USDOL/OALJ Reporter: 2023 Federal Court Whistleblower Decisions

“Affordable Care Act” (§ 218c of the FLSA)
Energy Reorganization Act
Federal Railroad Safety Act
Sarbanes-Oxley Act
Surface Transportation Assistance Act

Affordable Care Act

Bailey v. Dejoy, No. 20-cv-00042 (D. Me. Feb. 26, 2023) (2023 U.S. Dist. LEXIS 35831; 2023 WL 767859) (Recommended Decision on Defendant's Motion to Dismiss)

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

In Bailey v. Dejoy, No. 20-cv-00042 (D. Me. Feb. 26, 2023) (2023 U.S. Dist. LEXIS 35831; 2023 WL 767859), Plaintiff filed a complaint alleging ADA and Rehabilitation Act claims. She later amended the complaint to assert several additional Federal statutes, including the whistleblower protections of the Fair Labor Standards Act, 29 U.S.C. § 218c (Affordable Care Act), which incorporates the procedures of the Consumer Product Safety Improvement Act, 15 U.S.C. § 2087(b). The Magistrate Judge issued a recommended decision that included a recommendation to dismiss the § 218c claim because there was no evidence that Plaintiff had first filed an administrative complaint with OSHA as required by § 2087(b), and therefore the FLSA claim was not properly before the district court.

Energy Reorganization Act

Peck v. Administrative Review Board, USDOL, No. 20-1154 (4th Cir. Apr. 30, 2023) (2023 U.S. App. LEXIS 12962; 2023 WL 1704278) (Opinion), reh'g & reh'g en banc den., (4th Cir. July 13, 2023) (2023 U.S. App. LEXIS 20763)

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

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

In Peck v. Administrative Review Board, USDOL, No. 20-1154 (4th Cir. Apr. 30, 2023) (2023 U.S. App. LEXIS 12962; 2023 WL 1704278), an ALJ had dismissed Peck’s Energy Reorganization Act (ERA), 42 U.S.C. § 5851 whistleblower complaint because the United States had not waived sovereign immunity for such actions against the Nuclear Regulatory Commission (NRC). The ARB affirmed the ALJ’s decision en banc, over one dissent.

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

Federal Railroad Safety Act

Carlson v. BNSF Ry. Co., No. 19-cv-1232 (D. Minn. July 19, 2023) (2023 U.S. Dist. LEXIS 133895; 2023 WL 3030644) (Order Affirming Magistrate Judge's Order)

Related USDOL Case No.: 2019-FRS-00024

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

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

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

In Carlson v. BNSF Ry. Co., No. 19-cv-1232 (D. Minn. July 19, 2023) (2023 U.S. Dist. LEXIS 133895; 2023 WL 3030644), Plaintiff moved to compel discovery relating to his Federal Railroad Safety Act (FSRA), Federal Employers' Liability Act (FELA) and Locomotive Inspection Act (LIA) claims. Following in camera review, the magistrate judge denied the motion to compel, finding that the documents in question were “appropriately withheld either as work product, attorney-client privileged communications or both." Slip op. at 2 (quoting Magistrate’s decision). The district court applying the clearly erroneous or contrary to the law standard of review, affirmed the magistrate judge’s determinations.

Attorney-client privilege

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

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

Id. at 4.

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

Work product privilege

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

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

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

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

Pfeifle v. Portland Terminal R.R. Co., No. 19-cv-01436 (D. Or. June 25, 2023) (2023 U.S. Dist. LEXIS 118938) (Opinion and Order)

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

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

In Pfeifle v. Portland Terminal R.R. Co., No. 19-cv-01436 (D. Or. June 25, 2023) (2023 U.S. Dist. LEXIS 118938), Defendant moved for judgment on the pleadings on Plaintiff’s FRSA Section 20109 claim on the ground that Plaintiff failed to exhaust his administrative remedies on certain counts. The court denied the motion.

