NLRB and U.S. DOL Propose New NLRB Rules which will Affect all Union Representation Elections as well as Voter Reporting

NLRB and U.S. DOL Propose New NLRB Rules which will Affect all Union Representation Elections as well as Voter Reporting
On June 22, 2011, the National Labor Relations Board (“NLRB”) published proposed new rule changes in the Federal Register. If these employment rules are enacted, it will dramatically accelerate the timeframes for all union representation elections.
Additionally, the U.S. Department of Labor’s Office of Labor-Management Standards (“DOL”) published proposed rules to narrow the interpretation of the term “advice” as it pertains to the persuader reporting requirements set forth within Section 203 of the Labor-Management Reporting and Disclosure Act of 1959 (“LMRDA”), just a day earlier. Together, these proposed changes create new burdens for employers who wish to communicate with employees about collective bargaining and workplace unionization. If enacted, the practical result of these proposed changes (whether intended or not) is that they will create tactical advantages for organized labor that will in turn help unions win an increased number of representation elections.
The NLRB Proposes “Quickie” Elections
Under current NLRB practice and procedure, employers typically have several weeks between the date that a petition for an election is filed and the actual date of the union representation election. Employers will often use this period to communicate with their employees and, in accordance with certain restrictions, campaign in opposition to the union. The NLRB’s proposed rules, however, seek to streamline the NLRB election process and in effect shorten the amount of time for employers to mount such an opposition campaign. Under the NLRB’s proposal, elections that once took weeks could now be held within 10 days.
In a strongly worded dissent, Brian Hayes, a member of the NLRB, objected to the proposed rule changes, noting that employers will not be provided with sufficient time to communicate their position on unionization and collective bargaining. Specifically, Member Hayes stated:
“What is certain is that the proposed rules will (1) substantially shorten the time between the filing of the petition and the election date, and (2) substantially limit the opportunity for full evidentiary hearing or [NLRB] review on contested issues involving, among other things, appropriate unit, voter eligibility, and election misconduct. Thus, by administrative fiat in lieu of Congressional action, the [NLRB] will impose organized labor’s much sought-after ‘quickie election’ option, a procedure under which an election will be held in 10 to 21 days from the filing of the petition. Make no mistake, the principal purpose for this radical manipulation of our election process is to minimize, or rather, to effectively eviscerate an employer’s legitimate opportunity to express its view about collective bargaining.”

To sum it up, the NLRB has proposed several significant changes to its rules concerning representation. For purposes of clarity and convenience, I have outlined the most significant changes and contrasted them with the current rule here:

1. Currently, Petitions for NLRB elections and other election-related documents cannot be filed electronically. The proposed Rule voter lists may be transmitted electronically.
2. Currently, the amount of time for a pre-election hearing varies by the individual NLRB Regional Office. Under the proposed rules, barring any special circumstances, all pre-election hearings will be held within 7 days of the filing of an election petition with the NLRB.
3. Currently, there is no requirement for the parties to identify or disclose issues in dispute prior to a pre-election hearing. Under the new NLRB proposed rules, prior to the beginning or a pre-election hearing, an employer must produce a “statement of position.” The NLRB Statement of Position must include the employer’s position on disputed topics (e.g., the NLRB’s jurisdiction, appropriateness of the bargaining unit sought; and the type, date, and location of the union representation election).
4. Presently, only after a Regional Director has directed an election is a list of voters produced. Under the new NLRB proposed rules, the party not seeking the election (usually the employer), will be required to file and serve a “preliminary list of voters” which includes names, work location, shift, and classification by the start of the pre-election hearing.
5. Presently, either party can bring forth a challenge of voter-eligibility issues at the pre-election hearing. Under the new NLRB proposed rules, complaints involving eligibility issues raised by either party that involve less than 20% of the bargaining unit would be deferred until after the election.
6. Under the current NLRB rules, either party may request the NLRB formally review the Regional Director’s pre-election rulings prior to the election taking place. In addition, either party may waive their rights to seek review if they do not object to the ruling before the election. However, keep in mind that the NLRB review process will typically delay the election for about 30 days while the review process takes place. In contrast, under the new NLRB proposed rules, either party would be permitted to seek a review of the Regional Director’s rulings through a streamlined post-election request.
7. Under the current NLRB Rules, the final voter list, known as the “Excelsior List”, containing the names and home addresses of the voters must be provided within seven days after the direction of an election. Under the new NLRB proposed rules, the final Excelsior List (voting list) is now required to be provided within two workdays of the direction of an election. Also included in the new proposed Excelsior list will be the voters’ phone number and email address.

The U.S. DOL Seeks To Increase Persuader Reporting

In addition to the changes proposed by the NLRB, the DOL has proposed changes to its interpretation of the persuader reporting requirements set forth in Section 203 of the LMRDA. Section 203 currently requires employers (subject to limited exception) to disclose to the U.S. DOL (via Form LM-10) any arrangement that they have made with a third-party to persuade their employees as to their collective bargaining rights, directly or indirectly, or to obtain information about the activities of a labor organization involved in a labor dispute with the employer.

However, Section 203(c) of the LMRDA provides an exception to the reporting requirement for “advice” given to the employer. In the past, the U.S. DOL has construed this exception broadly to exclude agreements or arrangements where the consultant does not have any direct contact with employees. Accordingly, if a consultant or lawyer were to draft or review communications (e.g., documents, letters, speeches) presented to employees during an organizing drive or in anticipation of an NLRB election, such conduct was deemed “advice,” and therefore there was no need to inform the DOL.

