Office of Administrative Law Judges 800 K Street, NW, Suite 400-N Washington, DC 20001-8002
Issue Date: 28 January 2004 Case No. 2004-SOX-00002
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In the Matter of
MICHAEL T. MOREFIELD
Complainant
v.
EXELON SERVICES, INC., and
EXELON CORPORATION
Respondent
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ORDER DENYING MOTION TO DISMISS
COMPLAINT FILED BY EMPLOYEE OF NON-PUBLICLY TRADED CORPORATE SUBSIDIARY
By motion filed January 21, 2004, Respondents Excelon Services and Excelon Corporation seek dismissal of a whistleblower complaint under the employee protection provisions of Public Law 107-204, Section 806 of the Corporate and Criminal Fraud Accountability Act of 2002, Title VIII of the Sarbanes-Oxley Act of 2002. 18 USC §1514A. (hereinafter, Sarbanes-Oxley). Sarbanes-Oxley covers employees of publicly traded companies, their contractors, and agents from retaliatory or discriminatory actions by the employer.
On May 21, 2003, Michael Morefield, formerly Vice President-Finance for Excelon Services, filed a complaint with OSHA alleging that he was subjected to discriminatory threats, intimidation, and eventually terminated for reporting internal accounting control deficiencies and efforts by top management intentionally to manipulate the monthly financial results, forecasts and accounting records to make Excelon Services' performance appear better than the actual results. Attached to Morefield's OSHA complaint was a copy of a complaint he filed in state court alleging, inter alia, more detailed facts recounting his protected activities relating to alleged improper accounting treatment of vacant leases, intentional and improper balance sheet adjustments, improper manipulation of financial forecasts during the latter part of 2002, improper manipulation of the 2003 budget, and improper accounting treatment of liabilities for Bumler Mechanical, a business unit of Excelon Services.1 On September 16, 2003, OSHA dismissed Morefield's complaint, and Morefield subsequently requested a hearing.
1 Citing Ford v. Northwest Airlines, Inc., 2002 AIR 21, at n.3 (ALJ Oct.18, 2002), and 18 U.S.C. 1514A(b)(2)(D), Respondents contend that any "new claims" that Morefield failed to raise within 90 days of his termination and allegations which were not raised and investigated by OSHA are not properly subject to adjudication in this proceeding. Respondents' reading of these authorities is partially correct. Both the case law and the statute make clear that a complainant has 90 days from the "date of the violation" to file his or her complaint. The violation, however, is not the whistleblower's protected conduct, it is the retaliatory action which it allegedly triggered. In this instance it was the termination, and, although there are exceptions not here pertinent, Morefield generally would not now be free to charge additional violations. In contrast, neither Ford nor the statute require that every instance of protected activity be brought to OSHA's attention or that OSHA investigate every instance that is alleged in a complaint. The scope of an OSHA investigation does not establish boundaries of the factual inquiry permitted in the subsequent adjudication. After 90 days, new violations generally may not be raised, but the statute and the implementing regulations contemplate both discovery and a de novo hearing of the facts relating to both the protected activities and the reasons for the adverse action regardless of OSHA's findings. It involves no transgression of the "two tiered" scheme for handling whistleblower claims to adjudicate fully the circumstances of a timely filed complaint.
2 Historically, as Congress expanded whistleblower coverage to workers in various industries, efforts to limit the class of protected employees inevitably surfaced. For example, when the nuclear industry was covered by the Energy Reorganization Act, 42 U.S.C. 5851, the issue arose as to whether job shoppers employed by a third party but working at a nuclear power plant construction site, were employees of the power plant construction contractor within the meaning of the Act . In O'Brien v. Stone & Webster Engineering Corp. 1984-ERA-31 (ALJ, Feb 28, 1985), the job shoppers were covered. A contrary result, the O'Brien decision noted "would provide an incentive to replace covered workers with unprotected job shoppers thereby reducing the risk of unwelcome "whistleblowing." Consequently, although Section 5851 does not define the term "employee", a broad interpretation, which includes job shoppers within the protected category of covered workers, seems compatible with the legislative history of the Act, the overall statutory framework, and the actual manner in which job shoppers are used at Nine Mile II." See, also, Hasan v. System Energy Resources, Inc. 1989-ERA-36, (ALJ Aug. 2, 1989), aff'd (Sec'y Sept. 23, 1992) aff'd, (5th Cir. No. 94-40281). (Seconded engineers covered). Compare, Caimono v. Brinks, Inc., 95-STA-4, in which the Secretary reversed an ALJ decision which had held a messenger was not a covered employee within the meaning of the Surface Transportation Act. See, ((Sec'y Jan. 26, 1996), reversing (ALJ D&O, Sept. 7, 1995),
3 As recently observed in observed in Daniel v. Timco Aviation Services, Inc., 2002-AIR-00026, June 11, 2003:
It does not stray beyond the proper realm of administrative adjudication to postulate, a priori, that if reprisals, especially of a permanent nature or constituting a pattern of harassment, are allowed against an activity valued in the public interest, society is likely to get less of the valued activity. Conversely, one protects the behavior one wishes to promote; and this seems to be what Congress intended in dealing with the type of activity covered by the whistleblower statutes. Thus, in fostering the substantial public interest reflected in such enactments as the Air 21(Airline Industry); Energy Reorganization Act of 1974, as amended, Section 211, 42 U.S.C. §5851(Nuclear Industry), Clean Air Act, 42 U.S.C. §7622; the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. 9610; the Solid Waste Disposal Act, 42 U.S.C. §6971; the Safe Drinking Water Act, 42 U.S.C. 300j-9; the Federal Water Pollution Control Act, 33 U.S.C. §1367; Surface Transportation Assistance Act, 49 U.S.C. §31105 (Trucking Industry); the Toxic Substances Control Act, 15 U.S.C. §2622, and Sarbanes-Oxley Act of 2002, 18 U.S.C §1514A , the legislature sought to encourage workers voluntarily to communicate their environmental, safety, and certain other concerns while condemning discriminatory actions which target the activities Congress deemed beneficial in the public interest. Whistleblowing is protected; retaliation is discouraged, not the reverse.
4 What may constitute "material information" and whether covered protected activity should it be limited to concerns about such information or construed to include concerns about process and incipient inaccuracies which may impact, directly or indirectly "material information" is a separate question addressed infra.