“Affordable Care Act”

Wilson v. EI Dupont De Nemours & Co. , 710 Fed. Appx. 57 (3d Cir. Jan. 31, 2018) (per curiam) (not published) (No. 17-1804) (2018 U.S. App. LEXIS 2385; 2018 WL 637372) (Opinion)

Casenote(s):

See casenote below under the Consumer Product Safety Improvement Act cases.

Aviation Investment and Reform Act for the 21st Century

Am. Airlines v. Mawhinney , 904 F.3d 1114 (9th Cir. Sept. 26, 2018) (Nos. 16-56638, 16-56643) (2018 U.S. App. LEXIS 27450; 2018 WL 4609254) (Opinion)

Cases below: S.D. Cal. Nos. 3:16-cv-02270 and 16-cv-02296 and ARB Nos. 12-108, ALJ No. 2012-AIR-00014 and ARB No. 14-060, ALJ No. 2012-AIR-00017.

Casenote(s):

ARBITRATION; RESPONDENT DID NOT WAIVE ITS RIGHT TO ARBITRATE BY WAITING TO MOVE TO COMPEL UNTIL AFTER OSHA INVESTIGATION WAS COMPLETE

In Am. Airlines v. Mawhinney , 904 F.3d 1114 (9th Cir. Sept. 26, 2018) (2018 U.S. App. LEXIS 27450; 2018 WL 4609254), the Ninth Circuit “consider[ed] whether the district court properly compelled arbitration of Robert Steven Mawhinney’s claims for whistleblowing retaliation, brought under the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (‘AIR21’), 49 U.S.C. § 42121.” Slip op. at 4. Mawhinney argued on appeal that “the Airline waived its right to arbitrate his AIR21 action by participating in the initial investigation of Mawhinney’s complaint at DOL.” Id . at 12. The Ninth Circuit rejected the argument, finding that there had been “no ‘litigation’ at DOL from which to infer a waiver.” The court held:

   As the Airline could not have compelled arbitration of DOL’s independent investigation, the Airline cannot be faulted for failing to have sought to do so. The Airline’s demand for arbitration, filed with the ALJ shortly after [a] bankruptcy stay was lifted, reflects a timely and diligent assertion of the right to arbitrate, and so precludes a finding of waiver.

Id . at 13.

ARBITRATION; AIR21 DOES NOT FORBID ENFORCEMENT OF ARBITRATION AGREEMENT; WHERE OSHA FOUND NO VIOLATION, DOL’S INVESTIGATORY ROLE ENDED; IN THAT SITUATION HEARING BEFORE OALJ ONLY PROVIDED FORUM FOR RESOLUTION OF PRIVATE DISPUTE AND DOL WAS NOT A PARTY; OALJ PROCEEDING, THEREFORE, WAS CONTROLLED BY PARTIES’ ARBITRATION AGREEMENT

In Am. Airlines v. Mawhinney , 904 F.3d 1114 (9th Cir. Sept. 26, 2018) (2018 U.S. App. LEXIS 27450; 2018 WL 4609254), the Ninth Circuit “consider[ed] whether the district court properly compelled arbitration of Robert Steven Mawhinney’s claims for whistleblowing retaliation, brought under the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (‘AIR21’), 49 U.S.C. § 42121.” Slip op. at 4. Mawhinney argued on appeal that “his AIR21 action cannot be arbitrated because AIR21 itself forbids it.” The court noted that there is no statutory language forbidding arbitration, and that Mawhinney was instead relying on “the importance of DOL’s role in hearing and resolving retaliation complaints under AIR21.” Id . at 13. The court rejected this argument, finding that once OSHA ceased its investigation with a finding of no violation, DO”s investigatory role was complete. In regard to Mawhinney’s hearing request before an ALJ, the court found that

the AIR21 action at that point concerned only Mawhinney’s purely private dispute with the Airline, not the government’s independent interest in advancing the public interest in airline safety. Once DOL found no violation, that is, the agency provided only the forum, but was not a party to the dispute. The proceeding before the ALJ was therefore squarely controlled by the arbitration provision in the Agreement.

Id . at 14.

ARBITRATION; WHERE AGREEMENT PROVIDING FOR ARBITRATION OF FUTURE DISPUTES WAS PART OF A SETTLEMENT OF AN EMPLOYMENT DISPUTE, FEDERAL ARBITRATION ACT DID NOT APPLY AS THE FAA GOVERNS “CONTRACTUAL” ARBITRATION AGREEMENTS

In Am. Airlines v. Mawhinney , 904 F.3d 1114 (9th Cir. Sept. 26, 2018) (2018 U.S. App. LEXIS 27450; 2018 WL 4609254), the Ninth Circuit “consider[ed] whether the district court properly compelled arbitration of Robert Steven Mawhinney’s claims for whistleblowing retaliation, brought under the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (‘AIR21’), 49 U.S.C. § 42121.” Slip op. at 4. Mawhinney argued on appeal that the arbitration agreement fell “within the statutory exemption [found in the Federal Arbitration Act (FAA)] for ‘contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.’ 9 U.S.C. § 1.” Id . at 16. The court rejected the argument, first noting that it was doubtful that the cited FAA exclusion applied because the agreement was not the contract under which Mawhinney had been hired, or under which the terms and conditions of employment had been set. Rather, here, the agreement was found in a settlement agreement providing for the arbitration of later disputes.

The court also found that the Respondent was technically seeking to enforce an arbitration agreement that had been incorporated into a DOL order approving the agreement. It was not seeking, as required for the FAA to govern, a contractual arbitration agreement. The court ruled: “The [DOL] order incorporates the terms of the Agreement, including the arbitration provision for future disputes, and is separately enforceable under 42 U.S.C. § 42121(b)(6)(A).” Id . at 17 (emphasis as in original; footnote omitted).

ARBITRATION; WHERE EMPLOYER HAD ENTERED INTO SETTLEMENT OF PRIOR RETALIATION DISPUTE THAT INCLUDED AN AGREEMENT FOR ARBITRATION OF LATER DISPUTES, UNION COULD NOT ENFORCE THE ARBITRATION AGREEMENT AS AN “AGENT” OF EMPLOYER (DESPITE RULING BY THE ARB THAT THE UNION WAS A “CONTRACTOR” WITHIN THE COVERAGE OF AIR21 BECAUSE IT HAD BEEN PARTY TO A COLLECTIVE BARGAINING AGREEMENT)

WHETHER A UNION IS A “CONTRACTOR” WITHIN THE SCOPE OF AIR21 COVERAGE; ALTHOUGH NOT DECIDING THE ISSUE, THE NINTH CIRCUIT INDICATES DOUBT OF THE VALIDITY OF ARB FINDING THAT UNION WAS A “CONTRACTOR” WITHIN THE COVERAGE OF AIR21 BECAUSE IT HAD BEEN PARTY TO A COLLECTIVE BARGAINING AGREEMENT

In Am. Airlines v. Mawhinney , 904 F.3d 1114 (9th Cir. Sept. 26, 2018) (2018 U.S. App. LEXIS 27450; 2018 WL 4609254), the Defendant-Appellee (Mawhinney) had filed a claim that the Transport Workers Union, Local 591, had joined American Airlines in alleged retaliation in violation of the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (‘AIR21’), 49 U.S.C. § 42121. The ALJ had found that the Union fell outside the scope of AIR21. The ARB reversed and remanded, finding that a union could be a “contractor” by virtue of being party to a collective bargaining agreement with an employer. The union then brought an action seeking to enforce an agreement for arbitration of later disputes that American Airlines had negotiated in settlement of an earlier retaliation complaint. The ALJ in that earlier case had approved the settlement agreement.

On appeal, the Union acknowledged that it was not named as a party to the settlement agreement or to its arbitration provision, but contended that it could enforce the arbitration provision because under the circumstances, it qualifies as an “agent” of the Airline, which was a category of third parties specifically authorized in the Agreement to enforce the arbitration provision against signatories. The district court had found that the Union’s argument was at least colorable, and invoked the maxim that doubts about the scope of arbitrable issues should be resolved in favor of arbitration. The Ninth Circuit, however, reversed. The court held:

Under the established meaning of the term “agent,” and the statutory role of the Union under the Railway Labor Act, 45 U.S.C. §§ 151–165, 181–188, the Union simply was not the Airline’s agent with regard to its role in Mawhinney’s employment dispute, and so was not covered by the arbitration provision in the Agreement.

Slip op. at 20. The Ninth Circuit noted that the Union’s argument was “counterfactual,” driven by the ARB’s conclusion that it has “contractor” status. The court stated that it does do not resolve cases based on how another forum is approaching parallel litigation, albeit noting that the ARB’s decision was “neither final nor certain.” Id . at 22. The court found that the district court’s invocation of the federal policy regarding the scope of arbitrable issues was inapposite as the issue here was not about ambiguities about the scope of the arbitration clause, but whether a particular party is bound by the arbitration agreement.

Although the court did not reach the question of whether the Union was a “contractor” for purposes of AIR21, finding that this issue was not before it, the court included the following footnote in its opinion:

   It may well be that the Union is no more a “contractor” under AIR21 than it is an “agent” under the Agreement. The ARB’s view, under which any party to a contract is a “contractor,” is strangely literal, and seems to confuse contracting out or for something with simply being a party to any contract. Cf. Contractor, Webster’s Third New International Dictionary (2002) (“[O]ne that formally undertakes to do something for another . . . ; one that performs work . . . or provides supplies on a large scale . . . according to a contractual agreement . . . .”). In any event, AIR21 itself defines “contractor” narrowly, as “a company that performs safety-sensitive functions by contract for an air carrier.” 49 U.S.C. § 42121(e). There is little reason to believe the Union meets that definition — that is, that the Union, which is a representative for the workers in collective bargaining and in the grievance process, “performs safety-sensitive functions” for the Airline.

Id . at 21-22, n.10 (emphasis as in original).

Neely v. Boeing Co. , No. 16-cv-1791 (W.D. Wash. May 15, 2018) (2018 U.S. Dist. LEXIS 81771; 2018 WL 2216093) (Order)

Related to 2018-AIR-00019

Casenote(s):

FEDERAL DISTRICT COURT SUBJECT MATTER JURISDICTION; NO PRIVATE RIGHT OF ACTION TO INITIATE AIR21 COMPLAINT BEFORE DISTRICT COURT

In Neely v. Boeing Co. , No. 16-cv-1791 (W.D. Wash. May 15, 2018) (2018 U.S. Dist. LEXIS 81771; 2018 WL 2216093) (related to 2018-AIR-00019), the district court granted the Defendant’s motion to dismiss for lack of subject matter jurisdiction a count of the Plaintiff’s complaint that was based on the AIR21 whistleblower provision. The Defendant argued that AIR 21 claims must proceed before DOL, and that DOL decisions are appealable to federal courts of appeal. Moreover, AIR21 does not contain a mechanism to bring an AIR 21 claim in federal district court. The court noted that the 9th Circuit had held that AIR 21 does not create a private right of action in federal district court, finding that “the plain language of [AIR 21] and its statutory scheme counsel against implying a right of action in federal district court.” Williams v. United Airlines, Inc. , 500 F.3d 1019, 1024 (9th Cir. 2007). In the instant case, the Plaintiff argued only that the district court should ignore 9th Circuit law because of the “unique factual circumstances” of this case.

PROTECTED ACTIVITY; FAILURE TO STATE A CLAIM; SOX COUNT DISMISSED WHERE PLAINTIFF FAILED TO ALLEGE THAT HIS COMPLAINTS ABOUT FAILURE TO COMPLY WITH FAA REGULATIONS INCLUDED A REPORT OF A BELIEF THAT SUCH FAILURES WERE A FRAUD ON SHAREHOLDERS

In Neely v. Boeing Co. , No. 16-cv-1791 (W.D. Wash. May 15, 2018) (2018 U.S. Dist. LEXIS 81771; 2018 WL 2216093) (related to 2018-AIR-00019), the district court granted the Defendant’s motion to dismiss for failure to state a claim on the count of the Plaintiff’s complaint that was based on the SOX whistleblower provision. The court found that the Plaintiff’s second amended complaint only stated that the Plaintiff made complaints regarding the Defendant’s alleged failure to comply with FAA regulations, and did not contain an allegation that he reported his belief that these actions were defrauding shareholders to the Defendant or to any federal agency. The Plaintiff alleged that he filed complaints that he was being retaliated against for being a whistleblower, but did not specifically allege that he raised any allegations of shareholder fraud prior to any alleged retaliation. The court thus found that the Plaintiff failed to allege that he engaged in protected activity under SOX.

Comprehensive Environmental Response, Compensation and Liability Act (CERCLA)

Cale v. United States , 17-cv-1099 (W.D. Wash. Apr. 23, 2018) (2018 U.S. Dist. LEXIS 68091; 2018 WL 1907493) (Order Granting Motion to Dismiss)

Casenote(s):

DISTRICT COURT FOUND THAT IT DID NOT HAVE JURISDICTION OVER A CERLCA RETALIATION CLAIM BECAUSE (1) THE PROCEDURE IS TO FILE WITH THE SECRETARY OF LABOR WHOSE DECISION IS SUBJECT TO JUDICIAL REVIEW, AND (2) THE UNITED STATES HAD NOT WAIVED SOVEREIGN IMMUNITY

In Cale v. United States , 17-cv-1099 (W.D. Wash. Apr. 23, 2018) (2018 U.S. Dist. LEXIS 68091; 2018 WL 1907493), the court stated:

CERCLA does not provide a private right of action against the United States. See 42 U.S.C. § 9610. Instead, it provides that "[a]ny employee . . . who believes that he has been fired or otherwise discriminated against . . . may, within thirty days after such alleged violation occurs, apply to the Secretary of Labor for a review of such firing or alleged discrimination." 42 U.S.C. § 9610(b). The Secretary of Labor's determination is then subject to judicial review. Id . Because Plaintiff has not followed this procedure, and the United States has not waived its sovereign immunity, the Court finds that it is without jurisdiction to hear his claim under CERCLA.

Slip op. at 4.

Consumer Financial Protection Act

Calderone v. Sonic Houston JLR, L.P. , 879 F.3d 577 (5th Cir. Jan. 9, 2018) (No. 17-20029) (2018 U.S. App. LEXIS 532; 2018 WL 327349) (Opinion)

Casenote(s):

ALTHOUGH THE EQUAL CREDIT OPPORTUNITY ACT IS ENUMERATED AS SUBJECT TO THE JURISDICTION OF THE CONSUMER FINANCIAL PROTECTION BUREA, THE CONSUMER FINANCIAL PROTECTION ACT EXCLUDES BUREAU JURISDICTION OVER AUTOMOBILE DEALERS, AND CFPA RETALIATION CLAIM BASED ON THE ECOA COULD NOT LIE WHERE THE DEFENDANT WAS AN AUTOMOBILE DEALER

A MISTAKEN, BUT REASONABLE BELIEF THAT UNDERLYING STATUTE WAS VIOLATED CANNOT EXPAND BUREAU’S JURISDICTION OVER AUTOMOBILE DEALERS

In Calderone v. Sonic Houston JLR, L.P. , 879 F.3d 577 (5th Cir. Jan. 9, 2018) (No. 17-20029) (2018 U.S. App. LEXIS 532; 2018 WL 327349), the Plaintiff–Appellant (“Calderone”) claimed that he was unlawfully terminated under the Consumer Financial Protection Act. The district court had granted summary judgment in favor of Sonic on the ground that it is an automobile dealer excluded from the Bureau’s jurisdiction pursuant to § 5519(a).

The Fifth Circuit noted that the CFPA prohibits “covered person[s]” and “service provider[s]” from terminating or discriminating against any “covered employee” who provides information regarding a violation of federal law subject to the jurisdiction of the Consumer Financial Protection Bureau (“CFPB” or “the Bureau ”). 12 U.S.C. § 5567(a). If the Defendant-Appellee (“Sonic”) actions were covered by the CFPA, the complaint alleged a violation of the Equal Credit Opportunity Act (“ECOA”), 15 U.S.C. § 1691 et seq., which is a statute generally within the jurisdiction of the Bureau. The question, therefore, was whether the Defendant—an automobile dealer—was a covered entity.

Equal Credit Opportunity Act is Not a Statute Subject to the Jurisdiction of the Bureau As Applied to Automobile Dealers

The Fifth Circuit found that § 5519(a) operates to limit the Bureau’s enforcement authority, but that section does not preclude the Department of Labor from enforcing the anti-retaliation provision of § 5567(a) against dealers. The court noted that § 5519(c) expressly reserves the power of other federal agencies over automobile dealers. The court also found, however, that—although the ECOA is enumerated in § 5481(12)(D) as one of the laws subject to the Bureau’s jurisdiction—that section bears a preface that refers back to the § 5519 exclusions, meaning that “the enumerated consumer laws are subject to the automobile dealer exclusion.” The court thus concluded: “Just as § 5519(a) clarifies that automobile dealers are outside the Bureau’s jurisdiction, § 5481(12) clarifies that the statute itself is outside the Bureau’s jurisdiction as applied to those dealers. The ECOA, as applied to automobile dealers, is therefore not a statute subject to the jurisdiction of the Bureau, which means that, as a matter of law, Sonic could not have violated § 5567(a).” Slip op. at 5.

Mistaken, but Reasonable Belief About Violation of ECOA Cannot Expand Bureau’s Jurisdiction Over Automobile Dealers

The Plaintiff contended, that “even if he is mistaken in his belief about the statutory structure, as long as he reasonably believed Sonic was discriminating, his claim can survive.” The Plaintiff cited in this regard Wallace v. Tesoro Corp. , 796 F.3d 468 (5th Cir. 2015) (anti-retaliation provision protects an employee who “reasonably believes” conduct violates an enumerated statute, even if it actually does not). The court was not persuaded:

   The present controversy is distinct from the dispute in cases such as Wallace , however, because the question is not whether Calderone reasonably believed some underlying statute—here the ECOA—was violated. As long as the plaintiff’s belief is reasonable, he still can benefit from antiretaliation provisions even if he makes a mistake of law or fact about the underlying discriminatory conduct. Here we instead are asking, regardless of the reasonableness of Calderone’s belief about the underlying conduct, whether he is protected, as a statutory matter, by the anti-retaliatory-termination provision, § 5567(a). If that provision has no force against Sonic, Calderone’s termination could not have been unlawful under § 5567(a), regardless of whether Sonic was actually discriminating. Though the CFPA’s anti-retaliation provision protects an employee who tells her employer about an act that she “reasonably believes to be a violation of . . . any . . . provision of law that is subject to the jurisdiction of the Bureau,” CFPA’s “reasonable belief” language does not modify the Bureau’s jurisdiction. Under the CFPA, a plaintiff may have a reasonable, but mistaken, belief of fact or law that a statute has been violated. But the CFPA does not permit a plaintiff’s reasonable beliefs to expand the CFPB’s jurisdiction.

   As noted above, the ECOA, as enumerated, expressly incorporates the automobile dealer exclusion, so § 5567(a)’s protections have no bearing on Sonic. See 12 U.S.C. § 5481(12). The district court rightly decided that a CFPA retaliation claim cannot lie where statutory interpretation shows that the reported discrimination is not in violation of a law within the CFPB’s jurisdiction. See Murray v. UBS Sec., LLC , 2015 WL 769586, at *5–6 (S.D.N.Y. Feb. 24, 2015).

   A reasonable belief that discrimination is occurring under the ECOA cannot extend the jurisdictional scope of the CFPA to include actors to which the statute does not apply. Nor does the reasonableness of a plaintiff’s belief matter when it comes to the operative reach of a remedy, at least insofar as the statutes at issue here are concerned. This would allow an individual’s belief to alter the scope of a remedial statute. Section 5481 subjects the enumerated statutes to § 5519, a contrary interpretation is not reasonable, and even a reasonable belief otherwise could not extend a remedial provision beyond what Congress enacted.

Slip op. at 6-7.

Consumer Product Safety Improvement Act

Gibbens v. OptumRx, Inc. , No. 16-cv-723 (M.D. Tenn. Nov. 13, 2018) (2018 U.S. Dist. LEXIS 194079; 2018 WL 5982955) (Memorandum Opinion)

Appeal filed: Sixth Circuit No. 18-6292

Casenote(s):

EXHAUSTION OF ADMINISTRATIVE REMEDIES; COURT FINDS THAT WEIGHT OF THE AUTHORITY IS THAT FILING A COMPLAINT WITH THE SECRETARY OF LABOR PRIOR TO FILING A LAWSUIT IN FEDEDRAL COURT IS MANDATORY

In Gibbens v. OptumRx, Inc. , No. 16-cv-723 (M.D. Tenn. Nov. 13, 2018) (2018 U.S. Dist. LEXIS 194079; 2018 WL 5982955), the Plaintiff challenged an Arbitrator’s dismissal of the Plaintiff’s Consumer Product Safety Improvement Act (CPSIA) retaliation claim based on failure to exhaust administrative remedies. The Plaintiff contended that the use of the word “may” in § 2087(b)(1) makes filing first with the Secretary of Labor permissive only, and cited in support Parker v. 4247 Fx, Inc. , No. 16-2710, 2017 U.S. Dist. LEXIS 72582, at *25 n.8 (E.D. Pa. May 12, 2017). The court was not persuaded that the Arbitrator had manifestly ignored the law. Rather, the court found that the Arbitrator had examined Parker and found that it had only provided a cursory analysis. The court quoted the Arbitrator’s analysis:

   Nevertheless, the majority of courts addressing the issue of whether § 2087(b) require exhaustion of administrative procedures prior to filing a lawsuit have held that it is mandatory. In Wilson v. E.I. Du Pont de Nemours & Co. , No. 15-967-LPS, 2017 U.S. Dist. LEXIS 35100, at *7 (D. Del. Mar. 13, 2017), the District of Delaware held that under the CPSIA, a “[p]laintiff may commence an action in federal court only after filing a complaint with the Secretary of Labor and if ‘the Secretary has not issued a final decision within 210 days after the filing of the complaint, or within 90 days after receiving a written determination’ . . . [f]ailure to exhaust administrative remedies is a ground to dismiss a case for failure to state a claim under Fed. R. Civ. P. 12(b)(6). ” Id . (citing Devine v. St. Luke’s Hosp. , 406 F. App’x 654, 656 (3d Cir. Jan 10, 2011)). See also Opela v. Wausau Window & Wall , 264 F. Supp. 3d 980, 2017 U.S. Dist. LEXIS 141142, at *10-11 (W.D. Wis. 2017) (“A plaintiff bringing a whistleblowing claim under the CPSIA . . . must initially file a complaint with OSHA.”); Jallali v. USA Funds , No. 11-62510-CIV, 2012 U.S. Dist. LEXIS 113578, at *16-17 (S.D. Fla. Aug. 10, 2012) (dismissing FLSA Section 218c retaliation claim for failure to exhaust administrative remedies under 15 U.S.C. § 2087(b)(1) because “[a] plaintiff only obtains the right to commence an action for de novo review in federal court if ‘the Secretary has not issued a final decision within 210 days after the filing of the complaint, or within 90 days after receiving a written determination.’”); Richter v. Design at Work, LLC , No. 14-CV-650 (RRM) (LB), 2014 U.S. Dist. LEXIS 91154, at *9 (E.D.N.Y. July 3, 2014) (holding in FLSA section 218c retaliation case that 15 U.S.C. § 2087(b) “requires a plaintiff to exhaust administrative remedies before filing a civil action in court.”).

The court noted that the Arbitrator had found that exhaustion of administrative remedies was also supported by the relevant federal regulations.

Shaw v. United States Postal Serv. , No. 18-cv-651 (E.D. Pa. Nov. 9, 2018) (2018 U.S. Dist. LEXIS 191964; 2018 WL 5885900) (Memorandum Opinion)

Casenote(s):

The court dismissed the Plaintiff’s Consumer Product Safety Improvement Act (CPSIA) retaliation claim where the original complaint did not plead any facts that related to a consumer product safety issue. The court also noted that CPSIA complaints must be presented to the Secretary of Labor before filing civil suit. See 15 U.S.C. § 2087(b).

Opela v. Apogee Wausau Group, Inc. , 17-cv-124 (W.D. Wisc. May 8, 2018) (2018 U.S. Dist. LEXIS 77044; 2018 WL 2122828) (Opinion and Order)

Case below: ALJ No. 2016-SOX-00040 Later history: Opela v. Apogee Wausau Group, Inc. , 17-cv-124 (W.D. Wisc. June 27, 2018) (Special Verdict); Opela v. Apogee Wausau Group, Inc. , 17-cv-124 (W.D. Wisc. June 28, 2018) (Judgment in a Civil Case)

Casenote(s):

CONSUMER PRODUCTS; EVIDENCE THAT DEFENDANT’S PRODUCTS ARE USED IN COMMERCIAL AND INSTITUTIONAL BUILDING SUFFICIENT TO RAISE REASONABLE INFERENCE THAT THE PUBLIC MAY ENCOUNTER DEFENDANT’S PRODUCTS SUCH THAT PLAINTIFF’S CPSIA COMPLAINT WOULD SURVIVE A MOTION FOR SUMMARY JUDGMENT; COURT DIRECTS PARTIES TO BE PREPARED TO MAKE FACTUAL PROFFERS FOR A DETERMINATION OF WHETHER THE ISSUE COULD BE DETERMINED AS A MATTER OF LAW RATHER THAN AS AN ISSUE FOR A JURY

In Opela v. Apogee Wausau Group, Inc. , 17-cv-124 (W.D. Wisc. May 8, 2018) (2018 U.S. Dist. LEXIS 77044; 2018 WL 2122828), Defendant moved for summary judgment on Plaintiff’s Consumer Product Safety Improvement Act complaint on the ground that the claim does not concern a “consumer product” as required under that statute. In resolving a prior motion to dismiss, the court — construing all reasonable inference in Plaintiff’s favor — had found that the window frames, bolts and curtain wall products produced by Wausau qualify as consumer products as defined under 15 U.S.C. § 2052(a)(5). The court, however, indicated that it remained Plaintiff’s burden to gather evidence to support a finding that Wausau manufactures and distributes consumer products. Defendant’s present motion for summary judgment was supported by a declaration of Defendant’s VP of Design Engineering. The VP represented, inter alia, that Defendant’s finished products are sold exclusively to developers, contractors and subcontractors; that sales to individuals has been limited to replacement hardware or miscellaneous components (and even then only one or two sales per year); that it does not sell products directly to consumers, or through distributors or in “big box” retailers. The court found Plaintiff’s response lacking, but nonetheless found that the declaration did not “foreclose” a finding in Plaintiff’s favor, because the declaration showed that there were some isolated sales to individuals, there is some use of materials in residences, and there is a broader use of the products in commercial and institutional building such that a reasonable inference rises that the public may encounter Defendant’s products. The court noted that this would be an unusual issue for a jury’s review and that “there should not be any factual disputes as to the sale, use, consumption or enjoyment of defendant’s products.” Slip op. at 13. Thus, the court directed the parties to be prepared at a telephonic conference “to make factual proffers on the issue to determine if this is really an issue of law for the court to decide.” Id .

Wilson v. EI Dupont De Nemours & Co. , 710 Fed. Appx. 57 (3d Cir. Jan. 31, 2018) (per curiam) (not published) (No. 17-1804) (2018 U.S. App. LEXIS 2385; 2018 WL 637372) (Opinion)

Casenote(s):

EXHAUSTION OF ADMINISTRATIVE REMEDIES; FILING OF DISCRIMINATION COMPLAINTS WITH EEOC DID NOT ESTABLISH EXHAUSTION BASED ON EQUITABLE TOLLING OF CPSIA AND FLSA/ACA FILING DEADLINES FOR RETALIATION COMPLAINTS WHERE DISCRIMINATION COMPLAINTS PROPERLY FILED WITH EEOC AND DID NOT MENTION RETALIATION COMPLAINTS

In Wilson v. EI Dupont De Nemours & Co. , 710 Fed. Appx. 57 (3d Cir. Jan. 31, 2018) (per curiam) (not published) (2018 U.S. App. LEXIS 2385; 2018 WL 637372), the Third Circuit affirmed the judgment of the district court in Wilson v. EI Dupont De Nemours & Co. , No. 1:15-cv-00967 (D. Del. Mar. 13, 2017) (2017 WL 960395), dismissing the Appellant’s Consumer Product Safety Improvement Act of 2008 (CPSIA), 15 U.S.C. § 2087(a) and Fair Labor Standards Act (FLSA), 29 U.S.C. § 218c (Patient Protection and Affordable Care Act of 2010 (ACA), Pub. Law 111-148, 124 Stat. 119) retaliation cases for failure to exhaust administrative remedies before filing suit. The Appellant did not dispute that he failed to submit an administrative complaint to the U.S. Secretary of Labor or to OSHA. The court noted the Appellant’s argument that he properly exhausted administrative remedies because he filed a charge of age-, race-, gender-, and religion-based discrimination with the EEOC and the state Department of Labor. The court acknowledged that OSHA could equitably toll CPSIA and FLSA/ACA filing deadlines if a complainant mistakenly files a complaint with another agency instead of OSHA, citing 29 C.F.R. § 1984.103(d) and 29 C.F.R. § 1983.103(d). The court found, however, that is not what happened in the instant case. Rather, the discrimination complaints were properly filed with the EEOC, and the complaint said nothing about the “whistleblower” retaliation alleged in district court.

