USDOL/OALJ: Federal Court Whistleblower Decisions 2014

Federal Court Whistleblower Decisions - 2014

Aviation Investment and Reform Act
Consumer Financial Protection Act
Energy Reorganization Act
Environmental Acts
Federal Rail Safety Act
Sarbanes-Oxley Act
Surface Transportation Assistance Act

Aviation Investment and Reform Act

Ameristar Airways, Inc. v. Administrative Review Board, USDOL , No. 14-60061 (5th Cir. Nov. 12, 2014) (2014 WL 5861808; 2014 U.S. App. LEXIS 21726) (case below ARB No. 12-105, ALJ No. 2004-AIR-11)
Opinion
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Summary :
AFTER-ACQUIRED E-MAIL INSULTING COMPANY PRESIDENT AND ENCOURAGING RESIGNATION OF PILOTS DOES NOT MEET EMPLOYER'S CLEAR AND CONVINCING BURDEN OF PROOF

COURT OF APPEALS FOR FIFTH CIRCUIT UPHOLDS ARB RULING THAT CLEAR AND CONVINCING EVIDENCE BURDEN (§ 42121(B)(2)(B)(IV)) APPLIES TO ANY ISSUE RELATING TO DAMAGES, INCLUDING AFTER-ACQUIRED EVIDENCE, AND NOT MERELY LIABILITY

COURT OF APPEALS FINDS SUBSTANTIAL EVIDENCE IN THE RECORD FOR ALJ FINDING THAT E-MAIL DID NOT MEET CLEAR AND CONVINCING EVIDENCE TEST INASMUCH AS AMERISTAR RELIED ON E-MAIL ALONE WITHOUT ANY EXPLANATORY TESTIMONY, OFFERED "SHIFTING AND CONTRADICTORY" REASONS FOR ITS TERMINATION DECISION, AND ITS MANAGERS' TESTIMONY HAD ALREADY BEEN COMPLETELY DISCREDITED BY ALJ

In Ameristar Airways, Inc. v. Administrative Review Board, USDOL , No. 14-60061 (5th Cir. Nov. 12, 2014) (2014 WL 5861808; 2014 U.S. App. LEXIS 21726) (case below ARB No. 12-105, ALJ No. 2004-AIR-11), the Court of Appeals for the Fifth Circuit denied the appellant company's petition for review objecting to an ARB decision affirming an ALJ decision in an AIR 21 whistleblower retaliation case. The complainant was hired as the Director of Operations. Pilots complained to him that the company engaged in practices violating FAA regulations, including pressuring them to violate duty-time restrictions. The Director brought the complaints to other upper management officials and also raised concerns about the company's practice of sharing another airline's call signal without FAA approval and requiring pilots to confer with company officials before recording maintenance problems in their logbooks. In response, the VP of Operations instructed complainant not to request a new signal for the company's flights from the FAA. The complainant thereafter met with the FAA about these matters. Management was aware of the meeting. Shortly thereafter, the VP of Operations recommended to the company's President, Thomas Wachendorfer, that complainant be terminated. Complainant was terminated.

Litigation followed, including unemployment proceedings and the instant whistleblower reprisal litigation. Two months after Complainant was terminated, the Company discovered an e-mail that complainant had sent out to pilots in which he referred to the Company President as "Wachmeoffendorfer," informed them that the schedule he was sending to them to follow was not one of his making, but came from the President, and complainant knew it was inconsistent with the terms offered the pilots at hiring. The e-mail also noted that Complainant had already received a few resignations, expected more, and indicated he would support pilots' unemployment claims as well as provide them other support.

The case proceeded through litigation. The Fifth Circuit held in the initial petition for review by Ameristar that substantial evidence supported the ARB findings but remanded to the ALJ for the sole reason of considering whether the back-pay should be adjusted in light of the after-acquired evidence. On remand, the ALJ applied the clear and convincing test and did not adjust its back pay determination. The ARB affirmed.

While recognizing that its earlier decision (650 F. 3d 562 at 570 (5th Cir. 2011)) noted that "where there is after-acquired evidence of wrongdoing that would have led to termination on legitimate grounds had the employer known about it," (quoting McKennon v. Nashville Banner Publ'g. Co. , 513 U.S. 352, 362-63 (1995)) back pay should be limited to the period 'from the date of the unlawful discharge to the date the new information was discovered [.]'", the Court found that the ALJ applied the standard correctly. It found the ALJ had supported his findings that Ameristar had provided "shifting and contradictory responses" for the complainant's discharge throughout the proceedings, failed to rely on the e-mail in its filings with the Texas Workforce Commission in the unemployment proceedings, and generally "completely discredited the testimony of Ameristar's managers." Id ., slip op. at 6.
Unified Turbines v. USDOL , No. 13-3124 (2d Cir. Sept. 16, 2014) (non-precedential summary order) (2014 WL 4548305)(case below ARB No. 13-010, ALJ No. 2009-AIR-24)
Summary Order
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Summary :
IN NON-PRECEDENTIAL DECISION, SECOND CIRCUIT GIVES SKIDMORE DEFERENCE TO ARB's INTERPRETION THAT A "DISCHARGE" INCLUDES SITUATIONS WHERE AN EMPLOYEE DOES NOT ACTUALLY RESIGN, BUT AN EMPLOYER DECIDES TO INTERPRET AN EMPLOYEE's ACTIONS AS A QUIT OR RESIGNATION

In Unified Turbines v. USDOL , No. 13-3124 (2d Cir. Sept. 16, 2014) (non-precedential summary order) (2014 WL 4548305)(case below ARB No. 13-010, ALJ No. 2009-AIR-24), the Second Circuit summarily affirmed the ARB's affirmance of the ALJ's decision finding that the Petitioner discharged the complainant in violation of AIR21, after the complainant had informed the Petitioner that he suspected that another employee was abusing prescription medicine. On appeal, the Petitioner challenged, inter alia , the ARB's interpretation of the statutory term "discharge, " and the ARB's finding that the Petitioner discharged the Complainant when it did not follow up after the Complainant failed to report to work following an altercation with the other employee. The court wrote:

The ARB interprets the term "discharge" in the whistleblower retaliation context to include situations in which an employee has not actually resigned, but "an employer . . . decides to interpret an employee's actions as a quit or resignation. " Klosterman v. E.J. Davies, Inc. , ARB No. 08-035, 2010 WL 3878518, at *5 (ARB Sept. 30, 2010). While this reading does not mirror the definition that we have applied to similar terms in other employment laws, the ARB has a significant expertise in handling whistleblower claims, cf. Community Health Center v. Wilson-Coker , 311 F.3d. 132, 138 (2d Cir. 2002), and has consistently deployed this definition of discharge, see Klosterman , 2010 WL 3878518, at *5, which furthers the statute's purpose of protecting employees from retaliation. Accordingly, we defer to the ARB's reasonable interpretation. See Skidmore , 323 U.S. at 140. Moreover, we find that the agency's conclusion that Unified discharged Nagle was, under this standard, amply supported by substantial evidence in the record. Although Unified's position that Nagle voluntarily quit is not without some support in the record, that is insufficient to overturn the agency's conclusion under our deferential standard of review. See Bechtel , 710 F.3d at 446 (requiring a finding of no abuse of discretion where, inter alia , "the decision was based on a consideration of the relevant factors and . . . there has been [no] clear error of judgment").

Slip op. at 4-5.
Jones v. USDOL , No. 13-2970 (7th Cir. June 4, 2014) (unpublished) (per curiam) (2014 WL 2506298) (case below ARB No. 12-055, ALJ No. 2011-AIR-7)
Order [denying petition for review]
PDF
Summary :
CLEAR AND CONVINCING EVIDENCE; SUBSTANTIAL EVIDENCE SUPPORTED ALJ'S FINDING THAT SUPERVISOR WHO FIRED THE COMPLAINANT DID NOT KNOW ABOUT PROTECTED ACTIVITY AND THAT COMPLAINANT HAD REPEATEDLY VIOLATED RULE AGAINST FLYING WITHOUT AN UP-TO-DATE MANUAL

In Jones v. USDOL , No. 13-2970 (7th Cir. June 4, 2014) (2014 WL 2506298) (unpublished) (case below ARB No. 12-055, ALJ No. 2011-AIR-7), the court denied the Petitioner's petition for review on his AIR21 whistleblower complaint on the ground that substantial evidence supported the ARB's affirmance of the ALJ's finding that the Complainant's employer had shown by clear and convincing evidence that it would have terminated the Petitioner absent any alleged whistleblower activity. Specifically, substantial evidence supported the ALJ's finding that the Petitioner's supervisor did not know about the Petitioner's communications to the FAA and that the supervisor decided to fire the Petitioner for repeatedly flying with an outdated manual. Crew members were required, by regulation, to keep their manuals up to date. The Employer's articles of conduct had similar requirements. Under the Employer's system of progressive discipline, the Petitioner was on a warning level such that any further infractions could lead to discharge.

Consumer Financial Protection Act

Zilleges v. Kenney Bank & Trust , No. 13-C-1287 (E.D. Wis. Oct. 20, 2014) (2014 BL 298221, 39 IER Cases 513).
(Decision and Order)
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Summary :
FILING OF AMENDED COMPLAINT OPENS THE DOOR FOR A DEFENDANT TO RAISE NEW AFFIRMATIVE DEFENSES

In Zilleges v. Kenney Bank & Trust , No. 13-C-1287 (E.D. Wis. Oct. 20, 2014), the Plaintiff never filed his Consumer Financial Protection Act whistleblower discrimination complaint with the Secretary of Labor, and the Defendant moved to dismiss based on the contention that the requirement to file such a complaint is jurisdictional. The Plaintiff argued that filing with the Secretary is not jurisdictional and that defendant forfeited its failure to file as an affirmative defense where it failed to raise failure to exhaust in its original answer. The court found that the Defendant had not forfeited the defense because the Defendant pleaded failure to exhaust administrative remedies in its answer to the Plaintiff's First Amended Complaint. The court found that the Defendant's failure plead the defense in its answer to the original complaint was inconsequential, the amended complaint having opened the door for the Defendant to raise new affirmative defenses. The court found unpersuasive the Plaintiff's argument that the Defendant's failure to raise lack of exhaustion in its original answer had caused him prejudice because it would have alerted him in time to file a timely complaint with Secretary. The court stated: "It is not the purpose of Rule 8(c) to remind the plaintiff of any prerequisites to suit that he or she may have failed to fulfill." Slip op. at 3. Because the Plaintiff conceded that he had not filed a timely CFPA complaint with the Secretary of Labor, the court granted the Defendant's motion to dismiss the CFPA count.

Energy Reorganization Act

Vander Boegh v. EnergySolutions, Inc. , No. 14-5047 (6th Cir. Nov. 18, 2014) (2014 WL 6435099; 2014 U.S. App. LEXIS 21810)
(Opinion)
PDF
Summary :

[Nuclear & Environmental Whistleblower Digest XIV A 2 b]
EMPLOYEE; MERE JOB APPLICANT IS NOT AN "EMPLOYEE" UNDER THE PLAIN LANGUAGE OF THE ENERGY REORGANIZATION ACT

In Vander Boegh v. EnergySolutions, Inc. , No. 14-5047 (6th Cir. Nov. 18, 2014) (case below W.D.Ky No. 5:10-cv-0003, ALJ No. 2006-ERA-26), the Plaintiff-Appellant applied for a job with the Defendant-Appellee. He alleged that he was not hired because he engaged in protected whistleblowing activity at a prior job. The district court granted summary judgment against the Plaintiff-Appellant on the ground that he lacked statutory standing as an applicant rather than an employee under the Energy Reorganization Act (ERA). The Sixth Circuit affirmed the district court's holding. The court noted that the ERA provides that "[n]o employer may discharge any employee or otherwise discriminate against any employee with respect to his compensation, terms, conditions, or privileges of employment" because the employee engaged in an activity protected by the statute. 42 U.S.C. § 5851(a)(1). The court noted that although the ERA defines the term "employer, " it does not define "employee. " 42 U.S.C. § 5851(a)(2). The court noted that the regulations also do not define "employee. " See 29 C.F.R. § 24.100-05.

Consequently, the court referenced dictionary definitions for guidance as to the plain meaning of "employee." With some variation in details, those definitions essentially indicate that an employee is someone who works for another person. The court found that as a mere applicant, the Plaintiff-Appellant was not an employee under the plain language of the statute. The court found further support for this finding in the fact that the ERA's definition of "employer" includes an "applicant" for an NRC license, but omits any definition of "employee." The court found that this omission supported a finding that Congress did not intend "employee" to include applicants. The court also found support for its finding in Supreme Court authority that instructs on how to interpret "employee" when Congress does not define it. The court distinguished its decision in Demski v. U.S. Department of Labor , 419 F.3d 488 (6th Cir. 2005), because in that case there was a contractual relationship between the complainant and her corporations and the ERA-covered employer, whereas in the instant case there was never a contractual relationship.

Although the Plaintiff-Appellant's action included four environmental whistleblower statutes (the SDWA, CWA, TSCA and SWDA), the court did not reach the issue of whether an applicant has standing under those laws because it found that it did not have subject matter jurisdiction because those statutes provided for administrative review by the USDOL followed by a direct appeal to the court of appeals. Here, the Plaintiff-Appellant was appealing from a district court's dismissal of those causes of action, also on the ground of lack of jurisdiction.

The court also did not reach the Plaintiff-Appellant's alternative argument that he was an employee of the Defendant-Appellee by virtue of a contractual right of first refusal between the Department of Energy and the a company to which the Defendant-Appellee was a subcontractor for waste management services. The court did not reach this argument because it affirmed the district court's finding that the law of the case was that the Plaintiff-Appellant's contractual status had already been considered and rejected.

[Nuclear & Environmental Whistleblower Digest VIII C 1]
[Nuclear & Environmental Whistleblower Digest VIII C 2 c]
COURT OF APPEALS DOES NOT HAVE JURISDICTION OVER ENVIRONMENTAL WHISTLEBLOWER CLAIMS ON DIRECT APPEAL FROM DISTRICT COURT's DISMISSAL OF THOSE CLAIMS FOR LACK JURISDICTION, WHERE RELEVANT STATUTES PROVIDE EXCLUSIVE REMEDY OF AGENCY REVIEW FOLLOWED BY JUDICIAL REVIEW IN APPLICABLE COURT OF APPEALS

In Vander Boegh v. EnergySolutions, Inc. , No. 14-5047 (6th Cir. Nov. 18, 2014) (case below W.D.Ky No. 5:10-cv-0003, ALJ No. 2006-ERA-26), the Plaintiff-Appellant exercised his statutory right to bring an ERA whistleblower action in federal district court after the administrative complaint had been pending for more than a year. The Plaintiff-Appellant's complaint included four environmental statutes with whistleblower provisions: the SDWA, CWA, TSCA and SWDA. The district court ruled that the Plaintiff-Appellant lacked statutory standing to bring a district court action under those laws. The Sixth Circuit held that the environmental statutes at issue provide an exclusive set of remedies involving adminstrative review within the USDOL, following by judicial review of a final agency action in the court of appeals, and that those statutes do not grant jurisdiction to federal district courts to hear such claims. In contrast, the ERA includes an administrative by-pass option that allows complainants to remove administrative complaints to district court a year after filing with the agency. The court found that the exhaustion requirement is squarely jurisdictional, and denied the Plaintiff-Appellant's request that the court exercise pendant jurisdiction. Because the district court lacked subject-matter jurisdiction over the environmental claims, the Sixth Circuit found that it too lacked jurisdiction to review appeals directly from the district court as opposed to appeals directly from the agency to the court of appeals. In a footnote the court noted that the parties argument that the district court had supplement jurisdiction over the claims was not persuasive as there was not statutory private right of action.
Tamosaitis v. URS Corp. , No. 12-35924 (9th Cir. Nov. 7, 2014) (2014 U.S. App. LEXIS 21314; 2014 WL 5786708)
(Opinion)
PDF
[See also Order and Amended Opinion (9th Cir. Mar. 4, 2015) (order making technical amendments to opinion, and denying petitions for rehearing and rehearing en banc) PDF ]

Summary :
[Nuclear & Environmental Whistleblower Digest VIII C 2 c]
EXHAUSTION OF ADMINISTRATIVE REMEDIES IN ERA WHISTLEBLOWER CASE; BEFORE EMPLOYEE MAY OPT-OUT OF AGENCY PROCESS AND BRING SUIT IN FEDERAL COURT, RESPONDENT MUST HAVE HAD NOTICE OF AGENCY ACTION FOR ONE YEAR

[Nuclear & Environmental Whistleblower Digest VIII C 1]
NO STATUTORY RIGHT TO JURY TRIAL FOR ERA WHISTLEBLOWER SUIT, BUT CONSTITUTIONAL RIGHT TO JURY TRIAL ON CLAIMS SEEKING MONEY DAMAGES UNDER SECTION 5851(b)(4)

In Tamosaitis v. URS Corp. , No. 12-35924 (9th Cir. Nov. 7, 2014) (2014 U.S. App. LEXIS 21314; 2014 WL 5786708), reh'g denied and amended opinion, Tamosaitis v. URS Corp. , No. 12-35924 (9th Cir. Mar. 3, 2015), the U.S. Court of Appeals for the Ninth Circuit ruled on various issues involving the whistleblower provisions of the Environmental Reorganization Act ("ERA") as they involved the Hanford Nuclear Site clean-up. URS and URS Energy were subcontractors to Bechtel. With regard the issue of administrative exhaustion, the panel held that before an employee may "opt out" ("kick out") of the agency process and bring a retaliation suit in federal court, the respondent must have had notice of, and an opportunity to participate in, the agency action for one year. That requirement was not satisfied as against DOE, but was as to URS Energy where it was the named respondent to his administrative complaint. The panel also affirmed the district court's dismissal of URS Corp. for lack of administrative exhaustion where URS Corp. was not adequately named in the employee's original administrative complaint. The District Court had granted to company's request for summary judgment as to adverse conditions created by the change in conditions of employment finding that complainant had other job opportunities and continued to receive bonuses. Complainant had attested that his "current job duties vary dramatically" from his previous position at Hanford with regard to the size, scope, and number of supervised employees involved and the loss of bonuses. Of the alternative employment opportunities URS E&C offered complainant, the primary one was in another country, a transfer undesirable for him because of his family ties in the United States. The panel reversed the grant of summary judgment and found a genuine issue of fact as to whether Tamosaitis's compensation, terms, conditions, or privileges of employment were affected by his transfer. The panel also held that the employee did not have a statutory jury trial right for his ERA whistleblower suit, but did have a constitutional right to a jury trial for his claims seeking money damages (as did respondent) under § 5851(b)(4), and reversed. The panel remanded for further proceedings.
Hasan v. USDOL , No. 13-3998 (3rd Cir. June 13, 2014) (per curiam) (unpublished) (case below ARB No. 12-063, ALJ No. 2012-ERA-3)
(Opinion)
PDF
Summary :
BLACKLISTING COMPLAINT WAS UNTIMELY WHERE IT WAS FILED SEVEN YEARS AFTER COMPLAINANT REALIZED HE ALLEGEDLY HAD BEEN BLACKLISTED

In Hasan v. USDOL , No. 13-3998 (3rd Cir. June 13, 2014) (per curiam) (unpublished) (case below ARB No. 12-063, ALJ No. 2012-ERA-3), the Petitioner filed an ERA complaint alleging that he had not been hired as an engineer by Intervenor, Enercon, based on his past whistleblowing activities. An ALJ determined that the complaint was not timely because the time for filing ran from the date that the Petitioner had concluded, in 2004, that he had been blacklisted, and not from the date of any of Enercon's subsequent refusals to hire the Petitioner. The ARB agreed, noting that the Petitioner had stopped applying for positions with Enercon in 2004 and did not file the instant complaint until seven years later in 2011. The ARB found no grounds for equitable tolling. The Third Circuit denied the petition for review, agreeing with the ARB that the blacklisting complaint - filed seven years after the Petitioner realized that he had allegedly had been blacklisted - was untimely. The court stated that "[a]ny failure to hire Hasan after he was blacklisted would simply be the delayed consequence of that earlier adverse action."
Sanders v. Energy Northwest , No. 12-CV-0580 (E.D. Wash. Apr. 4, 2014) (2014 U.S. Dist. LEXIS 47052) (Appeal filed in the Ninth Circuit, No. 14-35368)
(Order Granting Defendant's Motion for Summary Judgment)
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Summary :
[Nuclear & Environmental Whistleblower Digest XII A]
PROTECTED ACTIVITY; DISAGREEMENTS OVER WHAT DEPARTMENT WAS RESPONSIBLE FOR ADDRESSING FACILITY ACCESS ISSUE AND HOW TO CHARACTERIZE THE SEVERITY OF THE ISSUE, RATHER THAN WHETHER TO ADDRESS THE ISSUE, FOUND NOT TO IMPLICATE SAFETY DEFINITIVELY AND SPECIFICALLY AS REQUIRED BY SIXTH CIRCUIT CASELAW

PROTECTED ACTIVITY; PLAINTIFF'S ARGUMENT THAT COST CUTTING SUGGESTION REGARDING BADGING PROCEDURE COULD IMPLICATE SAFETY BECAUSE IT WOULD FREE UP PERSONNEL AND MONEY FOR SAFETY PROGRAMS FOUND NOT TO IMPLICATE SAFETY DEFINITIVELY AND SPECIFICALLY AS REQUIRED BY SIXTH CIRCUIT CASELAW

In Sanders v. Energy Northwest , No. 12-CV-0580 (E.D. Wash. Apr. 4, 2014) (2014 U.S. Dist. LEXIS 47052), the court granted summary judgment denying the Plaintiff's ERA whistleblower claim on the ground that the two types of alleged protected activity lacked sufficient nexus to safety concerns.

The court began by reviewing the caselaw relating to what constitutes protected activity under the ERA. The court noted that the Sixth Circuit had ruled in Am. Nuclear Res., Inc. v. U.S. Dep't of Labor , 134 F.3d 1292, 1295 (6th Cir. 1998) that "[t]o constitute a protected safety report, an employee's acts must implicate safety definitively and specifically." In the instant case, the first type of alleged protected activity related to the Defendant's Unescorted Access Authority policy. The Plaintiff had a disagreement with a supervisor over which department was responsible for remedying a violation of the policy, and over the level of severity of the designation of a subsequent violation. The court found these disputes, which were not over whether the policy violations would be addressed but rather over the priority and depth of the resolution, did not implicate safety definitively and specifically. The second type of alleged protected activity related to a badging procedure regarding which the Plaintiff had recommended changes. The Plaintiff argued that this was protected activity because the badging procedure "implicates safety because it concerns when individuals are and are not allowed on a nuclear facility and the level of security clearance needed to be on the facility at that time." Slip op. at 18. The Defendant countered that the Plaintiff had advocated the changes to save time and money for a policy not governed by NRC regulations. The court agreed with the Defendant, and found that the Plaintiff's advocacy of changes to the policy related to location and timing and did not appear to improve safety. The court stated: "Procedures that Plaintiff admits do not involve safety, which do not appear to improve safety, and which Plaintiff himself states were made to save money or administrative time do not "implicate safety definitively and specifically" as required under the relevant case law. Such changes fall into the category of "incidental inquiry or superficial suggestion" to which the Sixth Circuit declined to extend protection in American Nuclear . See American Nuclear , 134 F.3d at 1295. Indeed, under Plaintiff's theory, any company cost cutting suggestion could implicate safety because it would free up personnel and money for safety programs. That, however, is not the test." Slip op. at 20-21.
Richardson v. Fluor Corp. , No. 13-cv-01908 (N.D. Cal. Feb. 5, 2014) (2014 WL 492344)
Amended Order Granting in Part and Denying in Part Plaintiff's Motion for Leave to Amend
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Summary :
AMENDMENT OF EXISTING DISTRICT COURT ACTION TO INCLUDE ERA WHISTLEBLOWER COMPLAINT; NO PREJUDICE SHOWN DESPITE PLAINTIFF'S DEPOSITION HAVING ALREADY BEEN TAKEN WHERE DEFENDANTS WERE ON NOTICE THAT PLAINTIFF INTENDED TO ADD THE ERA COMPLAINT UNDER 42 U.S.C. § 5851(b)(4) IF DOL DID NOT TIMELY RENDER A FINAL DECISION

Under 42 U.S.C. § 5851(b)(4), if one year has passed from the filing of an employee's ERA whistleblower complaint with OSHA without a final decision from the Secretary of Labor, the employee may file an action in federal district court. In Richardson v. Fluor Corp. , No. 13-cv-01908 (N.D. Cal. Feb. 5, 2014) (2014 WL 492344), the Plaintiff timely filed an ERA whistleblower complaint on October 5, 2012 claiming that he had been discharged for speaking out about the unsafe work performed by a union steward, rather than for the reasons stated by the Defendants related to the Plaintiff's claustrophobia. The Plaintiff later filed a disability discrimination complaint in federal district court alleging that the Defendants failed to accommodate his claustrophobia and improperly terminated his employment in violation of the Americans With Disabilities Act and the California Fair Employment and Housing Act. In his first amended complaint, the Plaintiff did not allege an ERA whistleblower complaint, but stated that he "expressly reserves the right to amend this complaint to seek relief from this court if, after October 5, 2013, no final decision had yet been made on his OSHA complaint." After the year had passed without action on the ERA administrative complaint, the Plaintiff sought leave from the district court to file a second amended complaint to add a claim under the ERA and include certain new allegations. The Defendants opposed the motion.

