U.S. Department of Labor
Administrative Review Board
200 Constitution Avenue, N.W.
Washington, D.C. 20210
USDOL/OALJ REPORTER
PAGE 1
In the Matter of:
ED HENRICH,
ARB CASE NO. 05-030
COMPLAINANT,
ALJ CASE NO. 04-SOX-51
v.
DATE: June 29, 2006
ECOLAB, INC.,
RESPONDENT.
BEFORE:
THE ADMINISTRATIVE REVIEW BOARD
Appearances:
For the Complainant:
Kurt C. Banowsky, Esq., Banowksy, Betz & Levine, Dallas, Texas
For the Respondent:
James D. Jordan, Munsch, Hardt, Kopf & Harr PC, Dallas, Texas
FINAL DECISION AND ORDER
This case arises under the employee protection provisions of the Sarbanes Oxley
Act (the Act or the SOX).1 Ed Henrich filed a complaint alleging that Ecolab, Inc.
retaliated against him in violation of the SOX. On November 23, 2004 an Administrative
1
18 U.S.C.A. § 1514A (West Supp. 2005). Title VIII of the SOX is designated the
Corporate and Criminal Fraud Accountability Act of 2002. Section 806, the employee
protection provision, protects employees who provide information to a covered employer or a
Federal agency or Congress relating to alleged violations of 18 U.S.C.A. §§ 1341 (mail
fraud), 1343 (wire, radio, TV fraud), 1344 (bank fraud), or 1348 (securities fraud), or any
rule or regulation of the Securities and Exchange Commission, or any provision of federal
law relating to fraud against shareholders. See 68 Fed. Reg. 31864 (May 28, 2003).
Department of Labor implementing regulations are found at 29 C.F.R. Part 1980 (2005).
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Law Judge (ALJ) issued a Recommended Decision and Order recommending dismissal
of the complaint. For reasons stated below, we affirm the ALJ’s ruling and dismiss the
complaint.
BACKGROUND
Ecolab is a publicly traded company with headquarters in St. Paul, Minnesota.
Henrich joined Ecolab in July 1997 as an operations manager at Ecolab’s plant in
Woodbridge, New Jersey. T. 31.2 In June 2002 Henrich became the plant manager at
Ecolab’s plant in Garland, Texas. T. 31, 34-35. Henrich’s supervisor at the Garland
plant was Roger Zillmer, one of Ecolab’s vice presidents for operations. T. 38, 231.
Zillmer in turn was supervised by Maurizio Nisita, Ecolab’s Senior Vice President for
Operations.3 T. 254, 358; R. D. & O. at 2. The Controller at the Garland plant was
Robert Peabody. T. 274.
Ecolab’s process
One of the products manufactured at the Garland plant was Geo, a commercial
dishwashing detergent. Geo was composed of raw materials that were processed, shaped
into blocks, labeled, and packaged for shipping. T. 36. During the manufacturing
process, some of the materials used to create Geo became “by-product” (material not
incorporated into the product). Some by-product was classified as “good bulk” (by-
product that could be put back into the manufacturing process at low cost) and some as
“inventory at risk” (by-product designated for salvage). T. 65-68.
Prior to Henrich’s arrival at the Garland plant, some of Ecolab’s customers had
complained about flaws in Geo, such as crumbled edges, discolored blocks, shrink wrap
tears, and improperly positioned labels. T. 53-54. In response Ecolab implemented
various quality-control procedures including a new inspection process, the MIL (military)
standard. CX 37, 45. The MIL standard required Ecolab employees to inspect 125 cases
from each lot of Geo. A lot consisted of 1,536 cases, on 27 full pallets and one partial
pallet. Cases were supposed to be selected for inspection according to a 4-5-4 pattern:
four cases from the first pallet, five from the second, four from the third, and so on. If an
inspection revealed a specified number of defects in any lot, then the employees were
2
We use the following abbreviations: R. D. & O. – Recommended Decision and
Order; T. – Hearing Transcript; C. – Complainant; R. – Respondent; CX – Complainant’s
Exhibit; RX – Respondent’s Exhibit.
3
The ALJ stated that Zillmer’s supervisor was Paul Anderson, head of Ecolab’s North
American manufacturing. R. D. & O. at 2. Both Zillmer and Henrich testified, however, that
Nisita was Zillmer’s supervisor. T. 38, 254, 358. Although Anderson testified that he
directed Zillmer to take certain actions, Anderson did not testify that he was Zillmer’s
“supervisor.” T. 402-422.
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supposed to inspect every case in that lot. R. D. & O. at 3; T. 86, 171-200, 295; RX 4.
Ecolab stopped requiring use of the MIL standard sometime in September or October
2003. R. D. & O. at 3; T. 94, 202, 216, 477.
Labor cost accounting
During the last quarter of 2002, Henrich noticed that some managers at the
Garland plant were attributing some of the plant’s labor costs to a divisional or corporate
expense account. T. 61-64. In March 2003, Henrich expressed concerns about this
practice to his supervisors, including Zillmer. Zillmer was aware that managers had
abused this practice. T. 64, 284. Ecolab discontinued this practice shortly thereafter, and
as a result the Garland plant began to exceed its budget by between $35,000 and $40,000
per month in labor charges. T. 64; R. D. & O. at 6. Zillmer testified that Henrich was
“instrumental” in helping Ecolab address the labor-costs issue. R. D. & O. at 10.
Inventory accounting
When Henrich arrived at the Garland plant, he observed Ecolab engaging in
accounting practices that he believed distorted its internal accounting. Specifically,
Henrich believed that Ecolab erroneously tracked as good bulk some by-product that
should have been classified as inventory-at-risk, as well as some defective by-product
that already had been discarded. T. 64-68, 70-71.
Ecolab employees are governed by a Code of Conduct. RX 1. The Code
describes company policies and grounds for discipline, and requires managers to file
annual written descriptions of violations of the Code, including accounting irregularities.
Id.; T. 135, 365-368.4 Despite his concerns about the accounting practices, Henrich did
not report any violations in his 2003 Code of Conduct certification. RX 3. Henrich
testified that he did not do so because he believed that discussing such violations with his
supervisors had fulfilled any reporting obligation, and he had done so because he had
expressed concern about the accounting practices to Zillmer, Peabody, and Carol Gribble
in accounting.5 T. 65, 72, 77-78. The ALJ, however, found that “Henrich’s testimony
that he informed Roger Zillmer, Bob Peabody, and Carol Gribble of the inventory
problems [was] less than credible.” R. D. & O. at 9.
4
See, e.g., RX 1 at 26 (“Committing or contributing to acts of dishonesty against
Ecolab, such as fraud, theft, embezzlement or misappropriation of corporate assets, will result
in appropriate discipline.”).
5
Henrich testified that in addition to reporting the labor-cost and inventory accounting
practices, he also verbally reported other Code violations, such as the adulteration of
products, and the falsification of cap-torque tests. T. 54-60. Henrich does not argue that
these violations were the underlying basis for any protected activity.
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In February 2003 Paul Anderson, head of Ecolab’s North American
manufacturing, instructed that certain good bulk inventory be reclassified as salvage
inventory, a classification similar to that of inventory-at-risk, in order to address the
possible inclusion of unusable inventory in the good bulk classification. T. 65, 69-70,
146-47, 403.
Zillmer’s alleged request that Henrich approve a write-off
Regarding the remaining inventory accounting issue – the possible inclusion of
already-destroyed inventory in the good bulk account – Henrich testified that although he
first raised the issue some time in mid-2002, Ecolab took no action for over a year. T.
