“Affordable Care Act”

Short-Irons v. Catham Acres Healthcare Group, Inc., No. 18-cv-5136 (E.D. Pa. Aug. 20, 2019) (2019 U.S. Dist. LEXIS 140672; 2019 WL 3936356) (Memorandum)

Casenote(s):

EXHAUSTION OF ADMINISTRATIVE REMEDIES; FAIR LABOR STANDARDS ACT § 215(a)(3) ANTI-RETALIATION CLAIM DOES NOT IMPOSE AN EXHAUSTION OF ADMINISTRATIVE REMEDIES REQUIREMENT; DISTRICT COURT DISAGREES WITH UNPUBLISHED SIXTH CIRCUIT DECISION IN WILSON THAT AFFORDABLE CARE ACT, FLSA WHISTLEBLOWER PROVISION AT § 218c REQUIRES EXHAUSATION, FINDING THAT ACA PROVISION IS PERMISSIVE

In Short-Irons v. Catham Acres Healthcare Group, Inc., No. 18-cv-5136 (E.D. Pa. Aug. 20, 2019) (2019 U.S. Dist. LEXIS 140672; 2019 WL 3936356), Plaintiff brought a retaliation suit under Fair Labor Standard Act claiming that she was fired for reporting to her supervisor that employees were not being paid for time working during meal breaks.

Defendant moved to dismiss on the ground of failure to exhaust administrative remedies. The court noted that the FLSA anti-retaliation provision is found in 29 U.S.C. § 215(a)(3) and the FLSA cause of action for enforcement of § 215(a)(3) is contained in 29 U.S.C. § 216(b). The court found that “[n]either § 215(a)(3) nor§ 216(b) imposes an exhaustion requirement (or even mentions administrative remedies). Slip op. at 4. The court stated:

   Thus, Catham Acres is incorrect in arguing that exhaustion is required. Catham Acres relies on the text of a separate provision of the FLSA, the whistle blower protection codified in 29 U.S.C. § 218c. Catham Acres also cites to an unpublished, non-precedential Third Circuit Court of Appeals decision holding that the whistleblower provision requires plaintiffs to exhaust administrative remedies. See Wilson v. EI DuPont de Nemours & Co, 710 F. App’x 57, 58 (3d Cir. 2018); see also Richter v. Design at Work, LLC, No. 14-650 2014 WL 3014972, at *4 (E.D.N.Y. July 3, 2014). Even crediting Wilson and interpreting § 218c to include an exhaustion requirement (an assumption that is not necessarily supported by a plain-text reading of § 218(c)), Wilson is inapposite, and Catham Acres is otherwise wrong because Ms. Short-Irons is suing under a provision of the FLSA other than the whistleblower provision. Because Ms. Short-Irons is suing under a provision of the FLSA that does not include an exhaustion requirement, the Court rejects Catham’s exhaustion argument.

Id. at 5-6 (emphasis as in original) (footnote omitted). In a footnote the court explained:

   The language of § 218c regarding remedies appears to be permissive rather than mandatory:

An employee who believes that he or she has been discharged or otherwise discriminated against by any employer in violation of this section may seek relief in accordance with the procedures, notifications, burdens of proof, remedies, and statutes of limitation set forth in section 2087(b) of Title 15.

218c(b)(1) (emphasis added).

   The statute that § 218c incorporates by reference also uses permissive language, this time in setting forth administrative remedies:

A person who believes that he or she has been discharged or otherwise discriminated against by any person in violation of subsection (a) may, not later than 180 days after the date on which such violation occurs, file (or have any person file on his or her behalf) a complaint with the Secretary of Labor alleging such discharge or discrimination and identifying the person responsible for such act.

15 U.S.C. § 2087(b)(l) (emphasis added). See also Parker v. 4247 FX, Inc., No. 16-2710, 2017 WL 2002794, at *10 n.8 (E.D. Pa. May 12, 2017), appeal dismissed, No. 17-2601, 2017 WL 7000263 (3d Cir. Oct. 16, 2017) (commenting that “neither [§ 218c(b)(l) nor § 2087(b)(l)] requires an employee to file a complaint of discrimination with the Secretary of Labor prior to commencing suit in federal court. Instead, both statutory provisions provide that an employee ‘may’ do so”).

Id. at 5, n. 3.

 

Aviation Investment and Reform Act for the 21st Century

Schellhaas v. Southwest Airlines Co., No. 18-7979 (E.D. La. July 19, 2019) (2019 U.S. Dist. LEXIS 119428; 2019 WL 3238565)

Casenote(s):

AIR21 retaliation complaint dismissed without prejudice by district court for lack of subject matter jurisdiction where Plaintiff did not file an OSHA complaint; AIR21 does not imply or create a private right of action

Hukman v. Southwest Airlines Co., No. 18-cv-1204 (S.D. Cal. May 28, 2019) (2019 U.S. Dist. LEXIS 90001; 2019 WL 2289390) (Order Granting Nonparty American Airlines, Inc.’s Motion to Quash Subpoena Duces Tecum for the Production of Documents [ECF No. 31)

Related to ALJ No. 2015-AIR-00003

Casenote(s):

FEDERAL COURT SUBPOENA AGAINST NON-PARTY FOR PERSONNEL RECORDS OF CERTAIN OF ITS EMPLOYEES QUASHED WHERE, INTER ALIA, INFORMATION SOUGHT WAS NOT SHOWN TO HAVE A BEARING ON PLAINTIFF’S NATIONAL ORIGIN SUIT AND WHERE THE PRIVACY RIGHTS OF THE EMPLOYEES OUTWEIGHED ANY NEED FOR THE INFORMATION IN THE INSTANT LITIGATION; COURT TOOK INTO CONSIDERATION NON-PARTY’S ARGUMENT THAT THE INFORMATION WAS LIKELY FOR USE IN OTHER LITIGATION, SUCH AS PLAINTIFF’S AIR21 ADMINISTRATIVE ACTION PENDING BEFORE THE ADMINISTRATIVE REVIEW BOARD

In Hukman v. Southwest Airlines Co., No. 18-cv-1204 (S.D. Cal. May 28, 2019) (2019 U.S. Dist. LEXIS 90001; 2019 WL 2289390), non-party American Airlines, Inc. (American), filed a motion to quash a subpoena duces tecum issued by Plaintiff for the production of documents on a broad range of personal and confidential information of American’s employees. The instant case related to Plaintiff’s national origin discrimination suit against Southwest Airlines Co. The court granted American’s motion in part because Plaintiff failed to oppose the motion, but also because the subpoena was overbroad on its face as it sought information not relevant to the claims and was not narrowly tailored to the needs of the instant litigation.

The court found that the privacy rights of American’s employees “in their employment applications, leaves of absence, performance reviews, complaints, workplace injuries, and the like greatly outweigh any need for [Plaintiff] to have these documents, particularly given that this information has no bearing on [Plaintiff’s] allegations against Southwest in this case.” Slip op. at 5-6.

American also argued that Plaintiff “likely intends to use the information sought in the subpoena in her separate lawsuit or administrative charge against American, currently pending in the United States District Court, Eastern District of Pennsylvania and the United States Department of Labor Administrative Review Board, respectively.” Id. at 6. The court stated: “A party is not permitted to exploit the liberal federal discovery rules to obtain information for purposes unrelated to the case at hand, including for use in other lawsuits. 6 James Wm. Moore et al., Moore’s Federal Practice § 26.101[1][b] (3d ed. 2017). Therefore, [Plaintiff] cannot use a subpoena in this case to obtain information for use in her separate actions against American.” Id.

[Editor’s note: The ALJ’s decision in the referenced administrative action was Hukman v. U.S. Airways, Inc., ALJ No. 2015-AIR-3; as noted by the court, the ALJ’s decision was pending before the ARB at the time of this court order granting American’s motion to quash.]

Transp. Workers Union, Local 591 v. Mawhinney, No. 18-cv-1620 (S.D. Cal. May 31, 2019) (2019 U.S. Dist. LEXIS 91756) (Order Granting Motion for Voluntary Dismissal)

Case below ARB No. 14-060, ALJ No. 2012-AIR-17

Casenote(s):

In Transp. Workers Union, Local 591 v. Mawhinney, No. 18-cv-1620 (S.D. Cal. May 31, 2019) (2019 U.S. Dist. LEXIS 91756), Plaintiff filed a federal district court action to confirm an arbitration award against Defendant. Plaintiff later filed a motion for voluntary dismissal based on mootness because of the Ninth Circuit’s ruling in American Airlines, Inc. v. Mawhinney, 904 F.3d 1114, 1125 (9th Cir. 2018), cert. denied Mawhinney v. American Airlines, Inc., No. 18-1032 2019 WL 485453 (Mem) (U.S. Apr. 1, 2019). The Ninth Circuit had reversed the district court’s order compelling arbitration between Mawhinney and the Union, rendering the arbitration award and the Union’s petition to confirm it moot. The court granted the motion, having not been persuaded by Defendant’s opposition to voluntary dismissal. The court found that no legal prejudice to Defendant would flow from the voluntary dismissal.

Am. Airlines, Inc. v. Mawhinney, No. 18-cv-00731 (S.D. Cal. Apr. 29, 2019) (2019 U.S. Dist. LEXIS 72990) (Order Granting Motion for Leave to Respond to Notice of Supplemental Authorities and Granting Petition to Confirm Arbitration Award)

Case below ARB No. 14-060, ALJ No. 2012-AIR-17

Casenote(s):

ARBITRATION; WHERE RESPONDENT (THE “WHISTLEBLOWER”) CHOSE NOT TO ENGAGE IN AN ARBITRATION OF HIS AIR21 COMPLAINT AND INSTEAD TO RELY ON A CHALLENGE TO THE UNDERLYING MOTION TO COMPEL SUCH ARBITRATION, IT WAS TOO LATE TO RAISE OBJECTIONS TO THE ARBITRATION AWARD IN RESPONSE TO THE PETITIONER’S (THE EMPLOYER’S) PETITION TO CONFIRM THE ARBITRATION AWARD

In Am. Airlines, Inc. v. Mawhinney, No. 18-cv-00731 (S.D. Cal. Apr. 29, 2019) (2019 U.S. Dist. LEXIS 72990) (case below ARB No. 14-060, ALJ No. 2012-AIR-17), American Airlines (“American”) petitioned the court to confirm an arbitration award.

Background

The case has a long procedural history. In brief, Mawhinney was fired in 2001, and he initiated actions, including a DOL administrative action, alleging that the firing was in retaliation for whistleblowing. The parties reached a settlement, which included a provision that all future employment disputes be resolved exclusively through private arbitration. Mawhinney continued to work for American until 2011, when he his employment was terminated. Mawhinney initiated two separate proceedings, requesting private arbitration pursuant to the 2002 settlement agreement, and filing an AIR21 administrative complaint with USDOL.

American prevailed on the private arbitration; the district court confirmed the arbitration award and the Ninth Circuit affirmed. In the meantime, the district court had denied American’s motion to enjoin the administrative action, or alternatively to compel the parties to arbitrate the claims in the administrative action. American filed a new civil action and moved to compel arbitration in the administrative action. The motion was granted by the district court. The Ninth Circuit denied Mawhinney’s motions to stay the arbitration, which went forward while the appeal was pending. Mawhinney’s only participation was to move to stay notwithstanding the Ninth Circuit’s denial of a stay. The arbitrator granted American’s motion for summary disposition on the ground that Mawhinney’s claims of employment retaliation and wrongful termination were already decided in the first arbitration and therefore barred under the doctrines of res judicata and collateral estoppel. After Mawhinney did not timely move to vacate, amend or correct the arbitration award, American filed the instant petition with the district court to grant the second arbitration award.

While the petition was pending, the Ninth Circuit held that the claims between Mawhinney and American were properly subject to arbitration, affirming the district court. See American Airlines, Inc. v. Mawhinney, 904 F.3d 1114 (9th Cir. 2018), pet. for reh’g den. American Airlines, Inc. v. Mawhinney, No. 16-55006 (9th Cir. Nov. 5, 2018), and cert. den. Mawhinney v. American Airlines, Inc., No. 18-1032 2019 WL 485453 (Mem) (U.S. Apr. 1, 2019).

Mawhinney’s opposition

Mawhinney asked the court to deny American’s petition and order that his administrative action be allowed to proceed — urging the court “to reject the Ninth Circuit’s ‘fallacious’ and ‘erroneous’ conclusion, and allow the action to be litigated before an Administrative Law Judge.” Slip op. at 5 (record citation omitted). The court explained how that argument “reflects a fundamental misunderstanding of the relationship between trial and appellate courts.” Id. “As a lower trial court, this Court defers to the Ninth Circuit and the U.S. Supreme Court, and is bound by those courts’ decisions. Here, Mawhinney has lost his appeal before the Ninth Circuit, and the Supreme Court denied certiorari. The underlying decision to compel arbitration is thus no longer disputable.” Id.

The court noted that Mawhinney had missed the three month window for challenging the arbitration award and ruled that he could not now do so through his opposition to American’s petition. Although Mawhinney was proceeding pro se, he was aware of the procedure, having properly moved to vacate the first arbitration. The court found that it had been a tactical decision not to engage in the second arbitration and instead rely on a challenge to the underlying motion to compel the arbitration. “To the extent Mawhinney now challenges the arbitrator’s ruling that res judicata and collateral estoppel apply to the administrative action, the arguments are untimely and unavailing.” Id. at 6 (record citation omitted). The court thus granted American’s petition to confirm arbitration award.

Consumer Financial Protection Act ("Dodd-Frank" 12 U.S.C. 5567)

Neal v. ASTA Funding, Inc., No. 13-cv-03438 (D. N.J. Feb. 8, 2019) (2019 U.S. Dist. LEXIS 21861; 2019 WL 522095) (Opinion)

Case below ALJ No. 2013-SOX-00026

Casenote(s):

See casenote below under Sarbanes-Oxley Act decisions. The Lawson ruling impliedly also applied to the "Dodd-Frank" 12 U.S.C. § 5567 count.

Hall v. Bank of Am. Corp., No. 18-cv-108 (W.D. N.C. Jan. 16, 2019) (2019 U.S. Dist. LEXIS 7774; 2019 WL 215617) (Order), affirming and adopting Hall v. Bank of Am. Corp., No. 18-cv-108 (W.D. N.C. July 16, 2018) (2018 U.S. Dist. LEXIS 219496) (Memorandum and Recommendation and Order)

Appeal filed: 4th Cir. No. 19-1088

Casenote(s):

FEDERAL DISTRICT COURT CONSUMER FINANCIAL PROTECTION ACT RETALIATION COUNT DISMISSED WHERE PLAINTIFF CONCEDED THAT HE HAD NOT TIMELY FILED A CFPA CLAIM WITH THE SECRETARY OF LABOR

In Hall v. Bank of Am. Corp., No. 18-cv-108 (W.D. N.C. Jan. 16, 2019) (2019 U.S. Dist. LEXIS 7774; 2019 WL 215617), the Plaintiff had filed a 16 count claim against the Defendants. Count 3 was for an alleged violation of the Consumer Financial Protection Act (“CFPA”), 12 U.S.C. § § 5567 et seq. The court found that the CFPA claim should be dismissed because the Plaintiff failed to exhaust his administrative remedies. Under the CFPA, an employee must file a complaint with the Secretary of Labor within 180 days of the alleged retaliatory act. See 12 U.S.C. § 5567(c)(1)(A). Here, the Plaintiff had conceded that he failed to file the required administrative complaint within the time prescribed.

Consumer Product Safety Improvement Act

Lenzi v. Systemax, Inc., No. 18-979 (2d Cir. Dec. 6, 2019) (2019 U.S. App. LEXIS 36218; 2019 WL 6646630)

Casenote(s):

CPSIA WHISTLEBOWER FRAMEWORK; SECOND CIRCUIT FINDS THAT CPSIA’S FRAMEWORK IS THE SAME AS THAT APPLIED TO SOX RETALIATION CASES

EMPLOYER KNOWLEDGE OF PROTECTED ACTIVITY; COURT AFFIRMED DISTRICT COURT’S GRANT OF SUMMARY JUDGMENT WHERE, UNDER THE FACTS OF THE CASE, PLAINTIFF DID NOT SHOW THAT HER COMMUNICATIONS WITH DEFENDANT COMPANY RAISED A CONCERN THAT THE COMPANY WAS VIOLATING CPSIA OR A RELATED LAW OR REGULATION

In Lenzi v. Systemax, Inc., No. 18-979 (2d Cir. Dec. 6, 2019) (2019 U.S. App. LEXIS 36218; 2019 WL 6646630), the Second Circuit reviewed the district court’s grant of summary judgment for Defendants-Appellees dismissing Plaintiff-Appellant’s claims under several laws, one of which was the whistleblower protections of the Consumer Product Safety Improvement Act of 2008, 15 U.S.C. § 2087 (CPSIA). Although the court vacated and remanded on Title VII claims, it affirmed the district court’s dismissal of the CPSIA claim. In reviewing the CPSIA claim, the court stated that this was the first occasion for it to determine what framework applies, and that it was adopting the framework applicable to SOX retaliation claims, 18 U.S.C. § 1514A(a). The court stated that a crucial requirement of the framework is that the whistleblower “reasonably believes” there is a violation. The court stated:

   To meet the “reasonable belief” standard, “a plaintiff must show not only [1] that he [or she] believed that the conduct constituted a violation, but also [2] that a reasonable person in his [or her] position would have believed that the conduct constituted a violation.” Nielsen v. AECOM Tech. Corp., 762 F.3d 214, 221 5 (2d Cir. 2014) (internal quotation marks omitted). In other words, the term “reasonable belief contains both subjective and objective components.” Id. “The objective prong of the reasonable belief test focuses on the basis of knowledge available to a reasonable person in the circumstances with the employee’s training and experience.” Id. (internal quotation marks omitted).

Plaintiff’s asserted protected activity related to her raising a concern about timely filing a compliance officer position — the failure to do so placing the company at risk of violations. In this respect, Plaintiff relied on emails related to compliance officer recruitment. The court assumed arguendo that Plaintiff engaged in protected activity based on a reasonable belief, but found that the claim nevertheless failed because she had not shown that Systemax knew about that protected activity. Reviewing the emails in question, the court found it clear that Plaintiff raised concerns about Systemax’s liability exposure and related insurance coverage implications, but that she had not raised concerns that Systemax was violating the CPSIA or related law or regulations.

Energy Reorganization Act

Franchini v. USDOL, No. 18-009 (7th Cir. Sept. 17, 2019) (Order [dismissing petition for review])

Case below: ARB No. 18-009, ALJ No. 2009-ERA-00014

Casenote(s):

Petition not timely filed.

Wilson v. Entergy Nuclear Operations, Inc., 17-cv-10877 (D. Mass. Sept. 16, 2019) (2019 U.S. Dist. LEXIS 157343; 2019 WL 4417771) (Memorandum and Order on Defendant’s Motion for Summary Judgment)

Casenote(s):

The court denied Defendant’s motion for summary judgment on Plaintiff’s ERA whistleblower complaint on the question of causation, finding that there were genuine issues of material fact concerning whether Plaintiff’s protected activity was a contributing factor to his termination from employment.

Kosack v. Entergy Enters., No. 14-cv-9605 (S.D. N.Y. Jan. 25, 2019) (2019 U.S. Dist. LEXIS 12483; 2019 WL 330870) (Opinion and Order)

Case below: ALJ No. 2017-ERA-00011

Casenote(s):

TIMELINESS OF ERA COMPLAINT; LIMITATIONS PERIOD BEGINS WHEN ALLEGED RETALIATORY ACT IS COMMUNICATED TO THE EMPLOYEE

In Kosack v. Entergy Enters., No. 14-cv-9605 (S.D. N.Y. Jan. 25, 2019) (2019 U.S. Dist. LEXIS 12483; 2019 WL 330870), the court dismissed the Plaintiff’s ERA whistleblower claim as untimely. The court noted that the Energy Reorganization Act, 42 U.S.C. § 5851(b)(1) provides that a complaint alleging retaliation is to be filed within 180 days after the alleged violation. The limitations period begins when the alleged "retaliatory act" is communicated to the employee. See 29 C.F.R. § 24.103. Here, the Plaintiff’s claim for retaliation under the ERA when he worked as a receipt inspector was untimely. The alleged retaliatory act was the Plaintiff’s termination, which occurred on April 1, 2016. The Defendant first informed the Plaintiff on March 7, 2016, and again on March 23, 2016. The court found that under the 180-day rule, the Plaintiff would have had to file a complaint with the OSHA by September 28, 2016, but he did not file his complaint until October 4, 2016.

Fair Labor Standards Act

Short-Irons v. Catham Acres Healthcare Group, Inc., No. 18-cv-5136 (E.D. Pa. Aug. 20, 2019) (2019 U.S. Dist. LEXIS 140672; 2019 WL 3936356) (Memorandum)

Casenote(s):

EXHAUSTION OF ADMINISTRATIVE REMEDIES; FAIR LABOR STANDARDS ACT § 215(a)(3) ANTI-RETALIATION CLAIM DOES NOT IMPOSE AN EXHAUSTION OF ADMINISTRATIVE REMEDIES REQUIREMENT; DISTRICT COURT DISAGREES WITH UNPUBLISHED SIXTH CIRCUIT DECISION IN WILSON THAT AFFORDABLE CARE ACT, FLSA WHISTLEBLOWER PROVISION AT § 218c REQUIRES EXHAUSATION, FINDING THAT ACA PROVISION IS PERMISSIVE

In Short-Irons v. Catham Acres Healthcare Group, Inc., No. 18-cv-5136 (E.D. Pa. Aug. 20, 2019) (2019 U.S. Dist. LEXIS 140672; 2019 WL 3936356), Plaintiff brought a retaliation suit under Fair Labor Standard Act claiming that she was fired for reporting to her supervisor that employees were not being paid for time working during meal breaks.

Defendant moved to dismiss on the ground of failure to exhaust administrative remedies. The court noted that the FLSA anti-retaliation provision is found in 29 U.S.C. § 215(a)(3) and the FLSA cause of action for enforcement of § 215(a)(3) is contained in 29 U.S.C. § 216(b). The court found that “[n]either § 215(a)(3) nor§ 216(b) imposes an exhaustion requirement (or even mentions administrative remedies). Slip op. at 4. The court stated:

   Thus, Catham Acres is incorrect in arguing that exhaustion is required. Catham Acres relies on the text of a separate provision of the FLSA, the whistle blower protection codified in 29 U.S.C. § 218c. Catham Acres also cites to an unpublished, non-precedential Third Circuit Court of Appeals decision holding that the whistleblower provision requires plaintiffs to exhaust administrative remedies. See Wilson v. EI DuPont de Nemours & Co, 710 F. App’x 57, 58 (3d Cir. 2018); see also Richter v. Design at Work, LLC, No. 14-650 2014 WL 3014972, at *4 (E.D.N.Y. July 3, 2014). Even crediting Wilson and interpreting § 218c to include an exhaustion requirement (an assumption that is not necessarily supported by a plain-text reading of § 218(c)), Wilson is inapposite, and Catham Acres is otherwise wrong because Ms. Short-Irons is suing under a provision of the FLSA other than the whistleblower provision. Because Ms. Short-Irons is suing under a provision of the FLSA that does not include an exhaustion requirement, the Court rejects Catham’s exhaustion argument.

Id. at 5-6 (emphasis as in original) (footnote omitted). In a footnote the court explained:

   The language of § 218c regarding remedies appears to be permissive rather than mandatory:

An employee who believes that he or she has been discharged or otherwise discriminated against by any employer in violation of this section may seek relief in accordance with the procedures, notifications, burdens of proof, remedies, and statutes of limitation set forth in section 2087(b) of Title 15.

218c(b)(1) (emphasis added).

   The statute that § 218c incorporates by reference also uses permissive language, this time in setting forth administrative remedies:

A person who believes that he or she has been discharged or otherwise discriminated against by any person in violation of subsection (a) may, not later than 180 days after the date on which such violation occurs, file (or have any person file on his or her behalf) a complaint with the Secretary of Labor alleging such discharge or discrimination and identifying the person responsible for such act.

15 U.S.C. § 2087(b)(l) (emphasis added). See also Parker v. 4247 FX, Inc., No. 16-2710, 2017 WL 2002794, at *10 n.8 (E.D. Pa. May 12, 2017), appeal dismissed, No. 17-2601, 2017 WL 7000263 (3d Cir. Oct. 16, 2017) (commenting that “neither [§ 218c(b)(l) nor § 2087(b)(l)] requires an employee to file a complaint of discrimination with the Secretary of Labor prior to commencing suit in federal court. Instead, both statutory provisions provide that an employee ‘may’ do so”).

Id. at 5, n. 3.

 

Federal Railroad Safety Act

Smith-Bunge v. Wis. Cent., Ltd., No. 18-cv-1251 (8th Cir. Dec. 27, 2019) (2019 U.S. App. LEXIS 38569; 2019 WL 7198351) (Opinion)

Case below: Smith-Bunge v. Wis. Cent., Ltd., 2017 U.S. Dist. LEXIS 140790 (D. Minn., Aug. 31, 2017)

Casenote(s):

DISCOVERY; DRAFT EXPERT REPORT PREPARED BECAUSE OF PROSPECT OF LITIGATION

In Smith-Bunge v. Wis. Cent., Ltd., No. 18-cv-1251 (8th Cir. Dec. 27, 2019) (2019 U.S. App. LEXIS 38569; 2019 WL 7198351), Plaintiff, who had brought a FRSA retaliation suit, appealed the district court’s grant of a protective order regarding Plaintiff’s discovery request for draft drawings of an accident scene and draft expert reports by the crash expert hired by Defendant. Plaintiff acknowledged that an expert’s materials are protected under FRCP 26(b)(4), but argued that the person hired by Defendant was not an expert witness but only an ordinary witness. The court of appeals found that the district court had not abused its discretion in granting the protective order. The court of appeals wrote:

On September 19, 2014, a day after the crash, Smith-Bunge’s counsel asked Wisconsin Central to place a litigation hold. A month later, Wisconsin Central retained Rogers to provide “litigation support.” Rogers then investigated the crash and prepared recommendations. The district court did not abuse its discretion in concluding Rogers acquired the information in preparation for trial, so he was an expert witness whose work is protected under Rule 26(b)(4). See Simon v. G.D. Searle & Co., 816 F.2d 397, 401 (8th Cir. 1987), quoting 8 C. Wright and A. Miller, Federal Practice and Procedure § 2024, at 198-99 (1970) (“[T]he test should be whether, in light of the nature of the document and the factual situation in the particular case, the document can fairly be said to have been prepared or obtained because of the prospect of litigation.”).

DISCOVERY; DEPOSITION OF OPPOSING COUNSEL; ATTORNEY-CLIENT PRIVILEGE

In Smith-Bunge v. Wis. Cent., Ltd., No. 18-cv-1251 (8th Cir. Dec. 27, 2019) (2019 U.S. App. LEXIS 38569; 2019 WL 7198351), Plaintiff, who had brought a FRSA retaliation suit, appealed the district court’s blocking of a deposition of Defendant’s counsel. Plaintiff argued that the district court should have applied the test from Pamida, Inc. v. E.S. Originals, Inc., 281 F.3d 726 (8th Cir. 2002), which permits deposing an opposing counsel if a party “seeks relevant information uniquely known by [the] attorneys about prior terminated litigation, the substance of which is central to the pending case.” Id. at 731. The court, however, held that Pamida was distinguishable—that case being about recovery of legal expenses—whereas in the instant case Plaintiff was seeking to discover whether counsel spoke with other of Defendant’s employees about Plaintiff’s earlier lawsuit and whether his prior suspension motivated his termination. The court found that neither piece of information was peculiarly within counsel’s knowledge, and that Defendant had not waived privilege.

The court found instead that Shelton v. American Motors Corp., 805 F.2d 1323 (8th Cir. 1986) applies. The court in that case held that a party may depose an opposing counsel if the information sought is: (1) not available through other means; (2) relevant and non-privileged; and (3) crucial to the preparation of the case. Id. at 1327. The court found that Plaintiff had not meet the first and second factors.

First, Plaintiff had other means, such as asking other employees, to discover whether the attorney spoke with other employees and whether a past suspension motivated the termination. Plaintiff asserted that he suspected that the other employees had “selective amnesia” during their depositions. The court, however, stated that “a party cannot depose opposing counsel to explore suspicions about opposing witnesses. See Shelton, 805 F.2d at 1327-28 (rejecting deposition where ‘plaintiffs’ counsel indicated that he was asking [counsel] these questions to determine whether [defendant] had in fact truthfully and fully complied with his document requests and interrogatories’).”

Second, the court held that the information was privileged. The court noted that Plaintiff had not identified any statements from the attorney outside of the attorney-client privilege, and had not attempted to narrow his inquiry to respect the privilege. Although Plaintiff argued that the attorney was merely a conduit for funds, or a scrivener, or a business advisor, Defendant’s attorney sworn that all of her communications had been strictly in her capacity as counsel for the Defendant for the purpose of providing legal advice on employment-related issues, that she did not make business decisions. The court stated that Plaintiff had not presented countervailing facts.

The court thus determined that that the district court did not abuse its discretion in granting Defendant’s motion for a protective order.

CONTRIBUTORY FACTOR CAUSATION; SUMMARY JUDGMENT; FAILURE TO ESTABLISH PRIMA FACIE CASE OF INTENTIONAL RETALIATION; HIRING OF EXPERT TO INVESTIGATE ACCIDENT IS NOT, IN ITSELF, EVIDENCE OF ANIMUS OR INTENT TO RETALIATE

In Smith-Bunge v. Wis. Cent., Ltd., No. 18-cv-1251 (8th Cir. Dec. 27, 2019) (2019 U.S. App. LEXIS 38569; 2019 WL 7198351), Plaintiff, who had brought a FRSA retaliation suit, appealed the district court’s grant of summary judgment for failure to make a prima facie case of retaliation. The Eighth Circuit affirmed the district court.

In the Eighth Circuit, “the contributing factor that an employee must prove is intentional retaliation prompted by the employee engaging in protected activity.” Kuduk v. BNSF Railroad Co., 768 F.3d 786, 791 (8th Cir. 2014). Here, the court found that Plaintiff had not raised an inference of intentional retaliation prompted by any of his three acts: (1) filing a prior lawsuit, (2) reporting an injury from a 2014 collision, and (3) reporting a brake failure that caused a 2014 collision. The court noted that Plaintiff failed in his brief to mention the Kuduk “intentional retaliation” standard.

The court found that no reasonable fact finder could infer a retaliatory motive. Plaintiff noted that Defendant had hired its expert to investigate the 2014 collision six days after Plaintiff won summary judgment in the 2013 litigation, and that Defendant did not terminate workers involved in other accidents. The court, however, held that hiring the expert to investigate the 2014 accident did not, by itself, indicate animus or intentional retaliation. Moreover, the short lapse between Plaintiff’s success in summary judgment and the hiring of the expert was insufficient. The court found that the 2013 litigation and the 2014 crash were completely unrelated, and that the 2014 crash was “an “intervening event that independently justified” his termination.” Slip op. at 7. As to differential treatment, the court found that Plaintiff had not provided sufficient details about the other crashes to determine if they were of the same magnitude, and that none of the workers in the other crashes provided false information as had Plaintiff.

As to the 2014 report of injury and brake failure, the court found that Plaintiff had provided no evidence of retaliatory motive. In this regard, the court stated:

[Plaintiff] relies on testimony from two Wisconsin Central employees that if he had not falsely reported the brake failure, he would not have violated the rule to furnish true information and, therefore, possibly not been terminated. He concludes from this testimony that his act of reporting caused the termination. It did not. His falsehoods in the report, substantiated by [Defendant’s expert’s] examination of his truck’s brakes after the crash, contributed to his termination.

Id. at 7-8 (emphasis as in original).

Voelker v. BNSF Ry. Co., No. 18-cv-172 (D. Mont. Dec. 19, 2019) (2019 U.S. Dist. LEXIS 219462; 2019 WL 6910167) (Order)

USDOL Case: ALJ No. 2018-FRS-00060

Casenote(s):

APEX DEPOSITIONS OF HIGH-LEVEL EXECUTIVES; DEPOSITIONS QUASHED WHERE DEFENDANT PRESENTED AFFIDAVITS DEMONSTRATING EXECUTIVES’ LACK OF PERSONAL, DIRECT KNOWLEDGE OF PLAINTIFF’S TERMINATION AND THAT OTHER AVENUES OF DISCOVERY WERE AVAILABLE

In Voelker v. BNSF Ry. Co., No. 18-cv-172 (D. Mont. Dec. 19, 2019) (2019 U.S. Dist. LEXIS 219462; 2019 WL 6910167), Defendant filed a motion to quash depositions and for a protective order regarding senior management-level executives who lacked knowledge of the events central to the litigation. The court granted the motion. The court first outlined the law regarding “apex depositions.”

   “The Court may, for good cause, issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense.” Fed. R. Civ. P. 26(c)(1). In Brewer v. BNSF Railway Co., No CV 14-65-GF-BMM-JCL (Oct. 16, 2015), this Court adopted the framework applied by many other district courts regarding “apex depositions,” or depositions of high-level executives with minimal direct involvement in the events giving rise to a case. Apex depositions present a substantial risk of “annoyance, embarrassment, oppression, or undue burden or expense,” and they are unlikely to elicit relevant testimony, even under the broad standard of relevance that applies for purposes of discovery. Fed. R. Civ. P 26(b)(1), (c)(1).

   As the Northern District of California has noted, “when a party seeks the deposition of a high-level executive (a so-called ‘apex’ deposition), courts have ‘observed that such discovery creates tremendous potential for abuse or harassment.’” Apple Inc. v. Samsung Elecs. Co., 282 F.R.D. 259,263 (N.D. Cal. 2012) (quoting Rivera v. NIBCO, Inc., 364 F.3d 1057, 1063 (9th Cir. 2004)). “In determining whether to allow an apex deposition, courts consider ( 1) whether the deponent has unique first-hand, non-repetitive knowledge of the facts at issue in the case and (2) whether the party seeking the deposition has exhausted other less intrusive discovery methods.” Id. (quoting In re Google Litig., No. C 08-03172 RMW (PSG), 2011 WL 4985279 (N.D. Cal. Oct. 19, 2011)).[2] Nonetheless, the “party seeking to prevent a deposition carries a heavy burden to show why discovery should be denied,” and “it is very unusual for a court to prohibit the taking of a deposition altogether absent extraordinary circumstances.” Id. (internal quotation marks and citation omitted).

    [2] Citing Robinett v. Opus Bank, No. C12-1755MJP (W.D. Wash. Oct. 30, 2013), BNSF suggests that these two considerations are elements rather than factors and that the party seeking deposition bears the burden of establishing both elements. The Court disagrees with BNSF’s formulation of the standard. As it did in Brewer, it applies the more flexible standard set forth in Apple Inc., which appropriately allocates the burden to the party seeking a protective order and affords the court the discretion generally available in pretrial matters.

Slip op. at 3-4 (footnotes omitted). In the instant case, Defendant met its “heavy burden” of showing why the depositions should not be taken absent further factual development—specifically: Defendant submitted declarations of each of the executives noticed for deposition (save for one who worked for a different company); the affidavits demonstrated that the noticed individuals did not have personal, direct knowledge of Plaintiff’s termination; and other, less intrusive methods of discovery were open to Plaintiff. The court, however, ruled that if Plaintiff discovers new, additional information showing that any individual has direct and/or unique knowledge of the events surrounding his termination, he may either stipulate to a deposition with Defendant, or if a stipulation cannot be reached, file a motion with the Court seeking an exception to the order.

Fresquez v. BNSF Ry. Co., No. 17-cv-0844 (D. Colo. Dec. 17, 2019) (2019 U.S. Dist. LEXIS 216402) (Order Granting in Part Remainder of Plaintiff's Motion for Back Pay and Directing Entry of Judgment)

Case below: ALJ No. 2017-FRS-00018

Casenote(s):

CALCULATION OF BACK PAY, FRONT PAY, AND PREJUDGMENT INTEREST; DISTRICT COURT EXERCISED DISCRETION TO OBTAIN EXPERT MODELS FROM PARTIES AND MODIFY THE AMOUNTS TO BE AWARDED CONSISTENT WITH THE COURT’S PRIOR RULINGS WHERE BOTH PARTIES’ HAD FAILED TO SO

In Fresquez v. BNSF Ry. Co., No. 17-cv-0844 (D. Colo. Dec. 17, 2019) (2019 U.S. Dist. LEXIS 216402), a FRSA retaliation case, the court had resolved certain disputes between the parties regarding calculation of back pay and front pay and directed supplemental briefs on the dollar amount to be awarded consistent with the court’s rulings. In that supplemental briefing, however, neither party’s experts calculated the back and front pay consistent with the court’s order. Frustrated by this additional complication to an already complicated matter, and seeking to end the protracted litigation, the court obtained the expert models from the parties, and exercised its discretion to modify the numbers to be consistent with the court’s prior rulings. Recognizing that each model made numerous assumptions and adjustments, the court found that Plaintiff’s model was inadequate for calculation of prejudgment interest, and thus used the BNSF model adjusted to arrive an amount that fairly represented the amount of back pay, front pay and prejudgment interest to which Plaintiff was entitled.

