Deltek, Inc. v. Department of Labor , 649 F. App'x 320 ( 2016 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 14-2415
DELTEK, INC.,
Petitioner,
v.
DEPARTMENT OF LABOR, Administrative Review Board,
Respondent,
DINAH R. GUNTHER,
Intervenor.
On Petition for Review of an Order of the United States
Department of Labor, Administrative Review Board. (13-068; 13-
069)
Argued: December 8, 2015 Decided: May 20, 2016
Before AGEE and HARRIS, Circuit Judges, and Theodore D. CHUANG,
United States District Judge for the District of Maryland,
sitting by designation.
Affirmed by unpublished opinion. Judge Harris wrote the
majority opinion, in which Judge Chuang joined. Judge Agee
wrote a dissenting opinion.
ARGUED: Charles B. Wayne, DLA PIPER LLP (US), Washington, D.C.,
for Petitioner. Dean A. Romhilt, UNITED STATES DEPARTMENT OF
LABOR, Washington, D.C., for Respondent. Stephen Martin Kohn,
KOHN, KOHN & COLAPINTO, LLP, Washington, D.C., for Intervenor.
ON BRIEF: M. Patricia Smith, Solicitor of Labor, Jennifer S.
Brand, Associate Solicitor, William C. Lesser, Deputy Associate
Solicitor, Megan E. Guenther, Counsel for Whistleblower
Programs, Office of the Solicitor, UNITED STATES DEPARTMENT OF
LABOR, Washington, D.C., for Respondent.
Unpublished opinions are not binding precedent in this circuit.
2
PAMELA HARRIS, Circuit Judge:
Dinah R. Gunther, a former employee of Deltek, Inc.,
alleges that Deltek fired her from her position as a financial
analyst in retaliation for whistleblowing activity, in violation
of the whistleblower protections of the Sarbanes-Oxley Act, 18
U.S.C. § 1514A. An Administrative Law Judge (“ALJ”) conducted a
twelve-day hearing on Gunther’s complaint, during which she
heard testimony from multiple witnesses presenting two very
different versions of the events immediately preceding Gunther’s
termination. Crediting Gunther’s account and deeming Deltek’s
explanation for the firing pretextual, the ALJ found Deltek
liable for retaliation. And after additional evidence and
briefing were presented, the ALJ assessed damages against
Deltek, including an award of four years of front pay to
Gunther. The Department of Labor’s Administrative Review Board
(“ARB” or “Board”) affirmed.
Deltek now appeals, asking us to reverse the finding of
retaliation and to overturn the front pay award. But we owe
deference to the findings of the ALJ and the Board and must
uphold them so long as they are supported by substantial
evidence and reached through application of the correct legal
standards. Under that deferential standard, we affirm.
3
I.
A.
Deltek, a Virginia-based software provider, hired Gunther
in October 2008 as a financial analyst in its Information
Technology (“IT”) Department. 1 Gunther, a former executive
assistant and workflow manager, had been unable to move into a
finance position with her last employer because she lacked a
college degree. Once hired by Deltek, she planned to take
advantage of the company’s tuition reimbursement program and
work toward a degree, hoping for a promotion to senior financial
analyst.
Deltek uses Verizon Business (“Verizon”) as a vendor for
information technology services. Deltek’s IT Department
commonly raised billing disputes with Verizon, as permitted by
the companies, with mixed results; some, but not all, of the
disputed amounts were credited to Deltek’s account. Almost from
the start of her Deltek employment, Gunther was concerned about
the lack of clear procedures and supporting documentation for
invoicing generally, and about Verizon invoicing in particular.
1The facts of this case are recounted in detail in the
ALJ’s two extensive opinions, totaling more than 70 pages. See
Gunther v. Deltek, Inc., No. 2010-SOX-00049 (Dep’t of Labor July
31, 2012), J.A. 23–56; Gunther v. Deltek, Inc., No. 2010-SOX-
00049 (Dep’t of Labor June 5, 2013) (“ALJ Supplemental Decision
and Order”), J.A. 58–96. We review here the facts most relevant
to this appeal, as found by the ALJ.
4
Ultimately, Gunther would become convinced that Deltek employees
were deliberately subjecting Verizon invoices to baseless
disputes in an effort to hide a telecommunications budget
shortfall and obfuscate the true financial condition of the IT
Department.
Gunther came to this conclusion in part through her work
with Chris Reynolds, a Project Manager in the IT Department who
had concerns similar to her own. Reynolds, a former Verizon
employee, was responsible for managing the relationship between
Deltek and Verizon, and his duties included reviewing billing
disputes between the companies, a task with which Gunther
assisted. Reynolds determined that Deltek was raising a number
of unjustified billing disputes; at the hearing before the ALJ,
presented with six disputes raised by Deltek, Reynolds opined
that five were baseless. Reynolds shared his views with
Gunther, and by the spring of 2009, Gunther believed that they
had “uncovered massive fraud and a pattern of abusing the
dispute process as to the Verizon invoices.” J.A. 31.
Gunther’s early efforts to bring the Verizon problem to the
attention of management were, in her view, unsuccessful, and led
to hostility from her immediate supervisor and negative changes
to her work status. By April 2009, Gunther was ready to take
more formal action. On April 20, 2009, she hand-delivered a
letter complaint to Deltek’s General Counsel, David Schwiesow,
5
and submitted the same letter to Deltek’s audit committee,
indicating by a “cc” that a copy also had been sent to the U.S.
Securities and Exchange Commission (“SEC”). Gunther’s letter
reported that Deltek employees were raising fraudulent billing
disputes with Verizon to avoid timely payment of fees and
conceal a large budget variance from Deltek management,
auditors, and shareholders, as well as the SEC. Gunther also
alleged that she had been ignored or punished for raising these
issues with her supervisors. Reynolds filed a similar
complaint.
Schwiesow, the General Counsel, took immediate action,
informing Deltek’s CEO of the complaints and then meeting
separately with Gunther and Reynolds. In his meeting with
Gunther on April 21, Schwiesow assured Gunther that her
complaints would be taken seriously and asked her to gather
information. And Deltek did conduct an investigation,
ultimately finding no improper activity or retaliation by Deltek
employees.
Gunther, however, was not entirely reassured by her meeting
with Schwiesow. After seeing employees shredding documents, she
became concerned about the integrity of documents relevant to
her complaint, and began emailing some of them to her personal
email account, which she shared with her husband. She also
6
became increasingly upset about what she viewed as her
mistreatment at the hands of her supervisor and other coworkers.
The result was a paid leave of absence for Gunther. On May
18, 2009, Gunther told Holly Kortright, Deltek’s Vice President
of Human Resources, that she was experiencing stress and other
medical issues that were affecting her work, and Kortright
offered her a paid temporary leave. Gunther accepted by email,
laying out certain conditions — including her right to receive
full compensation and benefits and to terminate the leave at her
discretion with 24 hours’ notice to Deltek — to which Kortright
agreed. Shortly after her leave began in May, Gunther filed a
complaint with the Occupational Safety and Health Administration
(“OSHA”), alleging retaliation for whistleblowing activities in
violation of the Sarbanes-Oxley Act.
Counsel for Gunther and Deltek began negotiating a
settlement that would result in Gunther’s separation from
Deltek. But the parties had trouble agreeing on terms. And in
the meantime, Gunther became concerned about the status of her
employment at Deltek, given that she received both a notice of
continuation of health coverage under the Consolidated Omnibus
Budget Reconciliation Act, or COBRA, suggesting that her health
benefits had been terminated, and a separate notice that Deltek
had reversed the deposit of a recent paycheck.
7
Things came to a head on Saturday, October 24, when
Gunther, after directing her counsel to end settlement
negotiations, sent an email to Kortright saying that Deltek was
in arrears on her employee benefits and paychecks and that she
would be reporting to work at 9:00 a.m. on Monday, October 26.
