WHISTLEBLOWER
NEWSLETTER United States Department of Labor Office of Administrative Law
Judges Law Library
May 12, 1997
This newsletter covers materials that became available during the period from
April 8 to May 12, 1997.
NUCLEAR AND ENVIRONMENTAL WHISTLEBLOWER
DECISIONS
[N/E Digest II B 1 b and VIII B 2 c]
BOARD'S CONSIDERATION OF UNPLEADED ISSUE
In MacLeod v. Los Alamos National
Laboratory, 94-CAA-18 (ARB
Apr. 23, 1997)(this was actually an "ERA" case), the Board considered
Complainant's complaints about oversized gloves when handling radioactive material in
reviewing Respondent's motive for discharge even though Complainant did not allege this
complaint as protected activity in the early stages of the litigation. The Board noted that
Complainant had referred to these particular complaints in her deposition prior to hearing, and
thus Respondent was on notice that such allegations existed. In addition, Complainant's
supervisor testified at the hearing about oversized gloves and conceded that they could be
deemed safety issues. The Board cited in this regard Yellow Freight Sys. Inc. v. Martin,
954 F.2d 353, 358-59 (6th Cir. 1992)(unpleaded issue may be tried by implied consent).
[N/E Digest II B 2 and XII D 3]
PROTECTED ACTIVITY; ENVIRONMENTAL VERSUS OCCUPATIONAL SAFETY
In Tucker v. Morrison &
Knudson, 94-CER-1 (ARB Feb. 28, 1997), the ALJ had concluded that
Complainant's reporting of the violation of internal safety procedures was protected
environmental whistleblower activity. The ALJ based this determination on the theory that
"[s]afety regulations to protect personnel charged with effectuating the purposes of
environmental legislation such as that involved in this incident should be deemed an integral
component of the law and its implementation process." The Board disagreed because
"[t]he safety violations which [an operations manager] committed did not relate to
environmental safety, but rather to occupational safety." The Board
wrote that: "[t]he distinction between complaints about violations of environmental
requirements and complaints about violations of occupational safety and health requirements
is not a frivolous one. Worker protection for whistleblowing activities related to
occupational safety and health issues is governed by Section 11 of the Occupational and
Safety and Health Act, 29 U.S.C. §§ 651-678 (1988), and enforced in United
States Federal District Courts, not within the Department of Labor's administrative
adjudicatory process." SeeMinard v. Nerco Delamar Co., 92-SWD-1 , slip
op. at 8 (Sec'y Jan. 25, 1995); DeCresci v. Lukens Steel Co., 87-ERA-113 ,
slip op. at 4 (Sec'y Dec. 16, 1993); Aurich v. Consolidated Edison Co. of New York,
Inc., 86-CAA-2, Slip op. at 3-4 (Sec'y Apr. 23, 1987).
[N/E Digest VII A 1 and 5]
DISCOVERY; SCOPE; PROTECTIVE ORDER
In Paine v. Saybolt, Inc.,
97-CAA-4 (ALJ Mar. 21, 1997)(prehearing order), the ALJ concluded based on a review various
legal authority, including the ARB decisions in Timmons v. Mattingly Testing Services,
95-ERA-40 (ARB June 21, 1996) and Seater v. Southern California Edison Co.,
95-ERA-13 (ARB Sept. 27, 1996), and the DOL regulations at 29 C.F.R. § 18.14(a) and
29
C.F.R. § 24.5(e)(1), that an ALJ should apply a broad scope of relevance, and that
"[i]t logically follows that the scope of discovery is even broader." Slip op. at 2
(citation omitted).
In Paine, the ALJ granted a protective order in regard to three items that
the ALJ found to be irrelevant to the burdens and possible defenses in a Clean Air Act
whistleblower case. The ALJ declined to issue a protective order for documents Respondent
asserted were protected on the grounds of attorney-client privilege and/or the work product
doctrine where Respondent failed to assert these privileges on a document specific basis but only
asserted a blanket privilege.
