Decisions of the Administrative Review Board
Palmer v. Canadian National Railway
, ARB No. 16-035, ALJ No. 2014-FRS-154
- Erratum (ARB Jan. 4, 2017) PDF (USDOL/OALJ Reporter)
Palmer v. Canadian National Railway
, ARB No. 16-035, ALJ No. 2014-FRS-154
- Decision and Order of Remand (ARB Sept. 30, 2016) (reissued with full dissent Jan. 4, 2017) PDF (USDOL/OALJ Reporter)
Palmer v. Canadian National Railway
, ARB No. 16-035, ALJ No. 2014-FRS-154 (ARB Sept. 30, 2016) (en banc)
Decision and Order of Remand
CONTRIBUTING FACTOR CAUSATION; ARB REJECTS FORDHAM v. FANNIE MAE
In Palmer v. Canadian National Railway , ARB No. 16-035, ALJ No. 2014-FRS-154 (ARB Sept. 30, 2016) (en banc), the ARB rejected the holding from Fordham v. Fannie Mae , ARB No. 12-061, ALJ No. 2010-SOX-51 (ARB Oct. 9, 2014) in which the panel indicated that “after an evidentiary hearing, if a complainant has proven by a preponderance of the evidence that his protected activity was a ‘contributing factor’ in the adverse action taken against him … the Administrative Law Judge (ALJ) [is] required to disregard the evidence, if any, the respondent offers to show that the protected activity did not contribute to the adverse action.” The ARB ruled that “ALJs are not required to disregard any of the evidence the respondent might offer to show that the protected activity did not contribute to the adverse action. Moreover, there are no limitations on the types of evidence an ALJ may consider when determining whether a complainant has demonstrated that protected activity was a contributing factor in the adverse action (other than limitations found in the rules of evidence).” The ARB also stated that this interpretation applies equally to all DOL-administered whistleblower provisions incorporating the AIR-21 burden-of-proof provision
The ARB summarized its decision as follows:
We divide our analysis into three sections.
Section 1 concludes that the first step of the AIR-21 whistleblower protection provision’s burden-of-proof framework requires the complainant to prove, by a preponderance of the evidence, that protected activity was a contributing factor in the unfavorable personnel action. It further concludes that there are no limitations on the evidence the factfinder may consider in making that determination. Section 1 contains a comprehensive analysis of AIR-21’s burden-of-proof provision and its provenance, and explains in significant detail why this Board’s decision in Fordham v. Fannie Mae was wrong. Readers who are not interested in the details of the analysis of the statutory text, structure, and background may skip straight to Section 2.
Section 1’s bottom line is that Fordham ’s interpretation is wrong, and we hereby overturn Fordham : nothing in the statute precludes the factfinder from considering evidence of an employer’s nonretaliatory reasons for its adverse action in determining the contributing-factor question. Indeed, the statute contains no limitations on the evidence the factfinder may consider at all. Where the employer’s theory of the case is that protected activity played no role whatsoever in the adverse action, the ALJ must consider the employer’s evidence of its nonretaliatory reasons in order to determine whether protected activity was a contributing factor in the adverse action.
Section 2 lays out the legal standard for cases involving whistleblower protection provisions with the AIR-21 burden-of-proof framework and explains how to apply that standard to this and other cases arising under AIR-21, the FRSA, or any other whistleblower protection provision with the same burden-of-proof framework. It explains that the level of causation that a complainant needs to show is extremely low: the protected activity need only be a “contributing factor” in the adverse action. Because of this low level, ALJs should not engage in any comparison of the relative importance of the protected activity and the employer’s nonretaliatory reasons. Since in most cases the employer’s theory of the facts will be that the protected activity played no role in the adverse action, the ALJ must consider the employer’s nonretaliatory reasons, but only to determine whether the protected activity played any role at all.
Finally, Section 3 explains why, under the proper legal standard, we remand this case and what the ALJ should do on remand.
Administrator, Wage and Hour Div. v. Seasonal AG Services, Inc.
, ARB No. 15-023, ALJ No. 2014-TAE-6 (ARB Sept. 30, 2016)
Decision and Order of Remand
ADVERSE EFFECT WAGE RATE; RESPONDENT’S LIABILITY IS GAUGED BASED ON COMMON LAW OF AGENCY TEST; EMPHASIS IS ON WHETHER OTHER COMPANY’S WORKERS WERE “EMPLOYEES” OF THE RESPONDENT, AND NOT ON WHETHER THE TWO COMPANIES WERE “JOINT EMPLOYERS”
In Administrator, Wage and Hour Div. v. Seasonal AG Services, Inc. , ARB No. 15-023, ALJ No. 2014-TAE-6 (ARB Sept. 30, 2016), the ALJ found that Seasonal Ag Services (“Seasonal Ag”), a contract agricultural employment agency that participated in the H-2A program, was not a joint employer with Ludy Moreno Services (“LMS”), a different contract agricultural employment agency that had no H-2A workers. The ALJ concluded that Seasonal Ag was not responsible for paying the Adverse Effect Wage Rate (“AEWR”) to U.S. workers who were on LMS’s payroll. In a split decision, the ARB remanded, finding that the ALJ failed to apply the correct legal standard.
The ARB began by outlining the legal background to the H-2A program. The statute and regulations mandate that the hiring of H-2A workers “not adversely affect the wages . . . of workers in the United States similarly employed.” 8 U.S.C. § 1188(a)(1); 20 C.F.R. § 655.100(a). The regulations require that employers pay their H-2A employees at the AEWR. 20 C.F.R. § 655.120(a). The regulations also require that U.S. employees be paid the AEWR for performing the same tasks. 20 C.F.R. § 655.122(a). The regulations contemplate the possibility of “[j]oint employment [w]here two or more employers each have sufficient definitional indicia of being an employer to be considered the employer” of a particular worker. 20 C.F.R. § 655.103(b).
