Whistleblower Digest
DISMISSALS AND WITHDRAWALS
[Last Updated May 9, 2013]
Dismissal for Cause
FEDERAL COURT DECISIONS
DISMISSAL FOR CAUSE; AUTHORITY OF FEDERAL DISTRICT COURT TO DISMISS BASED ON SPOLIATION OF EVIDENCE
In Leon v. IDX Sys. Corp. , No. 04-35983 (9th Cir. Sept. 20, 2006), the Ninth Circuit affirmed the district court's dismissal of the plaintiff's claims, including a SOX whistleblower claim, after determining that the plaintiff despoiled evidence by deleting 2,200 files from a company-owned laptop computer during the pendency of the litigation. The circuit court observed that federal courts have the inherent power to levy sanctions in response to abusive litigation practice, but before imposing the harsh sanction of dismissal should consider:
(1) the public's interest in expeditious resolution of litigation;
(2) the court's need to manage its dockets;
(3) the risk of prejudice to the party seeking sanctions;
(4) the public policy favoring disposition of cases on their merits; and
(5) the availability of less drastic sanctions.In the instant case, the plaintiff was found to have engaged in willful spoliation because he knew he had a duty to preserve all data on the laptop but intentionally deleted many files and wrote a program to write over deleted documents. The plaintiff argued that he deleted the files to protect his privacy by deleting files of a personal nature. However, the court found that such files were highly relevant to an employment discrimination claim. Because of such obvious relevance, the defendant was prejudiced by the spoliation. Lesser sanctions were not available because neither exclusion of evidence, a jury instruction, an order to compel, nor a warning by the court was applicable. The Ninth Circuit also affirmed the district court's imposition of a $65,000 monetary sanction.
ADMINISTRATIVE REVIEW BOARD DECISIONS
ALJ'S DISCRETION TO DISMISS FOR FAILURE TO PROSECUTE
In Prioleau v. Sikorsky Aircraft Corp. , ARB No. 13-002, ALJ No. 2010-SOX-3 (ARB Apr. 30, 2013), the Complainant stopped participating in the litigation after the ALJ denied his request for certification for interlocutory review of the ALJ's denial of his motion for reinstatement, and his request for a stay on the ALJ proceedings while he pursued an interlocutory appeal. The ALJ attempted twice to hold a status conference, but the Complainant did not participate. The ALJ issued an Order to Show Cause why the complaint should not be dismissed, to which the Complainant never responded. Thus, the ALJ dismissed the complaint. On appeal, the Complainant argued that his Mother had passed away several months earlier and that it had been extremely unpleasant for him when the ALJ wanted to begin litigating the case. The ARB found that the ALJ did not abuse his discretion in dismissing the Complainant's case. The ALJ had given ample notice that a stay had not be granted, and of the dates the conferences. The Complainant had not responded to the ALJ's order to show cause, even after the ARB had denied the request for an interlocutory appeal. The ARB appreciated that the death of a close family member is serious and tragic, but noted that the Complainant had been aggressively litigating the case for several months after his Mother's death, and found that the death was not sufficient reason for not participating in the ALJ conference or responding to the order to show cause.
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).
DISMISSAL FOR CAUSE; FAILURE TO COMPLY WITH ALJ'S DISCOVERY ORDERS
In Matthews v. LaBarge, Inc. , ARB No. 08-038, ALJ No. 2007-SOX-56 (ARB Nov. 26, 2008), the ALJ dismissed the complaint after the Complainant blatantly failed to comply with the ALJ's discovery orders and failed to show cause why sanctions should not be imposed. The ARB found that the ALJ had given the Complainant adequate opportunity to comply with his orders, had given him two opportunities to show cause why he should not impose sanctions, and had warned the Complainant about the consequences of failing to comply with the discovery orders. Affirming the ALJ, the ARB wrote: "'If an ALJ is to have any authority to enforce prehearing orders, and so to deter others from disregarding theses orders, sanctions such as dismissal or default judgments must be available when parties flagrantly fail to comply.' To hold otherwise would render the discovery process meaningless and vitiate an ALJ's duty to conclude cases fairly and expeditiously." Slip op. at 3, quoting Cynthia E. Aiken , BSCA No. 92-06 (July 31, 1992) (footnotes omitted).
