USDOL/OALJ: Federal Court Whistleblower Decisions 2015

Federal Court Whistleblower Decisions - 2015

"Affordable Care Act" (§ 218c of the FLSA)
Aviation Investment and Reform Act
Consumer Financial Protection Act
Energy Reorganization Act
Federal Railroad Safety Act
Sarbanes-Oxley Act
Surface Transportation Assistance Act

"Affordable Care Act" (§ 218c of the FLSA)

Banks v. Soc'y of St. Vincent De Paul , 143 F. Supp. 3d 1097 (W.D. Wash. Oct. 28, 2015) (15-cv-0304) (2015 U.S. Dist. LEXIS 146389)
Order Granting Defendant’s Motion for Summary Judgment
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Summary :
PROTECTED ACTIVITY UNDER FLSA SECTION 219(c); REFERENCE TO “THIS TITLE” REFERS TO TITLE I OF THE PATIENT PROTECTION AND AFFORDABLE CARE ACT, AND NOT TO THE ENTIRETY OF TITLE 29 OF THE UNITED STATES CODE

In Banks v. Soc'y of St. Vincent De Paul , 143 F. Supp. 3d 1097 (W.D. Wash. Oct. 28, 2015) (15-cv-0304) (2015 U.S. Dist. LEXIS 146389), the court construed the Plaintiff’s complaint to allege, inter alia, that “Defendants violated the FLSA by firing him for submitting an OSHA complaint, see 29 U.S.C. § 218c(a)(2), and for refusing to clean the bathrooms in a manner that he felt violated OSHA, see 29 U.S.C. § 218c(a)(5).” Slip op. at 11. In order to support these FLSA section 218(c) claims, the court found that the Plaintiff implicitly interpreted the references to “this title” in section 218(c) to refer to Title 29 of the United States Code. The court was not persuaded, writing:

Under that understandable interpretation, firing an employee for submitting an OSHA complaint would violate Section 218c(a)(2), and firing an employee for refusing to participate in an activity that the employee reasonably believed violated OSHA—such as cleaning restrooms with only warm water—would violate Section 218c(a)(5).

However, the better understanding of Section 218c(a)’s references to “this title” is as referring to Title I of the Patient Protection and Affordable Care Act (“PPACA”), Pub. L. No. 111-148, 124 Stat. 119.7 See Rosenfield v. GlobalTranz Enters., Inc. , No. CV 11-02327-PHX-NVW, 2012 WL 2572984, at *1-4 (D. Ariz. July 2, 2012) (performing extensive analysis of the PPACA’s legislative history and incorporation into the United States Code, and concluding that “this title” in Section 218c(a) refers to Title I of the PPACA). First of all, the “References in Text” note, which accompanies Section 218c in the United State Code, states that “[t]his title, referred to in subsec. (a)(2), (5), probably means title I of” the PPACA. See 29 U.S.C. § 218c. Furthermore, reading “this title” to refer to Title 29 of the United States Code would render Title I of the PPACA—which is largely codified in Titles 42 and 26 of the United States Code, not Title 29—without an anti-retaliation provision. See Rosenfield , 2012 WL 2572984, at *1-2. This would mean that “a whistleblower could be fired with impunity as far as the [PPACA] is concerned—surely an incongruous result given the comprehensive reforms Congress intended and its many protections against discrimination.” Id . Finally, reading Section 218c to apply to Title 29 at large would swallow the narrower anti-retaliation protections afforded by Section 215, which have been in place since 1938. See 29 U.S.C. § 215(a)(3) (making it unlawful to discharge or discriminate against an employee for filing a complaint or participating in a proceeding under the FLSA); Rosenfield , 2012 WL 2572984, at *3. “Enacting such changes in a new statutory section—as opposed to amending § 215—makes little sense, especially without mentioning how the new remedy might relate to the preexisting remedy.”8 Rosenfield , 2012 WL 2572984, at *4.

The court therefore concludes that “this title” in Sections 218c(a)(2) and 218c(a)(5) refers to Title I of the PPACA. There is no evidence in the record that Mr. Banks provided information regarding a violation of Title I of the PPACA. See 29 U.S.C. § 218c(a)(2). There is likewise no evidence that he was fired for objecting to a task that he reasonably believed violated Title I of the PPACA. See id . § 218c(a)(5). Accordingly, the court grants Defendants summary judgment as to Mr. Banks’ claims for violating Section 218c(a).9

Id . at 12-14 (footnotes omitted).

Aviation Investment and Reform Act

Bombardier, Inc. v. USDOL , 145 F. Supp. 3d 21 (D. D.C. Nov. 12, 2015) (No. No. 15-cv-604) (2015 U.S. Dist. LEXIS 152856) (case below 2014-AIR-00017)
Memorandum Opinion Granting Defendant's Motion to Dismiss and Denying as Moot Plaintiff's Motion for Preliminary Injunction
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EXTRATERRITORIAL APPLICATION OF AIR21 WHISTLEBLOWER PROVISION; DISTRICT COURT DISMISSED RESPONDENT’S REQUEST FOR DECLARATORY AND INJUNCTIVE RELIEF FROM DOL PROCEEDING ON THEORY THAT THE ADMINSITRATIVE ADJUDICATION OVER A FOREIGN COMPANY WAS ULTRA VIRES; RATHER THE AIR21 STATUTORY REVIEW SCHEME ALLOWS A RESPONDENT TO SEEK REVIEW OF AN ADVERSE FINAL DOL ORDER BEFORE A U.S. COURT OF APPEALS

In Bombardier, Inc. v. USDOL , 145 F. Supp. 3d 21 (D. D.C. Nov. 12, 2015) (case below 2014-AIR-00017), the Plaintiff, a Canadian company that designs and manufactures aircraft and which does not provide air transportation to the public, sought declaratory and injunctive relief on the ground that DOL acted ultra vires by exercising jurisdiction over it in an impermissible extraterritorial application of the AIR21 whistleblower protection provision. The complainant in the administrative action alleged that the Plaintiff discriminated against him by terminating his employment in retaliation for reporting safety of flight issues on an aircraft that had been flight tested in Wichita, Kansas. OSHA had dismissed for lack of jurisdiction, finding that the Plaintiff was not an air carrier, the complainant was not an employees, within the meaning of the applicable provisions of AIR21. Before the ALJ, the complainant argued that the Plaintiff was covered as an air carrier, or contractor of an air carrier, for AIR21 purposes, and that he was thus an employee under AIR21. The Chief ALJ issued an order to show cause why the complaint should not be dismissed for lack of jurisdiction, but ultimately declined to dismiss because the complainant mean the “fair notice” minimal pleading requirements for a DOL whistleblower protection proceeding. The case was then assigned to a presiding ALJ who denied the Plaintiff’s (i.e., Bombardier) motion for summary decision, finding that the record showed a significant nexus between the Plaintiff and the U.S. The ALJ denied the Plaintiff’s request for leave to file an interlocutory appeal to the ARB, request to stay discovery, and alternative request for the ALJ to reconsider the denial of summary decision. The ALJ also affirmed the earlier denial of summary decision, noting that the standard for consideration of such a motion required viewing the evidence in the light most favorable to the complainant. As the Plaintiff continued to resist the administrative proceedings, it filed the district court action. The ALJ had not yet held a hearing on the merits.

Statutory review scheme

DOL argued before the district court that (1) the Plaintiff failed to exhaust its administrative remedies, and (2) “the existing administrative scheme, which allows Bombardier to seek review of a final Department order in a United States Court of Appeals, precludes review by a district court now.” Slip op. at 13. The district court found the second argument persuasive and thus did not address the exhaustion argument. The court first examined the statutory scheme’s text, structure and purpose and found that it has “much in common with other review schemes that preclude premature district court review.” Id . at 15. The court found that the AIR21 whistleblower review scheme “carries a fairly discernible congressional intent to preclude extrastatutory district court suits.” Id . at 19 (footnote omitted). The court then examined whether the complainant’s AIR21 claims are of the type Congress intended to be reviewed within the statutory structure. The court found that the Plaintiff did not lack meaningful administrative review of its claims, noting that DOL had adjudicated its jurisdictional challenge and that the jurisdictional issue was an open issue that, if found adversely to the Plaintiff’s position, could be appealed to a court of appeals. The court found that the burden of discovery was not constitute irreparable injury. The Plaintiff’s objection that the U.S. government’s administrative process is “out of line” merely highlights what that process is trying to determine: whether the Plaintiff’s actions fall under U.S. regulatory authority. The court noted that the Plaintiff might, after a hearing on merits, convince the ALJ that AIR21 could not apply to the Plaintiff – or the ARB could rule in the Plaintiff’s favor on review of the ALJ’s decision. The court stated:

Bombardier’s situation shows us precisely why courts tend to “await the termination of agency proceedings”: so that the agency proceedings may “obviate all occasion for judicial review.” Jarkesy v. SEC , 803 F.3d 9, 27 (D.C. Cir. 2015) (quoting Standard Oil , 449 U.S. at 244 n.11). This is “a feature” of the administrative process, “not a bug.” Id .

Id . at 28. The court was not persuaded that its claims were wholly collateral to the AIR21 review provisions, or that the claims were outside DOL’s expertise. The court summarized:

In sum, Bombardier’s claims are of the type intended to be reviewed within the AIR21 statutory structure. Pursuing these claims administratively will not foreclose later meaningful judicial review, the claims are not wholly collateral to AIR21 review provisions, and those claims do not fall outside the Department’s expertise. For these reasons, and because the AIR21 statutory structure has a fairly discernible intent to preclude premature suits in federal court, Bombardier’s complaint must be dismissed. Holding otherwise would continue the parallel litigation of identical issues in this Court and in the Department of Labor, leaving open the possibility of future inconsistent judgments. See generally Jarkesy v. SEC , 803 F.3d 9, 30 (D.C. Cir. 2015) (discussing this possibility). To avoid that unwelcome result, the Court will dismiss Bombardier’s complaint for lack of jurisdiction.

Id . at 33 (footnote omitted).

Administrative Procedure Act

The court was no more persuaded by the Plaintiff’s APA claim, noting that the APA’s review provisions are not jurisdictional. The court noted that “[e]xisting statutory review procedures are adequate when they offer relief of the “same genre” as APA review” . . . and that here, once the Plaintiff “obtains a final order from the Department, AIR21 grants it the right to judicial review in a court of appeals and specifies that appellate review must conform to the APA. See 49 U.S.C. § 42121(b)(4)(A) . . . .” Slip op. at 38 (citations omitted). The court summarized:

In other words, AIR21’s statutory review procedures do not just offer relief of the “same genre” as APA review; judicial review under AIR21 exactly parallels review otherwise available under the APA. Because the AIR21 statutory scheme establishes separate and adequate procedures for judicial review of the Department’s actions, the APA cannot create an escape hatch for Bombardier. Bombardier must complete administrative proceedings in the Department before seeking judicial review. And, even then, it must seek judicial review in the courts of appeal, not before this Court.

Id .at 39 (footnote omitted).

[Editor’s note: The administrative action was concluded by the ALJ’s approval of a settlement agreement. See Sobhani v. Bombardier Aerospace Corp. , 2014-AIR-00017 (ALJ Oct. 7, 2016).]
Williams v. Perez , 110 F. Supp. 3d 1 (D.D.C. June 16, 2015) (No. 14-788) (2015 WL 3745148; 2015 U.S. Dist. LEXIS 77309) (case below ARB No. 08-063, ALJ No. 2008-AIR-3)
Memorandum Opinion
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DISTRICT COURT LACKS JURISDICTION TO REVIEW DOL DECISION ON AIR21 WHISTLEBLOWER COMPLAINT

In Williams v. Perez , 110 F.Supp.3d 1 (D.D.C. June 16, 2015) (case below ARB No. 08-063, ALJ No. 2008-AIR-3), the District court found that it lacked jurisdiction to entertain the Plaintiff’s action challenging certain DOL actions pertaining to his AIR21 whistleblower complaint. The court stated that the AIR21 statute “is clear: there is no collateral review of orders of the Secretary of Labor regarding whistleblower claims through any civil or criminal action, other than through the specified procedure for obtaining review in the Courts of Appeals. See 49 U.S.C. 42121(b)(4)(B). ” Slip op. at 6. The district court also found that the Plaintiff’s action was neither a civil action to enforce an order of the Secretary of Labor, nor a petition for mandamus. The district court further found that the judicial review provisions of the APA are inapplicable because the statute established a scheme for judicial review.

The D.C. Court of Appeals summarily dismissed the Plaintiff’s appeal, finding that the Ninth Circuit had already determined, in the context of the Plaintiff’s case, that a district court lacks jurisdiction to hear a claim under the AIR21 whistleblower provision—and therefore the Plaintiff’s new claim attempt in district court is barred by res judicata. Williams v. Perez , No. 15-5228 (D.C. Cir. Feb. 1, 2016) (2016 U.S. App. LEXIS 1708), cert. denied 2016 U.S. LEXIS 4770, 137 S. Ct. 60, 196 L. Ed. 2d 32 (U.S. Oct. 3, 2016) (No. 15-5228). The Ninth Circuit decision was Williams v. UAL, Inc. , No. 13-15299 (9th Cir. Dec. 31, 2013) (unpublished), cert. denied Nov. 18, 2013.
Leon v. Securaplane Technologies Inc. , No. 13-71450 (9th Cir. Mar. 2, 2015) (unpublished) (2015 WL 858758; 2015 U.S. App. LEXIS 3221) (case below ARB No. 11-069, ALJ No. 2008-AIR-12)
Memorandum
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The Ninth Circuit summarily denied Leon’s petition for review, stating: “Contrary to Leon’s contention, the ARB did not err in upholding the Administrative Law Judge’s decision because Securaplane Technologies demonstrated by clear and convincing evidence that it would have terminated Leon’s employment in the absence of his protected activity.” Slip op. at 2 (citations omitted).

Consumer Financial Protection Act (Dodd-Frank)

Rock v. Lifeline Systems Co. , No. 13-11833 (D. Mass. Oct. 23, 2015) (2015 U.S. Dist. LEXIS 144335; 2015 WL 6453139)
Memorandum and Order Re: Defendant's Motion for Summary Judgment
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Lifeline's products are “devices” registered under the Federal Food, Drug, and Cosmetic Act, and are not “consumer products” within the meaning of CPSIA.
Wimmer v. Gateway Funding Diversified Mortgage Services, L.P. , No. 15-cv-241 (S.D. Ohio Sept. 17, 2015) (2015 U.S. Dist. LEXIS 124277; 2015 WL 5453058)
Order Denying Motion to Dismiss or Stay Lawsuit
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KICK-OUT PROVISION; SUBJECT MATTER JURISDICTION; CFPA PROVIDES “SEPARATE TRACKS AND SEPARATE REQUIREMENTS” TO SEEK EITHER DE NOVO REVIEW IN DISTRICT COURT OR JUDICIAL REVIEW IN THE COURT OF APPEALS

In Wimmer v. Gateway Funding Diversified Mortgage Services, L.P. , No. 15-cv-241 (S.D. Ohio Sept. 17, 2015) (2015 U.S. Dist. LEXIS 124277), the Plaintiff asserted he was terminated by the Defendant in violation of the Consumer Financial Protection Act (CFPA). The Defendant moved to dismiss based on a lack of subject matter jurisdiction because the Plaintiff failed to exhaust administrative remedies. Specifically, Defendant argued that because the Plaintiff did not file objections to the Secretary of Labor’s findings and request a hearing within 30 days of receipt of the determination, the Secretary’s findings are a final order not subject to judicial review under 12 U.S.C. § 5567(c)(2)(C) of the CFPA. However, the court found that the Plaintiff was entitled to a de novo review in federal court pursuant 12 U.S.C. § 5567(c)(4)(D)(i) and 29 C.F.R. § 1985(a)(ii) because at the time he filed his federal court complaint, more than 210 days had passed without a final decision from the Secretary of Labor. The court stated that the CFPA “provides separate tracks and separate requirements to seek de novo review in the appropriate district court or judicial review in the appropriate court of appeals.” Slip op. at 9.

PLEADING IN FEDERAL COURT; COURT MAY LOOK AT PUBLIC RECORDS FROM ADMINISTRATIVE PROCEEDINGS ON A MOTION TO DISMISS TO DETERMINE SUFFICIENCY OF PLEADINGS

In Wimmer v. Gateway Funding Diversified Mortgage Services, L.P. , No. 15-cv-241 (S.D. Ohio Sept. 17, 2015) (2015 U.S. Dist. LEXIS 124277), the Plaintiff asserted he was terminated by the Defendant in violation of the Consumer Financial Protection Act (CFPA). The Defendant moved for dismissal on the basis that the Plaintiff failed to properly allege he was a covered employee and the Defendant was a covered service provider under the CFPA. The court rejected this argument, stating that while threadbare, conclusory allegations are insufficient to state a plausible claim for relief, the court can consider the public records from the administrative proceedings on a motion to dismiss. Because the Secretary of Labor made preliminary determinations that the Plaintiff and Defendant were covered under the CFPA, this was sufficient to satisfy Plaintiff’s pleading burden.
Somers v. Digital Realty Trust, Inc. , 119 F. Supp. 3d 1088 (N.D. Cal. July 22, 2015) (not for publication) (No. 14-cv-5180) (2015 U.S. Dist. LEXIS 97132; 2015 WL 4483955)
Amended Order Denying (1) Defendant's Motion to Dismiss; (2) Plaintiff's Motion to Disqualify Defense Counsel
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PROCEDURE IN FEDERAL COURT; ARGUMENT MADE FOR THE FIRST TIME IN A REPLY BRIEF IS WAIVED

In Somers v. Dig. Realty Tr., Inc. , 119 F. Supp. 3d 1088, 1091 (N.D. Cal. 2015), Complainant worked for Employer, a “real estate investment trust.” Complainant filed claims under the whistleblower antidiscrimination provisions of both Dodd Frank and SOX. Concerning the latter claim, Employer argued for the first time in a reply brief that Complainant “has not adequately pleaded that his internal reports were either ‘required or protected’” under the Act. Specifically, Employer argued that because Complainant did not exhaust his administrative remedies under SOX, his disclosures are not “protected,” Complainant is not a SOX whistleblower, and the Dodd Frank Act does not apply. The Court found that Employer did not make this argument in its initial motion to dismiss, and so held that “the argument is waived.”

DIFFERENCE BETWEEN DODD-FRANK ACT AND SARBANES-OXLEY ACT WHISTLEBLOWER CLAIMS:
In Somers v. Dig. Realty Tr., Inc. , the court noted three differences between a Dodd-Frank Act § 78u-6 case and a Sarbanes-Oxley Act, § 1514A case:

An aggrieved whistleblower under the DFA may also have a claim under the Sarbanes-Oxley Act, which created a civil right of action to protect employees from retaliation for reporting law violations. See 18 U.S.C. § 1514A. However, the remedies and procedures associated with a Sarbanes-Oxley Act anti-retaliation claim are considerably different from those provided under the whistleblower-protection provision of the DFA. Three main differences bear highlighting. First, the DFA provides for recovery of two times back pay, whereas Sarbanes-Oxley provides for recovery of back pay without a multiplier, along with other economic damages such as emotional distress damages. Compare 15 U.S.C. § 78u-6(h)(1)(C) with 18 U.S.C. § 1514A(c)(2); see also Halliburton, Inc. v. Admin. Review Bd. , 771 F.3d 254, 266 (5th Cir. 2014) (per curiam) (holding that Sarbanes-Oxley “affords noneconomic compensatory damages, including emotional distress and reputational harm”). Second, Sarbanes-Oxley act claimants must first file an administrative complaint with the Department of Labor, whereas DFA plaintiffs are not required to exhaust any administrative remedies. See 18 U.S.C. § 1514A(b)(1). And third, DFA claimaints [sic] have between six and ten years to file suit from the time a violation occurs, whereas Sarbanes-Oxley plaintiffs must file suit between 180 days after the violation occurs and 180 days after the employee becomes aware of the violation. See 15 U.S.C. § 78u-6(h)(1)(B)(iii); 18 U.S.C. § 1514A(b)(2)(D).
Safarian v. American DG Energy Inc. , No. 14-2734 (3d Cir. July 21, 2015) (not precedential) (2015 U.S. App. LEXIS 12548)
Opinion
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EMPLOYEE OR INDEPENDENT CONTRACTOR; THIRD CIRCUIT DIRECTED DISTRICT COURT TO USE SIX FACTOR TEST OF MARTIN V. SELKER BROS.

In Safarian v. Am. DG Energy Inc. , 622 Fed. Appx. 149 (3d Cir. 2015) (not precedential), the issue on appeal was whether Plaintiff was an independent contractor and not Employer’s employee. The Circuit Court remanded in part for the District Court to reason through the factors determining employment status under the Fair Labor Standards Act. Quoting Martin v. Selker Bros. , 949 F.2d 1286 (3d Cir. 1991), the Court found

There are six factors to determine whether a worker is an "employee" under the FLSA:

1) the degree of the alleged employer’s right to control the manner in which the work is to be performed; 2) the alleged employee’s opportunity for profit or loss depending upon his managerial skill; 3) the alleged employee’s investment in equipment or materials required for his task, or his employment of helpers; 4) whether the service rendered requires a special skill; 5) the degree of permanence of the working relationship; 6) whether the service rendered is an integral part of the alleged employer’s business.

Slip op. at 4 (citation omitted).
Murray v. UBS Securities, LLC , No. 14-cv-927 (S.D.N.Y. Feb. 24, 2015) (2015 WL 769586; 2015 U.S. Dist. LEXIS 22024)
Opinion and Order
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SOX AND CFPA RETALIATION CLAIMS WERE NOT IMPERMISSIBLY DUPLICATIVE CLAIMS OF EARLIER DODD-FRANK CLAIM WHERE WAITING PERIODS FOR FILING DE NOVO ACTION HAD NOT YET EXPIRED

In Murray v. UBS Securities, LLC , No. 14-cv-927 (S.D.N.Y. Feb. 24, 2015) (2015 WL 769586; 2015 U.S. Dist. LEXIS 22024), Plaintiff had filed suit in district court alleging termination in violation of Dodd-Frank, and on the same day filed complaints with the USDOL alleging termination in violation of SOX and the CFPA. The latter statutes' anti-retaliation provisions require that complaints first be filed with the Secretary of Labor, but allow complainants to file actions in federal court if no decision has been rendered by DOL within, respectively, 180 and 210 days. Plaintiff suggested that he would seek leave to amend his Dodd-Frank complaint by adding his SOX and CFPA claims once the necessary period had elapsed. Plaintiff did not amend that complaint, but rather filed a claim shortly after the court's opinion compelling arbitration of Plaintiff's Dodd-Frank claim. The new claim was based on Plaintiff's rights to bring SOX and CFPA claims de novo due to the failure of DOL to act. The court held that because the statutory waiting periods barred suit on Plaintiff's SOX and CFPA claims at the time of his earlier Dodd-Frank suit, Plaintiff's current claims were not impermissibly duplicative.

