DOL Home > OALJ > Whistleblower > Ewald v. Commonwealth of Virginia, 89-SDW-1 (Sec'y Apr. 20, 1995) |
DATE: April 20, 1995 CASE NO. 89-SDW-1 IN THE MATTER OF PAULINE EWALD, COMPLAINANT, v. COMMONWEALTH OF VIRGINIA, RESPONDENT. BEFORE: THE SECRETARY OF LABOR DECISION AND REMAND ORDER This case, which is before me for review, was brought pursuant to the environmental whistleblower provisions of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9610 (1988) (CERCLA); the Resource Conservation and Recovery Act, 42 U.S.C. § 6971 (1988) (RCRA); the Clean Water Act, 33 U.S.C. § 1367 (1988) (CWA); and the Safe Drinking Water Act, 42 U.S.C. § 300j-9(i) (1988) (SDWA)(the environmental whistleblower provisions). Complainant Pauline Ewald alleged that she was fired by Respondent Commonwealth of Virginia (Virginia) in retaliation for engaging in activity protected under the environmental whistleblower provisions, and that Virginia also blacklisted her as a result of her protected activity. Following substantial discovery, Virginia filed a motion to dismiss on the ground that Ewald was collaterally estopped from litigating her claim as a result of a final order issued in another action brought by Ewald in the United States District Court for the Eastern District of Virginia. Ewald v. Commonwealth of Virginia Department of Waste Management, CA-90-494-R (E.D. Va. April 22, 1991) (Ewald I). The Administrative
[PAGE 2] Law Judge (ALJ) subsequently issued a "Recommended Order Granting Summary Decision and Dismissing" (R. O.). For the reasons that follow I reject the ALJ's recommended decision and remand the case for further proceedings consistent with this decision. BACKGROUND Pauline Ewald was hired by Virginia's Department of Waste anagement in September 1986 to be Manager of the Superfund Pre- Remedial Program. Ewald I, Memorandum Decision, April 22, 1991, at 2; Ewald v. Department of Waste Management, No. 91-1583 (4th Cir. July 22, 1992), slip op. at 3 (Ewald II). [1] Her second level supervisor was Cynthia Bailey. Ewald II at 3. In April 1987 Dr. K.C. Das became Ewald's immediate supervisor. Ewald I at 4. In August 1987, Das gave Ewald a performance evaluation rating of 23 out of 50, just above minimally satisfactory. Ewald II at 3. In November 1987 Das issued Ewald the first of several notices regarding her performance and conduct on the job. Id. at3-4. On August 29, 1988, Das issued the last of these notices, which also constituted a notice of termination. Id. at 4. Within 30 days of her termination, Ewald filed a complaint with the Wage and Hour Division of the Department of Labor, alleging that she was retaliated against and fired as a consequence of her internal and external complaints about Virginia's handling of various aspects of the superfund program. The Wage and Hour investigator determined that Ewald was terminated because of preexisting employment problems, and not because of her protected activity. Ewald requested a hearing, and this proceeding followed. In August 1990, while her Department of Labor case was still in the discovery stage, Ewald filed a pro se complaint in the United States District Court for the Eastern District of Virginia alleging, among other things, that Virginia had terminated her in violation of her constitutional rights of freedom of speech and association (Ewald I). Virginia filed a motion for summary judgment, attaching, among other things, affidavits of Bailey and Das, as well as the notices that had been issued to Ewald prior to her termination. Ewald opposed the motion, attaching an affidavit of her own. The district court heard argument on the motion on April 10, 1991, and announced from the bench its determination that Ewald had not been discharged in violation of the First Amendment. Transcript of Hearing, Ewald I, April 10, 1991, at 15. On April 22, 1991, the district court issued a memorandum decision granting Virginia's motion for summary judgment. The district court concluded that even if Ewald's speech was protected under the First Amendment, that speech was not the "but-for" cause of her termination. The court relied on the Fourth Circuit's standard in Huang v. Board of Governors of the
