[Last Updated Aug. 6, 2014]
FEDERAL COURT DECISIONS
SUIT FOR DAMAGES AGAINST FORMER EMPLOYER, UNION, AND GOVERNMENT OFFICIALS BARRED BASED ON JUDICIAL IMMUNITY, RES JUDICATA, TIMELINESS AND OTHER GROUNDS
In Williams v. UAL Inc. , No. 12-CV-3781 (N.D. Cal. Dec. 13, 2012) (related to N.D.Cal. 04-CV-3787, ARB No. 08-063, ALJ No. 2008-AIR-3), the Plaintiff brought suit against his former employer, union officials, federal and state court judges and court personnel, the Secretary of Labor, former and current ARB members, and a DOL ALJ, alleging that they engaged in a conspiracy to terminate him from his employment for improper reasons and to uphold that termination through the various legal challenges he has made over the past several years. The Plaintiff's legal theories primarily relied on RICO and the Sarbanes-Oxley Act, 18 U.S.C. § 1514A, ("SOX") as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The court dismissed all claims without leave to amend. In regard to the judges, the court found that they were protected by judicial immunity. As to the court personnel, the court found that they were protected by absolute quasi-judicial immunity. As to the Department of Labor employees, the court found that the same claims against them had previously been litigated and rejected by a federal district court in a final judgment. Thus, the claims against the Department of Labor employees were barred by the doctrine of res judicata, and the court did not reach the question of whether the Plaintiff's damages claims could only be brought against the United States, and not individual federal defendants acting in their official capacities. The court found that the claim against the Plaintiff's former employer was time barred. The claim against the union was time barred. Finally, the court found that claims against individual union officers for the breach of the duty of fair representation are not permitted.
RES JUDICATA; PRIOR TITLE VII DISCRIMINATION CLAIM GROUNDED IN SAME NUCLEUS OF OPERATIVE FACT AS SOX CLAIM; DIFFERENCE IN RETALIATORY MOTIVE DOES NOT PREVENT APPLICATION OF CLAIM PRECLUSION
In Thanedar v. Time Warner, Inc. , No. 08-20734 (5th Cir. Nov. 3, 2009) (unpublished) (ALJ No. 2006-SOX-79), the Fifth Circuit upheld the district court's grant of judgment on the appellant's SOX claim under the doctrine of res judicata based on a finding that the claim should have been litigated in the appellant's Title VII lawsuit. Applying the "transactional test," which considers whether the two claims rest on the same nucleus of operative facts, the court stated that the operative facts defines the claims - not the relief requested, legal theories or rights asserted. Thus, "[t]he fact that the retaliatory motive asserted in the Title VII suit was not identical to that of the Sarbanes-Oxley claim does not bar a finding of res judicata." Slip op. at 9. The court noted that it previously held that claims asserting different grounds for wrongful termination may nevertheless be subject to claim preclusion. The court agreed with the district court aptly that both of the appellant's lawsuits focused "'on one critical issue: whether Thanedar's employer had a legitimate and lawful reason for taking the adverse employment action of which he complains.'" Slip op. at 10 (quoting district court). The court held that this was sufficient to establish a "same nucleus of operative fact."
RES JUDICATA; CLAIM SPLITTING; FAILURE OF PLAINTIFF TO AMEND PENDING FEDERAL COURT ACTION BASED ON SAME OPERATIVE FACTS TO INCLUDE SOX COMPLAINT FILED AFTER FAILURE OF DOL TO ISSUE FINAL DECISION WITHIN 180 DAYS OF THE COMPLAINT; DISMISSAL OF FIRST ACTION HAS PRECLUSIVE EFFECT ON SECOND ACTION
In Riel v. Morgan Stanley , No. 1:06-cv-05801 (S.D.N.Y. Aug. 6, 2009), the Plaintiff filed a SOX whistleblower complaint with OSHA, and while OSHA was investigating this complaint, filed an action in federal district court asserting common law causes of action arising out of essentially the same operative facts relied upon by the Plaintiff in his SOX complaint before OSHA. After 180 days passed without a decision by OSHA, the Plaintiff provided notice of intent to pursue the SOX claims in court. OSHA nonetheless issued findings and dismissed the complaint. Shortly thereafter, the Complainant commenced a second action in federal court, relying on essentially the same facts as relied on in the first set of actions. The court dismissed the causes of action in the first case, but granted leave to the Plaintiff to amend the complaint. The Plaintiff, determined to appeal the dismissal of the first action, did not amend the complaint but instead sought an appeal. He then sought a stay of the second action in district court. The Defendant left no doubt in all its filings that it would move to dismiss the second action under res judicata if the first action was affirmed on appeal. The court of appeals later affirmed the dismissal of the first action, and the Defendant moved the district court to dismiss the second action based on res judicata.
