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An $8 Million Whistleblower Settlement

Posted in False Claims Act fraud

I am pleased to announce a settlement totaling over $8 million dollars in a case brought by two whistleblower retaliation clients. Well may you ask: “Wait a minute, how do you leverage two individual employee whistleblower retaliation claims into a more than $8 million dollar settlement?” And the answer is: “Through the alchemy of the False Claims Act.”

My clients are pharmacists who were fired in October 2013 after insisting their employer comply with federal regulations governing the payment of drug prescriptions by Medicare. For more details on their case, see the U.S. Department of Justice’s Press Release and my Firm Press Release.

What transformed their individual retaliation claim into a multimillion dollar settlement was the involvement of federal monies, which made the False Claims Act applicable. The FCA is an extremely complex statute that when skillfully applied allows whistleblowers to add multimillion dollar premiums to their retaliation claims.

The purpose of the FCA is to punish the dishonest use of governmental monies and thus deter others from defrauding taxpayers. Examples of false claims include: falsely certifying a condition of payment; billing for services not done or that are unnecessary; over billing; billing for substandard service or goods; or failing to pay or refund monies owed to the government. There is a six year statute of limitations, so any false claims going back six years are fair game.

The FCA imposes triple damages and fines against the defrauding party, and entitles the whistleblower relator to receive a bounty of 15% to 30% of the total. However, FCA cases are fraught with hurdles and pitfalls. They can only be brought by an attorney on behalf of a whistleblower. Only the first relator to file can recover a bounty. The complaint must be filed under seal. And any public disclosure or breach of the seal can be fatal to a relator’s case.

Many FCA cases concern Medicare payments to health care providers or pharmaceutical companies. But defense contractors and any other businesses that directly or indirectly receive federal funds also are subject to a false claim action. One area that has not received the attention it deserves is transportation infrastructure projects.

Transportation infrastructure construction projects are subject to the False Claims Act because they depend on substantial federal and state funding. Such projects include the construction or renovation of tunnels, bridges, highways, stations, and ports, as well as publicly funded railroad capital improvements. For example, in the greater New York City area alone, a multitude of projects are underway at the MTA, Amtrak, Metro North Railroad, the Long Island Rail Road, PATH, and New Jersey Transit. The FCA applies to similar construction projects nationwide. Click here for a list of some of those projects.

So here is the message to all the managers and employees involved in such transportation construction projects: be on the look out for potential false claims. If you have concrete information showing the misuse of federal or state monies, do not go public until you contact an experienced FCA attorney to ensure you follow the special procedures of the FCA. Any discussion will be kept confidential, and any resulting FCA complaint will be filed under seal. You may receive a multimillion dollar bounty for protecting taxpayer dollars. Click here to learn more about the False Claims Act, so that when confronted with evidence taxpayer dollars are being lost to fraud or waste, you can do the right thing.

Two Recent FRSA Punitive Damages Decisions

Posted in Federal Rail Safety Act

Here are two recent federal court decisions affirming the amount of punitive damages awarded by the Administrative Review Board and by a district court jury.

In Jason Raye v. Pan Am Railways, the Administrative Law Judge awarded the statutory maximum of $250,000 in punitive damages despite the fact Jason Raye was not actually disciplined and lost no wages. The Administrative Review Board affirmed that decision, explaining that the employer’s misconduct need not be egregious or outrageous, only that it be in “reckless or callous disregard” of the employee’s rights.

The Railroad appealed to the Circuit Court, and the First Circuit Court of Appeals affirmed the ALJ, holding: “we conclude that the ALJ’s decision to award punitive damages of $250,000, to punish and deter what he perceived to be a culture of intimidating employees and discouraging them from engaging in protected activity, was within the realm of his discretion.”

The Circuit noted FRSA “punitive damages are warranted if a railroad:

  • acted with malice or ill will, or
  • with knowledge that its actions violated federal law, or
  • with reckless disregard or callous indifference to the risk that its actions violated federal law

As for the amount of the punitive damages, the Circuit Court confirmed the “ALJ was entitled, within wide limits, to decide how much weight to afford to each of the relevant facts, to assess the credibility of the witnesses, and to make the fact-sensitive and discretionary moral judgments” required.