[PAGE 3] Univ. of N.C., 902 F.2d 1134, 1140 (1990), a First Amendment employment case. In Huang the court of appeals held that summary judgment adverse to the plaintiff is improper: only if the record reflects that he made a statement on a matter of public concern, that this expression was the "but for" cause of [the alleged adverse action], and that the [adverse action] . . . deprived him of a valuable benefit. Huang v. Board of Governors of the Univ. of N.C., 902 F.2d at 1140; quoted in Ewald I at 17. The Ewald I court emphasized that the Fourth Circuit's "but-for" test is "rigorous": [I]t is not enough that the protected expression played a role or was a motivating factor in the retaliation; claimant must show that "but for" the protected expression the employer would not have taken the alleged retaliatory action. Ewald I at 17. Applying the principles of Huang to Ewald's case, the court ruled: For summary judgment purposes, the court accepts that Ewald spoke on matters of public concern at some time before her discharge. The Court nevertheless finds no material dispute that such speech was not the "but for" cause of the discharge. emorandum at 18. The district court therefore dismissed Ewald's complaint. Thereafter, Virginia filed a motion to dismiss Ewald's whistleblower complaint before the Department of Labor on the ground that Ewald was collaterally estopped from relitigating the issue whether she was retaliated against as a result of her protected activity. Virginia argued that the protected activity asserted by Ewald for First Amendment purposes in Ewald I was the same as the protected activity asserted in her whistleblower claim, and that therefore she was estopped from relitigating the issue. While Virginia's motion was pending before the ALJ, the Fourth Circuit issued its decision rejecting Ewald's appeal of Ewald I. The Court of Appeals reaffirmed its holding in Huang and agreed "with the district court's finding that Ewald met only the first two prongs of the Huang test, and that her claim failed to meet the 'but for' prong of that test." Ewald II, slip op. at 7. Thereafter, the Department of Labor ALJ issued a decision recommending that I grant Virginia's motion to dismiss. The ALJ held that the issues in the cases were identical, that the issue
[PAGE 4] raised in this case was necessary to the decision in Ewald I and II and that Ewald had a full and fair opportunity to litigate the issue in Ewald I and II. Therefore, the ALJ concluded that Ewald was collaterally estopped from "relitigating the cause of her discharge in the context of these administrative proceedings." R. O. at 5. The ALJ noted that both the districtcourt and the court of appeals applied the Huang "but-for" test to the facts presented in Ewald I. R. O. at 1-3. DISCUSSION The ALJ improperly invoked the doctrine of collateral estoppel (or as it is more commonly referred to today, issue preclusion) in recommending that I dismiss Ewald's complaint. For that reason I reject the recommendation and remand the case. I. The Doctrine of Issue Preclusion. "Issue preclusion" refers to the well established principle that "a litigant in one lawsuit may not, in a later lawsuit, assert the contrary of issues actually decided in and necessary to the judgment of the first suit." Slayton v. Willingham, 726 F.2d 631, 633 (10th Cir. 1984). See also 18 Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction (Wright and Miller) § 4416, at 136 (1981). The doctrine "has the dual purpose of protecting litigants from the burden of relitigating an identical issue with the same party or his privy and of promoting judicial economy by preventing needless litigation." Parklane Hosiery v. Shore, 439 U.S. 322, 326 (1979). [2] Issue preclusion has been invoked in administrative adjudications as well as in court cases. See Otherson v. DOJ, 711 F.2d 267, 272-273 (D.C. Cir. 1983); Chisholm v. Defense Logistics Agency, 656 F.2d 42, 46 (3rd Cir. 1981). Application of the doctrine is appropriate if certain conditions are met: First, the issue must have been actually litigated, that is, contested by the parties and submitted for determination by the court . . . . Second, the issue must have been "actually and necessarily determined by a court of competent jurisdiction" in the first trial. . . . Third, preclusion in the second trial must not work an unfairness. Otherson v. DOJ, 711 F.2d at 273 (citations omitted). See R. O. at 6. II. Whether Issue Preclusion is Appropriate in This Case. Ewald strongly disputes whether the issues presented in this case were actually determined in Ewald I and II. However, I need not decide that question, for this case falls within a widely recognized exception to the application of issue preclusion. It is well established that a party should not be precluded from litigating an issue in a second case where the burden of
[PAGE 5] persuasion on the issue was greater in the first case. As the D.C. Circuit has stated: Cogent precedent supports the position "that preclusive effect should not be given to the first determination when the party sought to be concluded [sic] had a heavier burden (or his adversary had a lighter burden) in the first proceeding than in the second." Whelan v. Abell, 953 F.2d 663, 668 (1992), quoting Restatement (Second) of Judgments § 28 reporter's note at 289. See One Lot Emerald Cut Stones v. United States, 409 U.S. 232, 235 (1972)(government's failure to prove an issue beyond a reasonable doubt in a criminal prosecution does not preclude a subsequent attempt to prove the same issue by a preponderance of the evidence in a civil action); Newport News Shipbuilding and Dry