CONSUMER FINANCIAL PROTECTION ACT RETALIATION PROVISION REQUIRES ACTUAL CFPB REGULATION TO PROVIDE COVERAGE

In Murray v. UBS Securities, LLC , No. 14-cv-927 (S.D.N.Y. Feb. 24, 2015) (2015 WL 769586; 2015 U.S. Dist. LEXIS 22024), Plaintiff, a Senior Commercial Mortgage-Backed Security Strategist and Executive Director performed research and created reports for Defendant's clients with regard to its products, services and transactions regulated by the SEC and the Consumer Financial Protection Bureau ("CFPB"). Plaintiff alleged that senior personnel made a "concerted effort" to influence him to skew his research to improve market conditions for its products and to produce reports about their products and services that did not conform with Federal consumer financial law but were intended to be unfair and deceptive. Plaintiff maintained that while he did not publish any report inconsistent with his research, he was criticized by his supervisors with regard to the "off-message" nature of his articles and excluded from meetings. Plaintiff maintained that he reported these negative encounters and exclusions to managers. Plaintiff alleged that his termination was motivated, in part, by his reporting the attempts by UBS personnel to skew his research to his supervisors. Plaintiff claimed that his termination thus violated the anti-retaliation provisions of Sarbanes-Oxley and the Consumer Financial Protection Act (CFPA). The court granted Defendant's motion to dismiss the CFPA claim.

The CFPA's anti-retaliation provision defines a "covered employee" as "any individual performing tasks related to the offering or provision of a consumer financial product or service." 12 U.S.C. § 5567(b). In relevant part, the CFPA defines a "consumer financial product or service" as "any financial product or service" within a list of enumerated products. 12 U.S.C. § 5481(5). The district court held that Plaintiff could not reasonably have believed that his reports or covered services fell within the Dodd-Frank/CFPA's provision defining a financial product or service as "such other financial product or service as may be defined by the [CFPB], by regulation, for purposes of this title." 12 U.S.C. § 5481(15)(A)(xi). The Court rejected Plaintiff's contention that such phrase defined a covered product or service as one which the CFPB had the authority to cover. Rather, it is a catch-all provision that requires enactment of an actual CFPB regulation; it does not extend coverage to regulations that did not exist at the time of Plaintiff's conduct. The court summarized:

Because the CFPA's catch-all provision requires an actual CFPB regulation to provide coverage, and because no such regulation existed at the time of Plaintiff's conduct, it was not reasonable for Plaintiff to believe that his reports were covered products or services within the meaning of 12 U.S.C. § 5481. Accordingly, his claim of retaliatory termination in violation of the CFPA is dismissed.

Slip op. at 13-14.

Energy Reorganization Act

Ma v. American Electric Power, Inc. , 123 F. Supp. 3d 955 (W.D. Mich. Aug. 18, 2015) (No. 13-cv-89) (2015 U.S. Dist. LEXIS 108537)
Opinion
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EMPLOYER’S AFFIRMATIVE BURDEN; PLAINTIFF TERMINATED BECAUSE SHE WAS UNABLE OR UNWILLING TO WORK COLLABORATIVELY AS PART OF A TEAM; EVIDENCE THAT MANY OF DEFENDANT’S EMPLOYEES FILE SAFETY COMPLAINTS WITHOUT SUFFERING DISCLIPINARY ACTION

In Ma v. Am. Elec. Power, Inc. , 123 F. Supp. 3d 955 (W.D. Mich. 2015), Complainant was an engineer who filed a complaint of discriminatory firing under the ERA. The Court found that Complainant proved her prima facie case under the Act. First, she proved that her complaints about working excessive hours constituted protected activity. Second, the Employer did not contest that it terminated Complainant’s employment. Third, Complainant established the final element of her prima facie case—that the protected activity was a contributing factor to her firing—showing that she received positive performance evaluations close to her firing. The Court, however, found that Employer succeeded to establish, by a preponderance of the evidence, that it fired her due to “interpersonal challenges . . . evident during the entirety of [Complainant’s] tenure at [Employer].” The Court continued that AEP:

[W]as not trying to force her out in retaliation for filing safety complaints or objecting to the proposed solution. Rather, they were terminating her because she was unable or unwilling to work collaboratively as part of a team; she wanted to be an island of righteousness in her own world . . . . [Complainant’s] approach created an untenable situation for AEP’s senior management, as the different groups of engineers could not work together to develop solutions to safety problems.

Slip op. at 18. The record showed that many of Defendant’s employees file safety reports. “But the record does not reveal any disciplinary action taken against any of the other employees who filed safety reports, refused to participate in solutions, or otherwise engaged in protected activity, simply for that reason. Instead, only Ma, who had a long history of interpersonal and performance issues at AEP, was the subject of disciplinary action. The obvious inference here is that the factor unique to Ma—her poor interpersonal skills—served as the catalyst of her firing.” Id . at 20.

Federal Railroad Safety Act

Jensen v. BNSF Railway Co. , No. 13-cv-5955 (N.D. Cal. Nov. 4, 2015)
Judgment [in favor of defendant]
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Jensen v. BNSF Ry. Co. , No. 13-cv-5955 (N.D. Ca. Nov. 4, 2015): Complaint under the whistleblower protection provisions of the Federal Rail Safety Act, 49 U.S.C. § 20109, related to an allegation that the Plaintiff was unlawfully disciplined for following the orders and treatment plan of his physician for a right wrist injury. In this order, the court entered judgment for Defendant, BNSF, after a jury verdict in its favor. Slip op. at 1.
Rookaird v. BNSF Railway Co. , No. 14-cv-176 (W.D. Wash. Oct. 29, 2015) (2015 U.S. Dist. LEXIS 147950; 2015 WL 6626069) (case below 2014-FRS-9)
Order Granting in Part and Denying in Part Plaintiff's Second Motion for Partial Summary Judgment and Denying Defendant's Motion for Summary Judgment
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EXHAUSTION OF ADMINISTRATIVE REMEDIES; APPLYING GENERAL EXHAUSTION PRINCIPLES, SCOPE OF DISTRICT COURT REVIEW IS LIMITED TO ISSUES IN THE ADMINISTRATIVE COMPLAINT, THE SUBSEQUENT INVESTIGATION, AND THE SCOPE OF AN INVESTIGATION THAT COULD REASONABLY BE EXPECTED TO FOLLOW THE CHARGES IN THE COMPLAINT

SUMMARY JUDGMENT; SUMMARY JUDGMENT IS NOT AN OPPORTUNITY TO FLESH OUT INADEQUATE PLEADINGS AND SO ISSUES IN CONSIDERATION ARE LIMITED TO THOSE PROPERLY PLEAD PRIOR TO THE MOTION AND OPPOSITION

PROTECTED ACTIVITY; GOOD FAITH; COURT STATES THAT AN EMPLOYEE MUST HAVE A GOOD FAITH BELIEF THAT THE REFUSAL TO ENGAGE IN AN ACTION WOULD VIOLATE A FEDERAL RULE OR REGULATION, WHICH CONTAINS BOTH SUBJECTIVE AND OBJECTIVE COMPONENTS, BUT DOES NOT REQUIRE THAT THE EMPLOYEE BE CORRECT ABOUT THE LAW; SUMMARY JUDGMENT INAPPROPRIATE WHERE DISPUTES OF FACT REMAINED AS TO THE REASON FOR THE EMPLOYEES ACTS AND THE INSTRUCTIONS GIVEN BY THE SUPERVISOR

CONTRIBUTORY FACTOR; SUMMARY JUDGMENT; INTEXTRICABLE INTERTWINEMENT; COURT GRANTS PARTIAL SUMMARY JUDGMENT TO EMPLOYEE WHERE ONE STATED REASON FOR DISCHARGE, INEFFICIENCY IN WORKING, COULD NOT “BE UNWOUND” FROM THE PROTECTED ACTIVITY AT ISSUE, PERFORMING TESTING IN THE FACE OF IMPLICIT INSTRUCTIONS NOT TO DO SO

SUMMARY JUDGMENT; AFFIRMATIVE DEFENSE; WHERE MULTIPLE REASONS WERE GIVEN FOR THE ADVERSE ACTION AND THERE WAS DISPUTED EVIDENCE ABOUT COMPARATORS, SUMMARY JUDGEMENT DENIED FOR BOTH PARTIES ON THE RAILROAD’S AFFIRMATIVE DEFENSE

In Rookaird v. BNSF Railway Co. , No. 14-cv-176 (W.D. Wash. Oct. 29, 2015) (2015 U.S. Dist. LEXIS 147950; 2015 WL 6626069) (case below 2014-FRS-9), Plaintiff had been instructed to move roughly 42 cars. Before doing so he conducted air tests on the cars. He and a trainmaster communicated over the radio about whether the testing was necessary. When Plaintiff returned to the depot he was told by the superintendent to “tie up” and go home. He did so, but provided an end time 28 minutes later than the time he completed his tie up and did not sign his time sheet because he could not locate it. Plaintiff also had a confrontation in the break room with another employee, after which the superintendent told him to leave. Defendant investigated the events and terminated Plaintiff. Its stated reasons were failure to work efficiently, dishonest reporting of time, failure to sign the time sheet, and not complying with instructions to leave the property. Plaintiff filed suit under the FRSA on the grounds that his air testing and communications about it were protected activities and led to the termination. This order considered Plaintiff’s Motion for Partial Summary Judgment and Defendant’s Motion for Summary Judgment.

The court explained that the FRSA employs a “two-part burden-shifting test” and that in the first part the plaintiff must “show by a preponderance of the evidence that (1) he engaged in a protected activity; (2) the employer knew he engaged in the allegedly protected activity; (3) he suffered an unfavorable personnel action; and (4) the protected activity was a contributing factor in the unfavorable personnel action.” “After the employee makes this showing, 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.” Here, Defendant conceded the second and third elements of the Complainant’s case.

The first issue for the court was which alleged protected activities were at issue. To be properly raised, Plaintiff needed to have exhausted his administrative remedies as to the issue. Relying on general principles of exhaustion, this meant that the action was limited to the administrative complaint, the investigation that followed, or the scope of an investigation that reasonably could have been expected to follow the complaint. Moreover, summary judgment is not a tool to flesh out inadequate pleadings, so protected activities and theories needed to be adequately plead prior to the summary judgment motion and opposition. Plaintiff’s administrative complaint and the operative complaint before the court limited the protected activity to refusing to violate federal safety rules or regulations related to air testing and his subsequent reports to the railroads hotline of the incident and subsequent harassment. Only those protected activities were properly before the court.

The parties disputed whether the air brake test was actually required by federal law. The court stated that the protections of the FRSA would be thwarted if actions were protected only if were later determined that the worker was correct about the law. The requirement was rather, only that the worker have a good faith belief, which contained both objective and subjective components. Both parties sought summary decision on the point, but neither motion was meritorious. Viewing the evidence in the light most favorable to Plaintiff, he believed based on his training that the testing was required and was implicitly instructed by a supervisor to not perform it, an instruction he refused. Viewing the evidence in the light most favorable to Defendant, Plaintiff was actually upset about a schedule change and was conducted a slowdown, and the supervisor never instructed him not to do the test. There were thus disputed facts precluding summary judgment for either party. The court also denied Defendant’s motion for summary judgment as to protected activities regarding an FRA inquiry about the necessity of the testing and a call to BNSF’s rules hotline, concluding that in the light most favorable to Plaintiff, they were good faith efforts to report activities that violated a federal law, rule, or regulation related to railway safety and a hazardous safety condition and report of discrimination.

Next, the court granted partial summary decision to Plaintiff on the contributing factor element. The efficiency of Plaintiff’s work was a stated reason for termination and “[t]his cited failure to work efficiently cannot be unwound from [Plaintiff’s] decision to air test on the same day.” Thus, even in the light most favorable to Defendant, Plaintiff met the “low bar” of the contributory factor element as to the decision to conduct the air brake testing. He did not meet it at the summary judgment phase as to the other protected activities at issue.

Both parties moved for summary judgment as to Defendant’s showing that it would have taken the same action absent the protected activity. Both motions were denied on this point. Defendant had given multiple reasons for terminating Plaintiff and Plaintiff pointed to comparative violations that had not been met with termination. Factual disputes remained in need of resolution after trail.

The court also quickly granted plaintiff summary judgment as to timeliness on the remaining protective activities, granted plaintiff summary judgment as to any preclusive effect of the Public Law Board decision but without prejudice to the parties addressing those findings as relevant to the issues in the case, and denied Plaintiff summary judgment as to the failure to mitigate damages defense.
Miller v. CSX Transp., Inc. , No. 1:13-cv-734 (S.D. Ohio Oct. 21, 2015) (case below 2013-FRS-64)
Order [dismissing based on settlement]
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Summary :
The court dismissed the action after being informed that the matter had settled.
Heim v. BNSF Railway Co. , No.13-cv-369 (D. Neb. Sept. 30, 2015) (2015 U.S. Dist. LEXIS 133913; 2015 WL 5775599) (case belwo 2013-FRS-40)
Memorandum and Order
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Aff’d sub nom. Heim v. BNSF Ry. Co. , 849 F.3d 723 (8th Cir. 2017)
Summary :
PROTECTED ACTIVITY; INJURY REPORTS; DISTRICT COURT HOLDS THAT FRSA PROTECTS INJURY REPORT, NOT THE FACT OF BEING INJURED

CONTRIBUTORY FACTOR; SUMMARY DECISION; DISCRIMINATORY ANIMUS/INTENTIONAL RETALIATION; BUT-FOR CAUSATION; APPLYING EIGHTH CIRCUIT LAW, DISTRICT COURT GRANTS SUMMARY DECISION FOR RAILROAD WHERE NO DISCRIMINATORY ANIMUS OR INTENTIONAL RETALIATION COULD BE INFERRED BASED SOLELY ON THE PROPOSITION THAT THE SAFETY VIOLATION WAS DISCOVERED AND DEEMED MORE SERIOUS BECAUSE IT RESULTED IN INJURY

CONTRIBUTORY FACTOR; SUMMARY DECISION; DISTRICT COURT FINDS SUBSTANTIVE CHALLENGES TO THE SAFETY RULE AND ITS APPLICATIONS INSUFFICIENT TO SUPPORT INFERENCE TO RETALIATION

In Heim v. BNSF Railway Co. , No.13-cv-369 (D. Neb. Sept. 30, 2015) (2015 U.S. Dist. LEXIS 133913; 2015 WL 5775599) (case below 2013-FRS-40), Plaintiff was working on a rail seat abrasion project, which involves replacing material under the train track. To do so, rail is declipped from the bed and moved, though it remains under tension. Plaintiff was tasked with picking up scraps along the track. He stepped over the declipped rail to pick up some material and the rail jumped, landing on his foot, causing injury. It took 30 minutes to free him and he suffered broken bones. He was subsequently disciplined for not being alert and attentive when he place his foot in harm’s way—a point that had been discussed at safety briefings. He was given a 30 record suspension and one year review period. He did not lose pay or benefits and the review period passed without incident.

The parties agreed that Plaintiff had engaged in protected activity when he reported his injury and that the railroad knew about that report. They disputed whether Plaintiff had suffered any adverse action and whether the protected activity contributed to any adverse action. The court noted that although Plaintiff suffered little real consequences in the case, the bar for adverse action in the FRSA is low and it “would not seem inaccurate” to characterize it as a reprimand or discipline. But the court then stated that it did not need to resolve the issue.

Applying Eighth Circuit law, Plaintiff was required to show some intentional relation or discriminatory animus, though he only needed to show that it contributed to the adverse action. Plaintiff argued that the injury report was a but-for cause of the adverse action because it is common to step into the area in question without consequence. The court however, found this insufficient. The injury report was the protected activity, not the injury itself. And it wasn’t clear that the report caused anything. Even looking to the injury, there was no inference to be made to intentional retaliation—it had only brought the violation to the attention of management. The court further saw no reason to conclude that the FRSA prevented railroads from taking violations of safety rules more seriously when they resulted in injury. Plaintiff had also not pointed to similarly situated employees who had been treated differently.

Plaintiff’s argument was partly a challenge to BNSF’s application of the rule and the ambiguity in how they applied to this situation. The court found this irrelevant because it was really a challenge to substance of the disciplinary process and the rule, not an allegation cognizable under the FRSA. Even if the discipline was substantively incorrect, that did not on its own license an inference that the protected activity was a contributing factor in the discipline.

CONTRIBUTING FACTOR CAUSATION; DISTRICT COURT HOLDS THAT AN INFERENCE OF INTENTIONAL RETALIATORY ANIMUS IS REQUIRED

In Heim v. BNSF R. Co. , No. 8:13-CV-369 (D. Neb. Sept. 30, 2015) (2015 WL 5775599), aff’d sub nom. Heim v. BNSF Ry. Co. , 849 F.3d 723 (8th Cir. 2017), Plaintiff claimed he was disciplined for reporting his work-related history in violation of the Federal Railway Safety Act. Employer and Plaintiff filed competing motions for summary judgment: Employer contended that Plaintiff did not suffer an adverse action, and that the circumstances do not support an inference that his injury report was a contributing factor to whatever adverse action he might have suffered.

The court held that Plaintiff was unable to show that injuries count as protected activity. The Court found:

The FRSA protects reporting an injury because it encourages safety to do so: it prevents railroads from covering up safety hazards by underreporting any resulting injuries. It would be peculiar indeed if the FRSA also protected employees from being disciplined for conduct actually resulting in an injury. Or, more to the point: reporting an injury is protected activity under 49 U.S.C. § 20109, but actually being injured is not protected.

The Court relied on Kuduk v. BNSF Ry. Co. , 768 F.3d 786, 789 (8th Cir.2014) that to satisfy the contributing factor element “an inference of intentional retaliatory animus is required.”
Lee v. Norfolk Southern Railway Co. , 802 F.3d 656 (4th Cir. Sept. 17, 2015) (No. 14-1586) (case below No. 13-cv-00004 (W.D. N.C.); 2013-FRS-4 (ALJ))
Opinion reversing and remanding
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Summary :
FRSA ELECTION OF REMEDIES PROVISION DOES NOT BAR FRSA SUIT WHERE THE PLAINTIFF PREVIOUSLY FILED A RACE DISCRIMINATION SUIT

On September 17, 2015 the Fourth Circuit issued a published decision in Lee v. Norfolk Southern Railway Co. , 802 F.3d 656 (4th Cir. 2015), a Federal Railroad Safety (FRSA) case involving FRSA's election of remedies provision. FRSA's election of remedies provision, 49 U.S.C. § 20109(f), prohibits an employee from seeking protection under FRSA and "another provision of law for the same allegedly unlawful act of the railroad carrier."

The Secretary of Labor participated as amicus curiae. The Fourth Circuit agreed with the Secretary’s position that the election of remedies provision does not bar an employee from seeking protection under FRSA in the circumstance where the plaintiff previously filed a lawsuit alleging that his employer discriminated against him on the basis of race.

The court concluded that the plain language of the statute indicated that an adverse action on the basis of race is not “the same allegedly unlawful act” as an adverse action in retaliation for FRSA whistleblowing. The court further reasoned that, even if it had found the statutory language ambiguous, the legislative history and statutory context show that the provision is narrow. It applies only to overlapping anti-retaliation or whistleblower statutes that provide protections similar to FRSA, such as section 11(c) of the OSH Act and similar state laws.
Armstrong v. BNSF Ry. Co. , No. 12-cv-7962 (N.D. Ill. Sept. 4, 2015) (2015 U.S. Dist. LEXIS 118224; 2015 WL 5180589)
Memorandum Opinion and Order
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Summary :
PROTECTED ACTIVITY; GOOD FAITH; SUMMARY DECISION; TO BE PROTECTED AN INJURY REPORT MUST BE MADE IN GOOD FAITH, WHICH REQUIRES BOTH AN ACTUAL SUBJECTIVE BELIEF AND AN OBJECTIVELY REASONABLE BELIEF; WHERE MATERIAL DISPUTES REMAINED ABOUT UNDERLYING EVENTS LEADING TO THE REPORT, SUMMARY JUDGMENT DENIED

CONTRIBUTORY FACTOR; SUMMARY JUDGMENT; CHAIN OF EVENTS / INEXTRICABLE INTERTWINEMENT; ANIMUS; COURT DENIES SUMMARY JUDGMENT BASED ON “EXPANSIVE” CAUSATION STANDARD IN FRSA AND POSSIBILITY OF MAKING THE SHOWING DUE TO THE CHAIN OF CAUSATION BETWEEN THE PROTECTED ACTIVITY AND ADVERSE ACTION AS WELL AS EVIDENCE OF TEMPORAL PROXIMITY, INTERTWINEMENT, AND ANIMUS

SECTION 20109(C)(1); SUMMARY JUDGMENT; SECTION 20109(C)(1) ONLY APPLIES WHERE THERE WAS AN INJURY, SO DISTRICT COURT DENIES SUMMARY JUDGMENT WHERE FACT OF INJURY, AS WELL AS FACTS ABOUT THE REQUESTS FOR TREATMENT, REMAIN IN DISPUTE

In Armstrong v. BNSF Ry. Co. , 128 F.Supp. 3d 1079, No. 12-cv-7962 (N.D. Ill. Sept. 4, 2015) (2015 U.S. Dist. LEXIS 118224; 2015 WL 5180589), Plaintiff was called to the “glasshouse” area of a station where he and his supervisor had a dispute over his uniform. Plaintiff alleged that his supervisor assaulted him, injuring his left foot and left knee. He alleged FRSA violations for delays in providing medical care and retaliation, by termination, for filing an injury report. Both parties moved for summary decision and the court denied both motions.

The parties disputed what happened between Plaintiff and his supervisor. In particular, they disputed whether the supervisor had slammed the door on the Plaintiff’s foot and knee. There was video with a partial view of the relevant area, but it did not capture the full sequence because the manager was out of view. Plaintiff had been taken for medical treatment after his request, but not immediately and not to the closest facility. After an investigation and hearing regarding the incident, the railroad had terminated Plaintiff for insubordination in not remaining in the “glasshouse” as instructed and for dishonesty in reporting the incident and in the injury report.

The relevant protected activity was the injury report and the parties did not dispute that Plaintiff made an injury report. But they disputed whether it was done in good faith. For an injury report to be made in good faith, the employee must “subjectively believe his reported injury was work-related” and that belief must be “objectively reasonable.” The underlying issue was whether the assault had been fabricated. There remained disputed issues of material fact on that question, so summary decision was not appropriate for either party.

As to the contributing factor element, the court observed that the causation standard in the FRSA is “expansive” and can be met be showing that the protected activity initiated a chain of events that led to the termination and the events in question are temporally close and intertwined. Here there was evidence that could indicate animus as well and thus a jury could reach the conclusion for Plaintiff on the element. It could thus reach a verdict for Defendant. Summary judgment was thus denied.