In Timothy Dendy and Jason Polk v. National Railroad Passenger Corp., a federal court jury awarded each plaintiff $711.43 in back pay and $125,000 in punitive damages. Amtrak asked the district judge to set aside the jury’s punitive damage awards, arguing there was no evidence of Amtrak’s recklessness or callous indifference to the plaintiffs’ FRSA whistleblower protection rights.

The district judge rejected Amtrak’s argument, noting direct evidence a railroad knew it was violating an employee’s FRSA rights is not required. Rather, it is sufficient to produce circumstantial evidence of the railroad’s “knowledge that it may be acting in violation of federal law.” And it is the role of the jurors to issue a moral judgment on the railroad’s conduct via their punitive damages award:

Ultimately, an award of punitive damages is a discretionary moral judgment that the defendant has engaged in conduct that is so reprehensible that it warrants punishment. The Court will not second-guess the jury’s judgment.

Here is the full text of the Raye v. Pan Am and Dendy v. NRPC decisions. For more information on the whistleblower rights of railroad workers, go to the free Rail Whistleblower Library.

Recent FRSA Circuit Court Decisions

Posted in Federal Rail Safety Act

The 8th Circuit has issued a spate of FRSA decisions falling outside the main stream of other Circuits. It is important to put them in perspective.

Araujo v. Kuduk: a distinction without a difference

Citing the Congressional Record and the leading whistleblower decision in Marano v. Dep’t of Justice, 2 F.3d 1137, 1140 (Fed. Cir. 1993), the 3rd Circuit in Araujo explained why the contributing factor standard did not require a railroad employee to prove the manager taking the adverse action had a retaliatory motive. Araujo v. NJT Rail Operations, 708 F.3d 152 (3rd Cir 2013). The 8th Circuit is trying to draw a distinction between itself and the 3rd Circuit, but it is a distinction without a difference.

In Kuduk v. BNSF Ry. Co., 768 F.3d 786, 791 (8th Cir 2014), the 8th Circuit noted:

the FRSA knowledge requirement may be satisfied by circumstantial evidence the employer had actual or constructive knowledge of protected activity. . . . We agree . . . that, under the [FRSA] statute’s “contributing factor” causation standard, “[a] prima facie case does not require that the employee conclusively demonstrate the employer’s retaliatory motive.” . . . But the contributing factor that an employee must prove is intentional retaliation prompted by the employee engaging in protected activity.

The use of the phrase “intentional retaliation” is simply a maladroit way of saying the managers who took the adverse action must have had some knowledge of the employee’s protected activity. Which has always been the case. Knowledge of the protected activity = intentional retaliation. The more accurate phrasing actually is: “intentional retaliation prompted by some knowledge of the employee’s protected activity.” If the supervisors taking the adverse action had no knowledge of the employee’s protected activity, then the  contributing factor element is not satisfied. But that is nothing new or different. The 8th Circuit’s “intentional retaliation” comment is a distinction without a difference.

In Kuduk the 8th Circuit also took a gratuitous swipe at the 3rd Circuit’s Araujo decision by footnoting the following dicta:

In our view, the Araujo panel may have improperly relied on Marano . . . for its no-need-to-show-motive conclusions because the court in Marano was construing a federal employee whistleblower statute that required only an ultimate showing of causation in fact (‘because of’), not discrimination.

But that dicta is simply wrong. In fact Marano interpreted and applied the “contributing factor” burden of proof standard, which is the very same standard cited in AIR-21 and incorporated by reference into FRSA Section 20109. The Administrative Review Board has stated many times that the “contributing factor” standard is the standard elucidated in Marano, see e.g., Palmer v. Canadian National Railway, ARB No. 16-035,  ALJ No. 2014-FRS-154 (ARB Sept. 30, 2016), as have other Circuits, see e.g., Halliburton v. Administrative Review Board, 771 F.3d 254 (5th Cir. 2014).

The 8th Circuit continues to cite Kuduk’s erroneous dicta. Blackorby v. BNSF Ry. Co., 849 F.3d 716 (8th Cir. 2017), and Heim v. BNSF Ry. Co., 849 F.3d 723 (8th Cir. 2017). But that is no reason for other courts to do so. Anytime a railroad cites Kuduk, make sure the court understands the phrase “intentional retaliation” is simply drawing a distinction without a difference.

