 28, 2023), the ARB issued an order of non-acceptance of Complainant's interlocutory appeal because the appeal was untimely. AIR21's implementing regulations provide that "a petition [for review] must be filed within ten business days of the date of the decision of the Administrative Law Judge." The ARB applies the ten business-day appeal deadline to interlocutory appeals under AIR21 and Complainant's appeal was filed outside of the deadline. The ARB further found that Complainant's appeal would not have met the "collateral order" exception required for acceptance of an interlocutory appeal when the ALJ has not certified an issue for interlocutory appeal. The ARB accordingly did not accept the Complainant's petition for interlocutory review.

Kreb v. Integra Aviation, LLC, ARB No. 2023-0056, ALJ No. 2023-AIR-00008 (ARB Nov. 20, 2023) (Order Denying Petition for Interlocutory Review)

DENYING PETITION FOR INTERLOCUTORY REVIEW

In Kreb v. Integra Aviation, LLC, ARB No. 2023-0056, ALJ No. 2023-AIR-00008 (ARB Nov. 20, 2023), the ARB issued an order denying Complainant's petition for interlocutory review. The ARB's delegated authority includes the consideration and disposition of interlocutory appeals "in exceptional circumstances."" When a party seeks interlocutory review of an ALJ's non-final order, the Board has elected to look to the interlocutory review procedures used by federal courts, including providing for certification of issues involving a controlling question of law as set forth in 28 U.S.C. Section 1292(b). In this case, the ALJ denied certification under 28 U.S.C. § 1292(b).

Even when a party has failed to obtain interlocutory certification under 28 U.S.C. § 1292(b), the ARB may consider interlocutory appeals if the requirements of the "collateral order" exception are met. To fall within the collateral order exception, the appealed order must: (1) conclusively determine the disputed question; (2) resolve an important issue completely separate from the merits of the action; and (3) be effectively unreviewable on appeal from a final judgment. In this case, the ARB found that the issues Complainant was raising were "fully reviewable on appeal from final judgment," and, therefore, did not satisfy the final element for collateral order review.

Frantz v. Hoselton Automotive Group, ARB Nos. 2021-0050, -0051, -0052, ALJ No. 2018-MAP-00003 (ARB Nov. 17, 2023) (Decision and Order Affirming, in Part, and Vacating, in Part)

PROTECTED ACTIVITY; DELIBERATE VIOLATION; CONTRIBUTING FACTOR; AFFIRMATIVE DEFENSE; ATTORNEY'S FEES

In Frantz v. Hoselton Automotive Group, ARB Nos. 2021-0050, -0051, -0052, ALJ No. 2018-MAP-00003 (ARB Nov. 17, 2023), the ARB affirmed, in part, and vacated, in part, the ALJ's D. & O. Respondent is an automotive dealership that hired Complainant as a warranty processor. As a warranty processor, Complainant was responsible for processing customers' claims for vehicle repairs or replacements covered by the applicable manufacturer's warranty and for processing those claims correctly and accurately.

In August 2017, Respondent's Service Director became dissatisfied with the dealership's warranty administration, led by Complainant. Sometime in November 2017, Complainant became aware that Toyota had recently instituted a Limited Service Campaign (LSC) to inspect and correct potential issues involving frame corrosion on certain models of Toyota vehicles. The LSC resulted from a class action settlement in Warner v. Toyota Motor Sales, through which Toyota announced a "Frame Inspection and Replacement Program" for specific vehicles. Through the LSC, Toyota provided the application of a corrosion resistant compound (CRC) to protect the vehicle from further corrosion. Toyota mandated that dealerships only allow certified technicians to perform work as part of the CRC LSC.

Around this same time, Respondent's Service Director emailed employees informing them that only certified technicians should be performing airbag replacement work as a part of an unrelated airbag recall. Respondent did not notify Complainant of Toyota's directive regarding technician certification related to airbag replacement.