As to the inference with medical treatment claim under Section 20109(c)(1), the court denied Plaintiff’s motion for summary judgment. It first concluded that the claim had been adequately pled. Summary judgment couldn’t be granted because a prerequisite to the protections is an actual injury, and that was a question open for the jury. There were additional disputes about how and when Plaintiff requested treatment.
Blackorby v. BNSF Ry. Co. , No. 4:13-cv-908 (W.D. Mo. Aug. 28, 2015) (2015 WL 5095989; U.S. Dist. LEXIS 114185) (case below 2013-FRS-68)
Order
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Summary :
PROCEDURE BEFORE DISTRICT COURT; JUDGMENT AS MATTER OF LAW APPROPRIATE ONLY WHERE VIEWING FACTS IN LIGHT MOST FAVORABLE TO THE PREVAILING PARTY, A REASONABLE JURY COULD NOT HAVE FOUND FOR THAT PARTY; MOTION FOR A NEW TRIAL APPROPRIATE WHERE A MISCARRIAGE OF JUSTICE HAS RESULTED DUE TO LEGAL ERRORS AT TRIAL, A VERDICT AGAINST THE WEIGHT OF THE EVIDENCE, OR AN EXCESSIVE DAMAGES AWARD; MOTIONS WILL NOT BE GRANTED WHEN DISPUTE IS OVER THE WEIGHING OF EVIDENCE AND CREDIBILITY DETERMINATIONS

ADVERSE ACTION; RECORD SUSPENSION QUALIFIES AS ADVERSE ACTION UNDER FRSA

DAMAGES; EMOTIONAL DISTRESS; AN EMPLOYEES TESTIMONY REGARDING EMOTIONAL DISTRESS IS INDEPENDENTLY COMPETENT TO SUSTAIN AN AWARD OF EMOTIONAL DISTRESS DAMAGES

In Blackorby v. BNSF Ry. Co. , No. 4:13-cv-908 (W.D. Mo. Aug. 28, 2015) (2015 WL 5095989; 2015 U.S. Dist. LEXIS 114185) (case below 2013-FRS-68), Plaintiff alleged that he was retaliated against for filing an injury report. Motions for summary judgment were denied and a jury returned a verdict in favor of Plaintiff, awarding $58,280 in damages but no punitive damages. Defendant’s motion for judgment as a matter of law was denied. Pending before the court was a renewed motion for judgment as a matter of law, or, in the alternative, for a new trial. The motion was denied.

On a motion for judgment as a matter of law, a court must affirm the jury’s verdict unless viewing the facts in the light most favorable to the prevailing party, the court determines that a reasonable jury could not have returned a verdict in favor of that party. A new trial is appropriate under Rule 59 where there has been a miscarriage of justice due to a verdict against the weight of evidence, an excessive damage award, or legal errors at trial.

Defendant first argued that Plaintiff’s 30 day record suspension was not an adverse action as a matter of law. The issue, however, had already been decided at summary decision and the analysis was renewed. The FRSA defines adverse actions broadly, more broadly than Title VII and includes “reprimands” and “any other way discriminate” language that reaches the sort of suspension given in the case.

The court also denied Defendant’s argument that it was entitled to judgment or a new trial on the contributory factor element. The issue had been previously considered and turned on the weighing of evidence and credibility determinations. These were questions for the jury.

BNSF challenged the award of emotional distress damages on the grounds that there was insufficient evidence to support the award. But the Plaintiff had testified about the distress he experience due to the disciplinary process and the one year review period. The court held that this was competent evidence of emotional distress and sufficient to support the award.

Last BNSF had raised a challenge to any punitive damages instruction and award. Since the jury had not awarded punitive damages and Plaintiff hadn’t sought to revive the issue, the court determined that BNSF had only been preserving an argument that was now moot.

CONTRIBUTING FACTOR CAUSATION; JURY NEED NOT BE INSTRUCTED TO DECIDE WHETHER DEFENDANT INTENTIONALLY RETALIATED [REVERSED ON APPEAL]

In Blackorby v. BNSF Ry. Co. , No. 4:13-cv-908 (W.D. Mo. Aug. 28, 2015) (2015 WL 5095989; 2015 U.S. Dist. LEXIS 114185) (case below 2013-FRS-68), Employer filed a renewed motion as a matter of law under Fed. R. Civ. Pro. 50(b), and, in the alternative, a motion for a new trial under Fed. R. Civ. Pro. 50, after a jury awarded a Plaintiff damages for retaliatory firing in violation of FRSA. Employer argued that Plaintiff did not suffer any cognizable damages; Plaintiff failed to establish all of the elements of a FRSA discriminatory firing claim; Plaintiff is not entitled to emotional distress damages; and the jury instructions concerning punitive damages prejudiced Employer.

The Court held that Employer’s actions constituted adverse employment actions and that a renewed judgment as a matter of law or a new trial are not required. The Court further found insufficient Employer’s argument that the record did not support the jury’s findings of fact concerning the elements of Plaintiff’s FRSA claim. Specifically, the Court ruled that “it is not necessary to instruct the jury to decide whether [Employer] ’intentionally retaliated’ against [Plaintiff].” Also, the Court found that Plaintiff’s testimony was sufficient to demonstrate emotional damages. The Court declined to rule on Employer’s argument about jury instructions concerning punitive damages, finding that the Employer merely preserved such an argument for appeal.

[Editor's note: On appeal, the Eighth Circuit in Blackorby v. BNSF Railway Co. , No. 15-3192 (8th Cir. Feb. 27, 2017) (2017 U.S. App. LEXIS 3462; 2017 WL 744037) held that the jury instruction was in error, finding that pusuant to Kuduk v. BNSF Railway Co. , 768 F.3d 786 (8th Cir. 2014), the Plaintiff was required to establish intentional retaliation.]
Jensen v. BNSF Railway Co. , No. 13-cv-5955 (N.D. Cal. Aug. 27, 2015) (2015 U.S. Dist. LEXIS 114690; 2015 WL 5095720)
Order Denying Defendant's Motion for Summary Judgment
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Summary :
In Jensen v. BNSF Ry. Co. , No. 13-cv-5955, 2015 U.S. Dist. LEXIS 114690, 2015 WL 5095720 (N.D. Ca. Aug. 27, 2015), a complaint under the whistleblower protection provisions of the Federal Rail Safety Act, 49 U.S.C. § 20109, related to an allegation that the Plaintiff was unlawfully disciplined for following the orders and treatment plan of his physician for a right wrist injury. Defendant BNSF moved for summary judgment, which was denied. Slip op. at 1. In a short order, the court noted the existence of genuine disputes of material fact related to the meaning of the doctor's instructions, which days off work were protected, whether those days off contributed to the adverse action, the non-discriminatory reasons for the termination, and facts relating to punitive damages. Id . at 2-3.
Miller v. CSX Transp., Inc. , No. 1:13-cv-734 (S.D. Ohio Aug. 25, 2015) (2015 U.S. Dist. LEXIS 112507; 2015 WL 5016507)(case below 2013-FRS-64)
Order
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Summary :
PROTECTED ACTIVITY; GOOD FAITH; SUMMARY DECISION; GOOD FAITH INJURY REPORT REQUIRES BOTH GOOD FAITH BELIEF THAT THE INJURY WAS WORK-RELATED AND GOOD FAITH IN MAKING THE REPORT; GOOD FAITH REQUIREMENT APPLIES TO THE INITIAL REPORT OF INJURY, NOT THE FULL RANGE OF AN EMPLOYEE’S INTERACTIONS WITH THE RAILROAD

PROTECTED ACTIVITY; GOOD FAITH; KNOWLEDGE; COURT REJECTS ARGUMENT THAT FRSA REQUIRES PROOF THAT IF KNEW THAT THE PROTECTED ACTIVITY WAS DONE IN GOOD FAITH

CONTRIBUTING FACTOR; SUMMARY DECISION; COURT OBSERVES THAT CONTRIBUTING FACTOR CAUSATION IS A LOW BAR AND DENIES SUMMARY DECISION WHERE THERE IS SOME EVIDENCE, INCLUDING TEMPORAL PROXIMITY, FROM WHICH SOME CONTRIBUTION COULD BE INFERRED, WHERE PROPOSED INTERVENING CAUSES WERE TOO INTERTWINED, AND BECAUSE PUBLIC LAW BOARD DECISIONS AND INDUSTRY PRACTICE ARE NOT RELEVANT

ELECTION OF REMEDIES; COURT HOLDS THAT ELECTION OF REMEDIES PROVISION NOT IMPLICATED WHEN PLAINTIFF ALSO FILED COMPLAINTS WITH EEOC RELATED TO TITLE VII AND THE ADA

AFFIRMATIVE DEFENSES; SUMMARY JUDGMENT; CLEAR AND CONVINCING EVIDENCE STANDARD IS DIFFICULT TO MEET, SUMMARY JUDGMENT DENIED WHEN NO EVIDENCE THAT RAILROAD UNIFORMLY TERMINATED EMPLOYEES FOR SAME MISCONDUCT

In Miller v. CSX Transp., Inc. , No. 1:13-cv-734 (S.D. Ohio Aug. 25, 2015) (2015 U.S. Dist. LEXIS 112507; 2015 WL 5016507) (case below 2013-FRS-64), in August 2012 the Plaintiff reported that about a month earlier he had suffered a back injury when his foot slipped on loose ballast while stepping off of the training, resulting in a twist and popping sound. He had gone to an emergency room 5 days after the injury and more recently to an orthopedist. Defendant’s rules require immediate reporting of on-duty injuries, so an investigation was initiated. Several days later Plaintiff gave a written statement retracting his injury report and stating that it had actually occurred at home while working on his car. Plaintiff claimed that through gestures and nodding, the managers had conveyed that if he retracted his report, he could go back to work with little or no penalty. After the investigation/hearing, Plaintiff was terminated. He pursued several actions, including an FRSA complaint.

Defendant sought summary judgment on the grounds that the injury report was not made in good faith. The court explained that the good faith requirement implicated both “good faith belief that an injury was work-related, and good faith in making the injury report.” Here Defendant argued that the retraction should be considered as part of the report and since one or the other was not true, Plaintiff had not acted in good faith. After reviewing other cases on the question, the court held that the good faith requirement applies to the initial injury report, not all of an employee’s interactions with the railway. Viewing the facts in the light most favorable to Plaintiff, a jury could conclude that he had acted in good faith when he made the initial report. The court also rejected the railroad’s argument that it could not be liable unless it knew that the report was made in good faith and was thus protected activity.

Defendant also sought summary judgment on the contributing factor element on the grounds that there was no evidence of intentional retaliation, the dishonesty was an intervening event, and it had followed long-standing industry practices. The court, however, observed that the contributory factor standard was a very low causal bar and considering the evidence presented, including the temporal proximity and indications that the managers had already decided on discipline before the retraction, concluded that there remained factual disputes. As to the proposed intervening causes, the court concluded that they were too intertwined in the facts as presented. Finally, the court rejected reliance on industry practice and public law board decisions as not relevant to the contributing factor question.

Defendant argued that the election of remedies provision, § 20209(f) precluded the FRSA action because Plaintiff had also pursued Title VII and ADA claims at the EEOC that related to the same adverse action. Relying on Norfolk So. Ry. Co. v. Perez , 778 F.3d 507, 513 (6th Cir. 2015), the court concluded the subsection was not meant to limit employee’s rights in this way. It did not reach the question of whether the Plaintiff could have also pursued Title VII and ADA actions in litigation.

Defendant moved for summary decision on its affirmative defense based on evidence of its termination of other employees for dishonesty and not terminating employees for injury reports. The court denied the motion. The clear and convincing evidence standard is difficult to meet and here the submission could not establish that every employee who was dishonest was discharged or that every employee who didn’t report an injury on time was discharged. It added that the termination letter here did not even cite dishonesty.

The court also denied summary decision on punitive damages, quickly determining that considering all of the evidence in the light most favorable to the Plaintiff, a jury could still award punitive damages on the record presented. Separately the court granted Defendant summary judgement on a FELA claim and granted Defendant’s motion to exclude testimony from an expert witness for failure to comply with FRCP 26(a)(2).
Bjornson v. Soo Line Railroad Co. , No. 14-cv-4596 (D. Minn. Aug. 24, 2015) (2015 U.S. Dist. LEXIS 111960; 2015 WL 5009349) (case below 2014-FRS-127)
Memorandum Opinion and Order Adopting Report and Recommendation of Magistrate Judge
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ELECTION OF REMEDIES; DISTRICT COURT FINDS THAT THE ELECTION OF REMEDIES PROVISION OF THE FRSA IS NOT IMPLICATED WHEN AN EMPLOYEE FILES A GRIEVANCE APPEAL UNDER THE RAILROAD LABOR ACT PURSUANT TO A COLLECTIVE BARGAINING AGREEMENT

In Bjornson v. Soo Line Railroad Co. , Civil No. 14-4596 (JRT/SER) (D. Minn. Aug. 24, 2015), the U.S. District Court for the District of Minnesota overruled the Defendant’s objections to a Magistrate’s Report and Recommendation. The Defendant objected to a portion of the Report and Recommendation striking one of its affirmative defenses that the Railroad Labor Act (RLA) or a collective bargaining agreement (CBA) “trigger the election of remedies provision of the [FRSA].” Bjornson , slip op. at 2.

Lonnie Bjornson (“Plaintiff”) fell in a bathtub while traveling on a work assignment for the Defendant. Id . 2. Plaintiff alleged that he was injured as a result, and that he required medical treatment for two years. Id . at 3. Plaintiff sought to request time off for a doctor’s appointment related to his injuries, but was denied leave. Plaintiff ultimately took a sick day in order to attend the appointment. The Defendant subsequently initiated an investigation and “placed a reporting violation on [Plaintiff’s] record and gave him a five-day suspension.” Id . at 3. The Plaintiff filed a grievance under the CBA, which was unsuccessful. Id . at 3. He then appealed the CBA to the National Railroad Adjustment Board pursuant to the RLA. That appeal was denied. Id . at 4. The Plaintiff also filed an action pursuant to the FRSA alleging that the Defendant disciplined him for taking time off work for medical treatment of on-duty injuries. Id . at 4.

The court rejected the Defendant’s contention that the election of remedies provision of the FRSA, 49 U.S.C. § 20109(f), prevents the Plaintiff from bringing a cause of action under that the FRSA because he filed a grievance appeal under the RLA. Id . at 6-12. The court reasoned that, in order to be “another provision of law” under the FRSA’s election of remedies provision, a statute must be the source of the substantive remedy sought. Id . at 10. The court found that “the RLA offers no independent substantive protections for railroad employees” because “[i]t merely establishes the procedures by which those employees may attempt to enforce their collective bargaining agreement rights.” Id . at 10. Therefore, employee CBAs provide the substantive protection, rather than the RLA, but a CBA is “not a law or rule or regulation.” Id . at 11. The court concluded that a CBA “cannot satisfy the election of remedies provision of the FRSA” either, and struck the Defendant’s affirmative defense. Id .
Clift v. BNSF Railway Co. , No. 14-cv-152 (E.D. Wash. Aug. 5, 2015) (2015 U.S. Dist. LEXIS 103424; 2015 WL 4656151)
Order Re Defendant's Motion for Reconsideration (ECF No. 62); and Plaintiff's Motion to Join a Party
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BANKRUPTCY; SUBSTITUTION OF PARTY; FRSA COMPLAINT IS A CLAIM SUBJECT TO BANKRUPTCY AND WHERE A PLAINTIFF HAS FILED FOR BANKRUPTCY THE REAL PART IN INTEREST IS THE BANKRUPTCY ESTATE; SUBSTITUTION OF THE REAL PARTY IN INTEREST CAN BE MADE IF THERE WAS EXCUSABLE MISTAKE AND THE PLAINTIFF ACTED IN GOOD FAITH IN BRING THE ACTION IN THEIR OWN NAME

BANKRUPTCY; JUDICIAL ESTOPPEL; WHERE A PLAINTIFF FAILS TO DISCLOSE A CLAIM IN A BANKRUPTCY PROCEEDING JUDICIAL ESTOPPEL MAY APPLY TO PROTECT THE INTEGRITY OF THE BANKRUPTCY PROCEEDING AND BAR THE COMPLAINT FROM PROCEEDING

In Clift v. BNSF Ry. Co. , No. 14-cv-152, 2015 U.S. Dist. LEXIS 103424, 2015 WL 4656151 (E.D. Wash. Aug. 5, 2015), the case involved a complaint under the whistleblower protection provisions of the Federal Rail Safety Act (“FRSA”), 49 U.S.C. § 20109, by the Plaintiff against BNSF. In the course of the litigation, BNSF discovered that the Plaintiff had filed for bankruptcy 11 weeks after filing the claim against BNSF with OSHA, but had not disclosed the claim against BNSF in the bankruptcy proceeding. BNSF filed a motion to dismiss, which was denied. Presently before the court was a motion for reconsideration of that order as well as Plaintiff's motion to join the bankruptcy trustee. Slip op. at 1.

Filing bankruptcy creates a bankruptcy estate and any causes of action that have accrued to the debtor become the property of the estate. Here there was no dispute that the cause of action against BNSF had accrued prior to the Plaintiff's bankruptcy. Thus, it was the property of the bankruptcy estate. The prior motion to dismiss had been premised on the concept of prudential standing, but the court indicated that it was better to analyze the issue in terms of the real party in interest. Id . at 2-3. The real party in interest was the bankruptcy estate, not Plaintiff. Thus, under Fed. R. Civ. P. 17, the action had to be prosecuted in the name of the estate. Rule 17 allows for the substitution of the real party in interest, which is what Plaintiff sought to do, but not when “the determination of the right party to bring the action was not difficult and when no excusable mistake was made.” Id . at 3.

The order proceeds through the factual background and the possibility of an excusable mistake. Id . at 4-8. Plaintiff's contention was that he had viewed the FRSA matter as a “complaint” rather than “claim” and so not something that had to be disclosed in the bankruptcy. The court stated the issue as follows:

It is necessary for this Court to determine whether or not Plaintiff was acting in good faith when he filed this action in his own name. If Plaintiff did not make an honest and understandable mistake when he filed this action in his own name, this Court will not allow substitution of the real party in interest.

Id . at 9. In answering that inquiry, the timing was important—it showed a request for damages in the FRSA complaint, a settlement offer to BNSF for a sum certain, and an interview with an investigator who called the complaint a “case” all immediately before the bankruptcy filing. The Plaintiff's level of involvement and legal representation made it “remarkable” that he now asserted an understandable mistake in the bankruptcy. It was also notable that a prior attorney had told Plaintiff to “fix” the bankruptcy, but he had done nothing. Id . The court found no understandable mistake so the case had to be dismissed and substitution of the real party in interest could not be permitted. The court also summarily dismissed the possibility of a post-bankruptcy retaliation claim (it hadn't been made properly yet and couldn't satisfy the procedural requirements). Id . at 10-11.

Moreover, “[e]ven if this Court allowed substitution of the trustee in for the Plaintiff, it would have to invoke judicial estoppel to protect the integrity of the bankruptcy process.” Id . at 11. Bankruptcy disrupts the “flow of commerce” and creates a duty to disclose all assets to the trustee, since creditors must rely on that information. Id . at 11-12. Here, the court was persuaded that not disclosing the FRSA complaint violated the integrity of the bankruptcy for the same basic reasons it found substitution of the trustee could not be permitted—the Plaintiff had been represented by several attorneys and was fully aware of the financial aspect of the FRSA complaint. He was told to fix the nondisclosure and did not. Further, in the colloquy with the trustee, he affirmatively asserted that he had no claim against a third party. Id . at 12-14.

Because depositions had been conducted to assist in the determination of whether there was an understandable mistake, the court converted BNSF's motion to dismiss into a motion for summary judgment and then granted summary judgment to BNSF. The motion to substitute the trustee was denied and the case file was closed. Id . at 14.
Fields v. Southeastern Pennsylvania Transportation Authority , No. 14-cv-2491 (E.D. Pa. July 31, 2015) (2015 U.S. Dist. LEXIS 100839; 2015 WL 4610876)
Memorandum [granting defendent's motion for partial summary judgment]
PDF
Summary :
PROTECTED ACTIVITY; SUMMARY JUDGMENT; COURT GRANTS RAILROAD SUMMARY DECISION WHERE NO EVIDENCE INDICATED THAT THE PLAINTIFF HAD MADE ANY REPORTS BUT INSTEAD HAD JUST BEEN IN AN ACCIDENT AND DISCIPLINED FOR UNSAFE CONDUCT

COMPENSATORY DAMAGES; SUMMARY JUDGMENT; SUMMARY JUDGMENT GRANTED ON EMOTIONAL DISTRESS DAMAGES WHEN NO REASONABLE JURY COULD FIND THAT THE ALLEGED RETALIATION WAS THE PROXIMATE CAUSE OF ANY DISTRESS

PUNITIVE DAMAGES; SUMMARY JUDGMENT; SUMMARY JUDGMENT GRANTED ON PUNITIVE DAMAGES WHERE THERE WAS NO RECORD EVIDENCE OF RECKLESS OR CALLOUS DISREGARD OF PLAINTIFF’S RIGHTS OR INTENTIONAL VIOLATION OF FEDERAL LAW

In Fields v. Southeastern Pennsylvania Transportation Authority , No. 14-cv-2491 (E.D. Pa. July 31, 2015) (2015 U.S. Dist. LEXIS 100839, 2015 WL 4610876), the matter involved two joined FRSA complaints. Both plaintiffs were passengers in trucks used in work on the railway that were in a collision. One was injured and received a settlement for his injuries. No discipline was assessed. Roughly two months later they were involved in an accident using the same equipment on the same part of the track in the same conditions. They were disciplined for safety violations. One had no prior discipline and received a written warning that was expunged after the review period was ended. The other was at the termination stage of the progressive discipline policy, but a settlement was reached that preserved his job. After two years of no violations, his record was cleared. They filed FRSA complaints, which were both kicked-out and then joined in the district court. After the close of discovery, Defendant moved for summary decision as to one employee for no protected activity and in part as to the other as to the absence of compensatory and punitive damages.

The first employee claimed that he had made a report of a violation of Federal law, rule, or regulation, and of an injury. But the court found that the record did not support the inference that this employee had reported anything to anyone. He was disciplined for operating a truck at an unsafe speed, but neither that nor being in an accident is protected activity. Defendant was thus summary judgment and the claim was dismissed.

As to the other plaintiff, he had produced no evidence to support the damages asserted in his complaint. The court concluded that the only support for emotional distress damages was the plaintiff’s own self-serving argument about fear of termination. But this was not rational since the plaintiff wasn’t ever in danger of termination given where he was in the progressive discipline policy. At the relevant time the plaintiff was going through a divorce and custody battle and received psychological treatment related to that, but none related to the allege employment distress. He had also testified to distress form the injuries in the prior accident, which was already settled. The court concluded that no reasonable juror could award compensatory damages on the record because it would not be reasonable to find that the alleged retaliation was a proximate cause of any distress. It thus granted the motion for summary judgment as to compensatory damages.

