ONCE THE ARB HAS ISSUED A FINAL DECISION, THE COMPLAINANT'S VENUE FOR REVIEW IS IN THE COURT OF APPEALS AND NOT THE DISTRICT COURT
In Levi v Anheuser-Busch Co., Inc., No. 08-00398 (W.D.Mo. Oct. 27, 2008) (case below ARB Nos. 06-102, 07-020, 08-006, ALJ Nos., 2006-SOX-37 and 108, 2007-SOX-55), the district court dismissed the Plaintiff's three consolidated SOX claims where he had already proceeded through the administrative process to a final order of the Secretary of Labor. The court wrote: "When the ARB issued its Final Decision and Order affirming dismissal of all three of Plaintiff's complaints before the USDOL, the appropriate United States Court of Appeals became Plaintiff's exclusive venue for review of the Secretary's order. In his complaint, Plaintiff indicates he has already sought review by the United States Court of Appeals for the D.C. Circuit. Pursuant to 49 U.S.C. § 42121(b)(4)(B) and 18 U.S.C. § 1514A(b)(2)(A), Plaintiff cannot collaterally attack the final decision of the Secretary of Labor in proceedings in a separate United States District Court." Slip op. at 6 (footnote omitted). In a footnote the court noted that a plaintiff wishing to file a SOX claim in district court must both meet the criteria found in 18 U.S.C. § 1514A(b)(1)(B) (passage of 180 days without a final decision by the Secretary, and lack of bad faith), and file a notice of intent to file a complaint in district court with the ALJ or ARB, as appropriate, fifteen days in advance of filing in district court. 29 C.F.R. § 1980.114(b). The Plaintiff had a fourth SOX complaint still pending before the ARB, which he had not indicated that he was seeking review of by the district court. But even if he had, the district court indicated that without the advance notice required by 29 C.F.R. § 1980.114(b), the Plaintiff could not properly invoke the district court's jurisdiction.
REMOVAL TO FEDERAL COURT; PROOF OF FILING WITH THE SECRETARY OF LABOR; PRESUMPTION OF DELIVERY; BAD FAITH NOT SHOWN MERELY BY FAILURE TO FOLLOW PROCEDURE
In Murray v. TXU Corp., No. 3:03-CV-0888-P (N.D.Tx. Aug. 27, 2003) (unpublished), the Defendant challenged the District Court's jurisdiction over the Plaintiff's SOX suit on the ground that it was not clear that the Plaintiff had timely filed his complaint with the Secretary of Labor. The court rejected the challenge based on the "well-recognized presumption concerning receipt of properly addressed, paid-for, and mailed documents" which the Plaintiff raised by sworn affidavit of his counsel. Slip op. at 3 (citation omitted). The Defendant attempted to rebut by asserting that there was no evidence to establish that the person who signed a return receipt worked at DOL, but the court found that merely making this observation was insufficient to rebut the presumption. The Defendant also pointed out that the Secretary had not taken any actions to investigate the complaint; the court, however, held that this circumstance did not rebut the presumption of receipt. Finally, the Defendant argued that the Plaintiff caused or contributed to DOL not investigating the complaint within the 180 days because the Plaintiff had not filed with the OSHA Area Director as provided in the regulations and had not contacted the Secretary about the status of the complaint. The court, however, found that the Plaintiff's failure to follow procedure "and not holding the Secretary's feet to the irons" might have caused delay, but they did not by themselves indicate bad faith on the part of the Plaintiff.
FEDERAL COURT JURISDICTION; MERE SUGGESTION THAT PLAINTIFF MAY HAVE BEEN UNCOOPERATIVE AND THAT DELAY WAS IN PART DUE TO SETTLEMENT NEGOTIATIONS INSUFFICIENT TO DEFEAT FEDERAL COURT JURISDICTION
The mere fact that the OSHA administrative file suggested that the SOX whistleblower Plaintiff may have not fully cooperated with OSHA investigators and that the delay in issuance of OSHA's final determination was due in some part to settlement negotiations was insufficient to defeat the federal district court of jurisdiction based on bad faith of the Plaintiff, "absent a greater showing." Collins v. Beazer Homes USA, Inc., __ F.Supp.2d __, 2004 WL 2023716 (N.D.Ga. Sept. 2, 2004). The court noted that a plaintiff's ability to file in federal court is not premised on a showing of good faith, but on a failure to show that the delay in OSHA's final determination was a result of bad faith.
FEDERAL COURT JURISDICTION; PROOF THAT COMPLAINT WAS SENT TO THE SECRETARY OF LABOR IN WASHINGTON, DC; FAILURE OF PLAINTIFF TO FILE WITH OSHA IN APPLICABLE GEOGRAPHICAL REGION AND TO CONTACT DOL TO INQUIRE ABOUT THE COMPLAINT DOES NOT ESTABLISH BAD FAITH REQUISITE TO DEPRIVE DISTRICT COURT OF JURISDICTION
In Murray v. TXU Corp., 279 F.Supp.2d 799 (N.D. Tex. 2003), the Defendants moved to dismiss the Plaintiff's federal court claim under the SOX whistleblower provision for lack of subject-matter jurisdiction, arguing that there was a question as to whether the Plaintiff had timely filed a complaint with the Secretary of Labor prior to filing in the federal court. The Plaintiff presented evidence showing that his counsel sent a SOX complaint by Federal Express to the Secretary of Labor at the Frances Perkins Building in Washington, D.C., and invoked the well recognized presumption concerning receipt of properly addressed, paid-for, and mailed documents. The Defendants responded by asserting that there was no evidence that the person who signed for the documents was authorized to accept a complaint or even worked for DOL or the Federal Government. The court, however, observed that the Defendant presented no evidence describing DOL procedure for handling Fed Ex deliveries.