Energy Reorganization Act

Novero v. Duke Energy , 753 Fed. Appx. 759 (11th Cir. Oct. 16, 2018) (No. 17-14963) (2018 U.S. App. LEXIS 29048; 2018 WL 5013823) (per curiam) (Opinion)

Cases below: M.D. Fla. No. 16-cv-00571; ARB No. 15-072; ALJ No. 2013-ERA-18

Casenote(s):

[Nuclear and Environmental Digest IX B 4]
ELEVENTH CIRCUIT ADDRESSES HANDLING OF SHOTGUN PLEADING BY PRO SE LITIGANT; DISTRICT COURT HAS AUTHORITY TO DISMISS SUA SPONTE A SHOTGUN PLEADING WITH LEAVE TO AMEND; LATER DISMISSAL WITH PREJUDICE AFFIRMED WHERE THERE WAS AN IMPLICIT FINDING BY THE DISTRICT COURT THAT NO LESSER REMEDY WOULD SUFFICE

In Novero v. Duke Energy , 753 Fed. Appx. 759 (11th Cir. Oct. 16, 2018) (2018 U.S. App. LEXIS 29048; 2018 WL 5013823) (per curiam), the Plaintiff-Appellant (Novero) had filed a pro se complaint in federal district court alleging, inter alia , retaliation and blacklisting in violation of 42 U.S.C. § 5851 and 29 C.F.R. § 24.102, followed by 10 pages of “Factual Bases for Lawsuit” without organizing the claims by separate counts. A Magistrate recommended that the ERA claims be dismissed, but with leave to amend. The Magistrate stated that “[n]either the Court, nor Defendants, should be required to sift through the factual allegations to determine which allegations are material to each Count.” The district court adopted the Magistrate’s Report and Recommendation, dismissing the ERA claims without prejudice for failure to comply with FRCP Rules 8 and 10, but granting leave to file an amended complaint. The Plaintiff failed to meet the deadline for filing an amended complaint, but later filed objections to the district court’s order adopting the Magistrate’s Report and Recommendations, and a two-page revision of one of the paragraphs of the original complaint to add Defendants’ names and a brief description of the listed claims. The district court denied reconsideration and dismissed the amended complaint with prejudice because it was not timely and because it had not remedied the deficiencies. The Plaintiff sought relief from the dismissal order, but the district court denied reconsideration and affirmed the entry of judgment. The Plaintiff then filed an appeal, which although not compliant with FRAP 28, the court of appeals construed to present two issues: “whether the district court erred in dismissing Plaintiff’s original complaint sua sponte for failure to comply with Federal Rules of Civil Procedure 8 and 10 and (2) whether the district court erred in dismissing with prejudice Plaintiff’s “Amended Complaint” as untimely and still deficient.” Slip op. at 9 (footnote omitted).

District Court’s Authority to Dismiss Sua Sponte a Shotgun Pleading With Leave to Amend

The Eleventh Circuit stated:

   The district court possessed inherent authority to dismiss Plaintiff’s original complaint sua sponte for failure to comply with Federal Rules of Civil Procedure 8 and 10. “A district court has the ‘inherent authority to control its docket and ensure the prompt resolution of lawsuits,’ which includes the ability to dismiss a complaint on shotgun pleading grounds.” Vibe Micro, Inc. v. Shabanets , 878 F.3d 1291, 1295 (11th Cir. 2018), citing Weiland , 792 F.3d at 1320. “This is so even when the other party does not move to strike the pleading.” Jackson v. Bank of Am., N.A. , 898 F.3d 1348, 1358 (11th Cir. 2018).

Id . at 10.

The court found that the district court had not abused that discretion here, noting that FRCP 8(a)(2) requires a complaint to contain “a short and plain statement of the claim showing that the pleader is entitled to relief,” and that FRCP 10(b) provides that a party must state its claims or defenses in numbered paragraphs, and where “doing so would promote clarity, each claim founded on a separate transaction or occurrence—and each defense other than a denial—must be stated in a separate count or defense.” Id . The court noted that complaints that violate either of these rules, or both, “are often disparagingly referred to as ‘shotgun pleadings.’” Id . at 11 (citation omitted).

The court found that Novero’s complaint was a shotgun pleading, which “includes a laundry list of accused violations in paragraph 1 followed by a recitation of the ‘Factual Bases for Lawsuit’ unconnected to any of the potential violations previously listed.” Id . The court observed that the fact that Novero was pro se did not give license to a court to serve as de facto counsel for a party or to rewrite a pleading to sustain a cause of action. The court thus indicated that it was proper for the district court to order repleading sua sponte .

District Court’s Discretion to Dismiss Claim With Prejudice Upon Untimely Submission of Amended Complaint

The Eleventh Circuit first noted that it had recently addressed in Vibe Micro , 878 F.3d at 1296, the court’s inherent authority to dismiss a shotgun pleading when represented by counsel, but that Vibe did not address the circumstance of a party proceeding pro se . The court noted that it had previously held that “’a dismissal with prejudice, whether on motion or sua sponte, is an extreme sanction that may be properly imposed only when: (1) a party engages in a clear pattern of delay or willful contempt (contumacious conduct); and (2) the district court specifically finds that lesser sanctions would not suffice.’ Betty K Agencies , 432 F.3d at 1337–38 (quotation marks omitted).” Id . at 13.

In the instant case, the district court had not made an express finding that Novero had engaged in a clear pattern of delay or willful contempt or that a lesser sanction would not suffice. The court, however, noted that it had nonetheless stated that “courts may make ‘an implicit or explicit finding that lesser sanctions would not suffice.’ Gratton v. Great Am. Commc’ns , 178 F.3d 1373, 1374 (11th Cir. 1999).” Id . The court noted that we have repeatedly upheld dismissals with prejudice in cases brought by pro se plaintiffs based on a district court’s implicit findings of a plaintiff’s willful contempt or that “lesser sanctions would not suffice.” Id . (citations omitted).

Applying these principles, the court that the district court had not abused its discretion in dismissing the Plaintiff’s claims with prejudice. On appeal, the Plaintiff had merely argued that the original complaint was valid and adequate, and the court had already found earlier in its decision that it was deficient. The court also found that the belated “amended complaint” was deficient, as it was not actually an amended complaint, and even if viewed as integrated with the original complaint, it still contained “a laundry list of claims followed by a bulk recitation of facts unconnected to the individual claims.” Id . at 15.

The court also noted that the district court had identified the deficiencies with the original complaint, had noted the FRCP rules that had been violated, had directed Novero to resources for pro se litigants on drafting of compliant pleadings, and granted leave to amend. The court also noted other instances in which the district court had exhibited remarkable patience for the Plaintiff’s procedural failures. In sum, the court—noting its “voluminous precedent decrying shotgun pleadings” —found that “the district court acted within its discretion to implicitly find that no lesser remedy would suffice and dismiss Plaintiff’s claims with prejudice.” Id . at 16.

Fair Labor Standards Act

Acosta v. Foreclosure Connection, Inc. , 903 F.3d 1132 (10th Cir. Aug. 15, 2018) (No. 17-4111) (2018 U.S. App. LEXIS 22607; 2018 WL 3911768) (unpublished) (Order and Judgment)

Casenote(s):

FLSA RETALIATION PROTECTION PROVISION APPLIES TO “ANY PERSON” REGARDLESS OF WHETHER THAT PERSON IS AN ENTERPRISE ENGAGED IN COMMERCE

In Acosta v. Foreclosure Connection, Inc. , 903 F.3d 1132 (10th Cir. Aug. 15, 2018) (2018 U.S. App. LEXIS 22607; 2018 WL 3911768) (unpublished), the district court ruled in favor of the Department of Labor in a bench trial of DOL‘s complaint alleging that the Defendants has obstructed its FLSA overtime pay investigation and retaliated against its employees. On appeal, the Defendants argued that DOL failed to demonstrate that the company was an enterprise engaged in commerce as required by the provision at FLSA, 29 U.S.C. § 270(a)(1) for entitlement to overtime pay. The court, however, noted that

[T]he anti-retaliation provision of FLSA does not refer to an enterprise engaged in commerce. It states that “it shall be unlawful for any person . . . to discharge or in any other manner discriminate against any employee because such employee has filed any complaint . . . related to [FLSA].” § 215(a)(3) (emphasis added). A person is defined as “an individual, partnership, association, corporation, business trust, legal representative, or any organized group of persons.” § 203(a).

Slip op. at 4. The court noted that several circuits have that the anti-retaliation provisions of FLSA apply to any person regardless of whether that person is an enterprise engaged in commerce, and was persuaded by that authority.

Acosta v. Southwest Fuel Mgmt. , No. 16-cv-4547 (C.D. Cal. Feb. 6, 2018) (2018 U.S. Dist. LEXIS 22554; 2018 WL 739425) (Order Granting Temporary Restraining Order and Issuing Order to Show Cause)

Casenote(s):

FLSA ANTI-RETALIATION PROVISION; DISTRICT COURT GRANTS SECRETARY OF LABOR’S APPLICATION FOR TEMPORARY RESTRAINING ORDER AGAINST DEFENDANTS WHO HAD COERCED DECLARATIONS FROM EMPLOYEES AND OTHER POTENTIAL WITNESSES AFTER PREVIOUSLY HAVING BEEN SANCTIONED FOR INTENTIONAL SPOLIATION OF EVIDENCE

In Acosta v. Southwest Fuel Mgmt. , No. 16-cv-4547 (C.D. Cal. Feb. 6, 2018) (2018 U.S. Dist. LEXIS 22554; 2018 WL 739425), the Secretary of Labor filed a complaint against the Defendants asserting claims for violations of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201, et seq. During the litigation, the Special Master imposed sanctions on the Defendants for intentional spoliation of evidence, including a finding that Defendants intended to deprive the Secretary of certain video recordings, and that the videos were unfavorable to Defendants. About two months later, Defendants’ counsel began gathering declarations from current employees stating that they never worked off the clock, and did not disclose the declarations until filing briefing on cross motions for summary judgment. The Secretary then filed an application for a Temporary Restraining Order and Preliminary Injunction. The court granted a TRO and issued an Order to Show Cause why a preliminary injunction should not be issued. The court described the basis for the Secretary’s application as follows:

   The Secretary brings the instant Application because of defendants’ and their counsel’s alleged misconduct related to “solicit[ing] from their clients’ employees statements that contradict what the video evidence would have shown to be true.” ... The Secretary contends that: “Defendants’ counsel was well aware that they do not represent the employees and that their clients’ interests are adverse to the [workers’] interests[;]” defendants are “keenly aware of the economic power their clients had over the employee declarants and that these workers were required to speak with defense counsel on work time and as a condition of employment[;]” “the Secretary had identified specific damages for each of the employee declarants and thus . . . defense counsel was seeking waivers that are unenforceable[;]” and, “the declarations were coercive, and thus Defendants were potentially securing false testimony from their employees[.]” ... According to the Secretary, the “information gathered to date . . . suggests that defense counsel abandoned their ethical duties and failed to safeguard the integrity of the fact-finding process [and that] Defendants and their counsel should be enjoined from discussing this case with employees or soliciting declarations while the Secretary completes his investigation.” ... Based on “Defendants’ intentional spoilation of evidence and defense counsels’ bad faith attempts to further obscure the factual record in this case[,]” ..., and the alleged violation of the FLSA these actions constitute, the Secretary asks for a temporary restraining order and preliminary injunction.

Slip op. at 3-4 (citations omitted). The court then assessed whether a preliminary injunction was warranted. The court found that the Secretary was likely to prevail with respect to the FLSA’s anti-retaliation provision at 29 U.S.C. § 215(a)(3). The court noted that the employees who signed declarations were potential witnesses who engaged in protected activities by testifying or being about to testify in the FLSA proceeding. The court found that “soliciting and extracting coerced declarations, which may include false and/or misleading testimony, constitutes an adverse employment action for purposes of the FLSA’s anti-retaliation provision.” Slip op. at 8 (footnote omitted). The court found causation based on the circumstances that the Defendants sought and obtained the declaration only two months after having been sanctioned for destroying evidence. The court was not persuaded by the Defendant’s defense that the declarants had signed consent forms, the Secretary having presented evidence of coercive circumstances surrounding the interviews and the signing of the consent forms and declarations. The court also found in the Secretary’s favor on the TRO elements of irreparable harm; the balance of hardships; and the public interest.

The court therefore granted the Secretary’s application in part. The court awarded attorneys’ fees and costs; it enjoined further retaliatory or discriminatory actions against current or former employees or potential witnesses; it ordered production all documents associated with securing or attempting to secure declarations from non-managerial employees; it ordered a privilege log for any document withheld or redacted based on work-product protection, and in camera review before the Special Master; it ordered the Special Master to conduct proceedings to determine whether the Defendants violated discovery obligations; it ordered Defendants to provide a copy of the court’s Order to each individual named defendant and the President and General Counsel for each corporate entity or business; it ordered Defendants to provide a copy of the court’s Order to all persons acting in concert or participating with defendants in business operations. The court also set a schedule for responses and replies to an Order to Show Cause why a preliminary injunction should not be granted.

Federal Railroad Safety Act

Neylon v. BNSF Ry. Co. , (D. Neb. Dec. 12, 2018) (2018 U.S. Dist. LEXIS 209190) (Memorandum and Order)

Case below ALJ No. 2017-FRS-00066

Casenote(s):

SUMMARY JUDGMENT; FAILURE TO OPPOSE MOVING PARTIES’ ARGUMENTS; POTENTIAL NEED FOR MORE DISCOVERY

In Neylon v. BNSF Ry. Co. , No. 4:17-cv-03153-RGK-SMB, 2018 U.S. Dist. LEXIS 209190 (D. Neb. Dec. 12, 2018) (case below 2017-FRS-00066), Plaintiff claimed retaliation for following a treatment plan in violation of 49 U.S.C. § 20109(c)(2) and for reporting a work-related injury in violation of 49 U.S.C. § 20109(a)(4). Defendant sought summary decision.

On the § 20109(c)(2) complaint, Defendant argued that Complainant failed to exhaust his administrative remedies, that the complaint was barred by the statute of limitations, and that it failed on the merits. The District Court did not reach these arguments. Rather, “[b]ecause Plaintiff has failed to address any of Defendant’s arguments—including neglecting to even mention the statute that provides the basis for his medical treatments claim under 49 U.S.C. § 20109(c)(2)—Defendant’s Motion for Summary Judgement shall be granted on this claim.”

On the § 20109(a)(4) claim, Plaintiff argued that there was a pending motion for sanctions against Defendant for failure to produce documents in discovery, and that the documents would be needed to effectively oppose summary judgment. Since the sanctions motion was pending with the magistrate judge, the District Court denied the Defendant’s Motion for Summary Judgement on this complaint without prejudice, pending resolution of the sanctions motion.

Lemieux v. Soo Line R.R. Co. , No. 16-cv-1794 (D. Minn. Dec. 10, 2018) (2018 U.S. Dist. LEXIS 207527) (Sealed Memorandum Opinion and Order on Motions for Summary Judgment)

Case below ALJ No. 2016-FRS-48

Casenote(s):

SUMMARY JUDGMENT; PROTECTED ACTIVITY; CONTRARY DETERMINATIONS ABOUT SAFETY HAZARD DO NOT RENDER A REPORT OBJECTIVELY UNREASONABLE UNLESS MADE BY SIMILARLY SITUATED EMPLOYEES

SUMMARY JUDGMENT; CONTRIBUTING FACTOR; EVIDENCE OF TEMPORAL PROXIMITY, INTERTWINED PROTECTED ACTIVITY AND REASON FOR DISCIPLINE, INCONSISTENT APPLICATION OF DISCIPLINE, AND IRREGULAR PROCESS SUFFICIENT TO SUPPORT INTERFERENCE OF INTENTIONAL RETALIATION AND ANIMUS

SUMMARY JUDGMENT; AFFIRMATIVE DEFENSE; WHERE NO COMPARATORS ARE SIMILARLY SITUATED AND BOTH PARTIES PROFFER EXAMPLES TO SUPPORT THEIR CASE, SUMMARY JUDGEMENT ON AFFIRMATIVE DEFENSE INAPPROPRIATE

In Lemieux v. Soo Line R.R. Co. , No. 16-cv-1794, 2018 U.S. Dist. LEXIS 207527 (D. Minn. Dec. 10, 2018) (case below ALJ No. 2016-FRS-48), Plaintiff alleged that Defendant violated the FRSA by investigating him, suspending him, and then terminating him in retaliation for good faith reports of hazardous and unsafe brakes. The parties filed cross motions for summary decision. The District Court found genuine disputes of material fact and denied both motions.

Plaintiff “bad ordered” about 56 cars on a train for brake problems. Defendant pursued discipline for delaying operations after it determined that all but one were improper determinations and the brakes/brake pads were compliant. This resulted in an investigation, hearing, and five day suspension. While this was ongoing, Plaintiff reported brake defects as signaled by track detectors and a frozen slack adjuster. A supervisor went to observe and the parties disputed what exactly happened. But Defendant pursued discipline against Complainant for not immediately securing the train as ordered by dispatch and not conducting a proper roll-by inspection of a passing train. This led to termination.

Defendant sought summary judgement as to the first protected activity on the grounds that it was not done in good faith arguing that 1) the reports were not objectively reasonable; 2) they were not timely made; and 3) bad-ordering 56 cars was unprecedented. The court quickly rejected the second two—there was evidence that the reports were made in line with the training Plaintiff received and an unprecedented number of reports of problems didn’t make them untrue. As to the objective reasonableness, the court observed that there was a disputed question of law about whether “good faith” included an objective component and the Eighth Circuit had not spoken on the issue. The court, however, declined to decide it on the grounds that on either interpretation there were genuine disputes of material fact. Even if “good faith” included an objective component, the question was whether a reasonable person in the same factual circumstances with the same training and experience would have come to the same conclusion. The evidence of what Defendant’s mechanics found later didn’t resolve that question. The court also somewhat summarily determined that the first incident could constitute a refusal protected by § 20109(b)(1)(C) and that the second incident was subject to genuine disputes that would need to be resolved by a jury.

Next, applying the Eighth Circuit’s Kuduk decision, the court noted that the more lenient contributory factor standard enhanced the probative value of temporal proximity. It also observed that in this case the protected conduct and the alleged intervening unprotected conducted were “closely intertwined” and so the close proximity remained probative. It noted that one manager was involved in both incidents, supporting an inference of animus. Plaintiff had produced evidence of selective enforcement of discipline policy, raising a dispute for the jury. Next, the court agreed that the way in which the hearings were conducted (refusal to hear witnesses, the managerial witness in the first hearing presiding in the second, only hearing from a managerial witness in the second hearing who had been involved in deciding the discipline in the first hearing) could support a finding for plaintiff. There was not evidence these shortcomings were standard practice, and the process as a whole were suggestive of pretext. Higher-level managers had also escalated the recommended discipline, which could suggest animus. Defendant pointed to evidence that Plaintiff was not disciplined for many other safety complaints, but though this would weigh against a finding of animus, it was not dispositive. The structure of the compensation program for managers could also support animus. In sum, the Court found that the Plaintiff had presented sufficient evidence that could support an inference of contribution, so the issue had to go to a jury.

Lastly, the Court asked whether Defendant had established its affirmative defense by showing by clear and convincing evidence that it would have taken the same adverse actions absent the protected activity. It found that this showing had not been made. Plaintiff had introduced evidence of many employees who were treated differently. Though these were different situated, so were the employees offered as comparators by Defendant. The fact that Defendant had terminated the other employee involved in the second incident was unavailing—that employee was differently situated in terms of the misconduct found and the initial recommendations for discipline had recognized that Plaintiff’s violation was less serious. Summary judgment was thus inappropriate.

O’Neal v. Norfolk S. R.R. Co. , 16-cv-519 (M.D. Ga. Nov. 15, 2018) (2018 U.S. Dist. LEXIS 194771; 2018 WL 6005425) (Order [on costs and expenses])

See also:
O’Neal v. Norfolk Southern R.R. Co. , 16-CV-519 (Aug. 13, 2018) (Judgment (Jury Verdict))
O’Neal v. Norfolk Southern R.R. Co. , 16-CV-519 (M.D. Ga., July 6, 2018) (2018 U.S. Dist. LEXIS 112185) (Order [denying summary judgment])
O’Neal v. Norfolk Southern R.R. Co. , No. 18-15178 –E (11th Cir. Jan. 23, 2019) (Entry of [Voluntary] Dismissal)

Casenote(s):

ATTORNEY’S FEES AND COSTS; LODESTAR USED TO DETERMINE REASONABLE FEE; PETITIONING PARTY HAS BURDEN TO ESTABLISH REASONABLE HOURLY RATES IN THE RELEVANT COMMUNITY; WHEN MULTIPLE CLAIMS ARE AT ISSUE, TIME SPENT SOLELY ON A CLAIM WITHOUT A FEE-SHIFTING PROVISION IS NON-COMPENSABLE; MULTIPLIER MAY BE APPROPRIATE IN CONTINGENT FEE CASES

In O’Neal v. Norfolk S. R.R. Co. , 16-cv-519 (M.D. Ga. Nov. 15, 2018) (2018 U.S. Dist. LEXIS 194771; 2018 WL 6005425), two joined FRSA actions proceeded to a jury trial, resulting in a verdict for the plaintiffs. Counsel for the plaintiffs sought an award of fees and costs. Defendant disputed the requested rate and the hours billed, as well as an application of a 1.33 multiplier.

The court explained that attorneys’ fees under the FRSA are determined using the lodestar: the reasonable hourly rate multiplied by the reasonable number of hours, with a “strong presumption” that the lodestar yields the proper award. Based on an affidavit of a local attorney about rates in the area, the court found that plaintiffs’ had established a rate of $405.00/hour, but rejected the claim of $450.00/hour that was based on an award in a different community.

The case involved a related FELA claim and FELA does not contain a fee-shifting provision. The court explained that the claims overlapped and hours that were necessary for the FRSA claim were billable, even if they also related to the FELA claim. But time spent solely on the FELA claim could not be billed to the Defendant. The court accordingly reduced FELA-only hours. The court also reduced clerical time, duplicate entries, and inaccurate entries.

Next, applying 11th Circuit law, the court awarded an enhancement to the lodestar with a 1.33 multiplier due to the risk of non-recovery. Lastly, the court rejected on objection to costs.

King v. Ind. Harbor Belt R.R. , No. 15-cv-245 (N.D. Ind. Nov. 13, 2018) (2018 U.S. Dist. LEXIS 193891; 2018 WL 5982134) (Opinion and Order)

Case below 2015-FRS-3

Casenote(s):

MOTION TO STRIKE; MEMOS WRITTEN FOR LITIGATION PURPOSES STRUCK ON SUMMARY JUDGMENT WHEN THEY WERE UNAUTHENTICATED AND REPRESENTED INADMISSIBLE HEARSAY

In King v. Ind. Harbor Belt R.R. , No. 15-cv-245 (N.D. Ind. Nov. 13, 2018) (2018 U.S. Dist. LEXIS 193891; 2018 WL 5982134) (Case below ALJ No. 2015-FRS-3), the district court granted a motion to strike two hand-written memorandums submitted as part of an opposition to summary judgment on the grounds that they were not properly authenticated and so would not be admissible at trial and the content of the memos was inadmissible hearsay.

SUMMARY JUDGMENT; SEVENTH CIRCUIT REQUIRES A SHOWING OF RETALIATORY MOTIVE TO MAKE OUT A CASE OF RETALIATION; SUMMARY JUDGMENT APPROPRIATE WHERE NO GENUINE DISPUTE THAT ORDINARY PROCEDURES OF DISCIPLINE WERE FOLLOWED, THERE WAS NO EVIDENCE OF A CHANGE IN ATTITUDE OR DIFFERENT TREATMENT FROM OTHER EMPLOYEES

In King v. Ind. Harbor Belt R.R. , No. 15-cv-245 (N.D. Ind. Nov. 13, 2018) (2018 U.S. Dist. LEXIS 193891; 2018 WL 5982134) (Case below ALJ No. 2015-FRS-3), applying Seventh Circuit law, the court found that to make out a case of retaliation under the FRSA, a plaintiff must show the existence of an improper retaliatory motive, which is distinct from the question of whether that motive contributed to the decision to take the adverse action. Temporal proximity could not create an inference to such a motive where the employer followed its standard procedures in determining the amount of discipline for an admitted violation and there was no evidence that they were manipulated or used to retaliate. The court also rejected a claim that the particular facts underlying a discipline was sufficient to render it a departure from ordinary practice. Summary judgment was also found appropriate when the plaintiff had no evidence of a changed attitude towards him in denying or delaying requests for benefits because there was no evidence he was treated differently than others. The court also rejected an inference to a retaliatory motive based on strong vulgar language from a manager when such language was an ordinary part of the workplace.

Rookaird v. BNSF Ry. Co. , 908 F.3d 451 (9th Cir. Nov. 8, 2018) (2018 U.S. App. LEXIS 31687; 2018 WL 5831631) (Nos. 16-35786, 16-35931, 16-36062, No. 16-35787) (Opinion)

Cases below: W.D. Wash No. 14-cv-176; ALJ No. 2014-FRS-9.

Casenote(s):

PROTECTED ACTIVITY; ACTUAL REFUSAL OF AN EXPLICIT ORDER FROM THE RAILROAD NOT NECESSARY IF REFUSAL CAN BE INFERRED FROM CONTEXT

PROTECTED ACTIVITY; REFUSAL PROVISION, 20109(A)(2), DOES NOT REQUIRE A SHOWING OF AN ACTUAL VIOLATION, INSTEAD ONLY A GOOD FAITH BELIEF OF A VIOLATION IS NECESSARY

CONTRIBUTING FACTOR; THE FRSA CONTAINS ELEMENTS FOR A PRIMA FACIE CASE AND FOR A SHOWING ON THE MERITS THAT DIFFER IN WHAT MUST BE SHOWN AS TO CONTRIBUTORY FACTOR; ON THE MERITS A COMPLAINANT MUST SHOW BY A PREPONDERANCE OF THE EVIDENCE THAT THE PROTECTED ACTIVITY DID CONTRIBUTE TO THE ADVERSE ACTION, NOT JUST THAT CIRCUMSTANCES WOULD PERMIT THAT INFERENCE

In Rookaird v. BNSF Ry. Co. , 908 F.3d 451 (9th Cir. Nov. 8, 2018) (2018 U.S. App. LEXIS 31687; 2018 WL 5831631) (cases below: W.D. Wash No. 14-cv-176; ALJ No. 2014-FRS-9), Plaintiff Rookaird was a conductor on (and in charge of) a switcher crew for BNSF. The crew was tasked with moving a train. When it arrived, it performed a 20-45 minute air brake test on the train. Plaintiff’s supervisor, the trainmaster, made comments on the radio during the test suggesting that they stop, but did not order them to do so. They finished the test and then began work. Supervisors became upset at the pace of the work, thinking that it was an intentional slow-down in retaliation for reduced overtime, and pulled the crew out of service. A de-briefing of sorts with Plaintiff followed. He was told to go home. He printed a time sheet just after 8:00 listing an off-duty time of 8:30. At 8:15 he was ordered to go home again. He did so without signing the timesheet. BNSF started an investigation and eventually terminated Plaintiff for not working efficiently, dishonesty on his time sheet, failure to sign the timesheet, and failure to leave the property when he was told.

Plaintiff filed an FRSA complaint, which was eventually kicked out to federal district court. He alleged that he was retaliated against for refusing to stop the air brake test. To prevail Plaintiff had to show 1) that he engaged in protected activity; 2) that the employer knew about the alleged protected activity; 3) that he suffered an unfavorable personnel action; and 4) that the protected activity was a contributing factor in the unfavorable personnel action. BNSF could defeat liability by showing by clear and convincing evidence that it would have taken the same adverse action absent the protected activity. The District Court granted summary judgement to Plaintiff on 2) knowledge; 3) adverse action; and 4) contribution. On contribution, it noted that the failure to work efficiently “cannot be unwound” from the action of continuing the airbrake test. Before the case went to the jury the District Court held that the airbrake test was not legally required (though it was a “close call”) but that it could still be a protected activity if Plaintiff had an objectively and subjectively reasonable belief that it was required. The jury had to decide a) whether there was protected activity; b) if so whether BNSF had established its affirmative defense; and c) if not, what damages to award. The jury returned a verdict for Plaintiff and awarded $1.2 million in damages. Both parties appealed the damages and BNSF appealed liability.

The Ninth Circuit affirmed the denial of summary judgement on the protected activity element but reversed the grant of summary judgment to Plaintiff on the contributing factor element. The verdict and damages were thus vacated and the case was remanded for further proceedings. Judge Ikuta dissented and would have also reversed the denial of summary decision to BNSF on the protected activity element.

BNSF appealed the denial of its motion that as a matter of law there was no protected activity. It argued that there was no actual refusal and that even if there was, since there would have been no actual violation of law the refusal wasn’t protected. The Ninth Circuit disagreed. A “refusal” does not need to be a refusal of an explicit order by the employer; it can be inferred from context. So here a supervisor questioning the need for the test and disapproving of it coupled with the Plaintiff’s statement that they were going to continue it nonetheless could be found to be a refusal. In addition, the panel majority held that the refusal provision, 20109(a)(2), does not require that the activity/action refused by the employee be an actual violation of a rule or regulation. A good faith belief (subjectively and objectively) that the activity/action would do so is sufficient to make the refusal a protected activity. The panel noted that the statute incorporates a good faith belief requirement in the general section of 20109(a), which would be undercut if it then required that the refusal had to for an actual violation (rather than just one that the employee had a good faith belief was a violation). It would also go against the purpose of the statute in a case like this where whether or not the test was required turned out to be a complicated and difficult legal question. In part this issue turned on statutory construction and what significance to assign to the presence of “reasonably believes” in (a)(1) but not (a)(2). The panel majority didn’t think this had the significance BNSF wanted and noted that district courts interpreting (a)(4) hadn’t required a showing that there was, in fact, a work-related injury. Additionally, (a)(7) contains a qualifier that the report must be “accurate” which belied the argument that in all but (a)(1) the employee had to be objectively correct.

Next, the Court turned to the grant of summary decision to Plaintiff on the contributory factor element. In the panel’s understanding, the FRSA contains two distinct phases with a burden shifting framework. In the first, the complainant must make our a prima facie case by showing 1) protected activity; 2) employer’s knowledge or suspicion of protected activity; 3) adverse action; and 4) that “[t]he circumstances were sufficient to raise the inference that the protected activity (or perception thereof) was a contributing factor in the adverse action.” The prima facie showing can be defeated by a showing by a clear and convincing evidence that the employer would have taken the same action absent the protected activity. At this stage a prevailing means that OSHA will investigate. The second stage is substantive. It is the same except that there is one important different: the complainant must show, by a preponderance of the evidence, that the protected activity was a contributing factor. Prevailing here means winning the case.

In this case the District Court erred by conflating the two stages and granting summary decision on contribution based on the showing that applies at the prima facie case stage, not the substantive stage. The District Court had found that the adverse action and protected activity could not be unwound and on that basis granted summary judgement on “the ‘contributing factor’ element of his prima facie case.” The Ninth Circuit agreed based on its understanding of the framework, but on that understanding it was error to not give the jury the contributing factor question on the “substantive” framework. Summary judgment was improper as to whether the protected activity was a contributing factor because BNSF presented evidence that, if believed, could lead a reasonably fact-finder to conclude that the protected activity did not contribute.

As a result, the Ninth Circuit vacated the judgment and remanded to the District Court for further proceedings. The damages appeals were dismissed as moot. In a note, the Ninth Circuit acknowledged that BNSF sought a new trial on all of the issues but opted to leave this to the determination of the District Court on remand.