However, should the DOL’s proposal become effective, the term “advice” shall be limited to “oral or written recommendation regarding a decision or course of conduct.” On the other hand “persuader activity” shall include a consultant providing material or communications to, or engaging in other actions, conduct, or communications on behalf of an employer that, in whole or in part, have the object (directly or indirectly) to persuade employees concerning their right to organize and bargain collectively. All agreements for persuader activities would need to be reported, even if a consultant/lawyer did not have direct contact with employees.

Accordingly, if lawyers or consultants draft, review, or analyze employee communications, or are otherwise involved in a campaign in opposition to a union’s organizing or collective bargaining efforts, such actions may now trigger the reporting requirements under Section 203. Moreover, these consultants and lawyers will also likely be required to file their own disclosures with the U.S. DOL (via revised Forms LM-20 and LM-21). Form LM-21 is particularly problematic as it requires disclosure of receipts for all labor relations advice or services provided to all employers during the year (regardless of when that advice is related to persuader activity). The primary effect of these disclosure requirements is to obfuscate employers in their efforts to seek advice in connection with a union organizing drive or election.

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  • services sprite NLRB and U.S. DOL Propose New NLRB Rules which will Affect all Union Representation Elections as well as Voter Reporting
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  • services sprite NLRB and U.S. DOL Propose New NLRB Rules which will Affect all Union Representation Elections as well as Voter Reporting
  • services sprite NLRB and U.S. DOL Propose New NLRB Rules which will Affect all Union Representation Elections as well as Voter Reporting
  • services sprite NLRB and U.S. DOL Propose New NLRB Rules which will Affect all Union Representation Elections as well as Voter Reporting
  • services sprite NLRB and U.S. DOL Propose New NLRB Rules which will Affect all Union Representation Elections as well as Voter Reporting
  • services sprite NLRB and U.S. DOL Propose New NLRB Rules which will Affect all Union Representation Elections as well as Voter Reporting
  • services sprite NLRB and U.S. DOL Propose New NLRB Rules which will Affect all Union Representation Elections as well as Voter Reporting
  • services sprite NLRB and U.S. DOL Propose New NLRB Rules which will Affect all Union Representation Elections as well as Voter Reporting
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ATTORNEY FEES; COMPLAINANT MUST FILE REQUEST FOR ATTORNEY’S FEES FOR WORK BEFORE THE ALJ WITH THE ALJ RATHER THAN THE ARB; THE ARB DISFAVORS BIFURCATED APPEALS OF ATTORNEY’S FEE AWARDS

Clemmons v. Ameristar Airways, Inc., ARB No. 08-067, ALJ No. 2004-AIR-11 (ARB June 7, 2011)
Order Denying Reconsideration of Attorney’s Fees Award
Clemmons v. Ameristar Airways, Inc., ARB No. 08-067, ALJ No. 2004-AIR-11 (ARB June 7, 2011)

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U.S. Department of Labor Administrative Review Board
200 Constitution Avenue, N.W.
Washington, D.C. 20210

ARB CASE NO. 08-067
ALJ CASE NO. 2004-AIR-011
DATE: June 7, 2011

In the Matter of:

THOMAS E. CLEMMONS,

COMPLAINANT,

v.

AMERISTAR AIRWAYS, INC.,

and

AMERISTAR JET CHARTER, INC.,

RESPONDENTS.

BEFORE: THE ADMINISTRATIVE REVIEW BOARD

Appearances:

For the Complainant:
Steven K. Hoffman, Esq., James & Hoffman, P.C., Washington, District of Columbia

For the Respondent:
Chris E. Howe, Esq., Kelly, Hart & Hallman, LLP, Fort Worth, Texas

Before: Paul M. Igasaki, Chief Administrative Appeals Judge, E. Cooper Brown, Deputy Chief Administrative Appeals Judge, and Luis A. Corchado, Administrative Appeals Judge

ORDER DENYING RECONSIDERATION OF ATTORNEY’S FEE AWARD

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[Page 2]
In a January 14, 2005 decision and order,1 an Administrative Law Judge (ALJ) concluded that Ameristar Airways, Inc. and Ameristar Jet Charter, Inc. violated the employee protection provisions of the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (AIR 21 or the Act)2 when Ameristar fired Thomas E. Clemmons after he complained about air safety issues. Ameristar appealed to the Administrative Review Board (ARB), which vacated the ALJ’s recommended decision and remanded the case for further consideration.3 On remand, the ALJ again concluded in a February 20, 2008 decision and order that Ameristar had violated AIR 21.4 Ameristar appealed, and the ARB affirmed the ALJ’s decision.5 On January 5, 2011, the ARB awarded Clemmons’s attorney fees of $55,328.00 and costs of $1,252.04 for a total of $56,580.04.6 He now seeks reconsideration.

Discussion
Under AIR 21, the Secretary of Labor shall, at the complainant’s request, assess against a person who violated the employee protection provision the costs of bringing the case, including attorney’s fees the complainant reasonably incurred.7 The regulations governing AIR 21 provide for an award of attorney’s fees incurred by a complainant who prevails before the ALJ and before the ARB.8

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[Page 3]
In its initial remand of this case, the ARB vacated the ALJ’s supplemental order awarding $225,293.19 in attorney’s fees and costs for legal services before him. We noted that Ameristar had appealed this award, ARB No. 05-096, but, given our disposition on the merits, we necessarily vacated and remanded the award decision, with leave to the ALJ to reinstate or modify his order as appropriate.9

In ruling in Clemmons’s favor on remand, the ALJ re-affirmed “his previous order, as it appears at page 74 of [the] original Decision and Order which issued on January 14, 2005.”10 That January 14, 2005 decision ordered Ameristar to pay Clemmons “all costs and expenses, including attorney fees, reasonably incurred . . . in connection with this proceeding” and further permitted Clemmons’s attorney “thirty days to file a fully supported fee application” with the ALJ.11

As noted, Ameristar appealed the ALJ’s decision on remand. The ARB affirmed the ALJ’s decision, with certain modifications to the back pay award, and permitted Clemmons’s attorney 30 days to submit a petition for fees and costs for legal services before the ARB.12 At the time, Clemmons’s attorney requested that we remand this case to the ALJ for consideration of fees and expenses before the ALJ. We declined this request, noting that Clemmons’s attorney must file a petition for such fees and expenses with the ALJ.

