Federal Court Whistleblower Decisions - 2016

Affordable Care Act

  • Bedminster v. Gurlea , No. 15-1 (D. V.I. Mar. 18, 2016) (2016 U.S. Dist. LEXIS 35088; 2016 WL 1089247)
    Memorandum Opinion
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    Summary :

    PROTECTED ACTIVITY; REFERENCE TO "THIS TITLE" IN SECTION 218c OF PPACA REFERS TO TITLE I OF PPACA, AND NOT TO TITLE 29 OF THE US CODE; MERE ALLEGATION OF FILING OF GRIEVANCES IS NOT SUFFICIENT TO WITHSTAND FRCP 12(b)(6) MOTION TO DISMISS AS IT DOES NOT ALLEGE FACTS SHOWING EXERCISE OF RIGHTS UNDER PPACA; LEAVE TO AMEND COMPLAINT

    In Bedminster v. Gurlea , No. 15-1 (D. V.I. Mar. 18, 2016) (2016 U.S. Dist. LEXIS 35088; 2016 WL 1089247), the Plaintiff was the union representative for Heavy Materials LLC, the named business-Defendant. The Plaintiff alleged that Heavy Materials retaliated against him for filing grievances in violation of several laws, including the Fair Labor Standards Act, 29 U.S.C. § 215, and the Patient Protection and Affordable Care Act, 29 U.S.C. § 218c. The court granted the Defendants motion to dismiss under FRCP 12(b)(6) for failure to state a claim upon which relief can be granted. In regard to the § 215 claim, the court found that the Plaintiff failed to decribe the subject matter of the grievances thereby preventing the court from determining whether they related to the subject matter of the Fair Labor Standards Act. In regard to the § 218c claim, the Defendant argued that the Plaintiff failed to plead facts showing that his actions were in any way related to a violation of PPACA, and that § 218c’s reference to “this title” is a reference to Title I of the PPACA, not Title 29 of the United States Code. The court determined that it agreed with other courts that had held that the reference was to Title I of PPACA and not Title 29 of the USC, and that it was implausible Congress intended in PPACA to include an anti-relaliation provision covering the FLSA and other labor laws, as opposed to protecting persons exercising their rights under Title I of PPACA. The court found that the complaint did not allege any facts indicating that the Plaintiff was retaliated against for engaging in actions related to rights created under the PPACA. The Plaintiff was granted leave to amend his complaint.

Aviation Investment and Reform Act

  • Watson v. Air Methods Corp. , No. 15-1900 (8th Cir. Aug. 24, 2016) (per curiam) (2016 U.S. App. LEXIS 15546; 2016 WL 4446106)
    Opinion affirming district court
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    Summary :

    In its 2016 opinion, the Eighth Circuit affirmed the District Court’s holding that Watson’s state claim was preempted by the ADA and AIR21. The Eighth Circuit later reheard the case en banc, and held “that the [Airline Deregulation Act ("ADA"), 49 U.S.C. § 41713(b)(1)] does not expressly pre-empt Watson’s state-law wrongful-discharge claims involving post hoc reporting of alleged violations of air-safety regulations.” Watson v. Air Methods Corp. , 870 F.3d 812 (8th Cir. Aug 31, 2017) (en banc), slip op. at 2 (overrules Botz v. Omni Air International , 286 F.3d 488 (8th Cir. 2002), in relevant part).

  • Mawhinney v. American Airlines , No. 15-cv-259 (S.D. Cal. Aug. 23, 2016) (2016 U.S. Dist. LEXIS 123386) (case below ARB No. 14-060, ALJ No. 2012-AIR-17)
    Order Denying Motion to Enforce Judgment or, in the Alternative, Compel Arbitration
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    Summary :

    In Mawhinney v. American Airlines , No. 15-cv-259 (S.D. Cal. Aug. 23, 2016) (2016 U.S. Dist. LEXIS 123386) (case below ARB No. 14-060, ALJ No. 2012-AIR-17), the ARB had reversed the ALJ’s dismissal of Mawhinney’s AIR21 complaint, finding that the ALJ did not have authority to dismiss merely based on the parties’ initiation of arbitration proceedings under an earlier settlement agreement. The ARB remanded the case to the ALJ for further proceedings. American filed a motion to enforce judgment in the Southern District of California “because the claims in the ALJ Action were already adjudicated in arbitration, and this Court confirmed the arbitration award, Mawhinney’s claims in the ALJ Action are barred by res judicata and collateral estoppel. Accordingly, American urges the Court to enjoin the ALJ Action from proceeding pursuant to the All Writs Act, or, alternatively, to compel the parties to arbitrate the claims in the ALJ Action.” The court denied the motion.

  • Cont’l Airlines, Inc. v. Admin. Review Bd., USDOL , No. 15-60012 (5th Cir. Jan. 7, 2016) (unpublished) (2016 U.S. App. LEXIS 324; 2016 WL 97461)(case below ARB No. 10-026, ALJ No. 2008-AIR-00009)
    Opinion
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    Summary :

    PROTECTED ACTIVITY; REPORT OF TURBULENCE ON PREVIOUS FLIGHT NOT LOGGED BY PREVIOUS PILOT; CHALLENGE OF REFUSAL TO CONDUCT INSPECTION

    In Cont’l Airlines, Inc. v. Admin. Review Bd., USDOL , No. 15-60012 (5th Cir. Jan. 7, 2016) (unpublished) (2016 U.S. App. LEXIS 324; 2016 WL 97461)(case below ARB No. 10-026, ALJ No. 2008-AIR-00009), the Fifth Circuit found that substantial evidence supported the ARB’s decision that “Continental [the Petitioner] retaliated against Luder [the AIR21 Complainant] when it suspended him for logging turbulence on an earlier flight reported to him by a member of the previous flight crew and triggering an inspection which resulted in a delayed flight.” Slip op. at 1-2.

    The court noted: “To establish protected conduct, the employee must show that he reported a violation of federal safety law. Specifically, activity is protected ’because the employee provided…information relating to any violation or alleged violation of any order, regulation, or standard of the [FAA].’ Moreover, the employee’s belief that a violation of federal law occurred must be reasonable.” Slip op. at 5 (footnotes omitted).

    The court found that substantial evidence supported the ARB finding that Luder reported an alleged violation of federal law. Because he believed that the airplane went through severe turbulence, Luder’s actions implicated federal regulations in two ways. First, by logging the turbulence, he effectively reported a violation by the previous pilot for failing to log his encounter with severe turbulence. Second, by challenging Continental’s refusal to conduct the inspection and refusing to acquiesce in Continental’s objection to an inspection he reasonably believed was required, Luder reported that Continental tried to cause him to violate FAA regulations.

    The court also found that Luder’s belief that the airplane encountered severe turbulence was reasonable. A crewmember who was on the first flight had described winds so strong they nearly tore the wings off, sent a person to the medical clinic, and appeared on the radar as pink—the greatest degree of turbulence. Defendant was found to have known that Luder logged the severe turbulence and requested an inspection, as the logbook entry and triggered inspection by Luder was the subject of a heated telephone conversation between him and Continental officials.

    ADVERSE EMPLOYMENT ACTION; SUSPENSION WITHOUT PAY

    In Cont’l Airlines, Inc. v. Admin. Review Bd., USDOL , No. 15-60012 (5th Cir. Jan. 7, 2016) (unpublished) (2016 U.S. App. LEXIS 324; 2016 WL 97461)(case below ARB No. 10-026, ALJ No. 2008-AIR-00009), The court stated that, because suspension without pay is a way to dissuade employees from engaging in protected conduct, the Defendant’s suspension of the Complainant for two weeks without pay was an adverse employment action.

    CONTRIBUTING FACTOR; COMPLAINANT’S LOGBOOK ENTRY CALLING FOR INSPECTION FOUND TO HAVE CONTRIBUTED TO DEFENDANT’S DECISION TO SUSPEND THE COMPLAINANT

    In Cont’l Airlines, Inc. v. Admin. Review Bd., USDOL , No. 15-60012 (5th Cir. Jan. 7, 2016) (unpublished) (2016 U.S. App. LEXIS 324; 2016 WL 97461)(case below ARB No. 10-026, ALJ No. 2008-AIR-00009), the Fifth Circuit found that substantial evidence supported the ARB’s decision that “Continental [the Petitioner] retaliated against Luder [the AIR21 Complainant] when it suspended him for logging turbulence on an earlier flight reported to him by a member of the previous flight crew and triggering an inspection which resulted in a delayed flight.” Slip op. at 1-2. The court found that Luder’s protected conduct contributed to the adverse employment action, as Luder’s logbook entry affected Continental’s decision to suspend him. In its letter advising Luder of his sanctions, Continental acknowledged that he “requested an aircraft inspection” and that it punished him for “calling for the inspection,” and as such, his “actions were unprofessional.”

    PRETEXT; PILOT’S IMPOLITE CONVERSATION AND FAILURE TO FOLLOW PROCEDURES REJECTED AS JUSTIFICATION FOR SUSPENSION WHERE PILOT HAD AUTHORITY UNDER 14 C.F.R. § 91.3 TO DECIDE HAT THE PLANE WAS UNSAFE TO OPERATE

    In Cont’l Airlines, Inc. v. Admin. Review Bd., USDOL , No. 15-60012 (5th Cir. Jan. 7, 2016) (unpublished) (2016 U.S. App. LEXIS 324; 2016 WL 97461)(case below ARB No. 10-026, ALJ No. 2008-AIR-00009), the Fifth Circuit found that substantial evidence supported the ARB’s decision that “Continental [the Petitioner] retaliated against Luder [the AIR21 Complainant] when it suspended him for logging turbulence on an earlier flight reported to him by a member of the previous flight crew and triggering an inspection which resulted in a delayed flight.” Slip op. at 1-2. The court found that substantial evidence supported the ARB’s finding that the alternative reasons presented by the Defendant were pretextual. The court rejected the Defendant’s argument that Luder’s impolite conversation and failure to follow procedures justified his suspension. Instead, the court found that Luder had the authority to decide that the plane was unsafe to operate under 14 C.F.R. § 91.3, which provides that “[t]he pilot in command of an aircraft is directly responsible for, and is the final authority as to, the operation of that aircraft.” Similarly, Luder followed Continental procedures for reporting his concern for the safety of the aircraft. Therefore, the ALJ was entitled to find that the real reason for Luder’s refusal to agree with them that an inspection was not required under Continental’s flight operations manual.

Clean Air Act

  • Perez v. Idaho Falls Sch. Dist. No. 91 , No. 15-cv-19 (N.D. Idaho Mar. 15, 2016) (2016 U.S. Dist. LEXIS 34513) (case below ALJ No. 2015-CAA-00001)
    Memorandum Decision and Order
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    Summary :

    DISTRICT COURT DECLINES TO ISSUE WRIT OF MANDAMUS COMPELLING DOL TO DISMISS PENDING CAA COMPLAINT WHERE SECRETARY OF LABOR HAD FILED AN AHERA COMPLAINT IN DISTRICT COURT INVOLVING THE SAME FACTS AND SEEKING THE SAME REMEDY

    In Perez v. Idaho Falls Sch. Dist. No. 91 , No. 15-cv-19 (N.D. Idaho Mar. 15, 2016) (2016 U.S. Dist. LEXIS 34513) (case below ALJ No. 2015-CAA-00001), the Secretary of Labor filed a complaint in Federal District Court under the Asbestos Hazard Emergency Response Act of 1986 (“AHERA”), and the Defendant filed a petition for writ of mandamus alleging that the Secretary had commenced two actions in different federal venues alleging the same facts, seeking the same remedy, and promoting the same public purpose, i.e., a CAA retaliation action, and the present AHERA action. The Defendant sought a writ dismissing the CAA proceeding before DOL. The court dismissed the petition on the grounds that the CAA grants exclusive jurisdiction over whistleblower claims to the DOL and the Court of Appeals, and because the Defendant had not exhausted its administrative remedies. The court found that although it has jurisdiction under 42 U.S.C. § 7622(f) to compel a nondiscretionary duty, there is no nondiscretionary duty of an ALJ to dismiss in the instant circumstance. Moreover, the court found that even if there was a nondiscretionary duty, an adequate remedy exists in the form of an appeal of the ALJ’s decision to the ARB, and then to the Ninth Circuit. The court rejected the Defendant’s concern about being subject to double recovery because the CAA and AHERA actions could eventually be consolidated for review in the Ninth Circuit.

Consumer Financial Protection Act

  • Lamb v. Rockwell Automation, Inc , 15-CV-1415 (E.D. Wis. Aug. 12, 2016) (2016 U.S. Dist. LEXIS 106976; 2016 WL 42732102016) (case below 2014-SOX-00029)
    Order
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    Summary :

    CONSUMER FINANCIAL PROTECTION ACT COUNT DISMISSED WHERE PLAINTIFF DID NOT CONTEST DEFENDANT’S MOTION TO DISMISS BASED ON FAILURE TO ALLEGE PRIMA FACIE CASE

    In Lamb v. Rockwell Automation, Inc. , 15-CV-1415 (E.D. Wis. Aug. 12, 2016) (2016 U.S. Dist. LEXIS 106976; 2016 WL 42732102016) (case below 2014-SOX-00029), Defendant moved to dismiss the Consumer Financial Protection Act count of Plaintiff’s complaint, noting that it was not clear which sections of that law on which Plaintiff relied, and that Plaintiff failed to allege the prima facie elements of a Section 1057 claim. Plaintiff made no attempt to oppose Defendant’s argument, the court therefore dismissed that count.

  • Veard v. F&M Bank , No. 15-cv-498 (M.D. Tn. Feb. 18, 2016) (2016 U.S. Dist. LEXIS 19835; 2016 WL 645309)
    Memorandum
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    Summary :

    PROTECTED ACTIVITY; MERELY ASKING A QUESTION ABOUT AN ACTIVITY GOVERNED BY MORTGAGE LAWS IS NOT PROTECTED ACTIVITY

    PROTECTED ACTIVITY; SUBJECTIVE AND OBJECTIVE STANDARDS; MERE STRONG DISAGREEMENT WITH SUPERIORS ABOUT CREDITWORTHINESS OF LOAN DOES NOT MAKE BELIEF OF CFPA VIOLATION AN OBJECTIVELY REASONABLE BELIEF

    In Veard v. F&M Bank , No. 15-cv-498 (M.D. Tn. Feb. 18, 2016) (2016 U.S. Dist. LEXIS 19835; 2016 WL 645309), the Plaintiff alleged that the Defendant improperly discharged him in violation of the Consumer Financial Protection Act in retaliation for complaining about illegal activity in the bank’s mortgage business. The court granted summary judgment dismissing the the CFPA claim. First, the court found that the Plaintiff had not engaged in protected activity under the CFPA when he merely asked a question about an activity governed by mortgage laws, rather a complaint about specific behavior. The Plaintiff had been told that the Defendant seeks to comply with those laws. Second, the court found that the Plaintiff had not engaged in protected activity under the CFPA when disagreed with a decision to deny a loan. The court stated that the Plaintiff was required to show that he believed that the Defendant’s conduct violated the CFPA and that a reasonable person in his position would have believed that the conduct constituted such a violation -- that is, the Plaintiff must satisfy both a subjective and objective standard. The court cited SOX caselaw by analogy. Here, the court found that the Plaintiff met the subjective standard, but not the objective standard. The court found that the Plaintiff had made no showing that the Defendant was required to grant the loan and did not explain how it was illegal for the loan to be declined, even if the reason turned out to be based on a misunderstanding of tax law or policy. Mere disagreement with supervisors does not make their decisionmaking "illegal" or transform an emphatically expressed subjective belief into an objectively reasonable one.

    CLEAR AND CONVINCING EVIDENCE; PLAINTIFF’S INSUBORDINATION

    In Veard v. F&M Bank , No. 15-cv-498 (M.D. Tn. Feb. 18, 2016) (2016 U.S. Dist. LEXIS 19835; 2016 WL 645309), the Plaintiff alleged that the Defendant improperly discharged him in violation of the Consumer Financial Protection Act in retaliation for complaining about illegal activity in the bank’s mortgage business. The court granted summary judgment dismissing the the CFPA claim, finding that the Defendant had offered clear and convincing evidence that it would have terminated the Plaintiff’s employment in the absence of any protected activity. Specifically, the court found that the record showed that the Plaintiff had been insubordinate, and that such insubordination was relied on in making the decision to terminate the Plaintiff’s employment.

Energy Reorganization Act

  • Sanders v. Energy Northwest , No. 14-35368 (9th Cir. Feb. 12, 2016) (opinion) (2016 U.S. App. LEXIS 2467; 2016 WL 560809) (case below D.C. No. 2:12-cv-00580-TOR)
    Opinion
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    Summary :

    [Nuclear & Environmental Whistleblower Digest XII C 5]
    PROTECTED ACTIVITY UNDER THE ERA; OBJECTION TO SECURITY LEVEL DESIGNATION FOUND NOT TO CONSTITUTE PROTECTED ACTIVITY WHERE THE COMPLAINANT WAS NOT RAISING A FIRST PERSON COMPLAINT, RESPONDENT ALREADY KNEW ABOUT PROBLEM AND WAS REMEDYING IT; THERE WAS LITTLE NEXUS TO AN ONGOING SAFETY CONCERN; AND COMPLAINANT HAD MERELY RAISED A SINGLE DIFFERENCE OF OPINION ABOUT THE RATING

    In Sanders v. Energy Northwest , No. 14-35368 (9th Cir. Feb. 12, 2016) (opinion) (2016 U.S. App. LEXIS 2467; 2016 WL 560809) (case below D.C. No. 2:12-cv-00580-TOR) , the Ninth Circuit affirmed the district court’s summary judgment, holding that the Plaintiff did not engage in protected activity when he objected to the security level designation given to an internal “condition report” of a safety procedure violation. In so holding, the court rejected Plaintiff’s contention that this objection constituted protected activity under 42 U.S.C. § 5851.

    According to the relevant factual findings, a “condition report” was a report generated by employees when safety procedures may have been violated. Once a condition report was generated, a condition review group assigned the report a severity level in decreasing order of severity: “Alpha,” “Bravo,” “Charlie,” or “Delta.” Plaintiff alleged that he had disagreed with a decision to assign a condition report the “Charlie” designation, and that the condition report should have been designated as “Bravo.” Sanders verbally expressed this disagreement to a plant manager, stating “If you guys want to let it go as a Charlie, I’ll let it go as a Charlie, but I’m not in agreement.”

    In consideration of the parties’ arguments, the court discussed Bechtel, a case in which an employee carpenter disagreed with his foreman about the safety procedures for measuring the amount of radioactive contamination of the carpentry tools. Bechtel Constr. Co. v. Sec’y of Labor , 50 F.3d 926, 932-33 (11th Cir. 1995). In that case, the carpenter raised his concerns initially with his foreman, and then with the foreman’s supervisor. The Eleventh Circuit held that the carpenter’s conduct qualified as protected activity, noting that he “did not merely make general inquiries regarding safety but, rather, he raised particular, repeated concerns about safety procedures for handling contaminated tools.” The Eleventh Circuit also noted that “questioning one’s supervisor’s instructions on safety procedures [is] ’tantamount to a complaint.’” The Eleventh Circuit also stated that “Section 5851 does not protect every act that an employee commits under the auspices of safety,” and that “[w]histleblowing must occur through prescribed channels.”

    The court also considered Stone & Webster Eng’g Corp. v. Herman , 115 F.3d 1568, 1574 (11th Cir. 1997), in which the Plaintiff, an employee ironworker, was responsible for holding a weekly safety meeting. Ironworkers had recently been assigned a new responsibility, ensuring fire safety. At the weekly safety meeting, the ironworkers complained that this procedure was unsafe. The Plaintiff raised the safety issue with the company’s fire marshal and also filed a complaint with the Nuclear Regulatory Commission. The Eleventh Circuit concluded, “If an employee talks about safety to a plant fire official, an employer and an industry regulator, he or she acts squarely within the zone of conduct that Congress marked out under 42 U.S.C. § 5851(a)(1).”

    In this case, Plaintiff maintained that his difference in opinion about the “Charlie” designation of a condition report was an objection to a specific practice, policy, or occurrence that he reasonably believed was a nuclear safety issue, similar to the employees’ complaints in Bechtel and Stone & Webster . The court, however, found Sanders’ conduct to be distinguishable. Unlike the carpenter and the ironworker employees who raised first-hand safety concerns with their supervisors, Sanders had no independent knowledge of possible safety violations prior to the creation of the internal condition reports, nor did he generate these condition reports. The Defendant was already aware of the potential safety violations, and its internal process for remediation was underway.