Judge Ikuta dissented in part. She accused the majority of “giving Congress a helping hand by substituting its own policy judgment for the plain language of the statute.” In her view, the fact that “reasonably believes” is present in (a)(1) but not in (a)(2) meant that to succeed under (a)(2), the refusal clause there had to be an actual violation of federal law, rule, or regulation at issue. Because here the District Court determined that the air brake test was not required by federal law, rule, or regulation, the FRSA complaint had to fail as a matter of law—his refusal to do it wasn’t protected.

Powell-Coker v. Norfolk S. Ry. Co. , 18-cv-01094 (N.D. Ala. Oct. 19, 2018) (2018 U.S. Dist. LEXIS 179590) (Memorandum Opinion and Order)

Casenote(s):

MOTION TO DISMISS; ADMINISTRATIVE REMEDIES MUST BE EXHAUSTED AS TO EACH NAMED DEFENDANT; COMPLAINT MUST CONTAIN SPECIFIC PLEADINGS AS TO THE ROLE OF EACH NAMED DEFENDANT AND HOW THE ELEMENTS OF THE COMPLAINT ARE SATISFIED AS TO EACH DEFENDANT

In Powell-Coker v. Norfolk S. Ry. Co. , 18-cv-01094 (N.D. Ala. Oct. 19, 2018) (2018 U.S. Dist. LEXIS 179590), Plaintiff brought an FRSA claim alleging retaliation for internal complaints about the maintenance of employee discipline files, which she alleged was a safety issue. She named the railroad and a variety of employees. The court granted a motion to dismiss the complaint as to several of the named parties because they had not been named or included in the complaint to OSHA, and so administrative remedies had not been exhausted. As to all the defendants, the pleading was an improper “shotgun complaint” that made multiple allegations against multiple defendants without specifying who engaged in what wrongdoing and how. The Plaintiff also failed to make “specific pleadings to establish knowledge of the protected conduct and/or involvement in the adverse conduct” as to the various individual defendants.

Fresquez v. BNSF Ry. Co. , No. 17-cv-00844 (D. Colo. Oct. 2, 2018) (2018 U.S. Dist. LEXIS 221496) (Order)

Case below: ALJ No. 2017-FRS-00018

Casenote(s):

The court denied summary judgment where, viewing the evidence to the Plaintiff’s advantage, there was temporal and other circumstantial evidence that made it impossible to divorce the timing of the Plaintiff’s protected activity of refusing to reclassify a defect, and his supervisor’s reporting him for insubordination. The court also denied summary judgment as to punitive damages, the Defendant claiming that the Plaintiff could not show reckless or callous disregard for his rights or intentional violations of federal law. The court found that testimony that the Plaintiff’s supervisor was aware that federal law prohibits retaliation against an employee who reports a safety concern, the fact that supervisor initiated disciplinary action against Plaintiff by telling another manager that the Plaintiff was insubordinate, and testimony from the Plaintiff and a track foreman that the supervisor (and the Defendant more generally) retaliated because the Plaintiff challenged the supervisor about reporting track defects, showed at least a dispute existed. Although BNSF contended that the Kolstad good-faith exception applied, the court found that there was a dispute over whether the Defendant has made good faith efforts to enforce its retaliation policies.

Tompkins v. Metro-North Commuter R.R. , No. 16-cv-09920 (S.D. N.Y. Sept. 24, 2018) (2018 U.S. Dist. LEXIS 163198; 2018 WL 4573008) (Opinion and Order)

Casenote(s):

PROTECTED ACTIVITY; SUMMARY JUDGMENT GRANTED IN FAVOR OF RAILROAD WHERE THE PLAINTIFF’S REFUSAL TO WALK TO DIFFERENT BUILDING AFTER REPORTING ICY SIDEWALKS WAS NOT SUPPORTED UNDER THE REASONABLE EMPLOYEE TEST; THE RAILROAD, HOWEVER, DID NOT CHALLENGE THAT THE REPORT ITSELF WAS PROTECTED

CONTRIBUTING FACTOR CAUSATION; COURT APPLIES GUNDERSON FIVE FACTOR TEST AND GRANTS SUMMARY JUDGMENT IN FAVOR OF RAILROAD WHERE DISCIPLINE WAS FOR NON-PROTECTED ACTIVITY AND INTERVENING FACTORS INDEPENDENTLY SUPPORTED DISCIPLINE

In Tompkins v. Metro-North Commuter R.R. , No. 16-cv-09920 (S.D. N.Y. Sept. 24, 2018) (2018 U.S. Dist. LEXIS 163198; 2018 WL 4573008), the Plaintiff brought a suit alleging that Defendant violated the whistleblower provisions of the Federal Railroad Safety Act (“FRSA”), 49 U.S.C § 20109, by suspending him in retaliation for his protected activities of reporting and refusing to work in unsafe working conditions. The district court granted summary judgment in favor of the Defendant.

First, the court assessed whether the Plaintiff had engaged in protected activity when he refused to walk to another building at the worksite. The Plaintiff believed that the sidewalks were too icy and refused to walk even after supervisors had checked conditions and other employees agreed to make the walk. Applying the “reasonable person with the same training and experience” test, the court noted that other the Plaintiff, “every individual cited in the record to have evaluated the situation on the night [in question] including at least four other Metro-North employees present that night, two Metro-North hearing officers, and an arbitration panel, all agreed that walking to the [other building] that night was not unsafe.” Slip op. at 10. The court found that the Plaintiff’s subjective assessment of the danger presented of on the walkways, which was supported by no evidence other than his own testimony and was contradicted by all others present on the scene or who had reviewed the events, was “insufficient to create a genuine dispute of material fact with respect to the objective reasonableness of his refusal to work.” Id . at 12. The court thus granted summary judgment based on the reasonable belief factor test for establishing protected activity.

The court then noted that it was undisputed that it was protected activity for the Plaintiff to have reported unsafe walking conditions and to have asked for a means of transport to the other building. Thus, the court considered whether the Plaintiff presented sufficient evidence for a reasonable jury to conclude that the Plaintiff’s safety complaints (separate and apart from the refusal to walk) were “contributing factors” to two disciplinary suspensions. The court described the legal standard as follows:

   To establish a contributing factor, a FRSA plaintiff must produce evidence identifying “intentional retaliation prompted by the employee engaging in protected activity.” Lockhart , 266 F. Supp. 3d at 663 (quoting Kuduk v. BNSF Ry. Co., 768 F.3d 786, 791 (8th Cir. 2014)). The “contributing factor” need not be the sole factor influencing the adverse employment action, and establishing a contributing factor does not require a showing of retaliatory motive. Araujo v. N.J. Transit Rail Ops., Inc. , 708 F.3d 152, 158 (3d Cir. 2013). But courts considering FRSA claims have held that “more than a temporal connection between the protected conduct and the adverse employment action is required to present a genuine factual issue on retaliation.” Kuduk , 768 F.3d at 792 (internal quotation marks omitted). “In considering [the contributing factor] element, [courts] must take into account the evidence of the employer’s nonretaliatory reasons.” Gunderson v. BNSF Ry. Co. , 850 F.3d 962, 969 (8th Cir. 2017) (internal quotation marks omitted).

Id . at 13. The court then applied a five-factor test as described in Gunderson , taking care to note that the assessment only related to the Plaintiff’s reporting of icy sidewalks, and not to his refusal to walk in those conditions which had been the basis for the discipline (but not protected activity under the FRSA). The court found several factors weighed in favor of the railroad on the first disciplinary action concerning a refusal to walk to the other building: (1) the Plaintiff had been represented by his union throughout the disciplinary proceedings, and the resulting suspension was upheld both by the railroad internally and by an arbitration panel; (2) the Plaintiff made no showing that a lower-level supervisor accountable for addressing the safety complaints played a decision-making role in the adjudication of the charges against him; (3) although there was temporal proximity, the record was clear that he was not disciplined for raising a safety issue but rather because he was argumentative and defied his supervisor’s instructions.

In regard to a second disciplinary action concerning the Plaintiff’s alleged threats to a supervisor in a lunchroom encounter, one of the factors weighed against the railroad because an arbitration panel overturned the Plaintiff’s suspension. However, other factors clearly weighed in the railroad’s favor given intervening events independently justifying adverse disciplinary action. The court found that “[t]he allegations at issue in Count II were based entirely on Tompkins’ alleged threats to a supervisor, not his safety complaints, and relevant intervening events include not only Tompkins’ insubordination for refusing to walk to the [other building], but also all of the subsequent disciplinary proceedings related to that insubordination and his initiation of the lunchroom confrontation with his supervisor.” Id . at 16. The court also granted summary decision as to this count.

Wooten v. BNSF Railway Co. , No. 16-cv-139 (D. Mont. Sept. 18, 2018) (2018 U.S. Dist. LEXIS 159199; 2018 WL 4462506) (case below 2016-FRS-00059) (Order [adopting Magistrate’s Findings and Recommendation and Order]), adopting Wooten v. BNSF Railway Co. , No. 16-cv-139 (D. Mont. May 29, 2018) (2018 U.S. Dist. LEXIS 89267; 2018 WL 2417858) (case below 2016-FRS-00059) (Findings and Recommendation and Order)

Casenote(s):

SUMMARY JUDGMENT; SUMMARY JUDGMENT ONLY APPROPRIATE ON AN UNDISPUTED ISSUE WHEN IT WILL NARROW THE ISSUES FOR TRIAL

SUMMARY JUDGMENT; WHERE GOOD FAITH OF AN INJURY REPORT IS IN GENUINE DISPUTE, SUMMARY JUDGMENT ON THE KNOWLEDGE ELEMENT IS INAPPROPRIATE

SUMMARY JUDGMENT; CONTRIBUTING FACTOR CAUSATION; PROOF OF INTENTIONAL RETALIATION NOT REQUIRED; RATHER, REQUISITE INTENT CAN BE INFERRED BASED ON CIRCUMSTANTIAL EVIDENCE; WHERE GENUINE DISPUTES REMAIN ABOUT THE CIRCUMSTANCES OF THE DISCIPLINE, SUMMARY JUDGMENT IS INAPPROPRIATE

SUMMARY JUDGMENT; AFFIRMATIVE DEFENSE; SUMMARY JUDGMENT DENIED WHEN THERE ARE NO ALTERNATIVE REASONS FOR THE DISCIPLINE AND EVIDENCE OF INCONSISTENT APPLICATION OF THE GENERAL RULE

SUMMARY JUDGMENT; DAMAGES; FAILURE TO MITIGATE; PLAINTIFF HAS DUTY TO MITIGATE BUT DEFENDANT HAS BURDEN TO SHOW FAILURE TO MITIGATE; WHERE QUESTION IS GEOGRAPHIC REASONABLENESS OF ALTERNATIVE JOBS, SUMMARY JUDGMENT INAPPROPRIATE

SUMMARY JUDGMENT; PUNITIVE DAMAGES; WHERE EVIDENCE EXISTS THAT COULD SUPPORT AN INFERENCE OF DISCRIMINATORY ANIMUS

SUMMARY JUDGMENT; EXHAUSTION OF ADMINISTRATIVE REMEDIES; PROTECTED ACTIVITIES THAT ARE CONTAINED WITHIN THE PROTECTED ACTIVITY PRESENTED TO OSHA HAVE BEEN EXHAUSTED

PROCEDURE; OBJECTIONS TO MAGISTRATE JUDGE’S RECOMMENDATIONS; TO TRIGGER DE NOVO REVIEW A PARTY MUST DO MORE THAN MERELY REPEAT ARGUMENTS MADE TO THE MAGISTRATE JUDGE

In Wooten v. BNSF Railway Co. , No. 16-cv-139 (D. Mont. Sept. 18, 2018) (2018 U.S. Dist. LEXIS 159199; 2018 WL 4462506), adopting Wooten v. BNSF Railway Co. , No. 16-cv-139 (D. Mont. May 29, 2018) (2018 U.S. Dist. LEXIS 89267; 2018 WL 2417858) (case below 2016-FRS-00059), the Plaintiff reported a work-related wrist injury. After investigation, a supervisor concluded that the injury had occurred prior to the work and that the Plaintiff had been dishonest in his reports. This led to termination. Plaintiff filed several actions, including an FRSA complaint.

The magistrate judge was presented with cross-motions for summary judgment on the issue of whether the protected activity was a contributing factor in the adverse action. The plaintiff also moved for summary judgment on the adverse action and knowledge elements. The parties agreed that summary judgment was not appropriate on the protected activity element since there was genuine dispute over whether the injury report had been made in good faith. The magistrate judge recommended denying the plaintiff’s motion for summary judgment on the “knowledge” element because though Defendant had knowledge of the injury report, there was dispute over good faith and derivatively dispute over knowledge of protected activity. In addition, though the adverse action element was not disputed, granting summary judgment served no purpose since it would be an issue at trial anyway.

Turning to the cross-motions on the contributing factor element, the parties disputed the nature of the required showing and, in particular, whether complainant had to make a showing of intentional retaliation and proximate cause. The court held that in the Ninth Circuit it was not necessary for a complainant to conclusively establish a retaliatory motive. Rather, the “requisite degree of discriminatory animus” could be shown by circumstantial evidence including temporal proximity, inconsistent application of policies, shifting explanations, hostility to protected activity, the relation between the protected activity and the discharge, and any intervening events justifying the discipline. On this standard neither party was entitled to summary judgment, as factual disputes affected the application of the factors to the case.

Defendant also sought summary judgment on the ground that it had established by clear and convincing evidence that it would have taken the same action absent the protected activity. But there was no evidence of another reason for the discipline. Insofar as Defendant’s argument was that it would have terminated the Plaintiff for any dishonesty, summary judgment was inappropriate because the plaintiff had produced evidence of discretion and inconsistency in punishing dishonesty.

Plaintiff sought summary judgment on the failure to mitigate defense. The court explained that while the plaintiff has the duty to mitigate, the defendant has the burden to show failure to mitigate, generally by showing the availability of substantially equivalent jobs and the failure of the plaintiff to use reasonable diligence in seeking alternative employment. The underlying issue here was whether the proposed alternate jobs were geographically reasonable. But this was a question of fact that would have to go to the jury.

Defendant sought summary judgment on the punitive damages request. This was inappropriate because evidence had been produced that could be found to establish discriminatory animus. It also sought summary judgment on failure to exhaust administrative remedies. This turned on allegedly additional protected activities asserted in the complaint that were not presented to OSHA. The magistrate judge found this wanting since the additional protected activities were contained within the injury report, which was the basis for the complaint to OSHA.

The magistrate judge also addressed a motion for summary judgment on a related claim and several evidentiary motions.

In a subsequent order, the district court adopted the magistrate judges’ recommendations in full. The objections to the FRSA recommendations were overruled on the grounds that they merely repeated arguments made to the magistrate judge, which is insufficient to trigger an obligation to conduct a de novo review.

Fresquez v. BNSF Ry. Co. , No. 17-cv-00844 (D. Colo. Sept. 17, 2018) (2018 U.S. Dist. LEXIS 221499) (Order Denying Motion to Compel and for Sanctions [ECF #63])

Case below: ALJ No. 2017-FRS-00018

Casenote(s):

TIMELINESS OF MOTION TO COMPEL

In Fresquez v. BNSF Ry. Co. , No. 17-cv-00844 (D. Colo. Sept. 17, 2018) (2018 U.S. Dist. LEXIS 221499), the magistrate judge considered the timeliness of the Plaintiff’s motion to compel. The magistrate judge first noted the factors for consideration:

   The Federal Rules of Civil Procedure do not provide a deadline for filing a motion to compel. The courts, however, generally look to the discovery deadline when considering whether a motion to compel is timely. See Days Inn Worldwide, Inc., v. Sonia Invs. , 237 F.R.D. 395, 397-98 (N.D. Tex. 2006) (collecting cases). Other factors courts have considered include: (1) the length of time since the discovery deadline expired; (2) the length of time that the moving party has known about the discovery; (3) whether the discovery deadline has been extended; (4) the explanation for the tardiness or delay in filing the motion to compel; (5) whether dispositive motions have been scheduled or filed; (6) the age of the case; (7) any prejudice to the party from whom the discovery is being sought; and, (8) any disruption of the court's schedule.

Slip op. at 4. The magistrate judge denied the motion because it had been filed 68 days after the magistrate judge gave the Plaintiff leave to file such a motion, 45 days after the Defendant filed its motion for summary judgment, and 19 days after the close of discovery. The magistrate judge also noted that the motion had been partially drafted at the time of the discovery conference before the magistrate.

PROPORTIONALITY IN DISCOVERY; MOTION TO COMPEL PRODUCTION OF EMAILS OF SEVEN MANAGERS DENIED WHERE PLAINTIFF HAD NOT DISPUTED DEFENDANT’S CONTENTION THAT THESE MANAGERS WOULD NOT HAVE RELEVANT INFORMATION AND WHERE PLAINTIFF’S VAGUE NEED FOR THE EMAILS EXCEEDED THE PROPORTIONAL NEEDS OF THE CASE

In Fresquez v. BNSF Ry. Co. , No. 17-cv-00844 (D. Colo. Sept. 17, 2018) (2018 U.S. Dist. LEXIS 221499), the magistrate judge denied the Plaintiff’s motion to compel the production of the emails of seven managers where the Plaintiff had not disputed BNSF’s contention that those individuals were not involved in the Plaintiff’s 2016 insubordination and dismissal, and the Plaintiff had not directly explained what relevant documents he believed had been withheld as to those individuals. The magistrate judge, citing FRCP 26(b)(1), found that the vague information the Plaintiff sought to compel exceeded the proportional needs of the case.

SPOLIATION OF EVIDENCE; BAD FAITH NOT FOUND WHEN NOTES REFERRED TO IN DEPOSITION WERE LATER DETERMINED TO HAVE BEEN DISCARDED 18 MONTHS BEFORE THE PLAINTIFF HAD FILED HIS OSHA COMPLAINT, THE TIMING OF WHICH WAS NOT INCONSISTENT WITH THE DEPOSITION TESTIMONY

In Fresquez v. BNSF Ry. Co. , No. 17-cv-00844 (D. Colo. Sept. 17, 2018) (2018 U.S. Dist. LEXIS 221499), the magistrate judge denied the Plaintiff’s motion for sanctions for spoliation. During his deposition, one manager testified about an email or notes that he said showed that certain track defects had been repaired. The notes, however, had been discarded. The magistrate judge found no evidence of bad faith, noting that the notes had been discarded 18 months before the Plaintiff had filed his FRSA complaint with OSHA, and that this timing was not refuted by the deposition testimony. The magistrate judge also noted that BNSF had sent a litigation notice to this manager (and others) upon the filing of the FRSA suit.

Jackson v. BNSF Railway Co. , No. 16-cv-5518 (N.D. Ill. Aug. 22, 2018) (2018 U.S. Dist. LEXIS 142498; 2018 WL 4003377) (case below 2016-FRS-00015) (Memorandum Opinion and Order)

Casenote(s):

SUMMARY JUDGMENT; SEVENTH CIRCUIT REQUIRES SHOWING OF DISCRIMINATORY ANIMUS AND PLAINTIFF COULD NOT MAKE THAT SHOWING WHERE THERE WAS NO GENUINE DISPUTE THAT THE DISCIPLINARY RULES APPLIED TO THE PLAINTIFF AND WERE APPLIED CONSISTENTLY; TEMPORAL PROXIMITY ALONE INSUFFICIENT WHEN PROTECTED ACTIVITY IS NOT HE PROXIMATE CAUSE OF THE ADVERSE ACTION

In Jackson v. BNSF Railway Co. , No. 16-cv-5518 (N.D. Ill. Aug. 22, 2018) (2018 U.S. Dist. LEXIS 142498; 2018 WL 4003377) (case below 2016-FRS-00015), Plaintiff was involved in an altercation at work in which another employee punched him after he repeatedly used profane language. He was given a suspension while the other employee was terminated. He was also disciplined under the attendance policy. He filed a variety of complaints, including an FRSA complaint. Defendant sought summary judgment.

As to the FRSA complaint, applying Seventh Circuit law, the court explained that showing that the protected activity was a contributing factor in the adverse action requires showing “that discriminatory animus at least partially motivated the employer’s action; merely showing a causal link between the protected activity and the employer’s action does not suffice.” Plaintiff could not make this showing because there was no genuine dispute that the workplace violence policy applied to him in this situation and that the Defendant followed that policy. There was no evidence that the attitude of the employer changed after the protected activity, that there was pretext, or that there was inconsistent application of the rules. Temporal proximity was the only factor supporting the inference to contribution, but in this case the protected report was not the proximate cause of his discipline. Thus, summary judgment for defendant was entered on the FRSA complaint.

Renzi v. Union Pac. R.R. Co. , No. 16 C 2641 (N.D. Ill. Aug. 20, 2018) (2018 U.S. Dist. LEXIS 140554; 2018 WL 3970149) (Memorandum Opinion and Order)

Casenote(s):

ADVERSE ACTION; WHETHER CHARGES AND AN INVESTIGATION WOULD DISSUADE A REASONABLE EMPLOYEE FROM REPORTING WORKPLACE INJURIES; CONTEXT IS IMPORTANT

In Renzi v. Union Pac. R.R. Co. , No. 16 C 2641 (N.D. Ill. Aug. 20, 2018) (2018 U.S. Dist. LEXIS 140554; 2018 WL 3970149), the Plaintiff alleged that he was subjected to charges and an investigation in retaliation for reporting a workplace injury. The Defendant filed a motion for summary judgment on the ground that under FRSA a plaintiff must demonstrate that he suffered disciplinary or financial loss relating to the charge. The court reviewed the case precedent and found that “‘adverse actions‘ under the FRSA include not just ‘discriminatory actions that affect the terms and conditions of employment,‘ but also any action that would dissuade an objectively reasonable employee from exercising her rights under the law.” Slip op. at 9, citing Burlington N. & Santa Fe Ry. Co. v. White , 548 U.S. 53, 64 (2006). The court also cited the admonishment that “context matters” when making this assessment. The court noted the observation in Brisbois v. Soo Line R.R. Co. , 124 F. Supp. 3d 891 (D. Minn. 2015), that it would have major implications for the railroad industry if it was an “adverse action” any time a rail carrier attempts to determine whether an employees violated a rule, typically through a formal investigation. The court, however, noted that a materiality requirement may be met where an investigation and its implicit threat of discipline would dissuade a reasonable employee from exercising rights under the FRSA. Here, there was an allegation of disparate treatment of the plaintiff, undisputed evidence that misleading evidence was introduced and then withdrawn at the investigatory hearing, and an allegation that the injury could subject the plaintiff to negative consequences in the Defendant‘s performance tracker that may subjected him to additional interventions by supervisors. The court denied summary judgment.

Lincoln v. BNSF Ry. Co. , 900 F.3d 1166 (10th Cir. Aug. 17, 2018) (No. 17-3120) (2018 U.S. App. LEXIS 22930; 2018 WL 3945875 (Opinion)

Case below D.C. No. 5:15-CV-04936; ALJ Nos. 2015-FRS-29 and 30.

Casenote(s):

CONTRIBUTING FACTOR CAUSATION; 10TH CIRCUIT HOLDS THAT FRSA PLAINTIFF MUST DEMONSTRATE THE DECISONMAKER HAD KNOWLEDGE OF THE PROTECTED ACTIVITY; FAILURE TO IDENTIFY DECISIONMAKER RENDERS COURT UNABLE TO DETERMINE THE QUESTION; AUTOMATIC REJECTION FOR NOT MEETING A PREREQUISITE FOR A POSITION DOES NOT PERMIT INFERENCE OF RETALIATORY MOTIVE

In Lincoln v. BNSF Ry. Co. , No. 17-3120 (10th Cir. Aug. 17, 2018) (2018 U.S. App. LEXIS 22930; 2018 WL 3945875) (case below D.C. No. 5:15-CV-04936; ALJ Nos. 2015-FRS-29 and 30), the Plaintiffs-Appellants (“Appellants”) had attempted over the course of two years to negotiate a settlement with BNSF as to injuries sustained from a tank car spill accident; during this period they had continued in their jobs. When settlement negotiations broke down, an attorney representing the Appellants sent demand letters. The demand letters advised BNSF that medical conditions attributable to the accident caused the Appellants to be partially, permanently disabled and prevented them from working outdoors. BNSF removed the Appellants from service because their jobs entailed outdoor work. Thereafter, the Appellants applied for, and were not selected for, several positions. The Appellants filed several retaliation complaints, including complaints under the FRSA. The district court determined that the Appellants had failed to exhaust their administrative remedies under FRSA relative to most of the positions to which they applied, and failed to show for the remaining positions that their protected activity contributed to the decision not the select them for those positions. On appeal, the court focused in regard to the FRSA claims only on those job applications on which the Appellants had not failed to exhaust their administrative remedies and had not forfeited their claims by omitting challenges in their opening appellate briefs. The deciding factor was lack of evidence that the demand letters played a role in BNSF not selecting the Appellants for the positions. The court first discussed the question of employer knowledge of the protected activity:

   Section 20109(a) of Title 49 makes it illegal for a railroad to “discriminate against an employee if such discrimination is due , in whole or in part, to the employee‘s lawful good faith act.” (emphasis added). The section‘s use of “due . . . to” suggests that the protected activity must be a cause of the unfavorable personnel action. And a protected activity cannot be a cause of an unfavorable personnel action where the person or persons authorizing the unfavorable personnel action do not know about the protected activity. Similarly, as the FRSA protects employees from retaliation for their engagement in a protected activity, Koziara v. BNSF Ry. Co. , 840 F.3d 873, 878 (7th Cir. 2016); Kuduk v. BNSF Ry. Co. , 768 F.3d 786, 787 (8th Cir. 2014), it follows that the decisionmaker(s) must have knowledge of the protected activity. For how can decisionmakers retaliate against an employee for taking protected activity if they do not know about the protected activity? See Koziara , 840 F.3d at 878 (employee must produce evidence that unfavorable personnel action was “motivated by animus”). Accordingly, we join those courts that have concluded an FRSA plaintiff advancing a retaliation claim must demonstrate the decisonmaker had knowledge of the protected activity. See Conrad , 824 F.3d at 107–08; Kuduk , 768 F.3d at 791; see also Head v. Norfolk S. Ry. Co. , 2017 WL 4030580, at *16 (N.D. Ala. Sept. 13, 2017) (“To show that Defendant knew of this protected activity, ‘it is not enough for the plaintiff to show that someone in the organization knew of the protected expression; instead, the plaintiff must show that the person taking the adverse action was aware of the protected expression.‘” (quoting Bass v. Bd. of Cty. Comm‘rs, Orange Cty., Fla. , 256 F.3d 1095, 1119 (11th Cir. 2001))); Cyrus v. Union Pac. R.R. Co. , 2015 WL 5675073, at *10 (N.D. Ill. Sept. 24, 2015) (“An FRSA retaliation claim cannot survive . . . absent a showing that the superiors knew he had engaged in protected activity before taking any adverse action.”).

Slip op. at 77-78 (emphasis as in original). Applying this ruling to the facts of the case, the court found that the Appellants‘ FRSA complaints failed. The first Appellant had failed to provide evidence to show who at BNSF decided to reject the union‘s appointment of the Appellant to the job in question, making it not possible for the court to determine whether the decisionmaker(s) knew about the demand letter, or rejected the appointment because of the demand letter. The second Appellant had been automatically rejected for the job in question because he had not passed a mechanical aptitude test. The court found both that the second Appellant failed to identify who the decisionmaker was (or even if it was a person rather than a computer program), and that “an automatic rejection for not meeting a prerequisite for a position is not the type of rejection that permits an inference of a retaliatory motive.” Id . at 80.

Hess v. Union Pacific Railroad Co. , 898 F.3d 852 (8th Cir. Aug. 6, 2018) (No. 17-1167) (2018 U.S. App. LEXIS 21661) (case below 2014-FRS-00006) (Opinion)

Casenote(s):

SUMMARY JUDGMENT; SUMMARY JUDGMENT ON CONTRIBUTING FACTOR AFFIRMED WHERE SIX YEARS PASSED BETWEEN PROTECTED ACTIVITY AND ADVERSE ACTION AND EXCESSIVE ABSENTEEISM INTERVENED

PLEADING; CLAIM OF RETALIATION NOT ADEQUATELY PLED WHEN NO ALLEGATION THAT THE PROTECTED ACTIVITY CONTRIBUTED TO THE ADVERSE ACTION

In Hess v. Union Pacific Railroad Co. , 898 F.3d 852 (8th Cir. Aug. 6, 2018) (No. 17-1167) (2018 U.S. App. LEXIS 21661) (case below 2014-FRS-00006), the railroad terminated the plaintiff, who then filed an FRSA complaint alleging that he was terminated for engaging in protected activity. The Eighth Circuit affirmed the district court’s determination that the Plaintiff was terminated for violating the railroad company’s absenteeism policy with excessive absences without providing medical documentation. Six years had passed between the original report of an injury and the termination and in that time there was substantial evidence of non-compliance with the attendance policy. The end of the employment also resulted from the Plaintiff’s failure to take the steps needed to effect reinstatement. The court also affirmed a determination that no § 20109(c), retaliation for complying with a treating plan, claim had been pled because there was no allegation in the complaint that the treatment contributed to the adverse action.

Brewer v. BNSF Railway Co. , No. 15-cv-65 (D. Mont. July 23, 2018) (Order for Dismissal with Prejudice)

Case below: ALJ No. 2014-FRS-00001

Casenote(s):

The court granted a stipulated motion of the parties for dismissal with prejudice.

Green v. Grand Trunk Western Railroad, Inc. , No. 16-cv-11587 (E.D. Mich. July 9, 2018) (2018 U.S. Dist. LEXIS 113217; 2018 WL 3345283) (case below 2013-FRS-00051) (Order: 1) Adopting the Magistrate Judge’s Report and Recommendation (ECF No. 58); 2) Dismissing Case Pursuant to Federal Rule Of Civil Procedure 25(A)(1)), adopting Green v. Grand Trunk Western Railroad, Inc. , No. 16-cv-11587 (E.D. Mich. June 20, 2018) (2018 U.S. Dist. LEXIS 113446) (Report and Recommendation)

Case below: ALJ No. 2013-FRS-00051

Casenote(s):

The magistrate judge recommended dismissing the FRSA complaint under FRCP 25(a)(1) after Defendant filed a suggestion of death and no response or motion to substitute was filed in the 90-day period provided by the rule. No objections were filed and the district court adopted the recommendation.