Factual and Procedural Background
The factual background to the case is too complex to capture adequately in a casenote. In brief, LMS had a history of hiring both H-21 and U.S. workers. LMS’s owner’s daughter worked for LMS for about 20 years in various capacities, including handling of H-2A paperwork in 2009. In 2010, the daughter established and incorporated Seasonal Ag. LMS’s owner assisted her daughter in obtaining contracts for Seasonal Ag. In 2010 and 2011, Seasonal Ag participated in the H-2A program, while LMS only hired U.S. workers. Seasonal Ag paid all workers the AEWR—both H-2A and U.S.. LMS paid its U.S. workers less than the AEWR. The record indicated that there was some blurring of the operations. Workers told Wage and Hour Division (“WHD”) investigators that they were not broken into separate crews. Workers had varying understandings of who was in charge, who tracked hours, and where their paychecks came from. Many workers believed that LMS’s owner was their boss.
The WHD began a “directed” investigation of Seasonal Ag in 2011, and found several regulatory violations. The WHD determined that Seasonal Ag and LMS were joint employers of both the H-2A and the U.S. workers, and that 142 U.S. workers on LMS’s payroll were paid less than the AEWR. The WHD concluded that Seasonal Ag owed $82,969.57 in back wages to those 142 U.S. workers on LMS’s payroll, and assessed $127,800 in civil money penalties, based on $900 for each of the 142 U.S. workers. As noted above, the ALJ found after a hearing that Seasonal Ag and LMS were not joint employers. The WHD Administrator petitioned for ARB review. Seasonal Ag did not file an opposition appellate brief.
The ARB Decision; Common Law of Agency Test Applies
The ARB’s essential holding was that Seasonal Ag must pay the AEWR to all of its “employees” as the term “employee” is understood under the common law of agency. The ARB found that if Seasonal Ag was an employer of any of the workers on LMS’s payroll, then it was liable for paying those workers at the AEWR. The ARB reviewed the regulatory text and regulatory history and found that DOL had consciously changed from a “suffer or permit to work” standard to the common law of agency standard effective January 2009, and had reaffirmed that change in March 2010. The regulations and caselaw provide an non-exhaustive list of factors to consider under the common law test. The ARB rejected other tests, such as the employer-employee relationship test from the FLSA that had been used in the past in H-2A cases. The ARB summarized by stating “to determine whether a ‘joint employment’ relationship exists between Seasonal Ag and LMS with respect to the 142 U.S. workers on LMS’s payroll requires consideration of whether Seasonal Ag has ‘sufficient definitional indicia of being an employer,’ where the relevant indicia are determined ‘under the general common law of agency.’” USDOL/OALJ Reporter at 17.
The ALJ had focused on two factors in concluding that LMS and Seasonal Ag were not joint employers: (1) the fact that Seasonal Ag paid its U.S. workers the AEWR undermined a claim of collusion to avoid paying LMS’s U.S. workers the AEWR, and (2) the two companies were formally separate entities with separate workers’ compensation policies and separate hiring and firing functions. The ARB found that this was error because the ALJ failed to consider the common law of agency factors. Moreover, the ARB found no requirement of collusion. The ARB stated: “Finally, the ALJ failed to focus on the crucial aspect of the question, which is whether the 142 U.S. workers on LMS’s payroll were ‘employees’ of Seasonal Ag, not whether Seasonal Ag and LMS were ‘joint employers’ in some abstract sense of that term. It is only Seasonal Ag, not LMS, whose actions are at issue here.” Id . at 18. The ARB noted that the WHD Administrator had not argued that the common law of agency was the proper test while the case was before the ALJ, wrongly arguing instead that the FLSA test applied. Thus, the ARB remanded for the ALJ to analyze the question under the proper legal standard.
Judge Brown wrote separately to further explain DOL’s decision to embrace of the common law of agency test. Judge Brown emphasized that Seasonal Ag need not have the same amount or degree of indicia of being an employer of LMS’s employees as LMS may have; rather, Seasonal Ag need only be shown to have “sufficient” indicia.
Judge Corchado dissented, stating that he “completely oppose[s] a reversal of the ALJ’s order.” Id . at 24. Judge Corchado pointed out that neither the statute nor the regulations contained a definition of “joint employer” helpful for the common business person, and that the caselaw only listed relevant factors. The tests are in his view so ambiguous and flexible that the ARB should analyze cautiously whether the ALJ committed reversible error. Judge Corchado pointed out that the WHD had not explained its basis for the “directed investigation.” Judge Corchado pointed out that the WHD had argued the four factor FLSA test before the ALJ, and now wanted a second chance to have the ALJ consider additional factors. Judge Corchado concluded that this was futile because the ALJ had already made determinations on major factual issues that collectively weighed heavily against joint employer status. Judge Corchado also stated that the Administrator’s evidence was largely based on hearsay. Judge Corchado conceded that H-2A appeals are not subject to a substantial evidence level of review, but argued that some deference should be given to the ALJ’s findings on fact issues and the ARB could adduce additional facts based on the record and the briefing of the parties.
CIVIL MONEY PENALTIES; ARB SUGGESTS THAT ALJ HAS DISCRETION TO PERMIT THE WHD TO RECONSIDER SIZE OF A CMP WHERE EVIDENCE AT THE HEARING SUGGESTED THAT A LOWER PENALTY MAY BE WARRANTED
In Administrator, Wage and Hour Div. v. Seasonal AG Services, Inc. , ARB No. 15-023, ALJ No. 2014-TAE-6 (ARB Sept. 30, 2016), the WHD concluded that the Respondent owed $82,969.57 in back wages to 142 U.S. workers on another company’s payroll, and assessed $127,800 in civil money penalties, based on $900 for each of the 142 U.S. workers. The ALJ concluded that the two companies were not joint employers and that the Respondent was not liable for back wages. The ARB found, however, that the ALJ failed to apply the correct legal standard of whether the workers were the Respondent’s employees under the common law of agency, and ordered a remand for reconsideration. In the remand order, the ARB noted that the ALJ had the discretion to permit the WHD Administrator to reconsider the CMP award. The ARB noted that at the hearing, the WHD’s Assistant District Director, who had assessed the penalties, expressed some misgivings about the amount. The ARB also noted several facts that the WHD might want to consider, such as the Respondent’s owner’s lack of knowledge of how much the other company’s workers were earning; the Respondent’s financial situation; the lack of malice or willfulness; and that the Respondent was no longer in business.
