Affordable Care Act

Bailey v. Dejoy, No. 20-cv-00042 (D. Me. Feb. 26, 2021) (2021 U.S. Dist. LEXIS 35831; 2021 WL 767859) (Recommended Decision on Defendant's Motion to Dismiss)

DISTRICT COURT JURISDICTION OVER AFFORDABLE CARE ACT WHISTLEBLOWER COMPLAINT WHERE PLAINTIFF HAD NOT FIRST FILED AN ADMINISTRATIVE COMPLAINT WITH OSHA; MAGISTRATE’S RECOMMENDATION TO DISMISS

In Bailey v. Dejoy, No. 20-cv-00042 (D. Me. Feb. 26, 2021) (2021 U.S. Dist. LEXIS 35831; 2021 WL 767859), Plaintiff filed a complaint alleging ADA and Rehabilitation Act claims. She later amended the complaint to assert several additional Federal statutes, including the whistleblower protections of the Fair Labor Standards Act, 29 U.S.C. § 218c (Affordable Care Act), which incorporates the procedures of the Consumer Product Safety Improvement Act, 15 U.S.C. § 2087(b). The Magistrate Judge issued a recommended decision that included a recommendation to dismiss the § 218c claim because there was no evidence that Plaintiff had first filed an administrative complaint with OSHA as required by § 2087(b), and therefore the FLSA claim was not properly before the district court.

Aviation Investment and Reform Act for the 21st Century

Aityahia v. Mesa Airlines, No. 20-72341 (9th Cir. Dec. 17, 2021) (2021 U.S. App. LEXIS 37324) (not published) (Memorandum [denying petition for review])

USDOL Case Nos.: ARB No. 2019-0068; ALJ No. 2018-AIR-00044

The Ninth Circuit denied Aityahia’s petition for review.  The court found that that the ARB “correctly dismissed Aityahia's AIR21 claim based on any unfavorable personnel actions taken by respondent Mesa Airlines in 2013 because his claim was untimely and Aityahia failed to show that equitable principles applied to toll the limitations period. See 49 U.S.C. § 42121(b)(1) (requiring an administrative complaint be filed not later than 90 days after an alleged AIR21 violation occurs); Coppinger-Martin v. Solis, 627 F.3d 745, 750-51 (9th Cir. 2010) (setting forth doctrines of equitable tolling and equitable estoppel).  The court also found that the ARB “correctly dismissed Aityahia's AIR21 claim based on Mesa Airlines' refusal to rehire him in 2017 because Aityahia failed to demonstrate that a violation occurred. See 49 U.S.C. § 42121(b)(2)(B) (setting forth requirements for AIR21 claim); Nat'l Mining Ass'n v. Zinke, 877 F.3d 845, 866 (9th Cir. 2017) (the standard of review under the APA is "highly deferential, presuming the agency action to be valid and affirming the agency action if a reasonable basis exists for its decision" (citation and internal quotation marks omitted)).”  
 

Ho v. DOL, No. 21-cv-2038 (M.D. Fla. Nov. 2, 2021) (2021 U.S. Dist. LEXIS 211330)

USDOL Case Nos.: ARB No. 2020-0027, ALJ No. 2019-AIR-00009

MOTION IN DISTRICT COURT AGAINST ALJ SEEKING REVIEW OF DISCOVERY RULING THAT RESULTED IN DISMISSAL OF AIR21 ADMINISTRATIVE COMPLAINT; MOTION DENIED BECAUSE ALJS ENJOY ABSOLUTE IMMUNITY FROM SUIT SO LONG AS THE ALJ WAS ACTING WITHIN HIS OR HER JURISDICTION

MOTION SEEKING DISTRICT COURT REVIEW OF ARB'S AFFIRMANCE OF ALJ'S DISMISSAL OF AIR21 COMPLAINT AS A SANCTION FOR PLAINTIFF'S FAILURE TO COMPLY WITH DISCOVERY ORDERS; COURT DENIES MOTION POINTING OUT THAT SUCH REVIEW MUST BE SOUGHT IN A COURT OF APPEALS

In Ho v. DOL, No. 21-cv-2038 (M.D. Fla. Nov. 2, 2021) (2021 U.S. Dist. LEXIS 211330), the District Court denied a motion filed by Plaintiff which, though rambling and incoherent, appeared to contest a discovery ruling by the presiding ALJ in an AIR21 administrative hearing, which resulted in the sanction of dismissal. The court explained:

  • An ALJ may not be sued for acts or omissions occurring in connection with duties performed on the United States' behalf. Smith v. Shook, 237 F.3d 1322, 1325 (11th Cir. 2001). The ALJ enjoys absolute immunity from suit so long as he or she did not act in the clear absence of jurisdiction. The ALJ clearly possessed jurisdiction in the pending matter before the Department of Labor. The case against the ALJ is therefore dismissed.

The court found that Plaintiff may be seeking judicial review of the ARB's affirmance of the ALJ's decision, although it was unclear from Plaintiff's complaint.  The court explained that such review is in a Court of Appeals:

  •     In Plaintiff's case, discovery had begun, but the ALJ dismissed the complaint as a sanction for Plaintiff's failure to comply with discovery. Section 42121(b)(4)(A) provides that a final order issued after a hearing may be reviewed by the United States Court of Appeals. Any person aggrieved by an order issued pursuant to the procedures in § 42121(b), may obtain review of the order in the United States court of appeals. 49 U.S.C. § 20109(d)(4).

The dismissal of Plaintiff's motion was without prejudice.  Plaintiff was provided an opportunity to file an amended complaint setting forth what relief he is seeking from the District Court.  The court stated that failure to timely file an amended complaint would result in dismissal without further notice.

Kestler v. Cook, 20-cv-1366 (E.D. Va. Sept. 13, 2021) (2021 U.S. Dist. LEXIS 189833) (Report and Recommendation), adopted Kestler v. Cook, 20-cv-1366 (E.D. Va. Sept. 29, 2021) (Order)

USDOL No.: ALJ No. 2020-AIR-00011 (reinstating Secretary's Findings because Respondent's request for hearing was not timely)

ENFORCEMENT ACTION; DEFAULT JUDGMENT

In Kestler v. Cook, 20-cv-1366 (E.D. Va. Sept. 29, 2021) (Order), adopting Kestler v. Cook, 20-cv-1366 (E.D. Va. Sept. 13, 2021) (2021 U.S. Dist. LEXIS 189833) (Report and Recommendation), the District Court adopted the Magistrate Judge's Report and Recommendation to grant default judgment against Defendants in an action brought pursuant to 49 U.S.C. § 42121(6)(A) by the U.S. Department of Labor to enforce the Secretary's Findings of retaliatory discharge in violation of AIR21, and remedial order requiring that Plaintiff be reinstated and paid damages.

Clean Air Act

Leckner v. General Dynamics Info. Tech., No. 21-70284 (9th Cir. Oct. 18, 2021) (unpublished) (2021 U.S. App. LEXIS 31143; 2021 WL 4843881)

USDOL Case Nos.: ARB No. 2020-0028, ALJ No. 2019-SOX-00028

The Ninth Circuit denied Petitioner's petition for review, finding that the ARB had properly affirmed the dismissal as untimely Petitioner’s retaliation claims under the CAA, CERCLA, SWDA, TSCA and FWPCA because he failed to raise a genuine dispute of material fact as to whether he filed his whistleblower complaint within 30 days of his employers’ alleged retaliatory decisions. See 29 C.F.R. § 24.103(d)(1).

The court also found that the ARB properly denied Petitioner's request to admit new evidence because he  failed to demonstrate that the evidence could not have been discovered with reasonable diligence before the record closed. See 29 C.F.R. § 18.90(b)(1).

Energy Reorganization Act

Peck v. Administrative Review Board, USDOL, 996 F.3d 224 (4th Cir. Apr. 30, 2021) (No. 20-1154) (2021 U.S. App. LEXIS 12962; 2021 WL 1704278) (Opinion), reh'g & reh'g en banc den., (4th Cir. July 13, 2021) (2021 U.S. App. LEXIS 20763), cert. denied, No. 21-813 (U.S. Jan. 24, 2022) (2022 U.S. LEXIS 654)

USDOL Case Nos:  ARB No. 2017-0062; ALJ No. 2017-ERA-00005

Later history: Peck v. Dep't of Labor, Administrative Review Board, et al., No. 21-813 (U.S. Jan. 24, 2022) (2022 U.S. LEXIS 654) (cert. denied) 

[Nuclear and Environmental Digest XX E]
SOVEREIGN IMMUNITY NOT WAIVED FOR THE NUCLEAR REGULATORY COMMISSION IN REGARD TO ENERGY REORGANIZATION ACT § 5851 WHISTLEBLOWER COMPLAINTS; NRC IS AN “EMPLOYER” AND SUBJECT TO THE ERA’S PROHIBITION AGAINST RETALIATION, BUT IT IS NOT A “PERSON” SUBJECT TO THE REMEDIAL SUBSECTION

In Peck v. Administrative Review Board, USDOL, 996 F.3d 224 (4th Cir. Apr. 30, 2021) (No. 20-1154) (2021 U.S. App. LEXIS 12962; 2021 WL 1704278), cert. denied, No. 21-813 (U.S. Jan. 24, 2022) (2022 U.S. LEXIS 654), an ALJ had dismissed Peck’s Energy Reorganization Act (ERA), 42 U.S.C. § 5851 whistleblower complaint because the United States had not waived sovereign immunity for such actions against the Nuclear Regulatory Commission (NRC).  The ARB affirmed the ALJ’s decision en banc, over one dissent. 

On appeal, the Fourth Circuit applied a de novo standard of review because the case presented a pure question of law.  Parsing the language of the ERA, the court first found that Congress had been conscious of the difference between the words “employer” and “person” in § 5851.   Although the NRC was Peck’s “employer,” and thus subject to the prohibition against retaliation, it was not a “person” under the remedial subsection of § 5851, given that the Government is not considered a “person” absent an affirmative showing to the contrary.  The court determined that “[i]nasmuch as the remedies and enforcement sections of the Act are directed at persons, not the government, it is hard to distill from the statute any waiver of sovereign immunity.”  Slip op. at 13.  The court stated:  “There is no doubt that the NRC is bound by the prohibitions of § 5851. But that fact alone is simply insufficient to form the basis of an unequivocal waiver of sovereign immunity.” Id. at 15.  The court pointed out that the NRC could use the prohibition as a basis for internal discipline or termination of supervisors who violation the whistleblower provisions, and that the aggrieved party could bring an action against the person employed by the NRC who committed the violation.  The court determined that this, however, is not a waiver of sovereign immunity.

FDA Food Safety Modernization Act

Brown v. Choice Prods., LLC, No. 20-cv-046 (W.D. Wisc. Oct. 27, 2021) (2021 U.S. Dist. LEXIS 208620)

TIMELINESS OF FSMA RETALIATION COMPLAINT WHERE OSHA HAD PERMITTED A TIMELY OSH ACT COMPLAINT TO BE AMENDED TO INCLUDE FSMA COMPLAINT; COURT DENIED DEFENDANT’S MOTION FOR SUMMARY JUDGMENT ON TIMELINESS WHERE THE RECORD RAISED A GENUINE ISSUE OF MATERIAL FACT AS TO WHETHER THE INITIAL COMPLAINT RAISED FOOD SAFETY ISSUES SUFFICIENT FOR THE FSMA CLAIM TO RELATE BACK OR SHOW A FACTUAL NEXUS

CAUSAL LINK BETWEEN FSMA PROTECTED ACTIVITY AND ADVERSE EMPLOYMENT ACTION; COURT DENIED DEFENDANT’S MOTION FOR SUMMARY JUDGMENT THAT WAS PREMISED ON LIMITING THE FSMA CLAIM TO STATEMENTS MADE TO OSHA, BECAUSE THERE WAS NO LEGAL SUPPORT FOR SUCH A LIMITATION AND THE RECORD SHOWED THAT PLAINTIFF RAISED SAFETY CONCERNS DIRECTLY WITH DEFENDANT’S MANAGEMENT, AND BECAUSE, EVEN IF LIMITED TO STATEMENTS TO OSHA, A REASONABLE JURY COULD NONETHELESS FIND A CAUSAL LINK

AFFIRMATIVE DEFENSE IN FSMA RETALIATION CASE THAT PLAINTIFF WAS FIRED FOR VIOLATION OF COMPANY POLICY ON COMPUTER USAGE; COURT DENIED SUMMARY JUDGMENT WHERE THE RECORD RAISED GENUINE ISSUES OF MATERIAL FACT AS TO PRETEXT -- WHETHER PLAINTIFF HAD PERMISSION FROM HIS DIRECT SUPERVISOR, WHETHER HE WAS SINGLED OUT FOR THE DISCIPLINE, AND WHETHER THE DISCIPLINE OF TERMINATION WAS JUSTIFIED

In Brown v. Choice Prods., LLC, No. 20-cv-046 (W.D. Wisc. Oct. 27, 2021) (2021 U.S. Dist. LEXIS 208620), Plaintiff filed a whistleblower retaliation complaint with OSHA under Section 11(c) of the OSH Act, alleging that he was terminated for reporting the safety concerns to OSHA.  In that complaint he also alleged that he made numerous safety concerns in daily reports.  Almost 15 months later, Complainant filed a second complaint with OSHA, this time detailing his complaints about food safety.  OSHA sent a letter to Defendant’s attorney informing that the administrative complaint was amended to include the Food Safety Modernization Act (FSMA), 21 U.S.C. §399d, and that OSHA would conduct its investigation under the 29 CFR Part 1987 procedures.  Plaintiff later kicked-out the case to Federal district court, pursuing the FSMA retaliation claim in a de novo proceeding.
Defendant sought summary judgment on three principal grounds: (1) the FSMA administrative complaint was not filed within the required period; (2) Plaintiff could not demonstrate a causal nexus between his termination and any complaint to OSHA about food safety; and (3) Plaintiff cannot rebut evidence of a legitimate, non-retaliatory basis for the termination.  The court found genuine issues of material fact on each ground, and denied summary judgment.

Timeliness

The court first addressed the timeliness of the FSMA administrative complaint.  It noted that OSHA has a policy of allowing amendments to complaints outside of the statutory filing period if the amendment reasonably relates to the original complaint. The court stated that it had “an independent obligation to ensure that the second complaint reasonably relates to the first complaint or, at least, that there is a factual nexus between the two.”  Slip op. at 13 (citation omitted).  The court found that Plaintiff’s evidence was open to dispute, but that it raised a genuine issue of material fact as to whether and when he complained to OSHA about food safety issues to indicate a sufficient relationship to the original complaint.  The court also found that the complaint raised specific food safety concerns Plaintiff raised with Defendant’s management, as opposed to OSHA.  The court found no legal support for Defendant’s contention that FSMA protected activity was limited in this case to statements made to OSHA.  The court cautioned, however, that Plaintiff will need to prove that he was terminated because of complaints about food safety, and not because of complaints about equipment.

Causation

In analyzing causation, the court first noted that the Seventh Circuit has not yet considered the elements of a FSMA retaliation claim, and that very few courts had to date.  The parties agreed that the court should look to similar retaliation claims for guidance.  The court found that, to survive summary judgment, Plaintiff needed to present direct evidence that he engaged in FSMA protected activity; that he suffered an adverse employment action; and that the two were causally linked.  Defendant’s causation argument was premised on the contention that Plaintiff could only pursue the retaliation claim based on statements made to OSHA.  The court noted that it had already rejected that framing of the FSMA complaint, and found that Plaintiff’s complaint and deposition indicated that he had discussed his specific food safety complaint directly with Defendant in a manner which apparently had escalated in frequency and seriousness in the month or so before the termination.  The court also found that the record would allow a reasonable jury to conclude that Plaintiff had been terminated after Defendant had full knowledge of Plaintiff’s involvement with an OSHA investigation.  Defendant’s potential argument that it made the decision to terminate Plaintiff prior to its awareness of the OSHA complaint would be a credibility determination for a jury.  The court also noted that Defendant’s evidence that it terminated Plaintiff for misuse of a company computer did not foreclose a finding by a jury that Plaintiff’s call to OSHA the day before the termination (or his earlier complaints directly to management) had a causal connection to the termination decision.   The court reiterated, however, that Plaintiff will need to prove that he was terminated because of complaints about food safety, and not because of complaints about equipment.

Legitimate, non-retaliatory reasons for dismissal; pretext

The court noted that it was not clear “whether the FSMA retaliation provision contemplates a dual motive or burden-shifting framework” but that the parties appeared “to agree that defendant can rebut the prima facie case by articulating a legitimate, non-retaliatory reason for Brown’s termination, and that the burden remains with Brown to demonstrate that the purported reason is a phony one.”  Id. at 18 (citation omitted).  Here, Defendant contended that it terminated Plaintiff’s employment because he violated the company’s Computer/E-mail/Internet Usage policy.   The court, however, found that Plaintiff had raised genuine issues of material fact as to: “(1) whether he was given permission by his direct supervisor to use the computer during downtime or while he was on break to complete academic work for a degree related to his work at Choice; (2) whether he was singled out and treated differently than at least one other employee who also used the computer for academic purposes; and (3) whether termination was justified in light of the fact that this was his first disciplinary action.”  Id. at 19.  The court thus declined to grant summary judgment to defendant on the question.

Burton v. Food Giant Supermarkets, Inc., No. 19-cv-2445 (W.D. Tenn. Aug. 12, 2021) (2021 U.S. Dist. LEXIS 151841; 2021 WL 3574885) (Order Granting Defendant’s Motion for Summary Judgment)

CONTRIBUTING FACTOR CAUSATION; SUMMARY JUDGMENT GRANTED WHERE THE RECORD SHOWED THAT DEFENDANT’S REASON FOR DISCHARGING PLAINTIFF WAS NOT BECAUSE HE MADE FOOD SAFETY COMPLAINTS, BUT BECAUSE -- BASED ON THE INFORMATION AVAILABLE AT THE TIME -- DEFENDANT DETERMINED THAT PLAINTIFF VIOLATED ITS STANDARDS OF CONDUCT WHEN HE FAILED TO DEAL RESPECTFULLY WITH A STATE INSPECTOR

In Burton v. Food Giant Supermarkets, Inc., No. 19-cv-2445 (W.D. Tenn. Aug. 12, 2021) (2021 U.S. Dist. LEXIS 151841; 2021 WL 3574885), Plaintiff was a meat market manager at one of Defendant’s grocery stores.  He had raised internal complaints about condensation dripping from the ceiling in the processing area into the meat.  Defendant took steps to stop the condensation and conducted employee meetings to discuss the status of its efforts.  At those sessions, Plaintiff and others made additional complaints about the issue.  Later, a state inspector arrived to investigate; the inspector and Plaintiff had an altercation which was witnessed by the store manager, and partially captured on video.  The inspector reported to Defendant’s managers that he felt threatened.  The manager had felt shocked by Plaintiff’s behavior.  Plaintiff was suspended, and discharged after an investigation, for violating Defendant’s standards of conduct.  Plaintiff filed a Food Safety Modernization Act (FSMA) retaliation complaint with OSHA.  After OSHA issued a determination dismissing the complaint, Plaintiff filed the instant action in U.S. District Court.  Defendant filed a motion for summary judgment, which the court granted on the issue of contributory factor causation.

The court found that there was no evidence that Defendant’s stated grounds for discharging Plaintiff was pretextual, and, although some of the details of the incident were contested, there was no genuine dispute as to any material fact.  The court noted that the inspector had felt threatened and Plaintiff’s manager had been shocked by Plaintiff’s actions.

Although Plaintiff argued that the investigation was “shoddy,” the court found that the employer only needed to show that its termination decision was based on an honestly held belief in a nondiscriminatory reason supported by particularized facts after a reasonably thorough investigation.  Although the HR department representative had not personally interviewed Plaintiff, she had the video of the incident, and the written statements of several employees including Plaintiff.  The court stated that the representative’s failure to personally interview Plaintiff was reasonable considering the other information available, and the fact that Plaintiff’s written statement had omitted significant details.  The court considered each of Plaintiff’s arguments as to why the reason for discharge was not reasonable, but found they did not demonstrate pretext.

The court next considered temporal proximity, and found that the altercation with the state inspector was an intervening evident.  The court rejected Plaintiff’s argument that Defendant had not followed its progressive discipline policy, as the standard of conduct at issue permitted by-passing that policy.  There was no evidence that Defendant ever gave a different explanation for the discharge, or that Defendant had shown antagonism or hostility when Plaintiff had made reports about condensation issues.  Although Plaintiff contended that he could not have violated the standard of conduct because he never physically or verbally threatened the state inspector, the court noted that this explanation was not given until 11 months after the incident and following the termination, and therefore the explanation was not before the decision-makers at the time of the decision to terminate Plaintiff’s employment.  The court also found that even if Plaintiff did not specifically threaten the state inspector, the incident had occurred and Plaintiff’s actions could constitute harassing and intimidating conduct.

The court, viewing the evidence in the light most favorable to Plaintiff found no genuine dispute as to any material fact, and no issues for trial as the record established that Plaintiff’s food safety complaints were not a contributing factor in Defendant’s decision to discharge him.

Brown v. Choice Prods., No. 20-cv-46 (W.D. Wisc. Feb. 26, 2021) (2021 U.S. Dist. LEXIS 36290; 2021 WL 765024) (Opinion and Order)

TIMELINESS OF FSMA ADMINISTRATIVE COMPLAINT THAT RELIES ON RELATION BACK TO OSH ACT COMPLAINT TO MEET STATUTORY LIMITATIONS PERIOD; COURT DENIED MOTION TO DISMISS UNDER FRCP 12(b)(6), WHERE, BASED ON THE LIMITED RECORD BEFORE IT, IT WAS REASONABLE TO INFER, AT THE PLEADING STAGE, THAT A COMPLAINT INVOLVING MALFUNCTIONING FOOD PROCESSING EQUIPMENT RELATED TO FOOD SAFETY 

In Brown v. Choice Prods., No. 20-cv-46 (W.D. Wisc. Feb. 26, 2021) (2021 U.S. Dist. LEXIS 36290; 2021 WL 765024), Plaintiff filed an action alleging that Defendant violated the whistleblower protections of the Food Safety Modernization Act ("FSMA"), 21 U.S.C. § 399d.  Defendant moved to dismiss pursuant to FRCP 12(b)(6) on the ground that the complaint was time-barred. When Complainant was fired, he filed a retaliation complaint with OSHA citing § 11(c) of the Occupational Health and Safety Act.  Later, he submitted an amended complaint with OSHA invoking the FMSA.  The amendment was made more than 180 days after the FSMA limitations period, and the question before the court was whether the amended complaint reasonably related back to the original complaint.  

While the original complaint only stated generally that Plaintiff was fired for reporting safety concerns to OSHA, the court was not persuaded by Defendant's contention that the safety concerns addressed only workplace safety.  Although the parties disputed what the original complaint said, neither party had placed it into the record.  The court stated: "Absent the complaint itself, plaintiff's allegation as to the scope of the original, general OSHA complaint will prevail at the pleading stage."  Slip op. at 7.

The court also found on the record before it that it was "at least as reasonable to construe plaintiff's complaint filed with OSHA on November 19, 2016, regarding ‘various safety concerns’ at a ‘company making food products’ to encompass concerns about food safety, as it is concerns about worker safety."  Id.  In support, the court cited the fact that the OSHA investigator concluded that the original complaint related to the FSMA retaliation complaint, which supported an inference that it touched on food safety. The court also found it "reasonable to infer that a complaint involving malfunctioning food processing equipment ‘relates to’ food safety."  Id. at 8. 

Federal Railroad Safety Act

Mangold v. Norfolk S. Ry. Co., No. 21-3059 (6th Cir. Dec. 14, 2021) (not published) (2021 U.S. App. LEXIS 37193; 2021 WL 5904091) (Opinion)

District Court No.: No. 20-cv-214 (N.D. Ohio)

USDOL Case No.: ALJ No. 2019-FRS-00059

CONTRIBUTORY FACTOR CAUSATION; SIXTH CIRCUIT’S CONRAIL TEST’S INCLUSION OF DECISIONMAKER KNOWLEDGE AS PART OF PLAINTIFF’S BURDEN WHEN RESPONDING TO SUMMARY JUDGMENT MOTION; ALLEGATIONS SUPPORTED ONLY BY PLAINTIFF’S OWN ARGUMENT ARE INSUFFICIENT TO RAISE A GENUINE ISSUE OF MATERIAL FACT

CONTRIBUTORY FACTOR CAUSATION; TEMPORAL PROXIMITY ALONE IS INSUFFICIENT TO CREATE A GENIUNE ISSUE OF MATERIAL FACT WHERE OTHER EVIDENCE SHOWED LACK OF KNOWLEDGE OF PROTECTED ACTIVITY BY THE RELEVANT DECISIONMAKERS; PROTECTED ACTIVITY WAS NOT RAISED DURING THE RAILWAY’S INTERNAL INVESTIGATION AND HEARING OF THE INTERVENING EVENTS THAT JUSTIFIED THE INVESTIGATION AND HEARING; THERE WAS NO EVIDENCE THAT THE DECISIONMAKERS WERE INFLUENCED BY PROTECTED ACTIVITY OR THE ALLEGED BIAS OF THE CHARGING OFFICIALS

COURT OF APPEALS DECLINED TO ADDRESS PRESENTMENT CLAUSE ARGUMENT THAT HAD NOT BEEN RAISED BEFORE THE DISTRICT COURT; ARGUMENT WAS THAT SIXTH CIRCUIT’S CONRAIL TEST’S INCLUSION OF DECISIONMAKER KNOWLEDGE AS PART OF PLAINTIFF’S BURDEN WAS IMPROPER LEGISLATING

COURT OF APPEALS FOUND THAT BREACH OF CONTRACT ARGUMENT WAS FORFEITED WHEN APPELLANT-PLAINTIFF FAILED TO ADDRESS IN APPELLATE BRIEF DISTRICT COURT’S FINDING THAT THE CLAIM HAD BEEN FORFEITED FOR FAILURE TO BRIEF IT BEFORE THE DISTRICT COURT 

In Mangold v. Norfolk S. Ry. Co., No. 21-3059 (6th Cir. Dec. 14, 2021) (not published) (2021 U.S. App. LEXIS 37193; 2021 WL 5904091), Mangold made frequent complaints, reports and notes of locomotive defects and other safety issues.  He also, however, had a record of major and minor disciplinary actions under Norfolk’s progressive discipline system.  In 2016 Mangold was dismissed from service, but reinstated as part of a settlement agreement settling Mangold’s FRSA retaliation complaint.  Once reinstated, Mangold continued to report alleged locomotive defects.  In 2017, he received two unfavorable personnel decisions – a letter of reprimand and a dismissal from service.   Mangold filed a new FRSA retaliation complaint.  The Sixth Circuit determined that the District Court properly granted summary judgment dismissing the complaint.

In the Sixth Circuit, FRSA retaliation cases are analyzed under the test set forth in Consolidated Rail Corp. (“Conrail”) v. United States Dep’t of Labor, 567 F. App’x 334 (6th Cir. 2014).  The district court had found that there was no evidence presented to show that the relevant decisionmakers knew that Mangold engaged in protected activity prior to disciplining him.  The district court also found that intervening events independently justified the discipline, such that Mangold failed to establish contributory factor causation.  Those events were Mangold’s failure to properly shut down his locomotive; speeding; and inattention to duty when he pulled a train out of a crossing without a signal to do so from the dispatcher.

Because the issue had not been raised before the district court, the Sixth Circuit declined to address Mangold’s Presentment Clause argument that the district court improperly legislated in Conrail when it required him to point to evidence that would create a genuine issue of material fact as to whether the decisionmakers had knowledge of the protected activity. 

As to whether summary judgment on the knowledge question was correctly granted, the court first noted that Norfolk had presented signed affidavits from the decisionmakers indicating that they were not aware of Mangold’s safety concerns, and even if they had been aware, they would not have considered them as they were irrelevant to the incidents under investigation.  Norfolk also cited Mangold’s own testimony indicating that he did not make safety reports to two of the decisionmakers.  This evidence thus required Mangold to come forward with specific facts or affidavits to show a genuine issue of material fact.  The court stated that what Mangold pointed to in the record were mere allegations supported only by his own argument.  Mangold also argued that “his that his reporting was so commonly known that it would have been impossible for a decisionmaker not to have been aware of it.”  The court stated:  “This is not, however, competent evidence on a motion for summary judgment as ‘these kinds of vague, conclusory statements do not suffice to get a case to a jury.’”  Slip op. at 9 (citations omitted).

The court further found that even if the relevant decisionmakers had knowledge of the protected activity, Mangold failed to demonstrate contributory factor causation.  Although Mangold cited temporal proximity, the court noted that this alone was insufficient because (1) there is no indication that any decisionmaker had knowledge of Mangold’s protected activities when the disciplinary decisions were made; (2) Mangold’s safety reporting was not raised at any point during Norfolk’s internal investigation and hearing and Mangold’s actions that led to the hearings were intervening events that independently justified the adverse disciplinary action; and (3) there was no evidence that the decisionmakers were influenced by Mangold’s protected activity or by the charging officers’ alleged bias.  

Mangold also argued that he should not have been faced with disciplinary charges as he did not violate any rules.   The court rejected this argument, noting that “courts do not act as a ‘super-personnel department’ and re-examine an employer’s disciplinary decisions.”  Id. at 11 (citation omitted).   The court stated:  “To do so here would be particularly improper in view of the fact that Mangold has provided scant evidence that anything other than his own negligence motivated the decisions to discipline him.”  Id.

Mangold’s FRSA complaint had also been based on an allegation that Norfolk had not complied with the settlement agreement in the prior FRSA case.  The court, however, noted that Mangold had failed in his appellate briefing to address the district court’s conclusion that Mangold forfeited this breach of contract claim by failing to address it in the district court briefing or other argument.   On appeal, Mangold had only repeated a conclusory allegation that the settlement agreement had been violated. The court found that Mangold’s failure to expressly appeal the district court’s forfeiture holding resulted in a forfeiture of a challenge to the district court’s dismissal of the breach of contract claim.
 

