Thompson v. U.S. Dept. of Labor

• Citation: 885 F.2d 551
• Decision Date: 08 September 1989
• Docket Number: No. 87-7509,87-7509
• Parties: Blaine P. THOMPSON, Petitioner, v. UNITED STATES DEPARTMENT OF LABOR, Respondent.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 551

885 F.2d 551

Blaine P. THOMPSON, Petitioner, v. UNITED STATES DEPARTMENT OF LABOR, Respondent.

No. 87-7509.

United States Court of Appeals,

Ninth Circuit.

Argued and Submitted March 15, 1989.

Decided Sept. 8, 1989.

Stephen M. Kohn, Kohn, Kohn & Colapinto, P.C., Washington, D.C., for petitioner.

Wendy B. Bader, Atty. for U.S. Dept. of Labor, Washington, D.C., for respondent.

On Petition for Review of a Final Determination of the Secretary of Labor.

Before POOLE, BOOCHEVER and WIGGINS, Circuit Judges.

BOOCHEVER, Circuit Judge:

OVERVIEW

Blaine P. Thompson (Thompson) appeals the Secretary of Labor's ("Secretary") order dismissing his complaint with prejudice after Thompson and the Arizona Public Service Company (APS) reached an agreement settling Thompson's claims under section 210 of the Energy Reorganization Act (ERA), 42 U.S.C. section 5851. We have jurisdiction pursuant to 42 U.S.C. section 5851(c), and we reverse and remand.

FACTS

Thompson was a security shift captain at the Palo Verde nuclear power plant operated by APS. Thompson filed a complaint with the Nuclear Regulatory Commission alleging that APS failed to investigate properly an alleged rape committed by one of APS' security guards. After he filed this complaint, Thompson allegedly was demoted, transferred, and discriminated against in his employment.

In 1986, Thompson filed three complaints with the Department of Labor alleging that his job changes were illegal retaliatory acts under the "nuclear whistleblower protection law", codified at 42 U.S.C. section 5851. In 1987, the parties attended a prehearing conference and Administrative Law Judge Karst (ALJ) encouraged the parties to settle. The parties began settlement negotiations.

On April 10, 1987, APS' attorneys sent a letter and proposed settlement agreement to Stephen Kohn (Thompson's attorney), and a copy to Judge Karst. APS' proposed agreement provided that:

In consideration for the Respondent's promises set forth above, Complainant and his representatives, GAP and CREE, by their execution of this Agreement, hereby withdraw Complainant's requests for hearing on the above-referenced complaints and further request the Secretary of Labor to terminate these proceedings with prejudice pursuant to this Agreement.

On April 14, 1987, Kohn sent a letter and counter-proposal to APS' attorneys, with a copy sent to Judge Karst. In this letter, Kohn stated that he had "modeled this settlement upon the successful settlement of the Hugh Kaufman v. EPA case." In Kaufman v. EPA, No. 83-CER-1 (Dep't Labor 1983), the Secretary signed an order that approved the parties' settlement agreement but was silent as to the dismissal of the complaint. Paragraph two stated that "the agreement settles, without prejudice, all claims that Mr. Thompson had, or may have had, under section 210 of the ERA...." (emphasis added).

In a letter dated April 16 one of APS' attorneys responded to Kohn's counter-proposal, however, this letter was never brought to the attention of the Secretary either before the initial decision or in Thompson's motion for reconsideration. ¹ There were settlement discussions regarding this issue, with Respondent desiring the case be dismissed "with prejudice", and Complainant seeking a dismissal "without prejudice."

In the motion for reconsideration, however, Thompson stated that:

In a letter dated April 29 and addressed to Kohn, however, Hayden stated that:

Consistent with Judge Karst's encouragement to resolve linguistic disputes, I have indicated that I will not insist upon the inclusion of the phrase "with prejudice" in paragraph 2. I expect the same compromise from you and will not agree to the inclusion of the phrase "without prejudice". The language contained in my April 27th draft should fully satisfy your expressed concerns by expressly acknowledging that the settlement shall not be construed as an adjudication on the merits for or against any party.

Judge Karst also was sent a copy of this letter.

On May 15, 1987, the parties signed the final settlement agreement. ² The agreement states: "[t]his Settlement Agreement constitutes a final and comprehensive resolution of Mr. Blaine Thompson's complaints ... filed under section 210 of the Energy Reorganization Act (ERA)." Paragraph One provides that Thompson voluntarily withdraws his DOL complaints, and agrees not to file any additional complaints under the ERA based on the same facts. Paragraph two provides that: "[t]his settlement shall not be construed as an admission of any wrongdoing by any of the parties, nor shall it be construed as an adjudication on the merits for or against either party." (emphasis added). In the final settlement agreement, Paragraph two is now silent as to the dismissal of the complaints.