The court noted that: "Rule 15(a)(2) of the Federal Rules of Civil Procedure provides that leave to amend a complaint should be 'freely given when justice so requires. ' Fed. R. Civ. P. 15(a)(2). The Ninth Circuit has repeated counseled that Rule 15 'is to be applied with extreme liberality. ' Eminence Capital, LLC v. Aspeon, Inc. , 316 F.3d 1048, 1051 (9th Cir. 2003). 'Four factors are commonly used to determine the propriety of a motion for leave to amend. These are: bad faith, undue delay, prejudice to the opposing party, and futility of amendment. ' Ditto v. McCurdy , 510 F.3d 1070, 1079 (9th Cir. 2007) (citing Foman v. Davis , 371 U.S. 178, 182 (1962))." Slip op. at 4.

The Defendants claimed prejudice because they had already deposed the Plaintiff. The court rejected the claim noting that the Defendants were aware of the Plaintiff's intention to add the ERA complaint. The court, however, directed that the Defendants be given a limited opportunity to depose the Plaintiff regarding his new claim in order to ameliorate any prejudice. The Defendants next claimed bad faith, not on the ground that the Plaintiff was seeking a tactical advantage, but rather on the ground that he should have alleged certain facts earlier and that some of the new allegations contradicted his deposition testimony. The court examined the challenged allegations. The court found no bad faith relating to the proposed amendments, but disallowed one set of allegations relating to whether the Defendant-Employer breached the implied covenant of good faith and fair dealing when it did not offer or pay any severance benefits, because those allegations had no bearing on the Plaintiff's existing claims or the ERA claim in particular.

The Defendants also alleged that the Plaintiff had failed to meet and confer in good faith prior to filing the motion to amend, as required by the court's standing order. The court found that both parties had failed to engage in a meaningful discussion regarding the Plaintiff's proposed amended complaint and warned that further transgressions of any order of the court may result in sanctions.
Hasan v. USDOL , No. 13-1886 (3d Cir. Jan. 23, 2014) (per curiam) (unpublished) (case below ARB No. 12-096, ALJ Nos. 2004-ERA-22 and 27)
(Opinion)
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Summary :
[Nuclear and Environmental Digest XI A 2 a]
SUBSTANTIAL EVIDENCE SUPPORTED DOL's FINDING THAT THE PETITIONER's WHISTLEBLOWER STATUS DID NOT CONTRIBUTE TO COMPANY's DECISION NOT TO HIRE THE PETITIONER

In Hasan v. USDOL , No. 13-1886 (3d Cir. Jan. 23, 2014) (per curiam) (unpublished) (case below ARB No. 12-096, ALJ Nos. 2004-ERA-22 and 27), the Petitioner, a civil/structural engineer, responded to two Internet advertisements placed by Enercon Services, Inc. seeking an engineer. The Petitioner did not receive an employment offer for either position, and thereafter filed ERA whistleblower complaints. After a seven day hearing, the ALJ denied the complaints, and the ARB adopted the ALJ's finding that the Petitioner's protected activity (prior whistleblowing) was not a contributing factor in Enercon's employment decisions. On appeal, the Third Circuit found that substantial evidence supported the ARB's conclusion. The evidence showed that Enercon's procedure for filling positions was to select existing employees first, then individuals recommended by clients, then known high performers, and only then applicants from a database of resumes gleaned from its Internet advertisements. Enercon often advertised for positions that did not exist as a means of obtaining additional resumes for its database. The Petitioner was not an existing employee, was not known to Enercon as a high performer, and had not been recommended by a client. The ALJ found based on the testimony of Enercon employees that Enercon had ultimately not hired anyone for the positions in question. Of the managers who hired engineers during the relevant period, only one was aware of the Petitioner's whistleblowing status. Enercon had purposely limited the group of persons who knew about the Petitioner's status in an effort to minimize the potential that it would be used against him. The engineers hired by the one manager who knew of the Petitioner's status were either known by Enercon or its client to be good performers. Moreover, the ALJ found that that this manager had not relied on the selected candidates' resumes, and did not rely on Enercon's database of resumes in regard to the open positions. The ALJ also found that Enercon had followed protocol and treated the Petitioner's resumes the same way as any other resume received, that no one had been instructed to discriminate against the Petitioner in any way, that information about the Petitioner's whistleblowing activity was restricted to three persons, and that Enercon actually encouraged whistleblowing by hiring and promoting past whistleblowers. The court found that substantial evidence supported these findings. The court rejected as without support allegations by the Petitioner that the ALJ was biased against him and that the ARB had acted illegally. The court stated: "Simply ruling against a party is not evidence of bias, and despite Hasan's assertions, nothing in the record suggests anything untoward." Slip op. at 9.

Environmental Acts

Kaufman v. Perez , 745 F.3d 521 (D.C. Cir. Mar. 14, 2014) (2014 WL 982871; 2014 U.S. App. LEXIS 4305) (Rehearing en banc denied May 19, 2014) (case below ARB No. 10-018, ALJ No. 2002-CAA-22)
Opinion
PDF
Summary :
Plaintiff, an EPA employee, who had been removed from his Ombudsman responsibilities and then failed to be reinstated, filed whistleblower retaliation complaint with regard to failure to be reinstated.

TIMELINESS OF COMPLAINT

Because original adverse action was removal of Ombudsman responsibilities, and such removal fell outside the 30 day statutes of limitations of various applicable environmental statutes, Appellant's claims that subsequent actions by employer reiterating or continuing to deny Appellant such responsibilities are merely "delayed, but inevitable consequence[s] of" the original decision, and "not themselves actionable." D.C. Circuit cites to ARB decision and Delaware State College v. Ricks , 449 U.S. 250. 257-8 (1980)(allegedly discriminatory denial and communication of denial of tenure triggered limitations period, eventual loss of teaching position merely a consequence of earlier adverse action).

STANDARD OF REVIEW OF STATUTES OF LIMITATIONS

Court does not resolve issue of whether Chevron deference applies to agency interpretations of statutes of limitations. Because substantial evidence supports the ARB's factual findings as to when adverse action(s) taken and legal conclusions follow such findings, ARB's decision meets any of standards of APA.

ADVERSE ACTION

Because original adverse action was removal of Ombudsman responsibilities, and such removal fell outside the 30 day statutes of limitations of various applicable environmental statutes, Appellant's claims that subsequent actions by employer reiterating or continuing to deny Appellant such responsibilities are merely "delayed, but inevitable consequence[s] of" the original decision, and "not themselves actionable." D.C. Circuit cites to ARB decision and Delaware State College v. Ricks , 449 U.S. 250. 257-8 (1980)(allegedly discriminatory denial and communication of denial of tenure triggered limitations period, eventual loss of teaching position merely a consequence of earlier adverse action.)Failure to reinstate may be separately actionable as independent discriminatory act, where there is uncertainty regarding whether initial adverse action will foreclose employment for foreseeable future, change in substantive policy producing initial firing, or Plaintiff can show disparate treatment or bias in reinstatement process. Concurring Judge opines that failure to reinstate could be a viable retaliation claim if involved discrete retaliatory reason.

Federal Rail Safety Act

Conrad v. CSX Transportation, Inc. , No. 13-cv-3730 (D. Md. Dec. 15, 2014) (2014 U.S. Dist. LEXIS 172629; 2014 WL 7184747)(case below ALJ No. 2012-FRS-88)
Memorandum
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Summary :
SUMMARY JUDGMENT; KNOWLEDGE; SUMMARY JUDGMENT GRANTED TO RAILROAD WHERE PLAINTIFF DID NOT SUBMIT SUFFICIENT EVIDENCE TO SUPPORT INFERENCE THAT INDIVIDUALS INVOLVED IN THE DISCIPLINE ALSO HAD KNOWLEDGE OF THE PROTECTED ACTIVITY

FRSA BURDEN SHIFTING FRAMEWORK; COURT HOLDS THAT AIR-21 FRAMEWORK INCORPORATED IN FRSA REQUIRES A SHOWING BY THE EMPLOYEE THAT THE EMPLOYER HAD KNOWLEDGE OF THE PROTECTED ACTIVITY AS AN INDEPENDENT ELEMENT OF THE EMPLOYEES CASE

In Conrad v. CSX Transportation, Inc. , No. 13-cv-3730 (D. Md. Dec. 15, 2014) (2014 U.S. Dist. LEXIS 172629; 2014 WL 7184747)(case below ALJ No. 2012-FRS-88), Defendant assessed Plaintiff with two serious offenses, which he alleged were in retaliation for two incidents in which he reported safety violations and objected to a union member being asked to engage in unsafe conduct. In January 2011 a union member was injured while applying a handbrake and contacted Plaintiff, the local union chairman. Plaintiff told him to report the injury and later, not to return to reenact the injury for injury due to a required rest break. Plaintiff reported the incident to the FRA and told management he was doing so.

The next month four managers observed him operating a train and charged him with a safety violation for operating a switch without first checking it and doing so with one instead of two hands. He was charged with a serious violation but it was handled through an alternative “time out” procedure. A note was placed in his file. In August 2011, Plaintiff was contacted when a crew that had run out of fuel had been instructed to enter a yard to retrieve a locomotive. They worried of low clearances and dangerous conditions in the yard. Based on a settlement between the railroad and a state agency, Plaintiff forbid the crew from entering the yard because they were not properly trained to do so. He told management as much. Later that month, two managers claimed that they saw Plaintiff operating without his radio on, not use proper ID in a radio check, and fail to use both hands while operating a switch. This led to disciplinary charges, which were still pending at the time of the decision.

The railroad moved for summary judgment on a number of grounds. This order only addressed one issue: knowledge of the protected activity. The FRSA incorporates the burden shifting framework of AIR-21. At the first step, “the employee must show, by a preponderance of the evidence, that ’(1) [he] engaged in protected activity; (2) the employer knew that [he] engaged in protected activity; (3) [he] suffered an unfavorable personnel action; and (4) the protected activity was a contributing factor in the unfavorable action.’” Slip op. at 6 (quoting Feldman v. Law Enforcement Assocs. Corp. , 752 F.3d 339, 344 (4th Cir. 2014)) (alternations in original). “Then, the burden shifts to the employer to demonstrate ’by clear and convincing evidence, that the employer would have taken the same unfavorable personnel action in the absence of [the protected activity].” Id . (quoting Livingston v. Wyeth, Inc. , 520 F.3d 344, 351 (4th Cir. 2008) (alternations in original)).

In support of summary decision, the railroad submitted declarations from the various supervisors and individuals involved in the two alleged infractions to the effect that they didn’t know about the safety complaints and protected activities. Plaintiff replied that knowledge didn’t have to be shown directly but could be inferred by the fact-finder from circumstantial evidence including temporal proximity, shifting explanations, deviation from standard practice, and changes in attitude. The court rejected this argument. The point went to the fourth, “contributing factor,” element, not the knowledge element. If “knowledge” were simply part of “contributing factor,” the Plaintiff’s point would hold. But the court understood the AIR-21 analysis to independently require a showing of “knowledge” as a separate element.

On this basis, the court held that to show knowledge the employee must show that someone involved in the adverse employment decision must have knowledge of the protected activity. Here there was not sufficient admissible evidence from which a jury could draw this inference. Plaintiff pointed broadly at his union activities and the ire of management, but this did not establish that the relevant managers had knowledge of the FRSA protected activity. The court also rejected the argument that the element was met because someone at the railroad had knowledge of the protected activity, imputing knowledge to the railroad. Plaintiff speculated that the information was shared, but had no evidence, only speculation. The court thus granted summary judgment to the railroad.
Heim v. BNSF Railway Co. , No. 8:13CV369 (D. Neb. Dec. 9, 2014) (2014 U.S. Dist. LEXIS 171009)(case below 2013-FRS-40)
Memorandum and Order
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DISCOVERY; DENIAL OF NATIONWIDE DOCUMENTATION OF DISCIPLINE HISTORIES AND FRSA COMPLAINTS OF ALL OTHER BNSF EMPLOYEES WHERE PLAINTIFF FAILED TO ESTABLISH NEED FOR SUCH INFORMATION

Relying on Carman v. McDonnell Douglas Corp. , 114 F. 3d 790, 792 (8th Cir. 1997); Sallis v. University of Minn. , 408 F. 3d 470, 478 (8th Cir. 2005); and Semple v. Federal Exp. Corp. , 566 F. 3d 788, 794 (8th Cir. 2009), the Magistrate Judge in Heim v. BNSF Railway Co. , No. 8:13CV369 (D. Neb. Dec. 9, 2014) (2014 U.S. Dist. LEXIS 171009)(case below 2013-FRS-40), denied the Plaintiff's request in his Federal Railroad Safety Act, 49 U.S.C. § 20109 case for company-wide discovery of discipline histories and FRSA complaints of all other BNSF employees with a FRA-reportable injury five years prior to the complaint. The Plaintiff contended that he needed this information to show a correlation between being injured and being disciplined. The Magistrate held that merely claiming an adverse employment action arose from a company's nationwide policy is insufficient. Company-wide information is usually not helpful in employment cases. The Magistrate noted that the Plaintiff's personal injury report, charges against him, hearing, and discipline, were all imposed at local level, and found that under the prevailing Eighth Circuit law, the Plaintiff "failed to show any particular need to conduct discovery concerning whether, on a company-wide basis, other injured BNSF employees faced disciplinary charges for reporting a personal injury." BNSF produced during discovery a chart listing whether discipline was imposed on 21 employees with FRA-reportable injuries in the relevant geographic division, but did not produce those employees' discipline histories.
Smith-Bunge v. Wisconsin Central, Ltd. , No. 13-2736 (D.Minn. Oct. 8, 2014) (2014 WL 5023471)
Memorandum Opinion and Order
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Plaintiff established that Defendant violated the FRSA when it disciplined him with a 15 day suspension without pay for failure to report a low-back injury on the same day that it occurred. The Plaintiff had not realized until after an MRI that there had been a new injury to his back.
Kuduk v. BNSF Ry. Co. , 768 F.3d 786 (8th Cir. Oct. 7, 2014) (No. 13-3326; 2014 U.S. App. LEXIS 19099)
(Opinion)
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CONTRIBUTING FACTOR; 8TH CIRCUIT RULES THAT COMPLAINANT MUST PROVE INTENTIONAL RETALIATION

CONTRIBUTING FACTOR; 8TH CIRCUIT RULES THAT MORE THAN A TEMPORAL CONNECTION BETWEEN PROTECTED ACTIVITY AND ADVERSE EMPLOYMENT ACTION IS REQUIRED TO ESTABLISH A PRIMA FACIE CASE

In Kuduk v. BNSF Ry. , No. 13-3326, 2014 BL 281425, 39 IER Cases 275 (8th Cir. Oct. 7, 2014), the Eighth Circuit upheld a summary judgment disposition by the district court and rejected complainant's reliance on Araujo v. N.J. Transit Rail Ops., Inc. , 708 F.3d 152, 158 (3d Cir. 2013) that he "need not demonstrate the existence of a retaliatory motive on the part of the employee taking the alleged prohibited personnel action in order to establish that his [protected activity] was a contributing factor to the personnel action. " Citing to Staub v. Proctor Hosp. , 131 S.Ct. 1186, 1190 n. 1 (2011) (the "cat's paw" case), the court stated that the essence of a FRSA claim is "discriminatory animus." 131 S.Ct. at 1193. It found that while a "contributing factor" causation does not require that the employee conclusively demonstrate the employer's retaliatory motive in making his prima facie case, he must prove intentional retaliation prompted by the employee engaging in protected activity. In making this distinction, the court opined that Araujo may have improperly relied on Marano v. Dep't of Justice , 2 F.3d 1137 (Fed. Cir. 1993), for its no-need-to-show-motive conclusion.

The court also found that "more than a temporal connection between the protected conduct and the adverse employment action is required to present a genuine factual issue on retaliation" and relied on complainant's disciplinary probation status as a result of an earlier derailing incident. The court acknowledged the more lenient "contributing factor" causation standard but rejected the "notion" in some ARB decisions that temporal proximity, without more, is sufficient to establish a prima facie case. The court found that complainant's June 9 fouling of the tracks was an intervening event that independently justified adverse disciplinary action rejecting complainant's argument as to whether [he] in fact committed the rule violation. In the absence of evidence connecting his protected activity to the discharge, Kuduk was not entitled to FRSA relief even if BNSF inaccurately concluded that he committed one of the Eight Deadly Decisions ("Do not walk between rails or foul the track, except when duties require and proper protection is provided"). See Allen v. City of Pocahontas , 340 F.3d 551, 558 n. 6 (8th Cir. 2003) ("it is not unlawful for a company to make employment decisions based upon erroneous information and evaluations"), cert. denied , 540 U.S. 1182 (2004).

The court also agreed with the district court that BNSF was not liable for wrongful retaliation because it demonstrated by clear and convincing evidence that it would have discharged Kuduk even if he had not engaged in protected activity. See 49 U.S.C. § 42121(b)(2)(B)(ii). In doing so, the court relied on the labor-management investigatory and arbitration procedures.
Ortiz v. Grand Trunk Western Railroad Co. , No. 13-cv-13192 (E.D.Mich. Sept. 17, 2014) (2014 WL 4658762; 2014 U.S. Dist. LEXIS 132666)
(Opinion and Order Granting Defendant's Motion for Summary Judgment)
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Defendant railroad filed summary judgment motion contending that nearly two year period of time between Plaintiff's injury and his termination for intervening misconduct, which Plaintiff did not allege was retaliatory, does not support that his injury was a contributing factor in Plaintiff's termination.

CONTRIBUTING FACTOR; TEMPORAL PROXIMITY TOO DISTANT

Temporal proximity of 22 months between injury report and termination of employment as a result of three intervening work violations within a two day period of time is insufficient to meet "contributing factor" test. Ortiz v. Grand Trunk Western Railroad Co. , No. 13-cv-13192 (E.D.Mich. Sept. 17, 2014) (2014 WL 4658762; 2014 U.S. Dist. LEXIS 132666).

DISPARATE TREATMENT

Discipline of a co-worker who was neither injured nor filed injury report at time of Plaintiff's earliest workplace violation shows lack of disparate treatment.

Plaintiff NOT similarly situated to supervisors or managers involved in or investigating and serving as witnesses to initial rules' violation because Company deciding official for disciplinary violation found Plaintiff not wholly credible with regard to initial incident.

Manager's testimony relied upon by Plaintiff found to be equivocal, i.e. not sufficiently definitive, with regard to his belief of disparate treatment, i.e., termination of other employees for similar conduct. To be "similarly-situated," Plaintiff must have dealt with same supervisor, subject to same standards and engaged in same conduct without such differentiating or mitigating circumstances that would distinguish their conduct or employer's treatment of it." Cites to Mitchell v. Toledo Hosp. , 964 F. 2d 577, 583 (6th Cir. 1992)(race discrimination).

Ortiz v. Grand Trunk Western Railroad Co. , No. 13-cv-13192 (E.D. Mich. Sept. 17, 2014) (2014 WL 4658762; 2014 U.S. Dist. LEXIS 132666).
Young v. CSX, Inc. , No. 1:12-CV-01150 (N.D.N.Y. Sept. 4, 2014) (2014 WL 4367461; 2014 U.S. Dist. LEXIS 123051) (case below 2012-FRS-38)
(Memorandum-Decision and Order)
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Plaintiff, following his disciplinary termination after collision of two passenger trains, filed an OSHA FRSA retaliation complaint. Later, he attempted to exercise seniority rights to return to work as a trackman and was informed that he would be allowed to return to work. In the meantime, a copy of the Plaintiff's OSHA complaint had been delivered to Defendant's law department, which set off a flurry of internal correspondence as well as communication with outside counsel. The Plaintiff returned to work as a trackman, but was told the same day not to come to work until further notice. Managers reviewed the situation and determined that the Plaintiff had forfeited his seniority rights by failing to displace within a ten-day limitation period provided for in the labor agreement and eventually sent a letter to the Plaintiff explaining the Defendant's conclusion about the forfeiture.

Plaintiff filed a complaint alleging that the Defendant violated the FRSA anti-retaliation provisions when it terminated his employment after becoming aware that he had filed a complaint with OSHA. Defendant moved for summary judgment on the ground that the manager who determined that the Plaintiff had forfeited his seniority rights had consistently testified that he was not aware of the OSHA complaint at the time the unfavorable decision was made and Plaintiff had produced no email or other documents indicating that the manager had such knowledge. Plaintiff responded that evidence of the general knowledge of the complaint in the corporate office and law department, and other circumstantial evidence just before the seeming change of course on the seniority issue, was sufficient to survive summary judgment. Plaintiff relied on the ARB decision in Rudolph v. Nat'l R.R. Pass. Corp. , ARB No. 11-037, ALJ No. 2009-FRS-15 (ARB Mar. 29, 2013) (2013 WL 1647527 at *11), in which the ARB noted that "[t]he ALJ's exclusive focus on the knowledge possessed by the final responsible decision-maker constitutes error as a matter of law" because "proof that an employee's protected activity contributed to the adverse action . . . . may be established through a wide range of circumstantial evidence, including the acts or knowledge of a combination of individuals involved in the decision-making process"). The Defendant attempted to distinguish Rudolph on the ground that "it stands for the more limited proposition that a plaintiff is not required to show actual decision-maker knowledge only when agents who are aware of a plaintiff's protected activity advise the individual ultimately responsible for the adverse action." 2014 U.S. LEXIS at * 17-18.

Court found that it was not necessary to determine whether general corporate knowledge is sufficient (as Plaintiff urged) , or specific decision-maker knowledge is required (as Defendant maintained). Viewing the facts in Plaintiff's favor, the court found that the circumstantial evidence of the involvement of the law department and corporate officials, and the timing of the reversal of course on the right to return to work question, would allow a reasonable jury to conclude that the reversal was made in retaliation for plaintiff's OSHA Complaint once members of the Defendant's upper management became aware of it. The court stated that "[a] jury is certainly free to consider the timing and substance of all of these events before accepting or rejecting CSX's claim that one hand was completely unaware of what the other was doing." Id . at * 21. The court was also "mindful that the 'contributing factor' element of the FRSA is 'any factor, which alone or in combination with other factors, tends to affect in any way the outcome of the decision. '" Id .