    Furthermore, the court found no suggestion in the record that because condition reports were labeled a “Bravo” or a “Charlie,” they would not be remedied in due course. The court also did not find any suggestion of any safety concern that was overlooked, neglected, or concealed by management. Instead, the court found that Sanders simply expressed a different opinion from a co-manager, then “let it go.”

    The court concluded that Sanders’ single expression of a difference of opinion about the “Charlie” designation of one existing internal condition report lacked a sufficient nexus to a concrete, ongoing safety concern. The court therefore decided that Sanders’ conduct fell outside the scope of the Act’s protection. Therefore, the court affirmed the district court’s grant of summary judgment to Energy Northwest.

    Dissenting, Judge Graber wrote that the majority wrongly narrowed the scope of the Energy Reorganization Act by rejecting the whistleblower claim on the basis that the safety problems were not overlooked, neglected, or concealed by management and were not concrete and ongoing issues.

Fair Labor Standards Act

  • Phelps v. City of Parma , No. 14-cv-00085 (D. Idaho Mar. 31, 2016) (2016 U.S. Dist. LEXIS 44079; 2016 WL 1275593)
    Memorandum Decision and Order
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    Summary :

    PROTECTED ACTIVITY UNDER THE RETALIATION PROTECTION PROVISION OF THE FAIR LABOR STANDARDS ACT; APPLICATION OF THE “FAIR NOTICE” TEST OF KASTEN v. SAINT-GOBAIN PERFORMANCE PLASTICS CORP.

    In Phelps v. City of Parma , No. 14-cv-00085 (D. Idaho Mar. 31, 2016) (2016 U.S. Dist. LEXIS 44079; 2016 WL 1275593), the Plaintiff was a city clerk who claimed that the former Mayor and certain City Council members retaliated against her in violation of the FLSA, 29 U.S.C. § 215(a)(3), for notifying the former Mayor that the manner in which the police department was being paid violated the FLSA in several respects. The Defendants filed for summary judgment on the ground that the Plaintiff did not engage in protected activity under the FLSA because she never had to “step outside the role” of her employment and never “[took] a position adverse to the employer.” Slip op. at 18 (citing Hagan v. Echostar Satellite, L.L.C. , 529 F.3d 617, 627 (5th Cir. 2008). The court noted that “[s]everal circuits have held an employee does not engage in protected activity under the FLSA unless that employee somehow steps outside his normal job role and takes an action adverse to the employer.” Id . at 19 (citations omitted). The court found, however, that after the briefing on Defendants’ Motion for Summary Judgment was complete, the Ninth Circuit in Rosenfield v. GlobalTranz Enterprises, Inc. , 811 F.3d 282 (9th Cir. 2015) “addressed whether the ‘stepping outside role’ requirement of Hagan, McKenzie , and other circuit cases applies in this circuit.” Id . at 22. The Ninth Circuit did not decide whether to adopt that requirement, but instead applied the “fair notice” rule of Kasten v. Saint-Gobain Performance Plastics Corp. , 563 U.S. 1 (2011), stating “‘To fall within the scope of the antiretaliation provision, a complaint must be sufficiently clear and detailed for a reasonable employer to understand it, in light of both content and context, as an assertion of rights protected by the statute and a call for their protection.’” Id . at 23-24, quoting Rosenfield at 286, 287, citing Kasten , 563 U.S. at 14. Applying that precedent, and reviewing the record, the district court concluded:

    Ms. Phelps’ deposition testimony, notes and actions illustrate she was attempting to protect the City and to ensure its compliance with the FLSA, and was not asserting rights protected by the FLSA on her own or others’ behalf. Under such circumstances, Defendants did not have fair notice that Ms. Phelps was making a complaint that could subject them to a later claim of retaliation. Rosenfield , 811 F.3d at 288; see also McKenzie , 94 F.3d at 1487 …. Ms. Phelps FLSA [complaint] accordingly fails to establish the first element of a prima facie FLSA retaliation claim, that she engaged in a protected activity pursuant to § 215(a)(3).

    Id . at 28-29 (footnote omitted).

Federal Railroad Safety Act

  • Armstrong v. BNSF Ry. Co. , No. 12-cv-7962 (N.D. Ill. Dec. 15, 2016) (2016 U.S. Dist. LEXIS 173199)
    Memorandum Opinion and Order
    PDF
    Summary :

    FRSA FRAMEWORK FOUND NOT TO CONSTITUTE AN EXCEPTION TO FRCP 54(d)(1), WHICH ALLOWS COSTS FOR A PREVAILING PARTY; THUS A DISTRICT COURT MAY AWARD COSTS TO DEFENDANT IN AN FRSA RETALIATION CASE

    In Armstrong v. BNSF Ry. Co. , No. 12-cv-7962 (N.D. Ill. Dec. 15, 2016) (2016 U.S. Dist. LEXIS 173199), a jury returned a verdict in favor of the Defendant on the Plaintiff’s FRSA retaliation claim, and the Clerk of Court entered a judgment against the Plaintiff directing that the Defendant shall recover costs. Plaintiff appealed, and moved the district court to vacate the order of costs. The Defendant filed a bill of costs in the amount of $31,054.23. The Plaintiff argued, inter alia , that the Defendant’s bill of costs be vacated or stayed because the FRSA creates a statutory exception to Rule 54(d)(1) of the Federal Rules of Civil Procedure.

    Rule 54(d)(1) provides that “[u]nless a federal statute, these rules, or a court order provides otherwise, costs—other than attorney’s fees—should be allowed to the prevailing party.” The court noted:

       The FRSA provides that “an employee prevailing in [an enforcement action] shall be entitled to all relief necessary to make the employee whole.” 49 U.S.C. § 20109(e)(1) (emphasis added). Such relief includes, inter alia , “compensatory damages, including compensation for any special damages sustained as a result of the discrimination, including litigation costs , expert witness fees, and reasonable attorney fees.” Id . § 20109(e)(2)(C) (emphasis added). Section 20109 is silent, however, on a prevailing employer ’s ability to cover costs.

       The FRSA further states that enforcement actions shall be governed under the Department of Labor complaint procedure set forth in 49 U.S.C. § 42121(b). Pursuant to that section, if the Secretary of Labor determines that an FRSA violation has occurred, then “at the request of the complainant ,” the Secretary shall assess against the violator “a sum equal to the aggregate amount of all costs and expenses (including attorneys’ and expert witness fees) reasonably incurred, as determined by the Secretary of Labor, by the complainant for, or in connection with,” the bringing of the complaint. Id . § 42121(b)(3)(B)(iii) (emphasis added). Once again, the statute omits any discussion of fees due to a prevailing employer , with one exception: if the Secretary finds that a complaint “is frivolous or has been brought in bad faith,” the Secretary may award the employer “a reasonable attorney’s fee not exceeding $1,000.” Id . § 42121(b)(3)(C).

    Slip op. at 3-4.

    The Plaintiff argued that this statutory framework constitutes an exception to Rule 54(d)(1). The court disagreed based on the Supreme Court’s decision in Marx v. Gen. Revenue Corp. , 133 S. Ct. 1166 (2013). The court found that the FRSA only confirms “the background rule,” and that "[t]he FRSA’s silence regarding costs in non-frivolous cases is not ‘contrary’ to Rule 54(d)(1)’s presumption, nor does it limit the Court’s discretion in that area.” Id . at 7. The court found, therefore, that it may award costs to prevailing defendants in FRSA cases.

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  • Koziara v. BNSF Railway Co. , No. 16-1577 (7th Cir. Oct. 31, 2016) (2016 U.S. App. LEXIS 19528; 2016 WL 6407246)
    Opinion
    PDF
    Summary : In Koziara v. BNSF Railway Co. , 840 F.3d 873, No. 16-1577 (7th Cir. Oct. 31, 2016), the Seventh Circuit reversed a jury verdict in favor of the Plaintiff (Koziara) on his Federal Rail Safety Act (FRSA) retaliation claim. The court focused largely on whether the Plaintiff had successfully established the “contributory factor” causation element of a FRSA claim, and whether an injury report was the proximate cause of the Plaintiff’s being fired. The Plaintiff had been fired when, after a reenactment of incident that had led to his injury report, information came to light indicating that the Plaintiff had taken railroad ties without permission in violation of the Defendant’s (BNSF) zero tolerance policy on theft.

    Background

    The Plaintiff was a track foreman supervising a crew assigned to remove and reinstall crossing planks. The Plaintiff had authorized a crew member to use a front loader to remove a plank. The plank flew loose just as the plaintiff was walking into the center of the track and struck one of his legs. The Plaintiff initially thought his leg was only bruised, but several days later his doctor informed him that he had fractured his shinbone. After first lying to two coworkers that the injury occurred at home, on advice of a union official and an affiliated lawyer, the Plaintiff reported the injury. The Defendant accepted the report and paid his medical bills.

    The Defendant’s policy was to investigate all reported injuries by staging a reenactment of the accident in order to learn how it happened. Here, the reenactment resulted in the Plaintiff’s supervisor’s (Veitz) conclusion that the Plaintiff had been careless and had placed himself in danger. Several days after the reenactment a crew member told the supervisor that he thought the Plaintiff might have been injured earlier while removing railroad ties from railroad property. Upon preliminary investigation, the supervisor concluded that theft charges against the Plaintiff were warranted. Under the CBA, two formal investigations were conducted: one on the carelessness, and one on the allegation of theft. The company imposed a 30‐day suspension for the carelessness, and a discharge for the theft. The National Railroad Adjustment Board denied the Plaintiff’s appeal. The Plaintiff then filed an FRSA retaliation complaint with OSHA, and later filed an action in federal district court after OSHA had not rendered a final decision within 210 days of the filing of the complaint.

    A jury returned a verdict in favor of the Plaintiff, and the Defendant, having failed to persuade the district judge to award judgment to it despite the jury’s verdict, appealed to the Seventh Circuit. The Seventh Circuit reversed the judgment.

    Contributing Factor/Affirmative Defense

    The court found that the Plaintiff failed to show that his injury was a “contributing factor” in his being fired, and that the trial judge erred when he “remarked that the plaintiff’s ‘injury report initiated the events that led to his discipline, and was therefore a contributing factor to the adverse actions that he suffered’ (emphasis the judge’s).” Slip op. at 9. The court wrote:

    But in so remarking [the trial judge] failed to distinguish between causation and proximate causation. The former term embraces causes that have no legal significance. Had the plaintiff never been born or never worked for BNSF he would neither have been hurt by the plank flung at him by the energetic front‐end loader nor have stolen railroad ties from the railroad. But that doesn’t mean that his being born or his being employed by the railroad were legally cognizable causes of his being fired.

    Proximate causation in contrast creates legal liability, “proximate” denoting in law a relation that has legal significance. There are different definitions of “proximate cause,” however, and in CSX Transportation, Inc. v. McBride , 131 S. Ct. 2630, 2638 (2011), a case under the Federal Employers’ Liability Act, the Supreme Court rejected a definition that required that the defendant’s negligence be “the sole, efficient [or immediate] producing cause” of the injury in order to be actionable. That would be a pertinent consideration in this case were the plaintiff arguing that he was injured by the negligence of his employer, but he is not arguing that. He caused himself to be injured by being careless, and to be fired for stealing railroad property—causal acts that the law deems to have legal consequences if the conduct in question—in this case carelessness and theft—is lawfully forbidden, as it was by a combination of the railroad’s announced employment policies and the terms of its collective bargaining agreement with the union that represents employees such as the plaintiff.

    The Federal Railroad Safety Act does not punish railroads for disciplining (including firing) employees unless the discipline is retaliatory. There is no evidence of that in this case—no evidence of the usual forms of employment discrimination, certainly, and no evidence that the suspension and discharge of the plaintiff were motivated by animus. It is true that a workman who was standing near the plaintiff when the plank soared was not disciplined for carelessness; but he wasn’t injured at all, which allowed the company to infer that he wasn’t careless, or at least not sufficiently careless to warrant an investigation. As for the argument in the plaintiff’s brief that it was “common for employees to take used railroad ties” without being disciplined for doing so, the record contains no instances of BNSF’s declining to discipline an employee who was found to have taken ties without permission. The plaintiff does not argue that BNSF believed that he was permitted to take the railroad ties, in which event the stated reason for his being fired would have been pretextual.

    The district judge’s remark that the plaintiff’s injury report to the company had initiated the events that led to his being fired and therefore had contributed to it is a further example of confusing a cause with a proximate cause. The plaintiff’s having been born was an initiating event without which he would not exist, but obviously an event devoid of legal significance. Veitz agreed that the plaintiff should submit an injury report, but based his conclusion that the plaintiff had been careless not on the report, which merely described the injury, but on the reenactment of the accident—and the reenactment, which was the proximate cause of the decision to suspend the plaintiff, had no connection to the injury report, which merely described medical treatment—not carelessness and not theft.

    And by the way there is nothing sinister, as the term “initiating event” may seem to suggest, in deeming the submission of an injury report a proper occasion for an employer‘s conducting an investigation. An injury report is a normal trigger for an investigation designed to uncover facts that can prompt corrective action that will reduce the likelihood of a future injury.

    In addressing the parties’ motions for summary judgment, the district judge made some legal rulings intended to narrow the issues for trial. The critical ruling—a grant of partial summary judgment in favor of the plaintiff—was that the injury report was a “contributing factor” to his being fired. In Ortiz v. Jordan , 131 S. Ct. 884, 888–89 (2011), the Supreme Court held that an order denying summary judgment can’t be appealed after a full trial on the merits has been held. “The order retains its interlocutory character as simply a step along the route to final judgment. Once the case proceeds to trial, the full record developed in court supersedes the record existing at the time of the summary judgment motion.” Id . at 889 (citation omitted). A grant of partial summary judgment is similarly just a way station en route to a final judgment. The grant of partial summary judgment in this case narrowed the case, as the district judge believed, to two issues for trial. The first was whether the injury report had been prepared and submitted by the plaintiff in good faith, and the second whether the railroad would have fired him had he not filed it. And on both those issues the jury sided with the plaintiff. Rightly on the first issue; there is no indication that the injury report was not submitted in good faith—the plaintiff had after all been injured, and the report described the injury accurately.

    But as for the second issue—whether the railroad would have terminated the plaintiff had he not made an injury report—the answer was yes (not no, as the jury thought), because there is no evidence that the railroad’s decision to fire him was related to his having made the report. So one sees that the district judge’s “contributing factor” ruling on summary judgment misled the jury. The railroad provided unrebutted evidence that it believed that the plaintiff had stolen the ties, and the plaintiff points to no evidence that BNSF would fail to fire an employee whom it discovered to have stolen from the company and no evidence that BNSF disbelieved Veitz’s account.

    BNSF thus proved its affirmative defense to the charge that it fired the plaintiff because he filed (with his superior’s agreement) an injury report citing negligible medical expenses. Consistent with language in its rules of employment quoted earlier, the company appears to have a firm policy of firing employees discovered to have stolen company property. What it does not have, so far as appears, is a policy of singling out for discipline an employee who submits an injury report. There is no basis in the record for supposing that had the plaintiff not submitted an injury report but BNSF had nonetheless discovered the stolen railroad property, he wouldn’t have been fired. Therefore we needn’t give the plaintiff a do‐over trial.

    Slip op. at 9-13.

    ______________

  • Thomas v. Union Pac. R.R. Co. , No. 15-cv-01375 (D. Or. Aug. 23, 2016) (2016 U.S. Dist. LEXIS 111957; 2016 WL 4473429)
    Opinion and Order
    PDF
    Summary :

    ADVERSE ACTION; DISTRICT COURT FOLLOWS ARB’S FRICKA DECISION IN FRSA CASE FOR THE PROPOSITION THAT NON-TANGIBLE ACTIVITY IS INCLUDED IN THE DEFINITION OF ADVERSE ACTION IF IT IS UNFAVORABLE AND NON-TRIVIAL, EITHER “AS A SINGLE EVENT OR IN COMBINATION WITH OTHER DELIBERATE EMPLOYER ACTIONS ALLEGED”

    In Thomas v. Union Pac. R.R. Co. , No. 15-cv-01375 (D. Or. Aug. 23, 2016) (2016 U.S. Dist. LEXIS 111957; 2016 WL 4473429), the Plaintiff alleged that her former employer, Defendant Union Pacific Railroad Company, terminated her in retaliation for filing a workplace injury report in violation of the Federal Rail Safety Act, 49 U.S.C. § 20109 (FRSA). The Plaintiff moved for partial summary judgment and the Defendant moved for summary judgment. The court granted the Plaintiff’s motion in part and denied the Defendant’s motion. One ground on which the Defendant had relied was the contention that “although Plaintiff relies on several adverse actions, only the termination is a sufficient unfavorable employment action.” The Plaintiff argued that “her allegations must be viewed in their entirety, not in isolation, and are evidence of a pattern of conduct in violation of the FRSA.” The court reviewed the caselaw on the subject in non-FRSA cases, including the ARB’s decision in Fricka v. Nat’l R.R. Passenger Corp. , ARB No. 14-047, 2015 WL 9257754, at *3-4 (ARB Nov. 24, 2015), and noted the expansive construction generally given to adverse action in retaliation cases.

    In the instant case, the Plaintiff alleged that following her workplace injury report she was “subject to (1) intimidating and harassing interviews by the [Defendant’s Director of Terminal Operations and the Manager of Terminal Operations]; (2) increased surveillance by Defendant’s employees; (3) increased employee testing; (4) discipline for a pattern of absenteeism; and (5) dismissal.” The Defendant replied with citations to decisions “indicating that investigative interviews standing alone or employer surveillance are not considered adverse action in retaliation cases.” The court found, however, that “many of the cases Defendant relies on are not FRSA cases with the expanded concept of unfavorable or adverse employment action. Additionally, these cases are enormously fact-dependent. The facts here, which on this motion must be examined in a light most favorable to Plaintiff, could support an inference that [the Defendant’s Director of Terminal Operations] was out to terminate her from the beginning.” The court also found that the Plaintiff alleged that when she met with the Director of Terminal Operations to complete her initial injury report, he did not let her have a co-worker present, do not let her verify the date of the incident, told her that her symptoms were the result of cumulative events rather than a single traumatic incident, and warned her about the repercussions for filing a false report. The court found that such facts could suggest that this meeting was more than just an “investigative interview.”

    The court denied summary judgment on the issue, ruling:

       While Fricka is not binding here, it recognizes the broad language of FRSA. Given the Ninth Circuit’s expansive view of retaliatory “adverse employment actions” in Title VII cases, and the even more expansive language in FRSA, I believe the Ninth Circuit would rule consistently with Fricka and conclude that non-tangible activity is included in the definition if it is unfavorable and non-trivial, either “as a single event or in combination with other deliberate employer actions alleged.” Fricka , 2015 WL 9257754, at *3.

       Furthermore, although the Ninth Circuit has made the following observation in the context of discussing the causation element of a retaliation claim and not the adverse employment action element, it has expressly recognized “patterns of antagonism.” ….

       When the record is viewed in Plaintiff’s favor, a reasonable juror could conclude that Defendant’s actions before termination could have had a chilling effect on protected activity, were unfavorable, and were more than trivial. Thus, even when these incidents are viewed in isolation, there are issues of fact as to whether they are “adverse employment actions” under FRSA. Moreover, whether each of those three acts is a separately cognizable adverse employment action is immaterial because they are properly viewed, when considering the facts in a light most favorable to Plaintiff, as evidence of a pattern of harassing or antagonistic conduct which culminated in termination.

    ______________

  • Stokes v. SEPTA , 657 Fed. Appx. 79 (3d Cir. Aug. 9, 2016) (not precedential) (No. 15-3967) (2016 WL 4191500; 2016 US App LEXIS 14605) (appeal from the E.D. Pa. No. 2:15-cv-02719)
    Opinion
    PDF
    Summary :

    PROTECTED ACTIVITY; § 20109(B)(1)(B); PROTECTED ACTIVITIES RELATED TO “HAZARDOUS SAFETY CONDITIONS” MUST RELATED TO SAFETY CONDITIONS AFFECTING RAILROAD SAFETY AND UNDER THE RAILROAD’S CONTROL, PERSONAL, NON-WORK-RELATED ILLNESSES OR CONDITIONS ARE NOT “HAZARDOUS SAFETY CONDITIONS” UNDER THE FRSA AND SO CANNOT BE THE BASIS FOR PROTECTED ACTIVITY

    In Stokes v. SEPTA , 657 Fed. Appx. 79 (3d Cir. Aug. 9, 2016) (not precedential) (2016 WL 4191500; 2016 US App LEXIS 14605), Plaintiff was injured at work and went on leave. While on leave she became pregnant, and her leave was extended. It was extended further under the FMLA due to potential complications post-pregnancy. The railroad told her to attend a medical examination, but she declined to do so on the grounds that she believed traveling to it would violate her doctor’s restriction to limit activity. The railroad terminated her and she made a complaint and then filed suit under the FRSA.