Brough v. Admin. Review Bd., No. 19-71983 No. 20-70655 (9th Cir. Dec. 14, 2021) (not published) (2021 U.S. App. LEXIS 36858) (Memorandum [denying petition for review])

USDOL Case Nos:  ARB No. 2016-0089, ALJ No. 2014-FRS-00103

CONTRIBUTORY FACTOR CAUSATION IN FRSA REPORT OF WORK-RELATED PERSONAL INJURY CASE UNDER FROST v. BNSF RAILWAY; NINTH CIRCUIT DISTINGUISHES, IN AN UNPUBLISHED DECISION, BETWEEN A SITUATION WHERE THE RAILROAD DOES NOT KNOW THAT AN EMPLOYEE MADE A PERSONAL INJURY REPORT, AND WHERE THE RAILROAD SUBJECTIVELY BELIEVED THAT THE EMPLOYEE’S ACTIONS WERE NOT PROTECTED ACTIVITY; THE EMPLOYEE DOES NOT HAVE THE BURDEN TO ESTABLISH A SUBJECTIVE DISCRIMINATORY ANIMUS BY THE EMPLOYER, AND THE RAILWAY CAN BE LIABLE EVEN IF IT HAD A SUBJECTIVE REASONABLE BELIEF THAT EMPLOYEE’S REPORT WAS NOT MADE IN GOOD FAITH

In Brough v. Admin. Review Bd., No. 19-71983 No. 20-70655 (9th Cir. Dec. 14, 2021) (not published) (2021 U.S. App. LEXIS 36858), the Ninth Circuit denied cross petitions for review of the ARB’s decision in Brough v. BNSF Railway Co., ARB No. 2016-0089, ALJ No. 2014-FRS-00103 (ARB June 12, 2019).  

BNSF challenged the ARB’s ruling that it violated the FRSA, 49 U.S.C. § 20109(a)(4) when it terminated Brough due to his report of work-related personal injury.   The court found that the ALJ’s decision finding contributory factor causation, as affirmed by the ARB, was supported by substantial evidence:   the timing of the discipline, the circumstances of Brough’s removal from his work station, and a shift in the basis for the disciplinary charges. 

BNSF’s appeal was largely based on its subjectively reasonable belief that Bough’s actions were not protected activity under the FRSA.  In this regard, the court cited its rulings in Frost v. BNSF Ry. Co., 914 F.3d 1189, 1195 (9th Cir. 2019), that “[a] finding that the employer terminated an employee due, in whole or in part, to the employee’s protected act establishes intentional discrimination for purposes of 49 U.S.C. § 20109(a)” and that “an employee need not prove the employer had a subjective discriminatory animus….”  Slip op. at 3.  The court distinguished the situations where the employer did not know at all about the protected activity, and the employer held a subjective belief that the activity was not protected.

  • In context, Frost’s statement that “it would not be possible to show that an employer retaliated in response to an employee engaging in protected activity if the employer could demonstrate that it honestly believed no protected activity had occurred,” id. at 1197, means that an employee’s report of a workplace injury cannot be a contributing factor to a decision to terminate the employee if the employer does not know that an employee made such a report at all.

Id.

Although the ALJ had found when considering punitive damages that BNSF had not intentionally violated the FRSA, and that the decision makers genuinely believed that they were punishing unprotected conduct, the court determined that the ARB’s conclusion that BNSF violated the FRSA was not undercut because Brough was not required to prove BNSF’s subjective animus.  The court further stated:

  • For the same reason, we reject BNSF’s argument that it did not violate the FRSA because § 20109(a)(4) bars discrimination against an employee only when the employee has engaged in a “lawful, good faith act,” and BNSF had a subjective reasonable belief that Brough’s report of injury was not in good faith.

Id. at 4.

PUNITIVE DAMAGES UNDER THE FRSA; LIABILITY FOR PUNITIVE DAMAGES DOES NOT ARISE WHERE THE EMPLOYER DISTINCTLY BELIEVED THAT ITS DISCRIMINATORY ACTIONS WERE LAWFUL

PUNITIVE DAMAGES UNDER THE FRSA; COURT REJECTS RAILWAY’S ARGUMENT THAT ARB’S REVERSAL OF ALJ’S AWARD OF PUNITIVE DAMAGES WAS UNREVIEWABLE AGENCY ACTION

In Brough v. Admin. Review Bd., No. 19-71983 No. 20-70655 (9th Cir. Dec. 14, 2021) (not published) (2021 U.S. App. LEXIS 36858), the Ninth Circuit denied cross petitions for review of the ARB’s decision in Brough v. BNSF Railway Co., ARB No. 2016-0089, ALJ No. 2014-FRS-00103 (ARB June 12, 2019).  Brough appealed the ARB’s determination that he was not entitled to punitive damages.  The court found that the ARB did not err in reversing the ALJ’s award, noting that the ALJ had found that BNSF’s managers genuinely believed that Brough’s conduct was not protected by the FRSA, and that the ARB had found that BNSF had made a good faith effort to comply with the law.  The court stated:

  • Although the ALJ found troubling evidence of indifference and callous disregard for the rights of workers, punitive damages liability does not arise where “the employer discriminates with the distinct belief that its discrimination is lawful,” Kolstad, 527 U.S. at 537.

Slip op. at 5.

The court rejected BNSF’s argument that the ARB’s reversal of the punitive damages award was unreviewable agency action, noting that 49 U.S.C. § 20109(d)(4) does not preclude court review of such, and that there are meaningful standards for determining whether an award of punitive damages is proper.

Monohon v. BNSF Railway Co., No. 18-3346 (8th Cir. Nov. 4, 2021) (2021 U.S. App. LEXIS 32840; 2021 WL 5114271)

PROTECTED ACTIVITY UNDER FRSA 49 U.S.C. § 20109(b)(1)(A); EIGHTH CIRCUIT JOINS SECOND CIRCUIT IN DETERMINING THAT OBJECTIVE REASONABLENESS IS NOT AN ELEMENT OF A REPORTING-A- HAZARDOUS-SAFETY-CONDITION COMPLAINT

PROTECTED ACTIVITY UNDER FRSA 49 U.S.C. § 20109(b)(1)(A); EIGHTH CIRCUIT WAS NOT PERSUADED BY BNSF’S ARGMENT THAT THE FRSA REPORTING PROVISON REPORTING PROVISION “REQUIRES AN EXISTING, PHYSICAL, TANGIBLE HAZARDOUS SAFETY CONDITION THAT CAN BE REMEDIATED”  

In Monohon v. BNSF Railway Co., No. 18-3346 (8th Cir. Nov. 4, 2021) (2021 U.S. App. LEXIS 32840; 2021 WL 5114271), the Eighth Circuit Court of Appeals joined the Second Circuit in concluding that objective reasonableness is not an element of a reporting-a-hazardous-safety-condition complaint under FRSA, 49 U.S.C. § 20109(b)(1)(A).  See Ziparo v. CSX Transp., Inc., 15 F. 4th 153, 155 (2d Cir. 2021).  

Background

Plaintiff-Appellant (Monohon), worked for Defendant-Appellee (BNSF) as a railroad track inspector.  Following some recent serious accidents, a BNSF Roadmaster conducted a conference call in which he reiterated a rule requiring employees to wear seat belts while operating or riding in a hy-rail vehicle.  A hy-rail is a pickup truck that can operate both on pavement and on railroad tracks.  Monohon expressed a concern that wearing a seatbelt while hy-railing would make it difficult to bail out if a train approached.   The Roadmaster replied that he understood the concern, but that the seatbelt rule must be followed.  The next day, Monohon was discovered hy-railing while not wearing his seatbelt.  Monohon seemed surprised when confronted that his seatbelt was not fastened, and explained that he had been in and out the vehicle several times that day.  The Line Chief reminded Monohon of the recent accidents, and asked him to fasten his seatbelt, which he did.  Monohon was told that he would receive an operations test failure and was asked to commit to wearing the seatbelt in the future.  Monohon replied by reiterating his concern that a fastened seatbelt would prevent a quick bail out.  The Line Chief ended the conversation and sent Monohon for the day. The Line Chief later testified that Monohon did not raise his voice, become argumentative, or disobey any orders during the conversation.

The Line Chief then emailed the Director of Line Maintenance, explained the discussion with Monohon, and related that although they had a good discussion, it had become apparent that getting compliance with the seatbelt rule would be a struggle.  The Director commenced an investigation to determine whether Monohon had been insubordinate.  The hearing officer found that by engaging the Line Chief with his objection to the seatbelt rule, Monohon had escalated the matter from a minor oversight to the more serious charge of insubordination.  The hearing officer recommended suspension or dismissal.  

The Director reviewed the hearing transcript and exhibits, considered the hearing officer’s findings and recommendations, and discussed the matter with other managers.  He then decided to terminate Monohon’s employment for insubordination, concluding that failure to wear the seatbelt was a serious rules violation, and that Monohon’s failure to commit to wearing a seatbelt constituted insubordination.  Monohon then brought Federal Rail Safety Act (FRSA), 49 U.S.C. § 20109(b)(1)(A) suit, charging that BNSF discharged him for reporting, in good faith, a hazardous safety condition.  A jury found in favor of Monohon, but the district court later granted BNSF’s motion for judgment as a matter of law.  The district court found that Monohon’s claim of reporting hazardous safety condition was not objectively reasonable and was not supported by the facts of the case.”

FRSA Reporting Provision Only Requires Good Faith, and Not Objective Reasonableness

The Eighth Circuit reversed the district court’s judgment as a matter of law, and remanded for reinstatement of the jury verdict and other relief.  The court first quoted § 20109(b)(1)(A), which prohibits railroads from retaliating against their employees for “reporting, in good faith, a hazardous safety or security condition.”   The Eighth Circuit determined that the plain language of the reporting provision of the FRSA only requires the employee to report “in good faith,” and does not require that the report be objectively reasonable, citing Ziparo, supra.  The court noted that the refusal-to-work provision of § 20109(b)(1)(B), in contrast, requires both good faith and objective reasonableness.  Citing decisions on statutory construction, the court found that the difference in statutory language reflected Congress’s decision to omit reasonableness in the reporting provision.  The court also found that broad protection for good faith reports was in accord with the FRSA’s purpose to “empower[] employees to make good faith reports of hazardous safety conditions without fear of retaliation.” Slip op at 10.  The court went on to further explain its reasoning and to state its agreement with the Second Circuit’s decision on the question in Ziparo.

Whether Reporting Provision Requires a Tangible Hazardous Safety Condition

BNSF also argued that the FRSA reporting provision “requires an existing, physical, tangible hazardous safety condition that can be remediated.”  Id. at 13.  The court, however, found that the FRSA does not require that an accident or injury had occurred.  Here, the jury made a finding of fact that Monohon’s report regarding the danger of wearing a seatbelt while hy-railing was a report of a hazardous safety condition.  The court found that the record contained a legally sufficient evidentiary basis to support the jury’s finding, reciting evidence that incidents have occurred where a hy-rail or train have collided or nearly collided, and that wearing a seatbelt could impede a bail out.

Evidence Sufficient to Support Finding of Intentional Retaliation

The court further found that the evidence was sufficient to support the finding that the Director of Line Maintenance intentionally retaliated against Monohon.  The court cited the Director’s testimony that he terminated Monohon for not wearing his seatbelt and for being insubordinate, and had considered the hearing officer’s report which found that Monohon had been insubordinate for reporting his concern to the Line Chief.  The court also cited Monohon’s evidence that BNSF had not terminated employees for violating the seatbelt rule, that he had not disobeyed any orders, and that he had not acted in an incorrigible manner when he raised his safety concern with the Line Chief.

Evidence Did Not Support Judgment As a Matter of Law Rejecting Jury Verdict

The court found that it could not be said that the evidence so pointed all in one direction such that no reasonable interpretation could support the jury’s verdict; that the district court erred in granting BNSF judgment as a matter of law; and that it was immaterial that the court might have drawn a different interference and felt that another conclusion was more reasonable.


REINSTATEMENT IS REQUIRED BY THE FRSA RETALIATION PROTECTION PROVISION; HOWEVER, WHERE REINSTATEMENT WOULD NOT BE POSSIBLE, DISTRICT COURT HAS THE DISCRETION TO AWARD FRONT PAY “TO MAKE THE EMPLOYEE WHOLE”; WHETHER PLAINTIFF REQUESTED OR DID NOT CHALLENGE AN AWARD OF FRONT PAY IS A FACTOR TO CONSIDER

In Monohon v. BNSF Railway Co., No. 18-3346 (8th Cir. Nov. 4, 2021) (2021 U.S. App. LEXIS 32840; 2021 WL 5114271), the jury in the district court proceeding had found in favor of Monohon on his FRSA retaliation claim.  Although the district court later found that Monohon’s claim of reporting hazardous safety condition was not objectively reasonable and was not supported by the facts of the case, and granted judgment as a matter of law in favor of BNSF, the Eighth Circuit found that objective reasonableness is not an element of the FRSA, 49 U.S.C. § 20109(b)(1)(A), “reporting” case, and   remanded for reinstatement of the jury verdict and other relief.

As to other relief, Monohon had argued before the Eighth Circuit that the district court erred in awarding front pay because the FRSA mandates reinstatement.  The court said that although it normally employs an abuse of discretion standard when reviewing a district court’s decision to order front pay, the FRSA unambiguously requires reinstatement. 49 U.S.C. § 20109(e)(2)(A).

The court, however, agreed with BNSF’s argument that the requirement is not absolute.  Where reinstatement would not be possible, the FRSA “gives the district court discretion to award whatever relief is ‘necessary to make the employee whole.’”  Slip op. at 17, quoting 49 U.S.C. § 20109(e)(1).  The court, however, noted that unlike the instant case, in the cases cited by BNSF, the plaintiff requested or did not challenge the award of front pay.  The court instructed the district court on remand to reconsider Monohon’s request for reinstatement.

Cole v. United States Dep't of Labor, No. 20-4075 (6th Cir. Sept. 24, 2021) (unpublished) (2021 U.S. App. LEXIS 29157) (Order [denying petition for review])

USDOL Nos.: ARB No. 2019-0029, ALJ No. 2018-FRS-00023

STANDARD OF REVIEW OF AGENCY’S GRANT OF SUMMARY DECISION; ALTHOUGH FOR PURPOSES OF THE CASE THE ARB HAD CONCEDED DE NOVO REVIEW, THE SIXTH CIRCUIT NOTED THAT – ALTHOUGH THE COURT OF APPEALS CONDUCTS DE NOVO REVIEW ON PURE QUESTIONS OF LAW – WHERE AN AGENCY PERMISSIBLY MADE FINDINGS OF FACT WITHOUT A HEARING IN RULING ON A SUMMARY DECISION MOTION, THE APA’S MORE DEFERENTIAL ARBITRARY-AND-CAPRICIOUS OR SUBSTANTIAL EVIDENCE STANDARD APPEARED TO BE APPLICABLE TO THE FACT-FINDING

In Cole v. United States Dep't of Labor, No. 20-4075 (6th Cir. Sept. 24, 2021) (unpublished) (2021 U.S. App. LEXIS 29157), the Sixth Circuit denied Cole’s petition for review of the ARB’s affirmance of the ALJ’s grant of summary decision denying Cole’s FRSA retaliation complaint.  The Sixth Circuit addressed the standard of review of an agency’s grant of summary decision.  It noted that in briefing the ARB conceded that a de novo standard applied, analogizing agency summary decision to a district court’s summary judgment.  The court accepted that concession but noted that the Administrative Procedure Act applied, and that dispositive facts which are permitted to be made without a hearing are not necessarily subject to de novo review, as opposed to pure questions of law which are reviewed de novo.  The court stated:

  • … [W]here the agency’s dispensing of a hearing is based on the compelling nature of the paper record regarding certain facts, and determining such facts without a hearing is not forbidden by the statute or regulations, the statute appears to require that we review such factfinding under a deferential arbitrary-and-capricious standard, or the similarly deferential substantial-evidence standard.

Slip op. at 3.  In the instant case, however, the court’s application of de novo review a fortiori supported denial of the petition under a more deferential scope of review.

CONTRIBUTORY FACTOR CAUSATION; UPON DE NOVO REVIEW OF DOL’S GRANT OF SUMMARY DECISION IN FAVOR OF THE RAILROAD, THE SIXTH CIRCUIT DENIED COMPLAINANT’S PETITION FOR REVIEW WHERE THE RECORD LACKED EVIDENCE THAT THE RAILROAD KNEW OR SUSPECTED THAT COMPLAINANT RAISED SAFETY ISSUES WHEN COMPLAINANT – WHO IN ADDITION TO BEING A CONDUCTOR WAS THE LOCAL UNION CHAIR – CALLED A CUSTOMER TO TRY TO OBTAIN A CONFIRMATION OR DENIAL OF THE RAILROAD’S STATEMENT THAT CREWS FROM MICHIGAN WERE BEING REPLACING BY CREWS FROM OHIO BASED ON THE CUSTOMER’S REQUIREMENT

In Cole v. United States Dep't of Labor, No. 20-4075 (6th Cir. Sept. 24, 2021) (unpublished) (2021 U.S. App. LEXIS 29157), the Sixth Circuit denied Cole’s petition for review of the ARB’s affirmance of the ALJ’s grant of summary decision denying Cole’s FRSA retaliation complaint.  Cole was a conductor for Norfolk Southern and the local chairman of his union.  Cole alleged he was discharged in retaliation for expressing safety concerns that the railroad was going to use Toledo-based crews who were unqualified to work in the Detroit area.  When he had expressed those concerns, the railroad replied that its customer, Detroit Edison, required the use of Toledo-based crews.  Cole called a Detroit Edison representative asking if Detroit Edison made the decision to use the Toledo-based crews.  The representative declined to comment and referred Cole back to the railroad.  Cole was eventually discharged based on a charge that this phone call was “conduct unbecoming an employee and detrimental to the interests of Norfolk Southern.”  The ALJ found that the phone call was not FRSA protected activity, and the ARB affirmed.

The court found that the record supported the ARB’s conclusion that Cole failed to offer sufficient evidence that any protected activity contributed to the termination. The record indicated that the phone call had the purpose of asking whether Detroit Edison was requiring the railroad to move Michigan jobs to Ohio, and the record did not show that safety concerns about whether the Ohio crews were adequately familiar the territory had been discussed.  During the railroad’s investigation, Cole had stated that he made the call in his capacity as a union official, and wanted Detroit Edison to confirm or deny what he had been told by the railroad.  Cole also stated that he had been doing due diligence for a civil lawsuit that the railroad had filed against the union and him.  Other communications with the Detroit Edition representative prior to the termination reiterated this purpose for the call -- and these communications did not show that safety concerns were discussed.  It was only later in a deposition that Cole stated that he conveyed safety concerns to the Detroit Edison representative.

The court stated that summary decision was appropriate on this record, as the record lacked any evidence that Cole or anyone else informed the railroad prior to the termination that Cole had reported safety concerns to Detroit Edison.  The court observed that it was not necessary to make a finding of fact on whether safety concerns had been communicated by Cole to Detroit Edison, because even if he did, there was no evidence that it contributed to his termination.

The court found Cole’s argument that he had a good faith belief that Detroit Edison had authority to address safety concerns to be immaterial because there was no evidence that the railroad knew or suspected that Cole informed Detroit Edison of safety concerns.  

Ziparo v. CSX Transportation, Inc., No. 20-1196 (2d Cir. Sept. 24, 2021) (2021 U.S. App. LEXIS 28941; 2021 WL 4343290) (Opinion)

Related District Court Decision:  Ziparo v. CSX Transp., Inc., 443 F.Supp.3d 276 (N.D. N.Y. Mar. 9, 2020) (No. 17-cv-708) (2020 U.S. Dist. LEXIS 39908; 2020 WL 1140663)

FRSA PROTECTED ACTIVITY; § 20109(b)(1)(A) ONLY REQUIRES SUBJECTIVE GOOD FAITH; §§ 20109(b)(1)(B) AND (b)(1)(C) REQUIRE BOTH SUBJECTIVE AND OBJECTIVE GOOD FAITH

NON-PHYSICAL HAZARDOUS SAFETY OR SECURITY CONDITIONS ARE NOT CATEGORICALLY EXCLUDED AS PROTECTED ACTIVITY UNDER § 20109(b)(1)(A); HOWEVER, THEY MUST INVOLVE THE OPERATION OF THE RAILROAD AND MUST BE WITHIN THE CONTROL OF THE RAILROAD TO REMEDY

PROTECTED ACTIVITY; COMPLAINTS OF STRESSFUL AND DISTRACTING WORK CONDITIONS MAY FALL WITHIN THE SCOPE OF “HAZARDOUS SAFETY OR SECURITY CONDITION[S]” UNDER § 20109(b)(1)(A)

In Ziparo v. CSX Transportation, Inc., No. 20-1196 (2d Cir. Sept. 24, 2021) (2021 U.S. App. LEXIS 28941; 2021 WL 4343290), the Second Circuit Court of Appeals decided, on a matter of first impression, that the FRSA protected activity of reporting in “good faith” a hazardous safety or security condition under 49 U.S.C. § 20109(b)(1)(A), “requires only that the reporting employee subjectively believe that the matter being reported constitutes a hazardous safety or security condition, regardless of whether that belief is objectively reasonable….”  Slip op. at 2.  The court also determined that the District Court erred in determining that Plaintiff-Appellant’s (Ziparo) report that pressure from supervisors to make false entries in work reports was causing employees undue stress and distraction from their duties, was not protected activity because only physical conditions subject to the railroad’s control could constitute such a “hazardous safety or security condition.”  The court held that “the statutory text suggests no reason to confine the meaning of ‘hazardous safety or security condition’ to encompass only physical conditions.”  Id. 

FRSA protected activity; § 20109(b)(1)(A) only requires subjective good faith; §§ 20109(b)(1)(B) and (b)(1)(C) require both subjective and objective good faith

The court noted that the district court had not been alone in interpreting § 20109(b)(1)(A) to contain an objective reasonableness element, but determined that those decisions erroneously relied on appellate decisions interpreting other whistleblower statutes that included specific statutory language requiring objective reasonableness.  FRSA § 20109(b)(1)(A) does not contain such language.  FRSA §§ 20109(b)(1)(B) and (b)(1)(C), in contrast, contain an objective reasonableness requirement.  Thus, Congress knew how to include an objective reasonableness test in § 20109(b)(1)(A) if it so intended.  The court also found that interpreting § 20109(b)(1)(A) to only require subjective good faith was consistent with the FRSA’s purpose.  The court also found its interpretation to be consistent with the overall structure of § 20109(b).  The court stated:

  • Section 20109(b)(1) creates three different types of protected activities: § 20109(b)(1)(A) protects employees who report hazardous safety or security conditions; § 20109(b)(1)(B) protects employees who refuse to work when confronted by such a hazardous condition; and § 20109(b)(1)(C) protects employees responsible for inspecting or repairing certain railroad equipment who refuse to authorize the use of such equipment when they believe that the equipment is in a hazardous condition.

          The conditions under which those categories of employees are protected, however, are different, and are made more restrictive as the burden imposed on the railroad by their actions escalates. Employees who simply report a hazardous condition are protected against retaliation by § 20109(b)(1)(A) on the sole condition that they make their report “in good faith.” Employees who take the more dramatic and burdensome steps of refusing to work or refusing to authorize the use of equipment when they believe that doing so would create a hazardous condition are subject to additional requirements, which are spelled out in § 20109(b)(2). Those employees too must act “in good faith,” 49 U.S.C. § 20109(b)(2)(A), but their belief must also be one that would be held by “a reasonable individual in the circumstances then confronting the employee,” id.  § 20109(b)(2)(B).

         This broader context helps to explain why Congress would subject some actions by employees, but not others, to an objective reasonableness requirement in order to be protected. A refusal to work or to authorize the use of equipment imposes a substantial burden on a railroad. In contrast, a mere report of a putative safety violation to the railroad itself, even if mistaken, imposes no meaningful costs on the railroad. Nor does the protection extended to an employee making such a report impose unreasonable burdens or costs: The FRSA does not require the railroad to take remedial action on the basis of the employee’s report, or even to investigate the reported condition. If the railroad concludes that the report does not really create a safety or security concern, it remains free to dismiss the report entirely. To avoid liability, it need only refrain from punishing the employee making the report.

Id. at 19-22 (footnote omitted) (emphasis as in original).

The court found that this did not create an absurd or intolerable result.  The court stated:  “The FRSA does not permit incompetent workers to hide behind a report that they later seek to characterize as involving safety. The statute does not protect from discipline every worker who has previously made, even in good faith, a report of a purported safety violation, or preclude any consideration of the reasonableness of the report. Rather, it prohibits the railroad from disciplining a worker ‘for’ reporting such a condition. 49 U.S.C. § 20109(b).”  Id. at 22.

Non-physical hazardous safety or security conditions are not categorically excluded as protected activity under § 20109(b)(1)(A); however, they must involve the operation of the railroad and must be within the control of the railroad to remedy

As to what an employee must report in good faith to be protected under § 20109(b)(1)(A), the court noted that the words “hazardous safety or security condition” are not defined in the FRSA, and that it would accord them their ordinary meaning.  The court stated that because these words are of common usage, there is no need to define them further.  The court found that the district court erred in imposing a non-textual, categorical restriction that the conditions reported must be physical conditions within the control of the rail carrier to be protected.  The court noted that it was plain that non-physical conditions can create safety hazards.  The court stated that this does not mean that the term “hazardous safety or security condition” has no limitations whatsoever, agreeing with the Third Circuit in Port Auth. Trans-Hudson Corp. v. Sec’y, U.S. Dep’t of Labor, 776 F.3d 157, 166 (3d Cir. 2015), that its reach is limited to conditions involving the operation of the railroad.  The court also found that the term’s reach only embraces conditions that are within the control of the railroad to remedy, citing as an example Jones v. BNSF Ry. Co., No. 18-cv-146, 2020 WL 2062180, at *6-7 (D. Mont. Apr. 29, 2020), where the complainant’s non-work-related sleep apnea made him too tired to work safely.  Such limitations, however, were not applicable to Ziparo’s case.  The court stated:

  •       Contrary to the district court, we hold that complaints of stressful and distracting work conditions like Ziparo’s may well fall within the scope of “hazardous safety or security condition[s]” under § 20109(b)(1)(A). That is not to say that any railroad employee who tells her employer that she feels unable to perform her work safely due to stress and distraction is protected under the statute; for example, an employee whose stress or distraction results from a turbulent personal life enjoys no protection from termination. But a jury, taking the facts in the light most favorable to the plaintiff, could find that is not what happened here. Ziparo complained about what he believed to be an unsafe environment caused by the improper conduct of CSX’s employees, which was well within CSX’s power to control. Indeed, there is evidence in the record that, after investigating Ziparo’s report, CSX put an end to the practices of which he complained. It is clearly for the factfinder at trial to determine whether Ziparo believed in good faith, as he has consistently asserted, that those practices were creating a genuine safety hazard. Section 20109(b)(1)(A) requires no more.

Id. at 29-30.
 

Adkins v. CSX Transp., Inc., No., 18-0321 (S.D. W.V. Aug. 10, 2021) (2021 U.S. Dist. LEXIS 149351; 2021 WL 3518529) (Memorandum Opinion and Order)

PROTECTED ACTIVITY; COURT GRANTS SUMMARY JUDGMENT AS TO PLAINTIFFS’ FRSA HAZARDOUS-WORK-CONDITION CLAIMS WHERE THE REPORTED INJURIES WERE NOT WORK RELATED; WHERE THERE WAS NO HAZARDOOUS WORK CONDITION BECAUSE DEFENDANT HAD NOT ASKED OR REQUIRED PLAINTIFFS TO WORK AFTER SUBMISSION OF THE INJURY REPORTS; AND WHERE DEFENDANTS HAD NOT REPORTED THEIR INJURIES AS HAZARDOUS SAFETY CONDITIONS

PROTECTED ACTIVITY; COURT GRANTS SUMMARY JUDGMENT AS TO PLAINTIFFS’ FRSA DISCIPLINE-FOR-FOLLOWING-PHYSICIANS-ORDERS CLAIMS BASED ON CASELAW FINDING THAT THIS PROVISION ONLY APPLIES TO ON-DUTY INJURIES

In Adkins v. CSX Transp., Inc., No., 18-0321 (S.D. W.V. Aug. 10, 2021) (2021 U.S. Dist. LEXIS 149351; 2021 WL 3518529), a group of 56 CSX Transportation workers filed FRSA claims (six of whom had settled with Defendants by the time of the court’s August 10, 2021 memorandum decision).   CSX became suspicious that Plaintiffs were involved with two chiropractors in submitting fraudulent Certificate of Illness and Injury (“COII”) reports.  After a formal investigation, CSX terminated the employment of all of the Plaintiffs.   Plaintiffs filed FRSA complaints with OSHA, and later filed a lawsuit alleging violation of the FRSA and other federal and state laws.  The instant memorandum decision addressed Plaintiff’s FRSA complaints.  

Off-Work Injuries

Plaintiffs argued that Defendant had not attempted to determine whether their injuries and treatment were work related, and thus Defendants had no basis to conclude that they were not.  The court rejected this argument because Plaintiffs had self-reported off-work injuries in the COII forms--and because Plaintiffs, who carried the burden of proof to establish protected activity, had not presented any evidence that their injuries were caused by their work.

Hazardous Work Conditions: § 20109(b)

Plaintiffs alleged that Defendants violated the FRSA, 49 U.S.C. § 20109(b)(1)(A)-(B), by terminating them for reporting a hazardous safety condition and/or refusing to work based on their physical impairments.  The court dismissed these claims for three reasons:  This provision does not extend to off-duty infirmities or injuries (as held by numerous courts); the absence of a hazardous safety condition because, once Plaintiffs submitted the COIIs, Defendant did not ask for require any of the Plaintiffs to work; and Plaintiffs had not reported to Defendant their injuries as hazardous safety conditions. 

Discipline for Following Physician's Orders: § 20109(c)

Plaintiffs also alleged that Defendants violated the FRSA, 49 U.S.C. § 20109(c) by disciplining them "for requesting medical or first aid treatment, or for following orders or a treatment plan of a treating physician."   The court, however, stated that it “joins the other courts throughout the country who have analyzed subsection (c)(2) and found that it ‘applies only to on-duty injuries’ despite the lack of an explicit limitation in the text.”  Slip op. at 8 (citations omitted) (emphasis as in original).

Carlson v. BNSF Ry. Co., No. 19-cv-1232 (D. Minn. July 19, 2021) (2021 U.S. Dist. LEXIS 133895; 2021 WL 3030644) (Order Affirming Magistrate Judge's Order)

Related USDOL Case No.:  2019-FRS-00024

ATTORNEY-CLIENT PRIVILEGE REGARDING COMMUNICATIONS WITH IN-HOUSE COUNSEL; TO BE PRIVILEGED SUCH COMMUNICATIONS MUST BE LEGAL ADVICE, RATHER THAN BUSINESS ADVICE 

WORK-PRODUCT PRIVILEGE; MAGISTRATE DID NOT CLEARLY ERR IN DETERMINING THAT THE TRIGGERING ANTICIPATION OF LITIGATION COINCIDED WITH THE DATE OF INJURY WHERE PLAINTIFF WAS ALREADY ENGAGED IN LITIGATION WITH DEFENDANT IN DIFFERENT MATTER, MAKING ADDITIONAL LITIGATION REASONABLY FORESEEABLE 

WORK-PRODUCT PRIVILEGE; MAGISTRATE DID NOT CLEARLY ERR IN NOT ORDERING RELEASE OF REDACTED DOCUMENTS WHERE PLAINTIFF CITED NO CASELAW MANDATING SUCH, AND WHERE MAGISTRATE HAD ORDERED DEFENDANT TO DISCLOSE UNDERLYING FACTUAL INFORMATION RELEVANT TO THE CLAIM AND DEFENSE

In Carlson v. BNSF Ry. Co., No. 19-cv-1232 (D. Minn. July 19, 2021) (2021 U.S. Dist. LEXIS 133895; 2021 WL 3030644), Plaintiff moved to compel discovery relating to his Federal Railroad Safety Act (FSRA), Federal Employers' Liability Act (FELA) and Locomotive Inspection Act (LIA) claims.  Following in camera review, the magistrate judge denied the motion to compel, finding that the documents in question were “appropriately withheld either as work product, attorney-client privileged communications or both."  Slip op. at 2 (quoting Magistrate’s decision).  The district court applying the clearly erroneous or contrary to the law standard of review, affirmed the magistrate judge’s determinations.