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

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

Agency’s “reasonably expected” investigation

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

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

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

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

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

The actual investigation

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

Henin v. Soo Line R.R. Co., No. 19-336 (D. Minn. June 14, 2023) (2023 U.S. Dist. LEXIS 110370) (Memorandum and Order)

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

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

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

In Henin v. Soo Line R.R. Co., No. 19-336 (D. Minn. June 14, 2023) (2023 U.S. Dist. LEXIS 110370), the parties engaged in four months of discovery before the ALJ on Henin’s FRSA retaliation claim; Henin, however, had not taken any depositions or propounded any discovery requests. The railroad then sought summary decision from the ALJ, filing its final version of the motion in October 2017. The ALJ granted the motion in January 2019. Henin petitioned for ARB review of the ALJ’s decision a week past the limitations period. Three days after the railroad filed a motion to dismiss the ARB petition as untimely, Henin filed his federal lawsuit under the FRSA kick-out provision. The ARB ultimately found equitable reasons to accept the untimely appeal, but dismissed the petition because Henin had filed the federal action. An appeal to the 8th Circuit on the ARB’s decision to reinstate the appeal was taken by the railroad. The district court action was stayed pending this appeal. The 8th Circuit affirmed the ARB’s reinstatement, and the stay of the district court action was lifted. The railroad then moved to dismiss Plaintiff’s FRSA retaliation claim based on waiver and laches because of the extent to which he had litigated the case before the ALJ and the ARB. The court granted the motion.

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

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

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

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

Yowell v. Administrative Review Board, USDOL, No. 20-60274 (5th Cir. Apr. 12, 2023) (2023 U.S. App. LEXIS 10417; 2023 WL 1344004) (Opinion)

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

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

In Yowell v. Administrative Review Board, USDOL, No. 20-60274 (5th Cir. Apr. 12, 2023) (2023 WL 1344004), the Fifth Circuit found that the ARB did not err in “in finding that the railroad terminated the petitioner's employment for failing to comply with his obligation to report promptly all known injuries and that his eventual acknowledgement of the injury was not a ‘contributing factor’ for purposes of the FRSA.” Slip op. at 2.

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

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

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

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

Stapleton v. CSX Transp., No. 19-cv-413 (M.D. Fla. March 30, 2023) (2023 U.S. Dist. LEXIS 61377) (Order [granting Defendant's Motion for Summary Judgment])

USDOL Case: ALJ No. 2019-FRS-00045

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

In Stapleton v. CSX Transp., No. 19-cv-413 (M.D. Fla. March 30, 2023) (2023 U.S. Dist. LEXIS 61377), Plaintiff filed a complaint, one count of which alleged that Defendant retaliated against him for reporting a workplace injury in violation of the FRSA, 49 U.S.C. § 20109(a). Defendant filed a motion for summary judgment, in part arguing that Plaintiff could not show that Defendant interfered with Plaintiff’s medical treatment in violation of 20109(c). In response, Plaintiff argued that Defendant interfered with his medical treatment in violation of 49 U.S.C. § 20109(c)(1) when it provided his health insurer with information that led to the temporary cancellation of his health insurance coverage.

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

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

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

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

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

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

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

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

Hand v. CSX Transp., No. 19-cv-941 (S.D. Ohio Mar. 15, 2023) (2023 U.S. Dist. LEXIS 47416; 2023 WL 9635842023) (Order Granting Amended Motion for Partial Summary Judgment)

USDOL Case: ALJ No. 2020-FRS-00008

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

In Hand v. CSX Transp., No. 19-cv-941 (S.D. Ohio Mar. 15, 2023) (2023 U.S. Dist. LEXIS 47416), the court granted Defendant’s motion for partial summary judgment on Plaintiff’s FRSA whistleblower retaliation claim. One of Defendant’s arguments was that Plaintiff failed to exhaust his administrative remedies. Plaintiff alleged in the Administrative Complaint filed with DOL that Defendant retaliated against him “for reporting the injury;” he did not allege in that complaint that he had reported safety hazards or safety regulation violations. Defendant argued that the court “should dismiss the FRSA claim to the extent that Hand alleges for the first time in Count 1 that CSXT retaliated against him for reporting safety hazards and railroad safety regulation violations” Slip op. at 12. The court agreed and found that the subclaims “fail as a matter of law. See Foster v. BNSF Railroad Co., 866 F.3d 962, 967 (8th Cir. 2017) (dismissing subclaims not related to the claims raised in the administrative complaint); see also Gibbs v. Norfolk S. Ry. Co., No. 3:14-CV-587-DJH-DW, 2018 WL 1542141, at *5 (W.D. Ky. Mar. 29, 2018) (considering only the subclaims based on adverse actions the plaintiff raised in the administrative complaint).” Id.