    The district court dismissed the claim under Rule 12(b)(6) on the grounds that per the holding in Port Authority Trans-Hudson Corp v. Sec., U.S. Dep’t of Labor , 776 F.3d 157 (3d Cir. 2015) § 20109(c)(2) does not apply to restrictions derived from conditions that are not work-related. Actions under § 20109(b)(1)(B) were dismissed because based on the complaint the Plaintiff was not reporting a hazardous safety condition or confronted with one in the course of her duties. Plaintiff appealed.

    The Third Circuit affirmed. Plaintiff argued that the combination of her non-work-related medical condition and the railroad’s instructions to attend the medical examination created a hazardous safety condition in a work-task and that she had refused to work in the face of that condition, as protected by § 20109(b)(1)(B). But the Third Circuit held that even if the failure to attend the examination could be construed as a failure to work, this was not motivated by the sort of hazardous safety condition contemplated by the FRSA. § 20109(b)(1)(B) relates to hazardous safety conditions in the operation of the railroad that are under the railroad’s control, not personal, non-work related illnesses. Since the risk identified was not connected to railroad safety, Plaintiff had not pled a protected activity under the FRSA. The panel added that Plaintiff might have chosen to proceed under other statutes, but that the FRSA was not the appropriate vehicle for her complaint.

    ______________
  • Welch v. Union Pac. R.R. Co. , No. 16-cv-00431 (W.D. Mo. Aug. 4, 2016) (2016 U.S. Dist. LEXIS 102193; 2016 WL 4154760)
    Order and Opinion Granting Defendant's Motion to Dismiss
    PDF
    Summary :

    MOTION TO DISMISS; COURT MAY TAKE JUDICIAL NOTICE OF MATTERS IN THE PUBLIC RECORD WITHOUT CONVERTING A MOTION TO DISMISS INTO A MOTION FOR SUMMARY DECISION

    ELECTION OF REMEDIES; WHERE PLAINTIFF HAD PREVIOUSLY PURSUED FRSA COMPLAINT AT OSHA, FRSA ELECTION OF REMEDIES PROVISION BARS STATE LAW ACTIONS ON THE SAME ALLEGATIONS

    COLLATERAL ESTOPPEL / RES JUDICATA; COLLATERAL ESTOPPEL AND RES JUDICATA APPLY WHEN ADMINISTRATIVE AGENCY ACTS IN A JUDICIAL CAPACITY; SUBSEQUENT STATE LAW CLAIMS BARRED BY RES JUDICATA AND COLLATERAL ESTOPPEL WHEN THEY COULD HAVE BEEN RAISED AND LITIGATED IN A PRIOR FRSA COMPLAINT DOL THAT HAD RESULTED IN A FINAL, ADVERSE DETERMINATION

    In Welch v. Union Pac. R.R. Co. , No. 16-cv-00431 (W.D. Mo. Aug. 4, 2016) (2016 U.S. Dist. LEXIS 102193; 2016 WL 4154760), Plaintiff filed an FRSA complaint with OSHA. After investigation, the complaint was dismissed. Plaintiff did not request a hearing, so the OSHA findings became final. Later Plaintiff filed a variety of state law claims in state court based in wrongful termination/public policy claims. The railroad removed the case to federal court and moved for dismissal based on res judicata and collateral estoppel.

    The district court granted the motion after taking judicial notice of DOL’s decisions, which were part of the public record. The FRSA contains an election of remedies provision at 49 U.S.C. § 20109(f) that 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.” In this case the new actions were based on the same allegedly unlawful act of the railroad and the Plaintiff had elected his remedy by filing a complaint with OSHA and exhausting his remedy by letting the adverse determination became final. That barred the state law actions.

    Further, even absent the election of remedies, res judicata and collateral estoppel precluded the suit. These doctrines extend to determinations made by administrative agencies acting in a judicial capacity. That was the case here, despite no hearing before an ALJ, because the plaintiff had foregone his rights to a de novo hearing and appeals by not asking for a hearing. The Plaintiff had a full opportunity to litigate his claims before DOL, so the final decision barred the latter action based on the same allegations.

  • Jones v. BNSF Ry. Co. , No. 14-2616 D. Kan. July 11, 2016) (2016 U.S. Dist. LEXIS 90212; 2016 WL 3671233) (case below 2014-FRS-53 ( Jones ) and -63 ( Hodges ))
    Memorandum and Order
    PDF
    Summary :

    MOTION FOR RECONSIDERATION; RECONSIDERATION APPROPRIATE WHERE THERE HAS BEEN AN INTERVENING CHANGE IN LAW, NEW EVIDENCE BECOMES AVAILABLE; OR A NEED TO CORRECT CLEAR ERROR OR PREVENT MANIFEST INJUSTICE; RECONSIDERATION NOT APPROPRIATE WHERE PARTY MERELY REHASHES OLD ARGUMENTS OR MAKES ARGUMENTS IT COULD HAVE MADE EARLIER

    CONTRIBUTORY FACTOR CAUSATION; DISTRICT COURT FINDS THAT TENTH CIRCUIT’S CAIN DECISION DID NOT REJECT AN INTENTIONAL RETALIATION REQUIREMENT, READS CAIN TO REQUIRE A SHOWING OF MORE THAN MERE CONNECTION WHEN WRONGDOING WAS DISCLOSED IN A PROTECTED FORMAT

    In Jones v. BNSF Ry. Co. , No. 14-2616 D. Kan. July 11, 2016) (2016 U.S. Dist. LEXIS 90212; 2016 WL 3671233) (case below 2014-FRS-53 (Jones) and -63 (Hodges)), Plaintiffs filed a Rule 59(e) motion to alter or amend the judgment entered in an earlier order granting the railroad’s motion for summary judgment. Reconsideration under Rule 59(e) is appropriate when there is an intervening change in controlling law, new evidence becomes available, or there is a need to correct clear error or prevent manifest injustice.

    Such a motion does not permit a losing party to rehash arguments previously addressed or to present new legal theories or facts that could have been raised earlier. A party’s failure to present its strongest case in the first instance does not entitled it to a second chance in the form of a motion to reconsider.

    Summary judgment as to Plaintiff Jones had been granted on the contributory factor element. Plaintiff argued that the court had misapprehended the facts and the parties’ positions, but the court found that this was merely a re-hash of old arguments and thus not proper for reconsideration. Plaintiff also argued that the Tenth Circuit’s decision in BNSF Ry. Co. v. U.S. Dep’t of Labor [Cain] , 816 F.3d 628 (10th Cir. 2016) had implicitly rejected the Eighth Circuit’s interpretation in Kuduk that contributory factor causation required intentional retaliation. The district court had applied Kuduk in granting summary decision. After reviewing Cain , the court determined that it had not rejected the Kuduk holding or even discussed it, but was instead focused on a different issue—showing contributory factor where wrongdoing is disclosed in a protected format. Even if Plaintiff’s reading of Cain was correct, the result would not change since the cases were similar in that the violation was disclosed in a protected format, requiring a showing of more than a mere connection between the protected activity and adverse action. On the record in the case, there was no evidence of any discriminatory animus.

    Plaintiff Hodges argued that the court had omitted an uncontroverted material fact in his favor from its discussion. The court summarily disagreed, stating that it had considered the fact and discussed it, but found that it was insufficient in the face of other evidence to survive summary judgment.

  • Worcester v. Springfield Terminal Ry. Co. , No. 14-1965 (1st Cir. June 29, 2016) (2016 U.S. App. LEXIS 11941) (case below No. 2:12-cv-00328 (D. Me. June 27, 2014))
    Opinion
    PDF
    Summary :

    PUNITIVE DAMAGES; FIRST CIRCUIT FINDS THAT “RECKLESS DISREGARD OR CALLOUS INDIFFERENCE” STANDARD APPLIES IN FRSA WHISTLEBLOWER CASES; ARB’S DECISION TO USE THAT COMMON LAW STANDARD FOUND TO BE PERSUASIVE

    In Worcester v. Springfield Terminal Ry. Co. , No. 14-1965 (1st Cir. June 29, 2016) (2016 U.S. App. LEXIS 11941), the Defendant had appealed from a jury verdict awarding punitive damages to the Plaintiff under the FRSA whistleblower provision at 49 U.S.C. § 20109. The Defendant argued that the district court instructions to the jury gave the incorrect standard for awarding punitive damages. The First Circuit, however, found that the district court properly instructed the jury that it could award punitive damages if it found that the Defendant “acted, ‘[w]ith malice or ill will or with knowledge that its actions violated federal law or with reckless disregard or callous indifference to the risk that its actions violated federal law’.” Slip op. at 6. This standard, the court noted, came from the Supreme Court’s decision in Smith v. Wade , 461 U.S. 30, 56 (1983), and is the standard adopted by the USDOL Administrative Review Board in Petersen v. Union Pac. R.R. Co. , ARB Case No. 13-090, 2014 WL 6850019, at *3 (Nov. 20, 2014). The court indicated that even if the ARB’s interpretation of the FRSA is not entitled to Chevron deference, that interpretation was still persuasive (citing Grosso v. Surface Transp. Bd. , 804 F.3d 110, 117 (1st Cir. 2015), and Skidmore v. Swift & Co. , 323 U.S. 134 (1944)), given that the Supreme Court looked to the common law in determining both the standard that should govern the award of punitive damages in Smith , and the ARB had followed that same course.

  • Rookaird v. BNSF Railway Co. , No. 14-cv-176 (W.D. Wash. May 27, 2016) (case below 2014-FRS-9)
    Jury Verdict
    PDF
    Summary :

    JURY VERDICT IN FRSA CASE TOTALING OVER $1.6 MILLION

    In Rookaird v. BNSF Railway Co. , No. 14-cv-176 (W.D. Wash. May 27, 2016) (case below 2014-FRS-9), the District Court for the Western District of Washington entered the following Judgment:

    Jury Verdict. This action came before the Court for a trial by jury. The issues have been tried and the jury has rendered its verdict.

    * * *

    THE COURT HAS ORDERED THAT

       Judgment is entered against defendant and in favor of plaintiff for past earnings in the amount of $420,249, for future earnings in the amount of $467,660, for mental and/or emotional distress in the amount of $558,400, and for punitive damages in the amount of $200,000 for a total amount of $1,646,309.

  • Conrad v. CSX Transportation, Inc. , No. 15-1035 (4th Cir. May 25, 2016) (2016 U.S. App. LEXIS 9570; 2016 WL 3006097)(case below D. Md. 13-cv-3730; ALJ No. 2012-FRS-88)
    Opinion
    PDF
    Summary :

    KNOWLEDGE OF PROTECTED ACTIVITY; FOURTH CIRCUIT REJECTS IMPUTED KNOWLEDGE THEORY AND HOLDS THAT DECISIONMAKERS MUST BE SHOWN TO HAVE BEEN AWARE OF THE PROTECTED ACTIVITY

    In Conrad v. CSX Transportation, Inc. , No. 15-1035 (4th Cir. May 25, 2016) (2016 U.S. App. LEXIS 9570)(case below D. Md. 13-cv-3730; ALJ No. 2012-FRS-88), the Fourth Circuit affirmed the district court's grant of summary judgment in favor of the Defendant. The district court had found that the Plaintiff failed to show that any of the Defendant's employees involved in the disciplinary process had known about the Plaintiff's union activities. Conrad v. CSX Transp., Inc. , No. WMN-13-3730, 2014 WL 7184747, at *5 (D. Md. Dec. 15, 2014). The Fourth Circuit rejected the Plaintiff's argument on appeal that "knowledge of an employee’s protected activities may be imputed to the decision-makers if any supervisory employee at the company knew of the subordinate employee’s protected activity when the decision-maker took the unfavorable personnel action, regardless of whether the person with knowledge played a role in the disciplinary process." The Fourth Circuit found persuasive ARB authority holding that "an employee 'must establish that the decision-makers who subjected him to the alleged adverse action were aware of the protected activity.' Rudolph v. Nat’l R.R. Passenger Corp. , ARB Case No. 11-037, 2013 WL 1385560, at *9 (Dep’t of Labor Mar. 29, 2013)..." and that "it is 'insufficient' to 'demonstrat[e] that an employer, as an entity, was aware of the protected activity.' Rudolph , 2013 WL 1385560, at *9...."

  • DiMauro v. Springfield Terminal Railway Co. , No. 16-cv-71, 72 and 73 (D. Me. May 20, 2016) (2016 WL 2992073; 2016 U.S. Dist. LEXIS 66584)
    Decision and Order on Motions to Dismiss
    PDF
    Summary :

    KICK OUT PROVISION

    "[W]hen the Department of Labor has not taken action within the 210 days, the worker notifies the Department of Labor that he will proceed in district court, and a Supervising Investigator then notifies the worker that as a result the Department of Labor will dismiss his claim, there is no thirty-day appeal period applicable whose passage results in the dismissal becoming a final Department of Labor decision that can be reviewed only in the court of appeals."

    Slip op. at 10.

  • Miller v. BNSF Ry. , No. 14-cv-2596 (D. Kan. May 17, 2016) (2016 U.S. Dist. LEXIS 64869; 2016 WL 2866152)
    Memorandum and Order
    PDF
    Summary :

    PROTECTED ACTIVITY UNDER THE FRSA; § 20109(c) ONLY APPLIES TO CASES INVOLVING WORK-RELATED INJURIES OR ILLNESSES

    In Miller v. BNSF Ry. , No. 14-cv-2596 (D. Kan. May 17, 2016) (2016 U.S. Dist. LEXIS 64869; 2016 WL 2866152), the Plaintiff sought protection under the FRSA, 49 U.S.C. § 20109(c). The Defendant contended that the Plaintiff was not “engaged in protected activity” because § 20109(c) only applies to cases involving work-related injuries or illnesses. The court agreed, adopting the reasoning of the Third Circuit in Port Authority Trans-Hudson Corp. v. Secretary of Labor (“PATH”) , 776 F.3d 157 (3d Cir. 2015), and holding that 49 U.S.C. § 20109(c)(2) is limited to addressing on-duty injuries. In the instant case, the Plaintiff “took medication as part of her doctor’s plan for treatment of her bipolar disorder and ADHD, and her sleep disorder was the consequence of following her doctor’s orders. Plaintiff [did] not assert, however, that her bipolar disorder, ADHD, and medication-induced sleep disorder were in any way work-related impairments. Thus, Plaintiff did not engage in protected activity under the FRSA, and BNSF is granted summary judgment on this claim.” Slip op. at 30 (footnotes omitted). The court rejected the Plaintiff’s request to give Chevron deference to the ARB decision in Bala v. Port Authority Trans-Hudson Corp. , ARB No. 12-048, ALJ Case No. 2010-FRS-26 (ARB Sept. 27, 2013), where the ARB determined the phrase “protected activity” in subsection (c)(2) also referred to non-work-related activity. The court noted that the PATH court rejected Chevron deference, and concluded that the ARB had misinterpreted the statute. The district court stated: “Accordingly, Bala is a nonprecedential, reversed agency decision and is thus not entitled to Chevron deference.” Slip op. at 30 (footnote omitted).

  • Despain v. BNSF Railway Co. , No. 15-cv-08294 (D. Ariz. May 13, 2016) (2016 WL 2770144; 2016 U.S. Dist. LEXIS 63455) (case below 2015-FRS-00067)
    Order [denying motion to dismiss]
    PDF
    Summary :

    KICK-OUT PROVISION

    A district court action under the kick-out provision is essentially a continuation of the pending agency action and therefore governed by the already-satisfied 180-day limitations period.

  • Lee v. Norfolk Southern Railway Co. , No. 13-cv-4 (W.D. N.C. May 11, 2016) (2016 WL 2746626; 2016 U.S. Dist. LEXIS 62307) (case below 2013-FRS-4)
    Memorandum Opinion and Order
    PDF
    Notice of appeal to the Fourth Circuit filed.
    Summary :

    RES JUDICATA / CLAIM SPLITTING; CLAIM SPLITTING DEFENSE PROHIBITS A PARTY FROM LITIGATING COMPLAINTS PIECEMEAL; COURT FINDS THAT CLAIM SPLITTING DEFENSE UNAVAILABLE WHEN RAILROAD CONSENTED TO PROCEEDING SEPARATELY ON RACE DISCRIMINATION AND WHISTLEBLOWER RETALIATION COMPLAINTS AND WAITED TO RAISE THE DEFENSE UNTIL AFTER ONE OF THE ACTIONS HAD BEEN DISMISSED

    SUMMARY JUDGMENT; CONTRIBUTING FACTOR; COURT GRANTS SUMMARY JUDGMENT ON CONTRIBUTING FACTOR ELEMENT WHERE CIRCUMSTANTIAL EVIDENCE PRESENTED FOUND INSUFFICIENT TO SUPPORT A REASONABLE INFERENCE THAT THE PROTECTED ACTIVITY CONTRIBUTED TO THE ADVERSE ACTION

    SUMMARY JUDGMENT; AFFIRMATIVE DEFENSE; COURT GRANTS SUMMARY JUDGMENT TO RAILROAD WHERE THERE WERE ADMITTED VIOLATIONS OF RULES WITH TERMINATION AS A CONSEQUENCE AND THE EMPLOYEE NEGOTIATED AND AGREED TO A LESSER PUNISHMENT

    In Lee v. Norfolk Southern Railway Co. , 187 F. Supp. 3d 623, No. 13-cv-4 (W.D. N.C. May 11, 2016) (2016 WL 2746626; 2016 U.S. Dist. LEXIS 62307) (case below 2013-FRS-4), Plaintiff alleged that he was wrongfully give a six month suspension in retaliation for giving too many cars “bad order” citations when he was working as a carman doing safety inspections. He had also filed a lawsuit contending that the suspension was race discrimination prohibited by 42 U.S.C. § 1981. That suit had been dismissed and the railroad argued that the FRSA’s election of remedies provision barred the FRSA action. The district court had agreed, but the Fourth Circuit reversed. On remand the district court considered the remaining arguments for summary decision.

    The railroad first argued that Plaintiff had violated the rule against claim splitting, which is part of the doctrine of res judicata . It prevents parties from litigating their claims piecemeal. But it can be relinquished. Here, the railroad had consenting to splitting the two claims earlier in the cases and so could not raise the defense now. In addition, since the two claims were pending at the same time, the railroad was required to raise the defense of claim splitting while they were both pending. The defense cannot be used to tactical advantage to wait and see if one action fails, only to then assert the defense in the other.

    The railroad also sought summary judgment related to the merits. It was undisputed that the Plaintiff had engaged in protected activity and had suffered an adverse action. Viewing the evidence in the light most in Plaintiff’s favor and making inferences in his favor, Plaintiff also defeated summary judgment as to the knowledge of the decision makers. In order to show contribution, Plaintiff alleged inconsistent application of company policy, overzealous investigation, temporal proximity, hostility, and a later suspension showing continued retaliation. The court reviewed the evidence on each. Plaintiff had been suspended for drinking alcohol while on duty. Though he claimed others were treated less harshly, the others were in travel status, not on duty. The rule that Plaintiff violated called for termination, but he was only suspended. The uncontroverted evidence also showed that the investigation was not out of the ordinary and that any zealousness was the result of the Plaintiff’s dishonesty in his initial denials. The protected activity was also too temporally remote to support an inference of retaliation. Evidence of hostility was really only evidence of hot-headedness and did not support an inference to contribution, especially when another manager conducted the hearing. The second suspension was another claim and wasn’t proper to litigate within the one at issue. The court thus concluded that Plaintiff could not make out a showing on the contributing factor element.

    In addition, the court found that even if a prima facie case of retaliation had been made, the railroad was entitled to summary judgment on the affirmative defense. The uncontroverted evidence showed that Plaintiff had violated rules that could have led to his termination and had instead agreed to a waiver process to limit his discipline to the suspension. The court observed that whistleblower statutes are not meant as a shield to be used to prevent consequences of misconduct and concluded that this is what Plaintiff was trying to do—he had admittedly violated several rules with harsh consequence and then agreed to lenient treatment, only then claiming for the first time that his discipline was the result of retaliation.