Byron v. L.E.H. Laboratories
, ARB No. 14-087, ALJ No. 2014-FDA-1 (ARB Sept. 28, 2016)
Decision and Order of Remand
STATUTORY INTERPRETATION OF FSMA; ARB FIRST ATTEMPTS TO APPLY PLAIN MEANING OF STATUTE, BUT MAY NEED TO USE RULES OF STATUORY INTERPRETATION; WHISTLEBLOWER PROVISION MUST BE APPLIED IN CONTEXT AND IN LIGHT OF WHOLE STATUTE, AND THUS ARB CAUTIOUSLY APPLIES MAXIMS THAT (1) WHEN CONGRESS INCLUDES SOME CLASSIFICATIONS IN SERIES, IT DOES SO TO THE EXCLUSION OF OTHERS, AND (2) WORDS ARE KNOWN BY THEIR ASSOCIATES OR ACCOMPANYING WORDS
In Byron v. L.E.H. Laboratories , ARB No. 14-087, ALJ No. 2014-FDA-1 (ARB Sept. 28, 2016), the Complainant filed a retaliation complaint under Section 402 of the Food Safety and Modernization Act of 2011 (FSMA). The ALJ granted the Respondent’s motion for summary decision on the sole ground that the FSMA whistleblower provision does not cover companies, such as the Respondent, engaged in testing samples of food. On appeal, the ARB acknowledged the ALJ’s commendable analysis, and that the statue was murky on the question, but concluded that Congress intended whistleblower protection to apply to the Respondent because it performed the testing in question on samples of food to detect threats to public safety arising during the manufacturing, processing, or importation process. The ARB also found that Section 402 covers the Respondent’s testing in this case because it performed the tests as an accredited and regulated entity.
The Respondent operated an accredited food testing laboratory. It performed microbial testing under contracts with food manufacturers, processors, and importers using representative food samples from food lots and from detained food shipments. The food samples may not have been intended for consumption, but the food lots and shipments from which they come were. In the instant case, the Complainant raised concerns about the Respondent’s salmonella testing method. During a phone call with the CEO, the Complainant asked for an update, and the CEO terminated his employment. The Complainant filed a retaliation complaint with OSHA, which denied the complaint. Prior to hearing, the ALJ found that the Respondent was not a covered entity under the FMSA, and dismissed the claim. The ALJ’s dismissal was based on his conclusion that Congress deliberately chose not to include “testing” within the FSMA coverage.
The ARB began its analysis by reviewing how it would conduct interpretation of the statute:
In applying any statute, like the courts, “our task is to give effect to the will of Congress.” Understanding Congressional intent begins with the statute, and we attempt to apply the plain meaning of the words used. Some rules of statutory interpretation serve as aids to finding Congressional intent. Importantly, the whistleblower provision must be applied in context and in light of the whole statute. Often courts assume that, when Congress includes some classifications in a series, it does so to the exclusion of others. In a similar vein, courts also often follow the maxim that words are known by their associates or accompanying words. We keep these principles in mind, but cautiously, as we attempt to decipher what Congress intended in making the whistleblower statute applicable to entities “engaged in manufacturing, processing, importing” or any other of the eight stages of moving food in the commerce chain.
USDOL/OALJ Reporter at 6 (footnotes omitted). The ARB thus reviewed to the FSMA’s focus as a whole– which is essentially detecting and responding to food safety problems. The ARB looked at the FSMA’s Titles and concluded that Congress viewed “testing” as part of eight stages of food movement and not a separate category. The ARB noted that the whistleblower provision was placed in the last Title as a miscellaneous provision, and had used broad terms throughout the whistleblower provision demonstrating intent to create broad coverage. The ARB concluded: “In passing FSMA, Congress viewed ‘testing’ food as it moved through the food commerce chain as ‘engaging in’ or participating in manufacturing, processing, and/or importation of food.” Id . at 9-10 (footnote omitted). The ARB observed that this conclusion comported with the principle that whistleblower provisions should be liberally interpreted.
The ARB found hyper-technical and unjustified the Respondent’s argument that it was not covered under the FSMA whistleblower provision because the samples were discarded and therefore not food intended for public consumption. The ARB found that the meaning of food includes test samples of food. The ARB was not persuaded by a proffered distinction by the Respondent that in-house testing is protected, but third-party testing is not.
In sum, the ARB concluded “that Section 402 covers [the Respondent] in this case because the testing in question was performed on samples of food to detect public health threats arising during the manufacturing, processing or importation process. In addition, Section 402 covers [the Respondent]’s testing in this case because it performed these tests as an accredited and regulated entity.” Id . at 11.
Judge Brown wrote a concurrence in which he addressed statutory interpretation in more detail.
Interstate Rock Products, Inc.
, ARB No. 15-025, ALJ No. 2013-DBA-10 (ARB Sept. 27, 2016)
Final Decision and Order
The ARB affirmed the ALJ's decision to debar the federal construction contractor, and three named corporate officers for intentionally disregarding their obligations under the Davis-Bacon Act.
Cain v. BNSF Railway Co.
, ARB No. 13-006, ALJ No. 2012-FRS-19 (ARB Sept. 15, 2016)
Order Vacating Order of Remand and Approving Settlement
- PDF (slip opinion)
The ARB had issued an order of remand to the ALJ for factfinding on the question of punitive damages pursuant to the 10th Circuit's decision in BNSF Railway Co. v. ARB , 816 F.3d 628 (10th Cir. 2016). The ARB's remand order, however, was issued prior to the 10th Circuit issuance of a mandate order. The parties filed a motion requesting that the Board re-issue the remand order after the mandate was issued on the ground that the earlier remand order had been issued prematurely. While that motion was pending, the parties submitted a motion to approve a settlement agreement. The ARB vacated its earlier order of remand, reviewed and approved the settlement agreement, and dismissed the complaint with prejudice.
Armstrong v. Flowserve US, Inc.