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

In Hand v. CSX Transp., No. 19-cv-941 (S.D. Ohio Mar. 15, 2023) (2023 U.S. Dist. LEXIS 47416), the court granted Defendant’s motion for partial summary judgment on Plaintiff’s FRSA whistleblower retaliation claim. One of Defendant’s arguments was that Plaintiff was disciplined for rules violations and not for reporting his injury. The court determined that Plaintiff could not prove that his protected activity contributed to Defendant’s decision to discipline him simply because Defendant investigated the incident surrounding the injury after Plaintiff reported his injury. The court noted that the Sixth Circuit in Lemon rejected a chain-of-events causation. The determined that although Plaintiff offered more than just a “chain-of-events” case, “ultimately the evidence does not show that the decision to discipline Hand for rules violations, as opposed to the decision to charge Hand with rules violations, was retaliatory.” Slip op. at 15 (emphasis as in original). The court reviewed the record, and concluded that “as a matter of law that CSXT has proven by clear and convincing evidence that it would have disciplined Hand for violating the Safe Way Rules even if he had not engaged in the protected behavior. Hand’s claim that CSXT violated the FRSA by retaliating against him for reporting an injury must be dismissed.” Id. at 17.

Taylor v. Union Pac. R.R. Co., No. 18-1110 (M.D. La. Mar. 12, 2023) (2023 U.S. Dist. LEXIS 47301; 2023 WL 952410) (Ruling [on Defendant’s Motion for Summary Judgment])

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

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

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

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

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

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

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

In Taylor v. Union Pac. R.R. Co., No. 18-1110 (M.D. La. Mar. 12, 2023) (2023 U.S. Dist. LEXIS 47301), the court denied Defendant’s motion for summary judgment on Plaintiff’s FRSA retaliation complaint. Citing Conrad v. CSX Transp., Inc., 824 F.3d 103 (4th Cir. 2016), one of Defendant’s contentions was that Plaintiff must do more than merely demonstrate that the employer, as an entity, was aware of the protected activity, and that, in the instant case the sole decision maker on Plaintiff’s termination from employment denied having knowledge of the protected activity. The court was not persuaded, finding that the Conrad court did not require direct knowledge of the decision maker, and had only ruled that “[t]he ‘knowledge’ relevant for a retaliation claim under the FRSA must be tied to the decision-maker involved in the unfavorable personnel action.” Slip op. at 13, quoting Conrad, supra, 824 F.3d at 108 (emphasis added). Here, there were indications in the record of constructive knowledge by the decision-maker in the form of an e-mail on which he had been copied.

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

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

In Taylor v. Union Pac. R.R. Co., No. 18-1110 (M.D. La. Mar. 12, 2023) (2023 U.S. Dist. LEXIS 47301), the court denied Defendant’s motion for summary judgment on Plaintiff’s FRSA retaliation complaint. One of Defendant’s arguments was that Plaintiff could not show causation because it was implausible for Defendant to retaliate against Plaintiff for removing tracks from service “because that act is ‘small potatoes’ in light of the ‘hundreds, if not thousands, of slow orders and track removals a year.’” Slip op. at 18 (citations to the record omitted). The court found that this appeal to common sense did not prevent Plaintiff from meeting his burden. The court also found that Brisbois v. Soo Line Railroad Co., No. 15-CV-0570, 2016 WL 7423387, at *5 (D. Minn. Dec. 22, 2016) -- in which the court granted summary judgment where that plaintiff had been argumentative and defied a supervisor’s instructions and that plaintiff’s safety violation report was “small potatoes” -- was distinguishable because in the instant case Defendant would have to have to spend millions of dollars to fix the safety problem, whereas in Brisbois, all that was required was an instruction to employees to stay off the track. The cases were also distinguishable because in Brisbois, the plaintiff had been previously formally disciplined for being argumentative and defying instructions, whereas Plaintiff in the instant case had recently received an overall “Good Performer” rating, and had received positive comments aside from one paragraph addressing his attitude.

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

In Taylor v. Union Pac. R.R. Co., No. 18-1110 (M.D. La. Mar. 12, 2023) (2023 U.S. Dist. LEXIS 47301), the court denied Defendant’s motion for summary judgment on Plaintiff’s FRSA retaliation complaint. One of Defendant’s arguments was that it would have fired Plaintiff regardless of the protected activity based on his insubordinate, quarrelsome, and discourteous conduct. The court, however, noted “that these adjectives are inherently subjective” and “would likely require credibility determinations that are, of course, prohibited at the summary judgment stage.” Slip op. at 21. The court reviewed the record and found questions of fact for the jury.