The Defendants also urged the court to infer nonreceipt based on the Secretary's inaction. The court, however, found the Secretary's lack of action on the complaint to be insufficient to rebut the presumption of receipt of the complaint.
The Defendants argued that the Plaintiff should be found to have contributed to DOL's failure to decide the claim in 180 days because he did not file with the OSHA Area Director for the applicable geographical area, and did not contact the Secretary after failing to receive a written report 60 days after filing. The court found that such factors fell short of a showing the Secretary's delay was due to bad faith on the part of the Plaintiff. The court noted that the statute does not identify whose burden it is to make a showing of bad faith, but found that under the posture of the case, the Defendants bore that burden.
Finally, the court denied the Defendants' motion to stay the proceeding to permit the Secretary time to investigate the Plaintiff's claims.
ADMINISTRATIVE REVIEW BOARD DECISIONS
DISMISSAL BASED ON FILING OF NOTICE OF INTENT TO FILE SOX ACTION IN FEDERAL COURT; BAD FAITH NOT SHOWN
In Moldauer v. Constellation Brands, Inc., ARB No. 09-042, ALJ No. 2008-SOX-73 (ARB Mar. 9, 2009), the ARB dismissed the appeal based on the Complainant's notice pursuant to 29 C.F.R. § 1980.114 of intent to file a SOX action in federal court. The Respondent opposed dismissal of the ARB appeal based on a contention that the Complainant had delayed the ALJ hearing in bad faith by failing to respond timely to an order to show cause issued by the ALJ, and in "improvident" motion to stay the ALJ proceeding. The ARB found no authority to support the contention that a pro se's complainant's failure to respond to a single order and single improvident filing constituted bad faith.
REMOVAL TO FEDERAL COURT; ARB DENIES MOTION TO STAY DISMISSAL OF ARB APPEAL TO PERMIT ATTEMPT TO MEDIATE OR TO PERMIT THE RESPONDENT TO ATTEMPT TO HAVE THE CASE RETURNED TO THE ARB; COMPLAINANT'S ADMISSION IN MALPRACTICE SUIT THAT THE SOX CLAIM WAS NOT TIMELY FILED WAS BEYOND ARB'S AUTHORITY TO ADDRESS ONCE THE COMPLAINANT REMOVED TO FEDERAL COURT
In Koeck v. General Electric Consumer and Industrial, ARB No. 08-068, ALJ No. 2007-SOX-73 (ARB Aug. 28, 2008), the Complainant filed notice with the ARB that she intended to remove her SOX case to federal court, and the ARB issued an order to show cause why the appeal to the ARB should not be dismissed. The Respondent initially argued that the ARB should stay a decision pending an attempt to mediate the case and, in the alternative, because, if mediation was unsuccessful, it intended to move the district court to dismiss Koeck's complaint on the grounds of collateral estoppel or return the case to the Board for decision. The ARB found that the Respondent, however, did not argue that "the complainant has acted in bad faith to delay the proceedings," which are the only grounds the regulations provide for denying dismissal under the regulation. The Respondent subsequently argued that the ARB should dismiss the complaint because she admitted in a malpractice suit against her former attorneys that they had failed to timely file her SOX complaint. The ARB found, however, that the Complainant's filing of a de novo complaint in district court had deprived the ARB of jurisdiction to rule on the merits of her claim. Accordingly, the ARB dismissed the appeal.
REMOVAL TO FEDERAL COURT; WHETHER DISMISSAL OF ARB APPEAL MAY BE HELD IN ABEYANCE
In Zang v. Fidelity Management & Research Co., ARB No. 08-078, ALJ No. 2007-SOX-27 (ARB Aug. 26, 2008), the Complainant had notified the ARB that he was removing the case to federal court, but the ARB had held the appeal before it in abeyance based on the Respondent's contention that it would be filing a motion with the district court to dismiss the appeal or to issue a mandamus to DOL to issue a ruling on the appeal of the ALJ's decision. The ARB had believed that the district court's decision was imminent. However, it had not become apparent that it was not. The ARB thus dismissed the appeal.
REMOVAL TO DISTRICT COURT; MOTION FOR MANDAMUS ORDERING DOL TO ISSUE A RULING ON APPEAL OF ALJ'S DECISION
In Zang v. Fidelity Management & Research Co., ARB No. 08-078, ALJ No. 2007-SOX-27 (ARB May 28, 2008), the ALJ had granted summary decision against the Complainant, and the Complainant filed a petition for review with the ARB. Thereafter, the Complainant filed a notice of intent to file a SOX complaint in federal district court. The ARB issued an order to show cause why the ARB appeal should not be dismissed. In response, the Respondents filed an opposition stating that they intended to file a motion with the district court to dismiss the SOX complaint with prejudice or in the alternative to issue a mandamus to DOL to issue a ruling on the appeal of the ALJ decision. The ARB held that, in the interest of judicial economy, it would hold the appeal in abeyance pending the ruling of the district court on the Respondents' motion.