The ALJ noted that Respondent was not relieved of discovery responsibilities merely
because Complainant potentially could obtain the documents through FOIA, citing Young v.
Philadelphia Elec. Co., 87-ERA-36 (ALJ Sept. 15, 1987)(citing Pleasant Hill Bank v.
U.S., 58 F.R.D. 97 (1973) ("Material which is exempt under FOIA is not necessarily
privileged for the purposes of discovery.")
[N/E Digest VII A 2]
DISCOVERY; BALANCING TEST WHEN OPPOSED BY CLAIM OF PRIVACY
In Saporito v. Florida Power & Light
Co., 89-ERA-7 and 17 (ALJ Dec.
24, 1996), Complainant attempted to discover the addresses and telephone numbers of certain
nonsupervisory/nonmanagerial employees of Respondent in order to depose them. Respondent
opposed the discovery on the privacy grounds and because it was not obliged to produce for
deposition or hearing nonsupervisory/nonmanagerial personnel. The ALJ applied the Eleventh
Circuit's balancing test for determining whether information is discoverable when opposed by a
claim of the privilege of privacy: the court must balance the plaintiff's interest in discovering
relevant information and the privacy and confidentiality interests of the individuals involved.
See Serina v. Alberstson's, Inc., 128 F.R.D. 290, 292 (M.D. Fla. 1989), citing
Farnsworth v. Procter & Gamble Co., 758 F.2d 1545 (11th Cir. 1985). The ALJ found
that the party posing the objection must show the particulars of the expectation of privacy
beyond merely conclusory allegations that the employer considers such information to be private
and keeps it confidential. Humphreys v. Caldwell, 881 S.W.2d 940, 946 (Tex. App.
1994). In the instant case, the ALJ found that the information sought was not particularly
sensitive nor the kind one would expect to be kept in confidence. The ALJ, however, directed
that subpoenas be served at the employee's work address.
[N/E Digest VII C 1]
SUMMARY DECISION; ADEQUATE OPPORTUNITY FOR DISCOVERY;
APPROPRIATENESS WHEN ELUSIVE CONCEPTS SUCH AS MOTIVE OR INTENT ARE
INVOLVED; SUFFICIENCY OF FILING OF VERIFIED COMPLAINT TO ESTABLISH
GENUINE ISSUES OF FACT
In Kesterson v. Y-12 Nuclear Weapons
Plant, 95-CAA-12 (ARB Apr. 8, 1997), summary decision was appropriate in
regard to factual allegations that did not establish protected activity. Complainant excepted to
summary judgment on the ground that full discovery was allegedly denied, citing Flor v.
Department of Energy, 93-TSC-1 (Sec'y Dec. 9, 1994). The Board distinguished
Flor because in that case the complainant had filed timely interrogatories and requests
for production of documents that the respondent had failed to answer, and there was a pending
motion to compel when summary decision was granted. In the instant case, Complainant filed
his first discovery requests ten months after the ALJ had closed discovery.
Complainant also contended that he had established a genuine issue of material fact on the
crucial issue of motivation. The Board's discussion follows:
Complainant relies on outdated authority as support for his opposition to
summary decision. See Armstrong v. City of Dallas, 997 F.2d 62, 66 (5th Cir.
1993) ("The once frequently repeated characterization of summary judgment as a
disfavored procedural shortcut no longer appertains.") More current case law makes
it clear that "[g]enuine issues of material fact are not the stuff of an opposing party's
dreams. On issues where the nonmovant bears the ultimate burden of proof, he must
present definite, competent evidence to rebut the motion." Mesnick v. General
Electric Co., 950 F.2d 816, 822 (1st Cir. 1991), cert. denied, Mesnick v. General
Elec. Co., 504 U.S. 985 (1992), citing Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 256-57 (1986). The court in Mesnick v. GE, an age discrimination and
retaliation case also involving difficult issues of motive, went on to hold that
"summary judgment can be appropriately entered even where elusive concepts such
as motive or intent are involved." Id. The court granted summary judgment
on both the age discrimination and retaliation claims. Even though the plaintiff had
submitted "a plethora" of evidence on his professional competence and some
evidence of age-motivated discrimination, the court found that "the summary
judgment record contained no evidence from which a rational jury could infer, without
the most tenuous insinuations, that [defendant's] legitimate, nondiscriminatory reason for
cashiering [plaintiff] was actually a pretext for age discrimination [and] the district court
did not err in defenestrating the plaintiff's claim." Id. at 826 (emphasis in
original). The court also affirmed summary judgment on the retaliation claim because
"[plaintiff] tendered nothing, direct or circumstantial, suggesting a retaliatory
animus." Id. at 828.