 

Jones v. BNSF Ry. Co., No. 18-cv-146 (D.Mont. Dec. 11, 2019) (2019 U.S. Dist. LEXIS 213475; 2019 WL 6728429) (Order)

Casenote(s):

DISCOVERY OF COMPARATOR DATA; COURT ORDERS PRODUCTION OF THREE YEARS OF DATA ON A NATIONWIDE BASIS OF EMPLOYEES ACCUSED OF VIOLATING SAME WORK RULE AS THE ONE APPLIED TO PLAINTIFF (AS OPPOSED TO THE SAME SPECIFIC CONDUCT); COURT ALLOWS DEFENDANT TO USE INITIALS RATHER THAN NAME AS IDENTIFIERS OF COMPARATOR EMPLOYEES

In Jones v. BNSF Ry. Co., No. 18-cv-146 (D.Mont. Dec. 11, 2019) (2019 U.S. Dist. LEXIS 213475; 2019 WL 6728429), the court addressed a variety of discovery disputes in an FRSA retaliation action. One of the disputes concerned comparator data. BNSF contended that Plaintiff’s discovery request was too broad. It offered to provide two years rather than seven years of data; provide Montana-specific rather than company-wide data; and provide data on those accused of same conduct as Plaintiff rather than same rule violations. The court noted that the attorneys in this matter were already familiar with the court’s views on entitlement to comparator data from prior FRSA litigation. The court stated that “[d]ata regarding similarly situated employees may tend to confirm or deny Jones’s theory that he was disciplined and/or terminated because of his engagement in a protected activity, and it may lead to further discoverable information.” Slip op. at 9-10 (citation omitted). The court, however, limited the time period for comparator data. The court stated that “BNSF’s request to limit production to only those employees accused of the same conduct as Jones would likely increase the burden of production, as Jones’s conduct has not been precisely defined, while he was clearly accused of violating a specific (if expansive) rule.” Id. at 10 (emphasis as in original). The court stated, moreover, that BNSF should not be the sole determiner of the comparability of other employees’ conduct. The court noted that discovery is broader in scope than the standard of relevance governing admissibility at trial. The court noted that the parties had agreed that BNSF could protect the identities of individual employees by providing on their initials, and indicated that the court concurred with this agreement. The court thus ordered BNSF to produce nationwide comparator data from 2016 through present on employees accused of violating the same work rule as Plaintiff, with BNSF being allowed to list individuals by initials rather than name.

DISCOVERY; RELEVANCE OF PERSONNEL RECORDS OF MANAGERIAL EMPLOYEES; CONCERNS OVER EMBARRASSMENT OR PRIVACY ADDRESSED THROUGH PROTECTIVE ORDER DURING DISCOVERY STAGE

In Jones v. BNSF Ry. Co., No. 18-cv-146 (D.Mont. Dec. 11, 2019) (2019 U.S. Dist. LEXIS 213475; 2019 WL 6728429), the court addressed a variety of discovery disputes in an FRSA retaliation action. One of the disputes concerned Plaintiff’s request for personnel documents for management-level employees involved in the decisions to discipline and terminate Plaintiff. Such requested documents included Defendant’s Incentive Compensation Plan (“ICP”), Performance Management Process (“PMP”), and Merit Award Documents. Defendant had produced documents as to three employees, and submitted for in camera review documents regarding other employees. BNSF argued that additional production would be unwarranted because such personal information was (1) not relevant; (2) harassing; (3) violates employees’ right of privacy; (4) was not proportional to the needs of the case; and (5) was privileged and confidential information of persons not parties to the case. The court was not persuaded. First, it found that the documents could show an incentive to discipline or terminate Plaintiff by managerial employees potentially involved in Plaintiff’s termination — noting that the attorneys in this case had been involved in a prior FRSA case in which such documents had probative value. As to the personal nature of the personnel records requested, the court stated the following:

   Additionally, while the documents may feel embarrassing or personal to the employees, they are personnel documents, and this is a case involving personnel decisions. This simply is not the sort of sensitive personal information giving rise to a valid objection to discovery. To the degree that BNSF’s objections are based on “harass[ment],” “privacy,” and “confidential[ity],” those concerns are sufficiently addressed by the parties’ protective order and the redaction of information already made in the documents produced in camera. See infra p. 26-28. While the Court recognizes that the employees involved would prefer to not have these materials reviewed by Jones’s attorneys——or to answer questions related to their job performance and compensation during their depositions-such preferences do not give rise to valid objections to discovery.

Slip op. at 14. The reference to the protective order involved BNSF’s designations of certain personal records produced with the marking “Confidential—Attorneys’ Eyes Only” —a category of protection defined in the parties’ stipulated protective order. The court in a separate part of its order allowed these designations to stand at this stage of the litigation. The court determined that the ICP, PMP, and Merits Award documents should be produced for four employees who could be seen as decisionmakers in Plaintiff’s discipline and termination, and for one employee whose role was overseeing safety operations in Plaintiff’s division.

DISCOVERY OF ELECTRONICALLY STORED INFORMATION (ESI); A SOPHISTICATED BUSINESS ENTITY SHOULD BE ABLE TO SEARCH FOR INFORMATION RELATED TO CLAIMS OR DEFENSES IN AN FRSA RETALIATION CASE; SUCH A REQUEST IS NOT TOO VAGUE OR BURDENSOME

DISCOVERY OF ELECTRONICALLY STORED INFORMATION (ESI); WHERE DEFENDANT DID NOT SUGGEST ALTERNATIVES, COURT ORDERED DEFENDANT TO USE SPECIFIC SEARCH TERMS AND DATABASES SUGGESTED BY PLAINTIFF

In Jones v. BNSF Ry. Co., No. 18-cv-146 (D.Mont. Dec. 11, 2019) (2019 U.S. Dist. LEXIS 213475; 2019 WL 6728429), the court addressed a variety of discovery disputes in an FRSA retaliation action. One of the disputes concerned requests for electronically stored information (ESI). Defendant’s objected that the request “for information related to the claims or defenses of any party in this matter” was unreasonably vague. The court was not persuaded, stating that “[t]his is a relatively narrow lawsuit relating to an alleged discriminatory termination, and the defense is that the termination was not discriminatory” and that “a sophisticated business entity such as BNSF should have no trouble conducting the requested search.” Slip op. 23-24 (citation omitted). The court also rejected Defendant’s objection to production of ESI on grounds of burden, stating that “sophisticated corporate entities have the ability to effectively find digital information when they need to, which is exactly why they store that information electronically in the first instance. BNSF’s claim that it is difficult to search the databases in which BNSF chooses to store information carries little weight.” Id. at 24. Defendant also objected that Plaintiff’s discovery request, which suggested specific databases and search terms, was a mandate on how to conduct a search for nonspecific information. The court noted that Defendant’s argument was that Plaintiff’s request was at once, both too specific and too unclear. The court, finding no suggestion from Defendant on how it could provide responsive information, ordered use of the specific search terms and databases identified by Plaintiff.

PUBLIC ACCESS TO MATERIALS PRODUCED DURING DISCOVERY; WHETHER CERTAIN PERSONNEL RECORDS OF MANAGEMENT EMPLOYEES COULD BE DESIGNATED UNDER TERMS OF A PROTECTIVE ORDER AS FOR “ATTORNEY-ONLY” USE DURING DISCOVERY, AND CERTAIN TRAINING MATERIALS COULD BE DESIGNATED AS CONFIDENTIAL; COURT PERMITTED THE DESIGNATIONS TO STAND DURING PRE-TRIAL STAGE AND RESERVED QUESTION OF WHETHER TO SEAL TO TRIAL

In Jones v. BNSF Ry. Co., No. 18-cv-146 (D.Mont. Dec. 11, 2019) (2019 U.S. Dist. LEXIS 213475; 2019 WL 6728429), the court addressed a variety of discovery disputes in an FRSA retaliation action. One of the disputes concerned a stipulated protective order that permitted Defendant to designate certain documents as “Confidential/Attorneys’ Eyes Only.” Defendant had made such a designation for certain Incentive Compensation Plan (“ICP”), Performance Management Process (“PMP”) personnel records of management employees. Defendant had also designated certain training documents using a somewhat less restrictive “Confidential” marking. Plaintiff challenged these designations, contending that “(1) the public interest in access to court proceedings outweighs the individual privacy interests involved; (2) the documents are stale and accordingly do not deserve protection; and (3) the documents are likely to arise in future litigation, and future time and expense could be spared by placing them into the public domain.”

The Court summarily rejected Plaintiff’s third argument, which was not supported by any legal authority. As to the designations, the court determined that they should stand at the discovery stage of litigation. The court, referencing a different part of its order finding that the ICP and PMP documents must be produced during discovery, stated:

If the documents become part of the record at trial, the Court will determine at that time whether they should be sealed. See Pintos v. Pac. Creditors Ass ’n, 605 F.3d 665, 678 (9th Cir. 2010); see also Frost v. BNSF Ry. Co., CV 15-124-M-DWM (D. Mont. Oct. 10, 2019).

   The Court “may, for good cause, issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense.” Fed. R. Civ. P. 26(c)(l). Although the Court disagreed with BNSF that individual employees’ ICP and PMP materials involved privacy interests so compelling as to avoid disclosure entirely, see supra p. 12-15, it nonetheless recognizes that the employees have a reasonable and significant interest in avoiding public dissemination of their salaries and performance reviews. See, e.g., Wisdom v. US. Tr. Program, 232 F. Supp. 3d 97, 126 (D.D.C. 2017); Oliver Wyman, Inc. v. Eielson, 282 F. Supp. 3d 684, 706 (S.D.N.Y. 2017). And BNSF, which takes precautions to avoid sharing its proprietary training materials outside of the company, has sufficiently demonstrated that it reasonably views these materials as confidential. (Doc. 46-8.)

Slip op. at 27.

 

Fresquez v. BNSF Ry. Co., No. 17-cv-0844 (D. Col. Nov. 4, 2019) (2019 U.S. Dist. LEXIS 190873) (Order Granting in Part and Denying in Part, and Taking Under Advisement in Part, Plaintiff's Motion For Back Pay and Front Pay, and Ordering Further Briefing)

Case below: ALJ No. 2017-FRS-00018

Casenote(s):

FRONT PAY; FUTURE UNCERTAINTY IS ACCOUNTED FOR BY DETERMINING CUTOFF DATE AND DISCOUNTING TO PRESENT VALUE

FRONT PAY; DURATION TO DATE OF FULL RETIREMENT MAY BE A WINDFALL FOR A YOUNG EMPLOYEE OR AN EMPLOYEE WITH ONLY SHORT TENURE

FRONT PAY; COURT MAY TAKE INTO ACCOUNT THAT RAILROAD JOBS ARE DIFFICULT TO MATCH IN TERMS OF WAGES, BENEFITS AND UNION PROTECTIONS

In Fresquez v. BNSF Ry. Co., No. 17-cv-0844 (D. Col. Nov. 4, 2019) (2019 U.S. Dist. LEXIS 190873), a jury found in favor of Plaintiff on his FRSA whistleblower complaint. The trial judge had found that the questions of back pay and front pay are equitable remedies to be decided by a judge. The trial judge passed away before these questions were decided and a second judge conducted a hearing on these remedies. The court initially found that reinstatement was not a viable option in this case and that an appropriate award of front pay must be determined. The parties disputed the appropriate duration for a front pay award. Plaintiff contended that “union railroad jobs are well-paid, secure positions available without a college degree with good health insurance and retirement benefits, and that no comparable employment exists outside the railroad industry” and stated that he sought front pay for the difference between his best alternative employment until his eligibility for full retirement with Defendant at age 60. Slip op. at 9. Defendant argued, inter alia, that front pay in the context of a FRSA case serves as “a limited-term stopgap payment for [Plaintiff] until he is able to secure a good job, not a long-term award for the remainder of [Plaintiff’s] career (as is common in personal injury cases, where the plaintiff’s capacity to work is diminished as a result of a defendant’s wrongful conduct).” Id. at 10.

The court noted authority cited by Defendant where courts distinguished between an equitable award of front pay and lost future wages. The court, however, found the 10th Circuit has not made such a distinction and declined to apply one in the instant case, finding that “[a]wards of front pay or lost future wages and benefits are necessarily speculative by nature, and the courts have accounted for future uncertainty by determining a cutoff date for awards of front pay, and discounting to net present value.” Id. at 12 (citation omitted).

The court noted that many cases involving awards of front pay until retirement involve older plaintiffs, and that some authority recognizes that awarding front pay until retirement for younger workers may result in a windfall. The court also noted that a plaintiff’s tenure with the organization is a relevant factor in determining duration of a front pay award, it being too speculative to assume that a worker with only short tenure would continue to work for the defendant until retirement. The court, however, found credible in the instant case that other comparable employment to that which Plaintiff enjoyed with Defendant could not reasonably be expected in terms of wages, fringe benefits, retirement income, and union job protection.

The court determined was that it was far too speculative to find that Plaintiff would stay 26 more years with Defendant until eligibility for full retirement. Moreover, the court found that award of front pay until full retirement age would be a windfall to Plaintiff, who was young and healthy, had an aptitude for learning, and appeared to have established a good alternative career in the building inspection industry since his termination by Defendant. The court, however, found that limiting front pay to only two to three years would result in a windfall to Defendant. Considering Plaintiff’s intent to stay with Defendant for the long term, his youth, his opportunity to build a career as building inspector with significant (if not comparable) wages and benefits, the court found that 10 years of front pay from the date of the jury verdict was warranted.

MITIGATION OF DAMAGES; COURT NOT PERSUADED BY EXPERT’S CONTENTION THAT PLAINTIFF SHOULD HAVE APPLIED FOR FIVE JOBS A DAY – THE STANDARD FOR MITIGATION NOT BEEING THE HIGHEST STANDARD OF DILIGENCE BUT RATHER A GOOD FAITH EFFORT

MITIGATION OF DAMAGES; BURDEN WAS NOT ON PLAINTIFF TO ESTABLISH WHY HE FOCUSED ON FINDING JOBS IN CONSTRUCTION INDUSTRY RATHER THAN RAILROAD FIELD, IT BEING CREDIBLE THAT PLAINTIFF DID NOT HAVE REASONABLE PROSPECTS WITH RAILROADS AFTER BEING DISCHARGED FOR INSUBORDINATION

In Fresquez v. BNSF Ry. Co., No. 17-cv-0844 (D. Col. Nov. 4, 2019) (2019 U.S. Dist. LEXIS 190873), a jury found in favor of Plaintiff on his FRSA whistleblower complaint. The trial judge had found that the questions of back pay and front pay are equitable remedies to be decided by a judge. The trial judge passed away before these questions were decided and a second judge conducted a hearing on these remedies. Defendant argued that Plaintiff did not make reasonable efforts to mitigate and presented expert testimony to bolster its claim. The court was not persuaded, noting that the expert had opined that Plaintiff should have applied to five jobs per day. The court noted that the expert’s report did not indicate that there were that many openings available during Plaintiff’s period of unemployment; that the report was limited to market research after Plaintiff obtained full-time employment; and that Plaintiff “was not required to use the highest standard of diligence, such as applying to five jobs a day, but rather required to make a good faith effort.” Slip op. at 20. The court noted Plaintiff’s post-termination efforts to find employment and found that Defendant failed to carry its burden to show failure to mitigate.

Plaintiff, who had been a track inspector with Defendant, had found employment in the building inspector field. Defendant argued that Plaintiff had “not shown that he has mitigated damages by finding the ’best available alternative employment’ because he has not shown that he applied to other railroads who would not hire him.” Id. at 21. The court found that this argument improperly inverted the burden of proof on mitigation. The court noted Plaintiff’s testimony that he applied for a position with a different railroad after his discharge from Defendant, but that he quickly received a rejection letter. The court also noted Plaintiff’s argument that “as a practical matter given the employment realities of the railroad industry, his dismissal from BNSF will prevent him from ever again working for another railroad.” The court found that Defendant had “not presented any credible evidence that another railroad will hire a candidate discharged from a class 1 railroad for insubordination (even if wrongfully terminated), and therefore has not shown that Fresquez could mitigate his damages by seeking employment in the railroad industry.” Id.

AUTHORITY OF COURT TO AWARD SPECIFIC AMOUNT OF BACK PAY OR FRONT PAY; COURT REJECTS ARGUMENT THAT RAILWAY LABOR ACT ONLY PERMITS A COURT TO SET LENGTH OF TIME FOR AWARD

In Fresquez v. BNSF Ry. Co., No. 17-cv-0844 (D. Col. Nov. 4, 2019) (2019 U.S. Dist. LEXIS 190873), a jury found in favor of Plaintiff on his FRSA whistleblower complaint. The trial judge had found that the questions of back pay and front pay are equitable remedies to be decided by a judge. The trial judge passed away before these questions were decided and a second judge conducted a hearing on these remedies. Defendant argued the Court lacked jurisdiction “to award a specific amount of back pay or front pay (as opposed to setting a length of time) because the Railway Labor Act (“RLA”) precludes all claims that involve rights vested in a CBA.” Slip op. at 21. The court was not persuaded, noting that “it appears contrary to the purpose of the FRSA to require that a remedy under that Act (namely, back pay or front pay) be exclusively reserved to a Public Law Board under the RLA for adjudication” and that “other federal courts and administrative bodies outside the RLA process have awarded back pay and front pay under the FRSA, instead of merely determining the length of time for a back pay or front pay award.” Id.at 23 (citations omitted).

BACK PAY AWARD IN TENTH CIRCUIT IS NOT REDUCED BY AMOUNT OF UNEMPLOYMENT BENEFITS RECEIVED BY PLAINTIFF

In Fresquez v. BNSF Ry. Co., No. 17-cv-0844 (D. Col. Nov. 4, 2019) (2019 U.S. Dist. LEXIS 190873), the court rejected BNSF’s argument that a back pay award should be reduced in the amount of unemployment benefits received by Plaintiff. The court stated:

   A review of Tenth Circuit case law explains BNSF’s lack of citations: courts within the Tenth Circuit and the District of Colorado do not reduce back pay by the amount of unemployment insurance benefits received. The Tenth Circuit has reasoned that “unemployment compensation is purely a collateral source and is peculiarly the property of the claimant. It would be unfair to give [the party that wrongfully terminated an employee] the benefit of it in these circumstances.” Sandia Corp., 639 F.2d at 625. It further explained that the “deduction or offsetting of employment benefits may well result in a windfall to the employer.” Id. at 626.

   Thus, “[t]his Court follows the rule that [a wrongfully terminated party’s] unemployment benefits should not be deducted from any back pay award.” Cooper v. Cobe Labs., Inc., 743 F. Supp. 1422, 1435 (D. Colo. 1990); see also Clawson v. Mountain Coal Co., 2007 WL 201253, at *12 (D. Colo. Jan. 24, 2007) (“[T]he more well-accepted trend in this Circuit is to decline to offset a damage award with unemployment benefits.”); Pickering v. USX Corp., 1995 WL 584372, at *44 (D. Utah May 8, 1995) (“either as a matter of law or a matter of discretion, unemployment compensation benefits are almost never offset against back pay awards”); Toledo v. Nobel-Sysco, Inc., 892 F.2d 1481, 1493 (10th Cir. 1989) (“the amount of unemployment compensation [the plaintiff] received is not essential to ascertaining backpay because it is within the district court’s discretion whether to discount a backpay award by the amount of unemployment compensation”).

Slip op. at 24-25.

CALCULATION OF LOST FUTURE WAGES; FACTORING UNION WAGE RATE, HOW MUCH WORK IS AVAILABLE, AND HOW MUCH PLAINTIFF WORKED IS A LOGICAL BASIS FOR CALCULATION

In Fresquez v. BNSF Ry. Co., No. 17-cv-0844 (D. Col. Nov. 4, 2019) (2019 U.S. Dist. LEXIS 190873), the court rejected BNSF’s argument that a calculation of lost future wages should be based on Plaintiff’s actual wages prior to termination adjusted for annual increases for inflation. The court noted that BNSF did not present an expert who made the calculation based on BNSF’s suggested approach. The court also noted that Plaintiff’s expert had used a logical method for calculation, factoring in how much railroad employees are paid under union contracts, how much work is available, and how much Plaintiff elected to work on a historical basis.

CALCULATION OF VALUE OF HEALTH INSURANCE BENEFITS FOR FRONT PAY AWARD; DISTRICT COURT, ACKNOWLEDGING SPILT IN AUTHORITY, FINDS THAT PROPER MEASURE IS ACTUAL OUT-OF-POCKET EXPENSES FOR PLAINTIFF FOR A BACK PAY AWARD, BUT THAT FOR A FRONT PAY AWARD THE PARTIES SHOULD COMPARE THE VALUE OF SUCH BENEFITS FOR DEFENDANT’S WORKERS WITH VALUE OF BENEFITS AT ALTERNATIVE EMPLOYMENT AND REDUCE THE SAME TO PRESENT VALUE

In Fresquez v. BNSF Ry. Co., No. 17-cv-0844 (D. Col. Nov. 4, 2019) (2019 U.S. Dist. LEXIS 190873), Plaintiff’s expert calculated front pay to include health insurance benefit amounts based on the premiums Defendant paid or would have paid absent unlawful discrimination. Defendant argued that the amount should be based on actual out-of-pocket expenses to the former employee. The court, noting a circuit split on the question and inconsistency in the 10th Circuit, found that the analysis differs for back pay as opposed to front pay. For back pay losses, the court found that “the proper measure of lost medical benefits is the out-of-pocket expenses incurred by the employee for purchasing replacement coverage or paying medical expenses that would have been covered by the employer’s policy. This is the actual measure of damages, and easily calculable. “ Slip op. at 28. The court, however, found that this measure did not make sense in relation to a front pay award, and ordered the parties to “calculate the health benefit it component of front pay by adding a multiplier to the straight front pay wage losses….” Id. at 30. The court elaborated:

This will entail looking at the value of the health insurance benefits Fresquez received at BNSF, as compared to the value of such benefits at his alternate employment, and reducing same to present value. This approach will address the relative loss in value of health benefits (recognizing that “health insurance benefits” are not fungible goods, but rather are of varying quality and benefit). The parties are instructed to, in their supplemental briefing, justify the multiplier they each use in determining the value of the future health insurance benefits.

Id.

CALCULATION OF PREJUDGMENT INTEREST; COURT FINDS THAT FOR FRSA COMPLAINT, 29 U.S.C., 6621 ENSURES COMPENSATION WITHOUT A WINDFALL, AND THAT MONTHLY COMPOUNDING BEST REFLECTS A PLAINTIFF’S LOSSES

In Fresquez v. BNSF Ry. Co., No. 17-cv-0844 (D. Col. Nov. 4, 2019) (2019 U.S. Dist. LEXIS 190873), Plaintiff argued that the court should calculate prejudgment interest according to 29 U.S.C. § 6621 (IRS underpayment interest rate, which is generally the Federal short-term rate plus three percent), and that the interest be compounded daily pursuant to DOL guidance at 80 Fed. Reg. 69115 (Nov. 9, 2015). Defendant argued that prejudgment interest should be calculated using the post-judgment interest rate calculations set forth by 28 U.S.C. § 1961 (interest rate “equal to the weekly average 1-year constant maturity Treasury yield” with interest usually computed daily and compounded annually). The court noted its discretion as to the calculation of prejudgment interest, and the several methods used by courts in the 10th Circuit. The court concluded that the interest rate in § 6621 would ensure that Plaintiff was fully compensated for his damages without receiving a windfall, and that “monthly compounding better serves the purposes of the FRSA, more accurately reflects the plaintiff’s losses, and balances the parties’ competing requests for daily compounding (Fresquez) and annual compounding (BNSF).” Slip op. at 32 (citations omitted).

 

Sanders v. Burlington Northern Santa Fe Ry., No. 17-cv-5106 (D. Minn. Oct. 24, 2019) (2019 U.S. Dist. LEXIS 184105; 2019 WL 5448309) (Opinion and Order)

Casenote(s):

PROTECTED ACTIVITY; “JOB-DUTIES” EXCEPTION HAS NOT BEEN ADOPTED FOR FRSA CASES IN THE EIGHTH CIRCUIT

In Sanders v. Burlington Northern Santa Fe Ry., No. 17-cv-5106 (D. Minn. Oct. 24, 2019) (2019 U.S. Dist. LEXIS 184105; 2019 WL 5448309), the court noted that Defendant appeared to argue for the first time in a reply brief that an employee is not protected by the FRSA when performing job duties. The court rejected the argument citing Brisbois v. Soo Line R.R. Co., No. 15-CV-0570 (PJS/TNL), 2016 WL 7423387, at *4 (D. Minn. Dec. 22, 2016). The court stated that “‘job-duties’ exception has never been adopted by the Eighth Circuit, is not supported by the text of the statute, and would undermine Congress’s intent in enacting the FRSA.” Slip op. at 23, n.11.

PROTECTED ACTIVITY; FRSA SECTION 20109(b)(1)(A) ONLY REQUIRES A SAFETY REPORT IN GOOD FAITH; THUS SUCH A REPORT ONLY NEEDS TO BE SUBJECTIVELY REASONABLE AND OBJECTIVE REASONABLENESS IS IMMATERIAL

In Sanders v. Burlington Northern Santa Fe Ry., No. 17-cv-5106 (D. Minn. Oct. 24, 2019) (2019 U.S. Dist. LEXIS 184105; 2019 WL 5448309), the court determined that Defendant did not appear to dispute that “reporting defects, entering slow orders, and removing tracks from service because of a defect—as Sanders undeniably did here—all constitute activity that is protected under § 20109(b)(1)(A) of the FRSA.” Slip op. at 23 (footnote omitted). The court then turned to the question of the reasonableness of these actions:

   Whether or not those actions were objectively reasonable is immaterial in determining whether they were protected under § 20109(b)(1)(A). To be protected under that provision, a safety report need only be “ in good faith,” 49 U.S.C. § 20109(b)(1)(A) (emphasis added)—in other words, subjectively reasonable. See Samson v. U.S. Dep’t of Labor, 732Fed. App’x 444, 446(7th Cir. 2017)(distinguishing (b)(1)(A)-protected activity from (b)(2)-protected activity on that basis); see also Monohan v. BNSF Ry. Co., No. 4:14–cv–00305–JAJ–SBJ, 2016WL 7426581, at *4 (S.D. Iowa May 11, 2016)(recognizing that reports need not be “reasonable” or “correct,” so long as they are made “in good faith,” a term which requires no more than subjective honesty). BNSF does not dispute that Sanders acted in subjective good faith when he reported track defects, entered slow orders, and removed tracks from service.

Id. at 23-24 (footnote omitted).

CONTRIBUTORY FACTOR CAUSATION; SUMMARY JUDGMENT NOT WARRANTED WHERE REASONABLE JURY COULD FIND THAT DIVISION ENGINEER HAD DISCRIMINATORY ANIMUS AND HAD INFLUENCED DISCIPLINARY DECISION MAKER, AND WHERE COMPARATOR EMPLOYEE EVIDENCE SHOWED LESSER DISCIPLINE WHERE OTHER EMPLOYEES HAD NOT ENAGED IN PROTECTED ACTIVITY

CONTRIBUTORY FACTOR CAUSATION; MERE FACT THAT EMPLOYER DECIDED TO SURVEIL PLAINTIFF DOES NOT SUPPORT A FINDING OF CONTRIBUTIJNG FACTOR CAUSATION IN RESULTING DISCIPLINE

CONTRIBUTORY FACTOR CAUSATION; MERE FACT THAT EMPLOYER GOT FACTS WRONG IN DISCIPLINARY INVESTIGATION DOES NOT SUPPORT A FINDING OF CONTRIBUTORY FACTOR CAUSATION WHERE EMPLOYER BELIEVED IN GOOD FAITH THAT PLAINTIFF HAD COMMITTED OFFENSE

CONTRIBUTORY FACTOR CAUSATION; A REASONABLE JURY COULD NOT FIND THAT MERE FACT THAT PLAINTIFF HAD ENGAGED IN PROTECTED ACTIVITY IN HIGH VOLUME SHOWED CONTRIBUTORY FACTOR CAUSATION BECAUSE IT WOULD BE ILLOGICAL FOR DEFENDANT TO SUDDENLY DECIDE TO RETALIATE AGAINST HIM FOR DOING SOMETHING IT KNEW HE HAD BEEN DOING FOR A LONG TIME

CONTRIBUTORY FACTOR CAUSATION; SUMMARY JUDGMENT; HISTORY OF DISCIPLINE OF PLAINTIFF DOES NOT PRECLUDE AN INFERENCE OF RETALIATION WHERE OTHER CIRCUMSTANTIAL EVIDENCE OF RETALIATORY MOTIVE EXISTS

In Sanders v. Burlington Northern Santa Fe Ry., No. 17-cv-5106 (D. Minn. Oct. 24, 2019) (2019 U.S. Dist. LEXIS 184105; 2019 WL 5448309), the court denied Defendant’s motion for summary judgment on the issue of contributory factor, finding that a jury could find that protected activity was a contributing factor to Plaintiff’s termination for time theft. The court first determined that Plaintiff did not have direct evidence of retaliation. The court, however, determined that there was sufficient circumstantial evidence to go to the jury.

First, Plaintiff had presented recordings that reasonably could be characterized as showing that a division engineer had discriminatory animus against Plaintiff for the number of track inspection slow orders Plaintiff entered. The court found that a reasonable jury could find that the division engineer was involved in the decision to charge Plaintiff with time theft and the subsequent decision to fire him. Although an investigatory team member testified that she independently concluded that dismissal was the appropriate sanction and did not rely at all on the division engineer’s interpretation, the court found that a jury could decide her testimony was not credible on that point, noting evidence that a jury might consider in that regard. Because of this, the court distinguished Gunderson v. BNSF Ry. Co., 850 F.3d 962 (8th Cir. 2017), in which there was no evidence that immediate supervisors had done anything except forward a complaint about the employee to the general manager.

Second, Plaintiff presented comparator evidence to show other employees who had not engaged in protected activity received lesser discipline after facing similar accusations of time-reporting dishonesty.

The court, however, noted a few types of circumstantial evidence that did not support a finding of contributory causation. First, the time gap between the last protected activity and the termination were not particularly close.

Second, the court found that Defendant’s decision to surveil Plaintiff, standing alone, did not support a finding that his protected activity was a contributing factor in the resulting discipline:

In BNSF v. U.S. Dep’t of Labor, the Eighth Circuit held that “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.” 867 F.3d at 946. In other words, the mere fact that an employee’s protected activity caused his employer to more closely scrutinize the employee’s record in the hopes of finding disciplinary violations, without any more evidence, is not enough to demonstrate that the protected activity was a contributing factor in whatever disciplinary outcome results. Id. at 946–47.

Slip op. at 34-35.

The court further found that “even if Sanders is correct that he did not falsify his time records—even if BNSF’s hearing process simply got it wrong—that fact on its own does not establish pretext if BNSF possessed a good-faith belief that he committed the time theft with which he was charged.” The court cited authority stating that courts do not sit as super-personnel departments, re-examing an employer’s disciplinary decision. The court stated: “In short, BNSF acting in good faith but getting its investigation wrong wouldn’t be enough to establish a prima facie case, but BNSF reaching the decision it did at least in part to retaliate against Sanders for his protected activity would.” Id. at 35.

Third, the court determined that a reasonable jury could not conclude that “every single one of the thousands of track defects he reported, and every single one of the hundreds of times he pulled tracks out of service or entered a slow order . . . contributed in some way over a period of many years to BNSF’s April 2016 decision to fire him.” Id. The court stated that “[b]aked into Sanders’s position is the undisputed fact that he had been engaging in this form of protected activity for a very long time, and in a very large volume. But none of those prior actions ever led to adverse action being taken against him. . . . Sanders does not point to any evidence suggesting why BNSF would take the seemingly illogical step of suddenly decided to retaliate against him for doing something it knew he had been doing for a long time.” Id. at 35-36(citation omitted).

The court acknowledged that a jury could conclude Plaintiff’s termination was not-retaliatory based on past discipline, the court found that a history of discipline does not preclude an inference of retaliation where other circumstantial evidence of retaliatory motive exists.

PUNITIVE DAMAGES; UNDISPUTED EVIDENCE THAT DEFENDANT HAD POLICIES IN PLACE TO TRY IN GOOD FAITH TO PREVENT RETALIATION INSUFFICIENT FOR SUMMARY DECISION WHERE THERE WERE GENUINE ISSUES OF MATERIAL FACT WHETHER ITS DISCIPLINARY REVIEW PROCESS WAS TRULY INDEPENDENT OF A MANAGER WHO COULD BE FOUND BY A JURY TO HAVE BEEN A BAD ACTOR

In Sanders v. Burlington Northern Santa Fe Ry., No. 17-cv-5106 (D. Minn. Oct. 24, 2019) (2019 U.S. Dist. LEXIS 184105; 2019 WL 5448309), BNSF sought summary judgment as to Plaintiff’s ability to seek punitive damages where there was undisputed evidence that it made good faith efforts to prohibit retaliation. The court noted authority finding that a defendant that makes good-faith efforts to comply with the FRSA is not liable for punitive damages. The court further noted that in the instant case it was a close-call. The court, however, found that there were genuine issues of material fact as to whether Defendant actually followed that policy where an internal review panel may not have been independent of a manager who a jury could find acted with reckless or callous disregard for Plaintiff’s FRSA rights or intentionally violated federal law by repeatedly pressuring Plaintiff to refrain from entering legitimate slow orders.

 

Petronio v. Amtrak, No. 19-cv-144 (S.D. N.Y. Oct. 2, 2019) (2019 U.S. Dist. LEXIS 171413) (Opinion and Order)

Case below: ALJ No. 2019-FRS-00012

Casenote(s):

CONTRIBUTORY FACTOR CAUSATION; COURT GRANTS SUMMARY JUDGMENT DISMISSING FRSA COMPLAINT WHERE THERE WAS NO EVIDENCE LINKING DISCIPLINARY HEARING ABOUT POSSIBLE VIOLATION OF WORKPLACE VIOLENCE POLICY WITH PLAINTIFF’S PROTECTED ACTIVITY; ALTHOUGH ONE SUPERVISOR WHO TESTIFIED AT DISCIPLINARY HEARING KNEW ABOUT PROTECTED ACTIVITY, HE DID NOT COMMUNICATE THIS INFORMATION TO DECISIONMAKERS AND THERE WAS NO EVIDENCE OF IMPERMISSIBLE BIAS BY SUPERVISOR SUFFICIENT TO INVOKE CAT’S PAW PRINCIPLE

In Petronio v. Amtrak, No. 19-cv-144 (S.D. N.Y. Oct. 2, 2019) (2019 U.S. Dist. LEXIS 171413), Plaintiff had reported several safety concerns at Penn Station via email to upper level management. About the same time, Amtrak was making staff changes at Penn Station. Plaintiff, who was local chairman for the SMART union, agreed to speak on behalf of a union member with a supervisor about a proposed bumping. In a second meeting, Plaintiff made a statement that the supervisor felt may have been a threat. Management advised the Assistant Division Engineer, John Collins, to ask Plaintiff what he meant before determining whether there had been a violation of Amtrak’s Workplace Violence Policy. Collins scheduled the meeting. There was some disagreement about what exactly was said and in what manner during the meeting — but it resulted in Plaintiff being escorted out and being withheld from service. It also resulted in Collins making a report to Amtrak’s charging officer. The Charging officer then charged Plaintiff with violations of Amtrak policies. A disciplinary hearing resulted in Plaintiff’s termination from employment. Plaintiff’s appeals were denied. Plaintiff filed a FRSA complaint with DOL, which was eventually kicked out to Federal district court.

The district court granted summary judgment in favor of Defendants. The court noted that “[t]here is a circuit split over which legal standard to apply in evaluating whether a protected activity was a contributing factor in an unfavorable employment decision,” with the Seventh and Eight Circuits requiring a plaintiff to prove “intentional retaliation” prompted by the employee’s protected activity, and the First, Third, Fourth, Sixth) Ninth, and Tenth Circuits apparently not requiring proof of “intentional retaliation.” The court further noted that the Second Circuit had not addressed the issue. The court determined that, even assuming the more “plaintiff-friendly” standard applies, there was no evidentiary support in the record supporting a finding, either directly or circumstantially, that Plaintiff’s protected activity played any role in Amtrak’s decision to initiate a disciplinary investigation which lead to Plaintiff’s discharge. The disciplinary actions were based solely on Plaintiff’s behavior during a heated exchange between Plaintiff and a supervisor. The court noted that there was no evidence that the hearing officer or the official who made the decision to terminate Plaintiff’s employment knew anything about Plaintiff’s safety reports at the time of the decision. The only person involved in the termination process who knew about the safety reports — Collins — was only a witness, and there was no evidence that he communicated this knowledge to the decisionmakers. The court was not persuaded by Plaintiff’s “cat-paw” argument:

For the cat’s paw principle to apply, there needs to be, at minimum, some evidence that the “individual shown to have the impermissible bias” has “played a meaningful role in the decisionmaking process.” Vasquez v. Empress Ambulance Serv., Inc., 835 F.3d 267, 272 (2d Cir. 2016); see also Staub v. Proctor Hospital, 562 U.S. 411, 421 (2011). For this reason, the circumstance where the cat’s paw principle applies generally involves “the supervisor advising the decision-maker or being intimately “involved in the decision.” Niedziejko v. Delaware & Hudson Ry. Co., No. 18-cv-0675 (GTS) (CFH), 2019 WL 1386047, at *4 (N.D.N.Y. Mar. 27, 2019); see also Lowery v. CSX Transp., Inc., 690 F. App’x 98, 100 (4th Cir. 2017); Johnston v. BNSF Ry. Co., 15-CV-3685, 2017 WL 4685012, at *8 (D. Minn. Oct. 16, 2017).

Slip op. at 16-17 (footnote omitted). The court found that in the instant case, there was no evidence that Collins harbored some impermissible bias in bringing the charge or testifying at the hearing. The court found that mere testimony is insufficient to create a cat’s paw theory. The court noted that Collins had not started the investigation on his own initiative, but rather because of Plaintiff’s argument with his supervisor — and even then only after consulting with a charging officer on how to proceed and after meeting with Plaintiff to hear his side of the story. Although the meeting with Plaintiff resulted in a heated exchange, there was nothing about the meeting that supported a connection with Plaintiff’s safety reports.

