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Acting on customer’s retaliatory animus could create employer liability for whistleblower retaliation

By Cynthia L. Hackerott, J.D.

In an action brought by an employee of federal subcontractor URS Energy & Construction, Inc., alleging violations of the Energy Reorganization Act’s (ERA) whistleblower protection provision, the Ninth Circuit ruled that the employee could proceed to trial on his claims against URS Energy even if the company was not acting on its own retaliatory animus. Rejecting URS Energy’s assertions that it was not responsible for the alleged retaliation against the employee who raised issues regarding the safety of certain nuclear waste clean-up efforts, the court held that it did not matter whether the employer was acting on its own retaliatory animus or in an attempt to please a customer (Tamosaitis v URS Inc, November 7, 2014, Berzon, M).

Safety concerns. The case involves cleanup efforts of nuclear waste at the Hanford Nuclear Site in Washington state. The Department of Energy (DOE) is leading the effort to clean up the pollution at Hanford, which includes construction and management of a Waste Treatment Plant (WTP) intended to turn radioactive waste into glass. The Department contracted with Bechtel National, Inc., which subcontracted with URS Energy for work on the project. URS Energy is a wholly-owned subsidiary of URS Corporation.

Following a report detailing problems with the Hanford clean-up, the engineer was appointed to lead a study reviewing technical challenges within the WTP project. Even though most issues identified in the study were resolved by October 2009, a design problem concerning the mixing of nuclear waste in certain of the WTP pretreatment tanks remained. Bechtel wanted this issue resolved by June 2010 to avoid jeopardizing Bechtel’s $6 million fee. However, the employee wanted to extend the deadline to September 2010. He brought a 50-point list of environmental and safety concerns to a meeting hosted by Bechtel and shared the list with another URS employee as well as others involved in the project.

Two days later, the engineer was fired from the WTP project and reassigned to a nonsupervisory role in a basement office without furniture or a telephone in a URS facility off the Hanford site. Although he was later offered other positions with URS, they required relocation. He filed an administrative complaint with OSHA and over a year later gave notice that he intended to bring an action in federal court pursuant to the ERA’s opt-out provision. In response to the employee’s notice of intent, OSHA dismissed the agency complaint, and the engineer filed suit.

Administrative exhaustion. The “opt-out” provision of the ERA, 42 U.S.C. Sec. 5851(b)(4), allows whistleblowing employees at nuclear energy sites to bring anti-retaliation claims to federal court after one year of agency inaction, the Ninth Circuit explained. However, the court held that before an employee may opt out of the agency process and bring a retaliation suit in federal court, the respondent must have had notice of, and an opportunity to participate in, the agency action for one year.

URS Corporation. Here, the employee did not assert in his administrative complaint that URS Corporation was either his employer or a subcontractor to Bechtel at the Hanford site, and in fact it was not. Moreover, URS Corporation affirmatively indicated that during the administrative process that it was participating in the proceedings not as the alleged wrongdoer, but on behalf of URS Energy. Thus, the appellate court affirmed the district court’s dismissal of URS Corporation for lack of administrative exhaustion because URS Corporation was not adequately named in the employee’s original administrative complaint.

DOE. The Ninth Circuit also affirmed the dismissal of the DOE because the employee did not wait a full year after naming the DOE in his agency complaint to file his federal court suit, and thus, he did not exhaust his administrative remedies as required by Sec. 5851(b)(4)).

URS Energy. However, the court found that the employee did sufficiently exhaust his administrative remedies as to URS Energy because he gave adequate notice to URS Energy that it was the named respondent to his complaint.

Not our retaliation. Addressing the merits, the Ninth Circuit held that the employee introduced sufficient evidence to create a triable issue as to whether his whistleblowing activity was a contributing factor in the adverse employment action URS Energy took against him. URS Energy stipulated in the district court that he engaged in protected activity and was retaliated against because of that conduct, but nevertheless moved for summary judgment on the ground that it was not responsible for the retaliation.

The Ninth Circuit found that there was “plenty of evidence” that Bechtel encouraged URS Energy to remove the employee from the WTP site because of his whistleblowing, that URS Energy knew that the employee’s whistleblowing motivated Bechtel, and that URS Energy carried out the removal. Thus, a reasonable factfinder could infer not only that the retaliatory motive of URS Energy’s customer, Bechtel, spurred URS Energy’s actions against the employee, but also that URS Energy knowingly acquiesced in or ratified Bechtel’s retaliation. Further, a reasonable factfinder could conclude that there was not clear and convincing evidence that URS Energy would have taken the same action had the employee not engaged in protected activity.

Whose animus? Such showings were sufficient to render URS Energy liable under the ERA’s whistleblower protection provision, the court held, noting that the presence of an employer’s subjective retaliatory animus is irrelevant under the ERA. “The relevant causal connection is not between retaliatory animus and personnel action, but rather between protected activity and personnel action,” the court wrote (court’s emphasis). Therefore, “there is no meaningful distinction between an employer who takes action based on its own retaliatory animus and one that acts to placate the retaliatory animus of a customer.”

The court also held that there was a genuine issue of fact as to whether the employee’s compensation, terms, conditions, or privileges of employment were affected by his transfer to another position. The employee testified that his current job duties “vary dramatically” from his previous position. At Hanford, he supervised a $500 million program involving between 15 and 50. In his current position, he did not supervise any programs or employees. He also lost his annual bonus, resulting in $30,000 to $100,000 less in compensation each year. Of the alternative employment opportunities URS Energy offered to him, the primary one was in another country, a transfer undesirable for him because of his family ties in the United States. Accordingly, the court reversed the district court’s grant of summary judgment to URS Energy.

Jury trial. Finally, the appeals court held that although the employee did not have a statutory jury trial right for his ERA whistleblower suit, he did have a constitutional right to a jury trial for his claims seeking money damages under Sec. 5851(b)(4). It, therefore, reversed the district court’s ruling denying the employee a jury trial.