BNSF Railway Co. v. United States Department of Labor Administrative Review Board

United States Court of Appeals
For the Eighth Circuit
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No. 16-3093
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BNSF Railway Company
lllllllllllllllllllllPetitioner
v.
United States Department of Labor Administrative Review Board
lllllllllllllllllllllRespondent
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Petition for Review of an Order of the
Administrative Review Board
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Submitted: April 7, 2017
Filed: August 14, 2017
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Before WOLLMAN and LOKEN, Circuit Judges, and NELSON,1 District Judge.
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LOKEN, Circuit Judge.
The Federal Rail Safety Act (FRSA) prohibits a rail carrier from retaliating
against an employee for reporting “a work-related personal injury.” 49 U.S.C.
§ 20109(a)(4). On August 30, 2007, Clyde Carter, Jr. injured his shoulder and neck
1
The Honorable Susan Richard Nelson, United States District Judge for the
District of Minnesota, sitting by designation.
while working as a carman at BNSF Railway Company’s yard in Kansas City,
Kansas. Carter immediately reported the injury to BNSF. The following year, he
filed a Federal Employers’ Liability Act (FELA) damage action, alleging that BNSF’s
negligence caused his injury. BNSF’s discovery in defending the FELA lawsuit
included a July 2009 deposition of Carter. In January 2012, as trial approached,
BNSF Manager Bryan Thompson reviewed discovery materials provided by BNSF’s
attorneys. He discovered discrepancies between Carter’s deposition testimony and
information provided on his employment application and medical questionnaire
submitted to BNSF in 2005. Thompson initiated a disciplinary investigation into
potentially dishonest statements. Later, BNSF opened a second disciplinary
investigation to determine if Carter signed a false statement that he arrived at work
on time on February 5, 2012.
The investigations culminated in two “on-property” evidentiary hearings before
BNSF General Foreman Charles Sherrill. Carter was represented by two union
representatives. After the hearings, hearing officer Sherrill found that Carter
committed both dishonesty violations and recommended discipline in accordance
with BNSF’s Policy for Employee Performance Accountability (PEPA). Phillip
McNaul, field superintendent of Kansas operations, submitted the hearing records and
Sherrill’s findings to Joseph Heenan, a Director of Labor Relations in Texas, whose
responsibilities included ensuring company-wide disciplinary consistency. Heenan
reviewed the record, concluded there was substantial evidence supporting Sherrill’s
findings, and recommended that Carter be terminated for dishonesty, a “stand alone”
violation that may result in dismissal without regard to the employee’s prior
disciplinary history. Senior management approved Heenan’s recommendation.
BNSF terminated Carter in two letters dated April 5 and April 16, 2012.
Following termination, Carter filed an FRSA complaint with the Department
of Labor, alleging that BNSF initiated the investigations leading to his dismissal in
retaliation for Carter reporting the August 2007 work-related injury. The
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Occupational Safety and Health Administration initially reviews FRSA retaliation
complaints. See 29 C.F.R. § 1982.104. OSHA dismissed Carter’s complaint, finding
he committed the violations, and BNSF proved by clear and convincing evidence that
“other employees who had not engaged in protected activity have been dismissed
from service for dishonesty.” Carter filed objections. See 29 C.F.R. § 1982.106.
After an evidentiary hearing, an Administrative Law Judge (ALJ) found that BNSF
violated 49 U.S.C. § 20109(a)(4) and awarded reinstatement, back pay, attorneys’
fees, and $50,000 punitive damages. BNSF filed an administrative appeal. The
Secretary’s Administrative Review Board (ARB) affirmed the ALJ.
BNSF petitions for review of the ARB’s order, which is the final agency action.
See 49 U.S.C. § 20109(d)(4); 29 C.F.R. § 1982.110(d). Our review of FRSA
retaliation orders conforms to Administrative Procedure Act standards. See 49 U.S.C.