The court also granted summary judgment on the punitive damages claim. Punitive damages may be awarded where there was reckless or callous disregard for the plaintiff’s rights or intentional violation of federal law. The court quickly concluded there was no evidence in the record that could possibly support such an award in the case.
Mosby v. Kansas City Southern Railway Co. , No. 14-472 (E.D. Okla. July 30, 2015) (case below 2014-FRS-34)
Judgment Dismissing Action by Reason of Settlement
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Summary :
The court dismissed the action after being advised that the case had settled or was in the process of being settled. It retained jurisdiction to reopen the action if the settlement was not completed.
Jones v. Union Pacific Railroad Co. , No. 14-cv-3908 (N.D. Ill. July 27, 2015) (2015 U.S. Dist. LEXIS 97327)
Memorandum Opinion and Order
PDF
Summary :
DISTRICT COURT ADJUDICATION; DISCOVERY; COURT PERMITS DISCOVERY BY PLAINTIFF ON RAILROAD AS TO PLAINTIFF’S ENTIRE JOB HISTORY, LIMITS GENERAL INQUIRIES INTO RAILROAD PRACTICES TO THE RELEVANT TIMEFRAME

In Jones v. Union Pac. R.R. Co. , No. 14-cv-3908, 2015 U.S. Dist. LEXIS 97327 (N.D. Ill. July 27, 2015), the Plaintiff was injured while working as a conductor with Union Pacific when the train he was working on collided with a train operated by CSX. The Plaintiff filed suits sounding in negligence against both Union Pacific and CSX. In addition, plaintiff alleged that after reporting his injury and the allegedly unsafe working conditions, he was investigated, disciplined, and then terminated by his employer, Union Pacific, in violation of the whistleblower protection provisions of the Federal Rail Safety Act (“FRSA”), 49 U.S.C. § 20109. Slip op. at 1-3.

This order concerns a discovery dispute and motions by both Union Pacific and CSX for protective orders pertaining to the scope of depositions that Plaintiff had noticed under Fed. R. Civ. P. 30(b)(6) of corporate representatives of both Defendants. The district court denied the motions for protective orders with the exception of limiting several deposition topics. Id . at 1. The objections generally alleged that all of topics in the notice of depositions (which including subparts numbering 25 and 20 respectively) were vague, overbroad, and called for irrelevant information. Id . at 3, 5. The court, however found that the topics were adequately described and, in general, when read naturally in context pertained to only relevant information. While some topics could be read to pertain to irrelevant information, this “would describe most Rule 30(b)(6) notices” and Plaintiff's counsel had every incentive to use the permitted time to focus on relevant aspects of the topics. Id . at 5. The court then applied those principles to each of the deposition topics, overruling the various objections but expressing an expectation that the depositions would be limited to the events at issue—e.g. to the operating rules pertaining to the accident, rather than any conceivable operating rule of either company. Id . at 6-8. The court also, for example, agreed to limit the deposition topic relating to track maintenance to the temporal timeframe of the accident, rather than the entire 75 year history of the track in question. Id . at 12-13.

Nearly all of the deposition topics pertain to the negligence dimension of the suit, not the FRSA claim. Pertinent to the FRSA claim, the court overruled objections to the deposition notice relating to the plaintiff's employment history, noting that the entire history was at issue given the alleged adverse action and Union Pacific's asserted affirmative defense. Id . at 15. The same held for information about wages and benefits provided to similarly situated trainmen. Id . at 15-16. The court also declined to limit the deposition notice as to information about the investigation and discipline of plaintiff. Id . at 18-19. But it did limit the scope of the deposition notice relating to Union Pacific's anti-relation and injury reporting practices and policies to the temporal timeframe of the accident and discipline at issue and the policies and procedures regarding FRSA anti-retaliation. Id . at 19-20. An objection about producing a representative about other whistleblower claims was resolved via a compromise limiting it to the relevant service unit. Id . at 20.
Hernandez v. Metro-North Commuter Railroad , No. 15-327 (2d Cir. July 24, 2015)
Mandate [order of dismissal]
PDF
Summary :
The court dismissed the appeal after failure to comply with a deadline for filing a brief and appendix.
Mosby v. Kansas City Southern Railway Co. , No. 14-472 (E.D. Okla. July 20, 2015) (2015 U.S. Dist. LEXIS 93869; 2015 WL 4408406) (case below 2014-FRS-34)
Order and Opinion
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Summary :
GOOD FAITH REPORT OF WORK RELATED INJURY; DISTRICT COURT DENIES SUMMARY JUDGMENT ON ISSUE OF GOOD FAITH REPORTING OF AN INJURY UNDER THE FRSA WHERE THE EMPLOYEE REPORTED HIS INJURY THREE DAYS AFTER IT OCCURRED BUT CONTENDED THAT HE NOTIFIED HIS EMPLOYER AS SOON AS HE BECAME AWARE OF IT

In Mosby v. Kansas City Southern Railway Co. , Case No. CIV-14-472-RAW (E.D. Okla. July 20, 2015), the U.S. District Court for the Eastern District of Oklahoma denied summary judgment under the FRSA. Mosby , slip op. at 14. The Defendant railroad company contended that the Plaintiff, Gregory Mosby, did not report his injury in good faith under the FRSA because he concealed it for three days. Id . at 9. The Plaintiff contended that he reported his injury immediately after seeing his chiropractor and that it was not until that consultation that he realized that he was seriously injured. Id . The court reasoned that, under the FRSA, the Plaintiff must “genuinely believe[] that the injury he [is] reporting [is] work-related”; and that actively concealing an injury from an employer could, in some circumstances, preclude a finding of good faith. Id . at 10-11. The court concluded that, on the above facts, “[a] reasonable jury could find that Mosby acted in good faith or did not act in good faith,” and accordingly denied summary judgment on the issue of good faith. Id . at 11.

CONTRIBUTING FACTOR CAUSATION AND SUMMARY JUDGMENT; DISTRICT COURT DENIES CROSS-MOTIONS FOR SUMMARY JUDGMENT ON THE CONTRIBUTING FACTOR PRONG WHERE THE INJURY REPORT WAS IN CLOSE TEMPORAL PROXIMITY AND WAS INEXTRICABLY INTERTWINED WITH THE DISCIPLINARY ACTION

In Mosby v. Kansas City Southern Railway Co. , Case No. CIV-14-472-RAW (E.D. Okla. July 20, 2015), the U.S. District Court for the Eastern District of Oklahoma denied cross-motions for summary judgment under the FRSA on the issue of whether the Plaintiff’s protected activity was a contributing factor in the Defendant’s decision to take adverse action. Mosby , slip op. at 14. The court found that because Plaintiff’s “injury report was both close in time to his discipline and inextricably intertwined therewith,” it raised a question of fact and the matter could not be dismissed on summary judgment. Similarly, the court found that the close temporal proximity and inextricably intertwined nature of the protected activity and the discipline were “not substantial enough to justify granting [Plaintiff’s] summary judgment motion. Id . at 13.

AFFIRMATIVE DEFENSE AND SUMMARY JUDGMENT; DISTRICT COURT DENIES SUMMARY JUDGMENT FOR THE DEFENDANT WHERE THE DEFENDANT ARGUED THAT IT CONSISTENTLY DISCIPLINED EMPLOYEES FOR SIMILAR VIOLATIONS, BUT THE PLAINTIFF INTRODUCED EVIDENCE THAT THE DEFENDANT WAS INCONSISTENT IN APPLYING THAT DISCIPLINE

In Mosby v. Kansas City Southern Railway Co. , Case No. CIV-14-472-RAW (E.D. Okla. July 20, 2015), the U.S. District Court for the Eastern District of Oklahoma denied summary judgment under the FRSA. Mosby , slip op. at 14. The Defendant railroad argued that it had proven by clear and convincing evidence that it would have taken the same disciplinary action in the absence of any protected activity. Id . at 13. However, the court pointed to the Plaintiff’s evidence that the Defendant “was not consistent in this discipline and that its employees are apprehensive about reporting injuries for fear of losing their jobs,” and found that there was a genuine issue of material fact to be resolved at trial. Id . at 13-14.
Loos v. BNSF Ry. Co. , No. 13-cv-03373 (D. Minn. June 30, 2015) (2015 WL 3970169) (not reported)
Memorandum and Order
PDF
Summary :
CONTRIBUTING FACTOR; SUMMARY JUDGMENT; COURT GRANTS SUMMARY JUDGMENT WHERE THERE WAS NO DIRECT EVIDENCE OF RETALIATION AND THE CIRCUMSTANTIAL EVIDENCE DID NOT SUPPORT THE CLAIM DUE TO NO TEMPORAL PROXIMITY, NO EVIDENCE OF ANIMUS, CONSISTENT EXPLANATIONS, AND INDEPENDENT SUFFICIENT EXPLANATION OF ADVERSE ACTION

INTERFERENCE WITH TREATMENT PLAN CLAIM; SUMMARY JUDGMENT; COURT GRANTS SUMMARY JUDGMENT TO RAILROAD ON TREATMENT PLAN COMPLAINT WHERE THE RELEVANT TREATMENT PLAN POST-DATED THE ABSENCES IN QUESTION

In Loos v. BNSF Ry. Co. , No. 13-cv-03373, 2015 U.S. Dist. LEXIS 84663, 2015 WL 3970169 (D. Minn. June 30, 2015) (not reported), Defendant terminated the Plaintiff after 15 years of work as a conductor, brakeman, and switchman. During the employment, “his history with the company was marked by three relevant circumstances: his attendance record, his safety efforts, and his workplace injury.” Plaintiff filed suit under the whistleblower protection provisions of the Federal Rail Safety Act (“FRSA”), 49 U.S.C. § 20109. Slip op. at 1. This order concerns Defendant’s motion for summary judgment.

The court observed that throughout his time with the company, the Plaintiff struggled to comply with BNSF's attendance policy, which had resulted in reprimands, a suspension, and “alternative handling.” Plaintiff was counseled and told that continued persistent failure to work full-time hours would be a violation of the attendance policy. The problems continued, leading to further discipline involving alternative handling, counseling, reprimands, and suspensions. Id . at 2-4. The Plaintiff also engaged in efforts to improve safety at BNSF, including an 8-12 month stint on the site safety committee in 2007-08. In addition, he testified on behalf of co-workers at an FRSA trial. Id . at 4-5. The Plaintiff reported a work-related injury in December 2010 after he twisted his right knee falling onto a drainage gate that had been covered with snow. He was off work through May 2011, when he was released without restrictions. Id . at 5.

Plaintiff was discharged after further attendance violations between May and July 2012. During that period, he had requested permission to code the absences as related to his 2010 injury on duty, which would have excused them, but this was denied because the only medical documentation offered was the May 2011 note releasing him to duty. Id . at 5-6. An investigation was noticed in August 2012 and conducted in November 2012. At the investigation, the Plaintiff produced a new note from earlier in November stating that due to his work-related injury he would have to periodically miss work, retroactive to the period in question. After the investigation, BNSF terminated Plaintiff for violations of the attendance policy while on probation. Id . at 6-7.

Plaintiff brought suit under the Federal Employer’s Liability Act (“FELA”), 45 U.S.C. § 51, et seq., alleging that BNSF was negligent in creating the conditions causing the December 2010 injury, and the FRSA, alleging that he had been disciplined for reporting a work-related injury, making safety complaints, serving on the safety committee, testifying in other FRSA proceedings, and following his doctor's treatment plans. BNSF moved for summary judgment on the FRSA claim and the FELA claim insofar as it arose after his discharge. Id . at 7. After laying out the relevant legal standard for an FRSA claim, Id . at 8-9, the court observed that the contested issues concerned only whether the Plaintiff could show that the protected activities were contributing factors in his termination or BNSF could establish its affirmative defense.

Summary judgment was appropriate on the contribution question, so the affirmative defense was not discussed. Id . at 9. The court observed that “[w]hile the contributing-factor standard does not require that the employee ‘conclusively demonstrate the employer's retaliatory motive,' it does require that the employee prove 'intentional retaliation prompted by the employee engaging in protected activity.’” Id . (quoting Kuduk v. BNSF Ry. Co. , 768 F.3d 786, 791 (8th Cir. 2014)). Since Plaintiff did not point

to any direct evidence of intentional retaliation, he must rely on circumstantial evidence, which may include: “temporal proximity, indications of pretext, inconsistent application of an employer's policies, an employer's shifting explanations for its actions, antagonism or hostility toward a complainant's protected activity, the falsity of an employer's explanation for the adverse action taken, and a change in the employer's attitude toward the complainant after he or she engages in protected activity.”

Id . (quoting DeFrancesco v. Union R.R. Co. , ARB No. 10-114, 2012 WL 694502, at *3 (Feb. 29, 2012).

Summary judgment was appropriate because none of these factors supported an inference of contribution. Temporal proximity undermined the claim since there was a 10 month gap between the last protected activity and the adverse action. The attendance issues pre-existed, continued through, and post-dated all of the protected activity and were not intertwined with any of it. Id . at 9-10. BNSF's explanations had been entirely consistent—years of attendance violations. There was no evidence of hostility toward the protected activities or that BNSF's attitude changed. There was no evidence that the Plaintiff was treated differently than other employees. Id . at 12-13.

Moreover, the court found that the treatment plan claim had to fail because the doctor's note that authorized the absences post-dated those absences, so the Plaintiff could not have been following a treatment plan when he missed work in the summer of 2012. At that time, the contemporary treatment plan released him to work without restrictions. Id . at 13, see also Id . at 11. The Plaintiff had “presented no evidence showing that his alleged protected activities were contributing factors in his discharge,” so summary judgment was appropriate in favor of BNSF on that claim. Id . at 13-14.

Defendant also sought summary judgment on the FELA claim for damages post-dating the discharge on the grounds that those damages were solely the product of the discharge, not the injury. This motion was denied, however, because there was a genuine dispute of material fact as to whether the injury had independently caused a loss of earning capacity that persisted after the discharge. Id . at 14-15. A motion for separate trials on the FRSA and FELA suits was denied as moot. Id . at 15.
Bjornson v. Soo Line Railroad Co. , No. 14-cv-4596 (D. Minn. June 15, 2015) (2015 U.S. Dist. LEXIS 112307) (Magistrate Judge) (case below 2014-FRS-127)
Report and Recommendation
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Summary :
DISTRICT COURT ADJUDICATION; MOTION TO STRIKE AFFIRMATIVE DEFENSES; COURT DECLINES TO STRIKE POTENTIALLY REDUNDANT AFFIRMATIVE DEFENSE BUT STRIKES TWO THAT ARE FORECLOSED BY LAW

ELECTION OF REMEDIES; COURT STRIKES ELECTION OF REMEDIES AFFIRMATIVE DEFENSE, CONCLUDING PURSUING COLLECTIVE BARGAINING RIGHTS DOES NOT BAR FRSA CLAIM

REMOVAL TO FEDERAL DISTRICT COURT; NOTICE TO DOL; COURT STRIKES AFFIRMATIVE DEFENSE FOR NON-COMPLIANCE WITH REGULATORY NOTICE PROVISION TO DOL ON GROUNDS THAT THE PROVISION COULD NOT DEPRIVE THE COURT OF JURISDICTION CONFERRED BY STATUTE

In Bjornson v. Soo Lin R.R. Co. , No. 14-cv-4596, 2015 U.S. Dist. LEXIS 112307 (D. Minn. June 15, 2015) (Report and Recommendation) (case below 2014-FRS-127), the matter involved a Federal Employer’s Liability Act, 45 U.S.C. § 51, et seq., negligence claim and a retaliation complaint under whistleblower protection provisions of the Federal Rail Safety Act (“FRSA”), 49 U.S.C. § 20109. The Plaintiff alleged that the railroad refused a request for a personal day to attend a doctor's appointment for a work-related injury and then initiated an investigation for “failure to protect services” and “laying off under false pretenses.” He also challenged the inclusion of the investigation on his personal record. Slip op. at 2. This order contains a report and recommendation by a magistrate judge concerning the Plaintiff's motion to strike three of the railroad's 25 affirmative defenses under Fed. R. Civ. P. 12(f). Id . at 1, 3-4. An affirmative defense will not be stricken if it is a sufficient as a matter of law or presents a question of law or fact that the court should hear, but will be stricken if it is legally insufficient, or foreclosed by prior decisions. Id . at 5.

First, the Plaintiff asked that an affirmative defense that his “claim is barred, in whole or in part, by the operation of 49 U.S.C. § 20109(d)” be stricken because it was redundant with another affirmative defense asserting statute of limitations. The court disagreed. The cited provisions included matters beyond the statute of limitations, so it was not redundant. Even if the two affirmative defenses were redundant, there was no prejudice to the plaintiff so it would be inappropriate to strike one. Id . at 6-8.

Next, Plaintiff sought to strike an affirmative defense premised on the election of remedies provision in 49 U.S.C. § 20109(f), which prohibits seeking protection under the FRSA “and another provision of law for the same allegedly unlawful act of the railroad carrier.” The affirmative defense relied on the Plaintiff's pursuit of a grievance under the collective bargaining agreement (“CBA”). Plaintiff argued that the CBA was not “another provision of law,” that pursuing the CBA rights in the manner prescribed by the Railway Labor Act (“RLA”), 45 U.S.C. § 151, et seq ., did not qualify because the RLA didn't create any rights, and that even so, the CBA grievance did not concern the same unlawful acts as the FRSA complaint. Id . at 8-9. The railroad argued that the scope and reach of the election of remedies provision, and whether it forced choice between CBA grievances that feel under the RLA or an FRSA complaint was an open question in the 8th Circuit and so the defense should not be stricken. Id . at 9-11. Though the court acknowledged there was no on point 8th Circuit case, it found that the affirmative defense was foreclosed by the statute itself and so should be stricken. Though the RLA was another provision of law, the plaintiff had not sought protection under it. He had sought protection under the CBA, which was a contract, not a provision of law. The RLA only specified the forum for some of the CBA disputes; it never provided the substantive rights that would be protected. As such, the statutory provision plainly did not provide to this circumstance and the affirmative defense failed as a matter of law. Id . at 11-16.

Lastly, the Plaintiff moved to strike an affirmative defense that alleged that because the Plaintiff had not complied with the regulatory requirements regarding giving 15 days’ notice to the relevant Department of Labor (“DOL”) body before taking advantage of the “kick-out” provision and filing a suit in federal court, the court lacked jurisdiction over the suit. The Plaintiff conceded that he had not complied with the regulations at issue, but argued that DOL regulations could not deprive the district court of jurisdiction and the statute itself created no advance notice requirement. Id . at 16-17. The court agreed with the Plaintiff and struck the defense as legally insufficient. The statute itself created the right to pursue the action in federal court and that created the jurisdictional prerequisites. Giving 15 days’ notice to DOL was not one of them. By the plain language of the statute then, the court had jurisdiction despite the lack of notice. Id . at 18-21.
Howell v. BNSF Railway Co. , No. 14-cv-997 (N.D. Ill. June 4, 2015) (2015 WL 3528237)
Memorandum Opinion and Order
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Summary :
WHETHER STATE LAW CLAIM CAN BE MANTAINED GIVEN PROTECTIONS OF FRSA

In Howell v. BNSF Railway Co. , No. 14-cv-997 (N.D. Ill. June 4, 2015) ((2015 U.S. Dist. LEXIS 72060, 2015 WL 3528237), Plaintiff filed suit bringing a race discrimination claim under Title VII and a state common-law retaliatory discharge claim. Defendant moved to dismiss the common-law retaliatory discharge claim under Rule 12(b)(6). The court granted the motion.

As relevant to the FRSA, in Illinois retaliatory discharge requires that the discharge violate a clear mandate of public policy. Plaintiff alleged that he was fired for reporting an on-the-job injury. He argued that his discharge violated public policy as articulated in the FRSA, which could then serve as a basis for a retaliatory discharge claim. The court disagreed—the existence of an adequate remedy in the FRSA was a factor against finding that there could be a retaliatory discharge claim based on the allegations in the complaint. There was no doubt that the FRSA squarely covered the allegations in question.