95-CAA-12 @ 6 (footnote omitted). Finally, the Board rejected Complainant's argument
that the filing of a verified complaint is itself sufficient to establish genuine issues of fact for a
hearing.
[N/E Digest VIII C 2 c]
APPEAL OF SECRETARY'S FINAL ORDER; TIMELINESS IS CALCULATED
BASED ON DECISION ON MERITS; COLLATERAL DETERMINATIONS, SUCH AS
ATTORNEY FEE REQUESTS, ARE NOT USED
In Fluor Constructors, Inc. v.
Reich, No. 95-2827, 1997 U.S. App. LEXIS 9388 (11th Cir. Apr. 15, 1997) (case
below 88-ERA-29), the Eleventh Circuit held that the Supreme Court's decision in Budinich
v. Becton Dickinson & Co., 486 U.S. 196, 108 S. Ct. 1717, 100 L. Ed. 2d 178 (1988),
regarding the collateral nature of fee determinations applies to administrative cases. The court
noted that a party is required to file a petition for review of a final decision of a Secretary
"within the time prescribed by law," Fed.R.App.P. 15(a), and that the ERA provides
that petitions for review in the United States courts of appeals "must be filed within sixty
days from the issuance of the Secretary's order." 42 U.S.C. § 5851(c)(1).
In Budinich, the Supreme Court held that both the imposition and the amount of
attorney's fees are always collateral to the merits of an action; for appealability purposes a
decision on the merits is a final decision even when a request for attorney's fees remains for
adjudication. On this basis, the Eleventh Circuit held that for the purposes of an appeal from an
administrative agency, both the imposition and the amount of attorney's fees are collateral to the
merits of an action. Although there is a "unique circumstances" exception, it is
limited to situations "where a party has performed an act which, if properly done, would
postpone the deadline for filing his appeal and has received specific assurance by a judicial
officer that this act has been properly done." Osterneck v. Ernst & Whinney, 489
U.S. 169, 179, 109 S. Ct. 987, 993, 103 L. Ed. 2d 146 (1989).
The Eleventh Circuit noted that Appellant's attorney in the instant case may have been
misled by the Secretary's titling of the final decision on the merits as "Decision and Order
of Remand," and the titling of the order following the remand for a determination of
attorney's fees, "Final Decision." Nonetheless, the court held that the fact that
Secretary's final order on the merits was styled as a remand for attorney's fees is not significant
for jurisdictional purposes.
[N/E Digest IX L]
MOTION IN LIMINE; ATTORNEY-CLIENT PRIVILEGE; WAIVER BY
DISCLOSURE; IMPLIED WAIVER WHERE INFORMATION CONSTITUTES DEFENSE
In Paine v. Saybolt, Inc.,
97-CAA-4 (ALJ Mar. 21, 1997)(prehearing order), Respondent submitted a motion in limine
seeking to exclude from evidence at the hearing of the matter Complainant's affidavit in support
of his charge filed with the Wage and Hour Division of the USDOL, based on the contention that
the affidavit -- which included descriptions of alleged conversations between Complainant (a
former district manager for Respondent) and Respondent's general counsel -- is protected on the
basis of attorney-client privilege. The ALJ denied the motion in an order that contains a good
discussion of the law of attorney-client privilege, who may assert the privilege, and when it may
be waived.