CIRCUMSTANTIAL EVIDENCE; AT SUMMARY JUDGMENT STAGE OF PROCEEDINGS, CIRCUMSTANTIAL EVIDENCE OF KNOWLEDGE OF PROTECTED ACTIVITY SUCH AS TEMPORAL PROXIMITY IS SUFFICIENT TO INFER "CONTRIBUTING FACTOR" ELEMENT OF FRSA WHISTLEBLOWER RETALIATION PROVISION AND SATISFY GENUINE DISPUTE OF MATERIAL FACT

SUMMARY JUDGMENT RECORD VS. JURY DETERMINATION ON DEVELOPED RECORD; AT SUMMARY JUDGMENT STAGE OF PROCEEDINGS, CIRCUMSTANTIAL EVIDENCE OF KNOWLEDGE OF PROTECTED ACTIVITY, SUCH AS TEMPORAL PROXIMITY, IS SUFFICIENT TO INFER "CONTRIBUTING FACTOR" ELEMENT OF FRSA WHISTLEBLOWER RETALIATION PROVISION AND SATISFY GENUINE DISPUTE OF MATERIAL FACT

"CONTRIBUTING FACTOR"; AT SUMMARY JUDGMENT STAGE OF PROCEEDINGS, CIRCUMSTANTIAL EVIDENCE OF KNOWLEDGE OF PROTECTED ACTIVITY, SUCH AS TEMPORAL PROXIMITY, IS SUFFICIENT TO INFER "CONTRIBUTING FACTOR" ELEMENT OF FRSA WHISTLEBLOWER RETALIATION PROVISION AND SATISFY GENUINE DISPUTE OF MATERIAL FACT

TEMPORAL PROXIMITY; PLAINTIFF'S INABILITY TO POINT TO ANY FACTS ESTABLISHING THAT DECIDING OFFICIAL WAS AWARE OF COMPLAINANT'S OSHA COMPLAINT NOT ENOUGH TO GRANT SUMMARY JUDGMENT TO EMPLOYER ON BASIS OF EXISTING RECORD WHERE FACT-FINDER JURY COULD DRAW INFERENCES FROM MORE DEVELOPED RECORD OF CIRCUMSTANTIAL EVIDENCE BASED ON ITS FULL RANGE OF REASON, EXPERIENCE, AND COMMON SENSE

Without reaching issue of whether general corporate knowledge or specific decision-maker knowledge is required with regard to the relevant protected activity, i.e. the filing of a complaint with OSHA, the relevant facts, which include knowledge of various members of the Law Department advising the deciding official and proximity in time of the change in the decision-makers' mind from permitting retention of the employee through seniority in a position in a prior bargaining unit to terminating employee-whistleblower, even in light of the decision-maker's consistent denial of knowledge of the employee-whistleblower's protected activity, would permit a jury-fact-finder to infer knowledge from circumstantial evidence. District Court in Second Circuit cites to Araujo v. N.J. Transit Rail Operations, Inc. , 708 F. 3d 152, 157 and 160 (3d Cir. 2013). Young v. CSX, Inc. , No. 1:12-CV-01150 (N.D.N.Y. Sept. 4, 2014) (2014 WL 4367461; 2014 U.S. Dist. LEXIS 123051) (case below 2012-FRS-38).

KNOWLEDGE OF PROTECTED ACTIVITY BY DECISIONMAKER; COMPLAINT SURVIVED SUMMARY JUDGMENT MOTION DESPITE DECISIONMAKER'S DENIAL OF KNOWLEDGE WHERE CIRCUMSTANTIAL EVIDENCE OF LAW DEPARTMENT'S AND CORPORATE OFFICERS' ACTIONS AND TEMPORAL PROXIMITY COULD LEAD A REASONABLE JURY TO CONCLUDE THAT THE ADVERSE EMPLOYMENT DECISION (CHANGING DECISIONMAKER'S RULING ON SENIORITY) WAS RETALIATORY

In Young v. CSX, Inc. , No. 1:12-CV-01150 (N.D.N.Y. Sept. 4, 2014) (2014 WL 4367461; 2014 U.S. Dist. LEXIS 123051) (case below 2012-FRS-38), the Plaintiff had been the dispatcher during an incident in which two passenger trains nearly collided. Following an investigation, the Defendant determined that the Plaintiff's involvement warranted his dismissal. Several months later, the Plaintiff filed an OSHA FRSA retaliation complaint. Later, the Plaintiff attempted to exercise seniority rights to return to work as a trackman. Initially, the Plaintiff had been informed that he would be allowed to return to work. In the meantime, a copy of the Plaintiff's OSHA complaint had been delivered to Defendant's law department, which set off a flurry of internal correspondence as well as communication with outside counsel. The Plaintiff returned to work as a trackman, but was told the same day not to come to work until further notice. Managers reviewed the situation and determined that the Plaintiff had forfeited his seniority rights by failing to displace within a ten-day limitation period provided for in the labor agreement. A manager eventually sent a letter to the Plaintiff explaining the Defendant's conclusion about the forfeiture. The Plaintiff then filed a complaint alleging that the Defendant violated the FRSA anti-retaliation provisions when it terminated his employment after becoming aware that he had filed a complaint with OSHA. The Defendant moved for summary judgment on the ground that the manager who determined that the Plaintiff had forfeited his seniority rights had consistently testified that he was not aware of the OSHA complaint at the time the unfavorable decision was made. The Defendant pointed out that the Plaintiff had produced no email or other documents indicating that the manager had such knowledge. The Plaintiff responded that evidence of the general knowledge of the complaint in the corporate office and law department, and other circumstantial evidence just before the seeming change of course on the seniority issue, was sufficient to survive summary judgment. The Plaintiff relied on the ARB decision in Rudolph v. Nat'l R.R. Pass. Corp. , ARB No. 11-037, ALJ No. 2009-FRS-15 (ARB Mar. 29, 2013) (2013 WL 1647527 at *11), in which the ARB noted that "[t]he ALJ's exclusive focus on the knowledge possessed by the final responsible decision-maker constitutes error as a matter of law" because "proof that an employee's protected activity contributed to the adverse action . . . . may be established through a wide range of circumstantial evidence, including the acts or knowledge of a combination of individuals involved in the decision-making process"). The Defendant attempted to distinguish Rudolph on the ground that "it stands for the more limited proposition that a plaintiff is not required to show actual decision-maker knowledge only when agents who are aware of a plaintiff's protected activity advise the individual ultimately responsible for the adverse action." 2014 U.S. LEXIS at * 17-18.

The court found that it was not necessary to determine whether general corporate knowledge is sufficient, as the Plaintiff urged, or specific decision-maker knowledge is required, as the Defendant maintained. Rather, viewing the facts in the Plaintiff's favor, the court found that the circumstantial evidence of the involvement of the law department and corporate officials, and the timing of the reversal of course on the right to return to work question, would allow a reasonable jury to conclude that the reversal was made in retaliation for plaintiff's OSHA Complaint once members of the Defendant's upper management became aware of it. The court stated that "[a] jury is certainly free to consider the timing and substance of all of these events before accepting or rejecting CSX's claim that one hand was completely unaware of what the other was doing." Id . at * 21. The court was also "mindful that the 'contributing factor' element of the FRSA is 'any factor, which alone or in combination with other factors, tends to affect in any way the outcome of the decision. '" Id .
Fulk v. Norfolk Southern Railway Co. , No. 13-cv-234 (M.D.N.C. Aug. 4, 2014) (2014 WL 3818048; 2014 U.S. Dist. LEXIS 106344)
(Memorandum Opinion and Order)
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Surviving spouse Plaintiff files a whistleblower retaliation complaint that railroad seeks to dismiss.

STANDING; SURVIVING SPOUSE MAY HAVE STANDING TO FILE FRSA RETALIATION COMPLAINT IF THE WORKER AUTHORIZED THE FILING PRIOR TO DEATH

In Fulk v. Norfolk Southern Railway Co. , No. 13-CV-234 (M.D.N.C. Aug. 4, 2014) (2014 WL 3818048; 2014 U.S. Dist. LEXIS 106344), the court held that a widow may have standing to file an FRSA worker's retaliation complaint with the Secretary of Labor drafted by the worker, but timely filed after his suicide by his widow on the worker's behalf, if she was properly authorized by him when he was alive to file the action. The court found that whether the widow had been "authorized within the meaning of the statute and the regulations (i.e., whether Mr. Fulk directed her to file the action when he was alive) is an issue of fact that, in light of the allegations contained in the Complaint, is sufficiently pled and may be further addressed at summary judgment, if necessary. "

PUNITIVE DAMAGES DO NOT SURVIVE COMPLAINANT'S DEATH

The right to recover punitive damages does not survive death of a complainant. Fulk v. Norfolk Southern Railway Co. , No. 13-CV-234 (M.D.N.C. Aug. 4, 2014) (2014 WL 3818048; 2014 U.S. Dist. LEXIS 106344), citing Faircloth v. Finesod , 938 F. 2d 513, 518 (4th Cir. 1991).
Pollock v. Union Pacific Railroad Co. , No. 12-cv-2128 (S.D.Cal. July 23, 2014) (2014 WL 3696116; 2014 U.S. Dist. LEXIS 101062)
(Order Granting Defendant's Motion for Partial Summary Judgment and Denying Plaintiff's Motion for Summary Adjudication)
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Where Plaintiff was one of two employees charged with discipline based on an incident which involved both employees, but only resulted in the filing of an injury action by Plaintiff and Defendant decided to propose charges against both individuals before receipt of a report, summary judgment motion by Defendant with regard to Plaintiff's claim of disciplinary action as a result of FRSA-protected conduct is granted by District Court to Defendant and denied to Plaintiff.

CAUSATION; DECISION TO DISCIPLINE MADE PRIOR TO FILING OF INJURY REPORTDISCRIMINATORY INTENT; DEFENDANT's EQUAL TREATMENT OF PLAINTIFF -SUPERVISORY EMPLOYEE (FOREMAN) WHO DID NOT FILE AN INJURY REPORT, BUT HAD BEEN INVOLVED IN THE BACKHOE INCIDENT REFLECTS LACK OF SUCH INTENT

In Pollock v. Union Pacific Railroad , No. 12-CV-2128 (S.D. Cal. July 23, 2014) (2014 WL 3696116; 2014 U.S. Dist. LEXIS 101062), the Plaintiff was attempting to crawl a backhoe across a bridge when the bridge collapsed. The Plaintiff stated that he was following the instructions of a foreman. Following an investigation, it was determined that the accident was the result of a poor briefing and risk assessment. At first, the Plaintiff did not think he had been injured; but several days later he filed an injury report. Prior to receipt of the injury report, a manager had sent an email indicating the possible need to impose discipline on the Plaintiff for the incident. Later, both the Plaintiff and the foreman were disciplined.

The court granted the Defendant's motion for summary judgment on the Plaintiff's FRSA retaliation claim on the ground that the Defendant's decision to file disciplinary charges against the Defendant was made prior to receipt of the Plaintiff's injury report, and on the ground that the foreman had also been charged with a violation even though he did not file an injury report. The court found that the FRSA requires some evidence of discrimination based on the protected conduct, and that in instant case the Defendant had not discriminated between those who had engaged in protected conduct and those who did not. The court was not persuaded by the Plaintiff's claim that his injury report threw the disciplinary process into "high gear. " The court stated that "[b]ecause Plaintiff's injury report was not taken into consideration when Defendant imposed the challenged discipline, an essential element of Plaintiff's claim is definitively negated. "
Davis v. Union Pacific Railroad Co. , No. 12-cv-2738 (W.D.La. July 14, 2014) (2014 WL 3499228) (case below 2011-FRS-33)
(Memorandum Ruling)
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PROTECTED ACTIVITY; WHEN REPORTING WORK PLACE INJURY, THE REPORT IS IN GOOD FAITH IF PLAINTIFF ACTUALLY BELIEVED AT THE TIME OF THE REPORT THAT THE INJURY WAS WORK RELATED

In Davis v. Union Pacific Railroad Co. , No. 12-cv-2738 (W.D.La. July 14, 2014) (2014 WL 3499228) (case below 2011-FRS-33), the Defendant filed a motion for summary judgment arguing that the Plaintiff's reporting of a work place injury was not protected activity under the FRSA because it was allegedly not made in good faith. Reviewing the caselaw, the court held that "when a plaintiff brings a claim under the FRSA alleging he was retaliated against for reporting a work-related injury, both Griebel [ v. Union Pacific Railroad Co. , No. 2011-FRS-11 (ALJ Jan. 31, 2013)] and Ray [v. Union Pacific Railroad Co ., 971 F.Supp.2d 869 (S.D.Iowa 2013)], require that the plaintiff actually believed, at the time he reported the injury , that it was work related. If the plaintiff did so believe, then his activities were in good faith and were protected under the FRSA. " Slip op. at 15-16 (emphasis added).

The injury had purportedly occurred on July 15, but the injury report was not filed until August 12. The Defendant alleged that during the interim, the Plaintiff consistently stated that the injury was not work related. The court, however, determined that a genuine issue of material fact existed because the Plaintiff alleged that he was initially diagnosed with gout, a non-work related injury, and that upon being diagnosed with a high ankle sprain, he filed the injury report the next day.

EMPLOYER's KNOWLEDGE OF WORK RELATED REPORT; EMPLOYER CANNOT AVOID LIABILITY MERELY BY ALLEGING THAT IT DID NOT BELIEVE THAT THE REPORT WAS MADE IN GOOD FAITH

In Davis v. Union Pacific Railroad Co. , No. 12-cv-2738 (W.D.La. July 14, 2014) (2014 WL 3499228) (case below 2011-FRS-33), the Defendant filed a motion for summary judgment arguing that, although it was aware of the Plaintiff's injury report, the Plaintiff could not establish the second element of his burden in an FRSA complaint (that the employer knew that the employee engaged in protected activity), because this element requires a showing that the Defendant's injury report was filed in good faith. The court stated that the Defendant's theory was that "if the employer believes an employee is acting in bad faith--for example, by filing a false or unsubstantiated report of a work-related injury--then the employer cannot be held to have known the employee was engaging in protected activity under the FRSA. " The court found the argument unpersuasive because it would immunize employers simply by alleging facts to show they thought the employee might be lying or otherwise acting in bad faith. The court noted that the FRSA is intended to be protective of employees, and concluded that the statute would be far less protective if the employer could avoid liability in this way.

CONTRIBUTING FACTOR; TEMPORAL PROXIMITY IS SUFFICIENT IN ITSELF TO CREATE A GENUINE ISSUE OF MATERIAL FACT SUFFICIENT TO SURVIVE MOTION FOR SUMMARY JUDGMENT

In Davis v. Union Pacific Railroad Co. , No. 12-cv-2738 (W.D.La. July 14, 2014) (2014 WL 3499228) (case below 2011-FRS-33), the Defendant filed a motion for summary judgment arguing that the Plaintiff's report of a work related injury was not a contributing factor in its decision to terminate the Plaintiff's employment, arguing that the Defendant was terminated for dishonesty and that the injury report played no part. The court found that temporal proximity between the Plaintiff's injury report, the Defendant's investigation charging dishonesty, and the Plaintiff's eventual termination, in itself created a genuine issue of material fact on the contributing cause element of the Plaintiff's FRSA claim sufficient to survive summary judgment.
Gunderson v. BNSF Railway Co. , No. 14-cv-223 (D.Minn. June 30, 2014) (2014 WL 2945762) (case below 2011-FRS-1)
(Order)
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PLAINTIFF'S PARTICIPATION IN HEARING PROCESS BEFORE ALJ IS NOT A WAIVER OF THE RIGHT TO FILE IN FEDERAL DISTRICT COURT UNDER 49 U.S.C. § 20109(d)(3)

In Gunderson v. BNSF Railway Co. , No. 14-cv-223 (D.Minn. June 30, 2014) (2014 WL 2945762) (case below 2011-FRS-1), the Plaintiff filed an FRSA lawsuit in federal district court nine business days after the ALJ issued his 14-page opinion. The Defendant filed a motion to dismiss (which the court converted to a motion for summary judgment) arguing that although the Plaintiff " acquired the right to file a federal lawsuit on the 211th day [pursuant to 49 U.S.C. § 20109(d)(3)], he thereafter waived that right by continuing to participate in the administrative process." Slip op. at 5 (emphasis as in original). Although the court had sympathy for the Defendant's argument, it found that the plain language of the statute, and the weight of the caselaw interpreting that provision, left the court with no choice but to hold that the Plaintiff did not waive his right to bring the FRSA lawsuit. The court noted that the Defendant's framing of the issue as one of waiver was unique, but found that no matter how the issue was framed "courts have repeatedly and unanimously rejected the idea that Congress did not intend for litigants to be able to file a lawsuit even after obtaining a merits decision from an ALJ." Id . at 7. The court stated:

In sum, although BNSF's argument has a great deal of appeal, and although Gunderson has wasted a great deal of scarce resources, the Court is constrained to hold that Gunderson has not waived his statutory right to file this action. As many courts have found, Congress must have been aware of the potential for duplicative proceedings, but nevertheless chose to give employees the right to bring a federal lawsuit whenever the Secretary has failed to issue a final decision within the required period. The Court is obligated to enforce the decisions of Congress, whether or not the Court agrees with them. BNSF's motion is therefore denied.

Id . at 9.
Worcester v. Springfield Terminal Ry. Co. , No. 2:12-cv-00328 (D. Me. June 27, 2014) (appeal filed in the First Circuit, No. 14-1965)
(Judgment)
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Summary :
Entry of judgment on jury verdict in favor of the Plaintiffs for damages in the amount of $150,000, pursuant to 49 U.S.C. § § 20109(e)(2)(B) and 20109(e)(2)(C),1 and punitive damages in the amount of $250,000, pursuant to 49 U.S.C. § 20109(e)(3).
Koger v. Norfolk Southern Railway Co. , No. 13-cv-12030 (S.D. W.Va. June 19, 2014) (2014 WL 2778793) (case below ARB No. 09-101, ALJ No. 2008-FRS-3)
(Memorandum Opinion & Order)
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Summary :
SECTION 20109(f) "ELECTION OF REMEDIES" PROVISION DOES NOT BAR FRSA RETALIATION SUIT BASED ON COMPLAINANT's APPEAL OF HIS DISMISSAL UNDER THE RAILWAY LABOR ACT

In Koger v. Norfolk Southern Railway Co. , No. 13-cv-12030 (S.D. W.Va. June 19, 2014) (2014 WL 2778793) (case below ARB No. 09-101, ALJ No. 2008-FRS-3), the Plaintiff filed an FRSA Section 20109 retaliation complaint in the Southern District of West Virginia. The Defendant filed a motion to dismiss for lack of subject matter jurisdiction on the ground that the Section 20109(f) FRSA "election of remedies" provision barred the FRSA complaint because the Plaintiff had already challenged his termination under the Railway Labor Act (RLA). The court first converted the FRCP 12(b)(1) motion into a FRCP 12(b)(6) motion for summary judgment, citing Ratledge v. Norfolk Southern Railway Co. , No. 1:12-cv-402, 2013 WL 3872793 (E.D. Tenn. July 25, 2013). The court denied the motion, citing the ARB decision in Mercier v. Union Pacific Railroad , ARB Nos. 09-121, -101, 2011 WL 4915758 (ARB Sept. 21, 2011) and several federal court decisions. In particular, the court found persuasive the 7th Circuit's decision in Reed v. Norfolk Southern Railway Co. , 740 F.3d 420, 425 (7th Cir. 2014) (appealing grievance to special adjustment board is seeking protection under collective bargaining agreement rather than seeking protection under the RLA).
Pfeifer v. Union Pacific Railroad Co. , No. 12-cv-2485 (D.Kan. June 9, 2014) (case below ARB No. 12-087, ALJ No. 2011-FRS-38),
(Memorandum and Order)
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Summary :
ARB's DISMISSAL OF ADMINISTRATIVE COMPLAINT UPON NOTICE OF COMPLAINANT's FILING OF ACTION IN FEDERAL DISTRICT COURT DOES NOT HAVE RES JUDICATA EFFECT

SECTION 20109(f) "ELECTION OF REMEDIES" PROVISION DOES NOT BAR FRSA RETALIATION SUIT BASED ON UNION's APPEAL OF COMPLAINANT's SUSPENSION TO THE PUBLIC REVIEW BOARD

In Pfeifer v. Union Pacific Railroad Co. , No. 12-cv-2485 (D.Kan. June 9, 2014) (case below ARB No. 12-087, ALJ No. 2011-FRS-38), the Defendant moved for summary judgment on the Plaintiff's whistleblower retaliation action under the FRSA on the grounds that the action was barred by the doctrine of res judicata and by Section 20109(f).

Res Judicata/Claim Preclusion

Following a three day hearing, the ALJ issued a Decision and Order finding in favor of Union Pacific. This decision was rendered well over 210 days after the complaint had been filed with OSHA. The Plaintiff filed a petition for review with the ARB. Prior to serving the ARB with a notice of intent to file an original action in federal court, the Plaintiff filed his complaint with the District Court in Kansas. After receiving the notice of intent, the ARB dismissed the appeal before it. The court had previously denied a motion to dismiss on the same res judicata ground, and the court declined to reconsider its earlier ruling. However, the court went on to explain why even if it reconsidered, it would not change its ruling. First, the court found the ARB dismissed the administrative complaint essentially because it recognized that the district now had jurisdiction. The ARB's decision was not on the merits, but merely in recognition of the Complainant's statutory right to file a federal court action. Moreover, even if the ARB's decision was a final decision on the merits, because it was issued more than 210 days after the filing of the administrative complaint, the ARB decision did not deprive the court of jurisdiction.

Election of remedies

The Defendant also challenged the court's jurisdiction under the FRSA election of remedies provision, arguing that the FRSA action was barred because the Complainant sought protection by appealing his suspension to the Public Review Board. The court rejected this contention, first because it was the union and not the Complainant who sought this protection, and second because the protection sought was not under the Railway Labor Act, but rather under the collective bargaining agreement.
Lynch v. Union Pacific Railroad Co. , No. 13-cv-2701 (N.D. Tx. June 4, 2014) (2014 WL 2519206) (case below ALJ No. 2012-FRS-49)
(Memorandum Opinion & Order)
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PLAINTIFF'S GAMESMANSHIP IN EMPLOYING FRSA "KICK-OUT" PROVISION DOES NOT DEPRIVE DISTRICT COURT OF JURISDICTION IF THE DELAY IN ISSUANCE OF THE SECRETARY'S FINAL DECISION WAS NOT DUE TO THE BAD FAITH OF THE PLAINTIFF

NORTHERN DISTRICT OF TEXAS INDICATES AGREEMENT WITH DISTRICT OF KANSAS INTERPRETATION THAT FRSA KICK-OUT PROVISION CONFERS DISTRICT COURT JURISDICTION EVEN IF THE SECRETARY ISSUED A FINAL DECISION, PROVIDED THAT THE DECISION WAS RENDERED MORE THAN 210 DAYS AFTER THE FILING OF T HE ADMINISTRATIVE COMPLAINT

In Lynch v. Union Pacific Railroad Co. , No. 13-cv-2701 (N.D. Tx. June 4, 2011) (2014 WL 2519206) (case below ALJ No. 2012-FRS-49), the court denied the Defendant's motion to dismiss the Plaintiff's FRSA, 49 U.S.C. § 20109 whistleblower claim. The Plaintiff contended that the court lacked subject matter jurisdiction because the Complainant's conduct in waiting 892 days after he filed his initial claim with OSHA, and 682 days after his right to remove his claim to federal district court had vested, constituted "bad faith" under the FRSA "kick-out" provision at 49 U.S.C. § 20109(d)(3). The court found it undisputed that: "(1) Plaintiff was responsible for delay in the OSHA investigator's ruling because he sought further investigation; (2) Plaintiff indicated that he did not intend to file the case in federal court and voluntarily entered into a scheduling order before the ALJ; (3) the ALJ and both parties expended significant resources in preparing for and conducting an extensive hearing; and (4) this lawsuit was filed five months after the hearing, after Defendant and the ALJ spent additional resources on lengthy posthearing briefs." The court, however, stated that gamesmanship was beside the point, the sole issue being whether the court lacks subject matter jurisdiction. Under the "kick-out" provision, the court lacks jurisdiction if the delay in the Secretary of Labor's final decision was due to the Plaintiff's bad faith. The court found that the Defendant had not established bad faith:

Defendant here has failed to establish that the court lacks subject matter jurisdiction. The Secretary of Labor clearly did not issue a final decision within 210 days after the filing of the OSHA complaint, and such delay — even if partially due to Plaintiff taking advantage of the rights afforded by Department of Labor regulations — was not caused by the "dishonestly of belief or purpose" of Plaintiff. See Pfeifer [v. Union Pacific R.R. Co. , No. 12-CV-2485] 2013 WL 1367054, at *5 [(D.Kan. Apr. 3, 2013)] (quoting Black's Law Dictionary 149 (9th ed. 2009)). As the ALJ observed and Defendant concedes, it is oftentimes unlikely that a decision can be reached within the 210-day deadline set by the statute, regardless of the good faith or bad faith of the Plaintiff. The record is clear that the delay resulting in the failure of the Secretary of Labor to issue a final decision within 210 days was not due to the bad faith of Plaintiff.