Plaintiff argued that the FRSA was inadequate because it didn’t guarantee him a jury-trial. But as a matter of law, the identity of the fact-finder did not render the remedy inadequate. In some ways the FRSA was superior—it allowed for recovery of fees and costs. The court observed that the FRSA’s election of remedies provision might bar him from pursuing other claims, but saw this as reason to not countenance a redundant state law retaliatory discharge claim because it would allow an end run around that provision of the FRSA. Finally, the court acknowledged Plaintiff’s argument that the FRSA was inadequate for him because the statute of limitations had run. But this “argument hardly merits a response.” State law was not a back door to bring federal claims where a plaintiff had failed to comply with the relevant statute of limitations.
Mullen v. Norfolk Southern Railway Co. , No. 14-cv-917 (W.D. Pa. May 29, 2015) (case below ARB No. 13-059, ALJ No. 2012-FRS-3) (2015 WL 3457493; 2015 U.S. Dist. LEXIS 69706)
Memorandum Opinion and Order
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Summary :
District court lacks subject matter jurisdiction under FRSA kick-out provision if district court complaint is filed after DOL issued a final decision, even if that final decision was rendered more than 210 days after the filing of the administrative complaint (disagreeing with Glista v. Norfolk S. Ry. Co. , No. CIV.A. 13-04668, 2014 WL 1123374 (E.D. Pa. Mar. 21, 2014))
Green v. Grand Trunk Western Railroad , No. 14-cv-11125 (E.D. Mich. Apr. 13, 2015) (case below ARB No. 13-100, ALJ No. 2013-FRS-51) (2015 WL 1637442; 2015 U.S. Dist. LEXIS 47819)
Opinion and Order Granting Respondent's Motion to Dismiss
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Summary :
DISTRICT COURT LACKS JURISDICTION TO REVIEW ARB'S DECISION TO DENY INTERLOCUTORY REVIEW OF ALJ'S DISCOVERY ORDER

In Green v. Grand Trunk Western Railroad , No. 14-cv-11125 (E.D. Mich. Apr. 13, 2015) (case below ARB No. 13-100, ALJ No. 2013-FRS-51) (2015 WL 1637442; 2015 U.S. Dist. LEXIS 47819), the Petitioner sought de novo review by the U.S. District Court of the ARB's denial of an interlocutory appeal of the ALJ's discovery order compelling the Petitioner to disclose certain relevant medical records and denying the Petitioner's motion for a protective order. The Respondents filed a motion to dismiss. The court granted the motion. The provision of the FRSA at 49 U.S.C. § 20109(d)(4) governing appeals by a "person adversely affected or aggrieved by an order issued pursuant to" the procedures governing the Secretary of Labor's review of a complaint, provides for review by a court of appeals, and only for "final orders" issued by the Secretary of Labor. The court found that the ARB's denial of interlocutory review of a discovery dispute clearly was not a final order. The provision of the FRSA at 49 U.S.C. § 20109(d)(3) provides for district court jurisdiction for de novo consideration of an FRSA claim provided that more than 210 days have lapsed without the Secretary of Labor issuing a final decision on the administrative complaint. The court found, however, that the Petitioner's petition in this case was unambiguously seeking review of the ARB's decision on the interlocutory appeal rather than a commencement of judicial proceedings on the underlying claim of retaliation. The court noted that the ALJ had issued an order dismissing the administrative proceedings for lack of jurisdiction based on the Petitioner's filing in federal district court, but found that the ALJ's views on jurisdiction were not binding on the court. The court also found that jurisdiction did not arise under the APA or the All Writs Act.
Jensen v. BNSF Railway Co. , No. 13-cv-5955 (N.D. Cal. May 19, 2015) (2015 U.S. Dist. LEXIS 66072)
Order Re Discovery Letter Brief at ECF No. 53
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Summary :
DISTRICT COURT ADJUDICATION; DISCOVERY DISPUTE; SANCTIONS NOT IMPOSED WHERE THERE HAD RECENTLY BEEN A CHANGE IN COUNSEL

In Jensen v. BNSF Ry. Co. , No. 13-cv-5955, 2015 U.S. Dist. LEXIS 66072 (N.D. Ca. May 19, 2015), the matter involved a discovery dispute in a complaint under the whistleblower protection provisions of the Federal Rail Safety Act, 49 U.S.C. § 20109, related to an allegation that the Plaintiff was unlawfully disciplined for following the orders and treatment plan of his physician for a right wrist injury. Plaintiff sought to depose BNSF's general counsel and a senior attorney, BNSF sought a protective order as well as sanctions. At the hearing on the motion, the Plaintiff withdrew the notices of deposition. The court denied the motion for a protective order as moot and denied the motion for sanctions. Slip op. at 1-2. The court noted that these were not fact-witnesses and their only involvement appeared to be privileged, but denied the motion for sanctions since punitive damages were involved and there had recently been a change in counsel, which might have impacted the way discovery was being handled. Id . at 3.
Jensen v. BNSF Railway Co. , No. 13-cv-5955 (N.D. Cal. May 19, 2015) (2015 WL 3662593)
Order Re Discovery Letter Brief at ECF No. 56
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Summary :
DISTRICT COURT ADJUDICATION; DISCOVERY INVOLVING “APEX” WITNESSES; PROTECTIVE ORDER

In Jensen v. BNSF Ry. Co. , No. 13-cv-5955, 2015 WL 3662593 (N.D. Ca. May 19, 2015), the matter involved a discovery dispute in a complaint under the whistleblower protection provisions of the Federal Rail Safety Act, 49 U.S.C. § 20109, related to an allegation that the Plaintiff was unlawfully disciplined for following the orders and treatment plan of his physician for a right wrist injury. Plaintiff noticed the depositions of the Executive Vice-President of Operations and a General Attorney in the law department.

The court granted a protective order as to the Executive VP and granted it without prejudice as to the general attorney, permitting the Plaintiff to raise the issue again. The court also adjusted discovery deadlines. Slip op. at 1-2. The analysis discussed the principles surrounding “apex” depositions and pointed out that although the case involved punitive damages, neither of the proposed deponents were fact witnesses or trial witnesses and discovery had already been ample on the punitive damages issues. The court suggested that the depositions would be more usefully conducted with other officials. Id . at 3-5. It allowed the Plaintiff to contest the protective order as to the attorney if he produced “a more robust factual proffer.” Id . at 5.
Murphy v. Norfolk Southern Railway Co. , No. 13-cv-863 (S.D.Ohio Mar. 3, 2015) (2015 WL 914922; 2015 U.S. Dist. LEXIS 25631) (case below 2014-FRS-4)
Order
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Summary :
PROTECTED ACTIVITY; GOOD FAITH; COURT EXPLAINS THAT GOOD FAITH INJURY REPORT REQUIRES BOTH GOOD-FAITH BELIEF THAT THE INJURY IS WORK-RELATED AND GOOD-FAITH IN THE ACT OF REPORTING THE INJURY

PROTECTED ACTIVITY; GOOD FAITH; SUMMARY JUDGMENT; CROSS-MOTIONS FOR SUMMARY JUDGMENT DENIED WHERE IT WAS POSSIBLE TO INFER THAT THE INDIVIDUAL ACT OF THE REPORT WAS DONE IN GOOD FAITH OR TO INFER THAT THE PLAINTIFF WAS NOT ACTING WITH HONESTY OF PURPOSE

SUMMARY JUDGMENT; COURT GRANTS SUMMARY JUDGMENT FOR RAILROAD ON INTERFERENCE WITH MEDICAL CARE CLAIM WHEN OPPOSING PAPERS DID NOT ADDRESS THE ISSUE AND NO RECORD EVIDENCE SUPPORTED THE CLAIM; GRANTS SUMMARY DECISION TO RAILROAD ON PUNITIVE DAMAGES WHERE NO EVIDENCE COULD SUPPORT THE AWARD

In Murphy v. Norfolk So. Ry. Co. , No. 13-cv-863, 2015 WL 914922, 2015 U.S. Dist. LEXIS 25631 (S.D. Ohio Mar. 3, 2015) (case below 2014-FRS-4), the matter invoved Federal Rail Safety Act (“FRSA”), 49 U.S.C. § 20109, and Federal Employer’s Liability Act (“FELA”), 45 U.S.C. § 51, et seq ., suits with cross-motions for summary judgment. Slip op. at 1. The plaintiff worked in the maintenance of way department and had been called in to help clear some trees from the track. While using a chainsaw to do so, it kicked back, and since he wasn't wearing his protective chaps, he suffered a significant cut and was taken for medical treatment by a co-worker. At the hospital, they called their supervisor and plaintiff asked his supervisor to make no further reports of his injury because he did not want to be ridiculed for the manner of injury, feared retaliation for reporting injury or discipline for violating the safety rule regarding the use of chaps, and did not want to jeopardize incentives offered to his crew for maintaining an injury-free record (e.g. free meals and stock bonuses). The supervisor agreed and the Plaintiff returned to work without incident. Id . at 2-3.

Nine months later, someone made an anonymous complaint about Plaintiff and his non-report of the injury. This led to an investigation and the discovery of the injury. Plaintiff then filled out the required form to report the injury. The co-worker received a ten-day time-served suspension for concealing the injury. The supervisor was terminated as a manager but allowed to return to his collective bargaining position with a 78 day suspension and other restrictions. Plaintiff was charged with conduct unbecoming of an employee for concealing the injury and convincing others to do so, as well as improper performance of duty for not wearing his chaps. The charges were sustained and he was issued a one-year suspension along with further restrictions pertaining to his exercise of seniority rights. Id . at 4-5. Plaintiff filed an FRSA complaint, but OSHA dismissed it. Plaintiff then took the suit to federal court. Id . at 5-6.

After explaining the analytical framework for an FRSA claim, Id . at 7-8, the court considered Norfolk Southern’s argument that the Plaintiff had not reported his injury in good faith and thus did not engage in protected activity. The railroad focused on the overall conduct in concealing the injury. Plaintiff argued that 1) he had a good faith belief that he suffered a work-related injury when he reported it; and 2) it was not his fault that his co-worker and supervisor had not done their jobs and reported the injury further. Id . at 9-10. The court remarked that this argument took “some chutzpah to make,” but that though the evidence supporting good-faith was “not overwhelming,” it was “substantial enough to withstand summary judgment.” Id . at 10. It also found substantial evidence supporting the railroad’s argument that the plaintiff had not acted in good faith and a reasonable juror could find that he did not act with “honesty of purpose.” Thus both FRSA-retaliation claim motions for summary judgement were denied. Id . at 11-12. A footnote in the order discusses the nature of the good faith requirement, and in particular the determination that it encompasses both 1) that there is a good-faith belief that the injury is work-related; and 2) that the making of the injury report was itself done in good faith. Id . at 11 n.3.

The Plaintiff also had an FRSA complaint for interference with his medical treatment. Norfolk Southern sought summary judgment, Plaintiff did not respond to that aspect of the motion, and the court found no evidence in the record to support an inference that there was any interference. The motion was thus granted. Id . at 12-13. In addition, the court granted the railroad's motion for summary judgment on the claim for punitive damages on the grounds that there was no evidence of record to support the conclusion that the railroad acted with a reckless or callous disregard for his rights. Id . at 13-16. The remainder of the order related to the sorts of damages the plaintiff could claim under FELA. Id . at 15-17.
Norfolk Southern Ry. Co. v. Perez , No. 14-3274 (6th Cir. Feb. 18, 2015) (case below ARB Nos. 12-081, -106, ALJ No. 2011-FRS-22) (2015 WL 670158; 2015 U.S. App. LEXIS 2460)
Opinion
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Summary :
ELECTION OF REMEDIES; SIXTH CIRCUIT HOLDS THAT 49 U.S.C. § 20109(f) ELECTION OF REMEDIES PROVISION DOES NOT BAR AN EMPLOYEE FROM PURSUING ARBITRATION OF COLLECTIVE BARGAINING RIGHTS UNDER THE RAILWAY LABOR ACT AND A WHISTLEBLOWER COMPLAINT UNDER THE FEDERAL RAIL SAFETY ACT

In Norfolk Southern Ry. Co. v. Perez , 778 F.3d 507, No. 14-3274 (6th Cir. Feb. 18, 2015) (case below ARB Nos. 12-081, -106, ALJ No. 2011-FRS-22) (2015 WL 670158; 2015 U.S. App. LEXIS 2460), the court noted that the FRSA’s election of remedies provision, 49 U.S.C. § 20109(f), provides that “[a]n employee may not seek protection under both this section and another provision of law for the same allegedly unlawful act of the railroad carrier.” This case involved an employee who pursued rights under the collective bargaining agreement and Railway Labor Act and then also pursued a complaint under the FRSA.

In particular, he was injured at work and reported the injury; he was investigated and suspended; he grieved the discipline under the collective bargaining agreement and RLA, leading to a mitigated punishment; and he also filed a complaint under the FRSA at the Department of Labor alleging that that his discipline was retaliation for reporting a work-related injury. The railroad argued that the FRSA action was barred by the election of remedies provision. The ALJ and ARB rejected this argument and found for the employee. The railroad appealed.

The Sixth Circuit reviewed the history of congressional regulation of labor relations in the railroad industry, the result of which is that a railroad employee may only pursue grievances under a collective bargaining agreement under the scheme of the RLA, with narrow exceptions. Congress also passed laws addressing railroad safety, leading to the FRSA in 1970, with an anti-retaliation provision added in 1980. The election of remedies provision was part of the new anti-retaliation provision and was linked by Congress to worries that separate remedies might be pursued under both the OSH Act and the FRSA, leading to waste of resources and inconsistent results.

Originally the anti-retaliation provision proceeding into the same arbitration procedures of the RLA, but in 2007 it was amended and complaints now went to the Secretary of Labor, and eventually the federal courts, not the arbitration process. 20109(h) was also added, which provides that “[n]othing in this section shall be deemed to diminish the rights, privileges, or remedies of any employee under any Federal or State law or under any collective bargaining agreement. The rights and remedies in this section may not be waived by any agreement, policy, form, or condition of employment.” The legislative history indicated that in the amendments, Congress sought to expand and enhance the rights of railroad workers and increase protections for whistleblowing. But the amendments left the election of remedies provision untouched

The Sixth Circuit agreed “with the Secretary that the plain language of § 20109(f) defeats Norfolk Southern’s position.” The railroad was right that the RLA was a provision of law and that the CBA was not. The question, however, is whether in pursuing arbitration of the grievance the employee was seeking protection of the RLA. The Secretary argued that the RLA created the procedural framework, not the protections, which were a product of the CBA. The Sixth Circuit agreed: “[a] railroad employee does not ‘seek protection’ under the RLA within the plain meaning of § 20109(f) by invoking the RLA-mandated arbitration when pursuing a grievance under a collective bargaining agreement.”

Taking protection under a statute was using it as a shelter and as the source of the substantive remedy for the harm. It is the source of the rights at issue that matters, not the procedural mechanism for enforcing those rights. The RLA confers rights, like the right to arbitrate, and an employee seeking to vindicate those rights would be seeking protection under the RLA. But if an employee is seeking to vindicate rights from the CBA under the framework of the RLA, they are seeking protection under the CBA, not RLA. This reading was supported by prior decisions from other circuits and the presence of § 20109(h), which indicated that the FRSA was not attempting to limit rights.

The court countenanced that the employee had sought some protection under the RLA and these was a linguistic contradiction between sub-sections (f) and (h) insofar as one seemed to plainly limit rights while the other said that nothing in the section did so. But given the history, “we would have little trouble concluding that, where subsection (f) conflicts with subsection (h), the latter controls instead of the former.” So even if the plain-reading of subsection (f) did not defeat the railroad’s position, the presence of subsection (h) would lead to the same result.
Port Authority Trans-Hudson Corp. v. Secretary, USDOL , No. 13-4547 (3rd. Cir Jan. 15, 2015) (776 F.3d 157; 2015 WL 178459; 2015 U.S. App. LEXIS 676) ("Bala") (case below ARB No. 12-048, ALJ No. 2010-FRS-26)
Opinion
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Summary :
THIRD CIRCUIT RULES THAT PROTECTED ACTIVITY UNDER SECTION 20109(c)(2) DOES NOT APPLY TO OFF-DUTY INJURIES

In Port Authority Trans-Hudson Corp. v. Secy of Labor , No. 13-4547 (3rd. Cir Jan. 15, 2015) (2015 WL 178459; 2015 U.S. App. LEXIS 676) ("Bala") (case below ARB No. 12-048, ALJ No. 2010-FRS-26), the U.S. Court of Appeals for the Third Circuit overturned the ARB's decision and held, as a matter of statutory interpretation, that 49 U.S.C. §20109(c)(2) involving the prohibition against discipline for following the orders or a treatment plan of a treating physician does not apply to off-duty injuries. The Court agreed with the railroad that "during the course of employment" limitation of (c) (1) applies to subsection (c)(2) .
Cash v. Norfolk Southern Railway Co. , No. 13-56 (W.D.Va. Jan. 14, 2015) (2015 WL 178065)
Memorandum Opinion
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Summary :
TEMPORAL PROXIMITY

The Defendant suspended the Plaintiff following a hearing conducted under CBA procedures. The Plaintiff had suffered an injury to his shoulder in February 2010, and sought medical attention for the injury, but did not report the injury until December 17, 2012. The failures to report were determined to have violated the Defendant's rules, and the Plaintiff was suspended for 30 days. The Plaintiff filed an FRSA retaliation complaint. The court denied cross motions for summary judgment. The court found that there was sufficient evidence in the record to present a genuine issue of material fact on whether the Plaintiff's act of reporting his shoulder injury as work-related could have been a "contributing factor" that led to the investigation and subsequent suspension. The court observed that the Defendant began disciplinary proceedings the very same day that it claimed to learn that the Plaintiff's injury had been reported as work related.
Hernandez v. Metro-North Commuter Railroad , No. 1:13-cv-02077 (S.D.N.Y. Jan. 9, 2015) (74 F. Supp. 3d 576; 2015 WL 110793; 2015 U.S. Dist. LEXIS 2457)
Opinion and Order
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Summary :
PROTECTED ACTIVITY; REASONABLE BELIEF TEST; COMPLAINANT'S REPORT OF A DE MINIMIS WASTE OF COMPANY TIME FOUND NOT TO REFLECT A SUBJECTIVELY OR OBJECTIVELY REASONABLE BELIEF OF OF UNLAWFUL BEHAVIOR RELATED TO RAILROAD SAFETY, SECURITY OR GROSS, FRAUD, WASTE OR ABUSE OF FUNDS FOR SAFETY OR SECURITY

In Hernandez v. Metro-North Commuter Railroad , No. 1:13-cv-02077 (S.D.N.Y. Jan. 9, 2015) (2015 WL 110793; 2015 U.S. Dist. LEXIS 2457), the Plaintiff reported an incident in which wreck crew employees spent 25-45 minutes repairing scratched paint on an employee's personal car. After an investigation, the Defendant gave an verbal reprimand to all involved. The superintendent considered it to be a minor incident. The Plaintiff alleged, however, was thereafter harrassed for being a squealer. The Plaintiff filed an FRSA retaliation complaint. The Defendant filed a motion for summary judgment. The court granted the motion on the ground that the Plaintiff had not satisfied the reasonable belief factor required to establish a protected activity under the FRSA. Drawing all reasonable inferences in the Plaintiff's favor, the court did not question that the Plaintiff honestly believed that the conduct was an unlawful use of company time. The court, however, found that the FRSA requires a reasonable belief that the unlawfulness was related to railroad safety or security or that the conduct constitutes "gross fraud, waste, or abuse of Federal grants or other public funds intended to be used for railroad safety or security." 49 U.S.C. § 20109(a)(1). The court found no indication that the Plaintiff considered what he reported was a safety concern, and therefore the Plaintiff failed to establish a subjectively reasonable belief. The court likewise found that no no objectively reasonable person in the same factual circumstances as the plaintiff could possibly believe that any railroad safety laws were violated by spending less than an hour of company time repairing a personal vehicle in the company paint shop, or that such amounted to a gross fraud, waste or abuse of funds (much less funds to be used for safety or security).

Sarbanes-Oxley Act

Puffenbarger v. Engility Corp. , 151 F. Supp. 3d 651 (E.D. Va. Dec. 31, 2015) (No. 15-cv-188) (2015 U.S. Dist. LEXIS 173764)
Memorandum Opinion
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Summary :
PROTECTED ACTIVITY; DISTRICT COURT FINDS THAT REPORTS OF INFORMAL PAID TIME OFF (PTO) CASH-OUT WERE NOT PROTECTED ACTIVITIES UNDER SOX BECAUSE IT WAS NOT OBJECTIVELY REASONABLE TO BELIEVE THAT THE PTO AWARD VIOLATED FRAUD-RELATED LAWS OR ANY RULE OR REGULATION OF THE SEC

In Puffenbarger v. Engility Corp. , 151 F. Supp. 3d 651 (E.D. Va. 2015), Plaintiff, who had been employed as the Director of Payroll, contended that Defendants had retaliated against her in violation of the SOX whistleblower provision for raising concerns about a paid-time-off (PTO) cash-out. Id . at 654. The cash-out took place after the implementation of a new policy disallowing PTO cash-outs, however the Human Resources Department had continued, informally, to allow cash-outs in circumstances of hardship. The cash-out at issue took place in June 2013 and totaled $856.20. In 2013, Engility had total revenue of $1.4 billion, net income of $54.7 million, and total assets of $930 million. It paid PTO cash-outs totaling $169,000. It had a materiality threshold for the purposes of financial reporting internal controls of $7.6 million. Id . at 656.

The court pointed out that the Fourth Circuit has held that the language in 18 U.S.C. § 1514A providing protection for employees reporting conduct believed to violate “any rule or regulation of the [SEC]” applies “only to regulations that prohibit fraud and that to conclude otherwise would absurdly allow a retaliation suit for an employee’s complaints about administrative missteps or inadvertent omissions from filing statements.” Id . at 658 n.5, quoting Livingston v. Wyeth, Inc. , 520 F.3d 344, 35 n.1 (4th Cir. 2008).

The court found that Plaintiff did not engage in protected activity under SOX when she reported a PTO cash-out because it was unreasonable to believe that the PTO award violated fraud-related laws or any rule or regulation of the SEC. Id . at 659-60. The court found it unreasonable to think that the award, though processed differently than other PTO cash-outs, was a violation of any fraud-related regulation or law “because it was not reasonable to believe that the cash out amounted to a false statement” and Plaintiff had “participated in the HR Department’s informal practice and never once contended . . . that the PTO cash outs made pursuant to this informal practice constituted fraud.” Id . at 659. The court further found it unreasonable to believe the PTO cash-out to be a violation of the requirement that internal controls be maintained because neither the cash-out at issue or cash-outs in the aggregate met the materiality threshold for 2013. Id . at 660-61.

CLEAR AND CONVINCING EVIDENCE; EVIDENCE OF PLANNED RESTRUCTURING

In Puffenbarger v. Engility Corp. , 151 F. Supp. 3d 651 (E.D. Va. 2015), Plaintiff, who had been employed as the Director of Payroll, contended that Defendants had retaliated against her for protected activity under the SOX whistleblower provision by restructuring the Payroll Department. Id . at 657. It was “undisputed that the plan to restructure the Payroll Department was established at least two months” before Plaintiff’s alleged protected activity. Id . at 661.

The court found that Defendants established by clear and convincing evidence that they would have taken the same action in the absence of Plaintiff’s report because “no rational juror could conclude that plaintiff’s reporting . . . was a but for cause of the putative unfavorable personnel action.” The court emphasized that the undisputed evidence established that Defendants planned to restructure the Payroll Department at least two months before Plaintiff’s report. Id . The court found Plaintiff’s bare assertions that the implementation of the restructuring differed from the pre-reporting discussions, without more, to be insufficient to establish a genuine issue of material fact. Id . at 661-62.
Wiggins v. ING U.S., Inc. , No. 14-cv-1089 (D. Conn. Dec. 15, 2015) (2015 U.S. Dist. LEXIS 167362; 2015 WL 8779559)
Ruling Re: Motion for Reconsideration (Doc. No. 47); Motion to Dismiss (Doc. No. 50); Motion to Stay (Doc. No. 51; Motion to Stay (Doc. No. 72)
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Summary :
PLEADING; FRCP 9(b) REQUIRING HEIGHTENED PLEADING IN A FRAUD CASE DOES NOT APPLY TO A SOX § 1514A CLAIM, SUCH A CLAIM ONLY REQUIRING REASONABLE BELIEF OF FRAUD RATHER THAN PROOF OF FRAUD

In Wiggins v. ING U.S., Inc. , No. 14-cv-1089 (D. Conn. Dec. 15, 2015) (2015 U.S. Dist. LEXIS 167362; 2015 WL 8779559), the court denied the Defendant’s motion to dismiss the Plaintiff’s amended SOX claim. In rejecting the Defendant’s claim that the pleading was not sufficiently specific, the Court recognized that the requirement that a pleading contain “specific detail as to the who, where, when, or how” generally applies only under the heightened pleading standard for fraud claims, pursuant to Rule 9 (b) of the Federal Rules of Civil Procedure. Further the Court held that because §1514A (SOX) protects the employee who acted under a reasonable belief that fraud was occurring-rather than protecting only those employees who report activity that is, in fact, fraudulent, Federal Rule of Civil Procedure 9(b) does not apply because Wiggins brings a retaliation claim based on the reasonable belief of fraud, rather than a claim necessitating proof of fraud. The Court also recognized that although the amended complaint could be drafted with more specificity, it is not so vague or conclusory as to render it deficient for lack of “tethering”—that is, none of the paragraphs which identify why Wiggins believed the action was illegal state exactly which federal statue or SEC rule such behavior violated. The Court determined that the amended complaint already identified all of the possible statues and rules in paragraphs 8 and 10, and therefore it would be inaccurate to say that the amended complaint does not connect, or “tether” Wiggins’ belief that ING’s actions were illegal, to the specific federal statutes and SEC rules that she believed ING was violating.
Rock v. Lifeline Systems Co. , No. 13-11833 (D. Mass. Oct. 23, 2015) (2015 U.S. Dist. LEXIS 144335; 2015 WL 6453139)
Memorandum and Order Re: Defendant's Motion for Summary Judgment
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Summary :
Lifeline's products are “devices” registered under the Federal Food, Drug, and Cosmetic Act, and are not “consumer products” within the meaning of CPSIA.
Wadler v. Bio-Rad Laboratories, Inc. , No. 15-cv-2356 (N.D. Cal. Oct. 23, 2015) (2015 U.S. Dist. LEXIS 144468; 2015 WL 6438670)
Order Granting in Part and Denying in Part Defendants' Motion to Dismiss
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COVERED RESPONDENTS; WHETHER INDIVIDUAL DIRECTORS MAY BE SUED UNDER § 1514A

In Wadler v. Bio-Rad Laboratories, Inc. , 141 F. Supp. 3d 1005 (N.D. Cal. Oct. 23, 2015) (No. 15-cv-2356) (2015 U.S. Dist. LEXIS 144468; 2015 WL 6438670), Plaintiff, former general counsel of 25 years for Defendant, brought a whistleblower action for wrongful termination in retaliation for investigating and reporting possible violations of the Foreign Corrupt Practices Act in China, asserting claims under the Sarbanes-Oxley Act, the Dodd-Frank Act, and California state law. One of the issues presented was whether Plaintiff could sue individual directors under SOX.