The ALJ found that Respondent's attorney's statements in a letter to Wage and Hour
(apparently in response to the complaint) destroyed the element of confidentiality necessary to
the attorney-client privilege, and that Respondent's attorney, as vice-president and general
counsel, was a person vested with authority to represent the position of the Respondent
corporation. Alternatively, the ALJ held that even if Respondent's attorney did not have this
authority, the privilege was waived when the information was revealed to another and
Respondent corporation did not object. In addition, the ALJ found that there was an implicit
waiver of the privilege because the questioned communications were inextricably merged with
Respondent's affirmative defense (the communications were relevant to motive and to
Respondent's claimed lack of knowledge of Complainant's protected activity). The ALJ
concluded that "[t]he benefit to be gained from disclosure certainly outweighs any claim to
the attorney-client privilege."
Having determined that the privilege had been waived, the ALJ found that he must
determine the scope of the waiver, balancing the interests of the importance of the privilege
against the non-asserting party's need for the information. The ALJ noted that retaliatory intent
cases that are based on circumstantial evidence require full presentation of a broad range of
evidence, and the ALJs may not exclude relevant evidence unless it is "unduly
repetitious." Moreover, the ALJ noted that Respondent had used the letter to Wage and
Hour "as a sword to pierce holes in Complainant's claim. Respondent, having been the
first to yield the sword may not now relinquish the weapon with which it chose to defend
itself." Slip op. at 8. Finally, the ALJ found that certain of the conversations alleged to be
covered by attorney-client privilege may fall within the crime-fraud exception (e.g.,
Complainant alleged that Respondent's attorney instructed Complainant to fire an employee
immediately because he was an EPA spy, and that the attorney instructed Complainant as to the
pretextual reason for the firing).
[N/E Digest XI A 2 d]
MOTIVE; "UNION MENTALITY" OF COMPLAINANT
Where the company official who made the decision to discharge Complainant based his
decision in part on Complainant's "union mentality," and that official's description of
what he meant by union mentality included Complainant's complaints about ALARA (the NRC
regulation requiring licensees to maintain radiation exposures and releases in unrestricted areas
"as low as reasonably achievable" 10 C.F.R. § 20.1(c)) and glove sizes, there
was direct evidence of discrimination for illegitimate reasons. The Board found that these
concerns were reasonably perceived violations of the ERA. MacLeod v. Los Alamos
National Laboratory, 94-CAA-18 (ARB Apr. 23, 1997)(this was actually an
"ERA" case).
[N/E Digest XI C 2 b]
PRETEXT NOT ESTABLISHED
In Olsovsky v. Shell Western E&P,
Inc., 96-CAA-1 (ARB Apr. 10,
1997), Complainant conceded that he may have been legitimately disciplined for his misconduct,
but maintained that discharge was unreasonably harsh in light of his conduct and in comparison
with discipline imposed on other employees. The Board found that pretext for discharge was not
established where Complainant had failed to show that other employees similarly situated
(i.e., those with substantially similar disciplinary records) received more lenient
treatment; Complainant's discharge occurred only after counseling and progressive discipline;
many witnesses indicated that Complainant was difficult to get along with and sometimes
worked in an unsafe manner; many of Complainant's performance problems began before he
engaged in any protected activity.
[N/E Digest XII C 3]
PROTECTED ACTIVITY; EMPLOYEE'S THREAT TO EXPOSE ALLEGED
WRONGDOING
In MacLeod v. Los Alamos National
Laboratory, 94-CAA-18 (ARB
Apr. 23, 1997)(this was actually an "ERA" case), Complainant failed to assume full
responsibility for her actions in regard to a safety-related error, and threatened to hold the chain
of command responsible (by asserting that she had not been properly supervised or certified, and
that if she was going to be held accountable, then everyone up the line should be held
accountable). The Board held that this response to a proposed reprimand had both protected and
unprotected aspects -- that the threat to expose alleged wrongdoing was protected. The ALJ, in
considering Respondent's explanation for the adverse action, had concluded that Complainant's
response was merely a way to avoid responsibility for her mistakes. The Board, however, found
that while Complainant may not have exhibited the maturity or responsibility that her supervisor
sought in an employee by failing to "take ownership" of the mistake, Complainant
was making protected allegations and threats to expose wrongdoing by management.