The removability of this case, for which both parties and the ALJ have already expended significant resources, it an unfortunate and likely unintended consequence of the statutory language used by Congress. There is no exception to federal subject matter jurisdiction when an FRSA case is removed as an act of gamesmanship if the initial delay was not the result of bad faith by the Plaintiff. The statute, as currently written, permits such gamesmanship and regrettably does nothing to promote judicial economy. It is, however, the task of Congress and not this court to remedy such an unintended outcome.

Slip op. at 7. Although the motion in the instant case did not turn on the issue, the court cited Glista v. Norfolk S. Ry. Co. , No. 13-04668, 2014 WL 1123374, at *3 (E.D.Pa. Mar. 21, 2014), for the proposition that Section 20109(d)(3) confers district court jurisdiction even if the Secretary issued a final decision, provided that the decision was rendered more than 210 days after the filing of the administrative complaint.
Consolidated Rail Corp. v. USDOL , No. 13-3740 (6th Cir. May 28, 2014) (unpublished) (2014 WL 2198410) (case below ARB Nos. 13-030, -033, ALJ No. 2012-FRS-00012)
(Opinion)
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CAT'S PAW THEORY OF LIABILITY; MANAGER'S INADEQUATE REVIEW OF TRANSCRIPT OF INTERNAL HEARING FOUND INADEQUATE TO CONSTITUTE AN INDEPENDENT INVESTIGATION FOR AVOIDING CAT'S PAW LIABILITY

In Consolidated Rail Corp. v. USDOL , No. 13-3740 (6th Cir. May 28, 2014) (unpublished) (2014 WL 2198410) (case below ARB Nos. 13-030, -033, ALJ No. 2012-FRS-00012), a train conductor (the Complainant) filed 35 formal written safety complaints in the six months before he was fired. The incident leading to the firing occurred when the Complainant's supervisor had asked to speak with employees about a recent accident. The Complainant had not responded to the supervisor's "Good Morning" and indicated that he would only speak with the supervisor if it involved a work-related issue. The supervisor stated that he could talk to the Complainant if he wanted to, to which the Complainant responded "Do you want to tangle with me?" The Area Superintendent suspended the Complainant. Following an internal hearing, the Petitioner's Manager of Field Operations terminated the Complainant's employment for violating the Petitioner's zero-tolerance policy for threats. The Complainant filed a Federal Rail Safety Act whistleblower complaint. Following a hearing, the ALJ concluded that the Petitioner terminated the Complainant in violation of the FRSA. The ARB affirmed. On appeal, the Sixth Circuit denied the Petitioner's petition for review under the highly deferential substantial evidence standard of review. Substantial evidence supported the ALJ's finding that the supervisor and the Area Superintendent had animus against the Complainant which contributed to his termination. The ALJ imputed these employees' hostility to the Manager under a "cat's paw" theory of liability. On appeal, the Petitioner argued that the ALJ's conclusion was contrary to Staub v. Proctor Hospital , 131 S.Ct. 1186, 1194 (2011). The court found, however, that substantial evidence supported the ALJ's finding that the Manager's review of the transcript of the internal hearing was not sufficiently independent to avoid liability under the cat's pay theory, and that the ALJ's decision was in line with Staub , which observes that mere conducting of an independent investigation does not necessarily preclude a claim of wrongful termination.

APPELLATE REVIEW; FINDINGS OF FACT REVIEWED ON DEFERENTIAL SUBSTANTIAL EVIDENCE STANDARD, LEGAL CONCLUSIONS ARE REVIEWED DE NOVO

CONTRIBUTING FACTOR; KNOWLEDGE; CAT’S PAW; SIXTH CIRCUIT AFFIRMS FINDING FOR COMPLAINANT ON CONTRIBUTING FACTOR WHERE DECISION MAKER’S CLAIM THAT HE DID NOT KNOW ABOUT PROTECTED ACTIVITY WAS NOT CREDIBLE, OTHER MANAGERS HAD RETALIATORY ANIMUS, AND CAT’S PAW APPLIED BECAUSE THE DECISION MAKER DID NOT CONDUCT AN INDEPENDENT REVIEW

AFFIRMATIVE DEFENSE; SIXTH CIRCUIT AFFIRMS FINDING THAT RAILROAD DID NOT ESTABLISH AFFIRMATIVE DEFENSE WHERE WERE WIDELY DIVERGENT ACCOUNTS OF THE ALLEGED THREATENING INCIDENT AND OTHER INSTANCES WHERE THE RAILROAD HAD NOT DISCIPLINED THREATS IN THE MANNER IT HAD IN COMPLAINANT’S CASE

Conrail v. United States DOL , 567 Fed. Appx. 334 (6th Cir. May 28, 2014) (unpub.) (case below ARB Nos. 13-030, -033, ALJ No. 2012-FRS-12): Complainant was terminated for threatening a supervisor. He also made a high number of safety reports. When the supervisor allegedly perceived the threat, he escalated the issue to his supervisor, who suspended complainant indefinitely pending a hearing. There was evidence that the supervisors were unhappy with the safety complaints and when complainant was suspended the more senior supervisor tossed some of his safety complaints back at him. Complainant was terminated in a decision that was made by another subordinate supervisor under the command of the senior supervisor.

The case proceeded to a hearing before an ALJ. There was evidence adduced that there was no threat or altercation at all and that the first supervisor had unreasonably escalated the situation. That supervisor also gave conflicting accounts of events. There was further evidence that the official decision-maker was unaware of basic facts in the hearing transcript and hadn’t reviewed the evidence. There was further evidence that the railroad had not punished threats in this manner in the past. The ALJ concluded that complainant had established by a preponderance of the evidence that his protected activity contributed to the decision to terminate him and that the railroad had not shown it would have taken the same action absent the protected activity by clear and convincing evidence. She awarded reinstatement and compensatory damages. Both parties appealed to the ARB, which affirmed. The railroad appealed to the Sixth Circuit.

After reviewing the legal framework for an FRSA complaint, the panel explained that factual determinations made by the ALJ were reviewed on the substantial evidence standard, which is a deferential form of review. Legal conclusions were reviewed de novo. On appeal, the railroad challenged the findings that the decision maker knew about the protected activity and that the protected activity contributed to the adverse action. The ALJ had found otherwise because the decision-makers claims were not credible given that he shared an office with someone who knew and the protected activities were reviewed in the transcript of the hearing. This was substantial evidence and so the finding was affirmed.

The panel also found substantial evidence to support the finding of animus in the flicking of safety reports back at complainant, a request that he not file so many, and questioning from managers about why he was still working for the railroad. The ALJ had applied a cat’s paw theory and the Sixth Circuit agreed it was appropriate since there was insufficient evidence that the decision-maker had conducted an independent review.

Finally, as to whether the railroad established that it would have taken the same adverse action without the protected activity, the panel determined that the different accounts of the alleged threat meant that there was substantial evidence to support that ALJ’s conclusion, especially where there were numerous other incidences of threats that did not result in termination.
Lee v. Norfolk Southern Railway Co. , No. 13-cv-00004 (W.D. N.C. May 20, 2014)
(Memorandum Decision and Order)
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Later history: Reversed in Lee v. Norfolk Southern Railway Co. , 802 F.3d 656 (4th Cir. 2015).

Summary :
ELECTION OF REMEDIES; SUMMARY JUDGMENT; COURT HOLDS THAT § 20101(F) BARS FRSA SUIT WHERE PLAINTIFF PREVIOUSLY LITIGATED RACE DISCRIMINATION SUIT RELATING TO SAME ADVERSE ACTION

In Lee v. Norfolk Southern Railway Co. , No. 13-cv-00004 (W.D. N.C. May 20, 2014), rev’d Lee v. Norfolk Southern Railway Co. , 802 F.3d 656 (4th Cir. 2015), Plaintiff alleged that he was retaliated against in violation of the FRSA by Defendant for tagging too many cars with “bad order” citations. He has been suspended for 6 months. Previously he had pursued an employment discrimination claim again Defendant alleging racial discrimination in reference to the same suspension. Here he alleged that supervisors had bad order quotas and there was pressure not to exceed those marks. He claimed that he did not succumb to the pressure and properly bad ordered unsafe cars, resulting in the retaliation. The railroad’s stated reason for the suspension was the consumption of alcohol (one beer) while on the clock. The railroad sought summary judgment under the election of remedies provision. The court granted the motion.

The court began by reviewing the structure of the Railway Labor Act and the FRSA, as well as the history of the FRSA’s election of remedies provision and the 2007 amendments that took the FRSA out of the RLA arbitration process and gave the Secretary of Labor responsibility under the FRSA. In this case, it was undisputed that the Plaintiff had sought protection in the discrimination lawsuit and the FRSA suit. The court also found it undisputed that the same allegedly unlawful act was at issue in both suits—the six month suspension. This left the question as whether the first lawsuit was an action brought pursuant to another provision of law.

Plaintiff attempted to forestall this question by arguing that the railroad was estopped from arguing otherwise because of an agreement reached in the first discovery process. The court found this unavailing since the election of remedies provision limited what actions could even be brought. And the court thought that the Plaintiff had plainly brought suits under different provisions of law. The court saw the FRSA’s framework as intended to provide an expedited framework to address complaints and the election of remedies provision as a way of ensuring that the FRSA process did not get bogged down while other suits were pursued.

In initiating the first action the Plaintiff had triggered § 20109(f) and the bar on the second action. It did not matter that in the first action the court had concluded that the forecast of evidence showed that he had been suspended for drinking alcohol on the job and this was a minor grievance subject to the RLA, depriving the court of jurisdiction. But at the same time, the court did have jurisdiction over the § 1981 claim and disposed of it in summary decision. The court acknowledged that if Plaintiff had sought redress under the CBA and RLA, the suit under the FRSA would not be barred because he would have been enforcing collective bargaining rights. But that was not the history in this case; he had not brought a CBA/RLA grievance at all; he brought a race discrimination claim and then an FRSA complaint.

Plaintiff argued that since § 1981 and the FRSA served different purposes, combating race discrimination and retaliation, respectively, and thus the election of remedies provision did not apply. But the court thought that this would prevent the election of remedies provision from serving its purpose since every lawsuit could be directed at a different wrong. As the court saw it, the overlap was in whether the suits concerned the same act, which it saw as the suspension.

Finally, the court rejected reliance on subsections (g) and (h) and the point that the FRSA was not meant to limit rights of employees. It stated that it had not done so because Plaintiff had been permitted to pursue his race discrimination claim to conclusion. As the court saw matters, 20109(f) requires that if an FRSA action is brought, it must be brought first. It did not prevent subsequent claims or side-by-side claims. But it barred subsequent FRSA complaints. If the later subsections were read to allow the action here, the court thought that subsection (f) would be eviscerated. It thus granted summary decision.

[ Editorial Note : Decision reversed on appeal in Lee v. Norfolk Southern Railway Co. , 802 F.3d 656 (4th Cir. 2015)].
Wallis v. BNSF Railway Co , No. 13-40 (W.D. Wash. Apr. 23, 2014) (2014 WL 16848472) (case below 2011-FRS-37)
(Order)
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Summary :
ATTORNEY FEES AND COSTS; HOURLY RATE; REASONABLE HOURS EXPENDED; ADJUSTMENT TO LODESTAR; DEDUCTIONS AND REDUCTIONS FOR UNEXPLAINED AND UNDOCUMENTED EXPENSES

In Wallis v. BNSF Railway Co. , No. 13-40 (W.D. Wash. Apr. 23, 2014) (2014 WL 16848472) (case below 2011-FRS-37), a jury found that the Defendants violated the whistleblower provision of the FRSA in regard to a 30-day suspension and to imposition of "risk-identifier/PPI points." The jury awarded $20,000 in damages. The Plaintiff then sought attorney fees and costs totaling $515,297.54. The court awarded $247,907.91 in attorney fees and expenses, and $30,459.82 in expert witness fees.

Reasonable hourly rates; local rate where not shown that local counsel was unavailable or unable to handle the matter; $600 per hour not supportable for Seattle area

The court applied the "lodestar" method for assessing the amount of reasonable attorney fees, and the 9th Circuit's Johnson-Kerr factors for determining whether to adjust the lodestar figure. See Hohlbein v. Utah Land Res. LLC , 467 Fed. Appx. 715, 716 (9th Cir. 2012). Because the Plaintiff had not shown that local counsel was unavailable or unable to handle the matter, the court found that the relevant community for determining the reasonable hourly rate was its own district. The Plaintiff's attorney had extensive experience and recognition in the field of railroad litigation, and requested an hourly rate of $600. The Plaintiff, however, presented no evidence on the rates from the court's judicial district. The Defendant presented affidavits opining that $400 was the appropriate rate in the district. The court adopted the $400 rate. The Plaintiff's local counsel asked for $500 per hour, but presented no evidence in support of the requested rate. The court awarded $325 per hour, which was the negotiated rate the local counsel charged the lead counsel. The court indicated that an attorney with the local counsel's experience might command a higher rate in other circumstances; but here he had only served as second-chair at the trial. The court awarded $275 and $250 an hour for attorneys with less experience. A $100 an hour rate for a paralegal was not challenged.

Reasonable hours; duplicate work by attorney and paralegal; fact that local counsel was not required to attend trial did not mean that his participation was unnecessary; deduction for defense on summary judgment where defense had limited success; no deduction for work on punitive damages claim where, although not successful, the claim went to the jury

The court made a number of deductions to hours claimed. The court made deductions for duplicate entries for an attorney and a paralegal for reviewing the same email, attending the same teleconferences and depositions, and drafting the same documents. The court allowed the duplicate hours for the attorney and the paralegal to both attend the trial.

The Defendant sought to exclude time for local counsel spent after a pre-hearing conference where the court told local counsel that he did not need to attend the trial. The court stated that its comment that local counsel did not need to attend the trial as local counsel did not preclude him from attending the trial as second-chair and serving an active role in the case. The court found that nature and complexity of the trial made the presence of two attorneys reasonably necessary, noting that the Defendant was represented by two attorneys.

The court made a deduction of 50% for defense of a summary judgment motion given the Plaintiff's limited success on that defense. On six unfavorable actions challenged by the Defendant, three were dismissed on summary judgment, one was dismissed at trial, and one was never presented to the jury. A claim for interference with medical treatment was dismissed. Thus, the Plaintiff had only been successful on one challenged action.

The court declined to make a reduction for time spend on a claim for punitive dates. Although unsuccessful, the court noted that there had been sufficient evidence to go to the jury on the issue.

The court reduced by 50% hours claims for travel time.

Adjustment of lodestar; no adjustment for limited success where plaintiff successful on claims that did go to the jury

The court recognized that a downward adjustment of a fee award may be considered where the plaintiff has limited success on pleaded claims. In the instant case, although many of the pleaded unfavorable personnel actions did not go the jury, the Plaintiff prevailed on the two unfavorable actions that went to the jury. The court therefore found that a reduction of the lodestar based on limited success was not warranted.

Costs and expenses; deductions for unexplained and undocumented expenses; reduction for excessive claimed meal expenses

The court noted that the FRSA does not define "litigation costs" and that no court had interpreted the phrase. The court concluded that "[w]here a statute authorizes an award of attorney's fees to a prevailing party, the Court may include reimbursement for out-of-pocket expense, such as travel, courier and copying costs." In the instant case, the court noted that the Plaintiff's method of presenting costs had made it difficult for the court to determine which expenses were reasonable and necessary. The court disallowed a claim for $9,077.95 in miscellaneous expenses where the request contained no explanation or documentation. The court allowed an unopposed claim for UPS/FedEx fees. In regard to travel, the court found that the Plaintiff's decision to hire national counsel was reasonable, and that it would award reasonable and necessary travel expenses as part of the attorney fee award. The court, however, found that the request failed to offer any explanation or justification for any of the trips taken by any of the travelers. The court allowed travel expenses for a deposition, a pretrial conference and the trial itself, but disallowed all of the remaining unexplained travel expenses. The court made a further reduction for the claimed meal expenses, reducing the amount to the court's per diem rate of $71 per day.

Expert witness fees; reduction for insufficient documentation

The court noted that the FRSA specifically allows a prevailing employee to recover expert witness fees. The court made a 25% reduction in the requested amount, however, due to insufficient documentation.
Mullen v. Norfolk Southern Railway Co. , No. 13-cv-06348 (E.D.Pa. Apr. 8, 2014) (2014 WL 1370119) (case below ARB No. 13-059, ALJ No. 2012-FRS-3)
(Memorandum Re Defendant's Motion to Dismiss or, in the Alternative, for Transfer)
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ARB's ISSUANCE OF FINAL ORDER DISMISSING ADMINISTRATIVE COMPLAINT DID NOT DEPRIVE DISTRICT COURT OF JURISDICTION WHERE THE ARB's ORDER WAS A ROUTINE AND NON-SUBSTANTIVE CLOSING OF THE ADMINISTRATIVE PROCEEDINGS IN ANTICIPATION OF PLAINTIFF's FEDERAL COURT FILING

In Mullen v. Norfolk Southern Railway Co. , No. 13-cv-06348 (E.D.Pa. Apr. 8, 2014) (2014 WL 1370119) (case below ARB No. 13-059, ALJ No. 2012-FRS-3), the ARB issued an Order to Show Cause why the ARB should not dismiss the claim pursuant to 29 C.F.R. § 1982.114, two days after receiving Plaintiff's Notice of Intention to File Original Action in the United States District Court. The Plaintiff did not respond. The Defendant responded, stating that it did not object to the dismissal but reserved its rights to offer certain defenses in the federal action. The ARB then issued its Final Decision and Order Dismissing Complaint, stating: "Accordingly, in accordance with 29 C.F.R. §1982.114 and Mullen's notification of his intent to proceed in district court and given his failure to respond to the ARB's Order to Show Cause, we DISMISS Mullen's complaint. " The Plaintiff did not file the federal court action until after the ARB issued this order. Before the District Court, the Defendant argued that the ARB's issuance of this final decision on the administrative complaint deprived the District Court of jurisdiction. The court, however, agreed with the Plaintiff that the ARB's order was a routine and non-substantive closing of the administrative proceedings in anticipation of Plaintiff's pursuit of his remedies in federal court, and that it did not constitute a final decision for purposes of 49 U.S.C. § 20109(d)(3).

VENUE; GENERAL VENUE GUIDELINES AT 28 U.S.C. § 1391(b) APPLY TO FRSA COMPLAINT; TRANSFER WARRANTED WHERE OPERATIVE FACTS AROSE IN OTHER DISTRICT, AND WHERE ONLY CONNECTION TO DISTRICT WHERE CLAIM WAS FILED WAS THE LOCATION OF THE PLAINTIFF's ATTORNEY

In Mullen v. Norfolk Southern Railway Co. , No. 13-cv-06348 (E.D.Pa. Apr. 8, 2014) (2014 WL 1370119) (case below ARB No. 13-059, ALJ No. 2012-FRS-3), the Defendant argued that Congress, in FRSA, 49 U.S.C. § 20109(d)(2)(A)(iii) and (d)(3), made it clear that venue lies only in the district where the violation occurred. The court (the District Court for the Eastern District of Pennsylvania) rejected this argument, agreeing instead with the Southern District of Illinois in Gouge v. CSX Transport., Inc. , No. 12-cv-1140, 2013 WL 3283714 (S.D. Ill. June 28, 2013) that Congress had not specified venue in the FRSA. The court found that "§ 20109(d)(3) does not supplant the general venue guidelines set forth in 28 U.S.C. § 1391(b)." Nonetheless, the court noted that it enjoys broad discretion to transfer venue under 28 U.S.C. § 1404(a). The court found that the operative facts in the matter arose in the Western District of Pennsylvania and noted that the Plaintiff had not contested the Defendant's statement that the Plaintiff was a resident of Pittsburgh. The only connection to the Eastern District of Pennsylvania, the court found, was that that it is where the Plaintiff's attorney is located. The court found that the circumstances weighed in favor of transfer of venue to the Western District of Pennsylvania.
Worcester v. Springfield Terminal Ry. Co. , No. 2:12-cv-00328 (D. Me. Mar. 31, 2014) (2014 U.S. Dist. LEXIS 42954) (later Judgment filed on June 27, 2014, and Appeal filed in the First Circuit, No. 14-1965)
(Order on Defendant's Motion for Summary Judgment)
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Summary :
Denying Defendant's motion for summary judgment based on the argument that the evidence fails to create a genuine issue of material fact as to whether the Plaintiff engaged in any whistleblowing activity protected by Section 20109. The court found that "taken in the light most favorable to the Plaintiff, the record evidence supports a conclusion that Worcester reported what he subjectively believed was a hazardous safety condition...." The Plaintiff subjectively believed that signalmen have insufficient training to clean up oil. See 49 U.S.C. 20109(b)(1)(A). The court also found that sufficient facts had been alleged to go the jury the question of whether the Plaintiff reasonably believed that the conditions on the ground and a worker's lack of expereince combined to create a harzardous safety condition.
Brig v. Port Authority Trans Hudson , No. 12-cv-05371 (S.D.N.Y. Mar. 28, 2014) (2014 WL 1318345)
(Opinion and Order)
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Summary :
ATTORNEY FEE AWARD; LODESTAR METHOD APPLIES TO FRSA FEE REQUESTS; A SOPHISTICATED TIMEKEEPING SYSTEM IS NOT REQUIRED TO MEET CONTEMPORANEOUS RECORDS REQUIREMENT; WORK BEFORE OSHA IS COMPENSABLE; TRAVEL TIME REDUCED TO 50% OF HOURLY RATE; REDUCTION FOR REPLY FILING WHERE REPLY LARGELY ADDRESSED DEFICIENCIES IN ORIGINAL FILING; $450 PER HOUR FOUND TO BE APPROPRIATE RATE FOR ATTORNEY IN SOUTHERN DISTRICT OF NEW YORK WITH 16 YEARS OF EXPERIENCE, 10 OF WHICH WERE DEVOTED TO REPRESENTATION OF RAILROAD WORKERS

