Tuesday, November 26, 2013

Exercise v. Assistance Clauses Under the WPEA



This Wednesday the Whistleblower Protection Enhancement Act will celebrate its first birthday. The law dramatically strengthened the protections for federal employees who blow the whistle.

However, the U.S. Merit Systems Protection Board’s ruling in Mudd v. U.S. Dep’t of VeteransAffairs, 2013 M.S.P.B. 90 (Nov. 19, 2013), this past week shows that the scope of the Enhancement Act is still very much at issue.

The Board is an administrative body charged with adjudicating various complaints from federal employees. One of the Board’s functions is to help resolve certain allegations of whistleblower retaliation. A successful whistleblower claim must show that an employee suffered reprisal for engaging in activity that is protected under the law.

The Enhancement Act provides that a federal employee can base a whistleblower action on retaliation for the “exercise” of any complaint, appeal, or grievance right regarding whistleblower reprisal. 5 U.S.C. § 1221(a) (providing whistleblower action for reprisal in violation of 5 U.S.C. § 2302(b)(9)(A)(i)). It also provides a whistleblower action for “assisting” any individual in the exercise of such a right, regardless of the topic of the complaint, appeal, or grievance. Id. (providing whistleblower action for reprisal in violation of 5 U.S.C. § 2302(b)(9)(B)).

Under the law’s plain language, a whistleblower enjoys very different protections under the “exercise” and “assistance” clauses. The former protects only employees who bring whistleblower allegations, while the latter protects employees who assist in any complaint or grievance process. 

In Mudd, the employee argued on review that she engaged in protected activity by alleging violations of law and regulation in her own union grievance. Mudd v. U.S. Dep’t of Veterans Affairs, 2013 M.S.P.B. 90 (Nov. 19, 2013).

The Board agreed with the initial decision’s rejection of this contention. Id. at 4. Analyzing the exercise clause, the Board held that because the grievance did not allege whistleblower reprisal, the employee had no claim that she suffered retaliation for filing the grievance. Id. However, the Board ignored the assistance clause.

What an employee must do to assist the exercise of a right, so that the protection extends to any grievance process, remains unclear. Reading the assistance clause literally would render meaningless the law’s limitation of the exercise clause to whistleblower complaints. However, literal application of the exercise clause would exclude a whistleblower aiding her own cause from the assistance clause’s broad protections. This result contradicts the statute’s plain language that extends to assisting “any individual,” presumably including oneself.

The legislative history is helpful in understanding the likely resolution of this conflict. A Senate committee report indicates that Congress agreed with the Board’s understanding of the exercise clause as articulated in Mudd. S. Report 122-155.

Further, the committee report shows that Congress understood the assistance clause to apply only when an employee helps “another individual,” notwithstanding the fact that the law states “any individual.” Id. In other words, assisting “any individual” does not include assisting oneself. 

Therefore, the law may reserve the assistance clause’s broader protection for an employee who helps others vindicate their rights. 

A year after the Enhancement Act’s passage, the scope of whistleblower protections remains unclear. However, at least one thing is certain: prosecuting a successful federal employee whistleblower action remains fraught with pitfalls. Federal employees who believe they have suffered unlawful reprisal will likely benefit from the advice of experienced whistleblower counsel, such as the attorneys at Kalijarvi, Chuzi, Newman & Fitch. Further, when possible, whistleblowers should engage in clearly protected activity and not rely on the assistance clause.

written by Dallas Hammer

A Year Later, Questions Remain About WPEA's Protections


This Wednesday the Whistleblower Protection Enhancement Act will celebrate its first birthday. The law dramatically strengthened the protections for federal employees who blow the whistle.

However, the U.S. Merit Systems Protection Board’s ruling in Mudd v. U.S. Dep’t of Veterans Affairs this past week shows that the scope of the Enhancement Act is still very much at issue.
The Board is an administrative body charged with adjudicating various complaints from federal employees. One of the Board’s functions is to help resolve certain allegations of whistleblower retaliation. A successful whistleblower claim must show that an employee suffered reprisal for engaging in activity that is protected under the law.