Laches Dicta

To prevail on a common law defense of laches, a defendant must prove the plaintiff unreasonably and inexcusably delayed filing the lawsuit, resulting in actual prejudice to the defendant. In pure dicta, and without benefit of any briefing or argument, two members of an 8th Circuit panel recently engaged in sua sponte speculation about the applicability of the common law principle of laches to Section 20109 cases. Gunderson v. BNSF Ry. Co., 2017 U.S. App. LEXIS 4258 (8th Cir. 2017). While such uninformed speculation has no precedential effect, in deciding when to opt out of the DOL and file a FRSA complaint in federal district court, attorneys representing FRSA clients should be mindful of the laches principle.

Scope of Hazardous Safety Conditions

In its PATH (Bala) decision, the 3rd Circuit commented in dicta that subsection (b)(1)(A)’s phrase “hazardous safety condition” is limited to conditions related to railroad work:  “we think that subsection (b)(1)(A) must be read as having at least some work-related limitation.” The 3rd Circuit did NOT say (b)(1)(A) is limited to work-related injury conditions. On the contrary, the Circuit Court was pointing out subsection (b)(1)(A) protects the reporting of any hazardous condition that is related to an employee’s railroad work. However, the district court in Murdock v. CSX Transp. Inc., 2017 U.S. Dist. LEXIS 46835 (N.D. Ohio 2017), entirely missed that point, erroneously merging (b)(1)(A)’s reporting of a hazardous condition with a (b)(2)(B) refusal to work. The 3rd Circuit’s PATH decision did no such thing.

For more information on the FRSA Section 20109 whistleblower statute, go to the free Rail Whistleblower Library.

Amtrak Hit With $900,000 Whistleblower Award

Posted in False Claims Act fraud

Amtrak’s Office of Inspector General (OIG) is supposed to investigate and remedy retaliation against employees who blow the whistle on contractor fraud or safety hazards. But in a ruling that raises serious questions about Amtrak’s commitment to whistle blower protection, OSHA has found Amtrak terminated one of its own OIG Supervisors for raising concerns about contractor fraud and safety. That Supervisory Special Agent is my client, Michael DeJoseph. OSHA has ordered Amtrak to immediately reinstate him and pay him over $900,000 in damages.

Michael’s long career in law enforcement is impressive. A graduate of the Connecticut State Police Academy and the FBI National Academy, he served 29 years on the Newtown Connecticut Police Department, retiring as Chief of Police. He then joined Amtrak’s OIG, where for ten years he was Supervisory Special Agent-in-Charge of the NYC and Boston offices, overseeing sensitive investigations into allegations of fraud and mismanagement by high level Amtrak management.

The trouble began when Michael discovered that ten concrete inspectors who certified the concrete used on Amtrak’s East River Tunnel projects were not actually certified to inspect concrete, and that Amtrak had been paying invoices based on the testing of those non-credentialed inspectors. Such fraudulent concrete testing posed obvious risks to the safety of Amtrak’s passengers using those tunnels, and Michael pressed ahead with his investigation. But when he issued a subpoena for more information, Amtrak’s Deputy Inspector for Investigations intervened and shut down the investigation. That Deputy Inspector then issued the first negative review in Michael’s career, eliminated his Supervisory position, and terminated him after claiming he was “not qualified” to be rehired as a Special Agent.

OSHA found OIG’s “not qualified” claim was a pretext to retaliate against Michael for raising fraud and safety concerns related to the uncertified inspections of Amtrak’s tunnel concrete. OSHA ordered Amtrak to immediately reinstate Michael into his former Supervisory position and pay him $892,550 in wages, interest, emotional distress, and punitive damages. With attorney fees the total is well over $900,000. Here is the full Merit Finding in Michael DeJoseph v. NRPC. And here is OSHA’s Press Release and Twitter post.

The take away? All railroad employees and managers must know that the Federal Rail Safety Act will protect them when they raise concerns over contractor fraud or safety. This is especially important going forward, given the billions of dollars in transportation infrastructure projects sure to flow from federal and state governments in the near future. Fraud by contractors working on tunnel, bridge, highway, and railroad infrastructure projects must not be tolerated. And anyone with knowledge of such fraud should know they may be entitled to rewards in the millions of dollars if they follow the special provisions of the False Claims Act (which requires the filing of a complaint under a seal of secrecy). Here is more on whistleblower awards under the qui tam provisions of the False Claims Act. For more on the rights of railroad whistleblowers, go to the free Rail Whistleblower Library.