REMOVAL TO FEDERAL COURT; WHETHER ARB DISMISSAL SHOULD BE WITH OR WITHOUT PREJUDICE
In Mozingo v. The South Financial Group, Inc., ARB No. 07-040, ALJ No. 2007-SOX-2 (ARB Feb. 8, 2007), a SOX whistleblower case, the ALJ granted summary decision against the Complainant and the Complainant petitioned for ARB review. Subsequently, the ARB received the Complainant's Notice of Intent to File Lawsuit in Federal District Court. The ARB ordered the parties to show cause why it should not dismiss the appeal in view of 18 U.S.C.A. § 1514(b)(1)(B). The Complainant then filed a Motion to Dismiss Without Prejudice. The Board denied the motion to dismiss without prejudice because the Complainant cited no statutory or regulatory basis, nor proffered any grounds, for doing so. Nonetheless, the Board dismissed the appeal because the Complainant had opted to pursue his complaint in district court rather than at the Board.
REMOVAL TO FEDERAL COURT
In Bulls v. Chevron Texaco, Inc., ARB Nos. 07-014, 07-016, ALJ No. 2006-SOX-117 (ARB Jan. 17, 2007), the ALJ found that the SOX whistleblower complaint was not timely filed and that the Complainant was not entitled to either equitable tolling or equitable estoppel. The Complainant filed a petition for review with the ARB, but the same day also filed a Notice of Intent to File Lawsuit in Federal District Court. Under SOX if the Board has not issued a final decision within 180 days of the date on which the complaint was filed and there is no showing of bad faith by the complainant to delay the proceedings, the complainant may bring an action in the appropriate United States district court. In the instant case the 180-day period had already expired by the time the Complainant petitioned for ARB review. Neither party responded to the ARB's order to show cause why the appeal should not be dismissed, and therefore the Board dismissed the appeal.
DISMISSAL OF APPEAL; COMPLAINANT DECIDES TO PROCEED IN FEDERAL DISTRICT COURT AFTER FILING OF APPEAL WITH THE ARB
In Heaney v. GBS Properties LLC, ARB No. 05-039, ALJ No. 2004-SOX-72 (ARB May 19, 2005), the ALJ had issued a recommended decision dismissing the complaint. Several months after filing an appeal with the ARB, the Complainant - acting pro se - wrote to the ARB stating that his attorney had filed an action in federal district court and that he requested to proceed de novo in that forum. The ARB dismissed the appeal, noting that the Sarbanes-Oxley whistleblower provision provides that if the Board has not issued a final decision within 180 days of the date on which the complainant filed the complaint and there is no showing that the complainant has acted in bad faith to delay the proceedings, the complainant may bring an action at law or equity for de novo review in the appropriate United States district court, which will have jurisdiction over the action without regard to the amount in controversy.
Similarly, in Allen v. Stewart Enterprises, Inc., ARB No. 05-059, ALJ Nos. 2004-SOX-60 to 62 (ARB Aug. 17, 2005), the Complainants filed their complaint on February 2, 2004. OSHA found that the complaint lacked merit, and the Complainants requested a hearing. On February 15, 2005 an ALJ issued a recommended decision finding against the Complainants. The Complainants filed a Petition for ARB review on March 22, 2005. On July 18, 2005, the Complainants informed the Board that they intended to purse their SOX case in federal court, and the Board dismissed the appeal pursuant to 18 U.S.C.A. § 1514A(b)(1)(B); 29 C.F.R. § 1980.114. The Board noted that, as usually is the case, the 180-day period for DOL to deciding the case had expired before the Complainants filed their petition with the Board.
EXHAUSTION; MERE FACT THAT COMPLAINANT IS AN ATTORNEY IS NOT AN EXEMPTION FROM THE REQUIREMENT TO EXHAUST ADMINISTRATIVE REMEDIES BEFORE FILING IN FEDERAL COURT
In Curtis v. Century Surety Co., No. 08-16236 (9th Cir. Mar. 23, 2009) (unpublished), the Ninth Circuit affirmed the District Court's ruling in Curtis v. Century Surety Co., No. CV 05-1538 (D.Ariz. Aug. 24, 2006), granting summary in favor of the Defendant on the Plaintiff's SOX whistleblower claim because the Complainant did not fulfill the exhaustion requirements of 18 U.S.C. § 1514A(b). The Ninth Circuit found that the Plaintiff had conceded that had not exhausted; the Ninth Circuit rejected the argument that being an attorney exempts the Plaintiff from doing so in this case.
The District Court's decision contains more detail about the Plaintiff's position: that the statutory exhaustion requirement "do[es] not apply because compliance would require him to breach his fiduciary duty to Defendant and require him to divulge information subject to the attorney-client privilege in violation of the Ethics Rules of the State Bar of Arizona." This District Court found that the only authority cited by the Plaintiff, a California State Bar Ethics Alert and Washington State Bar Opinion reminding lawyers that they remain bound by the ethical rules of conduct surrounding breach of attorney-client confidences despite the passage of disclosure requirements under SOX, only related to individuals divulging privileged information, not merely information deemed confidential by an employer, and that the Plaintiff had not established how the information upon which he would have relied would have been privileged, or that the purported privileged information would have been necessary to the administrative complaint. The District Court found that Congress recognized in the SOX that there would be circumstances in which attorney employees would be whistleblowers regarding violations of securities laws, but did not create exceptions for attorneys.