Epple v. BNSF Ry. Co., No. 18-10509 (5th Cir. Sept. 27, 2019) (per curiam) (unpublished) (2019 U.S. App. LEXIS 29232) (Opinion)

Prior History: Epple v. BNSF Ry. Co., 2018 U.S. Dist. LEXIS 228647 (N.D. Tex., Apr. 6, 2018)

Related to: ALJ No. 2015-FRS-63

Casenote(s):

AFFFIRMATIVE DEFENSE; ROBUST PROCEDURES EMPLOYER TOOK TO ASCERTAIN FACTS AND ARRIVE AT ITS DECISION TO TERMINATE COMPLAINANT’S EMPLOYMENT, TOGETHER WITH HISTORY OF COMPLIANCE, SHOWED THAT EMPLOYER FIRED COMPLAINANT BECAUSE IT BELIEVED HE COMMITTED A FIRING-LEVEL OFFENSE

In Epple v. BNSF Ry. Co., No. 18-10509 (5th Cir. Sept. 27, 2019) (per curiam) (unpublished) (2019 U.S. App. LEXIS 29232), the court declined to opine on whether the FRSA’s reference to AIR21 § 42121 eliminates a plaintiff’s obligation to establish a discriminatory or retaliatory motive, and instead found that the record developed at trial established by clear and convincing evidence that the railroad would have dismissed the complainant regardless of the injury report that he filed. Specifically, the court relied on procedures and safeguards used in BNSF’s disciplinary process:

   The record shows that BNSF terminated Epple’s employment only after it subjected the alleged charges to a thorough, multi-stage investigation. The investigation had robust safeguards built in and gave Epple plenty of opportunity to challenge the evidence against him as well as introduce information and context that could help vindicate the decisions he made leading to his injury. For example, the company assigned supervisors to interview Epple within hours of the accident and to examine the location where Epple fell. Then, after the supervisors concluded that a possible rule violation took place, the company called for a formal hearing. The proceedings were conducted “by the book.” And Epple offers no evidence that any of the participants at the hearing treated it frivolously or in a pretextual manner.

   Three different BNSF officials reviewed the investigation’s findings, including Hurlburt, the Director of Labor Relations, who was outside of the department’s chain of command and, therefore, could act as neutral party. Moreover, the discharge decision fully complied with company policy. Epple’s failure to take the safe course and to comply with his supervisor’s instructions both constitute serious infractions. And the company’s PEPA policy provides that an employee is subject to dismissal if he commits two serious offenses within a 36-month review period.

Slip op. at 5-6. The court noted that this process closely resembled the process that the Eighth Circuit upheld as clear and convincing evidence in Kuduk v. BNSF Ry. Co., 768 F.3d 786, 792 (8th Cir. 2014). The court stated that although the Eighth Circuit had not offered much explanation:

… it is easy to see why the court gave these procedures so much weight. The proceedings themselves cost time, money, and resources. A company signals its concern when it is willing to expend these resources to uncover the truth about an employee’s conduct. The procedures also have the added benefit of diluting the influence of any individual with an improper motive. The more layers of review and the more personnel involved makes it less likely for bad actors to steer the process toward an outcome the company would not have otherwise chosen. The company essentially limits the possibility that it pursued disciplinary measures for any reason other than the employee’s wrongful conduct.

Id. at 6-7. The court also pointed to evidence that the complainant had “reported workplace injuries on more than a dozen occasions yet was never disciplined or treated unfavorably as a result” and that “[o]ut of 37 employees in the Texas Division who reported injuries in 2010, only two received any form of discipline within three months of their injury.” Id. at 7. The court concluded:

A history of compliance does not preclude the possibility of discriminatory conduct by BNSF, but it does imply that the circumstances surrounding Epple’s injury set this incident apart. Combining this with the robust procedures that BNSF took to ascertain the facts and arrive at its decision, the evidence firmly shows that BNSF believed Epple committed a firing-level offense. In short, it was Epple’s perceived conduct—not his protected activity—that led to the disciplinary measures being taken against him. The company therefore qualifies for the affirmative defense provided in § 42121(b)(2)(B)(iv).

Id.

DISTRICT COURT’S EXCLUSION OF OSHA REPORT BASED ON HEARSAY OBJECTION; ERROR NOT PRESERVED WHERE THERE WAS NO OFFER OF PROOF AT TRIAL; DISTRICT COURT IS NOT MANDATED TO ADMIT GOVERNMENT INVESTIGATIVE REPORTS, BUT HAS OBLIGATION TO BALANCE PROBATIVE VALUE WITH POSSIBLE PREJUDICAL EFFECT

During a bench trial In Epple v. BNSF Ry. Co., No. 18-10509 (5th Cir. Sept. 27, 2019) (per curiam) (unpublished) (2019 U.S. App. LEXIS 29232), the district court sustained Defendant/Appellee’s objection to receipt into evidence a letter from OSHA to Defendant summarizing the agency’s investigative findings. Defendant had objected on the grounds that the letter was hearsay and that it did not fall under the government document exception. On appeal, Plaintiff/Appellant argued that the district court’s refusal to admit the letter was error. The Fifth Circuit noted that the circuit would not consider a claim of error on exclusion without an offer of proof, as required by FRE 103(a). The court also said: “Although a formal offer is not required to preserve error, the party must at least inform the trial court ‘what counsel intends to show by the evidence and why it should be admitted.’ United States v. Ballis, 28 F.3d 1399, 1406 (5th Cir. 1994).” Slip op. at 8. Here, Plaintiff did not proffer the substance of the OSHA letter at trial, and the substance was not apparent from the context. The court noted Plaintiff’s statement that the trial court had referenced the letter (i.e., the OSHA findings) “in its summary judgment motion.” The court stated that this brief reference to the letter was not sufficient to inform the trial court of what counsel intended to show by that evidence. The court was not persuaded by Plaintiff’s citation to Smith v. Universal Services, Inc., 454 F.2d 154, 157 (5th Cir. 1972), which had carved a hearsay exception recognizing that certain investigative reports have such high probative value that may they may, if circumstances allow, outweigh any possible prejudice to the defendant. The court noted that it had previously cautioned that Smith does not negate a district court’s responsibility under FRE 403 to balance the exhibit’s probative value with its possible prejudicial effect, and that a district court retains discretion over such a report’s admissibility.

Cleveland v. Long Island R.R. Co., No. 18-CV-2080 (S.D. N.Y. Sept. 18, 2019) (2019 U.S. Dist. LEXIS 160206) (Memorandum Opinion and Order)

Case below 2018-FRS-00014

Casenote(s):

FELA LAWSUIT FOUND NOT PROTECTED ACTIVITY UNDER THE FRSA ANTI-RETALIATION PROVISION; FRSA ADDRESSES STANDARDS FOR RAILROAD SAFETY, AND NOT FELA LAWSUITS

In Cleveland v. Long Island R.R. Co., No. 18-CV-2080 (S.D. N.Y. Sept. 18, 2019) (2019 U.S. Dist. LEXIS 160206) (case below 2018-FRS-00014), a jury in a separate FELA action for an on-the-job injury awarded Plaintiff $1.5 million. About a month later, Defendant sent Plaintiff a letter stating: "[G]iven the jury verdict rendered in your favor on May 18, 2016, effective immediately, your relationship with the Long Island Rail Road is hereby terminated." Slip op. at 2. Plaintiff filed the instant FRSA anti-retaliation suit under 49 U.S.C. § 20109. The District Court held that, as a matter of law, Plaintiff’s FELA lawsuit was not protected activity under the FRSA. Plaintiff relied on 49 U.S.C. § 20109(a)(1)(C), (a)(3), and (a)(4).

As to § 20109(a)(1)(C), Plaintiff argued that he engaged in protected activity by testifying during the trial, a trial jury allegedly being a body with the authority to investigate misconduct. The court rejected this argument, finding that "[a] trial jury’s role is to listen to and evaluate facts adduced by the parties at trial, not to investigate those facts." Id. at 5.

As to whether filing a FELA lawsuit is protected activity under § 20109(a)(3), the court noted that one district court had found that it is not. The court also noted that such an interpretation would run afoul of the plain language of the statute, a FELA lawsuit not being related to the enforcement of the part of the FRSA that § 20109(a)(3) applies to — i.e., setting standards for railroad safety. The court stated: "Inasmuch as a FELA lawsuit does not require evidence of a violation of one of the FRSA’s safety standards, the Court is hard-pressed to see how such a lawsuit is ’related to the enforcement’ of those standards. 49 U.S.C. § 20109(a)(3)." Id. at 7. The court noted that "[i]t is possible that a FELA lawsuit could be a protected activity under § 20109(a)(3) of the FRSA if it alleged liability based on a violation of an FRSA safety standard" but that "[b]ecause Plaintiff has adduced no evidence that his lawsuit was such a lawsuit, the Court need not address that possibility." Id. at 8 n.6.

As to § 20109(a)(4), which prohibits retaliation for any action done "to notify, or attempt to notify, the railroad carrier or the Secretary of Transportation of a work-related personal injury or work-related illness of an employee," the court noted that the ARB had held that "a FELA lawsuit falls under § 20109(a)(4) only if the lawsuit provides an employer with ’more specific notification’ about the employee’s injury than the employee had previously reported." Id. at 9 (citations omitted). The court stated: "Section 20109(a)(4) applies, in other words, only if the FELA lawsuit expands the employer’s knowledge of the injury beyond the information in the employee’s initial report (by, for example, providing new details about the extent, severity, or causes of the injury)." Id. (citation omitted). The court thus found that "Plaintiff’s 2016 FELA lawsuit is a protected activity under § 20109(a)(4) only if the lawsuit provided Defendant with new, previously-unknown details about th[e] injury [reported by Plaintiff in April 2014]". Id. (footnote omitted). Here, Plaintiff pointed to no such details.

The court noted two additional arguments made by Plaintiff, both of which were not persuasive. First Plaintiff argued that Defendant’s action "unfairly forces employees to choose between recovering compensation for their injuries and keeping their jobs." The court found that, even if this is true, the FRSA only protects certain categories focusing on railroad safety standards and not lawsuits to compensate for on-the-job injuries.

Second, Plaintiff argued that "the FELA lawsuit should count as protected activity because it kept the initial report of the injury fresh in the mind of Defendant’s key decisionmakers" which the court found was an attempt to show that the FELA lawsuit was evidence of a causal connection between the initial report and the termination. The court stated: "Merely keeping a two-year-old report of an injury ’fresh’ in an employer’s mind is not, without more, sufficient to raise a reasonable inference that the report was a contributing factor in the employer’s subsequent actions." Id. at 12. The court also stated that it did not fully consider the argument because it had not been adequately developed by Plaintiff.

Neylon v. BNSF Ry. Co., No. 17-cv-3153 (D. Ne. Sept. 4, 2019) (2019 U.S. Dist. LEXIS 150048) (Memorandum and Order)

Case below: ALJ No. 2017-FRS-00066

Subsequent history: Appeal to 8th Cir., No. 19-2905

Casenote(s):

SUMMARY JUDGMENT; STATEMENTS IN COMPLAINT ARE ADMISSIONS THAT MAY SUPPORT SUMMARY JUDGMENT, EVEN IF THE STATEMENTS CONFLICT WITH POST-PLEADING EVIDENCE

In Neylon v. BNSF Ry. Co., No. 17-cv-3153 (D. Ne. Sept. 4, 2019) (2019 U.S. Dist. LEXIS 150048) (case below ALJ No. 2017-FRS-00066), Plaintiff brought a FRSA lawsuit under 49 U.S.C. § 20109(a)(4) alleging that Defendant terminated his employment for reporting an ankle injury that he speculated occurred while climbing onto a train in the course of his employment as a BNSF conductor 17 months earlier. Defendant’s moved for summary judgment. One ground for summary judgment, rejected by the court, was the argument that Plaintiff did not establish protected activity because he repeatedly stated in deposition testimony that he reported a medical “condition” —not an “injury” or “illness,” as required by the statute. The court noted that Plaintiff had so testified in deposition because reporting an injury 17 months later would have violated Defendant’s late-reporting rules. The court also noted that Plaintiff maintained he was reporting a “condition” instead of an “injury” in his late-reporting investigatory hearing. Nonetheless, the court found that Plaintiff’s complaint filed with the court specifically stated that he “engaged in protected activity by reporting his left-ankle injury to BNSF.” Slip op. at 20, quoting complaint (emphasis added). The court noted that in the Eighth Circuit, even if post-pleading evidence conflicts with the pleadings, “admissions in the pleadings are binding on the parties and may support summary judgment against the party making such admissions.” Id., quoting Missouri Hous. Dev. Comm’n v. Brice, 919 F.2d 1306, 1315 (8th Cir. 1990). Plaintiff was bound by his admission in his complaint that he reported an “injury,” and he thus engaged in protected activity within the meaning of § 20109(a)(4). The court therefore denied summary judgment on the question of protected activity.

CONTRIBUTORY FACTOR CAUSATION; SUMMARY JUDGMENT GRANTED WHERE PLAINTIFF’S LATE REPORT OF AN INJURY VIOLATED A WELL-ESTABLISHED WORK RULE THAT PLAINTIFF WAS AWARE OF; DEFENDANT DID NOT HAVE A PATTERN OF RETALIATION FOR REPORTING INJURIES; COMPLAINANT ADMITTED THAT THE DECISIONMAKERS ON HIS DISCHARGE DID NOT HAVE RETALIATORY MOTIVES BASED ON REPORTING AN INJURY; TERMINATION DECISION WAS BASED ON A DELIBERATIVE, OBJECTIVE PROCESS; ONLY RELEVANT EVIDENCE PRESENTED BY COMPLAINANT WAS HIS OWN DEPOSITION TESTIMONY ABOUT A PURPORTED CONVERSATION WITH AN UNNAMED CLAIMS AGENT FOUR YEARS EARLIER

In Neylon v. BNSF Ry. Co., No. 17-cv-3153 (D. Ne. Sept. 4, 2019) (2019 U.S. Dist. LEXIS 150048) (case below ALJ No. 2017-FRS-00066), Plaintiff brought a FRSA lawsuit under 49 U.S.C. § 20109(a)(4) alleging that Defendant terminated his employment for reporting an ankle injury that he speculated occurred while climbing onto a train in the course of his employment as a BNSF conductor 17 months earlier. Defendant’s moved for summary judgment in part on the ground that Plaintiff’s injury was not a contributing factor in his dismissal. The ground granted the motion on this ground applying the contributing factor test laid out in Hess v. Union Pac. R.R. Co., 898 F.3d 852 (8th Cir. 2018):

To determine whether the circumstances raise an inference of retaliatory motive in the absence of direct evidence, we consider circumstantial evidence such as the temporal proximity between the protected activity and the adverse action, indications of pretext such as inconsistent application of policies and shifting explanations, antagonism or hostility toward protected activity, the relation between the discipline and the protected activity, and the presence of intervening events that independently justify discharge. We also consider evidence of the employer’s nonretaliatory reasons for the adverse action.

Id. at 21, quoting Hess, 898 F.3d at 858 (internal quotation marks and citation omitted). Reviewing the undisputed facts of the case, the court found that “no reasonable fact-finder could conclude that BNSF terminated Neylon’s employment because Neylon reported his injury; rather, the evidence establishes that BNSF terminated Neylon’s employment because Neylon late-reported his injury in violation of numerous BNSF employment plans, rules, and policies.” Id. The court also found that Plaintiff “failed to submit evidence creating any inference of a retaliatory motive on BNSF’s part or refuting the following evidence, all of which indicates a lack of such motive. . . . ” Id.

The court noted several specific factors:

  • Defendant had well-established plans, rules, and policies specifying that termination could occur if an employee committed a Serious Rule Violation — which included late reporting of an injury — during a review period for a prior violation, and in the instant case, there was no question that Plaintiff late-reported his injury during such a review period and that he was aware of the rule and its implications.
  • During the relevant time period, BNSF did not have a pattern of retaliating against employees for reporting an injury.
  • Complainant had conceded that he was not claiming the BNSF employees involved in deciding whether his employment should be terminated retaliated against him for reporting a work-related injury.
  • BNSF made the termination decision in a manner that reflected a deliberative, objective process, and not retaliatory animus.
  • The only “marginally relevant evidence of possible animus” Plaintiff presented was his deposition testimony that an unnamed claims agent handling an injury from four years prior told Plaintiff that all injuries reports are kept on record, and that multiple injuries could lead to punishment.

Lemon v. Norfolk S. Ry. Co., 18-cv-1029 (N.D. Ohio Aug. 28, 2019) (2019 U.S. Dist. LEXIS 146607) (Order)

Case below: ALJ No. 2017-FRS-00065

Casenote(s):

PROTECTED ACTIVITY; IN FRSA CASE, EMPLOYEE MUST SHOW BOTH THAT HE OR SHE HAD A GOOD FAITH BELIEF THAT THE INURY WAS WORK-RELATED AND THAT HE OR SHE ACTUALLY MADE THE INJURY REPORT IN GOOD FAITH; WHERE THERE A GENUINE ISSUE OF MATERIAL FACT AS TO WHETHER PLAINTIFF BELIEVED IN GOOD FAITH THAT INJURY WAS WORK RELATED, SUMMARY JUDGMENT NONETHLESS GRANTED WHERE RECORD SHOWED THAT PLAINTIFF LIED TO SUPERVISOR ABOUT NOT HAVING TO TALKED TO ANYONE ELSE ABOUT THE INJURY BEFORE REPORTING IT

In Lemon v. Norfolk S. Ry. Co., 18-cv-1029 (N.D. Ohio Aug. 28, 2019) (2019 U.S. Dist. LEXIS 146607), Plaintiff filed an FRSA retaliation complaint alleging that Defendant fired him in retaliation for reporting a workplace injury. Plaintiff had hurt his neck and reported his neck pain as a workplace injury. The supervisor investigated and concluded that Plaintiff lied and told inconsistent stories about the injury's cause. After a disciplinary hearing, Plaintiff was fired for dishonesty. The parties filed counter-motions for summary judgment. The court granted Defendant’s motion, which was based on the contention that the injury report was not a protected activity because Plaintiff did not make it in good faith. Plaintiff had requested that the court adopt the test used in Ray v. Union Pacific R.R. Co., 971 F.Supp.2d 869, 883 (S.D. Iowa 2013), in which the plaintiff was found to have acted in good faith, despite his changing stories about when and how he realized his injury was employment related, because at them the injury was reported the plaintiff genuinely believed he was reporting a work-related injury. Defendant asked the court to apply a more restrictive, two-part test. The court explained:

    Several district courts have disagreed with Ray’s approach and required plaintiffs to show both that: 1) “the employee [had] a good faith belief that his injury is work-related” and 2) “the employee . . . actually made the injury report itself in good faith.” 4 Murphy v. Norfolk S. Ry. Co., 2015 WL 914922, at *5 n.3 (S.D. Ohio) (citing Good Faith, BLACK’S LAW DICTIONARY (6th ed. 1990)); accord Bostek, supra, 2019 WL 2774147 at *3; Smith v. BNSF Ry. Co., 2019 WL 3230975, at *4 (D. Colo.); Armstrong v. BNSF Ry. Co., 128 F. Supp. 3d 1079, 1089 (N.D. Ill. 2015); see also Miller v. CSX Transport., Inc., 2015 WL 5016507, at *6-7 (S.D. Ohio).5 The second part of this test aims to prevent employees who have “some ulterior motive in reporting an injury,” or who are “actually attempt[ing] to avoid reporting an injury” from abusing the FRSA’s protections. Murphy, supra, 2015 WL 914922 at *5 n.3.

    I agree with these courts “that FRSA incorporates both elements[,]” Murphy, supra, 2015 WL 914922 at *5 n.3, and apply the two-part test.

Slip op. at 9-10.

In the instant case, viewing the evidence in the light most favorable to Plaintiff, the court found that there was a genuine issue of material fact as to whether Plaintiff believed in good faith that his injury was work related, but the record also showed that Plaintiff lied to his supervisor when he said that he had not talked to anyone else about his injury, when he had told at least three coworkers about hurting his neck before he made his injury report.

The court held that “lying about potential witnesses to a supervisor threatens his or her ability to find out what happened. It is a far graver act than a mere honest misstatement or meaningless request not to inform others.” Id. at 12 (footnote omitted). The court thus found that Plaintiff had not acted in good faith, and that FRSA claims failed on the protected activity element.

Molder v. BNSF Ry. Co., No. 18-cv-257 (E.D. Wash. Aug. 28, 2019) (2019 U.S. Dist. LEXIS 146683) (Order Granting Defendant BNSF Railway Company's Motion for Summary Judgment)

Case below: ALJ No. 2018-FRS-00022

Casenote(s):

SUMMARY JUDGMENT GRANTED ON AFFIRMATIVE DEFENSE

In Molder v. BNSF Ry. Co., No. 18-cv-257 (E.D. Wash. Aug. 28, 2019) (2019 U.S. Dist. LEXIS 146683), the court granted Defendant’s motion for summary judgment dismissing Plaintiff’s FRSA retaliation complaint where the record contained clear and convincing evidence it would have terminated Plaintiff based on timekeeping violations irrespective of Plaintiff’s reporting of alleged injuries.

Blackorby v. BNSF Ry. Co. , No. 18-2372 (8th Cir. Aug. 23, 2019) (2019 U.S. App. LEXIS 25313) (Opinion)

Cases below: W.D. Mo. No. 13-908; ALJ No. 2013-FRS-00068

Casenote(s):

HONESTLY HELD BELIEF DEFENSE; JURY INSTRUCTION IS PREJUDICIAL IF IT INDICATES THAT THE HONESTLY HELD BELIEF DEFENSE IS PART OF PLAINTIFF’S CONTRIBUTORY FACTOR BURDEN; THE DEFENSE IS, RATHER, CONSIDERED AS PART OF DEFENDANT’S AFFIRMATIVE DEFENSE UNDER THE CLEAR AND CONVINCING EVIDENCE STANDARD

CONTRIBUTORY FACTOR CAUSATION; AN EMPLOYER MAY HAVE BEEN MOTIVATED BY BOTH AN IMPERMISSIBLY RETALIATORY MOTIVE AND AN HONESTLY HELD BELIEF THAT PLAINTIFF VIOLATED A RULE

EIGHTH CIRCUIT DISTINGUISHES HONESTLY HELD BELIEF INSTRUCTION IN SEVENTH CIRCUIT DECISION IN ARMSTRONG, FINDING THAT ARMSTRONG WAS ABOUT WHETHER THERE HAD BEEN A FALSE REPORT AND THUS WHETHER THER HAD BEEN PROTECTED ACTIVITY

In Blackorby v. BNSF Ry. Co., No. 18-2372 (8th Cir. Aug. 23, 2019) (2019 U.S. App. LEXIS 25313), the Eighth Circuit held that a jury instruction on the “honestly held belief” defense, although not inherently impermissible in an FRSA retaliation case, was prejudicial where it was given in a manner where the jury was essentially told to consider the instruction as part of Plaintiff’s prima facie case and not as a part of Defendant’s heightened burden under the clear-and-convincing evidence standard. The court, referencing a decision on an earlier appeal of the case, stated:

   The second sentence of Instruction 17, however, is an incorrect statement of the law in the context of the contributing-factor standard. The second sentence states, “BNSF Railway cannot be held liable under the FRSA if you conclude that BNSF Railway disciplined Plaintiff based on its honestly held belief that Plaintiff engaged in misconduct or committed a rules violation.” As made clear in the first panel opinion, a retaliatory motive gives rise to FRSA liability if retaliation was a “contributing factor” in the discipline decision. Blackorby I, 849 F.3d at 721–22. Contrary to the plain language of Instruction 17’s second sentence, an employer can, in fact, be held liable under the FRSA if it disciplines an employee based on its honestly held belief that the employee engaged in misconduct or committed a rules violation. Liability will still exist notwithstanding such a belief if the employer’s retaliatory motive also played a contributing role in the decision and if the employer fails to carry the burden of proving by clear and convincing evidence that it would have taken the same action in the absence of the protected report. As Blackorby succinctly notes in his opening brief, “A finding that an employer maintained an honest belief that an employee engaged in misconduct or violated a rule is not mutually exclusive with a finding of retaliatory intent.” In fact, two causes being non-mutually exclusive is the very essence and definition of a “contributing” factor.

Slip op. at 7. The court noted that although this instruction itself did not reference a burden of proof, when taken in the context of the compounding effect of a second instruction, the jury had been told to consider the “honestly held belief” instruction as part of Plaintiff’s prima facie case. The court noted: “We do not mean to suggest there is anything inherently impermissible about using an ‘honestly held belief’ instruction in the context of an FRSA retaliation claim. Any such instruction, however, must be articulated in a manner that preserves the clear-and-convincing-evidence standard, the contributing factor standard, and the statutory burden-shifting framework.” Id. at 8, n. 5.

Defendant argued, inter alia, that the jury instructions were permissible in light of the Seventh Circuit decision in Armstrong v. BNSF Ry. Co., 880 F.3d 377 (7th Cir. 2018). The court distinguished Armstrong. First, it noted that the instruction in Armstrong did not suffer from the compounding effect present in the present case. The court then noted that in Armstrong, the misconduct perceived by the employer in raised a question whether the employee had filed a false report and had thus actually engaged in protected activity. In the instant case, there was no allegation of a false report. The court wrote:

   Second, we find Armstrong distinguishable on a separate basis. In Armstrong, the plaintiff-employee filed a report alleging a supervisor had attacked and injured him by slamming a door on his leg as he left the supervisor’s office. 880 F.3d at 379. The employee later sued under the FRSA alleging retaliation based on the filing of his report. Id. at 380. A video of the scene, however, appeared to show the supervisor located ten to twelve feet from the door at the time the plaintiff-employee left the supervisor’s office. Id. at 379. The fighting issue in Armstrong, therefore, involved a very specific type of perceived employee misconduct—the filing of a false report. Given that specific context, if the employer honestly believed the plaintiff-employee had knowingly made a false report, it would seem nearly impossible for that same report to support a claim of unlawful retaliation. The FRSA, after all, prohibits retaliation against employees who make lawful, good faith complaints. See 49 U.S.C. § 20109(a) (prohibiting discrimination “due, in whole or in part, to the employee’s lawful, good faith act”). And, the act of making a false report simply is not a lawful, good faith complaint. The issue in Armstrong, therefore, was not so much a question of mixed motives or contributing factors. Rather, the issue was the existence or nonexistence of a protected act. See Armstrong, 880 F.3d at 382 (“If BNSF fired Armstrong because it honestly believed that he was lying about his complaint, then it necessarily follows that it did not retaliate against Armstrong for filing a good faith complaint.”).

   The fighting issue in the present case, in contrast, did not involve allegations of a false report. Blackorby alleged BNSF retaliated against him for making a truthful and good-faith, albeit untimely, report and also for refusing his supervisor’s coercive attempts to prevent him from making any report at all. Unlike in Armstrong, there is no inconsistency between BNSF being motivated in part by an impermissible retaliatory motive and in part by an honestly held belief that Blackorby violated a rule. As a result, we decline BNSF’s invitation to adopt Armstrong as controlling in our circuit or as establishing a general rule that the language of Instruction 17 may be deemed appropriate in all cases.

Id. at 8-9.

Guerra v. Consolidated Rail Corp., No. 18-2471 (3rd Cir. Aug. 21, 2019) (2019 U.S. App. LEXIS 24910; 2019 WL 3938631) (Opinion of the Court)

Cases below: D.N.J. No. 17-cv-06497; ARB No. 2017-069; ALJ No. 2017-FRS-00047

Casenote(s):

FRSA LIMITATIONS PERIOD IS A NONJURISDICTIONAL CLAIM-PROCESSING RULE THAT MAY DEFEAT AN EMPLOYEE’S CLAIM, BUT WHICH DOES NOT LIMIT A DISTRICT COURT’S JURISDICTION TO HEAR A CASE UNDER THE FRSA “KICK-OUT” PROVISION

SUBJECT-MATTER JURISDICTION; COURT ALWAYS HAS JURISDICTION TO DETERMINE ITS OWN JURISDICTION, AND HAS THE INDEPENDENT OBLIGATION TO DETERMINE ITS JURISDICTION, EVEN IF NOT CONTESTED BY A PARTY

NON-JURISDICTIONAL CLAIMS-PROCESSING LIMITATIONS PERIOD DOES NOT BAR DISTRICT COURT JURISDICTION OVER FRSA KICK-OUT CLAIM—BUT LIMITATIONS PERIOD STILL “HAS TEETH”; UNTIMELY ADMINISTRATIVE COMPLAINT BARS CLAIM

In Guerra v. Consolidated Rail Corp., No. 18-2471 (3rd Cir. Aug. 21, 2019) (2019 U.S. App. LEXIS 24910; 2019 WL 3938631) (cases below: D.N.J. No. 17-cv-06497; ARB No. 2017-069; ALJ No. 2017-FRS-00047), the court considered the following question:

   This case asks whether FRSA’s 180-day limitations period is “jurisdictional.” That is, if an employee fails to file a timely complaint with OSHA, does that divest a district court of subject matter jurisdiction? Or is the limitations period simply a claim-processing rule, the breach of which may defeat an employee’s claim, but not a district court’s jurisdiction to hear the case?

Slip op. at 2-3. The court’s holding was:

   After considering the text, context, and history of the provision, and mindful of the Supreme Court’s decisions in this area, we hold that FRSA’s 180-day limitations period in 49 U.S.C. § 20109(d)(2)(A)(ii) is a nonjurisdictional claim-processing rule.

Id. at 3.

When Guerra exercised the option to “kick-out” the case from DOL to a Federal district court, Conrail filed a motion to “dismiss for lack of subject matter jurisdiction under Rule 12(b)(1), asserting that Guerra’s failure to file a timely complaint with OSHA deprived the District Court of jurisdiction over the case. Conrail also moved in the alternative under Rule 56 for summary judgment on the grounds that the record refuted Guerra’s only theory of timeliness. In response, Guerra agreed that the District Court would lack jurisdiction if his complaint had been untimely filed, but asserted that, under the mailbox rule, his attorneys had timely mailed his complaint to OSHA . . . .” Id. at 8.

The Third Circuit noted that a court always has jurisdiction to determine its own jurisdiction, and found that the district court erred by accepting without scrutiny the parties’ accord on the district court’s supposed lack of jurisdiction. Rather, the district court had an independent obligation to determine whether subject-matter jurisdiction existed. The Third Circuit proceeded to consider the question de novo.

The court noted that the distinction between subject-matter jurisdiction and claim- processing rules are sometimes confused or conflated. The court found that the text of the FRSA limitations provision speaks only to a claim’s timeliness and not a court’s power to adjudicate. So too, the provision’s context was not framed in jurisdictional terms, and the provision’s legislative history did not display a clear Congressional intent to create a jurisdictional bar. The court was not persuaded by Conrail’s argument that the fact that the FRSA anti-retaliation provision was designed for a full administrative adjudication means that the filing of an administrative complaint carries jurisdictional significance, the court observing that the kick-out provision at 49 U.S.C. § 20109(d)(3) provides for the bringing of an “original” action at law or equity for “de novo” review. Nor was the court persuaded by the Conrail’s citation of SOX decisions in which the courts dismissed “‘for lack of subject matter jurisdiction where the complainant failed to file a timely administrative complaint.’” Id. at 15 (quoting Appellee’s Supp. Letter which cited several district court decisions). The Third Circuit found that the cited cases were “all merely ‘drive-by jurisdictional rulings’ that easily ‘miss the critical differences between true jurisdictional conditions and nonjurisdictional limitations on causes of action.’ Muchnick, 559 U.S. at 161 (internal quotation marks and citations omitted); see, e.g., King v. Ind. Harbor Belt R.R., No. 2:15-CV-245-JD-PRC, 2017 WL 9565363, at *7–9 (N.D. Ind. Feb. 1, 2017) (analyzing and critiquing the haphazard “jurisdictional” language used by many district courts in the SOX context). (internal quotation marks and citations omitted).” Id.

The court then proceeded to address whether summary judgment was warranted based on an untimely filing of the FRSA complaint, the court noting that a non-jurisdictional claim-processing rule “still has teeth.” Id. at 16 (citations omitted). The court ultimately found that the administrative complaint was untimely and the claim barred.

TIMELINESS OF ADMINISTRATIVE FRSA COMPLAINT FILED BY REGULAR MAIL; MAILBOX RULE IS NOT INVOKED WHERE AFFIDAVITS CONCEDED THAT NORMAL BUSINESS PRACTICE HAD NOT BEEN FOLLOWED, AND THERE WAS AN ABSENCE OF OTHER RELEVANT CIRCUMSTANTIAL EVIDENCE; EVEN IF INVOKED, MAILBOX RULE ONLY PROVIDES A WEAK PRESUMPTION OF DELIVERY, AND OSHA’S DENIAL OF RECEIPT (BOLSTERED BY EVIDENCE THAT OSHA TRACKS CORRESPONDENCE) WOULD BREAK PRESUMPTION

In Guerra v. Consolidated Rail Corp., No. 18-2471 (3rd Cir. Aug. 21, 2019) (2019 U.S. App. LEXIS 24910; 2019 WL 3938631) (cases below: D.N.J. No. 17-cv-06497; ARB No. 2017-069; ALJ No. 2017-FRS-00047), the Third Circuit found that the District Court erred when it concluded that it did not have jurisdiction over an FRSA “kick-out” whistleblower claim where the administrative complaint was not timely filed. The court held that the FRSA limitations period is a non-jurisdictional claims-processing rule. The court, however, indicated even though non-jurisdictional, a limitations period for the filing of an administrative complaint still “has teeth.” The court thus considered Conrail’s motion for summary judgment under FRCP 56 based on lack of timeliness of the FRSA administrative complaint. Guerra maintained that his lawyers filed the administrative complaint by first-class mail on May 10, 2016—which would be timely under the FRSA‘s 180-day limitations period. OSHA, however, found that it first received the complaint by email on November 28, 2016—which would be an untimely filing. In this regard, Guerra relied on the mailbox rule and not equitable tolling.

The court noted that the common-law mailbox rule is, essentially, that “’if a letter properly directed is proved to have been either put into the post-office or delivered to the postman, it is presumed . . . that it reached its destination at the regular time, and was received by the person to whom it was addressed.’ Lupyan v. Corinthian Colls. Inc., 761 F.3d 314, 319 (3d Cir. 2014) (internal quotation marks and citation omitted).” Slip op. at 16-17. The record in the instant case contained affidavits from Guerra’s lawyers verifying that the law firm’s normal practice was to send complaints by both certified mail and fax, but conceding that in this case Guerra’s complaint was supposedly sent only by first-class mail due to clerical oversight.

The court stated:

   This evidence is not enough to invoke the mailbox rule’s presumption of delivery. To be sure, “receipt can be proven circumstantially by introducing evidence of business practices or office customs related to mail,” at least where the affiant has “personal knowledge of the procedures in place at the time of the mailing.” Lupyan, 761 F.3d at 319-20 (internal quotation marks and citations omitted). But Guerra’s circumstantial evidence of his lawyers’ typical mailing procedures is irrelevant because, “due to a clerical oversight,” those procedures were admittedly not followed. So this case is not like Lupyan, where the sender produced two affidavits, both of which showed “personal knowledge of [the sender’s] customary mailing practices,” and one of which was by the sender’s employee who “swore that she personally prepared the Letter and placed it in the outgoing mail bin.” Id. at 320. Nor is it like Philadelphia Marine, where the sender produced meaningful, relevant circumstantial evidence such as testimony of an express acknowledgement of receipt and a computer printout apparently reflecting metadata of the letter’s drafting date. See 523 F.3d at 153.

Id. at 17. Here, neither affiant were involved in the mailing process. The court agreed with the district court that such “unsupported, second-hand accounts cannot invoke the mailbox rule’s presumption.” Id. at 18 (footnote omitted). The court noted that even if Guerra’s evidence had been sufficient to invoke a presumption of delivery, it would only be a very weak presumption, and that OSHA’s denial of receipt would cause the presumption to disappear. The court also noted that OSHA’s denial of receipt was bolstered by its practice of tracking correspondence and its unavailing search for the purported filing.

The court was not persuaded by Guerra’s argument that such logic was “blatantly unreasonable” and puts a high evidentiary burden on an employee. The court indicated that it was not unreasonable to expect use of a form of mailing for an important document that includes a method of verifiable receipt.

Thus, because Guerra had not produced enough reliable evidence to invoke the common-law mailbox rule, the court determined that his administrative complaint was untimely and his claim barred.

Henin v. Soo Line R.R., No. 19-336 (D. Minn. Aug. 9, 2019) (2019 U.S. Dist. LEXIS 134109) (Order Granting Motion for Stay of Proceedings)

Case below ARB No. 2019-0028, ALJ No. 2017-FRS-00011

Casenote(s):

DE NOVO ACTION IN DISTRICT COURT STAYED PENDING COURT OF APPEALS DECISION ON ARB DECISION ON TIMELINESS OF PETITION FOR ARB REVIEW; ALTHOUGH PLAINTIFF WAS LIKELY TO WIN THIS POINT, ALL OTHER FACTORS SUPPORTED A STAY

In Henin v. Soo Line R.R., No. 19-336 (D. Minn. Aug. 9, 2019) (2019 U.S. Dist. LEXIS 134109) (case below ARB No. 2019-0028, ALJ No. 2017-FRS-00011), the ARB had initially dismissed the Complainant’s petition for review of the ALJ’s decision on a FRSA complaint as untimely, but later changed course on reconsideration and found that the petition was timely. Respondent appealed this ARB decision to the Eighth Circuit Court of Appeals. In the interim, Plaintiff filed a de novo action FRSA complaint in district court. Defendant filed a motion to stay, arguing that if the Eighth Circuit Court concludes that Plaintiff did not timely appeal, then the ALJ’s order became the final order of the Secretary of Labor and the district court does not have jurisdiction. The court granted the motion finding, inter alia, that it would simplify disputed issues about jurisdiction and conserve judicial resources, avoid the court making an inconsistent ruling with the Eighth Circuit, would not prejudice Plaintiff. The court noted that the factor of likelihood of success favored Plaintiff — but found that the other factors outweighed this factor.

