Xanthopoulos v. Marsh & McClennan Companies, Inc. , ARB No. 2019-0045, ALJ No. 2019-SOX-00008 (ARB June 29, 2020) (per curiam) (Decision and Order)

TIMELINESS OF FILING; EQUITABLE TOLLING UNDER “WRONG FORUM” GROUND NOT WARRANTED WHERE THE RECORD SHOWED THAT COMPLAINANT DELIBERATELY FILED WITH THE SEC, NOT FOR THE PURPOSE OF OBTAINING A MAKE-WHOLE REMEDY UNDER SOX, BUT RATHER TO RIGHT THE CONDUCT HE BELIEVED RESPONDENT HAD ENGAGED IN, AND TO OBTAIN AN AWARD UNDER THE SEC WHISTLEBLOWER PROGRAM

In Xanthopoulos v. Marsh & McClennan Companies, Inc., ARB No. 2019-0045, ALJ No. 2019-SOX-00008 (ARB June 29, 2020) (per curiam), the ARB affirmed the ALJ’s dismissal of Complainant’s SOX complaint on the grounds that the complaint was not timely filed and that equitable modification was not warranted.

SOX complaints must be filed not later than 180 days after the date on which the violation occurred, or after the date on which the employee became aware of the violation. Here, the complaint was untimely as it was filed 350 days after Complainant was fired.

On appeal, Complainant argued that filings he made with the SEC warranted equitable tolling because he raised the precise statutory claim in issue but had mistakenly done so in the wrong forum. The ARB was not persuaded. It noted that the SEC filings did not set forth a SOX retaliation or discrimination claim. Some the filing had not mentioned his termination—and those that claimed retaliatory termination did not seek employee-based remedies, but only a monetary award through the SEC’s Whistleblower Program. The ARB found that the filings clearly showed that Complainant wanted the SEC to address the underlying problems Complainant identified. His filings showed that his primary purpose was to right the underlying wrong he believed Respondent committed against shareholders, and not to obtain make-whole remedies concerning his employment. The ARB found that Complainant’s last filing with the SEC conceded Complainant’s awareness that he must seek further legal action, including the whistleblower complaint, in a forum other than the SEC, and that the SEC was not investigating the matters. The ARB found that the SEC filings were not the precise statutory claim as contemplated by equitable principles, and that they were not a SOX claim mistakenly filed with the SEC, but rather deliberatively filed with the SEC as a non-SOX claim.

Horn v. University First Federal Credit Union, ARB No. 2018-0033, ALJ No. 2017-CFP-00003 (ARB June 18, 2020) (per curiam) (Decision and Order)

PROTECTED ACTIVITY UNDER THE CONSUMER FINANCIAL PROTECTION ACT; DESCRIBING MERELY THEORETICAL SITUATIONS IS TOO ATTENUATED TO BE A REASONABLE BELIEF OF A VIOLATION OF LAW; MERE SPECULATION DOES NOT SATISFY A COMPLAINANT’S BURDEN

In Horn v. University First Federal Credit Union, ARB No. 2018-0033, ALJ No. 2017-CFP-00003 (ARB June 18, 2020) (per curiam), the ARB affirmed the ALJ’s conclusion that Complainant did not engage in protected activity under the employee protection provisions of the Consumer Financial Protection Act of 2010, Section 1057 of the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act of 2010.  The ALJ found that Complainant criticized Respondent’s loan closing procedures and accused Respondent of engaging in unethical conduct.  The ALJ, however, did not credit Complainant’s testimony that he raised concerns about violations of law or was “actively encouraged” not to print out disclosures required under the Truth in Savings Act (TISA). The ALJ acknowledged that Complainant spoke to one of Respondent’s auditors about TISA disclosures.  The ALJ also found that Complainant made suggestions for improving customer service.  The ALJ also found, however, that in doing so, Complainant had not raised concerns about Respondent’s compliance with disclosure laws.

On appeal, Complainant’s counsel contended that if “Mr. Horn was complaining . . . that the lack of written or standardized or internal policies and procedures could lead to mistakes and violations of Dodd-Frank, then such complaints should be entitled to protection.” Slip op. at 4-5, quoting Complainant’s Brief.  The ARB rejected this contention, stating:

This is incorrect because an employee does not engage in whistleblower activity by describing merely theoretical situations. Such a belief is too attenuated from the standard to be a reasonable belief of a violation of law and therefore failed to satisfy one of the required elements of his retaliation claim. Stated another way, mere speculation does not satisfy Horn’s burden.

Id. at 5.