, ARB No. 14-023, ALJ No. 2012-ERA-17 (ARB Sept. 14, 2016)
Decision and Order of Remand
[Nuclear and Environmental Digest VII C 1]
SUMMARY DECISION STANDARD IS DIFFICULT TO MEET IN EMPLOYMENT DISCRIMINATION CASES, ESPECIALLY ON ISSUE OF CAUSATION
EVIDENCE RAISING INFERENCES OF TEMPORAL PROXIMITY AND RETALIATORY MOTIVE, AND EVIDENCE OF PRETEXT FOUND TO BE SUFFICIENT AT SUMMARY DECISION STAGE TO DEFEAT RESPONDENT’S EVIDENCE OF LEGITIMATE NON-DISCRIMINATORY REASONS FOR THE ADVERSE ACTION
COMPLAINANT’S OWN AFFIDAVIT, ALTHOUGH IT MAY BE SELF-SERVING, IS SUFFICIENT TO SUPPORT OR DEFEAT SUMMARY DECISION
In Armstrong v. Flowserve US, Inc. , ARB No. 14-023, ALJ No. 2012-ERA-17 (ARB Sept. 14, 2016), the ALJ had granted summary decision in favor of the Respondent on the Complainant’s ERA complaint on the ground that the Complainant failed to establish the existence of a genuine issue of a material fact on the question of whether protected activity was a contributing factor to the adverse employment action. The ARB reversed and remanded for an evidentiary hearing, finding that the Complainant had raised genuine issues of fact precluding summary judgment. One member of the ARB panel concurred in the result only.
Standard for summary decision; employment discrimination cases unlikely to be appropriate for summary decision, especially on causation issues
The ARB reviewed the law governing summary decision in employment discrimination cases, noting that summary decision on causation issues are particularly unlikely to be appropriate for summary decision:
An ALJ may enter summary judgment for a party if the evidence submitted shows that there is no genuine issue as to any material fact. The burden of producing evidence on summary decision “is not onerous and should preclude [an evidentiary hearing] only where the record is devoid of evidence that could reasonably be construed to support the [complainant’ s] claim.” Drawing from the federal law pertaining to summary judgment motions in federal court, we adopt the principle that a “genuine issue” exists if a fair-minded fact-finder (the ALJ in whistleblower cases) could rule for the nonmoving party after hearing all the evidence, recognizing that in hearings, testimony is tested by cross-examination and amplified by exhibits and presumably more context.
Summary decisions are difficult in “employment discrimination cases, where intent and credibility are crucial issues.” And summary decision on the issue of causation is even more difficult in ERA whistleblower cases where Congress made it “easier for whistleblowers to prevail in their discrimination suits,” requiring only that the complainant prove that his protected activity was “a contributory factor” rather than the more demanding causation standards like “motivating factor,” “substantial factor,” or “but for” (determinative factor) causation. Because direct evidence of retaliation is rare, complainants may rely on circumstantial evidence to prove that protected activity contributed to the unfavorable employment action in question. Even where a respondent asserts legitimate, non-discriminatory reasons for its actions, a complainant can create a genuine issue of fact by pointing to specific facts or evidence that, if believed, could (1) discredit the respondent’s reasons or (2) show that the protected activity was also a contributing factor even if the respondent’s reasons are true. Further, it is not enough for Flowserve to point to evidence showing that Armstrong’s conduct violated company policy and constituted a legitimate basis upon which to fire him. Rather, Flowserve must show clearly and convincingly that Armstrong “would have” been fired- not simply that he “could have” been fired-in the absence of his protected activity.
At the summary decision stage, a complainant need not prove causation by a preponderance of the evidence, but need only produce admissible evidence sufficient to raise the inference that the protected activity was a contributing factor in the adverse action. Causation may be inferred from timing alone where an adverse action closely follows protected activity.
Slip op. at 6-7 (footnotes omitted). In the instant case, the ARB found that the ALJ had failed to credit the inference of causation arising from the close temporal proximity of the protected activity to the adverse actions, and failed “to favorably view material evidence and reasonable inferences therefrom, of the nature of the protected activity and the evolution of the unfavorable personnel action.” Id . at 7-8 (footnote omitted).
At summary decision stage, complainant may meet contributory causation burden of proof, even in the face of evidence of lawful reasons for the unfavorable employment action; temporal proximity may be sufficient to raise inference of causation, and temporal proximity plus knowledge of the protected activity by deciding officials raises an even stronger inference
The ARB explained why a respondent’s proffer of evidence of legitimate business reasons for the adverse employment action is generally insufficient at the summary decision stage to nullify a complainant’s evidence of contributory factor (such as evidence of temporal proximity and knowledge by deciding officials of the protected activity).
Although the ALJ properly recognized that this evidence of close temporal proximity raised an inference of causation, he proceeded to improperly discount the evidence in light of Respondent’s proffer of evidence of legitimate business reasons. However, in a motion for summary decision, an employer cannot nullify the complainant’s evidence of contributory factor by simply presenting an independent lawful reason for the unfavorable employment action. As we have explained in prior cases:
The complainant’s burden of proving contributory causation may be met notwithstanding the existence of evidence demonstrating that the employer also had a legitimate reason for the unfavorable employment action taken against the employee. Because under the ‘contributing factor’ burden of proof standard a complainant is not required to prove that his protected activity was the only or the most significant reason for any adverse action taken against him, it is enough that the complainant establish that the protected activity affected in any way the adverse action at issue notwithstanding other factors cited by an employer in defense of its action.
And at the summary decision stage, a complainant need only produce admissible evidence sufficient to raise the inference that the protected activity was a contributing factor in the adverse action. It is well established under ERA and similar statutes that causation may be inferred from timing alone where an adverse action closely follows protected activity. Here, undisputed facts in the record established not only close temporal proximity but also knowledge by the deciding officials. Evidence of close temporal proximity plus knowledge raises an even stronger inference of causation than temporal proximity alone, and such evidence is widely recognized as sufficiently probative of a causal link to withstand summary decision. As the Sixth Circuit stated in the context of the Age Discrimination in Employment Act standard for proving causation (higher than that of ERA): “[w]here an adverse employment action occurs very close in time after an employer learns of a protected activity, such temporal proximity between the events is significant enough to constitute evidence of a causal connection for the purposes of satisfying a prima facie case of retaliation.”
Slip op. at 9-10 (footnotes omitted) (emphasis as in original).