Greenup v. CSX Transp., Inc., No. 17-1295 (D. Md. July 31, 2019) (2019 U.S. Dist. LEXIS 128160; 2019 WL 3464632) (Memorandum)

Casenote(s):

The court found that Plaintiff could not establish that his decision to submit an injury report was a contributing factor in the decision to terminate him where, there was at least a five to eight month gap in time between the injury report and the decision to terminate Plaintiff’s employment; Plaintiff’s claim of pretext based on disparate treatment failed because of failure to provide the court with a meaningful comparator, and even if the comparator was accepted, there was no evidence that the difference in treatment was due in part to Plaintiff’s injury report; Defendant believed that Plaintiff had been insubordinate; Plaintiff’s absenteeism was well documented.

Ryan v. CSX Transp., Inc., No. 17-cv-353 (S.D. Ohio July 19, 2019) (2019 U.S. Dist. LEXIS 120739; 2019 WL 3254129) (Opinion and Order)

Casenote(s):

CLEAR AND CONVINCING EVIDENCE THAT DEFENDANT SUSPENDED PLAINTIFF FOR SAFETY RULE AND WORKPLACE VIOLENCE POLICY VIOLATIONS; FACT THAT PLAINTIFF BELIEVED DISCIPLINE WAS UNFAIR NOT RELEVANT; RECORD DID NOT SHOW THAT DEFENDANT DID NOT BELIEVE IN GOOD FAITH THAT PLAINTIFF WAS GUILTY OF THE RULES AND POLICY VIOLATIONS

In Ryan v. CSX Transp., Inc., No. 17-cv-353 (S.D. Ohio July 19, 2019) (2019 U.S. Dist. LEXIS 120739; 2019 WL 3254129), Plaintiff claimed that his protected activity—reporting the personal injury and being off work for sixteen months for treatment—was a contributing factor to his termination. The court noted that although contributing factor is a lenient causation standard, the plaintiff must prove is intentional retaliation prompted by the employee engaging in protected activity, citing inter alia, Kuduk v. BNSF Ry. Co., 768 F.3d 786, 791 (8th Cir. 2014). The court noted that the Plaintiff reported the injury the same day he was injured, and was terminated almost a year later, after he had been back on the job for two months. The court found that Plaintiff could not establish an inference of retaliation based on the timing of the protected activity and his termination. The court indicated that conversations Plaintiff had with co-workers shortly before he returned to work suggesting that Respondent would be coming after Plaintiff and he needed to be careful, noting that personal injuries adversely impact their bonuses, and suggesting that Plaintiff transfer to another division were not persuasive, and there was no evidence in the record that a bonus calculation for one of the railroad officials was altered because of Plaintiff’s knee injury. Plaintiff contended that he was treated differently and targeted after returning to work, but the court was persuaded by Defendant’s evidence indicates little difference in testing of Plaintiff for compliance with operating rules, and noted that there was no evidence that Plaintiff was tested more frequently than other employees. Plaintiff noted a couple of sarcastic comments from officials, but the court was not persuaded that such isolated comments were not circumstantial evidence of an improper motive, and may have had been intended to prevent another injury. The court further found that Defendant showed by clear and convincing evidence that would have suspended Plaintiff based on safety rules violations and the violation of the Violence in the Workplace Policy, finding that the record did not show that Defendant did not believe in good faith that Plaintiff was guilty of such conduct, and that the conduct was factually unrelated to the reporting of a knee injury or the time Plaintiff was off work for that injury. The court stated that the fact that Plaintiff believed the discipline was unfairly imposed was not relevant to the causal analysis. The court thus granted summary judgment in favor of the Defendant on the FRSA retaliation count of the complaint.

Smith v. BNSF Ry. Co., No. 17-cv-00977-KMT (D. Col. July 18, 2019) (2019 U.S. Dist. LEXIS 119794; 2019 WL 3230975) (Order)

Casenote(s):

PROTECTED ACTIVITY; GOOD FAITH INJURY REPORT

AFFIRMATIVE DEFENSE; A COMPANY MAY TAKE DISCIPLINARY ACTION AGAINST A WRONGDOER, EVEN IF THE WRONGDOING IS ONLY DISCOVERED WHEN COMPLAINANT DISCLOSED IT IN A PROTECTED REPORT; MAKING SUCH A DISCLOSURE IN A PROTECTED REPORT IS NOT IMMUNITY

In Smith v. BNSF Ry. Co., No. 17-cv-00977 (D. Col. July 18, 2019) (2019 U.S. Dist. LEXIS 119794; 2019 WL 3230975), the court denied Defendant’s motion for summary judgment on the question of FRSA protected activity. Defendant argued, relying on Murphy v. Norfolk S. Ry. Co., No. 1:13-CV-863, 2015 U.S. Dist. LEXIS 25631, 2015 WL 914922, at *5 n.3 (S.D. Ohio Mar. 3, 2015), that Plaintiff did not make a good faith injury report. The Murphy court had held that an employee must both “have a good faith belief that his injury is work-related” and “have actually made the injury report itself in good faith. ” Here, Defendant argued that Plaintiff had been dishonest because there was no real injury on the date it was reported; rather the injury had occurred earlier and had not been reported then. The court, however, found the evidence of record showed that “whether there was a work-related injury in May, 2015 or July 22, 2015, could support either side’s conclusions, thus creating a quintessential jury question.” In a footnote, the court noted:

BNSF employees cannot immunize themselves against wrongdoing by disclosing it in a protected-activity report. 816 F.3d at 639. See also McKennon v. Nashville Banner Publishing Co., 513 U.S. 352, 362, 115 S. Ct. 879, 130 L. Ed. 2d 852 (1995) (“Once an employer learns about employee wrongdoing that would lead to a legitimate discharge, [the court] cannot require the employer to ignore the information, even if it is acquired during the course of discovery in a suit against the employer and even if the information might have gone undiscovered absent the suit.”).

Slip op. at 13 n. 9.

CONTRIBUTORY FACTOR CAUSATION; PLAINTIFF NOT REQUIRED TO ESTABLISH RETALIATORY MOTIVE

In Smith v. BNSF Ry. Co., No. 17-cv-00977 (D. Col. July 18, 2019) (2019 U.S. Dist. LEXIS 119794; 2019 WL 3230975), the court denied Defendant’s motion for summary judgment on the question of contributory factor causation, finding that whether Defendant had a good faith belief in its conclusion of dishonesty by Plaintiff was a disputed issue that must be decided by a jury. In discussing the motion, the court addressed whether a plaintiff must show in an FRSA case that the decision-maker had a retaliatory motive:

   It is not necessary in an FRSA retaliation case that the plaintiff show that the decision-maker had a retaliatory motive. See Kuduk v. BNSF Ry. Co., 980 F. Supp. 2d 1092, 1100-01 (D. Minn. 2013), aff’d, 768 F.3d 786 (8th Cir. 2014). That protected activity was a contributing factor to an adverse employment action can be proven through circumstantial evidence of a temporal proximity, pretext, shifting explanations by the employer, antagonism or hostility toward the plaintiff’s protected activity, the falsity of the employer’s explanation or a change in the employer’s attitude toward plaintiff after he/she engaged in protected activity. Id. (citing DeFrancesco v. Union RR Co., ARB No. 10-114, ALJ No.2009-FRS-009, 2012 DOL Ad. Rev. Bd. LEXIS 23 (ARB Feb. 29, 2012)).

   The critical inquiry in a pretext analysis “is not whether the employee actually engaged in the conduct for which he was terminated, but whether the employer in good faith believed that the employee was guilty of the conduct justifying discharge.” Gunderson v. BNSF Ry. Co., 850 F.3d 962, 969 (8th Cir. 2017) (citing McCullough v. Univ. of Ark. for Med. Scis., 559 F.3d 855, 861-62 (8th Cir. 2009)).

PUNITIVE DAMAGES; DEFENDANT’S “GOOD FAITH EFFORTS TO COMPLY” DEFENSE FOUND NOT APPROPRIATE FOR DECISION AS A MATTER OF LAW ON MOTION FOR SUMMARY JUDGMENT

In Smith v. BNSF Ry. Co., No. 17-cv-00977 (D. Col. July 18, 2019) (2019 U.S. Dist. LEXIS 119794; 2019 WL 3230975), the court denied Defendant’s motion for summary judgment on the question of punitive damages. Defendant had submitted documents showing that it made good faith efforts to ensure compliance with the law. The court, however, found that Defendant’s good faith could not be decided as a matter of law, but necessarily only after the presentation of evidence at the trial. When considering the motion, the court outlined the law on punitive damages in an FRSA case:

   FRSA provides that relief under the statute shall include “compensatory damages, including compensation for any special damages sustained as a result of the discrimination, including litigation costs, expert witness fees, and reasonable attorney fees” and “may include punitive damages in an amount not to exceed $250,000.” 49 U.S.C.A. § 20109(e). It does not specify, however, the standard for awarding punitive damages.

   The Supreme Court has looked to general common law principles—rather than the standard for awarding punitive damages adopted by any particular state—in determining FRSA punitive damages. Smith v. Wade, 461 U.S. 30, 56, 103 S. Ct. 1625, 75 L. Ed. 2d 632(1983). In Smith, the court said “[p]unitive damages are to be awarded only when “the defendant’s conduct is shown to be motivated by evil motive or intent, or when it involves reckless or callous indifference to the federally protected rights of others.” Id. See also Worcester v. Springfield Terminal Ry. Co., 827 F.3d 179, 182 (1st Cir. 2016) (applying federal common law in FRSA case.) The Tenth Circuit has affirmed this interpretation in other contexts as well. See Flitton v. Primary Residential Mortg., Inc., 238 F. App’x 410, 419 (10th Cir. 2007) (In the context of punitive damages under Title VII actions, punitive damages are appropriate only if a plaintiff proves that her employer engaged in intentional discrimination “with malice or with reckless indifference to the federally protected rights of an aggrieved individual.”); Jolivet v. Deland, 966 F.2d 573, 577 (10th Cir. 1992)(punitive damages in §1983 action.)

   The Department of Labor is the federal agency charged with administering FRSA. See 49 U.S.C. § 20109(d). Congress made clear that a primary purpose of FRSA was that “[l]aws, regulations, and orders related to railroad safety . . . shall be nationally uniform to the extent practicable.” 49 U.S.C. § 20106. The DOL’s Administrative Review Board has interpreted the FRSA standard for awarding punitive damages to be the same as the Smith standard. Petersen v. Union Pac. R.R. Co., ARB Case No. 13-090, 2014 DOL Ad. Rev. Bd. LEXIS 89, 2014 WL 6850019, at *3 (Nov. 20, 2014); see also BNSF Ry. Co. v. United States DOL, 816 F.3d 628, 642 (10th Cir. 2016).

   In Kolstad v. American Dental Ass’n, 527 U.S. 526, 535, 119 S. Ct. 2118, 144 L. Ed. 2d 494 (1999), the Supreme Court explained that “malice” or “reckless indifference” does not require “a showing of egregious or outrageous” conduct. Instead, a plaintiff must present proof that the employer acted “in the face of a perceived risk that its actions will violate federal law.” Id. at 536.

   Plaintiffs seeking punitive damages have a formidable burden. “[A]n award of punitive damages requires an assessment of [the defendant’s] subjective state of mind.” Wulf v. City of Wichita, 883 F.2d 842, 867 (10th Cir. 1989). The focus must be on whether the defendant’s actions call for “deterrence and punishment over and above that provided by compensatory awards.” Smith, 461 U.S. 30 at 54, 103 S. Ct. 1625, 75 L. Ed. 2d 632; Jolivet, 966 F.2d at 577.

   Even if a plaintiff can show unlawful retaliation, BNSF “may avoid vicarious punitive damages liability by showing that it made good faith efforts to comply with [the FRSA].” BNSF Ry. Co. v. United States Dep’t of Labor Admin. Review Bd., 867 F.3d 942, 949 (8th Cir. 2017).

Slip op. at 17-18.

Bostek v. Norfolk S. Ry. Co., No. 16-cv-2416 (N.D. Ohio July 2, 2019) (2019 U.S. Dist. LEXIS 110623; 2019 WL 2774147) (Memorandum Opinion)

Casenote(s):

PROTECTED ACTIVITY UNDER FRSA § 20109(a)(4); GOOD FAITH REQUIREMENT REQUIRES BOTH A GOOD FAITH BELIEF THAT AN INJURY WAS WORK-RELATED, AND GOOD FAITH IN MAKING THE INJURY REPORT

CONTRIBUTING FACTOR CAUSATION; DISTRICT COURT NOTES SPLIT IN CIRCUITS ON WHETHER PLAINTIFF MUST SHOW RETALIATORY MOTIVE, AND INSTEAD APPLIES SEVEN-FACTOR TEST DERIVED FROM GIBBS AND WAGNER

In Bostek v. Norfolk S. Ry. Co., No. 16-cv-2416 (N.D. Ohio July 2, 2019) (2019 U.S. Dist. LEXIS 110623; 2019 WL 2774147), Plaintiff failed a “fitness-for-duty” drug test, and was subject to random drug tests for five years thereafter. During the second of those drug tests, Plaintiff needed to go to her car to obtain her driver’s license for identification, and allegedly slipped and fell on a metal staircase. Plaintiff was taken to the hospital and later discharged with a diagnosis of shoulder contusions. During the hospital visit, attempts were made to obtain a urine sample for the drug test, but Plaintiff was unable to produce the requisite volume even after being given fluid. Defendant’s medical department attempted numerous times to communicate with Plaintiff in the days following the incident to notify her of the scheduling of a “Shy Bladder Exam.” It finally reached Plaintiff the day before the scheduled exam, but Plaintiff informed the medical department that she had a conflicting doctor’s appointment. The medical department did not reschedule the exam. Plaintiff attended the doctor’s appointment rather than the shy bladder exam. Defendant then charged Plaintiff with rules violations for failing to attend the follow up medical examination, and for making false and/or conflicting statement on the day of the slip and fall incident. After a hearing, Plaintiff was dismissed from service based on both charges. Plaintiff then filed a 49 U.S.C. § 20109(a)(4) complaint. Defendant moved for summary judgment, alleging that the injury report was not made in good faith, and that Plaintiff could not establish that her protected activity was a contributing factor in the decision to terminate her employment.

Good Faith

The court stated that the FRSA good faith requirement requires both “a good faith belief that an injury was work-related, and good faith in making the injury report.” Slip op. at 5 (citations omitted). Here, it was undisputed that the reported injury occurred at work, so the remaining question was whether the report was submitted with good faith intent. Defendant contended that the report had the ulterior motive of avoiding the random drug test, and pointed to the fact that Plaintiff’s statements about the incident conflicted with others who were present. The court, however, declined to weigh evidence on summary judgment, but rather stated that it must view the evidence in the light most favorable to Plaintiff and determine whether there was sufficient evidence on which the jury could reasonably find for the plaintiff. The court found that there was a genuine issue of fact whether the inconsistency was a product of bad faith, and that a jury could reasonably conclude that Plaintiff reported the injury in good faith.

Contributing Factor

The court first noted a debate among courts whether the contributing factor prong of an FRSA complaint requires a showing that retaliation was a motivating factor, citing decisions form the 4th, 7th and 8th Circuits, or whether a plaintiff need not demonstrate retaliatory motive, citing a 3d Circuit decision. The court noted that the Sixth Circuit had yet to address this question, and that many trial courts in the Sixth Circuit had used a seven factor test derived from Gibbs v. Norfolk S. Ry. Co., No. No. 3:14-cv-587, 2018 WL 1542141, at *8 (W.D. Ky. Mar. 29, 2018) and Wagner v. Grand Trunk W. R.R., No. 15-10635, 2017 WL 733279, at *4 (E.D. Mich. Feb. 24, 2017)). The court used the seven factor test:

(i) temporal proximity
(ii) indications of pretext
(iii) inconsistent application of an employer’s policies
(iv) shifting explanations for an employer’s actions
(v) antagonism or hostility toward a complainant’s protected activity
(vi) falsity of an employer’s explanation for the adverse action taken, and
(vii) change in the employer’s attitude toward the complainant after he engages in protected activity.

The court reviewed the evidence in the light most favorable to the nonmoving party pertaining to each element, and denied summary judgment. In particular, the court noted Defendant’s failure to comply with DOT guidelines and Federal Railroad Administration regulations relating to drug testing, and possible pretext on the part of Defendant’s superintendent and hearing officer. The court also denied summary judgment as to Defendant’s affirmative defense and as to punitive damages.

PLEADING OF CLAIMS; LIBERAL PLEADING STANDARDS DO NOT APPLY AT SUMMARY JUDGMENT STAGE; WHERE COMPLAINT IS AMBIGUOUS, SIXTH CIRCUIT APPLIES A “COURSE OF THE PROCEEDINGS” TEST TO DETERMINE WHETHER DEFENDANT WAS ON NOTICE; DISTRICT COURT DOES NOT PERMIT PLAINTIFF TO PROCEED ON INTERFERENCE CLAIM UNDER FRSA § 20109(c) WHERE IT WAS RAISED FOR THE FIRST TIME IN RESPONDING TO A MOTION FOR SUMMARY JUDGMENT, WAS NOT PLEADED IN HER AMENDED COMPLAINT AND SHE HAD NOT SOUGHT LEAVE TO AMEND HER AMENDED COMPLAINT

In Bostek v. Norfolk S. Ry. Co., No. 16-cv-2416 (N.D. Ohio July 2, 2019) (2019 U.S. Dist. LEXIS 110623; 2019 WL 2774147), Plaintiff filed a FRSA complaint alleging that she was fired in retaliation for reporting a work related injury. Defendant moved for summary judgment. In opposing summary judgment, Plaintiff raised a claim not only for retaliation, but also for interference with prompt medical attention under 49 U.S.C. § 20109(c).

The court first noted that the liberal pleading standard does not apply at the summary judgment stage, and that to prevent an unfair surprise, a plaintiff may not expand claims to assert new theories for the first time in response to a summary judgment motion. Where a complaint is ambiguous, the Sixth Circuit applies a “course of the proceedings” standard to determine whether the defendant was on notice of the claim. The court reviewed Plaintiff’s amended complaint and found that it only stated a single retaliation claim. The court noted that the evidence suggested that Plaintiff may have alleged a colorable FRSA interference claim, she had not done so, and had not sought leave to amend her amended complaint to add such a claim. The court stated that “Therefore, the FRSA interference claim cannot be presented now.” Slip op. at 19.

Sparre v. United States DOL, 924 F.3d 398 (7th Cir. May 10, 2019) (Nos. 18-1105, 18-2348) (2019 U.S. App. LEXIS 14017; 2019 WL 2064060) (Opinion)

Case below ARB No. 18-022, ALJ No. 2016-FRS-00038

Casenote(s):

EQUITABLE TOLLING OF PERIOD FOR PETITIONING FOR ARB REVIEW; ARB DID NOT ABUSE ITS DISCRETION IN FINDING THAT “GARDEN VARIETY” NEGLECT BY COMPLAINANT’S ATTORNEYS DID NOT CONSTITUTE EXTRAORDINARY CIRCUMSTANCES THAT PREVENTED A TIMELY FILING OF THE PETITION

In Sparre v. United States DOL, Nos. 18-1105, 18-2348 (7th Cir. May 10, 2019) (2019 U.S. App. LEXIS 14017) (Opinion) (case below ARB No. 18-022, ALJ No. 2016-FRS-00038), the ALJ had granted summary decision in favor of the Respondent. The ALJ’s decision included complete instructions for filing a petition for review and a statement of the 14 day limitations period. The Complainant did not file an appeal with the ARB, but rather—30 days after the ALJ’s decision—appealed directly to the 7th Circuit. DOL filed a motion to dismiss for failure to timely exhaust administrative remedies. The 7th Circuit declined to take the case, and remanded to the ARB for the limited purpose of of ruling on the petition for review. The ARB ruled that the petition was not timely under 29 C.F.R. § 1982.110(a) (14 days to file for ARB review), that the Complainant was not entitled to equitable tolling, that the ALJ’s decision was affirmed, and that the ARB appeal was dismissed. The Complainant then filed an appeal of the ARB’s decision. The 7th Circuit found that the ARB’s decision finding the ARB petition to be untimely was not arbitrary or capricious. The court also found that the ARB’s decision finding an absence of grounds for equitable tolling was sound and supported, and not an abuse of discretion. The ARB had reviewed the Complainant’s “smorgasbord of arguments” to support a finding that he was prevented in some extraordinary way from filing his petition timely, and found that the arguments only showed “garden variety” neglect on the part of the Complainant’s attorneys. Because the court affirmed the ARB’s dismissal of an untimely petition for ARB review, it also denied for lack of jurisdiction the Complainant’s petition for review of the ALJ’s grant of summary decision.

Wooten v. BNSF Railway Co. , No. 16-cv-00139 (D. Mont. Apr. 23, 2019) (Order [on post-trial motions])

Case below ALJ No. 2016-FRS-00059

Casenote(s):

FRONT PAY IS A PERMITTED REMEDY IN FRSA RETALIATION CASES; JURY RENDERS AN ADVISORY VERDICT ON FRONT PAY

FRONT PAY FOUND TO BE WARRANTED WHERE AN EXTENDED PERIOD HAD PASSED SINCE THE INCIDENT, AND THE PROTRACTED AND AGGRESSIVELY LITIGATED LAWSUIT DEMONSTRATED SIGNIFICANT HOSTILITY AND ANIMOSITY BETWEEN THE PLAINTIFF AND THE DEFENDANT

EMOTIONAL DISTRESS; 9TH CIRCUIT DOES NOT IMPOSE AN OBJECTIVE EVIDENCE REQUIREMENT ON EMOTIONAL DISTRESS AWARDS

EMOTIONAL DISTRESS; REMITTITUR; $500,000 JURY AWARD NOT OVERTURNED WHERE PLAINTIFF’S TESTIMONY HAD BEEN COMPELLING; COURT TOOK INTO ACCOUNT THAT PLAINTIFF CAME FROM A “RAILROAD FAMILY” IN A SMALL “RAILROAD TOWN” AND HAD BEEN DECRIED BY THE RAILROAD AS A LIAR

EMOTIONAL DISTRESS AWARD; PLAINTIFF IS ENTITLED TO PREJUDGMENT INTEREST, WHICH IN FEDERAL DISTRICT COURT IS CALCULATED BASED ON 28 U.S.C. § 1961 RATHER THAN DOL REGULATIONS

“GROSS UP” FOR TAX CONSEQUENCES OF LUMP SUM AWARD; COURT DENIED PLAINTIFF’S REQUEST FOR A “GROSS UP” IN THIS CASE, NOTING THAT HE WAS NOT CERTAIN THAT THE JURY HAD NOT ALREADY CONSIDERED TAX CONSEQUENCES; THAT PLAINTIFF HAD NOT CITED CONTROLLING AUTHORITY REQUIRING THE COURT TO EXERCISE EQUITABLE POWERS TO ORDER A GROSS UP, AND THAT THE BALANCE OF EQUITIES WERE NOT SHOWN TO FAVOR A GROSS UP

ATTORNEY’S FEES; COURT AGREED THAT PLAINTIFF HAD REASONABLY ENGAGED A LAW FIRM THAT SPECIALIZED IN FRSA RETALIATION LITIGATION, BUT REJECTED NOTION OF APPLYING A NATIONWIDE COMMUNITY OF LAWYERS WITH THAT EXPERTISE STANDARD FOR DETERMINING THE RELEVANT COMMUNITY; RATHER, THE COURT FOUND THAT THE PACIFIC NORTHWEST WAS THE RELEVANT COMMUNITY FOR A CASE HEARD IN MONTANA

ATTORNEY’S FEES’; WHERE DEFENDANT OBJECTED TO ALL BUT 33 HOURS OF NEARLY 755 HOURS CLAIMED, THE COURT GENERALLY FOUND THAT THE OBJLECTSIONS WERE UNREASONABLE AND NOTED THAT THE COURT’S ROLE WAS TO DO ROUGH JUSTICE AND NOT TO ACHIEVE AUDITING PERFECTION

LITIGATION COSTS; TAXABLE “OUT-OF-POCKET” EXPENSES INCLUDE POSTAGE CHARGES, TRAVEL CHARGES (BUT REDUCED IF FLYING FIRST CLASS), HOTEL EXPENSES WITH PER DIEM, VIDEOGRAPHY AND TRANSCRIPTION COSTS; EXPENSES FOR LEGAL RESEARCH DATABASES, HOWEVER, ARE PART OF THE ATTORNEYS’ HOURLY RATE AND NOT SEPARATELY COMPENSABLE

BILL OF COSTS; TAXABLE AND NON-TAXABLE EXPENSES; PETITION FOR COSTS FOR EXPLICATION MUST COMPLY WITH LOCAL RULE

In Wooten v. BNSF Railway Co., No. 16-cv-00139 (D. Mont. Apr. 23, 2019), the Plaintiff filed a complaint alleging that he was unlawfully terminated by BNSF in retaliation for his report of an on-the-job injury. A jury found in his favor for Federal Employers’ Liability Act (“FELA”) and Federal Rail Safety Act (“FRSA”) violations, but not on a count under the Locomotive Inspection Act (“LIA”). “On his FRSA claim, the jury awarded Wooten $1,407,978 in lost wages and benefits in the future, reduced to present value, and $500,000 for his mental and emotional humiliation or pain and anguish. . . . Additionally, after finding that BNSF’s conduct was malicious or in reckless disregard for Wooten’s rights, the jury awarded Wooten $249,999 in punitive damages.” Both the Plaintiff and Defendant filed post-trial motions.

Defendant’s Post-Trial Motions

Asserted Failures of Proof, Errors, Etc.

The court was not persuaded by the Defendant’s arguments that it should have been granted judgment as a matter of law, that it was prejudiced by the court’s decision not to bifurcate the FRSA claim and the punitive damages question from the FELA and LIA claims, that the Plaintiff had made an argument during trial that the CBA procedures were unfair which improperly influenced the jury, that various of the jury instructions were a misstatement of the law, that the court made a number of errors on evidentiary rulings, and that the jury’s verdicts were inconsistent.

Remittitur

— Front Pay

The jury awarded the Plaintiff $1,407,978 for lost wages and benefits in the future, reduced to present value. The first question was whether front pay could be substituted for reinstatement. The court found that “reinstatement has not been so distinctly provided for in the FRSA context that it should be considered to be a legal remedy rather than an equitable one.” Id. at. 25. The next question was whether front pay was a proper question for the jury. The court first made a finding that reinstatement was not appropriate in this case because of the passage of time since the incident and because the “protracted and aggressively litigated lawsuit demonstrates significant hostility and animosity between BNSF and Wooten.” Id. at 28. The court then treated the jury’s front pay award as advisory. The court noted that the jury had received appropriate instructions and had heard extensive and detailed evidence and testimony on the question. The court accepted the advisory award for front pay as supported by the evidence, not grossly excessive, and consistent with the statutory mandate entitling the Plaintiff “to all relief necessary to make [him] whole.” Id. at 29 (quoting 49 U.S.C. § 20109(e)(1)).

— Emotional Distress

The jury awarded the Plaintiff $500,000 for mental and emotional humiliation or pain and anguish. The Defendant argued that the Plaintiff failed to prove that he suffered emotional distress, relying heavily on the contention that emotional distress damages must be supported by objective evidence. The court, however, noted that the Ninth Circuit does not impose an objective evidence requirement on emotional distress damage awards. The court noted that the Plaintiff’s testimony had been compelling, “[p]articularly in light of the fact that Wooten came from a ‘railroad family’ in a small ‘railroad town’ and was wrongfully terminated and decried as a liar by the railroad.” Id. at 30.

— Punitive Damages

The jury awarded the Plaintiff $249,999 in punitive damages. The Defendant challenged to the punitive damages award, which according to the court, was grounded in an attempt to apply Kolstad v. American Dental Ass’n, 527 U.S. 526 (1999), a Title VII decision, to the FRSA. Under Kolstad, a defendant is allowed to escape punitive damage liability if it “undertook good faith efforts by having policies in place to prevent retaliation.” The court noted that the Defendant was relying on the Eighth Circuit’s decision in BNSF Railway Co. v. US. Department of Labor Administrative Review Board, 867 F .3d 942 (8th Cir. 2017), as establishing Kolstad as the standard for awarding punitive damages under the FRSA, whereas the Plaintiff was relying on the First Circuit’s decision in Worcester v. Springfield Terminal Railway Co., 827 F.3d 179 (1st Cir. 2016). The court found the First Circuit’s decision to be more convincing. The court proffered that ineffective safeguards against retaliation should not allow a defendant to escape punitive liability. The court rejected the Defendant’s contention that the Plaintiff’s burden on punitive damages was anything more than preponderance of the evidence.

Plaintiff’s Post-Trial Motions

— Adjustments to Jury Award

The jury had only awarded front, and not back pay, on the FRSA claim, and the Plaintiff moved for the court to amend the jury award to include backpay with interest, prejudgment interest on the emotional distress damages award, and a tax “gross up.” The court declined to disturb the jury’s back pay determination, nothing that they had awarded the exact amount for backpay calculated by the Plaintiff’s expert in relation to the FELA claims, and that the jury had been instructed not to award a category of damages under the FRSA that had been awarded under FELA.

The court agreed that the Plaintiff should be awarded prejudgment interest on the emotional distress award in order to fully compensate him for his injury. The court was not, however, persuaded to use the DOL regulations rather than 28 U.S.C. § 1961 to calculate the rate.

The court noted that it had declined to give a jury instruction on a tax gross up and similarly declined to include a line of damages on the verdict form for such relief – but that the court had allowed the Plaintiff to present evidence and argument on such. The court denied a gross up, finding that he was not positive that the jury had not already taken tax consequences of a lump sum payment in account, that the Plaintiff had not cited controlling authority requiring the court to exercise equitable powers to order a gross up, and that the balance of equities were not shown to favor requiring the Defendant “to shoulder the tax consequences of a protracted front pay award intended to compensate Wooten for over 30 years of missed employment with BNSF.” Id. at 40 (footnote omitted).

— Attorneys’ Fees

The case was tried in Montana. The Plaintiff contended that it was necessary to attain attorneys with nationwide expertise in railroad litigation and that the relevant community for a fees determination should be that community, whereas the Defendant contended that the reasonable fees should be the prevailing rates for counsel in Missoula, Montana. The court acknowledged the absence of Montana law firms that represent claimants in FRSA litigation “at this level,” but declined to apply the Plaintiff’s broad “nationwide experience” definition for the relevant community. Rather, the court looked to the Pacific Northwest, and in particular the Western District of Washington where the Plaintiff’s attorneys had recently had the reasonableness of their fee evaluated in two separate cases. After reviewing the matter, the court determined the prevailing market rate as between $425 and $275 an hour for various attorneys, and $110 an hour for a paralegal. The court declined to consider time of a clerical nature spent by an administrative assistant, apparently on the ground that such is considered firm overhead. The court dismissed as unreasonable BNSF’s objections to all but 33 hours of the Plaintiff’s attorneys claimed hours, noting that the court’s role was to do rough justice and not to achieve auditing perfection. The court agreed to cut 10% of the claimed time because of the intermingling of the FRSA and FELA claims. The court noted that the case had been “fought tooth and nail” and indicated that it was not persuaded by BNSF’s claim that the hours claimed were so “stunning” as to result in “no award at all.” The court did make a few adjustments for certain hours, such as hours litigating a matter that concurring that resulted in the Plaintiff’s attorneys’ being sanctioned.

— Taxable and Non-Taxable Litigation Costs

The court noted that while the FRSA does not define “litigation costs,” the Ninth Circuit allows as compensation “out-of-pocket” expenses that would normally be charged to a fee-paying client. Thus, awards were made for postage charges, travel charges (with certain reductions, such as for flying first class), hotel expenses with per diem, and videography and transcription costs. The court found, however, that expenses for legal research databases were part of the attorneys’ hourly rate and not separately compensable.

— Expert Witness Fees

The court declined to get into requiring receipts for all charges based on BNSF’s “insinuation that Wooten has misrepresented what was actually charged on his invoices.” Id. at 63. The court reiterated that it “declines to become a ‘green-eyeshade accountant’ and will pursue ‘rough justice’ in relation to this fee award.” The court did reject a few unsupported invoices, but awarded $233,993.70 in expert witness fees.

Bill of Costs

The Plaintiff submitted a bill of costs, which BNSF objected to in numerous aspects. The court noted that it may tax costs as provided in 28 U.S.C. § 1920. It found that BNSF properly objected to inclusion of pro hac vice fees, and limited recovery to the $400 clerk of court filing fee. It allowed costs of service of summons and subpoenas, except for a $75 service fee accrued without a waiver request. It allowed fees for printed or electronically recorded transcripts. It allowed witness fees, except it disallowed fees for deposition testimony that should not be paid under the local rule. It disallowed all fees for explication because the Plaintiff failed to conform his request to the local rule. It disallowed fees for setting up video conferencing to allow to experts to testify remotely.

March v. Metro-North R.R., 369 F. Supp. 3d 525 (S.D.N.Y. Mar. 28, 2019) (No. 16-cv-8500) (2019 U.S. Dist. LEXIS 53677; 2019 WL 1409728) (Opinion and Order)

Casenote(s):

PROTECTED ACTIVITY; “GOOD FAITH” REPORTING OF HAZARDOUS CONDITION ELEMENT REQUIRES BOTH SUBJECTIVE AND OBJECTIVE REASONABLENESS; WHERE RELYING ON UNDISPUTED FACTS, COURT MAY DETERMINE OBJECTIVE REASONABLENESS AS A MATTER OF LAW

PROTECTED ACTIVITY; “GOOD FAITH” REPORTING OF HAZARDOUS CONDITION ELEMENT; PLAINTIFF’S OBSTINATE AND UNCOOPERATIVE BEHAVIOR FOUND TO BE INDICATIVE OF LACK OF REASONABLENESS

CAUSATION; ALTHOUGH PLAINTIFF IS NOT REQUIRED TO PROVE EMPLOYER’S MOTIVE, ESSENCE OF A RETALIATION CLAIM UNDER THE FRSA IS DISCRIMINATORY ANIMUS; WHERE ONLY DISTINGUISHING FACTOR BETWEEN INSTANT REPORT OF DEFECT AND PRIOR SIMILAR REPORT WAS PLAINTIFF’S OBSTINATE AND UNCOOPERATIVE BEHAVIOR, COURT GRANTED SUMMARY JUDGMENT FINDING THAT THE PLAINTIFF’S TERMINATION WAS BASED ON INSUBORDINATION

In March v. Metro-North R.R., No. 16-cv-8500 (S.D.N.Y. Mar. 28, 2019) (2019 U.S. Dist. LEXIS 53677; 2019 WL 1409728), the Plaintiff brought a FRSA complaint alleging that he suffered retaliation in violation of 49 U.S.C. § 20109 when he was removed from service for insubordination after reporting a defective wiper blade on one of the trains. The Plaintiff had refused a supervisor’s order to change the blade because he believed it was unsafe to use a ladder. The court granted the Defendant’s motion for summary judgment.

Protected Activity

The court found that the only basis in the statute for protected activity in this case was “reporting, in good faith, a hazardous safety or security condition or refusing to work around a hazardous safety condition.” 49 U.S.C. § 20109 (b)(1)(A). The court rejected the Plaintiff’s contention that this provision only requires a subjective belief that there was a hazardous condition, and instead found that the belief must have also been objectively reasonable. The court noted that it was “appropriate for it to determine what was objectively reasonable insofar as it is relying on undisputed facts. See e.g., Hernandez v. Metro-N. Commuter R.R., 74 F. Supp. 3d 576 (S.D.N.Y. 2015); Kerman v. City of New York, 374 F.3d 93, 109 (2d Cir. 2004) (in context of qualified immunity, it was appropriate for court to determine whether “defendant official’s conduct was objectively reasonable” as a matter of law).” Slip op. at 12 n.3.

The court found that “[w]hile Plaintiff may have subjectively believed there was a safety risk with the blade and with using the ladder to fix it, Plaintiff fails to support that his beliefs were objectively reasonable.” Id. at 13. Although he testified that the wiper blade was “bending” or “distorting” he did not identify any negative functional effect, and it was undisputed that the Plaintiff never relayed the precise issue or defect with the blade in subsequent conversations with supervisors, or in the contemporaneous ME-9 (defect report) form. Multiple experienced supervisors inspected the blades and could not find a defect.

As to use of the ladder, the court found enough undisputed facts to determine that it was not objectively reasonable for the Plaintiff to refuse to change the wiper. Among other factors, the court considered the Plaintiff’s obstinate behavior refusing to cooperate or to discuss the possibility of reasonable alternatives to using a ladder. The court found that “the overwhelming evidence, including [the Plaintiff’s] own testimony, shows that he was being persistently difficult, vague, and uncooperative and that there was no urgent or imminent threat of danger posed by the blade.” Id. at 16. Finally, the court found that the Plaintiff’s knowledge of a good faith process for reporting safety issues that would have protected him from disciplinary action, and his decision not to invoke that process during the wiper blade incident, further cemented the lack of an objectively reasonable safety concern.

Causation; Discriminatory Animus

The court stated that “While a plaintiff does not have to provide proof of the employer’s motive, ’at bottom, the essence of a retaliation claim under the FRSA is “discriminatory animus.”’ Lockhart, 266 F. Supp. 3d at 663.’” Slip op. at 10; see also slip op. at 16-17. As to the instant case, the court noted that the Plaintiff had made the same type of a complaint one month earlier and was not disciplined for it, and that the Defendant had immediately responded to the report of the wiper blade concern underlying the instant FRSA complaint. The court found that the only difference in the two instances was blatant insubordination and uncooperativeness on the second; that was the reason for the dismissal. The court also noted that the timeline of the incident did not support a finding that the termination was related to whether the blade was deficient; rather the termination was for repeated refusal to fix the blade or to cooperate with supervisors.