Notwithstanding what we believe were clear instructions, Clemmons’s attorney subsequently requested in his petition to the ARB for attorney’s fees, an award of fees for 13 hours of work before the ALJ on remand from July 2, 2007, through February 22, 2008.13 Subsequently, in our award of attorney’s fees before the ARB, we again instructed Clemmons’s attorney to apply to the ALJ for any legal fees to which he was entitled for services performed before the ALJ. We noted that the ALJ’s initial award of attorney’s fees had been returned to him for possible reinstatement or modification.14

On January 13, 2011, Clemmons’s attorney filed a motion to reconsider that portion of our January 5, 2011 decision pertaining to awarding attorney’s fees for services before the ALJ. Attorney Hoffman asks the ARB to “deem” the ALJ’s 2005 decision awarding Clemmons $225,293.19 in fees and costs “reinstated” by the ALJ’s

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[Page 4]
February 20, 2008 decision on remand and decide the merits of that fee award, based on the briefs of the parties that were filed in the 2005 appeal. Attorney Hoffman argues that the ALJ’s decision on remand effectively reinstated his supplemental award of fees and that the ARB should take jurisdiction in the interests of justice and to conserve the parties’ resources.15

By regulation, the ARB has power to award attorney’s fees and costs for services performed before the Board; it also has power to review an ALJ’s recommended award of fees upon appeal. There is no statutory authority for the ARB to review an ALJ’s award of attorney’s fees unless the ALJ’s recommended award is appealed.

Here, the ALJ’s 2005 fee award was appealed, but the ARB vacated that award when it vacated and remanded the merits decision to the ALJ for further consideration. The ALJ’s 2008 decision on remand re-affirmed his 2005 decision ordering Ameristar to pay fees and costs to Clemmons’s attorney. This reaffirmation, coupled with the ARB’s instruction to the ALJ to reinstate or modify his 2005 attorney’s fee award on remand if appropriate, could be construed as reinstatement of the initial fee award, without requiring Clemmons’s attorney to resubmit his initial petition to the ALJ.

Given such an ambiguity, the ARB in both its 2010 decision on the merits and its 2011 decision awarding attorney’s fees sought to clarify the fee situation for Clemmons and Ameristar. When the Board previously considered Clemmons’s request for additional legal fees for services before the ALJ on remand, we referred to his original fee petition and our limited ability to review fee awards for services before the ALJ. We had intended, in so doing, to make it clear that the ARB does not wish to consider bifurcated appeals of an ALJ’s fee awards, and that the proper course for Clemmons’s attorney is to wrap his request for 13 hours of legal fees on remand into his original request, thereby affording Ameristar the opportunity to challenge the entire amount of the fee request before the ALJ at one time and, depending on the results of the ALJ’s consideration of the entirety of the award, affording both parties the opportunity to challenge that decision on appeal to the ARB.

Thus, Attorney Hoffman’s reliance on two ARB cases that purportedly show that the ARB has in the past decided appeals of fee awards without requiring ALJ reinstatement is misplaced. In Jackson v. Butler & Co., the ARB considered appeals of both the merits decision and the fee award; no remand was involved.16 In McQuade v. U.S. Dep’t of Energy, the case settled and no attorney’s fee was involved.17

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[Page 5]
Accordingly, because the ALJ’s order to pay attorney’s fees has been reinstated, we deny Attorney Hoffman’s request for reconsideration of our January 5, 2011 fee award as unnecessary. Again we note that only upon the ALJ’s consideration of the attorney’s request for fees and costs pertinent to his services performed before the ALJ initially and on remand, and a final decision by the ALJ on the entire amount of a fee award, will the ARB entertain review of that award on appeal. As we have repeatedly indicated, awarding an attorney fees for services before the ALJ is only within the purview of the ALJ. The ARB has jurisdiction only over a timely appeal of the ALJ’s decision.

SO ORDERED.

PAUL M. IGASAKI
Chief Administrative Appeals Judge

E. COOPER BROWN
Deputy Chief Administrative Appeals Judge

LUIS A. CORCHADO
Administrative Appeals Judge

[ENDNOTES]
1 Clemmons v. Ameristar Airways, Inc, ALJ No. 2004-AIR-011 (ALJ Jan. 14, 2005).

2 49 U.S.C.A. § 42121 (Thomson/West 2011). Regulations implementing AIR 21 appear at 29 C.F.R. Part 1979 (2010).

3 Clemmons v. Ameristar Airways, Inc., ARB Nos. 05-048, -096; ALJ No. 2004-AIR-011 (ARB June 29, 2007).

4 Clemmons v. Ameristar Airways, Inc., ALJ No. 2004-AIR-011 (ALJ Feb. 20, 2008).

5 Clemmons v. Ameristar Airways, Inc., ARB No. 08-067, ALJ No. 2004-AIR-011 (ARB May 26, 2010).

6 Clemmons v. Ameristar Airways, Inc., ARB No. 08-067, ALJ No. 2004-AIR-011 (ARB Jan. 5, 2011).

7 49 U.S.C.A. § 42121(b)(3)(B)(iii).