In Brig v. Port Authority Trans Hudson , No. 12-cv-05371 (S.D.N.Y. Mar. 28, 2014) (2014 WL 1318345), the court found that the lodestar method is the correct analysis for calculation of reasonable attorney fees in an FRSA whistleblower case. Accordingly, the court stated that it would determine the amount of a reasonable fee by calculating the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate, based on prevailing market rates in the district in which the case was brought. The court stated that "[i]n order to recover attorney fees in the Second Circuit, three conditions must be met with respect to the reasonableness of the time billed. First, the hours submitted must be documented with contemporaneous records. ... Second, the records must not be overly vague. .... Finally, the billed time must have been reasonably spent." Slip op. at 4 (citations omitted). The Defendant challenged the contemporaneousness of the Plaintiff's billing records based on a lack of indicia of use of a timekeeping system. The court rejected this challenge, finding that the lack of a sophisticated timekeeping system does not foreclose meeting the contemporaneous requirement, and that in the instant case the specificity of the records reflected that the time entries were made on the date the work was performed. The court found that the time records met the requirement that they specify the date, the hours expended, and the nature of work done, and thus were not overly vague or non-descriptive. In regard to reasonableness of the time billed, the court deducted 0.2 hours for an unnecessary correspondence, declined to deduct time billed for work before OSHA, reduced travel time charges to 50 percent of the attorney's hourly rate, and reduced hours spent on a a reply declaration that was submitted in large part to address deficiencies in the original submission. The court reduced the requested hourly rate of $600 to $450 based on the Plaintiff's attorney's level of experience (16 years of practice, 10 of which were devoted exclusively to representation of railroad workers, and 22 cases tried to verdict with 19 verdicts against railroads), and based on the prevailing rates in the relevant community of the Southern District of New York.
Glista v. Norfolk Southern Railway Co. , 13-cv-04668 (E.D. Pa. Mar. 21, 2014) (2014 WL 1123374) (cases below 2013-FRS-45 and 46)
(Memorandum)
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Summary :
ALJ's ISSUANCE OF DISMISSAL AFTER PLAINTIFF's FILING OF NOTICE OF INTENT TO FILE ORIGINAL ACTION IN DISTRICT COURT DID NOT DEPRIVE DISTRICT COURT OF JURISDICTION EVEN THOUGH THE ALJ's DISMISSAL HAD BECOME THE FINAL DECISION OF THE SECRETARY BY OPERATION OF REGULATION PRIOR TO ACTUAL FILING OF DISTRICT COURT ACTION

In Glista v. Norfolk Southern Railway Co. , 13-cv-04668 (E.D. Pa. Mar. 21, 2014) (2014 WL 1123374) (cases below 2013-FRS-45 and 46), 982 days after the filing of the FRSA complaint with OSHA, the Plaintiffs filed with the ALJ a notice of intent to file an original action in district court. The ALJ issued an order to show cause why the Plaintiffs' claims should not be dismissed. The Plaintiffs did not respond, and the ALJ dismisssed their complaint with prejudice. Thereafter, the Plaintiffs filed in district court. Before the court, the Defendant argued that the court lacked jurisdiction because the ALJ's decision had become the final order of the Secretary of Labor by operation of 29 C.F.R. § 1982.110 nearly two weeks before the Plaintiffs filed their district court action. The Defendant contended that "once there is a final order of the Secretary, even if it is rendered more than 210 days after a complaint is filed, the federal district court lacks jurisdiction to conduct de novo review of the claim." Slip op. at 3. The court rejected this contention. The court found that the plain meaning of the FRSA kick-out provision was clear, and that "[i]f Congress had intended to deny a plaintiff de novo review by the federal district court in the event that a final decision was reached after the 210 day period had expired such an exception would be explicit in this portion of the statute." Id . at 6. The court also found that the ALJ's issuance of an order to show cause after receiving notice of a plaintiff's intent to file in district court does not prevent a plaintiff from taking advantage of the statutory kick-out provision. Any answer to the order to show would be redundant of the notice of intent where the plaintiff has a statutory right to remove the claim from the administrative process because 210 days had elapsed. The court noted that the ALJ's order to show cause had become a dismissal order merely by the passage of time and that there had been no evaluation of the merits of the case by the ALJ. The court also rejected the Defendant's arguments about concurrent jurisdiction, finding that the filing of the notice of intent by the Plaintiffs vitiated any concerns about concurrent jurisdiction.
Grimes v. BNSF Ry. Co. , 746 F.3d 184 (5th Cir. March 18, 2014)
(Decision on Petition for Rehearing)
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COLLATERAL ESTOPPEL; SUMMARY JUDGMENT; FIFTH CIRCUIT HOLDS THAT COLLATERAL ESTOPPEL DOES NOT APPLY TO FINDINGS MADE IN ARBITRATION WHERE ARBITRATION DID NOT INVOLVE NEURAL ARBITERS

ELECTION OF REMEDIES; FIFTH CIRCUIT HOLDS THAT ELECTION OF REMEDIES PROVISION DOES NOT BAR FRSA SUIT WHEN PLAINTIFF ARBITRATED CLAIMS UNDER THE CBA AND RLA

Grimes v. BNSF Ry. Co. , 746 F.3d 184 (5th Cir. March 18, 2014) (Decision on Petition for Rehearing) [ Editor’s Note : The original decision, which was replaced by this decision, can be found at 743 F.3d 114 (5th Cir. Feb. 17, 2014)]: Plaintiff was injured in an accident that occurred while working with two others on a nonmoving train, which was the result of one of the others operating one of the cars even though he was not certified to do so. He initially stated he could not recall what happened, but in question acknowledged that the other employee had operated the train. After an investigation and hearing, all three were terminated. Plaintiff pursued a collective-bargaining grievance. The Public Law Board upheld the discipline but mitigated the punishment, reinstating him without backpay. Plaintiff then filed a FRSA complaint, which ended up in district court. The district court gave preclusive effect to the arbitration finding that Plaintiff had been dishonest, and on that basis granted the defendant summary judgment.

On appeal Plaintiff argued that the arbitration findings could not collaterally estop issues in independent claims and that the procedures in arbitration were inadequate. The Fifth Circuit rejected plaintiff’s position that CBA proceedings could never result in issue preclusion/collateral estoppel and defendant’s position that they always do so. “[T]he answer lies somewhere in the middle.” Arbitration proceedings can result in collateral estoppel as to facts, but there is discretion in applying the doctrine, which should be guided by consideration of the procedural differences in the proceedings and the nature of the arbiters/arbitration. The issue to be precluded must be within the expertise and authority and the arbitrator and the procedures must adequately protect the rights of the parties. In this case the arbitration in question did not give plaintiff the basic procedural protections of a judicial forum, so it was inappropriate to give preclusive effect to the arbitration findings. Among the inadequacies, the railroad designated the hearing officer and made the termination decision, there was no representation by an attorney, and review was based on the record alone. The crucial point for the Fifth Circuit was that the arbiters were not neutral.

The Fifth Circuit also held that the Election of Remedies provision in 20209(f) did not bar the suit. Plaintiff had pursued contractual claims in the arbitration and the Railway Labor Act had only provided for the procedures to enforce the rights under the contract. Agreeing with the Seventh Circuit in Reed v. Norfolk So. Ry. Co. , 740 F.3d 420 (7th Cir. 2014), the Fifth Circuit held that the plaintiff had not sought protection under another provision of law—he had sought protection under the contract. The Election of Remedies Provision was thus inapplicable.
Almendarez v. BNSF Railway Co. , 13-cv-00086 (W.D. Wash. Mar. 10, 2014) (2014 WL 931530) (case below 2012-FRS-23)
(Magistrate Judge's Order Re: Plaintiffs' Motions for Summary Judgment)
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A THREAT RELATED TO PROTECTED ACTIVITY CAN, STANDING ALONE, CONSTITUTE ADVERSE ACTION UNDER THE FRSA WHISTLEBLOWER PROVISION

In Almendarez v. BNSF Railway Co. , 13-cv-00086 (W.D. Wash. Mar. 10, 2014) (magistrate) (2014 WL 931530) (case below 2012-FRS-23), the Plaintiffs brought an FRSA, 49 U.S.C. § 20109 suit alleging that the Defendant threatened the Plaintiffs' construction group ("gang") when in a meeting with the construction roadmaster, the roadmaster allegedly stated that the gang's injury record was excessive in comparison with other gangs, and advised that the gang would be abolished if any additional injuries were reported. The Plaintiffs moved for summary judgment. Principally at issue before the Magistrate Judge was whether the alleged threat was itself an adverse action, and if so, whether there were material facts at issue such that summary judgment was not available.

The gang had not, in fact, been disbanded. OSHA concluded that the Plaintiffs suffered no adverse actions and dismissed the complaint. The ALJ found that OSHA had viewed adverse action too narrowly, and set the matter for hearing. The Plaintiffs, however, opted to seek relief in federal court.

The Plaintiffs cited administrative decisions supporting the conclusion that a threat, standing alone, constitutes an adverse action within the meaning of the FRSA. The Defendant, pointing to other administrative decisions, stressed that the Plaintiffs had suffered no effect on the terms and conditions of their employment, and no actual consequences from the perceived threat.

The Magistrate Judge found no binding or otherwise persuasive authority "for the proposition that a prima facie claim under FRSA requires a showing of both an adverse action and a resulting effect on the terms and conditions of employment." Almendarez , slip op. at 10. The Magistrate Judge stated: "Neither the statute, the implementing regulations, nor the single federal appellate decision addressing FRSA's anti-retaliation provisions, see Araujo , 708 F.3d at 157, reflect or provide any support for the existence of this additional burden." Id . The Magistrate Judge, however, found that the matter was inappropriate for a determination on summary judgment because there was a dispute about what the roadmaster actually said during the meeting, and whether her statements actually constituted a threat.
Grigsby v. The Kansas City Southern Railway Co. , No. 13-cv-418 (S.D. Tex. Mar. 3, 2014) (2014 WL 837486)
(Opinion and Order)
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ENFORCEMENT OF FRSA SETTLEMENT AGREEMENT; NO PRIVATE ENFORCEMENT CAUSE OF ACTION

In Grigsby v. The Kansas City Southern Railway Co. , No. 13-cv-418 (S.D. Tex. Mar. 3, 2014), the Plaintiff sought enforcement of an FRSA settlement of a whistleblower complaint before OSHA. The settlement had been approved by OSHA on behalf of the Secretary of Labor. Following the settlement, the Defendant reviewed credits it believed it was entitled to assess against the settlement fund, and informed the Plaintiff that it had already paid more than the settlement amount. The Plaintiff complained to OSHA and sought enforcement of the settlement as interpreted by him. OSHA, however, took no action. Thus, the Plaintiff filed a lawsuit to personally enforce the settlement agreement. The court dismissed the action on the ground that the FRSA does not provide for a private enforcement cause of action under the facts of the case. The court found that district courts have jurisdiction under § 20109(d) only in two limited circumstances: where the Secretary has not isued a final decision within 210 days of the filing of an administrative complaint, or where the Secretary brings an action in district court to require compliance with a final order. Neither of these circumstances were present.
Reed v. Norfolk Southern Railway Co. , No. 13-2307 (7th Cir. Jan. 14, 2014) (2014 WL 117479)
(Memorandum Opinion and Order)
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FRSA ELECTION OF REMEDIES PROVISION DOES NOT PRECLUDE AN EMPLOYEE FROM PURSUING RELIEF BOTH UNDER GRIEVANCE ARBITRATION AND AN ADMINISTRATIVE CLAIM OR LAWSUIT UNDER THE FRSA

In Reed v. Norfolk Southern Railway Co. , No. 13-2307 (7th Cir. Jan. 14, 2014) (2014 WL 117479), the Plaintiff was fired for purportedly violating an internal rule requiring same-day reporting of on-site injuries. The Plaintiff and his union believed that his firing was in violation of a collective bargaining agreement, and the appealed the dismissal to an arbitral board. While the arbitration proceedings were pending, the Plaintiff filed a FRSA discrimination complaint with OSHA. Later, the discrimination complaint was filed in federal district court. After the arbitral board ruled in the railroad's favor, it moved for summary judgment in the district court action maintaining that the FRSA's election-of-remedies provision closed the courtroom door to the FRSA claim. The district court denied the motion. On appeal, the Seventh Circuit, although analyzing the issue differently than the district court and the Secretary of Labor, held that "FRSA's election-of-remedies provision is concerned with provisions of law that grant workers substantive protections, not with federal or state law writ large. The Railway Labor Act is not such a provision, and so we AFFIRM the district court's order denying summary judgment." Slip op. at 12.

Sarbanes-Oxley Act

Wood v. Dow Chem. Co. , No. 14-cv-13049 (E.D.Mich. Dec. 15, 2014) (2014 WL 7157100; 2014 U.S. Dist. LEXIS 172675)
Opinion and Order Denying Defendant's Motion to Dismiss
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Defendant seeks to dismiss twenty-five year employee and former fraud investigator who allege in lawsuit that she was terminated for making protected disclosures.

Being informed that one is to be terminated two days after making a significant report of fraud could create conditions sufficient to meet a "constructive discharge".

ADVERSE ACTION

"Constructive discharge" occurs when an employer unlawfully creates working conditions so intolerable that a reasonable person in employee's position would resign.Being informed that one is to be terminated two days after making a significant report of fraud could create conditions sufficient to meet a "constructive discharge".

SUBJECTIVE AND OBJECTIVE REASONABLE BELIEFSOX PLAINTIFF MUST PLEAD BOTH SUBJECT AND OBJECTIVE REASONABLE BELIEF THAT ALLEGED CONDUCT CONSTITUTED A VIOLATION

Plaintiff's advanced degree in accounting, as certified fraud examiner and certified management accountant, along with 25 years with company working with corporate treasury financial instruments, risk management, long-term debt, conducting internal investigations and reporting to corporate auditor, who himself has statutory and regulatory obligations to report such information to federal government, corroborate her subjective belief that conduct that she identified and investigated constituted violations of federal law. Conduct involved (1) excessive construction project budget; (2) unreported personal expenditures made on CEO's behalf that CEO had to reimburse after investigation; (3) unreimbursed payment of personal expenses by company to CEO; (4) payments by CEO to his own charity and one owned by his church; (5) excessive use of corporate jet and involvement of CEO and company's funds with church and charity; (6) improper accounting practices on a particular project to mask cost overruns; and (7) financial statement fraud on aforementioned project.

UNDER SOX, PLAINTIFF'S PROTECTED ACTIVITY MUST INVOLVE A PROVISION OF FEDERAL LAW, REGULATION, ETC. RELATING TO FRAUD AGAINST SHAREHOLDERS, AND NOT, AS DEFENDANTS ALLEGE "RELATED TO CONDUCT" REASONABLY BELIEVED TO BE A VIOLATION OF "RELEVANT" SECURITIES LAW OR REGULATION SPECIFIED IN STATUTE

Complainant need not show violation of an "enumerated provision" occurred, but only "reasonable belief" that violation occurred. Plaintiff need not show that each element of a statute has been met to show reasonable belief.

TEMPORAL PROXIMITY

A temporal gap of four years is not too long a period of time to substantiate a retaliation claim where allegation is that protected activities began at the earlier time and continued.At the same time, a temporal gap of one day between a disclosure to a supervisor and termination by upper management is not too short a time period for inferring causation. The above two temporal propositions are not contradictory .

KNOWLEDGE OF PROTECTED ACTIVITY

While Plaintiff in SOX case against individual defendant must allege sufficient facts from which it could be inferred that Defendant knew of protected activity and played a role in adverse employment action, she need not allege actual knowledge of protected activity by individual defendant. At the pleading stage, Plaintiff need not allege how a report of protected activity reached decision, but need merely allege facts sufficient for a plausible inference to be drawn that disclosure contributed to her termination. Plaintiff need only make allegations supporting an inference that her protected activity played a role in her dismissal, not that her reporting was the cause of her dismissal.
Halliburton v. Administrative Review Board, USDOL , No. 13-60323 (5th Cir. Nov. 12, 2014) (per curiam) (2014 WL 5861790; 2014 U.S. App. LEXIS 21743) (case below ARB Nos. 12-026, ALJ No. 2007-SOX-5)
(Opinion)
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(Revised Opinion - Dec. 29, 2014)
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(Rehearing En Banc Denied - Mar. 11, 2015)
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ADVERSE ACTION; REVEALING IDENTITY OF WHISTLEBLOWER WHO FILED CONFIDENTIAL COMPLAINT

CONTRIBUTING FACTOR; EMPLOYER NEED NOT HAVE BEEN WRONGFULLY MOTIVATED

NONECONOMIC COMPENSATORY DAMAGES ARE AVAILABLE UNDER SOX

In Halliburton v. Administrative Review Board, USDOL , No. 13-60323 (5th Cir. Nov. 12, 2014) (per curiam) (case below ARB Nos. 12-026, ALJ No. 2007-SOX-5) ( Revised Opinion - Dec. 29, 2014), the complainant (Menendez), an employee of Halliburton's finance and accounting department, used the company's confidential internal procedures to raise a concern about whether certain revenue recognition practices conformed to generally accepted accounting practices. The complainant also filed a complaint with the SEC. The SEC contacted Halliburton and instructed it to retain certain documents during the SEC's investigation. Halliburton inferred from the SEC notice that the complainant had filed a complaint with the SEC. Halliburton sent an email to the complainant's colleagues that instructed them to start retaining certain documents because "the SEC has opened an inquiry into the allegations of Mr. Menendez." The complainant's colleagues, whom he had essentially accused of fraud, then generally refused to work and associate with him. The 5th Circuit affirmed the ARB's determination that Halliburton's disclosure of the complainant's identity as the SEC whistleblower, resulting in the complainant's workplace ostracism, constituted illegal retaliation under § 806 of the Sarbanes-Oxley Act ("SOX"), 18 U.S.C. § 1514A(a).

Revealing identity of whistleblower who had filed confidential complaint as adverse action

On appeal, Halliburton argued that the ARB improperly determined that the complainant suffered an "adverse action" when the company disclosed his identity as the whistleblower to his colleagues,

The court initially observed that in Allen v. Admin. Review Bd. , 514 F.3d 468, 476 n.2 (5th Cir. 2008), it concluded that the Title VII material-adversity standard enunciated in Burlington Northern & Santa Fe Railway Co. v. White , 548 U.S. 53 at 67-68 (2006), applied to SOX's antiretaliation provision. The court noted that "under Allen , a SOX antiretaliation claim requires an 'adverse action' that meets Burlington 's definition of material adversity, i.e. , an action harmful enough that it well might have dissuaded a reasonable worker from engaging in statutorily protected whistleblowing." Halliburton, supra , slip op. at 9-10. In the instant case, the ARB "found that Halliburton's disclosure to Menendez's colleagues of his identity as the whistleblower who had reported them to the authorities, thus invoking an official investigation, constituted such an 'adverse action.'" Id . at 10.

Halliburton noted that the ALJ had reached the opposite conclusion and argued that the ARB had therefore disregarded the ALJ's factual findings. The court rejected this argument, noting that under the Burlington standard the question whether a company's conduct well might dissuade a "reasonable" worker from engaging in protected conduct is a legal question, that the ARB had adopted the ALJ's findings of fact but only came to a different conclusion as to the legal import of those facts. The court held that the ARB did not exceed its authority merely because it came to a different legal conclusion than did the ALJ.

In regard to the ARB's legal conclusion, the court found no reversible error. The court wrote:

The undesirable consequences, from a whistleblower's perspective, of the whistleblower's supervisor telling the whistleblower's colleagues that he reported them to authorities for what are allegedly fraudulent practices, thus resulting in an official investigation, are obvious. It is inevitable that such a disclosure would result in ostracism, and, unsurprisingly, that is exactly what happened to Menendez following the disclosure. Furthermore, when it is the boss that identifies one of his employees as the whistleblower who has brought an official investigation upon the department, as happened here, the boss could be read as sending a warning, granting his implied imprimatur on differential treatment of the employee, or otherwise expressing a sort of discontent from on high. Moreover, in Menendez's workplace, collaboration with colleagues was valued. Menendez's supervisor scolded him for not collaborating with his colleagues enough and told him to be more of a "team player." In an environment where insufficient collaboration constitutes deficient performance, the employer's disclosure of the whistleblower's identity and thus targeted creation of an environment in which the whistleblower is ostracized is not merely a matter of social concern, but is, in effect, a potential deprivation of opportunities for future advancement.

We, like other courts that have addressed similar circumstances, agree with the Review Board's conclusion that, in a workplace environment such as Menendez's where collaboration is an important part of the job, the employer's targeted disclosure to the whistleblower's colleagues that the whistleblower had reported them to the authorities for alleged wrongdoing and has caused them to become the subject of an official investigation, thus creating an environment of ostracism, well might dissuade a reasonable employee from whistleblowing.

Halliburton, supra , slip op. at 13-14 (citations omitted).

In a footnote, the court noted Halliburton's contention that the ARB had applied some sort of lesser standard than the Burlington 's material-adversity standard. The court stated:.

For example, parts of the opinion suggest that the Burlington standard does not "control" because it is not "broad" enough, but it is "compelling" and a "helpful guide." We agree with Halliburton that this language is troubling, but we conclude that it is dicta.

Id . at 10, n.5. See also id. at 23 and n.12 (declining to address language in ARB's decision indicating that under SOX's antiretaliation provision, company conduct is actionable regardless of whether it is "employment-related" or not).

[Editor's note: On March 11, 2015, the Fifth Circuit denied rehearing en banc. Halliburton v. Administrative Review Board, USDOL , No. 13-60323 (5th Cir. Mar. 11, 2015). Three Circuit Judges filed a dissent stating that the panel's decision concerning whether the disclosure of an employee's identity may be a materially adverse employment action under Burlington Northern was ad hoc, and should be reheard en banc "to provide some contours to the concept of an adverse employment action so that we mete out employee rights on the same standard to all."]

Contributing factor

Halliburton also contended that the ARB erred because it is not enough that the protected conduct be a "contributing factor" in the employer's adverse action, but rather, an employee must prove a "wrongfully- motivated causal connection." The court rejected this contention because it conflicted with the court's statement in Allen that a "contributing factor" is "any factor, which alone or in combination with other factors, tends to affect in any way the outcome of the decision." Id . at 15, quoting Allen , at 476 n.3 (citation omitted, emphasis added). The court also found that the contention entirely lacked support in the case law.

Availability of noneconomic compensatory damages

The ARB had affirmed the ALJ's alternative award of $30,000 to the complainant for emotional distress and reputational harm. Halliburton contended on appeal that such "noneconomic compensatory damages" (i.e., emotional distress and reputational harm) are not available under SOX. The court, reviewing the text of SOX, relevant caselaw, the policies underlying SOX and its common law background relating to damages, held that "the plain language of SOX's text relating to remedies for retaliation affords noneconomic compensatory damages." Id . at 22.
Connolly v. Remkes , No.: 5:14-cv-01344-LHK (N.D. Cal. Oct. 28, 2014) (2014 U.S. Dist. LEXIS 153439; 2014 WL 5473144; 2014 BL 305809; 39 IER Cases 443)
(Order Granting in Part and Denying in Part Motion to Dismiss)
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FACT THAT PLAINTIFF VOLUNTARILY RESIGNED AND DEFENDANTS NEVER COMMUNICATED TO HER A DISCRIMINATORY DECISION DOES NOT PREVENT LIMITATIONS PERIOD FOR SOX COMPLAINT FROM COMMENCING

In Connolly v. Remkes , No.: 5:14-cv-01344-LHK (N.D. Cal. Oct. 28, 2014), the court adopted the majority view that the Dodd-Frank whistleblower provision at 15 U.S.C. § 78u-6 protects internal whistleblowing, and deferred to the SEC interpretation in a case where the plaintiff internally raised violation of the FINRA rule.