The Enhancement Act provides that a federal employee can base a whistleblower action on retaliation for the “exercise” of any complaint, appeal, or grievance right regarding whistleblower reprisal. 5 U.S.C. § 1221(a) (providing whistleblower action for reprisal in violation of 5 U.S.C. § 2302(b)(9)(A)(i)). It also provides a whistleblower action for “assisting” any individual in the exercise of such a right, regardless of the topic of the complaint, appeal, or grievance. Id. (providing whistleblower action for reprisal in violation of 5 U.S.C. § 2302(b)(9)(B)).

Under the law’s plain language, a whistleblower enjoys very different protections under the “exercise” and “assistance” clauses. The former protects only employees who bring whistleblower allegations, while the latter protects employees who assist in any complaint or grievance process.

In Mudd, the employee argued on review that she engaged in protected activity by alleging violations of law and regulation in her own union grievance. Mudd v. U.S. Dep’t of Veterans Affairs, 2013 M.S.P.B. 90 (Nov. 19, 2013).

The Board agreed with the initial decision’s rejection of this contention. Id. at 4. Analyzing the exercise clause, the Board held that because the grievance did not allege whistleblower reprisal, the employee had no claim that she suffered retaliation for filing the grievance. Id. However, the Board ignored the assistance clause.

What an employee must do to assist the exercise of a right, so that the protection extends to any grievance process, remains unclear. Reading the assistance clause literally would render meaningless the law’s limitation of the exercise clause to whistleblower complaints. However, literal application of the exercise clause would exclude a whistleblower aiding her own cause from the assistance clause’s broad protections. This result contradicts the statute’s plain language that extends to assisting “any individual,” presumably including oneself.

The legislative history is helpful in understanding the likely resolution of this conflict. A Senate committee report indicates that Congress agreed with the Board’s understanding of the exercise clause as articulated in Mudd. S. Report 122-155.

Further, the committee report shows that Congress understood the assistance clause to apply only when an employee helps “another individual,” notwithstanding the fact that the law states “any individual.” Id. In other words, assisting “any individual” does not include assisting oneself.

Therefore, the law may reserve the assistance clause’s broader protection for an employee who helps others vindicate their rights.

A year after the Enhancement Act’s passage, the scope of whistleblower protections remains unclear. However, at least one thing is certain: prosecuting a successful federal employee whistleblower action remains fraught with pitfalls. Federal employees who believe they have suffered unlawful reprisal will likely benefit from the advice of experienced whistleblower counsel. Further, when possible, whistleblowers should engage in clearly protected activity and not rely on the assistance clause unless they were helping another employee.

Posted by Dallas Hammer

Wednesday, November 20, 2013

Processing Complaints of Discrimination by Lesbian, Gay, Bisexual, and Transgender (LGBT) Federal Employees

The EEOC has issued new guidance to federal EEO offices on processing complaints of discrimination by lesbian, gay, bisexual, and transgender employees.  In the EEOC's recent decision, Macy v. Dep't of Justice, EEOC Appeal No. 0120120821 (April 20, 2012), the Commission held that discrimination against an individual because that person is transgender is discrimination because of sex.  Therefore, the Commission advises federal agencies that "[c]omplaints of discrimination on the basis of transgender status should be processed under Title VII of the Civil Rights Act of 1964 and through the federal sector EEO complaint process at 29 C.F.R. Part 1614 as claims of sex discrimination."

With respect to EEO Counseling, the Commission states:  "In accordance with EEO Pre-Complaint Processing Procedures set forth in MD 110 Chapter 2, EEO Counselors should assist individuals in clearly defining their claims. Lesbian, gay and bisexual employees who believe they have been discriminated against because of their sexual orientation should be counseled that they have a right to file a complaint under the 1614 process, because they may have experienced sex discrimination, as described above."

The Commission also observed that Executive Order 13087 explicitly prohibits discrimination based on sexual orientation; therefore, federal agencies are instructed to maintain procedures permitting federal employees to file complaints of sexual orientation discrimination under the Executive Order.

In addition, employees can file complaints of sexual orientation and gender identity discrimination with the Office of Special Counsel (OSC) as these may constitute prohibited personnel practices over which the OSC has jurisdiction.

Kudos to the EEOC for providing guidance to federal EEO offices on how to properly process these types of claims.  Kalijarvi, Chuzi, Newman & Fitch can help you if you need assistance in the EEO process.

