USDOL/OALJ Reporter: ARB Decision Caselist - May 2012

The ARB denied the Complainant's three motions to reconsider where the motions did not satisfy any of the circumstances or criteria under which the Board will reconsider a Decision and Order.

DISMISSAL FOR FAILURE TO COMPLY WITH ALJ DISCOVERY ORDERS; SCOPE OF ALJ DISCRETION; MOTION TO DISQUALIFY ALJ GENERALLY MUST BE SUPPORTED WITH EVIDENCE OF EXTRA-JUDICIAL BIAS

In Matthews v. Ametek, Inc. , ARB No. 11-036, ALJ No. 2009-SOX-26 (ARB May 31, 2012), the parties engaged in lengthy and contentious pre-trial and discovery proceedings spanning two years. Ultimately, the ALJ issued an Order to Show Cause why the Complainant's failure to comply with a discovery order and failure to provide certain documents should not result in sanctions, including dismissal of the claim. Rather than responding directly to the order, the Complainant moved to disqualify the ALJ alleging personal bias. The ALJ denied the motion to disqualify, and while acknowledging that the Respondent had been more proactive and even aggressive than the Complainant in exercising its right to discovery, noted that the Complainant had repeatedly failed to comply with discovery requests requiring multiple orders, had provided late and incomplete responses, and was non-communicative. The ALJ concluded that dismissal was warranted. On appeal, the ARB found that the ALJ acted within his discretion in dismissing the complaint. One member of the ARB speculated that a lesser sanction may have cured any actual prejudice to the Respondent, but agreed that the ALJ acted within his discretion. The concurring member wrote: "Regardless of [the Complainant's] belief of judicial bias, his counsel cannot simply fail to appear for pretrial conferences, fail to return the ALJ's phone calls and e-mails, and continue to refuse to comply with repeated orders to produce documents." USDOL/OALJ Reporter at 8.

In regard to the motion to disqualify, the ARB rejected the Complainant's argument on appeal that disqualification was warranted because the ALJ had allegedly lost control of discovery and that the discovery permitted by the ALJ created an appearance of personal bias against the Complainant. The ARB wrote:

    A motion to disqualify (or recuse) an ALJ from proceedings can be filed pursuant to 29 C.F.R. § 18.31.3 ("Whenever any party shall deem the administrative law judge for any reason to be disqualified to preside . . . that party shall file with the [ALJ] a motion to recuse.")(emphasis added). Matthews alleged that the ALJ had a personal bias against him based on the ALJ's discovery rulings. Beyond disputing those rulings, Matthews has not asserted that the ALJ engaged in any non-judicial conduct that would question his impartiality. The ARB generally "presume[s] that an ALJ is unbiased unless a party alleging bias can support that allegation; and bias generally cannot be shown without proof of an extra-judicial source of bias." See, e.g., Matter of Slavin , ARB No. 04-088, ALJ No. 2004-MIS-002, slip op. at 15-18 (ARB Apr. 29, 2005); Eash v. Roadway Express, Inc. , ARB No. 00-061, ALJ No. 1998-STA-028, slip op. at 8 (ARB Dec. 31, 2002). "Unfavorable rulings and possible legal errors in an ALJ's orders generally are insufficient to prove bias." Powers v. Paper, Allied-Indust., Chem. & Energy Workers Int'l Union , ARB No. 04-111, ALJ No. 2004-AIR-019 (ARB Aug. 31, 2007). Here, Matthews has not shown that the ALJ had any personal bias against him based on any extra-judicial source.

USDOL/OALJ Reporter at 5 (footnote omitted).