ARB Reaffirms (c)(2) Protects Non Work Related Medical Conditions

Posted in Federal Rail Safety Act

In a major decision with national implications, the Administrative Review Board confirms that Federal Rail Safety Act subsection (c)(2) does indeed protect treatments for non-work related medical conditions. Williams v. Grand Trunk Western Railroad. In so doing, the ARB explicitly rejects the 3rd Circuit’s holding in Bala v. PATH, which imposed a work related limitation on the scope of (c)(2) protection. The result is that in every Circuit other than the 3rd, it now is the official position of the Department of Labor that (c)(2) protects employees who follow their treating doctor’s orders for a non work related medical condition.

The plain language of subsection (c)(2) states: “A railroad may not discipline or threaten to discipline employees for following the orders or treatment plan of a treating physician.” Congress did not include any work-related limitation, and the ARB explained why the 3rd Circuit’s imposition of a work-related limitation is “counter to the intent of Congress”:

the express language set out in Sections 20109(c)(1) and (2), as well as the legislative history, makes it clear that Congress did not intend to foreclose protection from railroad workers who were following a physician’s treatment plan for a non-work-related condition or injury.

Because there is no rule of intercircuit stare decisis, federal agencies are not bound by the decision of a circuit court in litigation arising in other circuits. Thus, we decline to apply the holding in PATH to cases not arising in the Third Circuit.

The wrong headedness of the 3rd Circuit’s Bala “work related” limitation has become glaringly obvious in light of the recent string of deadly derailments related to the untreated medical conditions of locomotive engineers. Situational awareness must be maintained at all times, and no one wants an employee in an unsafe condition to perform safety sensitive railroad work. When an employee follows his doctor’s orders not to work in an unsafe condition, that absence must be encouraged and protected. Period.

Bottom line? The ARB has given a green light to workers in all the other circuits to press complaints with OSHA and Administrative Law Judges when railroads discipline them for following the orders of their treating doctors, regardless of whether the medical condition is work or non-work related. Here is the complete text of Williams v. Grand Trunk Western  Railroad Company. For more information on FRSA Section 20109, go to the free Rail Whistleblower Library.

New Guidelines on FRSA Settlement Agreements

Posted in Federal Rail Safety Act

Recognizing it’s hard to blow the whistle once you’ve been gagged, OSHA has issued new guidelines prohibiting the use of gag and confidentiality clauses in settlement agreements. See Policy Guidelines for Approving Settlement Agreements in Whistleblower Cases.

OSHA reviews settlement agreements between whistleblowers and their employers “to ensure they are fair, adequate, reasonable, and in the pubic interest, and that the employee’s consent was knowing and voluntary.” OSHA now updates “the criteria that OSHA will use to evaluate whether a settlement impermissibly restricts or discourages protected activity.”

OSHA confirms it will not approve any gag or confidentiality provision that “prohibits, restricts, or otherwise discourages an employee from participating in protected activity.” Such protected activity includes but is not limited to providing information to the government, filing a complaint with a governmental agency, participating in an investigation, or testifying in proceedings regarding an employee’s past or future conduct.

Any provision that restricts such activity is prohibited, as is any provision that requires an employee to notify his employer before filing a complaint or communicating with the government regarding the employee’s past or future conduct. And even adding the phrase “except as provided by law” to a confidentiality clause will not spare it from deletion by OSHA.

The take away? Railroad attorneys should not even think about gagging employees with confidentiality clauses, because OSHA will rip off the gag every time. Here is the full OSHA Policy Guidelines for Approving Whistleblower Settlements. For more information on the whistleblower rights of railroad workers, go to the free Rail Whistleblower Library.

ARB Clarifies FRSA Punitive Damages Standard

Posted in Federal Rail Safety Act

The Administrative Review Board has handed down an important punitive damages decision that also shows how to eliminate a railroad’s affirmative defense. In Jason Raye v. Pan Am Railways, Inc., the Railroad charged the employee with making false statements in a Federal Rail Safety Act complaint filed with OSHA. Although Raye was never actually disciplined and lost no wages, the ALJ awarded him the statutory maximum of $250,000 in punitive damages. Here are the highlights:

How To Eliminate a Railroad’s Affirmative Defense

The ARB stressed that once an employee shows his protected activity contributed in whole or in part to the adverse action,

to avoid liability the railroad must prove by clear and convincing evidence that it would have taken the same action absent the employee’s protected activity. . . .Clear and convincing evidence is evidence indicating that the thing to be proved is highly probable or reasonably certain.