Smith v. Norfolk Southern Railroad Co. , No. 16-cv-520 (M.D. Ga. July 6, 2018) (2018 U.S. Dist. LEXIS 112419) (Order [denying cross motions for summary judgment])

Related proceeding at O’Neal v. Norfolk Southern Railroad Co. , No. 16-cv-519 (M.D. Ga. July 6, 2018) (2018 U.S. Dist. LEXIS 112185) (Order [denying cross motions for summary judgment, etc.])

Casenote(s):

SUMMARY DECISION; SUMMARY DECISION DENIED WHERE GENUINE DISPUTES REMAIN OVER WHETHER THERE WAS AN INJURY AND WHETHER EMPLOYER HAD A REASONABLE BASIS FOR ITS DISCIPLINE

In Smith v. Norfolk Southern Railroad Co. , No. 16-cv-520 (M.D. Ga. July 6, 2018) (2018 U.S. Dist. LEXIS 112419), Plaintiff was terminated after a determination that he had made false statements to a supervisor when reporting another worker’s injury. He filed an FRSA complaint. The court in this order denied cross-motions for summary decision. There remained genuine disputes over whether the other worker had actually fallen from the chair, which made summary decision on the protected activity element impossible. As to the contributing factor element, the court observed that the correctness of the discipline was not at issue and there only needed to be a reasonable basis for the disciplinary decision. But this turned on a question of interpretation of the evidence, which was an issue a jury would need to decide. Genuine disputes also remained over the affirmative defense showing.

O’Neal v. Norfolk Southern Railroad Co. , No. 16-cv-519 (M.D. Ga. July 6, 2018) (2018 U.S. Dist. LEXIS 112185) (Order [denying cross motions for summary judgment, etc.])

Later proceedings:
O’Neal v. Norfolk Southern R.R. Co. , 16-CV-519 (Aug. 13, 2018) (Judgment (Jury Verdict))
O’Neal v. Norfolk Southern R.R. Co. , No. 18-15178 –E (11th Cir. Jan. 23, 2019) (Entry of [Voluntary] Dismissal)

Related proceeding at Smith v. Norfolk Southern Railroad Co. , No. 16-cv-520 (M.D. Ga. July 6, 2018) (2018 U.S. Dist. LEXIS 112419) (Order [denying cross motions for summary judgment])

Casenote(s):

SUMMARY DECISION; SUMMARY DECISION DENIED WHERE GENUINE DISPUTES REMAIN OVER WHETHER THERE WAS AN INJURY AND WHETHER EMPLOYER HAD A REASONABLE BASIS FOR ITS DISCIPLINE

In O’Neal v. Norfolk Southern Railroad Co. , No. 16-cv-519 (M.D. Ga. July 6, 2018) (2018 U.S. Dist. LEXIS 112185), Plaintiff reported that he was injured when a defective chair broke and caused him to fall. After an investigation a manager determined that the chair was defective but there had been no fall. Plaintiff was charged with making false statements to a supervisor and then terminated. He then filed an FRSA complaint. The parties filed cross-motions for summary decision. Both were denied. There remained genuine disputes over whether the plaintiff had actually fallen from the chair, which made summary decision on the protected activity element impossible. As to the contributing factor element, the court observed that the correctness of the discipline was not at issue and there only needed to be a reasonable basis for the disciplinary decision. But this turned on a question of interpretation of the evidence, which was an issue a jury would need to decide. Genuine disputes also remained over the affirmative defense showing.

EXPERT WITNESS; MOTION TO STRIKE UNDER DAUBERT ; OPINION ABOUT BIOMECHANICS ALLOWED BUT OTHER OPINIONS STRUCK AS EITHER NOT RELEVANT TO A DISPUTE OR NOT AN EXPERT OPINION THAT WOULD ASSIST A FACT-FINDER

In O’Neal v. Norfolk Southern Railroad Co. , No. 16-cv-519 (M.D. Ga. July 6, 2018) (2018 U.S. Dist. LEXIS 112185), the court granted in part and denied in part a motion to strike expert witness evidence, allowing evidence from a biomechanical engineer concerning the likelihood of the described mechanism of the fall but disallowing opinions about the likely harms from such a fall (since this was not relevant to any dispute) and the likelihood of a witness seeing the accident from the claimed vantage (since this would not assist the fact-finder in making a determination).

Gibbs v. Norfolk Southern Railway Co. , No. 14-cv-587 (W.D. Ky. June 28, 2018) (Order [adopting Report and Recommendation]); Gibbs v. Norfolk Southern Railway Co. , No. 14-cv-587 (W.D. Ky. June 12, 2018) (Report and Recommendation)

Casenote(s):

COSTS; DISTRICT COURT MAY DECLINE TO AWARD COSTS TO A PREVAILING DEFENDANT WHEN PRESENTED WITH UNCONTESTED EVIDENCE OF AN INABILITY TO PAY

In Gibbs v. Norfolk Southern Railway Co. , No. 14-cv-587 (W.D. Ky. June 28, 2018), adopting Report and Recommendation , Gibbs v. Norfolk Southern Railway Co. , No. 14-cv-587 (W.D. Ky. June 12, 2018), Defendant prevailed in this FRSA case and filed a bill of costs seeking $3,224.60 for stenographically recorded depositions. Plaintiff did not dispute the costs, but asked that they not be billed because of his indigency, providing an affidavit detailing his financial situation. In reply Defendant argued that other factors weighing on the discretion to not award costs did not support waiving them, but did not challenge the claim of poverty or seek an evidentiary hearing. Accepting the contents of the affidavit, the magistrate judge recommended denying assessment of costs to plaintiff. No party objected and the district court adopted the recommendation.

Flakker v. New Jersey Transit Rail Operations, Inc. , No. 18-cv-1046 (E.D. Pa. June 18, 2018) (2018 U.S. Dist. LEXIS 101272; 2018 WL 3029258) (Memorandum)

Earlier history: Flakker v. N.J. Transit Rail Operations, Inc. , No. 18-cv-1046 (E.D. Pa. June 7, 2018) (2018 U.S. Dist. LEXIS 95767; 2018 WL 2745904) (Memorandum)
Appeal filed: No. 18-2572 (3rd Cir.)

Casenote(s):

SOVEREIGN IMMUNITY; CONGRESS DID NOT ABROGATE SOVEREIGN IMMUNITY IN THE FRSA

In Flakker v. New Jersey Transit Rail Operations, Inc. , No. 18-cv-1046 (E.D. Pa. June 18, 2018) (2018 U.S. Dist. LEXIS 101272; 2018 WL 3029258), Plaintiff filed an FRSA complaint against his employer, New Jersey Transit Rail Operations, for retaliating against him for reporting a work-related injury. Defendant filed a motion for judgment on the pleadings on the grounds that it was immune from suit under the Eleventh Amendment. The Third Circuit Court of Appeals had recently held that NJ Transit was an arm of the state and thus immune from suit under the Eleventh Amendment. There was no dispute that the Defendant was part of NJ Transit. The court further determined that Congress did not abrogate sovereign immunity in the Whistleblower Provision of the Federal Railroad Safety Act. And it found that sovereign immunity had not been waived in this case. It thus granted the motion and issued judgment on the pleadings to Defendant.

Guerra v. Consolidated Rail Corp. , No. 17-cv-6497 (D. N.J. June 13, 2018) (Opinion)

Casenote(s):

COURT DISMISSED FRSA CLAIM FOR LACK OF SUBJECT MATTER JURISDICTION ON THE GROUND THAT A TIMELY FRSA ADMINISTRATIVE COMPLAINT HAD NOT BEEN FILED, WHERE PLAINTIFF FAILED TO RESPOND TO DEFENDANT'S FRCP 12(b) MOTION WITH SUFFICIENT DOCUMENTATION TO ESTABLISH GROUNDS FOR INVOCATION OF MAILBOX RULE; AFFIDAVIT OF ATTORNEY INSUFFICIENT WHERE IT WAS NOT ACCOMPANIED BY AN AFFIDAVIT FROM UNINDENTIFIED PERSON WHO PURPORTEDLY MAILED THE ADMINISTRATIVE COMPLAINT, AND WHERE PLAINTFF CONCEDED THAT THE REGULAR LAW OFFICE PROCEDURE WAS NOT FOLLOWED BECAUSE THE COMPLAINT WAS SENT BY REGULAR MAIL INSTEAD OF CERTIFIED MAIL AND FAX

Guerra v. Consolidated Rail Corp. , 2:17-cv-6497 (D. N.J. June 13, 2018) (2018 U.S. Dist. LEXIS 98779) (unpublished) (case below 2017-FRS-00047), the Defendant filed a FRCP 12(b)(1) motion for dismissal based on lack of jurisdiction, contending that the court did not have jurisdiciton because the Plaintiff had not filed a timely FRSA administrative complaint. The Plaintiff did not challenge whether failure to file a timely complaint would divest the court of subject-matter jurisdiction, but instead contended that the complaint was timely. The court found, however, that the Plaintiff failed to present a sufficient sworn affidavit to take advantage of the mailbox rule presumption. Although the Plaintiff presented an affidavit from his attorney, there was no affidavit from the unidentified person who would have mailed the administrative complaint. Moreover, the Plaintiff acknowledged that typical office procedures had not been followed because the complaint was allegedly sent by regular mail, and not by certified mail and fax. The court thus granted the motion to dismiss. However, it stated that "[t]o the extent that the pleading deficiencies identified by this Court can be cured by way of amendment, Plaintiff is hereby granted thirty (30) days to file an amended pleading."

Neylon v. BNSF Ry. Co. , No. 17-cv-3153 (D. Neb., June 8, 2018) (2018 U.S. Dist. LEXIS 96423) (Order [on motion for protective order])

Case below ALJ No. 2017-FRS-00066

Casenote(s):

DISCOVERY; PROTECTIVE ORDER GRANTED FOR DEPOSITION OF CORPORATE REPRESENTATIVE CONCERNING ESI PRACTICES WHEN RELEVANT INFORMATION COULD BE OTHERWISE PROCURED THROUGH INTERROGATORY

In Neylon v. BNSF Ry. Co. , No. 17-cv-3153 (D. Neb., June 8, 2018) (2018 U.S. Dist. LEXIS 96423) (Case below ALJ No. 2017-FRS-66), Plaintiff noticed a deposition of a corporate representative to testify about electronically stored information. Defendant sought a protective order arguing that the topics were not relevant to the merits of the claim, but were aimed at investigation to assist discovery, which had just begun. It asserted that Plaintiff could not have a reasonable belief that it had not complied with its discovery obligations. Plaintiff asserted he had a right to the discovery in question and pointed to other cases where Defendant had been sanctioned for discovery abuses. The court granted the order on the grounds that the information sought at this stage could be procured through the less burdensome means of an interrogatory. It indicated that the issue could be reconsidered later, if the response was insufficient.

Powers v. USDOL , 723 Fed. Appx. 522 (9th Cir. May 22, 2018) (No. 17-70676) (2018 U.S. App. LEXIS 13297; 2018 WL 2308587) (unpublished) (Memorandum [denying petition for review])

Case below ARB No. 13-034; 2010-FRS-00030.

Casenote(s):

9th Circuit affirmed the ARB’s affirmance of the ALJ’s dismissal of the complainant’s FRSA complaint. The ALJ had found that the railroad’s decision to terminate the complainant was based on its reasonable belief that the complainant had been dishonest about his activities while on medical leave, and that the reporting of his work injury was not a contributing factor to the termination.

Samson v. USDOL , No. 17-2862 (7th Cir. May 21, 2018) (2018 U.S. App. LEXIS 13174; 2018 WL 2304223) (unpublished) (Order [denying petition for review])

Case below ARB No. 15-065; ALJ No. 2014-FRS-00091.

Casenote(s):

FUTILITY OF REMAND UNDER CHENERY DOCTRINE; COURT OF APPEALS DECLINED TO REMAND WHERE, ALTHOUGH ALJ HAD ERRONEOUSLY APPLIED THE HEIGHTENED “WORK REFUSAL” STANDARD TO CONSIDER WHETHER A HAZARD REPORT WAS FRSA PROTECTED ACTIVITY, A REMAND WOULD BE FUTILE BECAUSE THE ALJ’s CREDIBILTY FINDINGS INESCAPABLY LEAD TO THE CONCLUSION THAT THE COMPLAINANT WAS FIRED ONLY FOR INSUBORDINATION

In Samson v. USDOL , No. 17-2862 (7th Cir. May 21, 2018) (2018 U.S. App. LEXIS 13174; 2018 WL 2304223) (unpublished) (case below ARB No. 15-065; ALJ No. 2014-FRS-00091), the 7th Circuit dismissed the complainant’s petition for review of the ARB’s affirmance of the ALJ’s dismissal of his FRSA retaliation complaint. The ALJ had found that the Plaintiff’s belief about hazardous conditions was unreasonable and credited the company’s testimony that it fired the complainant only because he abandoned his job. On appeal, the Plaintiff did not challenge the ALJ’s conclusion that his work refusals were not objectively reasonable, but argued that the ALJ erroneously applied the heightened requirements for refusals to work under 49 U.S.C. § 20109(b)(2) when deciding whether the complainant’s hazard report was protected activity. The court found that the ALJ had recited the wrong standard, but that the ALJ’s error of law did not require a remand because it was harmless. The court that the error was harmless because, even if the hazard report was protected, the railroad had fired the complainant solely on the basis of insubordination. Because the ALJ had not decided this precise issue, the court applied the Chenery doctrine to consider whether a remand would be futile. The court found that the ALJ’s credibility findings “inescapably lead to the conclusion that the report played no role in [the complainant’s] firing. So the discharge was lawful, and a remand to the ALJ on that question is thus pointless.” Slip op. at 5.

ALJ DISCRETION TO IMPOSE ADVERSE INFERENCE FOR FAILURE TO PRODUCE EVIDENCE; ALJ CANNOT BE HELD TO HAVE ABUSED THAT DISCRETION WHERE APPEALING PARTY NEVER ASKED FOR ADVERSE INFERENCE TO BE DRAWN

In Samson v. USDOL , No. 17-2862 (7th Cir. May 21, 2018) (2018 U.S. App. LEXIS 13174; 2018 WL 2304223) (unpublished) (case below ARB No. 15-065; ALJ No. 2014-FRS-00091), the 7th Circuit dismissed the complainant’s petition for review of the ARB’s affirmance of the ALJ’s dismissal of his FRSA retaliation complaint. One of the complainant’s arguments on appeal was that the ALJ should have drawn an adverse inference sanctioning the respondent for not providing recordings of certain radio conversations that the complainant believed still existed. The court observed that imposing an adverse inference against a party is left to the discretion of the factfinder, and the ALJ could not have abused that discretion where the complainant had not asked the ALJ to draw an adverse inference.

Murdock v. CSX Transportation, Inc. , No. 15-cv-1242 (N.D. Ohio May 2, 2018) (2018 U.S. Dist. LEXIS 74341; 2018 WL 2045668) (Memorandum Opinion)

Casenote(s):

PROTECTED ACTIVITY; OFF-DUTY PERSONAL ILLNESS IS NOT PROTECTED ACTIVITY UNDER THE FRSA

In Murdock v. CSX Transportation, Inc. , No. 15-cv-1242 (N.D. Ohio May 2, 2018) (2018 U.S. Dist. LEXIS 74341; 2018 WL 2045668), the Plaintiff requested reconsideration of its ruling that the Plaintiff’s off-duty personal illness fell outside the scope of the anti-retaliation provisions to the Federal Railway Safety Act under 42 U.S.C. § 20109(c). See Murdock v. CSX Transp., Inc. , No. 15-cv-01242 (N.D. Ohio Mar. 29, 2017) (2017 U.S. Dist. LEXIS 46835; 2017 WL 1165995). The court denied the motion for reconsideration. It first noted that it had conducted a statutory analysis and had found persuasive the reasoning of the Third Circuit’s decision in Port Auth. Trans-Hudson Corp. v. Sec’y, U.S. Dep’t of Labor , 776 F.3d 157 (3rd Cir. 2015). Moreover, the district court found that the Sixth Circuit had issued a decision on this precise issue:

   In Grand Trunk Western Railroad Co. v. United States Dep’t of Labor , 875 F.3d 821 (6th Cir. Nov, 20, 2017), cert. denied sub nom., Williams v. Grand Trunk Western R. Co. , __S.Ct.__, 2018 WL 1023094 (April 30, 2018), the Sixth Circuit considered whether an employee’s unexcused absences, subject to his doctor’s treatment plan but for a non-work related illness, constituted a protected activity under § 20109(c). The Court first conducted a statutory analysis and then considered the statute’s legislative history. As a final matter, the Circuit also rejected the Chevron deference position advanced by the Board. In finding in favor of the petitioner railroad, the court noted, “we join every other federal court that has interpreted 49 U.S.C. § 20109(c) and reject the Board’s reliance on Russello .” Id . at 831.

   As the Sixth Circuit has made a clear determination on this issue and that position is consistent with my earlier finding, the Plaintiff’s motion for reconsideration is denied.

Tilley v. Union Pacific Railroad Co. , No. 16-cv-2382 (N.D. Tx. Apr. 12, 2018) (2018 U.S. Dist. LEXIS 63039; 2018 WL 1786965) (Order Accepting the Findings, Conclusion and Recommendation of the United States Magistrate Judge), adopting , Tilley v. Union Pacific Railroad Co. , No. 16-cv-2382 (N.D. Tx. Mar. 27, 2018) (2018 U.S. Dist. LEXIS 62902) (Findings, Conclusion and Recommendation of the United States Magistrate Judge)

Casenote(s):

SUMMARY JUDGMENT; WHERE NO OPPOSITION IS FILED A COURT MAY NOT TAKE A DEFAULT BUT MAY ACCEPT THE MOVING PAPERS AS UNOPPOSED

SUMMARY JUDGMENT; FAILURE TO EXHAUST; WHERE THE PLAINTIFF DID NOT FILE A COMPLAINT WITH OSHA, DEFENDANT IS ENTITLED TO SUMMARY JUDGMENT FOR FAILURE TO EXHAUST ADMINISTRATIVE REMEDIES

In Tilley v. Union Pacific Railroad Co. , No. 16-cv-2382 (N.D. Tx. Apr. 12, 2018) (2018 U.S. Dist. LEXIS 63039; 2018 WL 1786965), adopting, Tilley v. Union Pacific Railroad Co. , No. 16-cv-2382 (N.D. Tx. Mar. 27, 2018) (2018 U.S. Dist. LEXIS 62902), Plaintiff was terminated after the railroad determined that she failed to ensure that switch points on a track fit properly, which resulted in a derailment. Plaintiff filed a complaint containing several claims, including an FRSA retaliation claim. Defendant moved for summary judgment. Plaintiff did not file a response. In this situation, a court is not permitted to enter a default, but may accept the moving papers as unopposed. Where the complaint is not verified, as here, there will be no competent summary judgment evidence except for that provided by the moving party.

As to the FRSA retaliation claim, Defendant argued that Plaintiff had admitted that she never filed a complaint with OSHA. The magistrate thus recommended that summary judgment be granted for failure to exhaust administrative remedies. No objections were filed and the district court adopted the recommendation.

King v. Ind. Harbor Belt R.R. , No. 15-cv-245 (N.D. Ind. Mar. 30, 2018) (Memorandum Opinion and Order)

Case below 2015-FRS-3

Casenote(s):

BANKRUPTCY; STANDING OF COMPLAINANT TO PURSUE FRSA WHILE IN CHAPTER 13 BANKRUPTCY; CAN PURSUE ON BEHALF OF ESTATE, BUT BANKRUPTCY MUST BE REOPENED AND DISCLOSURE MADE

In King v. Ind. Harbor Belt R.R. , No. 15-cv-245 (N.D. Ind. Mar. 30, 2018) (case below 2015-FRS-3), Plaintiff filed for bankruptcy under Chapter 13. He listed one whistleblower claim in his schedule but later denied having any such claims at a creditors’ meeting. He received a discharge several years later. During the pendency of the bankruptcy, he brought an FRSA suit asserting three sets of claims—one that he may have disclosed in the bankruptcy and two that had accrued later, but still during the bankruptcy. The schedules were never amended. The Defendant sought summary judgment on the grounds of judicial estoppel and lack of standing.

The court explained that when a bankruptcy petition is filed, all property, including legal claims, becomes property of the bankruptcy estate. And property that is acquired during the bankruptcy also belong to the estate. Here the claims were neither abandoned nor administered by the estate. The Plaintiff might be able to pursue the action in his own name, but for the benefit of the estate, but not unless they were disclosed to the estate. This was particular true here, where the bankruptcy was closed. To be able to pursue the claims the bankruptcy would have to be re-opened so that the trustee could determine whether to administer or abandon the interest in the claims. It was not clear if the bankruptcy could be re-opened, so the case was stayed so that Plaintiff could attempt to re-open it.

If this was not done, the court stated it would dismiss the two newer claims for lack of standing, and may do so with the older claim if it determined that there was not disclosure. In a note the court added that if the trustee elected to abandon the claims, the Plaintiff would be judicially estopped from pursuing them because he failed to disclose them properly.

Gibbs v. Norfolk Southern Railway Co. , No. 14-cv-587 (W.D. Ky. Mar. 29, 2018) (2018 U.S. Dist. LEXIS 52565; 2018 WL 1542141) (Memorandum Opinion and Order)

Casenote(s):

SUMMARY JUDGMENT; AMENDMENT OF CLAIMS; PLEADINGS CANNOT BE AMENDED IN A BRIEF OPPOSING A MOTION FOR SUMMARY JUDGMENT

FAILURE TO EXHAUST; AMENDMENT OF CLAIMS; CLAIMS CANNOT BE AMENDED TO ASSERT NEW ADVERSE ACTIONS THAT WERE NOT PART OF THE ADMINISTRATIVE COMPLAINT AND THUS WERE NOT ADMINISTRATIVELY EXHUASTED

SUMMARY JUDGMENT; KNOWLEDGE; WHERE THERE IS NO EVIDENCE BEYOND SPECULATION THAT THE DECISION-MAKERS HAD KNOWLEDGE OF THE PROTECTED ACTIVITY, SUMMARY JUDGMENT IS APPROPRIATE

SUMMARY JUDGMENT; CAT’S PAW; TO PREVAIL ON CAT’S PAW THEORY A PLAINTIFF MUST BE ABLE TO SHOW THAT THE INDIVIDUAL WITH THE ALLEGED RETALIATORY MOTIVE PLAYED SOME SUBSTANTIVE ROLE AND WAS ABLE TO INFLUENCE THE OUTCOME

SUMMARY JUDGMENT; CONTRIBUTORY FACTOR; SUMMARY JUDGMENT APPROPRIATE WHERE TEMPORAL PROXIMITY NOT SUGGESTIVE AND BROKEN BY INTERVENING EVENTS, THERE IS NO EVIDENCE OR PRETEXT OR HOSTILITY, AND THERE IS NO EVIDENCE THAT SIMILARLY SITUATED EMPLOYEES WERE TREATED DIFFERENTLY

In Gibbs v. Norfolk Southern Railway Co. , No. 14-cv-587 (W.D. Ky. Mar. 29, 2018) (2018 U.S. Dist. LEXIS 52565; 2018 WL 1542141), Plaintiff made safety complaints related to parking arrangements for a time when the entrances to the main parking area at the Louisville yard were to be blocked. Later he and another employee were investigated after some managers found them sitting in a company truck at a restaurant during work hours. Plaintiff maintained that this was normal practice and authorized, but he was terminated for absenteeism, misuse of company property, and sleeping on the job. He filed an FRSA complaint. The court was presented with Defendant’s motion for summary judgment.

In his response to the motion, Plaintiff asserted some additional adverse actions, but the court stated that he was barred from relying on these adverse actions because he did not assert them in the operative complaint and it is not permissible to amend pleadings in a brief opposing summary judgment. In addition, they were not included in the OSHA complaint and so they would be dismissed due to a failure to exhaust.

For the adverse actions that were properly alleged, the court found that Plaintiff could not establish that the decision-makers had knowledge of the protected activity. Both had declared that they had no such knowledge and one wasn’t at the company when the protected activity occurred. In response, Plaintiff had only speculated that the protected activity was generally known in management, but there was no evidence to support this conclusion. Plaintiff also made a “cat’s paw” argument based on influence by a supervisor who did know about the protected activity. But the court found that the undisputed evidence showed that this employee played no substantive role in the decision-making process or actual investigation.

In the alternative, the court granted summary decision on the contributing factor element. The factors did not support an inference of contribution. There was not significant temporal proximity and there was an intervening event. There was no good evidence of disparate treatment because none of the suggested comparators had violated all of the rules in question and the only good comparator, the companion in the truck, had received the same discipline. There was no evidence of hostility to Plaintiff and no evidence that the full range or what Plaintiff had done was common practice or that any of the decision-makers or alleged influencers condoned any of the misconduct alleged. The court added that Plaintiff’s shifting theories about who at Defendant had the retaliatory motive against him belied his claims of hostility.

Metro-North Commuter R.R. Co. v. USDOL , 886 F.3d 97 (2d Cir. Mar. 23, 2018) (No. 15-2551) (2018 U.S. App. LEXIS 7319; 2018 WL 1439593) (Opinion)

Case below ARB No. 13-062, ALJ No. 2009-FRS-11.

Casenote(s):

MEDICAL INTERFERENCE PROHIBITION; SECOND CIRCUIT FINDS CHALLENGE TO DEPARTMENT OF LABOR’S JURISDICTION OVER MEDICAL INTERFERENCE CLAIMS WAIVED WHEN RAISED FOR THE FIRST TIME ON APPEAL

MEDICAL INTERFERENCE PROHIBITION; SECOND CIRCUIT QUESTIONS ARB’S LEGAL ANALYSES OF SECTION 20109(C)(1) CLAIMS OF MEDICAL INTERFERENCE AND SUGGESTS ARB REVISIT ITS HOLDING, BUT FINDS IT DOES NOT NEED TO DECIDE THE PROPER ANALYSIS IN THE CASE PRESENTED

MEDICAL INTERFERENCE PROHIBITION; SECOND CIRCUIT VACATES FINDING OF MEDICAL INTERFERENCE WHEN FINDING THAT THE RAILROAD INSERTED ITSELF INTO THE MEDICAL TREATMENT AND INFLUENCED DECISIONS WAS NOT BASED ON AFFIRMATIVE EVIDENCE OF ACTUAL INTERFERENCE AND RESTED ONLY ON POTENTIAL WAYS THE RAILROAD COULD HAVE INTERFERED

In Metro-North Commuter R.R. Co. v. USDOL [Santiago] , 886 F.3d 97 (2d Cir. Mar. 23, 2018) (2018 U.S. App. LEXIS 7319; 2018 WL 1439593) (Case below ARB No. 13-062, ALJ No. 2009-FRS-11), Complainant injured his back when he fell from a broken chair. It was determined to be occupational and treatment was provided. Several months later a physician’s assistant at the Employer’s Occupational Health Service, which was operated and staffed by a contractor, found that the injury had resolved. Treatment was then ended. While the health service was operated by a contractor, the Employer retained significant control in that it could terminate the contract and exercise some control over staffing. Complainant filed a complaint under § 20109(c)(1) alleging that the Respondent had delayed, denied, or interfered with his treatment for a work-related injury because a manipulation under anesthesia was delayed. After a remand from the ARB, an ALJ found for Complainant. This was affirmed by the ARB and then appealed to the Second Circuit.

The panel started by commenting on the ARB’s construction of the burdens of proof under § 20109(c)(1), which is a prohibition on denial, delay, or interference with treatment of a work-related injury. It is not a standard whistleblower provisions and so the ARB has adjusted the showings. The protected activity is the injury report and the adverse action is the denial, delay, or interference with treatment. To make out a prima facie case, a complainant must show that the railroad inserted itself into the medical treatment and that this in some way caused a denial, delay, or interference in care. The affirmative defense is a showing that the result would have been the same without the interference in that, here at least, any reasonable doctor would have made the same decision about coverage of the injury.

The panel observed that both the burden shifting scheme in the FRSA and the provision providing for an administrative cause of action in § 20109(d) were awkward as applied to § 20109(c)(1). But the panel then held that the jurisdictional challenge to DOL’s authority to hear complaints under § 20109(c)(1) had been waived because it was raised for the first time on appeal. And the panel determined that it did not need to reach the propriety of the ARB’s reconstruction of how the § 20109(c)(1) analysis was supposed to proceed. At the same time it suggested that the ARB reconsider its interpretation considering the structure and purpose of the relevant sections in ensuring prompt provision of medical care. It also pointed out that it was unexplained why the provision in question led to the conclusion that a railroad had to stay completely out of the way of medical treatment and might then refrain from having medical offices that might ensnare them in interference claims.

Rather, the Second Circuit held that even if the ARB interpretation was correct, the underlying decision was not supported by substantial evidence. The deficiency was in the conclusion that the decision of the medical doctor was not truly independent because the railroad had inserted itself into the process. The decision rested on a conclusion that the structure of the arrangement created indirect pressure on the providers, but there was no evidence that these factors affected the independent judgment of the medical staff in this case. There was no evidence that there had been any threats from the railroad to use its contractual powers, that it had interfered in staffing, or that it had set goals for occupational injury determinations. It had the potential to interfere, but that wasn’t sufficient—there needed to be evidence that it did interfere. As to the other aspect of the underlying reasoning, the record provided evidence that the decision by the staff may have been incorrect, but this didn’t license an inference that there was interference by the railroad—it could just have well been due to incompetence, laziness, or simple mistake. There was no affirmative evidence that undermined their claims of independence. The court thus granted the petition for review, vacated the decision, and remanded for further proceedings.