DISMISSAL FOR CAUSE; FAILURE TO FILE OPENING BRIEF OR RESPOND ADEQUATELY TO ARB'S ORDER TO SHOW CAUSE
In Zahara v. SLM Corp. , ARB No. 08-020, ALJ No. 2006-SOX-130 (ARB Mar. 7, 2008), the ARB dismissed the Complainant's appeal where he failed to file an opening brief or to timely request an extension of time to do so, and did not adequately respond to the ARB's order to show cause. The Complainant's attorney had filed a copy of an e-mail from the Complainant in which he asserted that he had not been aware of the ARB's briefing order, and that he had recently moved to a new address. The ARB found the response insufficient because even if the Complainant had not received the briefing order, his counsel had; the Complainant was obliged to inform the Board of his change of address; and the Complainant failed to explain how he timely received notice of the order to show cause but not the briefing order.
DISMISSAL FOR FAILURE TO PROSECUTE ARB APPEAL; ALJ'S DECISION BECOMES THE DOL'S FINAL ORDER
In Riedell v. Verizon Communications , ARB No. 06-144, ALJ No. 2005-SOX-77 (ARB Sept. 28, 2007), the ARB ordered the Complainant to show cause why his complaint should not be dismissed for failure to prosecute. The Complainant notified that he did not challenge such a dismissal. The ARB construed the response as a withdrawal of objections to the ALJ's decision pursuant to 29 C.F.R. § 1980.111(c) (2007). Accordingly, the Board dismissed the appeal, and noted that the ALJ's decision had become DOL's final order in the case.
ADMINISTRATIVE LAW JUDGE DECISIONS
DISMISSAL FOR CAUSE; FAILURE TO TIMELY RESPOND TO RESPONDENT'S MOTION FOR SUMMARY DECISION
In Rowland v. National Association of Securities Dealers , 2007-SOX-6 (ALJ July 2, 2007), the ALJ dismissed the Complainant's SOX complaint for failure to timely respond to the Respondent's motion for summary decision, and for failure to respond to the ALJ's order to show cause why the complaint should not be dismissed for her failure to comply with the ALJ's orders and timely file a response to the Respondent's motions.
DISMISSAL FOR CAUSE; CONTUMACIOUS CONDUCT IN DISCOVERY
In McDaniel v. Sysco Corp. , 2005-SOX-26 (ALJ Dec. 15, 2005), the ALJ granted dismissal as a sanction where the record established that the Complainant "deliberately engaged in conduct calculated to defeat [the Respondent's] right to depose him, and to make the discovery process as costly and as frustrating to [the Respondent] as possible." In dismissing the complaint, the ALJ analyzed the factors stated by the ARB in Howick v. Campbell-Ewald Co. , 2004-STA-7 (ARB Nov. 20, 2004).
DISMISSAL FOR CAUSE; FAILURE TO PROSECUTE AND FAILURE TO COMPLY WITH THE LAWFUL ORDERS OF THE ALJ
In Townsend v. Big Dog Holdings , 2006-SOX-28 (ALJ Feb. 14, 2006), despite repeated warnings that her failure to do so would result in sanctions, including the dismissal of her case, the Complainant failed to respond to the ALJ's prehearing orders. Accordingly, the ALJ dismissed the complaint for lack of prosecution and failure to comply with the lawful orders of an administrative law judge. See 29 C.F.R. §§ 18.6(d)(2)(v) and 24.6(e)(4); Link v. Wabash Railroad Co. , 370 U.S. 626 (1962) (inherent authority of judge to manage docket). The ALJ also found that, because of her failure to participate, the Complainant failed to establish a prima facie case. Moreover, the Complainant failed to prove that she engaged in protected activity and failed to prove that the Respondent's articulated legitimate, non-discriminatory grounds for her dismissal were pretextual.
