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Employment Alert: Final Un-Appealed Administrative Decision Acts as Collateral Estoppel in Subsequent State Court Whistleblower Action

Date: Aug 30, 2010

On August 23, 2010, the California Supreme Court held that when a whistleblower complainant fails to appeal an adverse causation finding made by the Occupational Safety and Health Administration (OSHA), that finding is final and binding and bars the complainant from re-litigating it in a subsequent California wrongful discharge lawsuit. The case is Murray v. Alaska Airlines, Inc., No. S162570 (Cal. Aug. 23, 2010), and the background facts are as follows:

Kevin Murray was a quality assurance auditor for Alaska Airlines, Inc. (AAI) who reported AAI to the Federal Aviation Association (FAA) for failing to conduct adequate safety maintenance procedures. When FAA investigated, it found significant discrepancies relating to air carrier safety. Subsequently, the maintenance facility at which Murray worked was closed and his position was outsourced. Although Murray applied for another position, AAI did not rehire him.

Murray then filed an administrative complaint with OSHA under the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (AIR 21), which protects employees from discrimination for reporting safety concerns. OSHA notified AAI of the complaint and requested a statement of position. Ultimately, OSHA issued a determination finding that although Murray had participated in protected whistleblower activity, and had suffered an adverse employment action when Alaska terminated and failed to rehire him, AAI had not violated AIR 21 because the record failed to establish causation. The letter notifying Murray of the findings informed him that the findings would become the final order of the Secretary unless he filed objections and requested a de novo hearing before an administrative law judge. Murray neither appealed nor withdrew his federal whistleblower complaint and the agency decision became final. Subsequently, Murray filed a state court action claiming wrongful termination and retaliation based on a violation of public policy as articulated in AIR 21. AAI removed Murray's complaint to federal court where the action was dismissed based on the OSHA findings. Murray appealed the dismissal to the Ninth Circuit, which certified to the California Supreme Court the question whether findings regarding causation made in the Secretary's final order should be afforded issue preclusive effect under California law.

In a divided ruling, the Court answered in the affirmative, holding that DOL procedures provided Murray with a full and fair opportunity to challenge the adverse OSHA findings, but that he failed to take advantage of them or otherwise negate them by withdrawing the complaint.

Based on the holding in Murray v. Alaska Airlines, Inc., employers contesting wrongful discharge claims in California and elsewhere will no doubt move for dismissal under the collateral estoppel doctrine where the plaintiff, like Murray, abandons his DOL appeal rights following an adverse OSHA determination based on the 20 federal whistleblower statutes within DOL administrative jurisdiction. It is by no means clear that the high courts of other states will agree with the decision of the California Supreme Court, but the Murray decision provides persuasive authority for dismissing state law retaliation claims brought by plaintiffs who walked away from DOL after receiving an unfavorable OSHA finding.

Keller and Heckman's Whistleblower Defense Team offers advice and assistance in compliance programming, supervisor training, internal investigations and documentation, analysis of employee claims and personnel actions, government investigations, and litigation defense. Contact Jacki Thompson, thompson@khlaw.com for information regarding these services.