Elliott v. BNSF Railway Co. , 714 Fed. Appx. 737 (9th Cir. Mar. 2, 2018) (unpublished) (Nos. 15-35785 and 15-25899) (Memorandum)

Casenote(s):

AFFIRMATIVE DEFENSE; NINTH CIRCUIT FINDS NO LEGAL ERROR WHEN JURY INSTRUCTIONS PROPERLY FOCUSED ON DEFENDANT’S SINCERE BELIEF ABOUT MISCONDUCT

SUBSTANTIAL EVIDENCE REVIEW; NINTH CIRCUIT AFFIRMS JURY VERDICT IN FAVOR OF FRSA PLAINTIFF AS SUPPORTED BY SUBSTANTIAL EVIDENCE

STANDARD OF REVIEW; JURY FINDINGS REVIEWED FOR SUBSTANTIAL EVIDENCE; JURY INSTRUCTIONS REVIEWED FOR LEGAL ERROR; EVIDENTIARY DETERMINATIONS REVIEWED FOR ABUSE OF DISCRETION; ALLEGED ERRORS NOT RAISED BEFORE THE DISTRICT COURT REVIEWED FOR PLAIN ERROR

In a memorandum decision, the Ninth Circuit in Elliott v. BNSF Railway Co. , 714 Fed. Appx. 737 (9th Cir. Mar. 2, 2018) (unpublished) (Nos. 15-35785 and 15-25899), affirmed a jury verdict in favor of the plaintiff under the FRSA. It rejected the contention that there was legal error in the “same-decision affirmative” defense because the jury instructions properly required only proof that the Defendant sincerely believed misconduct occurred, not that there had actually been misconduct. It also held that substantial evidence supported the jury’s “contributing factor” finding where “retaliatory motive” could be inferred where emails between managers connected the protected activity to an FRA investigation and fine, there was evidence of animus to the Plaintiff, and there was temporal proximity between the protected activity, the investigation, and the alleged retaliation. It further affirmed findings that BNSF did not sincerely and honestly believe that there was misconduct meriting dismissal because a reasonable jury could infer that BNSF manufactured an altercation with a manager as a pretext and that it had known about a prior felony conviction earlier and raised it after the protected activity as a pretext. The Ninth Circuit also quickly rejected challenges to evidentiary determinations, the decision not to give a “business judgement” jury instruction, and challenges to portions of the damages. An objection to an instruction that was not raised before the district court was reviewed for plain error.

Winch v. Secretary of Labor , 725 Fed. Appx. 768 (11th Cir. Feb. 13, 2018) (per curiam) (unpublished) (No. 16-15999) (2018 U.S. App. LEXIS 3584; 2018 WL 834194) (Opinion)

Case below ARB No. 15-020, ALJ No. 2013-FRS-14.

Casenote(s):

PROTECTED ACTIVITY; ASSUMING THAT REPORTING ONE’S OWN ILLNESS CAN QUALIFY AS REPORTING A HAZARDOUS CONDITION UNDER § 20109(b), THE PETITIONER’S FAILURE TO ESTABLISH THAT HE DID ANYTHING OTHER THAN CALL IN SICK WAS NOT SUFFICIENT TO REPORT A HAZARDOUS CONDITION UNDER § 20109(b)(1)(A); LACK OF NOTIFICATION OF HAZARDOUS CONDITION ALSO CAUSED THE COMPLAINT TO FAIL UNDER § 20109(b)(1)(B)

In Winch v. Secretary of Labor , 725 Fed. Appx. 768 (11th Cir. Feb. 13, 2018) (per curiam) (unpublished) (2018 U.S. App. LEXIS 3584; 2018 WL 834194) (case below ARB No. 15-020, ALJ No. 2013-FRS-14), the Petitioner filed a complaint with OSHA alleging that an absence from work was in compliance with his doctor’s orders not to go to work and that in firing him his employer violated FRSA, 49 U.S.C. § 20109(c)(2). OSHA denied the complaint based on the Petitioner’s history of attendance and safety violations. Before the ALJ, the Petitioner added the contention that his employer also violated the reporting and refusal provisions of 49 U.S.C. § 20109(b)(1)(A) and (B). The ALJ rejected the Petitioner’s § 20109(c)(2) claim, but determined under § 20109(b) that the Petitioner’s dismissal was wrongful because “it was reasonable for Complainant to conclude that it would have been unsafe to go to work.” The ARB reversed. The court described the ARB’s ruling as follows:

The ARB assumed, without deciding, that reporting one’s own illness can constitute “reporting” a hazardous condition, as set forth in § 20109(b)(1)(A). Nevertheless, as relevant here, it concluded that Winch failed to satisfy the conditions for “reporting” under that provision. The ARB explained, “Even the most liberal reading of section 20109(b)(1)(A) requires that some information be reported pointing to the ‘hazardous condition’ at the railroad. As a matter of law, the extremely limited information Winch reported falls short of ‘reporting . . . a hazardous . . . condition.’” The ARB further noted that “‘reporting a hazardous condition’ is [also] essential to a claim of protected ‘refusal’ under section 20109(b)(2).” Finally, as relevant here, the ARB held that the statute requires the employee to “notif[y]” the employer of the hazardous condition if possible, and Winch did not.

Slip op. at 6. The court affirmed the ARB’s decision as supported by substantial evidence:

Like the ARB, we do not opine on whether calling in to report one’s own illness can qualify as “reporting . . . a hazardous . . . condition” under § 20109(b). Assuming for purposes of this opinion that it can, the ARB relied on substantial evidence in concluding that Winch did not actually “report[] . . . a hazardous . . . condition” under § 20109(b)(1)(A). As the ARB noted, when Winch called in sick, he told the crew operator only his name, his identification number, and his desire to be marked off sick; he failed to list or describe any of his symptoms and how they would impact the performance of his duties. Nor did Winch otherwise put CSX on notice that he was “reporting . . . a hazardous . . . condition.” Indeed, nothing in his call indicated that he was attempting to trigger this hazardous-condition provision as opposed to simply requesting a sick day.

   And because Winch did not, as § 20109(b)(2)(C) requires, “notif[y]” CSX that a “hazardous condition” existed, despite his ability to do so, the ARB concluded that Winch’s claim fared no better under § 20109(b)(1)(B). This finding is supported by substantial evidence for the same reasons as the ARB’s conclusion that Winch failed to “report[] . . . a hazardous . . . condition” under § 20109(b)(1)(A).

Id . at 7-8.

Brewer v. BNSF Railway Co. , No. 15-cv-65 (D. Mont. Feb. 27, 2018) (2018 U.S. Dist. LEXIS 74508) (Findings and Recommendation), em=""> Brewer v. BNSF Railway Co. , No. 15-cv-65 (D. Mont. May 2, 2018) (2018 U.S. Dist. LEXIS 74458; 2018 WL 2047581) (Order [adopting Magistrate’s Findings and Recommendations])

Case below: ALJ No. 2014-FRS-00001

Casenote(s):

Denial of motion for discovery sanctions; although BNSF should have reasonably anticipated litigation and taken reasonable steps to preserve relevant ESI as of February of 2013, the magistrate did not find prejudice on behalf of Mr. Brewer so as to require curative measures under Rule 37(e)(1), and did not find an intent to deprive Mr. Brewer of relevant ESI so as to require sanctions under Rule 37(e)(2).

Williams v. Illinois Central Railroad Co. , No. 16-cv-838 (S.D. Miss. Feb. 23, 2018) (Order of Dismissal)

Casenote(s):

The district court dismissed the case with prejudice after the parties reached a settlement agreement. The court retained jurisdiction to enforce the settlement agreement.

Despain v. BNSF Railway Co. , No. 15-cv-8294 (D. Az. Feb. 20, 2018) (2018 U.S. Dist. LEXIS 95518; 2018 WL 1894708) (Order [denying Defendant’s motion for summary judgment])

Case below: ALJ No. 2015-FRS-00067

Later history: Despain v. BNSF Railway Co. , No. 15-cv-8294 (D. Az. July 5, 2018) (Order [dismissing complaint based on settlement])

Casenote(s):

SUMMARY JUDGMENT; CONTRIBUTORY FACTOR; SUMMARY JUDGMENT FOR DEFENDANT ON CONTRIBUTORY FACTOR DENIED WHERE IT DID NOT CHALLENGE GOOD FAITH OF INJURY REPORT; ITS EVIDENCE OF DISHONESTY WAS WEAK AND DISPUTED; AND TEMPORAL PROXIMITY AND THE MANNER OF INVESTIGATION PROVIDED CIRCUMSTANTIAL EVIDENCE OF CONTRIBUTION

SUMMARY JUDGEMENT, AFFIRMATIVE DEFENSE; SUMMARY JUDGMENT ON AFFIRMATIVE DEFENSE DENIED BECAUSE INJURY REPORT A BUT-FOR CAUSE OF THE ADVERSE ACTION AND COMPARATOR EVIDENCE WAS EITHER WEAK OR CONTEXT-FREE; DECISION OF PUBLIC LAW BOARD DOES NOT SUPPORT SUMMARY JUDGMENT IN A DE NOVO PROCEEDING

SUMMARY JUDGMENT; BACKPAY AND DUTY TO MITIGATE; DEFENDANT HAS THE BURDEN TO ESTABLISH FAILURE TO MITIGATE BY SHOWING THE AVAILABILITY OF SUBSTANTIALLY EQUIVALENT EMPLOYMENT AND FAILURE BY THE PLAINTIFF TO EXERCISE REASONABLE DIILGENCE IN SEEKING THAT EMPLOYMENT; SUMMARY JUDGMENT INAPPROPRIATE WHERE RECORD IS TOO IMCOMPLETE AND MURKY ON THE AVAILABILITY OF OTHER JOBS

SUMMARY JUDGMENT; PUNITIVE DAMAGES; WHERE DEPENDING ON FACTUAL FINDINGS A JURY COULD INFER RECKLESS OR CALLOUS DISREGARD FOR A PLAINTIFF’S RIGHTS, SUMMARY JUDGMENT ON PUNITIVE DAMAGES INAPPROPRIATE

In Despain v. BNSF Railway Co. , No. 15-cv-8294 (D. Az. Feb. 20, 2018) (2018 U.S. Dist. LEXIS 95518; 2018 WL 1894708) (Case below ALJ No. 2015-FRS-67), the district court denied a motion for summary judgment by the Defendant in an FRSA action. The protected activity in the case involved making an injury report. The Defendant terminated the Plaintiff for dishonesty in making the report and in the investigation. The termination was later converted to a lengthy suspension. The alleged dishonesty concerned when the Plaintiff determined the injury was work-related, when during the shift the injury occurred, and the circumstance of a quip pro quo proposal to drop the injury report in exchange for a paid deadhead trip. The Plaintiff and manger had different accounts of who made that proposal.

Defendant sought summary judgement on the contributing factor element. But it conceded for the purposes of the motion that the injury report was made in good faith. Having done so, the district court concluded that it could not have discharged him for a dishonest report. A reasonable fact finder could conclude from the record that the Plaintiff had not been dishonest at all and had promptly attempted to file the report but found no one to report it to. The alleged quid pro quo offer could not support summary judgement because it was “squarely disputed.” “The weakness of BNSF Railway’s assertion of dishonesty suggests it may be pretext for something else. It could well be pretext for telling the truth. The jury can say.” The district court also concluded that there was other circumstantial evidence that could support an inference to contribution, including temporal proximity and the manner in which the investigation and hearing proceeded, which evinced bias.

Defendant also sought summary judgment on its affirmative defense. The district court denied the motion on the grounds that the injury report was an obvious “but-for” cause of the termination and the comparator evidence either focused on instances where injury-reports were not punished (rather than where punishment occurred in similar circumstances without an injury-report) or was provided without the context needed to evaluate it. The district court also dismissed reliance on the Public Law Board finding in favor of the company, noting that the FRSA proceeding was de novo .

The district court also quickly denied summary judgment on several other issues. Alleged failure to exhaust administrative remedies did not merit summary judgment because BNSF didn’t provide the OSHA complaint. The complainant had provided evidence of medical expenses. Regarding backpay, a defendant is required to prove a failure to mitigate by showing both the availability of substantially equivalent employment and failure by the plaintiff to use reasonable diligence to find employment. The record was “too incomplete and murky” to conclude that substantially equivalent employment was available, so the argument failed. The district court also determined that a jury could infer reckless or callous disregard for the plaintiff’s rights, depending on how it resolved the factual disputes. Summary judgment barring punitive damages was thus improper.

Williams v. Illinois Central Railroad Co. , No. 16-cv-838 (S.D. Miss. Feb. 5, 2018) (2018 U.S. Dist. LEXIS 18106; 2018 WL 716568) (Order [denying Defendant’s motion for summary judgment])

Casenote(s):

PROTECTED ACTIVITY; REPORT OF WORK-RELATED INJURY; DISTRICT COURT REJECTS BRIGHT LINE RULE REQUIRING THAT A REPORT OF A HEART ATTACK AT WORK IS PROTECTED ONLY IF WORK CAUSED THE HEART ATTACK; TO BE PROTECTED A REPORT OF A WORK-RELATED INJURY DOES NOT NEED TO BE MADE USING THE FORMAL PROCEDURES OF THE EMPLOYER; WHERE AN EMPLOYEE DOES NOT KNOW WHETHER AN INJURY IS WORK-RELATED, IT IS NOT NECESSARY FOR A PROTECTED REPORT OF A WORK-RELATED INJURY TO CONVEY THAT THE INJURY WAS IN FACT WORK RELATED

SUMMARY DECISION; CONTRIBUTING FACTOR; WHERE EVIDENCE COULD SHOW THAT INJURY AND REPORT OF INJURY CAUSED THE ABSENCE THAT IN TURN WAS THE RATIONALE FOR DISCIPLINE, DEFENDANT NOT ENTITLED TO SUMMARY DECISION ON CONTRIBUTING FACTOR

PROTECTED ACTIVITY; § 20109(C)(2) COMPLIANCE WITH TREATMENT PLAN; WHERE INJURY MANIFESTS AT WORK COMPLIANCE WITH A TREATMENT PLAN IS COVERED BY § 20109(C)(2) REGARDLESS OF WHETHER WORK CONDITIONS ULTIMATELY CAUSED THE INJURY; DISTRICT COURT ALSO REJECTS CLAIM THE TREATMENT PLANS MUST INCLUDE FORMAL ORDERS AND BE SIGNED BY A DOCTOR

SUMMARY JUDGMENT; AFFIRMATIVE DEFENSE; DEFENDANT’S MOTION FOR SUMMARY JUDGMENT ON AFFIRMATIVE DEFENSE DENIED WHERE JURY COULD CONCLUDE THAT THE POLICY VIOLATION IN QUESTION WAS PROTECTED BY § 20109(C)(2)

In Williams v. Illinois Central Railroad Co. , No. 16-cv-838 (S.D. Miss. Feb. 5, 2018) (2018 U.S. Dist. LEXIS 18106; 2018 WL 716568), the Plaintiff had a history of attendance violations. While at work he experienced symptoms of a heart attack. He was taken to the hospital. His symptoms were attributed to stress/anxiety and he was discharged with a note keeping him off of work for a few days, though it was not signed. He then told the Defendant railroad that he would not be working. The Defendant determined that it was an additional unexcused absence and under the terms of its policy terminated Plaintiff, though the public law board later converted this into a suspension without pay. He filed suit under the FRSA claiming he was retaliated against for reporting a work-related injury, protected by § 20109(a)(4), and following a treatment plan, protected by § 20109(c)(2). Defendant sought summary decision.

The district court declined to adopt a bright line rule that in order for a heart attack at work to be a work-related injury it was necessary to show that working conditions caused the heart attack. It also rejected the position that to report a work related injury in the meaning of an FRSA an employee had to use the employer’s mandated form, rather than making informal reports. In addition, the district court dismissed the argument that in order to be protected, an injury report must convey that the injury was work-related. Reports of work-related injuries are protected even if, as here, at the time of the report that employee does not know the cause.

Defendant argued for summary decision on the contribution element. Applying Eighth Circuit law, the district court stated that evidence of intentional relation was required. Summary decision was improper, however, because there was evidence that the heart attack and injury report caused the absence, which was the sole factor in the adverse action.

The district court rejected Defendant’s assertion that in order to come within the scope of § 20109(c)(2) the treatment plan in question must be for an injury caused by work conditions. Assuming that Port Authority Trans-Hudson Corp. v. Secretary, U.S. Dept. of Labor , 776 F.3d 157 (3d 2015) applied, the district court held that § 20109(c)(2) applied to an injury that manifest at work, even if it was not caused by work conditions. The district court also rejected arguments that a treatment plan must formally order a particular action for compliance to be protected and that it must be formally signed by a doctor. Additional arguments about the causal role of compliance with a treatment plan were left to a jury.

Defendant sought summary judgment on its affirmative defense. The district agreed that the policy in question was written and was followed, but found summary judgment inappropriate because a jury could find that the asserted policy violation—the absence from work—was itself protected by § 20109(c)(2) because it was in accordance with a treatment plan.

Stapleton v. Union Pacific Railroad Co. , No. 16-cv-889 (N.D. Ill. Feb. 1, 2018) (2018 U.S. Dist. LEXIS 16031; 2018 WL 656083) (Memorandum Opinion and Order)

Casenote(s):

49 U.S.C. § 20109(C)(2) SAFE HARBOR PROVISION; SUMMARY JUDGMENT; DISTRICT COURT FINDS THAT WHERE WORK RESTRICTIONS IMPOSED IN ACCORDANCE WITH THE RELEVANT GUIDELINES WERE IMPOSED AFTER A REPORT OF A WORK RELATED INJURY AND HAZARDOUS SAFETY CONDITION, § 20109(C)(2) SAFE HARBOR PROVISION APPLIES AND SHIELDS RAILROAD FROM FRSA LIABILITY

In Stapleton v. Union Pacific Railroad Co. , No. 16-cv-889 (N.D. Ill. Feb. 1, 2018) (2018 U.S. Dist. LEXIS 16031; 2018 WL 656083), the Plaintiff was injured in a locomotive accident. He filed an injury report and report of the hazardous safety condition. He was off work for a time, but then released. A railroad doctor reviewed his medical records as part of the return to work and found that as to the injury he was cleared for work, but that he had a history of seizures. Under railroad policy, this triggered a fitness for duty evaluation. Eventually, the Plaintiff was given work-restrictions by the railroad related to his epilepsy. He filed suit under FELA for the injury and the FRSA for restriction his work because of his protected activities. The railroad sought summary judgment on the FRSA claim.

The district court granted the railroad summary judgment on the grounds that its actions were covered by the “safe harbor” provision in § 20109(c)(2), which provides: “except that a railroad carrier's refusal to permit an employee to return to work following medical treatment shall not be considered a violation of this section if the refusal is pursuant to Federal Railroad Administration medical standards for fitness of duty or, if there are no pertinent Federal Railroad Administration standards, a carrier's medical standards for fitness for duty.” The Plaintiff had produced no evidence suggesting that the work restrictions the railroad imposed were not in accord with the relevant standards. Hence, the district court held that “the undisputed record demonstrates that Union Pacific’s actions fall under the plain language of the FRSA’s safe harbor provision.”

Holloway v. Soo Line R.R. , No. 16-cv-9191 (N.D. Ill. Jan. 19, 2018) (2018 U.S. Dist. LEXIS 8641; 2018 WL 488259) (Memorandum Opinion and Order)

Casenote(s):

CONTRIBUTING FACTOR CAUSATION; DISTRICT COURT GRANTS SUMMARY JUDGMENT FOR DEFENDANT WHERE PLAINTIFF’S RESPONSE TO MOTION WAS BARE BONES CONTENTION THAT IT WAS OBVIOUS THAT PROTECTED ACTIVITY CONTRIBUTED TO THE DECISION TO TERMINATE HIS EMPLOYMENT

CONTRIBUTING FACTOR CAUSATION; DISTRICT COURT FOLLOWS EIGHTH CIRCUIT PRECEDENT HOLDING THAT COMPLAINT MUST PRESENT SUFFICIENT EVIDENCE OF INTENTIONAL RETALIATION

In Holloway v. Soo Line R.R. , No. 16-cv-9191 (N.D. Ill. Jan. 19, 2018) (2018 U.S. Dist. LEXIS 8641; 2018 WL 488259), the Plaintiff brought an action after the Defendant terminated Plaintiff’s employment following an accident involving a Kubota utility vehicle at the Defendant’s rail yard. The Plaintiff, who was a passenger and not the driver of the Kubota, reported an injury and sought medical care. Following an investigation and hearing, the Defendant discharged the Plaintiff on the ground that he violated safety rules by not wearing a seat belt and by failing to inspect the Kubota before riding in it or file a report regarding its safety defects. Part of the consideration in the discharge decision was the Plaintiff’s prior disciplinary record. The third count of the complaint was based on Federal Railroad Safety Act (“FRSA”), 49 U.S.C. § 20109 et seq . The parties filed cross-motions for summary judgment on this count. The court focused on whether the Plaintiff met the element of a FRSA retaliatory complaint that his protected activity was a contributing factor in the Defendant’s adverse or unfavorable employment action. The Plaintiff asserted that he reported a work-related injury and sought medical care, and argued that it was obvious that this protected activity was a contributing factor in the Defendant’s termination of his employment. The court found that this response to the summary judgment motion was inadequate, writing:

It is well-settled, however, that “inferences that are supported by only speculation or conjecture will not defeat a summary judgment motion.” Design Basics, LLC v. Lexington Homes, Inc. , 858 F.3d 1093, 1099 (7th Cir. 2017) (citation omitted). In short, Holloway’s bare-boned arguments are not supported by “evidence of pretext, shifting explanations, antagonism or hostility toward Plaintiff’s protected activity, or a change in attitude toward Plaintiff after he engaged in the protected activity.” Kuduk , 768 F.3d at 790. Moreover, there is “no evidence of the usual forms of employment discrimination, certainly, and no evidence that the suspension and discharge of the plaintiff were motivated by animus.” Koziara , 840 F.3d at 878; see also BNSF Ry. Co. v. United States Dep’t of Labor Admin. Review Bd. , 867 F.3d 942, 946 (8th Cir. 2017) (“Absent sufficient evidence of intentional retaliation, a showing that protected activity initiated a series of events leading to an adverse action does not satisfy the FRSA’s contributing factor causation standard.”).

Slip op. at 30. The court was not persuaded that the argument that a reasonable inference was raised that the Plaintiff’s report of a work-related injury was a contributing factor to his termination for purposes of the FRSA because the driver of the Kubota was not disciplined. The court pointed out that the driver was furloughed at the time of the internal hearing and was seeking new employment at that time. The court thus granted summary judgment on the FRSA count in favor of the Defendant.

Armstrong v. BNSF Railway Co. , 880 F.3d 377 (7th Cir. Jan. 18, 2018) (Nos. 16-3674, 17-1088) (2018 U.S. App. LEXIS 1208; 2018 WL 457521) (Opinion [affirming jury verdict])

Casenote(s):

CONTRIBUTING FACTOR; MOTIVE, ANIMUS, INTENTIONAL RETALIATION; SEVENTH CIRCUIT HOLDS THAT FRSA REQUIRES PROOF OF INTENTIONAL DISCRIMINATION, OR PROOF THAT AN EMPLOY WAS MOTIVATED BY DISCRIMINATORY ANIMUS; SEVENTH CIRCUIT AFFIRMS JURY INSTRUCTION THAT RAILROAD COULD NOT BE LIABLE IF IT HAD AN HONEST BELIEF THAT THE PLAINTIFF DID NOT ENGAGE IN PROTECTED ACTIVITY IN GOOD FAITH

COSTS; SEVENTH CIRCUIT HOLDS THAT FRSA DID NOT OVERCOME THE FRCP 54(d) PRESUMPTION THAT COSTS ARE AWARDED TO A PREVAILING PARTY, AFFIRMS AWARD OF COSTS TO DEFENDANT WHERE IT PREVAILED

In Armstrong v. BNSF Railway Co. , 880 F.3d 377 (7th Cir. Jan. 18, 2018) (Nos. 16-3674, 17-1088) (2018 U.S. App. LEXIS 1208; 2018 WL 457521), Plaintiff was a conductor. When his train arrived at a station his supervisor observed him from his office in the “Glasshouse” adjacent to the platform. He noted that the Plaintiff was not in the proper uniform, something that had occurred several times already in the prior few weeks, and asked him to come to the office. The parties disputed what happened next. Plaintiff contended that his supervisor yelled at him and then pushed the door shut on his leg when he tried to leave, injuring his left knee and foot. The supervisor contended that Plaintiff did the yelling, refused to talk without a union representative, was taken out of service for insubordination, and that there was no physical contact between the two. A witness to the start of the interaction supported the manager’s version. Video was obtained that showed the events, which tended to support the manager’s version, though the two were out of view for roughly 9 seconds. An investigation was conducted and Plaintiff was dismissed for insubordination, dishonesty, and misrepresenting what happened in the Glasshouse.

Plaintiff filed an OSHA complaint, which was then kicked out to federal district court. The first trial ended in a mistrial and the second trial ended in a jury verdict for BNSF. Plaintiff appealed, arguing that he was entitled to a new trial because of an erroneous jury instruction. This instruction was as follows:

In deciding Plaintiff’s retaliation claim, you should not concern yourselves with whether the Defendant’s actions were wise, reasonable, or fair. Plaintiff has to prove that Defendant’s decision to dismiss him was based on unlawful retaliation. Defendant cannot be held liable under the FRSA if you conclude that Defendant terminated Plaintiff’s employment based on its honestly held belief that Plaintiff did not engage in protected activity under the FRSA in good faith.

Plaintiff argued that this was in error insofar as it implied that he had to show that BNSF had an improper retaliatory motive to show contribution. He relied on Araujo v. N.J. Transit Rail Operations, Inc. , 708 F.3d 152 (3d Cir. 2013), which held that FRSA complainants do not need to show “a retaliatory motive” to make out a prima facie case.

The Seventh Circuit disagreed and relied on the Eighth Circuit’s Kuduk decision:

we find that while a FRSA plaintiff need not show that retaliation was the sole motivating factor in the adverse decision, the statutory text requires a showing that retaliation was a motivating factor. The statute prohibits intentional discrimination in response to an employee’s performance of a protected activity. The essence of this intentional tort is discriminatory animus. That is to say, an employer violates the state only if the adverse employment action is, at some level, motivated by discriminatory animus.

(Emphasis in original, internal citations and quotations removed.)

The court recognized that the “contributory factor” standard was lower than those used in other anti-discrimination contexts, but held that this was a lower standard of causation and did not obviate the need to show “the existence of an improper motive.” “The analysis of whether the employer possessed an improper (i.e. retaliatory) motive is separate from the analysis of whether, and to what extent, that motive influenced the employer’s actions.”

So the jury instruction was correct. Plaintiff had to show that BNSF had some retaliatory animus, so if it fired him due to an honest belief that he lied when he reported the injury, he could not prevail. While not the “clearest possible statement of the applicable law, it was not inaccurate.” Moreover, any error would have been harmless since the jury had also returned a verdict for BNSF on the affirmative defense.

Plaintiff also appealed the award of costs to Respondent under FRCP 54(d) on the grounds that the FRSA only provides for costs to be awarded to the complainant. The court disagreed. FRCP 54(d) creates a presumption that prevailing parties get costs and the FRSA did not provide that costs could not be awarded to a prevailing employer. Statutory silence was not enough to overcome the presumption.

Federal Water Pollution Control Act

Abdur-Rahman v. USDOL , Nos. 15-12407 and 15-15376 (11th Cir. July 26, 2018) (per curiam) ([Transfer of attorney fee issue to the ARB])

Case below ARB No. 13-080, ALJ Nos. 2006-WPC-2 and 3.

Casenote(s):

Pursuant to Federal Rule of Appellate Procedure 33 and Eleventh Circuit Rule 33-1, the Eleventh Circuit referred this case (and Case No. 14-15435) for mediation.

DeKalb County v. USDOL , No. 14-15435 (11th Cir. Mar. 1, 2018) ([Transfer of attorney fee issue to the ARB])

Case below ARB No. 13-080, ALJ Nos. 2006-WPC-2 and 3,

Casenote(s):

The Eleventh Circuit transferred petition for attorneys' fees to the Administrative Review Board.

Occupational Safety and Health Act

OALJ does not have jurisdiction over Occupational Safety and Health Act retaliation cases, but the following case is noted for informational value.

Perez v. Eastern Awning Sys. , No. 15-cv-1692 (D. Conn. Oct. 10, 2018) (2018 U.S. Dist. LEXIS 173900; 2018 WL 4926447) (Ruling on Motion for Summary Judgment)

Casenote(s):

LACHES

There had been a delay of 6 years in bringing the OSH Act complaint. The court held that "Consistent with the Fifth and Tenth Circuits, and with the Supreme Court's reasoning in Occidental Life Insurance , I conclude that I have discretion to limit the relief available for OSHA retaliation claims brought by the government under 29 U.S.C. 660(c) after an unreasonable delay causing prejudice to the defendants." (footnote omitted).

Sarbanes-Oxley Act

Stroh v. Saturna Capital Corp. , 746 Fed. Appx. 639 (9th Cir. Dec. 24, 2018) (unpublished) (No. 17-cv-35607) (2018 U.S. App. LEXIS 36240; 2018 WL 6735197) (Memorandum)

Casenote(s):

PROTECTED ACTIVITY AND CONTRIBUTORY FACTOR CAUSATION; EXCLUSION OF EVIDENCE ON GROUND THAT VIOLATIONS NEVER ACTUALLY OCCURRED IS ERROR IN A SOX CASE BECAUSE STANDARD IS ONLY REASONABLE BELIEF OF VIOLATION AND NOT PROOF THAT VIOLATION OCCURRED; SUCH ERROR, HOWEVER, FOUND HARMLESS WHERE THERE WAS OVERWHELMING EVIDENCE THAT REPORTING OF SUCH VIOLATIONS COULD NOT HAVE BEEN A CONTRIBUTING FACTOR IN TERMINATION

In Stroh v. Saturna Capital Corp. , 746 Fed. Appx. 639 (9th Cir. Dec. 24, 2018) (unpublished), the trial court erred in excluding evidence related to the employer’s chairman’s directive that certain employees install a backup computer system on his yacht and withhold certain information from the FBI if questioned. The district court excluded the evidence because the system was never installed and the FBI never questioned the employees. The court of appeals found that it was an abuse of discretion to exclude the evidence on this ground because SOX “protects whistleblowing regardless of whether the reported securities violation actually occurred.” 746 Fed. Appx. At 640 (citation omitted). However, the court of appeals found that error to be harmless when viewing the totality of evidence presented at trial. The court found that it was “highly unlikely that the admission of this evidence and any accompanying instruction would have changed the verdict.” Id . (citation omitted). The court stated:

There was overwhelming evidence that Stroh’s reporting of this incident was not a "contributing factor" in his termination: (i) Stroh received an $80,000 bonus after the incident; (ii) Stroh threatened to quit unless he received a thirty percent raise, and never mentioned any concerns about this incident or the firm’s regulatory compliance before leaving; and (iii) Stroh encouraged other members of the legal department to quit to increase his bargaining leverage.