 

Administrator, Wage and Hour Div., USDOL v. Northwest Title Agency, Inc., ARB No. 2017-0055, ALJ No. 2014-SCA-00011 (ARB June 12, 2020) (per curiam) (Decision and Order)

FRINGE BENEFITS UNDER THE SCA; INABILITY TO PROVE PAYMENTS AS CASH EQUIVALENTS TO FRINGE BENEFITS DUE TO LACK OF COOPERATION OF FORMER EMPLOYEES DID NOT ABSOLVE RESPONDENTS; LIABILITY OF 
CORPORATE OFFICERS; STATUTE OF LIMITATIONS


In Administrator, Wage and Hour Div., USDOL v. Northwest Title Agency, Inc., ARB No. 2017-0055, ALJ No. 2014-SCA-00011 (ARB June 12, 2020) (per curiam), Northwest Title entered into a contract with Housing and Urban Development (HUD) to provide real estate property sales closing services for single family properties owned by HUD.  The contract was subject to the SCA. After an investigation, the Administrator filed a complaint against Northwest Title, its owner (who was the company’s CEO, President and sole shareholder), and the owner’s brother (who was the COO and CFO).   The brother, in his individual capacity, entered into a settlement agreement with the Administrator.  The funds the brother paid were credited against the employees’ back wages, resulting in dismissal of that portion of the complaint.  A hearing proceeded against the company and its owner on the remaining claims.

On appeal, the ARB found that the record supported the ALJ’s findings of fact and conclusions of law that “Respondents failed to pay the minimum hourly wages and health and welfare benefits its employees were entitled to” under the Service Contract Act (SCA); and that Respondents “failed to maintain records showing the correct work classifications, hours worked, amounts of health and welfare fringe benefits provided, or cash equivalents allegedly paid separate from and in addition to the required wages under the SCA.”  Slip op. at 4-5, citing ALJ D&O.  Respondents raised five issues on appeal.

Cash equivalents to fringe benefits; inability to prove due to lack of cooperation from former employees

Respondents argued that wages in excess of the SCA minimum wage requirement should have been considered by the ALJ as a cash equivalent to the SCA benefits requirement.  The ARB acknowledged that “[a]n employer can satisfy its fringe benefit obligations by providing ‘equivalent or differential payments in cash’ to its employees but it must ‘keep appropriate records separately showing amounts paid for wages and amounts paid for fringe benefits.’”  Slip op. at 5 (citations omitted).  Here, the ALJ found that Respondents failed to provide payroll records to support their assertion.  On appeal, Respondent cited a lack of cooperation from former employees as hampering its ability to prove precisely the amount and recipient of benefits paid by the company.  The ARB was not persuaded, stating that such “lack of cooperation does not absolve Respondents of their obligations under the SCA.”  Id.

Liability of corporate officer

Respondent’s owner argued that he had not personally managed the HUD contract once it was put into place, and thus was not personally liable.  The ARB found this argument to be both factually and legally incorrect.  The ARB first noted the ALJ’s rejection of the assertion that the owner had surrendered control.  The ARB also noted that “[t]he SCA regulations require compliance not only by those who supervise employees working on the contract but also corporate officers.”  Id. at 5 (citations omitted).

Withheld funds from HUD and settlement funds used to pay back wages as offset

Respondents asserted that funds owed to them by HUD and paid the owner’s brother in his settlement with the Administrator should be offsets.  The ARB, however, held that Respondents could not “subtract the back wages due from [the owner’s brother] from the unpaid health and welfare benefits that are the subject of the Complaint and due pursuant to the D. & O. And any monetary relief Respondents may be entitled to from other federal agencies are not relevant to this case.” Id. at 5-6.

Statute of limitations

The ARB rejected Respondents’ contention that the complaint was untimely under the two-year statute of limitations in the Portal-to-Portal Act – the ARB stating that this statute does not apply to proceedings under the SCA.   The ARB also rejected Respondents’ contention that a state statute of limitations should apply.  In a footnote, the ARB declined to adopt the ALJ’s conclusion that the six-year statute of limitations applicable to contract actions brought by the United States, 28 U.S.C. § 2415(a), applied.  The ARB stated that this statute does not apply to administrative proceedings.

Debarment; asserted reasonable interpretation of SCA

Respondents argued that their debarment was “inappropriate because the alleged violations can be attributed to a reasonable interpretation of the statute.”  Id. at 6, quoting Respondents’ brief.  The ARB, however, was not persuaded, noting that Respondents failed to pay their employees’ health and welfare fringe benefits and failed to keep and make available the required records; that they did not provide notice of the required minimum benefits to their employees or post such information; and Respondent’s owner admitted that he failed to read the Contract and made no effort to determine whether his company’s practices were in violation of the SCA.  Although Respondents asserted that a WHD investigator failed to consider documents showing compliance, the ARB stated that the record indicated that those documents were accepted and rejected as insufficient to establish compliance.  The ARB determined that the SCA violations had been the result of the “culpable conduct” of Respondents, and therefore debarment was appropriate.
 