Dock v. Director, 583 F.2d 1273, 1278- 1279 (4th Cir. 1978) (failure to prove work-relatedness in a proceeding before state industrial commission where standard was preponderance of the evidence does not preclude second action under Longshoremen's Act in which a less stringent evaluation of the evidence applies). See also, Restatement (Second) of Judgments § 28(4) (1982); [3] Wright and Miller § 4422 at 209-214; Young & Co. v. Shea, 397 F.2d 185, 189 (5th Cir. 1968); Guenther v. Holmgreen, 738 F.2d 879, 888 (7th Cir. 1984); S.E.C. v. Ridenour, 913 F.2d 515, 518 (8th Cir. 1990); Artukovic, v. Immigration and Naturalization Service, 693 F.2d 894, 898 (9th Cir. 1982); Bulloch v. Pearson, 768 F.2d 1191, 1193 (10th Cir. 1985). Comment on the Restatement (Second) of Judgments gives the rationale for this exception: To apply issue preclusion in the cases described in Subsection (4) would be to hold in effect, that the losing party in the first action would also have lost had a significantly different burden been imposed. While there may be many occasions when such a holding would be correct, there are many others in which the allocation and weight of the burden of persuasion (or burden of proof, as it is called in many jurisdictions) are critical in determining who should prevail. Since the process by which the issue was adjudicated cannot be reconstructed on the basis of a new and different burden, preclusive effect is properly denied. Id. § 28 Comment f. As discussed below, with regard to the issue whether Ewald was dismissed as a result of engaging in protected activity, a very different and much more stringent burden of proof was applied by the courts in Ewald I and II than is applied in environmental whistleblower protection cases. Therefore it
[PAGE 6] would be error to use Ewald I and II to preclude determination of that issue in this case. In reaching its conclusion that Ewald was not dismissed as a result of her protected activity, the Ewald I court relied heavily upon the Fourth Circuit's "rigorous" Huang test of causal relationship in First Amendment employment cases: [I]t is not enough that the protected expression played a role or was a motivating factor in the retaliation; claimant must show that "but for" the protected expression the employer would not have taken the alleged retaliatory action. Huang v. Board of Governors of the Univ. of N.C., 902 F.2d 1134, 1140 (1990); see Ewald I at 17. Applying the Huang standard to Ewald's case, the district court ruled: For summary judgment purposes, the Court accepts that Ewald spoke on matters of public concern at some time before her discharge. The Court nevertheless finds no material dispute that such speech was not the "but for" cause of the discharge.Ewald v. Commonwealth of Virginia Department of Waste anagement, Memorandum at 18. On appeal, the Fourth Circuit also applied the Huang test to Ewald's First Amendment claim: In Huang, this Court held that, in order to prevail on a First Amendment whistle-blower claim, the plaintiff must satisfy a three-prong test: (1) plaintiff's expressions must have involved a matter of public concern; (2) plaintiff must have been deprived of some valuable benefit; and (3) "but for" the protected expression, the employer would not have taken the alleged retaliatory action. * * * * We agree with the district court's finding that Ewald met only the first two prongs of the Huang test, and that her claim failed to meet the "but for" prong of that test. Ewald II, slip op. 6-7 (emphasis supplied). Thus, it is clear that the Fourth Circuit's requirements for proof of a First Amendment claim in Ewald II placed the burden on the plaintiff to prove that "but for" her protected activity she would not have been retaliated against. [4] This allocation of burdens of persuasion is markedly different than those routinely applied by the Secretary in environmental whistleblower cases. The environmental whistleblower provisions prohibit an employer from retaliating against an employee "by reason of" or
[PAGE 7] "because of" the fact that the employee has engaged in activity protected under the various statutes. [5] Decisions under these provisions, as well as under the National Labor Relations Act [6] and Title VII of the Civil Rights Act of 1964, [7] demonstrate that in order to prevail a complainant need prove (by a preponderance of the evidence) only that retaliatory motive played a part in the employer's decision to take adverse action against the employee. The complainant does not need to prove that "but for" the retaliatory motive he or she would not have suffered the adverse action. There are two analytical constructs which are employed in environmental whistleblower cases as well as under Title VII and the NLRA. There is the so-called "pretext" case, in which the complainant establishes a prima facie case that the employer retaliated against him or her by showing that the