Attorney-client privilege 

On the question of attorney-client privilege, the communications in question were between in-house counsel and Defendant’s employees.  The court noted in this regard:

  •      The attorney-client privilege protects communications between in-house counsel and corporate employees when those communications are made for the purpose of securing or providing legal advice. See Upjohn Co. v. United States, 449 U.S. 383, 389–90 (1981); see also PaineWebber Grp., Inc. v. Zinsmeyer Trs. P’ship, 187 F.3d 988, 991 (8th Cir. 1999). Because in-house counsel serve as both legal advisors and business advisors, a court must consider whether the advice at issue primarily is legal advice, which is privileged, or business advice, which is not. See Cardenas v. Prudential Ins. Co. of Am., Nos. 99-1421JRTFLN, 99-1422JRTFLN, 99-1736JRTFLN, 2004 WL 234404, at *2 (D. Minn. Jan. 30, 2004). Only when an attorney acts in the role of legal counselor while communicating information to corporate employees does that information become subject to the attorney-client privilege. See Mission Nat’l Ins. Co. v. Lilly, 112 F.R.D. 160, 163 (D. Minn. 1986).

Id. at 4.

In the instant case, the court conducted its own in camera review of the documents, and found they “involve communications between BNSF's in-house counsel and BNSF employees, and the documents were created for the purpose of either providing or seeking legal advice.”  Id. at 4-5.  The court thus determined that the magistrate’s findings were neither clearly erroneous nor contrary to law.

Work product privilege

The magistrate judge also found that certain documents were subject to the work-product privilege.  The Plaintiff first argued that the magistrate erred by setting the date of anticipated litigation on the date of the alleged injury.  The court stated:  “Although the mere occurrence of an accident does not always establish whether litigation was reasonably anticipated, see United Nat’l Ins. Co. v. Gunderson, Inc., No. 08-678 (MJD/JJK), 2010 WL 11537511, at *6 (D. Minn. May 20, 2010), a court may find that litigation was reasonably anticipated from the moment an accident occurs, see Almaguer v. Chi., Rock Island & Pac.R.R. Co., 55 F.R.D. 147, 149 (D. Neb. 1972).”  Id. at 6.  The court noted that in the instant case, when the accident occurred, Plaintiff was already engaged in litigation against Defendant in a different matter. The court found that the magistrate judge's conclusion that, this fact alone rendered litigation over the work related injury in question reasonably foreseeable, was neither clearly erroneous nor contrary to law.

Plaintiff argued that the documents in question were created in the ordinary course of business and thus were not privileged.  Plaintiff contended that some of the documents would have been created regardless of whether he filed a lawsuit.  The court, however, found that this contention did not accurately reflect the facts of this case – the Defendant had “’received no other reports of rough track or accidents at the location where Carlson claims to have been injured,’ and Carlson was already engaged in other litigation against BNSF for work-related injuries.  Id. at 7 (quoting magistrate’s decision).   Having conducted its own in camera review, the court concluded that the magistrate judge's ruling was neither clearly erroneous nor contrary to law.

Plaintiff contended before the district court that he has a substantial need for the documents “so that he may understand how BNSF made its decisions and whether they were prompted by intentional retaliation.”   Id.   The court declined to consider this argument as it had not been made before the magistrate judge.

Plaintiff argued that the magistrate judge should have ordered redacted copies of the documents to be produced.  The court, however, determined that not ordering release of redacted copies was neither clearly erroneous nor contrary to law. The court noted that Plaintiff had not cited any supporting caselaw, and that magistrate judge ordered Defendant to disclose the underlying factual information relevant to the claim and defenses.  The court stated that the magistrate’s order ensured that Plaintiff had the relevant information he needed to prosecute this case.

Pfeifle v. Portland Terminal R.R. Co., No. 19-cv-01436 (D. Or. June 25, 2021) (2021 U.S. Dist. LEXIS 118938) (Opinion and Order)

EXHAUSATION OF ADMINISTRATIVE REMEDIES; TITLE VII STANDARD APPLIES TO ANALYZE WHETHER ALLEGATIONS IN FEDERAL COMPLAINT ARE WITHIN THE SCOPE OF THE ADMINISTRATIVE COMPLAINT FOR PURPOSES OF EXHAUSATION FOR A FRSA “KICK-OUT” COMPLAINT; ALTHOUGH PLAINTIFF HAD NOT ALLEGED IN THE ADMINISTRATIVE COMPLAINT A DENIAL OF MEDICAL ATTENTION OR THREATS OF TERMINATION FOR REPORTING, THE COURT FOUND THAT THEY WERE RELATED ENOUGH TO THE SPECIFIC ALLEGATIONS MADE IN THE ADMINISTRATIVE COMPLAINT TO MEET THE VASQUEZ “REASONABLY-EXPECTED-INVESTIGATION” STANDARD

EXHAUSATION OF ADMINISTRATIVE REMEDIES; TITLE VII STANDARD APPLIES TO ANALYZE WHETHER ALLEGATIONS IN FEDERAL COMPLAINT ARE WITHIN THE SCOPE OF THE ADMINISTRATIVE COMPLAINT FOR PURPOSES OF EXHAUSATION FOR A FRSA “KICK-OUT” COMPLAINT; WHERE THE RECORD DID NOT CONTAIN THE OSHA INVESTIGATORY FILE, THE “ACTUAL INVESTIGATION” PRONG OF THE VASQUEZ ANALYSIS COULD NOT BE EVALUATED

In Pfeifle v. Portland Terminal R.R. Co., No. 19-cv-01436 (D. Or. June 25, 2021) (2021 U.S. Dist. LEXIS 118938), Defendant moved for judgment on the pleadings on Plaintiff’s FRSA Section 20109 claim on the ground that Plaintiff failed to exhaust his administrative remedies on certain counts.  The court denied the motion.

Plaintiff had filed a complaint with OSHA alleging that he was disciplined for reporting an unsafe switch, and for reporting an injury the next day when throwing the switch.  After 210 days without a final decision from the Secretary of Labor, Plaintiff brought the instant action in federal court, one claim of which alleged three counts of violations of the FRSA:  alleged discipline for reporting a hazardous safety condition; alleged injury during course of employment and denial of prompt medical attention; and alleged discipline for reporting the injury.    Defendant moved to dismiss as to the newly raised parts of the federal court complaint, specifically the “denial-of-medical-attention” count, and parts of the first and third counts relating to alleged retaliatory threats of termination.   Defendant argued that “each prohibited action must be alleged in the OSHA complaint for that action to be properly exhausted.”  Slip op. at 4.  Plaintiff, in contrast, argued that “the exhaustion standard applicable in the Title VII context for Equal Employment Opportunity Commission (EEOC) complaints applies in the FRSA context. In the Title VII context, district courts may hear all allegations of discrimination ‘that either fell within the scope of the EEOC's actual investigation or an EEOC investigation which can reasonably be expected to grow out of the charge of discrimination.’ B.K.B. v. Maui Police Dep't, 276 F.3d 1091, 1100 (9th Cir. 2002), as amended (Feb. 20, 2002) (quotation marks, citations, and emphasis omitted).”  Id. at 5.

The court reviewed precedent from other courts that analyzed FRSA exhaustion, found that it suggested that that Title VII standard applies, found that this precedent was persuasive, and therefore used that standard in the instant case.  The court discussed the nature of administrative complaint investigations and how the absence of formal pleading requirements indicate that OSHA administrative proceedings are not expected to meet the pleading standards applicable in federal court.  In applying the Title VII standard, the court indicated that it may consider all claims that fall within the scope of the agency’s actual investigation or an investigation that could reasonably be expected to grow out of the charge.  In the instant case, Defendant argued that “the denial-of-medical-treatment and threat-of-termination claims are not similar to or related to Plaintiff’s claim.” Id. at 8 (citation omitted). 

Agency’s “reasonably expected” investigation

The court first reviewed whether the new claims were reasonably related to the complaint made to OSHA.  The court stated:  

  •      In determining whether a claim is “reasonably related” to the agency complaint, the court “may consider ‘such factors as the alleged basis of the discrimination, dates of discriminatory acts specified within the charge, perpetrators of discrimination named in the charge, and any locations at which discrimination is alleged to have occurred.’” Vasquez, 349 F.3d at 644 (citation omitted).

Id.  In the instant case, the court found that the OSHA complaint alleged “only that Defendant responded in a certain way to Plaintiff’s reporting of the switch and injury, and the new claims allege other responses by Defendant to that same reporting conduct.”  Id.   Applying the Vasquez v. Cty. of Los Angeles, 349 F.3d 634, 644 (9th Cir. 2003), as amended (Jan. 2, 2004), “reasonably expected” investigation analysis, however, the court found that 

  • … the direct causal relationship between these sets of facts, combined with the narrow temporal relationship at issue in Plaintiff’s OSHA complaint, demonstrate that both current claims are reasonably related to the OSHA complaint. A reasonable investigation of Plaintiff’s OSHA allegations would “encompass” Defendant’s reaction to the injury report, including any discussions of injuries and the need for medical attention, as well as interactions (including threats) relating to the reported unsafe switch and injury within the short alleged time frame.2 The additional claims are “so closely related” to the allegations in Plaintiff’s OSHA complaint “that agency action would be redundant” in investigating them separately. B.K.B., 276 F.3d at 1102 (quotation marks and citations omitted). The “operative facts” of Plaintiff’s current denial-of-medical-treatment and threat-of-termination claims are certainly “related to the facts in the EEOC charge.” Vasquez, 349 F.3d at 645.

Id. at 8-9 (footnote omitted).  The court noted that “[c]ases finding failure to exhaust where a plaintiff brought a new theory tend to emphasize the lack of temporal proximity between the facts supporting each theory.”  Id. at 9, n.2 (citations omitted).

The actual investigation

The court next noted that the OSHA investigative file had not been produced in discovery, and that in the FRSA context, courts have relied on such evidence in deciding exhaustion issues.  Id. at 10-11 (citing several decisions).  The court, however, indicated that it was nonetheless denying Defendant’s motion for judgment on the pleadings for the reasons discussed under the “reasonably expected” investigation analysis.

Henin v. Soo Line R.R. Co., No. 19-336 (D. Minn. June 14, 2021) (2021 U.S. Dist. LEXIS 110370; 2021 WL 2417709) (Memorandum and Order)

DOL Case Nos: ARB No. 2019-0028, ALJ No. 2017-FRS-00011

STATUTORY KICK-OUT PROVISION FOR FRSA RETALIATION COMPLAINT DOES NOT NEGATE COMMON LAW EQUITABLE RELIEF WHERE PLAINTIFF IS FOUND TO HAVE WAIVED HIS RIGHT TO KICK-OUT, AND/OR WHERE LACHES APPLIES; IN INSTANT CASE, PLAINTIFF WAITED UNTIL AFTER HE FILED AN UNTIMELY APPEAL OF THE ALJ’S DECISION TO FILE A DISTRICT COURT ACTION, AND OVER FOUR YEARS HAD PASSED SINCE THE DATE WHEN HE COULD HAVE KICKED-OUT THE CASE TO DISTRICT COURT

SUMMARY JUDGMENT ON CONTRIBUTORY FACTOR CAUSATION GRANTED WHERE THE ONLY EVIDENCE SUPPORTING CAUSATION WAS TEMPORAL PROXIMITY, WHICH IS NOT IN ITSELF SUFFICIENT TO CREATE A GENUINE ISSUE SUFFICIENT TO AVOID SUMMARY JUDGMENT

In Henin v. Soo Line R.R. Co., No. 19-336 (D. Minn. June 14, 2021) (2021 U.S. Dist. LEXIS 110370; 2021 WL 2417709), the parties engaged in four months of discovery before the ALJ on Henin’s FRSA retaliation claim; Henin, however, had not taken any depositions or propounded any discovery requests.  The railroad then sought summary decision from the ALJ, filing its final version of the motion in October 2017.  The ALJ granted the motion in January 2019.  Henin petitioned for ARB review of the ALJ’s decision a week past the limitations period. Three days after the railroad filed a motion to dismiss the ARB petition as untimely, Henin filed his federal lawsuit under the FRSA kick-out provision.  The ARB ultimately found equitable reasons to accept the untimely appeal, but dismissed the petition because Henin had filed the federal action.  An appeal to the 8th Circuit on the ARB’s decision to reinstate the appeal was taken by the railroad.  The district court action was stayed pending this appeal.  The 8th Circuit affirmed the ARB’s reinstatement, and the stay of the district court action was lifted.  The railroad then moved to dismiss Plaintiff’s FRSA retaliation claim based on waiver and laches because of the extent to which he had litigated the case before the ALJ and the ARB.  The court granted the motion.

The district court noted that “no court has yet precluded a railroad employee from bringing a federal lawsuit based on the employee’s pursuit of administrative remedies,” slip op. at 5-6 (footnote omitted), but also that “[t]he Eighth Circuit Court of Appeals has ruled the right to bring a federal lawsuit under FRSA may be waivable in some situations. Gunderson v. BNSF Ry. Co., 850 F.3d 962, 972 (8th Cir. 2017).”  Id. at 6.  In Gunderson, the 8th Circuit rejected the employee’s argument that there is an absolute right to file a kick-out de novo action assuming the delay was not due to the employee’s bad faith – and “instead found that ‘it is likely that common law principles of laches may apply to cut off an employee’s right to sue, or at least to seek equitable relief, some time after the § 20109(d)(3) action accrues.’”  Id. (quoting Gunderson at 972).  The 8th  Circuit did not apply waiver in Gunderson because the railroad had not developed the record on waiver, and had not raised laches or estoppel issues before the district court.  In the instant case, however, Defendant was squarely raising these defenses and had developed the record in that regard.

The district court first determined that Henin waived the right to litigate before the court where, despite being clearly on notice of the right to file a federal action, he did not file his federal complaint until after the ALJ issued his decision and he failed to file a timely appeal with the ARB – which was three years after he could have filed a federal action.

The district court also determined that laches applied, finding that the railroad established prejudice from the long delay between the 2015 incidents of which Henin complained, the Henin’s federal filing.  The court found that “Henin’s delay in the exercise of his right to bring a federal lawsuit smacks of forum-shopping, and his current claim that he requires more discovery is not well-taken in light of his failure to engage in any discovery before the ALJ.”  Id. at 8.

The court also found that, even if dismissal on equitable grounds was not warranted, summary judgment should be granted on the administrative record because the only support for the contributory factor causation element of the FRSA retaliation claim was temporal proximity, which the courts have held is not sufficient standing alone to create a genuine factual issue.   The court cited Kuduk v. BNSF Ry. Co., 768 F.3d 786, 791-792 (8th Cir. 2014).

Yowell v. Administrative Review Board, USDOL, 993 F.3d 418 (5th Cir. Apr. 12, 2021) (No. 20-60274) (2021 U.S. App. LEXIS 10417; 2021 WL 1344004) (Opinion)

USDOL Case:  ARB No. 2019-0039, ALJ No. 2018-FRS-00009 

CONTRIBUTORY FACTOR CAUSATION WHERE PROTECTED ACTIVITY LEADS TO DISCOVERY OF A DISCHARGEABLE OFFENSE; FIFTH CIRCUIT FINDS THAT THE WEIGHT OF THE FEDERAL APPELLATE CASELAW SUPPORTS THE ARB’S DECISION IN THORSTENSON TO ABANDON “INEXTRICABLY INTERTWINED” OR “CHAIN OF EVENTS” ANALYSIS; ARB FOUND NOT TO HAVE ERRED IN DETERMINING THAT RAILROAD DID NOT VIOLATE THE FRSA WHEN IT FIRED COMPLAINANT FOR FAILING TO IMMEDIATELY REPORT A WORKPLACE INJURY AS REQUIRED BY COMPANY POLICY

In Yowell v. Administrative Review Board, USDOL, 993 F.3d 418 (5th Cir. Apr. 12, 2021) (No. 20-60274) (2021 WL 1344004), the Fifth Circuit found that the ARB did not err in “in finding that the railroad terminated the petitioner's employment for failing to comply with his obligation to report promptly all known injuries and that his eventual acknowledgement of the injury was not a ‘contributing factor’ for purposes of the FRSA.”  Slip op. at 2.

Yowell reported a workplace-placed related injury to his knee.  The railroad learned that he had actually injured his knee the week before.  Because this was a violation of company policy that all injuries, no matter how small, must be reported immediately, Yowell’s employment was terminated.  An ALJ found in Yowell’s favor, but the ARB reversed.  On appeal, the only dispute was whether the protected activity was a contributing factor to the termination. 
The court framed the issue as “how to evaluate a factual scenario in which an employee's protected act itself reveals, or at least leads to the discovery of, conduct for which discipline is otherwise appropriate.”  Id. at 6.  The ALJ had applied the “inextricably intertwined” standard.  In reversing the ALJ, the ARB had explained that in Thorstenson v. BNSF Ry. Co., ARB Nos. 18-059, -060, ALJ No. 2015-FRS-052, slip op. at 10 (ARB Nov. 25, 2019), the ARB stated that it would no longer require ALJs to apply the “inextricably intertwined” or “chain of events” analysis.  In Thorstenson v. U.S. Dep't of Lab., 831 F. App'x 842, 843 (9th Cir. 2020), the Ninth Circuit rejected the ARB’s new approach, but in a non-precedential decision.  The court found that this Ninth Circuit decision stands alone in rejecting the ARB’s Thorstenson decision.  Reviewing contributory cause analysis by other circuits, the Fifth Circuit concluded that “There is consistent support in other circuits' analysis for what the ARB decided in this case and little authority that disagrees. We do not disagree either.”  Slip op. at 15.  The court summarized:   

     Under the FRSA, when an employee engages in a protected activity such as reporting a workplace injury, that employee is not insulated from what would otherwise be appropriate discipline for misconduct that becomes known to the employer at that time or during the course of the employer's addressing the protected activity. In simple terms, a protected activity does not by itself shield an employee from the ramifications of workplace misconduct.

Id.  Applying this standard to the facts of the case, which contained no evidence that the railroad attempted to prevent Yowell’s report or to discourage him from reporting, the court found no error in the ARB’s allowing the railroad to terminate Yowell’s employment for violating the employee handbook work and safety rule.  The court agreed with the ARB holding that “an employee may not rely solely on the fact that a protected activity is what informed the employer of wrongdoing. Instead, the focus must be on the employer's actions after learning of wrongdoing. There is unchallenged evidence in the record that it was not the fact of reporting an injury but the failure to report promptly an earlier injury that caused Yowell to be discharged.”  Id. at 16.

One member of the Fifth Circuit panel concurred, stating:  “I concur with the understanding that the ultimate holding of this opinion is, simply and succinctly: The protected activity provision cannot be interpreted to shield an employee from proper disciplinary action when the employee breaches a valid, established, and unchallenged work rule, and no legal legerdemain can make it otherwise.”  Id. at 17.
 

Stapleton v. CSX Transp., No. 19-cv-413 (M.D. Fla. March 30, 2021) (2021 U.S. Dist. LEXIS 61377) (Order [granting Defendant's Motion for Summary Judgment])

USDOL Case:  ALJ No. 2019-FRS-00045

SUMMARY JUDGMENT – AMENDMENT OF COMPLAINT; EVEN THOUGH BOTH PARTIES ACTED IN THE SUMMARY JUDGMENT STAGE AS THOUGH A FRSA SECTION 20109(c)(1) INTERFERENCE WITH MEDICAL TREATMENT CLAIM WAS AT ISSUE, THE COURT FOUND THAT SUCH A CLAIM HAD NOT ACTUALLY BEEN PLEADED IN THE ORIGINAL COMPLAINT; THE COURT DETERMINED THAT THE COMPLAINT WOULD NOT BE PERMITTED TO BE AMENDED TO INCLUDE SUCH A CLAIM IN RESPONSE TO DEFENDANT’S SUMMARY JUDGMENT MOTION

In Stapleton v. CSX Transp., No. 19-cv-413 (M.D. Fla. March 30, 2021) (2021 U.S. Dist. LEXIS 61377), Plaintiff filed a complaint, one count of which alleged that Defendant retaliated against him for reporting a workplace injury in violation of the FRSA, 49 U.S.C. § 20109(a).  Defendant filed a motion for summary judgment, in part arguing that Plaintiff could not show that Defendant interfered with Plaintiff’s medical treatment in violation of 20109(c).  In response,   Plaintiff argued that Defendant interfered with his medical treatment in violation of 49 U.S.C. § 20109(c)(1) when it provided his health insurer with information that led to the temporary cancellation of his health insurance coverage.

The first item the court addressed in regard to summary judgment was the claims properly before the court.  The court noted that Defendant’s motion included a § 20109(c)(1) claim in the motion apparently out of an abundance of caution because of a conclusory reference in the complaint to interference with medical treatment.  Upon careful review of the complaint, the court determined that Plaintiff had not presented a § 20109(c)(1) claim.  Plaintiff had not listed such a claim in regard to this count of the complaint (the other count being an allegation that Defendant owed him damages under FELA), and had not sought damages having to do with interference with medical treatment.  Plaintiff had not mentioned § 20109(c)(1) anywhere in his complaint, whereas he had specifically cited to § 20109(a).  Facts supporting a medical treatment claim were entirely absent from the complaint.  The court then noted that Eleventh Circuit precedent precludes a plaintiff from amending its complaint through argument at the summary judgment phase of the proceedings.  Even though both parties acted in the summary judgment stage as if a § 20109(c)(1) claim was at issue, the court found that the complaint actually asserted no such claim.  The court thus concluded:  “As such, Stapleton did not plead a claim under 49 U.S.C. § 20109(c)(1) for interference with medical treatment in the Complaint and the Court will not permit Stapleton to amend his complaint to include such a claim at summary judgment. Thus, to the extent CSXT seeks summary judgment on this claim, the Motion is due to be granted.”  Slip op. at 26.

SUMMARY JUDGMENT; ADVERSE EMPLOYMENT ACTION AND CAUSATION; PLAINTIFF’S SUBJECTIVE FEELING THAT HE WAS BEING CALLED DISHONEST BASED ON DEFENDANT’S ACTIONS IN RESPONSE TO HIS WORKPLACE INJURY WHERE INSUFFICIENT TO ESTABLISH RETALIATION WHERE THERE WAS NO EVIDENCE THAT ANY OF DEFENDANT’S EMPLOYEES ACCUSED HIM OF DISHONESTY

SUMMARY JUDGMENT; ADVERSE EMPLOYMENT ACTION AND CAUSATION; TEMPORARY SUSPENSION OF HEALTH INSURANCE COVERAGE WAS NOT RETALIATORY WHERE UNDISPUTED RECORD SHOWED THAT SUSPENSION WAS CAUSED BY PLAINTIFF’S FAILURE TO NOTIFY PAYROLL DEPARMENT THAT HE WAS ON LEAVE

ADVERSE EMPLOYMENT ACTION UNDER FRSA; COURT FINDS THAT THE MOST PERSUASIVE AUTHORITY IS TO APPLY THE “DISSUADED A REASONABLE EMPLOYEE FROM REPORTING THEIR INJURY” STANDARD AND NOT THE ARB’S “MORE THAN TRIVIAL” STANDARD

SUMMARY JUDGMENT; ADVERSE EMPLOYMENT ACTION; WHERE DEFENDANT’S INITIAL CLASSIFICATION OF INJURY AS NON-FRA REPORTABLE (WHICH DELAYED PLAINTIFF’S ELIBILITY FOR REIMBURSEMENT FOR OUT-OF-POCKET EXPENSES) BASED ON MEDICAL DOCUMENTATION AVAILABLE AT THE TIME, WHICH INCLUDED PLAINTIFF’S STATEMENT THAT HE HAD NOT SUFFERED AN INURY, AND WHICH WAS REVISED ONCE MORE DOCUMENTATION BECAME AVAILABLE, DID NOT MEET THE “DISSUADED A REASONABLE EMPLOYEE FROM REPORTING THEIR INJURY” STANDARD

In Stapleton v. CSX Transp., No. 19-cv-413 (M.D. Fla. March 30, 2021) (2021 U.S. Dist. LEXIS 61377), Plaintiff filed a complaint, one count of which alleged that Defendant retaliated against him for reporting a workplace injury in violation of the FRSA, 49 U.S.C. § 20109(a).  Defendant filed a motion for summary judgment.

Plaintiff alleged that in response to his reporting of a workplace injury, Defendant retaliated against him when its employees accused him of dishonesty and the payroll department temporarily cancelled his health insurance benefits causing him to delay his surgery by a week to ten days.  Plaintiff also alleged that Defendant retaliated against him when it initially classified his injury as non-FRA reportable deferring payment of his copays and deductibles for a period of less than three months until Defendant updated the classification and offered reimbursement.  The court found that essentially, Plaintiff was alleging that Defendant accused him of dishonesty.  The court, assuming arguendo that merely being accused of dishonesty can amount to adverse employment action under the FRSA, found that the evidentiary record did not support such a claim.  It only showed that Plaintiff felt he was being called dishonest.  The court wrote:  “Stapleton does not suggest that anyone at CSXT ever accused him of misrepresenting how or when the injury occurred, only that its classification of the injury as non-FRA reportable made him feel he was being accused of dishonesty. Stapleton’s feelings notwithstanding, they are not sufficient to support a claim that CSXT engaged in any retaliatory conduct.”  Slip op. at 29. 

The court also found no factual basis to support a claim that Defendant retaliated by causing Plaintiff’s health insurance coverage to be temporarily cancelled, the undisputed record establishing that employees are response for notifying the payroll department while on leave, and that it was such a failure that caused the temporary discontinuance.

Plaintiff also claimed retaliation because Defendant had initially determined that his workplace injury was non-FRA reportable, which delayed his receipt of a voluntary benefit that Defendant provides employees that suffer FRA reportable injuries until the classification was updated.  The court reviewed the Federal court and ARB precedent concerning what constitutes adverse action under the FRSA.  The Eleventh Circuit had not yet addressed the question, and the court thus looked to persuasive authority from other courts.  The court declined to apply the ARB’s “more than trivial” standard, and instead found that “the weight of the authority as well as the language of the relevant anti-retaliation statutes support a conclusion that that the Burlington definition of adverse action under Title VII should be applied to retaliation claims under the FRSA.”  Id. at 36.   The court thus found that the question was whether a reasonable jury could find that Defendant’s actions might have dissuaded a reasonable employee from reporting their injury.  Reviewing the uncontested facts of the case, the court found that an inference could not be drawn that the initial classification as non-FRA reportable would dissuade a reasonable worker from reporting a workplace injury.  It was clear that Defendant initially classified the injury as non-FRA reportable based on the medical records available at the time, which included Plaintiff’s denial that he suffered an injury.  Upon receipt of additional information, Defendant updated the classification and offered reimbursement for expenses incurred while the reportability question was being resolved.  The court determined that no reasonable jury could find that Plaintiff suffered an adverse action.
 

Hand v. CSX Transp., No. 19-cv-941 (S.D. Ohio Mar. 15, 2021) (2021 U.S. Dist. LEXIS 47416; 2021 WL 9635842021) (Order Granting Amended Motion for Partial Summary Judgment)

USDOL Case: ALJ No.  2020-FRS-00008

EXHAUSTION OF ADMINISTRATIVE REMEDIES; DISTRICT COURT GRANTS SUMMARY JUDGMENT DISMISSING FRSA “SUBCLAIMS” NOT CONTAINED IN THE ADMINISTRATIVE COMPLAINT BEFORE DOL, AND WHICH WERE FIRST RAISED BEFORE THE COURT

In Hand v. CSX Transp., No. 19-cv-941 (S.D. Ohio Mar. 15, 2021) (2021 U.S. Dist. LEXIS 47416), the court granted Defendant’s motion for partial summary judgment on Plaintiff’s FRSA whistleblower retaliation claim.  One of Defendant’s arguments was that Plaintiff failed to exhaust his administrative remedies.  Plaintiff alleged in the Administrative Complaint filed with DOL that Defendant retaliated against him “for reporting the injury;” he did not allege in that complaint that he had reported safety hazards or safety regulation violations.  Defendant argued that the court “should dismiss the FRSA claim to the extent that Hand alleges for the first time in Count 1 that CSXT retaliated against him for reporting safety hazards and railroad safety regulation violations” Slip op. at 12.  The court agreed and found that the subclaims “fail as a matter of law. See Foster v. BNSF Railroad Co., 866 F.3d 962, 967 (8th Cir. 2017) (dismissing subclaims not related to the claims raised in the administrative complaint); see also Gibbs v. Norfolk S. Ry. Co., No. 3:14-CV-587-DJH-DW, 2018 WL 1542141, at *5 (W.D. Ky. Mar. 29, 2018) (considering only the subclaims based on adverse actions the plaintiff raised in the administrative complaint).”  Id.

CLEAR AND CONVINCING EVIDENCE DEFENSE; SUMMARY JUDGMENT GRANTED WHERE THE RECORD SHOWED THAT PLAINTIFF WAS DISCIPLINED FOR RULES VIOLATIONS RATHER THAN FOR REPORTING AN INJURY 

In Hand v. CSX Transp., No. 19-cv-941 (S.D. Ohio Mar. 15, 2021) (2021 U.S. Dist. LEXIS 47416), the court granted Defendant’s motion for partial summary judgment on Plaintiff’s FRSA whistleblower retaliation claim.   One of Defendant’s arguments was that Plaintiff was disciplined for rules violations and not for reporting his injury.  The court determined that Plaintiff could not prove that his protected activity contributed to Defendant’s decision to discipline him simply because Defendant investigated the incident surrounding the injury after Plaintiff reported his injury.  The court noted that the Sixth Circuit in Lemon rejected a chain-of-events causation.  The determined that although Plaintiff offered more than just a “chain-of-events” case, “ultimately the evidence does not show that the decision to discipline Hand for rules violations, as opposed to the decision to charge Hand with rules violations, was retaliatory.”  Slip op. at 15 (emphasis as in original).  The court reviewed the record, and concluded that “as a matter of law that CSXT has proven by clear and convincing evidence that it would have disciplined Hand for violating the Safe Way Rules even if he had not engaged in the protected behavior. Hand’s claim that CSXT violated the FRSA by retaliating against him for reporting an injury must be dismissed.”  Id. at 17.