Necci v. Long Island R.R. Co., No. 16-CV-3250 (E.D. N.Y. Mar. 21, 2019) (2019 U.S. Dist. LEXIS 47231; 2019 WL 1298523) (Memorandum and Order)

Casenote(s):

CONTRIBUTING FACTOR CAUSATION; COURT APPLIES FIVE FACTOR TEST OF TOMKINS v. METRO-NORTH; WEIGHT GIVEN TO DETERMINATION OF NATIONAL RAILROAD ADJUSTMENT BOARD

PROTECTED ACTIVITY NOT SHOWN WHERE SAFETY ISSUE NOT DISCOVERED UNTIL AFTER WORK REFUSAL

PROTECTED ACTIVITY NOT SHOWN WHERE ALLEGED VIOLATION WAS OF STATE, AND NOT FEDERAL, CODE, RULE OR REGULATION

PROTECTED ACTIVITY NOT SHOWN BY REFUSAL TO MOVE FLOORMATS BECAUSE THEY MIGHT BE TOO HEAVY WHERE PLAINTIFF FAILED TO SHOW THAT IT WAS OBJECTIVELY REASONABLE FOR HER TO BELIEVE THAT THE HAZARDOUS CONDITION PRESENTED AN IMMINENT DANGER OF DEATH OR SERIOUS INJURY

In Necci v. Long Island R.R. Co., No. 16-CV-3250 (E.D. N.Y. Mar. 21, 2019) (2019 U.S. Dist. LEXIS 47231; 2019 WL 1298523), the Plaintiff alleged that the Defendant retaliated against her by decertifying her as a locomotive engineer after an incident in 2013 in which the train was 50 minutes late and after an internal hearing the Defendant found a pattern of improper performance making her an unfit and dangerous train operator. The Plaintiff also alleged retaliation based on her firing after a subsequent incident in 2016, at which time she had been returned to a Station Appearance Maintainer (“SAM”) position. In this second incident, the Defendant found that she had disobeyed and refused to follow direct orders to vacuum and to roll up floormats. The Plaintiff had refused based on her belief that it was unsafe to use electrical outlets in public areas and that she needed instruction and help on rolling up the mats.

2013 Decertification Incident – Five Factor Test on Contributing Factor Causation

On motion for summary judgment, the Defendant argued that the Plaintiff’s protected activities (inspecting the train; reporting safety concerns; slowing the train for a safety hazard) were not contributing factors in her decertification. The court analyzed the contributing factor question under the five factor framework articulated in Tompkins v. Metro-North Commuter Railroad, No. 16-CV-9920, 2018 WL 4573008 at * 7 (S.D.N.Y. Sept. 24, 2018), appeal filed, 2d Cir. Case No. 18-3174. The Tompkins court had in turn cited Gunderson v. BNSF Ry. Co., 850 F.3d 962, 969 (8th Cir. 2017). The court found that factors concerning the temporal and substantive connection between the protected activities and the adverse employment action favored the Plaintiff, although the court noted that the protected activities were not part of the charges lodged against the Plaintiff. Weighing against the Plaintiff was the lack of evidence that any of the lower-level supervisors accountable for addressing the Plaintiff’s safety complaints played a decision-making role in the adjudication of the charges against her. The court also noted that the Defendant had only decertified the Plaintiff as a locomotive engineer and reinstalled her as a SAM—which eroded the inference of a causal connection.

The court next analyzed the weight to be given to the National Railroad Adjustment Board of the National Mediation Board’s (NRAB) decision to uphold the decertification. The Plaintiff did not argue that the NRAB was partial, but stressed that her employer conducted the evidentiary hearing. The court found no evidence of prejudice or of an incomplete or tainted record before the NRAB. The court found that the NRAB’s decision was supported by the evidence. In sum, the court found that the fact that the Plaintiff was decertified after disciplinary hearings at which she was represented by union counsel —and that the decisions to discharge were upheld by the railroad internally and by the NRAB—weighed in favor of the Defendant. The court stated that “while the NRAB’s decision does not preclude Plaintiff’s FRSA claim, it has probative weight in establishing that the charged misconduct—and not Plaintiff’s protected activities—motivated LIRR’s disciplinary action.” Slip op. at 40 (citation omitted). Weighing the factors, the court granted summary judgment as to the decertification element of the complaint.

2016 Discipline

— Protected Activity

As to the refusal to vacuum the floormats based on safety concerns, the court found that this was not protected activity because the Plaintiff had not raised the question of whether it was safe to use a vacuum not rated to handle wet floors until after the incident, and thus a concern about the vacuum’s suitability could not have driven her refusal to vacuum. The court also noted that, even overlooking the chronological flaw in the Plaintiff’s argument, the Plaintiff did not satisfy the criteria of 49 U.S.C. § 20109(b)(2)(B)(i) because she had not shown the “objective reasonableness of her fear that using electrical outlets would have resulted in a fire, an electrical failure, or the electrocution of herself or others.” Id.at 44. To the contrary, the court cited the testimony of one of Defendant’s employees that SAMs “vacuum both wet and dry floormats at LIRR stations and regularly use electrical sockets at stations to power the vacuums.” Id. at 44-45.

As to the refusal to vacuum based on safety concerns based on asserted illegality, the court noted that 49 U.S.C. § 20109(a)(2) protects against refusals to violate “ Federal laws, rules, and regulations” regarding railroad safety and security, and that the Plaintiff had only indicated a belief that the outlets violated New York codes, rules and regulations, and not any federal provision. The court also noted that the Plaintiff offered no evidence or argument that her use of the outlets would actually have violated the New York provisions.

The court found that the Plaintiff’s initial refusal to move floormats because she did not know how heavy they were was not protected because the evidence failed to show that it was objectively reasonable for her to believe that “the hazardous condition present[ed] an imminent danger of death or serious injury. 49 U.S.C. § 20109(b)(2)(B)(i).”

Thus, because there was no protected activity during the 2016 incident, the court limited its consideration of contributory factor causation to the protected activities from the 2013 incident.

— Contributory Factor Causation

The court again applied the five factor test on contributory factor causation, and again granted summary judgment in favor of the Defendant. The court found that the disciplinary action in 2016 was completely unrelated to the 2013 protected activities. The court found that the disciplinary proceedings were remote in time to the protected activities. The court found an intervening event that independently justified the disciplinary action—the charged misconduct. The court found that the official who made the disciplinary decision had not met the Plaintiff and had no knowledge of the circumstances surrounding her disqualification as a locomotive engineer. The court reviewed the disciplinary proceedings and rejected the Plaintiff’s claim that she had not able to introduce evidence, and found that NMB’s decision upholding the charges was supported by substantial evidence. The court thus found that all five factors weighed against the Plaintiff’s claim.

BNSF Railway Co. v. Loos, __ U.S. __, 139 S. Ct. 893, 203 L. Ed. 2d 160 (U.S. Mar. 4, 2019) (No. 17-1042) (2019 U.S. LEXIS 1734; 2019 WL 100583) (Opinion)

Case below: 865 F.3d 1106 (8th Cir.)

Casenote(s):

BACK PAY; FELA DAMAGES FOR LOST WAGES, SUCH AS BACKPAY, ARE TAXABLE UNDER RRTA

In BNSF Railway Co. v. Loos, 139 S. Ct. 893, 203 L. Ed. 2d 160, 2019 U.S. LEXIS 1734, 2019 WL 100583 (U.S. Mar. 4, 2019), the U.S. Supreme Court held that FELA damages for lost wages, like backpay, are “compensation” taxable under the Railroad Retirement Tax Act (“RRTA”). Reversing Loos v. BNSF Ry., 865 F.3d 1106 (8th Cir. Aug. 3, 2017). See also Loos v. BNSF Railway Co., No. 13-cv-3373 (D. Minn. Apr. 22, 2019) (ordering offset of jury damages award for payment of taxes under the RRTA.

Fresquez v. BNSF Ry. Co., No. 17-cv-00844 (D. Colo. Feb. 19, 2019) (Jury Verdict Form)

Case below: ALJ No. 2017-FRS-00018

Casenote(s):

Jury awarded $800,000 in compensatory damages and $250,000 in punitive damages.

Frost v. BNSF Ry. Co., 914 F.3d 1189 (9th Cir. Jan. 30, 2019) (No. 17-35513) (2019 U.S. App. LEXIS 3062) (Opinion)

Case below: D. Mont. No. 15-cv-00124

Casenote(s):

NINTH CIRCUIT HOLDS THAT UNDER THE FRSA’S CLEAR STATUTORY SCHEME, A PLAINTIFF MEETS HIS BURDEN OF SHOWING DISCRIMINARY INTENT BY PROVING THAT THE PROTECTED CONDUCT WAS A CONTRIBUTING FACTOR TO THE EMPLOYER’S ADVERSE ACTION; COURT NOTES THAT THIS INTERPRETATION IS CONSISTENT WITH AUTHORITY FROM THE THIRD CIRCUIT BUT IT MAY CONFLICT WITH AUTHORITY FROM THE SEVENTH AND EIGHTH CIRCUITS; “HONEST BELIEF” JURY INSTRUCTION PRESUMPTIVELY PREJUDICIAL

In Frost v. BNSF Ry. Co., 914 F.3d 1189 (9th Cir. Jan. 30, 2019) (2019 U.S. App. LEXIS 3062), the Plaintiff-Appellant (Frost) had alleged that the Defendant-Appellee (BNSF) violated the Federal Railroad Safety Act (FRSA) when it disciplined and ultimately terminated him after he committed a pair of safety rule violations and filed an injury report. The district court provided jury instructions that “BNSF could not be liable if it terminated Frost due to an ‘honest belief’ that he violated the company’s safety rules.” Slip op. at 3. The jury returned a verdict in favor of BNSF. On appeal, the Ninth Circuit found that the “honest belief” jury instruction was “inconsistent with the FRSA‘s clear statutory mandate and [the court’s] prior caselaw….” Id. The court thus reversed and remanded for a new trial.

The court began by reviewing its recent decision in Rookaird v. BNSF Railway Co., 908 F.3d 451 (9th Cir. 2018). The court stated:

   Importantly, the only burden the statute places on FRSA plaintiffs is to ultimately prove, by a preponderance of the evidence, that their protected conduct was a contributing factor to the adverse employment action—i.e., that it “tend[ed] to affect” the decision in some way. Id. § 42121(b)(2)(B); Rookaird, 908 F.3d at 461.

Id. at 9-10. The court was not persuaded by BNSF’s argument that “the FRSA is a ‘discrimination statute’ and that plaintiffs must therefore affirmatively prove that their employers acted with discriminatory intent or animus in order to bring claims for unlawful retaliation.” Id. at 10. The court explained:

We recognize that the FRSA, by its terms, describes and forbids intentional retaliation, 49 U.S.C. § 20109(a), meaning that employers must act with impermissible intent or animus to violate the statute. What BNSF misses is that the only proof of discriminatory intent that a plaintiff is required to show is that his or her protected activity was a “contributing factor” in the resulting adverse employment action. Showing that an employer acted in retaliation for protected activity is the required showing of intentional discrimination; there is no requirement that FRSA plaintiffs separately prove discriminatory intent. 49 U.S.C. § 42121(b)(2)(B). Indeed, in Tamosaitis v. URS Inc., 781 F.3d 468 (9th Cir. 2015), we reviewed claims under the Energy Reorganization Act’s whistleblower retaliation protections that employ the same statutory framework as the FRSA. Id. at 480. We explained: “Under this framework, the presence of an employer’s subjective retaliatory animus is irrelevant. All a plaintiff must show is that his ‘protected activity was a contributing factor in the adverse [employment] action.’” Id. at 482 (alterations in original) (quoting 29 C.F.R. § 24.104(f)(1)). Coppinger-Martin v. Solis, 627 F.3d 745 (9th Cir. 2010) also involved a retaliation claim arising in the context of a statute with the same “contributing factor” framework. There, we explained that to meet her burden at the prima facie stage a plaintiff need not “conclusively demonstrate the employer’s retaliatory motive.” Id. at 750 (emphasis added). Rather, the employer’s retaliatory motive was established by proving that the protected conduct was a contributing factor to the employer’s adverse action.

Id. at 10-11 (emphasis as in original). The court went on to explain why it did not view the Eighth Circuit’s decision in Kuduk v. BNSF Railway Co., 768 F.3d 786 (8th Cir. 2014), as imposing an obligation on a plaintiff to prove retaliatory intent beyond the FRSA’s statutory scheme. The court further stated

Instead, Rookaird simply confirms that although intent or animus is part of an FRSA plaintiff’s case, showing that plaintiff’s protected conduct was a contributing factor is the required showing of intent or “intentional retaliation[.]” Id. That is, by proving that an employee’s protected activity contributed in some way to the employer’s adverse conduct, the FRSA plaintiff has proven that the employer acted with some level of retaliatory intent.

   Consistent with the language of 49 U.S.C. § 42121(b)(2)(B) and our prior decisions in Tamosaitis, Coppinger-Martin, and Rookaird, we hold that although the FRSA’s prohibition on “discriminat[ing] against an employee” ultimately requires a showing of the employer’s discriminatory or retaliatory intent, FRSA plaintiffs satisfy that burden by proving that their protected activity was a contributing factor to the adverse employment decision. There is no requirement, at either the prima facie stage or the substantive stage, that a plaintiff make any additional showing of discriminatory intent.

Id. at 11-12 (footnote omitted; court noted that this interpretation was consistent with that of the Third Circuit, but that it may conflict with authority from the Seventh and Eighth Circuits).

The court then turned to examine the “honest belief” jury instruction and found that it “may have encouraged the jury to skirt the actual issue and improperly focus on whether discipline was justified for Frost’s safety violation instead of whether his protected conduct ‘tend[ed] to affect in any way’ the decision to terminate him.” Id. at 13 (quoting Rookaird). The court found that the instruction was presumptively prejudicial and that BNSF had not rebutted that presumption.

O’Neal v. Norfolk So. Ry. Co., No. 18-15178-E (11th Cir. Jan. 23, 2019) (Entry of Dismissal)

Casenote(s):

The Eleventh Circuit dismissed the appeal pursuant to a joint motion for voluntary dismissal.

Grell v. UPRR R.R. Co., No. 16-cv-534 (D. Neb. Jan. 4, 2019) (2019 U.S. Dist. LEXIS 43449) (Memorandum and Order)

Case below 2016-FRS-00070

Casenote(s):

SUMMARY JUDGMENT; CONTRIBUTING FACTOR; SUMMARY JUDGMENT GRANTED TO RAILROAD WHERE NO DIRECT EVIDENCE OF CONTRIBUTION, SIGNIFICANT TIME GAP BETWEEN PROTECTED ACTIVITY AND ADVERSE ACTION; FAVORABLE EMPLOYMENT DECISIONS POST-DATED THE PROTECTED ACTIVITY, AND THERE WAS NO EVIDENCE THAT THE MANAGER ALLEGED THAT HAVE ENGAGED IN THE RETALIATION PARTICIPATED IN THE DECISION TO TAKE THE ADVERSE ACTION

SUMMARY JUDGMENT; NEW ADVERSE ACTIONS AND THEORIES OF RETALIATION INCLUDED FOR THE FIRST TIME IN AN OPPOSITION TO SUMMARY DECISION NOT CONSIDERED

Grell v. UPRR R.R. Co., No. 8:16-cv-00534, 2019 U.S. Dist. LEXIS 43449 (D. Neb. Jan. 4, 2019) (case below 2016-FRS-00070): Case involving a number of causes of action related to the end of an employment relationship after time off of work on short and long term disability related to psychological conditions attributed, at least in part, to work-related causes. After being cleared to return, Plaintiff sought assignment to a different boss or division. She was allowed time to apply for internal jobs, but when this was unsuccessful her employment was terminated.

The FRSA complaint alleged that Plaintiff had been retaliated against for reporting a work related injury resulting from her boss’ treatment. The injury report occurred in October 2014. The alleged adverse action related to verbal discipline came in August 2014, so the court found it could not have been related to the protected injury report. The other adverse action was the December 2015 termination. The district court concluded that there was no issue of material fact as to whether the injury report contributed to the termination, and so granted summary decision to the railroad. There was no direct evidence of a relation between the two and the gap in time between the injury report and termination weakened any inference to contribution. The court also noted that after the injury report the railroad had made a series of employment decisions favorable to Plaintiff. Plaintiff had also alleged that her direct supervisor was responsible for the retaliation, but there was no evidence that this supervisor was involved in the employment decisions that led to the ultimate termination.

In opposition to summary decision, plaintiff claimed a series of other adverse actions that were allegedly in retaliation for the injury report, but the court declined to consider them since they had not been articulated in the amended complaint and though the pleading requirements are permissive, it is not proper to plead new claims late in the litigation in order to defeat summary decision.

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.

Acosta v. Fairmount Foundry, No. 17-cv-4302 (E.D. Pa. Jan. 14, 2019) (2019 U.S. Dist. LEXIS 6162) (Memorandum), modified on reconsideration, Acosta v. Fairmount Foundry, No. 17-cv-4302 (E.D. Pa. Jan. 16, 2019) (Order)

Casenote(s):

INFORMER’S PRIVILEGE WHERE THERE HAD BEEN AN INADVERTENT DISCLOSURE OF INTERVIEWED EMPLOYEES’ IDENTITIES AND STATEMENTS—BUT NOT WHICH STATEMENTS RELATED TO WHICH EMPLOYEE

DELIBERATIVE PROCESS; OSHA INVESTIGATOR’S RECOMMENDATION TO SUE

In Acosta v. Fairmount Foundry, No. 17-cv-4302 (E.D. Pa. Jan. 14, 2019) (2019 U.S. Dist. LEXIS 6162), DOL inadvertently disclosed redacted material during discovery in an OSH Act retaliation suit, including the names and statements of the three employees OSHA had interviewed. The Defendant destroyed the inadvertently disclosed material. DOL then produced redacted copies of the records. The court granted the Defendant’s motion for in camera review of redacted and withheld documents.

Informer’s privilege

DOL asserted informer’s privilege over disclosure of the names of interviewed employees. The Defendant knew the names of the interviewed employees (OSHA having told the Defendant during the pre-suit investigation who it wanted to interview), but did not know who said what. After conducting in camera review, the court found that the identities of the three employees were not privileged because the Defendant’s need for the contents of their interviews outweighed the risk of retaliation—the court noting that it could not overlook the inadvertent disclosure of the names to the Defendant. A theoretical cloak was not warranted because anonymity was no longer present. The court found that even if the interview statements were redacted, the Defendant could infer that they provided OSHA with inculpatory information because DOL ended up suing the Defendant. The court noted that two of the three interviewees were former employees, reducing the possibility of retaliation.

The court apparently permitted DOL to continue to redact the names of the informants from the statements, but ordered release of information unrelated to informer identity. The court noted, however, that should one of the employees be listed as a witness in a pre-trial memo by either DOL or the Defendant, DOL must immediately produce the unredacted interview notes for a named witness.

Deliberative process

DOL asserted deliberative process privilege over the OSHA investigator’s recommendations to an OSHA assistant regional administrator. The Defendant argued that the privilege did not reach the investigator’s memorandum because it did not reflect any the investigator’s decision making process, and because the privilege does not cover investigator’s report. The court was not persuaded finding that the redacted portion of the report reflected the investigator’s legal opinions and conclusions about whether OSHA should sue on behalf of the complaining employee, and finding that the privilege reaches intra-agency documents reflecting the agency’s decision to sue.

DOL’s motion for reconsideration

On reconsideration, the court allowed some specific continued redactions after balancing the possible limited temporal period of redaction before pre-trial witness disclosures, the Plaintiff’s interest in promoting the confidentiality of informants’ identities, and the Defendant’s failure to show why it needed the information to move for summary judgment based on witness credibility. Acosta v. Fairmount Foundry, No. 17-cv-4302 (E.D. Pa. Jan. 16, 2019).

FDA Food Safety Modernization Act

Byron v. Inst. for Envtl. Health, Inc., No. 18-cv-1415 (W.D. Wash. Dec. 19, 2019) (2019 U.S. Dist. LEXIS 218403; 2019 WL 6913478) (Order Denying Defendant’s Motion for Summary Judgment)

Case below ARB No. 14-087; ALJ No. 2014-FDA-00001

Casenote(s):

PROTECTED ACTIVITY UNDER THE FOOD SAFETY MODERNIZATION ACT; APPLICATION OF REASONABLE BELIEF STANDARD WITH SUBJECTIVE AND OBJECTIVE ELEMENTS; SUBJECTIVE ELEMENT MAY SURVIVE SUMMARY JUDGMENT MOTION BASED ON PLAINTIFF’S OWN TESTIMONY; MISTAKEN BELIEF MAY MEET OBJECTIVE ELEMENT IF HELD IN GOOD FAITH AND REASONABLE FOR PERSON WITH PLAINTIFF’S TRAINING AND EXPERIENCE

In Byron v. Inst. for Envtl. Health, Inc., No. 18-cv-1415 (W.D. Wash. Dec. 19, 2019) (2019 U.S. Dist. LEXIS 218403; 2019 WL 6913478), Plaintiff filed a retaliation complaint under the Food Safety Modernization Act (FSMA) alleging that Defendant terminated his employment because Plaintiff expressed concern that some of Defendant’s food sample testing procedures relied on an insufficient number of samples. Defendant filed a motion for summary judgment. The court denied the motion.

Reasonable belief standard applies, even if conduct was not in fact unlawful

The court also stated that it adopted as the FSMA prima facie case standard the Ninth Circuit’s formulation under the SOX retaliation provision, citing Tides v. The Boeing Co., 644 F.3d 809, 814 (9th Cir. 2011). The court noted that there were few cases interpreting and applying the FSMA’s whistleblower protections, but that “the consensus is that the whistleblower provision extends to employees who report or oppose what they reasonably believe to be unlawful conduct, even if the conduct is not, in fact, unlawful. See Singletary v. Howard Univ., 939 F.3d 287, 296 and n.2 (D.C. Cir. 2019); Ortiz v. Priority Healthcare Group LLC, 2019 U.S. Dist. LEXIS 120044, 2019 WL 3240016, at *7 (M.D. Pa. July 18, 2019); Chase v. Brothers Int’l. Food Corp., 3 F. Supp.3d 49, 54 (W.D.N.Y. 2014).” Slip op. at 4. The court further noted that “[t]he ALJ in the underlying administrative action similarly concluded that FSMA’s anti-retaliation provision applies where the employee has a reasonable belief that the employer’s conduct violated relevant law.” Id. at 4 (citation to record omitted). The court applied the twofold reasonable belief standard, where the employee must show that his or her subjective belief that the employer’s conduct was unlawful at that time, and that the subjective belief was objectively reasonable.

Subjective belief element survives summary judgment based on employee’s testimony that he suspected conduct violated the FDCA

Defendant argued that Plaintiff could not have had a subjective belief that he was opposing unlawful (as opposed to merely suboptimal) conduct at the time because he had not communicated to anyone at the company that he believed that its conduct violated the Food, Drug, and Cosmetic Act (FDCA). The court, however, held that “[a]n employee’s testimony that he suspected the conduct complained of violated the law at the time is evidence of his subjective belief and is generally sufficient to raise a genuine issue of fact regarding that element of the claim. See Van Asdale, 577 F.3d at 1002 (concluding that plaintiff’s testimony regarding her subjective ‘belief that an investigation [into shareholder fraud] needed to occur’ was sufficient to reverse summary judgment in the employer’s favor).” Id. at 6.

Objective belief element is gauged by a reasonable person with same training and experience as plaintiff; mistaken belief still protected if in good faith and reasonable

Defendant next argued that Plaintiff’s belief that Defendant’s testing protocols were unlawful was not objectively reasonable because there were no specific sample size requirements for food testing in the FDCA. The court, however, stated that an employee need not cite a code violation; that an erroneous belief is reasonable if premised on a mistake made in good faith; and that objective reasonableness is based on a reasonable person with the same training and experience.

Here, Plaintiff was a salesman with food industry experience and not a scientist or regulatory expert. He was aware, however, that other employees with scientific training had expressed concerns about the testing procedures. The court found that Defendant had not offered evidence that Plaintiff’s mistaken belief was in bad faith.

Madison v. United States DOL, 924 F.3d 941 (7th Cir. May 24, 2019) (No. 18-1800) (2019 U.S. App. LEXIS 15606; 2019 WL 2256465) (Opinion)

Case below ARB No. 18-018, 2016-FDA-00004

Casenote(s):

TIMELINESS OF PETITION FOR ARB REVIEW; DUE DILIGENCE REQUIREMENT FOR EQUITABLE TOLLING; FAILURE OF COUNSEL TO TAKE TIMELY ACTION TO PRESERVE CLIENT’S INTRA-AGENCY APPELLATE RIGHTS UPON EMAIL NOTICE FROM ALJ’S PARALEGAL OF PROBLEM WITH MAILING OF ALJ’S DECISION; ALTHOUGH ATTORNEY HAD NOT TIMELY SEEN THE EMAIL, THE COURT FOUND THAT EMAIL COMMUNICATION FROM COURTS AND AGENCIES IS ROUTINE IN LITIGATION AND AN ATTORNEY SHOULD MONITOR HIS EMAIL (OR HAVE SOMEONE DO IT FOR HIM)

In Madison v. United States DOL, 924 F.3d 941 (7th Cir. May 24, 2019) (2019 U.S. App. LEXIS 15606; 2019 WL 2256465) (case below ARB No. 18-018, 2016-FDA-00004), the ALJ’s office had used an old address to serve Complainant’s counsel with the ALJ’s summary decision. When the mailing was returned as undeliverable, the ALJ’s paralegal sent an email to both counsel noting, among other matters, that the copy of the ALJ’s decision had been returned and that she had mailed another copy to Complainant’s counsel’s current address. The paralegal used an incorrect email address for Complainant’s counsel, but Respondent’s counsel corrected that error by copying Complainant’s counsel on a response to the paralegal that included the entire email string. At that point, Complainant still had five days remaining to file a timely petition for ARB review. Complainant’s counsel, however, did not file a petition for ARB review until after receiving the second mailed copy of the ALJ’s decision. By that time, the period for filing the petition had expired. The ARB issued an Order to Show Cause why the petition should not be dismissed as untimely. Complainant’s counsel averred that he had not seen the paralegal’s email until weeks later, after he received the second mailing of the ALJ’s decision, and that Complainant had been out of town and was also unaware of the ALJ’s decision. The ARB declined to apply equitable tolling on the ground that Complainant failed to timely file a petition or request an extension of time to file the petition once he was notified of ALJ’s decision. Complainant asked for reconsideration on the ground that Complainant’s counsel did not actually have knowledge of the ALJ’s decision on the date of the paralegal’s email, and that by the time he did know, the 14-day window had expired. The ARB denied the motion finding that Complainant’s counsel had notice as of the date of the paralegal’s email, and that Complainant failed to address the ARB’s alternative ground for dismissing the appeal—that Complainant failed to file her petition for ARB review within 14 days of the date the second copy of the ALJ’s decision was mailed to Complainant’s counsel.

Employing an abuse of discretion standard of review, the Seventh Circuit affirmed the ARB’s decision to dismiss the petition for ARB review as untimely. The court assumed, for purposes of deciding the appeal, that the ALJ’s office was at fault for misdirecting the initial mailing of the ALJ’s decision. The court, however, found that the situation changed materially on the date on which the ALJ’s paralegal sent a second copy of the ALJ’s decision to the correct address for Complainant’s counsel and sent an email to both counsel (which Complainant’s counsel received because Respondent’s counsel corrected the paralegal’s use of the wrong email address for Complainant’s counsel). The court found that Complainant’s counsel at that point was on notice of the ALJ’s decision with sufficient time to take appropriate action in the exercise of due diligence to preserve his client’s appellate rights— by asking the ALJ’s office to send a copy of the ALJ’s decision by email or fax and then filing a timely petition for ARB review, or immediately filing a motion with the ARB for additional time to file the petition. The court found that the email exchange had removed the obstacle preventing Complainant from diligently pursuing her appellate rights. The court was not sympathetic to Complainant’s counsel not having seen the email timely, finding that this was a matter within his control. The court wrote:

Today, courts and agencies routinely communicate with counsel electronically, and attorneys likewise communicate with one another via email. Even where, as here, a party has not consented to electronic service of agency orders, counsel can foresee that there may be electronic correspondence from both the agency and opposing counsel in the course of the case, and he can be expected to check (or have someone in his office monitor) his email on a regular basis to keep abreast of developments in litigation.

Slip op. at 13-14. The court noted that there had been prior email communications with the ALJ’s paralegal. The court thus found it reasonable for the ARB to rely on the date of the paralegal’s email for determining whether Complainant exercised due diligence to preserve her appellate rights. The court also found that Complainant’s counsel failed to act with appropriate dispatch upon receiving the second mailed copy of the ALJ’s decision, apparently erroneously assuming that he had another 14 days upon receipt of that copy to file a petition for ARB review.

Moving Ahead for Progress in the 21st Century Act

Barcomb v. GM LLC, No. 16-cv-1884 (E.D. Mo. Jan. 23, 2019) (2019 U.S. Dist. LEXIS 10652; 2019 WL 296479) (Memorandum and Order)

Casenote(s):

PROTECTED ACTIVITY; MAP-21 WHISTLEBLOWER PROVISION DOES NOT APPLY TO WHISTLEBLOWING ABOUT DEFECTS IN MOTOR VEHICLES THAT ARE STILL IN THE MANUFACTURING PROCESS WHERE THOSE DEFECTS ARE CURED BEFORE THE MANUFACTURING PROCESS IS COMPLETED

In Barcomb v. GM LLC, No. 16-cv-1884 (E.D. Mo. Jan. 23, 2019) (2019 U.S. Dist. LEXIS 10652; 2019 WL 296479), the Plaintiff’s job was to repair vehicles after they came off the manufacturing line where the repairs were needed due to earlier errors in the manufacturing process. He became concerned about some jobs coming into the final process repair section that had been previously confirmed as repaired in the Defendant’s electronic tracking system (GSIP system). A second redundancy system tracked outstanding repairs on paper tickets. The Plaintiff was concerned that cars needing repairs might end of the hands of consumers because of the falsification of the confirmations in the GSIP system. He did not report any specific instances of vehicle defects to management, but rather focused on the misuse of the system as a whole and false reporting by one particular co-worker.

The case presented an issue of first impression: whether the Moving Ahead for Progress in the 21st Century Act (MAP-21), 49 U.S.C. § 30171 “applies to whistleblowing on defects in motor vehicles that are still in the manufacturing process, even though those defects were later cured before the manufacturing process was completed.” Slip op. at 5. The Defendant argued that “plaintiff did not engage in protected activity under MAP-21 because MAP-21 necessarily pertains only to information related to defects in manufactured motor vehicles—that is, vehicles that have completed the manufacturing process. ” Id. The Plaintiff’s argument as understood by the court was that “the statute should be read broadly to encompass any defects that arise in the manufacturing process, even if they were later cured. . . . The point appears to be that this information falls within the purview of Section 30171(a)(1) because it could lead to a motor vehicle defect.” Id. (emphasis as in original).

The court agreed with the Defendant, writing:

   Though no federal court appears to have addressed the scope of whistleblowing protection under MAP-21, a plain reading of its statutory language reveals it does not support plaintiff’s claims regarding false reporting in the GSIP system. A “motor vehicle defect” is defined as “any defect in performance, construction, a component, or material of a motor vehicle or motor vehicle equipment. ” 49 U.S.C. § 30102(a)(3). The term “motor vehicle” is further defined—using past-tense language—as “a vehicle driven or drawn by mechanical power and manufactured primarily for use on public streets, roads, and highways[.]” 49 U.S.C. § 30102(a)(7) (emphasis added). Notably, the term “motor vehicle equipment” similarly utilizes past-tense language, defined as “any system, part, or component of a motor vehicle as originally manufactured or any similar part or component manufactured or sold for replacement or improvement of a system, part, or component[.]” 49 U.S.C. § 30102(8)(A)-(B) (emphasis added). Moreover, the other prongs of Section 30171—such as whistleblowing on violations of the notification requirements—likewise refer to a post-manufacture time period. See 49 U.S.C. § 30171(a); 49 U.S.C. § 30118 (requiring a manufacturer to notify the Secretary of Transportation and the “owners, purchasers, and dealers” of a defective vehicle). In view of these provisions, MAP-21 seems to address only post-manufacture whistleblowing. But plaintiff, in effect, would have this Court rewrite the statute—expressly limited to “information relating to any motor vehicle defect”—so that it pertains to “information that could lead to any motor vehicle defect.” The Court will not expand statutory language to say what it does not say. See Argus Leader Media v. U.S. Dept. of Agriculture, 740 F.3d 1172, 1176 (8th Cir. 2014) (noting that ”Congress expresses its purpose by words. It is for courts to ascertain—neither to add nor to subtract, neither to delete nor to distort” and finding the district court erred by broadly interpreting a statute that said “obtained” to mean “can be obtained” in regards to the scope of a FOIA exemption).

Id. at 6-7 (emphasis as in original). The court also stated that “[b]eyond the statutory language itself, is also difficult to surmise how, as a matter of common sense, a vehicle could be deemed legally ‘defective’ prior to its completion.” Id. at 7. The court found that the Plaintiff’s complaint was “about the GSIP system itself, rather than a complaint about a motor vehicle defect. It is not enough that the whistleblowing information given in this case could lead to a motor vehicle defect. Simply put, Plaintiff was whistleblowing about the dishonest conduct of a fellow employee, not about a motor vehicle defect as that term is statutorily defined. For this reason, summary judgment will be granted on [the MAP-21 count].” Id. at 9.

National Transit Systems Security Act

Buck v. Wash. Metro. Area Transit Auth., No. 17-cv-632 (D.D.C. Dec. 5, 2019) (2019 U.S. Dist. LEXIS 209628; 2019 WL 6617853) (Memorandum Opinion)

Casenote(s):

[STAA Digest II Z]
SOVEREIGN IMMUNITY UNDER THE ELEVENTH AMENDMENT; DISTRICT COURT FINDS THAT CIVIL RIGHTS REMEDIES EQUALIZATION ACT (CRREA) DID NOT CREATE A WAIVER OF STATE SOVEREIGN IMMUNITY FROM A RETALIATION SUIT BY A PRIVATE PARTY BROUGHT UNDER THE NATIONAL TRANSIT SYSTEMS SECURITY ACT (NTSSA)

In Buck v. Wash. Metro. Area Transit Auth., No. 17-cv-632 (D.D.C. Dec. 5, 2019) (2019 U.S. Dist. LEXIS 209628; 2019 WL 6617853), the court considered the following question: “Does the Civil Rights Remedies Equalization Act (“CRREA”), 42 U.S.C. § 2000d-7, waive the sovereign immunity of state transportation agencies for purposes of civil actions brought by private parties under the National Transit Systems Security Act (“NTSSA”), 6 U.S.C. § 1142?” Slip op. at 1.

Plaintiff filed an NTSSA suit against WMATA alleging that he was fired because he provided information to his supervisors about public safety violations. The court noted that, because WMATA is an agency of the States of Maryland and Virginia (as well as of the District of Columbia), it is entitled to immunity from private suit under the Eleventh Amendment unless sovereign immunity had been waived or abrogated. The court noted that CRREA abrogates such immunity “for violations “’of section 504 of the Rehabilitation Act of 1973, title IX of the Education Amendments of 1972, the Age Discrimination Act of 1975, title VI of the Civil Rights Act of 1964, or the provisions of any other Federal statute prohibiting discrimination by recipients of Federal financial assistance.” 42 U.S.C. § 2000d-7(a)(1) (emphasis added).’” Id. at 2. The court found that the NTSSA is not a “statute prohibiting discrimination by recipients of Federal financial assistance” and thus granted WMATA’s motion for summary judgment. The court found it clear that the NTSSA was not an exercise of power under section 5 of the 14th Amendment, and that the NTSSA did not include an abrogation of 11th Amendment immunity of the States. The court found that the more difficult question was whether WMATA waived its immunity by accepting federal transportation funding. The court stated that CRREA waiver would apply to the NTSSA only if it fit the residual clause of the CRREA. Applying the principles that waivers of sovereign immunity demand clarity and that a residual clause must be read in light of the “objects” that precede it, the court found that the NTSSA did not involve the kind of civil rights discrimination addressed by the statutes specifically enumerated in the CRREA. The court found that although the NTSSA uses the word “discriminate,” it was only in the context of rounding out a list of adverse employment actions to promote the statutory goal of promoting public safety, whereas in the enumerated statutes “discrimination is itself the iniquity that the statute seeks to prevent.” Id. at 20. The court was not persuaded by WMATA’s expression of its intention to be bound by the NTSSA — the court finding that WMATA’s obligation to comply with federal laws is distinct from its immunity from private suit.