§ 20109(d)(4). We set aside agency action that is “arbitrary, capricious, an abuse of
discretion, or otherwise not in accord with law.” 5 U.S.C. § 706(2)(A); see GoJet
Airlines, LLC v. FAA, 743 F.3d 1168, 1170 (8th Cir. 2014). We review the agency’s
legal conclusions de novo, giving deference to its “reasonable interpretation” of the
statute. Pattison Sand Co. v. Fed. Mine Safety & Health Review Comm’n, 688 F.3d
507, 512 (8th Cir. 2012). We review factual findings for substantial evidence on the
record as a whole, considering evidence that both supports and detracts from the
ALJ’s decision. Mercier v. U.S. Dep’t of Labor, 850 F.3d 382, 388 (8th Cir. 2017).
Here, we conclude the ARB’s order may not be upheld because the ALJ erred in
interpreting and applying the FRSA and failed to make findings of fact that are
critical to a decision applying the proper legal standard. Accordingly, we reverse the
ARB’s order and remand.
To prevail on his FRSA complaint, Carter must “prove, by a preponderance of
the evidence, that ‘(i) he engaged in a protected activity; (ii) BNSF knew or
suspected, actually or constructively, that he engaged in the protected activity; (iii)
he suffered an adverse action; and (iv) the circumstances raise an inference that the
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protected activity was a contributing factor in the adverse action.’” Gunderson v.
BNSF Ry., 850 F.3d 962, 968 (8th Cir. 2017), quoting Kuduk v. BNSF Ry., 768 F.3d
786, 789 (8th Cir. 2014). If he meets that burden, BNSF may avoid liability if it
“demonstrates, by clear and convincing evidence, that [it] would have taken the same
unfavorable personnel action in the absence of [Carter’s protected activity].” 49
U.S.C. § 42121(b)(2)(B)(ii). BNSF conceded the first three elements of Carter’s
affirmative case -- that his prompt injury report was protected activity; BNSF had
direct knowledge of this report; and Carter suffered adverse action when BNSF fired
him. This left two issues for adjudication: whether Carter could prove the
circumstances raised an inference that the injury report was a contributing factor in
his termination, and if so, whether BNSF could prove that it would have fired Carter
regardless of his protected activity. “A ‘contributing factor’ includes any factor
which, alone or in connection with other factors, tends to affect in any way the
outcome of the [adverse] decision.” Gunderson, 850 F.3d at 969 (quotation omitted).
An unusual aspect of this case is that Carter’s protected injury report was made
and known by his BNSF supervisors in August 2007, more than four years prior to
the adverse action of BNSF investigating and terminating Carter for acts of
dishonesty in 2005 and 2012 that were seemingly unrelated to his 2007 injury and
injury report. In a retaliation case, “[a] gap in time between the protected activity and
the adverse employment action weakens an inference of retaliatory motive.” Wells
v. SCI Mgmt., L.P., 469 F.3d 697, 702 (8th Cir. 2006) (quotation omitted); see Clark
Cty. Sch. Dist. v. Breeden, 532 U.S. 268, 274 (2001) (per curiam) (“Action taken (as
here) 20 months later suggests, by itself, no causality at all.”); Gunderson, 850 F.3d
at 969.
The ALJ nonetheless found that the injury report was a contributing factor by
applying a “chain of events” theory of causation. The ALJ reasoned:
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In establishing that a protected activity was a contributing factor
. . . it is not necessary to show that the employer was motivated by the
activity or even give any significance to the activity. . . . [A]ll a
complainant need do is show that the employer knew about the protected
activity and the protected activity was a necessary link in a chain of
events leading to the adverse activity.
* * * * *
Mr. Carter’s workplace injury, and its report to his supervisors, set off
a chain of events that led to his successful FELA suit against [BNSF],
which encompassed Mr. Carter’s deposition as part of discovery. . . . [I]t
was during the discovery phase in the FELA lawsuit that the medical
and other records used as a justification for firing Mr. Carter were
discovered. . . . [T]emporal distance between the protected activity and
the adverse action does not automatically ‘negate’ the contribution of
the protected activity to the adverse action.