At 12:18 a.m. on October 26, just nine hours before Gunther was
to report to Deltek, Schwiesow responded with an email telling
Gunther that because she was represented by counsel, Deltek
would be unable to discuss her employment with her if she came
into the office.
Nevertheless, Gunther — who testified that she did not
recall reading Schwiesow’s midnight email before leaving for
work — returned to Deltek on Monday, October 26, setting in
motion the events most critical to this case, and most contested
by the parties. This much is undisputed: Gunther, with her
husband accompanying her in a separate vehicle, arrived at
Deltek and then went alone to the Human Resources Department,
where she was told by Kortright’s assistant that she would have
to wait for Kortright’s arrival. After 15 or 20 minutes,
Gunther met with Kortright and Deltek’s in-house counsel Salman
Ahmad, and Ahmad told Gunther that he could not speak with her
about her employment because she was represented by counsel. In
response to Gunther’s questions, Ahmad assured Gunther that she
still had a job with Deltek, but also told her that she could
8
not return to work that day. After the meeting, Gunther left
the building and, in the parking lot, responded to questions
from her husband, who was holding a video camera, while
Kortright and Ahmad watched the scene from the window of
Kortright’s office. Finally — and, as it turns out, critically
— Gunther secretly made an audio recording of the meeting with
Ahmad and Kortright.
Beyond that, the parties’ accounts diverge. According to
Deltek, and in particular the testimony of Kortright, Gunther’s
behavior on October 26 was “confrontational” and “disruptive.”
Gunther intimidated Kortright’s assistant by standing and
staring at her, refusing to sit in a conference room while she
waited for Kortright; she was “confrontational” and “demanding,”
using a “strong tone,” in her meeting with Kortright and Ahmad;
and her interaction with her husband in the parking lot both
blocked other employees from entering and indicated that Gunther
had no intention of actually returning to work. But after
listening to the audio tape made by Gunther and reviewing the
evidence, the ALJ rejected that characterization, finding no
evidence that Gunther behaved in an inappropriate or threatening
manner or that her parking-lot interview with her husband caused
any disruption.
On the next day, October 27, 2009, Kortright sent Gunther a
letter terminating her employment at Deltek. According to the
9
letter, Gunther was being terminated because of her “disruptive
and very concerning” behavior at Deltek the prior day, and
specifically her “confrontational” posture toward Ahmad and the
“disruptive” videotaped interview with her husband. J.A. 41–42.
That brought to an end the employment relationship between
Gunther and Deltek, and Gunther promptly amended her OSHA
complaint to include her termination as a retaliatory action.
Even after the termination, the parties’ relationship
continued to deteriorate. In November 2009, Gunther and her
husband each sent letters to Kortright and Deltek’s CEO,
respectively, which Deltek characterized as “threatening” and
“aggressive.” J.A. 71. And in the course of its post-
termination investigation and preparation for litigation, Deltek
discovered not only that Gunther had emailed company documents
to her personal email account, but also that she had made secret
audio recordings of certain Deltek meetings and exchanged
allegedly derogatory instant messages with Reynolds.
B.
In July 2010, the Assistant Regional Administrator for OSHA
ruled on Gunther’s OSHA complaint, finding that there was no
reasonable cause to believe that Deltek had violated the
Sarbanes-Oxley Act, 18 U.S.C. § 1514A, which protects from
retaliation whistleblowers who report certain kinds of fraud
committed by publicly traded companies. Gunther filed a notice
10
of objection and requested a de novo hearing in front of an ALJ.
See 29 C.F.R. § 1980.106 (2010).
Following a twelve-day hearing on liability, the ALJ, after
dismissing all individual Deltek employees from the case, issued
a lengthy decision and order finding that Deltek had retaliated
against Gunther in violation of the Sarbanes-Oxley Act. See
Gunther v. Deltek, Inc., No. 2010-SOX-00049 (Dep’t of Labor July
31, 2012), J.A. 23–56. As the ALJ explained, to succeed on her
Sarbanes-Oxley retaliation claim, Gunther was required to show
by a preponderance of the evidence that (1) she had engaged in
protected whistleblowing activity, (2) Deltek was aware of her
protected activity, (3) she suffered an unfavorable personnel
action, and (4) her protected activity was a “contributing
factor” in the unfavorable action. See Jones v. Southpeak
Interactive Corp. of Del., 777 F.3d 658, 668 (4th Cir. 2015); 29
C.F.R. § 1980.104(e) (2012). If Gunther could make that prima
facie showing, then Deltek could avoid liability only by proving
by clear and convincing evidence that it would have taken the
same adverse action even in the absence of the protected
activity. See Feldman v. Law Enf’t Assocs. Corp., 752 F.3d 339,
345 (4th Cir. 2014).
On the first element of Gunther’s case, the ALJ found that
Gunther engaged in two forms of protected whistleblowing
activity: the letter complaint filed with Deltek management and
11
the SEC in April 2009, and the original OSHA complaint of May
2009. Deltek did not dispute that the filing of a formal
complaint or participation in OSHA proceedings generally would
constitute protected whistleblowing activity. But for her
reports to be protected, as the ALJ explained, Gunther also
would need both a “subjective” belief and an “objectively
reasonable” belief that the conduct she complained of was
illegal, and Deltek argued that Gunther had insufficient
education and experience to make such an assessment. The ALJ
disagreed, finding that it was clear from the record that
Gunther had a subjective belief that Deltek was engaged in
fraud, and that as a result of her collaboration with and
reliance on the more experienced Reynolds, Gunther’s belief also
was objectively reasonable.
The ALJ had no difficulty determining that Gunther had
satisfied the second element of her case, showing that Deltek
was aware of her April 2009 letter complaint (filed with Deltek
management) and her May 2009 OSHA complaint (naming Deltek).
The ALJ also found it clear that Gunther’s termination was an
adverse action, satisfying the third element.
On the fourth element, that Gunther’s protected activity
was a “contributing factor” in her termination, the ALJ
recognized that proximity in time is sufficient to raise an
inference of causation, and found that Gunther was terminated
12
almost immediately after the breakdown of the settlement
negotiations precipitated by her OSHA complaint. The ALJ also
made a finding that the reason for the termination offered by
Deltek — Gunther’s “egregious” behavior when she came to work on
October 26 — was pretextual. J.A. 52. After listening to
Gunther’s audio recording of the events of that day and
reviewing the record, the ALJ found that Gunther was not in fact
“confrontational” or rude, and that there was no evidence that
Gunther “ever took any actions in the workplace toward other
employees that were inappropriate or threatening” or that
Gunther and her husband had caused any disturbance at Deltek on
October 26. J.A. 52-53. In short, the reasons offered by
Deltek for Gunther’s termination were “contradicted by
[Gunther’s] tape” and unsupported by the record. J.A. 53.
Accordingly, Gunther satisfied the final element of her
prima facie case. And because the ALJ already had rejected
Deltek’s proffered explanation for Gunther’s termination as
pretextual, Deltek could not rebut that case by proving — by
clear and convincing evidence or, as the ALJ noted, under any
standard — that it would have fired Gunther even in the absence
of her protected activity. Deltek therefore was liable for
retaliation.
After considering additional evidence and briefing by the
parties, the ALJ issued a supplemental decision and order
13
awarding damages to Gunther. Gunther v. Deltek, Inc., No. 2010-
SOX-00049 (Dep’t of Labor June 5, 2013) (“ALJ Supplemental
Decision and Order”), J.A. 58-96. Applying the mandate of the
Sarbanes-Oxley Act that an employee who prevails on a
retaliation claim “shall be entitled to all relief necessary to
make the employee whole,” J.A. 64 (quoting 18 U.S.C.