Motive evidence; possibility that complainant’s allegations irritated managers, and fact that Complainant took concerns to the NRC, found sufficient to raise issue of genuine issues of material fact pertaining to causation
In the instant case, the Complainant had expressed concerns about defects in a discharge spacer on a pump that the Respondent was producing, and although the part had passed testing by another employee certified to conduct the test, the Complainant remained concerned, and expressed additional concerns in the context of a “NRC Part-21 meeting” (i.e., a meeting about the company’s obligation to inform the NRC of safety violations). The ARB found that the ALJ had failed in ruling on the summary decision motion to consider the possible significance of this meeting. The ARB found the record included the allegation that the Complainant had indicated in the meeting that he would be raising his concerns with the NRC. A Respondent’s exhibit included a statement of what the Complainant purportedly told the NRC. The ARB found this sufficient circumstantial evidence to prevent a grant of summary decision. The ARB stated:
Armstrong’s repeated concerns about the spacer had the potential to slow production and, though the part was ultimately shipped, Armstrong’s criticism of that decision, as well as his allegations of improper testing of the part, may have irritated his managers. Given that evidence suggests that Armstrong, dissatisfied with Flowserve’s response, took his safety complaints to the regulating agency, a factfinder could reasonably infer that Flowserve had a motive to retaliate against Armstrong, and again, reviewing the evidence de novo, we so conclude. Accordingly, he raised genuine issues of material fact pertaining to causation that preclude summary decision on that element.
Slip op. at 11 (footnotes omitted).
Pretext/Legitimate business reasons
The ARB also found that the Complainant presented evidence of pretext relating to the Respondent’s proffer of legitimate business reasons for the adverse action. The Complainant presented claims of being treated differently after raising the safety concerns. The ALJ declined to credit the Complainant’s disparate treatment testimony, but the ARB cited authority for the proposition that a “‘party’s own affidavit, containing relevant information of which he has first-hand knowledge, may be self-serving, but it is nonetheless competent to support or defeat summary judgment.’ Santiago-Ramos v. Centennial P.R. Wireless Corp. , 217 F.3d 46, 53 (1st Cir. 2000).” Slip op. at n.47. See also id . at 13.
The ARB proceeded to discuss a respondent’s difficult burden of establishing its affirmative defense of clear and convincing evidence that it would have taken the same unfavorable personnel action" in the absence of the protected activity. It then returned to why evidence of pretext was important in relation to a motion for summary decision, even though it is not a complainant’s burden to establish pretext:
Armstrong’s evidence of pretext provides additional support for an inference of retaliatory intent or motive. A complainant is not required to prove either pretext or retaliatory motive to prevail under the ERA. But a proffer of such evidence is sufficient to preclude summary judgment in a respondent’s favor, since evidence of pretext creates a genuine issue of disputed fact regarding the legitimacy of respondent’s reasons for discipline. Even in the context of Title VII—where a plaintiff’s burden is higher and a defendant’s burden is lower than under ERA—most circuits have held that evidence of pretext compels the denial of a defendant’s motion for summary judgment. As one commentator explained:
When the plaintiff has proof of pretext, there are always unresolved questions regarding the employer’s actual motive .... This inference (from evidence that purported legitimate reason is false) permits a plaintiff to prevail on the merits solely on the basis of evidence establishing pretext. At the summary judgment stage this is tantamount to a compulsory inference. The circuits that require evidence beyond proof of pretext are not drawing ‘all justifiable inference’ in the nonmovant’s favor.
Slip op. at 15-16 (footnotes omitted) (quoting Leland Ware, Inferring Intent from Proof of Pretext; Resolving the Summary Judgment Confusion in Employment Discrimination Cases Alleging Disparate Treatment , 4 EMPLOYEE RTS. & EMP. POL’Y J. 37, 71 (2000)).
Administrator, Wage and Hour Div., USDOL v. John Peroulis and Sons Sheep, Inc.
, ARB Nos. 14-076 and -077, ALJ No. 2012-TAE-4 (ARB Sept. 12, 2016)
Final Decision and Order
H-2A SHEEPHERDERS; UNCONSTITUTIONAL, INVALID, OR EXPIRED RULES AND REGULATIONS
In Administrator, Wage and Hour Div., USDOL v. John Peroulis and Sons Sheep, Inc. , ARB Nos. 14-076 and -077, ALJ No. 2012-TAE-4 (ARB Sept. 12, 2016), the ALJ had affirmed, with modification, WHD civil money penalties (CMP) under the H-2A regulations for several categories of violations. The assessments differed by contract according to which CMP rules applied. For contracts before the 2008 Rules went into effect, the DOL applied the “1987 Rules.” 52 Fed. Reg. 20,496. For contracts after the 2008 H-2A regulations went into effect on December 2008, the “2008 Rules” applied. 73 Fed. Reg. 77, 110. The 1987 Rules had a $1,000 cap on CMPs, while the 2008 Rules had a $5,000 CMP cap. Amendments to the H-2A regulations in 2015, 80 Fed. Reg. 62,957 (Oct. 16, 2015), did not affect the instant proceeding.
ARB lacks authority to rule on validity of regulations
On appeal, the Respondent argued that Congress did not delegate power to the DOL to enforce the 1987 or 2008 regulations or to issue CMPs. The Respondent argued that the DOL cannot enforce state contract law in a non-Article III court such as DOL’s administrative tribunals. The ARB, however, ruled that it “is not permitted to rule on the validity of DOL regulations. Thunder Basin Coal Co. v. Reich , 510 U.S. 200, 215 (1994); Secretary’s Order 02-2012, 77 Fed. Reg. 69,378 (Nov. 16, 2012) (‘The Board shall not have jurisdiction to pass on the validity of any portion of the Code of Federal Regulations that has been duly promulgated by the Department of Labor and shall observe the provisions thereof, where pertinent, in its decisions.’).”