* * * * *
In this case, it is not possible to isolate Mr. Carter’s ‘report’ of his
2007 workplace injury from the injury itself. . . . Indeed, the basis for
discussing Mr. Carter’s termination cannot be explained without also
discussing his ‘report’ of his injury. There is nothing even close to a
complete break in the chain of events, such that Mr. Carter’s ‘report’ of
his injury dropped out of the line of causation leading to his termination.
The ALJ’s chain-of-events theory of causation is contrary to judicial precedent
construing the causation element of an FRSA retaliation claim. As the Seventh
Circuit explained in Koziara v. BNSF Ry., to hold that protected activity is a
“contributing factor” to an adverse action simply because it ultimately led to the
employer’s discovery of misconduct “is a further example of confusing a cause with
a proximate cause. The plaintiff’s having been born was an initiating event without
which he would not exist, but obviously an event devoid of legal significance.” 840
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F.3d 873, 878 (7th Cir. 2016), cert. denied, 137 S. Ct. 1449 (2017).2 Of equal
importance, the ALJ’s ruling that BNSF’s motive was irrelevant to the contributing
factor inquiry is contrary to this court’s controlling decisions:
As the [Supreme] Court explained in Staub, the essence of this
intentional tort is “discriminatory animus.” . . . [T]he contributing factor
that an employee must prove is intentional retaliation prompted by the
employee engaging in protected activity.
Kuduk, 768 F.3d at 791, followed in Gunderson, 850 F.3d at 969. Absent sufficient
evidence of intentional retaliation, a showing that protected activity initiated a series
of events leading to an adverse action does not satisfy the FRSA’s contributing factor
causation standard.
The ARB properly declined to endorse the ALJ’s chain-of-events causation
theory, characterizing her contributing factor findings as “difficult to follow.” The
ARB nonetheless affirmed because the ALJ “provided sufficient reasons . . .
independent of this justification to support a finding of contributory causation” and
to reject BNSF’s affirmative defense. The ARB affirmed the ALJ’s decision based
on the following “findings”: (1) “evidence of a change in Carter’s supervisors’
attitude toward him after he filed his initial injury report,” (2) BNSF’s justifications
for both investigations of Carter were “unworthy of credence,” and (3)
“circumstantial evidence support[ed] an inference of retaliatory motive on [BNSF’s]
part.” If sound, we uphold the agency’s reliance on a factually supported alternative
2
Though “contributing factor” is a lenient causation standard, an FRSA plaintiff
must still prove that his injury report “not only was a ‘but for’ cause of his injury, but
was the proximate cause as well.” Hemi Group, LLC v. City of New York, N.Y., 559
U.S. 1, 9 (2010) (quotation omitted); see Staub v. Proctor Hosp., 562 U.S. 411, 419
(2011) (proximate cause excludes “those links that are too remote, purely contingent,
or indirect,” quoting Hemi Group).
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ground. But here, we conclude that these “findings” are either non-existent or
insufficient to support the ARB’s contributing factor and affirmative defense rulings.