The court rejected the plaintiff's argument that the SOX whistleblower provision at 18 USC §1514A does not require exhaustion with OSHA. The plaintiff had argued that because the alleged wrong included a SOX component, she need not comply with the requirements of exhaustion of administrative remedies by filing a complaint with the Secretary of Labor before bringing an action under the Dodd-Frank At. The court found that this argument failed because there was no authority cited by the plaintiff to show that exhaustion of remedies is optional.

The court also rejected the plaintiff's argument that under Coppinger-Martin , 627 F.3d at 749, a SOX violation occurs "when the discriminatory decision has been both made and communicated to the complainant" and that because the Defendant had not communicated any such decision to the plaintiff (she having voluntarily resigned) the limitations period would never run. The court noted that Coppinger-Martin did not address a voluntary resignation, and that the 9th Circuit has held that in a constructive discharge case, the date of resignation triggers the limitations period. The court stated: "Connolly resigned, so she cannot claim ignorance about the timing of her constructive discharge. Moreover, if no discriminatory decision has occurred, it is unclear how Connolly has a ripe claim at all. Her bare assertion that the limitations period 'will never run when one resigns' is therefore baseless." Slip op. at 12. The court found that the SOX complaint was not timely filed, but granted the plaintiff leave to amend her SOX cause of action to allege facts to establish equitable tolling, if applicable.

The court also found that the plaintiff had not plead sufficient facts to claim that the defendants constructively discharged her. Specifically, she had not pleaded facts sufficient to show that she was "compelled to resign" and had not identified "extraordinary" or "egregious" working conditions during the relevant period. The court, however, granted the plaintiff leave to amend her complaint to allege additional facts to support her constructive discharge theory. The court stated that the plaintiff "must must allege additional facts to support an inference that 'the resignation was coerced,' ... and that she gave Defendants a 'reasonable chance' to resolve the dispute before resigning. " Slip op. at 17 (citations omitted).
Taylor v. Fannie Mae , No. 11-cv-1189 (D.D.C. Aug. 25, 2014)
(Memorandum Opinion)
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PROTECTED ACTIVITY; D.C. DISTRICT COURT REJECTS "DEFINITIVELY AND SPECIFICALLY" ANALYSIS AND INSTEAD GIVES CHEVRON DEFERENCE TO THE ARB's SLYVESTER DECISION

In Taylor v. Fannie Mae , No. 11-cv-1189 (D.D.C. Aug. 25, 2014), the Plaintiff was a risk analyst for Fannie Mae, who was asked by his second-level supervisor for information regarding trending in technology related operational incidents. That supervisor, using the data provided, erroneously calculated a 60% reduction in operational incidents over a one year period. The 60% reduction calculation was reported to senior management and Fannie Mae's regulator. After questions arose about the 60% statistic, the supervisor meet with the Plaintiff and the Plaintiff's immediate supervisor, and during the meeting realized that his calculations were incorrect and that he had misunderstood the data provided by the Plaintiff. The supervisor prepared a retraction. Fannie Mae had in place mechanisms for reporting matters with SOX implications, and Fannie Mae's code of conduct mandated employees to report suspicions of potential violations of law. Neither the Complianant nor the Plaintiff's immediate supervisor used those mechanisms regarding second-level supervisor's use of the incorrect statistic. Later, the Plaintiff was subjected to a reduction-in-force. After termination, the Plaintiff filed an internal Fannie Mae complaint that the second level supervisor had violated the code of conduct. The Plaintiff then filed a district court complaint that charged, inter alia, that he termination was in violation of SOX, 18 U.S.C. § 1514A. The Defendants moved for summary judgment on the ground that the Plaintiff had not engaged in protected activity.

In its motion, the Defendants argued that the Plaintiff had failed to "definitively and specifically" relate his complaint to one of the six violations listed Section 1514A. The court rejected the "definitively and specifically" analysis, relying instead the analysis found in the ARB's decision in Sylvester v. Paraxel Int'l LLC , No. 07-123, 2011 WL 2165854, *14-15 (DOL Adm. Rev. Bd. May 25, 2011), to wit: the Plaintiff must "show that he had both a subjective belief and an objectively reasonable belief that 'the conduct he complained of constituted a violation of relevant law.' Sylvester , 2011 WL 2165854, at *11." Slip op. at 5. The court gave Chevron deference to the ARB's analysis in Sylvester concerning the rejection of the "definitively and specifically" analysis.

The court nonetheless granted the summary judgment motion, finding that the Plaintiff had "not shown that he possessed the subjective belief that [the second-level supervisor's] actions were illegal or fraudulent because he did not report his concerns about [second-level supervisor's] use of the 60% statistic." Id . at 6. The court noted at least three possible avenues for reporting such concerns, but found that the Plaintiff did not make a report until after he was terminated. The court noted that the Plaintiff had knowledge of the reporting devices and their importance. The Plaintiff did not raise a concern beyond his assigned job duties in the meeting about the 60% calculation error. The court found that the Plaintiff did not acutally believe the conduct he complained of constituted a violation of SOX.

The court also found that the Plaintiff failed to demonstrate that a reasonable person would consider the second-level supervisor's use of the 60% statistic to be a violation of SOX. The court noted that the Complainant's immediate supervisor was an operational risk professional and was aware of the mechanisms for reporting illegal conduct, and that she did not report any concerns about the use of the statistic, and believed that it was "just a management issue." The court concluded that "[a] reasonable person would not consider Magidson's mistaken use of the 60% statistic as anything more than a misunderstanding." The court also noted that the second-level supervisor had sought to resolve the misunderstanding by discussing the data with the Plaintiff and the Plaintiff's supervisor, and that once the mistake was understood, the statistic was retracted.
Van Asdale v. International Game Technology , No. 11-16538 (9th Cir. Aug. 15, 2014)
(Opinion)
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POSTJUDGMENT INTEREST ON BACKPAY AWARD TRIED IN DISTRICT COURT UNDER 18 U.S.C. § 1514A(b)(1)(B) IS GOVERNED BY 28 U.S.C. § 1961; MANNER OF CALCULATION OF PREJUDGMENT INTEREST IS COMMITTED TO DISTRICT COURT's DISCRETION
The Ninth Circuit's court staff's summary of the court's decision in Van Asdale v. International Game Technology , No. 11-16538 (9th Cir. Aug. 15, 2014), states:

The panel granted plaintiffs' motion for attorneys' fees and postjudgment interest following its affirmance of the district court's judgment, after a jury trial, in a Sarbanes-Oxley whistleblower case.

Agreeing with the views of the Secretary of Labor, as amicus curiae, the panel held that postjudgment interest on a back pay award in a Sarbanes-Oxley whistleblower case tried in district court is governed by 28 U.S.C. § 1961, the rate that applies to all civil cases in federal district courts, rather than 26 U.S.C. § 6621, the interest rate for underpayment of federal taxes.

Slip op. at 2.

The court acknowledged that Section 6621 "may" apply to cases that commence--and are resolved--before the Department of Labor. The instant case, however, was commenced before DOL, but was subsequently "kicked out" to federal district court. DOL took the position in its amicus brief that a court of appeals may award postjudgment interest under FRAP 37, even if the if district court did not address the issue, and that postjudgment interest should be governed by section 1961 when a case is tried in federal district court under 18 U.S.C. § 1514A(b)(1)(B), because postjudgment interest is "interest" on a money judgment in a civil case recovered in district court. The Plaintiff argued that the Defendant had essentially received a loan at below market rates by failing to pay the judgment, benefiting it from its unlawful conduct. The court rejected this argument, finding that section 1961 does reflect market rates and does fully compensate aggrieved parties. The court also provided Skidmore deference to DOL's interpretation.

The court declined to rule that postjudgment interest must always be calculated in the same manner that the district court calculated prejudgment interest. Noting DOL's argument that calculation of prejudgment interest was within the district court's discretion, and noting that the Defendant had failed to raise before the district court the district court's use of Section 6621 (citing the DOL regulation at 29 C.F.R. § 20.58(a)) for calculation of prejudgment interest, the court determined that it would not revisit the prejudgment interest award.
Liu v. Siemens AG , No. 13-4385 (2d Cir. Aug. 14, 2014) (case below SDNY No. 13-cv-317; ALJ No. 2012-SOX-10)
(Opinion)
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Antiretaliation provision of SOX does not apply extraterritorially.
Nielsen v. AECOM Technology Corp. , No. 13-235 (2d Cir. Aug. 8, 2014) (2014 WL 3882488) (case below SDNY No. 12-cv-5163; ARB No. 12-073; ALJ No. 2012-SOX-00013)
Order affirming district court's dismissal of complaint.
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PROTECTED ACTIVITY; SECOND CIRCUIT COURT OF APPEALS DEFERS TO ARB'S DECISION IN SYLVESTER V. PARAXEL INT'L LLC IN WHICH THE ARB REJECTED THE "SPECIFICALLY AND DEFINITIVELY" TEST, AND EMPLOYED INSTEAD AN OBJECTIVE/SUBJECTIVE REASONABLE BELIEF TEST; THAT BELIEF, HOWEVER, CANNOT BE WHOLLY UNTETHERED FROM THE ENUMERATED PROVISIONS IN SECTION 1514A(a)(1)

In Nielsen v. Aecom Technology Corp. , _ F. 3d _, 2014 WL 3882488 (2d. Cir. Aug. 8, 2014), the Plaintiff-Appellant was a Fire Engineering Manager who brought a concern to managers about a subordinate who allowed fire safety designs to be marked as approved even though the subordinate had not reviewed them. After being terminated, the Plaintiff-Appellant filed a SOX complaint. OSHA and the ALJ dismissed the complaint, and the employee filed an appeal to the ARB. The Plaintiff-Appellant then filed a lawsuit (a "kick-out") which the District Court dismissed on the ground that the Plaintiff-Appellant failed to plausibly allege that he had engaged in protected activity.

On appeal to the Second Circuit Court of Appeals, the court accorded Skidmore v. Swift & Co. , 323 U.S. 134, 65 S.Ct. 161, 89 L. Ed. 2d 124 (1944) (rather than Chevron ) deference to the decision of the ARB in Sylvester v. Paraxel Int'l LLC , ARB NO. 07-123, 2011 WL 2165854 (ARB May 25, 2011)(en banc), in which the ARB reversed its 2006 holding in Platone v. FLY, Inc. , that, in order to be protected under SOX's 18 U.S.C. §1514A, an employee's communication "must relate definitively and specifically to one of the listed categories of fraud or securities' violations in 18 U.S.C. § 1514(a)(1)." Slip op. at 9 (citation omitted). The Court agreed with the ARB that §1514A's focus instead should be on the reasonable belief of a complainant that s/he was reporting a violation of one or more of the categories of fraud or securities' violations enumerated under § 1514(a)(1). The court agreed with the ARB that a reasonable belief contains both subjective and objective components. The court indicates that the complainant must show both that s/he believed that the conduct constituted a violation, and that a reasonable person in his/her position would have believed that the conduct constituted a violation. The court did not, however, wholly endorse the ARB's decision in Sylvester , writing:

We are less certain whether the ARB was correct in concluding that a § 1514A complaint need not even "approximate specific elements" of the enumerated provisions allegedly violated, or that there is no requirement that the violation must be "material." See Sylvester , 2011 WL 2165854, at *17-18. We note that the statute does require plausible allegations that the whistleblower reported information based on a reasonable belief that the employer violated one of the enumerated provisions set out in the statute. See 18 U.S.C. § 1514A(a)(1). Thus, the statutory language suggests that, to be reasonable, the purported whistleblower's belief cannot exist wholly untethered from these specific provisions.

Slip op. at 16, n.16.

The Court found that in this particular case, the Plaintiff-Appellant failed to adequately plead under the FRCP 12(b)(6) standard that he had engaged in protected activity when he made disclosures or communications with regard to the alleged misconduct (failure of an employee to review fire safety designs) that s/he reasonably believed constituted a violation of one of the enumerated provisions of SOX. Specifically, the Court of Appeals agreed with the District Court's finding that the Plaintiff-Appellant complaint failed to meet Rule 12(b)(6)'s requirements because it failed to plausibly plead , "based on non-trivial allegations" an objectively reasonable belief that: (1) defendant engaged in a scheme to steal money or property, a necessary element of mail or wire fraud; (2) the conduct complained of constituted shareholder fraud; or (3) the supposed misconduct implicated any of the enumerated provisions in § 1514A.

The Court declined to reach the issue of extraterritorial nature of the conduct alleged upon which the ALJ had decided the case.

Slip op. at 1-2.
Fuqua v. SVOX AG , No. 14-cv-00216 (N.D.Ill. Aug. 1, 2014) (2014 WL 3811047; 2014 U.S. Dist. LEXIS 105090) (case below ARB Nos. 14-014, 14-069; ALJ Nos. 2013-SOX-46, 2014-SOX-18)
(Memorandum Opinion and Order)
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Summary :

Plaintiff sues for termination after refusal to sign intellectual property agreement.

"KICK OUT" TO FEDERAL COURT -- AMENDMENTS TO SOX COMPLAINTS DO NOT RESET THE JURISDICTIONAL CLOCK OR DELAYTHE 180 DAY LAPSE OF TIME FOR A FINAL DOL DECISION TO ISSUE NOR FILING OF CASE IN FEDERAL COURT

Agency did not render a final decision within 180 days. Court finds no authority for Defendant's position that amended complaint before administrative agency resets clock. Moreover, even if jurisdictional clock was delayed by amendments, ALJ ruled on final amendment on 181st day so 180 day time period concluded.

"COVERED PERSON" INCLUDES INDIVIDUAL WHO FORMERLY WORKED FOR ENTITY THAT IS NOW PUBLIC AND WHO ENGAGED IN PROTECTED ACTIVITY AFTER COMPANY BECAME PUBLIC

Former employee's allegedly protected actions post-date company becoming public.

DEFENDANTS' RESPONSES TO LEGAL ACTIONS INSTITUTED BY PLAINTIFF DO NOT CONSTITUTE RETALIATION

Defendants' filing of a brief relating to Plaintiff's complaint seeking arbitration and complaint involving wage claim do not constitute retaliation.

EMPLOYMENT AGREEMENT THAT IMPOSES ASSIGNMENT OF INTELLECTUAL PROPERTY RIGHTS TO EMPLOYER WITHOUT ANY SHAREHOLDERS AT TIME DOES NOT MEET THE STATUTORY REQUIREMENT OF SOX FOR "OBJECTIVELY REASONABLE BELIEF" AS TO THEFT OF TRADE SECRETS, INDUCEMENT TO SHARE SUCH SECRETS, NOR OTHERWISE CONSTITUTES A 'SCHEME OR ARTIFICE TO DEFRAUD, OR OBTAIN MONEY OR PROPERTY BY FALSE OR FRAUDULENT PRETENSES, REPRESENTATIONS OR PROMISES'

Plaintiff refused to sign an employment agreement which imposed a condition of employment assigning intellectual property rights. Plaintiff was terminated by Defendant. Plaintiff claimed that Defendant's conduct violated SOX as a scheme to misappropriate trade secrets from others including shareholders of publicly-traded companies. Court found that there was no misrepresentation. Inducement of others to share trade secrets, even if unlawful, is not per se fraudulent or deceptive. Objective reasonable belief of shareholder fraud requires a material misrepresentation or omission, scienter, loss and a causal connection. Defendant did not have shareholders at the time and Plaintiff did not identify any material misrepresentation.
Gibney v. Evolution Marketing Research, LLC , No. 14-1913 (E.D.Pa. June 11, 2014) (2014 WL 2611213)
(Memorandum Opinion)
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ALLEGED BILLING FRAUD BY NON-PUBLICLY TRADED CONTRACTOR AGAINST ITS PUBLICLY TRADED CLIENT FOUND NOT TO BE WITHIN COVERAGE OF SOX UNDER LAWSON DECISION

In Gibney v. Evolution Marketing Research, LLC , No. 14-1 913 (E.D.Pa. June 11, 2014) (2014 WL 2611213), the Plaintiff brought a SOX whistleblower action against his former employer for wrongful termination. The Plaintiff alleged that the Defendant's planned billing practices relating to a publicly traded client (to which the Defendant - a non-publicly traded company - was a contractor) were fraudulent. The Defendant filed a motion to dismiss. The Plaintiff contended that as an employee of a contractor to a publicly traded company, and pursuant to the Supreme Court's decision in Lawson v. FMR LLC , 134 S.Ct. 1158, 188 L.Ed.2d 158 (2014), his activities were protected under SOX 1514A. The court reviewed the Lawson decision and found that it was clear that whistleblower protection extends to employees of private contractors or subcontractors for a public company. The Defendant, however, framed the issue as whether Lawson supports extending SOX protection to employees of private companies who report overbilling "fraud" not committed by the public company and not having any connection to fraud on shareholders. The court found the question to be close, and did not agree entirely with the Defendant's characterization of the issue presented. The court found, however, that the Plaintiff was advocating "an impermissibly broad definition of SOX protection that was neither intended by Congress nor contemplated by the Supreme Court in Lawson ." Slip op. at 10. The court noted that unlike Lawson , the instant case did not implicate the peculiar structure of the mutual fund industry. Second, the complaint did not allege fraud by the publicly traded company or that the Defendant contractor abetted fraud by the publicly traded company. Rather, the complaint alleged that there was fraud being committed against the publicly traded company. Congress, the court noted, "was specifically concerned with preventing shareholder fraud either by the public company itself or through its contractors." Id . at 11 (emphasis as in original). The court stated that it "does not believe SOX was not intended [sic] to reach the type of scenario at issue here: where there are allegations of fraudulent conduct between two companies who are a party to a contract, and one of those companies just happens to be publicly-traded." Id . at 12. Finally, the court noted that OSHA, the agency charged with enforcement of SOX, had found in this case that SOX does not extend coverage to the Defendant's alleged overbilling of its publicly traded client. The court therefore granted the Defendant's motion to dismiss.
Feldman v. Law Enforcement Associates Corp. , No. 13-1849 (4th Cir. May 12, 2014) (2014 WL 1876546)
Opinion
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Summary :
FOURTH CIRCUIT CLARIFIES THAT COMPLAINANT'S BURDEN ON "CONTRIBUTING CAUSE" ELEMENT AT SUMMARY JUDGMENT PHASE IS PREPONDERANCE OF THE EVIDENCE RATHER THAN THE PRIMA FACIE CASE STANDARD OF SUFFICIENT EVIDENCE TO RAISE INFERENCE

In Feldman v. Law Enforcement Associates Corp. , No. 13-1849 (4th Cir. May 12, 2014) (2014 WL 1876546), the 4th Circuit noted that it held in Welch v. Chao , 536 F.3d 269, 275 (4th Cir. 2008), that an employee must show that his communications to his employer definitively and specifically related to one of the law enumerated in Section 1514A, and that subsequently the ARB concluded in Sylvester v. Parexel Int'l LLC , ARB No. 07-123 (ARB May 25, 2011), that this standard applies too strictly and that the critical focus is instead on whether the employee reported conduct that he or she reasonably believes constituted a violation of federal law. The court declined to clarify its holding in Welch because it decided in the instant appeal that the Plaintiff failed to establish the "contributing cause" element of a prima facie case. The court noted that in Welch , it had referred to the four part standard framing a prima facie case under a regulation that describes a complainant's burden at the investigatory stage of the administrative proceeding. For the fourth "contributing cause" element, the complainant must a prima facie showing that the circumstances were sufficient to raise an inference that the protected activity was a contributing factor in the adverse decision. See 29 C.F.R. § 1980.104. The court noted that other circuits and the ARB have noted that at the evidentiary stage, the regulation requires the complainant to prove by a preponderance of the evidence that the protected activity was a contributing factor in the adverse action, 29 C.F.R. § 1980.109(a), and not merely that the circumstances were sufficient to raise an inference. In the instant case, which was decided at the summary judgment stage before the district court, the 4th Circuit stated that it would apply the contributing factor element as articulated under the adjudicatory stage regulation at 29 C.F.R. § 1980.109(a).

AMENDMENT OF FEDERAL COURT ACTION TO INCLUDE SOX COMPLAINT ONLY AFTER 180 DAY WAITING PERIOD EXPIRED; ALTHOUGH FRCP 15(c) APPLIED LITERALLY WOULD RELATE THE SOX CLAIM BACK TO THE DATE OF THE ORIGINAL COMPLAINT AND DEPRIVE DISTRICT COURT OF JURISDICTION, COURT OF APPEALS CONSTRUED AMENDMENT AS SUPPLEMENTAL PLEADING TO CURE DEFECT

In Feldman v. Law Enforcement Associates Corp. , No. 13-1849 (4th Cir. May 12, 2014) (2014 WL 1876546), the 4th Circuit, prior to consideration of the merits of the appeal, noted an appellate court's special objection to evaluate not only its own subject matter jurisdiction but also that of the lower courts, even where the parties are prepared to concede jurisdiction, and examined whether there had been an exhaustion of administrative remedies in this case. The Plaintiff's initial complaint under the Americans With Disabilities Act had been filed prior to expiration of the required 180-day waiting period for filing an original SOX action in federal district court; but his amended complaint had been filed more than 180 days after he filed his OSHA complaint. The court considered whether, under FRCP 15(c), the amended complaint asserting the SOX claim related back to the date of the original complaint, and if so, had the district court properly exercised jurisdiction? The court found that under FRCP 15(c) the complaint did relate back, at which point the district court did not have jurisdiction over the SOX complaint. The Plaintiff, however, could not have filed the amendment to add the SOX complaint until the 180 period expired. Although the ADA complaint had been filed more than four months before the amendment, the Plaintiff had clearly indicated his intention to make the amendment once the SOX district court action became ripe. The court held that FRCP 15(c) should not be applied so mechanically as to prevent the SOX claim to proceed: "'[W]e construe the present complaint as a supplemental pleading under Rule 15(d), thereby curing the defect which otherwise would have deprived the district court of jurisdiction under Rule 15(c) '." Slip op. at 18 (citations omitted).

CONTRIBUTING FACTOR STANDARD IMPOSES A LIGHT BURDEN ON A SOX PLAINTIFF; HOWEVER, IN THE INSTANT CASE THAT BURDEN WAS NOT MET DUE TO EVIDENCE OF PRE-EXISTING ANIMUS, LACK OF TEMPORAL PROXIMITY, AND AN INTERVENING EVENT

In Feldman v. Law Enforcement Associates Corp. , No. 13-1849 (4th Cir. May 12, 2014) (2014 WL 1876546), the 4th Circuit affirmed the district court's grant of summary judgment against the Plaintiff on his SOX whistleblower complaint where the Plaintiff failed to sufficiently establish that his alleged protected activities were a contributing factor to his termination. The Plaintiff-Appellant had been the Defendant-Appellees' president and CEO. A dispute developed between the inside and outside directors. The tension deepened in part because the Plaintiff raised concerns about potentially illegal exports. After his termination, the Plaintiff filed a SOX complaint alleging that he was fired for, among other acts, reporting to the board of directors and the federal government the potentially illegal exports, objecting to falsified board meeting minutes, and notifying the government of suspected insider trading. On appeal, the Plaintiff argued that the district court "imposed an improperly onerous burden on him to prove that his protected activities solely or substantially caused his termination. " Slip op. at 20. The court of appeals stated that the Plaintiff did not need to show that his protected activity was a primary or even a significant cause of his termination. The court found, however, that the Plaintiff had "failed to satisfy his rather light burden of showing by a preponderance of evidence that the activities tended to affect his termination in at least some way. " Slip op. at 21. There was a complete absence of temporal proximity, with the most significant protected activity occurring roughly 20 months prior to the termination. In contrast, less than one month prior to the termination the Plaintiff engaged in activities that caused the outside directors to question his loyalty. The court wrote: "[T]his legitimate intervening event, coupled with the passage of a significant amount of time after Feldman's alleged protected activities, severs the causal connection. See Halloum , 2004 DOLSOX LEXIS 73, at *13." Slip op. at 22. Although the Plaintiff asked the court to take into consideration evidence of recurring animus, the court noted that that another officer had also engaged in one of the most serious instances of protected activity but was asked to remain with the company, and that the Plaintiff had not shown that the animus was a retaliatory response to his activities. The Plaintiff admitted that the acrimony began nearly two months prior to his first protected activity, and offered no evidence that his conduct had changed the status quo. The court concluded:

The contributing factor standard in SOX cases is indeed meant to be quite broad and forgiving. However, under the particular circumstances presented here, the standard would simply be toothless if we held that a preponderance of the evidence shows that these long-past activities affected Feldman's termination given the lengthy history of antagonism and the intervening events which caused the Outside Directors to view Feldman as insubordinate.