EXHAUSTION OF ADMINISTRATIVE REMEDIES; FAILURE TO NAME EMPLOYER AS DEFENDANT
In Smith v. Psychiatric Solutions, Inc., No. 3:08-cv-00003 (N.D.Fla.. Mar. 31, 2009), the court held that the Plaintiff could only pursue her SOX whistleblower complaint in federal court against defendants named in her administrative complaint because the federal court's jurisdiction depended on the claim having been administratively exhausted. 18 U.S.C. § 1514(b)(1)(A). The Plaintiff had only named the publicly traded parent corporation in her OSHA complaint, and had not named the subsidiary for which she worked. Since the Plaintiff did not allege in her complaint or amended complaint that the parent company was her employer, a necessary element of a SOX whistleblower claim, the parent company was entitled to summary judgment. Even if the parent had been alleged to be the Plaintiff's employer, there was no evidence to support an employment relationship. The fact that an insurance document had the parent's name on it and that the parent had sent an official to investigate the Plaintiff's post-termination grievances were legally insufficient to establish such an employment relationship, while voluminous other documentary evidence suggested that the subsidiary was the Plaintiff's employer.
EXHAUSTION OF ADMINISTRATIVE REMEDIES UNDER SOX; FILING OF STATE COMMON-LAW CLAIM FOR WRONGFUL TERMINATION
In Williams v. Boston Scientific Corp., No. C:08-cv-01437 (N.D.Cal. May 13, 2008), the Defendants moved to stay the Plaintiff's diversity action (which plead both California and federal actions, including a SOX whistleblower complaint), pending the Plaintiff's exhaustion of administrative remedies. At the time the motion had been filed, 180 days had not yet passed since the SOX complaint had been filed with OSHA. Notwithstanding that the 180 days had passed by the time the district court ruled on the motion, the court found no merit in the motion because California Supreme Court had explicitly held that common-law claims for wrongful termination predicated on violation of a statute need not comply with the underlying statute's exhaustion requirements. The court held, therefore that the "Plaintiff need not exhaust administrative remedies under the Sarbanes-Oxley Act in order to assert common-law claims for wrongful termination."
FEDERAL COURT JURISDICTION; RETALIATION AFTER FILING OF OSHA COMPLAINT CANNOT BE ASSERTED IN LATER FEDERAL COURT
PROCEEDING UNLESS THE PLAINTIFF SHOWS THAT HE AMENDED HIS OSHA COMPLAINT OR OTHERWISE REPORTED THE RETALIATION TO OSHA
In Portes v. Wyeth Pharmaceuticals, Inc., No. 06-CV-2689 (S.D.N.Y. Aug. 20, 2007)
(case below 2005-SOX-98), the Plaintiff alleged that the Defendant retaliated against him after he filed his administrative
SOX complaint when it disparaged his character and reputation by falsely claiming that he demeaned his supervisor and
co-workers and generally damaged relationships with key internal clients of his department. Because the Plaintiff did not
allege that he amended his OSHA complaint or otherwise reported the retaliation to OSHA, the court found that he could not
assert this claim in federal court. Specifically, the court noted that SOX Section 1514A(b)(1) requires that violations be
first presented to DOL, and that district court jurisdiction requires exhaustion of the administrative remedy.
DISTRICT COURT JURISDICTION; COMPLAINT MUST FIRST BE FILED WITH THE SECRETARY OF LABOR
In Mann v. Gannett Co., Inc., No. 2:06-CV-00888 (M.D.Ga. June 8, 2007), the Plaintiff had reported to the Defendant's attorney her belief that the Defendant was defrauding customers by overcharging for advertisements. The Plaintiff later sued the Defendant under the Victim and Witness Protection Act of 1982. The court granted summary judgment for the Defendant, finding that the the VWPA does not provide for a private right of action. In the ruling, the court noted that the Plaintiff had mentioned in her brief that the whistleblowing provision of the SOX supported her case. The court observed that there may have been some confusion on the part of the Plaintiff because the whistleblower provision of the SOX is found at 18 U.S.C. § 1514A, while the VWPA is found at 18 U.S.C. § 1514. Assuming for purposes of decision that the Plaintiff meant to rely on the SOX instead of, or in addition to, the VWPA, the court still found dismissal proper because a SOX complaint must be filed with the Secretary of Labor before filing a lawsuit in federal district court.
RIGHT TO FILE IN FEDERAL COURT IF OSHA MAKES ITS DETERMINATION AFTER 180 DAYS HAVE PASSED; COMPLAINANT IS NOT REQUIRED TO EXHAUST REMEDIES BEFORE ALJ AND ARB
Where OSHA issued its determination after 180 days had passed since the filing of the complaint under the whistleblower provision of the SOX, and the Complainant filed for de novo review in federal district court rather than requesting a hearing before a DOL ALJ, the Complainant was not required to exhaust administrative remedies prior to filing the district court action. Hanna v. WCI Communities, Inc., No. 04-80596-CIV. (S.D. Fla. Nov. 18, 2004). The court also rejected the Respondent's argument that the OSHA findings were entitled to res judicata effect.
