DOL Review of Whistleblower Settlements
Administrative Review Board Decisions Concerning Whistleblower
Settlements, Disclosure of Dollar Amount of Payments, and Possible Side Agreements
September 9, 1996 [Updated December 6, 1996]
DOLLAR AMOUNT MUST BE DISCLOSED
For those whistleblower case types that must be reviewed by the
Department of Labor before the matter may be dismissed, an ALJ is not permitted merely to
accept the parties' contention that the dollar amount received by the Complainant is fair, adequate
and reasonable. Rather, the dollar amount must be disclosed. This is not a new
rule, see Plumlee v. Alyeska Pipeline Service Co., 92-TSC-7 (Sec'y Aug. 6, 1993), but it
is one that the new Board has been pressing in the last several months. SeeFaust v.
Chemical Leaman Tank Lines, Inc., 92-SWD-2 and 93-STA-15 (ARB June 13, 1996);
Klock v. Tennessee Valley Authority, 95-ERA-20 (ARB May 1, 1996); Biddy v.
Alyeska Pipeline Service Co., 95-TSC-7 (ARB May 31, 1996); Ezell v. Tennessee
Valley Authority, 95-ERA-39 (ARB June 26, 1996).
DISCLOSURE MUST REVEAL AMOUNT OF TOTAL DESIGNATED FOR
ATTORNEY'S FEES, EXPENSES AND COSTS
In Guity v. Tennessee Valley Authority, 90-ERA-10 (ALJ Aug. 15, 1996), the ALJ
recommended approval of a settlement of an ERA whistleblower complaint. The ALJ noted that
she was required to determine the dollar amount received by Complainant to determine whether a
settlment was fair, adequate and reasonable. The Memorandum of Understanding and
Agreement submitted by the parties, in fact, did disclose the total dollar amount to be paid to
Complainant.
The Board, however, noting that another provision of the settlement released Respondent from
claims for attorney's fees, expenses and/or costs, and that the agreement did not specify the
amount of attorney's fees to be paid, ordered the parties to file a joint response indicating the
"actual amount of money to be to the Complainant...." Guity v. Tennessee Valley
Authority, 90-ERA-10 (ARB Aug. 28, 1996). If the parties could not agree upon a joint
response, Complainant's counsel was ordered to submit the required information.
DEGREE OF REVIEW OF ATTORNEY'S FEES
In Guity v. Tennessee Valley Authority, 90-ERA-10 (ARB Aug. 28, 1996), Klock v.
Tennessee Valley Authority, 95-ERA-20 (ARB May 1, 1996); and Biddy
v. Alyeska Pipeline Service Co., 95-TSC-7 (ARB May 31, 1996), the record did not specify
the amount of attorney's fees to be paid in a settlement agreement, but the Board stated that
"[a]s long as the parties are in agreement as to the amount of the attorney's fees to be paid,
it is not necessary for the Secretary to review the amount with the specificity usually required by
the lodestar method. Hensley v. Eckerhart, 461 U.S. 424 (1983). If a dispute arises
between the parties with regard to the appropriateness of the amount of attorney's fees, a
subsequent order requiring an itemization of such fees may be necessary."
In Blackburn v. Metric Constructors, Inc.,
86-ERA-4 (ARB July 22, 1996), however, the parties reached a settlement on attorneys fees and
costs relating to appellate work before the Fourth Circuit. The Board ordered the parties to
submit a copy of this settlement for approval by the Board as the Secretary's designee.
In Ezell v. Tennessee Valley Authority, 95-ERA-39 (ARB Aug. 21, 1996), the amount of the
settlement was slightly less than Complainant's total attorney's fees and costs. The Board,
however, approved the settlement, noting that "the Wage and Hour investigation found that the
adverse actions taken against Complainant were not motivated by her protected activities and
that she remains employed by Respondent at her regular employment."
SIDE AGREEMENTS
It is also not a new rule that the parties are not permitted to hide additional settlement terms
from the Department in an effort to avoid DOL review, see Bixby v. State of New
Mexico, 94-TSC-1 (Sec'y Aug. 16, 1994), but the Board's belief that this is a serious
problem is squarely presented in the recent decision in Biddy v. Alyeska Pipeline Service
Co., 95-TSC-7 (ARB Aug. 1, 1996).
In Biddy v. Alyeska Pipeline Service Co., 95-TSC-7 (ARB May 31, 1996) and Biddy
v. Alyeska Pipeline Service Co., 95-TSC-7 (ARB June 19, 1996), the Board had ordered the
parties to disclose the actual amount the Complainant will ultimately receive in settlement of his
complaint before DOL.
In Biddy v. Alyeska Pipeline Service Co., 95-TSC-7 (ARB Aug. 1, 1996). the Board
noted that the parties ultimately filed a joint response stating that none of the federal case
settlement would be used for attorneys' fees or costs, and that information regarding the details of
the settlement of a state-law based claim was beyond the purview of the Board's authority. The
Board, however, received information indicating that some of the parties representations may not
have reflected the actual total settlement amount. Apparently suspecting a side agreement to
avoid DOL review, the Board remanded the matter to the ALJ for further proceedings. In
addition, the Board directed the Wage and Hour Administrator and the Solicitor to review four
other settlements of persons who had been joint complainants with Complainant, noting that
those complainants had accepted nominal amounts to settle their federal cases and give up their
employment with the respondent.
In its Final Order Approving Settlement and Dismissing Complaint, the Board indicated that
the parties had submitted a nominal settlement to the
Department for approval, and did not reveal the existence of a side agreement constituting the
bulk of the total settlement amount. Biddy v.
Alyeska Pipeline Service Co., 95-TSC-7 (ARB Dec. 3, 1996). Indicating that it
was "perturbed at counsels' persistence in attempting to maintain the fiction of two
separate, independent settlement agreements, when the information contained in both agreements
is directly required by the Board in carrying out its statutory responsibilities...", slip op. at
2 (citation omitted), the Board held that:
In the future, the Board will require all parties requesting approval of
settlements of cases arising under the employee protection provisions of the
environmental protection statutes to provide us with the settlement documentation for
any other claims arising from the same factual circumstances forming the basis of the
federal claim, or to certify that no other such agreements were entered into between the parties.