Fact that Field Memorandum was substantive and issued with Notice and Comment rulemaking; ARB uncertain of its authority to review this contention, but agreed with the Administrator that certain APA violations do not require enjoining of use of rule
The Respondent also argued that Field Memorandum 24-01 is invalid because the DOL did not issue it following a period of notice and comment. Some of the violations at issue were based on that Field Memorandum, which involves mobile or range housing requirements. Employment Training Administration (ETA) Training and Employment Guidance Letter (TEGL or Field Memorandum) 24-01. The ARB observed that “[i]n Mendoza v. Perez , 754 F.3d 1009, 1020-25 (D.C. Cir. 2014), the court reviewed two field memoranda, one of which was Field Memorandum 32-10 that superseded Field Memorandum 24-01. The court declared that the field memoranda were substantive and promulgated as part of the legislative authority delegated to the DOL. Mendoza , 754 F.3d at 1021-25. The APA requires that substantive rules receive notice and comment before publication. 5 U.S.C.A. § 552(a)(l)(D). The field memoranda discussed in Mendoza were not issued with notice and comment.”
Here, the Respondent argued that Field Memorandum 24-01 at issue is likewise invalid, being substantive but not issued with notice and comment. The Administrator argued that “not all APA violations result in enjoining the use of the rule or regulation,” and noted that the court in Mendoza did not invalidate Field Memorandum 32-10, but remanded the case to the district court to craft a proper remedy. The ARB stated: “The district court, on remand, accepted a schedule for the DOL to redo the notice and comment period for the challenged Field Memorandum, 32-10. The district court commented that the absence of notice and comment required vacatur but held that vacatur would occur upon the effective date of the new Field Memorandum complying with notice and comment. Mendoza v. Perez , 72 F. Supp. 3d 168, 175 (D.D.C. 2014) (district court on remand).”
The ARB stated its authority to rule on the validity of the Field Memorandum 24-01 was uncertain, but that even if it entertained the Respondent’s contention, “the courts in deciding Mendoza did not rule the Memorandum invalid, they merely ordered the DOL to cure the deficiency before vacatur. Therefore, we reject Peroulis ’s challenges to the Field Memorandum based on the Mendoza litigation.”
Expiration date on Field Memorandum of no consequence where WHD continued to follow it beyond expiration date and Respondent had agreed to comply with it
The Respondent also argued that Field Memorandum 24-01 had expired, having been issued in 2001 but containing an August 31, 2003 expiration date. The ARB, however, noted that a WHD investigator had stated in an affidavit that the WHD continued to use the Memorandum beyond the expiration date. The ARB also noted that the Memorandum was “included in the ETA procedures that Peroulis agreed to comply with.” Thus, the ARB agreed with the Administrator that “the continued use of the Field Memorandum obviates the argument that the Field Memorandum had expired for purposes of the Peroulis contract.”
H-2A SHEEPHERDERS; APPLICATION OF 1987 OR 2008 RULES; DOL HAD RECOGNIZED INJUNCTION OF SUSPENSION OF 2008 RULES NATIONWIDE PRIOR TO CONTRACT AT ISSUE
In Administrator, Wage and Hour Div., USDOL v. John Peroulis and Sons Sheep, Inc. , ARB Nos. 14-076 and -077, ALJ No. 2012-TAE-4 (ARB Sept. 12, 2016), the ALJ had affirmed, in part, WHD civil money penalties (CMPs) under the H-2A regulations for several categories of violations. The assessments differed by contract according to which CMP rules applied. For contracts before the 2008 Rules went into effect, the DOL applied the “1987 Rules.” 52 Fed. Reg. 20,496. For contracts after the 2008 H-2A regulations went into effect on December 2008, the “2008 Rules” applied. 73 Fed. Reg. 77, 110. The 1987 Rules had a $1,000 cap on CMPs; the 2008 Rules had a $5,000 CMP cap. Amendments to the H-2A regulations in 2015, 80 Fed. Reg. 62,957 (Oct. 16, 2015), did not affect the instant proceeding.
The ALJ held that the 1987 Rules applied to Contract One and the 2008 Rules applied to Contract Two. The Respondent argued on appeal that the 1987 Rules were in effect for both Contracts. As background, the 2008 Rules became effective on January 17, 2009. 73 Fed. Reg. 77,110. The DOL attempted to suspend the 2008 Rules in May 2009, 74 Fed. Reg. 25,972. A growers association, however, obtained an injunction of the suspension of the 2008 Rules from a district court on June 29, 2009, and the DOL recognized the injunction on the same day.
The Respondent contended that the 2009 suspension of the 2008 rules, if applicable, would have reinstated the 1987 Rules for a period of nine months, which would overlap with Contract Two, it having been filed in August 2009 and begun in October 2009. The Respondent further argued that the injunction was issued in the 4th Circuit, while this case would be under the jurisdiction of the 10th Circuit.
The ARB was not persuaded by the Respondent’s arguments because Contract Two began in October 2009, while the injunction was issued in May 2009, and DOL had recognized the injunction on a nationwide basis in late June 2009.
H-2A SHEEPHERDERS WHO WERE DOUBLED UP IN MOBILE HOUSING IN THE WINTER IN VIOLATION OF FIELD MEMORANDUM 24-01; ALJ MAY REVIEW CIVIL MONEY PENALTY FACTORS DE NOVO
In Administrator, Wage and Hour Div., USDOL v. John Peroulis and Sons Sheep, Inc. , ARB Nos. 14-076 and -077, ALJ No. 2012-TAE-4 (ARB Sept. 12, 2016), the Respondent engaged H-2A workers for various sheep-raising services in northwestern Colorado. A Wage and Hour Division investigation resulted in findings of several categories of violations, one of which involved mobile or range housing requirements established by a 2001 Employment Training Administration (ETA) Training and Employment Guidance Letter (TEGL or Field Memorandum) 24-01. In accordance with Field Memorandum 24-01, the Respondent had certified that it would house only one worker per mobile wagon for those mobile wagons certified for only one person. The WHD imposed civil money penalties because the Respondent had housed two individuals per mobile unit in the winter.
Before the ALJ, the Respondent justified housing two individuals per mobile unit in the winter on the ground that it was safer because it would be warmer. The ALJ remanded for the WHD to consider this new argument. On remand, the WHD determined that the Respondent’s attestation of compliance but simultaneous violation of the mobile housing rules was “willful and worthy of the highest CMPs.” The WHD determined that the Respondent had been financially motivated.