Applying New York law on res judicata, the district court analyzed the matter as an instance of claim splitting. The Plaintiff cited authority to the effect that res judicata could not be applied where the parties agreed to or acquiesced in the plaintiff's splitting of his claim. The court found, however, that where a defendant raises an objection to the claim splitting prior to entry of a final judgment in either of the two cases, and does not affirmatively represent that he consents to the actions proceeding separately, there should not be a finding of acquiescence to the claim splitting or waiver of the res judicata defense. In the instant case, the court rejected the Plaintiff's argument that there had been an acquiescence, but instead found that the Defendants gave due notice that they would be raising a res judicata defense if the SOX claim in the second action was not brought into the first action.
In a footnote, the court noted that the SOX does not require a SOX plaintiff, who files a district court action after DOL failed to timely issue a final decision, to commence a new, separate action when another similar action is already pending before a court.
[Editor's note: The procedural history before the district court was complex, and some details have been omitted from this casenote.]
RES JUDICATA; DE NOVO REVIEW IN FEDERAL DISTRICT COURT IS NOT AVAILABLE ONCE THE ALJ'S DECISION BECOMES FINAL, EVEN IF THAT DECISION WAS RENDERED MORE THAN 180 DAYS AFTER THE FILING OF THE COMPLAINT WITH OSHA
In Groncki v. AT&T Mobility LLC , No. 1:08-cv-02016 (D.D.C. Aug. 4, 2009) (case below 2008-SOX-33), the Plaintiff had appealed OSHA's dismissal of his SOX whistleblower complaint to an ALJ. Following a formal hearing, the ALJ dismissed the complaint, and the ALJ's decision became the final DOL decision. The Plaintiff filed a complaint in federal district court, relying on the fact that DOL had not issued the final decision within 180 days of the Plaintiff's complaint. See 18 U.S.C. § 1514A(b)(1)(B). The question before the Court, thus, was whether the Plaintiff was precluded by res judicata from filing suit in federal district court after the agency reached a final decision, even if the final decision was issued after the 180 period. The district court found that the Secretary of Labor's interpretation of section 806 of the SOX to not allow an action in district court after the agency has issued a final order was entitled to deference. See 68 Fed. Reg. 31860, 31863 (2003) (preamble to SOX regulations). The district court also found support for this position in the Western District Court of Pennsylvania's decision in Tice v. Bristol-Myers Squibb Co. , 515 F. Supp. 2d 580, 599 (W.D. Pa. 2007), aff'd , No. 07-3977, 2009 WL 943838 (3d Cir. Apr. 8, 2009) (res judicata effect of final agency SOX decision on Title VII or Age Discrimination claims). The court found that the Plaintiff's position would lead to absurd results, such as allowing a plaintiff more avenues to appeal an adverse decision if the decision was reached after 180 days than a plaintiff would have if the decision was reached within 180 days. The court found nothing in the SOX that contemplated de novo review of final administrative order in district court.