72-74. Then, according to Henrich, in October or November 2003 Zillmer asked him to
approve writing off 20 percent of the inventory in the good bulk account. Id.
Henrich testified that he was uncomfortable with Zillmer’s request, because the
proposed write-off would not involve the disposition of actual discolored inventory. Id.;
CX-24. According to Henrich, the real reason for the write-off was to correct the good
bulk inventory account to reflect that 20 percent of the inventory did not exist (because it
already had been discarded). T. 73. Henrich admitted that performing the write-off
would make the accounts more accurate, but felt that it would be “cheating” to give the
wrong reason for the write-off. R. D. & O. at 8; T. 75-76, 151-152. For this reason,
Henrich testified, he did not approve the write-off. T. 73-75. When asked whether he
had “take[n] [his] complaint higher up the chain of command,” Henrich testified that he
had not done so because, as he explained, he was “hoping they would come around and
say, We just can’t do this.” T. 75, 76.
In contrast, Zillmer testified that he did not ask Henrich to approve writing off
any inventory. Zillmer further testified that Henrich did not have the authority to give
such approval. T. 280.6
Other than his finding that Henrich was not credible in alleging that he had
expressed to Zillmer, Peabody or Gribble any concern about Ecolab’s “inventory
problems,” the ALJ did not make any specific findings as to whether Henrich had the
authority to approve write-offs and, if so, whether he had refused to make that particular
write-off. R. D. & O. at 5-6, 8-11.
Kelso’s allegations
Russell Kelso, a supervisor on the Geo production line, gave notice of his
resignation in late October 2003. T. 430. On November 7, 2003 during an exit interview
Zillmer initiated, Kelso told Zillmer that in July and September 2003, Henrich had asked
Kelso and Jarun Chaiyaphan, another Ecolab supervisor, to falsify certain Geo inspection
6
Ecolab also presented evidence that the write-off related at least in part to discolored
inventory rather than already-destroyed inventory. See, e.g., T. 282.
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records. T. 432. Kelso showed Zillmer various notes and reports he had kept as
contemporaneous written proof of Henrich’s instructions to falsify those records. T. 245-
47, 431-443, 448-49; RX 5-10.
On November 10, 2003 Zillmer met with Chaiyaphan. RX 13. Chaiyaphan
testified that he told Zillmer that Henrich had several times instructed him to falsify Geo
inspection records, on various dates that Chaiyaphan was unable to identify. T. 387.
Chaiyaphan also said that in October 2003 Henrich had asked him to send an e-mail to
Ecolab’s headquarters falsely indicating that the inspection process involved inspecting
125 Geo cases (as the MIL standard required) when the practice at the time was to inspect
only 112 cases.7 T. 388-391; RX 10, 13. Chaiyaphan’s email read, in pertinent part, as
follows:
The sample size of a load for Japan (26 pallet (1456 cs)) is
125 cs, we collect 4 samples for the first pallet and 5
samples for the next one and continue until the last pallet
which we will collect more samples to make the sample
size up to 125 cs.
RX 10 (typos and numerical inaccuracies in original).
On Zillmer’s instructions, Kelso then forwarded his documents to Anderson. T.
408, 449. Anderson did some investigation and concluded that the shipments identified
by Kelso had contained products that had generated complaints from Ecolab’s customers.
T. 408-410.
Zillmer and Anderson then discussed Kelso’s allegations with Nisita. All three
concluded that the allegations described a Code of Conduct violation. T. 253-55, 410-
412; R. D. & O. at 3. Zillmer next consulted with Christine Larsen, Vice President of
Shared Services, who in turn consulted with Diana Lewis, Senior Vice President of
Human Resources. T. 255-56, 358. Following these consultations, Zillmer prepared a
“Summary of Findings,” which listed seven instances in which Henrich allegedly had
engaged in misconduct. RX 15.8
7
Henrich testified that when he talked with Chaiyaphan about the need to send the
email to headquarters, Henrich learned that the managers on the line had not been able to
understand the MIL standard’s 4-5-4 pattern and had backslid into a 4-4-4 pattern. T. 123-
24. Omitting the fifth sample from each of the thirteen even-numbered pallets resulted in a
sample size of 112 rather than 125. Henrich further testified that, at the time the email was
sent, the managers also were inspecting the last case on some or all pallets as a secondary
test. T. 171-200. When those extra cases were added, then the total number of cases tested
was more than 125 cases per shipment. T. 123. Henrich further testified that at the time he
asked Chaiyaphan to send his email, Ecolab no longer required use of the MIL standard.
8
The seven allegations in the Summary of Findings were as follows:
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On November 17, 2003 Zillmer met with Henrich and, by telephone, Larsen.
Zillmer presented the Summary of Findings to Henrich and asked Henrich to respond. T.
100, 256. Henrich testified that he denied the first six allegations and said there was
“more to the story” regarding the seventh, which related to Chaiyaphan’s e-mail, because
in the email “the number [of cases inspected – 125 – ] was true, but how we got to the
number wasn’t.” T. 100-103.9 Zillmer testified that Henrich said that “20 percent” of the
information was true, that Henrich did not indicate what he meant by “20 percent,” and
that Henrich admitted to the seventh allegation without explanation. T. 258-260. At the
end of the meeting, Zillmer suspended Henrich. T. 260.
Immediately afterwards, Larsen discussed Henrich’s responses with Nisita,
Lewis, and Anderson. Anderson had the ultimate authority to terminate Henrich’s
employment. T. 410-12. The four Ecolab executives concluded that Henrich had
violated the Code of Conduct, and that the violation was serious enough to justify
termination. T. 262-64. Larsen informed Zillmer of the Ecolab executives’ conclusion.
7/6: Supervisors instrcuted [sic] by you to put the maximum
number of failures of each type without triggering 100%
inspection. Comment from you was that we could not afford
the labor to do the full inspection.
7/14: You told the inspectors to only reject a wrap if the
defect was “big”; defined as larger than a dime. This violates
the specification.
7/21: You instructed the supervisors to inspect every fourth
case on the inspection pallets, which violates the mil standard
protocol. Rationale given to the supervisors was that we
couldn’t afford the labor.
9/8: Inspection results reported but no inspections done. Per
Russ this was done at your direction. Some of the blocks
were swollen and this in fact was a complaint that Japan had
when they received the load.
9/18: Inspection results were altered after the fact to meet the
AQL standards. This instruction came from you.
10/7: Inspection results were altered after the fact to meet the
AQL standards. This instruction came from you. Minor
defects reduced from 8 to 7 to put below the 100% inspection
threshold.
10/16: Jarun writes to Andy Kuo indicating that the sample
size for an inspection was incorrectly reported and was
actually at standard of 125 units. This was not true and Jarun
indicates he was instructed by you to write the email even
though you knew this to be the case.
9
See note 7.
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T. 263. Zillmer then called Henrich and informed him that his employment was being
terminated. Id.
Henrich filed a SOX whistleblower complaint with the Occupational Safety and
Health Commission (OSHA) on February 11, 2004.10 R. D. & O. at 1. OSHA
investigated the complaint and concluded that Ecolab had discharged Henrich for
violating its Code of Conduct. Id. Henrich requested a hearing, and an ALJ conducted
one from August 31, 2004 through September 2, 2004. Id. at 2; see 29 C.F.R. §§
1980.106, 107.
On November 23, 2004 the ALJ recommended dismissal of Henrich’s complaint.
Id. at 11. The ALJ concluded that Henrich had engaged in protected activity when he
expressed concern to Ecolab about its labor cost accounting, but that this protected
activity had not contributed to Ecolab’s termination of Henrich’s employment. Id. at 10.