§ 1514A(c)(1)), the ALJ awarded Gunther back pay and benefits
and also, because the parties agreed that Gunther should not be
reinstated at Deltek, four years of front pay — six years less
than the ten years Gunther was seeking. The front pay award was
based on the ALJ’s finding that without a college degree, it was
unlikely that Gunther could obtain a job comparable to her
financial analyst position at Deltek. But four years of front
pay combined with a restoration of tuition reimbursement
benefits, the ALJ concluded, would be sufficient to make Gunther
“whole,” allowing her to complete an undergraduate degree and
find a job similar to the one she held with Deltek.
The ALJ also rejected Deltek’s argument that its liability
should be limited under the after-acquired evidence doctrine to
the brief time period between Gunther’s firing and Deltek’s
discovery of misconduct for which it would have terminated
Gunther: the post-termination letters to Deltek from Gunther and
her husband, Gunther’s recording of Deltek meetings and
forwarding of Deltek documents to her personal email account,
14
and disparaging instant messages between Gunther and Reynolds.
On the record before her, the ALJ found, Deltek had not shown
that any of that conduct would have justified or in fact led to
Gunther’s termination had Deltek known of it earlier, rendering
the after-acquired evidence doctrine inapplicable.
Deltek appealed to the ARB. 2 The Board affirmed, holding
that both the liability finding and the damages award were
supported by substantial evidence and that the ALJ’s legal
conclusions were in accordance with law. Gunther v. Deltek,
Inc., Nos. 13-068, 13-069, 2014 WL 7227263 (Dep’t of Labor Nov.
26, 2014) (“ARB Final Order”), J.A. 14–18. Deltek timely
appealed the Board’s judgment to this Court.
II.
A.
Our review of the Board’s decision is limited. Under the
Administrative Procedure Act, which governs Sarbanes-Oxley
retaliation claims, 3 we must affirm the Board’s decision unless
it is “arbitrary, capricious, an abuse of discretion, or
2
Gunther cross-appealed certain determinations by the ALJ.
Those issues are not relevant to this appeal.
3
The whistleblower retaliation provision of the Sarbanes-
Oxley Act, 18 U.S.C. § 1514A, incorporates the rules and
procedures of 49 U.S.C. § 42121(b), which in turn incorporates
the Administrative Procedure Act’s standard of review in cases
like this, 5 U.S.C. § 706.
15
otherwise not in accordance with law,” or is “unsupported by
substantial evidence.” 5 U.S.C. § 706(2)(A), (E); see Platone
v. U.S. Dep’t of Labor, 548 F.3d 322, 326 (4th Cir. 2008). We
defer to the Board’s interpretation of § 1514A of the Sarbanes-
Oxley Act. See Welch v. Chao, 536 F.3d 269, 276 (4th Cir.
2008); see also Chevron, U.S.A., Inc. v. Nat. Res. Def. Council,
Inc., 467 U.S. 837, 843–44 (1984). And so long as the Board’s
findings are “supported by substantial evidence and [] reached
based upon a correct application of the relevant law,” we will
uphold them. See Craig v. Chater, 76 F.3d 585, 589 (4th Cir.
1996). We also defer to the factual findings of the ALJ, as
affirmed by the Board, if they are supported by substantial
evidence. Platone, 548 F.3d at 326. And in reviewing for
substantial evidence, our role is not to “substitute our
judgment” for that of the ALJ or the Board; “we do not undertake
to re-weigh conflicting evidence [or] make credibility
determinations.” Craig, 76 F.3d at 589. Rather, the
“substantial evidence” standard requires only that there be in
the record “such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion.” Platone, 548 F.3d
at 326 (internal quotation marks omitted).
B.
Deltek challenges the Board’s liability finding on two
grounds, arguing that the ALJ and the ARB erred first in holding
16
that Gunther engaged in protected activity and then in finding
that her protected activity was a “contributing factor” in her
termination. Because substantial evidence supports the ALJ’s
determination, affirmed by the Board, that Gunther complained of
conduct that she reasonably believed to be illegal and that her
complaints contributed to her termination, we affirm.
1.
As discussed above and explained by the ALJ, Gunther’s
April 2009 letter complaint and May 2009 OSHA complaint
constituted “protected activity” under the Sarbanes-Oxley Act
only if they were based on her “reasonable belief” that the
Deltek conduct she was reporting was in violation of the
securities laws and regulations identified by the statute. See
18 U.S.C. § 1514A(a)(1). And as the ALJ recognized, that
“reasonable belief” standard has both a subjective and an
objective component: Gunther must show that she subjectively
believed Deltek’s conduct to be illegal, and that her belief was
“objectively reasonable.” See Welch, 536 F.3d at 275. The ALJ
determined, in a finding affirmed by the Board, that Gunther
satisfied that standard, and we find no fault with her analysis.
There is ample record evidence to support the ALJ’s
finding that Gunther, who raised her concerns early and often,
both informally and formally, and even in the face of what she
perceived as adverse treatment, genuinely believed Deltek to be
17
violating the law. Deltek’s principal argument is that any
subjective belief Gunther may have had was not “objectively
reasonable,” because without a college degree or relevant work
experience, Gunther lacked sufficient knowledge to make that
judgment. But the ALJ rejected that contention, determining
that in forming her belief Gunther reasonably relied on her
close dealings with Reynolds, who did have extensive experience
in Verizon invoicing. Consideration of what Gunther learned
from Reynolds was consistent with governing law, which, in
evaluating objective reasonableness, focuses on the particular
“factual circumstances” of the putative whistleblower, see
Lockheed Martin Corp. v. Admin. Review Bd., 717 F.3d 1121, 1132
(10th Cir. 2013), which may include what he or she learns from
coworkers, see, e.g., Mahony v. KeySpan Corp., No. 04 CV 554 SJ,
2007 WL 805813, at *1-2, 6 (E.D.N.Y. March 12, 2007) (reasonable
for employee, who had taken only a few accounting classes, to
rely on judgment and expertise of more experienced employee in
forming belief that unlawful conduct was occurring). And there
is substantial evidence to support the ALJ’s finding, affirmed
by the ARB, that Gunther in fact relied on Reynolds, who was
himself a “credible, convincing witness at the hearing,” J.A.
48.
18
2.
Deltek’s more sustained argument is that the ALJ and the
Board erred when they found the necessary causal link between
Gunther’s 2009 letter complaint and 2009 OSHA complaint, on the
one hand, and her termination, on the other. Again, we
disagree. The ALJ and the Board properly applied the Sarbanes-
Oxley standard for causation — which is not a high one — to
factual determinations supported by substantial record evidence,
and we therefore affirm.
As both the ALJ and the Board explained, to satisfy the
“causation” element of her prima facie case, Gunther had to show
only that her protected activity “contributed to” her
termination. 49 U.S.C. § 42121(b)(2)(B)(i). The “contributing
factor” standard, we have recognized, is a “broad and forgiving”
one, Feldman, 752 F.3d at 350, distinctly more protective of
plaintiffs than the familiar McDonnell Douglas framework applied
in Title VII cases, see Araujo v. N.J. Transit Rail Operations,
Inc., 708 F.3d 152, 158 (3d Cir. 2013). Gunther could satisfy
this “rather light burden” by showing that her protected
activities “tended to affect [her] termination in at least some
way,” whether or not they were a “primary or even a significant
cause” of the termination. Feldman, 752 F.3d at 348.
In this case, application of the “contributing factor”
standard turns critically on one key finding by the ALJ,
19
affirmed by the Board: that the explanation proffered by Deltek
for Gunther’s termination was pretextual — or, more
colloquially, not true. Deltek’s position, tracking Kortright’s
termination letter to Gunther, is that Gunther was fired not for
whistleblowing activity, but as a result of her “egregious[ly]”
disruptive and confrontational conduct at Deltek on October 26,
2009. J.A. 52. But after a painstaking review of the evidence,
and having listened to Gunther’s audio recording of the day’s
events “more than once” and observed Gunther’s demeanor at the
twelve-day hearing, the ALJ rejected that contention as
“contradicted by the tape” and unsupported by the evidence.