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

Shearrer v. Norfolk S. Ry. Co., 19-cv-01062 (N.D. Ala. Mar. 9, 2023) (2023 U.S. Dist. LEXIS 43389; 2023 WL 871356) (Memorandum Opinion)

USDOL Case: ALJ No. 2018-FRS-00141

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

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

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

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

In Shearrer v. Norfolk S. Ry. Co., 19-cv-01062 (N.D. Ala. Mar. 9, 2023) (2023 U.S. Dist. LEXIS 43389; 2023 WL 871356), Plaintiff alleged that Defendant retaliated against him in violation of the FRSA for reporting safety concerns, and filing an OSHA complaint. The Magistrate Judge granted Defendant’s motion for summary judgment on the question of whether FRSA protected activity was a contributing factor to Plaintiff’s loss of pay while on a medical hold and being denied a position. The only employee involved in the decision to put Plaintiff on a medical hold was a Health Services Department employee. There was no evidence that she knew about Plaintiff’s months’ earlier safety report to his supervisors. She based her decision on a supervisor’s memorandum of finding Plaintiff asleep; that memorandum did not mention the safety report or any other protected activity. Moreover, Plaintiff’s own doctor confirmed the reason for the medical hold – that Plaintiff was being treating Plaintiff for circadian shiftwork disorder.

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

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

Fresquez v. BNSF Ry., No. 17-cv-0844 (D. Colo. Mar. 8, 2023) (Order Denying Defendant BNSF Railway's Rule 50(B) Renewed Motion for Judgment as a Matter of Law and Motion for New Trial)

USDOL Case: ALJ No. 2017-FRS-00018

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

In Fresquez v. BNSF Ry., No. 17-cv-0844 (D. Colo. Mar. 8, 2023), the court denied BNSF's post-trial Rule 50(b) motion for judgment as a matter of law on protected activity, the decision makers' purported lack of knowledge of the protected activity, and whether there was clear and convincing evidence that BNSF would have fired Fresquez for insubordination in the absence of the protected activity. In each instance, the court, after reviewing the evidence and drawing all inferences in Fresquez's favor, found that the evidence was insufficient to overturn the jury's conclusions.

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

In Fresquez v. BNSF Ry., No. 17-cv-0844 (D. Colo. Mar. 8, 2023), the court denied BNSF's motion for remittitur based on the argument that the jury's award of $800,000 as compensatory damages for emotional distress was not supported by Fresquez's testimony, and BNSF’s speculation that the jury's award appeared to be based on improper arguments of counsel and intent to punish. The court was not persuaded. The court recognized that while "Fresquez did not describe his emotional distress in the most graphic or descriptive terms, he clearly described that the stress from his termination had affected him in significant ways." Slip op. at 13.

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

In Fresquez v. BNSF Ry., No. 17-cv-0844 (D. Colo. Mar. 8, 2023), the court denied BNSF's argument that that the jury’s award of $250,000 in punitive damages was inappropriate because, according to BNSF, Fresquez’s proof of a FRSA violation was scant, BNSF’s conduct did not rise to the level of a reckless or callous disregard for Fresquez's rights, and BNSF made good faith efforts to comply with the FRSA and has rules and process to encourage reporting of misconduct and to prevent discrimination or retaliation for such reporting. The court was not persuaded, noting that the jury had "heard testimony that BNSF has a culture that disregards railroad safety rules and employee rights." Slip op. at 15.

Soo Line R.R., Inc. v. Admin. Review Bd., USDOL, 990 F.3d 596 (8th Cir. Mar. 4, 2023) (No. 19-1739) (2023 U.S. App. LEXIS 6286; 2023 WL 821401) (Dismissal of Petition for Review)

Related cases:

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

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

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

In Soo Line R.R., Inc. v. Admin. Review Bd., USDOL, No. 19-1739 (8th Cir. Mar. 4, 2023) (2023 U.S. (App. LEXIS 6286), the ALJ granted summary decision in favor of the Respondent (Petitioner Soo Line Railroad, Inc.) in a Decision and Order dated January 11, 2019. Complainant (Henin) received the Decision and Order on January 22, 2019. Complainant had filed a petition for review with the ARB on January 18, 2019. Respondent moved to dismiss the petition as untimely filed, and the ARB granted the motion. Complainant filed a motion for reconsideration explaining the circumstances. The ARB granted reconsideration and reinstated the administrative appeal as timely; but immediately dismissed the administrative complaint because Complainant had filed a complaint in federal district court on February 11, 2019 pursuant to 49 U.S.C. § 20109(d)(3) and 29 C.F.R. § 1982.114(a). The ARB noted that Complainant’s petition was untimely pursuant to 29 C.F.R. § 1982.110(a), which required filing of the petition within 14 days of the date of the decision of the ALJ, but applied Rule 26(c) of the Federal Rules of Appellate Procedure to add three days to the filing deadline for Complainant’s petition.