Taylor v. Union Pac. R.R. Co., No. 18-1110 (M.D. La. Mar. 12, 2021) (2021 U.S. Dist. LEXIS 47301; 2021 WL 952410) (Ruling [on Defendant’s Motion for Summary Judgment])


PROTECTED ACTIVITY; COURT DENIES SUMMARY JUDGMENT BASED ON DEFENDANT’S CONTENTION THAT PLAINTIFF WAS MERELY DOING HIS JOB; “JOB-DUTIES EXCEPTION” IS NOT SUPPORTED BY FRSA’S TEXT

PROTECTED ACTIVITY; COURT DENIES SUMMARY JUDGMENT BASED ON DEFENDANT’S CONTENTION THAT TAKING TRACKS OUT OF SERVICE WAS NOT A REFUSAL; FACT ISSUE EXISTED ON WHETHER PLAINTIFF HAD BEEN DISCOURAGED OR IMPLICTLY ORDERED NOT TO TAKE TRACKS OF OUT OF SERVICE

PROTECTED ACTIVITY; COURT DENIES SUMMARY JUDGMENT BASED ON DEFENDANT’S CONTENTION THAT PLAINTIFF HAD NOT SHOWN THAT FAILURE TO TAKE TRACKS OUT OF SERVICE PRESENTED IMMINENT DANGER OF DEATH OR SERIOUS INJURY; PLAINTIFF’S TESTIMONY ON THIS POINT WAS A QUESTION FOR THE JURY

In Taylor v. Union Pac. R.R. Co., No. 18-1110 (M.D. La. Mar. 12, 2021) (2021 U.S. Dist. LEXIS 47301), the court denied Defendant’s motion for summary judgment on Plaintiff’s FRSA retaliation complaint.  One of Defendant’s arguments was that Plaintiff had not engaged in protected activity.  It was undisputed that Plaintiff had taken a switch track out of service and had issued a slow order. Defendant made several purely legal arguments as to why these are not “protected activity” under the FRSA.  Defendant first argued that the actions Plaintiff took were merely of his job duties as Manager of Track Maintenance.  The court, however, agreed with Plaintiff that, when courts apply a “job duties exception,” it is based on the language of the underlying statute, and that the FRSA does not contain such an exception.  The court cited 9th Circuit and Minnesota district court precedent which had rejected the “job duties exception” in the FRSA context.  

Defendant next argued that Plaintiff could not show protected activity because he had not refused to follow an implicit or explicit order.  The court, however, found that Plaintiff had brought forth sufficient competent evidence to show a fact issue on whether he had been discouraged or “implicitly ordered” on occasions not to take tracks out of service.

Defendant next argued that Plaintiff could not show protected activity because he had not shown that conditions presented an imminent danger of death or serious injury if the tracks were not taken out of service.  The court, however, found that Plaintiff’s deposition testimony showed that he had learned through his experience that derailments could easily lead to the death of railroad employees or the spilling of hazardous material.  The court determined that the credibility of such testimony is a question for the jury.

EMPLOYER’S KNOWLEDGE OF PROTECTED ACTIVITY; FOURTH CIRCUIT’S DECISION IN CONRAD DOES NOT REQUIRE PROOF OF DIRECT KNOWLEDGE BY THE DECISION MAKER; CONSTRUCTIVE KNOWLEDGE MAY BE SUFFICIENT

EMPLOYER’S KNOWLEDGE OF PROTECTED ACTIVITY;COURT REJECTS DEFENDANT’S ARGUMENT FOR SUMMARY JUDGMENT THAT IT WAS SO OBVIOUS THAT PLAINTIFF’S PROTECTED ACTIVITY WAS TAKEN IN BAD FAITH THAT EMPLOYER COULD NOT BE IMPUTED WITH KNOWLEDGE OF PROTECTED ACTIVITY 

In Taylor v. Union Pac. R.R. Co., No. 18-1110 (M.D. La. Mar. 12, 2021) (2021 U.S. Dist. LEXIS 47301), the court denied Defendant’s motion for summary judgment on Plaintiff’s FRSA retaliation complaint.   Citing Conrad v. CSX Transp., Inc., 824 F.3d 103 (4th Cir. 2016), one of Defendant’s contentions was that Plaintiff must do more than merely demonstrate that the employer, as an entity, was aware of the protected activity, and that, in the instant case the sole decision maker on Plaintiff’s termination from employment denied having knowledge of the protected activity.  The court was not persuaded, finding that the Conrad court did not require direct knowledge of the decision maker, and had only ruled that “[t]he ‘knowledge’ relevant for a retaliation claim under the FRSA must be tied to the decision-maker involved in the unfavorable personnel action.” Slip op. at 13, quoting Conrad, supra, 824 F.3d at 108 (emphasis added).  Here, there were indications in the record of constructive knowledge by the decision-maker in the form of an e-mail on which he had been copied.

The court was not persuaded by Defendant’s additional argument, which was essentially that Plaintiff’s bad faith was so obvious that Defendant could not have been aware of any good-faith protected activity.   The court noted that under relevant legal standards, Plaintiff’s actions could be viewed as taken in good faith -- and that the FRSA regulations only require that the employer “knew or suspected that the employee engaged in the protected activity,” – and not that it knew the protected activity was undertaken in good faith.

CONTRIBUTORY FACTOR CAUSATION; COURT REJECTS SUMMARY JUDGMENT ARGUMENT THAT, IT DEFIED COMMON SENSE FOR DEFENDANT TO HAVE FIRED PLAINTIFF MERELY FOR REMOVING TRACKS FROM SERVICE AS OPPOSED TO PLAINTIFF’S INSUBORDINATION; COURT DISTINGUISHES BRISBOIS BASED ON THE FACTS

In Taylor v. Union Pac. R.R. Co., No. 18-1110 (M.D. La. Mar. 12, 2021) (2021 U.S. Dist. LEXIS 47301), the court denied Defendant’s motion for summary judgment on Plaintiff’s FRSA retaliation complaint.   One of Defendant’s arguments was that Plaintiff could not show causation because it was implausible for Defendant to retaliate against Plaintiff for removing tracks from service “because that act is ‘small potatoes’ in light of the ‘hundreds, if not thousands, of slow orders and track removals a year.’”  Slip op. at 18 (citations to the record omitted).  The court found that this appeal to common sense did not prevent Plaintiff from meeting his burden.  The court also found that Brisbois v. Soo Line Railroad Co., No. 15-CV-0570, 2016 WL 7423387, at *5 (D. Minn. Dec. 22, 2016) -- in which the court granted summary judgment where that plaintiff had been argumentative and defied a supervisor’s instructions and that plaintiff’s safety violation report was “small potatoes”  -- was distinguishable because in the instant case Defendant would have to have to spend millions of dollars to fix the safety problem, whereas in Brisbois, all that was required was an instruction to employees to stay off the track.  The cases were also distinguishable because in Brisbois, the plaintiff had been previously formally disciplined for being argumentative and defying instructions, whereas Plaintiff in the instant case had recently received an overall “Good Performer” rating, and had received positive comments aside from one paragraph addressing his attitude.

AFFIRMATIVE DEFENSE; CONTENTION THAT PLAINTIFF HAD BEEN INSUBORDINATE, QUARRELSOME AND DISCOURTEOUS; SUMMARY JUDGMENT DENIED WHERE RECORD SHOWED ISSUES OF FACT; FACT THAT DEFENDANT HAD A POLICY ADDRESSING INSUBORDINATION AND HAD FOLLOW    ED THE PERFORMANCE IMPROVEMENT PLAN PROTOCOL DID NOT ENTITLE DEFENDANT TO SUMMARY JUDGMENT

In Taylor v. Union Pac. R.R. Co., No. 18-1110 (M.D. La. Mar. 12, 2021) (2021 U.S. Dist. LEXIS 47301), the court denied Defendant’s motion for summary judgment on Plaintiff’s FRSA retaliation complaint.   One of Defendant’s arguments was that it would have fired Plaintiff regardless of the protected activity based on his insubordinate, quarrelsome, and discourteous conduct.  The court, however, noted “that these adjectives are inherently subjective” and “would likely require credibility determinations that are, of course, prohibited at the summary judgment stage.”  Slip op. at 21.  The court reviewed the record and found questions of fact for the jury.

The court also found that although Defendant demonstrated that it had a policy addressing insubordination, and that it had followed the appropriate procedure by providing Plaintiff with a Performance Improvement Plan, summary judgment was inappropriate because there were genuine issues of material fact regarding Plaintiff’s conduct.

Shearrer v. Norfolk S. Ry. Co., 19-cv-01062 (N.D. Ala. Mar. 9, 2021) (2021 U.S. Dist. LEXIS 43389; 2021 WL 871356) (Memorandum Opinion)

USDOL Case: ALJ No. 2018-FRS-00141

ADVERSE EMPLOYMENT ACTION; SUPERVISORS GOING THROUGH PLAINTIFF’S MEDICATIONS, THOUGH AN INVASION OF PRIVACY, FOUND NOT TO BE A MATERIAL ADVERSE EMPLOYMENT ACTION; SIMILARLY, REMOVAL OF CHAIRS, TOOLS AND A TV FROM A ROOM WERE NOT MATERIAL ADVERSE EMPLOYMENT ACTIONS

In Shearrer v. Norfolk S. Ry. Co., 19-cv-01062 (N.D. Ala. Mar. 9, 2021) (2021 U.S. Dist. LEXIS 43389; 2021 WL 871356), Plaintiff alleged that Defendant retaliated against him in violation of the FRSA for reporting safety concerns, and filing an OSHA complaint.  Plaintiff contended that Defendant engaged in adverse employment action when it searched his personal belongings, placed him on a medical hold, denied him a position, and removed chairs, tools, and a TV from an office.  The Magistrate Judge granted summary judgment in favor of Defendant.

Citing Jacobs v. U.S. Dep’t of Labor, 806 F. App’x 832, 835 (11th Cir. 2020), the Magistrate Judge found that under the FRSA retaliation provision, principles of what constitutes “adverse employment action” in Title VII retaliation claims:  an adverse employment action is one that produces an injury or harm and would dissuade a reasonable worker from making or supporting a charge of discrimination.  The Magistrate Judge found that “supervisors going through an employee’s medication, though an invasion of privacy, fails to meet the standard of a material adverse employment action. See Johnson v. Miami-Dade Cty., 948 F.3d 1318, 1326 (11th Cir. 2020) (receiving negative monthly evaluations does not constitute a material adverse employment action).  Removing better chairs, helpful tools, and a TV is even less so a material adverse employment action.”  Slip op. at 10-11.  The Magistrate Judge, however, found that the evidence supported a reasonable inference that Plaintiff’s loss of five days of pay while on a medical hold and being denied a position would dissuade an employee from reporting safety concerns.

CONTRIBUTORY FACTOR CAUSATION; SUMMARY JUDGMENT GRANTED WHERE THERE WAS NO EVIDENCE THAT HEALTH SERVICES DEPARTMENT EMPLOYEE WHO PUT PLAINTIFF ON A MEDICAL HOLD WAS AWARE OF PLAINTIFF’S PROTECTED ACTIVITY, OR THAT ANIMUS CONTRIBUTED TO A SUPERVISOR’S DECISION TO WRITE A MEMORANDUM ABOUT FINDING PLAINTIFF ASLEEP AT THE WORKSITE

CONTRIBUTORY FACTOR CAUSATION; SUMMARY JUDGMENT GRANTED WHERE THE TEMPORAL PROXIMITY BETWEEN PLAINTIFF’S FILING OF AN FRSA COMPLAINT WITH OSHA AND HIS NOT BEING SELECTED FOR A POSITION WAS TOO DISTANT TO SUPPORT AN INFERENCE OF CAUSATION; FACT THAT OSHA INVESTIGATION WAS STILL OPEN WAS NOT, STANDING ALONE, SUFFICIENT TO SHOW A CAUSAL LINK; PLAINTIFF’S ASSERTION THAT HE WAS SET UP TO FAIL A TEST FOR THE NEW POSITION BY BEING ASSURED IT WAS NOT NECESSARY TO STUDY FOR THE TEST WAS INADEQUATE WHERE THERE WAS NO EVIDENCE TO CONNECT SUCH AN UNFAIR ACT TO PROTECTED ACTIVITY

In Shearrer v. Norfolk S. Ry. Co., 19-cv-01062 (N.D. Ala. Mar. 9, 2021) (2021 U.S. Dist. LEXIS 43389; 2021 WL 871356), Plaintiff alleged that Defendant retaliated against him in violation of the FRSA for reporting safety concerns, and filing an OSHA complaint.  The Magistrate Judge granted Defendant’s motion for summary judgment on the question of whether FRSA protected activity was a contributing factor to Plaintiff’s loss of pay while on a medical hold and being denied a position.  The only employee involved in the decision to put Plaintiff on a medical hold was a Health Services Department employee.  There was no evidence that she knew about Plaintiff’s months’ earlier safety report to his supervisors.  She based her decision on a supervisor’s memorandum of finding Plaintiff asleep; that memorandum did not mention the safety report or any other protected activity.  Moreover, Plaintiff’s own doctor confirmed the reason for the medical hold – that Plaintiff was being treating Plaintiff for circadian shiftwork disorder.

The Magistrate Judge noted Plaintiff’s “cat’s paw” argument.  The Magistrate Judge noted that traditionally, to prevail on a cat’s paw theory, a plaintiff would have to prove that the supervisor’s animus was a causal factor in the decision.  Under the FRSA, however, Plaintiff in the instant case would not have to show that the Health Services Department employee was a conduit for a supervisor’s animus, but only that Plaintiff’s protected activity played any part in the supervisor’s decision to write the memorandum on which the employee based her decision.  The Magistrate Judge found that Plaintiff failed even this lighter burden of proof.  The Magistrate Judge reviewed the facts of the case, and found that the temporal proximity of the protected activity to the adverse action was too distant to support an inference of causation.

Plaintiff argued that his filing of an OSHA complaint contributed to Defendant’s not selecting him for a position to which he had applied.  The Magistrate Judge found that the six and a half months between the two events was too distant to raise a genuine dispute of causation.  Although Plaintiff pointed out that the OSHA investigation was still pending at the time, the Magistrate Judge determined:  “The filing of an OSHA complaint and participating in an OSHA investigation into railroad safety is protected activity; the existence of an OSHA investigation is not. See 49 U.S.C. § 20109(a)-(b).”  Slip op. at 15.  Plaintiff argued that Defendant set him up to fail by ensuring that he would not study for a test required for the position he was applying for.  The Magistrate Judge, assuming this was true for purposes of summary judgment, was not persuaded.  The Magistrate Judge stated:  “But, even if this inference is true, Shearrer’s burden is not to prove that his employer took an egregiously unfair act against him; his burden is to prove that his protected activity was a contributing factor to that egregious act. Again, no evidence connects the dots between Shearrer’s August 2016 OSHA complaint and the May 2017 WGL position, so no reasonable jury could find that his protected activity contributed in any way to his failure to receive the WGL position.”  Id. at 15-16 (emphasis as in original) (footnote omitted).  In a footnote, the Magistrate Judge emphasized that Plaintiff was not being held to Title VII or other non-FRSA standard of proof for causation, but that in this case, there was a complete lack of evidence of causation, and Plaintiff failed to meet even the light burden of proof found in FRSA.


Fresquez v. BNSF Ry., No. 17-cv-0844 (D. Colo. Mar. 8, 2021) (Order Denying Defendant BNSF Railway's Rule 50(B) Renewed Motion for Judgment as a Matter of Law and Motion for New Trial)

USDOL Case:  ALJ No. 2017-FRS-00018

POST-TRIAL MOTION FOR JUDGMENT AS A MATTER OF LAW; IN REVIEWING A RULE 50(b) MOTION, THE COURT MUST DRAW ALL REASONABLE INFERENCES IN FAVOR OF THE NONMOVING PARTY

In Fresquez v. BNSF Ry., No. 17-cv-0844 (D. Colo. Mar. 8, 2021), the court denied BNSF's post-trial Rule 50(b) motion for judgment as a matter of law on protected activity, the decision makers' purported lack of knowledge of the protected activity, and whether there was clear and convincing evidence that BNSF would have fired Fresquez for insubordination in the absence of the protected activity.  In each instance, the court, after reviewing the evidence and drawing all inferences in Fresquez's favor, found that the evidence was insufficient to overturn the jury's conclusions.

REMITTITUR; AWARD OF $800,000 FOR EMOTIONAL DISTRESS NEED NOT BE SUPPORTED BY GRAPHIC OR HIGHLY DESCRIPTIVE TESTIMONY

In Fresquez v. BNSF Ry., No. 17-cv-0844 (D. Colo. Mar. 8, 2021), the court denied BNSF's motion for remittitur based on the argument that the jury's award of $800,000 as compensatory damages for emotional distress was not supported by Fresquez's testimony, and BNSF’s speculation that the jury's award appeared to be based on improper arguments of counsel and intent to punish.  The court was not persuaded.  The court recognized that while "Fresquez did not describe his emotional distress in the most graphic or descriptive terms, he clearly described that the stress from his termination had affected him in significant ways."  Slip op. at 13.  

PUNITIVE DAMAGES MAY BE SUPPORTED BY TESTIMONY THAT DEFENDANT HAD A CULTURE THAT DISREGARDS RAILROAD SAFETY RULES AND EMPLOYEE RIGHTS

In Fresquez v. BNSF Ry., No. 17-cv-0844 (D. Colo. Mar. 8, 2021), the court denied BNSF's argument that that the jury’s award of $250,000 in punitive damages was inappropriate because, according to BNSF, Fresquez’s proof of a FRSA  violation was scant, BNSF’s conduct did not rise to the level of a reckless or callous disregard for Fresquez's rights, and BNSF made good faith efforts to comply with the FRSA and has rules and process to encourage reporting of misconduct and to prevent discrimination or retaliation for such reporting.  The court was not persuaded, noting that the jury had "heard testimony that BNSF has a culture that disregards railroad safety rules and employee rights."  Slip op. at 15.
 

Soo Line R.R., Inc. v. Admin. Review Bd., USDOL, 990 F.3d 596 (8th Cir. Mar. 4, 2021) (No. 19-1739) (2021 U.S. App. LEXIS 6286; 2021 WL 821401) (Dismissal of Petition for Review)

Related cases:

U.S. District Court:  Henin v. Soo Line R.R., No. 19-336 (D. Minn. Aug. 9, 2019) (2019 U.S. Dist. LEXIS 134109; 2019 WL 3759804 

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

TIMELINESS OF PETITION FOR ARB REVIEW; ARB DID NOT ABUSE ITS DISCRETION IN  UTILIZING ITS EQUITABLE POWERS TO APPLY FRAP 26(c) WHEN RECONSIDERING ITS EARLIER DISMISSAL OF COMPLAINANT’S PETITION FOR REVIEW OF THE ALJ’S DECISION WHERE IT HAD TAKEN 11 DAYS FOR COMPLAINANT TO RECEIVE THE ALJ’S DECISION 

In Soo Line R.R., Inc. v. Admin. Review Bd., USDOL, No. 19-1739 (8th Cir. Mar. 4, 2021) (2021 U.S. (App. LEXIS 6286), the ALJ granted summary decision in favor of the Respondent (Petitioner Soo Line Railroad, Inc.) in a Decision and Order dated January 11, 2019.  Complainant (Henin) received the Decision and Order on January 22, 2019.  Complainant had filed a petition for review with the ARB on January 18, 2019.  Respondent moved to dismiss the petition as untimely filed, and the ARB granted the motion.  Complainant filed a motion for reconsideration explaining the circumstances.  The ARB granted reconsideration and reinstated the administrative appeal as timely; but immediately dismissed the administrative complaint because Complainant had filed a complaint in federal district court on February 11, 2019 pursuant to 49 U.S.C. § 20109(d)(3) and 29 C.F.R. § 1982.114(a).  The ARB noted that Complainant’s petition was untimely pursuant to 29 C.F.R. § 1982.110(a), which required filing of the petition within 14 days of the date of the decision of the ALJ, but applied Rule 26(c) of the Federal Rules of Appellate Procedure to add three days to the filing deadline for Complainant’s petition.

Respondent appealed the ARB’s reopening of the administrative claim to the Eighth Circuit.  The district court action was stayed pending the Eighth Circuit appeal.  The Court of Appeals noted that it appeared that the reason for Respondent’s appeal was that the ARB’s reinstatement of the administrative appeal as timely would permit Complainant to proceed de novo before the district court -- but -- if the administrative appeal was found not to be timely, the ALJ’s Decision and order would arguably become of the final order of the Secretary of Labor and not subject to judicial review.

The court first addressed whether it was appropriate for the ARB to grant reconsideration, noting that the ARB has applied a four-prong test – two of which were applicable to the instant case – “material differences in fact or law” – and “failure to consider material facts.”  The court noted that for some unexplained reason – the record contained a copy of the ALJ’s Decision and Order indicating that it was issued on January 15, 2019.  In addition, Complainant alerted the ARB that it had taken 11 days for the ALJ’s Decision and Order to reach counsel by regular mail.  The court thus found that both prongs were satisfied, making reconsideration by the ARB appropriate.

The railroad also contended that the ARB improperly relied on FRAP 26(c) to find Complainant’s petition to be timely.   The court noted that the FRAP only govern procedure in the U.S. Courts of Appeals -- but also noted that the filing period for a petition for review by the ARB is not jurisdictional and is subject to equitable medication.  The court found that, here, the ARB “appropriately utilized its equitable powers to control its own docket and to recognize the record’s incongruities and the 11-day delay in service. Therefore, we find that the Board’s reconsideration, reinstatement, and dismissal of Henin’s petition was not ‘arbitrary, capricious, an abuse of discretion, or otherwise not in accord with law.’ BNSF Ry. Co., 867 F.3d at 945 (citation omitted).”  Slip op. at 7.
 

Johnson v. NJ Transit Rail Operations, Inc., No. 17-2309 (E.D. Pa. Jan. 8, 2021) (2021 U.S. Dist. LEXIS 3339) (Memorandum)

ATTORNEY’S FEES; WHERE SEPARATE SETTLEMENTS WERE REACHED WITH TWO PLAINTIFFS REPRESENTED BY THE SAME LAW FIRM, AND ONE OF THE SETTLEMENTS RESOLVED ATTORNEY’S FEES AND EXPENSES BUT THE OTHER DID NOT, THE COURT WAS NOT PERSUADED BY DEFENDANT’S “DOUBLE DIPPING” CONTENTION AS TO SECOND PLAINTIFF’S FEES AND EXPENSES DEMAND, WHERE  THAT PLAINTIFF HAD ACHIEVED A MUCH MORE SIGNIFICANT SETTLEMENT AMOUNT, AND WHERE DEFENDANT DID NOT PRESENT EVIDENCE TO SUPPORT ITS CONTENTION THAT THE FEES SHOULD BE CUT IN HALF AND THE ATTORNEY PROVIDED A FULL ACCOUNTING OF HIS WORK ON THE TWO CLAIMS

ATTORNEY’S FEES FOR LEGISLATIVE WORK AND INTERVENTION IN OTHER CASES INVOLVING ELEVENTH AMENDMENT IMMUNITY, RESULTING IN A NEW STATE LAW PROHIBITING THE NEW JERSEY TRANSIT RAIL OPERATIONS, INC. FROM RAISING SUCH IMMUNITY AS A DEFENSE, WAS FOUND TO BE COMPENSABLE WHERE IT PERMITTED PLAINTIFF’S CASE TO PROCEED

In Johnson v. NJ Transit Rail Operations, Inc., No. 17-2309 (E.D. Pa. Jan. 8, 2021) (2021 U.S. Dist. LEXIS 3339), Plaintiffs Jenkins and Johnson filed actions against Defendant alleging FRSA violations under 49 U.S.C. § 20109.   Both cases were settled.  The Jenkins settlement resolved the question of attorney’s fees and expenses, but the Johnson settlement did not.  Accordingly, Johnson filed with the court a petition for attorney’s fees and expenses.  Defendant filed objections, all of which the court denied.  The court’s discussion focused on two of Defendant’s objections:  whether Johnson’s fee petition for his law firm, which also represented Jenkins, included double dipping, and whether Johnson’s counsel’s work in effecting a legislative change to prohibit Defendant from asserting Eleventh Amendment immunity was compensable in the instant fee petition.

Double Dipping

Jenkins and Johnson were union officers, and brought their FRSA cases using the same law firm.  Jenkins raised one claim under the FRSA, while Johnson raised two claims.  Jenkins’ claim, and one of Johnson’s claims, arose out of the same underlying facts and involved similar allegations of retaliation.  Defendant argued that Johnson’s demand for fees included work applicable to representation of Jenkins, and that the court should only award one-half of the attorney’s fee demand.  The court, however, noted that Defendant provided no evidence that the fees agreed upon for Jenkins were also intended to cover Johnson’s claims, and that Johnson provided a complete account of his counsel’s work on his two claims.  Defendant had merely provided a notation on every entry on counsel’s timesheet that involved Jenkins, and declared that Johnson’s fee should thus be cut in half.  The court found that such notations did not carry Defendant’s burden in challenging the reasonableness of the requested fee.

The court found that the existence of Jenkins's settlement did not bear on Johnson's fee petition.  The court also noted that Johnson's claims were much more extensive" than Jenkins's sole claim, and resulted in a much larger settlement amount.  The court observed that the degree of success obtained is the most critical factor determining fee petitions, noting that "[w]here a plaintiff has obtained excellent results, his attorney should recover a fully compensatory fee." Hensley v. Eckerhart, 461 U.S. 424, 435 (1983). The court found it clear that Johnson had obtained excellent results in the instant case.

Eleventh Amendment Work

Defendant, New Jersey Transit Rail Operations, Inc., contended that Johnson should not recover fees for counsel’s legislative work and intervention in Eleventh Amendment cases.  Defendant had raised Eleventh Amendment immunity as a defense, and one of Johnson’s counsel’s responsive strategies was a successful effort to effect the New Jersey Transit Employee Protection Act, which prohibits the defense of sovereign immunity in cases involving NJ Transit Rail Operations, Inc.  This legislative effort allowed Johnson’s case to move forward, and the court determined that fees were recoverable for this work:

     Counsel may petition for fees for work that is “useful and the type ordinarily necessary to secure the final results obtained.” Pennsylvania v. Delaware Valley Citizens’ Council for Clean Air, 478 U.S. 546, 560-61 (1986). In Delaware Valley, the Supreme Court determined that “useful” work includes hours that “did not occur in the context of traditional judicial litigation.”  Id. (holding counsel could include time spent on regulatory work in fee petition pursuant to the Clean Air Act). Mr. Johnson has articulated the importance of counsel’s legislative work and intervention in Eleventh Amendment cases to his lawsuit. Without this work, Mr. Johnson’s lawsuit might not have gone forward. Therefore, Mr. Johnson’s counsel is entitled to recover fees for the Eleventh Amendment work.

Slip op. at 5.

Union Pacific Railroad Co. v. Brotherhood of Maintenance of Way Employes, No. 20-cv-516 (D. Neb. Jan. 7, 2021) (Preliminary Injunction)

FRSA ANTI-RETALIATION PROVISION DOES NOT PROHIBIT INJUNCTIVE RELIEF PURSUANT TO THE RAILWAY LABOR ACT AND AN EXCEPTION TO THE NORRIS-LAGUARDIA ACT TO PREVENT A THREATENED LABOR STOPPAGE RELATING TO THE ADEQUACY OF A RAILROAD’S COVID-19 RESPONSE

ASSUMING ARGUENDO THAT THE FRSA ANTI-RETALIATION PROVISION APPLIES TO UNION WORK STOPPAGES, COVID-19 FOUND NOT TO BE A WORK-SPECIFIC HAZARDOUS SAFETY CONDITION UNDER § 20109(b)(2), NOR AN IMMINENT DANGER AS PERCEIVED BY A REASONABLE PERSON UNDER THE FACTS OF THE CASE

In Union Pacific Railroad Co. v. Brotherhood of Maintenance of Way Employes, No. 20-cv-516 (D. Neb. Jan. 7, 2021), Union Pacific was granted a preliminary injunction over the union’s threat to strike over the adequacy of the railroad’s COVID-19 response.  

One of the union’s arguments was that injunctive relief  under the Railway Labor Act and an exception to the Norris-LaGuardia Act was prohibited by the anti-retaliation provision of the FRSA at 49 U.S.C. § 20109.  The union argued that the FRSA “protects its proposed strike because COVID-19 presents a hazardous condition which Union Pacific has failed to adequately address” and that “the FRSA protects the situation of a threatened mass labor strike like that in the present case.” Slip op. at 20.  The court disagreed, finding that the FRSA “is an anti-retaliation statute applicable when employees are unable to work due to hazards on the job” but that “[i]ts protections do not mention labor unions or mass labor strikes.”  Id. at 20-21.

The court further found, that even if the FRSA provision applies to threatened labor stoppages, the statutory requirements were not satisfied under the facts of the case.

First, the COVID-19 pandemic does not present a “hazardous safety or security condition related to the performance of the employee’s duties.” 49 U.S.C. § 20109(b)(2). The pandemic is not a work-specific safety concern for the BMWED employees under the FRSA; that is, it is not a hazardous condition “related to the performance” of BMWED employees’ duties. 49 U.S.C. § 20109(b)(2) (emphasis added). Instead, the pandemic is, unfortunately, a worldwide and widespread problem confronting not just the BMWED employees, but individuals of all walks of life. Thus, it does not constitute a condition “related to the performance of the employee’s duties” for purposes of the FRSA. See, e.g., Stokes v. Se. Pennsylvania Transportation Auth., 657 F. App'x 79, 82 (3d Cir. 2016) (finding the FRSA did not apply where “the safety risk that Stokes identified was unconnected to railroad safety, and thus her refusal to appear due to a non-work-related risk to her was not covered by the FRSA.”); Ziparo v. CSX Transportation, Inc., 443 F. Supp. 3d 276, 297 (N.D.N.Y. 2020) (“‘Hazardous safety or security conditions’ have generally been found to be physical conditions that are within the control of the rail carrier employer; circumstances outside of the carrier’s control and non-work related conditions are not included.”).