On November 16 and 17, 2017, MSX International performed a "courtesy audit" on Respondent's General Motors repair orders. The audit was based on a random sampling of twenty-two repair orders. The courtesy audit revealed that nineteen of the twenty-two repair orders contained errors. The repair orders were processed by Complainant's son, who was also employed by Respondent to do warranty related work. If such errors were discovered by the manufacturer, Respondent would be "charged back" for its claim submissions, resulting in it not being reimbursed for relevant warranty claim work. As a result, Respondent's management discussed the possibility of outsourcing Respondent's warranty work.

On November 28, 2017, Respondent's Service Director called Randy Shepard & Associates (RS&A), a warranty processing company, to discuss taking on the dealership's warranty work. Following the phone call, RS&A sent Respondent a brochure and requested the dealership's labor volumes via e-mail. On November 29, 2017, Respondent's Service Director provided RS&A with Respondent's labor volumes, and the RS&A replied with its labor rates.

In early December 2017, Respondent's Service Director learned that uncertified technicians were applying CRC to vehicles covered under the LSC. On December 4, 2017, Respondent's Service Director informed Complainant that there were uncertified technicians in the service department. On that same day, Respondent's Service Director e-mailed RS&A to inquire about contract specifics.

On December 6, 2017, Complainant met with Respondent's management to discuss subletting the CRC work to an outside source. At this meeting, Respondent's management informed Complainant that a detailer for Respondent's Toyota division had been performing CRC work since October 2017, and that he was not certified to work on the CRC LSC. According to Complainant, upon receiving this information, she told management she would no longer process CRC repair orders and wanted the vehicles that had been previously serviced by uncertified technicians to be brought back to the dealership for proper inspection and repair. Yet, following this objection and request, Complainant processed two CRC repair orders for work performed by uncertified technicians on December 14, 2017. Complainant testified that she initially refused to process the claims, but ultimately processed them after a service assistant called Complainant and assured her that a certified technician had re-inspected the vehicles. Complainant did not independently verify which technicians performed the work on these claims because she did not have the technicians' codes, nor was it part of her regular duties to do such verification.

During the same time frame in mid-December 2017, Respondent's management conducted an internal test to determine whether Complainant was checking repair orders before processing them. According to Respondent's Chief Operating Officer (COO), Complainant submitted fifteen repair orders and only one passed Respondent's internal compliance test; the others had internal errors and should not have been submitted.

On December 19, 2017, Complainant texted the COO and requested a meeting due to her "very serious and valid concerns." Complainant met with management on December 20, 2017, and showed them five repair orders in which the CRC application had been performed by an uncertified technician.

On January 4, 2018, Respondent informed RS&A that it intended to contract with RS&A for warranty processing needs. On January 8, 2018, management met with Complainant and her son. Respondent's Service Director informed Complainant and her son that Respondent intended to outsource its warranty administration process. RS&A began performing warranty processing services on January 9, 2018.

Complainant filed a complaint with the OSHA. On June 23, 2021, the ALJ issued a D. & O. denying Complainant's complaint. The ALJ concluded the following: (1) while Complainant's objection and refusal to process CRC claims involving the work of uncertified technicians were both subjectively and objectively reasonable, her later processing of those same claims constituted a deliberate violation of the Act which abrogated any claim to its protections; (2) assuming, arguendo, that Complainant engaged in protected activity and the deliberate violation provision of the Act did not bar her claim, her employment termination was an adverse action to which Complainant's protected activities were contributory factors; and (3) Respondent proved that it would have terminated Complainant's employment in the absence of any alleged protected activity, thus avoiding liability. On July 9, 2021, the ALJ issued an Attorney Fee Order denying Complainant's attorney's fee petition for services rendered.

SCOPE OF MAP-21; VIOLATION OF A COURT ORDER AND/OR TOYOTA'S SAFETY STANDARDS DO NOT FALL UNDER MAP-21'S PURVIEW

Complainant objected and refused to process warranty claims involving CRC related work completed by uncertified technicians on December 6 and 20, 2017. The ALJ concluded that "Respondent violated Toyota's safety standards that required the use of certified technicians, which falls under MAP-21's purview." The ALJ provided no analytical explanation for this legal conclusion, but merely cited to 49 U.S.C. § 30171(a)(5) and footnoted a California federal court case in which Toyota had agreed to a settlement including the CRC LSC.