DISMISSAL FOR CAUSE; DELAYING TACTICS AND FAILURE TO TIMELY COMPLY WITH ADMINISTRATIVE RULES; MERE STATEMENT OF INTENT TO FILE IN FEDERAL COURT DOES NOT EXCUSE FAILURE TO COMPLY WITH DOL ORDERS
In States v. Fluor Corp. , 2004-SOX-71 (ALJ Mar. 10, 2006), a hearing was originally scheduled to occur in October 2004; however, the hearing was repeatedly continued based on the Complainant's unsuccessful search for an attorney to represent him, unsuccessful settlement negotiations, and the Complainant's unavailability due to incarceration in Holland. In January 2006 the Complainant submitted a letter stating that he intended to file his case in a U.S. district court. In February 2006, the Respondent filed a motion to dismiss based on the Complainant's "dubious" effort to find a new attorney, failure to comply with discovery orders, refusal to appear for a deposition, and non-compliance with the deadline for filing a pretrial statement. The ALJ found no evidence that the Complainant ever actually filed in federal district court; rather the Complainant had submitted a series of letters asserting that he was going to do so, but had been temporarily delayed. The ALJ found these letters strongly similar to his letters about trying to find an attorney, and concluded that they appeared "to be nothing more than an attempt to use the option of filing in a District Court as a means of evading the deadlines in this proceeding and further delaying the final resolution of this matter." The ALJ acknowledged that the SOX provides the right to file in district court if a case has been pending at DOL for more than 180 days, but "nothing in the Act indicates that a mere statement of an intent to file such a complaint suspends the Department of Labor proceeding or in some way excuses a complainant from complying with the procedural orders and deadlines issued by the Department's Administrative Law Judges." For these reasons, and the Complainant's failure to timely respond to the Respondent's motion to dismiss, the ALJ dismissed the complaint.
Voluntary Dismissal
FEDERAL COURT DECISIONS
VOLUNTARY DISMISSAL WITHOUT PREJUDICE; AUTHORITY OF COURT TO IMPOSE CONDITIONS
In Jones v. Smartvideo Technologies, Inc. , 1:06-CV-02760 (N.D.Ga. June 4, 2007), the Plaintiff filed a motion for voluntary dismissal without prejudice of his SOX whistleblower case. The Defendants opposed the motion, arguing that they would be prejudiced by a dismissal without prejudice. The court found no evidence of bad faith by the Plaintiff or his counsel, that the Plaintiff had not failed to properly prosecute his case, that discovery was not yet complete and no dispositive motions had been filed, and that the Defendants had not substantially prepared for trial. The court also found that mere delay was not sufficient reason to deny dismissal without prejudice. The court, however, found that the Defendant had been prejudiced in having to prepare for the Plaintiff's deposition. Accordingly, the court granted dismissal without prejudice, but ordered that if the action was refiled (and was not barred by the applicable statute of limitations or other legal prohibitions), the Plaintiff must certify to the court that he had paid the Defendant's costs and fees incurred to prepare for the deposition (in an amount approved by the court). The court gave the Plaintiff 10 days to choose to withdraw the withdrawal and to proceed with the case if he was unwilling to accept the conditions on withdrawal.
ADMINISTRATIVE REVIEW BOARD DECISIONS
WITHDRAWAL OF APPEAL TO THE ARB; ALJ'S DECISION BECOMES FINAL DECISION OF THE SECRETARY
In SOX cases, if the ARB grants a party's request to dismiss its appeal, the ALJ's decision becomes the final decision of the Secretary of Labor pursuant to 29 C.F.R. § 1980.109(c). Lowe v. Terminix International Co., L.P. , ARB No. 07-004, ALJ No. 2006-SOX-89 (ARB Aug. 23, 2007).
WITHDRAWAL OF APPEAL RESULTS IN ALJ'S DECISION BECOMING THE FINAL DECISION OF THE SECRETARY OF LABOR
In Hagman v. Washington Mutual Bank, Inc. , 2005-SOX-73 (ALJ Dec. 19, 2006), the ALJ issued a recommended decision awarding front pay and reduced attorney fees. The Respondent filed a petition seeking review by the ARB. After the ARB issued a Notice of Appeal and Briefing Schedule, the parties were granted an extension of time for mediation. Subsequently, the Respondent requested that its petition for review be withdrawn and its appeal dismissed. In Hagman v. Washington Mutual Bank, Inc. , ARB No. 07-039, ALJ No. 2005-SOX-73 (ARB May 23, 2007), the ARB granted the request and dismissed the appeal, noting that the effect would be that the ALJ's decision becomes the final decision of the Secretary of Labor pursuant to 29 C.F.R. § 1980.109(c).