Aityahia v. Mesa Airlines, ARB No. 2019-0068, ALJ No. 2018-AIR-00044 (ARB June 9, 2020) (per curiam) (Decision and Order)

ADVERSE EMPLOYMENT ACTION; WHERE EVIDENCE ESTABLISHED THAT COMPLAINANT WAS NOT QUALIFIED FOR THE POSITION TO WHICH APPLIED, RESPONDENT’S “REFUSAL TO REHIRE” WAS NOT AN ADVERSE EMPLOYMENT ACTION

In Aityahia v. Mesa Airlines, ARB No. 2019-0068, ALJ No. 2018-AIR-00044 (ARB June 9, 2020) (per curiam), the ARB summarily affirmed the ALJ’s dismissal of Complainant’s refusal to rehire AIR21 complaint.  The ARB stated that the ALJ had thoroughly considered whether the refusal to rehire was an adverse employment action, and the facts readily demonstrated that it was not, as extensive evidence established that Complainant was not qualified for the position to which he applied in 2017.  Complainant had alleged an adverse employment action of termination in 2013.  The timely filed contention was limited to a 2017 refusal to rehire Complainant.  In this regard, the ALJ credited the training pilots’ assessment of Complainant’s flying proficiency, which was corroborated by the reviewing officials in 2013.

 

Tucker v. CSX Transportation, Inc., ARB No. 2018-0050, ALJ No. 2012-FRS-00063 (ARB June 3, 2020) (Decision and Order)

The ARB affirmed the ALJ’s decision granting Respondent’s motion for summary decision where Complainant’s own admissions established that protected activity could not have contributed to the adverse employment actions.

 

Cieslicki v. Soo Line Railroad Co. dba Canadian Pacific, ARB No. 2019-0065, ALJ No. 2018-FRS-00039 (ARB June 4, 2020) (per curiam) (Order Reversing and Remanding)

PROTECTED ACTIVITY; ARB REJECTS CONTENTION THAT FRSA PROTECTED ACTIVITY DOES NOT COVER EMPLOYEE WHO VOLUNTARILY BECAME IMPAIRED TO WORK; ARB, HOWEVER, NOTES THAT DISCIPLINE MAY BE PERMISSIBLE IF DRIVER KNEW HE WAS ON CALL OR IF THE IMPAIRMENT WAS ILLEGAL

In Cieslicki v. Soo Line Railroad Co., ARB No. 2019-0065, ALJ No. 2018-FRS-00039 (ARB June 4, 2020) (per curiam), Complainant alleged that Respondent violated the FRSA by terminating him in retaliation for telling his employer that he could not report to work because he drank two glasses of wine with dinner.  The ALJ granted Respondent’s motion to dismiss for failure to state a claim on the ground that a self-reported, non-work-related physical state caused by a personal decision to consume alcohol while off duty is outside the scope of the hazardous safety conditions contemplated by the FRSA.  The ARB reversed and remanded for further proceedings.

Although the ALJ cited several district court decisions in support of his ruling, including Lockhart v. Long Island R.R. Co., 266 F. Supp. 3d 659 (S.D.N.Y 2017), the ARB disagreed, finding that the FRSA is not so limited.  The ARB noted that although the Second Circuit had affirmed the district court’s decision in Lockhart, it did so on different grounds.

The ARB analyzed the protected activity covered by FRSA, 49 U.S.C. §20109(a)(2) and 49 U.S.C. §20109(b)(1)(A) and (B), and found that they do not limit their application to work-related conditions.  In regard to the latter section, the ARB held that “[t]he term ‘hazardous condition’ is broad and may encompass many types of hazardous conditions. We hold that it is broad enough to include impaired railroad workers who present a danger of death or serious injury if they were to work without reporting those hazardous conditions, or refusing to work because of their impaired condition.”  Slip op. at 7.   The ARB found that the STAA and ARB precedent supported its holdings.

The ARB, concluded with the following observations:

            Concerning both subparts (a) and (b) of 49 U.S.C. §20109, the ALJ relied on an inaccurate premise for support. Contrary to what the ALJ and the district court in the Southern District of New York (in Lockhart) contend, our ruling does not mean that an employee who engages in protected activity by refusing to work because of his impairment may not be disciplined. If an employer decides to discipline an employee because the employee voluntarily chose to become impaired at a time when the employee knew that he should not be impaired (because he was on call, or because it is illegal), then the employer is not prohibited by the FRSA from taking disciplinary action.