RES JUDICATA; DISTRICT COURT DISMISSAL; NATURE OF SOX REMEDIES PROVIDES PRIVITY BETWEEN PLAINTIFF AND THE DEPARTMENT OF LABOR
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, based on the plaintiff's despoliation of evidence. The Plaintiff had filed the claims in district court in response to the Defendant's suit for declaratory judgment seeking to establish that it could terminate the Plaintiff's employment without violating the False Claims Act, SOX and ADA. The district court denied the Defendant's motion to enjoin the OSHA investigation of the SOX claim based on its conclusion that there was an absence of privity between OSHA and the Plaintiff because OSHA's role is to serve a broad public interest. The Ninth Circuit reversed this finding, holding that the SOX anti-retaliation provision includes only individual remedies, and that the private nature of the remedies demonstrates that the agency is in privity with the Plaintiff. The Ninth Circuit found that all the elements of res judicata had been satisfied, and remanded for the district court to consider whether it would, in the exercise of its discretion, enjoin the DOL's proceedings.
[ Editor's note : On remand, the Plaintiff withdrew his SOX complaint, which was by then pending before an ALJ. Leon v. IDX Systems Corp. , 2005-SOX-85 (ALJ Nov. 22, 2006).]
ADMINISTRATIVE REVIEW BOARD DECISIONS
COLLATERAL ESTOPPEL DOES NOT PREVENT ADJUDICATION OF ISSUE OF PROTECTED ACTIVITY WHERE, ALTHOUGH THAT ISSUE HAD BEEN LITIGATED REGARGING PRE-DISCHARGE ACTIVITY, THE INSTANT COMPLAINT WAS BASED ON POST-DISCHARGE COMPLAINTS FILED WITH OSHA
In Levi v. Anheuser Busch Inbev , ARB No. 13-047, ALJ No. 2012-SOX-39 (ARB July 24, 2014), the Complainant filed a SOX complaint alleging that a pension plan determination that set the termination date for calculation of his pension on the final day he was actually paid, rather than the later effective date of his termination, constituted retaliation for his earlier whistleblowing activity against the Respondent. The ALJ dismissed the complaint for two reasons: (1) that collateral estoppel barred the Complainant from re-litigating whether he engaged in protected activity, and (2) the Complainant failed to offer evidence that he suffered an adverse personnel action when receiving his pension determination. The ARB found that the ALJ correctly determined that the complaint was precluded under collateral estoppel to the extent that the complaint was based on protected activity that occurred prior to the Complainant's discharge, an issue that had previously been litigated between the parties. The ARB, however, found that the Complainant had also asserted that his post-discharge filing with OSHA of whistleblower complaints constituted protected activity. The ARB found that this allegation of protected activity was not barred by collateral estoppel.
The ARB, however, found that the uncontroverted evidence of record showed that the effective date of the Complainant's discharge did not control the amount of the pension benefits; rather, the pension plan calculated benefits based on days actually paid as an employee. The ARB affirmed the ALJ's finding that the Complainant had not established an adverse action.
One member of the Board concurred. She concluded that the substantive protected activity alleged by the Complainant in his complaint and his amended complaint stemmed from pre-discharge activity, and therefore collateral estoppel and res judicata clearly applied to bar the instant complaint. This member of the Board would not have reached the adverse action issue.
ISSUE PRECLUSION; CLAIMS THAT WERE DERIVATIVE OF, OR DEPENDENT ON THEIR SUCCESS ON, THE RESULT IN AN EARLIER COMPLAINT
In Levi v. Anheuser Busch Companies, Inc. , ARB Nos. 06-102, 07-020, 08-006, ALJ Nos., 2006-SOX-27 and 108, 2007-SOX-55 (ARB Apr. 30, 2008), the Complainant had filed a second SOX complaint, and the ALJ held that the Complainant was barred by issue preclusion from re-litigating whether he was a whistleblower in the previous case. The ARB found that preclusion doctrines did not apply to the extent that the second complaint raised issues not actually decided in the first proceeding (e.g., a blacklisting claim), but concurred that certain issues were derivative of those of the first complaint - either duplicative claims or dependent on their success on the result in the first complaint. Because it appeared from the record that the Complainant had never engaged in protected activity, the ARB held that claims of subsequent retaliation, whether repeated from the first complaint, or newly stated in the second complaint, were not actionable.