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

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

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

Johnson v. NJ Transit Rail Operations, Inc., No. 17-2309 (E.D. Pa. Jan. 8, 2023) (2023 U.S. Dist. LEXIS 3339) (Memorandum)

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

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

In Johnson v. NJ Transit Rail Operations, Inc., No. 17-2309 (E.D. Pa. Jan. 8, 2023) (2023 U.S. Dist. LEXIS 3339), Plaintiffs Jenkins and Johnson filed actions against Defendant alleging FRSA violations under 49 U.S.C. § 20109. Both cases were settled. The Jenkins settlement resolved the question of attorney’s fees and expenses, but the Johnson settlement did not. Accordingly, Johnson filed with the court a petition for attorney’s fees and expenses. Defendant filed objections, all of which the court denied. The court’s discussion focused on two of Defendant’s objections: whether Johnson’s fee petition for his law firm, which also represented Jenkins, included double dipping, and whether Johnson’s counsel’s work in effecting a legislative change to prohibit Defendant from asserting Eleventh Amendment immunity was compensable in the instant fee petition.

Double Dipping

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

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

Eleventh Amendment Work

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

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

Slip op. at 5.

Union Pacific Railroad Co. v. Brotherhood of Maintenance of Way Employes, No. 20-cv-516 (D. Neb. Jan. 7, 2023) (Preliminary Injunction)

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

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

In Union Pacific Railroad Co. v. Brotherhood of Maintenance of Way Employes, No. 20-cv-516 (D. Neb. Jan. 7, 2023), Union Pacific was granted a preliminary injunction over the union’s threat to strike over the adequacy of the railroad’s COVID-19 response.

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

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

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

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

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

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

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

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

Sarbanes-Oxley Act

Kuba v. Disney Fin. Servs., No. 21-cv-312 (M.D. Fla. July 30, 2023) (2023 U.S. Dist. LEXIS 142968)

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

In Kuba v. Disney Fin. Servs., No. 21-cv-312 (M.D. Fla. July 30, 2023) (2023 U.S. Dist. LEXIS 142968), the Defendant filed a FRCP 12(b)(6) motion to dismiss which, inter alia, was based on the contention that the SOX count failed because Plaintiff voluntarily withdrew her administrative complaint, thereby failing to exhaust her administrative remedies. The court denied the motion, noting that Complainant filed the voluntary withdrawal of the administrative complaint after more than 180 days had passed since she filed that complaint without a final decision of the Secretary of Labor. The court stated: “Kuba has sufficiently alleged that she complied with the administrative prerequisites, and once the 180 days passed without a decision, the statute and related regulations allowed her to file suit in a federal district court. DFS's failure-to-exhaust argument fails.“ Slip op. at 6. See 18 U.S.C. § 1514A(b)(1)(B), 29 C.F.R. § 1980.114(a).

Botta v. PricewaterhouseCoopers LLP, No. 18-cv-02615 (N.D. Cal. July 26, 2023) (2023 U.S. Dist. LEXIS 138949) (Findings of Fact and Conclusions of Law)

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

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

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

In Botta v. PricewaterhouseCoopers LLP, No. 18-cv-02615 (N.D. Cal. July 26, 2023) (2023 U.S. Dist. LEXIS 138949), Plaintiff alleged that Defendant, an auditing company, fired him in violation of the Sarbanes-Oxley Act, 18 U.S.C. § 1514A, in retaliation for filing a whistleblower complaint with the Securities and Exchange Commission alleging that Defendant was prioritizing profits and client satisfaction over compliance with auditor independence standards. Plaintiff also alleged retaliation during the 2 ½ year period prior to the termination. Following a bench trial, the U.S. Magistrate Judge entered judgment for the Defendant.

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

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

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

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

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

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

Findings of fact relating to other alleged adverse employment actions

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

Court’s analysis and conclusions

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

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

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

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

Id. at 13.

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

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

Id. at 13-14.