Slip op. at 25.
Yang v. Navigators Group, Inc. , No. 13-cv-2073 (S.D.N.Y. May 8, 2014) (2014 WL 1870802)
Memorandum Opinion and Order
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Summary :
PROTECTED ACTIVITY; EMPLOYEE ONLY NEEDS TO COMMUNICATE CONDUCT BELIEVED TO BE ILLEGAL, NOT WHICH LAWS WERE ALLEGEDLY VIOLATED

PROTECTED ACTIVITY; FACT THAT EMPLOYEE WAS PEFORMING THE DUTIES OF HER POSITION DID NOT REMOVE PROTECTION UNDER SOX

In Yang v. Navigators Group, Inc. , No. 13-cv-2073 (S.D.N.Y. May 8, 2014) (2014 WL 1870802), the Plaintiff filed a Sarbanes-Oxley Act (SOX) 18 U.S.C. § 1514A complaint and a Dodd-Frank Act, 15 U.S.C. § 78u-6(h)(1) complaint. The Plaintiff was the Defendant's Chief Risk Officer. She alleged that she was terminated in retaliation for repeated internal reporting of the Defendant's improper risk management control practices, which constituted shareholder fraud and violated federal securities rules and regulations. The Defendant moved to dismiss the claims on the ground that the Plaintiff's communications to her supervisors were not protected activity under SOX, and that she was not a Dodd-Frank whistleblower because she did not report the purported securities law violations to the SEC. The court treated the motion a FRCP 12(b)(6) motion to dismiss for failure to state a claim. While ruling on this motion, the court also considered the Plaintiff's motion to submit a second amended complaint.

"Definitively and specifically" standard not binding precedent; employee is not required to communicate to the employer which laws were allegedly violated — only which conduct was believed to be illegal

In regard to the SOX claim, the Defendant first contended that the Plaintiff's communications did not "definitively and specifically" relate to one of the categories of fraud or securities violations listed in section 1514A(a)(1), citing the Second Circuit's decision in Vodopia v. Koninklijke Philips Elecs., N.V. , 398 F. App'x 659, 663 (2d Cir. 2010) (summary order). The district court stated that the Second Circuit's adoption of the "definitive and specific" standard in Vodopia was not binding because in the Second Circuit, rulings by summary order do not have precedential effect. The court noted that the ARB had found this standard to be inappropriate, and stated that the ARB's determination was entitled to some level of deference in the federal courts. The court, however, made no determination whether the standard applied: "Regardless of whether it applies, the employee is not required to communicate to the employer which laws the employer's conduct allegedly violated. Andaya , 2012 WL 1871511, at *3 (citing Fraser v. Fiduciary Trust Co. Int'l , 417 F. Supp. 2d 310, 322 (S.D.N.Y. 2006)). The employee's communication need only 'identify the specific conduct that the employee believes to be illegal. ' Ashmore v. CGI Grp. Inc. , No. 11 Civ. 8611 (LBS), 2012 WL 2148899, at *6 (S.D.N.Y. June 12, 2012) (emphasis added) (quoting Welch v. Chao , 536 F.3d 269, 276 (4th Cir. 2008)). Thus, Defendant's assertion--that the [Plaintiffs second amended complaint] does not provide any allegations plausibly suggesting that Plaintiff 'communicated to Defendant that it had violated [certain SEC] rules' enumerated in Plaintiff's brief, 'is of no moment.'" Slip op. at 14 (footnote omitted). The court reviewed the allegations made in the Plaintiff's second amended complaint and found that "in complaining that relevant information did not appear in SEC filings as required, Plaintiff allegedly implicated SEC rules violations which are sufficient to state a plausible claim under SOX." Slip op. at 15 (footnote omitted).

Protected Activity; fact that plaintiff is merely discharging her duties does not remove protection under SOX

The Defendant further argued that the Plaintiff's communications could not be protected activity under SOX because the Plaintiff was hired as the Chief Risk Officer, "and reporting risk issues were 'part and parcel of her job. '" The court rejected this argument, noting that the ARB had held that "an employee may engage in protected activity even where the employee is discharging her duties'. Barker , 888 F. Supp. 2d at 297 (citing Robinson v. Morgan-Stanley , ARB Case No. 07-070, 2010 DOLSOX LEXIS 7, at *26-27 (ARB Jan. 10, 2010))." Slip op. at 14-15. The court stated that because ARB determinations are entitled to some deference, the Defendant's job description argument was unavailing."

Reasonable Belief

The Defendant next argued that the Plaintiff did not reasonably believe that the Defendant's practices were unlawful. Looking to the Plaintiffs second amended complaint, the court found that the Plaintiff alleged that the Defendant's risk assessment understated the risk by 60% of the Defendant's assets to the board of directors and that other risk related information was not disclosed to the SEC and rating agencies, and that such information would impact actions taken by the board of directors and logically influence shareholders. The court concluded that it was not implausible that the Plaintiff believed that this reflected fraud on shareholders, and that the Plaintiff believed that it violated SEC rules. The court also noted that the Plaintiff did not need to prove a violation of the law to state a Section 1514A claim.

The Defendant argued that the Plaintiff did not subjectively believe that shareholder fraud was being committed because she did not explicitly so state. The Defendant pointed to two documents signed by the Plaintiff certifying that she knew nothing of fraudulent or untrue statements of material fact in certain financial information. The court again pointed out that the Plaintiff need not specify which laws she thought were violated, but rather only which specific conduct she believed to be illegal (as alleged in the second amended complaint). Although the Defendant also argued that the Plaintiff did not have an objectively reasonable belief that shareholder fraud was being committed, the court found that this was merely a rehash of arguments that it was part of the Plaintiff's job to identify risk management issues.

Accordingly, the court allowed the Plaintiff to amend her complaint, and denied the Defendant's motion for summary judgment on the pleadings.
Smith v. Psychiatric Solutions, Inc. , No. 13-12785 (11th Cir. May 6, 2014) (2014 WL 1775875)
Opinion
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Summary :
SOX FEE SHIFTING PROVISION DOES NOT BAR A PREVAILING DEFENDANT FROM RECOVERING ATTORNEY FEES UNDER A STATE WHISTLEBLOWER STATUTE

In Smith v. Psychiatric Solutions, Inc. , No. 13-12785 (11th Cir. May 6, 2014) (2014 WL 1775875), the Plaintiff-Appellant had brought a retaliatory discharge action against it former employer and its parent companies (the Defendant-Appellees) under the SOX whistleblower provision and a Florida whistleblower law. The district court dismissed both claims at summary judgment, and the 11th Circuit affirmed. The instant appeal concerned a fee dispute. After the district court granted summary judgment, the Defendants moved for attorney's fees under the Florida law, and the Plaintiff filed motions for Section 1927 sanctions and FRCP 11 sanctions. The district court, adopting a magistrate's report and recommendations, directed the Plaintiff to pay the Defendants $53,925.98 in attorney's fees, and directed the Plaintiff's attorney to pay the Defendants $5,338.20 in attorney's fees in connection with the Plaintiff's failed Rule 11 motion. On appeal, the 11th Circuit noted that the SOX does not authorize a court to award fees to a prevailing defendant, while the Florida law does. The court found that the SOX's statutory silence was not an implicit prohibition against awarding attorneys fees to employer: "Sarbanes-Oxley's fee provision requires courts to award fees to prevailing plaintiffs; it does not bar a defendant from recovering attorneys' fees that are authorized elsewhere." Slip op. at 6-7 (citations omitted). The court also found that the Florida law did not interfere with SOX's regulatory scheme, noting that fee awards under the Florida law are discretionary, "so judges need not award prevailing defendants fees if they determine doing so might deter employees from bringing meritorious actions in the future. Further, aggrieved employees can themselves eliminate the risk they may be held liable for a prevailing defendant-employer's attorneys' fees by foregoing an FWA claim and alleging on a Sarbanes-Oxley claim." Slip op. at 10-11. The court found that the district court's award was free from legal error and was within the district court's discretion. The court also found that the district court's Rule 11 sanctions award was within its discretion, and that the district court did not abuse its discretion in denying the Plaintiff leave to pursue fees under 28 U.S.C. 1927.
Rock v. Lifeline Systems Co. , No. 13-11833 (D. Mass. Apr. 22, 2014) (2014 U.S. Dist. LEXIS 55611; 2014 WL 1652613)
Memorandum and Order
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Summary :
SOX SECTION 1514A CLAIM FOUND TO PREEMPT COMMON LAW CLAIM FOR WRONGFUL TERMINATION UNDER FACTS OF THE CASE

In Rock v. Lifeline Systems Co. , No. 13-11833 (D. Mass. Apr. 22, 2014)(2014 U.S. Dist. LEXIS 55611; 2014 WL 1652613), the Plaintiff was a sales person who charged that she was illegally terminated from employment under several laws for reporting a fire hazard with the Defendant's medical alert devices. The Defendant argued that the Plaintiff's common law wrongful termination claim was preempted by the Plaintiff's SOX Section 1514A complaint. The court found that the allegations that gave rise to the common law claim arose from the same set of facts that gave rise to the SOX claim. The court found that the SOX was "designed to protect employees from the very same set of actions that [the Plaintiff] presently invokes in the wrongful termination claim" and that "[h]er reporting of the 'suspected violations of safety standards' that she believed 'present a threat to the safety of the population at large, ' 'arises from the same conduct that prompted her to report the alleged mail, wire and securities fraud'." Slip op. at 25 (citation omitted).

CPSIA WHISTLEBLOWER PROVISION DOES NOT COVER DEVICES REGISTERED UNDER THE FDA; DISMISSAL NOT WARRANTED WHERE DEFENDANT'S EXHIBITS DID NOT SHOW THAT REGISTERED DEVICES WERE THE SAME AS THE DEVICES AT ISSUE IN THE ACTION

In Rock v. Lifeline Systems Co. , No. 13-11833 (D. Mass. Apr. 22, 2014)(2014 WL 1652613), the Plaintiff was a sales person who charged that she was illegally terminated from employment under several laws for reporting a fire hazard with the Defendant's medical alert devices. The Defendant moved to dismiss a claim under the whistleblower provision of the Consumer Product Safety Improvement Act, 15 U.S.C. § 2087, on the ground that the Defendant's devices were registered under the Federal Food, Drug, and Cosmetic Act, and consequently such devices are not consumer products covered by the CPSIA. See 15 U.S.C. § 2052(H)(5). The Defendant supported its motion with exhibits. The Plaintiff conceded that if the devices were registered under the FDA, the CPSIA claim could not be maintained, but disputed the accuracy of the exhibits and whether they covered the devices at issue in the action. The court denied the motion to dismiss because the registered devices in the exhibits were not necessarily the devices at issue.

EXHAUSTION OF ADMINISTRATIVE REMEDIES; ON FRCP 12(b)(6) MOTION, COURT WAS WILLING TO DRAW REASONABLE INFERENCE THAT COMPLAINT WAS TIMELY FILED WITH DOL AND THAT PLAINTIFF WAITED SUFFICIENT TIME WITHOUT A FINAL DOL DECISION BEFORE FILING IN DISTRICT COURT

In Rock v. Lifeline Systems Co. , No. 13-11833 (D. Mass. Apr. 22, 2014)(2014 WL 1652613), the Plaintiff was a sales person who charged that she was illegally terminated from employment under several laws for reporting a fire hazard with the Defendant's medical alert devices. The Defendant moved to dismiss a claim under the whistleblower provision of the Consumer Product Safety Improvement Act, 15 U.S.C. 2087, on the ground that the Defendant had not exhausted her administrative remedies, citing Jallali v. USA Funds , 2012 WL 32918783 at *5 (S.D.Fla. Aug. 13, 2012). The court found that Jallali was inapplicable as in that case the Plaintiff had not alleged that it complied with any of the procedural requirements of 15 U.S.C. § 2087(b) and had not addressed arguments that she failed to exhaust her administrative remedies. Here, the Plaintiff had timely filed SOX whistleblower complaint with DOL, and later added a CPSIA complaint. The Plaintiff filed in district court after the DOL had not issued a final decision within 180 days of the filing of the complaint. The court found: "Although [the Plaintiff] did not specify the date she added the CPSIA charge, a reasonable inference can be drawn that [the Plaintiff] properly filed the CPSIA charge within the requisite 180 day time period. Again interpreting the record in [the Plaintiff's] favor, a reasonable inference therefore arises that she complied with section 2087(b)(4)'s filing requirements by waiting the requisite 210 days before filing suit in this court." Slip op. at 31-32 (citations omitted).
Wiest v. Lynch , No. 10-3288 (E.D.Pa. Apr. 16, 2014) ( (2014 WL 1490250; 2014 U.S. Dist. LEXIS 52472), on remand from 710 F. 3d 121 (3d Cir. 2013)
Memorandum Opinion
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Summary :

Former long-time Tyco accountant's case reinstituted under SOX.

LAW OF THE CASE DOCTRINE

Defendant's Second Motion to Dismiss is not barred by the law of the case doctrine. Although Court of Appeals held that the District Court had applied the wrong legal standard in analyzing and dismissing Plaintiff's retaliation claim, that did not mean that Plaintiff's stated claims were all cognizable and sufficient. The "law of the case" doctrine does not apply to resolution of undecided issues, but only precludes review of legal issues that the court in a prior appeal either expressly or by implication decided. Here, Court of Appeals only considered issue of whether Plaintiff's communications satisfied the newly articulated protected activity standard under Sylvester v. Parexel International LLC , ARB No. 07-123 , 2011 WL 2165854 (May 25, 2011)(en banc) and applied that standard. It did not consider other aspects of Plaintiff's claim.

MOTION TO DISMISS

Well-pleaded allegations are entitled to presumption of truth and receive benefit of every reasonable inference. Three misconduct charges appear to be trumped up and pretextual based on lack of "workplace impact," ancient and somewhat (trivial) nature of giving Plaintiff a "bit of his own medicine."

ADVERSE ACTION/CONSTRUCTIVE DISCHARGE

Plaintiff's allegations of adverse action included that manager; (1) was less communicative and acted differently towards him; (2) charged him with incorrectly reporting a gift of baseball tickets from a client; (3) wrongfully alleged that Plaintiff had had an improper relationship with female employee ten years earlier; (4) wrongfully alleged that Plaintiff had made sexually inappropriate remarks; and (5) continually isolated Plaintiff from fellow-employees. In addition, Plaintiff alleged a (1) continued failure by management to inform Plaintiff of status of investigation in response to his inquiries; and (2) made statements that investigation was serious and ongoing and Plaintiff should not bother about his performance review. These actions, followed by Plaintiff's physiological and psychological symptoms of stress and his departure from work, were sufficiently pled to permit this long-term employee to meet standard for a constructive discharge and defeat Defendant's Motion to Dismiss.

CONTRIBUTING FACTOR

Even if not all reports by Plaintiff constituted protected activity, permissible inference may be drawn that employer was annoyed by what it perceived as persistent needling or stonewalling by Plaintiff, of which his protected activities were a part and contributed to the adverse decision.

TEMPORAL PROXIMITY

Temporal activity is measured from protected activity, i.e., the report/disclosure of Plaintiff, to the beginning of the retaliatory conduct and NOT to the timing of the ultimate employment decision.

EMPLOYER KNOWLEDGE AND INVOLVEMENT IN DECISIONMAKING

Absent any evidence and specifically pled facts to support inference that decisionmakers knew of protected activity, were involved in making the adverse action decision, and there existed a causation between the protected activity and the adverse employment action, individual defendants (as opposed to company) are not proper defendants in SOX retaliation case. Specific knowledge of protected activity and specific role as a decisionmaker must be pled as to individual defendants.

AGENCY LAW WITHIN SOX PRE-DODD-FRANK CONTEXT

For purposes of SOX sec. 806's /18 U.S.C §1514A's "agency" language, i.e., "([n]o company . . . or such agent of such company " (italics in original) may discriminate)" anti-retaliation language, the applicable "agency law" analysis is not limited to a purely "employment" agency law analysis, but also includes an agent acting in a role of preparing financial data, securities purposes, or fraud or deception. Id . At 568-572. Wiest , supra cites with approval Dep. Chief ALJ Brown's concurrence in Johnson v. Siemens Building Technologies, Inc. , ARB No. 82-032, ALJ No. 2005-SOX-15 (Mar. 31, 2011) at n. 21.
Jordan v. Sprint Nextel Corp. , 3 F. Supp. 3d 917 (D. Kan. Mar. 11, 2014) ((2014 WL 2922399; 2014 U.S. Dist. LEXIS 31121), motion to amend denied (D.Kan. June 27, 2014) (2014 U.S. Dist. LEXIS 87459) (case below ARB Nos. 10-113, 11-020; ALJ Nos. 2006-SOX-41, 98, 2010-SOX-98)
Memorandum and Order
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Summary :

Defendant seeks to dismiss action by former attorney who "kicked out" to federal court from DoL proceedings.

STATUTE OF LIMITATIONS/STATUTE OF REPOSE

28 U.S.C. §1658(a) and (b), which generally apply statutes of limitations to civil actions arising under federal law, do not apply to a SOX whistleblower claim pursuant to 18 U.S.C. §1514A. Subsection (a) of the former statute precludes its application where "except as otherwise provided by law" and applies a specific 180 days statute of limitations requiring filing with the Department of Labor. Moreover, although §1514A relates to a "claim of fraud" under the SEC, the claim is for retaliation, not fraud.

ADVERSE ACTION/CONSTRUCTIVE DISCHARGE

Court finds that at pleading stage Plaintiff made sufficient factual allegations of intolerable workplace sufficient to meet "constructive discharge" standard. It cites at Footnote 39 to Chevron deference to ARB's definition of "constructive discharge" as provided by 10th Circuit in Lockheed Martin Corp v. Administrative Review Bd., USDOL , 717 F.3d 1121, 1133 (10th Cir. 2013).

ADVERSE ACTION/FAILURE TO REHIRE

Failure to hire claim requires Plaintiff to apply for and be rejected for particular position. General allegation that Defendant hired others to perform responsibilities similar to his former position is not sufficient.

DEFENDANT'S COMMUNICATIONS WITH SEC NOT ADVERSE ACTION

Defendant's requests to SEC to issue "No-Action" letters excluding Plaintiff's or his wife's shareholder proposals from Defendants' proxy materials and not to file an amicus brief in support of Plaintiff with ARB are not adverse employment actions or interference with Plaintiff's terms and conditions of employment. Court relies on ARB decisions that require current employment with a defendant by an employee asserting whistleblowing retaliation, blacklisting or other interference with subsequent employment, and/or failure to reinstate an employee upon issuance of proper order under Act.
Lawson v. FMR LLC , 134 S. Ct. 1158, 188 L.Ed.2d 158 (U.S. Mar. 4, 2014) (2014 WL 813701) (case below 670 F.3d 61 (1st Cir. 2012); ARB No. 08-078, ALJ No. 2007-SOX-27 (sub nom Zang v. FMR, LLC )
Opinion of the Court
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Supreme Court reverses the decision of the First Circuit Court of Appeals which held that the term "an employee" in 18 U.S.C. §1514A(a) refers only to employees of public companies.

Plaintiff filed whistleblower retaliation complaint as a result of termination by employer, private contractor to public company covered by SOX, and which itself has no employees. Such an employee is protected under SOX's whistleblower provision.

Majority Opinion (J. Ginsburg with J. Scalia concurring in part and in judgment in which J. Thomas joined.)

STATUTORY CONSTRUCTION/ORDINARY MEANING

The ordinary meaning of §1514A's whistleblower protection provision that "no contractor may discharge an employee" is to cover the contractor's own employees. Section 1514A protects not only those employed by the public company itself that has "a class of securities registered under section of if the Securities Exchange Act of 1934" or is "required to file reports under section 15(d) of that Act," but also the employees of privately held companies who contract their services to such public companies.

Reasoning based on :

Prohibited retaliatory measures in §1514A(a) describe actions an employer commonly takes against its own employees.

Likewise, other language Congress used in §1514A typically refers to an employer-employee relationship, including employer knowledge of employee furnishing information to third party and remedy of "reinstatement."

Inasmuch as the public company itself has no employees, Dissent's understanding of Congressional design, would only make inclusion of contractors as covered employers secondarily liable for carrying out retaliatory orders of public companies with which they contract, and would leave countless professionals, lawyers, accountants, etc., in the investment industry, excluded from whistleblower retaliation protection.

While Court's construction would appear to extend protection to personal employees of company officers, such as housekeepers or gardeners, and this may be an absurd result which Congress did not intend, nothing suggests that Congress realized that resultant drafting error; in any case, it is more a theoretical than real issue, and is outweighed by compelling arguments of covering only employees of public company when public company actually does not employ ANY employees.

STATUTORY HEADINGS DESERVE LESS WEIGHT THAN TEXT

Under-inclusiveness of §1514A's Heading which refers to "Whistleblower Protection for Employees of Publicly Traded Companies" and Section 806's Heading, which refers to "Protections for Employees of Publicly Traded Companies Who Provide Evidence of Fraud" are but short-hand references "'not meant to take the place of the detailed provisions of the text. '" Id . at 1169 citing to Brotherhood of R. R. Trainmen v. Baltimore & O. R. Co. , 331 U.S. 519, 528 (1947). Lawson , supra at 1169.

TEXTUAL ANALYSIS SUPPORTED BY CONGRESSIONAL PURPOSE

Whistleblower protection in SOX meant as one way to ward off another Enron debacle.

Congress plainly recognized complicity of outside professionals in shareholder fraud and subsequent cover-up. Court sites with approval to Spinner v. David Landau & Assoc., LLC , ARB No. 10-111. ALJ No. 2010-SOX-29, at 12-13 (ARB May 31, 2012). Lawson , supra . at 1169.

Congressional investigators discovered ample evidence of outside professionals bearing significant responsibility for reporting fraud and fear of retaliation as deterrence to reporting.

Senate report cited two examples of whistleblower retaliation against outside professionals and their own employees. Id . at 1170.

Although other provisions of the Act provide authority to the Public Accounting Oversight Board ("PAOC") and SEC authority to sanction and address Congress's concerns about outside professional's accountability, none afford them protection against retaliation by their employers for whistleblowing. Id . at 1171.

Congress intended to cover mutual finds companies by adding category of those "required to file reports under 15(d)" because mutual fund companies are structured to have no employees, privately held, manage some $14.7 trillion on behalf of some 94 million investors, insiders to fraud in the investment industry, and their exclusion from 1514A is their only shield from retaliation for disclosing fraud. Dissent's reading is "glaringly under-inclusive." Id . at 1171.

Dissent's fear that Majority Opinion is "overinclusive" is unwarranted. Id . at 1172-3. In any case, there are "various limiting principles" that can cure this or Congress can revisit statute. Id .

Congress specifically designed 1514A to track 49 U.S.C. §42121's (AIR 21; enacted 2009) whistleblower protection provision as closely as possible. Id . at 1175-6 citing S. Rep. at 30. AIR 21 covers employees of contractors. Cites to various ARB opinions. Id . Any textual differences between two statutes do not warrant distinction with regard to contractors.

