Gonzalez v. The Colonial Bank, 2004-SOX-39 (ALJ Aug. 17, 2004)

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Gonzalez v. The Colonial Bank, 2004-SOX-39 (ALJ Aug. 17, 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: 17 August 2004
Case No. 2004-SOX-39

...................................................................
In the Matter of:

ANTHONY F. GONZALEZ,
Complainant,

COLONIAL BANK,¹
Respondent.

&
THE COLONIAL BANCGROUP. INC.,
Respondent.
.....................................................................

ORDER GRANTING MOTION TO AMEND COMPLAINT

Complainant, Anthony F. Gonzalez, moves to amend the complaint filed in this matter under § 806 of the Sarbanes-Oxley Act ("Act") by adding The Colonial BancGroup, Inc. ("BancGroup") as a named Respondent.² Respondent, Colonial Bank ("Colonial"), filed an opposition to the motion to amend on July 27, 2004.

29 C.F.R. § 18.5(e) provides that an administrative law judge may allow appropriate amendments to complaints when the amendment is reasonably within the scope of the original complaint, a determination of a controversy on the merits will be facilitated thereby, and there is no prejudice to the public interest and the rights of the parties.

In support of his motion Complainant avers that BancGroup is the public held parent company of Respondent, Colonial, and was identified as such in the initial complaint filed by Complainant with the Department of Labor, Occupational Health and Safety Administration, although it was not identified as a Respondent.³ Complainant also asserts that BancGroup appointed Complainant to his position with Colonial and it was the CEO of BancGroup who approved the decision of the Colonial CEO to terminate Complainant; and that the discrimination against Complainant was achieved by the Colonial CEO in concert with the CEO of BancGroup, acting on behalf of Colonial or BancGroup.

[Page 2]

Complainant also moves that the amendment relate back to the original complaint as provided by Fed. R. Civ. P. 15(c).⁴

Complainant asserts that BancGroup would suffer no prejudice from being added as a Respondent because BancGroup has known of this claim since its inception, and service of the initial complaint was provided to BancGroup by service on BancGroup; service the Executive Vice-President of BancGroup; and on the CEO of BancGroup.

Respondent opposes the motion to amend because the ninety day period for filing a complaint against under the Act has run, and Rule 15(c) provides for an amendment to relate back to the original complaint only in "cases in which the plaintiff has named the correct defendant by the wrong name or other cases of genuinely mistaken identity."⁵ Respondent argues that courts do not permit relation back when the complainant seeks to add a new defendant whose identity the complainant has known from the outset, and either has not realized may be liable or simply has chosen not to sue.

The Secretary of Labor spoke to the issue of amending a complaint by adding an additional respondent in a case arising under the whistleblower provisions of the Surface Transportation Assistance Act, 49 U.S.C. § 2305. The Secretary in Wilson v. Bolin Associates, Inc, 91-STA-4 (Sec'y Dec. 30, 1991), agreed with the administrative law judge's decision to allow the complainant to amend his claim to add an individual as a party when the individual was reasonably within the scope of the original complaint, received notice from the outset of the case, and participated in the investigation and all proceedings. The Secretary of Labor found the amendment to be proper under 20 C.F.R. § 18.5(e) and consistent with cases arising under Fed. R. Civ. P. 15. The cases cited by the Secretary as supporting its position were Barkins v. International Inc., 825 F.2d 905 (5th Cir. 1987); Itell Capital Corp. v. Cups Coal Co., Inc., 707 F.2d 1253 (11th Cir. 1983) and Serrano v. Collazo Torres, 650 F. Supp. 722 (D.P.R. 1986).

All three cases cited by the Secretary interpreted Fed. R. Civ. P. 15 to permit the amendment of a complaint by adding a defendant and to permit the amended complaint to relate back to the date of the original complaint in order to bring the claim within the period provided by law for commencing the action. The Court in Barkins, supra, referred to four criteria as recognized by case law to be determinative of whether a complaint should be amended under Rule 15(c): (1) the claim arose out of the same transaction or conduct described in the original complaint; (2) the new party received notice in such a way as to not be prejudiced; (3) the new party knew or should have known that the suit would have been brought against it but for a mistake; and (4) the second and third requirements were met within the limitations period.