Noting that there was scant authority on the subject, the court looked to the statutory language. SOX provides that "no [publicly traded] company ... or any officer, employee, contractor, subcontractor, or agent of such company" may retaliate against an employee” for SOX protected activity. The court found that the meaning of “agent” was ambiguous. Thus, it proceeded to examine legislative intent, and found that the context and general purpose of SOX supported the conclusion that the term “agent” encompasses directors. The court found that Congress “intended to impose individual liability on those who have the functional ability to retaliate against whistle blowers (whether as a board member or a manager) . . . .” 141 F.Supp.3d at 1091. Thus, the court found a director may be held individually liable as an "agent" under that provision.

PLEADING; COURT DECLINES TO BASE ADMINISTRATIVE EXHAUSATION DETERMINATION ON WHO WAS A NAMED DEFENDANT ON THE FORMAL CAPTION OF THE ADMINISTRATIVE CASE, BUT RATHER EMPLOYED ARB’S “FAIR NOTICE” STANDARD; PLAINTIFF COULD NOT MAINTAIN SOX SUIT AGAINST INDIVIDUAL MEMBERS OF BOARD OF DIRECTORS WHO HAD NOT BEEN GIVEN FAIR NOTICE THAT THEY WOULD BE NAMED AS INDIVIDUAL DEFENDANT IN THE ADMINISTRATIVE COMPLAINT UNTIL AFTER THE 180-DAY LIMITATIONS PERIOD HAD EXPIRED

In Wadler v. Bio-Rad Laboratories, Inc. , 141 F. Supp. 3d 1005 (N.D. Cal. Oct. 23, 2015) (No. 15-cv-2356) (2015 U.S. Dist. LEXIS 144468; 2015 WL 6438670), Plaintiff, former general counsel of 25 years for Defendant, brought a whistleblower action for wrongful termination in retaliation for investigating and reporting possible violations of the Foreign Corrupt Practices Act in China, asserting claims under the Sarbanes-Oxley Act, the Dodd-Frank Act, and California state law.

Defendants contended that Plaintiff’s SOX claims against the individual were untimely because “he did not add these defendants to his administrative complaint until after the 180-day limitations period had expired and his claims against the individuals in the amended complaint do not relate back to the original complaint. See 18 U.S.C. § 1514A(b)(2)(D).” 141 F.Supp.3d at 1020-21.

The court began by noting:

There are no pleading requirements for whistleblower actions. See 29 C.F.R. § 1980. Indeed, a whistleblower complaint under Sarbanes-Oxley need not even be in writing but may be made orally, in which case it is reduced to writing by OSHA. 29 C.F.R. § 1980.103(b). Because of the absence of formal pleading requirements, complaints in OSHA administrative proceedings are not expected to meet the standards of pleading that apply to claims filed in federal court under Rule 12(b)(6). In The Matter Of: Douglas Evans v. United States Environmental Protection Agency , 2012 WL 3164358 (DOL Adm.Rev.Bd., July 31, 2012), at *6. Rather, a complaint is sufficient so long as the whistleblower complainants give an opposing party " ‘fair notice’ of the charges against it." Id .; see also Donovan v. Royal Logging Co. , 645 F.2d 822, 826 (9th Cir.1981) ("It is settled that administrative pleadings are liberally construed and easily amended").

In Evans , the DOL held that "fair notice" requires only that an administrative complaint "provide (1) some facts about the protected activity, showing some `relatedness' to the laws and regulations of one of the statutes in our jurisdiction, (2) some facts about the adverse action, (3) a general assertion of causation and (4) a description of the relief that is sought." Id . This test does not, however, specifically address the question of what is required to give a particular individual "fair notice" where only the corporation is expressly named as a respondent in an OSHA administrative action.

Id . at 1021. The court declined to follow the “formalistic” of some courts outside the Ninth Circuit which had held that “an individual defendant must be named in the ‘caption’ of an administrative complaint to state a claim against that defendant,” Id . (citations omitted), because those decisions were “based on the assumption that a complaint filed in an OSHA proceeding must meet the same pleading requirements as a complaint that is filed in federal district court.” Id . at 1021-22. [Editor’s note: In this case, the Plaintiff had still been proceeding before OSHA when he exercised SOX’s kick-out to federal court option. The case had not yet reached the OALJ level.] The court noted that Ninth Circuit Title VII caselaw indicated that under some circumstances an administrative complaint may be sufficient to exhaust administrative remedies even when a particular defendant is not named as a defendant in any heading or caption.

The court then reviewed who in the instant case had been given “fair notice” in the administrative complaint that they would be named as individual defendants, and found that the Defendant’s CEO had been given such notice, but that even under a liberal standard the remaining Board members had not. Thus, because the remaining Board members had not been added to the administrative complaint until after the 180-day limitations period expired, the court found that all the SOX claims against individual Board members except the Defendant’s CEO were untimely.
Sharkey v. J.P. Morgan Chase & Co. , No. 10-cv-3824 (S.D.N.Y. Oct. 9, 2015) (2015 U.S. Dist. LEXIS 138357)
Opinion [granting defendant's motion for summary judgment]
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SUMMARY JUDGMENT ON CONTRIBUTORY FACTOR CAUSATION (LATER VACATED BY COURT OF APPEALS)

In Sharkey v. J.P. Morgan Chase & Co. , No. 10-cv-3824 (S.D.N.Y. Oct. 9, 2015) (2015 U.S. Dist. LEXIS 138357), summary judgment in favor of Defendants was granted upon Defendants’ motion. The summary judgment order, however, was later vacated by the Second Circuit Court of Appeals. See Sharkey v. JPMorgan Chase & Co. , 660 Fed. Appx. 65 (2d Cir. N.Y., Sept. 12, 2016) (2016 U.S. App. LEXIS 16636).

The district court found that it was undisputed that the Defendants knew that Plaintiff had raised concerns regarding fraudulent activity, and that she suffered an unfavorable personnel action. The remaining issues were whether Plaintiff made a prima facie case that her actions were entitled to protection under §1514A (i.e., that she had a reasonable belief under Nielsen that there was a violation of one of the provisions enumerated in SOX), whether Plaintiff made a prima facie case that her raising her concerns about fraudulent activity was a contributing factor to her termination, and whether the Defendants could clearly and convincingly show that they would have terminated her had she not done so.

The district court found that, “applying the more lenient Nielsen test, [Plaintiff] has established at least a prima facie case.” The court noted that under this standard, a plaintiff must demonstrate that it was objectively reasonable for her to believe that the activity reported constituted a violation of the laws and regulations listed in §1514A, and that objective reasonableness is a “mixed question of law and fact.” The court found that Plaintiff contended “that she formed and explicitly communicated her belief” that a client was potentially involved in money laundering, bank fraud, wire fraud, mail fraud, and/or violations of federal law designed to prevent such conduct. The court stated that although Plaintiff did not point to specific statutes or explain how her allegations met the elements of enumerated categories under SOX, it was nonetheless objectively reasonable for her to believe that the client was engaged in illegal activity covered by §1514A(a)(1). The court also noted that the Nielsen reasonable belief test focuses on “the basis of knowledge available to a reasonable person in the circumstances with the employee’s training and experience.” Therefore, the court found that Plaintiff made a prima facie showing that she reasonably believed a client was violating federal law, and therefore that her conduct amounted to protected activity under SOX’s anti-retaliation provision.

However, the district court found that “even under SOX’s lenient standard, [Plaintiff did] not make a prima facie case that protected activity was a contributing factor to her firing.” The court noted that Plaintiff’s strongest argument connecting her whistleblowing to her firing was temporal proximity, as Plaintiff was fired less than two weeks after formally brining her concerns to her managers. But Plaintiff’s firing was also “very close” in time to an alleged incident with a manager, which weakened the temporal proximity inference. The alleged incident involved lying to her employer about an important client, which was considered a legitimate intervening basis for her firing. Although an email in evidence may have permitted the inference that Defendants wanted to fire Plaintiff for reasons outside of the alleged incident with a manager, the court found “nothing to suggest that those reasons are connected to her protected activity.” Furthermore, the email was sent three days before Plaintiff’s formal recommendation to her manager; the alleged protected activity.

The district court also found no hearsay issue with the admission of several documents reflecting the defendants’ state of mind in firing Plaintiff, because the motion for summary judgment turned on the Defendants’ state of mind, and not on the truth of the statements admitted.
Anthony v. Northwestern Mut. Life Insurance Co. , No. 14-cv-1416 (N.D. N.Y. Sept. 8, 2015) ( 2015 U.S. Dist. LEXIS 118961; 2015 WL 5226651)
Memorandum Decision and Order
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Later history: Anthony v. Northwestern Mut. Life Insurance Co. , No. 15-2987 (2d Cir. Dec. 14, 2015) (Order [approving stipulation of withdrawal]) PDF
Summary :
SECTION 1514A OF SARBANES-OXLEY ACT PROHIBITS RETALIATION BY CONTRACTORS, SUBCONTRACTORS, OR AGENTS OF PUBLICLY TRADED COMPANIES; SECOND CIRCUIT APPLIES SUPREME COURT’S DECISIONS IN LAWSON AND GIBNEY AND FINDS THAT § 1514A IS LIMITED TO SITUATIONS WHERE A CONTRACTOR EMPLOYEE IS FUNCTIONALLY ACTING AS AN EMPLOYEE OF A PUBLIC COMPANY AND IS A WITNESS TO FRAUD BY THE PUBLIC COMPANY

In Anthony v. Northwestern Mut. Life Insurance Co. , 130 F. Supp. 3d 644 (N.D. N.Y. Sept. 8, 2015), Plaintiff filed a retaliation claim under 18 U.S.C. § 1514A and a breach of contract claim. Section 1514A of Sarbanes-Oxley covers companies that have issued securities registered under § 12 of the Securities Exchange Act, or that are required to file reports under § 15(d) of the Securities Exchange Act. The Defendants moved to dismiss because Plaintiff did not plead that the Defendants were publicly traded companies covered by the provision, nor did Plaintiff plead that she engaged in conduct protected under § 1514A. < /p>

The court noted that § 1514A also prohibits retaliation by contractors, subcontractors, or agents of publicly traded companies. The Plaintiff had alleged that the Defendants were contractors or subcontractors of a public company covered by § 1514A. The court noted that “section 1514A’s coverage of employees of private contractors under Lawson is an apparent issue of first impression in the Second Circuit.” Slip op. at 6.

The court reviewed the Lawson and Gibney decisions, and found that analysis of the facts of Lawson , Gibney , and the Enron scandal demonstrates that “there are two main limitations on the scope of § 1514A.” Id . at 11. The whistleblowing must relate to the contractor’s provision of services to the public company, and “§ 1514A is concerned with public company fraud, whether committed by the public company itself or through its contractors.” Id . The court held that “[t]he effect of these limitations is to restrict § 1514A to situations where a contractor employee is functionally acting as an employee of a public company, and in that capacity, is a witness to fraud by the public company.” Id . at 12. The court distinguished the Plaintiff’s allegations from those of the Lawson plaintiff’s allegations on the basis that the Plaintiff “was not in a position to be a firsthand witness to shareholder fraud by the Northwestern Mutual Funds, as the investment advisors in Lawson were,” as she did not plead that she provided services to the Mutual Funds, but rather, to clients of the Mutual Funds. Id . at 13. The court stated that “finding Plaintiff’s claims cognizable under § 1514A would be to expand its coverage to ‘any situation where any private company sells products or services issued by any publicly traded company.’” Id . at 13 (citing Defendant Northwestern’s Reply, Dkt. No. 17, at 8).

The court found that the Plaintiff’s allegations failed to state a claim under § 1514A because she had neither “alleged that she provided services to the Mutual Funds, nor has she alleged any wrongdoing either by the Mutual Funds themselves or committed through their contractors.” Id . at 14. Accordingly, the court dismissed the Plaintiff’s § 1514A claim.

Breach of Contract Claim Dismissed

As the Plaintiff’s § 1514A claim was dismissed, the court found that it no longer had subject matter jurisdiction over the Plaintiff’s breach of contract claim, and declined to exercise supplemental jurisdiction. The breach of contract claim was dismissed without prejudice pursuant to 28 U.S.C. § 1367(c)(3).
Hill v. Komatsu America Corp. , No. 14-cv-2098 (N.D. Ill. Aug. 26, 2015) (2015 U.S. Dist. LEXIS 116611; 2015 WL 5162129)
Memorandum Opinion and Order
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Summary :
PROTECTED ACTIVITY AND CONTRIBUTORY FACTOR CAUSATION; NO PROTECTED ACTIVITY AND NO KNOWLEDGE OF PROTECTED ACTIVITY WHERE NO EVIDENCE PLAINTIFF ALERTED DEFENDANTS OF SUSPECTED SECURITIES FRAUD PRIOR TO HIS TERMINATION

In Hill v. Komatsu America Corp. , No. 14-cv-2098 (N.D. Ill. Aug. 26, 2015) (2015 U.S. Dist. LEXIS 116611; 2015 WL 5162129), Plaintiff filed a complaint for wrongful termination under the whistleblower provisions of the Sarbanes-Oxley Act. Defendants filed a defense and counterclaim for breach of fiduciary duty against Plaintiff. Defendants filed a motion for summary judgment of both Plaintiff’s claim and Defendants’ counterclaim. Defendants conceded that Plaintiff was able to establish one element of his prima facie case; that he was subject to an adverse employment action when his employment was terminated.

Protected activity

Plaintiff’s claim rested on a theory that Defendants had engaged in securities fraud. Plaintiff learned that the repair and maintenance program (RAMP) funding levels were low, and suggested raising the issue at the next board meeting. The issue was not addressed, and following Plaintiff’s termination, he filed suit against Defendants. The record indicated that after he was terminated, he calculated what he thought RAMP levels should be. The court found it significant that Plaintiff never alerted Defendants that the low RAMP levels may be having an effect on investors, or that he was concerned that securities or shareholders fraud was occurring. The court found that all evidence to support the argument that his concern was objectively reasonable occurred after employment, and so his actions were not protected. The court found that Plaintiff had not produced substantial evidence that subjective or objective belief that securities fraud was being committed.

Knowledge of protected activity

The court stated that Plaintiff correctly pointed out that an employee need not identify a specific code or law that was violated in order to alert his employer of the potential fraud, and by extension, his protected activity. However, the court found that Plaintiff’s conveyance of information regarding the RAMP reserves was insufficient to establish that Defendants understood or should have understood Plaintiff’s expression of concern as a report of potentially illegal activity. Plaintiff did not provide substantial evidence that Defendants should have known Plaintiff was engaging in protected activity.

Contributing factor to adverse employment action

The court found that the facts did not indicate that Defendants were aware of his complaint regarding RAMP funding, or that they changed their mind after learning of it and before making a final recommendation to fire Plaintiff.

AFFIRMATIVE DEFENSE; UNDISPUTED VIOLATIONS BY PLAINTIFF OF COMPANY POLICY COUPLED WITH PLAINTIFF’S ADMISSION OF FAULT WERE CLEAR AND CONVINCING EVIDENCE TERMINATION WOULD HAVE OCCURRED IN THE ABSENCE OF ALLEGED PROTECTED ACTIVITY

In Hill v. Komatsu America Corp. , No. 14-cv-2098 (N.D. Ill. Aug. 26, 2015) (2015 U.S. Dist. LEXIS 116611; 2015 WL 5162129), Plaintiff filed a complaint for wrongful termination under the whistleblower provisions of the Sarbanes-Oxley Act. Defendants filed a defense and counterclaim for breach of fiduciary duty against Plaintiff. Defendants filed a motion for summary judgment of both Plaintiff’s claim and Defendants’ counterclaim. One of Defendants’ arguments was that even if Plaintiff had established a prima facie case under SOX, he still could not prevail because there was clear and convincing evidence that he would have been terminated in the absence of his alleged protected activity. The record showed undisputed violations of Defendants’ Travel and Entertainment Policy and Code of Conduct in the form of trips and submitted expenses in violation of those policies. The court found that Defendants’ investigation into Plaintiff’s behavior coupled with Plaintiff’s admission of fault was sufficient to establish that there is clear and convincing evidence that Plaintiff’s employment would have been terminated in the absence of the alleged protected activity.

FEDERAL DISTRICT COURT’S SUMMARY JUDGMENT IN FAVOR OF DEFENDANTS RESULTS IN COURT’S LOSS OF JURISDICTION OVER DEFENDANTS’ STATE LAW BREACH OF FIDUCIARY DUTY COUNTERCLAIM

In Hill v. Komatsu America Corp. , No. 14-cv-2098 (N.D. Ill. Aug. 26, 2015) (2015 U.S. Dist. LEXIS 116611; 2015 WL 5162129), Plaintiff filed a complaint for wrongful termination under the whistleblower provisions of the Sarbanes-Oxley Act. Defendants filed a defense and counterclaim for breach of fiduciary duty against Plaintiff. Defendants filed a motion for summary judgment of both Plaintiff’s claim and Defendants’ counterclaim. The court granted summary judgment in favor of Defendants. The court was then confronted with the issue of whether to retain supplemental jurisdiction over Defendants’ state law claim for breach of fiduciary duty against Plaintiff. The court found that, as Defendants’ motion for summary judgment of Plaintiff’s SOX claim was granted, Defendants’ state law claims would be dismissed for lack of jurisdiction.
Wallace v. Tesoro Corp. , No. 13-51010 (5th Cir. July 31, 2015) (796 F.3d 468; 2015 U.S. App. LEXIS 13414; 2015 WL 4604967)
Opinion
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Summary :
PLEADING; EXHAUSTION OF ADMINISTRATIVE REMEDIES; WHETHER FEDERAL COURT ACTION IS CONSTRAINED BY ALLEGATIONS MADE IN ADMINISTRATIVE COMPLAINT; FIFTH CIRCUIT HOLDS THAT SCOPE IS LIMITED TO “THE SWEEP OF THE OSHA INVESTIGATION THAT CAN BE REASONABLY EXPECTED TO ENSUE FROM THE ADMINISTRATIVE COMPLAINT”

PLEADING; PLAINTIFF HAS LOW HURDLE OF PLEADING A PLAUSIBLE CASE FOR RELIEF, AND NOTHING IN SOX OR FRCP 9(B) SUGGESTS THAT A REASONABLE BELIEF OF FRAUD MUST BE PLEADED WITH PARTICULARITY

In Wallace v. Tesoro Corp. , 796 F.3d 468 (5th Cir. July 31, 2015) (No. 13-51010) (2015 U.S. App. LEXIS 13414; 2015 WL 4604967), Plaintiff appealed the dismissal of his retaliation claim against Defendant, contending that Defendant terminated Plaintiff for engaging in protected activity under the SOX Act. The court found that Plaintiff failed to satisfy the applicable exhaustion requirement for some of his allegations and failed to state a claim for others, but because he stated a claim relating to his investigation of Defendant’s accounting practices, the court affirmed in part and reversed in part, and remanded.

The court found that the district court correctly concluded that Plaintiff’s “wire-fraud-based protected activity was outside the scope of the OSHA complaint or any investigation it would reasonably prompt.” The court noted that while it was undisputed that Plaintiff was not required to wait more than 180 days for OSHA to resolve his administrative complaint before he could sue, the court had to determine whether the OSHA complaint was sufficient to allow the district-court complaint to contain the allegation of wire-fraud-based retaliation. Thus, the court was presented with the issue of whether SOX-retaliation lawsuits are limited in scope by the administrative complaint and whether the reach of this lawsuit exceeds what is allowed by application of that rule. The court found that “[a]n exhaustion requirement is consistent with SOX’s administrative-enforcement mechanisms.” The court joined the 4th Circuit in holding that the same exhaustion requirement that applies to Title VII complaints applies to SOX cases; “the scope of a judicial complaint is limited to the sweep of the OSHA investigation that can be reasonably expected to ensue from the administrative complaint.” The court did not agree with Plaintiff that merely filing a claim that meets OSHA’s technical requirements will exhaust an employee’s claims. The court further found that Plaintiff did not reference a distinct category of protected activity in his OSHA complaint, and so did not file a complaint whose investigation would reach that activity.

However, the court found that the district court erred in dismissing Plaintiff’s claim regarding Defendant’s allegedly booking taxes as revenue, finding that Plaintiff had adequately pled that he engaged in protected activity relating to that practice. The court held that “[n]othing in SOX or Rule 9(b) suggests that a reasonable belief of fraud must be pleaded with particularity.” The court found that Plaintiff’s second amended complaint was sufficient to preclude dismissal. The court stated that Plaintiff’s complaint remained “garbled,” and expressed no view on the ultimate merits, but found that Plaintiff had “cleared the low hurdle of pleading a plausible case for relief.”
Perez v. Progenics Pharaceuticals, Inc. , No. 10-cv-8278 (S.D.N.Y. July 2, 2015) (case below 2013-SOX-28)
Order [denying reconsideration]
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Summary :
MOTION IN LIMINE; REQUEST TO LIMIT ISSUES BASED ON DOL FINDINGS; WHEN PLAINTIFF FILED COMPLAINT IN DISTRICT COURT IT WAS FOR A DE NOVO PROCEEDING, AND THUS DOL FINDINGS DO NOT HAVE PRECLUSIVE EFFECT

In Perez v. Progenics Pharmaceuticals, Inc. , No. 10-cv-8278 (S.D.N.Y. July 2, 2015) (case below 2013-SOX-28), the Plaintiff filed a motion for reconsideration of the court’s denial of his motion in limine seeking to narrow the issues for trial based on findings made by DOL. The court found that “the Department of Labor’s findings have no preclusive effect on this proceeding and will not form the basis of any further restriction of the issues to be decided at trial.” Slip op. at 1. The court noted that when the Plaintiff sought a hearing before an Administrative Law Judge, “he initiated a de novo review of the Department’s conclusions in their entirety.” Id .