This means that

The lack of credible explanations from the employer makes the ALJ’s finding of causation that much stronger and effectively eliminates the employer’s ability to establish an affirmative defense.

Thus, all an employee need do to eliminate the railroad’s defense is to expose the falsity of the railroad’s explanation or demonstrate the lack of credible evidence supporting it.

When Punitive Damages Are Warranted

The ARB follows the United States Supreme Court’s standard for when an employer’s conduct triggers a punitive damages award, namely

where there has been reckless or callous disregard for the plaintiff’s rights, as well as intentional violations of federal law. The inquiry into whether punitive damages are warranted focuses on the employer’s state of mind, and thus does not require that the employer’s misconduct be egregious or outrageous.

The “requisite state of mind” is confirmed when a railroad consciously disregards an employee’s FRSA protected rights or intentionally interferes with the exercise of those rights. And although egregious or outrageous conduct by a railroad is not necessary to establish the requisite state of mind, its presence certainly supports an inference of the requisite state of mind.

The Amount of Punitive Damages

The ARB notes the purpose of punitive damages is to punish employer conduct that “calls for deterrence and punishment.” The amount to accomplish that purpose is up to the Judge’s discretion:

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 an award of punitive damages would be appropriate is to determine the amount necessary for punishment and deterrence, which is “a discretionary moral judgment.”

Finally, the ARB stresses that the FRSA’s “statutory limit on punitive damage awards” eases “any reluctance to award punitive damages where minimal or no compensatory damages have been awarded.”

In other words, it is perfectly appropriate to award the maximum statutory limit of $250,000 even in cases with little or no economic damages. And that was the case in Raye: Jason Raye was not actually disciplined and had no lost wages, yet the ARB upheld an award of $250,000 in punitive damages to punish the Railroad’s conduct and “to deter similar conduct in the future.”

Here is the full Decision in Raye v. Pan Am Railways, Inc. For more information on the whistleblower rights of railroad workers, go to the free Rail Whistleblower Library.

Landmark NTSSA Subway Whistleblower Decision

Posted in Subway Whistleblower

Most subway and bus workers probably don’t know it, but there is a federal law that protects them from any retaliation for reporting safety hazards in their workplace. It’s called the National Transit Systems Security Act, or NTSSA, and is a twin brother to the better known Federal Rail Safety Act whistleblower law protecting railroad workers. There have been very few decisions under the NTSSA, no doubt due to a pervasive culture of intimidation and retaliation that discourages whistleblowing by subway and bus workers. But that may change, given a landmark decision confirming the broad scope of the NTSSA, Janathan Harte v. New York City Transit Authority.

The NTSSA prohibits any public transportation agency from firing, demoting, suspending, reprimanding, or discriminating “in any other way against” employees for:

  • reporting a hazardous safety or security condition
  • refusing to violate or assist in violating any federal law, rule, or regulation relating to public transportation safety or security
  • providing information to any investigation regarding violations of any federal law, rule, or regulation relating to public transportation safety or security
  • providing information regarding the fraud or waste of public funds relating to public transportation safety or security
  • refusing to work when confronted by a hazardous safety or security condition related to performance of their duties, under certain conditions

The text of the NTSSA clearly protects employees where ever they work, but for the past nine years the largest subway system in the nation, the New York City Transit Authority, has pretended the NTSSA only applies to terrorist activity at passenger locations such as platforms and stations, and not to the shops and tracks where employees work. That dangerous fantasy is now exploded. A federal Administrative Law Judge has definitively declared that the scope of the NTSSA is not limited to terrorism but also includes employee work places, and thus employee “reporting of hazards that present a threat to employee safety” is protected activity under the NTSSA.

Janathan Harte worked at the NYCTA’s Linden Shop. After his internal complaints of safety hazards were ignored, he reported the hazards to PESH, the New York state agency that enforces OSHA standards in NYCTA work places. Two PESH inspectors then conducted a surprise inspection of the Shop. Harte and the Superintendent of the Shop accompanied them. When the inspectors came upon a drill press with no safety guards on it, they asked the Superintendent if the press was operational. The Superintendent said no, but Harte then walked over and turned on the machine, saying his co-workers do in fact use it. The Superintendent immediately blew up and threatened to take Harte off the overtime list and reassign him to “the rack.” After being warned by the PESH inspectors he could not retaliate against Harte, the Superintendent did not actually alter Harte’s overtime or job assignment. But the next day the Superintendent told Harte’s supervisors Harte was to blame for all the disruption resulting from the remedial actions PESH required after the inspection.