8 29 C.F.R. § 1979.109(b) (“At the request of the complainant, the administrative law judge shall assess against the named person all costs and expenses (including attorney’s and expert witness fees) reasonably incurred); 29 C.F.R. § 1979.110(d) (“If the Board concludes that the party charged has violated the law, . . . the Board shall assess against the named person all costs and expenses (including attorney’s and expert witness fees) reasonably incurred.”). See generally Jackson v. Butler & Co., ARB Nos. 03-116, -144; ALJ No. 2003-STA-026 (ARB Aug. 31, 2004).

9 Clemmons, ARB Nos. 05-048, -096; slip op. at 11, n.27.

10 Clemmons, ALJ No. 2004-AIR-011, slip op. at 9 (ALJ Feb. 20, 2008).

11 Clemmons, ALJ No. 2004-AIR-011, slip op. at 74 (ALJ Jan. 14, 2005).

12 Clemmons, ARB No. 08-067, slip op. at 15 n.73 (ARB May 26, 2010).

13 Complainant’s Fee Petition, Attachment 2 at 3.

14 Clemmons, ARB No. 08-067, slip op. at 4, n.13 (ARB Jan. 5, 2011).

15 Complainant’s Motion at 3-4.

16 ARB Nos. 03-116, -144; ALJ No. 2003-STA-026, slip op. at 9 (ARB Aug. 31, 2004).

17 ARB Nos. 01-093, -094; ALJ Nos. 1997-CAA-007-010 (ARB Nov. 28, 2001).

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WITHDRAWAL OF COMPLAINT; ALJ PROPERLY TREATS A MOTION TO WITHDRAW THE COMPLAINT AS A MOTION TO WITHDRAW OBJECTIONS TO THE OSHA FINDINGS

USDOL/OALJ Reporter
Saporito Energy Consultants, Inc. v. U.S. Nuclear Regulatory Commission, ARB No. 10-083, ALJ No. 2009-ERA-16 (ARB June 16, 2011)

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U.S. Department of Labor Administrative Review Board
200 Constitution Avenue, N.W.
Washington, D.C. 20210

ARB CASE NO. 10-083
ALJ CASE NO. 2009-ERA-016
DATE: June 16, 2011

In the Matter of:

SAPORITO ENERGY CONSULTANTS, INC.,

and

THOMAS SAPORITO,

COMPLAINANTS,

v.

U.S. NUCLEAR REGULATORY COMMISSION,

RESPONDENT.

BEFORE: THE ADMINISTRATIVE REVIEW BOARD

Appearances:

For the Complainants:
Thomas Saporito, pro se, Jupiter, Florida

For the Respondent:
Laura C. Zaccari, Esq., U.S. Nuclear Regulatory Commission, Rockville, Maryland

Before: Paul M. Igasaki, Chief Administrative Appeals Judge, Luis A. Corchado, Administrative Appeals Judge, and Lisa Wilson Edwards, Administrative Appeals Judge.

FINAL DECISION AND ORDER
Thomas Saporito and Saporito Energy Associates (Saporito) filed a complaint on March 23, 2009, with the United States Department of Labor’s Occupational Safety and Health

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[Page 2]
Administration (OSHA) alleging that the U.S. Nuclear Regulatory Commission (NRC) violated the employee protection provisions of the Energy Reorganization Act of 1974, as amended, 42 U.S.C.A. § 5851 (Thomson/West 2010) (ERA) and its implementing regulations.1 OSHA investigated the complaint and dismissed it on September 9, 2009. On September 17, 2009, Saporito objected to OSHA’s finding and requested a hearing before a Department of Labor (DOL) Administrative Law Judge (ALJ).

On March 7, 2010, Saporito filed a document with the ALJ assigned to this case seeking to withdraw the complaint “in accordance with Rule 41, under the Rules of Practice and Procedure before the Office of Administrative Law Judges.” The ALJ construed Saporito’s request as a motion for leave to withdraw Saporito’s objections to OSHA’s findings under 29 C.F.R. § 24.111(c), which the ALJ granted and then dismissed the complaint with prejudice. Saporito has appealed the ALJ’s order, contending that the ALJ erred in dismissing his complaint with prejudice. We affirm the ALJ’s order as a proper exercise of his discretion and in accordance with law.

Jurisdiction and Standard of Review
The Secretary of Labor has delegated authority to the Administrative Review Board (ARB) to review DOL ALJ decisions under the environmental whistleblower statutes, including the ERA.2 Under the Administrative Procedure Act, the ARB, as the Secretary’s designee, acts with all the powers the Secretary would possess in rendering a decision under the environmental whistleblower statutes.3 We review the ALJ’s conclusions of law de novo.4 The issue in this appeal – what rule of law applies to the dismissal of Saporito’s complaint – is a question of law.5

Discussion
Saporito contends that he sought to have his ERA whistleblower complaint dismissed without prejudice pursuant to Rule 41 of the Federal Rules of Civil Procedure. Thus, he argues

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[Page 3]
that the ALJ erred in construing his request as a motion to withdraw his objections to OSHA’s findings.

As a practical matter, whether the ALJ granted Saporito’s motion with or without prejudice makes no difference. Pursuant to 29 C.F.R. § 24.106, a party has thirty days to file a request for hearing after receiving OSHA’s decision on an ERA whistleblower complaint. If no request for hearing is filed before the 30-day deadline, then OSHA’s decision becomes final and is not subject to judicial review.6 It is the request for hearing that gives the Office of Administrative Law Judges (OALJ) the authority to consider the ERA whistleblower complaint and commence the ALJ proceedings. OALJ does not require the filing of a new “complaint.” Withdrawing a matter from the OALJ necessarily withdraws the request for a hearing. Where a motion to withdraw an ERA complaint is filed and granted six months after OSHA’s ruling, OSHA’s decision becomes final by operation of law. Here, it would be frivolous for Saporito to file a motion to withdraw his “complaint” six months after OSHA’s decision and then attempt to re-litigate it.