  • Lillian v. National Railroad Passenger Corp. (AMTRAK) , No. 14-cv-02605 (N.D. Ill. Mar. 30, 2016) (2016 U.S. Dist. LEXIS 41940)
    Memorandum Opinion and Order
    PDF
    Summary :

    ELECTION OF REMEDIES; DISTRICT COURT HOLDS THAT FRSA’S ELECTION OF REMEDIES PROVISION DOES NOT BAR AN FRSA ACTION WHEN THE PLAINTIFF ALSO PURSUED AN ADA ACTION THAT INVOLVED THE SAME ADVERSE ACTION

    In Lillian v. National Railroad Passenger Corp. (AMTRAK) , No. 14-cv-02605 (N.D. Ill. Mar. 30, 2016) (2016 U.S. Dist. LEXIS 41940), Plaintiff alleged that he discovered bed bugs while stripping sheets in a railcar and reported them to his supervisors as a safety hazard. The railroad did not investigate; instead it told him to return to work in the car. Plaintiff refused to do so and was taken out of service and then terminated. He filed an FRSA complaint. He also filed an ADA complaint for disability discrimination and retaliation.

    The railroad moved for judgment on the pleadings on the FRSA count on the grounds that the FRSA’s election of remedies provision worked to bar the complaint because the Plaintiff had pursued the ADA complaint as well. That provision, 49 U.S.C. § 20109(f), provides that “An employee may not seek protection under both this section and another provision of law for the same allegedly unlawful act of the railroad carrier.”

    The district court denied the motion. It found the Fourth Circuit’s discussion in Lee v. Norfolk S. Ry. , 802 F.3d 627 (4th Cir. 2015) persuasive. The same act served as the adverse action complained of in both legal actions, but they involved different unlawful acts and different operative facts—the same termination was involved, but it was unlawful for entirely different reasons based on a different set of background events. The court also noted that two additions to the FRSA underscored that the FRSA was not meant to diminish the rights of an employee. Forcing Plaintiff to choose the ADA and FRSA would do so because the violations in non-overlapping statutes. It rejected the claim that because both involved retaliation in some manner, they were overlapping. Rather they were distinct because they involved different sort of rights.

  • Wagner v. Grand Trunk W. R.R. , No. 15-10635 (E.D. Mich. Mar. 23, 2016) (2016 U.S. Dist. LEXIS 38406; 2016 WL 1161351) (case below ARB No. 15-030; 2014-FRS-00059)
    Opinion and Order Denying Defendant’s Motion to Dismiss
    PDF
    Summary :

    REMOVAL TO FEDERAL DISTRICT COURT; WAIVER NOT APPROPRIATE FOR DISPOSITION ON MOTION OF THE PLEADINGS; RIGHT TO REMOVAL WOULD NOT BE WAIVED BY DISPUTED OFF-THE-RECORD CONVERSATION ABOUT INTENT TO REMOVE

    REMOVAL TO FEDERAL DISTRICT COURT; BAD FAITH CAN PREVENT REMOVAL WHEN IT CAUSES DELAY IN DOL’S ISSUANCE OF A FINAL DECISION, BUT ENGAGING IN LITIGATION PROCESS ALONE IS NOT BAD FAITH

    REMOVAL TO FEDERAL DISTRICT COURT; RES JUDICATA; RES JUDICATA APPLIES TO ADMINISTRATIVE ADJUDICATIONS, BUT ONLY IF FINAL, SO HAD NO APPLICATION WHERE A TIMELY APPEAL WAS MADE OF THE ALJ’S ADVERSE DECISION

    REMOVAL TO FEDERAL DISTRICT COURT; CONSTITUTIONALITY; DISTRICT COURT FINDS THAT ONE-SIDED REMOVAL PROVISION DOES NOT VIOLATION THE DUE PROCESS CLAUSE OF THE EQUAL PROTECTION CLAUSE

    In Wagner v. Grand Trunk W. R.R. , No. 15-10635 (E.D. Mich. Mar. 23, 2016) (2016 U.S. Dist. LEXIS 38406; 2016 WL 1161351), Plaintiff cut his finger at work and filed an injury report. He was later investigated and suspended for alleged safety violations during the incident. He then filed a complaint with OSHA. OSHA found there had been retaliation and awarded damages. Defendant sought a hearing before an ALJ. Before the ALJ there was some discussion of whether Plaintiff would exercise the “kick-out” option and remove the case to federal court, with Plaintiff’s counsel indicating, in some way, that this was not contemplated. The ALJ found for the railroad and Plaintiff appealed. While the appeal was pending, the Plaintiff opted to file suit in federal court, which led to the dismissal of the DOL action.

    Defendant filed a motion for judgment on the pleadings arguing that Plaintiff had waived his right to remove the action, Plaintiff had engaged in bad faith, the action was barred by res judicata, and the removal provision of the FRSA, § 20109(d)(3) was unconstitutional. The court denied the motion.

    As to the waiver argument, it was based on material outside the pleadings—a declaration from counsel—and so could not succeed at this stage. The content was also a matter of factual dispute between the attorneys as to what happened before the ALJ. And even if the off-the-record conversation occurred, it wouldn’t amount to a knowing and voluntary waiver of rights.

    As to the bad faith argument, the court observed that bad faith can preclude removal, but only when the bad faith is the cause of the delay at DOL. There was no evidence of that here other than that the Plaintiff had engaged in the process at DOL and litigated the case. But the FRSA granted the right to remove actions if there was no final decision in 210 days and merely exercising that right did not amount to bad faith. The court observed that this led to unfortunate duplication between the forums and frustration, but this was the result of the language of the statute.

    As to the res judicata argument, the court observed that administrative adjudications could have preclusive effect but that Congress could also alter the rules. The crux, however, was that in order to have any preclusive effect the decision at DOL had to the final. It was not because Plaintiff had filed a timely appeal that was pending before the ARB.

    The constitutional challenge was made on due process and equal protection grounds. The railroad argued that its due process rights were violated because only the Plaintiff could remove the case to federal court in the event that he lost before the ALJ. It also complained that the attorney fee provisions were one-sided. But the court held this was not a cognizable due process claim because it didn’t contend that the railroad was deprived of due process requirements—it just complained the Plaintiff had too much process. Removal created duplication, but that burden fell on both parties and did not amount to a denial of due process. The equal protection challenge was also based on the one-sidedness of the provision. The court first rejected the claim that strict scrutiny review applied and then applying the rational basis analysis quickly determined that the removal provisions had a rational relation to an interest in helping railroad workers’ get speedy resolution of the claims. Whether it succeeded in that result was another question, but Congress had a rational basis for the provision.

  • BNSF Railway Co. v. USDOL, Administrative Review Board , 816 F.3d 628 (10th Cir. Mar. 7, 2016) (No. 14-9602) (2016 U.S. App. LEXIS 4234; 2016 WL 861101) (case below ARB No. 13-006, ALJ No. 2012-FRS-19) (Christopher Cain, Intervenor/Complainant)
    Opinion
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    Summary :

    CONTRIBUTING FACTOR STANDARD; INEXTRICABLE INTERTWINEMENT AND CIRCUMSTANTIAL EVIDENCE; WHERE THE PROTECTED ACTIVITY DISCLOSED THE MISCONDUCT THAT WAS THE STATED BASIS FOR DISCIPLINE, A COMPLAINANT MUST DO MORE TO ESTABLISH THE CONTRIBUTING FACTOR ELEMENT THAN SHOW THEY ARE INEXTRICABLY INTERTWINED; CIRCUMSTANTIAL EVIDENCE INCLUDING TEMPORAL PROXIMITY, THE SEQUENCE OF INVESTIGATIONS, HOSTILITY OF SUPERVISORS, HOWEVER, MADE THAT SHOWING

    AFFIRMATIVE DEFENSE; TENTH CIRCUIT AFFIRMS FINDING THAT RAILROAD DID NOT ESTABLISH AFFIRMATIVE DEFENSE WHEN THERE WAS EVIDENCE OF HOSTILITY FROM THE SUPERVISORS, DISCOURAGEMENT OR PROTECT ACTIVITY, AND AN INDICATION THAT DESPITE PRIOR KNOWLEDGE THE INVESTIGATION ONLY STARTED AFTER THE PROTECTED ACTIVITY

    PUNITIVE DAMAGES; TENTH CIRCUIT HOLDS THAT COMMENTS FROM SUPERVISORS WERE SUFFICIENT TO ESTABLISH RECKLESS AND CALLOUS DISREGARD FOR THE PLAINTIFF’S RIGHTS; VACATES ARB’S “HALVING” OF THE ALJ’S PUNITIVE DAMAGES WITHOUT EXPLAINING HOW IT JUSTIFIED THAT APPROACH; HOLDS THAT STATE FARM GUIDEPOSTS APPLY TO PUNITIVE DAMAGE AWARDS UNDER THE FRSA

    In BNSF Ry. Co. v. United States DOL , 816 F.3d 628, No. 14-9602, 2016 U.S. App. LEXIS 4234, 2016 WL 861101 (10th Cir. 2016) (case below ARB No. 13-006, ALJ No. 2012-FRS-19) (Christopher Cain, Intervenor/Complainant), BNSF hired the Complainant as a sheet-metal worker in 2006. He worked at two rail yards and traveled between them in a company vehicle. In early January 2010, the Complainant developed chest pains and sought treatment in an emergency room. On January 27, 2010, the Complainant rear-ended a produce truck stopped at a red light while driving the BNSF vehicle between job sites. He reported that his brakes had malfunctioned. He was not issued a citation. Another employee picked him up and took him to one of the yards, where he filled out an injury report for his knuckle and knee. He did not get treatment for these injuries, but later claimed that he had no memory of filling out the report and had been in shock. He missed the next two days of work due to coughing fits. On February 17, 2010, he sought medical treatment and a nurse practitioner diagnosed a rib fracture, likely due to the seatbelt impact during the accident. The Complainant decided to determine what exactly was going on before reporting additional injuries. He sought additional days off work to have fluid drained from his lungs, but told supervisors that it was not due to the accident. When he returned to work, he was assigned to work in an undesirable location of the yard. BNSF Ry. Co. , 816 F.3d at 633-34.

    On February 23, 2010, BNSF notified Complainant that it was investigating whether he had violated any safety rules in the accident. While the hearing was pending, Complainant saw a doctor on April 8, 2010, and was told that the work-related accident had caused his chest and lung injuries. He then updated the injury report, though two supervisors discouraged him from doing so. On April 30, 2010, BNSF notified Complainant that it was now also investigating its rules about timely reporting of injuries. The two hearings took place in May. On June 2, 2010, BNSF gave Complainant a 30 day suspension and 3 year probation, retroactive to the date of the accident, for safety violations that occurred in the accident. It warned him that any further violations during the probation could lead to termination. On June 8, 2010, BNSF terminated Complainant for not filing an injury report in a timely manner. The termination occurred because the violation had occurred during the retroactive probationary period. The Complainant unsuccessfully grieved the discipline and then filed a complaint under the whistleblower protection provisions of the Federal Rail Safety Act, 49 U.S.C. § 20109.

    The Occupational Safety and Health Administration dismissed the complaint, but an Administrative Law Judge ("ALJ") found that BNSF had unlawfully retaliated against him and awarded back wages, nominal compensatory damages, and the statutory maximum of $250,000.00 in punitive damages. Id . at 635-36. [Reinstatement had not been ordered because the ALJ determined that Complainant was no longer able to perform railroad work. See Cain v. BNSF Ry. Co. , ARB No. 14-006, ALJ No. 2012-FRS-019, slip op. at 5 (ARB Sept. 18, 2014).]

    BNSF appealed, but the Administrative Review Board (“ARB”) affirmed the liability finding. In analyzing the punitive damages award, the ARB determined that it did not need to consider the guideposts from State Farm Mut. Auto Ins. Co. v. Campbell , 538 U.S. 408, 418 (2003) because Congress had removed the need for guideposts by setting a statutory cap. The ARB then halved the award to $125,000.00. The ALJ's award had been based on a finding that managers engaged in a conspiracy against the Complainant and had assigned him to a very undesirable work location to punish him. The ARB noted that the second had not even been alleged as an adverse action and found it could not sustain a punitive damage award. So it cut the award in half. BNSF Ry. Co. , 816 F.3d at 636-37.

    Turning to the contributing factor standard, the Tenth Circuit explained that

    we must decide whether the agency abused its discretion in concluding that Cain's filing the April 8 Report was a factor that tended “to affect in any way” BNSF's decision to terminate him. Ordinarily, to meet this standard, an employee need only show “by preponderant evidence that the fact of, or the content of, the protected disclosure was one of the factors that tended to affect in any way the personnel action.” In other words, even if the personnel action resulted not simply from the protected activity itself (filing a report), but also from the content declared in the protected activity, the two parts are “inextricably intertwined with the investigation,” meaning the protected activity was a contributing factor to the personnel action. So if the employer would not have taken the adverse action without the protected activity, the employee's protected activity satisfies the contributing-factor standard.

    Id . at 639 (quoting and citing Lockheed Martin Corp v. Admin Review Bd, U.S. Dep't of Labor , 717 F.3d 1121, 1136 (10th Cir. 2013); Marano v. Dep't of Justice , 2 F.3d 1137, 1143 (Fed. Cir. 1993)) (internal citations omitted).

    Yet the Tenth Circuit held that this case “marks an exception to this rule” because “employees cannot immunize themselves against wrongdoing by disclosing it in a protected-activity report.” Id . “Accordingly, under these circumstances, we require Cain to show more than his updated Report's loosely leading to his firing. Because BNSF contends that it fired Cain for misconduct he revealed in his updated Report, Cain cannot satisfy the contributing-factor standard merely by arguing that BNSF would not have known of his delays in reporting his injuries absent his filing the updated Report.” Id . The Complainant had met his burden nonetheless, due to the temporal proximity, the sequence of the investigations, and the finding that the supervisors had discouraged him from filing the report by hinting to adverse consequences if he did so. Id . at 639-640.

    Next, the Tenth Circuit affirmed the ARB's determination that BNSF's had not shown by clear and convincing evidence it would have taken the same action absent the protected activity. The determination that the supervisors had encouraged the Complainant not to file the report, made implicit threats, and showed animus to the protected activity undermined any showing by BNSF on the issue. Id . at 640-41. Further, there were findings that BNSF had known earlier about the additional injuries but had not sought to discipline Complainant for not reporting them. BNSF had given inconsistent explanations about even who had fired the Complainant. And there was no evidence of actions taken against employees with similar violations. Id . at 641.

    BNSF also appealed the punitive damage award. The Tenth Circuit began by affirming the finding that some punitive damages should be awarded. The comments from the supervisors discouraging the injury report supported the finding that BNSF had acted with a reckless or callous disregard for the Complainant's rights. Id . at 642. Turning to the amount of the punitive damages, the Tenth Circuit found that the ARB acted arbitrarily and capriciously when it halved the award because it found half the ALJ’s analysis flawed. Appellate review is confined “to ascertaining ‘whether the agency examined the relevant data and articulated a satisfactory explanation for its decision, including a rational connection between the facts found and the decision made.’” Id . (quoting Colo. Wild v. U.S. Forest Serv. , 435 F.3d 1204, 1213 (10th Cir. 2006)). The ARB's “half-for-half approach fails this standard. On remand, the Board must explain why the available facts support the amount of punitive damages it awards.” Id . at 642-43.

    Lastly, the Tenth Circuit held that it was error for the ARB to disregard the State Farm guideposts in assessing a punitive damages award. The State Farm guideposts are: 1) the degree of reprehensibility of culpability in the respondent's conduct; 2) the relationship between the punitive damages and the actual harm to the Complainant; and 3) punitive damages awarded for comparable misconduct. Id . at 636, 643. Though the presence of a statutory cap changed the “landscape” of the review, the guideposts still had to be used in a “less rigid review.” Id . at 643. In doing so, the ARB was directed to “set forth clear findings about the degree of BNSF's reprehensibility.” Id . at 644. And even though the statute set an upper limit, it was still necessary to look at the ration between punitive and other damages. Id . at 644-45. Comparable cases should be considered as well. Id . at 645. The Tenth Circuit then declined to evaluate the constitutionality of the punitive damages award, instead remanding so that the ARB could apply the guideposts in the first instance. Id .

    On remand, the parties reached a settlement, which was approved by the ARB. See Cain v. BNSF Ry. Co. , ARB No. 13-006, ALJ No. 2012-FRS-019 (ARB Sept. 15, 2016).

  • Dafoe v. BNSF Railway Co. ., 164 F.Supp.3d 1101 (D. Minn. Feb. 26, 2016) (No. 14-439) (2016 WL 778367) (case below 2013-FRS-22)
    Memorandum Opinion and Order Granting Defendant’s Motion for Summary Judgment
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    Summary :

    SUMMARY JUDGMENT; CONTRIBUTING FACTOR; COURT GRANTS SUMMARY JUDGMENT WHEN PLAINTIFF’S EVIDENCE OF PRETEXT IS ONLY SPECULATION, CONJECTURE, AND TENUOUS INFERENCES

    SUMMARY JUDGMENT; AFFIRMATIVE DEFENSE; SUMMARY JUDGMENT PROPER ON AFFIRMATIVE DEFENSE WHEN EVIDENCE PERTAINING TO ALL RELEVANT FACTORS FAVOR RAILROAD

    In Dafoe v. BNSF Railway Co. , 164 F.Supp.3d 1101 (D. Minn. Feb. 26, 2016) (2016 WL 778367), Plaintiff was disciplined for three safety violations. The first involved not stopping his train when he was told over the radio that his “angle cock” appeared to be slightly turned. The second two grew out of a random safety inspection/audit in which Plaintiff was accused of improperly bottling air in the braking system when the train was stopped and walking between equipment without following safety procedures. He reached an agreement as to the first that included a probation. After he was found to have committed the second two he was terminated. He unsuccessfully grieved the dismissal and then filed a complaint with OSHA. He claimed that he was a known safety advocate and pointed to a series of protected safety complaints, both formal and informal. He also pointed to several injuries and injury reports in his long career. OSHA dismissed the complaint and Plaintiff asked for a hearing with an ALJ, but then removed the case to federal court.

    The Railroad moved for summary judgment on the contributory factor element and on the affirmative defense. Plaintiff made five arguments for pretext in favor of a finding of contribution, which the court considered in turn. First, Plaintiff pointed to differential treatment of the carman who radioed about the angle cock. But the court found that the two were not similarly situated in that they had acted differently and had different supervisors with different views of discipline. Second, Plaintiff argued that BNSF had a pattern of dismissing safety advocates. The court found the evidence here too speculative to permit a reasonable inference and noted that several of the others mentioned had recently lost FRSA suits. Next, Plaintiff argued that BNSF had a history of retaliating for injury reports, pointing to a 2013 accord between OSHA and the railroad that BNSF would cease increasing suspensions based on prior injuries. But this was too speculative as well and had no application to this particular case. Fourth, Plaintiff argued that he had been coerced to accept discipline on the angle cock violation and this set him up for dismissal in the later investigation. But he had no actual evidence of coercion and the latter two offenses alone were dismissible.

    Finally, Plaintiff pointed to alleged deficiencies in the internal process, including difficulty interpreting the relevant data regarding the violations. But the data difficulty was a normal feature of the way the data was kept and courts do not sit as super-personnel departments. Plaintiff pointed to evidence of innocence but this would not show that the decision-makers didn’t believe he had committed the violations. Other factors supported the decision and there was no good evidence of hostility by the decision makers. Some had very limited knowledge of any protected activity. The court also found it “significant” that all of the protected activity pled was completely unrelated to the discipline—there was no shared nexus. Plaintiff also had a long history of protected activity without any consequence, with the railroad even reacting positively to the complaints. The court concluded that Plaintiff had “offered only speculation, conjecture, and tenuous inferences” to support a finding of pretext. “Even under the more lenient contributing factor standard, viewing the evidence in the light most favorable to Dafoe, no reasonable jury could find in his favor.”

    In addition, the court found that BNSF was entitled to summary judgment on its affirmative defense. In evaluating whether a railroad has shown that it would have taken the same action absent the protected activity by clear and convincing evidence, courts look to 1) whether there are written policies addressing the alleged misconduct; 2) whether applicable investigatory procedures were followed; 3) whether the dismissals were approved by others in senior management; 4) whether the dismissal was upheld on appeal; 5) the temporal proximity between the non-protected activities and the adverse action; 6) whether the policies are consistently enforced; and 7) the independent significant of the non-protected activity. Looking at the evidence on offer, the court found that all factors favored BNSF and so summary judgment was proper.