[N/E Digest XII C 4]
PROTECTED ACTIVITY; REQUIREMENT OF REASONABLE PERCEPTION OF
VIOLATION OF ENVIRONMENTAL LAWS; SUBJECTIVE SPECULATION IS NOT
PROTECTED
In Kesterson v. Y-12 Nuclear Weapons
Plant, 95-CAA-12 (ARB Apr. 8, 1997), summary decision was appropriate in
regard to factual allegations that did not establish protected activity. The Board noted that the
employee protection provisions provide protection for making safety and health complaints
grounded in conditions constituting reasonably perceived violations of the environmental laws,
but not for an employee's mere subjective belief that the environment might be affected. The
Board also noted that there is a distinction "between protected acts, such as threatening to
file a citizens' suit under the environmental laws, and unprotected acts, such as contacting the
government and the news media about mischarging by a government contractor." The
Board observed that the Secretary had held that internal complaints about a technical issue which
could only threaten the environment if many speculative events all occurred was not
protected." 92-CAA-12 @ 3 (citations omitted). Thus, the following matters were not
protected activity:
Complainant's mere friendship with another employee who is a whistleblower
Complainant's truthful answers given in an internal investigation into who ordered
the purchase of allegedly illegal surveillance equipment (Complainant's theory was that
the allegedly illegal surveillance equipment could be used to spy on whistleblowers)
Complainant's objections to allegedly illegal orders to remove computer files from a
computer held in evidence in a state criminal case (although such actions may be
protected by other laws)
Complainant's complaint about abusive treatment by a manager that was not based
on the manager's fitness for duty, but the manager's military style of supervision
Complainant's refusal to assist in an alleged scheme to fabricate reasons to fire a
female employee (although such actions may be protected by other laws).
The Board noted that Complainant's allegation that he was interviewed by Respondent's
attorneys investigating another whistleblower's complaint would be protected activity, if proven.
[N/E Digest XIII A]
HOSTILE ACTS THAT DO NOT CAUSE ANY TANGIBLE JOB DETRIMENT
In Boudrie v. Commonwealth Edison
Co., 95-ERA-15 (ARB Apr. 24,
1997), Complainant urged the Board to find that employees are entitled to compensation for any
discriminatory hostility exhibited by their employer regardless of whether the employee suffered
any tangible job detriment. The Board declined to rule on this point of law because it found that
none of the allegedly hostile acts were either adverse or retaliatory.
[N/E Digest XIII B 16]
INVOLUNTARY TRANSFER; CONSTRUCTIVE DISCHARGE
In Boudrie v. Commonwealth Edison
Co., 95-ERA-15 (ARB Apr. 24,
1997), the Board clarified its understanding of the law regarding involuntary transfers:
An involuntary transfer to a demonstrably less desirable position is an
adverse employment action because it affects the employee's "compensation, terms,
conditions, or privileges of employment." 42 U.S.C. § 5851(a)(1);...
Moreover, the fact that an employee refuses to accept a retaliatory transfer, or acquiesces
to the transfer for only a short period of time, and quits, does not render the retaliatory act
of transferring the employee moot. Instead, the employee's refusal to accept the transfer
is relevant to the remedy to which the employee may be entitled. ... If the employee is
found to have been constructively discharged, reinstatement would be appropriate and
post-resignation back pay would be allowed. ... If the employee is found not have been
constructively discharged, such relief would be inappropriate.
Slip op. at 7 (citations omitted).
[N/E Digest XIII C]
HOSTILE WORK ENVIRONMENTAL; THREAT BY CO-WORKER WITHOUT
KNOWLEDGE OF EMPLOYER
An allegation that a co-worker threatened Complainant based on the belief that
Complainant had turned him in for not following safety procedures cannot be considered part of
a hostile work environment claim where the complainant does not allege that he told his
employer about the threat at the time and therefore cannot now allege that the employer acted
inappropriately in responding to the threat. Boudrie
v. Commonwealth Edison Co., 95-ERA-15 (ARB Apr. 24, 1997).