The issue at trial was, did the NTSSA extend to employee work places, and did the Superintendent’s threats constitute prohibited adverse action? After hearing all the evidence, the Judge ruled the NTSSA does indeed protect employee work areas such as shops, and that “a standalone threat, without a tangible loss of benefits, is sufficient to constitute an adverse action” under the NTSSA.

The NTSSA prohibits any adverse actions related to a protected activity such as reporting safety hazards, and a supervisor’s threats to alter the terms of an employee’s employment (wages, job assignments, etc) are adverse even if the threat is not carried out. This is because, given “the power imbalance that comes with the supervisor-subordinate relationship,” such threats “could reasonably dissuade workers from exercising their whistleblower rights.”  Accordingly, the Judge ruled the NYCTA did indeed violate Janathan Harte’s NTSSA right to report safety hazards, and awarded him damages.

The NTSSA is a very powerful law with the following “make whole” remedies:

  • an order voiding any retaliatory discipline
  • an order reinstating the worker with benefits and seniority unimpaired
  • an award of full back pay with interest
  • an award for any out of pocket expenses resulting from the retaliation
  • an award for emotional distress
  • a punitive damages award up to $250,000
  • an award for the attorney’s fees and costs of the worker’s own attorney

So, the message to subway and bus workers everywhere is, take Harte! Know that you have the right to report safety hazards in your workplace and that you will be protected from retaliation when you do. Don’t let any reluctance to blow the whistle on safety hazards endanger the lives of your co-workers or the public. Do the right thing, and you will be protected. Here is the full Harte v. New York City Transit Authority Decision. For more on the standards that apply to subway and bus whistleblowers, go to the free Rail Whistleblower Library.

ARB Clarifies FRSA Burdens of Proof

Posted in Federal Rail Safety Act

In a major en banc decision, the Administrative Review Board clarifies the burdens of proof applicable to ALJ whistleblower trials and explains how to apply that standard. Palmer v. Canadian National Railway. This is a must read decision for anyone interested in Federal Rail Safety Act whistleblower matters, but here are some of the highlights:

Proof of the Contributory Factor Element

 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 fact finder may consider in making that determination, and 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 non-retaliatory reasons in order to determine whether protected activity was a contributing factor in the adverse action.

However, the level of causation that a complainant needs to show contributing factor 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 non-retaliatory 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 non-retaliatory reasons, but only to determine whether the protected activity played any role at all.

We have said it many a time before, but we cannot say it enough: A contributing factor is ‘any factor, which alone or in combination with other factors, tends to affect in any way the outcome of the decision.’ We want to reemphasize how low the standard is for the employee to meet, how broad and forgiving it is. Any factor really means any factor. It need not be significant, motivating, substantial or predominant, it just needs to be a factor. The protected activity need only play some role, and even an [in]significant or [in]substantial role suffices.

Importantly, if the ALJ believes that the protected activity and the employer’s non-retaliatory reasons both played a role, the analysis is over and the employee prevails on the contributing-factor question. Thus, consideration of the employer’s non-retaliatory reasons at step one will effectively be premised on the employer pressing the factual theory that non-retaliatory reasons were the only reasons for its adverse action. Since the employee need only show that the retaliation played some role, the employee necessarily prevails at step one if there was more than one reason and one of those reasons was the protected activity.

We cannot emphasize enough the importance of the ALJ’s role here: it is to find facts. The ALJ must consider all the relevant, admissible evidence and make a factual determination, under the preponderance of the evidence standard of proof, about what happened: is it more likely than not that the employee’s protected activity played a role, any role whatsoever, in the adverse personnel action? If yes, the employee prevails at step one; if no, the employer prevails at step one. If there is a factual dispute on this question, as is usually the case, the ALJ must sift through the evidence and make a factual determination. This requires the ALJ to articulate clearly what facts he or she found and the specific evidence in the record that persuaded the ALJ of those facts.

Proof of Railroad’s Affirmative Defense

 The second step involves a hypothetical question about what would have happened if the employee had not engaged in the protected activity: in the absence of the protected activity, would the employer nonetheless have taken the same adverse action anyway? On that question, the employer has the burden of proof, and the standard of proof is by clear and convincing evidence. For the ALJ to rule for the employer at step two, the ALJ must be persuaded, based on a review of all the relevant, admissible evidence, that it is highly probable that the employer would have taken the same adverse action in the absence of the protected activity. . . . It is not enough for the employer to show that it could have taken the same action; it must show that it would have.