Id . (citation omitted). The district court also erred in excluding evidence relating to the employer’s dealings with entities purported to be linked to terrorist financing on the ground that there was a lack of proven ties to terrorist financing, again because SOX only requires a reasonable belief that a securities violation occurred. However, the district court had also excluded this evidence on an alternative ground that the complainant had not addressed in his opening appellate brief, and the court of appeals found that this failure was a waiver of challenge to the alternative ground for exclusion of the evidence.

Anderson v. Salesforce.com, Inc. , No. 18-cv-6712 (N.D. Cal. Dec. 21, 2018) (2018 U.S. Dist. LEXIS 215288; 2018 WL 6728015) (Order Compelling Arbitration and Staying Proceedings)

Later history: Anderson v. Salesforce.com, Inc. , No. 18-cv-6712 (N.D. Cal. Dec. 31, 2018) (Joint Stipulation and Order to Arbitrate Plaintiff’s Remaining Claim and to Dismiss Case) (including SOX claim).

Casenote(s):

ARBITRATION; WHERE COMPLAINT ALLEGES ARBITRABLE CLAIMS, THE FACT THAT A SOX CLAIM WAS ALSO PLEAD IS NOT RELEVANT TO WHETHER THE OTHER CLAIMS MUST PROCEED TO ARBITRATION; WHERE COURT GRANTS MOTION TO COMPELL ARBITRATION OF ARBITRABLE CLAIMS, COURT MAY STAY THE ENTIRE ACTION, INCLUDING SOX CLAIM, WHERE THE CLAIMS ALL AROSE FROM THE SAME CONDUCT

In Anderson v. Salesforce.com, Inc. , No. 18-cv-6712 (N.D. Cal. Dec. 21, 2018) (2018 U.S. Dist. LEXIS 215288; 2018 WL 6728015), the plaintiff asserted eleven causes of action, one of which was a SOX retaliation claim. The defendant filed a motion to compel arbitration and stay proceedings. The court granted the motion. The court first found that “though it is undisputed that plaintiff’s SOX claim is not subject to arbitration, that has no bearing on whether plaintiff’s ten arbitrable claims must proceed in arbitration.” 2018 U.S. Dist. LEXIS 215288 at *6 (citations omitted). The court also granted Defendant’s motion to stay the entire proceeding, stating: “it is appropriate to stay plaintiff’s SOX claim and the entire action because plaintiff’s claims all arise from the same conduct and because allowing the arbitration to resolve will simplify issues of law or questions of fact in future proceedings.” 2018 U.S. Dist. LEXIS 215288 at *7 (citations omitted).

Later, in Anderson v. Salesforce.com, Inc. , No. 18-cv-6712 (N.D. Cal. Dec. 31, 2018), the court granted the parties’ “Joint Stipulation and Order to Arbitrate Plaintiff’s Remaining Claim and to Dismiss Case.” The joint stipulation included the SOX claim.

Potts v. Ctr. for Excellence in Higher Educ., Inc. , No. 17-1143 (10th Cir. Nov. 6, 2018) (2018 U.S. App. LEXIS 31342; 2018 WL 5796963) (Opinion)

Casenote(s):

FORMER EMPLOYEES; WHETHER CAUSE OF ACTION EXISTS FOR RETALIATION THAT OCCURS ENTIRELY AFTER THE EMPLOYMENT RELATIONSHIP ENDED; COMPARSION OF FALSE CLAIM ACT AND SOX

In Potts v. Ctr. for Excellence in Higher Educ., Inc. , 908 F.3d 610 (10th Cir. Nov. 6, 2018), Plaintiff filed an action under the anti-retaliation provision of the False Claims Act. One of the issues presented was whether that provision only applies to current employees. The court found that it excludes relief for retaliatory acts occurring after the employee has left in employment. One of the contentions the court addressed was Plaintiff’s contention that DOL had interpreted parallel language in the SOX whistleblower provision to include former employees who are retaliated against solely after the employment ended. The court quoted the DOL regulation at 29 C.F.R. § 1980.101, and stated that it was “uncertain whether this regulation means to protect former employees whose whistleblowing occurs solely after employment. In other words, this regulation may simply recognize what we have already conceded here—that a former employee could sue for retaliatory discrimination occurring during employment.” 908 F.3d at 617 (citation omitted).

Burrs v. United Techs. Corp. , No. 18-cv-491 (M.D. N.C. Nov. 2, 2018) (2018 U.S. Dist. LEXIS 187929; 2018 WL 5779054) (Memorandum Opinion and Order)

Casenote(s):

CLAIM PRECLUSION BASED IN PART IN PRIOR SOX CLAIM WHERE CURRENT CLAIM WAS BASED ON SAME SET OF OPERATIVE FACTS

In Burrs v. United Techs. Corp. , No. 18-cv-491 (M.D. N.C. Nov. 2, 2018) (2018 U.S. Dist. LEXIS 187929; 2018 WL 5779054), aff’d Burrs v. United Techs. Corp. , No. 18-2406 (4th Cir. May 10, 2019) (per curiam) (2019 U.S. App. LEXIS 14034), Plaintiff filed a Section 1981 civil rights claim. Plaintiff had sued Defendant twice before, one of which was SOX retaliation action. Both the prior suits had been dismissed on summary judgment on the merits. The court held that “[b]ecause Mr. Burrs’ current claims are based on the same set of operative facts as these prior adjudications, his current claims are precluded, and the defendants’ motion to dismiss will be granted.”

Wutherich v. Rice Energy Inc. , No. 18-200 (W.D. Pa. Oct. 2, 2018) (2018 U.S. Dist. LEXIS 171113) (Report and Recommendation), adopted Wutherich v. Rice Energy Inc. , No. 18-200 (W.D. Pa., Nov. 1, 2018) (2018 U.S. Dist. LEXIS 187424) (Memorandum Order)

Casenote(s):

PROTECTED ACTIVITY; PLAINTIFF’S BELIEF THAT DEFENDANT’S NOT REPORTING LITIGATION RISK OF POSSIBLE THEFT OF TRADE SECRETS WAS A SECURITIES VIOLATION WAS SUFFICIENT TO RAISE AN INFERENCE OF REASONABLE BELIEF SUFFICIENT TO SURVIVE A MOTION TO DISMISS

In Wutherich v. Rice Energy Inc. , No. 18-cv-200 (W.D. Pa. Oct. 2, 2018) (2018 U.S. Dist. LEXIS 171113), adopted as the opinion of the court , (W.D. Pa. Nov. 1, 2018) (2018 U.S. Dist. LEXIS 187424), the magistrate judge, applying the subjectively-and-objectively reasonable belief test of Wiest v. Lynch , 710 F.3d 121, 129 (3d Cir. 2013), recommended denial of the Defendant’s motion to dismiss, at least at an early stage of the litigation, where the Plaintiff had alleged he engaged in protected activity consisting of his opposition to the handling of data received by the Defendant from an employee who had previously worked with a competitor. The Plaintiff believed there had been a theft of trade secrets, which constituted a securities violation because it had not been reported as a litigation risk in 10-k statements. The magistrate judge found that the allegation was sufficient to support an inference that the Plaintiff’s communication to the vice president to whom he reported, and others in management, reflected a reasonable belief that the Defendant’s conduct constituted a securities violation and thus was protected activity under the Sarbanes-Oxley Act.

Baskett v. Autonomous Research LLP , 17-CV-9237 (S.D. N.Y. Sept, 28, 2018) (2018 U.S. Dist. LEXIS 169633) (Opinion and Order)

Later history: Baskett v. Autonomous Research LLP , 17-CV-9237 (S.D. N.Y. Nov. 26, 2018) (Stipulation of Voluntary Dismissal With Prejudice)

Casenote(s):

SUMMARY JUDGMENT; FRCP 56 PRE-DISCOVERY SUMMARY JUDGMENT DENIED WHERE NON-MOVING PARTY RAISED AREAS THAT REQUIRE FACTUAL DEVELOPMENT

LIMITATION ON USE OF EVIDENCE OBTAINED IMPROPERLY; MATERIALS OBTAINED BY PLAINTIFF AS COMPLIANCE OFFICER; COURT HAS ABILITY TO IMPOSE SANCTION TO PREVENT ABUSES, OPPRESSION AND INJUSTICES, BUT MUST BALANCE SEVERITY OF WRONGDOING AGAINST PREJUDICE TO THE ADVERSARY

In Baskett v. Autonomous Research LLP , 17-CV-9237 (S.D. N.Y. Sept, 28, 2018) (2018 U.S. Dist. LEXIS 169633), the Defendants sought pre-discovery summary judgment on the ground that the Plaintiff was not an “employee” within the employment laws raised her complaint, one of which was the Sarbanes-Oxley Act, ), 18 U.S.C. § 1514A. The court applied the Supreme Court’s decision in Clackamas Gastroenterology Assocs., P.C. v. Wells , 538 U.S. 440, 451 (2003). The Defendants argued that the Plaintiff was an “employer” under Clackamas pursuant to the firm’s original and later restructured partnership agreements, while the Plaintiff pointed to the need for discovery to show that the partnership agreements were neither operative nor adhered to, and that Plaintiff in practice was a mere employee. The court found that the Plaintiff had identified areas that require factual development, and thus denied Rule 56(d) summary judgment, without prejudice to renewal following discovery. In a footnote, the court noted that the Defendants had requested that the court “preclude Plaintiff from using in this litigation certain emails and documents she allegedly improperly obtained outside of the litigation process through her position as a compliance officer at the Firm.” Slip op. at 13, n.8. The court denied the motion, writing:

Courts have the ability to limit the use of evidence because of the manner in which the information was obtained based on their “inherent equitable power over their own process to prevent abuses, oppression, and injustices.” Fayemi v. Hambrecht & Quist, Inc. , 174 F.R.D. 319, 325 (S.D.N.Y. 1997) (internal quotation marks omitted). “A court considering the appropriate sanction to impose on a party that has wrongfully obtained evidence should weigh two factors: the severity of the wrongdoing and the prejudice to the adversary.” Id . I do not rely on the disputed emails for purposes of this motion and Defendants have therefore not been prejudiced by Plaintiff’s inclusion of them in her papers. Moreover, while Plaintiff’s conduct was possibly improper it was not so severe as to rise to the level of sanctionable conduct. Cf. id. (imposing sanctions where plaintiff broke into employer’s office and copied confidential documents without permission); Lipin v. Bender , 644 N.E.2d 1300, 1304 (N.Y. 1994) (approving implementation of sanctions where, during pretrial conference, plaintiff removed from counsel table a stack of confidential papers belonging to opposing counsel, read them, and provided a copy to her attorney). I note, as Defendants acknowledge, that many if not all of the documents Plaintiff allegedly improperly obtained outside of the litigation process were documents she legitimately had access to as a compliance officer at the Firm.

COVERED “CONTRACTOR”; LAWSON DOES NOT COVER SITUATIONS WHERE PLAINTIFF DOES NOT ALLEGE FRAUD RELATED TO OR ENGAGED IN BY A PUBLIC COMPANY

In Baskett v. Autonomous Research LLP , 17-CV-9237 (S.D. N.Y. Sept, 28, 2018) (2018 U.S. Dist. LEXIS 169633), the court dismissed on summary judgment the Plaintiff’s SOX claim because she failed to allege that she made complaints relating to fraud committed by a public company or fraud that affects a public company's shareholders. The court, interpreting Lawson v. FMR LLC , 571 U.S. 429, 432 (2014), wrote:

   Since Lawson , federal courts that have addressed the scope of § 806’s “contractor” provision have found that it does not cover situations where, as here, the plaintiff employee does not allege fraud related to or engaged in by a public company. In other words, the contractor provision does not apply where a public company has no involvement in the conduct Congress sought to curtail by passing SOX. For instance, in Gibney v. Evolution Marketing Research, LLC , an employee sued his former employer, a private contractor of a public company, after the employer allegedly fired him for complaining that the employer was overbilling a publicly traded company for which it provided marketing services. 25 F. Supp. 3d 741, 742 (E.D. Pa. 2014). The court held that the allegations failed to state a claim, concluding that plaintiff was “advocat[ing] for an impermissibly broad definition of SOX protection that was neither intended by Congress nor contemplated by the Supreme Court in Lawson .” Id. at 747 (noting that the case “does not implicate the peculiar structure of the mutual fund industry” and that denying plaintiff coverage would not “‘insulate’ an entire industry from § 1514A protection”). In particular, the court found that “[n]othing in the text of § 1514A or the Lawson decision suggests that SOX was intended to encompass every situation in which any party takes an action that has some attenuated, negative effect on the revenue of a publicly-traded company, and by extension decreases the value of a shareholder’s investment.” Id . at 747–48 (“Plaintiff has not alleged that he blew the whistle on fraud committed by Merck (either acting on its own or acting through contractors like [defendant]). Rather, [p]laintiff is alleging that [defendant] committed fraud against Merck. Thus, based on Plaintiff’s allegations, Merck is the victim of fraud rather than its perpetrator.”). Numerous other courts have reached similar conclusions. See, e.g., Brown v. Colonial Sav. F.A. , No. 4:16-CV-884-A, 2017 WL 1080937, at *4 (N.D. Tex. Mar. 21, 2017) (relying on Lawson and Gibney and concluding that “Plaintiff’s allegations of fraud are too far removed from potentially harming the shareholders of a public company to be covered under § 1514A”); Reyher v. Grant Thornton, LLP , 262 F. Supp. 3d 209, 217 (E.D. Pa. 2017) (dismissing SOX claim, finding that the “purported whistleblower employed by a private company cannot invoke the protections of section 1514A simply because her employer happens to contract with public companies on matters unrelated to the alleged whistleblowing”); Anthony v. Nw. Mut. Life Ins. Co. , 130 F. Supp. 3d 644, 652 (N.D.N.Y. 2015) (finding that “§ 1514A only covers contractors insofar as they are firsthand witnesses to corporate fraud at a public company”).

   Plaintiff’s allegations do not concern retaliation based on her reports of fraud by any public company or fraud on a public company’s shareholders. Rather, Plaintiff’s allegations concern her complaints regarding the potential regulatory risk caused by the Firm’s supposed failure to follow SEC and FINRA rules pertaining to supervision, and claims that the Firm failed to include the correct disclaimers on certain reports. (Am. Compl. ¶ ¶ 79–86, 127–65; see also Pl.’s Opp. 34–35 (describing Plaintiff’s pleadings as complaining that Defendants’ research materials were “not subjected to the requisite rigorous supervisory review, and were therefore not compliant with SEC regulations” and that “the Firm’s reporting and supervisory structure itself did not comply with FINRA and SEC oversight requirements”).) These complaints concern the Firm and its internal structure rather than fraud committed by a public company or on its shareholders. As the court in Anthony explained, the “effect of [SOX’s] limitations is to restrict § 1514A to situations where a contractor employee is functionally acting as an employee of a public company, and in that capacity, is a witness to fraud by the public company.” 130 F. Supp. 3d at 652. Based upon the allegations in the Amended Complaint, that is not the case here.

Slip op. at 15-17.

SERVICE OF PROCESS OF UK DEFENDANTS; FRCP 4 AND HAGUE CONVENTION; WHETHER SERVICE IN THE UNITED KINGDOM MUST BE MADE BY A SOLICITOR; COURT FINDS THAT SERVICE IS SUFFICIENT IF MADE BY A REGISTERED UK SERVER

In Baskett v. Autonomous Research LLP , 17-CV-9237 (S.D. N.Y. Sept, 28, 2018) (2018 U.S. Dist. LEXIS 169633), the Plaintiff brought an action under several employment statutes, one of which was the SOX whistleblower provision. One of the Defendants was a financial research company that was founded in London. The Defendants contended that service by the Plaintiff was defective because it was effected by a process server whom the United Kingdom does not consider a “competent person of the state” under Article 10(c) of the Hague Convention. The court was not persuaded. Initially, it reviewed the applicable law:

   When a defendant is served in a foreign country, a plaintiff must show that service was made in accordance with Federal Rule of Civil Procedure 4. Under this Rule, service may be effected “by any internationally agreed means of service that is reasonably calculated to give notice, such as those authorized by the Hague Convention.” Fed. R. Civ. P. 4(f)(1); see also Fed. R. Civ. P. 4(h)(2). Compliance with the Hague Convention, to which both the United States and the United Kingdom are signatories, is mandatory in all cases in which it applies. Volkswagenwerk , 486 U.S. at 705.

   The Hague Convention provides for several methods by which service of process may be made. The principal method, set forth in Articles 2 through 7, is through a designated Central Authority, which in turn either serves the documents or has them served by an appropriate agency. See Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, Nov. 15, 1965, 20 U.S.T. 361. As an alternative method, Article 10(c) of the Hague Convention allows “any person interested in a judicial proceeding to effect service of judicial documents directly through the judicial officers, officials or other competent persons of the State of destination.” Id.

The Defendants relied on Thomas & Thomas Rodmakers, Inc. v. Sharpe’s, Inc. , No. 06-CV-421, 2007 WL 1057382, at *5 (S.D. Ohio Apr. 5, 2007), in which the court concluded in the UK personal service of foreign process under Article 10(c) must be accomplished by a solicitor. The court disagreed, finding that none of the sources cited by the Thomas court explicitly state that a solicitor must be used; rather, they only indicate that the UK prefers that a solicitor be used for direct service on their residents. In the instant case, affidavits of service confirmed that a UK-based process server directly served the UK defendants, and the court therefore found that service was effected pursuant to the Hague Convention and Rule 4. The court cited Hoffman v. Bailey , 996 F. Supp. 2d 477, 482 (E.D. La. 2014) (concluding that service that “was performed by a registered United Kingdom process server” was “both in compliance with Rule 4(f) and is permitted under the Hague Convention”).

Maretta-Brooks v. Hanuszvzcak , No. 18-cv-426 (N.D. N.Y. Sept. 4, 2018) (Decision and Order [adopting Magistrate’s Order, Report, and Recommendation]); Maretta-Brooks v. Hanuszvzcak , No. 18-cv-426 (N.D. N.Y. Apr. 26, 2018) (Order, Report, and Recommendation)

Casenote(s):

SECTION 1514A COMPLAINT DISMISSED WHERE THERE WAS NO EVIDENCE COMPLAINANT HAD PREVIOUSLY FILED A COMPLAINT WITH DOL

In Maretta-Brooks v. Hanuszvzcak , No. 18-cv-426 (N.D. N.Y. Apr. 26, 2018) (Order, Report, and Recommendation), adopted Maretta-Brooks v. Hanuszvzcak , No. 18-cv-426 (N.D. N.Y. Sept. 4, 2018), the Magistrate noted that the Plaintiff ’s complaint included a reference to the SOX whistleblower provision at 18 U.S.C. § 1514A, and stated: ”Setting aside the complete absence of any factual allegations suggesting that section 1514A applies, the claim is subject to dismissal because plaintiff has provided no indication that she filed a complaint with the United States Secretary of Labor prior to commencing this action, as required. 18 U.S.C. § 1514A(b)(A); Murray v. TXU Corp. , 279 F. Supp. 2d 799, 802 (N.D. Tex. 2003); accord, Hoffman v. Bailey , No. 13-CV-5153, 2017 WL 1505920, at *3 (E.D. La. Apr. 26, 2017); see also Day v. Staples, Inc. , 555 F.3d 42, 54 n.7 (1st Cir. 2009).” Magistrate ’s Order, Report, and Recommendation, slip op. at 21-21.

Erhart v. Bofi Holding , No. 15-cv-2287 (S.D. Cal. Sept. 4, 2018) (2018 U.S. Dist. LEXIS 150356; 2018 WL 4204928) (Order on Joint Motion for Determination of Discovery Dispute No. 4)

Casenote(s):

WORK PRODUCT DOCTRINE; COMMUNICATIONS BETWEEN WHISTLEBLOWER’S ATTORNEY AND REGULATORS; “SUBSTANTIAL NEED” AND “UNDUE BURDEN” TEST

In Erhart v. Bofi Holding , No. 15-cv-2287 (S.D. Cal. Sept. 4, 2018) (2018 U.S. Dist. LEXIS 150356; 2018 WL 4204928), the court was presented with a dispute in Plaintiff’s SOX case over whether Defendant’s discovery requests for documents reflecting communications between Plaintiff’s attorney and regulators needed to be produced. The court had previously held in a consolidated countersuit that work product doctrine protected these communications and that this protection was not waived when the attorney sent communications to the third party regulators. The issue now before the court was whether the work product protection could be overcome by a showing of substantial need in Plaintiff’s SOX case. The court first noted that the information that Defendant sought—documents reflecting any complaints Plaintiff filed with various government and regulatory agencies—was factual in nature—and was not seeking the mental impressions or opinions of Plaintiff’s counsel. As to substantial need, the court found that “what complaints Erhart made to what governmental and regulatory agencies is implicated and a central issue for at least these [SOX and Dodd-Frank Act] claims.” Slip op. at 8. Although Plaintiff asserted that he already produced his own communications with the various law enforcement agencies, he did not represent that his attorney’s communications were entirely redundant. Moreover, Plaintiff did not address whether his attorney’s communications may provide additional information as to the nature of the complaints; the court concluded that to the extent that they provide additional information, Defendant did not have any other source for that information. As to undue burden, the court found that the actual complaints made by Plaintiff could not be easily obtained elsewhere, and were likely the best evidence of the substance of the complaints.

The court thus granted the information request in part, directing Plaintiff to produce responsive documents reflecting communications between his attorney and law enforcement agencies, redacting and mental impressions or opinions of counsel, and excluding any communications that contained information that was wholly redundant of those already produced from Plaintiff.

DISCOVERY REQUEST FOR DOCUMENTS CONTAINING DEFENDANT’S CONFIDENTIAL INFORMATION THAT WAS DISSEMINATED TO THIRD PARTIES

In Erhart v. Bofi Holding , No. 15-cv-2287 (S.D. Cal. Sept. 4, 2018) (2018 U.S. Dist. LEXIS 150356; 2018 WL 4204928), Defendant alleged in a countersuit to Plaintiff’s SOX, Dodd Frank, and state whistleblower retaliation suit that Plaintiff stole and disseminated Defendant’s confidential information and documents. Defendant sought an order directing Plaintiff to produce documents containing its confidential information that Plaintiff was not permitted to disseminate but did disseminate to third parties not authorized to receive such information. Plaintiff had asserted during the meet-and-confer that he had no further documents to produce; the court, however, directed Plaintiff to confirm this with Defendant, or produce any responsive documents not yet produced.

Bhandari v. Maverick Tube Corp. , No. 16-cv-2265 (S.D. Tx. Aug. 31, 2018) (2018 U.S. Dist. LEXIS 149560; 2018 WL 4189527) (Opinion on Summary Judgment)

Appeal filed No. 18-20668 (5th Cir.)

Casenote(s):

SOX PROTECTED ACTIVITY; TAX DIRECTOR FOUND NOT TO HAVE REASONABLE BELIEF THAT HER EMPLOYER WAS DEFRAUDING IRS WHERE SHE SHOULD HAVE KNOWN THAT PRICING REPORTS ARE NOT ADJUSTED ON A YEAR-BY-YEAR BASIS

In Bhandari v. Maverick Tube Corp. , No. 16-cv-2265 (S.D. Tx. Aug. 31, 2018) (2018 U.S. Dist. LEXIS 149560; 2018 WL 4189527), appeal filed No. 18-20668 (5th Cir.), the Plaintiff [Bhandari] was the North American tax director for Maverick Tube Corp. (one of the Defendants). In 2010, one of Maverick’s subsidiaries gave a company (which was under the umbrella of a corporation that owned all the companies involved) a sublicense to market Maverick’s subsidiary’s patented technology outside the NAFTA. The subsidiary was included in Maverick’s U.S. tax return. For tax purposes, because the sublicense was between two related companies, Maverick was required to include a transfer pricing report. The transfer pricing report for that year was based on what the Maverick subsidiary would have earned had it continued to market the technology itself. Later, the sublicense turned out to be much more profitable than stated in the transfer pricing report, and the Plaintiff concluded that Maverick misled the IRS Service by under-reporting its taxable income. The Plaintiff contended that she engaged in SOX protected activity when she told her supervisors that Maverick underreported its tax liability and that she could not present the 2012 tax return “as is ” during a scheduled meeting with the IRS relating to an audit of Maverick’s 2012 tax return.

The court, however, found that “[i]t was not reasonable for someone like Bhandari to think Maverick broke the law by not adjusting its transfer pricing report. Actions by Maverick in 2014 do not” Slip op. at 5. The court stated “a regional tax director should know that pricing reports are not adjusted on a year-by-year basis. Because transfer pricing reports are changed using multi-year averages, she would have expanded the agenda to the 2015 meeting on the 2012 return had she brought it to the Service’s attention. No one would have been prepared to discuss it. She was not reporting wrongdoing - only a fact about something else. ” Id . at 5-6. The court reviewed the Plaintiff’s education and work experience, and concluded that

    She should have known that what she saw was not a problem because pricing reports are not adjusted on a year-by-year basis and because a change in 2014 would not have affected 2012. The law allows her to be mistaken in her belief, but it does not protect unreasonable beliefs or talking about whatever she wants in a meeting.

    In essence, she says it was illegal to wait until the time for receiving the reversion valuations to decide the amount reported. It is not reasonable for someone with her background to think Maverick tried to defraud the United States government by underpaying its tax liability on these facts.

Id . at 6 (footnote omitted). The court granted summary judgment in favor of the Defendants.

CONTRIBUTING FACTOR CAUSATION; PLAINTIFF’S SUSPICIONS AS TO REASON FOR LAYOFF OUTWEIGHED BY EVIDENCE OF INSUBORDINATION; LAYOFFS, AND DEFENDANTS’ SELF-REPORTING OF PLAINTIFF’S ALLEGATIONS

In Bhandari v. Maverick Tube Corp. , No. 16-cv-2265 (S.D. Tx. Aug. 31, 2018) (2018 U.S. Dist. LEXIS 149560; 2018 WL 4189527), appeal filed No. 18-20668 (5th Cir.), the Plaintiff [Bhandari] was the North American tax director for Maverick Tube Corp. (one of the Defendants). In 2010, one of Maverick’s subsidiaries gave a company (which was under the umbrella of a corporation that owned all the companies involved) a sublicense to market Maverick’s subsidiary’s patented technology outside the NAFTA. The subsidiary was included in Maverick’s U.S. tax return. For tax purposes, because the sublicense was between two related companies, Maverick was required to include a transfer pricing report. The transfer pricing report for that year was based on what the Maverick subsidiary would have earned had it continued to market the technology itself. Later, the sublicense turned out to be much more profitable than stated in the transfer pricing report, and the Plaintiff concluded that Maverick misled the IRS Service by under-reporting its taxable income. The Plaintiff contended that she engaged in SOX protected activity when she told her supervisors that Maverick underreported its tax liability and that she could not present the 2012 tax return “as is” during a scheduled meeting with the IRS relating to an audit of Maverick’s 2012 tax return.

Initially, the court found that the Plaintiff had not engaged in SOX protected activity because it was not reasonable for her to have believed that Maverick had defrauded the IRS under the facts of the case. The court also found that “Maverick would have fired her regardless of whether she had told her bosses that the company was going to under-report its taxes.” The Plaintiff contended that she had not been included on a list of potential employees to fire until after she raised the question of a significant tax liability and requested more information to help her understand a change in royalty rates. She also posited that it was suspicious that she had been fired the day after the she refused to only speak about the agenda items for the IRS audit meeting. The court, however, found that refusing a direct, legal order is a significant insubordination. The court moreover noted that the Plaintiff was one of 752 employees laid off between 2015 and 2016, and that there was evidence that Maverick no longer needed someone of her skill level and pay rate to do what it needed done. The court found that the decision to lay off the Plaintiff had been made months earlier than the IRS meeting, and that it was sensible for the company to keep her until then because she had been involved in preparing the 2012 tax return being audited. The court also noted that although the Plaintiff claimed to have been mistreated because Maverick was hiding its inter-company pricing, Maverick voluntarily sent her letter to the IRS.

Jordan v. USDOL , No. 18-2254 (8th Cir. Aug. 22, 2018) (Judgment)

Case below 2017-SOX-00055

Casenote(s):

Summary dismissal of appeal.

Newman v. Lehman Bros. Holdings , 901 F.3d 19 (1st Cir. Aug. 20, 2018) (No. 15-2239) (2018 U.S. App. LEXIS 23182; 2018 WL 3973444) (Opinion)

Casenote(s):

EXHAUSTION; TIMELINESS OF ADMINISTRATIVE COMPLAINT; DISTRICT COURT DID NOT ERR IN LOOKING TO ADMINISTRATIVE COMPLAINT TO DETERMINE DATE OF TERMINATION WHERE PLAINTIFF‘S SECOND AMENDED COMPLAINT WAS VAGUE AS TO THAT DATE

In Newman v. Lehman Bros. Holdings , 901 F.3d 19 (1st Cir. Aug. 20, 2018) (2018 U.S. App. LEXIS 23182; 2018 WL 3973444), the district court had granted a Defendant‘s motion for summary judgment based on the Plaintiff‘s failure to exhaust administrative remedies in regard to her SOX complaint. Specifically, the district court found that the Plaintiff failed to establish that she timely filed her complaint with OSHA. Because the Plaintiff‘s second amended complaint (“SAC”) had not expressly stated the date of her termination, the court looked to the OSHA complaint, in which the Plaintiff had twice stated that she had been terminated on a date that was 91 days prior to the filing of the OSHA complaint. At the time, the statute stated a 90 day filing period (since amended to 180 days). On appeal, the Plaintiff contended that the district court had engaged in improper fact-finding, and that the court should have found that she was terminated sometime after the filing of the OSHA complaint as alleged in the SAC. The court of appeals was not persuaded that the district court‘s actions were improper fact-finding. The SAC made express reference to the administrative complaint, and the SAC was lacking in clarity as to the date. The Plaintiff asked the court to look beyond the written complaint to her statements during her OSHA interview in which she said that she may have been terminated on the 90th day, but did not learn about it until the 91st day, and that as of the date of the interview she was still uncertain about the date of the termination. The court of appeals declined to entertain this contention because it had not been proffered before the district court. The Plaintiff also argued that the district court erred in granting dismissal without discussing the timeliness of additional retaliatory acts alleged in the SAC. The court of appeals, however, found that the Plaintiff had not relied on additional retaliatory acts in opposing the Defendant‘s motion to dismiss, which had encompassed both termination and an additional claim related to a denial of long term disability benefits. Although the Plaintiff presented additional evidence in a motion for reconsideration that the district court could have considered had it been new evidence, the court of appeals found that it had been in possession of the Plaintiff months before the motion to dismiss—thus it was merely newly proffered and new discovered evidence.