(1) Carter testified that his supervisors “targeted” him after the injury and
injury report. One of Carter’s former supervisors, Larry Lee Mills, testified that he
witnessed BNSF target Carter for discipline and overheard Sherrill say he had to “nail
Carter” following Carter’s report of his injury. That is certainly relevant to the issue
of discriminatory animus. But Sherrill denied ever saying he was going to “nail”
Carter and testified that he based his decision as hearing officer solely on his findings
of Carter’s dishonesty, not on his prior protected activity. Superintendent McNaul
testified that he never authored a document telling supervisors to watch employees
who suffered an injury and write them up, as Mills testified. The ALJ made no
explicit finding on the targeting issue. Indeed, she made no credibility finding as to
Mills’s testimony and found that Carter’s testimony was “contradictory or
inconsistent” at times but credible “on crucial points,” namely, in describing his
employment application process and his failure to clock in on February 5, 2012. If
credited, Carter’s and Mills’s testimony could support an ultimate finding of
intentional retaliation. But the ALJ made no finding of discriminatory animus by any
BNSF supervisor, and her chain-of-events causation theory allowed her to avoid
highly relevant questions -- was any animus in the workplace the result of Carter’s
injury or his filing a contested FELA lawsuit, rather than his injury report, and how
did that animus contribute to disciplinary investigations commenced many years
later? The ARB simply ignored these issues, instead adopting the ALJ’s arbitrary and
capricious assertion “that it is pure semantics to separate the ‘report of injury’ from
the injury itself.” If there was co-worker animus based solely on Carter filing an
FELA lawsuit accusing BNSF and its employees of negligence it vigorously denied,
that would not violate 49 U.S.C. § 20109(a)(4).
(2) The ALJ’s conclusory assertions that BNSF’s justifications for terminating
Carter were “unworthy of credence” are not supported by substantial evidence. Of
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course, as the ALJ noted, intentional discrimination may be inferred “from the falsity
of the employer’s explanation.” Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S.
133, 147 (2000). The ALJ found that the first termination was unworthy of credence
because BNSF failed to grant a request by Carter’s union representatives for a
continuance based upon BNSF’s delay in providing documents pertaining to his 2005
employment application. But the ALJ in an FRSA retaliation proceeding has no
authority to punish BNSF for conducting disciplinary proceedings in accordance
with the governing collective bargaining agreement and Railway Labor Act
procedures that the ALJ considers unfair. “The critical inquiry in a pretext analysis
is . . . whether the employer in good faith believed that the employee was guilty of the
conduct justifying discharge. Moreover, if the discipline was wholly unrelated to
protected activity . . . whether it was fairly imposed is not relevant to the FRSA causal
analysis.” Gunderson, 850 F.3d at 969 (citation and quotation omitted). Here, the
ALJ and the ARB did not undertake the “critical inquiry” and make the findings
needed to resolve it.
Regarding the second investigation into whether Carter was dishonest in
describing his late arrival to work on February 5, 2012, the ALJ found it “conceivable
that, considered in isolation, this incident could establish that [BNSF] would have
fired Mr. Carter even absent his injury.” However, because this second termination
followed the first investigation into Carter’s dishonesty, the ALJ found that it could
not be “cleanly excised from the surrounding circumstances,” and therefore BNSF’s
justification was “unworthy of credence.” This “finding” was not a legitimate pretext
analysis; it was an extension of the ALJ’s flawed chain-of-events causation theory.
The ARB credited the ALJ’s conclusion that firing Carter “not once, but twice,” was
evidence of retaliation for protected activity. We disagree, as there was no finding
that either disciplinary decision was the product of intentional retaliation for Carter
submitting an injury report four years earlier. See Gunderson, 850 F.3d at 966
(involving two hearings held on consecutive days to consider distinct disciplinary
violations).
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(3) The ARB’s conclusion that other circumstantial evidence supported an
inference of retaliatory motive was based on its determination that Carter’s FELA
litigation was itself FRSA-protected. Citing LeDure v. BNSF Ry., ARB No. 13-044,
2015 WL 4071574 (Admin. Rev. Bd. June 2, 2015), the ARB concluded that, “[w]hile
apparently not alleged as protected activity in its own right, the FELA litigation
undisputedly involved the 2007 injury and kept Carter’s protected report of injury
fresh as the events in the case unfolded.” Therefore, the ARB held it was protected.