J.A. 52–53 & n.29. Gunther was not, as Deltek alleged,
“confrontational”; instead, she was “[a]t all times . . . calm,
quiet, and (although she repeated herself) polite.” J.A. 52.
There was no evidence that Gunther “ever took any actions in the
workplace toward other employees that were inappropriate or
threatening.” J.A. 53. And even the alleged parking-lot
“disruption” turned out to be unsupported by the record, which
included “no testimony or other evidence” that Gunther and her
husband actually blocked traffic or hampered pedestrians outside
the Deltek offices. J.A. 52-53. 4
4
The ALJ did believe that Gunther’s decision to return to
work on October 26, without giving Deltek more notice and
obtaining permission, was “ill advised.” J.A. 52. But she also
20
That finding, affirmed by the Board, is supported by
substantial evidence and entitled to deference. Over the course
of a twelve-day hearing, the ALJ had ample opportunity to
evaluate the credibility of the witnesses before her, and to
assess their testimony in light of the audio tape of the October
26 meeting. Particularly when a factual finding rests on a
credibility determination, it “should be accepted by the
reviewing court absent exceptional circumstances” — where, for
instance, it rests on “an inadequate reason or no reason at all”
or is contradicted by other findings of fact. N.L.R.B. v. CWI
of Md., Inc., 127 F.3d 319, 326 (4th Cir. 1997) (internal
quotation marks omitted). Here, the ALJ fully explained her
finding, pointing to record evidence. Deltek cannot show the
kind of “exceptional circumstances” that would allow us to set
aside the ALJ’s finding of pretext, as affirmed by the Board.
See, e.g., id.; Craig, 76 F.3d at 589 (on substantial evidence
review, court does not “re-weigh conflicting evidence” or “make
credibility determinations”).
And in light of that finding, Deltek’s arguments on appeal
are unavailing. Deltek’s principal claim is that the ALJ and
found that Gunther’s premature return was not a basis for
Gunther’s termination — a finding amply supported by the fact
that Gunther retained the right to end her temporary leave at
her discretion — and that Deltek had not argued otherwise. See
also ARB Final Order, 2014 WL 7227263, at *2.
21
the Board improperly applied the law by failing to recognize
that a “legitimate intervening event” — here, Gunther’s
confrontational and disruptive conduct on October 26 — can
“sever” a causal connection between protected activity and a
subsequent adverse employment action, see Feldman, 752 F.3d at
348. But the ALJ and the Board had no occasion to apply that
doctrine, given their finding that there was no “legitimate
intervening event” because the egregious behavior identified by
Deltek had not in fact occurred. Similarly, the ALJ and the
Board did not, as Deltek would have it, impermissibly second-
guess an employer’s judgment as to the wisdom of terminating
employees who threaten workplace safety or comfort. Rather —
and entirely appropriately — they evaluated the truth of
Deltek’s allegation that Gunther was in fact such an employee
and found the claim pretextual.
Finally, Deltek appears to argue that there is simply no
evidence that Gunther’s April 2009 letter complaint or May 2009
OSHA complaint was a “contributing factor” to her termination,
and that the ALJ improperly relied only on an attenuated chain
of “but-for” causation to determine otherwise. But here again,
Deltek’s argument founders on the finding of pretext, which is
itself circumstantial evidence of causation. See Bechtel v.
Competitive Techs., Inc., No. 09-052, 2011 WL 4915751, *7 (Dep’t
of Labor Sept. 30, 2011) (“[I]f a complainant shows that an
22
employer’s reasons for its action are pretext, he or she may,
through the inferences drawn from such pretext, meet the
evidentiary standard of proving by a preponderance of the
evidence that protected activity was a contributing factor.”);
cf. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 147
(2000) (proof of pretext is a form of circumstantial evidence
probative of intentional discrimination that “may be quite
persuasive”). Moreover, proximity in time, as the ALJ
explained, also is sufficient to raise an inference that
protected activity contributes to an adverse action. See
Feldman, 752 F.3d at 348. And while six months separated
Gunther’s whistleblowing complaints in April from her
termination in October, the termination did come, the ALJ found,
as soon as negotiations around those complaints ended and it
became apparent that Deltek could not otherwise settle its
conflict with Gunther. Cf. King v. Rumsfeld, 328 F.3d 145, 151
& n.5 (4th Cir. 2003) (even extended period of time between
protected activity and adverse action may demonstrate causation
where adverse action occurred at “the natural decision point”). 5
5 That the ALJ relied on both these factors in finding
causation is established with “reasonable clarity,” Greater
Boston Television Corp. v. FCC, 444 F.2d 841, 851 (D.C. Cir.
1970), we think, by the fact that both are analyzed in the
“Causal Relationship” section of her opinion. J.A. 51-54. This
is not a case, in other words, in which we need “guess” as to
whether the ALJ deemed her pretext finding relevant to
23
Again, the question before us is not whether the record
demands the conclusion that Gunther’s whistleblowing activity
“contributed to” her termination, but only whether substantial
evidence supports the determination of the ALJ and the Board
that Gunther satisfied that forgiving test. See, e.g., Craig,
76 F.3d at 589 (where “evidence allows reasonable minds to
differ,” a reviewing court must defer to an agency determination
under the substantial evidence standard). Under that standard
of review, we have no cause to disturb the determination of the
ALJ, as affirmed by the Board, that Gunther made a prima facie
showing that her April 2009 letter complaint and May 2009 OSHA
complaint contributed to her termination by Deltek. 6
causation, Greater Boston, 444 F.2d at 851, or “substitut[e]” a
factor of our own that the ALJ has not considered, cf. SEC v.
Chenery Corp., 332 U.S. 194, 196 (1947). Parsing the ALJ’s
language, our dissenting colleague argues that the ALJ tied her
pretext finding to the wrong part of the causation inquiry. But
that cuts the analysis too fine. In reviewing an agency’s
reasoning, we demand not “ideal clarity,” Greater Boston, 444
F.2d at 851, but only a discernible path, id., or “rational
bridge” between record findings and legal conclusions, Cordova
v. Holder, 759 F.3d 332, 340 (4th Cir. 2014). It is enough here
that the ALJ required Gunther to “establish[] a causal
relationship by a preponderance of the evidence,” J.A. 51, and
in deciding whether she had met that burden, properly took into
account not only the events leading up to Gunther’s firing but
also Deltek’s pretextual explanation for that firing, J.A. 52-
53.
6For much the same reason, Deltek cannot prevail on its
alternative argument that even if Gunther made out a prima facie
case of retaliation, it rebutted that showing with clear and
24
C.
Deltek separately challenges the damages award to Gunther.
First, Deltek argues that the ALJ and the Board erred by failing
to apply the after-acquired evidence doctrine, limiting Deltek’s
liability for damages because evidence discovered after
Gunther’s termination would have led to her firing had the
company known of it earlier. Second, Deltek objects to the
award of four years of front pay as unduly speculative and
without a proper evidentiary basis. Again, we think that the
determinations of the ALJ and the Board are supported by
substantial evidence and consistent with law, and we therefore
affirm.
1.
As the ALJ and the Board recognized and all parties agree,
the after-acquired evidence doctrine applies in Sarbanes-Oxley
cases.
Under this doctrine, reinstatement or front pay is
inappropriate if an employer discovers evidence of
misconduct after it has wrongfully terminated an
convincing evidence that it “would have taken the same personnel
action in the absence of the protected activity,” Feldman, 752
F.3d at 345 (internal quotation mark omitted). In support of
this claim, Deltek again points only to Gunther’s October 26
conduct as an explanation for her termination. As the ALJ
determined, given the finding that Deltek’s explanation was
pretextual, Deltek by definition could not show by clear and
convincing evidence (or even a lesser standard of proof) that it
would have terminated Gunther for that reason.