     BMWED cites Kurec v. CSX Transportation, Inc., No. 518CV0670LEKTWD, 2020 WL 6484056 (N.D.N.Y. Nov. 4, 2020) for the proposition that the FRSA’s plain language does not require the hazardous safety or security condition to be under the railroad’s control. . . .  In Kurec, the railroad employee, an engineer, refused to report to work when he was intoxicated. 2020 WL 6484056, at *6. Thus, his altered state was one “related to the performance” of his job. In contrast, COVID-19 has no unique impact on BMWED employees’ job performance and thus is neither under Union Pacific’s control nor “related to the performance of the employee’s duties.” 49 U.S.C. § 20109(b)(2). Furthermore, the Kurec court cited the Stokes decision favorably for the proposition that a claim under subsection (b)(1)(B) “requires the hazardous condition to be ‘related to the performance of the employee’s duties.’” Kurec, 2020 WL at 12, n.15 (quoting 49 U.S.C. §§ 20109(b)(1)(B)). 

     Secondly, a reasonable individual under the circumstances would not conclude that there is “an imminent danger of death or serious injury” presented by the current situation. 49 U.S.C. § 20109(b)(2). First, Union Pacific has implemented certain safety measures for the protection of its workers starting in the early days of the pandemic in March 2020. These measures included complying with CDC guidance, . . . voluntarily providing fourteen days’ paid leave for those employees directed to quarantine for a work-related exposure, instituting policies requiring social distancing and face coverings, regular cleaning of equipment, and providing hand sanitizer and wipes to employees,. . . . The evidence also shows the parties have been in regular communication regarding evolving COVID-19 protocols since March 2020. . . .  BMWED claims Union Pacific’s response has been inadequate and that the recent increase in COVID-19 cases combined with the mutation of the virus into a more transmissible strain make the safety concern urgent. . . . In light of Union Pacific’s already-implemented safety measures, on-going dialogue between the parties, and continually-evolving safety procedures, the Court finds there is no “imminent danger of death or serious injury” as defined by 49 U.S.C. § 20109(b)(2). 

     Lastly, Union Pacific’s COVID-19 response itself does not constitute a “hazardous safety or security condition” as BMWED argues. While BMWED takes issue with certain aspects of Union Pacific’s COVID-19 protocol, it does not dispute that Union Pacific has, in fact, implemented numerous safety measures, including some requested by BMWED.  . . . Furthermore, witnesses testified that Union Pacific has continued to improve its response to the pandemic, including securing higher-quality masks, locating hand sanitizer when it was in short supply, and updating social-distancing requirements as CDC guidance has evolved. BMWED seeks additional safety precautions that are either of marginal benefit because of the measures already in place or, as in the case of on-site COVID-19 testing, unworkable. Furthermore, as set forth above, BMWED’s primary demands are related to pay and leave time, not measures relating to safety and health. The differences illustrated by the evidence presented over the level of protections needed and the semantics of implementing protections and paying workers during an unprecedented health situation do not rise to the level of “hazardous” contemplated by the FRSA. 

     Accordingly, the Court finds the FRSA does not apply to the dispute at hand. Rather, the RLA governs and, as set forth above, supports the issuance of the requested injunctive relief.

Id. at 21-24 (emphasis as in original) (footnotes omitted) (citations to court filings omitted).

 

National Transit Systems Security Act

Beall v. S. Fla. Reg'l Transp. Auth., No. 16-cv-24050 (D.C. Fla. Sept. 1, 2021) (2021 U.S. Dist. LEXIS 165652; 2021 WL 3912652) (Order)

DOL Case:  ALJ No. 2016-NTS-00006

CONTRIBUTORY FACTOR CAUSATION; SUMMARY JUDGMENT GRANTED IN FAVOR OF PUBLIC AGENCY WHICH HAD CONTRACTED WITH PLAINTIFF’S EMPLOYER TO PROVIDE COMMUTER RAIL TRANSPORTATION; ALTHOUGH THE PUBLIC AGENCY HAD CONTINUED A BAR IMPOSED BY CSX ON PLAINTIFF’S ACCESS TO THE COMMUTER TRACKS AFTER HAVING GAINED THE AUTHORITY TO LIFT THE BAR, ITS MAINTAINANCE OF THE BAR UNTIL IT LEARNED OF EXONERATING INFORMATION, COULD NOT BE LINKED TO PLAINTIFF’S PROTECTED ACTIVITY; THE RECORD DID NOT SUPPORT ANY RETALIATORY ANIMUS BY THE PUBLIC AGENCY, THERE WAS A LACK OF TEMPORAL PROXIMITY, AND PLAINTIFF DID NOT PRESENT EVIDENCE TO SUPPORT CONSTRUCTIVE KNOWLEDGE OR A CAT’S PAW THEORY 

In Beall v. S. Fla. Reg'l Transp. Auth., No. 16-cv-24050 (D.C. Fla. Sept. 1, 2021) (2021 U.S. Dist. LEXIS 165652; 2021 WL 3912652), the court granted Respondents South Florida Regional Transportation Authority’s (“SFRTA”) and Tri-Rail’s motion for summary judgment as to Plaintiff’s retaliation claim under the National Transit Systems Security Act (“NTSSA”), 6 U.S.C. § 1142.  Plaintiff was a locomotive engineer for Respondent Veolia Transportation Service, Inc. (“Veolia”), which operated a rail service under contract to Respondent SFRTA, which was a public agency authorized to provide commuter rail transportation.  That rail service was Tri-Rail.

Between 2008 and 2012, Plaintiff had repeatedly reported safety concerns to Veolia regarding the visibility of warning signs along the rail line.  Plaintiff raised these concerns during town hall meetings in 2009 and 2010, but the SFRTA officials who attended did not recall hearing Plaintiff’s statements about the warning signs.  Later, during a test conducted by Veolia consisting of placing a warning sign next to the tracks, Plaintiff failed to slow down or respond.  Veolia investigated, and revoked Plaintiff’s locomotive engineering certificate.  CSX Transportation (CSX), which at the time had the authority to bar individuals from working on trains operating on the commuter tracks, barred Plaintiff from accessing the tracks as the result of Veolia’s determination.  Plaintiff challenged the revocation through the Federal Railroad Administration (“FRA”) and his union.  The FRA found that the test was improper and the certificate should not have been revoked -- but that retaliation was not a factor.  The union challenge went to arbitration, and after extended litigation, the arbitrator’s determination that Plaintiff’s termination was excessive was affirmed by the Eleventh Circuit in 2017.  Veolia had refused to reinstate Plaintiff during the arbitration.  SFRTA was not a party, and did not participate in any of these proceedings.  In the interim, CSX gave up control of the tracks, and SFRTA gained the authority to lift Plaintiff’s bar.  In 2015, Veolia asked SFRTA whether it would continue the bar, informing SFRTA of the status of the arbitration, but not about the FRA’s decision.  SFRTA confirmed that it would not lift the bar.  In 2016, after learning more about the arbitration, the FRA decision, and a whistleblower action Plaintiff had filed with OSHA, SFRTA lifted the bar.  Veolia continued to refuse to reinstate Plaintiff as an engineer until shortly before its contract with SFRTA expired, and rehired Plaintiff as a station ambassador at his previous salary as a locomotive engineer.

In deciding SFRTA’s and Tri-Rail’s motion for summary judgment, the court focused on whether Plaintiff meet his initial burden of establishing a retaliation claim under the NTSSA against SFRTA and Tri-Rail for its decision to continue the CSX bar from March 2015 to November 2016.  The court found that Plaintiff failed to establish that his protected activity in 2009 and 2010 was contributing factor in SFRTA’s decision to continue the bar.  SFRTA had relied on information from Veolia in continuing the bar.  SFRTA’s Governing Board’s actions in 2016 upon learning more about the matter -- immediately seeking additional information from Veolia -- did not reasonably suggest retaliatory animus.  Even if SFRTA had not been diligent in seeking the FRA decision, Plaintiff had not connected such alleged inaction to his safety complaints.  The court noted the lack of temporal proximity between the protected activity and any alleged adverse action by SFRTA.  The court found no actual knowledge by SFRTA of the FRA decision until January 2016.  The court was not persuaded by Plaintiff’s argument that SRFTA had constructive knowledge of the FRA decision once it gained authority to lift the bar, finding such a conclusion too attenuated, and noting that Plaintiff presented no evidence showing that SFRTA knew about the FRA decision prior to January 2016 and ignored it in retaliation for Plaintiff’s protected activity.  Nor was the court persuaded by Plaintiff’s “cats-paw” theory that the decision to continue the bar had been influenced by two SRFTA officials who had attended the 2009-10 town hall meetings.  The court found that Plaintiff did not show that those officials had any animus toward him, or that they made any biased recommendations relied upon by the decision makers, or that SRFTA considered Plaintiff’s protected activity in deciding whether to maintain the bar.  The court thus found that Plaintiff failed to establish a prima facie claim of retaliation under the NTSAA on SRFTA’s decision to maintain the CSX bar.
 

Sarbanes-Oxley Act

Wutherich v. Rice Energy Inc., No. 20-2394 (3d Cir. Dec. 2, 2021) (not precedential) (2021 U.S. App. LEXIS 35595) (opinion)

PROTECTED ACTIVITY; PLAINTIFF DID NOT ENGAGE IN SOX PROTECTED ACTIVITY MERELY BECAUSE HE INSINUATED THAT USE OF A CERTAIN SERVICE PROVIDER HAD BEEN BASED ON FAVORTISM BECAUSE OF THE PROVIDER'S RELATONSHIP TO A COMPANY EXECUTIVE, WHERE PLAINTIFF DID NOT BELIEVE THAT USE OF THAT PROVIDER WAS ILLEGAL

In Wutherich v. Rice Energy Inc., No. 20-2394 (3d Cir. Dec. 2, 2021) (not precedential) (2021 U.S. App. LEXIS 35595), Wutherich gave a presentation to two of Defendant's executives about possible service providers.  During the presentation, Wutherich recommended against using one provider for certain, but not all services.  The company had previously used this provided, but Wutherich thought there were better providers.   Wutherich contended that he “insinuated” during the meeting that the company had used this provider in the past because of its relationship with one of the executives (Ajayi) to whom the presentation was being given.  Wutherich, however, did not tell the executives that it was illegal to use this provider. Nor did Wutherich believe that it was illegal to use the provider.  Nor did he tell anyone that he believed that Ajayi's relationship with the provider should be disclosed in a SEC filing.  

Later, Wutherich and Ajayi were fired the same day.  Ajayi was fired because the company learned that he had an undisclosed conflict of interest with another service provider.  Wutherich was fired for having an undisclosed consulting agreement with another company in violation of a condition in the company’s offer of employment.  Wutherich filed suit under several retaliation and discrimination laws, one of which was a SOX § 806 retaliation claim.  The district court dismissed one claim, and granted summary judgment against Wutherich on the SOX and other claims.

The Third Circuit noted that SOX protected activity requires the employee to have both a subjective and an objective belief that the conduct relates to an existing or prospective violation of certain federal laws.  Here, Wutherich could not claim the protected activity element of a prima facie case under SOX because he did not believe that the company's use of the previously used service provider violated federal law.
 

Kashif v. PNC Bank, N.A., 20-cv-01118 (E.D. Va. Nov. 29, 2021) (2021 U.S. Dist. LEXIS 229308) (Memorandum Opinion)

ADVERSE EMPLOYMENT ACTION; MERE PLACEMENT ON PAID ADMINISTRATIVE LEAVE DOES NOT CONSTITUTE ADVERSE EMPLOYMENT ACTION; PLAINTIFF’S SUPERVISOR’S SUBJECTIVE AND INFORMAL SUGGESTION TO PLAINTIFF THAT SHE WAS LIKELY TO BE FIRED AND SHOULD CONSIDER RESIGNING WAS INSUFFICIENT TO PREVENT SUMMARY JUDGMENT WHERE THE SUPERVISOR WAS NOT INVOLVED IN MAKING PERSONNEL DECISIONS ABOUT PLAINTIFF’S EMPLOYMENT, AND PLAINTIFF RESIGNED BEFORE RESPONDENT HAD TAKEN ANY ACTION BEYOND THE ADMINISTRATIVE LEAVE

ADVERSE EMPLOYMENT ACTION; DEFENDANT’S REJECTION OF PLAINTIFF’S ATTEMPTS TO RESCIND A RESIGNATION IS NOT ADVERSE EMPLOYMENT ACTION

CONTRIBUTORY FACTOR CAUSATION; SUMMARY JUDGMENT GRANTED WHERE PLAINTIFF’S ALLEGED PROTECTED ACTIVITY OCCURRED AFTER AN INVESTIGATION OF A CUSTOMER COMPLAINT INVOLVING PLAINTIFF HAD BEEN OPENED; PLAINTIFF’S THREATS TO HER SUPERVISOR TO ESCALATE HAD NOT BEEN CONVEYED THE INVESTIGATOR, THE SUPERVISOR HAD NO INFLUENCE OVER THE INVESTIGATION, AND THREATS TO ESCALATE WERE NOT PROTECTED ACTIVITY

In Kashif v. PNC Bank, N.A., 20-cv-01118 (E.D. Va. Nov. 29, 2021) (2021 U.S. Dist. LEXIS 229308), Plaintiff brought a SOX retaliation case alleging that, after she complained to her supervisor about the conduct of colleagues, Defendant placed her on administrative leave, and, after she resigned, refused to accept her subsequent attempt at rescission.  The court granted Defendant's motion for summary judgment based on the undisputed facts.

Defendant had opened an investigation of Plaintiff based on a customer compliant.   The investigation proceeded under an established procedure for investigating and remediating allegations of employee misconduct.  The investigation was assigned to an Employee Relations Investigator.  Later on the same day the investigation was opened, Plaintiff orally reported to her supervisor that she believed that a colleague had bundled a checking and savings account without the customer’s knowledge.  There was  no evidence, however, that this complaint was escalated to the Employee Relations Center, or to the investigator.  One than one month after the investigator opened her investigation of Plaintiff, Plaintiff advised her supervisor that her colleague had stolen $5 from a client’s deposited funds to force a cash deposit to balance.  The supervisor reported this complaint to the Employee Relations Center, and the matter was assigned to the same investigator who was assigned to the complaint against Plaintiff.  Plaintiff later reported to her supervisor that a second co-worker had improperly allowed a customer to submit a joint loan application.  There was no evidence, however, that the supervisor escalated this complaint to the Employee Relations Center or the investigator.

The investigator determined that the Plaintiff’s complaint about a co-worker stealing $5 from a cash deposit was unsubstantiated.    The investigator continued her investigation into the customer complaint about Plaintiff.  Plaintiff was placed on administrative leave on December 27, 2019 pending the final outcome of the investigation, after the investigator found that Plaintiff engaged in sales manipulation and falsification of customer information, and had been dishonest during the investigation.   Plaintiff believed that her options were to resign during the investigation, or to wait for it to conclude and be terminated.   On the early evening of December 27, 2019, Plaintiff submitted her resignation.  On January 1, 2020, Plaintiff attempted to rescind her resignation, but Defendant declined to accept the rescission.  Plaintiff filed her SOX complaint with OSHA, and later kicked-out the case to federal court.

Adverse Employment Action 

The court first found that Plaintiff failed to establish that she suffered an unfavorable personnel action.  Plaintiff contended that she suffered an unfavorable personnel action when Defendant placed her on administrative leave, with termination inevitably to follow.   The court acknowledged that placement on administrative leave, followed by a termination, removal from a position, or being required to accept a new position or resign, is an unfavorable personnel action.  However, the court stated that “being placed on paid administrative leave, without more, is not an unfavorable personnel action in this Court.” Slip op. at 9 (citations omitted).

Plaintiff testified that when she left to begin her period of administrative leave, her supervisor relayed her subjective belief that the bank would fire Plaintiff the following Monday, and that Plaintiff could resign.  The court found, however, under the facts of the case that the supervisor did not make personnel decisions regarding Plaintiff and had “informally encouraged plaintiff to resign without any imprimatur of official action.”  Id. at 10.  The court found it critical that this suggestion had occurred before Defendant removed Plaintiff from her position, terminated employment, or took any action that could be considered adverse.  The court stated:  “This evidence shows that while defendant did place plaintiff on administrative leave, defendant did not have the opportunity to do anything more.”  Id. (emphasis as in original).  The court reasoned that because placing an employee on administrative leave does not in itself constitute a material adverse action for purposes of a retaliation claim, Plaintiff failed to carry her burden on the “unfavorable personnel action” prong of a SOX prima facie case.  The court also determined that “[t]he fact that defendant rejected plaintiff’s later attempts to rescind her resignation does not change the outcome.”  Id. at 10-11 (citation omitted).

Causation

The court also found that Plaintiff failed to establish contributory factor causation.    Plaintiff contended that the investigator had closed her investigation four days after the investigation was opened.  The court, however, found that there was no connection to the closure event and the status of the investigator’s investigation.   Although Defendant’s Executive Client Relations department had closed its file on the customer complaint concerning Plaintiff after resolving the matter with the customer, the record showed that four minutes later, the Executive Client Relations department had referred the complaint to the Employee Relations Department for investigation into the employee conduct underlying the customer complaint. That investigation had remained open through the date of Plaintiff’s resignation.  Thus, Plaintiff’s complaints to her supervisor about the actions of co-workers, which were allegedly SOX protected internal complaints, occurred after the investigation of the customer complaint against Plaintiff had been opened.  The investigation had thus not been commenced in response to Plaintiff’s alleged protection activity.

Plaintiff argued that even if the investigation had not been commenced in response to SOX protected activity, it gained momentum and reached its conclusion, only after Plaintiff threatened to appeal the investigator’s findings regarding the alleged $5 theft.  The court, however, found that this threat had only been made to Plaintiff’s supervisor, and there was no evidence that the supervisor relayed the threat to the investigator or anyone else.  Moreover, there was no evidence that the supervisor had any influence over the investigation.  The court also found that Plaintiff’s threats of escalation were not themselves protected activity.  The court found that there was no factual basis for finding that Plaintiff’s complaints to her supervisor influenced the investigation of the customer complaint concerning Plaintiff or the decision to put Plaintiff on administrative leave.  There simply was not a causal connection.

The court further found that the record contained clear and convincing evidence that Defendant established that Plaintiff’s complaints were not the “but for” cause of its decision on place Plaintiff on paid administrative leave, Defendant having followed its established procedures for investigating and  remediating allegations of employee misconduct. 
 

Jordan v. USDOL, Nos. 20-3402, 20-3404 (8th Cir. Nov. 5, 2021) (per curiam) (unpublished) (2021 U.S. App. LEXIS 32956; 2021 WL 5149822) (Order dismissing petitions for review)

USDOL Case Nos.:  ARB No. 2018-0035, ALJ No. 2016-SOX-00042 and ARB No. 2019-0027, ALJ No. 2017-SOX-00055 (Jordan v. Dyncorp Intl, LLC)

The Eighth Circuit dismissed Petitioner’s petition for review of final orders of the ARB, finding that the ARB’s decisions were not arbitrary, capricious, an abuse of discretion, contrary to the law, or unsupported by substantial evidence in the record.
 

Thompson v. Tesla Motors, No. 21-cv-00238 (D. Nev. Nov. 3, 2021) (2021 U.S. Dist. LEXIS 212374)

DISTRICT COURT HAS THE DISCRETION TO STAY A SOX CASE PENDING RESOLUTION OF A RELATED STATE COURT ORDERED ARBITRATION

In Thompson v. Tesla Motors, No. 21-cv-00238 (D. Nev. Nov. 3, 2021) (2021 U.S. Dist. LEXIS 212374), Defendant, while conceding that a SOX claim is not arbitrable, moved for a stay of plaintiff's SOX whistleblower complaint pending completion of a state court ordered arbitration of a complaint filed by Plaintiff asserting several claims against the same Defendant.  

The court -- noting its discretion to control its docket and calendar -- granted the motion, finding that "The claims in the pending arbitration arise from the same facts and circumstances underlying this case and are thus closely related to the plaintiff's claim in this action. The arbitrator's conclusions may therefore be useful, if not dispositive, of issues in this action."  The court noted also noted that Plaintiff had not shown what prejudice would be caused by such a brief delay. 

Leckner v. General Dynamics Info. Tech., No. 21-70284 (9th Cir. Oct. 18, 2021) (unpublished) (2021 U.S. App. LEXIS 31143; 2021 WL 4843881)

USDOL Case Nos.: ARB No. 2020-0028, ALJ No. 2019-SOX-00028

The court found that the ARB properly affirmed the dismissal of Petitioner's SOX retaliation claim because he failed to raise a genuine dispute of material fact as to whether he engaged in protected activity.

The court also found that the ARB properly denied Petitioner's request to admit new evidence because he  failed to demonstrate that the evidence could not have been discovered with reasonable diligence before the record closed. See 29 C.F.R. § 18.90(b)(1).

Burris v. JPMorgan Chase & Co., No. 18-cv-03012 (D. Az. Oct. 7, 2021) (Order)

USDOL Case No. 2017-SOX-00016

DISMISSAL AS SANCTION FOR INTENTIONAL DESTRUCTION OF POTENTIALLY RELEVANT ELECTRONICALLY STORED INFORMATION (ESI) IN A SOX/DODD-FRANK ACT RETALIATION CASE BEFORE AN U.S. DISTRICT COURT

In Burris v. JPMorgan Chase & Co., No. 18-cv-03012 (D. Az. Oct. 7, 2021), Plaintiff, who worked as a financial advisor, filed a complaint alleging that he was fired and blacklisted in violation of the whistleblower retaliation provisions of the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act of 2010.  The court granted Defendants motion for termination sanctions without reaching the merits of the complaint.

  •      The current issues before the Court, however, have nothing to do with whistleblower retaliation. Instead, they arise from Plaintiffs’ systematic efforts to destroy electronically stored information (“ESI”) from an array of phones, laptops, email accounts, and external storage devices. Plaintiff’s evidence-destruction efforts took a variety of forms, including the repeated use of software programs called “BleachBit” and “iShredder,” and spanned a period of years, beginning before (but in anticipation of) this litigation and accelerating as the litigation unfolded. Eventually, a court-appointed forensic expert was tasked with investigating the scope of Plaintiff’s efforts to destroy ESI, but the day before Plaintiff produced certain devices to the expert, he used wiping software on them, too. Based on this and other conduct, the expert concluded, “to a reasonable degree of scientific certainty, that [Plaintiff] caused Potentially Relevant ESI to be irrevocably lost from his Electronic Media.” 

Slip op. at 1-2 (citation to the record omitted).

In ruling on Defendants’ motion, the court focused on FRCP 37(e)(2), and applied the multi-part test found in Porter v. City & Cnty. of San Francisco, 2018 WL 4215602, *3 (N.D. Cal. 2018) to find a violation.  The court found that:  it was undisputed that large volumes of ESI were lost; that litigation was reasonably foreseeable at the time of the challenged acts of ESI destruction (which in this case at a minimum arose when plaintiff initiated the action, and continued even after entry of a protective order that warned of sanctions); that the relevance of the lost ESI was reasonably foreseeable as to several categories of information; that reasonable steps were not taken to preserve the ESI (the situation being that the ESI was intentionally destroyed); that missing ESI was irrevocably lost; and that there was a clear level of intent to deprive Defendants of potentially relevant ESI. 

The court then applied a multi-part test, derived from several Ninth Circuit decisions, to determine sanctions.  Most importantly, Plaintiff had been warned by the court about the possibility of dismissal for failure to comply with a court order or for failure to preserve ESI.  The court considered several factors together when considering whether alternatives to dismissal were available to address the prejudice caused by the failure to preserve potentially relevant ESI.  The court found that “the sheer scope of Plaintiff’s dishonesty and spoliation efforts—which the Court explicitly finds amounted to bad faith—makes this the rare case where it is impossible to have confidence that Defendants will ever have access to the true facts.”  Id. at 21.   The court noted that dismissal was highly prejudicial to Plaintiff, but found this mitigated somewhat by the fact that there had already been a two-week FINRA arbitration, and that Plaintiff’s lack of contrition or awareness of the wrongfulness of his conduct indicated a serious risk that discovery abuse would continue.  The court found that the abuses had made it impossible for the court to conduct a trial where there would be a reasonable assurance that the truth would be available.

Samaroo v. Bank of N.Y. Mellon, No. 21-cv-02441 (S.D. N.Y. Oct. 5, 2021) (2021 U.S. Dist. LEXIS 193355) (Report and Recommendation on Motion to Dismiss)

USDOL Case Nos.: ARB No. 2021-0021, ALJ No. 2019-SOX-00010

PROTECTED ACTIVITY; NEPOTISM OR FAVORTISM ARE NOT VIOLATIVE OF ANY OF THE LAWS ENUMERATED IN SOX § 806; PLAINTIFF PERMITTED, HOWEVER, TO AMEND COMPLAINT TO SHOW THAT ASSOCIATED ALLEGATIONS OF FRAUD, MONEY LAUNDERING,  VIOLATION OF FOREIGN CORRUPT PRACTICES ACT, AND FINANCIAL CRIMES, WERE AMONG THE ENUMERATED LAWS AND THAT PLAINTIFF REASONABLY BELIEVED THEY HAD BEEN VIOLATED

In Samaroo v. Bank of N.Y. Mellon, No. 21-cv-02441 (S.D. N.Y. Oct. 5, 2021) (2021 U.S. Dist. LEXIS 193355), Defendant moved to dismiss Plaintiff’s SOX complaint for failure to state a claim pursuant to FRCP 12(b)(6).  The Magistrate Judge recommended granting the motion without prejudice to amend the complaint.   The complaint had only generally alleged retaliation based on the raising of internal concerns about fraud resulting in adverse actions such as removing and changing role and responsibilities, removing access to meetings, limiting access to systems, and termination of  employment.  The magistrate declined to consider documents from the administrative proceeding before OSHA filed by Defendant in connection with its motion because they were outside the complaint and not incorporated by reference in the complaint.   The magistrate did, however, consider documents submitted by Plaintiff in opposition to the motion because they provided some clarity about the dispute.

The magistrate found that the exhibits indicated that Plaintiff's ethics complaints primarily concerned alleged nepotism or favoritism at the Defendant company.  The magistrate stated:

  • Nepotism does not violate any of the laws listed under SOX § 806 and does not form the basis of a valid SOX complaint. Nor, as a matter of law, can Plaintiff show it was reasonable for him to have believed nepotism could form the basis of a SOX complaint. Diaz v. Transatlantic Reinsurance Co., No. 16-cv-1355, 2016 WL 3568071 at *5 (S.D.N.Y. June 21, 2016) (holding that it was not objectively reasonable for the plaintiff to believe her employer’s practice of nepotism and preferential treatment violated the SOX securities laws). To the extent Plaintiff also complains that various managers were poor managers and mismanaged projects, those allegations likewise cannot form the basis for a SOX complaint. See Andaya v. Atlas Air, Inc., No. 10-cv-7878, 2012 WL 1871511, at *4 (S.D.N.Y. Apr. 30, 2012) (requiring “criminal conduct, shareholder fraud, or fraudulent intent” to sustain a SOX whistleblower retaliation claim). Thus, the bulk of the alleged activity about which Plaintiff complained is not protected activity under SOX.

Slip op. at 8-9.  The internal complaints attached to Plaintiff’s opposition papers, however, also referenced fraud, money laundering, violation of the Foreign Corrupt Practices Act, and financial crimes in connection with government contracts.  The magistrate noted that, in context, it appeared that these assertions were related to the alleged nepotism or favoritism.  The magistrate nonetheless found found that if Plaintiff reasonably believed that they constituted a violation of the laws enumerated in SOX, they potentially could form the basis of a SOX claim.

Defendant also argued that Plaintiff failed to plead causation, and the magistrate found that the complaint was sparse on this point.  The submissions in opposition to the motion to dismiss, however, alleged that Plaintiff showed his manager his complaints within a month before termination – allegations which, if the complaint was amended, could support a claim of temporal proximity, and therefore an inference of causation, sufficient to survive dismissal at the pleading stage of the case.

The magistrate thus recommended dismissal without prejudice to allow Plaintiff to file an amended complaint sufficient to support a SOX claim without the allegations about nepotism or favoritism.  The magistrate also recommended that Plaintiff be encouraged to meet with a pro se legal clinic to see if they could help in preparing an amended pleading.

Erhart v. BofI Holding, Inc., Nos. 15-02287 and -02353 (S.D. Cal. Aug. 19, 2021) (Order Denying Ex Parte Application to Remove Document from the Public Docket and File It Under Seal (ECF No. 236))

CONFIDENTIALITY: COURT DENIED DEFENDANT’S MOTION TO PERMIT PARTY TO REMOVE A FILING FROM THE DOCKET AND TO RE-FILE IT UNDER SEAL; ALTHOUGH THE MOTION WAS BASED ON COURT ORDERS IN A RELATED CASE THAT DID NOT PERMIT DEFENDANT TO DISCLOSE THE IDENTITY OF CONFIDENTIAL WITNESSES, THE COURT IN THE INSTANT PROCEEDING FOUND THAT IT DID NOT HAVE THE POWER TO MAKE PRIVATE WHAT HAS ALREADY BECOME PUBLIC

In Erhart v. BofI Holding, Inc., Nos. 15-02287 and -02353 (S.D. Cal. Aug. 19, 2021), the court denied Defendant’s ex parte motion to be permitted to remove a declaration and its attachments from the docket to allow Defendant to file the information under seal based on orders in a related securities case that did not permit Defendant to publicly disclose the identity of certain individuals as confidential witnesses.  The court found that the cat was already out of the bag, and that it did not have the power to make private what has already become public.
 

Cagle v. United Surgical Partners International Inc., No. 20-cv-1681 (N.D. Tx. Aug. 18, 2021) (2021 U.S. Dist. LEXIS 156572) (Memorandum Opinion and Order)

DISCOVERY REGARDING VALUATION OF STOCK OPTIONS; BURDEN AND PROPORTIONALITY OBJECTIONS; CONCLUSORY STATEMENTS UNSUPPORTED BY ACTUAL EVIDENCE OF BURDEN INSUFFICIENT TO SUPPORT MOTION FOR PROTECTIVE ORDER; ARGUMENT THAT DISCOVERY IS BURDENSOME ON ITS FACE BECAUSE IT IS BEYOND THE SCOPE OF PERMISSIBLE DISCOVERY IS INSUFFICIENT 

DISCOVERY REGARDING VALUATION OF STOCK OPTIONS; RELEVANCY OBJECTIONS; ARGUMENT THAT PLAINTIFF HAD NOT PLEADED BREACH OF STOCK OPTION PLAN INSUFFICIENT TO SUPPORT MOTION FOR PROTECTIVE ORDER WHERE PLAINTIFF HAD REQUESTED A MAKE-WHOLE REMEDY THAT WOULD INCLUDE THE VALUE OF THE STOCK OPTIONS; OBJECTIONS GROUNDED IN ASSUMPTIONS THAT DEFENDANT WOULD PREVAIL ARE INSUFFICIENT

In Cagle v. United Surgical Partners International Inc., No. 20-cv-1681 (N.D. Tx. Aug. 18, 2021) (2021 U.S. Dist. LEXIS 156572), the court denied Defendant’s motion for a protective order in Plaintiff’s SOX retaliation case.  Plaintiff sought discovery concerning valuations under, and termination of a 2015 Equity Management Plan (the “Plan”) under which he was awarded stock options. Defendant moved for a protective order to prevent discovery of those matters. 