[N/E Digest XIV B 2]
EMPLOYER/EMPLOYEE RELATIONSHIP
In Stephenson v. National Aeronautics &
Space Administration, 94-TSC-5 (ARB Apr. 7, 1997), Respondent sought
reconsideration of the Board's ruling that "Respondent ... could be held liable for retaliating
against 'any employee' if it had acted as an employer with regard to the employee, e.g.,
by establishing, modifying or interfering with the employee's compensation, terms, conditions or
privileges of employment." See Stephenson v. National Aeronautics & Space
Adminstration, 94-TSC-5 (ARB Feb. 13, 1997)(order of remand).
Respondent pointed to language in Varnadore v. Oak Ridge National Laboratory
(Varnadore III), 95-ERA-1 (ARB June 14, 1996), where the Board stated that no basis
existed for concluding that the complainant was employed by the DOE and that he had not even
alleged that he was the employee of an individual respondent. Varnadore, 95-ERA-1,
slip op. at 59-60. In Varnadore III, the Board had also stated that "an employment
relationship between complainant and respondent is an essential element of any [whistleblower]
claim . . . ." Id. at 60.
The Board held that
this language should not be read to mean that only the direct or immediate
employer of a discriminatee is subject to suit under the whistleblower provision. A
complaint requires an allegation of employment discrimination, i.e., that an
employer's action adversely affected a complainant's employment, i.e., the
compensation, terms, conditions or privileges of employment. In this sense, an
"employment relationship" is essential to the complaint. The employment
relationship may exist between the complainant and the immediate employer. In
appropriate circumstances, however, protection may extend beyond the immediate
employer.
Slip op. at 2. The Board distinguished Varnadore III, from the instant case and
Hill v. TVA and Ottney v. TVA, 87-ERA-23/24 (Sec'y May 24, 1989), on the ground
that
in Varnadore III the complainant failed to articulate any association between his
immediate employer and the other respondents that resulted in adverse employment action. In
the present case, Complainant alleged that Respondent ordered the immediate employer to take
certain specified adverse actions against Complainant. In Hill & Ottney, the respondent
had canceled a contract with the immediate employer in retaliation for disclosure of safety
problems, thereby disemploying the complainants.
The Board noted that the focus of Robinson v. Martin Marietta Services, Inc.,
94-TSC-7 (ARB Sept. 23, 1996) (applying the "sufficient control" analysis of
Reid
v. Methodist Medical Center of Oak Ridge, 93-CAA-4 (Sec'y Apr. 3, 1995), aff'd,
No. 95-3648 (6th Cir. Dec. 20, 1996)), was whether the respondent was a co-employer. The
Board stated that the difference in analysis between Robinson and the instant case was
based on the issues framed by the complainant's allegations, and that the underlying question in
both instances is the same: "did [Respondent] act as an employer with regard to
the complainants, whether by exercising control over production of the work product or by
establishing, modifying or interfering with the terms, conditions or privileges of
employment?" Slip op. at 4.
[N/E Digest XVI A 2]
PREJUDGMENT BOND
In Creekmore v. ABB Power Systems Energy
Services, Inc., 93-ERA-24
(ALJ Jan. 9, 1997), Complainant filed an application for prejudgment remedy -- an order that
Respondent place a cash bond with the Clerk of the USDOL in the amount of $500,000. The
ALJ, assuming arguendo that he had the authority to seize Respondent's assets through
FRCP 64 (as theoretically made applicable through 29 C.F.R. § 18.1), denied the
application on the ground that Complainant failed to comply with the applicable state law (FRCP
64 ties such remedies to the law of the State in which the District Court is located).
