ARB CASE NO. 04-054
ALJ CASE NO. 03-SOX-15
DATE: May 13, 2004
In the Matter of:
DAVID E. WELCH,
COMPLAINANT,
v.
CARDINAL BANKSHARES CORPORATION,
RESPONDENT.
BEFORE: THE ADMINISTRATIVE REVIEW BOARD
Appearances:
For the Complainant:
D. Bruce Shine, Esq., Shine & Mason Law Office, Kingsport, Tennessee
For the Respondent:
Laura Effel, Esq., Flippin, Densmore, Morse & Jesse, Roanoke, Virginia
FINAL DECISION AND ORDER DISMISSING PETITION FOR REVIEW WITHOUT PREJUDICE
BACKGROUND
On January 28, 2004, a Department of Labor Administrative Law Judge (ALJ) issued a document entitled Recommended Decision and Order (R. D. & O.) in this case arising under the Sarbanes-Oxley Act of 2002 (SOX), 18 U.S.C.A § 1514A (West 2002). The ALJ found that the Respondent, Cardinal Bankshares Corp., had retaliated against the Complainant, David Welch, in violation of the SOX's whistleblower protection provisions, however he did not make a final determination on the amount of damages Cardinal owed to Welch. The ALJ stated that the record would remain open for thirty days to allow Welch to produce evidence upon which an award of back pay could be calculated and permitted Cardinal to respond to any evidentiary submission within fifteen days from the date upon which it received Welch's evidence. The ALJ also instructed the parties to inform him if they concluded that an evidentiary hearing was necessary to resolve the damages issue.
Cardinal also argues that the ALJ's decision was irrevocably "vacated" when the Board issued its Notice of Appeal and Briefing Schedule and that "there is no provision authorizing the Board to un-accept a matter for review." Resp. Mem. at 3. Cardinal cites no support for its assertion that the Board may not correct a premature acceptance of a petition for review and in fact its argument is contrary to Board precedent. See Dempsey, slip op. at 5 (case remanded to ALJ to conduct further proceedings and to issue a recommended decision resolving the case in its entirety after Board had issued Notice of Appeal and Order Establishing Briefing Schedule).
Furthermore, 29 C.F.R. § 1980.110(b) provides that the ALJ's recommended decision becomes "inoperative," when the Board accepts the case, not that the decision is vacated as Cardinal asserts. The ALJ's initial decision was not issued at the conclusion of all proceedings before the ALJ, as provided in 29 C.F.R. § 1980.110(c). At the time the Board accepted the petition for review, the ALJ's initial decision was "inoperative" and did not have the potential of becoming "operative" until all proceedings were completed and it was subsumed in the ALJ's final recommended decision and order disposing of the complaint. Accordingly, the Board's acceptance of the petition for review did not in any way affect the status of the ALJ's initial decision. It was inoperative and it will remain inoperative until such time that the ALJ issues a final recommended decision after concluding all proceedings before him and either Cardinal does not file a timely appeal of the ALJ's final decision within ten business days of the date on which it is issued or after consideration upon an appeal timely filed, the Board issues an order adopting the decision.
We also reject Cardinal's assertion that it will be prejudiced if we refuse to hear the case at this time because:
[i]f the Board fails to proceed now, Respondent's rights will be placed in jeopardy as the Board's time for consideration may run before it has an opportunity to act. The Board has only 120 days from 10 business days after the date of the ALJ's decision to issue its decision. 29 C.F.R. § 1980.110(c). That period expires on June 10, 2004.
Resp. Mem. at 3. As stated above, the 120-day period provided for the Board to issue its final decision does not begin to run until ten business days after the conclusion of all proceedings before the administrative law judge. Because those proceedings have not yet concluded, the Board's 120-day period has not yet begun to run.
[Page 4]
Furthermore, the 120-day period for issuing a final decision is directory and not jurisdictional. See Roadway Express, Inc., v. Dole, 929 F.2d 1060, 1066 (5th Cir. 1991)(agency does not lose jurisdiction for failing to comply with statutory time limits unless the statute both expressly requires the agency to act within a specified period and states a consequence for failing to comply.); Thomas v. Arizona Pub. Serv. Co., No. 89-ERA-19, slip op. at 16 n.8 (Sec'y Sept. 17, 1993)(same). Accord Brock v. Pierce County, 476 U.S. 253 (1986). Thus, Cardinal's assertion that the Board may not issue a decision in this case after June 10, 2004, is erroneous.
Finally, we reject Cardinal's argument that it was unduly prejudiced because it began working on its brief once the Board issued the Briefing Schedule. Resp. Mem at 3-4. Surely any resources Cardinal expended will not be wasted, but will simply be transferred to its appeal of the ALJ's final recommended decision and order in this case. In any event, the premature expenditure of resources in preparing Cardinal's brief did not render an otherwise interlocutory appeal "not interlocutory."
1 The Secretary of Labor has delegated her authority to issue final administrative decisions in cases arising under the SOX to the Administrative Review Board. Secretary's Order 1-2002, 67 Fed. Reg. 64272 (Oct. 17, 2002).
Any party desiring to seek review, including judicial review, of a decision of the administrative law judge, … must file a written petition for review with the Administrative Review Board …. To be effective, the petition must be filed within ten business days of the date of the decision of the administrative law judge.
When a district judge, in making in a civil action an order not otherwise appealable under this section, shall be of the opinion that such order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation, he shall so state in writing in such order. The Court of Appeals which would have jurisdiction of an appeal of such action may thereupon, in its discretion, permit an appeal to be taken from such order, if application is made to it within ten days after the entry of the order. Provided, however, That application for an appeal hereunder shall not stay proceedings in the district court unless the district judge or the Court of Appeals or a judge thereof shall so order.
28 U.S.C.A § 1292(b) (West 1993).
4 Cardinal argues that the R. D. & O. places Cardinal in an untenable position because the ALJ has ordered immediate reinstatement, but has "frustrated Respondent's ability to challenge this promptly." Cardinal's concerns are unfounded. It does not appear that the ALJ has issued a preliminary order of reinstatement in this case, see McNeill v. Crane Nuclear, ARB No. 02-002, ALJ No. 2001-ERA-003 (ARB Dec. 20, 2002), nor would it appropriate for him to do so until such time as he issues his final recommended decision and order in this case. 29 C.F.R. § 1980.110(b) ("if a case is accepted for review, the decision of the administrative law judge will be inoperative unless and until the board issues an order adopting the decision, except that a preliminary order of reinstatement will be effective while review is conducted by the Board.")(emphasis supplied).