Wickens v. Rite Aid Hdqtrs Corp., No. 19-cv-02023 (M.D. Pa. Apr. 12, 2023) (2023 U.S. Dist. LEXIS 70031) (Memorandum)

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

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

In Wickens v. Rite Aid Hdqtrs Corp., No. 19-cv-02023 (M.D. Pa. Apr. 12, 2023) (2023 U.S. Dist. LEXIS 70031), Plaintiff, an attorney who worked in Defendant’s HR Department, alleged that his position was eliminated during a reduction-in-force by Defendant in violation of Section 806(a) of the Sarbanes-Oxley Act in retaliation for the protected activity of reporting insider trading by certain of Defendant’s vice-presidents. The court granted Defendant’s motion for summary judgment. Although the parties presented many arguments about whether Plaintiff could establish a prima facie case, the court focused only on Defendant’s affirmative defense that it demonstrated by clear and convincing evidence that it would have terminated Plaintiff in the absence of any protected activity as part of the reduction in force. The court, construing all facts in the light most favorable to Plaintiff as the non-moving party, found that Plaintiff failed to establish any genuine dispute of material fact with respect to Defendant’s affirmative defense.

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

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

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

Yang v. The Bank of New York Mellon Corp., No. 20-cv-3179 (S.D. N.Y. Mar. 31, 2023) (2023 U.S. Dist. LEXIS 63951)

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

In Yang v. The Bank of New York Mellon Corp., No. 20-cv-3179 (S.D. N.Y. Mar. 31, 2023) (2023 U.S. Dist. LEXIS 63951), the court denied Defendant’s motion to dismiss the SOX count of Plaintiff’s complaint based on the assertion that Plaintiff had not engaged in protected activity under § 1514A. The court found that Plaintiff plausibly alleged that he reported Defendant's plan to withdraw as subadvisor to counsel at BNY Mellon and that he believed that this conduct would violate certain securities laws and regulations included in § 1514A. Moreover, the allegations in the complaint are sufficient to conclude that this belief, regardless of whether it was true, could be deemed reasonable. Therefore, Plaintiff has plausibly alleged that he engaged in “protected activity” under § 1514A

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

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

Ngai v. Urban Outfitters, Inc., No. 19-cv-1480 (E.D. Pa. Mar. 29, 2023) (2023 U.S. Dist. LEXIS 59211) (Memorandum Opinion)

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

In Ngai v. Urban Outfitters, Inc., No. 19-cv-1480 (E.D. Pa. Mar. 29, 2023) (2023 U.S. Dist. LEXIS 59211), the court dismissed the SOX retaliation count of Plaintiff’s complaint based on failure to show protected activity. Plaintiff had worked for over 40 years in the fashion and garment industry in the U.S., developing expertise in sourcing and costing apparel and the apparel manufacturing process.

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

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

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

Id. at 33 (footnote omitted).

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

Wagner v. Southern California Edison Co., No. 19-56190 (9th Cir. Mar. 23, 2023) (unpublished) (2023 U.S. App. LEXIS 8404; 2023 WL 1108580) (Memorandum)

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

In Wagner v. Southern California Edison Co., No. 19-56190 (9th Cir. Mar. 23, 2023) (unpublished) (2023 U.S. App. LEXIS 8404; 2023 WL 1108580), the Ninth Circuit affirmed, upon de novo review, the District Court’s grant of summary judgment in favor of Southern California Edison Company on Wagner’s SOX claim. The court stated:

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

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

Xanthopoulos v. United States Dep't of Labor, 991 F.3d 823 (7th Cir. Mar. 22, 2023) (No. 20-2604) (2023 U.S. App. LEXIS 8321; 2023 WL 1083636)

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

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

In Xanthopoulos v. United States Dep't of Labor, No. 20-2604 (7th Cir. Mar. 22, 2023) (2023 U.S. App. LEXIS 8321), the Seventh Circuit denied Xanthopoulos’ petition for review of the ARB’s decision in Xanthopoulos v. Marsh & McClennan Companies, Inc., ARB No. 2019-0045, ALJ No. 2019-SOX-00008 (ARB June 29, 2020) (per curiam). The ARB had affirmed the ALJ’s dismissal of Xanthopoulos’ administrative SOX complaint on the grounds that the complaint was not timely filed and that equitable modification was not warranted.

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

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

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

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

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

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

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

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

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

Id. at 21-22.

Katzel v. Solmssen, 20-cv-7220 (S.D. N.Y. Mar. 15, 2023) (2023 U.S. Dist. LEXIS 47967) (Order Granting Motion for Reconsideration)

USDOL Case: ALJ No. 2019-SOX-00014

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

In Katzel v. Solmssen, 20-cv-7220 (S.D. N.Y. Mar. 15, 2023) (2023 U.S. Dist. LEXIS 47967), the District Court dismissed the Plaintiff’s SOX complaint as to two named individuals where they had not been named as Respondents in the Administrative Complaint filed with OSHA. The court stated:

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

Slip op. at 4 (citations omitted).