25
employee if the misconduct, standing alone, would have
justified terminating the employee had the employer
known of it at the time of discharge. In such an
instance, an employer is only liable for back pay from
the date of unlawful discharge to the time this new
evidence is discovered.
ALJ Supplemental Decision and Order, J.A. 65 (citing McKennon v.
Nashville Banner Publ’g Co., 513 U.S. 352 (1995)).
To prevail, an employer must show by clear and convincing
evidence that it would have terminated the employee when it
discovered the misconduct in question. 49 U.S.C.
§ 42121(b)(2)(B)(ii), (iv) (“Relief may not be ordered . . . if
the employer demonstrates by clear and convincing evidence that
the employer would have taken the same unfavorable personnel
action in the absence of that behavior.”); Ameristar Airways,
Inc. v. Admin. Review Bd., 771 F.3d 268, 273 (5th Cir. 2014).
The ALJ found that Deltek failed to offer sufficient evidence
that the after-acquired evidence doctrine applied, and the ARB
affirmed. 7 And Deltek now faces an even higher burden on appeal:
it must show that this finding was unsupported by substantial
evidence or, put differently, that there could be no reasonable
difference of opinion as to whether Deltek had met the clear and
convincing threshold. See Platone, 548 F.3d at 326 (substantial
7 Neither the ALJ nor the Board referred expressly to the
clear and convincing standard in applying the after-acquired
evidence doctrine. To the extent that either applied the less
demanding preponderance of the evidence standard, such an error
could have worked only in Deltek’s favor.
26
evidence is “such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion”). Deltek cannot
satisfy that exacting standard.
Deltek points first to its discovery, post-termination,
that Gunther had emailed certain Deltek documents to her home
email account, shared by her husband, in violation of Gunther’s
employment contract and Deltek policies. In connection with
that claim, the ALJ recognized Gunther’s understanding that
Schwiesow, Deltek’s General Counsel, had directed her to collect
information to support her complaint. And the ALJ made specific
findings, affirmed by the Board, that Gunther forwarded to her
home account only documents that were relevant to her
whistleblowing reports; that when she did so, she had a
reasonable concern that the documents might be shredded by
Deltek employees or otherwise destroyed; and that Gunther’s
motivation for forwarding the documents was “to support her
[Sarbanes-Oxley] allegations.” J.A. 68-69. Distinguishing
cases like JDS Uniphase Corp. v. Jennings, 473 F. Supp. 2d 697,
703–04 (E.D. Va. 2007), in which courts had deemed employees
unprotected when they “indiscriminately misappropriated
documents containing proprietary information,” J.A. 68, the ALJ
concluded, and the ARB agreed, that Deltek had not made the
requisite showing that Gunther’s activity would have justified
her termination.
27
On this record and in light of the specific factual
findings of the ALJ and the Board, we see no reversible error.
Deltek contests the ALJ’s factual findings, but the ALJ cited
ample evidentiary support for her conclusions. And under those
narrow factual circumstances, we agree that Gunther’s effort to
protect selected relevant documents from what she reasonably
believed was a risk of destruction, on what she understood to be
instructions from Deltek’s General Counsel, would not have
justified her termination. Indeed, it is perhaps to Deltek’s
credit that it has not offered much by way of evidence that it
would have fired Gunther, or any other employee, for limited
efforts to document what is reasonably believed to be fraud:
all we have in this record are Deltek’s written policies and
Schwiesow’s self-serving testimony that their violation would
have led to termination, without any evidence of similar
circumstances under which Deltek had fired employees or
otherwise enforced its policies against them. Accordingly, we
defer to the determination of the ALJ and the Board that Deltek
has not made the requisite showing under the after-acquired
evidence doctrine.
We also find that substantial evidence supports the
determination of the ALJ, affirmed by the Board, that Deltek did
not meet its burden of showing that it would have terminated
Gunther for any of the other misconduct it identifies. As to
28
Gunther’s surreptitious audio recording of Deltek meetings, we
have no reason to question the ALJ’s finding that Deltek failed
to cite any company policy or law prohibiting the recordings,
and that Schwiesow’s testimony that “this kind of action would
not be tolerated” was by itself insufficient to meet Deltek’s
burden of proof. J.A. 66. Similarly, in the absence of record
evidence that Deltek had terminated other employees for sending
instant messages or that no other employee had sent comparable
messages, we defer to the ALJ’s finding that Gunther’s instant
messages were “trivial in nature” and so “petty” that Deltek
could not show that an employee would have been terminated on
that ground alone. J.A. 70.
And finally, substantial evidence supports the rejection of
the post-termination letters from Gunther and her husband as
after-acquired evidence limiting damages. As proof that those
letters would have led to Gunther’s termination, Deltek cited
only its own characterization of the letters as threatening and
aggressive. But the ALJ reviewed Gunther’s letter and concluded
that it was neither threatening nor aggressive, and went on to
“agree with [its] substance” because it did no more than request
a retraction of the mischaracterizations in Kortright’s
termination letter. J.A. 71. The ALJ also reviewed the letter
sent by Gunther’s husband, and while criticizing its tone, found
that its thrust was “simply [] to ask Deltek to refrain from
29
harassing his wife” and that it had been sent without Gunther’s
participation. J.A. 71. In light of that record, we have no
reason to disturb the determination of the ALJ and the Board
that Deltek has not met its significant burden of demonstrating
that it would have terminated Gunther for the post-termination
letters.
2.
Finally, Deltek challenges the ALJ’s award, affirmed by the
ARB, of four years of front pay totaling $300,352, along with
tuition reimbursement benefits of $30,000. As the ALJ
recognized, reinstatement rather than front pay is the
“presumptive and preferred remedy” for unlawful discharge in
whistleblower cases. See J.A. 80 (citing Hobby v. Ga. Power
Co., Nos. 98-166 & 98-169, 2001 WL 168898 (Dep’t of Labor Feb.
9, 2001)). But where, as here, pronounced animosity between the
parties leads both of them to advocate against reinstatement,
front pay may be an appropriate substitute, as the ALJ
concluded.
Neither party has appealed the threshold determination that
front pay and not reinstatement was the proper remedy in this
case, and so the only issue before us is the calculation of the
front pay award. Under Sarbanes-Oxley, a prevailing employee is
entitled to “all relief necessary to make the employee whole,”
18 U.S.C. § 1514A(c)(1), and front pay “is designed to place the
30
complainant in the identical financial position” that she would
have occupied had she remained employed or been reinstated.
Bryant v. Mendenhall Acquisition Corp., No. 04-014, 2005 WL
1542547, at *6 (Dep’t of Labor June 30, 2005) (internal
quotation mark omitted). By their nature, front pay awards are
“speculative,” but they “cannot be unduly so,” id. at *7, and it
is up to the employee to provide the “essential data necessary
to calculate a reasonably certain front pay award.” Id.
(quoting McKnight v. Gen. Motors Corp., 973 F.2d 1366, 1372 (7th
Cir. 1992)). But front pay is an equitable remedy, and given
the “infinite variety of factual circumstances” that must be
considered, front pay awards “rest in the discretion of the
court in shaping the appropriate remedy.” Duke v. Uniroyal
Inc., 928 F.2d 1413, 1424 (4th Cir. 1991).
After laying out the legal standard governing front pay
awards, Deltek devotes only a single, largely conclusory
paragraph of its brief to its argument on damages. 8 But reading
between the lines, Deltek appears to argue in part that the
front pay award in this case is “unduly speculative” because
8Indeed, the Secretary of Labor urges that Deltek’s “few
sentences of argument” on this point are so lacking in
specificity that they are insufficient to engage the issue on
appeal. Br. for the Secretary of Labor at 60 (citing cases).