Monday, November 18, 2013

Supreme Court justices show support for Lawson

Last week, the Supreme Court heard oral argument in Lawson v. FMR. This is the first Sarbanes-Oxley (SOX) corporate fraud whistleblower case to be heard by the High Court. The transcript is now available here.

The issue is whether the text of SOX's whistleblower protection covers the employees of the contractors of publicly traded companies. The First Circuit Court of Appeals said, “no,” even though SOX says that it covers, “any officer, employee, contractor, subcontractor, or agent of such company[.]” The First Circuit said this phrase prohibits the contractors from firing the employees of the publically traded company, and has no effect on the contractor's treatment of its own employees. I criticized this decision when it was issued in this prior blog post.

University of Washington law professor Eric Schnapper presented the argument for whistleblowers Jackie Lawson and Jonathan Zang. Schnapper was able to get out four iron clad reasons why this text in SOX has to cover the employees of the contractors. No justice questioned these four iron clad reasons. These four reasons are, (1) it renders the statutory language regarding contractors virtually meaningless, (2) it renders that language with regard to contractors in the mutual fund industry literally meaningless, (3) it has the implausible consequence of permitting the very type of retaliation that we know Congress was concerned about – retaliation by an accountant such as Arthur Andersen, and (4) it renders incoherent the remedial provisions regarding the burden of proof and an affirmative defense.

While Justice Breyer gave him some tough questions about how far SOX's language would reach, he later suggested the First Circuit's narrow construction was too narrow. “Oh, that itself is a big limitation. Huge,” he said at page 40. At pages 44-45, he stated, “if, in fact, the fraud is related to the contract or by certain kinds of contractors who do investment work, who do all kinds of important work for the company, why shouldn't it be covered? I mean, and the language, of course, does say what I read, as you agreed. It says a contractor.”

Instead, Justice Alito resorted to “reductio ad absurdum,” the logical fallacy of taking an argument to an extreme to ridicule it. One of Schnapper's particular talents in Supreme Court advocacy is crafting the argument that gets the Court to rule for the employees without pushing the Court any farther than it needs to go. Schnapper applied his talent in redirecting Justice Alito to Lawson and Zang's position as accountants in the thick of the public company's deceptive disclosure. When Justice Alito pressed again, Schnapper noted that the different context could yield a different result. Schnapper thereby minimized the time spent on the unhelpful hypothetical and noted that the different contexts could lead to different results that have not been fully briefed in this case.

Justice Scalia called it “peculiar” to have a different rule for officers than for contractors. But he pointed to a way out by asking, “is it as much of a disaster as -- as your opponent suggests? That is to
say, would -- would a firing for something that had nothing to do with the securities laws be swept in?” Justice Scalia picked up on a point made by the National Employment Lawyers Association (NELA) and the Government Accountability Project (GAP) in their amicus brief (which I co-wrote with Scott Oswald, Kelly Kruse, Michael Anderson, Tom Devine and Rebecca Hamburg). A SOX case requires both coverage and protected activity, and very few of the covered employees have engaged in any protected activity.

To me, the scope of protected activity is sufficient to explain why the gardener is unlikely to face SOX liability. As a practical matter, OSHA received only 168 cases last year – even while the Department of Labor policy calls for covering the employees of contractors. So, we are not seeing any floodgate. Assistant Solicitor General Saharsky made this point during her portion of the argument.

Justice Scalia told FMR's attorney (at p. 35), “the problem that I have is if – if the statute does not cover contractors', subcontractors', firing of their own people, what - what coverage does it have? A subcontractor usually cannot fire somebody from the principal company that's traded on the exchange.”

Chief Justice Roberts asked (p. 42), “What about the butler who does, in fact, hear all this information about a conspiracy and wire fraud?” He is clearly thinking about the need to protect employees who do come forward with evidence of fraud.

Justice Sotomayor touched on the remedial purpose of SOX at pp. 41-42: “So doesn't that drama reduce itself if we accept the government's limitation that it has to do only with the fraud related to the public company? ... Because that was the center of this bill -- what motivated this bill.” At page 44, she addressed the deference issue noting that, “we're not being asked to give deference to the Petitioner. We're being asked to give deference to the government.” At page 49, FMR's attorney claimed, “Remember the overall purpose of the statute is disclosure by public companies. It is not protection of investors, as some at times have said.” Thankfully, the NELA/GAP brief explained how the purpose of SOX was to protect investors, and the whistleblower provision was a “crucial” part of serving that purpose.