The ARB began its analysis with an examination of the plain language of the relevant provision. Section 30171(a)(5) prohibits discrimination against an employee who "objected to, or refused to participate in, any activity that the employee reasonably believed to be in violation of any provision of chapter 301 of this title, or any order, rule, regulation, standard, or ban under such provision." The ARB determined that Section 30171(a)(5) applies only to "orders" under any provision of Chapter 301; it does not encompass any and all orders involving motor vehicles issued by any entity not directly authorized by the Act. Thus, the ARB concluded that the term "order" in § 30171(a)(5) refers simply to orders issued by the Secretary of Transportation and not a Class Action Settlement.

The ARB then thoroughly examined the ALJ's conclusion and independently researched caselaw, regulations, and provisions of Chapter 301, but could not identify any link between Toyota's self-imposed safety standards and "standards" under the Act. The ARB determined that the term "standard" in Section 30171(a)(5) refers to motor vehicle standards prescribed by the Secretary of Transportation as discussed in Section 30111 and further evidenced by DOL and DOT guidance. The ARB held that given that the referenced "Toyota safety standards" were not prescribed by the Secretary of Transportation and did not involve regulatory or rulemaking processes, "Toyota safety standards" do not fall within MAP-21's purview.

PROTECTED ACTIVITY; THE ALJ CORRECTLY FOUND COMPLAINANT ESTABLISHED A SUBJECTIVE GOOD FAITH BELIEF BUT ERRED BY NOT SUPPORTING HIS DETERMINATION THAT COMPLAINANT'S BELIEF WAS OBJECTIVELY REASONABLE

While Complainant did not identify any Chapter 301 "order" or "standard" violation, the ARB noted that a complainant may prevail under Section 30171(a)(5) if she can establish that she objected to, or refused to participate in, an activity that she reasonably believed to be in violation of any order or standard under Chapter 301.

The ALJ concluded that Complainant's belief that a violation of MAP-21 had occurred "was subjectively reasonable because she actually believed that Respondent's use of uncertified technicians to perform work related to the CRC safety campaign violated safety standards[.]" The ALJ relied upon witness testimony and concluded that Complainant had credibly established that she did in fact believe that the use of uncertified technicians on CRC work violated the Act.

The ALJ also concluded that Complainant's belief that a violation of MAP-21 had occurred "was objectively reasonable because a similarly situated person could have come to the same determination." However, the ALJ provided no analysis or explanation of what a "similarly situated person" would believe when he made this determination.

The ARB determined that substantial evidence supported the ALJ's finding that Complainant had a subjective, good faith belief that using uncertified technicians to perform work related to the CRC LSC violated MAP-21. In doing so, the ARB noted that it generally defers to an ALJ's factual findings when they result from credibility judgments and determinations of the weight to be given to conflicting witness testimony. The ARB acknowledged that while Complainant's belief may have been incorrect with regard to whether the use of uncertified technicians actually constituted a violation of the Act, a mistaken belief is sufficient if it is held in good faith.

Nevertheless, the ARB found that the ALJ erred by not supporting his determination that Complainant's belief was objectively reasonable. The ARB recognized that typically, it would remand to the ALJ given the lack of analysis or citation to record evidence. However, the ARB determined that remand was unnecessary because it agreed with the ALJ's affirmative defense finding (addressed later in this summary).

DELIBERATE VIOLATION DEFENSE; THE ARB ADOPTS THREE-PART TEST TO DETERMINE WHETHER AN EMPLOYER ESTABLISHES DELIBERATE VIOLATION DEFENSE; THE ALJ ERRED IN HIS ANALYSIS OF THE DELIBERATE VIOLATION DEFENSE

MAP-21 does not apply to an employee of a dealership "who, acting without direction from such . . . dealership (or such person's agent), deliberately causes a violation of any requirement relating to motor vehicle safety under this chapter." The ALJ found that Complainant deliberately violated MAP-21 by processing two CRC claims after she objected to and refused to process CRC claims only days prior. Complainant processed claims after receiving a phone call from a certified technician, who she did not trust, and without independently inspecting the repair order. The ALJ concluded that Complainant's decision to continue to process repairs orders demonstrated her acquiescence in the system and was counter to her original refusal or objection. 

