Harvey v. The Home Depot, Inc., 2004-SOX-36 (ALJ May 28, 2004)

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Harvey v. The Home Depot, Inc., 2004-SOX-36 (ALJ May 28, 2004)

U.S. Department of Labor Office of Administrative Law Judges
800 K Street, NW, Suite 400-N
Washington, DC 20001-8002 DOL Seal

Issue Date: 28 May 2004
CASE NO.: 2004 SOX 36

In the Matter of

COLIN M. HARVEY
Complainant

THE HOME DEPOT, INC.
Respondent

Appearances:
Mr. Colin M. Harvey
Pro Se

Before:
Richard T. Stansell-Gamm
Administrative Law Judge

INITIAL DECISION AND ORDER-
DISMISSAL OF DISCRIMINATION COMPLAINT

In a complaint, dated January 30, 2004, Mr. Harvey alleged Home Depot had violated the employee protection provisions of Section 806 of the Sarbanes-Oxley Act of 2002, (Public Law 107-204), 18 U.S.C.§ 1514A, ("Act" or "SOX") as implemented by 29 C.F.R. Part 1980 (Interim Final Rule, 68 Fed. Reg. 31860, May 28, 2003). Following the dismissal of his complaint by the Regional Administrator, Occupational and Safety Health Administration ("OSHA"), on March 10, 2004, Mr. Harvey requested a hearing with the Office of Administrative Law Judges ("OALJ"). On March 17, 2004, I was assigned to conduct a hearing and render a decision in this case. Based on my review of the complaint's contents and attachment, on March 19, 2004, I issued a Show Cause Order on whether Mr. Harvey's January 30, 2004 SOX complaint should be dismissed for failure to state a cause of action. To date, neither party has responded.

Background¹

After working for Home Depot for about eight years, Mr. Harvey transferred within the company from Maryland to Atlanta, Georgia in the spring of 2001. After about a year in his new location, Mr. Harvey believed he was being subjected to racial discrimination. In particular, he presented to company executives a complaint of derogatory language contained in an e-mail reference to him. At the end of February 2002, due to stress and related health problems, Mr. Harvey's doctor placed him on sick leave.

[Page 2]

In the beginning of May 2002, while still on leave, Mr. Harvey sent the Home Depot Board of Directors a lengthy letter stating his multiple concerns and complaints about racial and employment discrimination within the company. When he returned to work on May 31, 2002, he was suspended. According to Mr. Harvey, the stated basis for the action was the on-going investigation into his May 3, 2002 letter of complaint to the Board of Directors. About a month later, after indicating an investigation disclosed no discrimination, company officials initially indicated he could not return to his former job in Atlanta. Later, company officials stated he could return to work in his old position. Eventually, Mr. Harvey was presented with a separation agreement. He did not sign the agreement for numerous reasons, including his suspicion that the executive's signature on the document was fraudulent.

Apparently, for about 30 days, Mr. Harvey remained at home while the company investigated the concerns he raised to the Board of Directors. Over the next month or two, Mr. Harvey wrote additional letters of complaint to the Board of Directors. Between the end of July and the beginning of August 2002, Mr. Harvey returned to Maryland. A few days before August 14, 2002, he received a letter, dated August 9, 2002, from a Home Depot vice president in response to his complaints to the Board. The executive summarized that an investigation had disclosed Mr. Harvey had not been mistreated. The vice president then noted that although Mr. Harvey had been informed that he could return to his job in the Atlanta, he had apparently departed Atlanta and moved back to Maryland. Based on Mr. Harvey's actions, the executive concluded he had resigned his employment with Home Depot. In closing, the executive told Mr. Harvey that if his intentions were misunderstood, he should contact the vice president by August 14, 2002. When Mr. Harvey attempted to contact the executive on August 14, 2002, the vice president was unavailable due to meetings; so, Mr. Harvey left messages indicating many issues remained unresolved. At the end of the day, the executive returned Mr. Harvey's call and left a message stating they needed to bring closure to the situation. The next day, Mr. Harvey attempted to contact the vice president again but he was on a business trip. On August 16, 2002, Mr. Harvey received a separation notice from Home Depot, completed August 14, 2002, indicating that his employment was terminated effective August 14, 2002.

In August 2003, Mr. Harvey filed grievances with the State Bar of Georgia against a Home Depot attorney claiming she had participated in the preparation of the separation agreement containing a fraudulent signature. He also alleged the same attorney was not competent to sign SEC documents for the company and other company officials were engaged in the unauthorized practice of law. In the attorney's response to the grievance, her legal representative contested the charges and stated Mr. Harvey's grievances were "part of an on-going campaign by Mr. Harvey to harass Home Depot and its employees."