Henrich appealed to the Administrative Review Board (ARB or Board) pursuant to 29
C.F.R. § 1980.110(a). We issued a briefing schedule on December 9, 2004. Both parties
filed briefs.
ISSUES PRESENTED
The issues before the Board are whether the ALJ erred in concluding that Henrich
did not engage in protected activity with regard to the inventory accounting issues;
whether the ALJ erred in concluding that Henrich failed to prove that his protected
activity contributed to Ecolab’s termination of his employment; and whether substantial
evidence supports those two conclusions.
JURISDICTION AND STANDARD OF REVIEW
The Secretary of Labor has delegated to the Board her authority to issue final
agency decisions under the SOX. See Secretary’s Order 1-2002(Delegation of Authority
and Responsibility to the Administrative Review Board), 67 Fed. Reg. 64,272 (Oct. 17,
2002); see also 29 C.F.R. § 1980.110.
Pursuant to the SOX and its implementing regulations, the Board reviews the
ALJ’s factual determinations under the substantial evidence standard. See 29 C.F.R. §
1980.110(b). Substantial evidence is that which is “more than a mere scintilla. It means
such relevant evidence as a reasonable mind might accept as adequate to support a
conclusion.” Universal Camera Corp. v. NLRB, 340 U.S. 474, 477 (1951) (quoting
Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)); Lyninger v. Casazza
Trucking Co., ARB No. 02-113, ALJ No. 2001-STA-38, slip op. at 2 (ARB Feb. 19,
2004) (same); Getman v. Southwest Sec., Inc., ARB No. 04-059, ALJ No. 2003-SOX-8,
10
OSHA has authority to investigate SOX complaints. 29 C.F.R. § 1980.104.
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slip op. at 7 (ARB July 29, 2005) (same). In assessing the substantiality of evidence, we
“must take into account whatever in the record fairly detracts from its weight.” Universal
Camera, 340 U.S. at 488. We must uphold an ALJ’s factual finding that is supported by
substantial evidence even if there is also substantial evidence for the other party, and
even if we “would justifiably have made a different choice had the matter been before us
de novo.” Id.
In reviewing the ALJ’s conclusions of law the Board, as the Secretary’s designee,
acts with “all the powers [the Secretary] would have in making the initial decision … .”
5 U.S.C.A. § 557(b) (West 1996). Therefore, the Board reviews an ALJ’s conclusions of
law de novo. See Getman, slip op. at 7 (discussing standard of review).
DISCUSSION
A.
Governing Law
The employee protection provision of the SOX generally prohibits covered
employers and individuals from retaliating against employees for providing information
or assisting in investigations related to violations of listed laws and SEC rules.
Specifically, the provision provides as follows:
(a) Whistleblower Protection For Employees Of Publicly
Traded Companies.— No company with a class of
securities registered under section 12 of the Securities
Exchange Act of 1934 (15 U.S.C. 78l), or that is required to
file reports under section 15(d) of the Securities Exchange
Act of 1934 (15 U.S.C. 78o(d)), or any officer, employee,
contractor, subcontractor, or agent of such company, may
discharge, demote, suspend, threaten, harass, or in any
other manner discriminate against an employee in the terms
and conditions of employment because of any lawful act
done by the employee—
(1) to provide information, cause information to be
provided, or otherwise assist in an investigation regarding
any conduct which the employee reasonably believes
constitutes a violation of section 1341, 1343, 1344, or
1348, any rule or regulation of the Securities and Exchange
Commission, or any provision of Federal law relating to
fraud against shareholders, when the information or
assistance is provided to or the investigation is conducted
by—
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(A) a Federal regulatory or law enforcement
agency;
(B) any Member of Congress or any committee of
Congress; or
(C) a person with supervisory authority over the
employee (or such other person working for the
employer who has the authority to investigate,
discover, or terminate misconduct); or
(2) to file, cause to be filed, testify, participate in, or
otherwise assist in a proceeding filed or about to be filed
(with any knowledge of the employer) relating to an
alleged violation of section 1341, 1343, 1344, or 1348, any
rule or regulation of the Securities and Exchange
Commission, or any provision of Federal law relating to
fraud against shareholders.
18 U.S.C.A. § 1514A.
Actions brought pursuant to the SOX are governed by the legal burdens of proof
set forth in the employee protection provision of the Wendell H. Ford Aviation
Investment and Reform Act for the 21st Century (AIR 21), 49 U.S.C.A. § 42121 (West
Supp. 2005)). See 18 U.S.C.A. § 1514A(b)(2) (mandating use of AIR 21 burdens of
proof in cases filed in federal court under 18 U.S.C.A. § 1514A(b)(1)(B)); Getman, slip
op. at 8 (applying AIR 21 burdens of proof to administrative review proceedings of
complaint brought under 18 U.S.C.A. § 1514A(b)(1)(A)). Accordingly, to prevail, a
SOX complainant must prove by a preponderance of the evidence that: (1) he engaged in
a protected activity or conduct; (2) the respondent knew that he engaged in the protected
activity; (3) he suffered an unfavorable personnel action; and (4) the protected activity
was a contributing factor in the unfavorable personnel action. See Getman, slip op. at 8;
49 U.S.C.A. § 42121(a)-(b)(2)(B)(iii)-(iv); see also Peck v. Safe Air Int’l, Inc. d/b/a
Island Express, ARB No. 02-028, ALJ No. 2001-AIR-3, slip op. at 6-10 (ARB Jan. 30,
2004). Cf. 29 C.F.R. § 1980.104(b) (describing prima facie showing needed before SOX
investigation may be conducted).11 If a complainant succeeds in establishing that
11
The ALJ stated that “[u]pon failing to provide the causal nexus between his protected
activity and his termination, Complainant could not prove his prima facie case.” R. D. & O
at 10 (first emphasis added). This sentence appears to conflate the burden Henrich might
have had, if Ecolab had moved for summary judgment, with Henrich’s actual burden at the
hearing. As we have indicated in previous decisions, after a whistleblower case has been
fully tried on the merits, the ALJ need not determine whether the complainant presented, or
provided evidence sufficient to prove, a prima facie case. Instead, the ALJ must determine
whether the complainant has proven by a preponderance of the evidence the elements of his
claim. See, e.g., Peck, slip op. at 8-9 (discussing burden-shifting framework); Martin v.
AKZO Nobel Chems., Inc., ARB No. 02-031, ALJ No. 2001-CAA-16, slip op. at 3-4 (ARB
July 31, 2003) (same).
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protected activity was a contributing factor, then the respondent still can avoid liability by
demonstrating by clear and convincing evidence that it would have taken the same
unfavorable personnel action in the absence of the protected activity. See Getman, slip
op at 8; 49 U.S.C.A. § 42121(b)(2)(B)(iv); Peck, slip op. at 10. Cf. 29 C.F.R. §
1980.104(c).
A contributing factor is “any factor which, alone or in combination with other
factors, tends to affect in any way the outcome of the decision.” Klopfenstein v. PCC
Flow Techs. Holdings, Inc., ARB No. 04-149, ALJ No. 04-SOX-11, slip op. at 18 (ARB
May 31, 2006) (quoting Marano v. Dep’t of Justice, 2 F.3d 1137, 1140 (Fed. Cir. 1993)).
Therefore, a complainant need not show that protected activity was the only or most
significant reason for the unfavorable personnel action, or that a respondent’s reason was
pretext, but rather may prevail by showing that the respondent’s “reason, while true, is
only one of the reasons for its conduct, and another [contributing] factor is the
complainant’s protected” activity. Id., slip op. at 19 (quoting Rachid v. Jack in the Box,
376 F.3d 305, 312 (5th Cir. 2004)).12
B.