The ARB’s full Decision is at Palmer v. Canadian National Railway. For more information on the whistleblower rights of railroad workers, go to the free Rail Whistleblower Library.

Landmark Seaman’s Protection Act Retaliation Award

Posted in Seaman's Protection Act

Under the Seaman’s Protection Act (SPA), merchant marine seamen enjoy the same protection against retaliation that railroad workers enjoy under the Federal Rail Safety Act. But due to the shipping industry’s pervasive culture of retaliation against seamen who report safety hazards to outside enforcement agencies, hardly any SPA cases have been brought. Now comes a landmark million dollar SPA award exposing that culture of intimidation and declaring it no longer will be tolerated.

The case is John Loftus v. Horizon Lines, Inc. and Matson Alaska, Inc. In 2013 Captain Loftus was Master of the Horizon Trader, an 813 foot long container ship operating on the eastern seaboard between New York, Jacksonville, and San Juan Puerto Rico. Despite his 20 year unblemished record as a Captain, in June 2013 he was abruptly removed as Master due to his reporting of safety violations to the U.S. Coast Guard and its delegated inspection agency, the American Bureau of Shipping.

The purpose of the SPA is to augment the Coast Guard’s limited enforcement resources by encouraging seamen to report possible violations of safety regulations. It does so by prohibiting retaliation against seamen who report possible regulatory violations to the USCG or ABS. The world of American Mariners is small and everyone knows everyone else. By removing Loftus as Captain for specious reasons, Horizon sent a chilling message throughout the industry that safety complaints will be punished. John Loftus filed a SPA case not only to clear his name but more importantly to remedy the profoundly unsafe effect of that message.

After a three day trial, United States DOL Administrative Law Judge Jonathan C. Calianos issued a detailed 48 page Decision that is a complete vindication of John’s character as a man and as a Captain. It is a landmark SPA decision that will encourage seamen to report safety violations and discourage management from retaliating when they do.

Judge Calianos found “Captain Loftus was the most safety conscientious Master in the entire Horizon Lines fleet” with “an unusually strong commitment to the safety of his vessel and crew.” But Captain Loftus’s insistence on calling Horizon’s attention to serious safety hazards was met with indifference and inaction. As a result, “Loftus resorted to reporting safety concerns to the regulatory agencies because of Horizon’s consistent failure to correct hazardous conditions aboard the Trader. Loftus was clearly a thorn in Horizon’s side.”

In removing Loftus as Master, the Judge found “Horizon’s conduct was reprehensible” because it engaged in “machinations,” “smoke and mirrors,” and “fabrication” to mask “the real reasons” for its removal of Loftus as Master, “namely to discipline Loftus for his protected activity.” In addition to awarding full back wages and emotional distress, the Judge found such reprehensible conduct required the imposition of punitive damages close to the statutory maximum, explaining:

the need to deter others from engaging in similar conduct is uniquely critical in the SPA whistleblower context given such claims involved public safety, and an adverse action may have a chilling effect on the willingness of other seamen to report a violation. This is especially true considering how small the marine industry is, and how quickly word travels within it. Horizon’s retaliation against Loftus is exceptionally troublesome considering his reputation for being an exemplar of safety, which is exactly what the SPA is designed to promote.

The damages resulting from Horizon’s retaliation totals over $1 million: $655,000 in back wages with a high rate of interest compounded on a daily basis; $225,000 in punitive damages; $10,000 for emotional distress; and over $200,000 in attorney’s fee and expenses.

Full disclosure: John Loftus is my client, and it was my privilege to try his case and help clear his name. I would like to extend a special thanks to the impressive marine safety experts who testified at trial on John’s behalf: Walcott J. Becker, Jr. (former Vessel Superintendent at Horizon Lines), Captain Kevin O’Halloran, Captain James Staples, and  Mark A. Bisnette (retired USCG officer).

For the sake of shipping safety, let us hope this landmark case encourages all seamen to freely exercise their SPA right to report safety hazards, and deters managers from retaliating when they do. Here is the full text of Loftus v. Horizon Lines, Inc. and Matson Alaska, Inc.