[N/E Digest XVI B 3]
PRELIMINARY ORDERS UNDER THE ERA NOT AUTHORIZED FOR
COMPLAINTS FILED PRIOR TO OCTOBER 24, 1992
In Smith v. Esicorp, Inc.,
93-ERA-16 (ARB Apr. 3, 1997), the Board denied Complainant's request that the Board issue a
preliminary order pursuant to the ERA ordering Respondent to pay attorney's fees and costs
because the instant case was filed prior to the 1992 amendments to the ERA. Such preliminary
orders were not authorized prior to the effective date (Oct. 24, 1992) of the Comprehensive
National Energy Policy Act of 1992, Pub. L. No. 102-486, 106 Stat. 2776, 3123.
[N/E Digest XVI B 3]
PRELIMINARY ORDER UNDER THE ERA; NONPECUNIARY FORMS OF RELIEF
In Van Der Meer v. Western Kentucky
University, 95-ERA-38 (ARB Apr. 8, 1997), the ALJ found in favor of
Complainant and recommended various forms of relief, including (1) expungement of any
reference to the adverse action against Complainant from all University files; (2) posting of the
ALJ's recommended decision and order on appropriate bulletin boards for a period of not less
than 60 days; and (3) release, without comment, of the recommended decision and order to the
press. In its preliminary order of relief, the Board ordered Respondent to comply with items (1)
and (2). The Board, however, declined to issue a preliminary order on item (3) because it
questioned whether it had the authority to order such relief even in a final order.
[N/E Digest XVI C 2 c i]
BACK PAY; DEDUCTION OF OTHER SETTLEMENT AMOUNTS
In Saporito v. Florida Power & Light
Co., 89-ERA-7 and 17 (ALJ Mar.
12, 1997), the ALJ considered what amounts, if any, could be deducted from a back pay award
for settlements of other whistleblower cases. The ALJ accepted Respondent's argument that
amounts designated in settlement agreements as back pay awards should be deducted from a
back pay award, but rejected the contention that front pay awards should be similarly deducted.
In addition, where Complainant did not have a current job, but described himself as an
"investor", the ALJ accepted Respondent's contention that capital gains and
dividends received by Complainant from his investments should also be deducted from a back
pay award.
[N/E Digest XVI C 2 e]
PREJUDGMENT INTEREST; COMPOUNDING
In Willy v. The Coastal
Corp., 85-CAA-1 (ALJ May 8, 1997), Complainant contended that pre-judgment
interest should be compounded either yearly or quarterly based on OFCCP v. WMATA,
84-OFC-8 (Ass't Sec'y Aug. 23, 1989). The ALJ recognized that WMATA contained
language that could be interpreted as approval of yearly compounding, but concluded based on
the context of the decision as a whole, as well as subsequent decisions in the matter WMATA,
84-OFC-8 (Ass't Sec'y Nov. 17, 1989) and WMATA, 84-OFC-8 (Ass't Sec'y Nov. 14, 1990), that
there should be no compounding of interest.
[N/E Digest XVI D 3 d]
COMPENSATORY DAMAGES; ADJUSTMENT FOR ADVERSE TAX
CONSEQUENCES
In Willy v. The Coastal
Corp., 85-CAA-1 (ALJ May 8, 1997), Complainant requested that his
compensatory damages award be adjusted for any adverse tax consequences of receiving a lump
sum award in a single year. Reviewing legal authority indicating that excess tax liability is not a
loss within the meaning of the law of damages in contract and tort cases, the ALJ concluded that
the same rule is applicable to employee protection cases. Thus, the ALJ declined to include
additional compensation for tax liability in his recommended decision.
[N/E Digest XVI E 5]
COSTS FOR RESPONDENT
In Olsovsky v. Shell Western E&P,
Inc., 96-CAA-1 (ARB Apr. 10,
1997), Respondent requested an award of its costs, other than attorney's fees. The Board,
following Secretarial precedent, held that DOL does not have statutory authority to award costs
when a complaint is denied.