  • Rader v. Norfolk Southern Ry. , No. 1:13-cv-298 (E.D. Tenn. Feb. 10, 2016) (2016 U.S. Dist. LEXIS 17913)
    Memorandum Opinion
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    Summary :

    SUMMARY JUDGMENT; CONTRIBUTING FACTOR; EVIDENCE THAT MEDICAL DEPARTMENT CLEARED A RETURN TO WORK BUT IT WAS DELAYED BY THE SUPERVISOR AS WELL AS EVIDENCE OF HOSTILITY FROM THE SUPERVISOR FOUND SUFFICIENT TO DEFEAT SUMMARY JUDGMENT

    SUMMARY JUDGMENT; AFFIRMATIVE DEFENSE; RAILROAD NOT ENTITLED TO SUMMARY JUDGMENT ON AFFIRMATIVE DEFENSE BASED ON THE COMMONALITY IN DELAYS IN RETURN TO WORK FOR WORK-RELATED AND NON-WORK-RELATED INJURIES WHERE CASE IN QUESTION DIDN’T INVOLVE A DELAY IN MEDICAL CLEARANCE

    SUMMARY JUDGMENT; PUNITIVE DAMAGES; WHERE MATERIAL DISPUTES OF FACT REMAINED ON THE SEQUENCE OF EVENTS AND THE BEHAVIOR OF SUPERVISORS, SUMMARY JUDGMENT ON PUNITIVE DAMAGES FOUND NOT APPROPRIATE

    In Rader v. Norfolk Southern Ry. , No. 1:13-cv-298 (E.D. Tenn. Feb. 10, 2016) (2016 U.S. Dist. LEXIS 17913), the court denied Defendants’ Norfolk Southern Railway Company’s (“NSRC”) and Norfolk Southern Corporation’s (“NSC”) Motion for Summary Judgment, finding that Plaintiff had presented sufficient evidence to meet the permissive threshold applicable at the summary judgment stage of proceedings.

    The Plaintiff hurt his knee at work and reported the injury. He had surgery and was out for a time. He was then released to return to work, though his doctor also said he should use a Neoprene Sleeve on his knee. The medical department at the railroad cleared Claimant to return to work without restriction. This was transmitted to the relevant supervisors, along with mention of the sleeve. When Plaintiff returned to work he was told that he could not work and had to leave the property. The parties disputed the conversation, but use of the Sleeve was mentioned and emails indicated uncertainty over whether there was a work restriction. Eventually Plaintiff’s doctor removed that restriction and after another physical and clearance by the medical department, Plaintiff returned to work. He filed a complaint under the FRSA alleging that his return had been delayed in retaliation for reporting a work-related injury.

    The Railroad sought summary judgment. As to the contributing factor element, the court found that the Plaintiff had enough evidence to meet “this very permissive threshold.” Given the evidence that the medical department had cleared him to return to work and instructed the supervisors that he should be allowed to work, as well as the evidence of the hostility Plaintiff encountered when he returned, a reasonable jury could find that the injury report contributed to the decision to delay the return.

    As to the affirmative defense, the Railroad provided evidence that delays from the medical department are common for both work-related and non-work-related injuries. The court found that this was insufficient—the delay here resulted from the direct supervisor, not the medical department. The medical department had cleared Plaintiff to return. That was conveyed to the supervisor who made the opposite decision, which undercut the argument that the delay would have occurred regardless of the protected activity.

    The court also denied summary judgment as to the punitive claim on the grounds that there were material issues of facts in dispute and denied a motion to strike a notice of supplemental authority.

  • Jones v. BNSF Ry. Co. , No. 14-2616 D. Kan. Jan. 14, 2016) (2016 U.S. Dist. LEXIS 4887; 2016 WL 183514) (case below 2014-FRS-53 ( Jones ) and -63 ( Hodges ))
    Memorandum and Order
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    Summary :

    CONTRIBUTING FACTOR; TEMPORAL PROXIMITY ALONE INSUFFICIENT

    In Jones v. BNSF Ry. Co. , No. 14-2616 D. Kan. Jan. 14, 2016) (2016 U.S. Dist. LEXIS 4887; 2016 WL 183514) (case below 2014-FRS-53 (Jones) and -63 (Hodges)), Plaintiff Brian Jones alleged that Defendant BNSF retaliated against him for reporting an altercation with a fellow employee and for obtaining a restraining order against that employee. Plaintiff Nick Hodges alleged Defendant retaliated against him for reporting verbal threats made against Jones by another employee in the same altercation. The court granted Defendant’s Motions for Summary Judgment on Plaintiffs’ claims and dismissed Plaintiffs’ Complaint.

    Plaintiff Jones claimed that BNSF retaliated against him by holding him out from service, with pay, after he reported a threat by a coworker and obtained a temporary restraining order (“TRO”) against that coworker. BNSF argued that Jones failed to make a prima facie case of retaliation under the FRSA.

    The court found that Jones failed to establish a prima facie case of unlawful retaliation and BNSF was indeed entitled to summary judgment, because Jones had not presented evidence sufficient to support a finding that his protected activity was a contributing factor to his discipline. Specifically, the court found that Jones did not point to any direct evidence of intentional retaliation, and that evidence of temporal proximity alone was insufficient to present a genuine factual issue when the employer was concerned about the problem before the employee engaged in the protected activity. Jones offered no further evidence of discriminatory animus, and there was no evidence that BNSF was hostile towards or changed its attitude towards Jones because he obtained the TRO. The court found that the record showed that removing an employee who was part of a workplace altercation pending an investigation was contemplated by BNSF policies and procedures, and that Jones’s union representative advised him as much. Furthermore, the court stated that Jones’s argument that his supervisors did not need to remove him from service in order to comply with the TRO in essence would require the court to sit as a “super-personnel department” to second guess the decisions of the employer.

    CLEAR AND CONVINCING EVIDENCE ON HIRING DECISION; OTHER APPLICANTS WERE MORE QUALIFIED

    In Jones v. BNSF Ry. Co. , No. 14-2616 D. Kan. Jan. 14, 2016) (2016 U.S. Dist. LEXIS 4887; 2016 WL 183514) (case below 2014-FRS-53 (Jones) and -63 (Hodges)), Plaintiff Brian Jones alleged that Defendant BNSF retaliated against him for reporting an altercation with a fellow employee and for obtaining a restraining order against that employee. Plaintiff Nick Hodges alleged Defendant retaliated against him for reporting verbal threats made against Jones by another employee in the same altercation. The court granted Defendant’s Motions for Summary Judgment on Plaintiffs’ claims and dismissed Plaintiffs’ Complaint.

    Plaintiff Hodges claimed that he was “blackballed” from a machinist apprentice position at BNSF after he reported a verbal threat of violence against Jones. The court found that there was no serious dispute that Hodges had established a prima facie case, as 1) Hodges engaged in protected activity when he reported to BNSF what he heard the coworker say to Jones; 2) failure to promote Hodges was an adverse employment action; 3) Defendant knew about Hodges’s protected activity; and 4) Hodges’s reports and testimony were a contributing factor in BNSF’s decision not to promote him, as supported by testimony.

    The court found that even though Hodges had shown that his protected activity contributed in some way to BNSF’s decision not to hire him for machinist apprentice positions, BNSF was entitled to summary judgment because it demonstrated by clear and convincing evidence that it would have made the same hiring decisions even if Hodges had not engaged in a protected activity. The evidence was uncontroverted that Hodges began applying for machinist apprentice positions well before the altercation between Jones and the coworker. In early 2012, he interviewed for an open position, but was not selected, in part because he did not have sufficient education and/or experience. In January 2013, before the altercation, Hodges again applied for an apprentice position and was not hired. It was undisputed that the applicants selected for the position had more experience, training, and education than Hodges. Likewise, it was undisputed that after Hodges’s reports and testimony about the altercation, the applicants hired for the apprentice positions he applied for were more qualified, with technical degrees and years of experience and training that Hodges lacked working as heavy machinery mechanics. The court therefore found the record to show that Hodges was not promoted to a machinist apprentice position because the position was given to more qualified applicants. Thus, the undisputed evidence was clear and convincing that, even if BNSF was motivated in part by hostility to Hodges’s protected activity, BNSF would not have promoted Hodges for the machinist apprentice positions because he was competing against more qualified candidates.

  • Sweatt v. Union Pac. R.R. Co. , No. 14-cv-7891 (N.D. Ill. Jan. 12, 2016) (2016 U.S. Dist. LEXIS 3609; 2016 WL 128036)
    Memorandum Opinion and Order
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    Summary :

    TIMELINESS OF COMPLAINT; DISCRETE ACTS; CLOCK IS NOT RE-SET BY SECOND REQUEST FOR SURGERY THAT WAS PREVIOUSLY DENIED; DISTINCTION FROM ISSUING OF PAYCHECKS DISCUSSED IN AMTRAK v. MORGAN

    In Sweatt v. Union Pac. R.R. Co. , No. 14-cv-7891 (N.D. Ill. Jan. 12, 2016) (2016 U.S. Dist. LEXIS 3609; 2016 WL 128036), the District Court granted Defendant’s motion for summary judgment, holding that Plaintiff had not timely filed his complaint. Specifically, the court found that the 180-day limitations period for filing a complaint was triggered by Defendant’s first denial to pay for a surgical procedure, and that Plaintiff could not restart the limitations period by filing a second request for the same surgery.

    Plaintiff Ronald Sweatt claimed that Defendant Union Pacific Railroad Company violated the Federal Rail Safety Act (FRSA), 49 U.S.C. § 20106 et seq., by refusing his request that the company pay for surgery to treat his bilateral carpal tunnel syndrome. In a previous case against Defendant, Sweatt had claimed that Union Pacific was liable under the Federal Employer’s Liability Act (FELA) for his development of carpal tunnel syndrome. During a November 2013 deposition in the previous case, Sweatt’s treating physician testified that Sweatt’s carpal tunnel syndrome was a work-related injury. The district court in that case concluded that Sweatt’s FELA claim was time-barred and granted summary judgment to Union Pacific. See Sweatt , 2014 U.S. Dist. LEXIS 76156, 2014 WL 2536807, at *5-*6. The Seventh Circuit affirmed the decision on the same basis. Sweatt v. Union Pac. R. Co. , 796 F.3d 701, 707-08 (7th Cir. 2015).

    Following the physician’s November 2013 deposition, Sweatt again requested that Union Pacific approve the surgery. Union Pacific provided no formal response to this request, but the parties agreed that the company consistently maintained its refusal to authorize payment for the proposed surgery. On January 31, 2014, Sweatt filed a complaint with the Occupational Safety and Health Administration (OSHA), claiming that Union Pacific’s refusal to approve payment for the surgery violated the FRSA.

    Before the District Court, Union Pacific moved for summary judgment on the basis that Sweatt failed to file a timely administrative complaint. Sweatt responded that the FRSA’s limitations period should not be measured from the day Union Pacific denied his initial request for surgery, but should instead be measured from the day the company denied his subsequent request for the same surgery. Sweatt detailed that the violation alleged in his complaint was Union Pacific’s denial of his subsequent request for surgery in November 2013—not the denial in 2012—and measured from the later denial, his complaint in January 2014 fell well within the limitations period. In support of his arguments, Sweatt contended that the 2013 denial was the sort of “discrete act” of discrimination described in AMTRAK v. Morgan , 536 U.S. 101, 113, 122 S. Ct. 2061, 153 L. Ed. 2d 106 (2002).

    In response, Union Pacific contended that the discrete act triggering the limitations period was its denial of his request in 2012. The company stressed that the 180-day limitations period of § 20109(d)(2)(A)(ii) would be meaningless if Sweatt could reset it simply by requesting the same surgery a second time and again being told “no.”

    The court considered Morgan , a Title VII case, and stated that the point of the case was to distinguish discrete acts from “continuing violations.” The court provided examples of discrete acts including “termination, failure to promote, denial of transfer, or refusal to hire,” as well the issuing of individual paychecks that each reflects a policy of discrimination. The court agreed with Union Pacific’s argument that its 2012 denial of Sweatt’s request for surgery triggered the 180-day limitations period, and that the denial of his 2013 request for the same surgery to treat the same injury did not restart it. The court found that the 2013 denial of Sweatt’s second request for the same surgery could not be viewed as a “discrete act” within the meaning of Morgan . Unlike individual paychecks or the other acts discussed in Morgan , the denial of Sweatt’s second request for the same surgery did not injure him afresh. Rather, the second denial changed nothing, and although Sweatt may have been worse off the longer he was without treatment, a “lingering effect of an unlawful act is not itself an unlawful act . . . so it does not revive an already time-barred illegality.”

    The court found that Sweatt’s situation was instead analogous to the situation presented in Brown v. Unified School District 501, Topeka Public Schools , 465 F.3d 1184, 1186 (10th Cir. 2006), a Title VII case, where the plaintiff was fired from his position as a physical education teacher and then asked the school district to rehire him. In Brown , the school district informed the Plaintiff unequivocally that it would not consider him for rehire. Plaintiff filed an EEOC charge about this refusal, but he did not file a lawsuit within the 90-day limitations period after receiving his right-to-sue notice. Instead, he again asked the district to rehire him, and the district again refused. He then filed a new EEOC charge and, upon receiving a second right-to-sue notice, filed a lawsuit. The Tenth Circuit held that the plaintiff’s lawsuit was untimely because the evidence showed that district’s most recent refusal was a “mere reiteration” of the earlier refusal.

    The court concluded that Union Pacific’s 2013 refusal, like the refusal to rehire at issue in Brown, was a “mere reiteration” of its earlier refusal and must not be treated as a second discrete act. According to the court, accepting Sweatt’s position would render the limitations period of 49 U.S.C. § 20109(d)(2)(A)(ii) a nullity because Sweatt would be able to restart the period as many times as he liked. The court therefore granted Union Pacific’s motion for summary judgment.

Federal Water Pollution Control Act

  • DeKalb County v. USDOL , No. 14-15435 (11th Cir. Feb. 8, 2016) (2016 U.S. App. LEXIS 2115; 2016 WL 463455) (case below "Abdur-Rahman" ARB Nos. 12-064, -067, ALJ Nos. 2006-WPC-2 and 3)
    Denial of Petition for Review
    PDF
    Summary :

    FWPCA CAUSATION STANDARD IS “A” MOTIVATING FACTOR AND NOT “THE” MOTIVATING FACTOR

    ARB’S ERROR IN STATING ITS REVIEW OF ALJ’S FINDINGS OF FACT WAS DE NOVO DID NOT WARRANT REMAND WHERE ARB REVERSED ALJ ON LEGAL ANALYSIS AND HAD ACCEPTED THE ALJ’S FINDINGS OF FACT

    In DeKalb County v. USDOL , No. 14-15435 (11th Cir. Feb. 8, 2016) (2016 U.S. App. LEXIS 2115; 2016 WL 463455) (case below “Abdur-Rahman” ARB Nos. 12-064, -067, ALJ Nos. 2006-WPC-2 and 3), the Eleventh Circuit denied a petition to review an Administrative Review Board’s (“ARB” or “Board”) decision in a proceeding under the Federal Water Pollution Control Act, 33 U.S.C. § 1367. The petitioner argued that the ARB’s ruling in the case should be vacated, as the ARB had applied de novo rather than substantial-evidence scrutiny to the ALJ’s factual findings. The Eleventh Circuit concluded that, because the ARB reversed the ALJ on matters of law not fact, remanding the case for the agency to review the questions of fact for substantial evidence would not change the result in the case.

    Before the ALJ, Daisy Abdur-Rahman and Ryan Petty alleged that they were terminated from their jobs with the DeKalb County in violation of the Federal Water Pollution Control Act. The ALJ dismissed their complaints, finding that Abdur-Rahman and Petty had engaged in activity that the FWPCA protects, but that this activity was not the motivating factor behind the decision to terminate their employment. The ALJ also concluded that the County had shown that it would have terminated Abdur-Rahman and Petty “even had they not engaged in protected activity because managing them was above their supervisor’s [Gudewicz’s] means and they did not fit the peculiar culture [of their workplace].”

    On appeal, the ARB reviewed the ALJ’s factual findings and legal conclusions de novo and reversed. In so reversing, the Board accepted the ALJ’s factual findings. The Board, however, identified errors in the ALJ’s legal analysis. Regarding the motivating factor element of the claim, the ALJ had asked whether Abdur-Rahman and Petty had shown that their protected activity was the motivating factor—rather than a motivating factor—in the decision to fire them. The Board found that the protected activity was in fact a motivating factor—not the motivating factor, as the ALJ had incorrectly stated—in the County’s decision to fire them, and that Abdur-Rahman and Petty had shown that their protected activity met the proper causation test. The Board further rejected the ALJ’s legal analysis regarding whether the County had met its burden to show that it would have reached the same decision absent the protected activity. The Board remanded to the ALJ to decide the remedy for the retaliatory terminations. The Board affirmed the ALJ’s post-remand decisions, and the County petitioned for review.

    The Eleventh Circuit found that the Board correctly applied de novo review in rejecting the ALJ’s legal analysis. The Eleventh Circuit also found that, while the Board incorrectly described its review of the ALJ’s factual findings as de novo , substantial evidence supported the Board’s review. The Eleventh Circuit considered Stone & Webster II , 684 F.3d at 1133, which was remanded to the agency because the Board “acknowledged that it was bound by the substantial evidence standard” but, in effect, reviewed the ALJ’s factual findings de novo , “show[ing] little deference to the ALJ’s findings with which it disagreed, and . . . disregard[ing] the ALJ’s conclusions supported by substantial evidence in the record.” The Eleventh Circuit stated that in the instant case, in contrast to Stone & Webster II , “the . . . issue is legal, not factual.” The Eleventh Circuit therefore found that the Board’s decision would have been the same had it reviewed the ALJ’s factual findings for substantial evidence rather than de novo . The Eleventh Circuit concluded that remand to the agency in this case was unnecessary because “the agency would reach the same result upon a reconsideration cleansed of errors.”

National Transit Systems Security Act

  • Duncan v. Wash. Metro. Area Transit Auth. , No. 14-cv-224 (D. D.C. Mar. 31, 2016) (2016 U.S. Dist. LEXIS 42926; 2016 WL 1273179)
    Memorandum Opinion
    PDF
    Summary :

    ADVERSE ACTION; INVESTIGATION WAS NOT ADVERSE ACTION WHERE DECISION TO LAUNCH INVESTIGATION INTO WHETHER PLAINTIFF WAS FALSIFYING INCIDENT REPORTS WAS MADE TWO MONTHS BEFORE PLAINTIFF FILED A COMPLAINT WITH THE OFFICE OF THE INSPECTOR GENERAL

    In Duncan v. Wash. Metro. Area Transit Auth. , 174 F. Supp. 3d 123 (D.D.C. 2016), the United States District Court for the District of Columbia granted a motion for summary judgment filed by Washington Metropolitan Area Transit Authority (the “Defendant”) in a case of retaliation brought by James Duncan (the “Plaintiff”) under the National Transit Systems Security Act (“Act”).

    Relevant Facts :

    The Plaintiff was a detective for the Defendant. On August 13, 2012, he was questioned as part of an investigation into whether he had falsified information on his incident reports. Shortly thereafter, the Plaintiff filed a complaint with the Defendant’s Office of Inspector General (“OIG”), alleging that he had been instructed to “cover up” a potential homicide in 2011. Ten days later, after being formally told that he was under investigation, and after being been stripped of his badge and gun, the Plaintiff retired.

    No Adverse Action :

    The Court agreed with the Defendant that even if the Plaintiff’s report to the OIG was a protected activity, no reasonable jury could conclude that he suffered any adverse action from making the report. The Court emphasized that the investigation into whether the Plaintiff falsified incident reports began two months before the Plaintiff filed a complaint with OIG. Moreover, the individual who was responsible for investigating police misconduct filed an affidavit stating that he did not even become aware of the Plaintiff’s report to the OIG until months after the Plaintiff resigned. Thus, as the Plaintiff was subject to investigation for falsifying reports before he filed a complaint with the OIG, the Court held that the “timeline” was “dispositive.” Slip op. at 5. As the Plaintiff failed to establish a prima facie case of retaliation under the Act, the Court granted the Defendant’s motion for summary judgment.