The court first found that Defendant had not met its burden under FRCP 26(b)(1) to show that compliance would be unduly burdensome, expensive, or unnecessary or that the requests for information were disproportionate to the needs of the case.  Defendant had only presented conclusory language but no actual evidence of burden.  The court determined that an argument that the matters were burdensome on their face because they are outside the scope of permissible discovery is insufficient.

The court then turned to Defendant’s relevancy objections.  Defendant argued that matters concerning valuations, including stock option values awarded under the Plan, and termination of the plan, were not relevant because Plaintiff had not asserted claims for breach of the Plan or breach of the Award Agreements based on improper or bad-faith stock valuations.   The court was not persuaded, noting that the discovery at issue was relevant to damages.  The court found that Plaintiff had sufficiently pleaded that he sought “make-whole relief, and damages which would  include the value of his equity that would have vested as of the date of the court’s judgment.  

The court rejected Defendant’s argument that Plaintiff had no standing to pursue discovery of matters that occurred after his termination (i.e., alleged devalution of the stock options and termination of the Plan).   The court found that the standing assertion was grounded in an assumption that Defendant would prevail in the litigation.  Moreover, Plaintiff was entitled to discovery on the value of the stock options as part of his make-whole relief should he prevail.  Similarly, the court rejected Defendant’s contention that discovery on the valuation should be denied because the value was set contractually by a committee and is binding on the participant--and thus Plaintiff could not prevail on his claims.  The court said that discovery is not denied merely because the resisting party believes it will win.
 

Katz v. USDOL, Administrative Review Board, 857 Fed. Appx. 859 (7th Cir. Aug. 18, 2021) (unpublished) (No. 21-1140) (2021 U.S. App. LEXIS 24675; 2021 WL 4256843) (Order [Denying Petition for Review])

USDOL Case No.:  ARB No. 2021-0006, ALJ No. 2018-SOX-00030

SERVICE OF ALJ DECISION BY EMAIL; 29 C.F.R. § 18.30(a)(2)(ii)(E) AUTHORIZES SERVICE BY EMAIL; COURT NOTES THAT DOL HAD ANNOUNCED THAT IT SERVE ALJ ORDERS BY EMAIL BECAUSE OF THE COVID-19 PANDEMIC; COURT ALSO STATES THAT, EVEN IF SERVICE BY MAIL IS REQUIRED, PARTIES ARE EXPECTED TO MONITOR THEIR EMAIL BOXES

EQUITABLE TOLLING; CLAIM THAT ESERVED ALJ DECISION WAS NOT RECEIVED; TIMELINESS OF PETITION FOR ARB REVIEW; ARB DID NOT ABUSE ITS DISCRETION IN FINDING THAT EQUITABLE TOLLING WAS NOT WARRANTED BASED ON COMPLAINANT’S CLAIM THAT HE DID NOT RECEIVE THE ALJ’S DISMISSAL ORDER, WHERE THERE WAS NO EVIDENCE TO CONTRADICT THE ALJ’S CERTIFICATE OF SERVICE SHOWING SERVICE ON THE EMAIL ADDRESS USED BY COMPLAINANT THROUGHOUT THE LITIGATION, AND WHERE COMPLAINANT HAD NOT ACTED PROMPTLY ONCE HE RECEIVED THE ALJ’S DENIAL—BASED ON LACK OF JURISDICTION—OF COMPLAINANT’S REQUEST TO LIFT A STAY ON DISCOVERY 
 
In Katz v. USDOL, Administrative Review Board, 857 Fed. Appx. 859 (7th Cir. Aug. 18, 2021) (unpublished) (2021 U.S. App. LEXIS 24675), Katz filed a SOX retaliation complaint against his former employer UL LLC (Underwriters Laboratories).  OSHA and the ALJ found that UL LLC, a private company, was not covered by the Act.  The Administrative Review Board (ARB) dismissed Katz’s appeal as untimely.  The Seventh Circuit found no error in the ARB’s decision, and dismissed the Katz’s petition for review.

Background

The ALJ’s decision, issued September 30, 2020, included a notice of appeal rights, and a service sheet certified that the decision was served on Katz that same day via the email address he had used throughout the proceedings.  Katz averred that he did not receive the email, and did not learn of the dismissal by the ALJ until after the 14-day appeal period had expired.  On October 6, 2020, Katz asked the ALJ to lift a stay on discovery, to which the ALJ replied that she no longer had jurisdiction.  Katz filed his petition for ARB review six days later, which was 21 days after the ALJ's dismissal.  The ARB granted UL LLC s motion to dismiss the petition as untimely because Katz had not filed the petition within the applicable 14-day period, and had not shown that he was entitled to equitable tolling.   The ARB was not persuaded by Katz's explanation that someone "mysteriously kept" the ALJ's decision from his email inbox.  The determined that Katz’s explanation did not establish extraordinary circumstances that prevented him from timely filing.  The ARB noted that the ALJ’s D&O certificate of service had the correct email address.  The ARB also found that Katz had not shown diligence in pursuing his appellate rights, the ARB noting that the ALJ's decision was publicly available online, and that Katz waited six days after receiving the ALJ's reply to his discovery request before appealing.

Regulation requires petition for ARB review to be filed with 14 business days; old 10 business day regulation did not apply, and ARB was not required to use “reasonable time” criteria because of Complainant’s pro se status

The court rejected Katz’s argument that his petition for ARB review was timely because he filed it within 14 business days of the ALJ's decision.   The court determined that the regulations had changed the deadline from 10 business days to 14 days in 2015, OSHA explaining in the rulemaking that the new version was consistent with deadlines for other types of filings.  The court determined that the ARB appropriately applied the current regulations.

The court rejected Katz’s argument that, pursuant to the ARB’s decision in Henrich v. Ecolab, Inc., No. 05-030, 2007 WL 1578490, at *3 (ARB May 30, 2007), the ARB should have accepted his petition given his pro se status because he filed it within a "reasonable time."  The court found that Henrich involved a motion to reconsider, and that the ARB had explained that it used a "reasonable time" criteria because there was no statutory or regulatory authority to the contrary.  Here, however, 29 C.F.R. § 1980.110(a), specifies that petitions for review must be filed within 14 days. 

Equitable tolling; USDOL regulation permits service by email, vague suggestion by Complainant that someone prevented email from reaching in-box not credible where other email communication had occurred without incident

The court was not persuaded that the ARB should have applied equitable tolling.  Katz continued to contend that he did not receive the ALJ's order by email on September 30, and, in his opening brief, argued that the ALJ should have served the order by mail.   The court, however, found that the ARB reasonably explained that there was no evidence to contradict that ALJ’s certificate of service showing service on the date it was issued using the email address Katz had used throughout the proceeding.  The court stated:

  • Agency regulations authorize service by email, see 29 C.F.R. § 18.30(a)(2)(ii)(E), and as of April 2020, the Department of Labor announced that, in response to the COVID-19 pandemic, it would not serve decisions by mail if the parties had email addresses on file, as Katz did. U.S. DEP’T OF LAB., OFFICE OF ADMIN. LAW JUDGES, Implementation of Electronic Service During COVID-19 Pandemic, 2020-MIS-00007 (Apr. 16, 2020), https://www.dol.gov/agencies/oalj/COVID_19_AND_HEARINGS. Still, parties are expected to monitor their emails even when service by mail is required, see Madison, 924 F.3d at 948, and Katz’s vague suggestion that someone must have prevented the email from reaching his inbox lacks both credibility and support. Indeed, Katz regularly corresponded with the court via email during this time without incident.

Slip op. at 5.

Equitable tolling; Complainant’s letter seeking to reopen discovery filed after ALJ’s dismissal did invoke an obligation on opposing counsel or the ALJ to notify Complainant of the dismissal where as far as they knew it had been served on Complainant

Katz argued that his letter seeking to reopen discovery should have alerted the ALJ and UL LLC's counsel that he had not received the decision, and they thus should have informed him sooner of the ALJ’s decision.  The court stated, however, that “inaction is not deception,” and that “[n]either opposing counsel nor the ALJ was under any obligation to inform Katz of a decision that, as far as they knew, already was sent to his email. See Sparre v. U.S. Dep't of Lab., Admin. Rev. Bd., 924 F.3d 398, 403 (7th Cir. 2019) (noting that equitable tolling may be warranted where movant was ‘actively misled’).”  Id.

Equitable tolling; argument that ARB should have treated letter to ALJ seeking to reopen discovery as attempt to appeal was not made before the ARB; moreover letter did not identify a basis for Complainant to have appealed

Katz also argued that this letter could be seen as an improperly executed attempt to appeal.  The court, however, found that Katz had not made this argument before the ARB, and thus the ARB could not have abused its discretion by failing to do so.  The court also noted that 29 C.F.R. § 1980.110(a) requires that petitions for review identify “the legal conclusions or orders to which they object, or the objections may be deemed waived,” and that Katz’s letter seeking to reopen discovery made no mention of the basis for the ALJ’s dismissal.

Equitable tolling; argument first raised in reply brief before the court was twice waived; merely claiming that pandemic prevented timely appeal was insufficient 

In a reply brief, Katz for the first time argued that equitable tolling was warranted because of the COVID-19 pandemic.  The court found that such an argument was waived twice, first by failure to raise it before the ARB, and second by failure to raise it in his opening brief with the court.  The court also noted that Katz had not explained why the pandemic prevented him from filing a timely appeal, the court noting that he had filed other documents without incident.

Lack of due diligence once Complainant learned of ALJ’s decision

The court was not persuaded by Katz’s argument that he exercised due diligence in pursuing his appeal, the ARB having explained its finding that “even assuming Katz's story about the missing email was true, he did not act immediately when he learned of the decision from the court's October 15 letter, but rather waited six days to appeal.”   Id. at 5.   The court found that the ARB “had discretion to conclude that delay showed Katz was insufficiently diligent. See Madison, 924 F.3d at 949 (concluding that a 10-day delay in filing petition for review after receiving ALJ decision was ‘inconsistent with due diligence’).”  Id.

Other insufficient arguments; procedural error by ARB not established; generalized claim of fraudulent conduct by opposing party did not show why Complainant could not file timely appeal

The court rejected Katz’s contention of procedural error by the ARB in allowing UL LLC to move to dismiss, the court finding that the ARB’s scheduling order had permitted the filing of motions, and that the ARB had considered Katz’s arguments about the timeliness of the petition.

Finally, the court noted Katz’s arguments that UL LCC engaged in fraudulent conduct throughout the litigation, but stated that “even if we accepted Katz's wholly unsupported allegations, none of them suggest that UL LLC interfered with his ability to file a timely appeal. Therefore, these arguments have no bearing on this appeal.”  Id.

[Editor’s Note: See also Rollins v. Home Depot USA, Inc., No. 20-50736 (5th Cir. Aug. 9, 2021) (2021 U.S. App. LEXIS 23602; 2021 WL 3486465) (“Cautionary tale” ruling in August 2021 from the Fifth Circuit; failure by counsel to ensure that e-mail box did not send served document to unmonitored folder).]


Lawson v. FMR LLC, No. 19-11222 (D. Mass Aug. 9, 2021) (2021 U.S. Dist. LEXIS 149033) (Memorandum and Order)

CLAIM PRECLUSION; COURT FINDS THAT NEW COMPLAINT FILED BY PLAINTIFF WHICH WAS ESSENTIALLY AN AMPLICATION OF PLAINTIFF’S EARLIER UNSUCCESSFUL SOX § 806 CASE, WERE ALL PRECLUDED BASED ON THE FINAL RESOLUTION OF THAT PRIOR CLAIM

In Lawson v. FMR LLC, No. 19-11222 (D. Mass Aug. 9, 2021) (2021 U.S. Dist. LEXIS 149033), the self-represented Plaintiff filed claims for wrongful discharge and whistleblower retaliation framed as a putative class action (“Lawson II”).  Plaintiff had been unsuccessful in a prior SOX § 806 case against the same defendants (“Lawson I”).  Defendants moved to dismiss, principally on the ground that the new claims were all precluded by final judgment in the prior SOX case.  Plaintiff’s claim in Lawson I had gained some notoriety because it included a seminal decision from the U.S. Supreme Court regarding the scope of coverage of SOX § 806 to include employees of private contractors and subcontractors serving public companies.  On remand, however, a jury rejected the SOX claim on the merits.   Following resolution of the rejection of Plaintiff’s claim for partial attorney’s fees for her interlocutory success before the Supreme Court, the first SOX claim was brought to finality in 2019.

Plaintiff’s claims in Lawson II alleged:  interference by Defendant with OSHA’s investigation; collusion between OSHA and Defendant’s counsel to delay the investigation; negligence by OSHA when withholding documents under FOIA (suggesting improper influence by Defendant); collusion between Defendant and the SEC in the processing of a FOIA request; and misconduct by Defendant’s counsel in the first court proceeding.   The new complaint included RICO counts.  The court granted Defendant’s motion to dismiss all of the new claims.

The court first rejected Plaintiff’s argument that the court needed to consider class certification before entertaining a motion to dismiss.  As to the merits of the motion to dismiss, the court first turned to the RICO counts, which the court found were “essentially amplifications of the original Sarbanes-Oxley claims made in Lawson I.”  Slip op. at 11.  After a detailed analysis, the court found that Plaintiff failed to state a plausible claim under the RICO counts, “because her alleged predicate offenses that may qualify as ‘racketeering activity’ — mail and wire fraud, 18 U.S.C. §§ 1341, 1343, obstruction of justice, 18 U.S.C. § 1503, and witness tampering and retaliation, 18 U.S.C. §§ 1512, 1513(e) — are claim precluded.”  Id. at 24.   The court found that the alleged mail and wire fraud as RICO predicate offenses were precluded by the final judgment in Lawson I, as the claims grew out of the same operative facts.  As to the obstruction of justice and witness tampering claims, the court found that they were based on information and the record available to Plaintiff in the prior proceedings, and thus could have been challenged in that litigation.  The court determined that “[b]ecause Ms.Lawson did not make these misconduct-based claims when she could have done so in Lawson I, the claims are now barred.”  Id. at 29.   As to a claim of witness retaliation because of Defendant’s alleged retaliation after she made claims against Defendant to DOL and the SEC, the court found that this was “essentially a rehashing of the Sarbanes-Oxley Act retaliation claim Ms. Lawson alleged in Lawson I under a different legal theory,” and thus barred by claim preclusion.  The court then applied this analysis to the non-RICO claims in the new complaint, and found that they were all precluded by the finality of the litigation in Lawson I (including, inter alia, new SOX and Dodd-Frank Act counts).

La Belle v. Barclays Capital Inc., No. 19-cv-03800 (S.D. N.Y. Aug. 3, 2021) (2021 U.S. Dist. LEXIS 145071; 2021 WL 3363545) (Order)

DISCOVERY; PRODUCTION OF AUDIO CALLS NOT SHOWN TO BE UNDULY BURDENSOME WHERE THE REQUEST WAS PROPORTIONATE AND LIMITED IN SCOPE, AND DEFENDANT DID NOT SPECIFY THE EXPENSE INVOLVED

DISCOVERY; ALTHOUGH AUDIT DOCUMENTATION ABOUT WHETHER A SUPERVISOR WORKED DURING BLOCK LEAVE WAS NOT RELEVANT TO WHETHER THAT SUPERVISOR RETALIATED AGAINST COMPLAINTS ABOUT A PURPORTED POLICY OF MAKING SUBORDINATES DO THE SAME, IT WAS DISCOVERABLE FOR POSSIBLE IMPEACHMENT OF SUPERVISOR’S TESTIMONY THAT HE HAD NOT WORKED DURING BLOCK LEAVE

DISCOVERY; SCOPE OF FRCP 30(b)(6) DEPOSITION IS DEFINED BY TOPICS IN THE NOTICE AND NOT THE QUESTIONS ASKED 

DISCOVERY OF DOCUMENTS PROVIDED TO REGULATORS WOULD NOT AID PLAINTIFF IN ESTABLISHING OBJECTIVELY REASONABLE BELIEF ELEMENT OF SOX CLAIM BECAUSE THOSE DOCUMENTS WOULD NOT HAVE BEEN AVAILABLE TO HIM AT THE TIME OF THE ALLEGED PROTECTED ACTIVITY

In La Belle v. Barclays Capital Inc., No. 19-cv-03800 (S.D. N.Y. Aug. 3, 2021) (2021 U.S. Dist. LEXIS 145071; 2021 WL 3363545), the court addressed several discovery disputes. 

Audio Calls

One dispute regarded whether production of certain audio calls between Plaintiff and his former supervisor was unduly burdensome given that Defendant was offering to produce many of the audio files that had been previously collected in response to SEC inquiries, and based on Defendant’s claim that it could take weeks to collect the audio files.  The court was not persuaded by Defendant’s contentions.  The court found that Plaintiff’s request was proportionate to the needs of the case, limited to a single custodian and to discrete time period and to only a few collective hours of audio.  The court also found Defendants’ assertions about the difficulty of collection conclusory and lacking any specificity as to person-hours or expense.

Audit Documentation that May Support Impeachment of Credibility

Plaintiff sought audit documentation to show that his supervisor worked through his block leave.  The court agreed with Defendant that such documentation was irrelevant to the merits of the claim because whether the supervisor worked during the relevant period had no bearing on whether the supervisor retaliated against Plaintiff for complaining about a policy of making subordinates working during block leave.  The court, however, agreed with Plaintiff that the audit documentation could be used to impeach the supervisor’s credibility if he falsely attested to not working.  The court found the request proportionate:  “Here, plaintiff is seeking easily produced information from the defendant in order to impeach the credibility of one of its employees, a key witness in this case. The Court cannot conclude that plaintiff’s request for this specific information is disproportionate to the needs of this case, given that Kravetz’s credibility with regard to plaintiff’s performance is a critical issue. Moreover, the burden on defendant in producing this document appears to be minimal.”  Slip op at 2-3.

Scope of FRCP 30(b)(6) Deposition Is Defined by Topics in the Notice and Not the Questions Asked

Plaintiff requested that Defendant be compelled to identify when it started a certain program on the ground that this topic had been asked at a prior deposition and not objected to, and thus there was a waiver of objection.  Defendant responded that this information was outside the noticed and agreed upon scope of the Rule 30(b)(6) deposition and irrelevant.  The court denied Plaintiff’s request, stating:  “Plaintiff has provided no evidence that the question was within the scope of the noticed topics of the Rule 30(b)(6) deposition. The lack of objection to the question is irrelevant inasmuch as the permitted scope of a Rule 30(b)(6) is defined by the topics in the notice, not by the questions asked.”

Documents Provided to Regulators; Plaintiff’s Objectively Reasonable Belief Burden 

Plaintiff requested that Defendant produce certain information requests from regulators and responds thereto, to rebut Defendant’s argument that Plaintiff’s disclosure about violations of a program were not protected activity because the program was not legally required.  Defendant contested the relevancy and proportionality of the request, and proffered that the disclosures would be covered by the bank examination privilege that only the regulator could waive. Plaintiff responded that Defendant could not contend that he was not a whistleblower because the program was voluntary, but also refuse to provide documents to show that its argument was wrong.  Plaintiff also contended that the privilege issue could be avoided if Defendant only produced internal communications.  The court did not address the privilege issue, but – assuming that the issue was about the objectively reasonable belief test for a SOX claim -- denied Plaintiff’s request on the ground that “Plaintiff has not alleged that a reasonable person in his circumstances would have any of these documents available to him, and thus the Court does not see how having these documents would strengthen his claim or have any bearing on it.”  Id. at 3.

Other matters

The court denied Plaintiff’s request for the court to order Defendant to immediately produce certain documents from a computer drive on which it did not object to production, but instead ordered their production within 14 days.  The court declined to rule on Plaintiff’s request for permission to depose a supervisor for more than the presumptive 7 hour limit of FRCP 30(a)(1), finding that it was premature, and encouraging the parties to reach a reasonable compromise.

 

Kuba v. Disney Fin. Servs., No. 21-cv-312 (M.D. Fla. July 30, 2021)  (2021 U.S. Dist. LEXIS 142968)

EXHAUSTION OF ADMINISTRATIVE REMEDIES; PLAINTIFF'S WITHDRAWAL OF ADMINISTRATIVE COMPLAINT MORE THAN 180 DAYS AFTER FILING OF THE COMPLAINT WITHOUT FINAL DECISION FROM THE SECRETARY OF LABOR DID NOT PREVENT HER FROM FILING A COURT ACTION PURSUANT TO 18 U.S.C. § 1514A(b)(1)(B)

In Kuba v. Disney Fin. Servs., No. 21-cv-312 (M.D. Fla. July 30, 2021)  (2021 U.S. Dist. LEXIS 142968), the Defendant filed a FRCP 12(b)(6) motion to dismiss which, inter alia, was based on the contention that the SOX count failed because Plaintiff voluntarily withdrew her administrative complaint, thereby failing to exhaust her administrative remedies.  The court denied the motion, noting that Complainant filed the voluntary withdrawal of the administrative complaint after more than 180 days had passed since she filed that complaint without a final decision of the Secretary of Labor.  The court stated:  “Kuba has sufficiently alleged that she complied with the administrative prerequisites, and once the 180 days passed without a decision, the statute and related regulations allowed her to file suit in a federal district court. DFS's failure-to-exhaust argument fails.“ Slip op. at 6.  See 18 U.S.C. § 1514A(b)(1)(B), 29 C.F.R. § 1980.114(a). 

Botta v. PricewaterhouseCoopers LLP, No. 18-cv-02615 (N.D. Cal. July 26, 2021) (2021 U.S. Dist. LEXIS 138949) (Findings of Fact and Conclusions of Law)

CONTRIBUTORY FACTOR CAUSATION; TEMPORAL PROXIMITY ALONE MAY BE INSUFFICIENT TO ESTABLISH CONTRIBUTION; IN INSTANT CASE, IT WAS INSUFFICIENT WHERE DEFENDANT PROVED THAT ITS SOLE REASON FOR FIRING PLAINTIFF WAS VIOLATION OF COMPANY POLICY

CONTRIBUTORY FACTOR CAUSATION; CHAIN-OF-EVENTS ANALYSIS IS BESIDE THE POINT WHERE DEFENDANT PROVED THAT ITS SOLE REASON FOR FIRING PLAINTIFF WAS VIOLATION OF COMPANY POLICY

CONTRIBUTORY FACTOR CAUSATION; REJECTION OF PLAINTIFF’S CONTENTION THAT IT ONLY TAKES A SINGLE PERSON IN A SUPERVISORY ROLE TO KNOW OR SUSPECT PLAINTIFF’S WHISTLEBLOWER ACTIVITY TO IMPUTE KNOWLEDGE OF PROTECTED ACTIVITY; SOX § 1514A DOES NOT SUPPORT SUCH A STRICT LIABILITY STANDARD

In Botta v. PricewaterhouseCoopers LLP, No. 18-cv-02615 (N.D. Cal. July 26, 2021) (2021 U.S. Dist. LEXIS 138949), Plaintiff alleged that Defendant, an auditing company, fired him in violation of the Sarbanes-Oxley Act, 18 U.S.C. § 1514A, in retaliation for filing a whistleblower complaint with the Securities and Exchange Commission alleging that Defendant was prioritizing profits and client satisfaction over compliance with auditor independence standards.  Plaintiff also alleged retaliation during the 2 ½ year period prior to the termination.  Following a bench trial, the U.S. Magistrate Judge entered judgment for the Defendant.

Findings of fact - temporal proximity raised suspicion of causal link but record lacked supporting evidence whereas Defendant presented persuasive evidence of a lack of connection; Plaintiff’s violation of company policy; lack of knowledge of protected activity by official who made termination decision, despite possibility that outside counsel knew or suspected that Plaintiff filed SEC complaint

The Magistrate noted that temporal proximity did support finding a causal link between the termination and the SEC complaint.  Plaintiff had worked for Defendant for 17 years, but was fired four months after the SEC provided notice that it had opened an investigation.  The Magistrate, however, found no other evidence to bolster a connection, whereas Defendant offered a persuasive and different version of the story.  Outside counsel hired by Defendant in response to the investigation interviewed employees who had worked on the audits under investigation.  Defendant admitted that he had documented as existing an internal control that he had created but which a client had not actually implemented.  This admission was conveyed to Defendant’s managing partner, who promptly fired Plaintiff for either fabricating an internal control or lying about doing so.  Although Plaintiff disputed whether he fabricated an internal control or had told the outside counsel that he had, the Magistrate found that Defendant’s evidence was more persuasive, outside counsel’s testimony being believable and confirmed by Plaintiff’s own writings.  

Both outside counsel and the managing partner testified that they did not know prior to Plaintiff’s firing that he had filed a whistleblower complaint, or even suspected that he had.  The Magistrate noted that one could wonder how the outside counsel would not have known or suspected that Plaintiff had gone to the SEC, but nonetheless found outside counsel’s testimony credible.  The Magistrate also found that even if outside counsel had known or suspected, the managing partner had no reason to suspect that Plaintiff was a whistleblower.  The managing partner was a high level official who was not directly involved in responding to the SEC investigation and had not reviewed the documentation of Plaintiff’s accounting concerns.  Outside counsel testified that he was not involved in the termination decision and never discussed that prospect with the managing partner.  The Magistrate found no proof to support Plaintiff’s theory that the managing partner was manipulated by someone behind the scenes to have Plaintiff fired because he was a whistleblower.

In sum, the Magistrate found although temporal proximity allowed suspicion that protected activity contributed to the firing, there simply was not enough evidence in the record to confirm that suspicion.  

Findings of fact - Defendant proved that prior removals of Plaintiff from audits were unrelated to protected activity

In regard to the adverse employment actions of removal of Plaintiff from three audit engagements in the 2 ½ years prior to the termination, the Magistrate found that Plaintiff failed to prove that flagging of potential accounting errors contributed to the removals—and that Defendant proved that it appreciated Plaintiff’s raising of accounting concerns but had found problematic his inability to do so in a collaborative manner with clients, Defendant having received dozens of complaints about Plaintiff’s  approach to auditing, and having removed him from the engagements only after Plaintiff did not change his approach after counseling and Defendant’s conclusion that such a mutual lack of trust had developed that the success of future audits would be jeopardized.  Other factors contributed to the reason for the removal, but critically, Plaintiff’s identification of potential errors in financial reports was not among those factors. 

Findings of fact relating to other alleged adverse employment actions

The Magistrate also made factual findings that Plaintiff had not proved that a decline in his utilization rate (e.g., client-chargeable work”) after the removals had a negative impact on his professional prospects; that Plaintiff failed to provide any proof that company officials who decided not to staff him on an advisory project relating to a life-science company had any involvement in the prior removals, whereas Defendant credibly explained that it staffed the project with employees who, unlike Plaintiff, were in its life-science auditing group; and that Defendant’s witness was more credible that Plaintiff about an alleged threatened termination.

Court’s analysis and conclusions

Based on these findings, the Magistrate found that Plaintiff’s SOX claim failed factually mostly on the contributory factor causation element of the claim, and that the remainder failed on the adverse employment action element.

The Magistrate also found that Plaintiff’s legal arguments were unpersuasive.  The court explained that temporal proximity alone may be sufficient to proceed in early stages of a SOX § 1514A claim, but that once the case proceeded to trial, “temporal proximity alone doesn't require a finding of retaliation;” rather, “[r]etaliation claims are context specific and require the factfinder to consider all evidence in the record.”  Slip op. at 12-13 (citation omitted).  In the instant case, compelling evidence supported the conclusion that Plaintiff’s SEC complaint had not contributed contribute to his termination. 

Plaintiff also argued that his SEC complaint contributed to his termination because it started the chain of events that resulted the firing.  The Magistrate, however, stated:

  • The chain of events isn't the crucial point. In the retaliation context, a "contributing factor" is a factor that the employer considered in deciding to take adverse action. See Allen v. Admin. Rev. Bd., 514 F.3d 468 , 476 n.3 (5th Cir. 2008) (noting that a "contributing factor" under § 1514A must tend to affect "the outcome of the decision") (emphasis added). Here, PwC proved that there was only one factor it considered in deciding to fire Botta—his violation of firm policy. His SEC complaint wasn't considered and so didn't "contribute" to PwC's decision to fire him.

Id. at 13.

Plaintiff argued that if a "single person in a supervisory role" knew or suspected that he had filed the SEC complaint, then that knowledge needed to be imputed to the terminating official.  The Magistrate, however, stated:

  •  A mandatory-imputation rule may apply at earlier stages of litigation, which are designed to weed out meritless claims, see Leznik v. Nektar Therapeutics, Inc., No. 2006-SOX-00094, 2007 WL 5596626, at *1, 8 (ALJ Nov. 16, 2007) (applying a similar imputation rule on a motion for summary adjudication), but Botta hasn't cited to any authority applying such a rule at trial. If adopted, the rule would come close to establishing a strict liability standard: a supervisor's knowledge of protected activity could trigger liability for the employer even if the terminating official knew nothing about the protected activity and wasn't influenced by the supervisor who did. Section 1514A is not a strict liability statute. It requires the plaintiff to prove retaliation by a preponderance of the evidence, see 29 C.F.R. § 1980.109(a), and makes no mention of irrefutable presumptions or imputations. Because Botta hasn't cited to any authority to support the application of this rule at trial, the Court declines to apply it.

Id. at 13-14.

Fountain v. Firefly Agency LLC, No. 2:19-cv-3004 (S.D. Ohio May 17, 2021) (2021 U.S. Dist. LEXIS 92846; 2021 WL 1964594) (Opinion and Order)

SOX SECTION 1514 DOES NOT CREATE A PRIVATE RIGHT OF ACTION TO SEEK A TEMPORARY RESTRAINING ORDER

In Fountain v. Firefly Agency LLC, No. 2:19-cv-3004 (S.D. Ohio May 17, 2021) (2021 U.S. Dist. LEXIS  92846; 2021 WL 1964594), Plaintiffs alleged causes of action included claims under the Sarbanes Oxley Act, 18 U.S.C. § 1514 and 1514A.  The legal basis for the SOX action was unclear, but Plaintiffs cited the venue provision of SOX which provides that a district court, "upon application of the attorney for the Government" may issue a temporary restraining order "prohibiting harassment of a victim or witness in a Federal criminal case." 18 U.S.C. § 1514(a)(1).  The district court found that “Plaintiffs' claim under this statute fails as a matter of law because Plaintiffs are not attorneys for the United States, they do not seek a temporary restraining order, and this is not a criminal matter.”  Assuming that the SOX action was for a whistleblower claim under § 1514A, it failed because (1) Plaintiffs failed to allege the elements of such a claim, and (2) the Defendant was not a publicly traded company.
 