EXHAUSTION OF ADMINISTRATIVE REMEDIES; POST-OSHA COMPLAINT RETALIATION; COMPLAINANT MUST AMEND OR FILE NEW COMPLAINT WITH OSHA IN ORDER FOR FEDERAL DISTRICT COURT TO PROCEED WITH POST COMPLAINT RETALIATION CLAIM
In Willis v. Vie Financial Group, Inc., No. Civ.A. 04-0435 (E.D. Pa. Aug. 6, 2004) (available at 2004 WL 1774575), the court held that the exhaustion requirement of the whistleblower provision of the Sarbanes-Oxley Act precludes recovery for a discrete act of retaliation that arose after the filing of the administrative complaint which was never presented to OSHA for investigation. In Willis, the original OSHA complaint filed in April of 2003 was based on a threatened termination and a stripping of job responsibilities. The Complainant was terminated in May 2004, but he never sought to amend his administrative complaint, nor did he file a new complaint, nor did he inform OSHA that he was complaining in any way about his termination. At some point (the district court's decision does not identify when this occurred) the case was removed to federal court. Because an OSHA complaint was never filed in regard to the termination, the Complainant did not exhaust his administrative remedies (which under the SOX process are judicial in nature compared with the informal conciliatory process in Title VII cases), and the termination complaint could not be pursued before the federal district court.
EXHAUSATION OF ADMINISTRATIVE REMEDIES; INDIVIDUALS NOT NAMED AS DEFENDANTS IN OSHA COMPLAINT
In Bozeman v. Per-Se Technologies, Inc., 1:03-CV-3970 (N.D.Ga. Sept. 12, 2006), the court granted summary judgment dismissing as defendants two officers of the Defendant company based on the Plaintiff's failure to exhaust administrative remedies where the officers had not been named in the heading of the administrative complaint filed with OSHA. The court rejected the Plaintiff's contention that the officers were covered by the administrative complaint because they were named as actors and therefore had notice as to the claims against them, finding that the same argument had been rejected by the court in Hanna v. MCI Communities, Inc., 2004 U.S. Dist. LEXIS 25652, at *7-9 (S.D. Fla. Nov. 15, 2004). Merely mentioning the officers as actors in the body of the complaint is insufficient because OSHA is not thereby put on notice that it was required to investigate the individual officers' actions.
EXHAUSTION OF ADMINISTRATIVE REMEDIES; ASSERTION OF TORT CLAIM RATHER THAN STATUTORY CLAIM
In Romaneck v. Deutsche Asset Management, No. C-5-2473 (N.D.Cal. Aug. 17, 2006), the Defendant sought summary judgment on the Plaintiff's SOX whistleblower claim based on failure to exhaust administrative remedies. The court denied the motion, holding that "a plaintiff asserting a common law tort claim for wrongful termination based on a particular statute need not comply with that statute's administrative remedies. Stevenson, 16 Cal. 4th at 904-05. Therefore, it is irrelevant that Romaneck has not complied with the statutory enforcement scheme provided for by SOX because Romaneck does not assert a statutory claim under that act." Slip op. at 8.
REMOVAL TO FEDERAL COURT AFTER THE ALJ ISSUED DECISION ON SUMMARY JUDGMENT; MANDAMUS FOR ARB TO ISSUE DECISION ON THE MERITS
On November 30, 2007, the ARB dismissed the Complainant's appeal in Stone v. Instrumentation Laboratory, SpA, ARB No. 07-122, 2007-SOX-21 (Nov. 30, 2007), after the Complainant filed a de novo action in federal district court on his SOX claim. On July 2, 2008, the district court stayed the proceedings before it and issued a mandamus to the DOL to reinstate the proceedings within 14 days and to order the ARB to rule on the merits of the Complainant's appeal within 90 days. Stone v. Instrumentation Laboratory, SpA, No. 07-cv-03191 (D.Md. July 2, 2008). The court also granted the Defendant's motion to dismiss. The court reviewed the law on collateral estoppel and found little authority on the subject under SOX. The court noted that in Allen v. Stewart Enterprises, Inc., No. 05-4033 (E.D.La. Apr. 6, 2006), the court had stayed its proceedings and remanded for the ARB to rule on the merits on the ground that relitigating the case after it had been fully litigated before an ALJ and the Complainant had requested ARB review would be absurd. The court noted that in Hanna v. WCI Communities, Inc., 348 F. Supp. 2d 1322 (S.D.Fla. 2004), the court found that OSHA's findings were entitled to neither res judicata nor collateral estoppel effect. The court noted that the Hanna court had stressed the absence of an ALJ or ARB decision in the matter. The court noted that in the case before him, unlike Hanna, the ALJ had issued a decision and the Complainant had filed an ARB appeal before suit in the federal court. The Complainant had an opportunity to fully litigate his claims, filing voluminous briefs, declarations, and supporting exhibits, which were considered by the ALJ in a 24 page decision. The court rejected the Complainant's claim that he was not afforded an adequate opportunity to litigate his claims because the ALJ dismissed without discovery and a hearing. The court found that discovery had not been necessary to resolve the legal issue before the ALJ. The court found that the ALJ's decision was a final judgment on the merits for purposes of collateral estoppel.
On July 14, 2008, the ARB issued an Order Reinstating Case and Establishing Briefing Schedule. In view of the fact that the district court had ordered expedited review, the ARB stated that it would grant no motions for enlargement of time to file briefs.
In Stone v. Instrumentation Laboratory, SpA, ARB No. 08-113, 2007-SOX-21 (ARB July 31, 2008), the ARB therefore dismissed the appeal on July 31, 2008 for failure to prosecute because the Complainant had refused to file a brief with the ARB. The Complainant had refused because "[he] believes that the ARB does not properly have jurisdiction over this matter since Stone filed his SOX claim in the United States District Court."