Justice Alito (at page 45), asked FMR's attorney if there is any basis to limit the scope of protection to frauds by the publicly traded company. “It is not in the terms of the statute,” FMR's attorney conceded. That prompted Justice Scalia to say, “It's a very sensible limitation. Unfortunately, it's not there.”

Overall, the justices each expressed that they would be looking to apply the plain language of SOX to protect those employees SOX meant to protect.  Whether the Court will look for a "limiting principle" that is not in the text of SOX remains unknown, but the Court has good reasons to say that Lawson and Zang are covered and the coverage of others can be decided by the the Department of Labor, subject to future court review.




Wednesday, November 6, 2013

MSPB Reverses Removal Because Due Process Was Not Provided.

In Massey v. Department of the Army, 2013 M.S.P.B. 80 (Oct. 25, 2013), the Merit Systems Protection Board (MSPB) issued an important decision about the right of federal employees to Due Process of Law.

In Ms. Massey’s case, she was originally represented by the union.  The agency proposed to terminate her employment as a Nurse for medical inability to perform the duties of her position.  The human resources specialist instructed the union to “[p]lease ensure you are on [the deciding official's] calendar NLT COB on 7Feb12.”  On February 3, Ms. Massey informed the deciding official that she would be represented by an attorney.  On February 7, the attorney emailed the deciding official to schedule an oral reply.  A written reply was never submitted.  No one responded to Ms. Massey’s attorney’s request for an oral reply.  Instead, the deciding official issued a decision sustaining the charge and removing her.

Ms. Massey appealed to the MSPB.  Although she did not dispute that she was unable to perform the essential functions of her position, she argued that the agency should have tried harder to find her a position in which her chronic respiratory disorder would not be disabling.  She also asserted that the agency violated her right to due process when it did not allow her to respond orally to the proposal. 

The Administrative Judge sustained the agency’s charge, found that the agency did not discriminate against the appellant, and rejected Ms. Massey’s due process argument.  The Administrative Judge rejected Ms. Massey’s due process argument because he found that the agency provided Ms. Massey with numerous opportunities to respond to the charges and did not owe her an additional extension of time.   Ms. Massey petitioned for review of the Initial Decision.

The Board granted Ms. Massey’s Petition for Review, vacated the Initial Decision in part, reversed the agency’s removal action because it deprived Ms. Massey of due process, and affirmed the administrative judge’s finding that the agency did not discriminate on the basis of disability.

With respect to the due process issue, the Board relied upon Cleveland Board of Education v. Loudermill, 470 U.S. 532 (1985), which established that the “root requirement” of due process was an opportunity to be heard before being deprived of a significant property interest.  At a minimum, this requires that the employee have notice of the charges against her, an explanation of the employer’s evidence, and an opportunity, either in person or in writing, to present evidence and convince the decision maker that the proposed action should not be taken.

The Board disagreed with the Administrative Judge and relied upon Alford v. Department of Defense, 118 M.S.P.R. 556 (2013), in which it found a due process violation. In Alford, the agency gave the appellant two weeks to submit a written reply and to schedule an oral reply.   Two weeks after receiving the notice, the appellant sent a letter requesting an oral reply.  Two days after the letter was sent, but before it was received, the agency issued its decision.  The Board found that because the appellant’s request was timely, issuance of the decision violated the appellant’s due process rights. 

Similarly, in Ms. Massey’s case, the Board found that Ms. Massey timely requested an oral reply.  The agency’s notice of proposed removal allowed Ms. Massey to request an oral reply on the final day of the original response period. According to the Board, the “instruction to be ‘on [the deciding official’s] calendar’ by February 7, 2012, implies that February 7 was the new deadline for filing a written response or for requesting an oral reply.” (Emphasis in original).  If the agency considered February 7 to be the date by which the oral reply had to be completed, it should have stated this when it granted the extension.  Therefore, because the agency violated Ms. Massey’s due process rights, she was entitled to a new constitutionally correct removal procedure and the removal was reversed.

This is the kind of issue that Kalijarvi, Chuzi, Newman & Fitch looks for when we represent federal employees before the Board.