Analysis
There is no dispute that the termination of Henrich’s employment was an
unfavorable personnel action. There also is no dispute as to whether Henrich engaged in
protected activity when he raised the issue of the labor-cost accounting practice, and
whether Ecolab knew of that activity.13 Henrich does contest the ALJ’s determination
that he did not express his concerns relating to the inventory accounting issues. Henrich
12
The ALJ in the “Applicable Law” section erroneously stated without discussion that a
complainant must prove that “the protected activity was the likely reason for the adverse
action.” R. D. & O. at 7 (emphasis added). But the ALJ subsequently, in the analysis part of
a later section called “Causation – Contributing Factor,” includes an entire paragraph
discussing the correct “contributing factor” standard and quoting Marano. See R. D. & O. at
10. Therefore, we understand the ALJ to have applied the correct “contributing factor”
standard.
13
Ecolab took exception to the ALJ’s rulings on protected activity and knowledge in
a cross-petition for review, but the Board dismissed that petition as untimely. See
Henrich v. Ecolab, ARB No. 05-036, ALJ No. 04-SOX-51, slip op. at 5 (ARB Mar. 31,
2005). The regulations governing SOX cases provide that on review by the Secretary,
“[a]ny exception not specifically urged ordinarily will be deemed to have been waived.”
29 C.F.R. § 1980.110(a). Therefore, insofar as Ecolab’s response brief could be
understood as making arguments that Henrich’s activities with regard to the labor-cost
accounting practices did not constitute protected activity, and that Ecolab did not have
knowledge of any protected activity by Henrich, we consider such arguments waived.
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also contests the ALJ’s conclusion that his protected activity did not contribute to
Ecolab’s termination of Henrich’s employment.
Protected Activity
Henrich argues that he engaged in SOX-protected activity by expressing concern
about Ecolab’s accounting practices of (1) erroneously attributing some of the plant’s
labor costs to divisional or corporate expense accounts, and (2) tracking inventory-at-risk
and already-disposed of inventory in the good bulk inventory account, which was
“overinflating” the value of Ecolab’s inventory. C. Brief at 4-8; T. 61-64, 66, 70, 73.
Henrich also argues that he engaged in protected activity by allegedly refusing to comply
with Zillmer’s alleged instruction that Henrich approve a write-off from the good bulk
inventory account. T. 73-76; C. Brief 7-9, 14.
1. Labor-cost accounting
With respect to the labor-cost accounting practice, the ALJ concluded both that
Henrich reasonably believed this practice was a violation that could give rise to a SOX
issue, and that Henrich expressed this concern. Because Ecolab’s challenge to this
conclusion was untimely, we assume for purposes of review that Henrich engaged in
SOX-protected activity when he expressed concern about the labor-cost accounting
practice.
2. Inventory accounting
The ALJ found that Henrich’s “testimony that he informed Roger Zillmer, Bob
Peabody, and Carol Gribble of the inventory problems [was] less than credible.” R. D. &
O. at 9. The ALJ further found that “Complainant provided no evidence, other than his
own testimony at the hearing, that these three individuals had knowledge of his protected
activity as to the accounting issues.” R. D. & O. at 9.
It appears from the opinion that the ALJ may have concluded that Henrich’s
“recognition of accounting irregularities … constitutes protected activity,” whether or not
Henrich expressed concern about any such irregularities. R. D. & O. at 10. Any such
conclusion would be erroneous. A would-be whistleblower must actually express his
concerns in order for his activity to be considered protected. See Knox v. United States
Dep’t of the Interior, ARB No. 06-089, ALJ No. 01-CAA-3, slip op. at 5 (ARB Apr. 28,
2006) (ARB finds protected activity only where complainant both has reasonable belief
and “expresses” concern based on that belief). Any such error was harmless, however.
Because the ALJ subsequently concluded that “Complainant failed to show that Ecolab
had knowledge of his protected activity as to the [inventory accounting issues relating to
the] good bulk and material losses,” the ALJ did not consider the inventory accounting
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issues in determining whether any protected activity had contributed to Ecolab’s
termination of Henrich’s employment. R. D. & O. at 11.
Despite the arguably confusing phrasing and headings in this part of the opinion,
we understand the ALJ to have concluded that Ecolab lacked knowledge of Henrich’s
concerns about the accounting practices because there was no credible evidence that
Henrich had expressed his concerns. (As noted above, the ALJ found that Henrich’s
testimony was not credible, and did not find any other evidence in the record that Henrich
expressed his concerns.) In other words, Henrich did not demonstrate that he actually
blew his whistle.
Henrich argues that the ALJ erred in making his credibility finding. C. Brief at 3-
4. Henrich further argues that there was other evidence that he reported his concerns,
including the evidence that he refused to approve Zillmer’s requested write-off. Id.
Finally, Henrich argues that in any case his supervisors were themselves aware of the
inventory accounting issues. Id. Therefore, he argues, the ALJ erred in finding that
Ecolab did not have knowledge of his concerns (or, as we interpret the ALJ’s opinion, in
finding that Henrich did not express his concerns to Ecolab).
The ALJ’s credibility finding
We generally defer to an ALJ’s credibility determinations, and Henrich has not
suggested any reason why we should not defer to this one.14 Other than his own belief
that his testimony was credible, Henrich has offered no evidence that detracts from the
ALJ’s finding.15 Even if there was contrary evidence – even, perhaps, substantial
14
We give “great deference to an ALJ’s credibility determinations that ‘rest explicitly
on the evaluation of the demeanor of witnesses.’” Stauffer v. Wal-Mart Stores, Inc., ARB
No. 00-062, ALJ No. 99-STA-21, slip op. at 9 (ARB July 31, 2001) (quoting NLRB v.
Cutting, Inc., 701 F.2d 659, 663 (7th Cir. 1983)). The ALJ did not explicitly state that his
credibility determination was based on witness demeanor. Therefore, we do not accord his
determination such great deference. Jones v. United States Enrichment Corp., ARB Nos. 02-
093 and 03-010, ALJ No. 2001-ERA-21, slip op. at 5 (ARB Apr. 30, 2004) (“since the ALJ
did not base this credibility determination on demeanor, we are not bound to give substantial
weight to Jones’s testimony”);KP&L Elec. Contractors, Inc., ARB No. 99-039, ALJ No. 96-
DBA-34, slip op. at 4 n.2 (ARB May 31, 2000) (“An ALJ’s demeanor-based credibility
determinations are entitled to great weight and ‘the Board will not reverse credibility
determinations where they are not clearly erroneous’”) (citingMilnor Constr. Corp., WAB
Case No., 91-21 (Sept. 12, 1991). Instead, we treat the determination as an ordinary finding
of fact and review it under the substantial evidence standard.
15
Henrich does not argue that his discussions with Kelso about the inventory
accounting practices constituted such evidence, nor does he argue that the ALJ erred in
crediting Zillmer’s, rather than Henrich’s, account of their lunch meeting. See R. D. & O. at
4 n.3 and 9 n.8. Henrich does argue that his testimony constituted such evidence, but that
testimony does not show that the ALJ erred in finding the Henrich did not express his
concerns. Although Henrich testified that he had “tried to push [the issue of the inventory
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PAGE 13
accounting practices] with the controller from day one,” he provided no details and his
answers were inconsistent. The first relevant exchange went as follows:
Q: Any other accounting-type issues that you had with the
way the Garland plant was being run?