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

Id. at 5.

Moody v. American National Insurance Co., No. 20-40462 (5th Cir. Jan. 29, 2023) (per curiam) (unpublished) (2023 U.S. App. LEXIS 2528; 2023 WL 317623) (Opinion)

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

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

In Moody v. American National Insurance Co., No. 20-40462 (5th Cir. Jan. 29, 2023) (per curiam) (unpublished) (2023 U.S. App. LEXIS 2528), Moody filed a SOX retaliation complaint against American National Insurance Co. (ANICO) asserting that ANICO had retaliated against him by terminating a contract with Moody Insurance Group (MIG) to sell its insurance products after Moody charged ANICO’s officers and board members with violating SEC regulations. Moody was the owner and president of MIG, and was not individually party to the contract.

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

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

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

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

Surface Transportation Assistance Act

Budri v. Firstfleet, Inc., No. 20-10612 (5th Cir. June 8, 2023) (unpublished) (2023 U.S. App. LEXIS 17002)

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

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

In Budri v. Firstfleet, Inc., No. 20-10612 (5th Cir. June 8, 2023) (unpublished) (2023 U.S. App. LEXIS 17002), Budri sought the Fifth Circuit's review of the district court's denial of Budri's FRCP 59(e) motion seeking to alter or amend the district court's final judgment dismissing the case. The Fifth Circuit affirmed the district court, stating:

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

Slip op. at 5-6.

Walsh v. Ahern Rentals, Inc., No. 21-cv-00441 (D. Nev. June 4, 2023) (2023 U.S. Dist. LEXIS 105258; 2023 WL 2301923) (Order Granting Motion for Preliminary Injunction and Ordering Reinstatement)

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

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

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

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

In Walsh v. Ahern Rentals, Inc., No. 21-cv-00441 (D. Nev. June 4, 2023) (2023 U.S. Dist. LEXIS 105258; 2023 WL 2301923), the U.S. Department of Labor filed sought to enforce a preliminary order of reinstatement issued, as required by 49 U.S.C. § 31105(b)(2)(A)(ii), after OSHA found that a STAA complainant had been fired in violation of the retaliation protection provision of the STAA. Ahern Rentals ("Ahern") opposed a preliminary injunction, arguing that OSHA had unreasonably delayed in issuing the reinstatement order and that the Secretary delayed seeking injunctive relief.

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

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

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

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

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

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

Id. at 9.

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

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

Id. at 10.

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

Budri v. Admin. Review Board, USDOL, No. 20-60574 (5th Cir. Apr. 30, 2023) (per curiam) (unpublished) (2023 U.S. App. LEXIS 12986)

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

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

In Budri v. Admin. Review Board, USDOL, No. 20-60574 (5th Cir. Apr. 30, 2023) (per curiam) (unpublished) (2023 U.S. App. LEXIS 12986), the Fifth Circuit denied Budri’s petition for review of the denial of his fourth STAA administrative complaint that was based on the same operative facts as his previous claims arising out of his February 17, 2017 termination from employment as a commercial truck driver by Firstfleet, Inc., and its disclosure of negative employment information about Budri to a hiring services company, Tenstreet. For the fourth complaint, Budri asserted a new allegedly adverse employment action – i.e., that Firstfleet disclosed new and additional negative employment information about him to Tenstreet. The ALJ ordered Budri to provide greater detail regarding this new allegation, to which Budri provided additional factual allegations concerning the employment information previously disclosed to Tenstreet, and a series of non-responsive filings. The ALJ found that Budri failed to allege any new actionable adverse activity and dismissed the complaint. The ARB declined review. The Fifth Circuit affirmed the ALJ’s determination:

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

Slip op. at 8 (footnote omitted).

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

In Budri v. Admin. Review Board, USDOL, No. 20-60574 (5th Cir. Apr. 30, 2023) (per curiam) (unpublished) (2023 U.S. App. LEXIS 12986), the Fifth Circuit denied Budri’s petition for review of the denial of his fourth STAA Administrative Complaint that was based on the same operative facts as his previous claims. In this appeal, Budri argued that the ALJ who dismissed the fourth complaint was not properly appointed under the Appointments Clause of the United States Constitution, as required by Lucia v. Securities & Exchange Commission. Budri also argued that the “for cause” removal protections of the Administrative Procedure Act, 5 U.S.C. § 7521(a), are violative of the “at will” employment associated with the Appointments Clause, citing Free Enterprise Fund v. Public Company Accounting Oversight Board. The Fifth Circuit declined to address the Appointment Clause challenges, finding that Budri had forfeited the challenges for several related reasons.