Wickens v. Rite Aid Hdqtrs Corp., No. 19-cv-02021 (M.D. Pa. Apr. 12, 2021) (2021 U.S. Dist. LEXIS 70031) (Memorandum)

AFFIRMATIVE DEFENSE; PLAINTIFF’S SUBJECTIVE BELIEF THAT HIS EMPLOYMENT WAS TERMINATED DURING A REDUCTION IN FORCE IN RETALIATION FOR SOX PROTECTED ACTIVITY WAS INSUFFICIENT TO CREATE A GENUINE ISSUE OF MATERIAL FACT IN OPPOSITION TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT WHERE SUCH BELIEF WAS NOT SUPPORTED BY ANY OTHER EVIDENCE OF RECORD, AND DEFENDANT’S MOTION WAS SUPPORTED BY EVIDENCE THAT THE REDUCTION IN FORCE HAD RESULTED IN ELMINATION OF OVER 80 POSITIONS, AND THAT PLAINTIFF’S POSITION HAD BEEN SELECTED FOR ELIMINATION BECAUSE HIS JOB DUTIES COULD BE ELIMINATED OR REALLOCATED

AFFIRMATIVE DEFENSE; COURT FINDS THAT THE FACT THAT AN EMPLOYEE’S JOB DUTIES ARE REALLOCATED AFTER ELIMINATION OF THAT EMPLOYEE’S POSITION DURING A REDUCTION IN FORCE DOES NOT SHOW THAT THE POSITION WAS NOT PROPERLY ELIMINATED

In Wickens v. Rite Aid Hdqtrs Corp., No. 19-cv-02021 (M.D. Pa. Apr. 12, 2021) (2021 U.S. Dist. LEXIS 70031), Plaintiff, an attorney who worked in Defendant’s HR Department, alleged that his position was eliminated during a reduction-in-force by Defendant in violation of Section 806(a) of the Sarbanes-Oxley Act in retaliation for the protected activity of reporting insider trading by certain of Defendant’s vice-presidents.  The court granted Defendant’s motion for summary judgment.  Although the parties presented many arguments about whether Plaintiff could establish a prima facie case, the court focused only on Defendant’s affirmative defense that it demonstrated by clear and convincing evidence that it would have terminated Plaintiff in the absence of any protected activity as part of the reduction in force.  The court, construing all facts in the light most favorable to Plaintiff as the non-moving party, found that Plaintiff failed to establish any genuine dispute of material fact with respect to Defendant’s affirmative defense.

First, the record clearly established that Defendant had eliminated over 80 positions following a failed merger with Walgreens.  Plaintiff did not identify any evidence to dispute testimony of record that the determination to eliminate Plaintiff’s position was based on identification of individuals whose work could either not be done or could be reallocated; or to dispute that the HR Department where Plaintiff worked dropped from 87 to 67 employees during the relevant time period.  The court stated that Plaintiff’s own subjective beliefs were insufficient to create a genuine issue of material fact when unsupported by any other record evidence.

Second, the record demonstrated that Plaintiff’s position of “Associate Counsel-Human Resources” was eliminated.   Although Plaintiff alleged that his position was offered to another attorney, the court found that the record showed that she had not replaced Plaintiff.  Although some of Plaintiff’s duties had been allocated to her, other of his duties were allocated to other individuals and to outside counsel.  Moreover, Plaintiff presented no evidence that he was responsible for the majority of the duties currently handled by the attorney he alleged was given his position.

The court also noted that Plaintiff cited “no authority to support the notion that an individual’s position is not properly deemed eliminated during a reduction in force merely because job duties are reallocated to other current employees.”  Slip op. at 19 (footnote omitted).  Rather, the court cited Third Circuit authority that regularly affirms summary judgment where current employees assumed the duties of an employee who had been laid off during a reduction-in-force.

Yang v. The Bank of New York Mellon Corp., No. 20-cv-3179 (S.D. N.Y. Mar. 31, 2021) (2021 U.S. Dist. LEXIS 63951)

PROTECTED ACTIVITY UNDER SOX; PLAUSIBILTY PLEADING STANDARD; SENIOR EXECUTIVE IN BANKING INDUSTORY PLAUSIBLY ALLEGED THAT HE REASONABLY BELIEVED THAT DEFENDANT’S CONDUCT VIOLATED FIDUCIARY DUTIES AND REQUIREMENT NOT TO MAKE MISLEADING STATEMENTS IN PROSPECTUS OR TO INVESTORS; PLAINTIFF ONLY NEEDED TO REPORT CONDUCT AND NOT TO CITE SPECIFIC STATUTORY OR REGULATORY PROVISIONS

In Yang v. The Bank of New York Mellon Corp., No. 20-cv-3179 (S.D. N.Y. Mar. 31, 2021) (2021 U.S. Dist. LEXIS 63951), the court denied Defendant’s motion to dismiss the SOX count of Plaintiff’s complaint based on the assertion that Plaintiff had not engaged in protected activity under § 1514A.  The court found that Plaintiff plausibly alleged that he reported Defendant's plan to withdraw as subadvisor to counsel at BNY Mellon and that he believed that this conduct would violate certain securities laws and regulations included in § 1514A. Moreover, the allegations in the complaint are sufficient to conclude that this belief, regardless of whether it was true, could be deemed reasonable. Therefore, Plaintiff has plausibly alleged that he engaged in “protected activity” under § 1514A 

The court found that it was sufficient for Plaintiff to report Defendant’s conduct, and, while general inquiries are insufficient, SOX does not require a Plaintiff to reference specific statutory or regulatory provisions when reporting the conduct he believes constituted a violation.  Moreover, in this case, Plaintiff went beyond simply reporting the conduct and also informed counsel why he believed this conduct violated the law, specifically alleging that t he told counsel that the directive would violate fiduciary duties to the Fund and its investors, and that it would render representations made in the prospectus, as well as future representations, materially misleading.  Plaintiff also generally referenced a belief that the conduct might be subject to “regulatory penalties.” 

As to the reasonableness of Plaintiff’s belief, Plaintiff alleged that as a senior executive in the banking industry he was generally awaref that of fiduciary duties to the fund and investors, and the requirement not to make misleading statements in the prospectus and to investors.  Plaintiff argued that even if the alleged directive he reported would not actually have violated any of the laws or regulations cited in § 1514A, he still plausibly alleged that it was not unreasonable for someone in his position to believe it did.  Defendants argued that Plaintiff should have known under the facts of the case there had been no fraud or deception, and thus should not have believed that the directive was illegal.  The court, however, that Plaintiff alleged “he believed that Alcentra NY had fiduciary obligations to act in the best interests of the Fund, advise the Fund, attend meetings, and provide updates, and those obligations would not cease simply because Alcentra NY informed the fund it would not fulfill them. Therefore, the Court determines that Plaintiff has alleged a reasonable belief regardless of the notice issue.” Slip op. at 12-13 (footnote omitted).

Ngai v. Urban Outfitters, Inc., No. 19-cv-1480 (E.D. Pa. Mar. 29, 2021) (2021 U.S. Dist. LEXIS 59211) (Memorandum Opinion)

PROTECTED ACTIVITY UNDER SOX; PLAINTIFF FAILED TO PLED SUBJECTIVE OR OBJECTIVELY REASONABLE BELIEF THAT HE WAS REPROTING VIOLATIONS OF THE LAW ENUMERATED IN SOX, WHERE HE ONLY MADE GENERAL ALLEGATIONS THAT DEFENDANT’S VENDORS AND MANUFACTURIERS WERE ENGAGED IN WRONGDOING, AND DEFENDANT FAILED TO ROOT OUT THE MISCONDUCT

In Ngai v. Urban Outfitters, Inc., No. 19-cv-1480 (E.D. Pa. Mar. 29, 2021) (2021 U.S. Dist. LEXIS 59211), the court dismissed the SOX retaliation count of Plaintiff’s complaint based on failure to show protected activity.  Plaintiff had worked for over 40 years in the fashion and garment industry in the U.S., developing expertise in sourcing and costing apparel and the apparel manufacturing process.  

As relevant to the SOX count of his district court action, Plaintiff alleged that he made complaints of corporate waste and unlawful or improper activities by third-party vendors and manufacturers, as raised in letters submitted to Defendant by Plaintiff's attorney between April and September 2018.  These letters essentially alleged that “Plaintiff utilized his expertise in sourcing to identify how Urban's vendors and manufacturers were being wasteful, overcharging Urban, self-dealing, and otherwise profiting at Urban's expense, yet Urban routinely ignored his reports of mismanagement and misconduct.”  Slip op. at 32 (footnote omitted).


The court first found that a jury could not conclude that Plaintiff subjectively believed he was reporting violations of the enumerated laws in Section 806.   The court stated:

The issue is not whether Plaintiff believed Urban’s business practices were wasteful, inefficient, unreasonable, or even unlawful, but whether Plaintiff subjectively believed he was reporting legal violations covered by Section 806. While specific and detailed in the factual allegations therein, none of Plaintiff’s letters refer to the Sarbanes-Oxley Act, the enumerated laws in Section 806, or any specific violation of federal law for that matter.  While a Sarbanes-Oxley whistleblower “need not ring the bell on each element” of a specified law in Section 806, Wiest I, 710 F.3d at 134, more than veiled references to unspecified legal violations is required where, as here, Plaintiff’s legal counsel sent over twenty communications to the employer regarding the alleged misconduct and subsequent retaliation. In fact, Plaintiff’s repeated references to Urban’s Code of Conduct tends to show that Plaintiff believed he was reporting violations of the company’s own internal polices, rather than violations of federal law. This conclusion is buttressed by the observation that in his brief in opposition to summary judgment, Plaintiff fails to articulate a single provision of Section 806 arguably implicated by the conduct complained of.

Id. at 33 (footnote omitted).

The court next found that “[t]he evidentiary record contains nothing to show that an objectively reasonable person with Plaintiff's decades of training and experience in the fashion industry would believe that Urban's failure to root out misconduct by third-party vendors, and thereby save itself money, amounted to bank fraud, wire fraud, securities fraud, shareholder fraud, and/or SEC violations.”  Id. at 34.   The court noted that Plaintiff’s overarching concern was that Defendant failed to rectify wrongdoing by its vendors and manufacturers.   The court stated that “[g]eneric references to mismanagement, unlawful business practices, lost profits, and losses to shareholders fall short of connecting Urban's own conduct (or inaction) in any understandable way to mail fraud, bank fraud, securities fraud, violation of an SEC rule or regulation, or federal law relating to shareholder fraud.”  Id. (citation omitted).  The court concluded that “[a] reasonable employee tasked with curtailing waste and maximizing profits would not reasonably believe that raising concerns related to those goals implicated his employer in criminal fraud. Plaintiff has therefore failed to identify evidence in the record from which a jury could deduce he engaged in protected activity and, thus, cannot succeed on his Sarbanes-Oxley claim.”  Id. at 34-35.
 

Wagner v. Southern California Edison Co., No. 19-56190 (9th Cir. Mar. 23, 2021) (unpublished) (2021 U.S. App. LEXIS 8404; 2021 WL 1108580) (Memorandum)

PROTECTED ACTIVITY UNDER SOX; REASONABLE BELIEF STANDARD MUST BE TIED TO SPECIFIC VIOLATION LISTED IN 18 U.S.C. § 1514A(a)(1); VAGUE REFERENCES TO SUPERVISOR’S PURPORTED SOX VIOLATIONS AND UNSPECIFIED ACCOUNTING CONTROL DO NOT AMOUNT TO REASONABLE BELIEF OF VIOLATION OF RULE OR REGULATION OF THE SECURITIES AND EXCHANGE COMMISSION

In Wagner v. Southern California Edison Co., No. 19-56190 (9th Cir. Mar. 23, 2021) (unpublished) (2021 U.S. App. LEXIS 8404; 2021 WL 1108580), the Ninth Circuit affirmed, upon de novo review, the District Court’s grant of summary judgment in favor of Southern California Edison Company on Wagner’s SOX claim.  The court stated:

     Reviewing the facts and circumstances in the record, a reasonable person would not have formed a good faith belief that he was reporting a Sarbanes-Oxley violation. See Van Asdale v. Int’l Game Tech., 577 F.3d 989, 1000–01 (9th Cir. 2009). Wagner failed to submit sufficient evidence that he had an objectively reasonable belief that one of the specific violations listed in 18 U.S.C. § 1514A(a)(1) had occurred. See Van Asdale, 577 F.3d at 996–97, 1000. His vague references to his supervisor’s purported violations of Sarbanes-Oxley and unspecified accounting controls do not amount to the requisite reasonable belief that the supervisor violated a “‘rule or regulation of the [SEC].’” Wadler v. Bio-Rad Labs., Inc., 916 F.3d 1176, 1186 (9th Cir. 2019); cf. id. at 1187–88.

Slip op. at 2-3 (footnotes omitted).  The court, however, remanded the case on other matters.
 

Xanthopoulos v. United States Dep't of Labor, 991 F.3d 823 (7th Cir. Mar. 22, 2021) (No. 20-2604) (2021 U.S. App. LEXIS 8321; 2021 WL 1083636)

USDOL Case:  ARB No. No. 2019-0045, 2019-SOX-00008
 

TIMELINESS OF SOX COMPLAINT; THE RECORD SUPPORTED THE DEPARTMENT OF LABOR’S DETERMINATION THAT THE PETITIONER'S FILINGS WITH THE SEC WERE SPECIFICALLY FOR PURSUIT OF RELIEF UNDER THE DODD-FRANK ACT, AND THEREFORE THE “EXACT CLAIM IN THE WRONG FORUM” GROUND FOR EQUITABLE TOLLING FOR FILING A SOX SECTION 806 COMPLAINT DID NOT APPLY

In Xanthopoulos v. United States Dep't of Labor, No. 20-2604 (7th Cir. Mar. 22, 2021) (2021 U.S. App. LEXIS 8321), the Seventh Circuit denied Xanthopoulos’ petition for review of the ARB’s decision in Xanthopoulos v. Marsh & McClennan Companies, Inc., ARB No. 2019-0045, ALJ No. 2019-SOX-00008 (ARB June 29, 2020) (per curiam).  The ARB had affirmed the ALJ’s dismissal of Xanthopoulos’ administrative SOX complaint on the grounds that the complaint was not timely filed and that equitable modification was not warranted.

On appeal to the Seventh Circuit, Xanthopoulos sought review of whether any of his reports to the SEC tolled the 180-day period for his SOX complaint.   The court first outlined the anti-retaliation provision of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”), 18 U.S.C. § 1514A, and the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), 15 U.S.C. § 78u-6(h).  The court highlighted the differences between the two statutes, such as distinct objectives, procedures meant for a different forum, a different statute of limitations, and different remedies.

In the instant case, Xanthopoulos’ internal complaints about securities fraud fell on deaf ears, so he made a series of contacts with the Securities and Exchange Commission (SEC).  Specifically, he submitted a number of “TCR” forms to the SEC’s “tips, complaints, and referrals” website between 2014 and 2018.   Xanthopoulos was fired on October 3, 2017.  Although he made additional contacts with the SEC, he first filed a SOX complaint with OSHA on September 18, 2018.   The parties did not contest on appeal to the Seventh Circuit that the OSHA complaint was not filed within 180 days of the adverse action, and the sole issue was whether equitable tolling applied.  The ALJ had not been persuaded by Xanthopoulos’ “wrong-forum” ground for equitable tolling, which the ARB affirmed.  On appeal, the Seventh Circuit applied the “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law” standard of review at 5 U.S.C. § 706(2)(A).  

The court found that the Supreme Court’s decision in the Title VIII context in Johnson v. Ry. Express Agency, Inc., 421 U.S. 454 (1975), was instructive:

      We have construed Johnson v. Railway Express to mean that “pursuit of an administrative remedy unrelated to a later filed federal claim does not toll the statute of limitations for the federal claim.” Cheeney v. Highland Cmty. Coll., 15 F.3d 79, 82 (7th Cir. 1994) (emphasis added). “The Supreme Court in Johnson [v. Railway Express] focused on the independence of Title VII from other remedies … .” Johnson v. Artim Transp. Sys., Inc., 826 F.2d 538, 550 (7th Cir. 1987) (“Artim Transportation System”). That is because “[o]nly where there is complete identity of the causes of action will the … courts have an opportunity to assess the influence of the policy of repose inherent in a limitation period.” Id. (alterations in original) (quoting Johnson v. Ry. Express, 421 U.S. at 468 n.14).

Slip op. at 16.  The court described how it applied this analysis in Artim Transportation System, and then stated:

    In determining whether there is a “complete identity of the causes of action” for equitable tolling, we therefore ask: Are “the remedies available” for the earlier, timely filed claim “separate, distinct, and independent” from those of the belated claim? See Artim Transp. Sys., 826 F.2d at 550; Johnson v. Ry. Express, 421 U.S. at 461. If the answer to that question is yes, then the statute of limitations is not tolled.

Id. at 17.  Applying this analysis to the instant case, the court held that the ARB’s conclusion that Xanthopoulos’s TCR forms did not equitably toll the limitations period for his Complaint was sound and supported by adequate evidence. The TCR forms that Xanthopoulos filed with the SEC were “‘independent of and separate from’ his later-filed Complaint for retaliation. Artim Transp. Sys., 826 F.2d at 550.”   Id. at 18.  The court noted that both the prompts and Xanthopoulos’ responses in the TCR forms were directed at securities fraud, and that Xanthopoulos’ submissions reflected a multi-year campaign to use the SEC’s “tips, complaints, and referrals” website to bring his employer’s fraud to the SEC’s attention.  All his filings sought a whistleblower award, which is an incentive specifically designed to encourage whistleblowing, as distinct from curing retaliation.  The court determined that the evidence thus supported the ARB’s conclusion that the SEC filings did not constitute the ‘precise statutory claim’ ‘mistakenly’ filed in the wrong forum required for equitable tolling.

The court was not persuaded by Xanthopoulos’ argument that the TCR forms had a dual purpose which included reporting of retaliation and fraud.  Assuming that the forms had this dual purpose, the record nonetheless suggested that Xanthopoulos was seeking Dodd-Frank rather than SOX retaliation protection.  In conclusion, the court stated:

     Given two paths to recover for Mercer’s alleged retaliation—federal court or OSHA—Xanthopoulos chose OSHA. He could have filed with OSHA at any time after his termination but “slept on” that right for nearly one year. Johnson v. Ry. Express, 421 U.S. at 466. “The fact that his slumber may have been induced by faith in the adequacy of” his attempt to blow the whistle at the SEC is unfortunately “of little relevance inasmuch as the two remedies are truly independent.” Id.

Id. at 21-22.
 

Katzel v. Solmssen, 20-cv-7220 (S.D. N.Y. Mar. 15, 2021) (2021 U.S. Dist. LEXIS 47967) (Order Granting Motion for Reconsideration)

USDOL Case:  ALJ No. 2019-SOX-00014

DISTRICT COURT JURISDICTION OVER SOX CLAIM; REQUIREMENT TO EXHAUST ADMINISTRATIVE REMEDIES; COURT DISMISSES AS DEFENDANTS INDIVIDUALS WHO WERE NOT NAMED AS RESPONDENTS IN THE ADMINISTRATIVE COMPLAINT AND PROCEEDINGS BEFORE OSHA

In Katzel v. Solmssen, 20-cv-7220 (S.D. N.Y. Mar. 15, 2021) (2021 U.S. Dist. LEXIS 47967), the District Court dismissed the Plaintiff’s SOX complaint as to two named individuals where they had not been named as Respondents in the Administrative Complaint filed with OSHA.  The court stated:

     The proceeding in OSHA must be against the party in interest, and Plaintiff cannot sue under SOX except if such a proceeding was brought against that party. Plaintiff sued AIG in the OSHA proceedings, not either of the Individual Defendants, and waited 180 days without having a decision before he sued AIG. See 18 U.S.C. § 1514A(b)(1)(B); see Daly v. Citigroup Inc., 939 F.3d 415, 426–28 (2d Cir. 2019). But he did not make claim in OSHA against either Solmssen or Fato, and so failed to exhaust against either. They may have been involved factually, but that is not enough. As several of my colleagues have held, the exhaustion requirement requires that the Defendant be a named person in the underlying OSHA proceeding.

Slip op. at 4 (citations omitted).

     Plaintiff argues that Defendants were given fair notice of the charges against them. The argument is conclusory, since the individuals were not named as Respondents, and OSHA was not given cause to discharge its obligation to investigate those who were not respondents. Plaintiff’s OSHA Complaint did not give the agency notice to investigate and fully and fairly adjudicate the claims against Solmssen and Fato. I hold that Plaintiff has not exhausted his administrative remedies against Fato and Solmssen, and cannot sue them in court. Plaintiff’s claims against them are dismissed for lack of subject matter jurisdiction.

Id. at 5.

Moody v. American National Insurance Co., 842 Fed. Appx. 875  (5th Cir. Jan. 29, 2021) (per curiam) (unpublished) (No. 20-40462) (2021 U.S. App. LEXIS 2528; 2021 WL 317623) (Opinion)

Case below: S.D. Tx. No. 19-cv-206
USDOL No.:  ALJ No. 2019-SOX-00031


COVERED EMPLOYEE UNDER SOX; OWNER AND PRESIDENT OF COMPANY COULD NOT MAINTAIN A SOX RETALIATION COMPLAINT AGAINST ANOTHER COMPANY THAT ALLEGEDLY TERMINATED A CONTRACT WITH THE COMPLAINANT’S COMPANY IN RETALIATION FOR SOX PROTECTED ACTIVITY; COMPLAINANT WAS NOT AN EMPLOYEE OF RESPONDENT

In Moody v. American National Insurance Co., 842 Fed. Appx. 875 (5th Cir. Jan. 29, 2021) (per curiam) (unpublished) (No. 20-40462 ) (2021 U.S. App. LEXIS 2528), Moody filed a SOX retaliation complaint against American National Insurance Co. (ANICO) asserting that ANICO had retaliated against him by terminating a contract with Moody Insurance Group (MIG) to sell its insurance products after Moody charged ANICO’s officers and board members with violating SEC regulations.    Moody was the owner and president of MIG, and was not individually party to the contract.

ANICO filed a motion to dismiss arguing that Moody was not a covered employee under § 1514A.  The district court granted dismissal under FRCP 12(b)(6).  The Fifth Circuit affirmed the district court’s judgment:

     At issue in this case is whether Moody qualifies as an employee of ANICO and is therefore protected from retaliatory measures under § 1514A(a). The Supreme Court has interpreted this provision to mean that even if an employer is a private contractor or subcontractor for a publicly traded company, such a contractor may not retaliate against its own employees for engaging in protected whistleblowing activity. In Lawson v. FMR LLC, Plaintiffs were former employees of private companies that contracted to advise or manage mutual funds who blew the whistle on the mutual funds for committing fraud. The contractors who were Plaintiffs’ employers then retaliated against them. The Supreme Court explained that the prohibited retaliatory measures enumerated in § 1514A(a) are actions an employer takes against its own employees. The Court explained that the section’s enforcement procedures and remedies make it clear that the whistleblower entitled to protection must be an employee of the retaliator.

     Lawson is thus distinguishable from the case at hand, as Moody is employed by MIG—not ANICO—and therefore, the alleged retaliatory act he complained of—cancelling MIG’s contract—was not done by Moody’s employer. Moody’s complaint makes it clear that he was an employee of MIG, which was an ANICO contractor.

Slip op. at 4-5 (footnotes omitted) (emphasis as in original).
 

Surface Transportation Assistance Act

Poulter v. United States Dep't of Labor, No. 20-72978 (9th Cir. Oct. 25, 2021) (unpublished) (2021 U.S. App. LEXIS 31958; 2021 WL 4947881) (Memorandum)

USDOL Nos.:  ARB No. 2018-0056, ALJ No. 2017-STA-00017

PROTECTED ACTIVITY;  COMPLAINANT’S REFUSAL TO ATTEMPT A “SLAM” MANEUVER” TO REDISTRIBUTE THE VEHICLE’S LOAD DESPITE A SUPERVISOR’S REPEATED DIRECTION TO DO SO WAS NOT PROTECTED ACTIVITY UNDER 49 U.S.C. § 31105(a)(1)(B)(i), WHERE THE SUPERVISOR HAD NOT INSTRUCTED COMPLAINANT TO DRIVE AN OVERWEIGHT LOAD, AND THE ALJ’S DETERMINATION THAT THE SUPERVISOR WOULD HAVE SO INSTRUCTED WAS MERE SPECULATION

In Poulter v. United States Dep't of Labor, No. 20-72978 (9th Cir. Oct. 25, 2021) (unpublished) (2021 U.S. App. LEXIS 31958; 2021 WL 4947881), the ARB had found that that the ALJ’s determination that the complainant in a STAA retaliation claim (Poulter) engaged in STAA protected activity was not supported by substantial evidence.  The Ninth Circuit denied the complainant’s petition for review, finding that the ARB’s decision was not arbitrary and capricious.  The court stated:

  • The record shows that Poulter's supervisor ordered Poulter to undertake a lawful "slam" maneuver to redistribute the vehicle's overweight load, and expressed an erroneous understanding regarding the vehicle's weight restrictions, but did not instruct Poulter to drive an overweight load in violation of regulations. Because Poulter refused "to attempt to adjust the weight in spite of repeated requests," the ARB could reasonably conclude that the ALJ's determination that the supervisor "would have attempted to compel her to drive" an overweight load was based on "mere speculation." Nor was the ARB arbitrary and capricious in concluding that (1) the ALJ based his ruling that the supervisor implicitly ordered Poulter to drive an overweight load primarily on the supervisor's "misstatement of the applicable weight limit," and that (2) the ALJ failed to consider "the countervailing evidence that [Poulter] was never directed to drive an overweight load and that, for that reason alone, she could never have refused to do so." Therefore, the ARB was not arbitrary and capricious in concluding that the ALJ's ruling was not based on substantial evidence.
  • In light of the ARB's ruling, Poulter did not refuse to operate a vehicle in a manner that violated a regulation, and therefore did not engage in protected activity under 49 U.S.C. § 31105(a)(1)(B)(i).

Slip op. at 1-2.

Budri v. Firstfleet, Inc., No. 20-10612 (5th Cir. June 8, 2021) (unpublished) (2021 U.S. App. LEXIS 17002; 2021 WL 2351127)

District Court No.: 19-cv-409 (N.D Tx.)
DOL Case Nos: ARB No. 2018-0055, ALJ No. 2018-STA-00033

[STAA Digest II I]
FRCP 59(e) MOTION TO ALTER OR AMEND JUDGMENT; DISTRICT COURT DID NOT ERR IN DENYING MOTION WHERE PLAINTIFF SOUGHT TO REHASH ARGUMENTS AND LEGAL THEORIES

In Budri v. Firstfleet, Inc., No. 20-10612 (5th Cir. June 8, 2021) (unpublished) (2021 U.S. App. LEXIS 17002; 2021 WL 2351127), Budri sought the Fifth Circuit's review of the district court's denial of Budri's FRCP 59(e) motion seeking to alter or amend the district court's final judgment dismissing the case.  The Fifth Circuit affirmed the district court, stating:

     Neither in his motion for reconsideration before the district court nor in his briefing here has Budri identified a manifest error of law or fact, or newly discovered evidence,  that demonstrates the district court abused its discretion in denying Budri the "extraordinary remedy" of amending its final judgment. See Templet, 367 F.3d at 479. Instead, as the district court explained in its thorough opinion denying Budri's motion for reconsideration, Budri sought to rehash the arguments and legal theories that he had already put forth in his myriad filings before the district court. He also sought to advance new arguments and claims that could have been previously offered. In short, Budri offered nothing that would justify a decision by the district court to reconsider its judgment. The district court thus did not err in denying Budri's Rule 59(e) motion for reconsideration.

Slip op. at 5-6.


Walsh v. Ahern Rentals, Inc., No. 21-cv-00441 (D. Nev. June 4, 2021) (2021 U.S. Dist. LEXIS 105258; 2021 WL 2301923) (Order Granting Motion for Preliminary Injunction and Ordering Reinstatement)

Related to DOL OALJ Case No. 2020-STA-00105

[STAA Digest IX A 4 c]
ACTION TO ENFORCE OSHA'S PRELIMINARY ORDER OF REINSTATEMENT ON STAA COMPLAINT; LIKELIHOOD OF SUCCESS PART OF TEST FOR PRELIMINARY INJUNCTION IN CONTEXT OF STAA CASE IS WHETHER DUE PROCESS HAD BEEN SATISFIED IN REGARD TO THE ISSUANCE OF THE OSHA REINSTATEMENT ORDER (THE DISTRICT COURT NOT HAVING AUTHORITY TO REVIEW THE MERITS OF THE STAA CLAIM); IN INSTANT CASE, COURT WAS NOT PERSUADED BY EMPLOYER'S ARGUMENT THAT DELAYS VIOLATED THE DUE PROCESS RIGHT TO BE HEARD AT A MEANNINGFUL TIME

ACTION TO ENFORCE OSHA'S PRELIMINARY ORDER OF REINSTATEMENT ON STAA COMPLAINT; COURT DETERMINES THAT LIKELIHOOD OF IRREPARABLE HARM MAY BE PRESUMED GIVEN THAT THE STAA REQUIRES 
ISSUANCE OF PRELIMINARY ORDER OF REINSTATEMENT ONCE THE DEPARTMENT MAKES OF PRELIMINARY DETERMINATION OF A STAA VIOLATION, AND THAT THE STAA REQUIRES THE SECRETARY TO SEEK ENFORCEMENT IF THE RESPONDENT REFUSES TO COMPLY; MOREOVER, THE COURT FOUND THAT THE SECRETARY SHOWED IRREPARABLE HARM IF EMPLOYERS COULD IGNORE PRELIMINARY REINSTATEMENT ORDERS WITH IMPUNITY

ACTION TO ENFORCE OSHA'S PRELIMINARY ORDER OF REINSTATEMENT ON STAA COMPLAINT; IN BALANCING HARDSHIPS AND THE PUBLIC INTEREST, THE COURT FOUND THAT CONGRESS HAD PUT ITS THUMBS ON THE SCALE THROUGH  THE STAA'S MANDATE TO ISSUE A PRELIMINARY ORDER ONCE THE DEPARTMENT MAKES OF PRELIMINARY DETERMINATION OF A STAA VIOLATION 

In Walsh v. Ahern Rentals, Inc., No. 21-cv-00441 (D. Nev. June 4, 2021) (2021 U.S. Dist. LEXIS 105258; 2021 WL 2301923), the U.S. Department of Labor filed sought to enforce a preliminary order of reinstatement issued, as required by 49 U.S.C. § 31105(b)(2)(A)(ii), after OSHA found that a STAA complainant had been fired in violation of the retaliation protection provision of the STAA.  Ahern Rentals ("Ahern") opposed a preliminary injunction, arguing that OSHA had unreasonably delayed in issuing the reinstatement order and that the Secretary delayed seeking injunctive relief.