SUFFICIENCY OF COMPLAINT; ELEMENT OF PROTECTED ACTIVITY; BLANKET ASSERTION THAT COMPLAINANT ENGAGED IN PROTECTED ACTIVITY INSUFFICIENT TO PLEAD CAUSE OF ACTION UNDER SOX

In Pik v. Credit Suisse AG , ARB No. 11-034, ALJ No. 2011-SOX-6 (ARB May 31, 2012), the Complainant was the resident of a foreign country employed by a foreign company operating in that country, but who alleged that he was managed by staff from New York City. The Complainant's original complaint filed with OSHA contained no factual allegations addressing whether he had engaged in SOX protected activity. The ALJ issued an Order to Show Cause why the complaint should not be dismissed based on a failure to allege protected activity. In response, the Complainant merely provided a general, conclusory statement that the Respondent retaliated against him for "reporting fraud" to "management" regarding false market data. The ARB agreed with the ALJ that neither the complaint nor the response to the Order to Show Cause sufficiently indicated what information the Complainant might have provided to management that constituted SOX protected activity. The ARB noted that the Complainant appeared pro se and was entitled to some leeway, but that "a complainant must at least point to facts that fairly identify the activity protected by the SOX statute, particularly where the issue of extraterritoriality must be resolved." USDOL/OALJ Reporter at 5. The ARB found that the allegation was nothing more than a blanket assertion that the Complainant engaged in SOX protected activity.

SUFFICIENCY OF COMPLAINT; ALJ MAY USE ORDER TO SHOW CAUSE TO COMPEL COMPLAINANT TO SPECIFY FACTUAL ALLEGATIONS FOR ESSENTIAL ELEMENT OF THE CASE WHERE THE ORIGINAL COMPLAINT FAILED TO ADDRESS THAT ELEMENT

In Pik v. Credit Suisse AG , ARB No. 11-034, ALJ No. 2011-SOX-6 (ARB May 31, 2012), the original complaint filed with OSHA contained no factual allegations addressing whether the Complainant had engaged in SOX protected activity. The ALJ issued an Order to Show Cause why the case should not be dismissed for failure to allege protected activity. When the Complainant only responded with a general, conclusory statement, the ALJ dismissed the complaint. The ARB affirmed, noting that the Order to Show Cause provided the Complainant "an opportunity to explain that he had additional information that could address whether he engaged in SOX protected activity, one of the requisite elements of his SOX complaint." USDOL/OALJ Reporter at 5.

PRO SE LITIGANTS HELD TO LESS EXACTING PLEADING STANDARDS, BUT CANNOT SHIFT BURDEN OF LITIGATING CASE TO THE ADJUDICATOR AND ULTIMATELY BEAR THE BURDEN OF PLEADING ALL ELEMENTS OF A COMPLAINT

In Pik v. Credit Suisse AG , ARB No. 11-034, ALJ No. 2011-SOX-6 (ARB May 31, 2012), the original complaint filed with OSHA contained no factual allegations addressing whether the Complainant had engaged in SOX protected activity. The ALJ issued an Order to Show Cause why the case should not be dismissed for failure to allege protected activity. When the Complainant only responded with a general, conclusory statement, the ALJ dismissed the complaint. The ARB affirmed. The ARB, evidently concerned about the application of pleading standards when the complainant is pro se, explained that ultimately all litigants are responsible for the presentation of their case. The Board wrote:

    Initially, we note that adjudicators must accord a party appearing pro se fair and equal treatment, but a pro se litigant "cannot generally be permitted to shift the burden of litigating his case to the courts, nor avoid the risks of failure that attend his decision to forego expert assistance." Thus, although an ALJ has some duty to assist pro se litigants, a judge also has a duty of impartiality and must refrain from becoming an advocate for the pro se litigant. In the end, pro se litigants have the same burdens of proving the necessary elements of their cases as litigants represented by counsel.

USDOL/OALJ Reporter at 4-5 (footnotes omitted). The ARB noted that the Complainant appeared pro se and was entitled to some leeway, but that "a complainant must at least point to facts that fairly identify the activity protected by the SOX statute, particularly where the issue of extraterritoriality must be resolved." USDOL/OALJ Reporter at 5. The ARB also stated in regard to the Complainant's appellate brief: "Again, we are aware that pro se pleadings are held to less exacting standards than those prepared by counsel and are to be liberally construed, but the Board must be able to discern cogent arguments in any appellate brief, even one from a pro se litigant." USDOL/OALJ Reporter at 5 (footnote omitted).