When the matter was returned to the ALJ, the Respondent presented a letter from an association claiming that sharing mobile housing in the winter was safe and well established. The ALJ considered the Respondent’s evidence supporting its justification for doubling up workers and found that the reasons were not wholly cost-driven and that the practice was common in the industry. Specifically, “[d]uring the winter months, the workers need to move the sheep to different camp sites. Two workers are needed during the winter: one to move and tend the sheep; the other to melt water and tend the camp and horses. Trucks are not always able to reach the mobile camp site due to snow, so the workers rely on horses. Horses can pull a single wagon but not a double unit.” Notwithstanding the willful violation, the ALJ determined that the Respondent’s reasons for assigning workers to a single unit warranted mitigation. The ALJ thus reduced the CMPs by one-third.
The Administrator asked the ALJ for reconsideration, arguing that the ALJ under the wrong standard. The ALJ explained, however, that he reviewed the CMPs de novo because he was considering evidence not presented to WHD. The ALJ applied an abuse of discretion standard to the WHD’s interpretation of the regulations but a de novo review standard as to whether the evidence warranted mitigation of the CMPs.
On appeal, the ARB found that “the ALJ did not err in reviewing the CMP factors de novo. Parties have the right to a de novo hearing before the ALJ. 29 C.F.R. § 501.41(b). A party may file an objection that triggers an Order of Reference to the Office of ALJs and gives the objecting party an opportunity to have a hearing with the ALJ. A copy of WHD’s assessment is attached to the Order of Reference, which becomes akin to a complaint before the ALJ. Section 501.41 provides that the ALJ may alter or amend the WHD’s assessment.” Slip op. at 8-9 (footnote omitted).
The Administrator cited Peter’s Fine Greek Food , ARB 14-003b, ALJ Nos. 2011-TNE-002, 2012-PED-001 (ARB Sept. 17, 2014), the H-1B regulations at issue in that case being identical or nearly identical to the H-2A regulations at issue in the instant appeal. In that case, the ALJ reduced the CMP from $10,000 to $1,000, and the ARB reversed on the ground that the ALJ’s reasoning did not support the reduction. The ARB did not find citation to Peter’s Fine Greek Foods persuasive because in that decision the ARB had worked within the ALJ’s analysis to find error, and did not state that the ALJ should defer to WHD’s factual findings.
The ARB then turned to the Administrator’s argument that the weight of several factors supported the full CMP assessment and that the ALJ erred in reducing the assessment by one-third. The ARB, noted that the ALJ had acknowledged the WHD’s points but felt the evidence warranted reduction of the CMPs. The ARB found no error by the ALJ on the facts of the case. The ARB noted that the ALJ had not dismissed the CMPs, but only reduced them.
Raye v. Pan Am Railways, Inc.
, ARB No. 14-074, ALJ No. 2013-FRS-84 (ARB Sept. 8, 2016)
Final Decision and Order
ABUSE OF DISCRETION STANDARD OF REVIEW ON AMOUNT OF PUNITIVE DAMAGES AWARD
The ARB employs an abuse of discretion standard for review on the amount of a punitive damages award in an FRSA case. Raye v. Pan Am Railways, Inc. , ARB No. 14-074, ALJ No. 2013-FRS-84 (ARB Sept. 8, 2016), slip op. at 2 and n.5. The ARB, however, noted that the standard of review is different for constitutional challenges. Id . at n.37.
FILING OF INTERNAL CHARGE OF DISHONESTY WHERE FRSA COMPLAINT CONTAINED A FACTUAL ALLEGATION INCONSISTENT WITH THE COMPLAINANT’S STATEMENTS DURING INTERNAL INVESTIGATION; RESPONDENT’S AFFIRMATIVE DEFENSE THAT IT WOULD HAVE TAKEN THE SAME ACTION ABSENT PROTECTED ACTIVITY; COMPARATOR EVIDENCE FOUND INSUFFICIENT
In Raye v. Pan Am Railways, Inc. , ARB No. 14-074, ALJ No. 2013-FRS-84 (ARB Sept. 8, 2016), the Complainant stumbled, but did not fall, after stepping off a boxcar onto some railroad ties, and consequently injured his left ankle. Three weeks earlier, the Complainant had reported these railroad ties as a hazard to his manager. The Respondent charged the Complainant with violation of a rule requiring employees to be assured of firm footing before they step down from a train. At the Respondent’s investigatory hearing, the Complainant stated that he stumbled but did not fall. The Complainant received a reprimand, upon which the Complainant filed a FRSA complaint, drafted entirely by the Complainant’s counsel, which was consistent with the Complainant’s account, except that it stated that the Complainant “fell heavily to the ground.” The Respondent concluded that the statement about a fall was a major discrepancy and charged the Complainant with providing false statements and acts of insubordination, hostility, or willful disregard of the Company’s interests, sufficient as cause for dismissal. The Complainant then amended his FRSA complaint to allege that the Respondent discriminated against him for filing his FRSA complaint. The Respondent conducted an investigatory hearing on this new charge, but did not take any disciplinary action against the Complainant because it found the attorney had added the language in the FRSA complaint about a fall without the Complainant’s approval.
OSHA found no violation with respect to the Complainant’s reports of a safety hazard and workplace injury, but found reasonable cause to find that the Respondent retaliated for the filing of the FRSA complaint. The Respondent requested an ALJ hearing. The ALJ found that the Respondent violated FRSA.
On appeal to the ARB, the Respondent challenged whether substantial evidence supported the ALJ’s finding that the Respondent failed to prove its affirmative defense by clear and convincing evidence that it would have taken the same action absent the protected activity.
