December 2009
SARBANES-OXLEY ACT Van Asdale v. International Game, Technology , No. 3:04-CV-00703-RAM (D.Nev. Dec. 8, 2009) PDF |
DISCOVERY SANCTIONS; INADVERTENT FAILURE TO DISCLOSE A SINGLE EMAIL
In Van Asdale v. International Game, Technology , No. 3:04-CV-00703-RAM (D.Nev. Dec. 8, 2009), a United States Magistrate Judge found that the Plaintiffs' failure to properly disclose an email in discovery, and their disclosure of that email to a third party in violation of the court's sealing order, did not rise to a level justifying terminating sanctions where the failure to disclose appeared to be inadvertent, the information disclosed to the third party provided little significant information not already available to the public, and only minimal harm had been done to the Defendant's litigation position.
Stone v. Instrumentation Laboratory Co. , No. 08-1970 (4th Cir. Dec. 31, 2009) (case below ARB Nos. 07-122 and 08-113, ALJ No. 2007-SOX-21) PDF | HTML
SOX PROVISION FOR DE NOVO REVIEW IN DISTRICT COURT; DISTRICT COURT DOES NOT HAVE THE INHERENT AUTHORITY TO IMPOSE PRECLUSION PRINCIPLES TO ALJ DECISION PENDING ON APPEAL BEFORE THE ARB WHEN THE COMPLAINANT FILES THE DISTRICT COURT ACTION
In Stone v. Instrumentation Laboratory Co. , No. 08-1970 (4th Cir. Dec. 31, 2009) (case below ARB Nos. 07-122 and 08-113, ALJ No. 2007-SOX-21), the Plaintiff had filed a SOX whistleblower complaint with OSHA, and had requested an ALJ hearing after OSHA issued its findings. The ALJ granted summary decision, and the Plaintiff appealed to the ARB. While the appeal was pending before the ARB, the Plaintiff brought a de novo action in district court. More than 180 days had passed after the filing of the complaint with OSHA. The district court applied preclusion principles, and issued a mandamus to DOL ordering the ARB to rule on the appeal within 90 days. The Plaintiff, believing that the ARB no longer had jurisdiction over the matter, declined to prosecute the appeal before the ARB. The ARB dismissed the appeal for failure to prosecute. The Plaintiff thereafter obtained a final judgment from the district court, and appealed to the Fourth Circuit.
On appeal, the Fourth Circuit observed that the relevant portion of the SOX whistleblower law states that an aggrieved individual may bring "an action at law or equity for de novo review in the appropriate district court of the United States" if a final decision has not been issued by the Secretary of Labor within 180 days after the filing of an administrative complaint. 18 U.S.C. § 1514A(b)(1)(B). The court of appeals found this language to be plain and unambiguous. The district court found that the provision had not abrogated its inherent power to apply preclusion principles. The court of appeals, however, found that the "de novo review" language required the district court to consider the merits anew. The Appellees argued that de novo review after the ALJ had already issued a ruling would lead to an absurd result, relying in part on comments made by the Secretary of Labor in the preamble to the Federal Register notice of implementing regulations. See 69 Fed. Reg. 52104, 52111-12 (Aug. 24, 2004). The Secretary had suggested that courts may apply preclusion principles where there had been extensive litigation before DOL that had resulted in a decision by the ALJ or Secretary, and that courts might treat a petition for de novo review as a petition for mandamus. The court of appeals rejected the Appellee's absurdity argument, stating that "[n]either the Secretary nor the courts have the authority to engage in creative interpretation of the statute to avoid duplication of efforts, even if the goal for doing so is laudable." Slip op. at 17 (citation omitted). The court stated that if the SOX procedures were unworkable in practice, the remedy must be provided by Congress rather than the courts. The court also found that literal interpretation of the statute did not, in fact, lead to an absurd result, as SOX whistleblower cases involve fact patterns where time is of the essence, and as Congress could design a scheme aiding SOX whistleblower plaintiffs even if it was less efficient than the Secretary of Labor would have contemplated.
The court of appeals did not reach the issue of whether a de novo hearing before a district court would be available if the ARB issued a final decision more than 180 days after the administrative complaint was filed.
Bridges v. McDonald's Corp. , No. 1:09-cv-01880 (N.D.Ill. Dec. 21, 2009) (case below 2008-SOX-41) PDF | HTML
INDIVIDUAL LIABILITY; INDIVIDUAL NOT SPECIFICALLY NAMED IN OSHA COMPLAINT AS A PARTY
In Bridges v. McDonald's Corp. , No. 1:09-cv-01880 (N.D.Ill. Dec. 21, 2009) (case below 2008-SOX-41), the district court granted summary judgment dismissing the count of the Plaintiff's SOX claim against her former supervisor, where that supervisor had not been named as a party when the case was before OSHA and OALJ. The court acknowledged that the SOX regulation may provide for individual liability, but found a complainant is nonetheless obligated to exhaust her administrative remedies for each claim that she seeks to assert against each defendant. The mere fact that an individual is named in the body of the OSHA complaint is insufficient to put OSHA and that individual on notice that the complainant is pursuing a claim against that individual. The court found that the limited exception recognized in Title VII case law permitting a claim against an unnamed party when that party had adequate notice of the proceeding and the opportunity to participate in conciliatory proceedings, is not applicable in SOX proceedings because the Title VII procedures are geared toward fostering settlement, while the SOX administrative scheme is judicial in nature. Accordingly, the court found that the Plaintiff had failed to exhaust her administrative remedies as to her SOX claim asserted against the supervisor as an individual.