In addition to the practical realities, the regulations now clearly provide that a withdrawal of an ERA complaint constitutes a withdrawal of the request for hearing. The general regulations governing the procedures to be followed before the Office of Administrative Law Judges (OALJ) are set forth at 29 C.F.R. Part 18, which provide, at § 18.1(a), “[t]he Rules of Civil Procedure for the District Courts of the United States shall be applied in any situation not provided for or controlled by these rules . . . .” Before 2007, the rules of practice before the OALJ and the environmental whistleblower statutes’ implementing regulations found at 29 C.F.R. Part 24 did not directly address the voluntary dismissal of complaints. Thus, the ARB held that Rule 41 of the Federal Rules of Civil Procedure governs voluntary dismissals of environmental whistleblower cases, such as those arising under the ERA.7

Prior to the filing of Saporito’s ERA complaint in this case, the Part 24 regulations were amended.8 The implementing regulations of the environmental statutes, applicable to Saporito’s ERA complaint in this case, now provide only two options for a party to terminate a case pending with an ALJ prior to final adjudication.9 Under one option, a party may withdraw his or

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[Page 4]
her objections to OSHA’s findings or order by filing a written withdrawal with the ALJ. In that case OSHA’s findings or order becomes the final order of the Secretary.10 In the alternative, the parties may enter into an adjudicatory settlement.11 If the parties enter into a settlement in a case arising under the ERA, the regulations require the parties to file a copy of the settlement with the Board for its review.12 Because the parties did not enter into a settlement in this case, the ALJ, within his discretion, construed Saporito’s filing of a written withdrawal of his ERA complaint in this case as a withdrawal of his objections to OSHA’s findings pursuant to 29 C.F.R. § 24.111(c), the only other option available for Saporito to terminate his case before the ALJ prior to its final adjudication.13 Accordingly, the ALJ’s order construing Saporito’s request to withdraw his complaint as a withdrawal of his objections to OSHA’s findings, thereby deeming his objections as withdrawn, and dismissing Saporito’s ERA complaint with prejudice is AFFIRMED as in accordance with the ERA’s implementing regulation at 29 C.F.R. § 24.111(c). Consequently, as provided in 29 C.F.R. § 24.111(c), OSHA’s September 9, 2009 findings becomes the Secretary of Labor’s final decision in this case.

SO ORDERED.

LUIS A. CORCHADO
Administrative Appeals Judge

PAUL M. IGASAKI
Chief Administrative Appeals Judge

LISA WILSON EDWARDS
Administrative Appeals Judge

[ENDNOTES]
1 See 29 C.F.R. Part 24 (2010).

2 29 C.F.R. § 24.110 (2010). See also Secretary’s Order No. 1-2010 (Delegation of Authority and Assignment of Responsibility to the Administrative Review Board), 75 Fed. Reg. 3924 (Jan. 15, 2010) (delegating to the ARB the Secretary’s authority to review cases arising under, inter alia, the statutes listed at 29 C.F.R. § 24.100(a)).

3 See 5 U.S.C.A. § 557(b) (West 1996); 29 C.F.R. § 24.100(a).

4 5 U.S.C.A. § 557(b).

5 See Saporito v. FedEx Kinko’s Office & Print Serv., Inc., ARB No. 06-043, ALJ No. 2005-CAA-018, slip op. at 4 (ARB Mar. 31, 2008).

6 29 C.F.R. § 24.106(b).

7 See Saporito, ARB No. 06-043, slip op. at 5 (applying Rule 41 to case arising under the ERA).

8 72 Fed. Reg. 44,956 (Aug. 10, 2007); see also Saporito, ARB No. 06-043, slip op. at 2, n.1. These regulations have been amended since Saporito filed his complaint, but the regulations relevant to this decision remain unchanged. See Procedures for the Handling of Retaliation Complaints under the Employee Protection Provisions of Six Environmental Statutes and Section 211 of the Energy Reorganization Act of 1974, as amended, 76 Fed Reg. 2808 (Jan. 18, 2011).

9 29 C.F.R. § 24.111(c), (d)(2); see also Hamilton v. PBS Envtl. Bldg. Consultants, Inc., ARB No. 11-010, ALJ No. 2009-CER-003, slip op. at 2, n.9 (ARB Feb. 28, 2011).

10 29 C.F.R. § 24.111(c); see also Hamilton, slip op. at 3, n.10.

11 29 C.F.R. § 24.111(d)(2); see also Hamilton, slip op. at 3, n.11.

12 Id.

13 Saporito notes that in Hutchins v. TNT Logistics, ARB No. 05-065, ALJ No. 2004-STA-009, slip op. at 4 (ARB Jan. 31, 2008), the Board held that it must issue the final administrative decision in cases in which a party wishes to withdraw his or her objections to the Secretary’s findings. Saporito’s reliance on the holding in Hutchins is misplaced, however, as this requirement is only for cases arising under the Surface Transportation Assistance Act of 1982 (STAA), as amended and recodified, based on the Secretary’s delegation of authority to the Board to issue final agency decisions in cases arising under the STAA and the plain language of the STAA’s interpretive regulations. 49 U.S.C.A. § 31105 (West 1997); 29 C.F.R. §§ 1978.109(a), (c); 1978.111(c) (2010). The holding in Hutchins is inapplicable to this case arising under the ERA.

