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Pan Am Railways, Inc. v. United States Department of Labor

United States Court of Appeals, First Circuit

April 21, 2017

PAN AM RAILWAYS, INC., Petitioner,


          Andrew J. Rolfes, with whom Robert S. Hawkins and Buchanan Ingersoll & Rooney, P.C. were on brief, for petitioner.

          Dean A. Romhilt, Senior Attorney, Office of the Solicitor, U.S. Department of Labor, with whom Nicholas C. Geale, Acting Solicitor of Labor, Jennifer S. Brand, Associate Solicitor, and Megan E. Guenther, Counsel for Whistleblower Programs, were on brief, for respondent.

          Stephen J. Fitzgerald, with whom Garrison, Levin-Epstein, Fitzgerald & Pirrotti, P.C. was on brief, for intervenor.

          Before Howard, Chief Judge, Selya and Lynch, Circuit Judges.

          LYNCH, Circuit Judge.

         This is a petition for review, in a Federal Railroad Safety Act ("FRSA") whistleblower retaliation action, of an agency decision resulting in the statutory maximum award of punitive damages against a railroad. The railroad brought charges of dishonesty and insubordination, as well as threats of dismissal, against an injured employee who had filed a complaint under the FRSA with the Occupational Safety and Health Administration ("OSHA"), alleging that he lied in that complaint about precisely how his on-the-job accident happened, based on a purported discrepancy between the complaint and his prior story. An Administrative Law Judge ("ALJ") later found that those charges of dishonesty constituted unlawful retaliation against the employee for filing the OSHA complaint.

         We agree with the Department of Labor's Administrative Review Board ("ARB") that substantial evidence supported the ALJ's rejection of the railroad's affirmative defense and the ALJ's decision to impose punitive damages. The amount of the punitive damages award presents a closer question. The award seems high, and we might ourselves have chosen a different sum. In the end, however, we conclude that the ALJ's decision to award punitive damages of $250, 000, to punish and deter what he perceived to be a culture of intimidating employees and discouraging them from engaging in protected activity, was within the realm of his discretion. We deny the petition for review.


         A. The FRSA and Raye's Injury

         This story begins with an on-the-job accident in which Jason Raye, a train conductor for a subsidiary of petitioner Pan Am Railways, Inc. ("Pan Am"), injured his ankle and missed work as a result. The FRSA's employee protection provision forbids railroad carriers from retaliating against employees who engage in protected activity, such as reporting a workplace injury or filing an OSHA complaint. See 49 U.S.C. § 20109. Importantly, this case concerns FRSA retaliation against Raye for filing an OSHA complaint.

         A few weeks before his accident, on October 5, 2011, Raye noticed a pile of old railroad ties next to a track in a railyard in Waterville, Maine. He thought the pile a tripping hazard and reported it to his manager, Dwynn Williams. The pile was not removed before Raye's accident.[1]

         On October 24, 2011, during his shift, Raye stepped off a train onto that same pile of railroad ties and badly sprained his ankle. We recount later his testimony about the accident. Raye called his dispatcher for a ride to the hospital, where Raye was diagnosed with the sprain. Williams visited Raye at the hospital, and Raye explained that he had "rolled [his] ankle on the same ties that [he had] turned in three weeks ago." In response, Williams said that Raye should "probably expect a [disciplinary] hearing" in the wake of the injury.

         Raye had two scheduled days off after his injury, but he needed three days to recover, so he missed a day of work. That missed day required Pan Am to report Raye's injury and the injury's cause to the Federal Railroad Administration ("FRA"). See 49 C.F.R. § 225.19(d)(3)(i). When Raye returned to work on October 28, 2011, his superintendent, Jim Quinn, learned about the injury and the missed day. Quinn told Raye that the missed day "change[d] everything" and that "[t]here w[ould] probably be a hearing . . . for that FRA reportable injury, for missing a day."

         B. First Pan Am Disciplinary Proceeding Brought Against Raye for His Alleged Safety Violation

         On November 1, 2011, Raye received a Notice of Hearing from Pan Am, signed by Williams. The notice alleged that Raye had violated Pan Am Safety Rule P-76, which provides that "[b]efore getting on and off [a train], [employees must] carefully observe ground condition and be assured of firm footing." At the November 11, 2011 hearing, Raye testified that he had stepped down from the train safely and cautiously, but had nonetheless lost his balance on the unstable pile of ties. Raye also testified that after rolling his ankle he had "caught [him]self" and sat down on the ground rather than falling over.

         On November 28, 2011, John Schultz, Pan Am's Vice President of Transportation, sent Raye a letter stating that Raye had failed to assure himself of firm footing before stepping onto the pile of ties. The letter itself "serve[d] as discipline in the form of a formal [r]eprimand and . . . a copy of it w[as] . . . placed in [Raye's] personal file."

         C. Raye's OSHA Complaint, Second Pan Am Disciplinary Proceeding for Raye's Alleged Dishonesty, and Raye's Amended OSHA Complaint Charging Retaliation

         Raye retained a lawyer, who drafted and submitted a typed complaint to OSHA on December 6, 2011, without Raye first reviewing or signing it. This initial complaint accused Pan Am of violating the FRSA by retaliating against Raye, both for reporting a safety hazard and for reporting his injury. See 49 U.S.C. § 20109(a)(4), (b)(1)(A). The typed OSHA complaint was consistent with Raye's testimony at the earlier Pan Am disciplinary hearing, with one exception: the complaint stated that Raye "fell hard to the ground" at the time of the injury, rather than that he sat down on the ground.

         On December 12, 2011, OSHA sent Pan Am a copy of Raye's complaint and sought Pan Am's response to the allegations. At the request of Pan Am's legal and human resources departments, Schultz reviewed the OSHA complaint -- which he reasonably believed had been drafted by Raye himself -- and thought there was a "major discrepancy" between the complaint's statement about Raye falling hard to the ground and Raye's prior hearing testimony that he had caught himself and sat down on the ground after stumbling. That discrepancy, Schultz said later, caused Pan Am to make a "collective determination" to bring a second set of disciplinary charges against Raye. Pan Am made that determination without any effort to first ask Raye about the purported inconsistency.

         On December 23, 2011, Pan Am sent Raye a second Notice of Hearing, which directed him to appear at a second disciplinary proceeding, levied several serious charges against him, and threatened him with termination. OSHA and the ALJ would later find that retaliation against Raye for filing the initial OSHA complaint was a contributing factor in Pan Am's decision to bring these new charges. The notice alleged that Raye had "[p]rovid[ed] false statements to [Pan Am] and/or a government agency, in connection with [his] description as to how the incident . . . on October 24, 2011, took place." That purported dishonesty, the notice further alleged, violated two Pan Am Safety Rules: (1) Rule PGR-C, which threatens employees with dismissal if they commit "act[s] of insubordination, hostility, or willful disregard of [Pan Am's] interests" or if they "conduct themselves in such a manner that [Pan Am] will . . . be subject to criticism or loss of good will"; and (2) Rule PGR-L, which threatens employees with dismissal if they are "dishonest, immoral, vicious, ...

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