DISTRICT COURT ACTION; STAY OF ACTION AND MANDAMUS WHERE COMPLAINANTS TRANSFERRED TO DISTRICT COURT ONLY AFTER LENGTHY ADMINISTRATIVE ADJUDICATION THAT WAS PENDING REVIEW BEFORE THE ARB WHEN TRANSFERRED
In Allen v. Stewart Enterprises, Inc., No. 05-4033 (E.D.La. Apr. 6, 2006) (case below ARB Nos. 06-081, ALJ Nos. 2004-SOX-60 to 62), the ALJ had issued a 109 page decision, which was pending on review at the ARB. The parties had filed briefs, and the Respondent filed a motion to strike the Complainants' brief because it violated the ARB's page limits. The ARB issued an Order to Show Cause. At this point, the Complainants' informed the ARB that they would transfer to federal district court. Before the district court, the Respondent filed a motion for mandamus relief.
The district court stayed the district court action, and issued a mandamus for the ARB to reinstate the appeal and issue a decision within 90 days. The court found that it would be absurd to start a whole new trial at this point. The court cited principles of collateral estoppel and issue-law preclusion, and its inherent power to stay a proceeding and issue a mandamus against an agency.
Pursuant to the order of mandamus, the ARB issued a decision affirming the ALJ on July 27, 2006. Allen v. Stewart Enterprises, Inc., ARB No. 06-081, ALJ Nos. 2004-SOX-60 to 62 (ARB July 27, 2006).
DISTRICT COURT JURISDICTION; FACTORS SUGGESTING THAT THE COURT ASSERT EQUITABLE REMEDIES SUCH AS MANDAMUS OR PROCEED AS A REGULAR FEDERAL QUESTION CASE
In Stone v. Duke Energy Corp., 3-03-CV-256 (WD NC June 10, 2003) (case below 2003-SOX-12), the complaint had been investigated by OSHA and Complainant requested a hearing before an ALJ. The ALJ scheduled a hearing. Complainant's attorney subsequently informed the ALJ that he would be filing a civil complaint in District Court under 18 U.S.C. § 1514A(b)(1)(B) and would therefore no longer continue with the administrative proceeding. The ALJ issued a ruling that he would retain jurisdiction until such time as he ruled on a pending motion for summary decision or until a district court asserted jurisdiction over the matter. Upon application to the District Court for the Western District of North Carolina, the court observed that more than 180 days had passed since the filing of the complaint and that there was no indication of bad faith or delay on the part of the Complainant. The court then considered how its jurisdiction should be exercised, observing that :
... while the statute provides for a cause of action allowing the Court to hear the case under its federal question jurisdiction, it does not specifically limit the remedies available to the Court once it exercises jurisdiction. For example, the Secretary of Labor has opined, in a recent interim final rule, that a Court might, upon a finding that significant resources have been expended by the Department of Labor to adjudicate the dispute, and that findings of fact have been made after ample process, choose to exercise its discretion by issuing a writ of mandamus compelling the Secretary to complete the administrative proceeding. 29 CFR § 1980.114. Note that the statute specifically authorizes equitable remedies. So both mandamus and the stay Plaintiff seeks would be available remedies.
The court determined that mandamus would not be appropriate where there was no prospect that the Secretary would issue a final order anytime in the immediate future, and although some administrative resources had been expended on the matter, an initial investigation was all that had yet occurred. Thus, the court ordered the Secretary of Labor's proceeding stayed and took jurisdiction "in the manner of a typical federal question case."
REMOVAL TO DISTRICT COURT; ADVANCE NOTICE TO ALJ OR ARB AS A JURISDICTIONAL REQUIREMENT
In Levi v Anheuser-Busch Co., Inc., No. 08-00398 (W.D.Mo. Oct. 27, 2008) (case below ARB Nos. 06-102, 07-020, 08-006, ALJ Nos., 2006-SOX-37 and 108, 2007-SOX-55), the district court dismissed the Plaintiff's three consolidated SOX claims where he had already proceeded through the administrative process to a final order of the Secretary of Labor. The court wrote: "When the ARB issued its Final Decision and Order affirming dismissal of all three of Plaintiff's complaints before the USDOL, the appropriate United States Court of Appeals became Plaintiff's exclusive venue for review of the Secretary's order. In his complaint, Plaintiff indicates he has already sought review by the United States Court of Appeals for the D.C. Circuit. Pursuant to 49 U.S.C. § 42121(b)(4)(B) and 18 U.S.C. § 1514A(b)(2)(A), Plaintiff cannot collaterally attack the final decision of the Secretary of Labor in proceedings in a separate United States District Court." Slip op. at 6 (footnote omitted). In a footnote the court noted that a plaintiff wishing to file a SOX claim in district court must both meet the criteria found in 18 U.S.C. § 1514A(b)(1)(B) (passage of 180 days without a final decision by the Secretary, and lack of bad faith), and file a notice of intent to file a complaint in district court with the ALJ or ARB, as appropriate, fifteen days in advance of filing in district court. 29 C.F.R. § 1980.114(b). The Plaintiff had a fourth SOX complaint still pending before the ARB, which he had not indicated that he was seeking review of by the district court. But even if he had, the district court indicated that without the advance notice required by 29 C.F.R. § 1980.114(b), the Plaintiff could not properly invoke the district court's jurisdiction.