As the concurring ARB member noted, LeDure held only that the FRSA
protects a notice of injury made in the course of FELA litigation, not that FELA
litigation is per se protected by the FRSA. By misstating the scope of its decision in
LeDure, the ARB decided without discussion a significant issue that Carter failed
even to allege and that has never been considered by this court or by our sister
circuits. This was “such failure to explain administrative action as to frustrate
effective judicial review.” Camp v. Pitts, 411 U.S. 138, 142 (1973). The ALJ found
that Thompson, who initiated the first investigation in January 2012, knew of Carter’s
injury “on the date it occurred or very soon thereafter,” so it is clear the FELA
litigation did not notify Thompson of Carter’s injury. To base its decision on LeDure,
the ARB needed a finding that Carter’s FELA lawsuit provided BNSF with “more
specific notification” of his injury report, a fact question relevant to the temporal
proximity between the protected activity and Carter’s termination.
The ARB was unable to salvage an ALJ analysis built upon a flawed theory of
causation because the ARB lacked critical fact findings needed to affirm the ALJ’s
decision when applying the appropriate legal standard. To the extent the ARB filled
in the missing findings, it exceeded its scope of review. See Stone & Webster
Constr. v. U.S. Dep’t of Labor, 684 F.3d 1127, 1133 (11th Cir. 2012), construing 29
C.F.R. § 1982.110(b). Accordingly, we must remand. See Florida Power & Light
Co. v. Lorion, 470 U.S. 729, 744 (1985); GoJet Airlines, 743 F.3d at 1172. We need
only briefly address BNSF’s additional contentions on appeal.
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First, in rejecting BNSF’s contention that it proved it would have fired Carter
even in the absence of his FRSA-protected activity, the ARB summarily affirmed the
ALJ, who ruled: “It is virtually impossible for [BNSF] to establish that it would have
fired Mr. Carter for dishonesty on his employment application absent his workplace
injury and its report, for the simple reason that, had Mr. Carter not suffered this
injury, which ultimately led to a lawsuit under the FELA, [BNSF] would not have
learned about the injuries and military history that were the basis for its dismissal of
Mr. Carter.” This reasoning is nothing more than the ALJ’s flawed chain-of-events
causation theory and should be disregarded on remand.
Second, BNSF argues the ARB erred in affirming the ALJ’s award of punitive
damages. Plaintiffs seeking punitive damages have a “formidable burden.” Sturgill
v. United Parcel Serv., Inc., 512 F.3d 1024, 1035 (8th Cir. 2008) (applying malice or
reckless indifference standard in Kolstad v. Am. Dental Ass’n, 527 U.S. 526, 536
(1999), cited by the ARB in this case). Even if Carter can show unlawful retaliation,
BNSF “may avoid vicarious punitive damages liability by showing that it made good
faith efforts to comply with [the FRSA].” Id. Here, the ALJ acknowledged that
BNSF “has a Code of Conduct that specifically prohibits retaliation, an Injury
Reporting Policy prohibiting retaliation against employees who report injuries, a
Mechanical Safety Rule expressly prohibiting retaliation, a hotline or website, and
review of dismissals by its Labor Relations Department,” and that Heenan, “the
person ultimately responsible for reviewing the file and making a recommendation,
had never met Mr. Carter, and knew nothing about his injury or subsequent lawsuit.”
This is strong evidence of BNSF’s good-faith efforts to prevent retaliation. See
Bennett v. Riceland Foods, Inc., 721 F.3d 546, 553 (8th Cir. 2013). As summarized
by the ARB, the ALJ awarded punitive damages because BNSF fired Carter “not
once, but twice,” and did not provide Carter with fair discovery and a continuance at
his first on-property hearing. On this record, we would reverse the award of punitive
damages.
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Third, we remand without considering BNSF’s contention that the ARB should
not have ordered Carter reinstated to his prior position because of “animosity between
the parties and the likelihood that they could not work together in peace.” McIntosh
v. Jones Truck Lines, Inc., 767 F.2d 433, 435 (8th Cir. 1985); compare 42 U.S.C.
§ 2000e-5(g), the governing statute in McIntosh, with 49 U.S.C. § 20109(e)(2)(A)
(relief afforded the employee “shall include . . . reinstatement”).
We grant BNSF’s petition for review, vacate the ARB’s order, and remand for
further proceedings not inconsistent with this opinion.
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