COVERED EMPLOYEE; EMPLOYEES OF CONTRACTORS TO PUBLICLY TRADED COMPANIES; ACCOUNTANT EMPLOYED BY PRIVATE ACCOUNTING FIRM THAT PROVIDES SERVICES TO PUBLICLY TRADED COMPANY IS A COVERED EMPLOYEE UNDER SOX, SECTION 806

In Spinner v. David Landau and Associates, LLC , ARB Nos. 10-111 and -115, ALJ No. 2010-SOX-29 (ARB May 31, 2012), the ARB held that "that accountants employed by private accounting firms who in turn provide SOX-compliance services to publicly traded corporations are covered as employees of contractors, subcontractors, or agents under Section 806. " Although Spinner specifically involved an accountant, the ARB's decision was expressly for the purpose of explaining why it declined to acquiesce to the First Circuit Court of Appeals decision in Lawson v. FMR, LLC , 670 F.3d 61, 68 (1st Cir. 2012), where the court held that Section 806 provides whistleblower protection only to employees of publicly traded companies. The ARB looked to the text of Section 806 and explained why it concluded that the First Circuit's construction of the statute was implausible. The ARB, however, acknowledged that because the statute failed to define "employee" there was some ambiguity about the scope of coverage, and therefore it was necessary to turn to other rules of statutory construction.

The ARB first acknowledged that Section 806's caption referred to "employees of publicly traded companies" but cited Supreme Court authority to the effect that statutory heading are not controlling. The ARB looked to the legislative history, and particularly to the context in which SOX was enacted (the Enron scandal in which outside professionals such as accountants and lawyers were implicated), to conclude that Congress had the objective of protecting both employees of publicly traded companies and employees of private firms that work with, or contract with, publicly traded companies when such employees blow the whistle on fraudulent corporate practices. The ARB also looked to the overall statutory framework of SOX and the framework of analogous whistleblower statutes as support for coverage of employees of contractors under SOX Section 806.

Noting the concern expressed by the Respondent and some caselaw that finding such coverage would go beyond the scope of Act, the ARB responded first, that it is obliged to interpret Section 806 broadly both because it is a remedial statute and the legislative history encourages it to do so, and second, that "although the theoretical coverage of employees of any contractors, subcontractors, or agents of public companies might be broad, Section 806 contains built-in limitations including (1) its specific criteria for employees to have a reasonable belief of violations of specific anti-fraud laws or SEC regulations and (2) its requirement that the protected activity was a causal factor in the alleged retaliation." USDOL/OALJ Reporter at 16.

One member of the Board reiterated and expanded on the majority's discussion to more fully respond to the First Circuit's Lawson decision. That member of the Board made a point of expressing his opinion that SOX's coverage would extend to investment advisors to mutual funds. See USDOL/OALJ Reporter at 26-27 and 30.

The ARB provided notice that it would not review the ALJ's post-decision, compliance related orders.

The ARB provided notice that it would not review the ALJ's decision.

ARB order affirming ALJ's order dismissing Complainant's complaint because it was not filed within 15 calendar days of Administrator's determination.

[STAA Digest III A]
WHERE CASELAW WAS IN A STATE OF FLUX, APPLICATION OF REGULATIONS IN EFFECT AT TIME OF DECISION DID NOT CREATE RETROACTIVE EFFECTS

In Strohl v. YRC, Inc. , ARB No. 10-116, ALJ No. 2012-STA-35 (ARB May 7, 2012), the ARB had remanded the matter to the ALJ based on its finding that under the new STAA regulations, a warning letter can be an adverse action and that previous STAA case law did not bind the ARB where those cases were issued before the August 2010 STAA regulations were promulgated. The Employer filed a motion for reconsideration on the ground that the ARB applied the regulations retroactively. The ARB denied the motion finding that it had applied the regulations in force at the time of the decision. The ARB stated that "Prior to the issuance of the August 2010 regulations, the issue of whether a warning letter could be an adverse action was in a state of flux depending on the facts of particular cases. Accordingly, the application of the STAA's regulations to Strohl's complaint did not create retroactive effects." USDOL/OALJ Reporter at 2 (cititation omitted).