[N/E Digest XVII G 9]
SETTLEMENT AFTER ENTRY OF FINAL ORDER BY SECRETARY; REQUEST OF
PARTIES THAT DOL ORDERS BE VACATED SO THAT RESPONDENT IS NOT
STIGMATIZED
In Smith v. Littenberg,
92-ERA-52 (ARB Apr. 29, 1997), Complainant
and Respondents entered into a settlement agreement after the Secretary had entered a final
decision and order, and while a petition for review was pending in the court of appeals. The
settlement, obtained through mediation, prevented the parties from revealing its terms to the
Secretary, who was not a party to the court settlement. The parties requested that the Board
"respect the parties's wishes" and vacate the Secretary's and ALJ's decisions.
Respondents were "particularly concerned that the Secretary's Order and the ALJ's
Recommended Decision should be vacated because of the potential for stigmatizing
Respondents." The Board found, however, that public interest favors allowing those
decisions to stand as legal precedent. In addition, the Board found that the decisions should
stand because, "[u]nlike the usual ERA case in which there is a settlement, in this case the
Secretary did not examine or enter into the settlement agreement because it occurred after the
issuance of a final agency decision." Slip op. at 3.
[N/E Digest XIX]
COMPLAINANT'S DELIBERATE VIOLATION OF THE ERA OR AEA AS AN
AFFIRMATIVE DEFENSE
In Fields v. Florida Power
Corp., 96-ERA-22 (ALJ Mar. 11, 1997), the
ALJ recommended the dismissal of three whistleblower complaints based on 42 U.S.C. §
5851(g), which serves as a bar to an ERA claim once it is determined that the complainant
caused a deliberate violation of the ERA or AEA. The ALJ reviewed the pertinent statutory
language, statutory history, caselaw, competing policy considerations, and principles of statutory
construction, to reject Complainant's contention that § 5851(g) requires that a complainant
know his or her acts are illegal. The ALJ, however, concluded that a Respondent has the burden
of proving § 5851(g) as an affirmative defense, and must prove (1) that the act was done
without direction from the employer, (2) that the complainant deliberately did the act, and (3)
that the act caused a violation of ERA or AEA requirements.
[STAA Digest IX B 3 a]
DUTY TO MITIGATE; AFFIRMATIVE DEFENSE
The Sixth Circuit affirmed DOL's decision on back pay in Intermodal Cartage
Co., Ltd. v. Reich, No. 96-3131 (6th Cir. Apr. 24, 1997)(unpublished decision available
at 1997 U.S. App. LEXIS 9044)(case below 94-STA-22). The central issue in the appeal was the
complainants' duty to mitigate. The court wrote:
An employee discharged in violation of the Act has a duty to mitigate damages
by seeking other substantially equivalent employment. The employer can assert the
employee's failure to do so as a defense against liability for back pay. However, the
failure-to-mitigate or "willful loss of earnings" defense will be difficult to
sustain if the facts are at all favorable to the employee. The Sixth Circuit has discussed
the defense as follows:
It is beyond peradventure that the defense of willful loss of earnings is an
affirmative defense, with the burden of proof resting upon the employer. . .
. Further, a wrongfully-discharged employee is only required to make a
reasonable effort to mitigate damages, and is not held to the highest
standard of diligence. This burden is not onerous, and does not mandate
that the plaintiff be successful in mitigating the damage. . . . The
reasonableness of the effort to find substantially equivalent employment
should be evaluated in light of the individual's background and experience
and the relevant job market. . . . Finally, it must be remembered that the
Board's conclusion as to whether an employer's asserted defenses against
liability have been successfully established [*7] will be overturned on
appeal only if the record, considered in its entirety, does not disclose
substantial evidence to support the Board's findings. . . . The general rule
in labor cases is that "an employee must at least make reasonable
efforts to find new employment which is substantially equivalent to the
position [lost] . . . and is suitable to a person of his background and
experience" . . . .
NLRB v. Seligman & Assoc.
, 808 F.2d 1155, 1164-65 (6th Cir. 1986), quoting
(with citations omitted) NLRB v. Westin Hotel, 758 F.2d 1126, 1129-30 (6th Cir. 1985).
The efforts to mitigate damages must be analyzed with these principles in mind.