complainant engaged in protected activity, the employer knew it and thereafter took adverse action against the employee. The complainant must also present evidence sufficient to raise an inference that the protected activity was the likely reason for the adverse action. Dean Darty v. Zack Company of Chicago, Case No. 82-ERA-2, Sec. Dec., Apr. 25, 1983, slip op. at 7-8. See also McCuistion v. TVA, Case No. 89-ERA- 6, Sec. Dec., Nov. 13, 1991, slip op. at 5-6; Mackowiak v. University Nuclear Systems, Inc., 735 F.2d 1159, 1162 (6th Cir. 1983). The complainant's prima facie showing places a burden upon the employer to produce evidence that it took action against the employee for other, legitimate reasons. The complainant may prevail if he or she persuades the factfinder that the employer's stated reasons were a pretext, and that the "true" reason for the adverse action was illegal retaliation. Darty at 5-9 (citing Texas Department of Community Affairs v. Burdine, 450 U.S. 248 (1981)); St. ary's Honor Center v. Hicks, 113 S.Ct 2742 (1993). [8] In the pretext case the factfinder ultimately concludes either that the complainant has proven that the employer acted with discriminatory motive or that the complainant did not prove that fact. There are situations, however, in which there is no one "true" reason for the employer's actions, in the sense that there was one motivation, either legitimate or illegitimate. In such "dual motive" cases, the analysis proceeds down a slightly different path. First, the complainant must persuade the trier of fact (by a preponderance of the evidence) that retaliation was a motivating factor in the employer's adverse action against the employee. N.L.R.B. v. Transportation anagement Corp., 462 U.S. at 401; Goldstein v. Ebasco, Case No. 86-ERA-36, Sec. Dec. and Ord., Apr. 17, 1992, slip op. at 12 n.3. The complainant's prima facie case is basically the same as
[PAGE 8] with a pretext analysis: the employee engaged in protected activity, the employer knew it and thereafter took adverse action, and there is evidence which raises an inference that the employer had an illegitimate motive. The employer then puts forth evidence to show that retaliation was not its motive. However, in the dual motive case, the factfinder concludes that the complainant has proven that the employer acted at least in part for retaliatory reasons. The employer then must prove by a preponderance of the evidence that, although improper motive played a part in its action, it would have taken the same action regarding the complainant even if no improper motive existed. N.L.R.B. v. Transportation Management Corp., 462 U.S. at 401-403. The employer's burden in such a "dual motive" case is handled much like an "affirmative defense; the plaintiff must persuade the factfinder on one point, and then the employer, if it wishes to prevail, must persuade it on another." Price Waterhouse v. Hopkins, 490 U.S. 228, 246 (1989). See Carroll v. Bechtel Power Corp., Case No. 91-ERA-0046, Sec. Dec. and Ord., Feb. 15, 1995, slip op. at 9-10. Unlike the Fourth Circuit's "but-for" test under the First Amendment, [9] under the environmental whistleblower provisions it is "enough that the protected expression played a role or was a motivating factor in the retaliation." Ewald II, slip op. at 7. Thus the environmental whistleblower complainant never has a "but-for" burden, however the employer in a dual motive case bears a "but-for" burden. If the complainant has proven by a preponderance of the evidence that illegitimate motives played a part in the employer's decision to take adverse action, and the employer does not persuade the factfinder that it would have taken the same action, based upon legitimate motives, even if the illegitimate motives had not existed, the employer loses. The Transportation Management case articulates the critical distinction between the two types of burdens at issue here. [10] In Transportation Management, the NLRB, consistent with its prior decision in Wright Line (251 N.L.R.B. 1083 (1980), enforced, NLRB v. Wright Line, 662 F.2d 899 (1st Cir. 1981), cert. denied 455 U.S. 989 (1982)), ruled that once a discharged employee had established (by a preponderance of the evidence) that anti-union animus was a substantial or motivating factor in the employer's decision to fire the employee, the employer then had the burden of persuading the Board (by a preponderance of the evidence) that the discharge would have taken place even if the employee had not engaged in protected activity. [11] The Court of Appeals rejected this allocation of burdens of persuasion, and instead held that the General Counsel of the NLRB had the burden of "showing not only that a forbidden motivation contributed to the discharge but also that the discharge would