In a letter, dated January 30, 2004, to the Regional Administrator, OSHA, Mr. Harvey filed a complaint under the employee protection provisions of SOX. According to Mr. Harvey, he was filing the complaint "against my former employee [sic] the Home Depot Inc. USA for stating that I have been ‘harassing' the Home Depot Board of Directors and Executives by exercising rights afforded an individual in the SOA [Sarbanes-Oxley Act]." To support his allegation, Mr. Harvey attached the grievance response to the State Bar of Georgia.

[Page 3]

The Regional Administrator dismissed Mr. Harvey's complaint on February 25, 2004 for failure to establish a prima facie case of a SOX employee protection provisions violation. In his March 10, 2004 objection to the Regional Administrator's dismissal of his complaint for failure to establish a prima facie case, Mr. Harvey maintained that the required elements for a prima facie case are present. Specifically, 1) Mr. Harvey's complaints to Home Depot's senior leadership and federal authorities alleging "fraud, malfeasance, chicanery, and violations of other Federal Statutes" were protected activities under SOX. 2) Since Mr. Harvey communicated his complaints both verbally and in writing, Home Depot was aware of his activities. 3) By his termination, Mr. Harvey suffered an adverse action. And:

4) [T]he circumstances were sufficient to raise the inference that the protected activity was likely to have been a contributing factor in the unfavorable action, which they are because as the enclosed State Bar of Georgia Grievance Response . . . states, I have been ‘harassing' Home Depot's Board of Directors by filing a SOX complaint.

FINDINGS AND CONCLUSIONS OF LAW

In determining whether a complaint states a cognizable cause of action, the Federal Rules of Civil Procedure are applicable because neither 29 C.F.R Part 1804 (SOX whistleblower proceedings) nor 29 C.F.R. Part 18 (proceedings before the Office of Administrative Law Judges) addresses this issue. See 29 C.F.R. § 18.1 (a) and Freels v. Lockheed Martin Energy Sys. 1995 CAA 92 and 1994 ERA 6 (ARB Dec. 4, 1996). Federal Rule of Civil Procedure 12 (b) (6) provides that an action may be dismissed if it fails to state a claim upon which relief can be granted. Under this rule, dismissal of a claim is appropriate if the complaint fails to allege "a set of facts, which if proven, could support [Complainant's] claim of entitlement to relief." Freels, at pages 10 and 11.

To determine whether Mr. Harvey's complaint states a claim for which relief under SOX is available, I must first review the employee protection provisions in SOX and establish the requisite elements in a claim for relief. Subsection 1514A (a) of the Act and 29 C.F.R. § 1980.102 of the implementing interim regulations prohibit a company with either a class of securities registered under section 12 of the Securities Exchange Act of 1934, 15 U.S.C. § 781, or that is required to file reports under section 15 (d) of the Securities Exchange Act of 1934 (15 U.S.C. § 78 o (d)) from discharging, demoting, suspending, threatening, harassing or in any manner discriminating against an employee in the terms and conditions of employment because an employee engaged in any lawful act to provide information, cause information to be provided, or otherwise assist in an investigation, regarding any conduct the employee reasonably believes constitutes a violation of 18 U.S.C. §§ 1341 (mail fraud and swindle), 1343 (fraud by wire, radio, or television), 1344 (bank fraud), or 1348 (security fraud), or any rule or regulation of the Securities and Exchange Commission or any provision of federal law relating to fraud against shareholders, when the information is provided to a federal regulatory or law enforcement agency, any member of congress, or a person with supervisory authority over the employee.

[Page 4]

Further, by reference,² SOX incorporates the procedural provisions and rules of the employee protection provisions of the Aviation Investment and Reform Act for the 21st Century ("AIR 21"), 49 U.S.C. § 42121 (b). According to 49 U.S.C. § 42121 (b) (2) (B) (iii) and 29 C.F.R.. § 1980.109 (a), a violation of SOX employee protection provision will be established if the complainant establishes through the preponderance of the evidence that his protected activity was a contributing factor in the alleged unfavorable personnel action. That is, the complainant must prove that:

1. He engaged in a protected activity or conduct under the Act;³
2. The respondent knew the complainant engaged in the protected activity;
3. He suffered an unfavorable personnel action; and,
4. The protected activity was a contributing factor in the respondent's decision to take the unfavorable personnel action.⁴

In the Show Cause Order I identified an apparent legal deficiency in Mr. Harvey's complaint concerning the third element, the presence of an unfavorable or adverse personnel action. The difficulty with this element involves a matter of timing. Mr. Harvey introduced the timing issue when he referred to Home Depot in his January 30, 2004 complaint as his "former" employer. The timing of events is significant in this case because, with the exception of blacklisting or other active interference with subsequent employment,⁵ the SOX employee protection provisions essentially shelter an employee from employment discrimination in retaliation for his or her protected activities, while the complainant is an employee of the respondent.