Brown v. Sec'y of Labor , 739 Fed. Appx. 978 (11th Cir. July 11, 2018) (per curiam) (unpublished) (No. 17-13151) (2018 U.S. App. LEXIS 18803; 2018 WL 3385406) (Opinion)

Case below ARB No. 17-037, ALJ No. 2015-SOX-18.

Casenote(s):

ARB HAD THE AUTHORITY TO CONSTRUE A PRO SE COMPLAINANT’S RULE 60(d)(3) MOTION TO SET ASIDE THE ALJ’S DECISION BASED ON A FRAUD ON THE COURT, AS AN UNTIMELY PETITION FOR ARB REVIEW; ARB IS NOT REQUIRED TO FOLLOW THE FRCP

In Brown v. Sec’y of Labor , 739 Fed. Appx. 978 (11th Cir. July 11, 2018) (per curiam) (unpublished), over three months after the deadline for petitioning for ARB review of an ALJ’s SOX decision, the complainant filed a pro se “Motion and Brief to Set Aside the Order Due to Fraud on the Court” under Federal Rule of Civil Procedure 60(d)(3) alleging that the ALJ intentionally omitted and misrepresented facts in favor of the respondent. The ARB construed the motion as a petition for review and ordered the complainant to show cause why the petition should not be dismissed as untimely. The ARB rejected the complainant’s reliance on attorney error and dismissed the petition, noting that the complainant had waited over three months to file the petition after he learned his attorney had not filed a petition. On appeal, Brown contended that the ARB erred when he construed the 60(b)(3) motion as a petition for review. The court was not persuaded by this contention:

   The Board did not err in construing his motion to set aside the ALJ’s order as a petition for review instead of a Rule 60(d)(3) motion. The Board liberally construes pro se filings, Svendsen v. Air Methods, Inc. , ARB Case No. 03-074, 2004 WL 1923132, at *1 n.2 (Aug. 26, 2004), and there is no authority for Brown’s argument that the Board is required to follow the Federal Rules of Civil Procedure, see Henrich v. Ecolab, Inc. , ARB Case No. 05-030, 2007 WL 7143174, at *5 (May 30, 2007) (“Adopting the entire Federal Rules of Civil Procedure would prevent the Board from exercising the greater authority it possesses as the decision-maker for the Department of Labor.”).

Slip op. at 4-5.

TIMELINESS OF PETITION FOR ARB REVIEW; ARB DID NOT ERR IN FINDING PETITION UNTIMELY WHERE COMPLAINANT’S GROUND FOR EQUITABLE TOLLING WAS ATTORNEY ERROR, AND WHERE, ONCE COMPLAINANT DISCOVERED THAT HIS ATTORNEY HAD NOT FILED PETITION HE WAITED OVER THREE MONTHS TO DO SO

In Brown v. Sec’y of Labor , 739 Fed. Appx. 978 (11th Cir. July 11, 2018) (per curiam) (unpublished), over three months after the deadline for petitioning for ARB review of an ALJ’s SOX decision, the complainant filed a pro se “Motion and Brief to Set Aside the Order Due to Fraud on the Court” under Federal Rule of Civil Procedure 60(d)(3) alleging that the ALJ intentionally omitted and misrepresented facts in favor of the respondent. The ARB construed the motion as a petition for review and ordered the complainant to show cause why the petition should not be dismissed as untimely. The ARB rejected the complainant’s reliance on attorney error and dismissed the petition, noting that the complainant had waited over three months to file the petition after he learned his attorney had not filed a petition. On appeal, Brown contended that the ARB erred when he found the petition to be untimely. The court was not persuaded:

   The Board also did not err in denying Brown’s petition as untimely. The ALJ issued its decision on December 16, 2017, which gave Brown until December 30, 2017 to file his appeal with the Board. 29 C.F.R. § 1980.110(a). But, as Brown admits, he did not timely file an appeal, and his argument that attorney error warrants equitable tolling is a non-starter. See , e.g. , Higgins v. Glen Raven Mills, Inc. , ARB Case No. 05-143, at *9 & n.60 (Sept. 29, 2006) (“In considering whether attorney error constitutes an extraordinary factor for tolling purposes, the Board has consistently held that it does not because ultimately, clients are accountable for the acts and omissions of their attorneys.”) (quotation marks and alterations omitted) (collecting cases). And, as the Board noted, even if equitable tolling did apply, once Brown learned on January 14, 2017, that his attorney did not file his appeal, he had another 14 days to file that appeal. See id . ; See also 29 C.F.R. § 1980.110(a). But instead of doing that, he waited over three months until April 6, 2017, to file his motion with the Board. As a result, the Board did not err in denying his motion as untimely.

Slip op. at 5 (footnote omitted).

Seguin v. United States DOL , 730 Fed. Appx. 168 (4th Cir. July 10, 2018) (per curiam) (unpublished) (No. 18-1414) (2018 U.S. App. LEXIS 18700) (Opinion)

Case below ARB Nos. 15-038, -040, 16-014, ALJ No. 2012-SOX-37.

Casenote(s):

COURT OF APPEALS DOES NOT HAVE JURISDICTION OVER AN APPLICATION TO ENFORCE ARB'S ORDER AWARDING ATTORNEY'S FEES AND COSTS RELATED TO SOX COMPLAINT

In Seguin v. United States DOL , 730 Fed. Appx. 168 (4th Cir. July 10, 2018) (per curiam) (unpublished), the Petitioner filed an application with the Fourth Circuit Court of Appeals to enforce ARB's order awarding attorney's fees and costs related to her SOX complaint. The court agreed with the Respondents that it lacks jurisdiction over the application. FRAP 15 is not a source of appellate jurisdiction. The court stated: "No statute confers jurisdiction on this Court to enforce the order in question. See 18 U.S.C. § 1514A(b)(2)(A) (2012); 49 U.S.C. § 42121(b)(6) (2012) (providing that jurisdiction over application for enforcement of final order of Secretary of Labor in whistleblower action is in appropriate district court)." Slip op. at 2.

Westawski v. Merck & Co., Inc. , 739 Fed. Appx. 150 (3rd Cir. June 27, 2018) (unpublished) (No. 16-4075) (2018 U.S. App. LEXIS 17595; 2018 WL 3159093) (Opinion)

Casenote(s):

PROTECTED ACTIVITY; SUMMARY JUDGMENT PROPERLY GRANTED WHERE PLAINTIFF FAILED TO SHOW THAT IT WAS OBJECTIVELY REASONABLE TO BELIEVE THAT DEFENDANT ENGAGED IN MAIL, WIRE, OR SHAREHOLDER FRAUD WHEN IT ALLEGEDLY GAVE A SWEETHEART DEAL TO A CERTAIN RESEARCH FIRM IN ORDER TO IMPROVE DEFENDANT’S RELATIONSHIP WITH A HEALTH PLAN PROVIDER

In Westawski v. Merck & Co., Inc. , 739 Fed. Appx. 150 (3rd Cir. June 27, 2018) (unpublished) (No. 16-4075) (2018 U.S. App. LEXIS 17595; 2018 WL 3159093), the District Court had granted summary judgment of favor of the defendant on the plaintiff’s SOX Section 806 claim. Plaintiff was a research analyst assigned to oversee a diabetes related study for a grocery store chain (H-E-B) and its health insurance benefits administrator (Blue Cross Blue Shield of Texas “BCBSTx”). Defendant (Merck) hired an outside market research firm (DrTango) as the researcher. Defendant allegedly had a historically strained relationship with BCBSTx. Plaintiff contended that DrTango was hired outside the usual bidding process, was paid above the standard rate, and received other special treatment, because one of DrTango’s scientists had a close relationship with BCBSTx executives. Defendant investigated but found no violation of its internal policies. Plaintiff was transferred to another department after she informed Defendant that she could no longer work with her immediate supervisors. About eight months later Plaintiff’s employment was terminated during a company-wide restructuring. Plaintiff alleged the termination was retaliation for engaging in SOX-protected activity — i.e., her belief that Defendant sought to use the DrTango project fraudulently to gain access to executives at Blue Cross, Texas.

The District Court found that Plaintiff failed to show she had engaged in "protected activity" because Plaintiff had conceded that she had no claim rooted in bank or securities fraud, and because it was not objectively reasonable for a person of her training and experience to believe Defendant had committed mail, wire, or shareholder fraud.

On appeal Plaintiff argued that “her belief need not be ‘objectively reasonable only within the strictly limited context of mail fraud, wire fraud, and shareholder fraud,’ and to require otherwise would contravene the whistleblower statute’s broad purposes.” Slip op. 4. The Court stated that “[t]his ignores both Section 806’s plain text and our binding precedent in Wiest [ v. Lynch (Weist I) , 710 F.3d 121, 134 (3d Cir. 2013)]. Although a plaintiff is not required to show ‘a reasonable belief that each element of a listed anti-fraud law is satisfied,’ she must still ‘have an objectively reasonable belief of a violation of one of the listed federal laws .’ Wiest I , 710 F.3d at 132(emphases added).” Id . at 4. The court stated:

   Even assuming Merck selected DrTango and paid it a premium to conduct a study for H-E-B so Merck could improve its business relationship with Blue Cross Texas, Westawski fails to explain how that is fraud. As the District Court noted, she “identifies no prohibition on pharmaceutical companies networking with employers and health plan providers” like H-E-B and Blue Cross Texas, let alone a prohibition within the scope of mail fraud, wire fraud, or shareholder fraud. Westawski , 215 F. Supp. 3d at 427.

   In an effort to satisfy her burden, Westawski vaguely asserts the payments to DrTango were some form of “bribe,” “inducement,” or “quid pro quo.” . . . She claims she “had an objectively reasonable belief that there was a fraudulent scheme taking place.” . . . Without reference to any theory of fraud, and indeed citing no law at all, Westawski asserts that “anyone in the pharmaceutical industry . . . would understand that the buying of access to executives at a large managed care organization would be illegal.” Id . at 37. This falls short of showing her complaints regarding the DrTango project “relate in an understandable way” to any of Section 806’s enumerated forms of fraud. Weist I , 710 F.3d at 133.

Id . at 5 (record citations omitted).

Sharkey v. J.P. Morgan Chase & Co. , No. 10-cv-3824 (S.D. N.Y. June 11, 2018) (Stipulation and Order of Voluntary Dismissal of All Claims With Prejudice)

Casenote(s):

In Sharkey v. J.P. Morgan Chase & Co. , No. 10-cv-3824 (S.D. N.Y. June 11, 2018), the court ordered dismissal of the case based on the parties’ stipulation of voluntary dismissal of all claims with prejudice and each party bearing its own attorneys’ fees and costs.

[Editor’s note: This stipulated dismissal came after a jury verdict in Plaintiff’s favor making a large damages award that the court found was not supported by the trial record. The court found that the magnitude of the award indicated that the verdict had been infected by passion and prejudice, and that a new trial was required on liability and certain damages. See casenote below on Sharkey v. J.P. Morgan Chase & Co. , No. 10-cv-3824 (S.D. N.Y. Mar. 5, 2018)].

Wingo v. The Southern Co. , No. 17-cv-01328 (N.D. Ala. May 29, 2018) (2018 U.S. Dist. LEXIS 88938; 2018 WL 2416447) (Memorandum of Opinion)

Related to 2017-SOX-00023.

Casenote(s):

FRCP 12(b)(1); FAILURE TO EXHAUST ADMINISTRATIVE REMEDIES IS A MATTER IN ABATEMENT PROPERLY ADDRESSED AS A MOTION TO DISMISS; IN 12(b)(6) CONTEXT, JUDGE MAY CONSIDER CERTAIN FACTS OUTSIDE THE PLEADINGS

A contention that a plaintiff failed to exhaust administrative remedies should be addressed as a motion to dismiss under FRCP 12(b)(1). Failure to exhaust is a matter in abatement and not generally an adjudication on the merits, and thus is not ordinarily the proper subject for a summary judgment. In matters in abatement it is proper for the judge to consider facts outside the pleadings and to resolve factual disputes provided that they are not decisions on the merits issues and provided that the parties have sufficient opportunity to develop a record. “[I]n the 12(b)(6) context, the Court may ‘consider a document attached to a motion to dismiss without converting the motion into one for summary judgment if the attached document is (1) central to the plaintiff’s claim and (2) undisputed.’ Day v. Taylor , 400 F.3d 1272, 1276 (11th Cir. 2005) (citing Horsley v. Feldt , 304 F.3d 1125, 1134 (11th Cir. 2002)). In this context, “undisputed” means that the authenticity of the document is not challenged. Id . ” Wingo v. The Southern Co. , No. 17-cv-01328, slip op. at 9 (N.D. Ala. May 29, 2018) (2018 U.S. Dist. LEXIS 88938; 2018 WL 2416447).

EXHAUSTION OF ADMINISTRATIVE REMEDIES; PURPOSE IS TO PUT OSHA ON NOTICE OF POSSIBLE SOX VIOLATIONS; THUS, FAILURE TO PUT NAME OF INDIVIDUAL RESPONDENT ON CAPTION OF ADMINISTRATIVE COMPLAINT IS NOT, IN ITSELF, A FAILURE TO EXHAUST ADMINISTRASTIVE REMEDIES

EXHAUSTION OF ADMINISTRATIVE REMEDIES; “CAN REASONABLY BE EXPECTED TO GROW OUT OF CHARGE” STANDARD; UNDER THE FACTS OF THE CASE WHERE COMPLAINANT HAD FILED A SUPPLEMENTAL COMPLAINT “DISTILLING” HIS CASE, THE COURT FOUND THAT COMPLAINANT HAD NOT EXHAUSTED ADMINISTRATIVE REMEDIES AS TO DEFENDANT COMPANY’S CEO AS AN INDIVIDUAL DEFENDANT; ORIGINAL COMPLAINT HAD NAMED OVER 60 INDIVIDUALS OR ENTITIES

In Wingo v. The Southern Co. , No. 17-cv-01328 (N.D. Ala. May 29, 2018) (2018 U.S. Dist. LEXIS 88938; 2018 WL 2416447), Defendants sought to have the company’s CEO dismissed based on exhaustion of administrative remedies as to the CEO. The court noted that the 11th Circuit had not spoken directly on the requirements for the contents of an administrative complaint sufficient to comply with SOX § 1514A’s exhaustion requirements. The district court found that it was proper to employ the “can reasonably be expected to grow out of the charge” standard of Title VII cases.

The court first rejected Defendants’ contention that it is a per se failure to exhaust administrative remedies as to an individual if that individual is not named in the caption to the administrative complaint. Defendants cited Bozeman v. Per-Se Techs., Inc. , 456 F. Supp. 2d 1282, 1356 (N.D. Ga. 2006) and Hanna v. WCI Communities, Inc. , No. 04-cv-80595 (S.D. Fla. Nov. 15, 2004). The court wrote:

   Defendants’ reading of Bozeman and Hanna is discordant with the purpose of the exhaustion requirement, which is to put OSHA on notice of possible SOX violations. The Court has been unable to find any law or regulation requiring the complainant to include a caption of which defendants are to be sued, and pulling such a requirement out of thin air directly contradicts the current version of § 1980.103(b), which states that “no particular form of a complaint is required.” The Court cannot invent formalistic requirements and then fault the complainant, who in this case drafted the administrative complaint without counsel, for failing to follow them.

Slip op. at 15.

Next, the court looked to the content of the two administrative complaints filed by Plaintiff. Plaintiff had initially filed a 34 page complainant, that he conceded was confusing and poorly communicated his charges. Plaintiff then filed a supplemental complaint in which he sought to “distill” his complaint down to “its essence” in order to “have a more efficient review process.” Id . at 17 (quoting the record). Plaintiff had mentioned over 60 individuals or entities in the original complaint who allegedly either retaliated against him, or who were witnesses to the violations. The CEO was mentioned in the original complaint. He was not referred to at all in the supplemental complaint. Moreover, Plaintiff directed in regard to the Supplemental complaint that the recipient ignore events occurring prior to a certain date. The court, reviewing the two complaints, found it could not reasonably be concluded that Plaintiff asked OSHA to investigate the CEO for SOX violations or retaliation. Although the CEO had been mentioned in the original complaint, he had not been conspicuously identified in comparison to the other 60 individuals. The two complaints had to be read in reference to each other. The court thus granted Defendants’ motion to dismiss as to the CEO.

Startley General Contractors, Inc. v. The Water Works Board of the City of Birmingham , No. 18-cv-543 (N.D. Ala. May 24, 2018) (2018 U.S. Dist. LEXIS 113562) (Memorandum Opinion and Order)

Casenote(s):

The court granted Defendants’ motion to dismiss where none of the defendants was a publicly traded company or an affiliate of such a company, and therefore a Sarbanes-Oxley Act retaliation claim could not be maintained against the defendants.

Witbeck v. USDOL , 723 Fed. Appx. 533 (9th Cir. May 22, 2018) (No. 17-71397) (2018 U.S. App. LEXIS 13308; 2018 WL 2308657) (unpublished) (Memorandum [denying petition for review])

Case below ARB No. 15-077, ALJ Nos. 2013-SOX-1 and 2014-SOX-40.

Casenote(s):

NINTH CIRCUIT SUMMARILY DENIED PETITION FOR REVIEW WHERE COMPLAINANT FAILED TO PRESENT SUPPORTING EVIDENCE BEFORE ALJ

In Witbeck v. USDOL , 723 Fed. Appx. 533 (9th Cir. May 22, 2018) (2018 U.S. App. LEXIS 13308; 2018 WL 2308657) (unpublished) (case below ARB No. 15-077, ALJ Nos. 2013-SOX-1 and 2014-SOX-40), the 9th Circuit summarily denied the complainant’s petition for review of the ARB’s order denying his SOX and FWPCA whistleblower complaints. The court found that the complainant failed to present evidence in support of his claims to the ALJ.

Johnson v. Amerigas Propane, LP , No. 17-cv-252 (N.D. N.Y. May 21, 2018) (2018 U.S. Dist. LEXIS 84379; 2018 WL 2304742) (Memorandum Decision and Order)

Casenote(s):

DISTRICT ACTION DISMISSED WHERE THERE WAS NO EVIDENCE THAT THE PLAINTIFF HAD FILED A TIMELY COMPLAINT WITH DOL

In Johnson v. Amerigas Propane, LP , No. 17-cv-252 (N.D. N.Y. May 21, 2018) (2018 U.S. Dist. LEXIS 84379; 2018 WL 2304742), the court stated:

To the extent Plaintiff also alleges that his termination violated Sarbanes-Oxley, . . ., Defendants assert that they are entitled to summary judgment dismissing such a claim because Plaintiff does not allege he has met the administrative exhaustion requirement, . . . . See Digital Realty , 138 S. Ct. at 776 (noting that Somers did not “file an administrative complaint within 180 days of his termination, rendering him ineligible for relief under Sarbanes-Oxley ”); 18 U.S.C. § 1514A(b)(2)(D). Indeed, there is no evidence from which a reasonable fact-finder could conclude that Plaintiff filed an administrative complaint within the relevant time period. Accordingly, Defendants’ motion for summary judgment is granted.”

Slip op. at 11-12 (footnote omitted).

Blalock v. Fifth Third Bank , No. 17-cv-170 (S.D. Ind. May 17, 2018) (2018 U.S. Dist. LEXIS 83181; 2018 WL 2266419) (Order on Defendant’s Motion to Dismiss or, Alternatively, Strike Requests for Improper Relief)

Casenote(s):

TIMELINESS OF COMPLAINT; WHERE DEFENDANT CONTINUED TO PAY INCENTIVE COMPENSATION FOR TWO YEARS AFTER NOTICE THAT IT WOULD BE REVOKED, SOX COMPLAINT FILED WITHIN SIX MONTHS OF WHEN INCENTIVE COMPENSATION WAS NOT PAID WAS FOUND TO BE SUFFICIENTLY TIMELY TO PERMIT AMENDMENT OF DISTRICT COURT COMPLAINT (WHICH HAD BEEN GROUNDED IN ERISA) TO INCLUDE SOX CLAIM AFTER 180-DAY “KICK-OUT ” PROVISION OF SOX APPLIED

In Blalock v. Fifth Third Bank , No. 17-cv-170 (S.D. Ind. May 17, 2018) (2018 U.S. Dist. LEXIS 83181; 2018 WL 2266419), the Plaintiff filed a motion to amend the district court complaint (which was grounded in ERISA) to add a SOX whistleblower retaliation complaint after 180 days had passed since he had filed his administrative SOX complaint without a final decision from the Secretary of Labor. The proposed amendment asserted that the SOX claim, like the others before the district court, arose out of a December 2014 revocation of the Plaintiff’s incentive compensation. The Defendant opposed the motion to amend, arguing that the claim accrued in December 2014 and was thus barred under the SOX limitations period for filing a claim, making an amendment to the district court complaint futile. See 18 U.S.C. § 1514A(b)(2) (SOX complaint must be filed “not later than 180 days after the date on which the violation occurs, or after the date on which the employee became aware of the violation”). The Plaintiff argued in response that the claim was timely because it was filed with DOL on August 29, 2017, within six months of the day he was denied his incentive compensation payment in April 2017. The court allowed the motion to amend, finding ?at this stage of the litigation, . . . Plaintiff’s SOX whistleblower retaliation claim is timely because . . . Fifth Third acted inconsistently by paying him incentive compensation in 2014 and 2015, notwithstanding its prior revocation of the same. Therefore, the statute of limitations began to run when it failed to pay him his incentive compensation in April 2017.” Slip op. at 12.

Genberg v. Porter , 888 F.3d 470 (10th Cir. Apr. 19, 2018) (No. 16-1368) (Order [on panel rehearing])

Casenote(s):

SAME ACTION DEFENSE ON MOTION FOR SUMMARY JUDGMENT FOREITED IF NOT RAISED IN ANSWER OR SUMMARY JUDGMENT BRIEF; SUCH, HOWEVER, FOUND ON REHEARING NOT TO FORECLOSE DEFENSE IN FURTHER PROCEEDINGS

In Genberg v. Porter , 882 F.3d 1249 (10th Cir. Feb. 22, 2018) (No. 16-1368) (2018 U.S. App. LEXIS 4199; 2018 WL 1004603) (case below: Genberg v. Porter , No. 11-cv-02434 (D. Col. Aug. 11, 2016)), the Plaintiff–Appellant (Genberg), an executive with Ceragenix, was fired after raising concerns of suspected misconduct by Ceragenix’s board of directors. The instant action, which included a SOX retaliation claim, was filed against Ceragenix’s CEO (Porter). The district court granted summary judgment to Porter.

On appeal, Porter invoked the same-action defense, which allows a defendant to prevail by submitting clear and convincing evidence that the employee would have been fired even without the protected conduct. The court initially found that Porter forfeited this defense because he had not asserted it in either his Answer or in his summary-judgment briefs. The court, however, found that assuming the argument had been preserved, Porter was not entitled to summary judgment because a reasonable factfinder could have gone either way on the issue.

Later, the panel granted rehearing “to clarify that the prior opinion addressed only the award of summary judgment to the defendant. The Court did not address, one way or another, whether the defendant can present the same-action defense in the district court’s further proceedings.” Genberg v. Porter , 888 F.3d 470 (10th Cir. Apr. 19, 2018).

Pompliano v. Snap Inc. , No. 17-cv-3664 (C.D. Cal. Apr. 11, 2018) (2018 U.S. Dist. LEXIS 107357) (Order Re Defendants’ Motion to Compel Arbitration and to Dismiss or, in the Alternative, Stay Action)

Casenote(s):

SOX PREDISPUTE ARBITRATION BAN DOES NOT APPLY TO DODD-FRANK CLAIMS

In Pompliano v. Snap Inc. , No. 17-cv-3664 (C.D. Cal. Apr. 11, 2018) (2018 U.S. Dist. LEXIS 107357), the Plaintifff argued that SOX’s predispute arbitration ban at 18 U.S.C. § 1514A(e)(2) applied to his Dodd-Frank 15 U.S.C. § 78u-6 claim based largely on Wiggins v. ING U.S., Inc. , No. 3:14-CV-1089, 2015 WL 3771646, at *7 (D. Conn. June 17, 2015), in which the court concluded that SOX’s predispute arbitration ban applied to plaintiff’s Dodd-Frank claim. The court, however, was not persuaded, finding that

   Notwithstanding the result in Wiggins , every other court to have considered the issue has concluded that SOX’s predispute arbitration ban does not apply to a Dodd-Frank claim.

* * *

   The Court agrees with the weight of authority that has concluded that SOX’s antiarbitration provision does not apply to claims arising out of Dodd-Frank. As an initial matter, SOX and Dodd-Frank do not “arise under” the same provisions. They are “not in the same title of the United States Code, let alone the same section.

Slip op. at 11-12 (citations omitted).

Kshetrapal v. Dish Network, LLC , No. 14-cv-3527 (S.D. N.Y. Mar. 23, 2018) (2018 U.S. Dist. LEXIS 48493; 2018 WL 1474375) (Opinion and Order)

Case below 2014-SOX-23.

Casenote(s):

BLACKLISTING; AVOIDING DOING BUSINESS WITH SOMEONE IS NOT ADVERSE EMPLOYMENT ACTION IF IT DOES NOT AFFECT THE TERMS AND CONDITIONS OF EMPLOYMENT

BLACKLISTING; COURT APPLIES ARB’s PROPHYLACTIC RULE THAT CONSIDERS ALL IMPROPER REFERENCES THAT TEND TO INTERFERE WITH EMPLOYMENT OPPORTUNITIES TO BE UNFAVORABLE PERSONNEL ACTIONS

BLACKLISTING; ALLEGATION OF DISSEMINATION OF DAMAGING INFORMATION “THROUGHOUT THE INDUSTRY” FOUND NOT TO BE ACTIONABLE; RATHER PLAINTIFF MUST SHOW THAT A SPECIFIC ACT OF BLACKLISTING OCCURRED

BLACKLISTING; MERELY SMILING AT A SUGGESTION ABOUT THE WHISTLEBLOWER’s COMPLICITY IN MISCONDUCT AND FAILING TO CORRECT ANY MISIMPRESSION IS INSUFFICIENT TO CONSTITUTE DISSEMINATION OF DAMAGING INFORMATION

In Kshetrapal v. Dish Network, LLC , No. 14-cv-3527 (S.D. N.Y. Mar. 23, 2018) (2018 U.S. Dist. LEXIS 48493; 2018 WL 1474375) (case below 2014-SOX-23), the court granted summary judgment on the Plaintiff’s SOX blacklisting claim. The Plaintiff had been employed as the Associate Director of South Asian Marketing for Dish Network. He alleged that the blacklisting resulted from SOX protected activity in reporting concerns about a marketing company’s false invoices and by testifying in a lawsuit brought by the marketing company seeking payment for unpaid invoices. The Plaintiff alleged four specific alleged acts of blacklisting, which the court considered in turn.

Avoidance of doing business with Plaintiff

The first allegation was that the Dish Network had formed a policy of avoiding doing business with the Plaintiff (the “Avoidance Policy”). The court recited the factual contentions of the parties regarding the policy. The Defendant essentially contended that a new department head (who claimed he was not aware of the Plaintiff’s protected activity) had a goal to establish distance and separation from those who had been deeply involved in the situation with the marketing company. The Plaintiff alleged that the policy was retaliatory and that the new department head knew of the protected activity (or if he did not know, his decision was poisoned by those who did know). The court noted that the Plaintiff could point to no testimony to support knowledge on behalf of the new department head or that he had been influenced to adopt the policy. The court noted that the Plaintiff’s contention was based on speculation. The court was skeptical that the scant evidence could support the Plaintiff’s case, but found nonetheless that “mere application of the Avoidance Policy to Plaintiff is not an ‘unfavorable personnel action,’ as it did not affect his employment.” Slip op. at 17 (citation omitted). The court wrote:

   Although a decision to avoid working with someone may colloquially be considered “blacklisting,” such an action does not necessarily fall within the scope of this statutory language. Section 1514A applies only to employers’ decisions to “discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment because of any lawful act.” 18 U.S.C. 1514A(a) (emphasis added). An action must affect a plaintiff’s employment to be considered an unfavorable personnel action under Section 1514A. The Supreme Court analyzed similar statutory language in Burlington Northern and Santa Fe Railway Co. v. White , 548 U.S. 53 (2006). There, the Court held that Title VII’s anti-retaliation provision is not limited to actions affecting employment because it lacks limiting phrases such as “with respect to his compensation, terms, conditions, or privileges of employment,” which appear in Title VII’s substantive antidiscrimination provision. 548 U.S. at 62-64. Although the Court also discussed the purpose of deterring retaliation, it concluded that this purpose merely “reinforces what language already indicates, namely, that the antiretaliation provision, unlike the substantive provision, is not limited to discriminatory actions that affect the terms and conditions of employment.” Id . at 64. Section 1514A contains the limiting language that the anti-retaliation provision of Title VII lacks. Thus, Section 1514A, like the substantive antidiscrimination provision of Title VII, is limited to discriminatory actions that affect “the terms and conditions of employment.” See 18 U.S.C. 1514A(a).

   Here, the application of the Avoidance Policy to the Plaintiff, as opposed to communicating that policy, did not affect Plaintiffs employment. In fact, Plaintiffs employment likely could only be affected by the existence of the Avoidance Policy if companies employing or potentially employing Plaintiff learned of its existence. Plaintiff has pointed to no evidence suggesting that Dish Network’s mere avoidance of doing business with Plaintiff’s employers actually affected his employment.

Id . at 17-18 (emphasis as in original). The court also found that even if the Plaintiff had established a prima facie case of blacklisting based on the Avoidance Policy, the Defendants had proved by clear and convincing evidence that the new department head would have applied the policy to the Plaintiff even in the absence of his protected activity given the reputational reasons for avoiding such business.

Communication of avoidance policy – prophylactic rule

The Plaintiff’s second allegation of blacklisting was communication of the Avoidance Policy to the Plaintiff’s new employer. The court found that this was not an unfavorable personnel action because there was no evidence that the communication actually affected the Plaintiff’s new employment – the Plaintiff having never been told that his job was in danger, having no changes in responsibilities attributable to the policy, having remained in his position for several years with a salary increase, and having voluntarily left the new employer for another job of his choosing.