 

            Thus, following the plain language of the statute to allow for such reports if a violation of a rule is implicated, or a hazardous safety or security conditions exists, does not lead to “absurd results.” Indeed, an absurd result would occur if an employee who is not on call, drinks alcoholic beverages (as adults of legal age are allowed to do), gets called to work unexpectedly, and then has to choose between working in an impaired state on the railroad (violating federal law or causing a hazardous safety or security condition), or getting fired for indicating that he cannot safely report for duty.

Id. at 9.

 

Berg v. S&H Express, ARB No. 2017-0075, ALJ No. 2018-STA-00001 (ARB June 4, 2020) (per curiam) (Decision and Order)

[STAA Digest IV G]

CONTRIBUTORY FACTOR CAUSATION; FACT THAT RESPONDENT DID NOT STRICTLY FOLLOW PROGRESSIVE DISCIPLINARY POLICY MAY NOT BE PRETEXT UNDER THE FACTS OF THE CASE; WHILE A SERIES OF VIOLATIONS MAY BE INDICATIVE OF PRETEXT, IT MAY ALSO BE THE PROVERBIAL “STRAW THAT BROKE THE CAMEL’S BACK”

In Berg v. S&H Express, ARB No. 2017-0075, ALJ No. 2018-STA-00001 (ARB June 4, 2020) (per curiam), the ARB found that substantial evidence supported the ALJ’s finding that there was no contributing factor causation, and affirmed the ALJ’s decision denying Complainant’s STAA complaint.  The ALJ had concluded that “while Complainant engaged in protected activities on two occasions and was fired in close temporal proximity to that protected activity, there was no contributing factor causation because Respondent fired Complainant for her documented history of disciplinary problems including many occurrences of lateness and lack of communication.”

One of the elements of the case was whether Respondent’s application of a flexible disciplinary policy was evidence of a pretext.  The record showed that, according to company policy, the next step for a driver in Complainant’s position--who had received a verbal warning, a written reprimand, and a three-day suspension for late loads--would be termination.  Respondent, had not always strictly adhered to its progressive discipline policy; had made exceptions in the past; and, in the instant case, had not issued formal written discipline to Complainant for every late load.  Respondent also waited a month from Complainant’s suspension until firing her. 

The ALJ, however, found that failure to discipline Complainant for every late load was not evidence of pretext, determining that Respondent’s flexibility reflected a desire for its drivers to succeed, and that under Respondent’s disciplinary policy, the next step in regard to Complainant was termination.

The ALJ also found that evidence that Complainant had not been late with loads was not evidence of pretext, finding that Respondent believed that Complainant had late loads.  The ALJ cited ARB authority that ALJs do not sit as super-personnel departments who second-guess employment decisions.

The ARB found that substantial evidence supported the ALJ’s findings, and commended the ALJ’s analysis of pretext.  The ARB stated:

The ALJ appropriately found that that there was no pretext based on company practice which permitted a degree of flexibility as to discipline for the goal of success for its drivers. Acosta v. Union Pac. R.R. Co., ARB No. 2018-0020, ALJ No. 2016-FRS-00082, slip op. at 11-12 (ARB Jan. 22, 2020) (ARB reversed an ALJ decision which improperly focused on whether the respondent’s justifications for terminating the complainant had merit, rather than on whether the respondent violated the underlying statute). We confirm that it is not within the authority of the Board or ALJs to “sit as a super-personnel advocate” who second-guesses an employer’s decisions. Id. at 11. Our responsibility is to determine whether the whistleblower protection statute in this case has been violated, not whether the employer acted the best it could have, made every right decision, or did as we would have done.

Slip op. at 9.  One member of the ARB stated in a concurring opinion:

I write separately to emphasize a point concerning Respondent’s termination of Complainant for multiple violations of a policy notwithstanding that the employer did not take action following each instance of the policy violation. While an employer’s action after a series of violations may be indicative of pretext, it may also be the proverbial “straw that broke the camel’s back.” A fact-finder is permitted to find such even though the employer has a progressive discipline policy, as the ALJ did in this case. D. & O. at 25-26. See Simpson v. Equity Transp. Co., Inc., ARB No. 2019-0010, ALJ No. 2017-STA-00076 (ARB May 13, 2020) (ARB agreeing with Respondent that employer may discipline an employee on a cumulative-events theory even though it did not take a disciplinary action on each event comprising the ultimate basis for the adverse action).

Id. at 10.