The parties submitted a "recommended decision and order" to the ALJ for approval with the settlement agreement. This order was also silent as to whether Thompson's complaints should be dismissed. This order only provided that the ALJ approved the settlement agreement, and was similar to the settlement order signed by the Secretary in Kaufman v. EPA.

PROCEEDINGS BELOW

The ALJ signed the parties' Recommended Decision and Order approving the settlement agreement. Pursuant to 29 C.F.R. section 24.6(a), the recommended decision was submitted to the Secretary for a final order. On September 17, 1987, the Secretary issued the final order approving the settlement agreement. The Secretary deleted the ALJ's statement that the agreement constituted "findings of fact and conclusions of law". The Secretary reasoned that findings of fact were unnecessary because: 1) the complaint was settled by voluntary compromise of the parties; and 2) the agreement provided that it was not an admission of wrongdoing by any party or an adjudication on the merits. The Secretary added, however, that the case was dismissed with prejudice.

Thompson filed a Motion for Reconsideration with the Secretary objecting to the dismissal with prejudice. Thompson brought several letters to the Secretary's attention that were not part of the certified official record forwarded to the Secretary for consideration in the initial decision. ³ APS opposed Thompson's motion for reconsideration, and claimed that the parties never agreed as to the form the Secretary's order should take.

Thompson filed a timely petition for review in this court, but all proceedings were stayed pending the Secretary's decision on

Thompson's motion for reconsideration. The Secretary denied Thompson's motion, and this court lifted the stay of proceedings in May of 1988.

DISCUSSION

Jurisdiction and Standard of Review

The Secretary of Labor had jurisdiction over Thompson's ERA claims pursuant to 42 U.S.C. section 5851(b). This court has jurisdiction over this appeal under 42 U.S.C. section 5851(c). Pursuant to section 5851(c), we review the Secretary's decision under the Administrative Procedure Act, 5 U.S.C. section 706. "We will set aside the agency decision if it is 'unsupported by substantial evidence' or 'arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law.' " Mackowiak v. University Nuclear Sys., Inc., 735 F.2d 1159, 1162 (9th Cir.1984)(quoting 5 U.S.C. section 706(2)(A), (E)). To determine whether an agency decision was arbitrary and capricious, the court "must consider whether the [Secretary's] decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment." Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 416, 91 S.Ct. 814, 824, 28 L.Ed.2d 136 (1971).

I. The Administrative Record

Initially, the parties dispute whether certain letters relied on by Thompson were part of the administrative record. ⁴ Generally, judicial review of agency action is limited to review of the record on which the administrative decision was based. See, e.g., id. at 420, 91 S.Ct. at 825. The reviewing court can go outside the administrative record but should consider such evidence relevant to the substantive merits of the agency decision only for the limited purpose of background information or to determine whether the agency considered all the relevant factors. See Asarco, Inc. v. EPA, 616 F.2d 1153, 1160 (9th Cir.1980); see also Love v. Thomas, 858 F.2d 1347, 1356 (9th Cir.1988), cert. denied, --- U.S. ----, 109 S.Ct. 1932, 104 L.Ed.2d 403 (1989). If the court determines that the agency did not consider all the relevant factors then it should remand the matter to the agency "and not compensate for the agency's dereliction by undertaking its own inquiry into the merits." Asarco, 616 F.2d at 1160.

The whole administrative record, however, "is not necessarily those documents that the agency has compiled and submitted as 'the' administrative record." Exxon Corp. v. Department of Energy, 91 F.R.D. 26, 32 (N.D.Tex.1981) (emphasis in original). "The 'whole' administrative record, therefore, consists of all documents and materials directly or indirectly considered by agency decision-makers and includes evidence contrary to the agency's position." Id. at 33 (emphasis added); see also Animal Defense Council v. Hodel, 840 F.2d 1432, 1436 (9th Cir.1988), corrected, 867 F.2d 1244 (1989); National Wildlife Federation v. Burford, 677 F.Supp. 1445, 1457 (D.Mont.1985).

The Secretary argues that these letters should not be considered part of the record on review because they were not before the ALJ. The Secretary's position is without merit. The correspondence was sent to the ALJ, who, at the very least, indirectly considered the settlement negotiations when he approved the recommended order that was silent as to the mode of dismissal. 29 C.F.R. section 24.5(e)(2) provides in part: "All exhibits and other pertinent documents or records, either in whole or in material part, introduced as evidence, shall be marked for identification and incorporated into the record." There was no formal hearing before the ALJ. U...