Sarbanes-Oxley Act

Zornoza v. TerraForm Global, Inc., No. 18-cv-11617 (S.D. N.Y. Dec. 9, 2019) (2019 U.S. Dist. LEXIS 211762; 2019 WL 6701875) (Opinion and Order)

Casenote(s):

COVERED PERSONS; SOUTHERN DISTRICT OF NEW YORK JUDGE FINDS THAT DIRECTORS ARE NOT LIABLE PERSONS UNDER SOX, SECTION 1514A; COURT DISAGREES WITH CONCLUSIONS OF NORTHERN DISTRICT COURT OF CALIFORNIA IN WADLER

In Zornoza v. TerraForm Global, Inc., No. 18-cv-11617 (S.D. N.Y. Dec. 9, 2019) (2019 U.S. Dist. LEXIS 211762; 2019 WL 6701875), Plaintiff’s complaint included a count alleging that he was terminated in retaliation for protected activity under SOX, 18 U.S.C. § 1514A. Defendants filed a FRCP 12(b)(6) motion on several grounds. First, two named defendants who at the relevant time were chairs of the Board of Directors of various co-defendants contended that the SOX claim against them should be dismissed because SOX does not provide for director liability on a claim of retaliation. Second, a named defendant — who at the relevant time was a both director of two defendant companies and an officer of a company that had substantial equity status in and voting control over two defendant companies — argued that the retaliation claim should be dismissed against him as to any action taken in his capacity as director.

The court noted that section 1514A does not expressly mention a member of a corporation’s board of directors. Reviewing the statute, the court found that the drafters used the word “director” when they meant director, and “agent when they meant agent, and “directors … or agents” when they meant either. The court disagreed with the one other court that had addressed the issue: Wadler v. Bio-Rad Labs., Inc., 141 F. Supp. 3d 1005, 1017-18 (N.D. Cal. 2015). Unlike the court in Wadler, the court here found no ambiguity in section 1514A, and found that the plain text of section 1514A does not provide for director liability. The court also found that the two named defendants who were only on the boards of directors were not plausibly alleged to have functioned as an officer or agent. Those two named defendants were found not to be liable parties. The third individual defendant, who had functioned as both a director and an officer, argued that a claim against him as an officer should be dismissed because he was a “peer” of Plaintiff and incapable of taking retaliatory action against him. The court found that, to the extent that the question of whether the two persons were peers is relevant, it could not be resolved at the pleading stage. Thus, the court denied the motion to dismiss the retaliation claim against the third defendant in his capacity as an officer.

Bigland v. FCA N. Am. Holdings, LLC, No. 19-11659 (E.D. Mich. Oct. 7, 2019) (2019 U.S. Dist. LEXIS 173399)

Casenote(s):

AMENDMENT OF FEDERAL COURT COMPLAINT TO ADD SOX § 1514A CLAIM DENIED WITHOUT PREJUDICE WHERE 180-DAY “KICK-OUT” PERIOD HAD NOT YET PASSED

In Bigland v. FCA N. Am. Holdings, LLC, No. 19-11659 (E.D. Mich. Oct. 7, 2019) (2019 U.S. Dist. LEXIS 173399), Plaintiff sought to amend his complaint to add a claim under SOX. 18 U.S.C. § 1514A. The court denied the motion without prejudice because Plaintiff had a pending SOX claim before OSHA, and 180 days had yet passed to invoke the SOX “kick-out” provision. Thus, the court found the proposed amendment was futile.

Daly v. Citigroup Inc., No. 18-665 (2d Cir. Sept. 19, 2019) (2019 U.S. App. LEXIS 28183) (Opinion)

Cases below: SDNY No. 16-cv-9183; ALJ No. 2017-SOX-00045

Casenote(s):

FEDERAL DISTRICT COURT JURISDICTION; SOX CLAIM PROPERLY DISMISSED FOR LACK OF JURISDICTION WHERE PLAINTIFF HAD NOT TIMELY FILED A COMPLAINT WITH OSHA AND THUS FAILED TO EXHAUST ADMINISTRATIVE REMEDIES

In Daly v. Citigroup Inc., No. 18-665 (2d Cir. Sept. 19, 2019) (2019 U.S. App. LEXIS 28183) (cases below SDNY No. 16-cv-9183; ALJ No. 2017-SOX-00045), Plaintiff-Appellant had brought suit for discrimination and retaliation under several local, state and federal statutes. The district court had granted Defendant’s motion to compel arbitration as to all claims except as a SOX claim (the SOX claim being nonarbitrable by statute). The district court dismissed of the SOX claim, however, for lack of subject matter jurisdiction on the ground that the Plaintiff had failed to file an administrative complaint within 180 days of the alleged violation, and, thus, had not exhausted her administrative remedies under the statute. The Second Circuit affirmed.

The court noted that the district court had "noted its uncertainty as to whether failure to exhaust under SOX is a jurisdictional bar to suit, evaluated on a motion to dismiss under Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction, or a claim‐processing requirement to be assessed under Rule 12(b)(6) for failure to state a claim. But it determined that the plaintiff’s claim was in either event dismissible . . . ." Slip op. at 10. On appeal, the court first examined whether SOXʹs administrative exhaustion requirements are a jurisdictional prerequisite to suit. The court found a lack of clear guidance from its sister circuits, and turned the text of the statute. The court wrote: "We conclude that the text of SOX makes clear that Congress intended for its administrative exhaustion requirements to be a jurisdictional prerequisite to suit in federal court. The statute’s exhaustion requirements are included in the same provision—indeed, in the same sentence—as its jurisdictional provision. And that provision expressly grants federal jurisdiction only when specific administrative remedies have been exhausted . . . ." Id. at 27 (citing 18 U.S.C. § 1514A(b)(1)(A)‐(B). The court also noted that SOX states that a whistleblower claim must be filed with the Secretary of Labor "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." Id. at 28 (quoting 18 U.S.C. § 1514A(b)(2)(D)). The court also noted that the Secretary had delegated the responsibility for adjudicating such a claim to OSHA. The court noted that the statute and regulations thus permit review in federal court in two circumstances: where the "kick-out" provision applies and where a party seeks review of a final order from OSHA. The court found that this procedural structure reflects clear Congressional "intent for federal courts to exercise jurisdiction over a SOX claim only after the claimant has first exhausted the statute’s administrative remedies. We therefore conclude that the administrative exhaustion requirements under SOX are jurisdictional and a prerequisite to suit in federal court." Id. at 30. In the instant case, the OSHA complaint was submitted long after the 180-day filing period had expired.

Plaintiff-Appellant argued that even if filing a complaint with OSHA is a jurisdictional prerequisite, she satisfied it under the "continuing violation" doctrine. The court, however, noted that the Supreme Court "has rejected the continuing violation doctrine in the employment discrimination context when the alleged violation involves discrete acts, rather than an ongoing discriminatory policy." Id. at 31-32 (citing Nat’l R.R. Passenger Corp. v. Morgan, 536 U.S. 101, 114‐15 (2002)).

The court thus held that "[b]ecause the district court lacked subject matter jurisdiction over her claim, the court properly dismissed it under Rule 12(b)(1)." Id. at 33 (footnote omitted).

Brooks v. U.S. Department of Labor, Administrative Review Board, No. 19-71240 (9th Cir. Sept. 17, 2019) (2019 U.S. App. LEXIS 28239) (Order)

Case below: ARB No. 2017-0033, ALJ No. 2016-SOX-00037

Casenote(s):

PROPER RESPONDENT IN APPEAL OF ARB DECISION; WHERE PETITION SOUGHT REVIEW OF AGENCY ACTION, THE UNITED STATES DEPARTMENT OF LABOR, ADMINISTRATIVE REVIEW BOARD WAS SUBSTITUTED AS SOLE RESPONDENT IN PLACE OF THE INDIVIDUAL ARB MEMBERS NAMED IN THE PETITION FOR REVIEW

In Brooks v. U.S. Department of Labor, Administrative Review Board, No. 19-71240 (9th Cir. Sept. 17, 2019) (2019 U.S. App. LEXIS 28239) (case below ARB No. 2017-0033; ALJ No. 2016-SOX-00037), the court granted Respondent’s motion to substitute the U.S. Department of Labor, Administrative Review Board, as the respondent.

[Editor’s note: Respondent’s motion noted that the petition for review had named as respondents the three ARB Board Members, as well as the ARB itself. Respondent argued that because the petition sought review of agency action, the relevant agency was the only proper respondent in this case, citing inter alia, FRAP 15(a)(2)(B). Respondent thus asked the court to substitute the U.S. Department of Labor, Administrative Review Board for the named individuals.]

Colesanti v. Dickinson, No. 18-cv-491 (D. R.I. Aug. 27, 2019) (2019 U.S. Dist. LEXIS 145185; 2019 WL 4039529) (Order)

Colesanti v. Dickinson, No. 18-cv-491 (D. R.I. July 19, 2019) (2019 U.S. Dist. LEXIS 145578) ([Magistrate’s] Redacted Report and Recommendation)

Casenote(s):

PLEADING STANDARD; DISMISSAL GRANTED WHERE COMPLAINT DID NOT ALLEGE FACTS, AS OPPOSED TO CONCLUSORY ALLEGATIONS, SUFFICIENT TO SHOW THAT A PERSON WITH PLAINTIFF’S LEGAL TRAINING AND EXERIENCE HAD A REASONABLE SUBJECTIVE OR OBJECTIVE BELIEF THAT CONDUCT DISCLOSED TO DEFENDANT APPROXIMATED OR IMPLICATED FRAUD PREVENTION PURPOSES OF SOX

In Colesanti v. Dickinson, No. 18-cv-491 (D. R.I. July 19, 2019) (2019 U.S. Dist. LEXIS 145578), Plaintiff’s SOX retaliation complaint was based on an allegation that Plaintiff reported fraudulent activity to his supervisor and was terminated after an independent audit confirmed his report. The Magistrate Judge recommended granting Defendant’s motion to dismiss on the ground that the complaint failed to allege that what Plaintiff—who was an experienced attorney—reasonably subjectively believed he had uncovered and was disclosing approximated fraudulent activity. The Magistrate Judge stated: “Put differently, the pleading cannot clear the Twombly/Iqbal bar because it does not contain facts (as opposed to conclusory allegations) that establish or permit the inference that a person with Colesanti’s legal training and experience could reasonably believe that the conduct he disclosed to his superiors at Bard involved ‘deceit [or] misrepresentation’ that approximates or implicates fraud or that the conduct is otherwise tethered to wrongdoing connected to ‘the fraud-prevention purposes of SOX.’ Lamb, 249 F. Supp. 3d at 912; see Day, 555 F.3d at 55-56.” Slip op. at 17. The U.S. District Court judge accepted the Magistrate’s Report and Recommendation, rejecting Plaintiff’s argument that the court could infer fraud from Defendant’s actions. Colesanti v. Dickinson, No. 18-cv-491 (D. R.I. Aug. 27, 2019) (2019 U.S. Dist. LEXIS 145185; 2019 WL 4039529).

Northrop Grumman Sys. Corp. v. United States DOL, No. 17-1811, No. 17-2204 (4th Cir. Aug. 12, 2019) (2019 U.S. App. LEXIS 24006) (Seguin) (Order)

Cases below: Northrop Grumman Sys. Corp. v. United States Dep't of Labor, 927 F.3d 226 (4th Cir. June 13, 2019) (2019 U.S. App. LEXIS 17728); ARB No. 16-014, ALJ No. 2012-SOX-00037

Casenote(s):

The court denied the petition for rehearing and rehearing en banc.

Moldauer v. Constellation Brands, Inc., No. 15-5103 (D.C. Cir. Aug. 7, 2019) (per curiam) (unpublished) (2019 U.S. App. LEXIS 23628) (Order)

Cases below: Moldauer v. Constellation Brands Inc., No. 14-1984 (D.D.C. Apr. 3, 2015); ALJ No. 2014-SOX-00035

Casenote(s):

In Moldauer v. Constellation Brands, Inc., No. 15-5103 (D.C. Cir. Aug. 7, 2019) (per curiam) (unpublished) (2019 U.S. App. LEXIS 23628), the D.C. Court of Appeals granted Defendant’s motion for summary affirmance of the District Court’s decision in Moldauer v. Constellation Brands, Inc., 87 F. Supp. 3d 148 (D.D.C., Apr. 3, 2015) (2015 U.S. Dist. LEXIS 44011), dismissing the complaint for lack of subject matter jurisdiction, the D.C. district court not being the appropriate forum to review the final order of the Secretary of Labor dismissing Moldauer’s SOX whistleblower complaint. Moldauer had not disputed that the alleged violations occurred in California, and that he resided in California at that time. See 18 U.S.C. § 1514A(b)(2)(A); 49 U.S.C. § 42121(b)(4)(A). The court affirmed the district court’s holdings that DOL is not a proper defendant in a SOX lawsuit filed pursuant to the Sarbanes-Oxley Act’s 180-day provision alleging retaliation, see 18 U.S.C. § 1514A(b)(1)(B); that there was a lack of personal jurisdiction over the employer. The court also found that Moldauer failed to show that the district court erred in denying lave to amend the complaint.

Gryga v. Henkels & McCoy Grp., Inc., No. 19 C 1276 (N.D. Ill. Aug. 6, 2019) (2019 U.S. Dist. LEXIS 131521; 2019 WL 3573565) (Memorandum Opinion and Order)

Case below ARB No. 2018-0017, ALJ No. 2017-SOX-00049

Casenote(s):

MATTERS THAT MAY BE CONSIDERED WHEN DECIDING A MOTION TO DISMISS WITHOUT CONVERTING THE MOTION INTO A MOTION FOR SUMMARY JUDGMENT; PROPER TO CONSIDER ALLEGATIONS OF COMPLAINT, DOCUMENTS ATTACHED TO COMPLAINT, DOCUMENTS CENTRAL TO COMPLAINT AND REFERRED TO IN THE COMPLAINT; INFORMATION SUBJECT TO JUDICIAL NOTICE

In Gryga v. Henkels & McCoy Grp., Inc., No. 19 C 1276 (N.D. Ill. Aug. 6, 2019) (2019 U.S. Dist. LEXIS 131521; 2019 WL 3573565) (case below ARB No. 2018-0017, ALJ No. 2017-SOX-00049), the court explained why it was permissible to cite documents from the administrative SOX proceedings in considering a motion to dismiss:

On a motion to dismiss, the Court may consider the allegations of the complaint itself, documents that are attached to the complaint, documents that are central to the complaint and are referred to in it, and information that is properly subject to judicial notice, without converting the motion into a motion for summary judgment. Williamson v. Curran, 714 F.3d 432, 436 (7th Cir. 2013). The cited documents from the administrative proceedings (which are attached to defendants’ supporting memorandum) are central to the complaint and referred to therein.

Slip op. at 3, n. 3.

COVERED EMPLOYER; COURT FINDS LAWSON APPLIED TO IMPOSE SOX COVERAGE ON PRIVATELY-HELD CONSTRUCTION COMPANY THAT WAS ALLEGEDLY INVOLVED IN COLLUSION WITH A PUBLICLY-TRADED CLIENT TO DEFRAUD THE CLIENT; COURT REJECTS VIEW OF E.D. OF PENNSYLVANIA IN GIBNEY THAT SOX COVERAGE DID NOT APPLY MERELY BECAUSE ONE COMPANY ENTERING A CONTRACT HAPPENS TO BE A PUBLIC COMPANY

NAMED DEFENDANT; PARENT COMPANY OF EMPLOYER DISMISSED AS DEFENDANT TO SOX RETALIATION CLAIM WHERE COMPLAINT FAILED TO STATE A SPECIFIC CLAIM AGAINST THE PARENT BUT MERELY TREATED EMPLOYER AND PARENT COMPANY AS ONE ENTITY; LEAVE GRANTED TO AMEND COMPLAINT

In Gryga v. Henkels & McCoy Grp., Inc., No. 19 C 1276 (N.D. Ill. Aug. 6, 2019) (2019 U.S. Dist. LEXIS 131521; 2019 WL 3573565) (case below ARB No. 2018-0017, ALJ No. 2017-SOX-00049), OSHA and the presiding ALJ dismissed Plaintiff’s SOX complaint on the ground that Complainant’s employer was not a covered entity under the Act and Plaintiff was not an employee within the meaning of the Act. While the administrative case was pending before the ARB, Plaintiff filed the instant complaint in Federal district court. Plaintiff named his former employer, Henkels & McCoy, Inc. (“H&M”) as a defendant. H&M is “a privately-owned engineering firm.” Plaintiff also named H&M’s party company, Henkels & McCoy Group, Inc. Plaintiff alleged that he was retaliated against for reporting that certain H&M executives were allegedly defrauding one of H&M’s largest clients. This client was a publicly-traded company. Defendants filed a motion to dismiss, arguing that Plaintiff had not state a claim under SOX because neither defendant is a publicly-traded company. The district court found this argument to be a “nonstarter because the Supreme Court clearly held in Lawson that § 1514A extends whistleblower protection to employees of privately-held contractors who perform work for public companies.” Slip op., at 6, citing Lawson v. FMR LLC, 571 U.S. 429 (2014).

Defendants argued that Lawson was inapposite because that case involved a mutual-fund company – and such companies typically have no employees of their own and require the services of privately-held companies to handle their day-to-day operations. According to Defendants, Lawson thus was an effort to avoid insulating the entire mutual fund industry, which is not a concern in the instant case. The court rejected this argument finding that the holding in Lawson was not limited to the mutual-fund industry or any particular industry, and that the “limiting principles” discussed in Lawson did not apply to the instant case because H&M was performing construction work for the publicly traded company over a period of time, and not in the context of a fleeting business relationship, and because the whistleblowing related to H&M fulfilling its role as a contractor for the public company.

Defendants also attempted to distinguish Lawson on the ground that that case involved a report of fraud by the mutual-fund companies that directly implicated the funds’ shareholders, whereas in the instant case, Plaintiff’s allegations were that fraud was committed against the publicly-traded company. The district court first noted that Plaintiff had alleged that executives at both H&M and client participated in a scheme to defraud the client. The court also found that Defendants were relying on “a distinction without a difference” because “the subject of plaintiff’s alleged whistleblowing activity falls squarely within the types of conduct listed in § 1514A.” Slip op. at 7. The court agreed with Plaintiff that “a company’s shareholders can be equally harmed whether it is the contractor, or the company itself, that causes losses due to fraud.” Id.

The Court was not persuaded by Defendants citation of the ALJ’s view that the alleged fraud falls outside the protection of the Act because it is “two or three steps removed from potentially affecting a shareholder’s investment . . . and a the Eastern District of Pennsylvania’s decision in Gibney v. Evolution Marketing Research, LLC, 25 F. Supp. 3d 741, 747-48 (E.D. Pa. 2014), “in which the court ruled that the Act was not intended to reach a scenario where there are allegations of fraudulent conduct between two companies that are parties to a contract, and one of those companies happens to be publicly-held.” Id. The court stated: “There is no support in the plain text of the statute, in Lawson, or in Seventh Circuit case law for such a narrowing of the reach of the Act.”

The court, however, granted dismissed without prejudice of the parent company, Henkels & McCoy Group, Inc., because the basis for Plaintiff’s claims against that company were unclear. The court stated: “In fact, Gryga does not state a claim against that entity; the amended complaint varyingly refers to a single defendant (when referring to Gryga’s employment and employer) and defendants, plural, but does not describe specific conduct of Henkels & McCoy Group, Inc. that would serve as a basis for any of Gryga’s claims.” Slip op. at 11-12. The Court, however, gave leave to amend “with respect to that entity to the extent plaintiff can do so consistent with Federal Rule of Civil Procedure 11.” Id. at 12.

Jaludi v. Citigroup, No. 16-3577 (3rd Cir. Aug. 6, 2019) (2019 U.S. App. LEXIS 23464; 2019 WL 3558978) (Opinion of the Court)

Casenote(s):

ARBITRATION OF SOX RETALIATION CLAIM; WHERE EMPLOYER ISSUED A NEW HANDBOOK AFTER THE DOOD-FRANK AMENDMENT OF SOX TO BAR PRE-DISPUTE ARBITRATION AGREEMENTS, WITH THE NEW HANDBOOK APPENDING A REVISED ARBITRATION CLAUSE THAT, IN EFFECT, EXCLUDED SOX CLAIMS, COURT APPLIED STATE LAW TO DETERMINE THAT LATTER ARBITRATION AGREEMENT SUPERCEDED EARLIER AGREEMENT

In Jaludi v. Citigroup, No. 16-3577 (3rd Cir. Aug. 6, 2019) (2019 U.S. App. LEXIS 23464; 2019 WL 3558978), the Appellant had filed a complaint with SOX retaliation and RICO counts. The district court found that arbitration was required for all claims. The Appellant appealed to the Third Circuit, which affirmed the district court in regard to the RICO claim, but reversed on the SOX claim.

Citigroup’s 2009 Employee Handbook contained an arbitration agreement requiring arbitration of all claims arising out of employment—including Sarbanes–Oxley claims. In 2010, Congress passed the Dodd–Frank Wall Street Reform and Consumer Protection Act, which amended Sarbanes-Oxley to prohibit pre-dispute agreements to arbitrate whistleblower claims. Pub. L. No. 111-203, § 922, 124 Stat. 1376, 1848 (2010) (codified at 18 U.S.C. § 1514A(e)). Citigroup’s 2011 version of the Handbook contained an arbitration agreement that excluded “disputes which by statute are not arbitrable” and deleted Sarbanes–Oxley from the list of arbitrable claims. The court first interpreted the two Handbooks and concluded that the 2011 superseded the 2009 Handbook, including the arbitration clause. The court stated: “Although our holding is merely an application of our prior precedent, . . . we make clear today that the question of whether a later agreement supersedes a prior arbitration agreement is tantamount to whether there is an agreement to arbitrate. It is therefore a question to which state law, not federal law, applies. Under Pennsylvania law, the later of two agreements between the same parties as to the same subject matter generally supersedes the prior agreement.” Slip op. at 21.

Reilly v. GlaxoSmithKline, LLC, No. 17-cv-2045 (E.D. Pa. July 18, 2019) (2019 U.S. Dist. LEXIS 119618; 2019 WL 3233203) (Memorandum)

Case below ARB No. 17-028, ALJ No., 2017-SOX-00004

Casenote(s):

TIMELINESS OF COMPLAINT; FINAL, DEFINTIVE AND UNEQUIVOCAL NOTICE; IN INSTANT CASE, MIXED SIGNALS FOUND COLLECTIVELY SUFFICIENT TO CAST SUCH DOUBT ON WHETHER AN EMPLOYEE IN PLAINTIFF’S POSITION WOULD KNOW HE HAD BEEN DISCHARGED THAT SUMMARY JUDGMENT WAS NOT WARRANTED IN REGARD TO TIMELINESS OF COMPLAINT

In Reilly v. GlaxoSmithKline, LLC, No. 17-cv-2045 (E.D. Pa. July 18, 2019) (2019 U.S. Dist. LEXIS 119618; 2019 WL 3233203), OSHA and the presiding ALJ had both found that Plaintiff’s SOX complaint was not timely filed. Shortly after appealing the ALJ’s decision to the ARB, Plaintiff filed an action in Federal district court. Defendant filed a motion for summary judgment based on, inter alia, the timeliness of the complaint. The district court found that a material issue of fact existed on whether the SOX claim was time barred. The court noted:

   A plaintiff’s awareness of the SOX violation, which starts the limitations period running, is marked by when the employer makes and reasonably communicates the discriminatory adverse employment decision to the employee. Delaware State College v. Ricks, 449 U.S. 250, 258 (1980). Ricks focused on when the “decision was made” and when an employee was “notified,” not when the employer’s adverse employment decision took effect. Ricks, 449 U.S. at 258. . . . Also relevant, “a notification of termination to be executed on a future certain date is sufficient to trigger the running of the filing time limit.” Sneed, 2007 WL 7135802 at *3 (citing Chardon v. Fernandez, 454 U.S. 6 (1981)).

Slip op. at 20-21 (some citations omitted). The court also noted:

   Essentially, “[f]or the clock to start, the complainant must have received final, definitive, and unequivocal notice of an adverse employment decision.” Id. at *4. “Final” and “definitive” notice denotes communication that is decisive or conclusive, i.e., leaving no further chance for action, discussion, or change. “Unequivocal” notice means communication that is not ambiguous, i.e., free of misleading possibilities.

Id. at 21 (some citations omitted). Moreover, the court stated:

   The standard for assessing whether the plaintiff received “final, definitive, and unequivocal notice of an adverse employment decision. . .” is “an objective one, based not on what the complainant subjectively thought, but rather what a reasonable person in her position would have understood.”

Id. at 22 (citations omitted).

Here, Plaintiff was a Senior Consultant for Defendant’s computer operating system. Plaintiff had raised issues about risks to the system, and whether those risks should have been reported specifically in filings with the SEC. The company conducted internal investigations. It was undisputed that Plaintiff learned of the decision to outsource his position in May 2014; that any team member who was not hired as the sole remaining Service Analyst would be notified in August 2014 of their official termination; and the termination was to become effective in September 2014. It was also undisputed that Defendant changed the effective date of Plaintiff’s termination more the once. Also, Plaintiff established a material issue of fact as to whether the official who lead the first internal investigation into Plaintiff’s complaint communicated that the outcome of the investigation could change Defendant’s decision to terminate his employment. Although Defendant argued that Plaintiff’s belief that he would be promoted after the investigation was objectively unreasonable, the court found that “the internal investigation into Plaintiff Reilly’s complaints was not, as in Ricks, a ‘grievance, or some other method of collateral review of an employment decision,’ which ‘does not toll the running of the limitations periods.’” Id. at 25. The court found language in documents of record about the investigation stating that the company would get back to Plaintiff about his employment status. The court also noted Plaintiff’s testimony that an official had communicated that Defendant had a “safeguarding” policy that could “save” Plaintiff’s job. The court found that this evidence showed “mixed official signals” and collectively was sufficient to cast doubt on whether an employee in Plaintiff’s position should have known that he had been discharged.

PROTECTED ACTIVITY; SUMMARY JUDGMENT GRANTED WHERE PLAINTIFF DID NOT ESTABLISH FACTS SHOWING THAT HIS COMPLAINTS ABOUT COMPUTER SECURITY WERE EVEN REMOTELY RELATED TO FRAUD; NOTWITHSTANDING PLAINTIFF’S BELIEF THAT COMPANY REPORTS TO S.E.C. LACKED SUFFICIENT SPECIFICITY, THE S.E.C. REPORTS HAD NOTED RISKS TO COMPUTER SYSTEM

In Reilly v. GlaxoSmithKline, LLC, No. 17-cv-2045 (E.D. Pa. July 18, 2019) (2019 U.S. Dist. LEXIS 119618; 2019 WL 3233203), Plaintiff, a Senior Consultant for Defendant’s computer operating system, filed a SOX whistleblower complaint grounded in his belief that Defendant’s annual disclosures to the SEC omitted material facts about computer system risks and that Defendant’s outsourced his position because he reported his concerns. Plaintiff had raised concerns that a decision to “uncap” processors on the computer operating system could cause the computer’s memory to “thrash” or “lock up.” Plaintiff eventually escalated his concerns to the company’s global compliance office and then to the company’s CEO. In an email to the CEO, Plaintiff related his fear that due to the computer stability and security concerns, the company’s certifications to the SEC in 2013 and 2014 falsely claimed compliance with the company’s internal code of conduct, and thereby violated Sarbanes-Oxley, which requires compliance with SEC rules that mandate corporate disclosure of the effectiveness of internal controls. In Plaintiff’s view, the 2013 annual report to the SEC materially omitted reference to the deficiencies reported by Plaintiff.

Defendant filed a motion for summary judgment grounded in the argument that Plaintiff’s complaints were too attenuated from corporate fraud or any violation contemplated by the Act to constitute protected activity under SOX. The court applied the objective reasonableness test of Sylvester v. Parexel Int’l, LLC, ARB Case No. 07-123, 2011 WL 2165854, at *11 (DOL, May 25, 2011).

In assessing the objective reasonableness of Plaintiff’s belief, the court noted that – notwithstanding Plaintiff’s dissatisfaction with their specificity -- the Defendant’s annual reports had disclosed

the “[r]isk to the Group’s business activity if critical or sensitive computer systems or information are not available when needed, are accessed by those not authorized, or are deliberately changed or corrupted.” Def. Ex. 30 at 8. Specifically, the company reported the risk to their business posed by “[f]ailure to adequately protect critical and sensitive systems and information. . . . which could materially and adversely affect our financial results. . . . [t]here is the potential that malicious or careless actions expose our computer systems or information to misuse or unauthorised disclosure.” Def. Ex. 29 at 10; Def. Ex. 30 at 9. Additionally, the company identified the risk of “[f]ailure to comply with current Good Manufacturing Practice requirements in commercial manufacture, . . . through inadequate controls. . .and in supporting regulated activities.” Id. at 3.

Slip op. at 32-33. The court thus agreed with Defendant that “[n]o reasonable person in [Mr. Reilly]’s place, with [his] training and experience, could have believed that [GSK’s] conduct violated SOX.” Id. at 33.

The court found that Plaintiff had not established facts showing that his complaints about computer security were even remotely related to fraud of any kind. The court found that the complaints were “’far too attenuated from the welfare of the shareholders to fall within the SOX ken.’ Lamb, 249 F. Supp. 3d at 918.” Slip op. at 34. The court stated that “[n]o factfinder could find Plaintiff's belief that [Defendant] violated SOX by not naming precise server issues [in its annual disclosures to the SEC] to be objectively reasonable. Therefore, summary judgment on Plaintiff's SOX whistleblower claim is appropriate.” Id. at 34 (footnote omitted).

Bugtani v. Dish Network, LLC, No. 18-CV-5003 (E.D. N.Y. July 8, 2019) (2019 U.S. Dist. LEXIS 113680; 2019 WL 2914158) (Memorandum and Order)

Casenote(s):

The court dismissed Plaintiff’s claim for whistleblower protection under the Sarbanes-Oxley Act, 18 U.S.C.A. § 1514A because Plaintiff never filed a complaint with OSHA, and therefore she failed to exhaust administrative remedies.

Northrop Grumman Sys. Corp. v. U.S. Dep’t of Labor, Admin. Review Bd. [Seguin], No. 17-1811 (4th Cir. June 13, 2019) (2019 U.S. LEXIS 17728; 2019 WL 2455321) (Opinion)

Case below: ARB No. 15-038, ALJ No. 2012-SOX-37

Casenote(s):

DEFINITIVELY AND SPECIFICALLY STANDARD; FOURTH CIRCUIT DECLINES TO ADDRESS WHETHER ADOPTION OF STANDARD IN WELCH REMAINS VALID IN VIEW OF ARB’S SUBSEQUENT SYLVESTER DECISION, WHERE COMPLAINANT FAILED TO MEET EITHER STANDARD

In Northrop Grumman Sys. Corp. v. U.S. Dep’t of Labor, Admin. Review Bd. [Seguin], No. 17-1811 (4th Cir. June 13, 2019) (2019 U.S. LEXIS 17728; 2019 WL 2455321) (case below ARB No. 15-038, ALJ No. 2012-SOX-37), the Fourth Circuit noted that it had adopted the “definitively and specifically” standard of Platone v. FLYi, Inc., ARB No. 04-154 (ARB Sept. 29, 2006) in Welch v. Chao, 536 F.3d 269, 275 (4th Cir. 2008). The court noted that DOL has since determined in Sylvester v. Parexel Int’l LLC, ARB No. 07-123 (ARB May 25, 2011) that the this standard was too strict, and that the proper standard was whether the employee reported conduct that he or she reasonably believes constituted a violation of federal law. In the instant case, the complainant failed to satisfy either standard, and the court determined that it need not resolve whether Welch’s adoption of the definitively and specifically” standard remains good law.

WHETHER SOX COMPLAINANT’S BELIEF OF A VIOLATION OF THE LAWS ENUMERATED IN 1514A(a)(1) CAN BE OBJECTIVELY REASONABLE WITHOUT SUCH VIOLATION APPROXIMATING THE ELEMENTS OF FRAUD; FOURTH CIRCUIT SUMMARIZES COURTS’ REACTION TO ARB’S DECISION IN SYLVESTER; FOURTH CIRCUIT FINDS PLAIN TEXT OF SOX COMPELS APPROXIMATION OF ELEMENTS OF SHAREHOLDER FRAUD

In Northrop Grumman Sys. Corp. v. U.S. Dep’t of Labor, Admin. Review Bd. [Seguin], No. 17-1811 (4th Cir. June 13, 2019) (2019 U.S. LEXIS 17728; 2019 WL 2455321) (case below ARB No. 15-038, ALJ No. 2012-SOX-37), the Fourth Circuit addressed in a footnote the ARB’s decision in Sylvester v. Parexel Int’l LLC, ARB No. 07-123 (ARB May 25, 2011), in regard to the ARB’s contention that the courts had improperly “’merged the elements required to prove a violation of a fraud statute . . . with the requirements a whistleblower must allege or prove to engage in protected activity.’ 2011 WL 2165854, at *20.” Slip op. at 15-16, n.9. The court noted that “[t]he ARB insisted that an employee can have an objectively reasonable belief of a violation of the laws in § 1514A(a)(1) even if the employee did not prove or approximate the specific elements of fraud. Id.” Id. The court wrote:

The response to Sylvester has been varied. Some circuits have followed Sylvester’s approach, affording the decision varying degrees of deference. See Beacon v. Oracle America, Inc., 825 F.3d 376, 380 (8th Cir. 2016) (adopting Sylvester without specifying a level of deference); Rhinehimer v. United States Bancorp Inves., Inc., 787 F.3d 797, 806 (6th Cir. 2015) (adopting Sylvester applying Skidmore deference); Wiest v. Lynch, 710 F.3d 121, 133 (3d Cir. 2013) (adopting Sylvester applying Chevron deference). In contrast, the Second Circuit emphasized that Sylvester’s approach runs contrary to the statutory language of § 1514A(a)(1). Nielsen, 762 F.3d at 222 n.6. Other circuits, including this Court, have continued to insist on approximating the elements of fraud without addressing the impact of Sylvester. Rocheleau, 680 F. App’x at 535; Jones, 777 F.3d at 668. Regardless of the deference afforded to the ARB (and Welch indicates that this Court should afford Chevron deference to ARB decisions interpreting § 1514A), the plain text of the statute compels us to conclude that the reasonableness of an employee’s belief must be measured against the specific statutory provisions in § 1514A(a)(1) requiring approximation of the elements of shareholder fraud in this case.

Id.

PROTECTED ACTIVITY UNDER SOX; COMPLAINT MUST RELATE TO CONDUCT COMPLAINANT REASONABLY BELIEVES VIOLATES ONE OF SIX CATEGORIES LISTED IN 1515A(a)(1); SOX PROTECTION DOES NOT EXTEND TO EVERY EMPLOYEE COMPLAINT ABOUT POSSIBLE IMPROPER OR ILLEGAL CONDUCT; THE CATEGORIES ALL RELATE TO FRAUD

In Northrop Grumman Sys. Corp. v. U.S. Dep’t of Labor, Admin. Review Bd. [Seguin], No. 17-1811 (4th Cir. June 13, 2019) (2019 U.S. LEXIS 17728; 2019 WL 2455321) (case below ARB No. 15-038, ALJ No. 2012-SOX-37), the Fourth Circuit stated in regard to protected activity under SOX:

   The requirement that the information provided relate to one of the six specified categories is crucial. The whistleblower protection provision does not extend protection to every employee complaint about possible improper or even illegal conduct. The provision prohibits retaliation only if the employee provides information regarding conduct that he or she reasonably believes violates one of six categories listed by Congress in § 1514A(a)(1). Villanueva v. United States Dept. of Labor, 743 F.3d 103, 109 (5th Cir. 2014).

Slip op. at 5. The court noted that “[t]hose categories are mail fraud, wire fraud, bank fraud, securities fraud, any SEC rule or regulation or any federal law relating to fraud against shareholders. Significantly, all six categories relate to fraud. See, e.g.¸ Livingston v. Wyeth, Inc., 520 F.3d 344, 351 n.1 (4th Cir. 2008).” Id. at 4-5.

PROTECTED ACTIVITY; COMPLAINTS THAT EMPLOYER WAS VIOLATING SOX’S PROHIBITION ON MANDATORY PRE-SUIT ARBITRATION DO NOT CONCERN SHAREHOLDER FRAUD, AND ARE NOT PROTECTED ACTIVITY UNDER SECTION 1514A(a)(1)

In Northrop Grumman Sys. Corp. v. U.S. Dep’t of Labor, Admin. Review Bd. [Seguin], No. 17-1811 (4th Cir. June 13, 2019) (2019 U.S. LEXIS 17728; 2019 WL 2455321) (case below ARB No. 15-038, ALJ No. 2012-SOX-37), the complainant [“Seguin”] opposed in various ways her employer’s [“Northrop”] arbitration policy, essentially contending that her employer in various ways was attempting to trick employees into agreeing to arbitration policy. After the complainant was terminated during a reduction in force, she filed a SOX claim. The ARB determined that the complainant engaged in protected activity under SOX. On appeal, DOL crystalized its position: “According to the DOL, Seguin objected to Northrop’s arbitration policy because she believed Northrop’s arbitration policy violated § 1514A(e) of the SOX whistleblower provision, which prohibits pre-suit arbitration of SOX claims. The DOL argues that as a result of this belief, Seguin refused to sign the Conflict of Interest form because she believed that doing so was tantamount to consenting to the arbitration policy.” Slip op. at 10. The court stated that DOL’s contention was that “§ 1514A(e) is a provision of ‘Federal law relating to fraud against shareholders’—the sixth enumerated category of § 1514A(a)(1).” Id. at 11. DOL also contended that the complainant’s belief that her employer’s arbitration policy violated § 1514A(e) was reasonable.

The court soundly rejected DOL’s interpretation, finding that under the plain text of SOX, the sixth category of § 1514A(a)(1) “applies only to information provided that concerns shareholder fraud. It is not a broad, catchall provision.” Id. at 12. The court elaborated:

   Shareholder fraud involves false representations of material fact intended to deceive shareholders and reliance by shareholders on those false representations to their detriment. Dura Pharmaceuticals, Inc. v. Broudo, 544 U.S. 336, 341-42 (2005). The basic elements of the claim include: a material misrepresentation (or omission), scienter, a connection with the purchase or sale of a security, reliance, economic loss, and loss causation. Id. Neither Seguin’s complaints about Northrop’s arbitration policy nor her complaints about violations of § 1514A(e) involve any of these elements. Simply put, the DOL’s interpretation is contrary to law. Complaints like Seguin’s do not constitute shareholder fraud and, thus, are not afforded whistleblower protection under § 1514A.