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COVERED EMPLOYERS; CONSOLIDATED SUBSIDIARIES OF PUBLICLY TRADED PARENT COMPANY

U.S. Department of Labor Administrative Review Board
200 Constitution Avenue, N.W.
Washington, D.C. 20210

ARB CASE NO. 09-025
ALJ CASE NO. 2008-SOX-040
DATE: June 16, 2011

In the Matter of:

GEREON MERTEN,

COMPLAINANT,

v.

BERKSHIRE HATHAWAY, INC.,

and

FLIGHTSAFETY INTERNATIONAL, INC.,

RESPONDENTS.

BEFORE: THE ADMINISTRATIVE REVIEW BOARD

Appearances:

For the Complainant:
Gereon Merten, pro se, Congers, New York

For Respondents:
Paul E. Hash, Esq., and Michael J. DePonte, Esq., Jackson Lewis LLP, Dallas, Texas

Before: Paul M. Igasaki, Chief Administrative Appeals Judge; E. Cooper Brown, Deputy Chief Administrative Appeals Judge; and Joanne Royce, Administrative Appeals Judge

DECISION AND ORDER OF REMAND

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[Page 2]
Gereon Merten filed a complaint under Section 806 of the Corporate and Criminal Fraud Accountability Act of 2002, Title VIII of the Sarbanes-Oxley Act (SOX).1 Merten alleged that Respondent FlightSafety International, Inc. (FSI), a subsidiary of Respondent Berkshire Hathaway, Inc., wrongfully terminated his employment in violation of the SOX’s employee protection provisions. The Respondents moved to dismiss for lack of subject matter jurisdiction under Federal Rule of Civil Procedure (Fed. R. Civ. P.) 12(b)(1), and for failure to state a claim under Fed. R. Civ. P. 12(b)(6). A Department of Labor (DOL) Administrative Law Judge (ALJ) concluded that Merten did not set forth facts that would establish that the Respondents are employers covered by SOX Section 806 and, therefore, dismissed the complaint. Because the ALJ had subject matter jurisdiction over Merten’s SOX complaint and Section 806 covers a subsidiary whose financial information is included in a publicly traded parent company’s consolidated financial statements, the ALJ’s decision is vacated, and this case is remanded for further proceedings consistent with this Decision and Order of Remand.

Background
Respondent FSI is a non-publicly traded subsidiary of Berkshire Hathaway, a publicly traded company subject to the SOX and to Securities and Exchange Commission regulation.2 Merten was an FSI employee until FSI notified him on October 12, 2007, that his employment would be terminated as of October 31, 2007.3 In response to his discharge, Merten filed a complaint with OSHA alleging that the Respondents violated SOX Section 806 when it terminated his employment. 4 Finding no reasonable cause to believe that the Respondents violated the Act, OSHA dismissed his complaint. Merten requested a hearing before the Department of Labor’s Office of Administrative Law Judges (OALJ).

Prior to a hearing, the Respondents filed a Motion to Dismiss, along with a supporting sworn affidavit, before the ALJ. Specifically, the Respondents argued that Merten was not an employee of a company subject to the SOX. Thus, they contended that the ALJ should dismiss Merten’s complaint pursuant to Fed. R. Civ. P. 12(b)(1), as OSHA lacked subject matter jurisdiction over his SOX complaint, and pursuant to Fed. R. Civ. P. 12(b)(6), for failing to state a claim upon which relief can be granted.

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[Page 3]
The ALJ considered the Motion to Dismiss, relying on the Board’s holding in Klopfenstein v. PCC Flow Tech. Holdings, Inc., ARB No. 04-149, ALJ No. 2004-SOX-011 (ARB May 31, 2006) (Klopfenstein I), which held that a subsidiary acting as the agent of a publicly traded company with respect to the challenged employment decision can be held liable under Section 806. The ALJ also considered the “integrated enterprise test” for determining whether a parent company is responsible for the activity of its subsidiary as set forth in Pearson v. Component Tech. Corp., 247 F.3d 471, 485 (3d Cir. 2001). The ALJ concluded that Merten did not set forth facts in his complaint that supported a finding that FSI is an agent of Berkshire Hathaway for purposes of employee protection under Section 806 or, therefore, that the Respondents were employers subject to the SOX. Consequently, the ALJ granted the Motion to Dismiss.5 Merten filed a timely petition for review of the ALJ’s decision with the ARB.

Jurisdiction and Standard of Review
Congress authorized the Secretary of Labor to issue final agency decisions with respect to claims of discrimination and retaliation filed under the SOX. 18 U.S.C.A. § 1514A(b). The Secretary has delegated that authority to the Administrative Review Board. Secretary’s Order No. 1-2010 (Delegation of Authority and Assignment of Responsibility to the Administrative Review Board), 75 Fed. Reg. 3924 (Jan. 15, 2010). See 29 C.F.R. § 1980.110(a). The Board reviews the ALJ’s findings of fact under the substantial evidence standard. 29 C.F.R. § 1980.110(b). The Board reviews questions of law de novo. See Simpson v. United Parcel Serv., ARB No. 06-065, ALJ No. 2005-AIR-031, slip op. at 4 (ARB Mar. 14, 2008).

Discussion
Initially, the ALJ erred in considering the Motion to Dismiss pursuant to Fed. R. Civ. P. 12(b)(1). The ALJ’s subject matter jurisdiction to hear SOX whistleblower complaints exists pursuant to the Secretary of Labor’s delegation of her hearing and adjudication authority under 18 U.S.C.A. § 1514A(b) to DOL ALJs.6 By filing a complaint alleging that the Respondents violated the SOX by terminating his employment, Merten properly invoked the DOL’s jurisdiction to adjudicate his complaint. Sylvester v. Parexel Int’l LLC, ARB No. 07-123, ALJ Nos. 2007-SOX-039-042, slip op. at 11 (ARB May 25, 2011).