A: The first couple weeks I was there I was asking the people
– you know, they had this garbage going around at the Geo
line, and they said, Well, it’s going to be reground [i.e., that it
was not good bulk but rather salvage]. I said, I don’t see a part
of the salvage inventory…. And then Paul Anderson visited
the facility in February 2003, and he says, Hey, where’s this
stuff being charged?....
…
Q: Okay. And prior to Paul Anderson coming down and
basically clearing that up, had you discussed that or pushed
that with anybody?
A: When you become the plant manager of a facility, you
want to make sure that all practices – at least you catch as
many as you can walking in, so you don’t get accused of
starting them or being a participant or whatever, so I had my
eyes open and whatever. And we saw that and I identified it
real quickly. And Bob Peabody – I think he was Roger’s
puppet. He just wouldn’t do it. He – and I was worried about
doing it because eventually it was going to be a surprise to
somebody, and they were going to say, Hey, Henrich, what’s
all this stuff doing over here?
T. 64, 65-66. Later, the following exchange took place:
Q: Did you follow up [on the issue of the inventory
accounting practices] with any [of your supervisors]?
A: The only people I followed up with were Carol and Bob
and then – made a couple comments to Roger that, You got to
look at this issue, this good bulk thing.…And they basically –
you know, they said they’d take care of that at another time.
Q: Did they – when was this that you were having these
discussions with these folks?
A: When I first got there.
USDOL/OALJ REPORTER
PAGE 14
evidence – in favor of Henrich’s position that his own testimony was credible, that would
not demonstrate that the ALJ’s credibility finding was not supported by substantial
evidence. As we have stated, in situations where both parties provide substantial
evidence for their position, we uphold the finding of the ALJ. Based on our review of the
whole record including the entire hearing transcript, we conclude that the ALJ’s finding
that Henrich’s testimony was “less than credible” was supported by substantial evidence.
Therefore, we defer to that finding.
The alleged request that Henrich approve the write-off
Henrich argues that the ALJ erred in failing to conclude that his refusal to approve
the write-off was protected activity. C. Brief at 14. The ALJ did not determine whether
Henrich had authority to approve write-offs and, if so, whether Henrich refused Zillmer’s
request that Henrich approve the write-off. R. D. & O. at 5-6, 8-11. No such
determinations are necessary, because any refusal to approve the write-off was not
protected activity.
In order to establish that he engaged in protected activity, a complainant must
prove that he “provide[d] information” about conduct that the complainant reasonably
believed constituted one of six violation types enumerated in the SOX. 18 U.S.C.A. §
1514A(a). See, e.g., Getman, slip op. at 7-8. Where a complainant refuses to act but
does not relate such refusal to a concern about potential fraud or another possible SOX
violation, such refusal does not necessarily “provide information” about a SOX violation.
Getman, slip op. at 9-10 (stock analyst did not “provide information” about SOX
violation when, in review committee meeting with supervisor, analyst refused to change
her rating but told supervisor to publish changed report without analyst’s name).
Here, other than his own testimony, Henrich points to no evidence that the request
or the refusal actually occurred. Although Henrich describes the incident as a “refusal”
in his submissions to this Board, he did not provide evidence that any failure to approve a
write-off was a “refusal” ratherthan a task left undone. To the contrary, Henrich testified
that during the weeks between Zillmer’s alleged request and the termination of Henrich’s
employment, Henrich did not “follow through” and give approval. T. 75. Henrich did
not prove, or even allege, that he told Zillmer that he refused to approve the write-off.
Nor did Henrich prove, or allege, that he told Zillmer why he was refusing. We therefore
T. 72-73. These answers specified neither a date nor a manner in which Henrich brought the
accounting inventory issues to the attention of any supervisor in a way that would have
alerted such supervisor to the existence of conduct that Henrich believed “constitute[d] a
violation.” 18 U.S.C.A. § 1514A (a)(1). That lack of specificity in Henrich’s testimony,
combined with the lack of any other evidence that Henrich reported concerns about the
inventory accounting practices, as well as the rest of the evidence in the record, confirms our
view that substantial evidence supports the ALJ’s finding that Henrich did not actually report
to any supervisor, or person with authority to correct the situation, concerns about the
inventory accounting practice.
USDOL/OALJ REPORTER
PAGE 15
conclude that Henrich’s refusal, even if it occurred, did not “provide information” to
Zillmer about such conduct. Therefore, the refusal did not constitute protected activity
and, insofar as Henrich argues that the ALJ erred in not considering whether the write-off
incident was an independent instance of protected activity, any error by the ALJ was
harmless.16
Supervisors’ independentknowledge of the inventory accounting issues
Henrich asserts that he provided “clear evidence that his supervisors and others
had direct knowledge of the illegal activity in the failure to properly account for material
losses during process.” C. Brief at 8. Henrich appears to believe that proving that the
Ecolab executives and Zillmer were aware of the inventory accounting issues would
constitute proof that the executives and Zillmer “were aware of his protected activity.”
C. Brief at 4. But as we explained above, in order for his activity to be protected, a
complainant must demonstrate that the activity included an expression of concern – i.e.,
must demonstrate that he actually blew his whistle. Proof that Ecolab supervisors shared
Henrich’s concern does not necessarily prove that any supervisor learned about the
concern from Henrich, and thus does not prove that Henrich expressed concern.
Therefore, the evidence Henrich highlights for us does not show that the supervisors
learned about the concern from him.
The ALJ’s reference to Ecolab’s Code of Conduct
In pointing out that there was no other evidence that Henrich had reported his
concerns about the inventory accounting, the ALJ noted that “[w]hen Complainant had
the opportunity to report code of conduct violations in writing, he failed to do so.” R. D.
& O. at 9. Henrich has brought to our attention his concern that the ALJ “seems to
indicate that Henrich failed to comply with the Code of Conduct by not reporting the
violations in writing.” C. Brief at 27 (noting that Henrich made verbal reports, which the
Code specified as a preferred method of reporting violations).17 Henrich’s concern is
misplaced. The ALJ did not conclude that Henrich’s failure to provide written reports
had violated the Code. Rather, the ALJ concluded that Henrich’s failure to provide
written reports had deprived Henrich of the opportunity to use such written reports as
16
Henrich also argues that the refusal was evidence of his prior protected activity
informing Zillmer and the management about his concerns with the good bulk inventory
accounting practices. C. Brief at 9 (“Based on the single incident of refusing to write-off
[sic] invisible inventory as ‘bad color,’ [Henrich] put Ecolab, through his supervisor, on
notice of his protected activity”). For reasons expressed in the text, the refusal did not
constitute such evidence.
17
RX 1 at 32 (“A VERBAL OR WRITTEN REPORT TO YOUR SUPERVISOR OR
THE GENERAL COUNSEL IS THE PREFERRED METHOD OF REPORTING
VIOLATIONS OR OBTAINING GUIDANCE IN COMPLYING WITH THE CODE OF
CONDUCT.”).
USDOL/OALJ REPORTER
PAGE 16
documentary evidence for his claim that he expressed his concerns about the inventory
accounting issues.
Henrich offers us no other evidence contrary to the ALJ’s finding that Henrich did
not express to Ecolab any concerns about the inventory accounting. Therefore, and based
upon our review of the entire record, we conclude that substantial evidence supports the
ALJ’s implicit determination that Henrich did not provide information to Ecolab about
his inventory accounting concerns. The ALJ concluded that Henrich’s failure to express
his concerns meant that Ecolab did not have knowledge of any protected activity related
to the inventory accounting practices. We agree, but also conclude (based upon the
ALJ’s factual finding) that Henrich did not engage in protected activity related to these
practices.