[PAGE 9] not have taken place independently of the protected conduct of the employee." [12] NLRB v. Transportation Management Corp., 462 U.S. at 401-402. The Supreme Court reversed. The Court concluded: The Board's allocation of the burden of proof is clearly reasonable in this context . . . . The employer is a wrongdoer; he has acted out of a motive that is declared illegitimate by the statute. It is fair that he bear the risk that the influence of legal and illegal motives cannot be separated, because he knowingly created the risk and because the risk was created not by innocent activity but by his own wrongdoing. N.L.R.B. v. Transportation Management Corp., 462 U.S. at 403. The analysis endorsed by the Supreme Court in Transportation Management has been adopted by the Secretary in environmental whistleblower cases. See Willy v. The Coastal Operation and Coastal States Management Corp., 85-CAA-01, Sec. Dec. and Ord., June 1, 1994, slip op. at 17 n.9; Goldstein, slip op. at 12 n.3. The ALJ appears to recognize the difference between the Huang burdens and the environmental whistleblower burdens: I have taken into consideration the fact that the Fourth Circuit in Huang v. Board of Governors of University of North Carolina, 902 F.2d 1134 (4th Cir. 1990), places a burden upon the employee to show that but for the protected expression, the employer would not have taken the alleged retaliatory action. Under the Mt. Healthy framework, the burden rests with the employer to demonstrate that it would have taken the same action even if the employee had not engaged in the protected activity. The District Court in this matter, however, found not only that Ewald failed to carry her burden of proof, it also considered the Employer's reasons supporting the action which it took. Thus, the Court affirmatively found that the protected activity was not the cause for the discharge. Indeed, the Court concluded that there was no material dispute in this regard. In these respects the Court's decision, while citing Huang, nevertheless weighed Mt. Healthy-type justifications proffered by the Employer. R.O. at 4. However, the difference between the Fourth Circuit's burden allocation and that applicable to environmental whistleblower cases cannot be so easily dismissed. As Wright and iller point out: The rule that a shift in the burden of persuasion
[PAGE 10] defeats preclusion should apply even if the first action went beyond a negative finding that the burden was not carried . . . . Any such determination . . . would not be necessary to decision of the first action and may be denied preclusive effect on that score. Denial of preclusion, moreover, rests on grounds deeper than the general necessity principle. However difficult it may be to justify in terms of abstract burden theory, the fact remains that direct responsibility for immediate consequences is apt to control resolution of uncertainty. A tribunal that is prepared to state that the plaintiff was negligent when nothing turns on the statement might easily make a different statement if the defendant's claim were before it for actual disposition. Wright and Miller § 4422 at 213-214. Thus, the district court's conclusion that there was "no material dispute that [Ewald's] speech was not the "but for" cause of the discharge . . ." (Ewald I at 18) does not have preclusive effect in this case. The ALJ also considered it relevant that the Ewald I court discussed Virginia's asserted motives in reaching its conclusion that Ewald had not been retaliated against. R. O. at 4. However, the employer's asserted motives are relevant under either a Huang-type analysis or an environmental whistleblower provision-type analysis. Under Huang, once the employer comes forward with evidence that it possessed any legitimate reasons for taking adverse action against an employee, the employee loses her case unless she can prove, by a preponderance of the evidence, that those reasons were not the "true" motive, and that the illegitimate reason was. Under the burden allocation used in environmental whistleblower cases, once the complainant has proven that an illegitimate motive played a part in the employer's actions, it is incumbent upon the employer to persuade the trier of fact that it would have taken the same action based upon other, legitimate reasons alone. Thus, the fact that the district court in Ewald I "considered the Employer's reasons supporting the action which it took" (R. O. at 4) does not show what burdens of persuasion it applied. There can be no doubt that the burden of persuasion applied by the district court in Ewald I and the court of appeals in Ewald II is more stringent than that which is routinely applied in environmental whistleblower decisions. Because of that critical difference between the cases, I decline to apply the doctrine of issue preclusion to this case. CONCLUSION For the foregoing reasons I decline to adopt the recommended decision of the ALJ and remand this case for further proceedings consistent with this decision. SO ORDERED.