PRIOR NOTICE OF INTENT TO FILE COMPLAINT IN DISTRICT COURT; VALIDITY OF REGULATION
In JDS Uniphase Corp. v. Jennings, No. 1:06-CV-00200 (E.D.Va. Feb. 7, 2007), the court questioned, without deciding, whether the DOL regulation at 29 C.F.R. § 1980.114(b), which requires that the complainant file a notice with the ALJ or ARB 15 days before filing a complaint in district court, was promulgated in excess of DOL's statutory authority insofar as it imposes additional jurisdictional requirements beyond those in the text of the SOX itself.
ADMINISTRATIVE REVIEW BOARD DECISIONS
REMOVAL TO FEDERAL COURT; COMPLAINANT IS NOT
REQUIRED TO WITHDRAW DOL COMPLAINT PRIOR TO FILING IN FEDERAL DISTRICT COURT
A complainant is not required to withdraw his SOX
complaint before DOL prior to filing a de novo action in federal district court where
DOL has not made a final decision in his case within 180 days of the filing of
the complainant with OSHA. Nixon v. Stewart & Stevenson Services,
Inc., ARB No. 05-066, ALJ No. 2005-SOX-1 (ARB Sept. 28, 2007).
REMOVAL TO DISTRICT COURT; LACK OF NOTICE OF SUIT
The ARB dismissed the appeal before it where the Complainant had begun a proceeding in U.S. District Court seeking a de novo hearing on his SOX claim. The Board observed that the record did not show that the Complainant ever notified the ALJ or the ARB of this suit until after the ARB issued a briefing schedule. McIntyre v. Merrill Lynch Pierce Fenner & Smith, Inc., ARB No. 04-055, 2003-SOX-23 (ARB July 27, 2005).
DISTRICT COURT ONLY OBTAINS JURISDICTION IF THE SECRETARY HAS NOT ISSUED A FINAL DECISION WITHIN 180 DAYS OF THE COMPLAINT
In Wingard v. Countrywide Home Loans, Inc., No. 2:07cv904-MHT (M.D.Ala. Sept. 18, 2008), the court rejected the Plaintiff's contention that she was entitled to by-pass the administrative process at DOL for a SOX whistleblower complaint if the Secretary had not issued a decision within 60 days under 29 C.F.R. § 1980.105(a). The court found that the statute and the regulation clearly provide that the whistleblower can only by-pass the administrative process and file in district court if the Secretary has not issued a decision within 180 days of the complaint, and that the Plaintiff's argument was senseless. The court therefore dismissed the district court action.
FILING OF COMPLAINT WITH DISTRICT COURT BY QUALIFYING SOX COMPLAINANT DEPRIVES ALJ OF JURISDICTION
Once a qualifying complainant files his complaint with a federal district court under section 1514A(b)(1)(B) of the SOX, jurisdiction vests in the district court and an ALJ no longer has jurisdiction. Stone v. Duke Energy Corp., 432 F.3d 320 (4th Cir. 2005) (case below 2003-SOX-12). In Stone, once the complainant filed his district court action the ALJ's order closing the matter before OALJ correctly stated simply that the administrative complaint was no longer before him.
ADMINISTRATIVE REVIEW BOARD DECISIONS
FILING OF COMPLAINT IN FEDERAL DISTRICT COURT DEPRIVES DOL OF JURISDICTION; THEREFORE MOTION TO STAY DOL PROCEEDING WILL BE DENIED
In Kelly v. Sonic Automotive, Inc., ARB No. 08-027, ALJ No. 2008-SOX-3 (ARB Dec. 17, 2008), the Complainant had filed a timely request for a hearing before a DOL ALJ, and about a month later filed a SOX lawsuit in the U.S. district court. He then filed a motion to stay the ALJ proceedings until the federal court "acknowledged jurisdiction" over the SOX claim. The ALJ, however, issued a decision canceling the hearing and dismissing the complaint without prejudice. On appeal, the ARB ruled that "once Kelly filed his action in district court seeking de novo review of his SOX complaint, the Department of Labor was deprived of jurisdiction of Kelly's complaint and thus could not stay the proceedings before the Department." The ARB therefore dismissed the Complainant's appeal of the ALJ's dismissal of his complaint. The Complainant had argued that a stay of a judicial proceeding pending an arbitration is specifically authorized by the Federal Arbitration Act (FAA). The ARB found that it did not need to decide whether the FAA was applicable because the Complainant had not moved before the DOL for a stay pursuant to the FAA. Moreover, the ARB found that even if such a motion had been filed and granted, once the Complainant invoked his right to de novo review in the district court, DOL was deprived of jurisdiction, the stay would no longer have been effective. The ARB stated that the proper procedure for the Complainant would be to request a stay of the district court with jurisdiction over the complaint (which in fact the Complainant had done).
ALJ JURISDICTION OVER SOX COMPLAINT ONCE COMPLAINANT FILES SUIT IN FEDERAL DISTRICT COURT
In Powers v. Pinnacle Airlines, Inc., ARB No. 05-138, ALJ No. 2005-SOX-65 (ARB Oct. 31, 2005), the Complainant had filed a complaint that pleaded both AIR21 and SOX whistleblower causes of action. The Respondent filed a motion to dismiss the SOX complaint and the ALJ issued an order directing the Complainant to respond. The Complainant filed a "Notice of Intent" to file a SOX claim in federal district court. The ALJ, however, found that she retained jurisdiction over the SOX claim and, about one month later, issued an order dismissing the SOX complaint for failure to state a claim upon which relief can be granted. The Complainant took an interlocutory appeal of this, and other rulings of the ALJ.