  • Ndzerre v. Wash. Metro. Area Transit Auth. , No. 15-cv-1229 (D. D.C. Mar. 22, 2016) (2016 U.S. Dist. LEXIS 37715; 2016 WL 1225599)
    Memorandum Opinion
    PDF
    Summary :

    FEDERAL DISTRICT COURT JURISDICTION OVER NTSSA CLAIMS IS LIMITED TO TWO CIRCUMSTANCES: (1) TO FORCE A PERSON TO COMPLY WITH A FINAL ORDER BY THE DOL; AND (2) TO REVIEW A COMPLAINT DE NOVO WHEN THE DOL HAS FAILED TO ISSUE A FINAL DECISION WITHIN 210 DAYS OF FILING

    In Ndzerre v. Wash. Metro. Area Transit Auth. , No. 15-cv-1229 (D. D.C. Mar. 22, 2016) (2016 U.S. Dist. LEXIS 37715; 2016 WL 1225599), the Plaintiff, acting pro se , alleged, inter alia , that Defendants violated the National Transit Systems Security Act (NTSSA). The court dismissed the NTSSA claim for lack of subject matter jurisdiction. The court found the claim did not fall under the two limited circumstances in which NTSSA provides jurisdiction to federal district courts, namely: (1) to force a person to comply with a final order by the DOL; and (2) to review a complaint de novo when the DOL has failed to issue a final decision within 210 days of filing.

    AMENDMENT TO COMPLAINT; PRO SE LITIGANT’S ALLEGED VIOLATION OF THE FRSA RAISED FOR THE FIRST TIME IN AN OPPOSITION TO DEFENDANT’S MOTION TO DISMISS MAY BE CONSIDERED AS AN AMENDMENT TO AN ORIGINAL COMPLAINT /p>

    FEDERAL DISTRICT COURT JURISDICTION OVER FRSA CLAIMS IS LIMITED TO TWO CIRCUMSTANCES: (1) TO FORCE A PERSON TO COMPLY WITH A FINAL ORDER BY THE DOL; AND (2) TO REVIEW A COMPLAINT DE NOVO WHEN THE DOL HAS FAILED TO ISSUE A FINAL DECISION WITHIN 210 DAYS OF FILING

    In Ndzerre v. Wash. Metro. Area Transit Auth. , No. 15-cv-1229 (D. D.C. Mar. 22, 2016) (2016 U.S. Dist. LEXIS 37715; 2016 WL 1225599), the Plaintiff, a pro se litigant, raised an alleged violation of the FRSA for the first time in his opposition to Defendants’ motion to dismiss. The court noted that pro se pleadings are generally entitled to liberal construction, and that in certain circumstances it is appropriate to consider an opposition of a pro se plaintiff as an amendment to an original complaint, citing Richardson v. United States , 193 F.3d 545, 548-49 (D.C. Cir. 1999). Slip op. at 9. However, the court found that even if the Plaintiff’s opposition was accepted as a de facto amendment to his complaint, the new FRSA claim failed as a matter of law due to lack of subject matter jurisdiction. The court found the FRSA provides jurisdiction to federal district courts in two limited circumstances: (1) to force a person to comply with a final order by the DOL; and (2) to review a complaint de novo when the DOL has failed to issue a final decision within 210 days of filing. Because Plaintiff’s case did not fall into either of these categories, the FRSA claim was dismissed.

Sarbanes-Oxley Act

  • Wadler v. Bio-Rad Labs., Inc. , No. 15-cv-02356 (N.D. Cal. Dec. 20, 2016) (2016 U.S. Dist. LEXIS 176166; 2016 WL 7369246)
    Order Denying Motion to Exclude
    PDF
    Summary :

    ATTORNEY-CLIENT PRIVILEGE; A SOX COMPLAINANT WHO IS AN ATTORNEY MAY USE PRIVILEGED COMMUNICATIONS AND CONFIDENTIAL INFORMATION THAT IS REASONABLY NECESSARY TO ANY CLAIM OR DEFENSE IN THE CASE; STRICTER STATE ETHICAL RULES ARE PREEMPTED BY FEDERAL LAW ON THE SUBJECT

    In Wadler v. Bio-Rad Labs., Inc. , No. 15-cv-02356 (N.D. Cal. Dec. 20, 2016) (2016 U.S. Dist. LEXIS 176166; 2016 WL 7369246), the Defendant filed a motion to exclude virtually all of the evidence and testimony Plaintiff might rely upon to prove his case, including all testimony that may be based on information Plaintiff learned in the course of his service as Bio-Rad’s general counsel. Initially, the court found that the motion was effectively one for dispositive action that was now untimely under the trial management plan without permission from the court. The court denied the motion for that reason, but nonetheless considered the merits of the motion. The court first rejected Defendant’s contention that state rules and limitations on in-house counsel’s use of attorney-client privileged information applied to a federal SOX claim. The court thus turned to Federal law, and found:

       The Court further concludes that the standard set forth in Rule 1.6 of the Model Rules of Professional Conduct is the applicable standard under federal common law and therefore under Rule 501 of the Federal Rules of Evidence in this case. Moreover, there is nothing in the cases discussed above — Kachmar, Doe, Willy or Van Asdale — that suggests that the reasons for making an exception to attorney-client privilege under federal common law are any less applicable in litigation in federal court than in an administrative proceeding. Rather, they point to the conclusion that the Court may need to take some special measures when Wadler seeks to introduce sensitive communications and to be vigilant in ensuring that such evidence is admitted only when plaintiff’s belief that it is necessary to prove a claim or defense is reasonable .

       In this case, the rules discussed above lead the Court to conclude that Wadler should be permitted to rely on privileged communications and confidential information that is reasonably necessary to any claim or defense in the case, including communications and information pertinent to the following topics: 1) whether the concerns Wadler expressed in the Audit Committee Memo were objectively reasonable and whether Wadler had a subjective belief that his concerns were legitimate; and 2) whether Bio-Rad’s claims that Wadler was fired for other reasons, including alleged failure to implement adequate FCPA compliance policies in China, delay in connection with the Form 10-K and quarterly report filings, unauthorized conduct in connection with the Life Technologies settlement negotiations, and difficulties in his relationships with other employees, are credible. While there almost certainly will be evidence on many or all of these topics that is neither privileged not confidential, to the extent that such evidence is intertwined with privileged and confidential information (something Bio-Rad itself recognized in the Motion), the Court will permit that evidence where it finds that it meets the standards set forth above.

    Slip op at 25 (footnote omitted; in the footnote the court emphasized that the list of topics was not exclusive). The court further stated:

       Even aside from the latitude afforded under federal common law to use privileged communications in whistleblower retaliation actions, the rules governing waiver of attorney-client privilege also support the conclusion that Wadler may introduce privileged and confidential communications and information on a broad variety of topics because of Bio-Rad’s open and aggressive approach to litigation of this case as well as its public disclosures in the SEC and DOL proceedings.

    Id . at 26.

    The court also found that California attorney ethical rules cited by Defendant in support of its assertion that Plaintiff may not disclose client confidences in connection with his SOX claim are preempted by SOX, Section 307, 15 U.S.C. § 7245, and the implementing SEC regulations at 17 C.F.R. Part 205.

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

    PDF
    Summary :

    PROTECTED ACTIVITY; JUDGMENT ON THE PLEADINGS GRANTED WHERE PLAINTIFF FAILED TO ALLEGE FACTS SHOWING OBJECTIVELY REASONABLE BELIEF THAT DEFENDANT VIOLATED LAW ENUMERATED IN SOX OR THAT DEFENDANT HAD ENGAGED IN FRAUD; CLAIM OF NEEDLESS LOSS OF REVENUE IS NOT FRAUD

    In Burrs v. Walter Kiddie Portable Equipment, Inc. , No. 16-cv-1018 (M.D. N.C. Nov. 15, 2016) (2016 U.S. Dist. LEXIS 189784), aff’d Burrs v. Walter Kiddie Portable Equip., Inc. , No. 16-2419 (4th Cir. Sept. 13, 2017) (per curiam), Plaintiff contended that Defendant, his former employer, retaliated against him in violation of SOX for reporting that certain software used by the company was susceptible to fraud by employees and vendors. The district court granted judgment on the pleadings under FRCP 12(c) in favor of the Defendant because Plaintiff had not identified how the alleged facts gave rise to an objectively reasonable belief that Defendant violated any of the pertinent laws listed in SOX § 1514A. The court noted that the standard of review for Rule 12(c) motions is the same as that under Rule 12(b)(6). The court wrote:

       In his complaint, Mr. Burrs states that he believed that the continued existence of the defect in the company’s returns software, which circumvented the segregation of duties and which had previously allowed an employee to defraud the company, was an SOX violation. . . . His response similarly offers a generalized and conclusory claim that management’s refusal to agree with him about the importance of correcting problems with software could lead to financial losses and harm to the company’s shareholders. . . .

       Such characterizations and conclusions are insufficient to state a claim. While Mr. Burrs has alleged that he had a good faith belief that the company exposed itself to fraud by employees and others through a software defect, he did not allege that Walter Kiddie committed any fraud. . . . “A claim of needless loss of revenue is not a claim of fraud.” Day , 555 F.3d at 56. Mr. Burrs has not even alleged any misrepresentation or deceit by Walter Kiddie, which are “the hallmarks of fraud.” Id . at 55 (citation omitted).

       Moreover, the complaint does not “approximate the basic elements” of securities fraud, id . , and Mr. Burrs has not alleged, identified, or explained which SOX provision he reasonably believed that Walter Kiddie was violating. . . . He asserts, without tying his factual allegations to any particular statute, that the software “defect was more than a defect, it was a liability; it was fraud.” (Doc. 18 at 18). But neither the complaint nor Mr. Burrs’ briefing explain how he could reasonably believe Walter Kiddie’s actions constituted wire fraud, bank fraud, mail fraud, securities fraud or shareholder fraud. . . .

       Even if Walter Kiddie ignored Mr. Burrs’ disclosure of a harmful defect in its software and retaliated against him for his disclosure of the information by creating a hostile work environment and by constructively discharging him as the complaint alleges, Mr. Burrs is not entitled to recovery under the Sarbanes-Oxley Act because he has not shown an objectively reasonable belief that Walter Kiddie violated a law covered by the Act.

    Slip op. at 3-4 (record citations and footnote omitted).

    ______________
  • Westawski v. Merck & Co. , No. 14-cv-3239 (E.D. Pa. Oct. 18, 2016) (2016 U.S. Dist. LEXIS 144234; 2016 WL 6082633)
    Opinion
    PDF
    Summary :

       “The Court finds that, on the undisputed facts, no reasonable juror could conclude that a reasonable person in the Plaintiff's position could have believed that the facts known to the Plaintiff amounted to a violation of one of the federal laws or regulations set forth in Section 806. Because the Plaintiff has failed to establish that she engaged in protected activity, she cannot succeed in her Sarbanes-Oxley challenge. As a result, there is no need to determine whether the Plaintiff has met the remaining elements for a prima facie case under Section 806, or whether Defendant has proved by clear and convincing evidence that Plaintiff would have been discharged notwithstanding her complaints. Summary judgment in favor of Defendant shall therefore be granted.”

    (slip op. at 28).

    ______________

  • Erhart v. Bofi Holding , No. 15-cv-02287 (S.D. Cal. Sept. 26, 2016) (2016 U.S. Dist. LEXIS 131761; 2016 WL 5369470)
    Order Granting in Part and Denying in Part Defendant Bofi Holding, Inc.'s Motion to Dismiss and Motion to Strike
    PDF
    Summary :

    MOTION TO DISMISS UNDER FRCP 12(b)(6); FAILURE TO IDENTIFY IN COMPLAINT WHICH FEDERAL LAW RELATING TO FRAUD AGAINST SHAREHOLDERS IN § 1514A HAD BEEN VIOLATED IS GROUNDS FOR DISMISSAL WITHOUT PREJUDICE TO AMEND

    In Erhart v. Bofi Holding, Inc. , No. 15-cv-02287 (S.D. Cal. Sept. 26, 2016) (2016 WL 5369470, 2016 U.S. Dist. LEXIS 131761), Plaintiff filed a whistleblower complaint against Defendant alleging violations of SOX, Dodd-Frank, and California state law. He alleged that he received a negative performance review, his bonus was adversely affected, and ultimately he was terminated from his position following his reporting of potential violations. Defendant moved to dismiss Plaintiff’s complaint under Federal Rule of Civil Procedure 12(b)(6), arguing that Plaintiff failed to allege a plausible whistleblower claim under either SOX or Dodd-Frank because he did not allege that he engaged in protected activity.

    The standard for retaliation claims under SOX and Dodd-Frank in the Ninth Circuit had previously required that: (1) a complaint must “definitively and specifically” relate to an enumerated legal violation to be protected and (2) the complaint must “approximate the basic elements” of the fraud or violation alleged. However, the standard has shifted and now a plaintiff must only show that he/she “reasonably believes” that the conduct in the complaint constitutes a violation of SOX or Dodd-Frank. To make this showing, a plaintiff must have a subjective belief that the conduct violates a relevant law and the belief must be objectively reasonable. An objectively reasonable belief is one that a reasonable person with the same training and experience as the plaintiff in the same situation as the plaintiff would believe to constitute a violation.

    The Court noted SOX does not protect an employee from harassment or retaliation for reporting the violation of any law, it protects employees who reasonable believe conduct violates mail fraud, wire fraud, bank fraud, securities or commodities fraud, any rule or regulation of the SEC or any provision of federal law relating to fraud against shareholders. In a complaint, the employee must articulate which actions he/she reasonably believes to violate the specific laws in 18 U.S.C. §1514(a)(1), rather than generally listing violations. Similarly, Dodd-Frank protects employees who reasonable believe that conduct violates securities law or provisions enumerated in the SOX anti-retaliation provision. Plaintiff’s complaint was dismissed for failing to allege a plausible claim, but the Court granted him leave to amend his claim because he plausibly could reasonably believe that Defendant’s actions violated the provisions of SOX and/or Dodd-Frank.

  • Nhira v. Thompson Hospitality , No. 14-cv-676 (D. Md. Sept. 8, 2016) (2016 U.S. Dist. LEXIS 121187; 2016 WL 4699414)
    Memorandum
    PDF
    Appeal filed in the 4th Cir., No. 16-2106
    Summary :

    The district court found that because the Plaintiff never filed an administrative claim with OSHA, the court lacked jurisdiction over his SOX claim. See 18 U.S.C. § 1514A(b)(2)(D); 29 C.F.R. § 1980.103 and 18 U.S.C. § 1514A(b)(1)(B).

  • Sharkey v. JPMorgan Chase & Co. , No. 15-3400 (2d Cir. Sept. 12, 2016) (not precedential)
    Summary Order
    PDF
    Summary :

    SUMMARY JUDGMENT; DISTRICT COURT’S GRANT OF SUMMARY JUDGMENT ON CONTRIBUTORY FACTOR CAUSATION VACATED WHERE TEMPORAL PROXIMTY TOGETHER WITH “SHIFTING RATIONALES” WERE SUFFICIENT TO CREATE TRIABLE ISSUE OF FACT; DISTRICT COURT ERRED IN DETERMINING THAT THERE WAS A LEGITIMATE INTERVENING FACTOR WHERE DETERMINATION WAS BASED ON A CONTESTED FACT

    In Sharkey v. J.P. Morgan Chase & Co. , No. 15-3400 (2d Cir. Sept. 12, 2016) (not precedential), Plaintiff appealed from an award of summary judgment in favor Defendants on Plaintiff’s claim of retaliatory discharge for protected whistleblower activity in violation of the SOX Act. The court found that, viewed most favorably to Plaintiff, the record showed that she was terminated approximately one week after making her formal recommendation that J.P. Morgan Chase end its relationship with a client about whom she had communicated concerns of possible illegal activity for months. The court noted that “[s]uch temporal proximity between protected activity and unfavorable personnel action can support a prima facie inference that the protected activity was a contributing factor to the termination. The district court had concluded that Plaintiff’s purported lie to a superior about communicating with a difference client demonstrated a legitimate intervening basis for her discharge. The reviewing court found that here, Plaintiff disputed lying to her supervisor, and that the district court had acknowledged that whether Plaintiff lied remained an issue of factual dispute. The court found that it must assume in the face of conflicting accounts that the factfinder would draw inferences in favor of Plaintiff. The court determined that evidence of defendants’ “shifting rationales” for terminating Plaintiff, in consideration of the close temporal proximity discussed above gave rise to a triable issue of fact on the contributing factor element, and thus, vacated the district court’s award of summary judgment.

  • Perez v. Progenics Pharms., Inc. , 204 F. Supp. 3d 528 (S.D.N.Y. Aug. 30, 2016) (No. 10-cv-08278) (2016 U.S. Dist. LEXIS 116411; 2016 WL 4533398) (case below 2009-SOX-00017)
    Opinion
    PDF
    Summary :

    PREJUDGMENT INTEREST; IN NEW YORK DISTRICT COURT, SUCH INTEREST IS TYPICALLY CALCULATED UNDER THE NEW YORK STATUTORY INTEREST RATE COMPOUNDED ANNUALLY; PRO RATA DISTRIBUTION OF COMPENSATORY AWARD BEST METHOD TO FULFILL INTENT OF PREJUDMENT INTEREST AWARD

    In Perez v. Progenics Pharmaceuticals, Inc. , 204 F. Supp. 3d 528 (S.D.N.Y. Aug. 30, 2016) (No. 10-cv-08278) (2016 U.S. Dist. LEXIS 116411; 2016 WL 4533398) (case below 2009-SOX-00017), Plaintiff was terminated after he wrote a memorandum accusing his employer of committing fraud on shareholders. A jury trial on Plaintiff’s SOX whistleblower claim resolved in favor of Plaintiff. The court granted Plaintiff’s post-trial motion for prejudgment interest.

    Interest Percentage

    Employer argued that if the court denied its post-trial motion for a new trial and the jury’s verdict stood, then the court should apply the federal post-judgment rate as set forth in 28 U.S.C. § 1961(a). The court held that the New York statutory interest rate was the appropriate rate. The court considered Plaintiff’s testimony regarding the adverse effect that his termination had on his employment prospects and long term financial well-being. The court found no remedial purposes of the Sarbanes-Oxley Act “or other general principles” that would suffer by the Court’s application of the New York interest rate to Claimant’s federal claim.

    Interest time period

    Employer argued that Plaintiff was responsible for the length of litigation, thus, the court should reduce the prejudgment interest time period. The court found no basis for this argument, noting that both Plaintiff and Employer had filed motions and requests for extension, and the case had been reassigned three times through no fault of Plaintiff. The court ordered the parties to recalculate interest through September 9, 2016 or nearest month end, in light of the time to brief and resolve post-trial motions.

    Calculation

    The court held that as it had elected to apply the 9% New York interest rate rather than the “much lower” federal post-judgment interest rate, annual compounding rather than monthly compounding was sufficient to make the Plaintiff whole, noting that “[c]ourts within this Circuit typically apply prejudgment interest on an annual compounding basis.” The Court agreed with Defendant that a pro rata distribution of the compensatory award across the relevant time period was the best method of fulfilling the intent of the prejudgment interest award: to make Plaintiff whole.

    FRONT PAY WHERE REINSTATEMENT NOT FEASIBLE

    REINSTATEMENT; COURT MAY FIND REINSTATMENT NOT FEASIBILE BASED ON ITS OBSERVATIONS OF DEMEANOR AND INTERACTIONS BETWEENT THE PARTIES THROUGHOUT TRIAL AND LITIGATION

    In Perez v. Progenics Pharmaceuticals, Inc. , 204 F. Supp. 3d 528 (S.D.N.Y. Aug. 30, 2016) (No. 10-cv-08278) (2016 U.S. Dist. LEXIS 116411; 2016 WL 4533398) (case below 2009-SOX-00017), Plaintiff was terminated after he wrote a memorandum accusing his employer of committing fraud on shareholders. A jury trial on Plaintiff’s SOX whistleblower claim resolved in favor of Plaintiff. Post-trial, the Plaintiff moved for reinstatement.

    The court discussed the relationship between Plaintiff and Employer’s CEO at the time of trial (Employer’s General Counsel at the time of Plaintiff’s termination) and noted that Employer’s CEO was condescending and hostile toward Plaintiff. The court stated that the relationship would “inform the Court’s decision regarding the feasibility of [Plaintiff’s] reinstatement.”