Comparator evidence insufficiently corroborated and distinguishable; lack of credibility of need for second disciplinary hearing
The Respondent had contended that it had charged other employees in the past for dishonesty comparable to that alleged against the Complainant. The ALJ rejected this contention, noting the lack of corroborating evidence for meaningfully comparing the false statements involved in the two offered examples with the statements made by the Complainant. The ALJ further noted that the testimony of the two comparator employees was completely at odds to the evidence in those cases, while the Complainant’s statement was mostly consistent. The ALJ found that the allegation in the FRSA complaint that the Complainant had fallen was a discrepancy that did not rise to the level of the false statements involved in the other two cases. The ALJ also distinguished the comparator cases on the ground that the false statements there were made in the process of the Respondent’s internal disciplinary process, while here, the Respondent charged the Complainant with false statements made in a complaint filed with a federal agency that was, itself, FRSA-protected activity. After analyzing all relevant evidence, the ALJ rejected the Respondent’s affirmative defense, concluding that “the only conceivable reason” for the internal charges about the statements in the FRSA complaint was “to intimidate the complainant and discourage [the Complainant] from engaging in protected activity.”
The ARB affirmed the ALJ’s determination as supported by substantial evidence, citing the very high burden a respondent bears on the affirmative defense stage of a FRSA case, and the thoroughness of the ALJ’s examination of the evidence. The ARB stated that it was significant that the ALJ did not believe the Respondent’s justification that the second disciplinary hearing was necessary to clarify how the injury occurred, given that the charging letter made no mention of a need to clarify the injury but only charged the Complainant with rule violations and subjected the Complainant to possible termination.
PUNITIVE DAMAGES; ALJ DID NOT ABUSE HIS DISCRETION IN AWARDING STATUTORY MAXIMUM PUNITIVE DAMAGES UNDER THE FRSA, EVEN THOUGH THE HARM TO THE COMPLAINANT HAD BEEN LIMITED, WHERE THE ALJ DETERMINED THAT THE AMOUNT WAS NECESSARY TO PUNISH AND DETER FUTURE CONDUCT
In Raye v. Pan Am Railways, Inc. , ARB No. 14-074, ALJ No. 2013-FRS-84 (ARB Sept. 8, 2016), the Complainant stumbled, but did not fall, after stepping off a boxcar onto some railroad ties, and consequently injured his left ankle. Three weeks earlier, the Complainant had reported these railroad ties as a hazard to his manager. The Respondent charged the Complainant with a violation of a rule requiring employees to be assured of firm footing before they step down from a train. At the investigatory hearing, the Complainant stated that he stumbled but did not fall. The Complainant received a reprimand, upon which the Complainant filed a FRSA complaint, drafted entirely by the Complainant’s counsel, which was consistent with the Complainant’s account except that it stated that the Complainant “fell heavily to the ground.” The Respondent concluded that the statement about a fall was a major discrepancy and charged the Complainant with providing false statements and acts of insubordination, hostility, or willful disregard of the Company’s interests, sufficient as cause for dismissal. The Complainant then amended his FRSA complaint to allege that the Respondent discriminated against him for filing his FRSA complaint. After the investigatory hearing on this new charge, the Respondent did not take any disciplinary action against the Complainant because it found the attorney had added the language in the FRSA complaint about a fall without the Complainant’s approval.
OSHA found no violation with respect to the Complainant’s reports of a safety hazard and workplace injury, but found reasonable cause to find that the Respondent retaliated for the filing of the FRSA complaint. The Respondent requested an ALJ hearing. The ALJ found that the Respondent violated FRSA, and, among other relief, awarded the statutory maximum in punitive damages of $250,000. The ALJ, using the Supreme Court’s “ State Farm guideposts,” awarded the maximum amount because he found that the Respondent intentionally violated the Complainant’s rights under the FRSA, and the award was necessary to deter similar conduct by in the future, even though t the harm suffered by the Complainant was limited because he was not formally disciplined after the second internal hearing.
In regard to whether punitive damages were appropriate, the ARB, noted that it follows the common law rule recognized by the Supreme Court in Smith v. Wade , 461 U.S. 30, 51 (1983), and found that substantial evidence of record supported the ALJ’s findings of egregious and intentional conduct warranting the award of punitive damages. In a footnote, the ARB stated: “Concerning the egregious nature of Pan Am’s conduct, it is significant to note that the ALJ found that Pan Am intentionally retaliated against Raye for engaging in quintessential protected activity under the FRSA. See 49 U.S.C.A. § 20109(a)(l), (3), (4).” Slip op. at 8, n.32 (emphasis added).
In regard to whether the amount awarded was appropriate, the ARB noted: “Punitive damages are not awarded as of right upon a finding of the requisite state of mind; rather, the question of whether to award punitive damages is in the ALJ’s discretion. An ALJ’s task, after determining that the evidence is sufficient for a punitive damages award, is to consider the amount necessary for punishment and deterrence and then to either make an award or not, based on those considerations.” Id . at 9. The ARB stated that it “reviews the amount an ALJ awards in punitive damages for an abuse of discretion.” Id . (noting, however, that the standard of review is different for constitutional challenges). The ARB then determined that the ALJ’s consideration of the Respondent’s actions in response to the injury report, even though that aspect of the complaint was not appealed by the Complainant, was harmless error:
We find that the ALJ did not abuse his discretion in determining that $250,000.00 in punitive damages was necessary in this case in furtherance of the goal of punitive damages awards to punish and deter future misconduct. This is so even though the ALJ considered, as a part of his analysis, Pan Am’s actions relating to Raye’s injury report when it was no longer a part of this case [the Complainant having not appealed OSHA’s determination that the Respondent carried its affirmative defense burden in regard to this aspect of the case]. This consideration did not change the intentional and reprehensible nature of Pan Am’s conduct in targeting Raye because he filed a FRSA complaint. Further, the ALJ did not rely on this evidence but only viewed it in context, so the error was harmless.
Id . (footnotes omitted).
The ARB also implied that the ALJ’s use of the State Farm guideposts was not reversible error:
We note that while the ALJ’s analysis of the State Farm guideposts as a part of his analysis to determine the amount to award in punitive damages was not reversible error, it was also not necessary. An ALJ’s task after determining that an award of punitive damages would be appropriate is to determine the amount necessary for punishment and deterrence-“a discretionary moral judgment.” The ALJ did not abuse his discretion in awarding $250,000.00 in punitive damages. We note that a “statutory limit on punitive damage awards strongly undermines the concerns that underlie the reluctance to award punitive damages where minimal or no compensatory damages have been awarded.”
Id . at 9-10 (footnotes omitted).