Causation – Contributing Factor
The ALJ concluded that “no evidence whatsoever tended to show that [Henrich’s]
protected activity contributed in any way to his termination.” R. D. & O. at 10. Henrich
raises multiple arguments taking issue with this conclusion. As we explain, none have
merit.
1. Henrich’s legal arguments
Henrich makes two legal arguments, which we discuss in turn.
Burden-shifting
Henrich contends that the way a complainant must meet his burden to
“demonstrate by a preponderance of the evidence that protected activity was a
contributing factor in the unfavorable action” is “through the presentation of a prima
facie case.” C. Brief at 25 (first emphasis added). Henrich further contends that “[o]nce
a complainant meets this burden, the complainant is entitled to relief unless the
respondent demonstrates by clear and convincing evidence that it would have taken the
same unfavorable personnel action in the absence of any protected activity.” Id. Based
upon this understanding of the burden-shifting framework, Henrich argues that that the
ALJ erred in “finding that Complainant failed to” “me[e]t the prima facie standard” and
further erred in failing to conduct a mixed motive analysis. Id. at 26.
Henrich’s understanding of the burden-shifting framework is incorrect. A
complainant does not need to prove a prima facie case (although if the respondent moves
for summary judgment, the complainant must present evidence sufficient to prove it).
Nor does the presentation of a prima facie case entitle a complainant to prevail. Rather,
presenting a prima facie case merely entitles a complainant to force a respondent to
articulate its reason(s) for an unfavorable personnel action. Once the respondent has
articulated a reason and a full hearing has been held, there is no longer any purpose in
USDOL/OALJ REPORTER
PAGE 17
determining whether the complainant presented a prima facie case because the purpose of
presenting a prima facie case – forcing the respondent to articulate its reason(s) – already
has been fulfilled. Ultimately, whether or not the respondent has articulated a reason, the
complainant in order to obtain relief must prove each element of his case by a
preponderance of the evidence. See Kester v. Carolina Power & Light Co., ARB No. 02-
007, ALJ No. 2000-ERA-31, slip op. at 5-8 (ARB Sept. 30, 2003) (discussing burden-
shifting framework under the Energy Reorganization Act, 42 U.S.C.A. § 5851 (2003)).
Only if the complainant so proves must the ALJ apply a mixed motive analysis and
determine whether the complainant’s employment would have been terminated anyway.
Although the ALJ stated that Henrich “did not prove his prima facie case,” we
read the ALJ’s opinion to indicate that the ALJ found that Henrich failed to prove the
elements of his claim because he failed to prove an essential element – namely, that
protected activity was a contributing factor in the termination of his employment. R. D.
& O. at 10; see also note 10. Because Henrich failed to prove all the elements of his
claim, mixed motive analysis did not apply. Therefore, Ecolab had no obligation to
prove that Henrich “would have been terminated anyway,” and the ALJ did not err in
declining to engage in a mixed motive analysis.
Causation – Contributing Factor
The ALJ found that “none of the [accounting practices about which Henrich was
concerned] rose to a level of illegality.” R. D. & O. at 11. The ALJ further concluded
that “[a]s such, there is no indication that Complainant’s perception of Ecolab’s practices
would have motivated Ecolab’s executives to terminate him.” R. D. & O. at 11.
Henrich argues that the ALJ erred in using the legality of the accounting practices
as a basis for the conclusion that Henrich’s protected activity did not contribute to the
Ecolab executives’ termination decision.18 According to Henrich, the ALJ’s statement
“eviscerate[s] the ‘reasonable belief’ standard required under the statute” because under
the ALJ’s approach “unless a complainant canshow actual illegality, there is no possible
way for a complainant to actually be protected.” C. Brief at 22.
It is not clear whether the ALJ actually found that the accounting practices were
not illegal, or merely repeated an assumption – apparently shared by both parties19 – that
18
Henrich also argues that the ALJ erred in finding that Ecolab’s accounting practices
did not rise “to a level of illegality,” because in Henrich’s view the inventory accounting
practices were “a violation of SEC law or regulations.” C. Brief at 23. Because Henrich’s
only protected activity related to the labor-cost accounting practice, the legal status of the
inventory accounting practices is irrelevant.
19
Ecolab, of course, did not argue that any of its practices were illegal. Henrich argued
that the inventory accounting practices violated “SEC Rules,” and made no argument
regarding the legality of the labor cost accounting practices. C. Post-Hearing Brief at 35-38.
USDOL/OALJ REPORTER
PAGE 18
the accounting practices were not illegal. In any case, the ALJ properly focused upon
whether Henrich had a reasonable belief that the labor-cost accounting practice was a
violation of a SOX-listed law or regulation, and whether Henrich’s expression of that
belief contributed to Ecolab’s termination ofHenrich’s employment. See R. D. & O. at 8,
10-11.
Contrary to Henrich’s argument, in drawing his conclusions the ALJ did not
create a universally-applicable rule for the analysis of SOX cases. In other words, the
ALJ did not conclude that where a company’s conduct is legal, the company never can be
found to have discriminated against an employee for expressing concern about such
conduct. Rather, the ALJ concluded that because in this case Henrich’s concerns about
the labor-cost accounting practice did not result in the exposure of illegal conduct, the
Ecolab executives’ decisioncould not be explained as a hostile reaction to such exposure.
2. Henrich’s substantial evidence arguments
Henrich argues that the ALJ’s decision is not supported by substantial evidence
because the ALJ failed to discuss, and therefore must have ignored, multiple important
pieces of evidence showing that Henrich’s protected activity was a contributing factor in
the termination of his employment. As we stated above, however, a party cannot prevail
on appeal simply by demonstrating that substantial evidence supports his view. Rather,
in order to convince us not to adopt an ALJ’s recommendation a party must demonstrate
that substantial evidence did not support the findings necessary to that recommendation.
Although Henrich highlights numerous pieces of “potential evidence,” he fails to explain
how these pieces of evidence undermine or cast doubt upon the evidence that the ALJ
relied upon in concluding that Henrich’s protected activity did not contribute to Ecolab’s
termination of Henrich’s employment. We discuss each piece in turn.
Temporal proximity
Henrich contends that the ALJ did not “properly consider the temporal proximity
of the protected activity and adverse action.” C. Brief at 13 (emphasis added). There is
no evidence for a contention that the ALJ did not take account of the sequence of events
and the time periods between the relevant events. The ALJ noted, for example, that
Henrich’s “termination immediately followed the discovery of” the falsified inspection
records. R. D. & O. at 11 (emphasis added). Instead, Henrich appears to be suggesting
that the ALJ did not consider the temporal proximity issue “properly” because the ALJ
does not appear to have shared Henrich’s premise that Henrich’s “refusal” to approve the
write-off constituted protected activity. Based on his premise, Henrich asserts that there
was a very short time gap between his “protected activity” in October or November 2003
and the termination of his employment on November 17, 2003, and argues that this short
time gap strongly suggests that protected activity was a contributing factor in that
termination. C. Brief at 13-17. As we discussed above, however, the alleged refusal was
not protected activity. Henrich’s only protected activity was his expression of concern
about the labor-cost accounting.