DISSENT'S RELIANCE ON ENACTMENT OF 2010 DODD-FRANK AMENDMENTS TO 1514A IS UNAVAILING

Dodd-Frank's specific addition of National Recognized Statistical Rating Organizations (NSRSRO) to 1514A's protection is irrelevant because not all NRSROs are privately held, nor do all contract with public companies. Accordingly, their addition in Dodd-Frank does not support argument that coverage in addition to that provided by SOX was needed for private companies. Id . at 1174.

At time of Dodd-Frank, DOL regulations already provided protections for contractor employees, 29 C.F.R. §1980.101(2009).

Dodd-Frank's coverage focuses primarily on reporting to federal authorities.

Concurring Opinion: J. Scalia and J. Thomas

Adopts holding, but rejects departures by Majority from text of statute and context to "swamps" of legislative history.

Rejects reliance by Majority on cross-reference reliance to AIR 21 provision because of substantive differences in text.

Rejects Majority and Government's suggestion that contractor employees only protected to extent whistleblowing relates to contractor's fulfillment of role as contractor for public company as having no textual basis. Asserts that employee is protected as long as works for a 1514A(a) enumerated actor and reports a covered form of fraud in manner identified in provision.

Dissenting Opinion: J. Sotomayor, with Kennedy and Alito joining

TEXT OF §1514A IS DEEPLY AMBIGUOUS. GIVEN AMBIGUITY, STATUTORY HEADINGS, STATUTORY CONTEXT, AND ABSURD RESULTS THAT FOLLOW FROM MAJORITY'S INTERPRETATION, DISSENT WOULD FIND THAT EMPLOYEES OF PRIVATE COMPANIES SERVICING PUBLICLY TRADED COMPANIES ARE NOT COVERED BY §1514; RATHER PUBLIC COMPANIES AND 1514A'S LISTED REPRESENTATIVES ARE PROHIBITED FROM RETALIATION UNDER THAT PROVISION

Dissent states that in addition to finding that employees of §12 and §15(d) companies are covered by the majority's interpretation of § 1514A, it would also cover"(2) household employees of any individual who works for a §12 or §15(d) company; (3) employees of any private company that contracts with a §12 or §15(d) company; (4) employees of any private company that, even if it does not contract with a public company, subcontracts with a public company that does; and (5) employees of any agent of a §12 or §15 (d) company."

[EDITOR'S NOTE: What Lawson does not resolve, but the Dissent does raise, is what deference, if any, the courts will give the ARB and Spinner . For that discussion, see pages 1186-7.]
Galinsky v. USDOL , No. 12-5133 (2d Cir. Feb. 26, 2014) (unpublished) (case below ARB No. 11-057, ALJ No. 2011-SOX-10)
Summary Order
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Summary affirmance of ARB decision in Galinsky v. Bank of America, Corp. , ARB No. 11-057, ALJ No. 2011-SOX-10 (ARB Oct. 31, 2012)
Stewart v. Doral Financial Corp. , 13-cv-1349 (D.Puerto Rico Feb. 21, 2014) (2014 WL 661587)
Opinion and Order
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Summary :
PROTECTED ACTIVITY; DISTRICT COURT APPLIES CHEVRON DEFERENCE TO ARB'S SYLVESTER DECISION; FACT THAT PLAINTIFF, AS PRINCIPAL ACCOUNTING OFFICER, WAS RESPONSIBLE FOR ACCURACY OF FINANCIAL STATEMENTS WEIGHED AS FACTOR IN OBJECTIVE REASONABLENESS OF HIS REPORT TO AUDIT COMMITTEE

In Stewart v. Doral Financial Corp. , 13-cv-1349 (D.Puerto Rico Feb. 21, 2014) (2014 WL 661587), the Plaintiff was a Senior Vice President and Principal Accounting Officer for a financial corporation. He sent a letter to the Defendant's Audit Committee about his concerns about SOX-required internal controls, and a concern that the Defendant would fail to accurately report financial information in the upcoming quarters as a result of comments and events personally perceived by him. The Defendant filed two motions to dismiss arguing, inter alia, that the Plaintiff had not engaged in protected activity under SOX Section 806. In deciding the motions, the preliminary question before the court was whether the ARB's decision in Sylvester v. Paraxel Int'l LLC , ARB No. 07-123, ALJ Nos. 2007-SOX-39 and 42, slip op. at 17-18 (ARB May 25, 2011) (2011 WL 2165854), was entitled to Chevron deference. The court determined that Chevron deference applied, despite the fact that the ARB had changed course in Sylvester , because two Circuit Courts of Appeals had granted such deference, and because the ARB had thoroughly outlined its reasons for its reversal of course. Thus, the court applied the Sylvester "reasonable belief" standard rather than the "definitively and specifically" standard of Platone v. FLYi, Inc. , ARB No. 04-154, ALJ No. 2003-SOX-27, slip op. at 17 (ARB Sept. 29, 2006) (2006 WL 3193772). The court found no doubt that the Plaintiff met the "subjective belief" element of Sylvester analysis given his letter to the Chairman of the Audit Committee. The court then examined whether the Plaintiff met the element of the Sylvester analysis "whether a reasonable person, in the same factual circumstances and with the same training and experience as the [Plaintiff], would have held a reasonable belief that the conduct complained of constituted a violation of pertinent law." Slip op. at 16. The court noted that the Plaintiff was the Defendant's Principal Accounting Officer and was responsible for the accurate reporting of the Defendant's financial statements, general ledger and budget, and would be "would be implicated immediately if any oversight or inconsistencies were detected in any of [the Defendant's] financial disclosure statements." Id . The court was persuaded that sufficient facts had been alleged to show that a reasonable Principal Accounting Officer in the Plaintiff's position could have plausibly held a reasonable belief that a SOX violation was likely to occur (essentially a plan to "cook the books" and report inaccurate financial information).

ARBITRATION AGREEMENT FOUND INVALID AND UNENFORCEABLE AS TO BREACH OF CONTRACT CLAIMS WHERE THOSE CLAIMS AROSE FROM THE SAME NUCLEUS OF OPERATIVE FACTS AS SOX SECTION 806 CLAIM

In Stewart v. Doral Financial Corp. , 13-cv-1349 (D.Puerto Rico Feb. 21, 2014) (2014 WL 661587), the Plaintiff was a Senior Vice President and Principal Accounting Officer for a financial corporation who had filed a SOX Section 806 whistleblower complaint, and breach of contract claims. The Defendant sought dismissal of the breach of contract claims on the ground that they were subject to an arbitration agreement. The Plaintiff countered that the arbitration agreement was invalid and unenforceable as the breach of contract claims were "entangled with the SOX dispute and arise from the same nucleus of operative facts." Slip op. at 19. The court agreed with the Plaintiff. The court noted that an amendment to SOX from the Dodd-Frank Act in 2010 rendered predispute arbitration agreements invalid and unenforceable as to claims arising under Section 806. See 18 U.S.C. § 1514A(e)(2). The court found that the breach of contract claims were grounded in the same operative facts as the Section 806 claims. The court wrote:

Thus, compelling arbitration would require both sides to re-litigate the application of SOX's whistleblower provision in order to determine whether Doral did in fact breach its contractual obligations. Compelling arbitration would not only frustrate the purpose of 18 U.S.C. § 1514A(e)(2) but would also place a substantial financial and temporal burden on all parties involved.

Slip op. at 20.
Busche v. URS Energy and Construction, Inc. , No. 13-cv-5016 (E.D.Wash. Feb. 21, 2014) (2014 WL 688371)
Order Granting in Part and Denying in Part Plaintiff's Motion to Stay; Denying in Part and Denying as Moot in Part Plaintiff's Second Motion for Protective Order; And Resetting the Hearing on Defendants' Joint Motion to Strike Jury Demand
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[Nuclear & Environmental Digest VIII C 1]
STAY OF FEDERAL DISTRICT COURT ACTION FOR DOL PROCEEDINGS ON NEW ERA WHISTLEBLOWER CLAIM RELATED TO PRIOR CLAIM WHERE DEFENDANTS HAD MOVED TO DISMISS NEW CLAIM FOR FAILURE TO EXHAUST ADMINISTRATIVE REMEDIES

In Busche v. URS Energy and Construction, Inc. , No. 13-cv-5016 (E.D.Wash. Feb. 21, 2014) (2014 WL 688371), the Plaintiff sought a stay of her federal district court litigation so that her 2013-based ERA whistleblower retaliation administrative complaint could be addressed by the U.S. Department of Labor. Although the Plaintiff believed that her 2013-based claims related to 2010/11-based retaliation claims which had previously been presented to DOL, and it was unnecessary for her to present the 2013 claims to DOL, the Defendants had filed motions to dismiss the 2013-based claims for failure to exhaust administrative remedies. The Plaintiff therefore sought permission to stay the lawsuit until her 2013-based claims have been before DOL for one year, at which time she would opt out of the DOL proceedings. The Defendants opposed a stay. The court determined that a limited stay was warranted to the date that the DOL had the complaint for six months. At that time, the court could assess whether DOL intended to address the more recent administrative complaint, and whether discovery and motions relating to the 2013-based claims should proceed in court. The stay would also provide time for a possible ruling by the Ninth Circuit on whether an ERA whistleblower claim may be tried to a jury. See Tamosaitis v. URS Inc. , No. 12-35924 (9th Cir. Filed Nov. 9, 2011). The court stated that the jury-trial issue could impact the discovery process and pretrial preparations.
Villanueva v. U.S. Dep't of Labor , No. 12-60122 (5th Cir. Feb. 12, 2014) (2014 WL 550817)
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PROTECTED ACTIVITY UNDER SOX SECTION 806; COMPLAINANT MUST PROVIDE INFORMATION THAT HE OR SHE REASONABLY BELIEVED VIOLATED ONE OF THE SIX PROVISIONS OF U.S. LAW ENUMERATED IN SECTION 806; INFORMATION PROVIDED BASED ON REASONABLE BELIEF OF VIOLATION OF A FOREIGN LAW IS NOT COVERED

In Villanueva v. U.S. Dep't of Labor , No. 12-60122 (5th Cir. Feb. 12, 2014), the Complainant filed a SOX whistleblower complaint alleging that his employer, a Columbia affiliate of a Netherlands limited liability company whose stock is publicly traded in the U.S., retaliated against him in violation of SOX § 806 for blowing the whistle on an alleged scheme to violate Columbian tax law. OSHA and the ALJ dismissed the complaint on ground that it would require impermissible extraterritorial application of SOX § 806. The ARB dismissed the complaint on the narrow ground that the Complainant's disclosures of alleged violations of foreign law did not have a sufficient connection to a violation of one of the six provisions of U.S. law enumerated in § 806.

On appeal, the Fifth Circuit did not reach the question of whether § 806 applies extraterritorially. Rather, the court found that the Complainant's claim did not fall within the scope of § 806's protection. The court noted that "§ 806 bars companies that are publicly traded in the United States from retaliating against a whistleblowing employee, but only if the employee seeking the statute's protection demonstrates that he provided information regarding conduct that he or she reasonably believed violated one of the six enumerated provisions of U.S. law. See 18 U.S.C. § 1514A(a)(1)(C); Allen , 514 F.3d at 476." Slip op. at 3. The court determined that "On review of the facts of the case . . . we conclude that Villanueva did not provide information regarding conduct that he reasonably believed violated one of the six provisions of U.S. law enumerated in § 806; rather, he provided information regarding conduct that he reasonably believed violated Colombian law. In other words, he failed to show that he engaged in protected activity under § 806." Slip op. at 3 (emphasis as in original).
Murray v. UBS Securities, LLC , No. 12-cv-05914 (SDNY Jan. 27, 2014) (2014 WL 285093)
Order granting Defendants' motion to compel arbtritration and to stay proceeding.
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SOX ANTI-ARBITRATION PROVISION CANNOT BE TRANSPLANTED TO THE DODD-FRANK ANTI-RETALIATION PROVISION WHICH DOES NOT CONTAIN AN ANTI-ARBITRATION PROVISION, EVEN IF PLAINTIFF MIGHT HAVE A COLORABLE CLAIM UNDER SOX SECTION 806

In Murray v. UBS Securities, LLC , No. 12-cv-05914 (SDNY Jan. 27, 2014) (2014 WL 285093), the court held that where the Plaintiff's claim arises under the Dodd-Frank Act anti-retaliation provision at 15 U.S.C. § 78u-6(h), even though the Plaintiff might have a cognizable claim under SOX Section 806 not before the court, the claim before the district court could not be converted in an effort to thwart an agreeement to arbitrate disputes with the Defendants. Moreover, SOX's anti-arbitration provision at 18 U.S.C. 1514A(e) could not be transplanted to statutes for which Congress did not include an anti-arbitration provision.

Surface Transportation Assistance Act

Stark v. Hartt Transportation Systems, Inc. , No. 12-cv-00195 (D. Me. Aug. 11, 2014) (2014 WL 3908128) (court's order affirming magistrate's recommended decision)
(Order Affirming the Recommended Decision of the Magistrate Judge)
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Stark v. Hartt Transportation Systems, Inc., No. 12-cv-00195 (D. Me. Apr. 1, 2014) (magistrate's recommended decision)
(Memorandum Decision on Motion to Prohibit Plaintiff from Relying on Certain Facts and Recommended Decision on Motions for Summary Judgment)
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[STAA Digest V B 1 a]
PROTECTED ACTIVITY; PLAINTIFF IS NOT REQUIRED TO SHOW THAT HIS REPORT WENT BEYOND NORMAL CHANNELS OR NORMAL JOB DUTIES

In Stark v. Hartt Transportation Systems, Inc. , No. 12-cv-00195 (D. Me. Aug. 11, 2014) (2014 WL 3908128), aff'g Stark v. Hartt Transportation Systems, Inc. , No. 12-cv-00195 (D. Me. Apr. 1, 2014) (magistrate's recommended decision), the District Court adopted the recommendation of the Magistrate Judge to deny the Defendant's motion for summary judgment on the Plaintiff's STAA complaint. One of the grounds for summary judgment proffered by the Defendant was that the Plaintiff had not engaged in protected activity because the STAA purportedly requires that a plaintiff report a specific violation of a specific DOT regulation and the Plaintiff only reported routine mechanical issues. The Magistrate Judge noted the Plaintiff's observation that under Manske v. UPS Cartage Servs., Inc. , 870 F.Supp.2d 185 (D. Me. 2012), the court had held that:

a driver's reports to his employer constituted protected activity for purposes of the STAA when those reports were mandated pursuant to DOT regulations either because they concerned listed vehicle conditions or because they concerned issues that "would affect the safety of operation of the vehicle or result in its mechanical breakdown. " Manske , 870 F. Supp.2d at 203 (citation and internal quotation marks omitted). The court observed: "Congress recognized that by performing ordinary and routine job duties, drivers are often best able to detect safety violations, and Congress therefore mandated reporting requirements. " Id . at 204 (citation and internal quotation marks omitted).

Magistrate's recommended decision at 57. The Magistrate noted that the Defendant had contended at oral argument that "for purposes of the STAA as well as the MWPA, an employee must step outside of his or her normal role and/or make reports through other than normal channels to be considered a 'whistleblower.'" Id . at 58. The Plaintiff had countered that the STAA does not impose such requirements. The Magistrate held that the Complainant had the better argument, stating that "[t]he Manske court did not base its holding that the driver in that case had engaged in protected activity on a finding that he had gone beyond normal channels and/or his normal job duties." Id .
Torres v. DeMatteo Salvage Co., Inc. , No. 14-cv-00774 (E.D.N.Y. Aug. 4, 2014) (2014 WL 3828271)
(Decision and Order)
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[STAA Whistleblower Digest XIII A]
YOUNGER ABSTENTION DOCTRINE FOUND NOT TO APPLY TO ADJUDICATION OF STAA COMPLAINT IN FEDERAL DISTRICT COURT WHERE STATE COURT ACTION WAS NOT AKIN TO CRIMINAL PROSECUTION

In Torres v. DeMatteo Salvage Co., Inc. , No. 14-cv-00774 (E.D.N.Y. Aug. 4, 2014) (2014 WL 3828271), the Defendant filed a motion to dismiss the Plaintiff's STAA whistleblower complaint under the Younger v. Harris , 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 ((1971), abstention doctrine because the Plaintiff's claims could be litigated in a first-filed state action. Applying the standards found in the recent U.S. Supreme Court decision in Sprint Commc'ns, Inc. v. Jacobs , __ U.S. __, __, 134 S.Ct. 584, 593, 187 L.Ed.2d 505 (2013), the district court considered whether the state proceeding under New York State Labor Laws fit into the classification of "particular state civil proceedings that are akin to criminal prosecutions." The court found that although the state law generally incentivized enforcement of the law by private parties, it was not the type of state proceedings akin to a crimination prosecution as contemplated by Sprint , in particular because the state court action was between two private parties and was not initiated by a state body in its sovereign capacity. The court thus denied the motion to dismiss.
Maverick Transportation, LLC v. USDOL, Adminstrative Review Board , No. 12-3004 (8th Cir. Jan. 16, 2014)(corrected Jan. 17, 2014) (2014 WL 148713) (case below ARB No. 11-012, ALJ No. 2009-STA-54)
(Denial of petition for review of ARB's affirmance of ALJ's determination that Respondent violated the STAA whistleblower provision)
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[STAA Digest II B 2 c iii]
STAA LIMITATIONS PERIOD IS TRIGGERED BY DATE EMPLOYEE RECEIVES NOTICE OF ADVERSE ACTION

[STAA Digest V B 2 b]
PROTECTED ACTIVITY; REFUSAL TO DRIVE DOES NOT NEED TO BE PREDICATED ON VIOLATIONS OF FEDERAL SAFETY REGULATIONS SO SEVERE AS TO MANDATE TAKING THE TRUCK OUT OF SERVICE

[STAA Digest VI B 4]
ADVERSE ACTION; NEGATIVE DAC REPORT; COMPLAINANT MUST PROVE NEGATIVE INFORMATION NEGATIVELY AFFECTED FUTURE EMPLOYMENT

[STAA Digest IX B 3 f]
BACK PAY; NO TOLLING OF AWARD WHERE COMPLAINANT LEFT SUBSEQUENT EMPLOYMENT BECAUSE OF UNREASONABLE WORKING CONDITIONS

[STAA Digest IX B 3 e]
COMPENSATORY DAMAGES FOR EMOTIONAL DISTRESS BASED SOLELY ON COMPLAINANT'S TESTIMONY; $75,000 AWARD AFFIRMED

In Maverick Transportation, LLC v. U.S. Dept. of Labor, Admin. Review Bd. , No. 12-3004 (8th Cir. Jan. 16, 2014, corrected Jan. 17, 2014) (2014 WL 148713), the Complainant, a commercial truck driver, was involved a fatal traffic accident, and was allowed to drive the truck away from the scene by a state trooper on condition that the truck's brakes were adjusted immediately, and that the trucking company, Maverick Transportation, LLC (Maverick), provided assurances that other federal safety violations would be corrected. The Complainant drove the truck about 80 miles to a truck stop, left the trailer to be picked up by another driver, and proceeded with the truck another 9 miles to his home. Maverick had the Complainant take medical leave for depression. Upon being cleared to work, the Complainant resigned instead. Maverick asked the Complainant to drive the truck about 200 to 250 miles to the yard, and the Complainant refused to do so unless Maverick first fixed the remaining defects and provided transportation home. The Complainant informed Maverick that the uncorrected defects were in violation of federal safety regulations, and left the truck at the truck stop where he had left the trailer a month earlier. The Complainant informed Maverick of the location of the truck. Maverick placed an abandonment notation in the Complainant's Drive-A-Check (DAC) report. After resigning from Maverick, the Complainant worked for five different trucking companies between 2004 and 2008. In 2008, the Complainant began having trouble finding work, and was told by a recruiter that information on his DAC report prevented his hiring. The Complainant then requested the report, and learned for the first time in July or August of 2008 about the abandonment notation. The Complainant subsequently sought employment with a trucking company for which he met all hiring criteria, but that company refused to hire him because of the DAC report. In December 2008, the Complainant filed a STAA complaint with OSHA against Maverick. The ALJ found that the complaint was timely, and that Maverick had unlawfully retaliated against the Complainant for his refusal to drive the truck back to the yard. The ARB affirmed, and Maverick petitioned for review by the Eighth Circuit.

ARB's adoption of rule that limitations period begins to run when employee received notice of adverse action is entitled to Chevron deference

On appeal, Maverick first contended that the complaint was not timely. The court, giving Chevron deference to the ARB, found that the ARB's finding that the complaint was timely was not contrary to law. The court found that the ARB had interpreted the STAA to incorporate an exception to the general rule that a claim accrues at the time of injury, and adopted instead a rule that the limitations period begins to run when the employee receives notice of the adverse action taken by the employer. The court found that under Chevron , the court's review is only whether the agency's interpretation is a permissible one, and disagreed with one dissenting member of the court that Chevron deference was inappropriate.

Protected activity; refusal to drive; federal safety violations do not need to be severe enough to place truck out of service

The ARB had concluded that the Complainant's refusal to drive was protected by the STAA because the truck's uncorrected defects violated federal safety regulations. See 49 U.S.C. § 31105(a)(1)(B)(i). Maverick argued on appeal that under 49 C.F.R. § 396.9(c) the defects were not violations of safety regulations because they were not severe enough to place the truck out of service. The court was not persuaded, finding nothing in the text of section 396.9(c) "which sets forth the standard for placing a vehicle out of service, limits violations to only those severe enough to place a vehicle out of service. " Slip op. at 11. The court did not address the ARB's alternative finding that the refusal to drive was also protected activity under 49 U.S.C. § 31105(a)(1)(B)(ii) based on the Complainant's reasonable fear of danger to himself or the public due to the truck's unsafe condition.

Adverse employment action; mere existence of negative employment report is not adverse in absence of proof the report negatively affected future employment opportunities

Maverick argued that the abandonment notation in the Complainant's DAC report was not adverse employment action because the Complainant was initially able to find work. The court acknowledged that had the Complainant been aware of the DAC report notation such that the limitations period elapsed while he was still able to work, Maverick might have a case. The court noted that it had held that "the mere existence of a negative employment report not to be adverse in the absence of proof the report negatively affected future employment opportunities. See Turner v. Gonzales , 421 F.3d 688, 696 (8th Cir. 2005) (holding negative employee review not adverse until it is used to deny a job opportunity). " Slip op. at 12. The court found, however, that the ARB had before it a finding supported by substantial evidence that Maverick's placement of an abandonment notation on the DAC actually led to the Complainant being denied employment. Thus, the ARB's finding that the DAC report notation was adverse employment action was not contrary to law.

Back pay award not reduced based on complainant's voluntary leaving of subsequent position where motivation was based on unreasonable working conditions

Maverick argued that the back pay award should be reduced or eliminated because the Complainant failed to mitigate damages by voluntarily leaving his position with a subsequent employer. The court noted that typically such a voluntary decision tolls the back pay period, but stated that when the decision is motivated by unreasonable working conditions there is no tolling. In the instant case, the Complainant left the subsequent employer because it wanted him to violate hours-of-service regulations, which is an unreasonable working condition.

Compensatory damage award for emotional distress without presentation of medical evidence; $75,000 award affirmed

Maverick argued that the ALJ's award of $75,000 in compensatory damages for emotional distress was contrary to law because it was excessive given that the only evidence offered on the Complainant's depression was his own testimony. The court found no abuse of discretion in setting the emotion distress award at $75,000. The court noted that it intervenes in such awards only where there was plain injustice or a monstrous or shocking result, that a plaintiff's own testimony can be sufficient for a finding of emotional distress, and that although $75,000 was on the high end of damages awards approved by the ARB in other cases, the ARB had made similar awards.