    The court found that Plaintiff’s reinstatement was not feasible because of the hostility between Dr. Perez and Progenics. The court based this on the demeanor and interactions between the parties throughout trial and litigation. Accordingly, the court analyzed whether front pay was a more feasible remedy. The court found that Plaintiff had made a good-faith effort to mitigate his damages, and his future employment prospects were unpromising in part due to Defendant’s violations of his rights. The court further found that the jury had not already awarded front pay. The court was satisfied with Plaintiff’s calculation of estimated expected pay from his age at the time of the verdict to a “reasonable retirement age of 66 years and 6 months,” with no anticipated promotions, and raises commensurate with previous pay raises. The court denied Plaintiff’s motion for reinstatement but granted Plaintiff’s motion for front pay.

    ATTORNEY’S FEES; PRIOR COUNSEL LAW FIRM LACKED STANDING TO REQUEST ATTORNEY’S FEES, BUT WAS ENTITLED UNDER STATE LAW TO A CHARGING LIEN; COURT GRANTED THE PLAINTIFF (WHO WAS NOW PROCEEDING PRO SE) LEAVE TO FILE A MOTION FOR ATTORNEY’S FEES

    In Perez v. Progenics Pharmaceuticals, Inc. , 204 F. Supp. 3d 528 (S.D.N.Y. Aug. 30, 2016) (No. 10-cv-08278) (2016 U.S. Dist. LEXIS 116411; 2016 WL 4533398) (case below 2009-SOX-00017), Plaintiff was terminated after he wrote a memorandum accusing his employer of committing fraud on shareholders. A jury trial on Plaintiff’s SOX whistleblower claim resolved in favor of Plaintiff. Post-trial, the Plaintiff’s former attorneys’ motion for attorney’s fees.

    Plaintiff had been was first represented by counsel, but came to proceed pro se. The law firm Westermann, Sheehy, Keenan, Samaan, & Aydelott, LLP (“Westermann”) was Plaintiff’s counsel from November 2, 2010 to February 17, 2012. Westermann moved for an order granting Plaintiff’s reinstatement on September 1, 2015, and filed a reply in support of their motion on October 1, 2015.

    The court found that “in light of the statutory text’s ‘prevailing party’ language, the analogous precedent of the Court of Appeals’ Brown decision, and the compelling interest of prevailing plaintiffs to collect judgments independent of their former counsel’s interests…the lack of standing” was not merely a procedural defect. Accordingly, the court denied Westermann’s motion for attorney’s fees for lack of standing. Westermann moved in the alternative for leave to renew its application for a charging lien and grant Plaintiff leave to file a motion for attorney’s fees and costs pursuant to the Sarbanes-Oxley Act. The court noted that Sarbanes-Oxley “clearly confers upon Plaintiff the right to move for attorneys fees in this action.” The court also noted that New York Law provides an attorney the right to a lien upon his client’s cause of action, claim, or counterclaim claim, which attaches to a verdict in the client’s favor, and an attorney’s permitted withdrawal does not affect entitlement to the statutory lien. Finding no dispute that Westermann appeared on behalf of Plaintiff from November 2, 2010 to February 17, 2012, the court found that Westermann was entitled to a lien for the value of its services. The court granted Westermann’s motion for leave to renew its application for a charging lien, and granted Plaintiff leave to file a motion for attorney’s fees following entry of the charging lien.

  • Verfuerth v. Orion Energy Systems, Inc. , No. 10-cv-08278 No. 14-C-352 (E.D. Wisc. Aug. 25, 2016) (affirmed 879 F.3d 789 (7th Cir. 2018))
    Opinion
    PDF
    Summary :

    Affirmed Verfuerth v. Orion Energy Systems, Inc. , 879 F.3d 789 (7th Cir. 2018)

  • Beacom v. Oracle America, Inc. , 825 F.3d 376 (8th Cir. June 6, 2016) (No. 15-1729) (2016 WL 3144730; 2016 U.S. App. LEXIS 10183) (case below D. Minn. 13-985)
    Opinion
    PDF
    Summary :

    PROTECTED ACTIVITY; 8TH CIRCUIT ADOPTS ARB’S SLYVESTER REASONABLE PERSON STANDARD; UNDER THAT STANDARD, HOWEVER, PERSON IN PLAINTIFF’S POSITION WAS FOUND TO HAVE KNOWN THAT A COMPANY’S MISSING REVENUE PROJECTIONS BY MILLIONS OF DOLLARS WAS INSIGNIFICANT TO A COMPANY WITH BILLIONS IN ANNUAL REVENUE, AND THE PLAINTIFF THEREFORE DID NOT REASONABLY BELIEVE THAT THIS WAS FRAUD AGAINST SHAREHOLDERS

    In Beacom v. Oracle America, Inc. , No. 15-1729 (8th Cir. June 6, 2016) (case below D. Minn. 13-985), the 8th Circuit Court of Appeals joined the 2d, 3d, and 6th Circuits in adopting the ARB’s Sylvester “reasonable person” standard:

       Sarbanes-Oxley requires the employee to hold a reasonable belief that the employer’s conduct amounts to fraud against the shareholders. The reasonable belief standard has both an objective and a subjective component. Rhinehimer , 787 F.3d at 811. The employee must subjectively believe the employer’s conduct violated a law relating to fraud against shareholders, and the employee’s belief must be objectively reasonable. Id .

       The Administrative Review Board (ARB) of the Department of Labor, which adjudicates Sarbanes-Oxley whistleblower claims, first considered the objective component of the “reasonable belief” standard in 2006. Platone v. FLYI, Inc. , ARB No. 04-154, 2006 WL 3246910 (ARB Sept. 29, 2006). In Platone , the ARB held that to qualify as protected conduct, the employee’s complaint must (1) “definitively and specifically” relate to one of the categories of fraud or securities violations listed under Sarbanes-Oxley’s whistleblower statute, 18 U.S.C. § 1514A(a)(1); and (2) “approximate . . . the basic elements” of the fraud or securities violation to which the complaint relates. Id . at *8, adopted by Van Asdale v. Int’l Game Tech. , 577 F.3d 989, 996-97 (9th Cir. 2009); Welch v. Chao , 536 F.3d 269, 275 (4th Cir. 2008); Allen v. Admin. Review Bd. , 514 F.3d 468, 477 (5th Cir. 2008). See also Day v. Staples, Inc. , 555 F.3d 42, 54 n.8 (1st Cir. 2009).

       In 2011, however, the ARB rejected the Platone standard. Sylvester v. Parexel Int’l LLC , ARB No. 07-123, 2011 WL 2165854, at *12 (ARB May 25, 2011) (en banc). Instead, the ARB held that to satisfy the objective component of the “reasonable belief” standard, the employee must simply prove that a reasonable person in the same factual circumstances with the same training and experience would believe that the employer violated securities laws. Id . at *11-12 (noting that the Senate Report indicated Congress’s intent to impose “the normal reasonable person standard”). Under the new Sylvester standard, an employee’s mistaken belief may still be objectively reasonable. Id . at *13.

       No court has rejected the Sylvester standard. The Second, Third, and Sixth Circuits have deferred to the Sylvester standard, rejecting Platone ’s “definite and specific” standard. Nielsen v. AECOM Tech. Corp. , 762 F.3d 214, 220-21 (2d Cir. 2014); Wiest v. Lynch , 710 F.3d 121, 131-32 (3d Cir. 2013); Rhinehimer , 787 F.3d at 806. The Fourth and Tenth Circuits have addressed Sylvester , but found the plaintiff satisfied the more rigorous “definite and specific” standard from Platone . Feldman v. Law Enforcement Assocs. Corp. , 752 F.3d 339, 344 n.5 (4th Cir. 2014); Lockheed Martin Corp. v. Admin. Review Bd. , 717 F.3d 1121, 1132 n.7 (10th Cir. 2013).

       This court, joining the Second, Third, and Sixth Circuits, adopts the Sylvester standard.

    Slip op. at 5-7.

    The court, however, affirmed the district court’s court grant of summary judgment in favor of the Defendant:

       Under the Sylvester standard , Beacom must establish that a reasonable person in his position, with the same training and experience, would have believed Oracle was committing a securities violation. Rhinehimer , 787 F.3d at 811. This fact-dependent inquiry is typically inappropriate for summary judgment. Id . “[T]he issue of objective reasonableness should be decided as a matter of law only when no reasonable person could have believed that the facts [known to the employee] amounted to a violation or otherwise justified the employee’s belief that illegal conduct was occurring.” Id . (second alteration in original) (internal quotation marks omitted).

       RGBU Americas missed its projections by no more than $10 million. Beacom—an Oracle salesperson and shareholder—would understand the predictive nature of revenue projections. And, he would understand that $10 million is a minor discrepancy to a company that annually generates billions of dollars. These facts compel the conclusion that Beacom’s belief that Oracle was defrauding its investors was objectively unreasonable, even under the less-stringent Sylvester standard.

    Slip op. at 7 (footnote omitted).

  • Fuqua v. SVOX AG , No. 14-cv-00216 (N.D. Ill. May 24, 2016) (2016 WL 2986971; 2016 U.S. Dist. LEXIS 67661) (case below ARB Nos. 14-014, 14-069; ALJ Nos. 2013-SOX-46, 2014-SOX-18)
    Order
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    Summary :

    PLEADING; FAILURE TO ALLEGE THAT REPORTED CONDUCT CONSTITUTED VIOLATION OF 1515A(a)(1); ALLEGATION OF THEFT OF TRADE SECRETS — ALTHOUGH SUCH A THEFT MAY BE ILLEGAL, IT IS NOT PER SE FRAUDULENT — AND ALLEGATION IS INSUFFICIENT TO STATE A PLAUSIBLE CLAIM UNDER SOX

    In Fuqua v. SVOX AG , No. 14-cv-00216 (N.D. Ill. May 24, 2016) (2016 WL 2986971; 2016 U.S. Dist. LEXIS 67661) (case below ARB Nos. 14-014, 14-069; ALJ Nos. 2013-SOX-46, 2014-SOX-18), the U.S. District Court for the Northern District of Illinois, Eastern Division dismissed the Plaintiff’s amended complaint with prejudice for failure to state a cause of action under the whistleblower provision of the Sarbanes-Oxley Act (“SOX”). The Defendant had asked the Plaintiff (“Fuqua”) to sign a new employment agreement with an intellectual property assignment clause as a condition of continued employment. Fuqua stated concerns about the legality of the assignment clause to management, refused to sign the agreement and was subsequently terminated. The Court continued to find, as it had with Fuqua’s original complaint, that he had failed to allege protected activity under SOX because he had not alleged an “objectively reasonable belief that the conduct that [he] complained of constituted fraud as described in 18 U.S.C. §1514A(a)(1),” quoting Robinson v. U.S. Dep’t of Labor , 406 Fed. Appx. 69, 72 (7th Cir. 2010).

    The Court determined, “Theft of trade secrets and inducement of others to share such secrets, even if it may be unlawful, is not per se fraudulent or deceptive and Fuqua’s allegations, again fail to describe a scheme to defraud,” quoting its previous memorandum opinion in this case at 15-16. The Court stated that none of Fuqua’s new allegations change the fact that the inventions assignment clause is not a misrepresentation but rather a contractual condition. Thus, the Court concluded without an objective (as well as a subjective) basis to assert that a fraud had been committed, the plaintiff could not state a plausible retaliation claim under SOX.

  • Deltek, Inc. v. USDOL, Administrative Review Bd. , 649 Fed. Appx. 320 (4th Cir. May 20, 2016) (unpublished) (No. 14–2415) (2016 WL 2946570; 2016 U.S. App. LEXIS 9274) (case below ARB Nos. 13-068, -069; ALJ No. 2010-SOX-49)
    Unpublished opinion
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    Summary :

    PROTECTED ACTIVITY; “OBJECTIVE REASONABLE BELIEF” EVALUATED ON PARTICULAR CIRCUMSTANCES OF THE WHISTLEBLOWER; IN THE INSTANT CASE, THAT INCLUDED WHAT COMPLAINANT LEARNED FROM A CO-WORKER

    In Deltek, Inc., v. Dep’t of Labor, Admin. Review Bd. , 649 Fed. Appx. 320 (4th Cir. 2016) (unpublished), the ALJ found Deltek liable for retaliation in violation of the whistleblower provisions of the Sarbanes-Oxley Act (“SOX”). In regard to the question of protected activity, the Court noted that the law only recognizes the complainant’s formal and informal complaints as protected activity if the complaints were based on her “reasonable belief” that Deltek was engaging in conduct in violation of SOX. 18 U.S.C. § 1514A(a)(1). The reasonable belief standard has both a subjective and objective component. Here, Deltek argued that the complainant’s belief could not be objectively reasonable because she herself lacked a college degree and/or significant relevant work experience. The Court rejected this contention because of the complainant’s relationship with an extremely knowledgeable and experienced co-worker, noting that “in evaluating objective reasonableness, [the focus is] on the particular ‘factual circumstances’ of the putative whistleblower, see Lockheed Martin Corp. v. Admin. Review Bd. , 717 F.3d 1121, 1132 (10th Cir. 2013), which may include what he or she learns from coworkers.”

    CONTRIBUTORY FACTOR CAUSATION; INTERVENING EVENT DEFENSE OF PLAINTIFF’S CONFRONTATIONAL CONDUCT; SUBSTANTIAL EVIDENCE SUPPORTED ALJ’S FINDING THAT THIS DEFENSE WAS PRETEXT AS ESTABLISHED BY VIDEO AND AUDIO RECORDINGS

    In Deltek, Inc., v. Dep’t of Labor, Admin. Review Bd. , 649 Fed. Appx. 320 (4th Cir. 2016) (unpublished), the ALJ found Deltek liable for retaliation in violation of the whistleblower provisions of the Sarbanes-Oxley Act (“SOX”). In regard to whether the complainant (“Gunther”) established the necessary causal link between her protected activity and her termination, the court explained that the SOX standard for causation is “not a high one,” requiring only that the employee show that the protected activity “contributed to” the adverse employment action. 49 U.S.C. § 42121(b)(2)(B)(i). See Feldman v. Law Enf’t Assocs. Corp. , 752 F.3d 339, 350 (4th Cir. 2014) (recognizing that the contributing factor standard is a “broad and forgiving” one). The Court explained that, here, the contributing factor standard “turns critically” on the ALJ’s determination that “the explanation proffered by Deltek for Gunther’s termination was pretextual—or, more colloquially, not true.” Deltek alleged that it terminated Gunther because of “egregious,” “disruptive,” “confrontational” conduct on one occasion, after her protected activity. Deltek also argued that this was a legitimate intervening event that severed any connection between the protected activity and termination event. However, the ALJ found these contentions contradicted by video and audio recordings of the conversations and conduct in question and thus concluded that Deltek’s proffered reason for terminating Gunther was pretext, which the Board affirmed. Because the Court could only overturn this finding upon Deltek provided evidence of “exceptional circumstances,” which Deltek failed to provide, the Court affirmed the ALJ’s finding.

    One member of the panel dissented, arguing that the majority erroneously relied on the finding of pretext as a “new basis for causation.” This is incorrect because, in the dissent’s view, the ALJ’s determination on pretext was made after Gunther proved her prima facie case and the burden shifted to Deltek; the dissent found it improper to rely on pretext as a means of establishing the prima facie case.

    DAMAGES; AFTER-ACQUIRED EVIDENCE DOCTRINE; COMPLAINANT’S SENDING WORK RELATED DOCUMENTS TO PERSONAL EMAIL; DEFENDANT FAILED TO ESTABLISH THAT IT WOULD HAVE FIRED COMPLAINANT FOR THIS REASON; COMPLAINANT HAD A REASONABLE FEAR OF DESTRUCTION OF DOCUMENTS AND HAD BEEN INSTRUCTED BY RESPONDENT’S COUNSEL TO PRESERVE DOCUMENTS RELEVANT TO HER FRAUD CONCERNS

    In Deltek, Inc., v. Dep’t of Labor, Admin. Review Bd. , 649 Fed. Appx. 320 (4th Cir. 2016) (unpublished), the ALJ found Deltek liable for retaliation in violation of the whistleblower provisions of the Sarbanes-Oxley Act (“SOX”). Deltek challenged to the ALJ’s damages award, asserting that the after-acquired evidence doctrine—which stands for the premise that “reinstatement or front pay is inappropriate if an employer discovers evidence of conduct after it has wrongfully terminated an employee if the misconduct, standing alone, would have justified terminating the employee had the employer known of it at the time of discharge”—should have been applied because Deltek would have fired Gunther if it knew she had sent work-related documents to her personal e-mail. See McKennon v. Nashville Banner Publ’g Co. , 513 U.S. 352 (1995). The Court rejected this argument because it found Deltek failed to meet “its significant burden of demonstrating that it would have terminated Gunther” for her conduct, given that the employee had a reasonable fear of document destruction and was instructed by Deltek’s general counsel to preserve documents relevant to her fraud concerns.

    FRONT PAY; ALJ’S SETTING OF FRONT PAY AT FOUR YEARS BASED ON PLAINTIFF’S TESTIMONY THAT SHE WOULD NEED TO OBTAIN A COLLEGE DEGREE (THROUGH DEFENDANT’S TUITION REIMBURSEMENT PROGRAM) TO OBTAIN COMPARABLE EMPLOYMENT WAS NOT AN ABUSE OF DISCRETION; IT WAS LOGICALLY TIED TO A MAKE-WHOLE REMEDY

    In Deltek, Inc., v. Dep’t of Labor, Admin. Review Bd. , 649 Fed. Appx. 320 (4th Cir. 2016) (unpublished), the ALJ found Deltek liable for retaliation in violation of the whistleblower provisions of the Sarbanes-Oxley Act (“SOX”). Deltek seemingly argued on appeal that the award of front pay was unduly speculative. Noting that front pay awards are, by nature, speculative, the Court found that Gunther (the complainant) met her burden in providing the “essential data necessary to calculate a reasonably certain front pay award.” Bryant v. Mendenhall Acquisition Corp. , 2005 WL 1542547, 6 (Dep’t of Labor June 30, 2005); McKnight v. Gen. Motors Corp. , 973 F.2d 1366, 1372 (7th Cir. 1992). Gunther submitted a proof of damages including her annual salary and benefits, and testified that she would be unable to find comparable employment without a college degree, which she had planned to obtain with Deltek’s tuition reimbursement program; the ALJ calculated the front pay award by multiplying her annual pay and benefits by four. The Fourth Circuit said this finding had a logical basis, as it would take Gunther four years to receive a college degree and be “made whole” such that she would then be able to obtain a comparable job to the one she lost. Because the Court concluded that the ALJ and Board did not abuse their discretion in shaping the front pay and tuition reimbursement remedy, the Court affirmed the damages award.

    One member of the panel dissented, taking issue with the front pay and tuition reimbursement award. The dissent contended that Gunther did not put forth sufficient “essential data” necessary to calculate a front pay award, as she did not present testimony form a vocational expert, job counselor, or a neutral witness that could support the ALJ’s finding that she would be unable to find comparable employment without a college degree. Further, the dissent noted that the tuition reimbursement plan was inexorably linked to Deltek’s belief that it would receive a benefit in return for tuition payment, something the ALJ did not account for. Overall, the dissent viewed the damages award as a windfall for Gunther, as it put her in a far superior position than if she had remained with Deltek.

  • Trusz v. UBS Realty , No. No. 09-cv-00268 (D. Conn. Apr. 18, 2016) (2016 U.S. Dist. LEXIS 51427; 2016 WL 1559563)
    Amended Rulings on Cross-Motion for Summary Judgment
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    Summary :

    COVERED RESPONDENT; 2010 AMENDMENT TO § 1514A WAS A CLARIFICATION OF COVERAGE OF SUBSIDIARIES OR AFFILIATES THAT MAY BE APPLIED RETROACTIVELY

    In Trusz v. UBS Realty , No. 09-cv-00268 (D. Conn. Apr. 18, 2016) (2016 U.S. Dist. LEXIS 51427; 2016 WL 1559563), the U.S. District Court for the District of Connecticut, in an amended ruling on cross motions for summary judgment, denied both parties’ motions for summary judgment and determined the case should proceed to trial.