Id. at 13.

PROTECTED ACTIVITY; COMPLAINANT’S PUTATIVE BELIEF THAT EMPLOYER WAS VIOLATING SOX’S PROHIBITION ON MANDATORY PRE-SUIT ARBITRATION BY REQUIRING EMPLOYEES TO SIGN A CONFLICT OF INTERESTS FORM WAS NOT OBJECTIVELY REASONABLE WHERE THE FORM DID NOT MENTION OR REFERENCE THE ARBITRATION POLICY, AND WHERE THE POLICY’S PLAIN LANGUAGE INDICATED THAT THE POLICY DID NOT APPLY TO CLAIMS WHERE AGREEMENTS TO ARBITRATE WERE BARRED

PROTECTED ACTIVITY; LACK OF OBJECTIVE REASONABLENESS OF COMPLAINANT’S BELIEF THAT THERE HAD BEEN A SOX VIOLATION MAY BE REINFORCED WHERE RESPONDENT HAD EXPLAINED TO COMPLAINANT WHY THERE WAS NO VIOLATION

PROTECTED ACTIVITY; COMPLAINANT’S PUTATIVE BELIEF THAT EMPLOYER WAS VIOLATING SOX’S PROHIBITION ON MANDATORY PRE-SUIT ARBITRATION BY REQUIRING EMPLOYEES TO SIGN A CONFLICT OF INTERESTS FORM WAS NOT OBJECTIVELY REASONABLE WHERE SUCH A VIOLATION WOULD NOT HAVE SHOWN EVEN AN APPROXIMATION OF SHAREHOLDER FRAUD

In Northrop Grumman Sys. Corp. v. U.S. Dep’t of Labor, Admin. Review Bd. [Seguin], No. 17-1811 (4th Cir. June 13, 2019) (2019 U.S. LEXIS 17728; 2019 WL 2455321) (case below ARB No. 15-038, ALJ No. 2012-SOX-37), the complainant [“Seguin”] opposed in various ways her employer’s [“Northrop”] arbitration policy, essentially contending that her employer in various ways was attempting to trick employees into agreeing to arbitration policy. After the complainant was terminated during a reduction in force, she filed a SOX claim. The ARB determined that the complainant engaged in protected activity under SOX. On appeal, DOL crystalized its position: “According to the DOL, Seguin objected to Northrop’s arbitration policy because she believed Northrop’s arbitration policy violated § 1514A(e) of the SOX whistleblower provision, which prohibits pre-suit arbitration of SOX claims. The DOL argues that as a result of this belief, Seguin refused to sign the Conflict of Interest form because she believed that doing so was tantamount to consenting to the arbitration policy.” Slip op. at 10. The court stated that DOL’s contention was that “§ 1514A(e) is a provision of ‘Federal law relating to fraud against shareholders’—the sixth enumerated category of § 1514A(a)(1).” Id. at 11. DOL also contended that the complainant’s belief that her employer’s arbitration policy violated § 1514A(e) was reasonable.

The court soundly rejected DOL’s interpretation, finding that under the plain text of SOX, the sixth category of § 1514A(a)(1) “applies only to information provided that concerns shareholder fraud. Id. at 12.

The court, however, went on to address whether in the instant case the complainant’s beliefs about the arbitration policy were objectively reasonable. The court found that they were not because the Conflict of Interest form did not mention arbitration policy; although it referenced the employer’s Standards of Business Conduct, that document also did not mention the arbitration policy. Thus, substantial evidence did not support as reasonable the complainant’s belief that the form was a means of tricking her into agreeing to the arbitration policy. The court stated: “The DOL’s reasoning, which the ARB also adopted, conflates the subjective and objective belief requirements in a way that renders the objective reasonable belief requirement meaningless. That reasoning is inconsistent with the law.” Id. at 14.

The court an found additional ground for finding that the belief was not objectively reasonable because Northrop employees had reiterated to the complainant the Conflict of Interest form had nothing to do with the arbitration policy. The court stated: “Seguin’s alleged belief to the contrary was all the more objectively unreasonable in light of this confirmation. Day v. Staples, Inc., 555 F.3d 42, 58 (1st Cir. 2009) (Putative whistleblower’s ‘beliefs were not initially reasonable as beliefs in shareholder fraud and they became less reasonable as he was given explanations [by company employees].’).” Id. The court also found that a reasonable person in the complainant’s position would not have reasonably believed that the arbitration policy violated § 1514A(e) because the plain language of the policy indicated that it did not apply to claims for which an agreement to arbitration is prohibited by law.

The court further found that the complainant could not have reasonably believed that a violation of 1514A(e) constituted shareholder fraud. The court stated:

To be objectively reasonable, a whistleblower is not required to strictly plead all the elements of a shareholder fraud cause of action. However, the reasonableness of an employee’s belief must be considered in the context of what is required to establish shareholder fraud. . . . Consequently, an employee, like Seguin, who asserts protected status on the basis of complaints about shareholder fraud must, at a minimum, “have an objectively reasonable belief that the company intentionally misrepresented or omitted certain facts to investors, which were material and which risked loss.” Day, 555 F.3d at 55.

Id. at 15 (citations omitted). The court find that none of the complainant’s complaints about the arbitration policy approximated the elements of shareholder fraud.

LACK OF CLARITY OF STATUTORY INTERPRETATIVE BASIS FOR ALJ AND ARB ORDERS DID NOT SUPPORT VACATING OF THOSE ORDERS WHERE THERE WAS A RATIONAL BRIDGE BETWEEN THE RECORD FINDINGS AND LEGAL CONCLUSIONS

In Northrop Grumman Sys. Corp. v. U.S. Dep’t of Labor, Admin. Review Bd. [Seguin], No. 17-1811 (4th Cir. June 13, 2019) (2019 U.S. LEXIS 17728; 2019 WL 2455321) (case below ARB No. 15-038, ALJ No. 2012-SOX-37), the complainant [“Seguin”] opposed in various ways her employer’s [“Northrop”] arbitration policy, essentially contending that her employer in various ways was attempting to trick employees into agreeing to arbitration policy. After the complainant was terminated during a reduction in force, she filed a SOX claim. The ARB determined that the complainant engaged in protected activity under SOX. On appeal, DOL crystalized its position: “According to the DOL, Seguin objected to Northrop’s arbitration policy because she believed Northrop’s arbitration policy violated § 1514A(e) of the SOX whistleblower provision, which prohibits pre-suit arbitration of SOX claims. The DOL argues that as a result of this belief, Seguin refused to sign the Conflict of Interest form because she believed that doing so was tantamount to consenting to the arbitration policy.” Slip op. at 10. The court stated that DOL’s contention was that “§ 1514A(e) is a provision of ‘Federal law relating to fraud against shareholders’—the sixth enumerated category of § 1514A(a)(1).” Id. at 11. DOL also contended that the complainant’s belief that her employer’s arbitration policy violated § 1514A(e) was reasonable.

Lack of Clarity of Basis for Agency’s Decision

On appeal, “Northrop contended that the ARB and ALJ orders could be vacated because the DOL’s theory on appeal was not ‘invoked when [the agency] took action.’ Michigan v. E.P.A., 135 S. Ct. 2699, 2710 (2015).” Id. at 12 n.7. The court found that the ALJ’s decision had not been clear on the issue, but nonetheless found that the ALJ and ARB orders “viewed § 1514A(e) as a component of the theory of protected activity. See Deltek, Inc. v. Dept. of Labor, Administrative Review Bd., 649 F. App’x 320, 330 n.5 (noting that agency decisions need not provide ideal clarity but only a rational bridge between the record findings and legal conclusions).”

WHERE THE DEPARTMENT OF LABOR PROVIDED A POST HOC INTERPRETATION OF SOX THAT THE ALJ AND ARB DECISIONS HAD NOT EXPRESSLY ARTICULATED, THE COURT APPLIED SKIDMORE DEFERENCE TO THE AGENCY’S INTERPRETATION

In Northrop Grumman Sys. Corp. v. U.S. Dep’t of Labor, Admin. Review Bd. [Seguin], No. 17-1811 (4th Cir. June 13, 2019) (2019 U.S. LEXIS 17728; 2019 WL 2455321) (case below ARB No. 15-038, ALJ No. 2012-SOX-37), the complainant [“Seguin”] opposed in various ways her employer’s [“Northrop”] arbitration policy, essentially contending that her employer in various ways was attempting to trick employees into agreeing to arbitration policy. After the complainant was terminated during a reduction in force, she filed a SOX claim. The ARB determined that the complainant engaged in protected activity under SOX. On appeal, DOL crystalized its position: “According to the DOL, Seguin objected to Northrop’s arbitration policy because she believed Northrop’s arbitration policy violated § 1514A(e) of the SOX whistleblower provision, which prohibits pre-suit arbitration of SOX claims. The DOL argues that as a result of this belief, Seguin refused to sign the Conflict of Interest form because she believed that doing so was tantamount to consenting to the arbitration policy.” Slip op. at 10. The court stated that DOL’s contention was that “§ 1514A(e) is a provision of ‘Federal law relating to fraud against shareholders’—the sixth enumerated category of § 1514A(a)(1).” Id. at 11. DOL also contended that the complainant’s belief that her employer’s arbitration policy violated § 1514A(e) was reasonable.

Because the DOL crystalized its interpretation of 1514A on appeal, the court addressed the level of deference owed and found that Skidmore deference applies:

   Because neither the ARB nor the ALJ explicitly articulated the DOL’s interpretation of § 1514A below, we need not afford Chevron deference to the DOL’s post hoc interpretation. Miller v. Clinton, 687 F.3d 1332, 1342 (D.C. Cir. 2012). This interpretation may be entitled to deference under Skidmore v. Swift & Co., 323 U.S. 134 (1944) but only such deference as its power to persuade commands. Pub. Citizen, Inc. v. United States. Dept. of Health and Human Servs., 332 F.3d 654, 661-62 (D.C. Cir. 2003).

Id. at 12 n.8.

Burrs v. United Techs. Corp., No. 18-2406 (4th Cir. May 10, 2019) (per curiam) (Memorandum Opinion and Order) (2019 U.S. App. LEXIS 14034)

Casenote(s):

In Burrs v. United Techs. Corp., No. 18-2406 (4th Cir. May 10, 2019) (per curiam) (Memorandum Opinion and Order) (2019 U.S. App. LEXIS 14034), the Fourth Circuit summarily affirmed the district court’s order granting Defendant’s motion to dismiss for the reasons stated by the district court. The district court had dismissed the plaintiff’s Section 1981 civil rights claim based on claim preclusion because two prior suits based on the same set of operative facts (one of which was a SOX retaliation case) had been dismissed on summary judgment on the merits. See 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).

[The prior SOX case was Burrs v. United Techs. Corp., No. 16-cv-1018 (M.D. N.C. Nov. 15, 2016) (Order and Judgment) (2016 U.S. Dist. LEXIS 189784), aff’d Burrs v. Walter Kiddie Portable Equip., Inc., No. 16-2419 (4th Cir. Sept. 13, 2017) (per curiam)].

Wagner v. S. Cal. Edison Co., 16-cv-06259 (C.D. Cal. Apr. 18, 2019) (2019 U.S. Dist. LEXIS 66509; 2019 WL 1746127) (Order Granting Defendants' Motion for Partial Summary Judgment)

Casenote(s):

PROTECTED ACTIVITY; SUBJECTIVE BELIEF NOT ESTABLISHED MERELY BASED ON FACT THAT SUPERVISOR TOLD PLAINTIFF THAT HIS OWN ACTIONS MAY RESULT IN A SOX VIOLATION

PROTECTED ACTIVITY; OBJECTIVE BELIEF MUST APPROXIMATE ELEMENTS OF SECURITIES FRAUD; FACT THAT SUPERVISOR CONVERTED AN EMERGENCY PROJECT INTO A CAPITAL WORK ORDER ALONE DOES NOT SHOW SUCH FRAUD; PLAINTIFF MUST DO MORE THAN SIMPLY THROW OUT THE PHRASE “SARBANES-OXLEY”

In Wagner v. S. Cal. Edison Co., 16-cv-06259 (C.D. Cal. Apr. 18, 2019) (2019 U.S. Dist. LEXIS 66509; 2019 WL 1746127), Plaintiff filed various claims related to his termination, including a SOX claim. Plaintiff had received a letter of reprimand from his supervisor for failing to follow another supervisor’s instructions. The letter warned that further misconduct would result in further disciplinary action up to and including termination. A few months later, the supervisor sent Plaintiff an email reminding him that a work order needed to be approved by another supervisor, and informing Plaintiff that this submission was a SOX requirement. A few months later, the supervisor again informed Plaintiff that failure to obtain work order approvals could result in SOX violations. The next day, Plaintiff failed internal complaints alleging that his supervisor had engaged in SOX violations. The supervisor then placed Plaintiff on a temporary disciplinary suspension for failure to follow work order processes despite directives to make corrections. The next day, Plaintiff filed a whistleblower retaliation complaint with a state agency alleging the supervisor engaged in SOX violations. A few weeks later, Plaintiff filed a claim with OSHA. The supervisor was not aware of these complaints until later. In the interim, Plaintiff was reinstated, but informed that it was a “last chance” agreement. Two weeks later, Plaintiff submitted a timesheet which his immediate supervisor suspected was falsified. Additionally, allegations were received by Defendant that Plaintiff violated the last chance agreement by making denigrating remarks to a third party about the immediate supervisor and a co-worker. After an investigation, Plaintiff was terminated for the timesheet violations.

The court granted summary judgment on the SOX on the ground that Plaintiff failed to present evidence sufficient to show that (1) he had a subjective belief that the supervisor was violating SOX; and (2) the belief was objectively reasonable.

The court found that “Plaintiff’s actions and deposition testimony established that he filed his complaints not because he had any subjective belief that [the supervisor] committed a Sarbanes-Oxley violation, but instead because she had informed him that his own failures may constitute a violation if not remedied. . . . Plaintiff made claims against Ms. Pillado only in retaliation for her accusations.” Slip op. at 7. In addition, the court found that Plaintiff’s Opposition to the motion for summary judgment failed to address how he had a subjective belief that the supervisor committed a SOX violation, other than a one sentence, conclusory statement. The stated that “[t]his bare assertion is insufficient to overcome a motion for summary judgment. “ Id.

The court stated to satisfy the objectively reasonable standard, the theory of shareholder fraud must at least approximate the basic elements of securities fraud. Here, Plaintiff only made claims against the supervisor after he was informed that his own actions could result in SOX violations. The court stated that “to even approach the elements of securities fraud … Plaintiff must do more than simply throw out the phrase ‘Sarbanes-Oxley’ ….” Id. at 8. Here, Plaintiff had not claimed or provided evidence that the supervisor’s alleged conduct —converting an emergency project into a capital work order —involved any of the elements of securities fraud.

Shea v. Kohl's Dep't Stores, Inc., 16-cv-01155 (N.D. Ala. Apr. 2, 2019) (2019 U.S. Dist. LEXIS 56105; 2019 WL 1452887) (Memorandum Opinion)

Casenote(s):

The court denied Defendant’s motion for summary judgment, finding that Plaintiff made out a prima facie case of retaliation under Section 806 of the Sarbanes-Oxley Act, and that Defendant had not shown by clear and convincing evidence for purposes of summary judgment that it would have terminated the plaintiff's employment even if he had not engaged in protected activity.

Brooks v. Agate Res., Inc., No. 15-cv-00983 (D. Or. Mar. 25, 2019) (2019 U.S. Dist. LEXIS 83681) ([Magistrate’s] Findings and Recommendation), adopted by, dismissed by, motion denied by Brooks v. Agate Res., Inc., 2019 U.S. Dist. LEXIS 83423 (D. Or. May 14, 2019)

Related cases below: 2016-SOX-00037 and 2018-SOX-00046

Casenote(s):

PLEADING; FEDERAL COURT PLAUSIBILITY STANDARD; MERE CONJECTURE THAT DEFENDANT KNEW ABOUT PROTECTED ACTIVITY BECAUSE DEFENDANT ALLEGEDLY HACKED HIS COMPUTER WAS NOT ENTITLED TO PRESUMPTION OF TRUTH IN DECIDING MOTION FOR SUMMARY JUDGMENT

PLEADING; FAILURE TO ALLEGE FACTS SHOWING THAT DEFENDANT WAS A COVERED EMPLOYER, OR PLAINTIFF WAS A COVERED EMPLOYEE, UNDER SOX OR DODD-FRANK SECTION 5567

PLEADING; FAILURE TO ALLEGE EXHAUSATION OF ADMINISTRATIVE REMEDIES; ALJ’S DETERMINATION THAT SOX AND ACA WERE FILED OUTSIDE LIMITATIONS PERIOD; MAGISTRATE SAYS THAT PENDING APPEAL TO ARB SHOULD BE ALLOWED TO RUN ITS COURSE; LACK OF ALLEGATION OF FILING OF ADMINISTRATIVE COMPLAINT UNDER DODD-FRANK

In Brooks v. Agate Res., Inc., No. 15-cv-00983 (D. Or. Mar. 25, 2019) (2019 U.S. Dist. LEXIS 83681), adopted by Brooks v. Agate Res., Inc., 2019 U.S. Dist. LEXIS 83423 (D. Or., May 14, 2019) (related to 2016-SOX-00037 and 2018-SOX-00046), Plaintiff filed a wide-ranging set of federal and state actions, at least 10 of which were whistleblower protection laws. The Magistrate Judge recommended that all counts be dismissed on summary judgment. The District Court accepted those recommendations and dismissed the actions.

The Magistrate found that “each whistleblower claim fails because Plaintiff has not alleged facts that give rise to a plausible inference that Defendant took any adverse employment action against Plaintiff because of the alleged whistleblowing.” Slip op. at 20. Among the whistleblower counts were three administered by DOL: a SOX claim, an ACA claim, and a Dodd-Frank section 1057 claim.

Lack of plausibility that Defendant Knew About Protected Activity Based on Speculation that Defendant hacked his computer

The Magistrate made a blanket finding that Plaintiff had not alleged any facts that plausibly suggested that Defendant knew about any reports Plaintiff claims to have made to state or federal agencies at any time before his employment was terminated. Rather, Plaintiff merely stated his suspicion that Defendant hacked his computer, and therefore knew about his reports to the agencies. The Magistrate found that such conjecture was “not entitled to the assumption of truth.”

SOX claim —failure to allege covered employer; failure to exhaust (failure to file a timely administrative complaint)

The Magistrate found that two counts raised a SOX, 18 U.S.C. § 1514A claim. Plaintiff had acknowledged, however, that the Defendant was a “private company” and did not allege any facts suggesting that he was retaliated against by an entity covered by SOX. The Magistrate was not persuaded by Plaintiff’s argument that he was conducting business as a state contractor and thus subject to SOX under the Supreme Court’s decision in Lawson, the Magistrate finding that the state is not a public company. The Magistrate also found that Plaintiff had not exhausted his administrative remedies, having not filed a timely complaint with DOL. The ALJ had summarily dismissed the complaint as untimely, and the ALJ’s decision was pending before the ARB.

Affordable Care Act claim —failure to exhaust (failure to file timely administrative complaint)

The Magistrate also found that Plaintiff failed to exhaust his administrative remedies with respect to his claim under the ACA, taking judicial notice that Plaintiff had filed a complaint with the DOL, but “he waited until April 4, 2016 to do so —or 920 days after the termination of his employment, or 740 days after the expiration of his 180-day filing window —his complaint was summarily dismissed by the ALJ.” The Magistrate stated that Plaintiff’s appeal to the ARB should be allowed to run its course.

Dodd-Frank section 5567 claim —not a covered employer/employee; failure to allege exhaustion by filing administrative complaint

The Magistrate was not persuaded of Dodd-Frank, 12 U.S.C. § 5567 coverage based on Plaintiff’s allegation that Defendant, which offered various health insurance plans, is a “covered person” or “service provider” under the statute, or that it offered “a consumer financial product or service” that would make it subject to section 5567. The Magistrate found no allegations suggesting that Plaintiff ever complained about or reported any purported violations of any laws subject to the CFPB’s jurisdiction to Defendant or the government or law enforcement authority. And, there were no allegations suggesting that Plaintiff was is a “covered employee” as defined in the statute.

The Magistrate found that even if § 5567 applied, Plaintiff failed to meet the administrative exhaustion requirement, the amended complaint containing no allegations that Plaintiff ever filed a complaint for an alleged violation of 12 U.S.C. § 5567 with the DOL in a manner that complies with the statute and implementing regulations.

Bhandari v. Maverick Tube, 763 Fed. Appx. 359 (5th Cir. Apr. 1, 2019) (per curiam) (unpublished) (No. 18-20668) (2019 U.S. App. LEXIS 9468; 2019 WL 1466956) (Opinion)

Case below: S.D. Tex. No. 4:16-CV-226

Casenote(s):

PROTECTED ACTIVITY; COMPLAINANT MUST SUBJECTIVELY AND OBJECTIVELY BELIEVE — AT THE TIME OF ASSISTING IN AN INVESTIGATION — THAT THE COMPLAINED OF CONDUCT VIOLATED ONE OF THE SPECIFIC CRIMES IN § 1514A(A)(1)

In Bhandari v. Maverick Tube, 763 Fed. Appx. 359 (5th Cir. Apr. 1, 2019) (per curiam) (unpublished) (2019 U.S. App. LEXIS 9468; 2019 WL 1466956), the Fifth Circuit affirmed the District Court’s grant of summary judgment dismissing Bhandari’s SOX § 1514A complaint, albeit on different grounds.

Maverick Tube fired Bhandari after she expressed concerns about the tax valuation of one of Maverick’s subsidiaries’ licensing deals. The Fifth Circuit found that “Bhandari has identified evidence that only shows she warned about a potential tax consequence from the undervalued license. She has not identified any record evidence tending to prove that she believed or warned that the complained of conduct amounted to one of the enumerated crimes in § 1514A.” Slip op. at 4. Although Bhandari argued to the district court that the complained of conduct might satisfy the elements of those crimes, the Fifth Circuit stated that such an argument is insufficient under its decision in Villanueva v. United States Department of Labor, which requires that “[w]histleblowers must provide evidence that they contemporaneously believed the conduct violated one of the enumerated crimes.” Id. The Fifth Circuit wrote:

   To succeed on a § 1514A claim, employees must show that they provided information about “conduct which the employee[s] reasonably believe[d] constitute[d] a violation of” one of six enumerated categories of crimes. 18 U.S.C. § 1514A(a)(1). In Villanueva v. United States Department of Labor, we rejected a § 1514A claim when a fired employee “did not complain, based on a reasonable belief, that one of six enumerated categories of U.S. law had been violated.” 743 F.3d 103, 109 (5th Cir. 2014). We did so even though the conduct complained of could have been easily recast as one of the enumerated crimes. Id. at 109. It is not enough for whistleblowers to assist in the investigation of one of the enumerated crimes; they must also subjectively and objectively believe, at the time of their assistance, that the relevant conduct violated one of the specific crimes in § 1514A(a)(1). See Allen v. Admin. Review Bd., 514 F.3d 468, 477 (5th Cir. 2008) (noting that “an employee’s reasonable belief must be scrutinized under both a subjective and objective standard”).

Id. at 3-4.

Burrs v. United Techs. Corp., No. 18-cv-491 (M.D.N.C. Mar. 29, 2019) (2019 U.S. Dist. LEXIS 53542) (Memorandum Opinion and Order)

Casenote(s):

ATTORNEY FEES AWARDED AGAINST PRO SE PLAINTIFF UNDER RULE 11 WHERE PRIOR MONETARY SANCTIONS HAD NOT DETERRED PLAINTIFF

In Burrs v. United Techs. Corp., No. 18-cv-491 (M.D.N.C. Mar. 29, 2019) (2019 U.S. Dist. LEXIS 53542), the court had earlier dismissed the case because it was barred by claim preclusion based on two prior suits (one of which was a SOX case) involving the same operative facts, and in a subsequent order had imposed a pre-filing injunction and Rule 11 sanctions, with leave for Defendant to file a fee petition. The instant order granted a sanction of attorney’s fees of $25,065.08 under Rule 11. The court stated that Plaintiff’s conduct had been egregious, that he had several opportunities to withdraw his case before the Court imposed sanctions, and that previous monetary sanctions had not deterred Plaintiff.

[The prior SOX case was Burrs v. Walter Kiddie Portable Equipment, Inc., No. 16-cv-1018 (M.D. N.C. Nov. 15, 2016) (Order and Judgment) (2016 U.S. Dist. LEXIS 189784), aff’d Burrs v. Walter Kiddie Portable Equip., Inc., No. 16-2419 (4th Cir. Sept. 13, 2017) (per curiam)].

Walder v. Bio-Rad Laboratories, Inc., 916 F.3d 1176 (9th Cir. Feb. 26, 2019) (No. 17-16193) (2019 U.S. App. LEXIS 5612; 2019 WL 924827) (Opinion)

Wadler v. Bio-Rad Laboratories, Inc., No. 17-16193 (9th Cir. Feb. 26, 2019) (unpublished) (Memorandum)

Casenote(s):

PROTECTED ACTIVITY; INTERNAL REPORT OF PLAINTIFF’S BELIEF THAT DEFENDANTS HAD VIOLATED THE FOREIGN CORRUPT PRACTICES ACT (FCPA); NINTH CIRCUIT HOLDS THAT AN FCPA PROVISION IS NOT A “RULE OR REGULATION” OF THE SEC

In Walder v. Bio-Rad Laboratories, Inc., 916 F.3d 1176 (9th Cir. Feb. 26, 2019) (2019 U.S. App. LEXIS 5612; 2019 WL 924827)—a case alleging violations of Sarbanes-Oxley, Dodd-Frank, and California public policy—the jury found that the Defendants (Bio-Rad and its CEO) had retaliated against the Plaintiff (Wadler), the former general counsel, when the Plaintiff was terminated after he made an internal report that he believed the company had violated the Foreign Corrupt Practices Act (FCPA). The district court had instructed the jury that the Plaintiff had to prove that he engaged in protected activity under SOX, which depended on whether he disclosed something that he reasonably believed violated a rule or regulation of the SEC. The district court further instructed the jury that under the applicable rules and regulations of the SEC, it was unlawful to bribe foreign officials, to fail to keep accurate and reasonably detailed books and records, to knowingly falsify books and record, and knowingly circumvent an internal accounting controls system. The jury returned a $10.92 million verdict, plus interest. In a post-verdict motion for judgment of a matter of law, the district court concluded that the FCPA was a rule or regulation of the SEC under SOX because the FCPA was an amendment to the Securities Act of 1934. The Defendants appealed arguing that no reasonable employee in Wadler’s position would believe that there were the FCPA violations in question, and thus he had not engaged in protected activity under SOX.

The Ninth Circuit vacated as to the SOX award. The appeal turned on a question of statutory interpretation: whether the FCPA’s books-and-records provisions, 15 U.S.C § 78m(b)(5), (2)(A), and anti-bribery provision, § 78dd-1(a), were for purposes of SOX § 806, a “rule or regulation” of the SEC. The court found that “rule or regulation” used in reference to an administrative agency means administrative rules and regulations, not statutes. Moreover, SOX also protects reports of conduct violating “any provision of Federal law relating to fraud against shareholders, ” which indicates Congress was using “law” and “rule and regulation” as distinct concepts. The court found the language in the statute was plain, and rejected the reference to SOX’s remedial purpose, since the purpose alone cannot expand the language.

In a concurrently filed unpublished memorandum decision, the court concluded that the error was not harmless. In the published decision the court turned to the remedy. The difficulty was that one of the four FCPA violations listed, falsifying books and records, is a violation of an SEC regulation. A reasonable jury could find that Wadler reasonably believed that Bio-Rad and its employees were falsifying books and records. It thus could still find for the Plaintiff on the SOX claim. The court thus vacated the verdict and remanded for the trial court to determine whether a new trial was warranted, in light of considerations about double recovery. The district court was also told it could consider whether new theories of protected activities, a “fraud against shareholders” theory, should be permitted.

In regard to double recovery concerns, the Ninth Circuit determined that despite the error on the SOX jury instruction, the California public policy verdict could stand since it was premised on reports of violations of the FCPA, not violations of SOX.

In the concurrently filed memorandum opinion, Wadler v. Bio-Rad Laboratories, Inc., No. 17-16193 (9th Cir. Feb. 26, 2019) (unpub.), the Ninth Circuit decided that 1) the Plaintiff’s arguments on appeal that the SOX instruction was harmless error had been “abandoned, forfeited, or waived” because they were entirely different from the arguments raised in the district court. The court found that the verdict under Dodd-Frank § 78u-6(h) count had to be reversed since Digital Realty Trust, Inc. v. Somers, 138 S. Ct. 767, 778 (2018) held that purely internal reports are not covered by Dodd-Frank. As a result of this finding, the damages under the Dodd-Frank doubling provision had to be vacated.

PROTECTED ACTIVITY; REASONABLE BELIEF STANDARD; WHISTLEBLOWER GENERALLY IS NOT REQUIRED TO INVESTIGATE PRIOR TO REPORTING CONCERNS

In Walder v. Bio-Rad Laboratories, Inc., 916 F.3d 1176 (9th Cir. Feb. 26, 2019), the court stated: “While the evidence needed to support a whistleblower ’s reasonable belief will necessarily vary with the circumstances, § 806 generally does not require an employee to undertake an investigation before reporting his concerns. See Van Asdale, 577 F.3d at 1002 (‘Requiring an employee to essentially prove the existence of fraud before suggesting the need for an investigation would hardly be consistent with Congress’s goal of encouraging disclosure.’). Such a requirement would undermine the purpose of SOX, particularly where, as here, a general counsel reports his concerns to the Board of Directors because he believes that senior management is complicit in unlawful conduct. ” Slip op. at 18.

Wallace v. Andeavor Corp. , 916 F.3d 423 (5th Cir. Feb. 15, 2019) (No. 17-50927) (2019 U.S. App. LEXIS 4670; 2019 WL 643217) (Opinion)

Cases below: W.D. Tex. No. 11-ca-00099; ALJ No. 2011-SOX-00011. Note: Tesoro Corp. changed its name to Andeavor Corp. in 2017.

Casenote(s):

PROTECTED ACTIVITY; OBJECTIVE BELIEF; SUMMARY JUDGMENT GRANTED WHERE PLAINTIFF HAD CERTIFIED AS CORRECT SEC 10-K FILING AT TIME OF SUBMISSION AND ONLY LATER DID HE CLAIM THAT DEFENDANT HAD MISREPRESENTED REVENUE TREATMENT OF TAXES; PLAINTIFF COULD NOT CREATE A FACT ISSUE BY RELYING ON EXPERT TESTIMONY THAT HAD NOT BEEN TIMELY DISCLOSED AS REQUIRED BY FED R. CIV. P. 26(a)(2)

In Wallace v. Andeavor Corp. , 916 F.3d 423 (5th Cir. Feb. 15, 2019) (2019 U.S. App. LEXIS 4670; 2019 WL 643217), the court affirmed the district court’s findings that the employer’s decision to fire the plaintiff was not prohibited retaliation under SOX, and that the plaintiff did not have an objectively reasonable belief that a violation of reporting requirements had occurred. The court noted that the case turned on whether the Plaintiff’s purported belief that his employer was misreporting its revenue was objectively reasonable in light of the undisputed facts.

The Defendant asserted that it terminated the Plaintiff for poor performance. The Plaintiff asserted that he was terminated in retaliation for reporting the Defendant’s practice of booking sales taxes as revenues, which he claims was not properly disclosed in the Defendant’s 10-K and 10-Q filings.

The court first examined the training and experience that formed the basis of the Plaintiff’s belief, and found that he should have been capable of understanding disclosures in SEC filings. The court then reviewed the facts underling the claim, and observed that the Plaintiff had certified the 2009 10-K shortly before his termination from employment, and that this 10-k had disclosed that “[f]ederal and state motor fuel taxes on sales by our retail segment are included in both ‘Revenues’ and ‘Costs of sales and operating expenses’.” The Plaintiff attempted to show that an issue of fact existed as to his reasonable belief by noting that the 2009 10-K did not include the period in 2010 when he discovered and reported his concern, and that his certification applied only to 2009. The court was not persuaded, finding that the same accounting issues he found in 2010 had existed in 2009, and that the evidence showed no reasonable dispute that the Plaintiff was aware of the inclusion of sales taxes as revenues in 2009.

The court stated that a reporting individual such as the Plaintiff, who was a sub-certifier with accounting oversight experience, “should conduct reasonable investigation to ensure the reasonableness of his conclusion that the public disclosures contained a reporting violation. … Had [the Plaintiff] conducted a limited investigation, he would have determined that the same footnote present in the 2009 10-K was present in the 2008 10-K.” Slip op. at 7 (citation omitted).

The court found that the district court had not abused its discretion by finding that a paragraph of a declaration submitted by the Plaintiff to attempt to call into question testimony of the Defendant’s VP of Internal Audits was impermissible expert testimony, and striking that testimony. The Plaintiff had not timely disclosed the deponent as an expert or provided a report as required by FRCP 26(a)(2) and FRE 702.

Barrick v. PNGI Charles Town Gaming LLC, No. 17-cv-91 (N.D. W.V. Feb. 8, 2019) (2019 U.S. Dist. LEXIS 20444) (Memorandum Opinion and Order Granting the Defendants’ Motion for Summary Judgment)

Casenote(s):

PROTECTED ACTIVITY; SUMMARY JUDGMENT GRANTED ON SUBJECTIVE BELIEF FACTOR WHERE PLAINTIFF TESTIFIED THAT HE DID NOT KNOW WHAT LAWS WERE COVERED BY SOX; ALTHOUGH IT IS NOT REQUIRED THAT A PLAINTIFF HAVE AN EXACT KNOWLEDGE, IN ORDER FOR THE BELIEF TO BE SUBJECTIVELY REASONABLE HE MUST AT LEAST HAVE A BASIC UNDERSTANDING

In Barrick v. PNGI Charles Town Gaming LLC, No. 17-cv-91 (N.D. W.V. Feb. 8, 2019) (2019 U.S. Dist. LEXIS 20444), the Plaintiff alleged that he, together with others, uncovered and reported an illegal sports gambling operation taking place at Defendant’s casino. In an amended complaint, the Plaintiff alleged a violation of the SOX whistleblower provision. The court granted summary judgment as to the SOX count based on the “subjective belief” prong of the ARB’s Sylvester test for determining whether the employee engaged in protected activity by reporting conduct “that he or she reasonably believes constituted a violation of federal law.” In the instant case, the Plaintiff supported his subjective belief based on testimony that he alleged that sports gambling was unlawful and had been concerned that it was affecting the business. The Defendants noted, however, that the Plaintiff had testified that “he did not know what mail fraud, wire fraud, bank fraud, securities fraud or the other enumerated laws were under SOX.” Slip op. at 20. The court wrote:

   The Court would find it hard, if not impossible, for someone to hold a subjective belief of a violation if they have no understanding of the law. This is not to say the Plaintiff needed to know the elements of fraud or an exact definition, but to have a belief, he should have, at the very least, a basic understanding. “It would make no sense to allow [the Plaintiff] to proceed if he himself did not hold the belief required by the statute. . . .” Livingston, 520 F.3d at 352. Because this Court finds the Plaintiff did not hold a subjective belief that the conduct he reported violated one of the enumerated laws, it is not necessary to address if the Plaintiff’s belief was objectively reasonable or if the “definitively and specifically” standard is still the appropriate test to apply. The Plaintiff did not reasonably believe the reported conduct constituted a violation of one of the laws covered by SOX.

Id. (footnote omitted).

In a footnote, the court noted that the Defendant argued that that the Fourth Circuit had adopted the “definitively and specifically relate to” test, and had not adopted the less stringent Sylvester standard. The Defendant countered that the Fourth Circuit had earlier given deference to the ARB, and would do so again. The court did not address the issue because the Plaintiff’s claim failed under the less stringent standard.

CLEAR AND CONVINCING EVIDENCE OF INTERVENING EVENT; DISCOVERY THAT PLAINTIFF HAD TAKEN LOANS FROM OTHER EMPLOYEES IN VIOLATION OF COMPANY POLICY

In Barrick v. PNGI Charles Town Gaming LLC, No. 17-cv-91 (N.D. W.V. Feb. 8, 2019) (2019 U.S. Dist. LEXIS 20444), the Plaintiff alleged that he, together with others, uncovered and reported an illegal sports gambling operation taking place at Defendant’s casino. In an amended complaint, the Plaintiff alleged a violation of the SOX whistleblower provision. The court granted summary judgment as to the SOX count primarily based on the Plaintiff’s failure to establish that he held a reasonable subjective belief that there had been SOX violations. The court also made an alternative finding that the Defendant established by clear and convincing evidence that the Plaintiff would have discharged because it had been discovered during the Defendant’s investigation of the sports gambling allegations that the Plaintiff had taken loans from other employees in violation of company policy.