We need not decide that question. Even assuming that Deltek’s
argument, supplemented by an additional paragraph in its reply
brief, adequately presents the issue for appeal, we find no
ground to disturb the ALJ’s front pay award.
31
Gunther failed to provide the ALJ with “essential data” on which
to rest a proper award. We disagree. Gunther submitted a proof
of damages that included her annual salary and benefits, and the
ALJ used that data to calculate the value of four years of front
pay, essentially multiplying by four. As is always the case,
“some speculation about future earnings [was] necessary,”
Barbour v. Merrill, 48 F.3d 1270, 1280 (D.C. Cir. 1995)
(emphasis in original), but the ALJ and the Board made the
reasonable choice to assume that Gunther would have continued to
earn the same salary and benefits at Deltek had she not been
unlawfully terminated. Indeed, the ALJ was careful to avoid
undue speculation, rejecting Gunther’s request to include in the
award annual salary increases that were “not guaranteed.” J.A.
83. 9
9
To the extent the dissent suggests that Gunther’s
obligation to provide “essential data” went beyond this showing,
we must disagree. Under case law applying the “essential data”
standard, Gunther amply met her burden of providing the ALJ with
the basic data necessary to calculate a front pay award: “a
proposed salary base” and “a definite duration for the award.”
See Barbour v. Merrill, 48 F.3d 1270, 1279, 1280 (D.C. Cir.
1995) (under “essential data” rule, where plaintiff established
a “prima facie case” for front pay by providing a proposed
salary base and duration, district court erred by denying front
pay as unduly speculative); see also McKnight v. Gen. Motors
Corp., 973 F.2d 1366, 1372 (7th Cir. 1992) (affirming denial of
front pay in part because plaintiff failed to provide “essential
data” such as “the amount of the proposed award” and “the length
of time the plaintiff expects” the award to cover).
32
The heart of Deltek’s claim, as we understand it, is that
the choice of four years as the period for front pay (and
perhaps the inclusion of tuition reimbursement benefits for
those years) lacked an evidentiary or logical basis. Gunther
sought ten years of front pay, arguing that it would take her at
least that long to regain the professional status she lost when
Deltek fired her. The ALJ rejected that claim, and found that
Gunther could obtain a job comparable to the one she held at
Deltek, and thus be “made whole,” in four years during which she
obtained a college degree. We think that determination, as
affirmed by the Board, is supported both by the ALJ’s reasoning
and by substantial evidence in the record.
Based on record evidence that Deltek does not contest, the
ALJ found that Gunther had worked in administrative and support
positions prior to her time at Deltek, and that she had been
unable to obtain a finance position from her prior employer
because she lacked a college degree. The ALJ also found that
Gunther again had been unable to secure a position as a
financial analyst after her termination by Deltek and that she
was “now unlikely to obtain” comparable employment without an
undergraduate degree, “as she did not work for [Deltek] for a
sufficient period of time to obtain on-the-job qualifications.”
J.A. 82. It followed, the ALJ concluded, that in order for
Gunther to be “made whole” as required by statute, she would
33
need the opportunity to earn a college degree, which generally
requires four years. Accordingly, the ALJ ordered Deltek to pay
four years of front pay, along with the tuition-reimbursement
benefits to which Gunther had been entitled when employed.
We cannot agree with Deltek that the ALJ provided no
“logical basis” for her ruling, or that her determination is
unsupported by substantial evidence. Deltek insists that,
contrary to the ALJ’s determination, Gunther could find work as
a financial analyst without a college degree, pointing to its
own decision to hire Gunther. But the ALJ considered and
rejected that claim, finding that Gunther had been unable to
obtain a financial analyst position either before or after her
tenure at Deltek, and that Gunther remained unlikely to find
such a position without a degree despite the fact that Deltek
had been “willing to give [Gunther] a chance” that other
employers had not. J.A. 81. And while the ALJ’s assessment of
Gunther’s employment prospects necessarily involved some
speculation, so too does Deltek’s — and nothing in this record
required the ALJ to adopt Deltek’s optimistic prediction about
Gunther’s future as a financial analyst without a college
degree. Cf. Barbour, 48 F.3d at 1280 (front pay should not be
denied because “some speculation about future earnings is
necessary, or because parties have introduced conflicting
evidence” (emphasis in original)).
34
Gunther was entitled to be returned to “the identical
financial position” that she would have occupied had she not
been terminated unlawfully for protected whistleblowing
activities. See Bryant, 2005 WL 1542547, at *6; 18 U.S.C.
§ 1514A(c)(1) (employee entitled to all relief necessary to be
made whole). Consistent with that statutory mandate, the ALJ
determined, and the Board agreed, that a four-year front pay
award would return Gunther to the position she would have been
in but for her termination — that is, employment as a financial
analyst. The ALJ’s rationale is fully explained and its
findings, as affirmed by the Board, are supported by substantial
evidence. Even if “reasonable minds might disagree regarding
the amount,” Traxler v. Multnomah Cnty., 596 F.3d 1007, 1014
(9th Cir. 2010) (affirming front pay award), the ALJ and the
Board did not abuse their discretion in shaping the appropriate
front pay remedy in this case. See Duke, 928 F.2d at 1424
(front pay awards rest in equitable discretion of court);
Traxler, 596 F.3d at 1014 (holding that district court did not
abuse discretion in setting front pay award).
III.
For the foregoing reasons, we affirm the judgment of the
Administrative Review Board.
AFFIRMED
35
AGEE, Circuit Judge, dissenting:
As the Supreme Court has stressed, Courts of Appeals in
administrative agency cases must engage in a “meaningful review”
to determine whether the record supports the agency’s
conclusions. Dickinson v. Zurko, 527 U.S. 150, 162 (1999). We
are to undertake that review to assure we are “not simply
rubber-stamping agency factfinding.” Id. In my view, the
majority fails in that obligation to engage in a meaningful
review. Instead, it permits the administrative law judge’s
(“ALJ’s”) fallacious post hoc ergo propter hoc basis for
causation to pass review and affirms a front pay award that is
patently unreasonable and bears no relation to Gunther’s
prospective future losses. I therefore respectfully dissent.
I. Causation
The ALJ found that Gunther met her burden to prove
causation solely based on the sequence of events leading to her
termination of employment. In the ALJ’s view, the timeline of
events was in itself sufficient to prove a causal connection
between Gunther’s protected activity and subsequent termination
because her “termination resulted after her return from a leave
of absence that was precipitated by an investigation into the
matters raised by the SEC [SOX] complaint.” J.A. 52. The
Administrative Review Board (the “Board”) affirmed the ALJ’s
36
finding of causation, reciting only the chronology of events
with one following in time after the other with the last being
Gunther’s termination. J.A. 15.
To see why the ALJ’s causation finding is not simply
erroneous but illusory, it is necessary to consider, not simply
recite, the standard that appellate courts employ when reviewing
an administrative agency decision. The Court will set aside an
administrative agency’s conclusions that are “arbitrary,
capricious, an abuse of discretion, or otherwise not in
accordance with law.” Welch v. Chao, 536 F.3d 269, 276 (4th
Cir. 2008) (quoting 5 U.S.C. § 706(2)(A)) 1; Craig v. Chater, 76
F.3d 585, 589 (4th Cir. 1996) (explaining that deference is owed
only where the ALJ’s finding was “supported by substantial
evidence and was reached based upon a correct application of the
relevant law”). A reviewing Court is obliged to take into
account the entire record, including the evidence opposed to the
agency’s view from which conflicting inferences reasonably could
be drawn. Universal Camera Corp. v. N.L.R.B., 340 U.S. 474,
487-88 (1951). Thus, where the record “clearly precludes [the]
Board’s decision from being justified by a fair estimate of the
worth of the testimony of witnesses or its informed judgment on
1
I have omitted internal quotation marks, alterations, and
citations here and throughout this opinion, unless otherwise
noted.