    The first issue addressed by the Court was whether named defendant UBS Realty, as distinct from Defendant “UBS AG,” would be subject to the whistleblower provision of SOX which states that the relevant provision applies to companies either “with a class of securities registered under… the Securities and Exchange Act of 1934” or that are required to file reports under that Act. 18 U.S.C. §1514A. The Dodd Frank Act in 2010 amended §1514A to state that Sarbanes-Oxley also covers “any subsidiary or affiliate whose financial information is in consolidated financial statements of such company.” UBS Realty, which does not have publicly traded securities, is a subsidiary of UBS AG, which is a Swiss global financial services company with approximately $2.8 trillion in assets and securities registered under §12 of the Securities Exchange Act of 1934. Significantly, all of the events in this case took place prior to 2010 and the passage of Dodd-Frank. The Court followed the ARB’s decision in Johnson v. Siemens Building Technologies, Inc. , 2011 WL 1431986 (A.R.B. 2011) and the weight of the 2nd Circuit cases which have addressed the issue. These courts concluded that prior to Dodd-Frank, §1514A of SOX was ambiguous and that the Dodd-Frank amendment was a reasonable interpretation of the previous law and therefore should apply to pre-enactment (of Dodd Frank) conduct. In other words, the Dodd Frank Act amendment to SOX was merely clarifying an ambiguous provision of SOX and therefore was not impermissibly retroactive. Thus the Court determined that the whistleblower provisions of SOX did apply to defendant Realty as a subsidiary of UBS AG.

  • Allstate Ins. Co. v. Zeefe , No. 15-cv-159 (E.D. Ky. Mar. 17, 2016) (2016 U.S. Dist. LEXIS 35381; 2016 WL 1071011)
    Memorandum Opinion and Order
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    Summary :

    TIMELINESS OF SOX COMPLAINT; SOX COMPLAINT RAISED IN COUNTERCLAIM IN DISTRICT COURT DISMISSED WHERE THE SOX STATUTE OF LIMITATIONS HAD EXPIRED

    In Allstate Ins. Co. v. Zeefe , No. 15-cv-159 (E.D. Ky. Mar. 17, 2016) (2016 U.S. Dist. LEXIS 35381; 2016 WL 1071011), the U.S. District Court for the Eastern District of Kentucky granted Plaintiff, Allstate Ins. Co.’s motion to dismiss the counterclaims of the Defendants, Kevin and Sandra Zeefe involving several counts which include retaliation claims alleged under Sarbanes Oxley (“SOX”) and Dodd Frank. Allstate had filed a complaint alleging the defendants had breached independent contractor agreements with Allstate including non-compete and non-disclosure provisions. Subsequently defendants filed counterclaims alleging wrongful termination and discriminatory retaliation under several statutes including SOX and Dodd Frank.

    The Court dismissed the SOX count on the basis of the statute of limitations noting under SOX that “An action under paragraph (1) shall be commenced not later than 180 days after the date on which the violation occurs, or after the date on which the employee became aware of the violation.” 18 U.S.C. §1514A(b)(2)(D). The Court also quoted 9th Circuit case, Coppinger-Martin v. Solis , 627 F. 3d 745. 749 (9th Cir. 2010) and applicable regulation 29 C.F.R. §1980.103(c), stating “A plaintiff seeking whistleblower protection under SOX must file an administrative complaint with OSHA . . . ’not later than 90 days after the date on which the violation occurs’[.]” The Court determined that the Dodd-Frank claim survived the relevant statute of limitations as Dodd Frank imposes a 3 year statute of limitations. However, the Court determined that plaintiff had not stated a plausible claim under Dodd-Frank because the alleged adverse action (termination) occurred before the alleged whistleblowing.

  • Wiest v. Tyco Electronics Corp. , No. 15-2024 (3d Cir. Feb. 2, 2016) (2016 U.S. App. LEXIS 1730; 2016 WL 386088)
    Opinion of the Court
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    Summary :

    CONTRIBUTING FACTOR CAUSATION; COMPLAINANT FOUND TO HAVE FAILED TO IDENTIFY ANY EVIDENCE LINKING PROTECTED ACTIVITY WITH ADVERSE ACTION

    In Wiest v. Tyco Electronics Corp. , No. 15-2024 (3d Cir. Feb. 2, 2016) (2016 U.S. App. LEXIS 1730; 2016 WL 386088), the Third Circuit affirmed the District Court’s order granting summary judgment to Defendant Tyco Electronics Corporation (“Tyco”) on appeal by Plaintiff Jeffrey Wiest. The Third Circuit found that Plaintiff Wiest failed to offer any evidence to establish that his protected activity was a contributing factor to any adverse employment action that Tyco took against him.

    Wiest asserted his claim for unlawful retaliation under the Sarbanes-Oxley Act, 18 U.S.C. § 1514A, which protects whistleblowing employees from retaliation for providing information, either directly or indirectly, about certain types of expressly enumerated illegal activities. Wiest contended that Tyco unlawfully terminated his employment for reporting suspected securities fraud violations pertaining to the accounting treatment of two Tyco events. Specifically, Wiest claimed that he engaged in a six-month “anguished field battle” during which he frustrated Tyco’s management with his refusals as an accountant to process payments allegedly due from Tyco that related to two Tyco employee and dealer meetings in resort settings.

    Tyco contended that Wiest’s involvement with the specific events at issue was minimal and he did not frustrate, or even inconvenience, anyone in Tyco’s management by his conduct. Tyco asserted that more than eight months after he engaged in the alleged protected activity, Tyco’s human resources director—who had no involvement with, or knowledge of, Wiest’s protected activity—conducted an investigation after she received multiple complaints that Wiest made inappropriate sexual comments to several female Tyco employees, and that he had inappropriate sexual relationships with two subordinates during his employment. Tyco argued that the findings from this investigation caused it to take employment actions with respect to Wiest unrelated to the accounting issues he had raised.

    Tyco based its motion for summary judgment on the assertion that Wiest had not identified any evidence in the record from which a jury could conclude that Wiest’s protected activity was a contributing factor to any adverse action that it may have taken against him. Alternatively, Tyco argued that it would have taken the same action even in the absence of the protected activity.

    The court agreed that Wiest had not identified any record evidence to establish causation, and affirmed the District Court’s order granting summary judgment to defendant Tyco. The court further found that the record was devoid of any evidence that Wiest’s conduct frustrated management personnel or that, even if he frustrated management personnel, any such individual was involved in the investigation and an ultimate recommendation to terminate his employment. Moreover, even if Wiest could have satisfied those threshold requirements, the court found that Tyco demonstrated that it would have taken the same actions with respect to Wiest in the absence of Wiest’s accounting activity given the thorough, and thoroughly documented, investigation conducted by its human resources director. Because there were no genuine issues of material fact with respect to Wiest’s anti-retaliation claim under the Sarbanes-Oxley Act, the court affirmed the District Court’s grant of summary judgment.

Surface Transportation Assistance Act

  • In re Altegrity, Inc. , No. 15-10226 (Bankr. D. Del. Nov. 28, 2016) (2016 Bankr. LEXIS 4096) (related to Barr v. HireRight Solutions, Inc. , 2014-STA-00022)
    Memorandum
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    Summary :

    Bankruptcy court denied a STAA complainant's motion for relief from a bankruptcy discharge injunction with respect to his STAA claim in Barr v. HireRight Solutions, Inc. , 2014-STA-00022.

  • Smith v. Perez , Nos. 13-4342 and 15-3071 (6th Cir. Aug. 25, 2016) (2016 U.S. App. LEXIS 15870; 2016 WL 4473239) (unpublished) (case below ARB No. 14-063, ALJ No. 2006-STA-32)
    [Denial of petition for review]
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    Summary :

    COVERED RESPONDENT; JOINT EMPLOYER; SPOUSE OF EMPLOYER’S OWNER FOUND TO HAVE BEEN PROPERLY DISMISSED AS A RESPONDENT ON THE GROUND THAT HE HAD NO CONTROL OVER COMPLAINANT’S EMPLOYMENT

    In Smith v. Perez , 659 Fed. Appx. 296 (6th Cir. Aug. 25, 2016) (Nos. 13-4342 and 15-3071) (2016 U.S. App. LEXIS 15870; 2016 WL 4473239) (unpublished) (case below ARB No. 14-063, ALJ No. 2006-STA-32), Petitioner, a truck driver for Lake City Enterprises, got into a dispute, over a truck safety issue, with the owner of the company, Crystle Morgan and was terminated from his employment by Crystle. Petitioner had filed a complaint under the STA for whistle blower retaliation against the company, Crystle Morgan and her husband Donald Morgan. Petitioner was successful in his claim against Lake City Enterprises and Crystle Morgan but not against Donald Morgan. On appeal, the court concluded there was substantial evidence to support the Secretary of Labor’s determination that Donald Morgan was not liable under the Act.

    The Court noted that the Act imposes liability on “a person” who discharges or otherwise disciplines an employee engaged in a protected activity. Petitioner argues that even through Donald Morgan himself did not discharge Smith, he should still be liable because of his central role and involvement with Lake City and because Crystle and Donald were “joint employers at Lake City.” The Board had affirmed the ALJ’s decision that Donald was not liable by applying a test that examined “whether the entity exercised control over the complainant’s employment…Such control includes the ability to hire, transfer, promote reprimand or discharge the complainant, or to influence another employer to take such actions against a complainant.” The court determined, because the purpose of the Act is to protect employees from retaliation, the Secretary’s interpretation that a person liable under the Act must exercise control of the employee’s employment is reasonable. Therefore, the Secretary’s “control over employment test is entitled to deference.”

    The Court concluded that substantial evidence supports the Secretary’s conclusion that “while Donald Morgan advised his wife about her business, stored and maintained his truck at the [Lake City] facility, and helped with equipment issues, he exercised no control over Smith’s employment,” noting that Donald did not hire or fire Smith, did not hold any managerial supervisory, or ownership position at Lake City, nor was Smith ever told that Donald was a manager. Thus the court denied Smith’s petition for review of the order finding Donald Morgan not individually liable under the Act.

    ARB JURISDICTION; ARB PROPERLY DENIED COMPLAINANT’S MOTION TO REOPEN WHERE HE HAD ALREADY FILED A PETITION FOR REVIEW BY THE COURT OF APPEALS

    In Smith v. Perez , 659 Fed. Appx. 296 (6th Cir. Aug. 25, 2016) (Nos. 13-4342 and 15-3071) (2016 U.S. App. LEXIS 15870; 2016 WL 4473239) (unpublished) (case below ARB No. 14-063, ALJ No. 2006-STA-32), the court denied the STAA complainant’s petition to review the ARB’s order denying his motion to reopen the record. The motion had been filed before the Board after the petition for review with the Sixth Circuit was filed and thus the Board correctly denied the motion finding it lacked jurisdiction while the appeal before the 6th circuit court was pending.

  • TransAm Trucking, Inc. v. Admin. Review Bd., USDOL , 883 F.3d 1206 (10th Cir. Aug. 8, 2016) (No. 15-9504) (published on motion of the ARB) (2016 WL 4183865) (case below ARB No. 13-031, ALJ No. 2010-STA-20 (Maddin))
    Order and Judgment
    PDF
    Summary :

    PROTECTED ACTIVITY; TENTH CIRCUIT FINDS THAT “OPERATE” IN THE STAA’S “REFUSAL TO OPERATE” PROVISION, 49 U.S.C. § 31105(a)(1)(B)(ii), IS NOT COEXTENSIVE WITH THE TERM “DRIVE,” BUT ENCOMPASSES OTHER USES OF A VEHICLE WHEN IT IS WITHIN THE CONTROL OF THE EMPLOYEE

    In TransAm Trucking, Inc. v. Admin Review Board, USDOL , 883 F.3d 1206 (10th Cir. 2016) (case below ARB No. 13-031, ALJ No. 2010-STA-20), Alphonse Maddin, a truck driver for TransAm Trucking (“TransAm”), was terminated for abandoning his trailer. After alerting TransAm that the trailer’s brakes were frozen and waiting several hours for repair service, Maddin again contacted TransAm. Maddin informed his dispatcher that the truck’s bunk heater was not working and that his torso and feet were numb. Maddin unhitched the trailer from the truck when he began having trouble breathing and made a final call to his supervisor, who instructed him to “either drag the trailer with its frozen brakes or remain with the trailer until the repairperson arrived.” Ultimately, Maddin left the trailer and sought help in the truck, returning to the trailer to meet the repairman. TransAm , 883 F.3d 1206, 1209.

    The ALJ found that Maddin engaged in protected activity when he reported the frozen brakes and when he refused to drag the trailer while its brakes were frozen. Id . The ALJ further found that the protected activity was a contributing factor in Maddin’s termination, awarding backpay and ordering reinstatement and the removal of any negative information shared with driver reporting companies. The ARB affirmed, interpreting the “refusal to operate” provision of the STAA to encompass Maddin’s refusal “to operate the truck under the conditions set by” TransAm. TransAm appealed to the Tenth Circuit Court of Appeals. Id . at 1209-1210.

    The Tenth Circuit denied Respondent’s petition for review of the ARB’s decision affirming the ALJ’s finding of retaliation in violation of the STAA and award of reinstatement and backpay. The court applied Chevron to the DOL’s interpretation and concluded that: (i) the term “operate” is not defined in the STAA, Id . at 1211; and (ii) the DOL’s interpretation “furthers the purpose of the STAA by prohibiting an employer from discharging an insubordinate employee whose insubordination was motivated by the employee’s reasonable apprehension,” Id . at 1212. Accordingly, the court found it appropriate to defer to the DOL’s position that the word “operate” in the “refusal to operate” provision, 49 U.S.C. § 31105(a)(1)(B), is not coextensive with the term “drive.” Id .

    The court found substantial evidence to support the ARB’s finding that Maddin refused to operate his vehicle when he unhitched the trailer and left in the truck, both by “refusing to drag the tractor-trailer” and by “refusing to remain with the trailer.” The court reiterated that, “although Maddin actually drove the truck after unhitching it, he refused to operate his tractor-trailer in the manner instructed by his employer.” Id . at 1213.

    CAUSATION; TENTH CIRCUIT FINDS SUBSTANTIAL EVIDENCE TO SUPPORT A FINDING OF CAUSATION WHERE THE EMPLOYER’S STATED EXPLANATION FOR ADVERSE ACTION NECESSARILY IMPLICATED THE EMPLOYEE’S PROTECTED ACTIVITIES

    In TransAm Trucking, Inc. v. Admin Review Board, USDOL , 883 F.3d 1206 (10th Cir. 2016) (case below ARB No. 13-031, ALJ No. 2010-STA-20), Alphonse Maddin, a truck driver for TransAm Trucking (“TransAm”), was terminated for abandoning his trailer. After alerting TransAm that the trailer’s brakes were frozen and waiting several hours for repair service, Maddin again contacted TransAm. Maddin informed his dispatcher that the truck’s bunk heater was not working and that his torso and feet were numb. Maddin unhitched the trailer from the truck when he began having trouble breathing and made a final call to his supervisor, who instructed him to “either drag the trailer with its frozen brakes or remain with the trailer until the repairperson arrived.” Ultimately, Maddin left the trailer and sought help in the truck, returning to the trailer to meet the repairman. The ALJ awarded reinstatement and backpay; the ARB affirmed. TransAm , 883 F.3d 1206, 1209-1210.

    The Tenth Circuit found substantial evidence to support a finding of causation where TransAm admitted that it terminated Maddin for abandoning his trailer, agreeing with the ARB that “the stated explanation for Maddin’s termination necessarily implicates his protected activities,” which included “refusing to drag the tractor-trailer” and “refusing to remain with the trailer.” The court also found that indirect evidence—close temporal proximity of the protected activity to the termination and shifting explanations given for the termination—supported the finding. Id . at 1214.

    BACK PAY; THE TENTH CIRCUIT AFFIRMS INCLUSION OF PER DIEM TRAVEL ALLOWANCES IN BACKPAY AWARD WHERE SUCH ALLOWANCES WERE NOT INTENDED TO OFFSET EXPENSES

    In TransAm Trucking, Inc. v. Admin Review Board , USDOL, 883 F.3d 1206 (10th Cir. 2016) (case below ARB No. 13-031, ALJ No. 2010-STA-20), the Tenth Circuit found substantial evidence to support the inclusion of per diem travel allowances in a backpay award. The court approved the ALJ’s award of a per diem travel allowance of $168.58 per week as part of Complainant’s lost earnings. The court noted the lack of record evidence to establish that the payments were intended as reimbursements for expenses incurred driving and found substantial evidence to support the ALJ’s conclusion, affirmed by the ARB, that the allowances were not intended to offset expenses and were properly calculated in lost earnings. TransAm , 883 F.3d 1206, 1214-1215.

    BACK PAY; DEDUCTIONS; TENTH CIRCUIT FINDS THAT DIRECT EVIDENCE WAS NOT NECESSARY TO ESTABLISH A NET LOSS FOR THE POST-TERMINATION PERIOD, AND THAT THE NET LOSS JUSTIFIED THE ALJ’S DECISION NOT TO DEDUCT POST-TERMINATION INCOME FROM THE BACKPAY AWARD

    In TransAm Trucking, Inc. v. Admin Review Board, USDOL , 883 F.3d 1206 (10th Cir. 2016) (case below ARB No. 13-031, ALJ No. 2010-STA-20), the Tenth Circuit found that Complainant’s tax records and personal financial statement were sufficient to establish a net loss during his post-termination period. The court further found that the net loss justified the ALJ’s decision not to deduct Complainant’s post-termination income from the backpay award. TransAm , 883 F.3d 1206, 1215.

    BACK PAY; INTEREST; THE TENTH CIRCUIT REJECTS RESPONDENT’S ASSERTION THAT COMPLAINANT WAS NOT ENTITLED TO BACKPAY WITH INTEREST FOR THE ENTIRE PERIOD BETWEEN TERMINATION AND REINSTATEMENT DUE TO AN ALLEGED EXCESSIVE DELAY BEFORE DOL

    In TransAm Trucking, Inc. v. Admin Review Board, USDOL , 883 F.3d 1206 (10th Cir. 2016) (case below ARB No. 13-031, ALJ No. 2010-STA-20), the Tenth Circuit rejected Respondent’s assertion that Complainant was not entitled to backpay with interest for the entire period between termination and reinstatement because of excessive delay in the resolution of the matter before the Department of Labor. Complainant filed his complaint with OSHA on June 1, 2009. The ALJ issued an interim decision ordering reinstatement on October 26, 2012. The court found that Respondent’s “assertions are wholly self-serving and its opening appellate brief contains no legal authority in support of its position.” TransAm , 883 F.3d 1206, 1215.

  • TransAm Trucking, Inc. v. Admin. Review Bd. , No. 15-9504 (10th Cir. July 15, 2016) (unpublished) (2016 U.S. App. LEXIS 13071) (case below ARB No. 13-031, ALJ No. 2010-STA-20 (Maddin))
    Order and Judgment
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    Summary :

    See published decision, 883 F.3d 1206.

  • Yusim v. DOL , No. 14-15087 (11th Cir. Mar. 16, 2016) (per curiam) (2016 U.S. App. LEXIS 4798; 2016 WL 1039556) (unpublished) (case below ARB No. 14-007, ALJ No. 2010-STA-00066)
    Memorandum Decision and Order
    PDF
    Summary :

    DOL IS NOT OBLIGATED TO INTERVENE ON BEHALF OF A COMPLAINANT IN A PROCEEDING CONCERNING THE RESPONDENT’S BANKRUPTCY

    COURT DISMISSES PETITION FOR REVIEW OF ARB’S DISMISSAL OF STAA COMPLAINT BASED ON RESPONDENT’S BANKRUPTCY

    In Yusim v. DOL , No. 14-15087 (11th Cir. Mar. 16, 2016) (per curiam) (2016 U.S. App. LEXIS 4798; 2016 WL 1039556) (unpublished) (case below ARB No. 14-007, ALJ No. 2010-STA-00066), the Eleventh Circuit dismissed Yusim’s petition for review to the extent that he was challenging the Department of Labor’s refusal to intervene on his behalf to withdraw the reference of his STAA claim from a bankruptcy court. The court found that Yusim had not shown that the agency was required to intervene on his behalf. The court dismissed Yusim’s petition for review challenging the ARB’s dismissal of his STAA complaint due to the Respondent’s bankruptcy. The Court wrote:

       The ARB’s legal conclusion that Yusim’s complaint should be dismissed was not arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law. The ARB could not provide any of the relief authorized under § 31105(b)(3) once Midnight Sun was no longer operating as a business and had no assets from which damages could be paid. Indeed, Midnight Sun was not an employer under the STAA at the time of the ARB’s decision because it did not operate a business that owned or leased a commercial motor vehicle. Yusim argues that the ARB could have granted him relief by declaring that he accurately reported his hours, but the STAA does not state that the Department of Labor can provide such declaratory relief.

    Slip op. at 5.