MOTION IN LIMINE; REQUEST TO CALL WITNESS WHO RESIDED MORE THAN 100 MILES FROM TRIAL LOCATION

In Perez v. Progenics Pharmaceuticals, Inc. , No. 10-cv-8278 (S.D.N.Y. July 2, 2015) (case below 2013-SOX-28), the Plaintiff filed a motion for reconsideration of the court’s denial of his motion in limine seeking to call a live witness at trial. The court had denied the motion because the witness lived more than 100 miles from the trial location and because deposition testimony was available. The court found that evidence submitted with the motion for reconsideration was insufficient to demonstrate that the witness “‘regularly transacts business in person’ such that she is within the Court’s subpoena power.” Id . at 2 (citations omitted). Additionally, the court continued to find that the witness’s live testimony would be cumulative.
Perez v. Progenics Pharaceuticals, Inc. , No. 10-cv-8278 (S.D.N.Y. June 24, 2015)(2015 WL 411551; 2015 U.S. Dist. LEXIS 83557) (case below 2013-SOX-28)
Memorandum and Order [ruling on motions for limine]
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MOTION IN LIMINE; COURT DENIES PLAINTIFF’S REQUEST TO CALL AS A LIVE WITNESS THE AUDIT COMMITTEE CHAIR/MEMBER OF BOARD OF DIRECTOR WERE THAT PERSON LIVED MORE THAN 100 MILES FROM THE LOCATION OF THE TRIAL AND DEPOSITION TESTIMONARY WAS AVAILABLE; COURT DENIED REQUEST FOR ADVERSE INFERENCE INSTRUCTION

In Perez v. Progenics Pharmaceuticals, Inc. , No. 10-cv-8278 (S.D.N.Y. June 24, 2015)(2015 WL 411551; 2015 U.S. Dist. LEXIS 83557) (case below 2013-SOX-28), The Plaintiff filed a Sarbanes-Oxley Act (SOX) 18 U.S.C. § 1514A complaint against his former employer, a publicly traded biotechnical company. The court denied the Plaintiff’s motion in limine requesting to call as a live witness to testify concerning the details of the decision to terminate the Plaintiff, the Chair of Defendant’s Audit Committee and a member of the Defendant’s Board of Directors. The court denied the Plaintiff’s request to call the witness in person, as the witness lived more than 100 miles from the location of trial, and deposition testimony from the witness was available for use at trial. The court found that the witness’ testimony would be cumulative and nonmaterial, and so declined to issue an adverse inference instruction.

MOTION IN LIMINE; COURT GRANTS PLAINTIFF’S REQUEST TO EXCLUDE PRIOR ACTS EVIDENCE PURPORTEDLY TO BE PROFFERED IN REGARD TO “REASONABLE BELIEF” ELEMENT OF SOX CLAIM, BUT WHICH APPEARED INSTEAD TO BE INTENDED TO SUGGEST THAT PLAINTIFF HAS A PROPENSITY TO MAKE FRIVILOUS ACCUSATIONS

In Perez v. Progenics Pharmaceuticals, Inc. , No. 10-cv-8278 (S.D.N.Y. June 24, 2015)(2015 WL 411551; 2015 U.S. Dist. LEXIS 83557) (case below 2013-SOX-28), The Plaintiff filed a Sarbanes-Oxley Act (SOX) 18 U.S.C. § 1514A complaint against his former employer, a publicly traded biotechnical company. The Plaintiff alleged that he was terminated in retaliation for a memorandum in which he informed the Defendant that it was defrauding “shareholders since representations made to the public were not consistent with the actual results of the relevant clinical trial” of a drug the Defendant was developing with another pharmaceutical company. Slip Op. at 3. The Memorandum was developed in response to the Plaintiff’s review of a document which the Defendant alleges was confidential. The court granted the Plaintiff’s motion in limine to exclude prior acts evidence.

The Defendant had sought to introduce evidence of two prior acts by Plaintiff, arguing that the prior acts were relevant to the Plaintiff’s state of mind at the time he drafted the Memorandum, tending to show that “the Plaintiff either did not truly believe that Defendant had made misrepresentations or that Plaintiff’s believe was not reasonable, either of which would mean that Plaintiff did not engage in protected activity.” Slip Op. at 8. One instance involved litigation against a former employer, including the “Plaintiff’s removal of confidential documents without permission and accusations against his employer of, among other things, retaliation, discrimination, slander, and libel in 2005.” Id . at 9. The other prior act involved misconduct by the Plaintiff’s prior attorney in the instant case.

The court found that the Defendant failed to demonstrate the relevance of a conflict between the Plaintiff and his attorney to the “Plaintiff’s state of mind when he drafted the Memorandum years earlier.” Slip Op. at 9. The court found that raising evidence of Plaintiff’s conflict with his attorney appeared to be “an attempt to suggest that Plaintiff made supposedly frivolous accusations of misconduct against his attorney, which makes it more likely that his accusations in the Memorandum were frivolous.” Id . at 10. The court found this to be propensity evidence prohibited by Rule 404(b) of the Federal Rules of Evidence, and therefore granted the Plaintiff’s motion to exclude evidence with respect to the Plaintiff’s former counsel.

The court also found that the Defendant failed to demonstrate the relevance of the Plaintiff’s litigation against a Purdue Pharmaceuticals, a former employer, to his state of mind at the time he drafted the Memorandum. The court found “it appears as though Defendant wishes to raise this prior act to illustrate Plaintiff’s supposed propensity to make unfounded allegations against his employers;” evidence therefore prohibited by Rule 404(b). Slip Op. at 12. The court further found that this introduction of this evidence risked “confusing the issues” and “misleading the jury” with limited probative value, and thus excludable under Rule 403. Id . Accordingly, the court granted the Plaintiff’s request to exclude evidence of “the Purdue litigation.” Id .

MOTION IN LIMINE; COURT DENIES PLAINTIFF’S REQUEST TO LIMIT ISSUES FOR TRIAL BASED ON DOL’S FINDINGS AND NON-DISPOSITIVE WITNESS STATEMENTS

In Perez v. Progenics Pharmaceuticals, Inc. , No. 10-cv-8278 (S.D.N.Y. June 24, 2015)(2015 WL 411551; 2015 U.S. Dist. LEXIS 83557) (case below 2013-SOX-28), The Plaintiff filed a Sarbanes-Oxley Act (SOX) 18 U.S.C. § 1514A complaint against his former employer, a publicly traded biotechnical company. The court denied the Plaintiff’s motion in limine requesting to limit the issues at trial.

The court noted that it had previously ordered, based on mutual agreement of the parties, that the only disputed issues for trial are whether the Plaintiff was engaged in protected activity and whether that activity was a contributing factor to the Plaintiff’s termination. The Plaintiff now argued that the first element should no longer be disputed because the Department of Labor determined in its 2008 decision “that Plaintiff engaged in protected activity but ultimately concluded that activity was not a contributing factor to his termination.” Slip Op. at 13. The court found that it could not “accept the first portion of those findings while ignoring the ultimate conclusion,” and declined to rely on the Department of Labor decision for determination of issues for trial. Id . at 13. The court further found that the Plaintiff’s other evidence in support of his argument that the protected activity element was undisputed rested upon witness statements that are open to interpretation and not dispositive. Accordingly, the court denied the Plaintiff’s request to limit the issues to be decided at trial.
Bogenschneider v. Kimberly Clark Global Sales, LLC , No. 14-cv-743 (W.D. Wis. June 29, 2015) (2015 WL 3948137; 2015 U.S. Dist. LEXIS 83827) (case below 2013-SOX-28)
Opinion and Order
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UNFAVORABLE PERSONNEL ACTION; NO EVIDENCE OF RETALIATORY INTENT WHERE PLAINTIFF TERMINATED PURSUANT TO MUTUAL SEPARATION AGREEMENT FOR RESTRUCTURING; DEFENDANT ENTITLED TO LITIGATION PRIVILEGE WHERE CONDUCT AT ISSUE OCCURRED IN CONTEXT OF A STATE COURT LAWSUIT FILED BY DEFENDANT FOR BREACH OF CONTRACT

In Bogenschneider v. Kimberly Clark Global Sales, LLC , No. 14-cv-743 (W.D. Wis. June 29, 2015) (2015 WL 3948137; 2015 U.S. Dist. LEXIS 83827) (case below 2013-SOX-28), the court denied the Plaintiff’s motion for summary judgment and entered summary judgment in favor of the Defendant in this Sarbanes-Oxley Act (SOX) 18 U.S.C. § 1514A claim of retaliation. The Plaintiff, formerly employed as a tax lawyer for the Defendant, claimed that the Defendant retaliated against him for reporting alleged tax fraud by the Defendant. The Plaintiff alleged that the Defendant retaliated by: “retaliatory termination for cause”; “blacklisting” through defamatory statements made in a 2011 state court lawsuit; and “harassment” by disclosing confidential information in that lawsuit. Slip op. at 1. The court also found that the Plaintiff had not offered evidence of retaliatory intent and “even if he had, all of the conduct at issue occurred in the context of a state court lawsuit, so defendant is entitled to assert a litigation privilege.” Id .

Termination by mutual consent

The court found that “the undisputed facts show that plaintiff agreed to the terms of his departure from Kimberly Clark and he was not terminated for cause as he says, so he cannot rely on that issue to show retaliation.” Id . at 2 (internal quotations omitted). The Plaintiff was terminated pursuant to a mutual termination agreement under which the Plaintiff would, at the end of a set period of time, either choose to resign, or if he did not resign, be terminated “due to a restructuring.” Id . at 4. The court agreed with the Plaintiff “that the reason provided by the employer for the termination could be important because it could have consequences for the employee’s reputation and future employment.” Id . at 4. However, the court found that the reason in the instant case, restructuring, was provided in the agreement. The court noted that if, in fact, the Plaintiff was terminated for cause and not due to a restructuring, the separation agreement would help his future prospects by allowing him to leave voluntarily and “save face.” Id . at 5.

“Blacklisting” Claim

The court noted that the term “blacklisting” is not included in the text of the statute, although “the Department of Labor has concluded that § 1514A prohibits ‘blacklisting or other active inference with subsequent employment.’” Id . at 6 (citation omitted). The court found that the issue was not whether the defendant’s conduct constituted “blacklisting,” but whether “the challenged action [is] one that a reasonable employee would find to be materially adverse such that the employee would be dissuaded from engaging in the protected activity.” Id . at 6 (citations omitted).

Litigation Privilege

All of the Plaintiff’s evidence “in support of his retaliation claim occurred in the context of litigation.” Id . at 6-7. The court noted “it is questionable whether any of the statements would deter a reasonable person from engaging in activity protected by the Sarbanes-Oxley Act, particularly because plaintiff cites no evidence that any potential employer read the statements or was likely to do so.” Id . at 8 (citation omitted). “Even assuming that the statements are materially adverse,” the court found that the statements could not serve as the basis of a retaliation claim because the Defendant is entitled to a litigation privilege, and the Plaintiff “has not adduced any evidence that plaintiff’s protected activity played any role in defendant’s decision to make these statements.” Id . at 8.

The court found Steffes v. Stepan Co., 144 F.3d 1070 (7th Cir. 1998) to be controlling. Steffes held that “it will be the rare case in which conduct occurring within the scope of litigation constitutes retaliation prohibited by federal employment statutes because [d]efendants… must have some leeway to investigate possible defenses without undue fear of being subjected to additional liability in retaliation suits.” Slip op. at 8 (internal quotations omitted) (citation omitted). The court found that the statements made by the Defendant were made in the context of a lawsuit filed by the Plaintiff, and were relevant to the Plaintiff’s claims in that lawsuit.

Contributing Factor

The court found that the Plaintiff “failed to adduce any evidence that his protected conduct was a contributing factor in defendant’s decision to submit the litigation materials that it dId.” Slip op. at 12. Rather, it found that “all of the statements at issue were relevant to plaintiff’s claims.” Id . Regarding a letter from the Defendant’s counsel which threatened various legal consequences of filing a complaint against the defendant for breach of contract, the court found that the decision to file for breach of contract “has nothing to do with” the SOX statute. Slip op. at 12.

Harassment Claim

In a brief filed by the Defendant in the 2011 state court case, the Defendant stated that the Plaintiff sued his law school when he did not make law review. The Plaintiff argued that this statement constitutes harassment. The court found that the Defendant is entitled to a litigation privilege and the Plaintiff did not adduce any evidence of retaliatory intent. The court further noted that the Plaintiff discussed the previous lawsuit “openly during his state court deposition” and the Plaintiff did not state that any part of that case, other than the settlement, was confidential. Slip. op. at 13.
Wiggins v. ING U.S., Inc. , No. 14-cv-1089 (D. Conn. June 16, 2015) (2015 U.S. Dist. LEXIS 78129)
Ruling Re: Defendants' Motion to Stay (Doc. No. 13) and Defendants' Motion to Dismiss (Doc. No. 14)
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ARBITRATION AGREEMENT; 2010 AMENDMENT TO SOX MAKING UNENFORCEABLE PREDISPUTE ARBITRATION AGREEMENTS FOUND APPLICABLE TO AN AGREEMENT SIGNED IN 2006

In Wiggins v. ING U.S., Inc. , No. 14-cv-1089 (D. Conn. June 16, 2015) (2015 U.S. Dist. LEXIS 78129; 2015 WL 3771646), Plaintiff Wiggins filed an action against defendants ING U.S., Inc., and ING Life Insurance and Annuity Company (collectively “ING”), alleging her former employer took adverse employment actions against her because she acted as a whistleblower alleging in separate Counts violations of three statutes: Count 1 — Sarbanes-Oxley Act of 2002 (“SOX”); Count II — “Dodd Frank” and Count III — Section 31-51q of the Connecticut General Statutes. The Defendant moved that all three counts be stayed pending arbitration of the matters or in the alternative dismissed for failure to state a cause of action.

The U.S, District Court for the District of Connecticut initially addressed ING’s argument that the Plaintiff was bound by a pre-employment agreement to arbitrate any dispute, claim or controversy between her and the firm (“Form U-4”) which Plaintiff signed at the time she began working for ING in February of 2006. Thus Defendant alleged Plaintiff had agreed to arbitrate any of the alleged complaints. The Court determined that the U-4 pre-employment agreement to arbitrate claims would generally be enforceable as a contract. However, Plaintiff was not required to submit the SOX claim to arbitration because a 2010 amendment to SOX states “No predispute arbitration agreement shall be valid or enforceable if the agreement requires arbitration of a dispute arising under this section.” See 18 U.S.C. §1514A(e)(2). While recognizing a split of authority on the issue, the Court followed the decision in Wong v. CKX, Inc. , 890 F. Supp. 2d 411, 420-23 (S.D.N.Y. 2012), in finding that the SOX amendment establishes that the U-4 agreement is not valid or enforceable in relation to the SOX claim. The Court also extended the SOX amendment prohibiting enforcement of pre-employment arbitration agreements to the Dodd Frank claim finding that the “arising under this section” provision of the SOX Amendment should apply to Dodd Frank claims as well. However the Court determined that the U-4 pre-employment agreement to arbitrate claims was binding in relation to the Count III claim arising under the Connecticut state statute.

PLEADING; FAILURE TO PLEAD “SUBJECTIVE BELIEF” ELEMENT OF SOX CLAIM IS GROUNDS FOR DISMISSAL WITHOUT PREJUDICE TO AMEND THE COMPLAINT

In Wiggins v. ING U.S., Inc. , No. 14-cv-1089 (D. Conn. June 16, 2015) (2015 U.S. Dist. LEXIS 78129; 2015 WL 3771646), Plaintiff Wiggins filed an action against defendants ING U.S., Inc., and ING Life Insurance and Annuity Company (collectively “ING”), alleging her former employer took adverse employment actions against her because she acted as a whistleblower under, inter alia, the Sarbanes-Oxley Act of 2002 (“SOX”). In regard to the SOX claim the court determined that Plaintiff had failed to specifically plead that she had a “subjective belief” that the “complained-of activity” constituted prohibited activity. Therefore, the court dismissed the SOX claim without prejudice to Plaintiff’s repleading the claim. The court provided the Plaintiff 21 days to do so.
Levi v. Perez , No. 14-9583 (10th Cir. May 29, 2015) (unpublished) (case below ARB No. 13-047, ALJ No. 2012-SOX-39) (2015 WL 3423243; 2014 U.S. App. LEXIS 8921)
Order and Judgment
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In an appeal of DOL's denial of a § 1514A SOX complaint, the 10th Circuit found that substantial evidence supporteed the agency's determination that the Plaintiff failed to demonstrate that he sufffered an adverse personnel action. The Plaintiff argued that he suffered adverse action in regard to his pension benefits when records were changed in regard to the effective date of his termination. DOL had found that the pension benefits at isse were based on the date of suspension and that the effective date of the termination was irrelevant.
Rhinehimer v. U.S. Bancorp Investments, Inc. , No. 13-6641 (6th Cir. May 28, 2015)
Opinion
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PROTECTED ACTIVITY; SIXTH CIRCUIT REJECTS “DEFINITIVELY AND SPECIFICALLY” STANDARD AND ADOPTS “SUBJECTIVE AND OBJECTIVE REASONABLE BELIEF” STANDARD; DEFENDANT VIOLATED SOX WHEN IT RETALIATED AGAINST PLAINTIFF FOR REPORTING WHAT HE BELIEVED TO BE “UNSUITABILITY FRAUD”

In Rhinehimer v. U.S. Bancorp Investments, Inc. , 787 F.3d 797 (6th Cir. May 28, 2015) No. 13-6641) (2015 U.S. App. LEXIS 8803), the court affirmed the judgment of the district court that Plaintiff established that he engaged in activity protected by §1514A(a)(1). After working with an elderly client for approximately a decade, Plaintiff began to suspect that the client had diminishing capacity and that unsuitable trades were being made on his account by the financial advisor covering for Plaintiff while he was out on extended disability leave. Plaintiff expressed his concerns to his supervisors. Following his return from disability leave, Plaintiff was given a written warning, and shortly after, placed on a performance improvement plan requiring him to increase his revenue to $40,000 per month. Plaintiff did not meet that goal, and was later fired.

Here, Plaintiff accused Defendant of “unsuitability fraud.” Defendant argued that to satisfy the reasonable belief standard, Plaintiff’s complaint must have “definitively and specifically” related to one of the enumerated categories of fraud by approximating the basic elements of the fraud claim. The district court accepted the Defendant’s statement of the legal standard. On appeal, Defendant argued that Plaintiff could not show he had adequate information to form a reasonable belief that Defendant intentionally or with reckless disregard misrepresented or omitted material facts in its communications about trades.

The court on appeal rejected the “definitively and specifically” standard as inconsistent with §1514A and the statutory scheme. The court adopted “the emerging rule that the employee’s reasonable belief is a simple factual question requiring no subset of findings that the employee had a justifiable belief as to each of the legally-defined elements of the suspected fraud. The court discussed “the rise and fall of the ‘definitively and specifically’ standard,” and accorded deference to the ARB’s interpretation of §1514A. The court found that the subjective and objective components of “reasonable belief” necessitate a fact-based inquiry. Applying this standard, the court found that although Plaintiff had no specific knowledge of whether Defendant intentionally or with reckless disregard omitted or misrepresented material information, the evidence was “more than sufficient to sustain the jury’s finding that Plaintiff reasonably believe[d] that the trades constituted unsuitability fraud.” The court noted that even if the trades were “above board,” §1514A protects employees who reasonably but mistakenly believe there was a violation of relevant law. The court found that “[t]he information that was available to Plaintiff was more than adequate to allow him reasonably to believe that the trades were the result of conduct constituting unsuitability fraud,” and as such, Defendant’s retaliation against Plaintiff for reporting that information was in violation of SOX’s whistleblower protections.
Wiest v. Tyco Electronics Corp. , No. 10-3288 (E.D.Pa. Apr. 10, 2015) (2015 WL 1636860; 2015 U.S. Dist. LEXIS 47935)
Memorandum
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Court granted summary judgment to Defendant, finding that "Plaintiffs have insufficient evidence as a matter of law to prove that Mr. Wiest's protected activity was a contributing factor in Tyco's preliminary or final decision to terminate Mr. Wiest." Slip op. at 22.
Moldauer v. Constellation Brands Inc. , No. 14-cv-1984 (D.D.C. Apr. 3, 2015) (cases below ALJ Nos. 2003-SOX-26, 2008-SOX-73, 2010-SOX-9, 2014-SOX-35) (2015 WL 1541961; 2015 U.S. Dist. LEXIS 44011)
Memorandum Opinion and Order
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Summary :
The court found a lack of subject matter jurisdiction over the part of Moldauer's complaint that was directed at DOL. The district court noted that it could have jurisdiction of a SOX case only under 18 U.S.C. § 1514A(b)(1), which provides for a complainant's right to file a de novo action in district court where DOL did no t issue a final decision within 180 days of the filing of the complaint. But such a complaint would be filed against the named respondent and not DOL. Thus, DOL would not be a proper party to such a suit.

The court noted that if Moldauer was seeking review of DOL's decision to deny the administrative complaints, the appeal goes to the court of appeals rather than district court.

The court dismissed the complaint against the employer for lack of personal jurisdiction.

The court denied Moldauer's request to amend his complaint to allege defamation and breach of privacy against DOL and the FTC because there was no evidence that Moldauer exhausted administrative remedies on such claims.
Hartzman v. Wells Fargo & Co. , No. 14-cv-808 (M.D.N.C. Mar. 19, 2015) (case below 2013-SOX-45) (2015 WL 1268267; 2015 U.S. Dist. LEXIS 33945)
Memorandum Opinion and Order
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Summary :
AMENDMENT OF COMPLAINT; SUFFICIENCY UNDER FRCP 8; SOX “REASONABLE BELIEF” ELEMENT NOT CLEARLY INSUFFICIENT WHERE PLAINTIFF HAD CONSULTED OUTSIDE EXPERTS (THROUGH A JOURNALIST)

AMENDMENT OF COMPLAINT; SUFFICIENCY UNDER FRCP 8; REQUEST TO ADD INDIVIDUAL DEFENDANTS CLEARLY INSUFFICIENT WHERE THERE WAS NO ALLEGATION THAT THOSE INDIVIDUALS HAD RETALIATED AGAINST THE PLAINTIFF

In Hartzman v. Wells Fargo & Co. , No. 14-cv-808 (M.D.N.C. Mar. 19, 2015) (case below 2013-SOX-45) (2015 WL 1268267; 2015 U.S. Dist. LEXIS 33945), the U.S. District Court for the Middle District of North Carolina addressed the pro se Plaintiff’s motion to amend complaint alleging that Defendant, his former employer, retaliated against him for reporting Defendant’s allegedly fraudulent practices in violation of the whistleblower provision within the Sarbanes-Oxley Act. The Defendant contended that the amended complaint failed to satisfy the pleading requirement of Twombly and Iqbal in that it was devoid of facts that would reasonably inform the reader of the factual basis of the claim asserted. See Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570 (2007); Ashcroft v. Iqbal , 556 U.S. 662, 678 (2009).

