Id. at 7-8. Citing Supreme Court Standard 503-Lawyer Client Privilege, the American Bar Association (ABA) Model Rules of Professional Conduct, the ABA Model Code of Professional Responsibility, the Texas Disciplinary Rules of Professional Conduct, and the Fifth Circuit's decision in Doe v. A Corp., 709 F.2d 1043 (5th Cir. 1983) (allowing former in-house counsel to prosecute action in his own behalf using confidential
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information outside the attorney-client privilege), the Secretary held that the report could be introduced into evidence and relied upon under both federal and Texas law allowing attorneys to defend themselves against client accusations of wrongdoing. Id. at 8-10. The Secretary specifically noted that "application of a privilege is a matter of federal law in a case such as this arising under the laws of the United States." Id. at 9, n.4.
The Secretary also declined to continue the ALJ's March 15, 1988 order sealing the record.
With regard to the ALJ's recommendation that no relief be granted Willy because of his deceptive testimony regarding his post-termination employment status, the Secretary questioned whether the Acts permitted the denial of back pay to a successful claimant. The Secretary noted that the language of the Acts regarding relief is mandatory. Thus, if there is a violation of the whistleblower provisions, the "Secretary shall" order relief, including back pay. Id. at 22. Moreover, even if the Acts allowed the Secretary discretion to deny a back pay award, the Secretary ruled that he would not exercise that discretion in this case:
The central purpose of the environmental whistleblower laws, to protect whistleblowers and in so doing to protect public health and safety, would be frustrated if all relief were denied even though the Secretary has found a violation . . . .
Id. at 24-26 (footnote omitted).
The Secretary remanded the case to the ALJ to calculate back pay based on the difference between what Willy would have earned if he had continued to be employed by Coastal and the amount he earned or with reasonable diligence could have earned from the date of his termination to the date of his subsequent discharge from the Merichem Corporation, whose employment he had concealed from the ALJ. Since Merichem terminated Willy for paying insufficient attention to his duties, the Secretary found that Willy's right to back pay was cut off as of the date of that termination. Id. at 27.13
1 The complaint was filed pursuant to the employee protection provisions of the Clean Air Act, 42 U.S.C. § 7622 (2000), the Water Pollution Control Act, 33 U.S.C. § 1367 (2000), the Safe Drinking Water Act, 42 U.S.C. § 300J-9(i) (2000), the Resource Conservation and Recovery Act, 42 U.S.C. § 6971 (2000), the Toxic Substances Control Act, 15 U.S.C. § 2622 (2000), and the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9610 (2000). We refer to these provisions collectively as "the Acts."
2 The facts are summarized from Willy v. Coastal Corporation, Case No. 85-CAA-1, ALJ's Recommended Decision and Order, Nov. 29, 1988, and the Secretary's Final Decision and Order, June 1, 1994.
3 For reasons we later explain, the Board concludes that the information in Willy's draft Belcher Reports and related testimony are subject to the attorney-client privilege and, thus, are excluded as "evidence" in this federal whistleblower case. However, we cite the "privileged" information here because it was allowed into evidence and made public by the 1994 decision of the Secretary. Secretary's Final Decision and Order, June 1, 1994.
4 Webb died before the hearing in this case. Facts regarding Webb were provided by testimony of his colleagues and supervisors.
5 Willy learned of Webb's memo and complained to Fawcett that Webb had "stabbed him in the back." Webb subsequently apologized to Willy for sending the memorandum without Willy's knowledge.
6 Willy testified that, although his duties did not change following the Belcher Report incident, he started "getting the cold shoulder" from William Dunker, Fawcett, Brundrett, Webb, and Pardue.
7 Willy testified that he did not recall having a telephone conversation with Lewis, that he doubted that he made such a call, but that such a call could have taken place.
8 The ERA is not at issue in the Willy case currently before the Board. The environmental statutes that are at issue in this case are interpreted to cover internal complaints (see footnote 11). It is noted that in 1992 Congress amended the whistleblower provision of the ERA to specifically apply to internal complaints through Sec. 2902(a) of the Comprehensive National Energy Policy Act of 1992, Pub. L. No. 102-486, 106 Stat. 2776 (Oct. 24, 1992).
9 Following the hearing, the ALJ issued a March 15, 1988 order sealing the record, including Willy's draft versions of the Belcher Report. The order stated:
In light of Respondents' privilege claims, the post-hearing procedures herein will be governed by the following:
1. The transcript of the hearing of March 7-10, 1988 and the exhibits received at that hearing are placed incamera and sealed.
2. The materials referred to in item 1 of this Order may be utilized by the parties solely for briefing purposes.
3. The Administrative Law Judge and the Secretary of Labor are free to refer to the incamera materials in their respective decisions and such decisions are to be placed on the public record. No part of such decisions are to be incamera.
4. This incamera order does not purport to bind the Secretary of Labor and the Secretary, should this matter come before him on review, is free to determine whether the provisions of this Order shall remain in effect or whether all or part of the evidentiary materials in this proceeding shall be placed in the public record.
10 The ALJ also held that Willy's call to the TDWR was not external protected activity because Willy denied making the call or failed to recall that such a conversation took place. R. D. & O. at 22.