Neal v. ASTA Funding, Inc., No. 13-cv-03438 (D. N.J. Feb. 8, 2019) (2019 U.S. Dist. LEXIS 21861; 2019 WL 522095) (Opinion)

Case below ALJ No. 2013-SOX-00026

Casenote(s):

COLLATERAL ESTOPPEL AND ISSUE PRECLUSION APPLIED TO FINDING IN ARBITRATION THAT PLAINTIFF WAS NOT AN EMPLOYEE OF THE DEFENDANT, EVEN THOUGH SOX AND DODD-FRANK CLAIMS HAD NOT BEEN DECIDED IN THE ARBITRATION

EMPLOYEES OF CONTRACTORS; LAWSON DID NOT HOLD THAT EMPLOYEES OF CONTRACTORS HAD A SOX CAUSE OF ACTION AGAINST THE PUBLIC COMPANY— RATHER SUCH EMPLOYEES HAVE A SOX CAUSE OF ACTION BASED ON RETALIATION BY THEIR OWN EMPLOYERS; CONGRESS PRESUMED AN EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN THE RETALIATOR AND THE WHISTLEBLOWING EMPLOYEE

AMENDMENT OF COMPLAINT; FUTILITY WHERE PLAINTIFF WAS NOT AN EMPLOYEE OF DEFENDANT AND ONLY RELIEF SOUGHT WAS REINSTATEMENT

In Neal v. ASTA Funding, Inc., No. 13-cv-03438 (D. N.J. Feb. 8, 2019) (2019 U.S. Dist. LEXIS 21861; 2019 WL 522095), the Plaintiff had filed claims in 2013 that ASTA discriminated and retaliated against him in violation of Sarbanes-Oxley Act and the Dodd-Frank Act. The federal district court action was stayed pending arbitration; the SOX and Dodd-Frank matters were not decided in the arbitration. After the arbitration ended, the Plaintiff amended his complaint to drop individuals as named defendants and to seek only reinstatement as remedy. ASTA filed a FRCP Rule 12(b)(6) motion to dismiss and a statement that any claims remaining after a 12(b)(6) analysis should be referred to arbitration. The Plaintiff responded that ASTA had waived arbitration of the SOX and Dodd-Frank claims. The court noted that the Defendant had acquiesced to the court’s jurisdiction by pressing for a 12(b)(6) dismissal, and thus proceeded to address that motion.

The Defendant argued that the arbitration award (which had been judicially confirmed) established that the Plaintiff was not an “employee” of ASTA, and that collateral estoppel (issue preclusion) bars further litigation on the Plaintiff’s employment status. Since the only relief sought was reinstatement, there was no plausible entitlement to relief. The court analyzed the elements of collateral estoppel as applied to the case. The court was not persuaded by the Plaintiff’s argument that the arbitration and other prior actions did not decide the SOX and Dodd-Franks claims, because the question currently before the court was issue preclusion and not claim preclusion. The court stated: “The issue decided in the prior proceedings is the fact that Neal was not an employee of ASTA, but rather a consultant and officer of NWS.” Slip op. at 18. NWS was a consulting company set up by the Plaintiff. The court thus determined: “It is res judicata that Neal’s relationship with ASTA was not an employer-employee relationship, and he is collaterally estopped from asserting that fact here. Because Neal’s status as an employee of ASTA is foundational to his claims and the relief of reinstatement that he seeks, the motion to dismiss the complaint for failure to state a claim is granted.” Id. (footnote omitted).

The court then turned to whether the dismissal should be with prejudice because further amendment to the complaint would be futile. The Plaintiff argued that SOX protects not only employees of the public company, but also employees of independent contractors, citing Lawson v. FMR, 571 U.S. 429, 134 S. Ct. 1158, 188 L. Ed. 2d 158 (2014). The court interpreted this to mean that the Plaintiff proposed to amend the complaint to allege that he was an employee of NWS and thus could assert a SOX claim against the Defendant. The court found that this was a misreading of Lawson. The court stated: “Lawson did not hold … that the employees of the contractors had a SOX cause of action against the public company. Rather, they, as employees, had a SOX cause of action based on retaliation by their own employers….” Slip op. at 20 (emphasis as in original). The court noted that the Supreme Court had “reasoned that, in enacting SOX § 1514A, ’Congress presumed an employer-employee relationship between the retaliator and the whistleblowing employee.’ 571 U.S. at 442 (emphasis added).” Id. The court thus found:

   The holding of Lawson, read onto the facts of this case, establishes that Neal, qua employee of NWS, would not have a SOX cause of action against ASTA. At most, Neal could assert such a claim against his employer, NWS. The sole SOX relief sought by Neal in this action is restoration of his employment. ASTA cannot restore Neal’s employment; it never employed him. In short, under Lawson, Neal’s employment by NWS would not confer upon him a SOX claim against ASTA.

Id. at 21 (footnote omitted) (the footnote observed that the arbitrator had found that Neal was not an employee but rather the owner of NWS). The court determined that further amendment of the complaint would be futile and thus entered the dismissal as with prejudice.

Baker v. Smith & Wesson Corp., No. 18-cv-3847 (N.D. Ill. Jan. 22, 2019) (2019 U.S. Dist. LEXIS 10300; 2019 WL 277714)

Case below: ALJ No. 2017-SOX-00042

Casenote(s):

TRANSFER OF SOX ACTION; PLAINTIFF’S CHOICE OF FORUM WHERE HE CURRENTLY LIVED OUTWEIGHED BY CONVENIENCE OF ALMOST ALL OTHER WITNESSES; ALTHOUGH PLAINTIFF NOTED ADDED EXPENSE TO LITIGATE IN DISTANT FORUM, COURT TOOK INTO CONSIDERATION FACT THAT PLAINTIFF HAD LITIGATED CASE FOR 14 MONTHS BEFORE AN ALJ; PLAINTIFF’S CONTENTION THAT CASE WOULD BE EXPEDITED BECAUSE OF HOME FORUM’S PARTICIPATION IN MANDATORY INITIAL DISCOVERY PROGRAM UNDERMINED BY FACT THAT DISCOVERY HAD TAKEN PLACE BEFORE DOL

In Baker v. Smith & Wesson Corp., No. 18-cv-3847 (N.D. Ill. Jan. 22, 2019) (2019 U.S. Dist. LEXIS 10300; 2019 WL 277714), the court granted the Defendant’s motion to transfer the case, which included a SOX whistleblower count, to the District of Massachusetts, where the Defendant was headquartered and where the Plaintiff worked, even though the Plaintiff preferred to litigate in the Northern District of Illinois, where he currently lived. The court weighed the relevant factors under 28 U.S.C. § 1404(a). Among the factors considered, the court noted that—although substantial weight is given to a plaintiff’s choice of forum where it is his home forum—in the instant case that factor was readily outweighed by the convenience of almost every other relevant witness, including the non-party witnesses. Almost nothing at all relating to the case happened in Illinois. Although the court was sympathetic to the Plaintiff’s concerns about the financial burden of litigating in Massachusetts, the court noted that it was unlikely that the Plaintiff would have to make continuous appearances in Massachusetts, and that the Plaintiff had litigated the SOX case for 14 months in front of an ALJ. The Plaintiff argued that the Illinois district’s participation in the Mandatory Initial Discovery Program would expedite the discovery process, but the court stated that ”given that at least part of the discovery has already been completed in Baker’s OSHA proceeding, it is doubtful that the Program will make discovery proceed any faster.” Slip op. at 10.

Burrs v. United Techs. Corp., No. 18-cv-491 (M.D. N.C. Jan. 16, 2019) (Order and Pre-Filing Injunction)

Casenote(s):

RULE 11 SANCTIONS MAY BE IMPOSED ON PRO SE LITIGANT IF ARGUMENTS ARE CLEARLY OR MANIFESTLY FRIVILOUS; FILING AND MAINTAINING A SUIT WHERE PLAINTIFF WAS ON NOTICE THAT IT WAS CLEARLY BARRED BY CLAIM PRECLUSION IS GROUNDS FOR SANCTIONS; ATTORNEY’S FEES AND INJUNCTION FOUND WARRANTED WHERE LESSER SANCTIONS WOULD HAVE BEEN INADEQUATE BECAUSE OF PLAINTIFF’S LACK OF RESPECT FOR LEGAL SYSTEM AND PRIOR SUGGESTIONS OF VIOLENCE

In Burrs v. United Techs. Corp., No. 18-cv-491 (M.D. N.C. Jan. 16, 2019), the court had dismissed Plaintiff’s Section 1981 civil rights claim because two prior suits based on the same operative facts (one of which was a SOX retaliation case) had been dismissed on summary judgment on the merits. Defendant then filed a FRCP Rule 11 motion seeking attorney’s fees, costs and a pre-filing injunction. The court granted the motion. The court stated: “By filing the complaint and an amended complaint that was virtually identical to the original, Mr. Burrs initiated and persisted in litigating a suit that was clearly barred by res judicata. The claims in the complaint and the amended complaint were not warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law, in violation of Rule 11(b)(2).” Slip op. at 1. The court noted that in the Fourth Circuit, the same Rule 11 “objective reasonableness test” used for attorneys is applied to pro se litigants, although “courts will typically only find a violation of Rule 11(b)(2) by pro se litigants if their arguments are ‘clearly’ or ‘manifestly frivolous.’” Slip op. at 7 (citations omitted). The court further noted that: “‘A [pro se] plaintiff may be sanctioned under Rule 11 for filing claims barred by res judicata.’ Thomas v. Evans, 880 F.2d 1235, 1240 (11th Cir. 1989); see also Reaves v. Roanoke Redev. & Hous. Auth., No. 7:08–cv–00560, 2009 WL 366045, at *1, 7 (W.D. Va. Feb. 12, 2009).” Id. at 8.

The court noted that Defendant had sent Plaintiff a letter that detailed the law of claim preclusion and its implications for the claims raised in the third action. Plaintiff did not respond, and Defendant then sent Plaintiff an un-filed, “safe-harbor” motion for sanctions. The district court noted that courts have the right to expect pro se litigants to find clearly settled law that goes against them, especially what that clearly settled law had been explained to them in an action to which they are a party. Here, instead of withdrawing the manifestly frivolous complaint, Plaintiff filed an amended complaint that was virtually identical to the original and did not provide any basis for avoiding the preclusive effect of the prior judgments.

The court found that the attorney fee sanctions requested were appropriate because prior monetary sanctions for payment of fees and costs had not deterred Plaintiff, and likely would not deter him from filing another case based on the same or similar allegations. The court also found that a warning or censure would unlikely have any effect, noting Plaintiff’s lack of respect for the court and his misconduct in the present and past suits, including not-so-veiled threats of violence. The court thus enjoined Plaintiff from filing additional suits against Defendants pertaining or relating to any allegations or legal claims made in the present suit or either of his two previous suits.

[The prior SOX case was Burrs v. Walter Kiddie Portable Equipment, Inc., No. 16-cv-1018 (M.D. N.C. Nov. 15, 2016) (Order and Judgment) (2016 U.S. Dist. LEXIS 189784), aff’d Burrs v. Walter Kiddie Portable Equip., Inc., No. 16-2419 (4th Cir. Sept. 13, 2017) (per curiam)].

Surface Transportation Assistance Act

Ellerbee v. Annett Holdings, Inc., No. 19-1795 (4th Cir. Dec. 19, 2019) (per curiam) (unpublished) (2019 U.S. App. LEXIS 37754; 2019 WL 6927460) (denial of petition for review)

Case below: ARB No. 2019-0059, ALJ No. 2019-STA-00011

Casenote(s):

The court dismissed Ellerbee’s petition for review of the ARB’s dismissal of the ALJ’s STAA whistleblower decision. The ARB had found that the petition was untimely. The court found that Ellerbee forfeited review of the ARB’s determination that the petition for ARB review was untimely because he failed to raise this issue in his informal brief to the court. The court also found that because the ARB petition was untimely, the court lacked authority to exercise judicial review.

Budri v. FirstFleet Inc., No. 19-cv-0409 (N.D. Tx. Sept. 20, 2019) (2019 U.S. Dist. LEXIS 188250) ([Magistrate’s] Findings, Conclusions, and Recommendation [on Defendant’s motion for Rule 11 sanctions])

Budri v. FirstFleet Inc., No. 19-cv-0409 (N.D. Tx. Oct. 29, 2019) (2019 U.S. Dist. LEXIS 187024) (Order Accepting Findings, Conclusions, and Recommendation of the United States Magistrate Judge [on Defendant’s motion for Rule 11 sanctions])

Case below: Case below: ARB No. 2018-0055, ALJ No. 2018-STA-00033

Casenote(s):

[STAA Digest II M]
RULE 11 SANCTIONS; PRO SE LITIGANTS ARE SUBJECT TO SANCTIONS; BEFORE MONETARY OR INJUNCTIVE SANCTIONS ARE IMPOSED – OR THE LITIGANT IS BARRED FROM FILING SUIT IN FEDERAL COURT WITHOUT FIRST OBTAINING LEAVE — PRO SE LITIGANT MUST BE REPRIMANDED AND WARNED OF CONSEQUENCES

In Budri v. FirstFleet Inc., No. 19-cv-0409 (N.D. Tx. Sept. 20, 2019) (2019 U.S. Dist. LEXIS 188250), Defendants filed a motion for Rule 11 sanctions against the pro se Plaintiff, who had filed multiple administrative complaints and federal and state lawsuits against Defendants, including STAA cases before the USDOL. Defendants filed the motion based on an email in which Plaintiff stated that he would continue to file lawsuits against Defendants, Plaintiff’s continued assertion of claims that had been dismissed in prior actions or which are not recognized causes of action, and the fact that Plaintiff already owed attorneys’ fees from a prior state court action against a supervisor.

In a recommended order, the Magistrate noted caselaw permitting Rule 11 sanctions against a pro se litigant who has a history of filing multiple frivolous claims. The Magistrate stated that Plaintiff’s repeated attempts to re-litigate his claims, threat to continue pursuing litigation against Defendants, and litigation tactics in this case suggest that he filed it to harass Defendants in violation of Rule 11(b)(1).” Slip p. at 11. The Magistrate also stated that “[i]t also appears that Plaintiff has violated Rule 11(b)(2) by asserting legal contentions that are not warranted by existing law or by a non-frivolous argument for relief despite the current state of the law. He continues to assert the same or similar claims that have previously been found to be without merit in his prior actions against some of the same Defendants.” Id. The Magistrate found that Plaintiff had engaged in sanctionable conduct, but found that two warnings about burdensome filing of multiple motions and other documents in two federal cases and a state appellate court, and the assessment of attorney’s fees by a state county court, did not warrant monetary or injunctive sanctions or a bar to filing suit without first seeking leave of the court. Rather, the Magistrate determined that the appropriate sanction was a reprimand and warning “that any future litigation against Defendants or any of their agents or employees arising out of the same facts underlying this case will result in the imposition of more severe sanctions.” Id. at 12 (footnote and citations omitted). The Magistrate noted that such sanctions “may include a monetary fine, injunctive sanctions, and/or an order barring him from filing any civil actions in federal court without obtaining prior authorization from a district judge or magistrate judge.” Id. at 12 (citation omitted).

In Budri v. FirstFleet Inc., No. 19-cv-0409 (N.D. Tx. Oct. 29, 2019) (2019 U.S. Dist. LEXIS 187024), the District Court Judge ordered that the Magistrate’s Findings, Conclusions and Recommendation be accepted. The court stated that “Plaintiff is reprimanded and strongly warned that future litigation against Defendants or any of their agents or employees arising out of the same facts underlying this case will result in the imposition of more severe sanctions, which may include monetary and injunctive sanctions and/or an additional bar preventing Plaintiff from filing any civil action in federal court without obtaining prior judicial authorization.” Slip op. at 1.

Budri v. FirstFleet Inc., No. 19-cv-0409 (N.D. Tx. Sept. 20, 2019) (2019 U.S. Dist. LEXIS 188251) ([Magistrate’s] Findings, Conclusions, and Recommendation)

Budri v. FirstFleet Inc., No. 19-cv-0409 (N.D. Tx. Oct. 29, 2019) (2019 U.S. Dist. LEXIS 187025; 2019 WL 5579971) (Order Accepting Findings, Conclusions, and Recommendation of the United States Magistrate Judge)

Case below: ARB No. 2018-0055, ALJ No. 2018-STA-00033
Related history: Budri v. FirstFleet Inc., No. 19-11119 (5th Cir. Nov. 14, 2019) (per curiam) (appeal dismissed for want of jurisdiction); Budri v. FirstFleet Inc., 19-11203 (5th Cir. Dec. 18, 2019)

Casenote(s):

[STAA Whistleblower Digest II H 5 a]
DISTRICT COURT SUBJECT MATTER JURISDICTION; DISTRICT COURT LACKED JURISDICTION TO CONSIDER PORTION OF COMPLAINT RAISING STAA RETALIATION CLAIMS WHERE THOSE CLAIMS HAD BEEN LITIGATED AND DISMISSED IN ADMINISTRATIVE PROCEEDINGS AND THE DISMISSAL AFFIRMED BY THE FIFTH CIRCUIT

In Budri v. FirstFleet Inc., No. 19-cv-0409 (N.D. Tx. Sept. 20, 2019) (2019 U.S. Dist. LEXIS 188251), Plaintiff filed a complaint alleging numerous violations of state and federal law, including a claim under the whistleblower provision of the STAA. As to the STAA claim, Defendants moved for dismissal on the ground that the claims were previously litigated in a prior STAA administrative proceedings and dismissed, and that the prior dismissal was affirmed by the Fifth Circuit.

The Magistrate found that because Plaintiff had not “shown that the Secretary of Labor ‘fail[ed] to issue a final decision within 210 days after the filing of the complaint,’ and he properly sought review in the Fifth Circuit after receiving its final decision, this Court lacks subject-matter jurisdiction over any claims for wrongful and retaliatory discharge under the STAA.” Slip op. at 12 (citation omitted). The Magistrate recommended dismissal without prejudice for lack of subject-matter jurisdiction. The Magistrate declined to address whether the claims should be dismissed based on collateral estoppel.

Defendants also moved to dismiss STAA claims based on an allegedly fraudulent employment reference because he previously brought these claims as part of a second STAA claim, and they were ultimately dismissed by the DOL, and Plaintiff’s only avenue for relief is to petition for review to the Fifth Circuit under 49 U.S.C. § 31105(d). The Magistrate denied this motion, finding that the instant complaint did not assert a retaliation claim under the STAA based on the allegedly fraudulent employment reference, and did not appear to seek of review of the ALJ’s decision. The Magistrate, however, ruled in the alternative:

   To the extent Plaintiff is attempting to assert a retaliation claim under the STAA based on the employment reference in this action, the relevant filings show that he filed his administrative complaint on January 23, 2018, and the ALJ issued a decision within 210 days of its filing. . . . Because the ALJ’s final decision was timely, Plaintiff’s only avenue of seeking relief from that decision is to pursue his claim in the appropriate United States Court of Appeals. See 49 U.S.C. § 31105(d). This Court therefore lacks subject-matter jurisdiction to the extent Plaintiff seeks review of the ALJ’s timely decision under the STAA, and any claim based on the employment reference under the STAA should be dismissed. See Rose, 2010 WL 3211948, at *1.

Id. at 15 (citation to record omitted).

In Budri v. FirstFleet Inc., No. 19-cv-0409 (N.D. Tx. Oct. 29, 2019) (2019 U.S. Dist. LEXIS 187025; 2019 WL 5579971), the District Court Judge accepted the Magistrate’s Findings, Conclusions and Recommendation, and – inter alia — dismissed the STAA claims without prejudice for lack of subject matter jurisdiction. An appeal to the Fifth Circuit was dismissed for want of prosecution. Budri v. FirstFleet Inc., 19-11203 (5th Cir. Dec. 18, 2019).

Smith v. U.S. Dep’t of Labor, No. 18-9547 (10th Cir. June 12, 2019) (per curiam) (unpublished) (2019 U.S. App. LEXIS 17525; 2019 WL 2452321) (Order and Judgment)

Case below: ARB No. 18-021, ALJ No. 2017-STA-60

Casenote(s):

[STAA Digest II I]
PETITION FOR JUDICIAL REVIEW; TOLLING OF PERIOD FOR JUDICIAL REVIEW BASED ON FILING OF MOTION FOR RECONSIDERATION; A SECOND AND SUCCESSIVE MOTION TO RECONSIDER DOES NOT TOLL THE DEADLINE TO SEEK JUDICIAL REVIEW WHERE THE PETITION FOR REVIEW IS OF THE ARB’S REFUSAL TO RECONSIDER FOR MATERIAL ERROR

In Smith v. U.S. Dep’t of Labor, No. 18-9547 (10th Cir. June 12, 2019) (per curiam) (unpublished) (2019 U.S. App. LEXIS 17525; 2019 WL 2452321) (case below ARB No. 18-021, ALJ No. 2017-STA-60), the complainant’s petition for review of the ALJ’s decision on the complainant’s STAA complaint was dismissed by the ARB for failure to timely comply with procedural requirements. The ARB also dismissed two motions for reconsideration, both because they merely focused on the merits of the case and did not address the timeliness issue. The complainant filed a petition for judicial review in the Tenth Circuit. The court determined, however, that the complainant filed his petition for judicial review too late to challenge the ARB’s dismissal and denial of the first motion for reconsideration. Although the first motion for reconsideration filed with ARB tolled the period for seeking judicial review, the second did not. Here, the complainant had not filed his petition for judicial review within the 60-day limitations period after the ARB denied the first motion for reconsideration.

The court also determined that the ARB’s denial of the second motion for reconsideration was not reviewable:

   Review of the Board’s denial of Mr. Smith’s second motion for reconsideration is governed by the Administrative Procedure Act, 5 U.S.C. §§ 701-06, see 49 U.S.C. § 31105(d). Under this Act, “refusals to reconsider for material error” are not reviewable. Interstate Commerce Comm’n v. Bhd. of Locomotive Eng’rs, 482 U.S. 270, 282 (1987).

   An error is considered material when it is based “on the same record that was before the agency when it rendered its original decision.” Id. at 280. Thus, if reconsideration is sought “on the basis of new evidence or changed circumstances[,] review [would be] available and the abuse-of discretion standard would apply; otherwise, the agency’s refusal to go back over ploughed ground [would be] nonreviewable.” Id. at 284.

   Mr. Smith twice sought reconsideration for the alleged failure to recognize that he had “presented direct evidence of [his employers] forcing [him] to violate D.O.T. regulations.” R., Vol. II, Ex. 32 at 1; see also Id., Ex. 34 at 2 (arguing that his employers “violat[ed] DOT rules and regulations”). Because Mr. Smith’s second motion for reconsideration involved a successive challenge to the administrative law judge’s view of the evidence, the Administrative Review Board’s second denial of reconsideration was not reviewable. See Tsegay v. Ashcroft, 386 F.3d 1347, 1356 (10th Cir. 2004).

Slip op. at 6-7.

Jackson v. Doubleback Transp., 17-cv-00386 (S.D. Ala. June 5, 2019) (2019 U.S. Dist. LEXIS 94755; 2019 WL 2396571) (Order Entering Summary Judgment in Defendant’s Favor)

Related to ALJ No. 2018-STA-00083

Casenote(s):

[STAA Digest II P]
SUMMARY JUDGMENT; COURT MAY GRANT SUMMARY JUDGMENT TO A NONMOVANT AS LONG AS NOTICE AND A REASONABLE TIME TO RESPOND ARE PROVIDED

In Jackson v. Doubleback Transp., 17-cv-00386 (S.D. Ala. June 5, 2019) (2019 U.S. Dist. LEXIS 94755; 2019 WL 2396571), the court noted that FRCP 56(f)(1) permits a court to grant summary judgment for a nonmovant to avoid an unnecessary trial, as long as the court provides notice and a reasonable time to respond. In the instant case, the pro se Plaintiff had filed a motion for judgment on the pleadings, which the court converted to a motion for summary judgment because it implicated factual issues, and gave Plaintiff time to supplement the motion,. Upon reviewing the evidence, the Court believed summary judgment was due to Defendant, a nonmovant.

[STAA Digest II Y]
DISTRICT COURT JURISDICTION OVER STAA COMPLAINT; COURT DISMISSED STAA COUNT FIRST RAISED IN RESPONSE TO NOTICE OF SUMMARY JUDGMENT WHERE THE STAA COUNT HAD NOT BEEN ALLEGED IN AN EARLIER AMENDED COMPLAINT, AND WHERE COMPLAINANT WAS STILL LITIGATING THE STAA COMPLAINT BEFORE THE DEPARTMENT OF LABOR

The court in Jackson v. Doubleback Transp., 17-cv-00386 (S.D. Ala. June 5, 2019) (2019 U.S. Dist. LEXIS 94755; 2019 WL 2396571), found that it was without jurisdiction to address Plaintiff’s STAA claims first raised in response to the court’s sua sponte notice that it would consider summary judgment on behalf of Defendant. The court first found that the instant court proceeding was filed within 210 after filing an administrative STAA complaint, and even if such a court filing was now within the district court’s jurisdiction, Plaintiff’s amended complaint had not alleged STAA as a cause of action and Complainant was still litigating his case before DOL.

 

Budri v. Admin. Review Bd., 764 Fed. Appx. 431 (5th Cir. Apr. 9, 2019) (per curiam) (unpublished) (No. 18-60579) (2019 U.S. App. LEXIS 10419) (Opinion)

Later history: Budri v. USDOL, Administrative Review Board, No. 19-198 (U.S. Oct. 15, 2019) (Cert. denied)

Case below: ARB No. 18-025, ALJ No. 2017-STA-86

Casenote(s):

CONTRIBUTING FACTOR CAUSATION; FIFTH CIRCUIT AFFIRMS GRANT OF SUMMARY DECISION IN ADMINISTRATIVE PROCEEDING WHERE THERE WAS NOT A GENUINE ISSUE OF MATERIAL FACT ON CAUSATION

In Budri v. Admin. Review Bd., 764 Fed. Appx. 431 (5th Cir. Apr. 9, 2019) (per curiam) (unpublished) (2019 U.S. App. LEXIS 10419), cert. denied, Budri v. USDOL, Administrative Review Board, No. 19-198 (U.S. Oct. 15, 2019), the Fifth Circuit denied Budri’s petition for review of the ARB’s affirmance of the ALJ’s grant of summary decision in favor of the Respondent, FirstFleet, Inc., on Budri’s under the STAA 49, U.S.C. § 31105 claim. Budri had been fired after a series of work-related errors occurring during his first month of employment. The Fifth Circuit stated:

His termination took place after those mistakes and not directly after the protected activity recognized by the ARB. Budri does not dispute these facts. The record also indicates that Firstfleet’s human resources manager authorized Budri’s termination after an email request from Budri’s supervisor that detailed Budri’s on-the-job mistakes and did not mention any of the protected activity. We therefore agree there is no genuine dispute of material fact as to the element of causation. Firstfleet was due a favorable decision as a matter of law.

Slip op. at 4. The ARB had considered protected activity relating to an inoperative headlamp on a truck and factored it into the causation analysis. On appeal, Budri raised other contentions about ARB rulings or the lack of them, but the court found that Budri either failed to brief the contentions adequately, or that the ARB’s actions did not constitute reversible error.

Kennedy v. Supreme Forest Products, Inc., 761 Fed. Appx. 72 (2d Cir. Feb. 6, 2019) (No. 18-221) (2019 U.S. App. LEXIS 3635; 2019 WL 459755) (Summary Order)

Case below: D. Conn. 14-cv-01851

Casenote(s):

[STAA Digest V A 3]
PROTECTED ACTIVITY; WORK REFUSAL TO DRIVE IN VIOLATION OF FEDERAL WEIGHT LIMIT; ELEMENT OF DRIVING ON INTERSTATE HIGHWAY; JURY MAY MAKE REASONABLE INFERENCE OF USE OF INTERSTATE BASED ON LOCAL KNOWLEDGE OF ROUTE

In Kennedy v. Supreme Forest Products, Inc., 761 Fed. Appx. 72 (2d Cir. Feb. 6, 2019) (2019 U.S. App. LEXIS 3635; 2019 WL 459755) (Summary Order), the jury had rendered a verdict in favor of the Plaintiff on his STAA, 49 U.S.C. § 31105(a)(1)(B)(i) whistleblower claim that his employment had been terminated because he refused to drive trucks loaded beyond the federal weight limit. The district issued several post-verdict orders. On appeal, the Defendant argued that the Plaintiff failed to establish that he would have operated the vehicle on an interstate highway because at the trial there had been no testimony or direct evidence on the route; the court, however, found sufficient evidence for a reasonable inference of such by the jury. The court noted that the local jury would not have even needed a map to infer that the Plaintiff would have driven on an interstate for the assigned route.

[STAA Digest IX D 4]
PUNITIVE DAMAGES; REQUISITE STATE OF MIND MAY BE ESTABLISHED BY PROOF OF INTENT TO VIOLATE OR RECKLESS DISREGARD FOR THE LAW; DEFENDANT’S EFFORTS TO COVER UP ITS CONDUCT CAN SUPPORT AN INFERENCE OF RECKLESS INDIFFERENCE TO FEDERALLY PROTECTED RIGHT; EVIDENCE THROUGH EMPLOYEE HANDBOOK THAT DEFENDANT WAS AWARE OF APPLICABLE LAW MAY SUPPORT INFERENCE OF WILLFUL DISRIMINATION

[STAA Digest IX D 4]
PUNITIVE DAMAGES; REMITTUR; LONG-RUNNING, PROFIT-DRIVEN POLICY TO VIOLATE FEDERAL TRANSPORTATION SAFETY LAW SUPPORTED FINDING OF REPREHENSIBILITY; $250,000 IS NOT DISPROPORTIONATE TO LOSS OF JOB; RATIO OF COMPENSATORY AWARD TO PUNITIVE DAMAGES CAN BE HIGH WHERE THE INJURY WAS VERY SMALL BUT THE REPREHENSIBLE CONDUCT WAS VERY HIGH

In Kennedy v. Supreme Forest Products, Inc., 761 Fed. Appx. 72 (2d Cir. Feb. 6, 2019) (2019 U.S. App. LEXIS 3635; 2019 WL 459755) (Summary Order), a jury had rendered a verdict in favor of the Plaintiff on his STAA whistleblower claim that his employment had been terminated because he refused to drive trucks loaded beyond the federal weight limit. The jury awarded punitive damages in the amount of $425,000. The district court later reduced this amount to the statutory maximum of $250,000.

State of Mind

On appeal, the Defendant argued that no reasonable jury could have found it liable for punitive damages because there was no evidence of the requisite state of mind. The court stated:

As we have explained, plaintiffs “may establish the requisite state of mind for an award of punitive damages with evidence (1) that the defendant discriminated in the face of a perceived risk that its actions violated federal law, or (2) of egregious or outrageous acts that may serve as evidence supporting an inference of the requisite evil motive.” United States v. Space Hunters, Inc., 429 F.3d 416, 427 (2d Cir. 2005) (internal citations, ellipses, and quotation marks omitted). Mere intent to discriminate is not enough; there must be proof of intent to violate (or reckless disregard for) the law. As the Supreme Court explained, “[t]here will be circumstances where intentional discrimination does not give rise to punitive damages liability under this standard. In some instances, the employer may simply be unaware of the relevant federal prohibition.” Kolstad v. Am. Dental Ass’n, 527 U.S. 526, 536–37 (1999).

Slip op. at 4. Here, the court found that a reasonable juror could have determined that the Defendant acted at least recklessly with regard to the Plaintiff’s legal rights. The court also noted that “’evidence of a defendant’s actions to cover up discriminatory conduct can support an inference that the defendant acted with reckless indifference to a federally protected right.’ Space Hunters, Inc., 429 F.3d at 428 (citing E.E.O.C. v. Wal-Mart Stores, Inc., 156 F.3d 989, 993 (9th Cir. 1998)).” Id. Here, there was trial testimony that the Defendant immediately tried to cover up the true circumstance under which the Plaintiff left the company, an HR official having informed the Plaintiff’s supervisor that the Plaintiff had quit. The court also found that the company’s employee handbook discussing applicable regulations demonstrated a knowledge of related law that supported an inference of willful discrimination.

Excessiveness

The Defendant also argued that the punitive damages award had been excessive. The court stated in determining a claim of excessiveness, it considers three factors: “’(1) the degree of reprehensibility of the defendant’s misconduct; (2) the disparity between the actual or potential harm suffered by the plaintiff and the punitive damages award; and (3) the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases.’ State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 418 (2003)[.]” Id. at 5.

As to reprehensibility, the court affirmed the district court’s judgment. The District Court and the jury had agreed with the Plaintiff that he had been terminated as the result of a long-running, profit-driven policy to violate federal transportation safety law. The court rejected the Defendant’s argument that characteristics of greed and repeat offenses only showed the reprehensibility of its overweight driving policy, and not the separate act of firing the Plaintiff. The court found that the Defendant had fired the Plaintiff “in furtherance of that broader policy” and that “similarly reprehensible intent underlies both illegal acts.” Id. at 5, n.5.

The court found that a punitive damages award of $250,000 was not disproportionate to the harm of losing one’s job. Moreover, $250,000 was precisely the sum authorized by Congress, a factor of particular importance given that caselaw indicates that reduction of a punitive damages award to an amount below a statutory cap should only be ordered where the award would shock the judicial conscience and constitute a denial of justice, such as for example, where the award would financially ruin the defendant or constitute a disproportionately large percentage of its net worth—factors that the Defendant in the instant case had not asserted.

Finally, in the instant case, the jury award for compensatory damages was $11,900. The court noted:

   That SPF’s conduct was particularly reprehensible, coupled with the small amount of compensatory damages available to Kennedy, further justifies the punitive damages award. See State Farm, 538 U.S. at 419 (“[B]ecause there are no rigid benchmarks that a punitive damages award may not surpass, ratios greater than those we have previously upheld may comport with due process where ‘a particularly egregious act has resulted in only a small amount of economic damages.’” (quoting Gore, 517 U.S. at 606 (1996)); Payne, 711 F.3d at 102 (“[I]n cases of very small injury but very reprehensible conduct, the appropriate ratios can be very high.”).

Id. at 6, n.6.

Bauer v. Old Dominion Freight Line, Inc., No. 17-cv-510 (D. Or. Jan. 28, 2019) (2019 U.S. Dist. LEXIS 13446; 2019 WL 339404) (Opinion and Order)

Casenote(s):

OREGON DISTRICT COURT GIVES CHEVRON DEFERENCE TO ARB’S INTERPETATION OF STAA § 31105(a)(1)(B)(ii) AS INCLUDING REFUSALS TO DRIVE IN HAZARDOUS WEATHER, WHEN THE DRIVER HAS A REASONABLE APPREHENSION THAT DRIVING THE VEHICLE IN THE WEATHER CONDITIONS COULD POSE A SAFETY RISK TO THE DRIVER OR THE PUBLIC

In Bauer v. Old Dominion Freight Line, Inc., No. 17-cv-510 (D. Or. Jan. 28, 2019) (2019 U.S. Dist. LEXIS 13446; 2019 WL 339404), the Plaintiff brought an STAA “refusal to operate” retaliation suit under 49 U.S.C. § 31105(a)(1)(B). The Plaintiff had been fired after he drove his truck off his scheduled route to a friend’s house because of weather conditions without first getting approval from the Defendant’s dispatcher in violation of the Defendant’s policy. The Plaintiff contended that the court should afford deference to the ARB’s interpretation of 49 U.S.C. § 31105(a)(1)(B)(ii) as including “refusals to drive in hazardous weather, when the driver has a reasonable apprehension that driving the vehicle in the weather conditions could pose a safety risk to the driver or the public. ” Slip op. at 10 (citations omitted). The court found that Chevron deference applied. The court summarized DOL’s interpretation as follows:

Thus, in order to qualify for protection under the STAA [§ 31105(a)(1)(B)(ii)], a driver need not continue driving to confirm that conditions are in fact dangerously unsafe. Under the DOL’s interpretation of the statute, drivers are protected from retaliation when they refuse to operate a vehicle either because doing so would violate a safety regulation or because they hold a reasonable apprehension of serious injury due to unsafe conditions. The reasonable apprehension prong of the statute is necessary to protect drivers who have both a subjective and an objectively reasonable apprehension that the operation of the vehicle would pose a risk of serious injury, regardless of whether the actual conditions are in fact so severe as to violate one of DOL’s [sic] safety regulations. This ensures that “it is not complainant’s burden to prove that there was no possibility that he could safely drive—a complainant’s burden based on a refusal under (a)(1)(B)(ii) is simply to show that he had a ‘reasonable apprehension of serious injury to the employee or the public because of the vehicle’s hazardous safety or security condition. ’” Treur, 2016 WL 4184207, at *9 (emphasis in original). By focusing the inquiry on what the employee knew and the circumstances confronting the employee at the time of his decision-making, employees who exercise reasonable caution that is later not borne out by subsequent events may not be subjected to retaliation

Id. at 17 (footnotes omitted) (emphasis as in original). Deferring to the DOL’s interpretation of the statute, the court denied the Defendant’s motion for summary judgment at to § 31105(a)(1)(B)(ii). The court stated: “The STAA prohibits employers from retaliating against an employee who refuses to drive because the employee has a reasonable apprehension of serious injury to the employee or the public due to hazardous weather conditions, provided that the employee notified the employer that the refusal to drive is because of current or forecasted weather conditions. See 49 U.S.C. § 31105(a)(2).”

A DEFENDANT’S ALLEGED EGREGIOUS POLICY SHOWING RECKLESS INDIFFERENCE TO PUBLIC SAFETY NEED NOT BE LONG-RUNNING FOR A JURY TO CONSIDER AN AWARD OF PUNITIVE DAMAGES

In Bauer v. Old Dominion Freight Line, Inc., No. 17-cv-510 (D. Or. Jan. 28, 2019) (2019 U.S. Dist. LEXIS 13446; 2019 WL 339404), the Plaintiff brought an STAA “refusal to operate” retaliation suit under 49 U.S.C. § 31105(a)(1)(B). The court denied the Defendant’s motion for summary judgment as to the Plaintiff’s claim for punitive damages, finding that at trial, a jury will determine whether the Defendant’s actions demonstrated a reckless indifference to public safety. The Defendant apparently had argued that punitive damages were not warranted because the Plaintiff had not alleged a longstanding policy of egregious misconduct. The court stated that there was no requirement for the alleged conduct to be long-running in order for a punitive damages claim to go to the jury.