The Court recognized that the federal rules strongly favor granting leave to amend and that leave to amend a pleading should be denied only when the amendment would be prejudicial to the opposing party, there had been bad faith on the part of the moving party, or the amendment would be futile. In addressing the requirements of Rule 8 of the Federal Rules of Civil Procedure, the Court recognized that Rule 8 does not require technical forms of pleading or motions and that the pleadings submitted by parties proceeding pro se are to be viewed especially liberally, yet the Court noted that the Defendant must be provided notice of the claims against it so that it may prepare a defense. The Court determined, given the circumstances in this case, particularly the absence of bad faith on Plaintiff’s part, that Rule 8 should not bar amendment in this case. The Court also determined that Plaintiff’s proposed second amended Complaint as concerns Plaintiff’s Sarbanes-Oxley whistleblower claim did not appear “clearly insufficient or frivolous on its face.”

The Court noted that under the Sarbanes-Oxley Act, the whistleblower need only show that he had both a subjective belief and an objectively reasonable belief that the conduct violated relevant law. The Court noted in this case that “[p]laintiff consulted (through a journalist) with outside experts who provided some support for the positon that Defendant’s conduct may have violated federal law” and therefore concluded that Plaintiff’s allegations did not qualify as “clearly insufficient or frivolous on their face.”

The Court determined however, that Plaintiff’s request to add additional individual defendants was clearly insufficient as a matter of law, as no plausible factual basis existed to join them to the action, where none of the factual allegations described any retaliatory acts committed by them against Plaintiff. The Court also limited its ruling that Plaintiff had asserted a plausible claim, to the Sarbanes Oxley whistleblower complaint. It denied Plaintiff’s proposed second amended complaint regarding a list of 21 additional claims including several criminal statutes, civil securities violations and ERISA.
Halliburton v. Administrative Review Board, USDOL , No. 13-60323 (5th Cir. Mar. 11, 2015) (case below ARB Nos. 12-026, ALJ No. 2007-SOX-5) (2015 WL 1058102; 2015 US App LEXIS 3814)
Order [denying rehearing en banc]
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DISCLOSURE OF EMPLOYEE'S IDENTITY AS A MATERIALLY ADVERSE EMPLOYMENT ACTION UNDER BURLINGTON NORTHERN

In Halliburton v. Administrative Review Board, USDOL , No. 13-60323 (5th Cir. Mar. 11, 2015) (case below ARB Nos. 12-026, ALJ No. 2007-SOX-5), the Fifth Circuit denied rehearing en banc of Halliburton v. Administrative Review Board, USDOL , No. 13-60323 (5th Cir. Nov. 12, 2014) (per curiam) ( Revised Opinion - Dec. 29, 2014). 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."
Leary v. Centene Corp. , No. 14-cv-2547 (D.Kan. Mar. 10, 2015) (2015 WL 1034343; 2015 U.S. Dist. LEXIS 28918)
Memorandum & Order
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Summary :
COUNTERCLAIM FOR ABUSE OF PROCESS BASED ON ALLEGATION THAT PLAINTIFF FILED SOX LAWSUIT TO EXTORT MONEY AND HARASS DEFENDANTS; COUNTERCLAIM DENIED WHERE COURT FOUND THAT PLAINTIFF’S SETTLEMENT DEMAND WAS WITHIN FOUR CORNERS OF LITIGATION

COUNTERCLAIM FOR DEFAMATION ALLOWED TO PROCEED WHERE DEFENDANTS’ DEFAMATION COUNTERCLAIMS WERE BASED, AT LEAST IN PART, ON THE SAME FACTUAL ALLEGATIONS ASSERTED BY PLAINTIFF IN SUPPORT OF HER CLAIMS FOR RELIEF UNDER SOX

Brief Summary :

In Leary v. Centene Corp. , No. 14-cv-2547 (D.Kan. Mar. 10, 2015) (2015 WL 1034343, 2015 U.S. Dist. LEXIS 28918), the U.S. District Court for the District of Kansas granted Jacqueline Leary’s (“Plaintiff”) Motion to Dismiss Centene Corporation, et al. (“Defendants”) counterclaims as to abuse of process after finding that Defendants alleged only that Plaintiff initiated her lawsuit to coerce a settlement of the very claims set forth in the lawsuit. The Court denied the Motion as to Defendants’ defamation counterclaims upon determining that said counterclaims were based, at least in part, on the same factual allegations asserted by Plaintiff in support of her claims for relief.

Relevant Facts :

Plaintiff alleges a claim against three corporate defendants under the whistleblower provision of the Sarbanes-Oxley (“SOX”) Act, and other laws. In response, each of the corporate defendants asserted state law counterclaims against Plaintiff for abuse of process and defamation. Defendants’ counterclaims for abuse of process alleged that Plaintiff filed this lawsuit to extort a large sum of money and to harass Defendants. Defendants’ defamation counterclaims are based on allegedly defamatory remarks that Plaintiff purportedly made after her termination to a third-party regarding her termination for contacting Defendants’ compliance department and Defendants’ purported unethical or unlawful business practices.

Failure to State a Claim for Abuse of Process :

The Court determined that Defendants had not alleged any overt act or willful act outside the course of legal proceedings in the case. Further, the Court provided that even if an abusive settlement demand could satisfy the willful act requirement for an abuse of process claim, the Plaintiff’s demand was within the four corners of the litigation and was not so unreasonable as to fall outside the legal process where her prayer for relief included claims for economic, emotional distress, and punitive damages. Because Defendants alleged only that Plaintiff initiated her lawsuit to coerce a settlement of the very claims set forth in the lawsuit (as opposed to a collateral matter), the Court held that Defendants could not recover for abuse of process. As a result, the Court granted Plaintiff’s motion to dismiss Defendants’ counterclaims for abuse of process.

Subject Matter Jurisdiction over Counterclaims :

The Court determined that even though the allegedly defamatory statements were made after Plaintiff’s termination, the statements in question were nonetheless sufficiently tied to Plaintiff’s underlying SOX claim to satisfy subject matter jurisdiction requirements. Specifically, the Court found that both Plaintiff’s SOX claim and Defendants’ defamation counterclaims would require evidence as to whether Defendants engaged in unethical or unlawful business practices and whether Plaintiff reasonably believed that they did so. On this basis, the Court determined that both claims would arise out of the same facts and the evidence underlying both claims would overlap. As Defendants’ defamation counterclaims were based, at least in part, on the same factual allegations asserted by Plaintiff in support of her claims for relief, the Court found that the supplemental jurisdiction standard was satisfied. Accordingly, the Court denied Plaintiff’s motion to dismiss Defendants’ counterclaims for defamation.
Lutzeier v. Citigroup, Inc. , No. 14-cv-183 (E.D.Mo. Mar. 9, 2015) (2015 WL 1033696; 2015 U.S. Dist. LEXIS 28231)
Memorandum and Order
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Summary :
EXHAUSATION OF ADMINISTRATIVE REMEDIES; WHERE PLAINTIFF HAD NOT NAMED INDIVIDUAL AS A RESPONDENT IN HIS OSHA COMPLAINT — BUT ONLY HIS FORMER EMPLOYER, AND ITS PARENT, SUBSIDIARY AND AFFILIATED COMPANIES — DISTRICT COURT DISMISSED THE SOX CLAIM AGAINST THE INDIVIDUAL FOR FAILURE TO EXHAUST ADMINISTRATIVE REMEDIES AS TO THAT INDIVIDUAL

Brief Summary :

In Lutzeier v. Citigroup, Inc. , No. 14-cv-183 (E.D.Mo. Mar. 9, 2015) (2015 WL 1033696, 2015 U.S. Dist. LEXIS 28231), the U.S. District Court for the Eastern District of Missouri granted Citigroup, Inc., et al.’s (“Defendants”) Motion for Clarification of the Court’s March 2, 2015 Memorandum and Order and Partial Motion to Dismiss the First Amended Complaint and Motion to Strike as to Defendant Steve Champney (“Defendant Champney”) with respect to claims under the Sarbanes-Oxley (“SOX”) Act filed by Fred E. Lutzeier (“Plaintiff”) after finding that Plaintiff failed to exhaust his claims against Defendant Champney because Defendant Champney was neither named as a respondent in Plaintiff’s Office of Health and Safety Administration (“OSHA”) complaint nor otherwise specifically identified as a party against whom the complaint was brought.

Relevant Facts :

Plaintiff filed a SOX retaliation claim with OSHA, naming his former employer, and its parent, subsidiary and affiliated companies as respondents. Plaintiff alleged that Defendant Citigroup discharged him from his employment and that Defendant Citigroup’s failure and refusal to hire him for other positions for which he was qualified and had applied to since his termination was further indicia of Defendant Citigroup’s retaliation against him. In response, Defendants contend that a plaintiff must name an individual in his OSHA complaint to exhaust his administrative remedies against the individual.

Failure to Exhaust Administrative Remedies :

As 29 C.F.R. 1980.101(k) requires that a defendant be listed as a “named” respondent who is alleged to have violated the Act, the Court held it was insufficient for an individual to be named “in the body of an administrative company….” [Editor’s note: the court probably meant “administrative complaint’]. While Defendant Champney was named as an actor in Plaintiff’s complaint, the Court found there was no indication that Plaintiff was bringing his action against Defendant Champney as a respondent because Plaintiff named only his former employer, and its parent, subsidiary and affiliated companies as the respondent. Based on this, the Court found there was no indication that OSHA had the opportunity to respond to Plaintiff’s allegations against Defendant Champney through the administrative process. Thus, because Defendant Champney was not named as a respondent in the heading of Plaintiff’s OSHA complaint or otherwise specifically identified as a party against whom the complaint was brought, the Court dismissed Plaintiff’s SOX claim with respect to Defendant Champney.
Kshetrapal v. Dish Network, LLC , No. 14-cv-3527 (S.D.N.Y. Feb. 27, 2015) (2015 WL 857911; 2015 U.S. Dist. LEXIS 24573) (case below 2014-SOX-23)
Opinion and Order
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Summary :
SOX Section 1514A covers post-termination protected activity by former employee; Plaintiff's deposition testimony in lawsuit involving Defendant company found covered.

Injunctive and declaratory relief is not available under Dodd-Frank Act, Section 78u-6(h) but is available under the Sarbanes-Oxley Act, Sectin 1514A.
Bogenschneider v. Kimberly Clark Global Sales, LLC , No. 14-cv-743 (W.D. Wis. Feb. 25, 2015) (case below 2013-SOX-28) (2015 U.S. Dist. LEXIS 22377)
Opinion and Order
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Summary :
ALJ's decision has no preclusive effect where there had not been a final DOL decision within 180 days of the filing of the administrative complaint. The Plaintiff filed his federal court action within 10 days of the ALJ's decision. Defendants did not show at this stage of the proceedings that the doctrines of laches or election of remedies require dismissal of this case.

Where the Plaintiff did not allege that he had an employment relationship with the Employer-Defendant's law firm, Godfrey & Kahn, he could not sustain a claim against the law firm under § 1514A.

Court denies Defendant's motion to dismiss based on argument that statements of counsel do not, as a matter of law, constitute an adverse employment action. Court defers consideration of whether litigation privilege applies. Claim that Defendant retaliated by filing a frivilous counterclaim in state court was not timely raised.
Murray v. UBS Securities, LLC , No. 14-cv-927 (S.D.N.Y. Feb. 24, 2015)
Opinion and Order
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Summary :
Because the statutory waiting periods barred suit on Plaintiff's Sarbanes-Oxley and CFPA claims at the time of his earlier Dodd-Frank suit, the current claims are not impermissibly duplicative.
Duffy v. United States , No. 14-288T (Fed.Cl. Feb. 13, 2015) (2015 WL 648411; 2015 U.S. Claims LEXIS 118) (related to ALJ No. 2007-SOX-63)
Opinion
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Summary :
Proceeds of settlement of SOX case taxable as ordinary income and not capital gains.
Westawski v. Merck & Co., Inc. , No. 14-3239 (E.D.Pa. Feb. 4, 2015) (2015 WL 463949; 2015 U.S. Dist. LEXIS 13363)
Opinion
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Summary :
"Because the facts as alleged in the Complaint show that Merck, through its employees, was aware of the Plaintiff's protected activity, her Sarbanes-Oxley claim is 'sufficient to cross the federal court's threshold.' Skinner v. Switzer , 131 S. Ct. at 1297. Thus, the Defendant's motion to dismiss the Sarbanes-Oxley claim in Count I is denied." Slip op. at 13 (footnote omitted).
Jones v. Southpeak Interactive Corp. of Delaware , No. 13-2399 (4th Cir. Jan. 26, 2015) (2015 WL 309626; 2015 U.S. App. LEXIS 1114)
Opinion
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Summary :
SOX RETALIATORY DISCHARGE SUIT IN FEDERAL COURT IS GOVERNED BY FOUR YEAR STATUTE OF LIMITATIONS UNDER 28 U.S.C. § 1658(a), AND NOT THE TWO YEAR STATUTE OF LIMITATIONS UNDER 28 U.S.C. § 1658(b)(1)

In Jones v. Southpeak Interactive Corp. of Delaware , No. 13-2399 (4th Cir. Jan. 26, 2015) (2015 WL 309626; 2015 U.S. App. LEXIS 1114), after more than 180 days passed without a final order from OSHA on her SOX complaint, the Appellee notified OSHA that she was electing to file a federal lawsuit. The Appellee waited nearly two years to file the federal suit, which was a little less than three years after her termination from employment. The district court held that the SOX claim was timely because it was commenced within the four-year statute of limitations under 28 U.S.C. § 1658(a). On appeal, the Appellants argued that the two-year limitations period set forth in § 1658(b)(1) applied. The Fourth Circuit rejected the Appellants' argument, finding that the SOX complaint alleged, not fraud as covered by § 1658(b), but retaliatory discharge. In a SOX retaliatory discharge case, the whistleblower is not required to prove that the employer's conduct was, in fact, a legally actionable fraud. The court recognized that the Appellee's complaint approximated the basic elements of a section 10(b) securities fraud claim, but noted that the retaliation complainant is not under an obligation to establish scienter. The court therefore held that Section 1658(a) controls, and that because the Appellee brought her suit within that Section 1658(a)'s four-year window, her claim was timely.

EXHAUSTION OF ADMINISTRATIVE REMEDIES; WHERE OSHA COMPLAINT PUT INDIVIDUAL DEFENDANTS ON NOTICE THAT IT WAS BEING ALLEGED THAT THEY HAD VIOLATED SOX, EXHAUSTION REQUIREMENT WAS MET EVEN THOUGH THE OSHA COMPLAINT DID NOT CLEARLY NAME THE INDIVIDUALS AS RESPONDENTS IN THE ADMINISTRATIVE PROCEEDING

In Jones v. Southpeak Interactive Corp. of Delaware , No. 13-2399 (4th Cir. Jan. 26, 2015) (2015 WL 309626; 2015 U.S. App. LEXIS 1114), the Appellee's original SOX complaint filed with OSHA, Southpeak Interactive was named as the respondent. The complaint mentioned the company's chief executive and the complaint's chairman as persons who were alleged to have violated the Act, but did not specifically identify them as respondents. After OSHA had not issued a final decision within 180 days of the complaint, and the Appellee filed a complaint in federal district court, the chief executive and the chairman were named as defendants. The Appellants argued that the Appellee had not exhausted administrative remedies in regard to the named individuals. The Fourth Circuit held that the administrative complaint satisfied the exhaustion requirement. The record did not suggest that the Appellee was trying to circumvent the SOX exhaustion requirement. The complaint filed with OSHA was substantially similar to the complaint filed in district court, and the alleged harm of a retaliatory discharge was identical. The OSHA complaint plainly identified the individuals as persons who allegedly violated the Act who the complaint was being filed against. The court found that nothing more precise was required for the form of the OSHA complaint, and that OSHA's subsequent treatment of the complaint could not take away the Appellee's opportunity to seek recourse. The record showed no doubt that the individuals were well aware of the allegations against them and that it had been alleged that they personally had violated the Act. The court found that it would not have been surprising, therefore, when the Appellee named them in the instant civil action.

DAMAGES FOR EMOTIONAL DISTRESS ARE AVAILABLE UNDER THE SOX WHISTLEBLOWER PROVISION; DISTRICT COURT HAS DISCRETION TO REDUCE JURY'S AWARD BASED ON COMPARISON TO AWARDS IN COMPARABLE CASES

In Jones v. Southpeak Interactive Corp. of Delaware , No. 13-2399 (4th Cir. Jan. 26, 2015) (2015 WL 309626; 2015 U.S. App. LEXIS 1114), the Appellants argued that damages for emotional distress are not permissible under the whistleblower provisions of the Sarbanes-Oxley Act. The Fourth Circuit rejected this argument because 18 U.S.C. § 1514A(c)(1) expressly entitles a prevailing employee to "all relief necessary to make [her] whole." In this regard, the Fourth Circuit joined the Fifth Circuit and the Tenth Circuit in holding that emotional distress damages are available under the statute. Halliburton, Inc. v. Admin. Review Bd. , 771 F.3d 254, 266 (5th Cir. 2014); Lockheed Martin Corp. v. Admin. Review Bd. , 717 F.3d 1121, 1138 (10th Cir. 2013). The court also afforded deference to the Administrative Review Board's history of upholding non-pecuniary compensatory damages in Sarbanes-Oxley Act whistleblower cases, citing Menendez v. Halliburton, Inc. , ARB Nos. 12-026, ALJ No. 2007-SOX-5 (ARB Mar. 15, 2013) (reissued with corrected caption Mar. 20, 2013) (2013 WL 1282255, at *11), aff'd sub. nom. . Halliburton, Inc. v. Admin. Review Bd. , 771 F.3d 254, 266 (5th Cir. 2014). The court found that the district court had not abused its discretion when reducing a jury's award for emotional distress to $100,000 when comparing the jury's damages assessment to awards in comparable cases.

[Editor's note: The court cited the ARB's Menendez decision using ARB Case Nos. 09-002 and 09-003 in the case citation. However, those case numbers were an error on the caption of the ARB's decision as originally issued on March 15, 2013. The ARB reissued the decision on March 20, 2013, with a correction to show the ARB Case No. as 12-026.]

ALLOCATION OF ATTORNEYS' FEES; JOINT AND SEVERAL LIABILITY

In Jones v. Southpeak Interactive Corp. of Delaware , No. 13-2399 (4th Cir. Jan. 26, 2015) (2015 WL 309626; 2015 U.S. App. LEXIS 1114), the Defendants objected to the district court's joint-and-several allocation of attorneys' fees among the defendants. The 4th Circuit found that the district court had not abused its discretion, noting that the district court enjoys considerable latitude in deciding how it will allocate attorneys' fees. The court noted that the7th Circuit and the DC Circuit have identified several situations in which it may be appropriate to hold all defendants jointly and severally liable for attorneys' fees, and that a defendant's ability to pay the award may be relevant. In the instant case, the Defendants requested that the Court of Appeals redistribute the fee award in proportion to each appellant's share of the damages awarded. The court denied the request, writing:

We have never required a defendant's share of a fee award to equal his share of damages, nor have other circuits. See, e.g., Corder v. Gates , 947 F.2d 374, 383 (9th Cir. 1991) ("We have never mandated apportionment based on each defendant's relative liability under a jury's verdict."). Such a requirement would take away the discretionary power that district courts have traditionally enjoyed in this area.

Slip op. at 41.
Bogenschneider v. Kimberly Clark Global Sales, LLC , No. 14-cv-743 (W.D. Wis. Jan. 14, 2015)(case below 2013-SOX-28) (2015 U.S. Dist. LEXIS 4383)
Order
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Summary :
Denial of Plaintiff's motion for default judgment for Defendant's failure to timely respond to complaint where no prejudice shown.

Surface Transportation Assistance Act

Carr v. Thompson , No. 15-1769 (D.S.C. Oct. 21, 2015)
Order [adopting Magistrate's Report and Recommendations]
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Summary :
Order adopting Magistrate Judge's report and recommendation that STAA claim be dismissed.
Carr v. Thompson , No. 15-1769 (D.S.C. Oct. 1, 2015) (2015 U.S. Dist. LEXIS 143038)
[Magistrate's] Report and Recommendation
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Summary :
Failure to exhaust administrative remedies under 49 U.S.C. § 31105.
Marinkovic v. Vasquez , No. 14-3069 (D. Md. June 16, 2015) (2015 U.S. Dist. LEXIS 77463)
Memorandum Opinion
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Summary :
[STAA Digest VII B 7]
VEHICLE RATING OR WEIGHT

In Marinkovic v. Vasquez , No. 14-3069 (D. Md. June 16, 2015) (2015 U.S. Dist. LEXIS 77463), the Plaintiff alleged that the Respondent directed him to drive an ambulance, which he believed had a carbon monoxide leak. The court found that the Respondent's ambulance did not fit within the STAA, 49 U.S.C. § 31101(1) defintion of "commercial motor vehicle." The court found that the ambulance only weighed 9,400 pounds, only seated approximately six individuals, and did not transport any hazardous material nor a sufficient quantity of hazardous materials to require placarding under the statute. Thus, the Plaintiff could not, as a matter of law, assert a viable claim under the STAA.
Peacock v. Suffolk Bus Corp. , No. 14-4479 (E.D.N.Y. Apr. 23, 2015) (100 F. Supp. 3d 225; 2015 U.S. Dist. LEXIS 53539)
Memorandum Opinion
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Summary :
[STAA Whistleblower Digest XIII B]
STAA DOES NOT CREATE A PRIVATE RIGHT OF ACTION

In Peacock v. Suffolk Bus Corp. , No. 14-4479 (E.D.N.Y. Apr. 23, 2015) (100 F. Supp. 3d 225; 2015 U.S. Dist. LEXIS 53539), the court granted the Defendant's FRCP 12(b)(6) motion to dismiss the Plaintiff's STAA, 49 U.S.C. § 31105, on the ground that the STAA expressly sets forth a comprehensive administrative scheme for the resolution of claims of retaliation and does not create a private right of action.