In his March 2004 request for a hearing before OALJ, Mr. Harvey asserted that his August 14, 2002 employment termination satisfied the third requisite element of a prima facie case. However, in his January 30, 2004 SOX complaint, Mr. Harvey essentially charges that the characterization of his complaints as harassment represents additional retaliation for his protected activities. That is, the harassment comment is the alleged adverse, or unfavorable action. However, since Mr. Harvey was not an employee of Home Depot at the time of the grievance response, the harassment comment was not an adverse personnel or employment action.

Further, Mr. Harvey has not presented any statements or evidence to support a finding that the harassment comment in the September 2003 State Bar of Georgia grievance response adversely affected the terms or conditions of any subsequent employment.

Since the harassment comment was not an action that adversely impacted on the terms and condition of his employment with Home Depot, or other subsequent employment, Mr. Harvey's January 30, 2004 SOX complaint lacks the third requisite element - an adverse or unfavorable personnel or employment action. In the absence of that third element, Mr. Harvey's January 30, 2004 SOX complaint fails to state a cause of action upon which relief under SOX may be granted. Consequently, his SOX complaint must be dismissed.

[Page 5]

ORDER

Accordingly, Mr. Harvey's January 30, 2004 SOX complaint is DISMISSED.

SO ORDERED:

RICHARD T. STANSELL-GAMM
Administrative Law Judge

Date Signed: May 27, 2004
Washington, D.C.

NOTICE OF APPEAL RIGHTS: This decision shall become the final order of the Secretary of Labor pursuant to 29 C.F.R. § 1980.110, unless a petition for review is timely filed with the Administrative Review Board ("Board"), US Department of Labor, Room S-4309, 200 Constitution Avenue, NW, Washington DC 20210, and within 30 days of the filing of the petition, the ARB issues an order notifying the parties that the case has been accepted for review. The petition for review must specifically identify the findings, conclusions or orders to which exception is taken. Any exception not specifically urged ordinarily shall be deemed to have been waived by the parties. To be effective, a petition must be filed within ten business days of the date of the decision of the administrative law judge. The date of the postmark, facsimile transmittal, or e-mail communication will be considered to be the date of filing; if the petition is filed in person, by hand-delivery or other means, the petition is considered filed upon receipt. The petition must be served on all parties and on the Chief Administrative Law Judge at the time it is filed with the Board. Copies of the petition for review and all briefs must be served on the Assistant Secretary, Occupational Safety and Health Administration, and on the Associate Solicitor, Division of Fair Labor Standards, U.S. Department of Labor, Washington, DC 20210. See 29 C.F.R. §§ 1980.109(c) and 1980.110(a) and (b), as found OSHA, Procedures for the Handling of Discrimination Complaints Under Section 806 of the Corporate and Criminal Fraud Accountability Act of 2002, Title VIII of the Sarbanes-Oxley Act of 2002; Interim Rule, 68 Fed. Reg. 31860 (May 29, 2003).

[ENDNOTES]

¹ Mr. Harvey has another SOX complaint against Home Depot, 2004 SOX 20 before me. In considering a Motion to Dismiss regarding that complaint, I prepared an extensive summary of Mr. Harvey's employment background. That summary provides the basis for this background.

² 18 U.S.C. § 1541A (b) (2) (A).

³ In the Show Cause Order I stated that Mr. Harvey's complaints of corporate malfeasance would be protected activities, thus establishing the first element. These complaints were also present in Mr. Harvey's other SOX complaint against Home Depot, 2004 SOX 20. Subsequently, during my adjudication of the Motion to Dismiss in 2004 SOX 20, upon close examination of underlying details of Mr. Harvey's corporate malfeasance complaints, I reached a different conclusion finding Mr. Harvey's specific stated concerns did not relate to violations covered by SOX. Thus, I no longer believe that Mr. Harvey would be able to establish the first element of a prima facie case of discrimination in this complaint.

⁴ This fourth element differs from the fourth element of a prima facie case mentioned by both the Regional Administrator and Mr. Harvey. The prima facie analysis is conducted at the investigative phase of a whistleblower complaint to determine whether the case will even be investigated. 20 C.F.R. § 1980.104 (b) (2). At that stage of the inquiry, an inference of discrimination is sufficient to permit an investigation of the complaint unless the Respondent provides clear and convincing evidence it would have taken the same adverse action in the absence of the complainant's protected activity. 20 C.F.R. § 1980.104 (c). In contrast, if the case proceeds to an administrative law judge, to establish entitlement to relief under the employee protection provisions of SOX, a complaint must prove by a preponderance of the evidence that his or her protected activity was a contributing factor to the adverse action. 20 C.F.R. § 1980.109 (a).

⁵ See Egenrieder v. Metropolitan Edison/G.P.U./, 1985 ERA 23 (Sec'y Apr. 20, 1987 (blacklisting a former employee for protected activities is prohibited) and Robinson v. Shell Oil Co., 117 S.Ct. 843 (1997) (a former employee may sue a former employer for alleged retaliatory post-employment actions).