In vacating the ALJ's deliberate violation finding, the ARB examined other whistleblower statutes' deliberate violation provisions (AIR21 and ERA) and caselaw interpreting these provisions. The ARB adopted a three-part test to determine whether an employer established the defense in the present case. The ARB held that to establish the deliberate violation defense, an employer must show that: (1) the employee caused a violation of the pertinent statute(s); (2) the violation was deliberate; and (3) the employee's conduct occurred without the employer's direction.

The ARB applied the test to the present case and determined that the ALJ erred by: (1) not identifying a specific violation relating to motor safety under Chapter 301 that resulted from Complainant's actions; (2) not making a finding that Respondent proved that Complainant's conduct was "willful" or "reckless;" and (3) not determining whether Complainant acted "without the employer's direction." The ARB acknowledged that typically, it would remand to the ALJ to reassess his deliberate violation analysis consistent with its instructions, but determined that remand was unnecessary because it agreed with the ALJ's affirmative defense finding (addressed later in summary).

CONTRIBUTING FACTOR; THE ALJ ERRED IN HIS CONTRIBUTING FACTOR ANALYSIS; FINDING SIMILARLY SITUATED EMPLOYEES REQUIRES LEGAL ANALYSIS AND CONSIDERATION OF EMPLOYEES' POSITIONS AND ACTIONS

The ALJ found that Complainant demonstrated that her alleged protected activity was a contributing factor in her termination. Respondent argued that the ALJ erred by: (1) stating that a complainant "automatically prevails" on contributing factor if she can prove both knowledge and temporal proximity; (2) failing to consider Respondent's legitimate non-discriminatory reasons for terminating her employment; and (3) failing to consider Respondent's intervening events arguments. The ARB considered these arguments and disagreed with Respondent. Specifically, the ARB stated that regardless of the phrasing the ALJ used in his analysis, the ALJ considered Respondent's legitimate non-discriminatory reasons, the intervening events, and other evidence, in addition to knowledge and temporal proximity, to find that Complainant's protected activity was a contributing factor in the termination of her employment. Nevertheless, the ARB found that the ALJ erred in concluding that Complainant was treated differently than a similarly situated employee—an assistant service manager who was not terminated. The ALJ merely accepted that the two were similarly situated without performing any legal analysis or considering the distinguishing circumstances of the employees' actions and positions. The ARB acknowledged that typically, it would remand to the ALJ for additional fact finding, but determined that remand was unnecessary because it agreed with the ALJ's affirmative defense finding (addressed later in summary).

SAME-ACTION DEFENSE; THE ALJ'S FINDING THAT RESPONDENT ESTABLISHED ITS SAME-ACTION DEFENSE WAS SUPPORTED BY SUBSTANTIAL EVIDENCE

The ARB found that substantial evidence supported the ALJ's conclusion that Respondent proved by clear and convincing evidence that Respondent would have terminated Complainant's employment in the absence of protected activity. In affirming the ALJ's conclusion, the ARB noted that the record reflected that Respondent intended to outsource Complainant's job long before Complainant's protected activities on December 6 and December 20, 2017. The record also clearly reflected that Complainant and Respondent's Service Director could not work collaboratively and their working relationship continued to devolve. Respondent's Service Director actively pursued multiple options to terminate Complainant's employment, outsource the warranty administration department, as described above, and even "tested and trapped" Complainant with internal audits. Moreover, other employees corroborated this poor working relationship.

ATTORNEY'S FEE PETITION; THE ALJ CORRECTLY DENIED COMPLAINANT'S ATTORNEY'S FEE PETITION

In affirming the ALJ's Attorney Fee Order, the ARB examined MAP-21's regulations which provide that "[i]f the ALJ concludes that the respondent has violated the law, the ALJ will issue an order that will require, where appropriate . . . payment of compensatory damages, including" attorney fees. The ARB affirmed, in part, the ALJ's D. & O., and held that Respondent did not violate the law. Accordingly, the ARB held that ALJ correctly denied Complainant's attorney's fee petition.