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PAGE 19
The probative value of temporal proximity decreases as the time gap lengthens,
particularly when other precipitating events have occurred closer to the time of the
unfavorable personnel action. See, e.g., Poll v. R. J. Vynhalek Trucking, ARB No. 99-
110, ALJ No. 96-STA-35, slip op. at 7 (ARB June 28, 2002) (intervening event means
“evidence of timing is inadequate to sustain [complainant’s] ultimate burden of pro[ving
causation] by a preponderance of the evidence”); Tracanna v. Arctic Slope Inspection
Serv., ARB No. 98-168, ALJ No. 97-WPC-1, slip op. at 8 (ARB July 31, 2001)
(“intervening event of sufficient weight [can] preclude any inference of causation which
otherwise would have been drawn from the nearness of [complainant’s] protected activity
to his layoff”).
Henrich’s protected activity occurred in the last quarter of 2002. The termination
of Henrich’s employment did not occur until November 2003, around a year later.
Moreover, that termination occurred in the same week that the Ecolab executives learned
about the irregularities in Henrich’s inspection procedures. Therefore, in the
circumstances of this case, substantial evidence supports the ALJ’s implicit conclusion
that any temporal proximity between Henrich’s protected activity and Ecolab’s
termination of his employment about a year later did not tend to show that Henrich’s
protected activity contributed to that termination.
“Potential evidence of retaliatory animus stemming from Henrich’s complaints”
Henrich argues that the ALJ “failed to reconcile the conflicting testimony of
Ecolab’s witnesses with regards to the accounting for material losses,” that “the
testimony regarding the classification of rework material is conflicting,” and that the ALJ
also did not discuss or resolve “the inconsistent testimony regarding the dates and details
of some of the allegations brought forth by Kelso.” C. Brief at 10-12.
Presumably, Henrich believes that the ALJ’s failure to resolve all disputed factual
questions caused the ALJ erroneously to conclude that Henrich’s protected activity did
not contribute to Ecolab’s decision to terminate Henrich’s employment. But Henrich
neither specifies how the ALJ should have resolved these disputes, nor explains how
those resolutions would support the conclusions Henrich believes should have been
drawn. Resolving the disputed evidence relating to the inventory accounting practices
became unnecessary once the ALJ concluded that Henrich did not report his concerns
about these practices. Similarly, the issues relating to Kelso’s evidence20 do not cast such
20
Henrich points to evidence that Kelso did not know the MIL standard had been
discontinued; that some of the incidents about which Kelso complained had occurred after
such discontinuation; and that Kelso said he had reported one concern to Don Tartt even
though Tartt was no longer the quality manager. C. Brief at 12. But there also was evidence
presented tending to show that Tartt still was involved in quality control throughout the
relevant time period, even if he was no longer the manager, T. 74; and that the incidents of
which Kelso complained – for example, Chaiyaphan’s email – were perceived as serious
violations of the Code of Conduct by the Ecolab executives, even if they did not involve
USDOL/OALJ REPORTER
PAGE 20
doubt upon Kelso’s central contention (that Henrich asked him to alter inspection
records) as to suggest a lack of substantial evidence for the ALJ’s conclusion that “the
cause of Complainant’s termination was the Code of Conduct violation brought to the
company’s attention by Russ [Kelso].” R. D. & O. at 11.
“Potential falsity” of Ecolab’s reasons for terminating Henrich’s employment
Henrich asserts that “the ALJ failed to fully analyze the reasons for termination
and the potential falsity of those reasons,” in that the ALJ “failed to note Respondent’s
lack of supporting evidence relating to the allegations that formed the basis of the
termination.” C. Brief at 12-13; Reply at 8. Henrich further asserts that “the seven
reasons given by Respondent were untrue or at least unsubstantiated and therefore cannot
support Mr. Henrich’s termination.” Reply at 10.
Henrich does not appear to link these assertions with any particular argument.
Insofar as he is arguing that Ecolab needed substantial evidence to “support” its
termination decision, that argument has no merit. The SOX does not require an employer
to collect “substantial evidence” before making its termination decisions. Indeed, in an
at-will employment situation, an employer need not have any reason whatsoever for such
a decision, so long as the employer does not act for a prohibited reason.
Insofar as Henrich is attempting to prove that Ecolab’s articulated reason is false,
we note that Ecolab’s articulated reason isnot Kelso’s allegations per se, but rather is the
Ecolab executives’ belief, based on those allegations, that Henrich violated Ecolab’s
Code of Conduct. Henrich does not argue that substantial evidence did not support the
ALJ’s conclusions that the Ecolab executives were “outraged” by those allegations, and
that the executives terminated Henrich’s employment based upon the allegations and
violations of the MIL standard. In his Reply, Henrich asserts that the ALJ also ignored
“evidence of Mr. Kelso’s potential motivations,”Reply at 1-5, and “evidence to explain why
Mr. Chaiyaphan would be likely to shade the truth to support Respondent, if not lie.” Reply
at 5-7. Even if these arguments are not waived due to Henrich’s failure to raise them in his
opening brief, they are meritless because they do not cast doubt upon the ALJ’s conclusion
that the cause of the termination of Henrich’s employment was the Ecolab executives’
discovery of Henrich’s “Code of Conduct violation.” R. D. & O. at 11. Moreover, although
Henrich argues that Kelso may have disliked Henrich because Henrich had forced Kelso to
adhere to punctuality requirements and had taken some actions against Kelso’s mentor
(Tartt), Henrich does not argue that any such dislike on Kelso’s part for Henrich was in any
way related to Henrich’s protected activity. See Reply at 1-5. Similarly, Henrich does not
suggest Chaiyaphan was motivated to “shade the truth” because of Henrich’s protected
activity. Henrich’s assertions that Chaiyaphan and Kelso were biased thus become no more
than an argument that the ALJ should not have relied upon their testimony. Yet Henrich
offers no evidence or argument significant enough to warrant the conclusion that substantial
evidence did not support the findings that were based upon the testimony of Chaiyaphan and
Kelso.
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PAGE 21
Henrich’s lack of satisfactory response to them. Therefore, Henrich’s argument that
Kelso’s allegations were false is not relevant. Even if Henrich were correct about the
falsity of Kelso’s allegations – a matter on which we express no opinion – the ALJ did
not need to determine the truth or falsity of Kelso’s allegations in order to determine that
the Ecolab executives relied upon them in deciding to terminate Henrich’s employment.
Accord EEOC v. BCI Coca-Cola Bottling Co. of Los Angeles d/b/a Phoenix Coca-Cola
Bottling Co., __ F.3d __, 2006 WL 145501 (10th Cir. 2006), slip op. at 13, 21 (except
where plaintiff has proven that “subordinate bias” caused higher-level decision to
terminate, courts generally should determine whether employer had discriminatory intent
by evaluating “facts as they appear[ed] to the person making the decision to terminate”).
We interpret the ALJ’s statement that theexecutives were “outraged by Henrich’s
admitted violation” as a finding that the executives genuinely believed that Henrich’s
inspection procedure irregularities were offenses warranting termination. R. D. & O. at
11. As we discuss below, Henrich did not prove that Zillmer had retaliatory animus and
thus did not prove that any animus should be imputed to the Ecolab executives. Absent
proof that Zillmer had retaliatory animus and influenced the decision, evidence showing
that Kelso’s allegations were false or misleading does not demonstrate a lack of
substantial evidence for that finding.
“Potential retaliatory animus” of Zillmer
Henrich does not appear to take issue with the ALJ’s implicit finding that
Ecolab’s executives believed that he had violated Ecolab’s Code of Conduct. Rather,
Henrich argues that the executives developed such belief because Zillmer, who had
developed retaliatory animus against Henrich because of Henrich’s protected activity,
took the opportunity provided by Kelso’s allegations to present to the executives a biased
case against Henrich. Henrich argues that Zillmer thereby induced the executives to
terminate Henrich’s employment when they otherwise would not have, and that
Henrich’s protected activity thus contributed to that termination.