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[Page 4]
Moreover, subsequent to the issuance of the ALJ’s decision, Congress enacted and the President signed into law on July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat. 1376 (2010) (Dodd-Frank Act). Section 929A of the Dodd-Frank Act clarifies the SOX whistleblower provision at Section 806 to specifically cover a subsidiary whose financial information is included in the consolidated financial statements of a parent company subject to the registration and reporting requirements of Sections 12 and 15(d), respectively, of the Securities Exchange Act of 1934. Because the Section 929A clarifying amendment does not create retroactive effects, it applies to Merten’s case on appeal. Johnson v. Siemans Bldg. Tech., Inc., ARB No. 08-032, ALJ No. 2005-SOX-015, slip op. at 16 (ARB Mar. 31, 2011). The record suggests that FSI is a consolidated entity of Berkshire Hathaway, but we do not find that the record before us conclusively establishes that fact.7 Consequently, the ALJ’s decision is vacated, and this case is remanded for the ALJ to address FSI’s status as a consolidated entity8 of Berkshire Hathaway consistent with the Board’s holding in Johnson and, if so, to determine the issue of liability under the facts presented at hearing.

Finally, we note that Merten also contended on appeal that the ALJ erred in denying his request to amend his complaint by adding two individuals as parties and to supplement his complaint with nine additional alleged adverse personnel actions to which he was subjected. Because this case must be remanded for reconsideration, the ALJ should also consider all relevant claims of adverse personnel actions which Merten raises when determining the issue of liability. In addition, ALJs should freely grant parties the opportunity to amend their initial filings to provide more information about their complaint prior to consideration of summary dismissal, and dismissals should be a last resort. See Sylvester, ARB No. 07-123, slip op. at 13.9

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[Page 5]

Conclusion
An employee of a subsidiary whose financial information is included in a publicly traded parent company’s consolidated financial statements is protected against retaliation where the employee engages in whistleblower protected activity under Section 806. Because whether FSI was a consolidated subsidiary of Berkshire Hathaway when FSI terminated Merten’s employment is uncertain on the record before us, we leave that finding for consideration on remand. If FSI was a consolidated subsidiary, the ALJ must then determine the issue of liability.

Accordingly, the ALJ’s Order Granting Motion to Dismiss is Vacated and this case is REMANDED for further proceedings consistent with this Decision and Remand Order.

SO ORDERED.

E. COOPER BROWN
Deputy Chief Administrative Appeals Judge

PAUL M. IGASAKI
Chief Administrative Appeals Judge

JOANNE ROYCE
Administrative Appeals Judge

[ENDNOTES]
1 18 U.S.C.A. § 1514(A) (Thomson/West 2010). The SOX’s implementing regulations are found at 29 C.F.R. Part 1980 (2010).

2 ALJ Order Granting Motion to Dismiss (Order) at 2; Affidavit of Thomas W. Riffe (Affd.) at 2. Section 806, 18 U.S.C.A. § 1514A(a), prohibits a “company with a class of securities registered under section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 781), or that is required to file reports under section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 780(d))” from retaliating against an employee who engages in whistleblower protected activity. Such companies are generally referred to as “publicly traded.”

3 Order at 2; Complaint at 1.

4 Complaint at 1-2.

5 Order at 5-8. The ALJ also denied Merten’s request to amend his complaint by adding two individuals as parties and to supplement his complaint with nine additional alleged adverse personnel actions to which he was subjected. Order at 8.

6 See 18 U.S.C.A. § 1514A(b) (authorizing the Secretary of Labor to hear SOX whistleblower complaints), 29 C.F.R. §§ 1980.106, 1980.107 (delegating the Secretary’s hearing and adjudication authority to Department ALJs). See also, 69 Fed. Reg. 52104-01 (Aug. 24, 2004) (“Responsibility for receiving and investigating these complaints has been delegated to the Assistant Secretary for OSHA.” Secretary’s Order 5-2002, 67 Fed. Reg. 65008 (Oct. 22, 2002)).

7 While there is evidence of record suggesting that FSI is a consolidated subsidiary of Berkshire Hathaway within the meaning of Section 806, see Merten’s Answer in Opposition to Respondents’ Motion to Dismiss, Exhibits 21-22, the determination of that question, based upon an appropriate finding of fact(s) subject to such further evidentiary development as may be warranted, is reserved to the ALJ upon remand.

8 Because a consolidated subsidiary is covered under Dodd-Frank and the record indicates that FSI is a consolidated subsidiary of Berkshire Hathaway, we decline to discuss further subsidiary coverage under agency law. See Johnson, ARB No. 08-032, slip op. at 17.

9 Dismissal is even less appropriate when the parties submit additional documents that justify an amendment or further evidentiary analysis under 29 C.F.R. § 18.40 (ALJ Rule 18.40), the ALJ rule governing motions for summary decision, which is analogous to Fed. R. Civ. P. 56 (summary judgment). In contrast, Rule 12 motions challenging the sufficiency of the pleadings are highly disfavored by the SOX regulations and highly impractical under the OALJ rules. These rules do not contain a rule analogous to Rule 12, but instead allow parties to seek prehearing determinations pursuant to ALJ Rule 18.40. Merten’s complaint instead requires further analysis pursuant to ALJ Rule 18.40 or an evidentiary hearing on the merits. See Sylvester, ARB No. 07-123, slip op. at 13.