The court employed the standard test to determine whether a petitioner qualifies for a preliminary injunction.

As to likelihood of success on the merits, the court and the parties agreed that in the present context, the court's review was limited to determining whether the procedures the Secretary followed in issuing the preliminary order satisfied due process. This is  because the merits of whether the STAA was violated is reserved to the Secretary of Labor, with review in the Court of Appeals.  The court found that due process had been satisfied.  Ahern had not disputed that the Secretary complied with the statutory and regulatory procedures, but argued that delays violated its due process right to be heard at a meaningful time.  The court reviewed the procedural history of and before OSHA and OALJ.  After mediation at the OALJ level failed, and the administrative proceedings resumed, and Ahern continued not to comply with the OSHA reinstatement order, the Secretary filed the instant action for injunctive relief in district court.  See 49 U.S.C. § 31105(e) (requiring Secretary to bring civil action to enforce if employer does not comply).  The court stated:

    Ahern’s complaint about the time period between the July 2020 reinstatement order and the motion for injunctive relief is meritless. Ahern and Balint agreed to mediate, so the Secretary’s decision not to pursue injunctive relief during this period was reasonable. Moreover, Ahern defied the reinstatement order throughout this time. If Ahern wanted to avoid potentially having to pay backpay to Balint without receiving the benefit of his services during this period, it could have simply complied with the order. Given that Ahern continues to refuse to comply, any suggestion that it would have done so if only the order had issued earlier rings hollow.
    As for the time period between Balint’s April 2017 complaint and the July 2020 reinstatement order, Ahern was given ample due process throughout this time. It was advised of the complaint, given a full hearing and appeal before NV OSHA, was able to present multiple position statements, and was invited several times to meet with the investigator and provide witnesses for interviews. Indeed, much of the time period was spent giving Ahern numerous opportunities to respond and be heard. Although there are some gaps of several months in the activity (some of which is due to Ahern’s counsel’s failure to respond to communications), the Secretary is likely to succeed in showing that the overall length of time is not so excessive as to violate Ahern’s due process rights.


Slip op. at 7-8.  The court also noted that there was no evidence that Ahern had sought relief from the preliminary reinstatement order from the presiding ALJ pursuant to 29 C.F.R. § 1978.106(b).

As to likelihood of irreparable harm, the Secretary argued that "he need not show a likelihood of irreparable harm because he is charged with enforcing a statute that has the express purpose of preventing serious public harm."  Id. at 8.  The court found that "it is likely that irreparable injury is presumed in this instance", the court noting that the STAA requires the Secretary to issue a reinstatement order if there is a preliminary finding of a violation, and requires the Secretary to seek judicial enforcement if there is noncompliance.  The court further found that the Secretary had shown the likelihood of irreparable harm given Ahern's refusal to comply with the reinstatement order.  The court stated:

Congress found reinstatement such an important remedy to protect whistleblowers in this context that it statutorily required the Secretary to order reinstatement upon finding a probable violation. Allowing an employer to disregard a reinstatement order with impunity is likely to irreparably harm the Secretary’s efforts in enforcing the statute and protecting whistleblowers.

Id. at 9.

As to balancing hardships and the public interest, the court stated:

   Congress ... put its thumb on the scale in considering the balance of hardships among the employer, employee, and Secretary at the preliminary reinstatement stage. A mandate to reinstate Balint may impose some burden on Ahern and potentially the replacement employee, although Ahern does not present evidence that it could not afford to reinstate Balint or that it would be forced to fire his replacement. But the rights of an employee who was discharged in retaliation for a safety complaint are superior to the rights of someone the employer hired to take his place. Cf. Aguayo ex rel. N.L.R.B. v. Tomco Carburetor Co., 853 F.2d 744, 750 (9th Cir. 1988), overruled on other grounds by Miller ex rel. N.L.R.B. v. Cal. Pac. Med. Ctr., 19 F.3d 449 (9th Cir. 1994). The burden on the Secretary and the discharged employee outweighs the harm to Ahern. And the public interest weighs in favor of enforcing the reinstatement order to support the public policies underlying the STAA.

Id. at 10.

The court thus granted the Secretary's motion for a preliminary injunction, and ordered Ahern to reinstate the complainant to his former position as a branch manager.

Budri v. Admin. Review Board, USDOL, No. 20-60574 (5th Cir. Apr. 30, 2021) (per curiam) (unpublished) (2021 U.S. App. LEXIS 12986; 2021 WL 1726818)

USDOL Case:  ARB No. 2020-0047; ALJ No. 2020-STA-00037  
 

[STAA Digest VI B 4]
ADVERSE EMPLOYMENT ACTION; PROVISION OF NEGATIVE EMPLOYMENT INFORMATION TO TENSTREET; MAINTENANCE AND/OR RE-DISCLOSURE BY A THIRD PARTY OF INFORMATION PROVIDED BY EMPLOYER DOES NOT CONSTITUTE NEW OR CONTINUOUS ADVERSE ACTION

In Budri v. Admin. Review Board, USDOL, No. 20-60574 (5th Cir. Apr. 30, 2021) (per curiam) (unpublished) (2021 U.S. App. LEXIS 12986; 2021 WL 1726818), the Fifth Circuit denied Budri’s petition for review of the denial of his fourth STAA administrative complaint that was based on the same operative facts as his previous claims arising out of his February 17, 2017 termination from employment as a commercial truck driver by Firstfleet, Inc., and its disclosure of negative employment information about Budri to a hiring services company, Tenstreet.  For the fourth complaint, Budri asserted a new allegedly adverse employment action – i.e., that Firstfleet disclosed new and additional negative employment information about him to Tenstreet.  The ALJ ordered Budri to provide greater detail regarding this new allegation, to which Budri provided additional factual allegations concerning the employment information previously disclosed to Tenstreet, and a series of non-responsive filings.  The ALJ found that Budri failed to allege any new actionable adverse activity and dismissed the complaint.  The ARB declined review.  The Fifth Circuit affirmed the ALJ’s determination:

     We begin our analysis by considering the merits of the ARB’s decision. The ALJ concluded that Budri had failed to allege any new adverse action because “maintenance and/or re-disclosure by a third party of information provided by an employer does not constitute new or continuous adverse action.” We agree. Budri did not allege specific facts in his fourth complaint pertaining to any new information disclosure by Firstfleet. Rather, Budri’s fourth complaint merely reasserts issues raised in his prior three complaints, which have been fully litigated and resolved in Budri’s prior administrative and judicial proceedings. Thus, further litigation is precluded. See Budri, 825 F. App’x at 179 (third OSHA complaint “contains no new relevant facts, arguments, or claims not previously considered [] and rejected [] by an ALJ, the ARB, the district court, or this Court”); Comer v. Murphy Oil USA, Inc., 718 F.3d 460, 467 (5th Cir. 2013) (“A final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action.”) (quoting Federated Dep’t Stores, Inc. v. Moitie, 452 U.S. 394, 398 (1981)).

Slip op. at 8 (footnote omitted).

[STAA Whistleblower Digest II E 5]
APPOINTMENTS CLAUSE, AND “FOR CAUSE” REMOVAL; OBJECTIONS FORFEITED WHERE STAA COMPLAINT HAD ALREADY TAKEN APPEALS OF THE SAME OPERATIVE FACTS AND HAD NOT RAISED THE CHALLENGE, AND WHERE THE LITIGANT WAS ENAGED IN ABUSIVE LITIGATION

In Budri v. Admin. Review Board, USDOL, No. 20-60574 (5th Cir. Apr. 30, 2021) (per curiam) (unpublished) (2021 U.S. App. LEXIS 12986; 2021 WL 1726818), the Fifth Circuit denied Budri’s petition for review of the denial of his fourth STAA Administrative Complaint that was based on the same operative facts as his previous claims.  In this appeal, Budri argued that the ALJ who dismissed the fourth complaint was not properly appointed under the Appointments Clause of the United States Constitution, as required by Lucia v. Securities & Exchange Commission.   Budri also argued that the  “for cause” removal protections of the Administrative Procedure Act, 5 U.S.C. § 7521(a), are violative of the “at will” employment associated with the Appointments Clause, citing Free Enterprise Fund v. Public Company Accounting Oversight Board.  The Fifth Circuit declined to address the Appointment Clause challenges, finding that Budri had forfeited the challenges for several related reasons.

The court noted that Budri had not cited any controlling legal authority to support his contention that the Secretary of Labor’s 2017 ratification of the ALJ’s appointment failed to satisfy the Appointment Clause challenges relative to Budri’s 2019 and 2020 proceedings before that ALJ.    As to the “for cause” removal requirements, the court noted that the remedy of severance would be the remedy if possible and warranted, and that Budri had not shown the contrary to be true or addressed the possibility of severance.

In addition, the court noted that the Lucia decision emphasized that Appointments Clause challenges must be timely, and although Lucia had been decided in June 2018, and Free Enterprise in 2010, Budri’s first mention of his Appointment Clause challenges was in an August 13, 2020 motion filed, post-briefing, while previously before the Fifth Circuit--and that the court had declined to consider Budri’s multiple motions that raised grounds for relief beyond that raised before the ARB in his briefing with the court.   The court noted that in the instant proceeding, Budri’s Appointments Clause challenges had not been raised prior to the ARB’s decision and order.  The court stated:  

Nevertheless, on the instant record, reflecting the numerous administrative and judicial opportunities that Budri had to present these challenges—long before filing the instant July 3, 2020 petition for appellate court review regarding his fourth OSHA complaint—but simply failed to do so. Accordingly, we, like the panel of this court addressing Budri’s January 2020 petition for review, decline to consider these assertions.  See also Block v. Tanenhaus, 867 F.3d 585, 589 (5th Cir. 2017) (arguments that could have been raised on prior appeal, but were not, are forfeited for purposes of subsequent appeal).

slip op. at 12 (emphasis as in original; footnote omitted).

The court next noted that Budri could have urged his Appointments Clause challenges during his first appeal in August 2018, on which briefing was not competed until January 2019; during his second appeal; and, in connection with the petition for review in the instant appeal.  The court observed that Budri’s litigation style had been based on “quantity, repetition, and obstinance, rather than quality, logic, and prudence, with little regard for legal requirements, efficiency, or conservation of resources.”  Id. at 13.  The court also found it apparent that Budri “also seeks to utilize his pro se status as both a shield and sword thereby exhibiting a complete lack of respect for the legal process and those who strive to proceed in a manner that is expeditious, fair, and ethical.”  Id. (footnote omitted).  The court noted that Budri had filed numerous motions before the court addressing substantive issues, titled as motions to avoid the requirements and restrictions found in the FRAP on briefing and supplemental letters submissions.  

The court further noted that Budri persisted despite multiple warning against repetitive and abusive litigation and wasting of resources.  The court included a long quotation from the ALJ’s decision in the matter in which the ALJ explained why, in addition to dismissing the fourth complaint for failure to state a claim, the ALJ was alternatively dismissing the complaint as a sanction for failure to comply with the ALJ’s orders.   The ALJ explained, inter alia, that the fourth complaint appeared to have been filed merely to vex the Respondent and to cause it to expend more resources in defense; that re-litigating the case was a drain on OALJ’s resources to the detriment of other pending cases; that Budri’s pro se status did not justify his proceeding in bad faith and defiance of orders that he clearly understood but elected to ignore; and that every adjudicative authority to which Budri had addressed the matter had instructed him that he was not entitled to relief.

Based on all these reasons, the Fifth Circuit declined to consider the Appointments Clause challenges.

The court observed in a footnote that the Fifth Circuit had not yet considered whether DOL ALJs had been properly appointed under Lucia or whether such challenges are forfeited if not first presented in the underlying administrative proceeding--but that several other circuits had.  The court also noted the Supreme Court’s recent decision in Carr v. Saul, which addressed forfeitures in SSA proceedings. The court, however, found the forfeiture determination in the instant case rested on broader grounds than the questions decided by its sister Circuits, and by the Supreme Court.

[STAA Digest II M]
VEXATIOUS LITIGANT; FIFTH CIRCUIT GRANTS RESPONDENT’S REQUEST TO ENJOIN STAA COMPLAINANT FROM MAKING FILINGS BASED ON SAME OPERATIVE FACTS AS HAD BEEN RAISED IN MULTIPLE PRIOR CLAIMS

In Budri v. Admin. Review Bd. USDOL, No. 20-60574 (5th Cir. Apr. 30, 2021) (per curiam) (unpublished) (2021 U.S. App. LEXIS 12986; 2021 WL 1726818), the Fifth Circuit denied Budri’s petition for review of the denial of his fourth STAA Administrative Complaint that was based on the same operative facts as his previous claims.  The court also granted Respondent’s request for an order enjoining Budri from future filings from the same operative facts as his previous claims.   The court explained that this order was based on the same reasons on which it had declined to consider Budri’s forfeited Appointments Clause challenge, and on which the court had denied his almost 50 motions.  Those reasons included Budri’s failure to earlier raise the Constitutional challenges despite numerous opportunities to do so, and his persistence in attempting to relitigate the same case despite multiple warning against repetitive and abusive litigation and wasting of resources.  The court’s order imposed certain restrictions and requirements for future filings in the court, and a warning of potential sanctions, “including the striking of pleadings, dismissal, and/or the imposition of substantial monetary sanctions.”  Slip op. at 19.

Buie v. DOL, Admin. Review Bd., 141 S.Ct. 1517 (U.S. Mar. 8, 2021) (No. 20-942) (2021 U.S. LEXIS 1297; 2021 WL 850641) (cert. denied)

The U.S. Supreme Court denied Buie's petition for a writ of certiorari regarding the Eighth Circuit's decision in Buie v. Admin. Review Bd., 823 Fed. Appx. 450, 2020 U.S. App. LEXIS 31193 (8th Cir., Oct. 1, 2020).

Stewart v. U & Me Logistics, No. 18-cv-02609 (S.D. Ind. Jan. 22, 2021) (2021 U.S. Dist. LEXIS 12182) (Order on Motion for Default Judgment)

USDOL Case: ALJ No. 2016-STA-00039


[STAA Digest IX F]

ENFORCEMENT OF MONETARY DAMAGES IN STAA CASE; DEFAULT JUDGMENT WITHOUT HEARING BECAUSE OF DEFENDANT’S DEFAULT ON LIABILITY, AND BECAUSE SUCH DAMAGES WERE CAPABLE OF ASCERTAINMENT FROM DEFINITE FIGURES PROVIDED BY ALJ’S ORDER AND THE STATUTORY RATE FOR PREJUDGMENT INTEREST

In Stewart v. U & Me Logistics, No. 18-cv-02609 (S.D. Ind. Jan. 22, 2021) (2021 U.S. Dist. LEXIS 12182), the Secretary of Labor filed a complaint to enforce a United States Department of Labor ALJ’s order requiring U & Me Logistics to pay damages to a former employee pursuant to the Surface Transportation Assistance Act ("STAA") employee protection provision.  After the Clerk of Court entered a default against U & Me Logistics, and the Secretary filed a motion for default judgment, the court took the complaint’s allegations as true and found U & Me Logistics liable, leaving only the question of damages.    The court found that a hearing on monetary relief was not required because the complaint sought the specific amounts as ordered by the ALJ plus interest at a statutory rate –making the monetary damages “capable of ascertainment from definite figures.”  Slip op at 3, quoting e360 Insight v. The Spamhaus Project, 500 F.3d 594, 602 (7th Cir. 2007).   The court thus granted default judgment finding that the Secretary “is entitled to enforce the award of wages, prejudgment interest, fees, and costs totaling $27,927.39, plus interest accruing since June 5, 2017 at the rate provided at 26 U.S.C. § 6621.”  Id. at 4.

The Secretary also sought to permanently enjoin U & Me Logistics from violating the employee protection provisions of the STAA and to require it to post a notice for 60 days stating that it would not discriminate against employees for STAA protected activity.   The court denied this request as overly broad and not sufficiently tailored to the violation.

Budri v. FirstFleet Inc., No. 19-cv-00409 (N.D. Tx. Feb. 18, 2021) (2021 WL 849012) (Findings, Conclusions, and Recommendation of U.S. Magistrate Judge), accepted as the Findings and Conclusions of the Court Budri v. FirstFleet Inc., No. 19-cv-00409 (N.D. Tx. Mar. 5, 2021) 

Related USDOL Case:  ARB No. 2020-0065, ALJ No. 2020-STA-00108 ("fourth administrative complaint")

[STAA Whistleblower Digest II M]

VEXATIOUS LITIGANT; DISTRICT COURT DECLINES TO HOLD PLAINTIFF IN CONTEMPT OR TO SANCTION PLAINTIFF FOR FILING FOURTH ADMINISTRATIVE STAA COMPLAINT ARISING OUT THE SAME FACTS AND ALLEGATIONS AS EARLIER COMPLAINTS, WHERE EARLIER COURT REPRIMAND AND WARNING HAD NOT SPECIFICALLY ADDRESSED ADMINISTRATIVE COMPLAINTS, AND WHERE DEFENDANT HAD CITED NO AUTHORITY PERMITTING A DISTRICT COURT TO BAR A PLAINTIFF FROM FILING AN ADMINISTRATIVE ACTION WHERE SUCH DID NOT DISRUPT THE MATTER BEFORE THE COURT

In Budri v. FirstFleet Inc., No. 19-cv-00409 (N.D. Tx. Mar. 5, 2021) (2021 WL 849012), the United States District Court for the Northern District of Texas accepted the Magistrate’s recommendation in Budri v. FirstFleet Inc., No. 19-cv-00409 (N.D. Tx. Feb. 18, 2021), to deny Defendants motion for the court to order Plaintiff to show cause why he should not be held in contempt or sanctioned.

Earlier in the proceedings, the court had accepted the Magistrate’s recommendation that Plaintiff be reprimanded and warned of future sanctions, essentially for repeatedly attempting to re-litigate the same case.  The court had stated:  “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.”

Plaintiff thereafter filed a fourth STAA administrative complaint with OSHA.  The ALJ ordered Plaintiff to file a detailed set of particulars; Plaintiff’s response appeared to assert the same allegations as in prior proceedings, and the ALJ dismissed the complaint.  The ARB affirmed the dismissal.  After the ALJ had dismissed the administrative complaint, Defendants filed a motion before the Magistrate requesting that Plaintiff be ordered to show cause why he should not be held in contempt of court or sanctioned for filing the fourth administrative complaint.  The Magistrate ordered briefing, and then recommended denial of Defendants’ motion.  As to civil contempt, the Magistrate found that the earlier reprimand and warning had not prohibited Plaintiff from filing administrative complaints.  The court noted that the Defendants cited no authority regarding whether a federal district court could hold a litigant in contempt for filing an administrative action, particularly when the filing was not disrupting the case before the court.

Defendants also contended that the court had inherent power to sanction Plaintiff for filing the fourth administrative complaint.  Defendants argued that sanctions were warranted because the fourth administrative complaint violated the court’s order “to curb all future litigation.”   Again, however, the Magistrate noted that Defendants had not cited legal authority or precedent for a district court to prohibit a litigant from filing an administrative action.  The Magistrate recommended that the request for sanctions be denied because the administrative complaint was neither before the court nor in direct defiance of the court’s orders.

The district court accepted the Magistrate’s recommendation.

Taxpayer First Act

Fountain v. Firefly Agency LLC, No. 2:19-cv-3004 (S.D. Ohio May 17, 2021) (2021 U.S. Dist. LEXIS 92846; 2021 WL 1964594) (Opinion and Order)

SCOPE OF COVERAGE UNDER TAXPAYER FIRST ACT RETALIATION PROVISION, INTERNAL REVENUE CODE, 26 U.S.C. § 7623(d) IS LIMITED TO PROTECTING “EMPLOYEES”

AMENDMENT OF COMPLAINT TO INCLUDE NEW TAXPAYER FIRST ACT RETALIATION CLAIM TO CONFORM TO EVIDENCE FOUND IN DISCOVERY; PLAINTIFFS WOULD NEED TO ALLEGE THAT THEY WERE EMPLOYEES OF THE DEFENDANT AND THAT THEY HAD FIRST FILED AN ADMINISTRATIVE COMPLAINT WITH THE SECRETARY OF LABOR

In Fountain v. Firefly Agency LLC, No. 2:19-cv-3004 (S.D. Ohio May 17, 2021) (2021 U.S. Dist. LEXIS  92846; 2021 WL 1964594), Plaintiffs alleged causes of action included claims under the Sarbanes Oxley Act, 18 U.S.C. § 1514 and 1514A.  The legal basis for the SOX action was unclear, but Plaintiffs cited the venue provision of SOX which provides that a district court, "upon application of the attorney for the Government" may issue a temporary restraining order "prohibiting harassment of a victim or witness in a Federal criminal case." 18 U.S.C. § 1514(a)(1).  The district court found that “Plaintiffs' claim under this statute fails as a matter of law because Plaintiffs are not attorneys for the United States, they do not seek a temporary restraining order, and this is not a criminal matter.”  Assuming that the SOX action was for a whistleblower claim under § 1514A, it failed because (1) Plaintiffs failed to allege the elements of such a claim, and (2) the Defendant was not a publicly traded company.

The court noted that Plaintiffs had not responded to Defendant’s arguments as to whether they failed to state a claim under § 1514 or § 1514A, but instead asserted whistleblower protections are not limited to employees, citing Internal Revenue Code, 26 U.S.C. § 7623(d)) (the Taxpayer First Act), as an example.   The court found the argument to be problematic:

  • First, Plaintiffs did not raise 26 U.S.C. § 7623(d) as statutory basis for any claim in their Amended Complaint, nor did they ask to amend their complaint again to include a § 7623(d) claim. See Tucker v. Union of Needletrades, Indus. and Textile Emps., 407 F.3d 784, 788 (6th Cir. 2005) ("[I]f a plaintiff decides to advance a new claim as a result of . . . discovery, liberal amendment of the complaint is provided for by Rule 15(a) of the Federal Rules of Civil Procedure, which states that leave to amend the complaint 'shall be freely given when justice so requires.'"). Second, contrary to Plaintiffs' argument, 26 U.S.C. § 7623(d) is indeed limited to protecting employees. Subsection (d)(1) is titled "Anti-retaliation whistleblower protection for employees," and the substance of the statute prohibits adverse actions relating to "terms and conditions of employment" to retaliate against an employee who provides information to the government about tax fraud. 26 U.S.C. § 7623(d)(1)(A)-(B) (emphasis added). Finally, in order to state a claim under this statute, plaintiffs would need to allege that they were Firefly employees who were qualified for protection under the statute and that they filed a complaint with the Secretary of Labor. Id. Plaintiffs do not assert either of these allegations. Plaintiffs therefore have failed to identify any legal basis for their whistleblower protection claim. The Court DISMISSES this claim.

Slip op. at 6-7 (emphasis as in original) (footnote omitted).  In a footnote, the court observed evidence of record indicating that two Plaintiffs had held management positions with Defendant’s predecessor company, but that those positions had ended several years before a change in corporate structure resulted in Defendant as the sole remaining entity for which it did not appear that Plaintiffs were employees.

[Editor’s note:  The court’s May 17, 2021 dismissal was with leave to amend the complaint as it related to the whistleblower claim.   Plaintiffs filed a motion for a continuance to file an amended complaint, but about week later filed a notice of voluntary dismissal.   Defendant opposed an extension and the voluntary dismissal. The court found that Plaintiff’s had a right to reassess their litigation strategy and take a voluntary dismissal rather than further amend the complaint.  The court thus denied Defendant’s motion to strike the Notice of Voluntary Dismissal as moot, and dismissed the case without prejudice.  See Fountain v. Firefly Agency LLC, No. 2:19-cv-3004 (S.D. Ohio Dec. 20, 2021).]
 

Non-Whistleblower Decisions of Note

FEDERAL SOVEREIGN IMMUNITY IS NOT WAIVED IN REGARD TO EEOC’S IMPOSITION OF A MONETARY SANCTION FOR FAILURE TO COMPLY WITH DISCOVERY OBLIGATIONS IN AN ADEA HEARING BEFORE AN ADMINISTRATIVE  JUDGE; SUCH A WAIVER CANNOT BE BASED ON A GENERAL GRANT OF ENFORCEMENT AUTHORITY TO THE AGENCY

The Ninth Circuit in Plaskett v. Wormuth, No. 19-17294 (9th Cir. Nov. 19, 2021) (2021 U.S. App. LEXIS 34552), addressed the authority of the EEOC to impose monetary sanctions pursuant to the regulation at 29 C.F.R. § 1614.109(f)(3) against the Secretary of the U.S. Department of the Army for failure to comply with discovery obligations during administrative proceedings before an EEOC administrative judge.  In this case, the Plaintiff-Appellant — Plaskett — was the employee found to have been discriminated against in the EEOC proceeding under the Age Discrimination in Employment Act (“ADEA”).  Plaskett brought a mandamus action in federal court to, inter alia, attempt to enforce the EEOC monetary sanction. 

Plaskett noted that the Ninth Circuit had upheld the imposition of monetary litigation sanctions under the FRCP, and had recognized a limited power to waive the Government’s immunity from sanctions.  The court, however, stated that administrative agencies simply do not stand on the same footing as an Article III court.  Agencies do not possess inherent equitable powers, except those specifically conferred by statute.  Thus, whether the Army’s sovereign immunity as to the EEOC’s monetary discovery sanction was waived turns on whether such a waiver was unequivocally expressed in statutory text.  Here, Plaskett relied on § 15 the ADEA, which authorized enforcement of that law “through appropriate remedies, including reinstatement or hiring of employees with or without backpay, as will effectuate the policies of this section.” 29 U.S.C. § 633a(b).  Section 15 also authorized the agency to issue “such rules, regulations, orders, and instructions as it deems necessary and appropriate to carry out its responsibilities under this section.”  Id. The court found that § 15’s reference to “appropriate remedies” refers to discrimination based on age as made unlawful by § 15(a), that this is not the same as authority to impose sanctions to address litigation misconduct, and that this aspect of § 15 does not supply a waiver of immunity in that regard.  Similarly, § 15’s authorization to the EEOC to issues rules, regulations, orders, and instructions is only a general grant of enforcement authority insufficient to infer a waiver of sovereign immunity as to monetary sanctions.  Plaskett made the policy argument that if the EEOC could not impose monetary litigation sanctions against the government, the EEOC will be unable to effectuate authority over its own proceedings.  The court, however, noted that the EEOC has a range of non-monetary sanctions it can impose, such as drawing adverse inferences or excluding evidence.

One member of the Ninth Circuit’s panel concurred.  That member found the regulation at 29 C.F.R. § 1614.109(f)(3) does not expressly include monetary sanctions for failure to respond to discovery requests, and that the law was clear that without express authority, monetary sanctions cannot be imposed against the government.  Since neither the ADEA nor the regulations provide such express authority, the concurring member would not have reached the question of “whether—given the broad statutory waiver of sovereign immunity authorizing the EEOC to enforce the ADEA against the government—that express authority must be by a statutory amendment or whether an amendment to the EEOC regulations would be sufficient.”  Slip op. at 31.

[Editor’s note:  Although this case did not involve the U.S. Department of Labor, the statutory and regulatory context is similar to many of the cases adjudicated before the Department, where sovereign immunity is waived in regard to violation of the substantive matter addressed by the statute, and the statute requires the government to abide by the implementing regulations, but there is no express waiver of sovereign immunity as to the imposition of monetary sanctions for litigation abuses.]

REMOVAL FOR CAUSE STATUTE FOUND CONSTITUTIONAL AS APPLIED TO U.S. DEPARTMENT OF LABOR ADMINISTRATIVE LAW JUDGES

In Decker Coal Co. v. Pehringer, No. 20-71449 (9th Cir. Aug. 16, 2021) (2021 U.S. App. LEXIS 24338; 2021 WL 3612787), the Ninth Circuit held that 5 U.S.C. § 7521(a), which permits removal of an Administrative Law Judge only for good cause determined by the Merits Systems Protection Board, is Constitutional as applied to DOL ALJs. 

E-SERVICE; "CAUTIONARY TALE" - FAILURE TO ENSURE THAT EMAIL BOX DID NOT SEND SERVED DOCUMENTS TO UNMONITORED FOLDER

In Rollins v. Home Depot USA, Inc., No. 20-50736 (5th Cir. Aug. 9, 2021) (2021 U.S. App. LEXIS 23602; 2021 WL 3486465), the Fifth Circuit affirmed the District Court’s grant of summary judgment where Plaintiff’s counsel never saw Defendant’s motion because his e-mail sent this filing to his “other” e-mail filter.   Plaintiff sought FRCP 59(e) relief, but the court found that the District Court did not abuse its discretion in denying such relief.  The court characterized its decision as a “cautionary tale for every attorney who litigates in the era of e-filing.”  Slip op. at 1.  The court stated:

  •     To be sure, we do not question the good faith of Rollins’s counsel. But it is not “manifest error to deny relief when failure to file was within [Rollins’s] counsel’s ‘reasonable control.’” Trevino, 944 F.3d at 571. Notice of Home Depot’s motion for summary judgment was sent to the email address that Rollins’s counsel provided. Rule 5(b)(2)(E) provides for service “by filing [the pleading] with the court’s electronic-filing system” and explains that “service is complete upon filing or sending.” Fed. R. Civ. P. 5(b)(2)(E). That rule was satisfied here. Rollins’s counsel was plainly in the best position to ensure that his own email was working properly—certainly more so than either the district court or Home Depot. Moreover, Rollins’s counsel could have checked the docket after the agreed deadline for dispositive motions had already passed. See Trevino, 944 F.3d at 571 (stressing that “Plaintiffs had a duty of diligence to inquire about the status of their case.”); Two-Way Media LLC v. AT&T, Inc., 782 F.3d 1311, 1317 (Fed. Cir. 2015) (no abuse of discretion where district court found it “inexcusable for . . . counsel to fail to read all of the underlying orders they received, or—at minimum—to monitor the docket for any corrections or additional rulings”); Fox v. Am. Airlines, Inc., 389 F.3d 1291, 1294 (D.C. Cir. 2004) (describing counsel’s argument that the electronic-filing system was to blame as “an updated version of the classic ‘my dog ate my homework’ line”).

Id. at 4-5.

[Editor's Note:  See also Katz v. USDOL, Administrative Review Board, No. 21-1140 (7th Cir. Aug. 18, 2021) (unpublished) (2021 U.S. App. LEXIS 24675), in which the Seventh Circuit affirmed the ARB's dismissal of a SOX Complainant's failure to file a timely petition for ARB review.  Complainant's claim that he had not received e-service of the ALJ's decision was found by the ARB not to be credible where other e-mail communications had worked without incident.  A full casenote if located above with the SOX cases.]