[PAGE 11] ROBERT B. REICH Secretary of Labor Washington, D.C. [ENDNOTES] [1] The ALJ included very few facts in his recommended decision. I have generally relied on undisputed facts which are recited in the district court's decision in Ewald I and the decision of the Court of Appeals for the Fourth Circuit (Ewald II). [2] As the Supreme Court stated in Montana v. United States, 440 U.S. 147, 153-154 (1979): To preclude parties from contesting matters that they have had a full and fair opportunity to litigate protects their adversaries from the expense and vexation attending multiple lawsuits, conserves judicial resources, and fosters reliance on judicial action by minimizing the possibility of inconsistent decisions. [3] The Restatement provides that there should be no issue preclusion when: [t]he party against whom preclusion is sought had a significantly heavier burden of persuasion with respect to the issue in the initial action than in the subsequent action; the burden has shifted to his adversary, or the adversary has a significantly heavier burden than he had in the first action . . . . Id. [4] The Court of Appeals relied upon the Supreme Court's decision in Givhan v. Western Line Consol. School Dist., 439 U.S. 410 (1979), in Huang and in Ewald II. Thus, in Huang the court, citing Givhan, stated "[t]he causation requirement is rigorous; it is not enough that the protected expression played a role or was a motivating factor in the retaliation; claimant must show that "but for" the protected expression the employer would not have taken the alleged retaliatory action." Huang, 902 F.2d at 1140. See also Ewald II, slip op at 7. However, Givhan explicitly endorsed the Court's earlier holding in Mt. Healthy City Bd. of Ed. v. Doyle, 429 U.S. 274, 287 (1977), that in a First Amendment employment case once the employee has shown that his constitutionally protected conduct played a "substantial" role in the employer's decision, the employer is entitled to show "by a preponderance of the evidence that it would have reached the same decision as to [the employee] even in the absence of the protected conduct." See Givhan v. Western Line Consol. Sch. Dist., 439 U.S. 410, 416 (1979). [5] The CWA (33 U.S.C. § 1367 (1988)), RCRA (42 U.S.C. § 6971 (1988)), and CERCLA (42 U.S.C. § 9610 (1988)), use "by reason of", while the SDWA (42 U.S.C. § 300j-9(i) (1988)), uses "because of." The Department of Labor implementing regulations refer to "because." 29 C.F.R. § 24.2 (a) (1994). There is no historical or analytical reason to conclude that these terms were meant to have different meanings. [6] 29 U.S.C. § 151 et seq. (1988) (NLRA). [7] 42 U.S.C. § 2000e et seq. (1988) (Title VII). [8] In N.L.R.B v. Transportation Management Corp., 460 U.S. 393, 399 n.5 (1983), the Supreme Court described this situation as one "in which the issue is whether either illegal or legal motives, but not both, were the 'true' motives behind the decision." [9] As the Supreme Court has pointed out in the Title VII context: But-for causation is a hypothetical construct. In determining whether a particular factor was a but-for cause of a given event, we begin by assuming that factor was present at the time of the event, and then ask whether, even if that factor had been absent, the event nevertheless would have transpired in the same way. Price Waterhouse v. Hopkins, 490 U.S. at 240. [10] NLRA case law is particularly relevant to interpretations of the environmental whistleblower provisions, as the provisions were explicitly modeled on the NLRA. See S. Rep. No. 414, 92d Cong., 2d Sess. 80-81 (1972), reprinted in 1972 U.S.C.C.A.N. 3668, 3748-49. [11] As the Supreme Court stated, "[i]t thus became clear, if it was not clear before, that proof that the discharge would have occurred in any event and for valid reasons amounted to an affirmative defense on which the employer carried the burden of proof by a preponderance of the evidence." N.L.R.B. v. Transportation Management Corp., 462 U.S. at 400. [12] Thus the Court of Appeals placed the "but-for" burden upon the discharged employee.