11 The Board is not reconsidering the Secretary's holding on coverage of internal employee complaints under the environmental statutes. See Passaic Valley Sewerage Commissioners v. United States Dep't of Labor, 992 F.2d 474, 478-80 (3d Cir. 1993) (holding that internal complaints are covered under the Water Pollution Control Act).
12 The Fifth Circuit had made it clear that Coastal could not allow its witnesses to testify about the report without waiving its privilege claim. In re Willy, 831 F.2d at 548.
13 The Secretary declined to continue the ALJ's March 15, 1988 order sealing the record. Id. at 12.
14 Sec. Ord. 2-96, 61 Fed. Reg. 19,978, May 3, 1996, establishing the Administrative Review Board.
16 The Fifth Circuit also upheld the district court's decision to award Rule 11 sanctions against Willy and his attorney, but remanded the case to the district court to determine the amount. Id. On remand, the district court recomputed and imposed sanctions in the amount of $19,307, the amount of attorney's fees that Coastal had incurred in responding to Willy's sanctionable conduct. The Court of Appeals affirmed. Willy v. Coastal Corp., 915 F.2d 965, 967 (5th Cir. 1990). It noted that the sanctions "were imposed for the filing of misleading and ill founded pleadings, the use of the discovery process to harass opposing parties, repeated references to non-existent disciplinary and evidentiary rules, baseless allegations of conflict of interest, and the filing of the infamous 110-page summary judgment motion accompanied by reams of irrelevant and unorganized material." 915 F.2d at 966, n.3. The United States Supreme Court affirmed the Court of Appeals' judgment, ruling that "[t]he interest in having rules of procedure obeyed . . . does not disappear upon a subsequent determination that the court was without subject–matter jurisdiction." Willy v. Coastal Corp., 503 U.S. 131, 139 (1992).
17See concurring opinion of Supreme Court of Texas justices in withdrawing writ of error in Willy v. Coastal States Mgmt. Co., Inc., 977 S.W.2d. at 567 ("The [appeals] court then proceeded to examine the evidence and held that Willy could not prove his claim without violating his ethical obligations to maintain Coastal's confidences.").
19 The Assistant Secretary declined to file a brief.
20 "Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State. And the Congress may by general Laws prescribe the Manner in which such Acts, Records and Proceedings shall be proved, and the Effect thereof." U.S. Const. Art. IV, § 1.
21 "The . . . judicial proceedings of any court of any . . . State . . . shall have the same full faith and credit in every court within the United States . . . as they have by law or usage in the courts of such State . . . " 28 U.S.C. § 1738 (2000).
22 We are not concerned with res judicata or claim preclusion. "Under res judicata, a final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action." Allen, 449 U.S. at 94. Accord Migra, 465 U.S. at 77 n.1. The Texas state courts lacked jurisdiction over Willy's whistleblower claim arising under federal statutory law. No one has suggested that the Secretary does not have jurisdiction to issue a final decision because the claim was or should have been litigated in the Texas court.
23 Texas Rules of Evidence, Rule 503(b)(1) provides the general rule: "A client has a privilege to prevent any other person from disclosing confidential communications [between the client and the client's lawyer] made for the purpose of facilitating the rendition of professional legal services." The Rule recognizes exceptions to the privilege for: "Furtherance of crime or fraud" where "the services of the lawyer were sought or obtained to enable or aid anyone to commit or plan to commit what the client knew or reasonably should have known to be a crime or fraud," Rule 503(d)(1) (emphasis in original); and "Breach of duty by a lawyer or client": "As to a communication relevant to an issue of breach of duty by a lawyer to the client or by a client to the lawyer." Rule 503(d)(3).
24 In 1990, prior to the Secretary's 1994 ruling on attorney-client privilege, 29 C.F.R. § 18.44 on evidence was replaced by a new Subpart B on Rules of Evidence, 55 Fed. Reg. 13218 et seq. (Apr. 9, 1990). Now 29 C.F.R. § 18.501 on privilege specifically incorporates the language of Fed. R. Evid. § 501 (substituting the words "rules or regulations prescribed by the administrative agency pursuant to statutory authority or pursuant to executive order" for "rules prescribed by the Supreme Court pursuant to statutory authority"). 55 Fed. Reg. at 13221.
29 C.F.R. § 18.501 (2002), as adopted in 1990, specifically states:
Except as otherwise required by the Constitution of the United States, or provided by Act of Congress, or by rules or regulations prescribed by the administrative agency pursuant to statutory authority, or pursuant to executive order, the privilege of a witness, person, government, State, or political subdivision thereof shall be governed by the principles of the common law as they may be interpreted by the courts of the United States in the light of reason and experience. However with respect to an element of a claim or defense as to which State law supplies the rule of decision, the privilege of a witness, person, government, State or political subdivision thereof shall be determined in accordance with State law.
(emphasis added). Hence, both 29 C.F.R. § 18.44 and substituted §18.501 require adherence to Fed. R. Evid. § 501 with regard to privilege determinations.
25 Although Willy's telephone call to the TDWR might have constituted protected activity and the basis for a claim of discrimination, Willy failed to prove that it was related to an environmental complaint, and in fact denied that he made a call. Nov. 27, 1988 R. D. & O., slip op. at 22.