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

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

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

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

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

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

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

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

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

In Budri v. Admin. Review Bd. USDOL, No. 20-60574 (5th Cir. Apr. 30, 2023) (per curiam) (unpublished) (2023 U.S. App. LEXIS 12986), the Fifth Circuit denied Budri’s petition for review of the denial of his fourth STAA Administrative Complaint that was based on the same operative facts as his previous claims. The court also granted Respondent’s request for an order enjoining Budri from future filings from the same operative facts as his previous claims. The court explained that this order was based on the same reasons on which it had declined to consider Budri’s forfeited Appointments Clause challenge, and on which the court had denied his almost 50 motions. Those reasons included Budri’s failure to earlier raise the Constitutional challenges despite numerous opportunities to do so, and his persistence in attempting to relitigate the same case despite multiple warning against repetitive and abusive litigation and wasting of resources. The court’s order imposed certain restrictions and requirements for future filings in the court, and a warning of potential sanctions, “including the striking of pleadings, dismissal, and/or the imposition of substantial monetary sanctions.” Slip op. at 19.

Buie v. DOL, Admin. Review Bd., No. 20-942. (U.S. Mar. 8, 2023) (2023 U.S. LEXIS 1297) (cert. denied)

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

Stewart v. U & Me Logistics, No. 18-cv-02609 (S.D. Ind. Jan. 22, 2023) (2023 U.S. Dist. LEXIS 12182) (Order on Motion for Default Judgment)

USDOL Case: ALJ No. 2016-STA-00039

[STAA Digest IX F]

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

In Stewart v. U & Me Logistics, No. 18-cv-02609 (S.D. Ind. Jan. 22, 2023) (2023 U.S. Dist. LEXIS 12182), the Secretary of Labor filed a complaint to enforce a United States Department of Labor ALJ’s order requiring U & Me Logistics to pay damages to a former employee pursuant to the Surface Transportation Assistance Act ("STAA") employee protection provision. After the Clerk of Court entered a default against U & Me Logistics, and the Secretary filed a motion for default judgment, the court took the complaint’s allegations as true and found U & Me Logistics liable, leaving only the question of damages. The court found that a hearing on monetary relief was not required because the complaint sought the specific amounts as ordered by the ALJ plus interest at a statutory rate –making the monetary damages “capable of ascertainment from definite figures.” Slip op at 3, quoting e360 Insight v. The Spamhaus Project, 500 F.3d 594, 602 (7th Cir. 2007). The court thus granted default judgment finding that the Secretary “is entitled to enforce the award of wages, prejudgment interest, fees, and costs totaling $27,927.39, plus interest accruing since June 5, 2017 at the rate provided at 26 U.S.C. § 6621.” Id. at 4.

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

Budri v. FirstFleet Inc., No. 19-cv-00409 (N.D. Tx. Feb. 18, 2023) (Findings, Conclusions, and Recommendation of U.S. Magistrate Judge), accepted as the Findings and Conclusions of the Court Budri v. FirstFleet Inc., No. 19-cv-00409 (N.D. Tx. Mar. 5, 2023)

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

[STAA Whistleblower Digest II M]

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

In Budri v. FirstFleet Inc., No. 19-cv-00409 (N.D. Tx. Mar. 5, 2023), the United States District Court for the Northern District of Texas accepted the Magistrate’s recommendation in Budri v. FirstFleet Inc., No. 19-cv-00409 (N.D. Tx. Feb. 18, 2023), to deny Defendants motion for the court to order Plaintiff to show cause why he should not be held in contempt or sanctioned.

Earlier in the proceedings, the court had accepted the Magistrate’s recommendation that Plaintiff be reprimanded and warned of future sanctions, essentially for repeatedly attempting to re-litigate the same case. The court had stated: “Plaintiff is reprimanded and strongly warned that future litigation against Defendants or any of their agents or employees arising out of the same facts underlying this case will result in the imposition of more severe sanctions, which may include monetary and injunctive sanctions and/or an additional bar preventing Plaintiff from filing any civil action in federal court without obtaining prior judicial authorization.”

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

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

The district court accepted the Magistrate’s recommendation.