Business Assault on DOL Judges Begins With Whistleblower Claims

A pair of lawsuits filed by Perdue Farms and Comcast Corp. that seek to have whistleblower claims heard before a court instead of US Labor Department in-house judges are the first signs of what attorneys expect will be a flurry of challenges to the agency’s internal tribunals.

Both cases cite the US Supreme Court’s June ruling in SEC v. Jarkesy, where the high court majority said defendants have a constitutional right to make their case to a federal jury when the Securities Exchange Commission is seeking financial penalties, as opposed to before an administrative law judge.

While that dispute involved SEC regulations, attorneys say cases at other agencies involving statutory claims that provide money damages and have parallels to common law—like the whistleblower statutes’ retaliation protections for employees who make complaints under various federal laws—will likely be subject to some scrutiny in the wake of Jarkesy.

“That’s going to be a good sign that this is potentially a claim subject to the Seventh Amendment, because money damages are the prototypical common law remedy, as the Court stated in Jarkesy,” William Boak, an attorney with Barley Snyder, said of the two cases. “These whistleblower claims are really sort of analogous to common law wrongful discharge claims.”

How far the Jarkesy ruling will curb the DOL’s ability to use administrative law judges to resolve certain matters will become clearer as employers file more challenges to the system, which attorneys say they expect more of.

But if the argument made by the companies regarding the whistleblower claims are convincing in court, one advocacy group warns it “will effectively dismantle the administrative process that has long provided accessible justice for whistleblowers” under more than two dozen similar laws.

“This would strip the rights of workers across the country whose disclosures are vital to protecting public health and safety, leaving millions of employees vulnerable to illegal retaliation and threatening all of us who depend on whistleblowers to keep us safe from corporate abuses,” Louis Clark, executive director of the Government Accountability Project said of the Perdue case. “This is a shameful exercise of corporate power to silence workers who speak truth.”

Types of Remedies

The DOL’s Occupational Safety and Health Administration is in charge of more than 25 whistleblower statutes, including protections against retaliation for employees who report illegal activities under the Sarbanes-Oxley Act of 2002 and the Food Safety Modernization Act, the laws cited in the Comcast and Perdue Farms cases respectively.

In the Perdue Farms case, a contractor who raised chicks for the poultry producer invited an animal welfare group to film the conditions the birds were raised in, alleged he was retaliated against when Perdue placed him under a performance improvement plan, and increased monitoring of his farm.

And in the other case, two former executives of a startup acquired by Comcast alleged that the company breached a promise to pay them millions in incentive compensation in retaliation for reporting Comcast’s failure to disclose the bonus payment on its financial statements.

“In both cases, you see both of the underlying whistleblower complaints are seeking money damages, which the court in Jarkesy certainly suggests that the claim is legal in nature” and subject to a jury trial, Boak said. “Just from what I’ve seen at this early stage, it appears that they have a good chance to prevail on based on the Jarkesy decision, and that being forced to have to litigate these whistleblower complaints before the Department of Labor could violate the Seventh Amendment.”

Adam Pulver, an attorney at the Public Citizen Litigation Group, however, noted that in the Comcast case, the weaknesses caused by Jarksey are likely due to the type of remedy sought by the two former executives.

Because the executives aren’t seeking make-whole relief like back pay—which is typical for whistleblower or constructive discharge cases—and instead only want to receive the bonus compensation they were promised, the remedy in the case is legal in nature and brings Jarkesy into play, Pulver said.

He added that the range of cases where Jarkesy could be implicated isn’t so broad because the DOL can seek injunctive relief and equitable relief under the statutes it administers, types of relief that weren’t impacted by the high court ruling.

“If you read the Comcast complaint, the general theory is, this really isn’t a whistleblower case under the statute,” Pulver said.

Future Challenges

While both lawsuits seeking to have the whistleblower cases sent to a full court are in the early process of briefing, attorneys expect similar arguments to be lodged against the DOL.

The agency uses ALJs for a number of different reasons, according to Paul DeCamp, a management-side attorney with Epstein Becker Green, ranging from whistleblowers, federal contractor debarment cases, to civil money penalty assessments. But the full impact of the Jarkesy ruling on the judges overseeing these actions won’t be fully realized until tested in court.

“Those claims are going to be now potentially up in the air in terms of whether the ALJs have the authority to deal” with them, he said. “There’s a lot of litigation that’s going to happen as the courts flesh out which claims precisely should have been in court and which ones should not.”

Whether businesses will see this as an advantageous strategy in response to claims brought by workers is also yet to be seen. Attorneys note that there are risks and benefits to bringing a case before a full court compared to an administrative tribunal.

Federal courts offer less predictability, can be more expensive to litigate in, and are a more public arena for resolving such legal claims, said Pulver of Public Citizen. And given that these ALJs are subject to appointment, businesses fighting claims may prefer to have their cases heard before a judge that was appointed by a business-friendly administration.

“One thing that will be interesting to see is if an administration changes, whether there becomes a desire to rather be in before the agency than before a federal court,” Pulver said.

The cases are Comcast Corp. v. DOL, E.D. Va., No. 1:24-cv-01401 and Perdue Farms Inc. v. Su, E.D.N.C., No. 24-00477.