VOLUNTARY DISMISSAL OF APPEAL; COMPLAINANT MUST SPECIFY WHETHER DISMISSAL IS SOUGHT (1) BECAUSE OF WITHDRAWAL OF OBJECTIONS TO THE ALJ'S ORDER, (2) BECAUSE OF A SETTLEMENT, OR (3) BECAUSE OF REMOVAL OF THE CASE TO FEDERAL DISTRICT COURT
In Vodicka v. Dobi Medical International, Inc. , ARB No. 06-037, ALJ No. 2005-SOX-111 (ARB May 30, 2007), a Sarbanes-Oxley Act whistleblower claim, the ALJ had granted summary judgment for the Respondent, and the Complainant petitioned for review by the ARB. The ARB granted the petition. Later, the ARB received a letter from the Complainant requesting dismissal of the whistleblower claim with prejudice. The ARB issued an Order requiring the Complainant to specify which of three options he wished to proceeding, noting:
The SOX implementing regulations provide three options for terminating a case pending at the Board prior to final adjudication. First, a party may withdraw his or her objections to the findings or order on appeal by filing a written withdrawal with the Board. In that case the findings or order becomes the final order of the Secretary. Second, the parties may enter into an adjudicatory settlement. If the parties enter into a settlement, the regulations require the parties to file a copy of the settlement with the Board for its review. Third, if the Board has not issued a final decision within 180 days of the filing of the complaint, the complainant may bring an action at law or equity for de novo review in the appropriate United States district court.
USDOL/OALJ Reporter at 2 (footnotes omitted). The Complainant's counsel responded that the Complainant was withdrawing his objections to the ALJ's recommended decision and order. The ARB then approved the motion to withdraw, dismissed the appeal, and noted that the ALJ's decision had become the DOL's final order in the case.
VOLUNTARY DISMISSAL; WITHDRAWAL OF OBJECTIONS ON APPEAL
In Dolan v. EMC Corp. , ARB No. 04-077, ALJ No. 2004-SOX-1 (ARB July 24, 2006), the ARB had granted the Respondent's motion to stay the appeal proceedings pending a settlement negotiation. Later, the Complainant filed a "Withdrawal of Objections" to the OSHA findings and the ALJ's recommended dismissal, asserting that the withdrawal was not based on a settlement. The ARB approved the request and dismissed the appeal.
WITHDRAWAL OF APPEAL RESULTS IN ALJ'S DECISION BECOMING THE FINAL DECISION OF THE SECRETARY OF LABOR
In Hagman v. Washington Mutual Bank, Inc. , 2005-SOX-73 (ALJ Dec. 19, 2006), the ALJ issued a recommended decision awarding front pay and reduced attorney fees. The Respondent filed a petition seeking review by the ARB. After the ARB issued a Notice of Appeal and Briefing Schedule, the parties were granted an extension of time for mediation. Subsequently, the Respondent requested that its petition for review be withdrawn and its appeal dismissed. In Hagman v. Washington Mutual Bank, Inc. , ARB No. 07-039, ALJ No. 2005-SOX-73 (ARB May 23, 2007), the ARB granted the request and dismissed the appeal, noting that the effect would be that the ALJ's decision becomes the final decision of the Secretary of Labor pursuant to 29 C.F.R. § 1980.109(c).
ADMINISTRATIVE LAW JUDGE DECISIONS
VOLUNTARY DISMISSAL; "WITHOUT PREJUDICE"The Complainant filed a Motion for Voluntary Dismissal without prejudice to his right to pursue claims under state law. The ALJ granted the motion. The Respondent expressed a concern that the purpose of the "without prejudice" request is [to] indefinitely suspend implementation of the Assistant Secretary's findings and preliminary order. The ALJ, however, found that within the context of his motion, the Complainant was only seeking to ensure that the dismissal of his objection would not adversely affect his ability to pursue relief under state law. The ALJ, therefore, interpreted the request for dismissal "without prejudice" not to mean that the Complainant seeks an indefinite deferral of the Assistant Secretary's findings and preliminary order. Stavrulakis v. Forest City Enterprises, Inc. , 2005-SOX-5 (ALJ Jan. 27, 2005).
WITHDRAWAL BEFORE ALJ CONSTITUTES WITHDRAWAL OF HEARING REQUEST RATHER THAN WITHDRAWAL OF CLAIM
Where the Secretary's Findings are not final and a written withdrawal has been filed with the ALJ, approval of the withdrawal is appropriate under 29 C.F.R. § 1980.111(c). Although the Complainant may indicate a desire to withdraw his claim, he is actually withdrawing his hearing request. Weed v. Asset Acceptance Corp. , 2005-SOX-63 (ALJ Aug. 5, 2005).
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