November 18, 2008
The Department of Labor’s Administrative Review Board (“ARB”)—which hears cases under Sarbanes-Oxley and other whistleblower laws—has affirmed dismissal of a complaint brought under the whistleblower provisions of several environmental statutes, in part because the complainant did not engage in protected activity by participating in an internal investigation when he hindered the investigation’s progress. Caldwell v. EG&G Defense Materials, Inc., ARB No. 05-101 (October 31, 2008).
The case may be an important precedent in other cases where whistleblowers fail to cooperate with company attempts to investigate their allegations.
Gregory Caldwell was charged with designing a system to transport hazardous chemicals in a chemical disposal facility. The Company experienced several releases of toxic chemicals during 2002 and 2003, and Caldwell was interviewed multiple times by the Company’s internal investigation team. During these interviews, Caldwell was not forthcoming in explaining potential causes for the release of chemicals, denying that his system could have been the source and providing unsupported information regarding equipment compatibility. Another release of toxic chemicals followed shortly after Caldwell’s interviews. After it was determined that his actions hindered the investigative team’s ability to prevent further incidents, Caldwell was placed on leave, and he filed a whistleblower complaint with OSHA. The Company continued to investigate his performance, and Caldwell was terminated after his suspension was completed.
The ARB found that although Caldwell was involved in the internal investigation of the hazardous waste incident, his actions only “constituted protected activity to the extent that they advanced the purpose of the [environmental whistleblower] acts” “to protect the public health and the environment.” Thus, Caldwell’s initial participation in the internal investigations was protected, but his participation lost protected status when he “made ‘unwarranted assurances’” and “failed to fully disclose information critical to the investigation” because, the ARB explained, Caldwell’s participation “did not further the purpose of the acts.” Indeed, “[i]nstead of furthering the purpose of the environmental acts, his participation in the investigation actually endangered the public health and the environment.”
This sensible limitation on the scope of protected activity prevents employees from “under the guise of protected activity . . . interfer[ing] with internal investigations while also avoiding disciplinary action and successfully maintaining a claim against their employers if the employers take adverse action for their misconduct,” the ARB explained.
Additionally, the ARB determined that interference with the investigation was a legitimate business reason to suspend and terminate Caldwell—the Company “fired him because it could have avoided [an additional release of toxic chemicals] if Caldwell had provided accurate information in the first place.”
Similar investigation interference was recently recognized by a Labor Department Administrative Law Judge to be a legitimate basis for discipline. In Bucalo v. United Parcel Service, No. 2006-TSC-2 (ALJ May 8, 2008), Gibson Dunn successfully argued that the complainant’s improper insertion of himself into the Company’s investigation of a hazardous material spill created a risk of harm and was a legitimate basis for discipline.
Gibson, Dunn & Crutcher’s Labor and Employment Practice Group has extensive experience with whistleblower investigations and litigation, including claims under the Sarbanes-Oxley Act and state law claims. For more information, please contact the Gibson Dunn attorney with whom you work or any of the following:
Eugene Scalia – Practice Chair, Washington, D.C. (202-955-8206, email@example.com)
Jason C. Schwartz – Washington, D.C. (202-955-8242, firstname.lastname@example.org)
Jennifer J. Schulp – Washington, D.C. (202-955-8244, email@example.com)
Karl G. Nelson – Dallas (214-698-3203, firstname.lastname@example.org)
Jessica Brown – Denver (303-298-5944, email@example.com)
William D. Claster – Orange County (949-451-3804, firstname.lastname@example.org)
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