The ARB held that once the Complainant files her SOX suit in federal district court, the ALJ no longer had jurisdiction to enter any order in the case other than one dismissing it on the ground that the Complainant had removed the case to district court. Similarly, the ARB was divested of jurisdiction over the interlocutory appeal in regard to the SOX complaint.
ADMINISTRATIVE LAW JUDGE DECISIONS
DISMISSAL FOR FAILURE TO FILE SUBSTANTIVE RESPONSE TO MOTION FOR SUMMARY DECISION; MERE STATEMENT OF INTENT TO FILE IN FEDERAL COURT DOES NOT END DOL JURISDICTION
In Rusick v. Merrill Lynch & Co., Inc., 2006-SOX-45 (ALJ Mar. 22, 2006), the Respondent filed a motion for continuance together with a motion for summary decision. During a telephone conference several days later, the Complainant's counsel stated that the Complainant intended to remove to federal district court upon the expiration of the administrative period. The ALJ extended the time period for a response to the motion for summary decision, stated that in the event of removal to federal court she would not expect a timely response to the motion, instructed the Complainant to file notice of his intention to remove, and rescheduled the hearing. The Complainant filed the notice, and the ALJ directed that OALJ be served with copies of the federal court pleading, noting that she would retain jurisdiction until so served. Having received no pleadings, about five weeks later the ALJ reminded the parties that a DOL hearing was still scheduled. About a week later, the Respondent moved for dismissal based on the Complainant's failure to respond to its motion for summary decision. The Complainant responded, reiterating his intention to remove to federal district court.
The ALJ observed that she had fully expected compliance with her order setting an extended time period for responding to the summary decision motion if the Complainant did not remove the case, and wrote: "The expiration of the 180 day period does not trigger the expiration of the Secretary's jurisdiction over complaints brought under the Act, but merely provides Complainant the option to remove the complaint to Federal district court. Absent such removal, the Secretary's jurisdiction remains. Accordingly, Respondent's motion remains outstanding." Slip op. at 4. Because the Complainant did not respond to the Respondent's motion except to disparage the Respondent's pleadings and to repeat his intention to remove to federal court, despite having more than one month to file a response, the ALJ found the motion unopposed and granted dismissal of the complaint. The ALJ, however, observed that the DOL's decision was not final until the period for filing an appeal with the ARB had expired, and that the Complainant remained free to remove to federal court until then.
In Rusick v. Merrill Lynch & Co., Inc., 2006-SOX-45 (ALJ Apr. 6, 2006), the Complainant moved for "review" of the order of dismissal, which the ALJ construed as a motion for reconsideration. The Complainant had filed his complaint in Federal court the day after the ALJ issued the order of dismissal. The ALJ determined that she no longer had jurisdiction over the case, and therefore denied reconsideration, observing, however, that she did not believe that the dismissal would be prejudicial to the federal court action.
REMOVAL TO FEDERAL COURT; COMPLAINANT'S RENEGE ON REPRESENTATION THAT HE UNDERSTOOD THAT DELAYS CAUSED BY HIM WOULD TOLL THE 180 DAY PERIOD
In Nixon v. Stewart & Stevenson Services, Inc., 2005-SOX-1 (ALJ Feb. 16, 2005), the ALJ denied the Complainant's motion for a voluntary withdrawal of his complaint to pursue an action de novo in federal district court where the Complainant had obtained several delays in the hearing date over the objection of the Respondent and based on the concession by the Complainant that the delays would toll the 180 day clock. By the ALJ's reckoning, the tolled 180 day time period would not expire for several more months.
The ALJ concluded that because the withdrawal under these circumstances could result in a finding that the Complainant had not exhausted administrative remedies thereby depriving the district court of jurisdiction, he would deny the motion to withdraw, but would also consider the request as a motion for a stay pending filing with a district court.
The ALJ recognized that the ultimate determination of whether the 180 day period had elapsed and whether jurisdiction is properly in federal district court is for the federal district court, but that he was still obliged to address whether a stay was appropriate. The ALJ found that it was not because of the delays sought by the Complainant or caused by the Complainant's failure to comply with discovery obligations, and because it was bad faith to renege on his representation that he understood that the 180 day period would be tolled. The ALJ went on to consider, and grant the Respondent's motion for summary decision on the ground that the Complainant did not engage in protected activity.
REMOVAL TO DISTRICT COURT; ORDER OF COURT DIRECTING ALJ TO DEMONSTRATE WHETHER DOL'S FAILURE TO ISSUE FINAL DECISION IN 180 DAYS WAS ATTRIBUTABLE TO THE COMPLAINANT'S BAD FAITH
In Corrada v. McDonald's Corp., 2004-SOX-7 (ALJ Jan. 23, 2004), the Complainant notified the ALJ that she intended to remove the case to Federal District Court and moved for a stay of the ALJ proceeding. The ALJ denied the stay pending assertion of jurisdiction by the District Court. Subsequently, a claim was filed in District Court. The District Court then faxed to the ALJ an order asserting jurisdiction and staying the DOL proceeding. In the order, the District Court ordered the ALJ to demonstrate whether the failure of DOL to issue a final decision within 180 days was due to the bad faith of the complainant. The ALJ noted no indication of bad faith on the part of the complainant, and found that since the District Court had asserted jurisdiction, DOL's role in the matter had terminated. Thus, the DOL proceeding was dismissed.