37
matters within its special competence,” the Court must set aside
the agency’s findings. Id. at 490.
To prevail on her SOX retaliation claim, Gunther shoulders
the burden of establishing causation by showing that her
protected activity was a “contributing factor” in her
termination. 29 C.F.R. § 1980.109(a). The contributing factor
standard of causation is not “toothless.” Feldman v. Law Enf’t
Assocs. Corp., 752 F.3d 339, 350 (4th Cir. 2014). Under this
standard, a complainant must still point to evidence showing a
causal link between protected activity and adverse employment
action. Id.
In deciding that Gunther established a causal nexus between
her filing of a SOX complaint and her termination, the ALJ
looked only at the sequence of the events that led to the
cessation of Gunther’s employment at Deltek. The ALJ concluded
that because Gunther’s termination followed protected activity,
the protected activity must have caused her termination. But
nothing tied the chain of events to causation other than
happenstance.
The ALJ’s only discussion of proof of causation is, in
toto, the following:
Had neither complaint been filed, . . . she would not
have returned to work on the day that she did, and she
would not have been terminated based upon her actions
at the time she returned. Accordingly, Complainant’s
38
termination was causally related to the protected
activities.
J.A. 52. It was solely upon this finding that the ALJ concluded
Gunther met her burden of proof of the element of causation.
But this is a post hoc ergo propter hoc conclusion that is
erroneous as a matter of law. Post hoc ergo propter hoc is “a
fallacy because it makes an assumption based on the false
inference that a temporal relationship proves a causal
relationship.” McClain v. Metabolife Int’l, Inc., 401 F.3d
1233, 1243 (11th Cir. 2005); see also Huss v. Gayden, 571 F.3d
442, 459 (5th Cir. 2009) (noting “the post hoc ergo propter hoc
fallacy assumes causality from temporal sequence”). The mere
circumstance that protected activity precedes termination is not
proof of a causal connection between the two.
Retaliation under SOX necessarily requires more than the
mere occurrence of protected activity followed by adverse
employment action, but that is all that the ALJ found to satisfy
Gunther’s burden of proving the element of causation. The
statute cannot be read to mean, as the ALJ and Board found, that
whenever an employee engages in protected activity prior to an
adverse employment action like termination, the plaintiff has
met her burden as to causation. See Huskey v. City of San Jose,
204 F.3d 893, 899 (9th Cir. 2000) (noting that a retaliation
claim cannot rest on the logical fallacy of post hoc ergo
39
propter hoc, i.e., “after this, therefore because of this”);
Gibson v. Old Town Trolley Tours of Washington, D.C., Inc., 160
F.3d 177, 182 (4th Cir. 1998) (accord); Bermudez v. TRC
Holdings, Inc., 138 F.3d 1176, 1179 (7th Cir. 1998) (“Timing may
be an important clue to causation, but does not eliminate the
need to show causation -- and [the plaintiff] really has nothing
but the post hoc ergo propter hoc ‘argument’ to stand on.”).
Proof of causation requires an evidentiary link between the
protected act and an adverse event. That evidentiary nexus
mandates evidence of actual causation, which is not supplied by
the metaphysical concept that an event later in time could only
have happened after an earlier event. But that is the ALJ’s
stated basis of finding causation. The majority ignores this
error and relies on a new basis for causation that neither the
ALJ nor Board found: “that the explanation proffered by Deltek
for Gunther’s termination was pretextual – or, more
colloquially, not true.” Maj. op. at 20. The ALJ’s finding
that Deltek’s proffered reasons for terminating Gunther were
pretextual came only after the ALJ determined that Gunther
satisfied the elements of her prima facie case, including
causation. At no time did the ALJ or the Board tie any part of
a prima facie finding of causation to any finding of pretext,
40
which came only after the burden had shifted to Deltek to show
an affirmative defense. 2
Congress has imposed on this Court the responsibility to
ensure that an agency “keeps within reasonable grounds. That
responsibility is not less real because it is limited to
enforcing the requirement that evidence appear substantial when
viewed, on the record as a whole, by courts invested with the
authority and enjoying the prestige of the Courts of Appeals.”
Universal Camera Corp., 340 U.S. at 490. Under that standard, I
am compelled to conclude based on this record that the ALJ erred
as a matter of law in determining Gunther met her burden of
proof for causation. See Welch, 536 F.3d at 276 (indicating we
owe no deference to an agency determination that is “otherwise
not in accordance with law”). Accordingly, I would reverse the
2 The ALJ found causation solely based on a post hoc ergo
propter hoc logical fallacy, and the majority is foreclosed from
saving the ALJ’s causation determination for reasons the ALJ did
not articulate in the prima facie causation stage. “[A]
reviewing court . . . must judge the propriety of [agency]
action solely by the grounds invoked by the agency.” SEC v.
Chenery Corp., 332 U.S. 194, 196 (1947). Where, as here, the
agency has made a finding “for no reason or for the wrong
reason,” King v. Califano, 615 F.2d 1018, 1020 (4th Cir. 1980),
the Court is “powerless to affirm . . . by substituting what it
considers to be a more adequate or proper basis.” Chenery, 332
U.S. at 196; see also N.L.R.B. v. Ky. River Cmty. Care, Inc.,
532 U.S. 706, 721 (2001) (“We may not enforce the Board’s order
by applying a legal standard the Board did not adopt.”); Nken v.
Holder, 585 F.3d 818, 822 (4th Cir. 2009) (“Established
precedent dictates that a court may not guess at what an agency
meant to say, but must instead restrict itself to what the
agency actually did say.”).
41
decision of the Board and direct that judgment be entered for
Deltek.
II. Damages
The ALJ awarded Gunther four years of front pay in the
amount of $300,352 in addition to tuition reimbursement of
$30,000 for the same period, although the ALJ recognized that
Gunther “was essentially an entry level employee in a new
field.” J.A. 81. Gunther had neither a high school nor a
college degree when Deltek hired her approximately one year
before her termination, but the ALJ opined that Gunther would be
“unlikely to obtain employment in her chosen field without the
degree, as she did not work for [Deltek] for a sufficient period
of time to obtain on-the-job qualifications.” 3 J.A. 82. For
reasons not apparent in the record, the ALJ then awarded Gunther
four years of front pay and tuition reimbursement so that she
could “attend a university full-time, without working, if she so
chooses” in order to obtain a bachelor’s degree in accounting or
finance. Id. Although I would reverse the ALJ’s decision on
liability on the merits, I also address the damages award in
view of the majority’s approval of an award that is rankly
3 Gunther represented that she had obtained a GED at some
point.
42
speculative and not substantially supported by the record. See
Dotson v. Pfizer, Inc., 558 F.3d 284, 300 (4th Cir. 2009).
It is again helpful to consider the standard by which we
review the ALJ’s findings. We will defer to an ALJ’s factual
findings only if supported by substantial evidence. 5 U.S.C.
§ 706(2)(E). “Substantial evidence is more than a mere
scintilla. It means such relevant evidence as a reasonable mind
might accept as adequate to support a conclusion.” Consol.
Edison Co. of N.Y. v. N.L.R.B., 305 U.S. 197, 229 (1938). “Even
if legitimate reasons exist for rejecting [or crediting] certain
evidence, the [ALJ] cannot do so for no reason or for the wrong
reason.” King v. Califano, 615 F.2d 1018, 1020 (4th Cir. 1980).
See also Cotter v. Harris, 642 F.2d 700, 706 (3d Cir. 1981)
(“[I]t is apparent that the ALJ cannot reject evidence for no
reason or for the wrong reason.”).