Respondent does not question the first two requirements. It does not dispute that BancGroup received notice of the claim when it was originally filed or that the claim against BancGroup arises out of the same transaction described in the original complaint. As stated above, Respondent argues that Rule 15(c) does not permit relation back in this case because Complainant's failure to name BancGroup as a Respondent from the beginning was not based on a "mistake" as that term is used by Rule 15(c). Respondent argues that case law allows a relation back based on mistake only when complainant has named the "correct defendant by the wrong name or other cases of genuinely mistaken identity."⁶

[Page 3]

Respondent's contention of when a respondent may be added and when the claim may relate back to the original differs from that applied by the Secretary in Wilson. In Wilson, the administrative law judge added as a respondent an individual, Russell Bolin, who was the sole shareholder and chief executive officer of the original respondent corporation, not because of a mistake in the identity of the named respondent, but because the original claim "challenged Bolin's individual employment decision"⁷ , and Bolin was "the person who discharged Complainant…"⁸

Also, the cases referenced by the Secretary in Wilson support his position. In Itel Capital Corporation, supra, the 11th Circuit Court of Appeals affirmed the District Court's Order granting the plaintiff's motion to add an additional defendant, Herman Mulvehill, the 97% owner of the respondent corporation. The requirements of Rule 15(c) were found to be met and the date of filing of the amendment were found to relate back prior to the running of the statute of limitations not because of a "mistake of identity" between the original corporate defendant and the added individual defendant, Mulvehill, but because of a mistake in identifying the responsible party. In Serrano, supra, a complaint was amended to add as a defendant a penal guard. The original defendants were Department of Correction officials and prison officials. The Court granted the motion to amend under Rule 15(c) because the additional defendant "knew or should have known that he was a proper party to the action" because he had a "direct and crucial role in the incident…"⁹ The Court reasoned in language that is apropos here:

In reviewing plaintiff's motion, we are mindful that the judicial principle behind Rule 15(c) "is to ensure that the statute of limitations is not used mechanically to prevent adjudication of claims where a real party in interest was sufficiently alerted to the proceedings, or was involved in them in a practical sense from an early stage. (citations omitted) Thus, amendments under this statute are to be "freely given" absent a showing of undue delay, bad faith or dilatory tactics. (citations omitted)"¹⁰

Here, it is determined that amending the complaint filed before OSHA by adding BancGroup, the parent company of Complainant's employer, as a respondent comports with the purpose of Rule 15(c) and the purpose of the Act. Complainant has alleged that BancGroup was responsible for his employment at Colonial and had responsibility for the termination of his employment at Colonial. Specifically, that BancGroup appointed Complainant to the position of Advisory Board Member for Colonial and that the BancGroup CEO approved of the proposal of the Colonial CEO to terminate Complainant. As Complainant points out the Act covers an employee of a company as well as an employee whose employment could be affected by a company. See 29 C.F.R. § 1980.101

[Page 4]

Also, it is undisputed that a shared management and function existed between the parent and the subsidiary. BancGroup and Colonial had the same chairman of the Board, CEO and president in 2002. The principal activity of BancGroup is to supervise and coordinate the business of its subsidiaries and to provide them with capital and services. BancGroup derives substantially all of its income from dividends received from Colonial. Complainant's service to the Colonial Bank Bay Area Advisory Board was paid, in part, with stock in BancGroup. The address of both BancGroup and Colonial is One Commerce Street, Montgomery, Alabama, and Colonial and BancGroup are represented by the same law firm.

Granting Complainant's motion to amend his complaint presents him with the opportunity to establish whether he was discriminated against with respect to his employment at Colonial and/or whether his employment at Colonial was affected by BancGroup contrary to § 806 of the Sarbanes-Oxley Act.

ORDER

In consideration of the aforesaid, IT IS HEREBY ORDERED THAT:

1) Complainant's Motion For Leave To Amend Initial Complaint is granted;
2) The complaint is amended as set forth in Exhibit "A" of Complainant's motion and relates back to July 11, 2003.

Thomas M. Burke
Associate Chief Administrative Law Judge

[ENDNOTES]

¹ The caption on prior Orders issued by the undersigned administrative law judge incorrectly identified the Respondent as Colonial Bancgroup.

² Complainant's motion was filed on July 16, 2004.

³ When the Regional Administrator issued its Findings and Preliminary Order it treated BancGroup as a named Respondent.

⁴ Rule 15(c) provides that [w]henever the claim or defense asserted in the amended pleading arose out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading, the amendment relates back to the date of the original pleading. An amendment changing the party against whom a claim is asserted relates back if the foregoing provision is satisfied and, within the period provided by law for commencing the action against him, the party to be brought in by amendment (1) has received such notice of the institution of the action that he will not be prejudiced in maintaining his defense on the merits, and (2) knew or should have known that, but for a mistake concerning the identity of the proper party, the action would have been brought against him.

⁵ Respondent's Opposition To Complainant's Motion To Amend, p. 8, 9.

⁶ Respondent's Opposition To Complainant's Motion To Amend, p. 8.

⁷ Wilson v. Bolin, 91-STA-4 (Sec'y Dec. 30, 1991) p. 3.

⁸ Id. p. 4.

⁹ Serrano v. Torres, 650 F. Supp 722 at 727 (D.P.R. 1989).

¹⁰ Id. p. 726.