FAILURE OF ARB TO ISSUE FINAL ORDER WITHIN ONE YEAR OF ALJ'S RECOMMENDED DECISION, OR EXCEPTIONS AND RESPONSES THERETO, IS NOT GROUNDS FOR DISMISSAL OF THE APPEAL; TIME LIMIT IS DIRECTORY AND NOT JURISDICTIONAL

The provision in 41 C.F.R. § 60-1.26(b)(2) providing that the ARB issue a final order within one year of either the ALJ's recommended decision or the submission of exceptions and responses to exceptions, whichever occurs first, is directory not jurisdictional. Consequently, the ARB denied the Respondent request that the ARB dismiss appellate review in USDOL, OFCCP v. Frito-Lay, Inc. , ARB No. 10-132, ALJ No. 2010-OFC-2 (ARB May 8, 2012). The Respondent had noted that the ARB had closed the appeal in USDOL, OFCCP v. United Space Alliance, LLC , ARB No. 11-033, ALJ No. 2011-OFC-2 (Apr. 11, 2011). The ARB, however, distinguished that case because it arose under the expedited review procedure at 41 C.F.R. §§ 60-30.37, a regulation that sets forth consequences for a failure to act in a timely manner.

[Editor's note: in Frito-Lay , the ALJ hearing had been conducted under the expedited review procedure; however, on appeal the parties waived expedited proceedings before the ARB.]

OFCCP'S AUTHORITY TO REQUEST AAP DATA POST-DATING DESK AUDIT SCHEDULING LETTER

In USDOL, OFCCP v. Frito-Lay, Inc. , ARB No. 10-132, ALJ No. 2010-OFC-2 (ARB May 8, 2012), OFCCP commenced a desk audit of the Respondent in 2007. After the Respondent produced Affirmance Action Plan (AAP) data for 2005, 2006 and 2007, OFCCP found a "statistically significant disparity" in the data, and to further investigate the perceived disparity, requested data for 2008 and 2009. The Respondent refused asserting that such data fell outside the scope of the desk audit scheduling letter. OFCCP invoked the expedited hearing procedure seeking compliance with the data request. The ALJ recommended summary decision in favor of the Respondent, essentially on the ground that there was a temporal scope to the 2007 desk audit. On appeal, the ARB reversed the ALJ's recommended dismissal and ordered the Respondent to produce the data.

The ARB found that OFCCP had the discretion to request the AAP data covering activity occurring after the date of the scheduling letter under the specific circumstances of the case � specifically where OFCCP was conducting a disparate impact analysis under E.O. 11246 as amended, based on an objectively determined finding of a statistically significant disparity in the prior years' data. The ARB noted that request for 2008 and 2009 data was narrow, was motivated by the statistically significant disparity finding, and was focused only on AAP plans and data for two years. The ARB ruled that "this is not a case where OFCCP simply extended a desk audit; it is a case where a deficiency motivated the request for more information." USDOL/OALJ Reporter at 6.

The ARB noted that it was not reaching the question of whether OFCCP has the ability to ask for post-Scheduling Letter data in all desk audits or where OFCCP has not objectively identified a concern about compliance.

The ARB also rejected arguments based on inferences drawn from internal OFCCP guidelines and comments to regulatory amendments that desk audits have an inflexible temporal limitation. The ARB ruled that such arguments could not overcome the discretion provided by the regulations themselves.

POLICY STATED IN FEDERAL CONTRACT COMPLIANCE MANUAL GENERALLY DOES NOT CREATE DUE PROCESS RIGHTS

OFCCP's Federal Contract Compliance Manual (FCCM) is "an internal manual that courts generally consider 'non-binding statements of general policy' that do not provide due process rights in the public, except in unusual circumstances." USDOL, OFCCP v. Frito-Lay, Inc. , ARB No. 10-132, ALJ No. 2010-OFC-2 (ARB May 8, 2012), USDOL/OALJ Reporter at 6, n.23 (citing United Space Alliance, LLC v. Solis , __ F.Supp. 2d __ (D.D.C. Nov. 14, 2011)).