Nonetheless, the Plaintiff asserted that “the Administrative Review Board applies a ‘prophylactic rule’ in some blacklisting cases, which considers all improper references that tend to interfere with employment opportunities to be unfavorable personnel actions.” See Timmons v. CRST Dedicated Services, Inc. , ARB No. 14-051, ALJ No. 2014-STA-9, 2014 WL 5409560, at *3 (ARB Sep. 29, 2014). Apparently accepting the ARB’s prophylactic rule on blacklisting, the court found that the revelation that the Defendant did not want to do business with the Plaintiff may have tended to impede and interfere with the Plaintiff’s employment opportunities. The court thus assumed that the communication was unfavorable personnel action. Nonetheless, the court also found no evidence that protected activity was a contributing factor in the decision to reveal the policy. There was no evidence that anyone with a motive to harm the Plaintiff influenced the decision to communicate the policy.

Interference with job candidacy — lack of evidence

The Plaintiff’s third allegation of blacklisting was alleged interference with a potential employer’s decision not to proceed with the Plaintiff’s candidacy. Reviewing the evidence, the court found it insufficient to establish a prima facie case.

General allegation of probable dissemination — blacklisting claim must be grounded in specific act

The Plaintiff’s fourth allegation of blacklisting was based on the assertion that it was not credible that blacklisting only occurred on two occasions and that a variety of witnesses testified that the Defendant disseminated damaging information “throughout the industry.” The court found that claim not to be actionable because the Plaintiff did not show that “ ‘a specific act of blacklisting occurred.’ See Pittman , 2007 DOLSOX LEXIS 56, at * 10.” [The Pittman citation is to the ALJ’s decision in Pittman v. Siemens AG , 2013-SOX-00029 (ALJ Mar. 27, 2014).]. The court noted that some testimony was only hearsay. The court noted the Plaintiff’s “smoking gun” evidence was based on the assertion that a former co-worker smiled at the suggestion by a third party that the Plaintiff was complicit in some of the marketing company’s behavior because the Plaintiff’s “girlfriend” had been involved, and that the co-worker had not corrected the suggestion. The court found that smiling is not the dissemination of damaging information. The court found that even if the Plaintiff had identified specific comments, he failed to show that they ever made their way to a company with which the Plaintiff was seeking a position.

Sharkey v. J.P. Morgan Chase & Co. , No. 10-cv-3824 (S.D. N.Y. Mar. 5, 2018) (Opinion and Order)

Casenote(s):

NEW TRIAL; NEW TRIAL ORDERED WHERE MAGNITUDE OF DAMAGES AWARD REFLECTED VERDICT INFECTED BY PASSION AND PREJUDICE

In Sharkey v. J.P. Morgan Chase & Co. , No. 10-cv-3824 (S.D. N.Y. Mar. 5, 2018), after pending for nine years, a jury awarded Plaintiff $563,000 in back pay damages, and an identical amount for her emotional distress on her Sarbanes-Oxley retaliation case. The court found that these amounts were not supported by the trial record, and the magnitude of the award reflected a verdict infected by passion and prejudice. The court thus reluctantly ordered a new trial on liability and certain damages.

[Editor’s note: In Sharkey v. J.P. Morgan Chase & Co. , No. 10-cv-3824 (S.D. N.Y. June 11, 2018), the court ordered dismissal of the case based on the parties’ stipulation of voluntary dismissal of all claims with prejudice and each party bearing its own attorneys’ fees and costs.].

Genberg v. Porter , 882 F.3d 1249 (10th Cir. Feb. 22, 2018) (No. 16-1368) (2018 U.S. App. LEXIS 4199; 2018 WL 1004603) (Opinion)

Case below: Genberg v. Porter , No. 11-cv-02434 (D. Col. Aug. 11, 2016)

Casenote(s):

PROTECTED ACTIVITY; GHOSTWRITING OF EMAIL; DISTRICT COURT ERRED IN APPLYLING OBSOLETE “DEFINITELY AND SPECIFICALLY” STANDARD; SUBJECTIVE STANDARD OF SYLVESTER REASONABLE BELIEF TEST CAN SURVIVE SUMMARY JUDGMENT BASED ON AFFIDAVIT OF WHISTLEBLOWER; MAJORITY REJECTS CONCURRING/DISSENTING JUDGE’s CONCERN ABOUT WHETHER SHAM AFFIDAVIT DOCTRINE SHOULD APPLY

In Genberg v. Porter , 882 F.3d 1249 (10th Cir. Feb. 22, 2018) (No. 16-1368) (2018 U.S. App. LEXIS 4199; 2018 WL 1004603) (case below: Genberg v. Porter , No. 11-cv-02434 (D. Col. Aug. 11, 2016)), the Plaintiff–Appellant (Genberg), an executive with Ceragenix, was fired after raising concerns of suspected misconduct by Ceragenix’s board of directors. The instant action, which included a SOX retaliation claim, was filed against Ceragenix’s CEO (Porter). The district court granted summary judgment to Porter.

On appeal, one of the issues was whether it was SOX protected activity for Genberg to have ghostwritten an email for a shareholder demanding that the Ceragenix Board of Directors transfer proxy voting rights to the shareholders, which the Board had controlled for roughly five years. The email contended that the proxy retention clashed with SEC policies of “sound corporate governance and shareholder accountability.” The district court concluded that writing this email was not protected activity, reasoning that the email had not “definitively and substantively” related to a violation of law as the email had not cited a specific SEC rule. The 10th Circuit reversed, finding that the district court applied the wrong standard on protected activity, and that under the proper standard, a factfinder could reasonably characterize writing the email as protected activity.

The 10th Circuit first noted that the ARB had explicitly disavowed the “definitive and specific” evidentiary standard. The court stated that this interpretation was entitled to Chevron deference. Porter did not contest that the standard no longer applied, but nonetheless argued that the district court correctly granted summary judgment because the allegations in the email were not specific. The court, however, found that the district court had applied the obsolete standard.

The 10th Circuit granted Chevron deference to the ARB’s Sylvester v. Parexcel International standard: “[T]he [plaintiff] need only show that he or she ‘reasonably believes’ that the conduct complained of constitutes a violation of the laws listed” in the Sarbanes-Oxley Act. On appeal, Porter only addressed the subjective belief portion of the Sylvester standard. The court found that Genberg’s statement under oath that he had believed that the Ceragenix Board was violating SEC Rule 14 by continuing to rely on the initial proxy was sufficient to survive summary judgment. The court reviewed the email text and found that a factfinder might reasonably conclude that Genberg believed that the Board was violating an SEC rule.

One member of the court filed a concurrence/dissent essentially finding that Genberg was an attorney with a sophisticated understanding of securities law, and that the email actually conveyed a belief that the challenged behavior was not governed by securities law. Thus, no reasonable juror could infer that Genberg subjectively believed that the email was reporting a past, or even potential, violation of federal securities law. The concurrence/dissent also expressed a concern about whether Genberg’s affidavit, filed almost 6 years after the email, suffered the defect of “sham” affidavits that fail to explain why the original document did not say what was being explained in the affidavit. The majority found, however, that the concurrence/dissent required too much under the Sylvester standard, and that the “sham” affidavit opinions he cited involved a different issue.

CONTRIBUTORY FACTOR CAUSATION; TENTH CIRCUIT EMPLOYS ARB KLOPFENSTEIN “TENDS TO AFFECT IN ANY WAY” STANDARD, AND ARB PALMER “INEXTRICABLY INTERTWINED” STANDARD

In Genberg v. Porter , 882 F.3d 1249 (10th Cir. Feb. 22, 2018) (No. 16-1368) (2018 U.S. App. LEXIS 4199; 2018 WL 1004603) (case below: Genberg v. Porter , No. 11-cv-02434 (D. Col. Aug. 11, 2016)), the Plaintiff–Appellant (Genberg), an executive with Ceragenix, was fired after raising concerns of suspected misconduct by Ceragenix’s board of directors. The instant action, which included a SOX retaliation claim, was filed against Ceragenix’s CEO (Porter). The district court granted summary judgment to Porter.

On appeal, Porter argued that no reasonable factfinder could conclude that two emails in which Genberg had raised his concerns contributed to Genberg’s termination from employment. The 10th Circuit applied ARB caselaw in analyzing the contributory factor causation question:

   The fourth element of the statutory claim is that the protected activity contributed to Mr. Genberg’s termination. Lockheed Martin Corp. v. Admin. Review Bd., U.S. Dep’t of Labor , 717 F.3d 1121, 1129 (10th Cir. 2013). This element is “broad and forgiving,” requiring the plaintiff to point to “any factor” that “tends to affect ‘ in any way ’ the outcome of the decision.” Id . at 1136 (emphasis in original) (quoting Klopfenstein v. PCC Flow Techs. , No. 04-149, 2006 WL 3246904, at *13 (Admin. Rev. Bd., U.S. Dep’t of Labor May 31, 2006)). The contributing factor need not be “‘significant, motivating, substantial, or predominant.’” Id . (internal quotation marks omitted) (quoting Klopfenstein , 2006 WL 3246904, at *13).

Slip op. at 15. The court noted temporal proximity between the first email and the decision to fire — and that it was not convinced that Porter’s alternative explanations for the firing justified summary judgment. Porter contended that the second email did not contribute the firing because of a legitimate intervening event: an investigator’s determination that Genberg had breached a fiduciary duty to Ceragenix. The court cited ARB “inextricably intertwined” authority in rejecting this contention:

   To rely on a legitimate intervening event, the adverse action cannot be inextricably intertwined with the protected activity; therefore, Mr. Porter needed to explain Mr. Genberg’s termination “without reference to [his] protected activity.” Palmer v. Canadian Nat’l Ry./Ill. Cent. R.R. , No. 16-035, 2016 WL 5868560, at *34 (Admin. Rev. Bd., U.S. Dep’t of Labor Sept. 30, 2016). Mr. Porter did not satisfy this burden. Ceragenix began to investigate Mr. Genberg only after he had written the two emails, and we have already held that a reasonable factfinder could regard the writing of both emails as protected activity.

   If we take away both emails, Ceragenix would never have had a reason to investigate Mr. Genberg. Therefore, a reasonable factfinder could conclude that Mr. Genberg’s protected activities on March 2 and 4 were inextricably intertwined with his termination. See id . at *34-35 (stating that if the protected activity had led the employer to investigate a possible rule violation and then fired the employee for violating the rule, “the protected activity . . . would be ‘inextricably intertwined’ with the adverse action”). And if the investigation was inextricably intertwined with protected activities, we could not regard the investigation as an “independent” cause for the termination. See id . Thus, Mr. Porter cannot avoid liability based on a legitimate intervening event.

Slip op. at 17-18.

SAME ACTION DEFENSE (I.E., CLEAR AND CONVINCING EVIDENCE); SUMMARY JUDGMENT INAPPROPRIATE WHERE REASONABLE FACTFINDER COULD GO EITHER WAY ON THE QUESTION

In Genberg v. Porter , 882 F.3d 1249 (10th Cir. Feb. 22, 2018) (No. 16-1368) (2018 U.S. App. LEXIS 4199; 2018 WL 1004603) (case below: Genberg v. Porter , No. 11-cv-02434 (D. Col. Aug. 11, 2016)), the Plaintiff–Appellant (Genberg), an executive with Ceragenix, was fired after raising concerns of suspected misconduct by Ceragenix’s board of directors. The instant action, which included a SOX retaliation claim, was filed against Ceragenix’s CEO (Porter). The district court granted summary judgment to Porter.

On appeal, Porter invoked the same-action defense, which allows a defendant to prevail by submitting clear and convincing evidence that the employee would have been fired even without the protected conduct. The court initially found that Porter forfeited this defense because he had not asserted it in either his Answer or in his summary-judgment briefs. The court, however, found that assuming the argument had been preserved, Porter was not entitled to summary judgment because a reasonable factfinder could have gone either way on the issue.

Later, the panel granted rehearing “to clarify that the prior opinion addressed only the award of summary judgment to the defendant. The Court did not address, one way or another, whether the defendant can present the same-action defense in the district court’s further proceedings.” Genberg v. Porter , No. 16-1368 (10th Cir. Apr. 19, 2018).

Digital Realty Trust, Inc. v. Somers , 583 U.S. __, 138 S. Ct. 767, 200 L. Ed. 2d 15 (U.S. Feb. 21, 2018) (No. 16-1276) (2018 U.S. LEXIS 1377; 2018 WL 987345) (Opinion)

Case below: Somers v. Digital Realty Trust Inc. , 850 F.3d 1045 (9th Cir. Mar. 8, 2017) (No. 15-17352) (2017 U.S. App. LEXIS 4079; 2017 WL 908245).

Casenote(s):

DODD-FRANK WHISTLEBLOWER PROVISION DOES NOT EXTEND TO AN INDIVIDUAL WHO HAS NOT REPORTED A VIOLATION OF THE SECURITIES LAWS TO THE SEC; §78u-6 OF THE DODD-FRANK ACT AND §1514A OF THE SARBANES-OXLEY ACT BOTH SHIELD WHISTLEBLOWERS FROM RETALIATION, BUT THEY DIFFER IN IMPORTANT RESPECTS

In Digital Realty Trust, Inc. v. Somers , 583 U.S. __, 138 S. Ct. 767, 200 L. Ed. 2d 15 (U.S. Feb. 21, 2018) (2018 U.S. LEXIS 1377; 2018 WL 987345), the U.S. Supreme Court found that the Dodd-Frank Act whistleblower provision does not extend to an individual who has not reported a violation of the securities laws to the Securities and Exchange Commission. The decision contains a discussion of important differences between the Dodd-Frank Act whistleblower provision administered by the SEC, and the Sarbanes-Oxley Act whistleblower provision administered by the U.S. Department of Labor. The following is an excerpt from the Supreme Court’s syllabus].

Endeavoring to root out corporate fraud, Congress passed the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley) and the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). Both Acts shield whistleblowers from retaliation, but they differ in important respects. Sarbanes-Oxley applies to all “employees” who report misconduct to the Securities and Exchange Commission (SEC or Commission), any other federal agency, Congress, or an internal supervisor. 18 U. S. C. §1514A(a)(1). Dodd-Frank defines a “whistleblower” as “any individual who provides . . . information relating to a violation of the securities laws to the Commission, in a manner established, by rule or regulation, by the Commission.” 15 U. S. C. §78u-6(a)(6). A whistleblower so defined is eligible for an award if original information provided to the SEC leads to a successful enforcement action. §78u-6(b)-(g). And he or she is protected from retaliation in three situations, see §78u-6(h)(1)(A)(i)-(iii), including for “making disclosures that are required or protected under” Sarbanes-Oxley or other specified laws, §78u-6(h)(1)(A)(iii). Sarbanes-Oxley’s anti-retaliation provision contains an administrative-exhaustion requirement and a 180-day administrative complaint-filing deadline, see 18 U. S. C. §1514A(b)(1)(A), (2)(D), whereas Dodd-Frank permits a whistleblower to sue an employer directly in federal district court, with a default six-year limitation period, see §78u-6(h)(1)(B)(i), (iii)(I)(aa).

   The SEC’s regulations implementing the Dodd-Frank provision contain two discrete whistleblower definitions. For purposes of the award program, Rule 21F-2 requires a whistleblower to “provide the Commission with information” relating to possible securities-law violations. 17 CFR §240.21F-2(a)(1). For purposes of the anti-retaliation protections, however, the Rule does not require SEC reporting. See §240.21F-2(b)(1)(i)-(ii).

   Respondent Paul Somers alleges that petitioner Digital Realty Trust, Inc. (Digital Realty) terminated his employment shortly after he reported to senior management suspected securities-law violations by the company. Somers filed suit, alleging, inter alia , a claim of whistleblower retaliation under Dodd-Frank. Digital Realty moved to dismiss that claim on the ground that Somers was not a whistle-blower under §78u-6(h) because he did not alert the SEC prior to his termination. The District Court denied the motion, and the Ninth Circuit affirmed. The Court of Appeals concluded that §78u-6(h) does not necessitate recourse to the SEC prior to gaining “whistleblower” status, and it accorded deference to the SEC’s regulation under Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc. , 467 U. S. 837.

Held : Dodd-Frank’s anti-retaliation provision does not extend to an individual, like Somers, who has not reported a violation of the securities laws to the SEC. Pp. 9-19.

* * *

Syllabus, slip op. at 1-2

Hendrick v. ITT Engineered Valves, LLC , No. 16-cv-204 (N.D. Miss. Feb. 12, 2018) (2018 U.S. Dist. LEXIS 22232; 2018 WL 837600) (Memorandum Opinion [denying Defendant’s motion for summary judgment])

Casenote(s):

Defendant’s motion for summary judgment was denied where, under the facts pleaded, a reasonable jury could find that Plaintiff engaged in protected activity, that Defendants knew about his activity, that he suffered an adverse employment action, and that his termination was caused by his protected activity. In addition, Defendant had not presented clear and convincing evidence that Plaintiff’s termination would have occurred in the absence of his protected activity.

Daly v. Citigroup Inc. , No. 16-cv-9183 (S.D. N.Y. Feb. 6, 2018) (2018 U.S. Dist. LEXIS 19413; 2018 WL 741414) (Opinion and Order)

Casenote(s):

ARBITRATION; SOX § 1514A ANTI-RETALIATION CLAIM IS NOT SUBJECT TO BINDING ARBITRATION AGREEMENT, WHEREAS DODD-FRANK § 78u-6 CLAIM IS

In Daly v. Citigroup Inc. , No. 16-cv-9183 (S.D. N.Y. Feb. 6, 2018) (2018 U.S. Dist. LEXIS 19413; 2018 WL 741414), the Plaintiff had entered into arbitration agreements with the Defendants in which she agreed to mandatory arbitration of employment-related disputes. When she brought an action in Federal district court alleging discrimination on the basis of gender and retaliation for complaints about that discrimination and unrelated securities-law violations, the Defendants filed a motion to compel arbitration. The District Court found that the Plaintiff’s Sarbanes-Oxley whistleblower anti-retaliation claim was exempted from arbitration because “[w]hen Congress enacted Dodd-Frank, it amended Sarbanes-Oxley’s whistleblower anti-retaliation provision to make it non-arbitrable. See 18 U.S.C. § 1514A(e)(2) (‘No predispute arbitration agreement shall be valid or enforceable, if the agreement requires arbitration of a dispute arising under this section.’).” Slip op. at 7. The court found, however, that the Plaintiff’s Dodd-Frank’s whistleblower anti-retaliation claim under 15 U.S.C. § 78u-6(h)(1) was not exempted from arbitration. The district court also found that the Title VII violation was subject to arbitration.

MOTION TO DISMISS FOR FAILURE TO EXHAUST ADMINISTRATIVE REMEDIES GRANTED WHERE THE ADMINISTRATIVE COMPLAINT WAS NOT TIMELY FILED

TIMELINESS OF COMPLAINT; DEFENDANTS’ FILING OF NEGATIVE U5 FORM IS A DISCRETE ACT THAT DOES NOT FIT CONTINUING VIOLATION DOCTRINE

In Daly v. Citigroup Inc. , No. 16-cv-9183 (S.D. N.Y. Feb. 6, 2018) (2018 U.S. Dist. LEXIS 19413; 2018 WL 741414), the Defendants sought dismissal of the Plaintiff’s Sarbanes-Oxley claim for lack of jurisdiction due to the Plaintiff’s failure to exhaust her administrative claim. In the instant case, the parties agreed that more than 180 days had elapsed since the Plaintiff filed her administrative complaint with OSHA. Rather, the problem with the Plaintiff’s claim was that “it was not timely filed and thus was not properly exhausted, since Plaintiff was fired in December 2014, but did not file her complaint for retaliation for two years, well after the 180-day filing window that followed the alleged retaliation.” Slip op. at 11. The court was not convinced by the Plaintiff’s response that she is suffering a continuing violation because the Defendants’ filed a negative U5—which is accessible to potential employers via the FINRA database. The court found that the filing of a U5 form is a discrete act that does not fit the continuing violation doctrine. The court stated:

   In sum, Plaintiff’s Sarbanes-Oxley claim was not properly exhausted under Section 1514A(b)(2)(D). Accordingly, if the exhaustion requirement is jurisdictional, Plaintiff’s Sarbanes-Oxley claim fails for lack of subject-matter jurisdiction; if proper exhaustion is simply an element of the claim, Plaintiff fails to state a claim. Either way, Defendants’ motion to dismiss must be granted.

Id . at 12.

Verfuerth v. Orion Energy Systems, Inc. , 879 F.3d 789 (7th Cir. 2018) (Opinion)

Case below E.D. Wisc. No. 14-C-352.

Casenote(s):

PROTECTED ACTIVITY; SEVENTH CIRCUIT REQUIRES INFORMATION PROVIDED TO RELATE TO A FRAUD WITHIN THE MEANING OF THE SARBANES-OXLEY ACT

In Verfuerth v. Orion Energy Systems, Inc. , 879 F.3d 789 (7th Cir. 2018) (case below E.D. Wisc. No. 14-C-352), the Seventh Circuit affirmed the District Court’s grant of summary judgment for Respondent, finding that Complainant had failed to establish protected activity under the Sarbanes-Oxley Act. Complainant, while CEO of Orion Energy Systems, Inc., had voiced concerns about the following matters:

(1) overbilling by outside counsel; (2) a potential patent infringement by one of Orion’s products; (3) potential conflicts of interests involving a member of the board and a company executive; (4) miscellaneous violations of internal company policy, such as consumption of alcohol at an “informal [board] meeting”; (5) the board’s handling of a defamation suit brought by a former employee who had been accused of stock manipulation; and (6) the fact that the chairman of Orion’s audit committee allowed his CPA license to expire.

Id . at 791. Complainant “advised the board to disclose these issues to Orion’s shareholders.” The board declined to disclose these matters and Complainant “never mentioned these issues in any of the quarterly or annual reports he filed on Orion’s behalf with the Securities and Exchange Commission.” Id . Complainant raised the same concerns with the board several months later, and this subsequent communication was claimed as the basis of his SOX complaint. Id . at 792.

The Court interpreted the Sarbanes-Oxley Act to require a fraud within the meaning of the statute and found that Complainant’s concerns “are not ‘fraud’ within the meaning of the statute.” Id . at 793. The Court rejected Complainant’s characterization of his communications as “(implicitly) telling board members that their failure to disclose his grievances to Orion’s shareholders amounted to securities fraud.” Id . at 794. The Court found, instead, that Complainant had simply “advise[d] board members to disclose a fact that the board already” knew, and therefore had not ‘provided information’ as defined under the Sarbanes-Oxley Act; and “[a]t most, . . . [Complainant had] provid[ed] an opinion” about fraud. Id .

PROTECTED ACTIVITY; SEVENTH CIRCUIT FINDS THAT ADVISING BOARD MEMBERS “TO DISCLOSE A FACT THAT THE BOARD ALREADY” KNEW DID NOT QUALIFY AS ‘PROVIDING INFORMATION’ UNDER THE SOX WHISTLEBLOWER PROVISIONS

In Verfuerth v. Orion Energy Systems, Inc. , 879 F.3d 789 (7th Cir. 2018) (case below E.D. Wisc. No. 14-C-352), the Seventh Circuit affirmed the District Court’s grant of summary judgment for Respondent, finding that Complainant had failed to establish protected activity under the Sarbanes-Oxley Act. Complainant, while CEO of Orion Energy Systems, Inc., had voiced concerns about the following matters:

(1) overbilling by outside counsel; (2) a potential patent infringement by one of Orion’s products; (3) potential conflicts of interests involving a member of the board and a company executive; (4) miscellaneous violations of internal company policy, such as consumption of alcohol at an “informal [board] meeting”; (5) the board’s handling of a defamation suit brought by a former employee who had been accused of stock manipulation; and (6) the fact that the chairman of Orion’s audit committee allowed his CPA license to expire.

Id . at 791. Complainant “advised the board to disclose these issues to Orion’s shareholders.” The board declined to disclose these matters and Complainant “never mentioned these issues in any of the quarterly or annual reports he filed on Orion’s behalf with the Securities and Exchange Commission.” Id . Complainant raised the same concerns with the board several months later, and this subsequent communication was claimed as the basis of his SOX complaint. Id . at 792.

The Court found that Complainant had simply “advise[d] board members to disclose a fact that the board already” knew, and therefore had not ‘provided information’ as defined under the Sarbanes-Oxley Act. Id . at 794.

 

Surface Transportation Assistance Act

Duke v. Xylem Tree Experts, Inc. , No. 18-cv-290 (E.D. Va. Dec. 27, 2018) (2018 U.S. Dist. LEXIS 217063; 2018 WL 6809184) (Opinion)

Casenote(s):

[STAA Digest II Y]
DISTRICT COURT JURISDICTION; COMPLAINT MUST PLEAD FACTS SUFFICIENT TO SHOW THAT A DOL STAA COMPLAINT WAS FILED AND THE SECRETARY OF LABOR FAILED TO ISSUE A FINAL DECISION WITHIN 210 DAYS AFTER THE FILING OF THAT COMPLAINT

In Duke v. Xylem Tree Experts, Inc. , No. 18-cv-290 (E.D. Va. Dec. 27, 2018) (2018 U.S. Dist. LEXIS 217063; 2018 WL 6809184), the district court had directed the Plaintiff to amend his complaint to allege sufficient facts to establish subject matter jurisdiction under the Surface Transportation Assistance Act ("STAA") claim—specifically whether the Plaintiff had exhausted administrative remedies as required by § 31105(b). The Plaintiff was able to show that he complained to the FMCSA, but he did not establish that the Secretary of Labor “fail[ed] to issue a final decision within 210 days after the filing of the complaint. ” 49 U.S.C. § 31105(c). The court noted that Congress granted district courts subject-matter jurisdiction over 49 U.S.C. § 31105 complaints only where the Secretary of Labor fails to issue a final decision within 210 days after filing the complaint. The court thus found that it lacked subject matter jurisdiction to hear the claim under the STAA.

Butensky v. Federal Express Corp. , No. 16-cv-1718 (D. Nev. Sept. 7, 2018) (2018 U.S. Dist. LEXIS 152775; 2018 WL 4283057) (Order)

Casenote(s):

Summary judgment on STAA cause of action denied where Plaintiff had established a prima facie case for retaliation and had raised a genuine dispute of material fact regarding the legitimacy of Defendant’s reason for the adverse employment action.

Evans v. USF Reddaway, Inc. , 730 Fed. Appx. 566 (9th Cir. July 16, 2018) (unpublished) (No. 17-35603) (2018 U.S. App. LEXIS 19535; 2018 WL 3423923) (Memorandum)

Case below D. Idaho 1:15-cv-00499-EJL-REB

Casenote(s):

[STAA Digest V B 1 c iii]
PROTECTED ACTIVITY; GENERAL WORKPLACE SAFETY COMPLAINTS ARE NOT PROTECTED ACTIVITY UNDER THE STAA

In Evans v. USF Reddaway, Inc. , 730 Fed. Appx. 566 (9th Cir. July 16, 2018) (unpublished) (No. 17-35603) (2018 U.S. App. LEXIS 19535; 2018 WL 3423923), the court stated: “Evans’ complaints—dirt, dust, gravel, ruts, poor lighting, and lack of fencing/security at the two Reddaway terminals—relate to general workplace safety conditions at the lots, rather than commercial motor vehicle safety or security. Thus, his complaints are not reasonably related to a violation of a commercial motor vehicle safety regulation and are therefore not protected activity under the STAA.”

Le Roux v. Central Oregon Truck Co., Inc. , No. 17-cv-533 (D. Or. June 28, 2018) (2018 U.S. Dist. LEXIS 108228; 2018 WL 3186944) (Opinion and Order)

Casenote(s):

Summary judgment denied where reasonable jury could find in Plaintiff’s favor.

Johnson v. Star Freight, LLC , No. 18-cv-575 (N.D. Ga. Apr. 26, 2018) (2018 U.S. Dist. LEXIS 98398) (Final Report and Recommendations), adopted Johnson v. Star Freight, LLC , No. 18-cv-575 (N.D. Ga. June 12, 2018) (2018 U.S. Dist. LEXIS 98129; 2018 WL 2931963) (Opinion and Order [adopting Magistrate’s Final Report and Recommendations)

Casenote(s):

[STAA Digest II Y]
DISTRICT COURT JURISDICTION; COMPLAINT MUST PLEAD FACTS SUFFICIENT TO SHOW THAT A DOL STAA COMPLAINT WAS FILED AND THE SECRETARY OF LABOR FAILED TO ISSUE A FINAL DECISION WITHIN 210 DAYS AFTER THE FILING OF THAT COMPLAINT

In Johnson v. Star Freight, LLC , No. 18-cv-575 (N.D. Ga. June 12, 2018) (2018 U.S. Dist. LEXIS 98129; 2018 WL 2931963) , adopting Johnson v. Star Freight, LLC , No. 18-cv-575 (N.D. Ga. Apr. 26, 2018) (2018 U.S. Dist. LEXIS 98398), the court found that the Plaintiff was required to pursue his STAA, 49 U.S.C. § 31105 claim administratively before filing suit in district court, and therefore it lacked subject matter jurisdiction to adjudicate the Plaintiff’s STAA claim.

Hormoz v. 1-800-Pack-Rat, LLC , 17 CV 2440 (N.D. Ill. Jan. 24, 2018) (2018 U.S. Dist. LEXIS 11268; 2018 WL 558513) (Memorandum Opinion and Order)

Casenote(s):

[STAA Whistleblower Digest XIII C]
MOTION TO TRANSFER STAA CLAIM BASED ON VENUE CLAUSE IN ADR POLICY DENIED WHERE, INTER ALIA, THE STAA ENTITLES A PLAINTIFF TO SEEK RELIEF IN DISTRICT COURT, AND WHERE DEFENDANT WAIVED ENFORCEMENT OF ADR POLICY WHEN IT DID NOT TIMELY RAISE AN INTENTION TO DO SO

In Hormoz v. 1-800-Pack-Rat, LLC , 17 CV 2440 (N.D. Ill. Jan. 24, 2018) (2018 U.S. Dist. LEXIS 11268; 2018 WL 558513), the court denied the defendant’s motion to transfer the case to the District of Maryland based on a forum selection clause in the defendant’s ADR Policy. The court denied the motion to transfer based on several grounds, one of which was that the plaintiff was not bound by the ADR Policy. The court found that because the STAA explicitly allows a plaintiff to pursue his claims in district court when the DOL failed to issue a final order within 210 days of plaintiff filing his administrative complaint, forcing him to arbitrate is prohibited by the STAA. The court also found that the defendant waived its right to compel arbitration pursuant to the ADR Policy where it was past the policy’s one-year window of time for enforcing ADR, and where the defendant had actively litigated the case before the district court before mentioning the ADR policy or any intention to arbitrate.