SOX entitles a prevailing employee only to such “relief
necessary to make the employee whole,” including reinstatement,
back pay with interest, and various other fees and costs. 18
U.S.C. § 1514A(c). The statute does not identify front pay as
an available remedy, but front pay “has been recognized as a
possible remedy in cases under the Sarbanes-Oxley and other
whistleblower statutes enforced by OSHA in circumstances where
reinstatement would not be appropriate.” Department of Labor,
Procedures for the Handling of Retaliation Complaints Under
43
Section 806 of the Sarbanes-Oxley Act of 2002, as Amended, 80 FR
11865-02. Front pay, however, is “disfavored.” Sellers v.
Mineta, 358 F.3d 1058, 1063 (8th Cir. 2004). As such, we have
cautioned courts to employ “discretion, restraint and balance”
when considering whether to award front pay in order to avoid a
“windfall” to the party seeking front pay. Duke v. Uniroyal
Inc., 928 F.2d 1413, 1424 (4th Cir. 1991). A plaintiff bears
the burden of providing “the essential data necessary to
calculate a reasonably certain front pay award.” McKnight v.
Gen. Motors Corp., 973 F.2d 1366, 1372 (7th Cir. 1992). We will
not give deference to front pay awards that are “unduly
speculative.” Dotson, 558 F.3d at 300.
The amount of front pay awarded in this case lacks
substantial evidentiary support. The ALJ explicitly tied the
award of four years’ front pay, with full time tuition
reimbursement for those years, to Gunther’s supposed entitlement
to a four-year college degree. But Gunther declined to present
testimony from a vocational expert, a job counselor, or any
neutral witness to support the ALJ’s conclusion that she would
be unable to secure comparable employment absent a college
degree. The only record evidence to support the ALJ’s award is
Gunther’s self-serving speculation as to her prospective ability
to secure similar employment. On this record, she has failed to
meet the required burden of proof to adduce the “essential data”
44
necessary to calculate a reasonable front pay award. See
McKnight, 973 F.2d at 1372.
Gunther’s anecdotal and self-serving testimony that a four-
year college degree would be a prerequisite for obtaining
comparable employment is belied by the fact that Deltek hired
Gunther just one year prior to her termination without any
college education and without relevant on-the-job training.
Gunther admitted she had none of the usual certifications for a
financial analyst position and was not pursuing any. J.A. 1281-
82 (testifying that she was not a Certified Internal Auditor,
Certified Fraud Examiner, or a Charted Financial Analyst and
lacked a certificate in financial forensics). Her only
certification was “a certificate in common sense.” J.A. 1282.
Put simply, the ALJ did not temper the front pay
calculation to avoid a “windfall” in Gunther’s favor. See Duke,
928 F.2d at 1424. During her brief stay at Deltek, Gunther was
enrolled only in a two-year program at a community college where
she took two courses. She was not seeking a bachelor’s degree,
nor was she attending school full time. Further, Gunther
discontinued taking classes after her termination. No law
requires Deltek to bear the onerous burden of subsidizing
Gunther’s full time, four-year college education, a
qualification Gunther didn’t need to obtain her post with Deltek
just one year earlier. There is no record evidence remotely
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supporting this award, which actually puts Gunther in a far
superior position than if she had remained at Deltek.
For example, the Deltek tuition reimbursement policy was
limited to two classes per semester. J.A. 2224. And any such
reimbursement plan was tied to Deltek receiving the benefit of
the employee’s services and a commitment to future services, a
fact not accounted for in the tuition or front pay awards. Even
if Gunther had taken the maximum reimbursable course-load year
round (assuming the availability of three semesters) her maximum
coverage over four years would be 24 classes, far fewer than
required for a bachelor’s degree. See U.S. Dep’t of Educ., NCES
1999-179, Credit Production and Progress Toward the Bachelor’s
Degree: An Analysis of Postsecondary Transcripts for Beginning
Students at 4-Year Institutions, at iii (1999) (noting a
bachelor’s degree generally requires 120 earned credit hours).
Assuming each of those 24 courses was worth three credit hours
and that she never missed one and performed satisfactorily,
Gunther would only accumulate 72 credit hours in four years
under the Deltek plan -- barely half those needed for a
bachelor’s degree. Gunther’s tuition award bonanza thus puts
her in a far better position than she could have been in while
employed at Deltek.
Nothing in the record shows Gunther had a specific plan,
much less a plan approved by Deltek, to obtain any level of
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further education while employed there. The ALJ’s conclusion
that Gunther was entitled to attend school full time to obtain a
bachelor’s degree is fundamentally divorced from what is
necessary to make Gunther whole. See 18 U.S.C. § 1514A(c). See
also Shore v. Fed. Express Corp., 777 F.2d 1155, 1160 (6th Cir.
1985) (“The cost of obtaining a college degree, cited by the
plaintiff as a basis for the front pay award, cannot be
considered a post-judgment effect of defendant’s discrimination
. . . . However desirable a college education may be, we cannot
impose this cost on the defendant in this case.”); Ogden v. Wax
Works, Inc., 29 F. Supp. 2d 1003 (N.D. Iowa 1998) (“[T]he
expense of a college education should not be borne by [the
employer] under the guise of front pay.”).
The “windfall” character of the front pay award is also
apparent from its extended duration. Gunther worked for Deltek
for approximately one year and, for a substantial period, she
was out on Deltek-approved paid medical leave. The front pay
award exceeds the amount of time Deltek employed Gunther by at
least three years. A front pay award extending years into the
future where the employee’s tenure lasted approximately a year
is patently speculative. Moreover, Gunther has failed to
present any evidence justifying such a lengthy prospective
award. Four years of front pay is an arbitrary award plucked
from space without any record basis.
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The majority, for its part, accepts the ALJ’s four-year
front pay award because the ALJ rejected Gunther’s demand for
ten years of front pay. Under the majority’s logic, had Gunther
only had the foresight to demand twenty years of front pay, she
would have received an eight-year pay award. But rejection of
Gunther’s unsupported front pay request of ten years does not
fill the void of record evidence to support the actual award.
The only record “evidence” to support the award is Gunther’s
self-serving speculation. See, e.g., J.A. 2197-2201, 2288-95.
Searching for some evidentiary basis on which to affirm the
ALJ’s front pay determination, the majority points to the ALJ’s
finding that Gunther did not work for Deltek long enough to
“‘obtain on-the-job qualifications’” and is “‘now unlikely to
obtain’ comparable employment without an undergraduate degree.”
Maj. op. at 34 (quoting J.A. 82). This reasoning misses the
mark, for if Gunther could obtain sufficient “on-the-job
qualifications” then she would not require a college degree.
This is not a circumstance where a longtime employee is
terminated from a post she held for years and years and faces a
vastly different job market with expanded job-credential
requirements. Deltek hired Gunther just one year prior to her
termination without a college degree, and nothing precludes
another employer from doing the same.
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The award of front pay and tuition in this case is an
arbitrary and capricious agency act. The Court owes no
deference to the ALJ’s decision on front pay, as it lacks a
basis in the record and shows no “discretion, restraint and
balance,” which is required to avoid a front pay “windfall” such
as Gunther received in this case. Duke, 928 F.2d at 1424.
III. Conclusion
For all the foregoing reasons, I believe the majority
opinion fails to take account of the Supreme Court’s direction
that we engage in “meaningful review” of agency decisions.
Dickinson, 527 U.S. at 162. Instead, it affirms a finding of
causation premised on nothing more than post hoc ergo propter
hoc reasoning and a front pay award that is “unduly
speculative,” Dotson, 558 F.3d at 300, and amounts to a gross
“windfall,” Duke, 928 F.2d at 1424. I respectfully dissent and
would reverse the judgment of the Board.
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