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COVERED EMPLOYEE; STATE EMPLOYEE; WHETHER A UNIVERSITY IS AN ARM OF THE “STATE” IS A LEGAL ISSUE THAT CANNOT BE DECIDED BY THE ADMISSION OR STIPULATION OF THE PARTIES

Lewis v. Virginia Commonwealth University Police Dept., ARB No. 10-008, ALJ No. 2009-STA-39 (ARB June 16, 2011)
Final Decision and Order
U.S. Department of Labor Administrative Review Board
200 Constitution Avenue, N.W.
Washington, D.C. 20210

ARB CASE NO. 10-008
ALJ CASE NO. 2009-STA-039
DATE: June 16, 2011

In the Matter of:

ORVILLE LEWIS, JR.,

COMPLAINANT,

v.

VIRGINIA COMMONWEALTH
UNIVERSITY POLICE DEPARTMENT,

RESPONDENT.

BEFORE: THE ADMINISTRATIVE REVIEW BOARD

Appearances:

For the Complainant:
Orville Lewis, Jr., pro se, Petersburg, Virginia

For the Respondent:
Martha Parrish, Virginia Commonwealth University Office of the General Counsel, Richmond, Virginia

Before: Paul M. Igasaki, Chief Administrative Appeals Judge; Luis A. Corchado, Administrative Appeals Judge; and Joanne Royce, Administrative Appeals Judge

FINAL DECISION AND ORDER
Orville Lewis, Jr. filed a complaint with the United States Department of Labor’s Occupational Safety and Health Administration (OSHA) alleging that his employer, the Virginia Commonwealth University Police Department (VCU), violated the employee protection provisions of the Surface Transportation Assistance Act (STAA) of 1982, as amended and re-

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[Page 2]
codified, when it terminated his employment. 49 U.S.C.A. § 31105 (Thomson/West 2007 & Supp. 2010).

We review Lewis’s case pursuant to Secretary’s Order No. 1-2010 (Delegation of Authority and Assignment of Responsibility to the Administrative Review Board), 75 Fed. Reg. 3924 (Jan. 15, 2010). The Board “shall issue a final decision and order based on the record and the decision and order of the administrative law judge.” 29 C.F.R. § 1978.109(c)(2010).

In reviewing VCU’s motion for summary decision, the ALJ focused solely on the issue of coverage, given that the STAA excludes state employees from coverage. See 49 U.S.C.A. § 31105(j)(2). Whether Lewis was a state employee necessarily involves a mixed question of fact and law. The ALJ found that Lewis was a VCU employee based on an uncontested affidavit that said Lewis was employed by VCU. This fact is undisputed. The legal issue is whether VCU is the “state.” VCU argues that members of its staff are employees of the Commonwealth of Virginia. Resp. Br. at 4. Lewis does not deny that VCU is “a state” under the STAA or that he was employed by the Commonwealth of Virginia. Consequently, Lewis has essentially conceded that he is excepted from coverage under STAA because he is a state employee. Nevertheless, whether VCU is “a state” under the STAA is not an issue that can be decided by the admission or stipulation of the parties; it must be decided by law. The STAA does not define the term “state.” However, we believe that Virginia statutes and prior case law sufficiently answer the legal issue.

We note that Virginia federal courts have repeatedly used eight factors to determine whether a university or other entity is the “state.”1 Those are: (1) whether and to what extent any judgment will be payable from the state treasury; (2) the extent of funding provided to the institution by the state; (3) the extent of the state’s control in appointing the governing body of the institution; (4) the degree of the institution’s autonomy over its operations; (5) whether the institution is separately incorporated; (6) whether it has the power to sue and be sued and to enter into contracts; (7) whether its property is immune from state taxation; and (8) whether the institution’s function is governmental or proprietary.2 We see no reason to deviate from the Jacobs factors to decide this case.

Most of the Jacobs factors can be determined in this case by looking to the Virginia Code. Pursuant to that Code, the Commonwealth of Virginia established VCU as “a corporation consisting of the board of visitors of [VCU]” which is under the control of Virginia’s General Assembly. Va. Code § 23-50.4. All of VCU’s “real estate and personal property [is] the property of the Commonwealth.” Va. Code § 23-50.5. The Governor of Virginia appoints VCU’s board of visitors subject to confirmation by the General Assembly. Va. Code § 23-50.6. VCU was formed for the purpose of establishing and maintaining programs of education. Va.

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[Page 3]
Code § 23-50.7. The Commonwealth of Virginia appropriates funds to VCU for VCU to perform its functions. Va. Code § 23-50.8. The board of visitors must first obtain approval from the Governor of Virginia to convey any real estate. Va. Code § 23-50.13.

Applying the Jacobs factors, we note that VCU essentially parallels the College of William and Mary, which was found to be an arm of the state in Jacobs. Consequently, we agree that the state is the real party in interest in this case, and that VCU is the “state” as intended by the STAA.

After reviewing the record and the ALJ’s recommended decision and order, we agree with the ALJ’s conclusion that (1) there is no genuine issue of material fact that Lewis was a VCU employee, (2) VCU is the “state” for purposes of the STAA, and (3) VCU is entitled to judgment in its favor, as a matter of law, because Lewis, as an employee of a “state,” is not a covered “employee” under the STAA. Therefore, we affirm the ALJ’s recommended decision to dismiss this case.

Conclusion
Accordingly, we affirm the ALJ’s order and DENY Lewis’s complaint.

SO ORDERED.

LUIS A. CORCHADO
Administrative Appeals Judge

PAUL M. IGASAKI
Chief Administrative Appeals Judge

JOANNE ROYCE
Administrative Appeals Judge

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