Henrich contends that the ALJ “failed to consider … the potential retaliatory
animus of Roger Zillmer,” and asks us to rule differently based upon the “[s]ubstantial
evidence of Mr. Zillmer’s retaliatory intent [that was] provided in Complainant’s [filings
on appeal].” C. Brief at 9; Reply at 7. Henrich further argues that Zillmer’s
“misrepresented facts and Zillmer’s tainted interview investigation were relied upon by
the decision makers in their termination of Henrich,” and thus “Zillmer was ultimately
the ‘man behind the curtain’ in Mr. Henrich’s termination.” Reply at 8, 9.
Arguably, this argument is waived because Henrich did not clearly indicate in his
opening brief why the alleged retaliatory animus of Zillmer was relevant. In any case,
the evidence Henrich highlights does not demonstrate retaliatory animus. In contrast to
mere dislike or need to find a scapegoat, retaliatory animus by definition must arise from
and be based upon protected activity. See, e.g., Jones, slip op. at 13 (“even if
[supervisor’s] attitude could be deemed antagonistic, Jones has not adduced sufficient
facts for us to infer that this enmity existed because of his protected activity”). The
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PAGE 22
evidence Henrich brings to our attention does not demonstrate any link between Zillmer’s
alleged animus and Henrich’s protected activity.
“First,” Henrich points to evidence “that Zillmer’s performance was partly tied to
the success of th[e Geo] line,” that this line was having “quality issues,” and that “Zillmer
[was] looking for a scapegoat for the Geo issues.” C. Brief at 17. But even if Zillmer
intended to use Henrich as a scapegoat, that intent does not itself indicate that Zillmer had
retaliatory animus against Henrich based upon Henrich’s reports of the labor-cost
accounting problems. Henrich speculates that his protected activity reporting the labor-
cost issues contributed to the management’ssubsequent correction of those issues, which
in turn allowed the inefficiencies in the Geo production line to become more apparent,
which in turn caused Ecolab executives to perceive the Geo problems as more serious,
which in turn caused Zillmer to become concerned about possible repercussions if those
problems were not corrected, which in turn caused Zillmer to develop retaliatory animus
towards Henrich. Even if correct, in the absence of any other evidence this causation
chain is too attenuated and too speculative to support an inference that Zillmer had
retaliatory animus based upon Henrich’s reports about the labor-cost accounting.
“Second,” Henrich alleges that Zillmer failed to conduct an adequate investigation
of Kelso’s allegations.21 But evidence showing that Zillmer’s investigation was poorly
conducted, or even deliberately biased against Henrich, does not itself demonstrate that
such inadequacy or bias stemmed from retaliatory animus. Cf. Mullin v. Gettinger, __
F.3d __, 2006 WL 1549050 (7th Cir. 2006), slip op. at 10 (“[t]he fact that [employer
representatives] may have calculated [plaintiff’s] benefits incorrectly is not evidence that
their errors were motivated by [employer’s] protected speech”). While an inadequate
investigation potentially could corroborate other evidence of animus, no such evidence is
adduced here. Thus, in the circumstances of this case, any inadequacies in Zillmer’s
investigation do not constitute sufficient evidence to suggest that Zillmer had animus.
Indeed, Henrich primarily appears to argue that the manner in which Zillmer conducted
the investigation demonstrates that Zillmer was “clearly interested in protecting his own
interests rather than discovering the truth.” C. Brief at 19-20. But again, absent other
evidence, Zillmer’s desire to protect his own interests does not itself demonstrate
retaliatory animus based upon Henrich’s report (a year previously) of the labor-cost
issues.
21
Specifically, Henrich alleges that Zillmer “did not research, speak to inspectors or the
qualify [sic] supervisor, or provide a full explanation of the allegations against Henrich”; that
Zillmer’s “summarized version of Russ Kelso’s allegations .… contained misleading
statements and outright misrepresentations pertaining to dates and statements”; and that in the
meeting with Larsen “when Henrich denie[d] the allegations, Zillmer refuse[d] to believe him
without providing Henrich an opportunity to gather any information” and indeed “was quick
to interrupt when Henrich did attempt to offer explanations and ended the meeting without
further investigation.” C. Brief at 18-19; R. Brief at 8.
USDOL/OALJ REPORTER
PAGE 23
Henrich reminds us that he also reported many other problems at the Garland
plant – such as the accounting inventory issues, the adulteration of products and the
falsification of cap-torque tests – and argues that these other reports played a role in the
development of Zillmer’s “retaliatory animus.” But retaliatory animus by definition can
arise only from protected activity. Because Henrich’s only protected activity was his
reports of the labor-cost accounting issue, only those reports can be considered in
determining whether Zillmer had retaliatory animus. Henrich does not appear to argue
that Zillmer’s “animus” was based in any significant way upon Henrich’s having reported
concerns about the labor-cost accounting practice, but insofar as he does the argument
has no merit in light of the length of time that passed between those reports and Zillmer’s
subsequent actions in investigating Kelso’s allegations.22
Henrich makes two further arguments premised upon his assertion that he
engaged in protected activity related to the accounting inventory issues.23 Because that
activity was not protected, those two arguments have no merit.
22
Because Henrich did not prove that Zillmer had retaliatory animus, we need not
determine whether Zillmer’s influence on the investigation was significant enough to indicate
that any such animus was a contributing factor in the termination decision.
23
Henrich argues that Zillmer was motivated to act against Henrich because, as Henrich
summarizes it, “Zillmer testified that he would be held accountable if [the] practices [reported
by Henrich] were discovered” [by Ecolab executives]. (Tr. 279).” C. Brief at 19 (emphasis
added). But the hearing transcript contains no such statement by Zillmer. To the contrary,
on the page indicated, although Zillmer does discuss his initial concern that the accounting
inventory problems “didn’t indicate that I’d been keeping very good track of it,” he
immediately indicated that he “was a little bit relieved” when, after Anderson discovered the
issue, Anderson simply indicated that Anderson and Zillmer should work together to solve
the problem. T. 279. Thus far from being concerned about what might happen if the practice
were to be discovered, Zillmer indicated his relief about what did happen after the practice
was discovered.
Henrich also asserts that “Zillmer attempted to conceal the fact that material losses
were not reported when he testified that the CASBO report did account for Geo material
losses,” and that by requesting that Henrich approve the write-off Zillmer engaged in another
“intentional attempt to hide the fact that the Geo line was not reporting material losses as they
were incurred.” C. Brief at 21. Henrich contends that this “circumstantial evidence of
Zillmer’s mind set provides evidence that Zillmer was more interested in retaliating against
Henrich than finding out of [sic] Kelso’s complaints were true or even relevant.” Id. Even if
Zillmer was attempting to conceal such information – a matter on which we express no
opinion – such attempted concealment would not constitute evidence of any retaliatory
animus on the part of Zillmer because it relates only to the accounting inventory issues.
USDOL/OALJ REPORTER
PAGE 24
CONCLUSION
Substantial evidence supports the ALJ’s factual findings, and there is no merit in
Henrich’s legal arguments that the ALJ erred in finding that Henrich did not report his
concerns about the accounting inventory practices and in concluding that Henrich failed
to prove by a preponderance of the evidence that his protected activity contributed to the
termination of his employment. We therefore affirm the ALJ’s decision and DISMISS
Henrich’s complaint.
SO ORDERED.
A. LOUISE OLIVER
Administrative Appeals Judge
OLIVER M. TRANSUE
Administrative Appeals Judge
