Welch v. Cardinal Bankshares Corp.

• Decision Date: 05 October 2006
• Docket Number: Civil Action No. 7:06CV00407.
• Citation: 454 F.Supp.2d 552
• Court: U.S. District Court — Western District of Virginia
• Parties: David E. WELCH, United States of America, Plaintiffs, v. CARDINAL BANKSHARES CORPORATION, et al., Defendants.

454 F.Supp.2d 552

David E. WELCH, United States of America, Plaintiffs, v. CARDINAL BANKSHARES CORPORATION, et al., Defendants.

Civil Action No. 7:06CV00407.

United States District Court, W.D. Virginia, Roanoke Division.

October 5, 2006.

D. Bruce Shine, Donald Franklin Mason, Jr., Shine and Mason Law Offices, Kingsport, TN, Gregory Michael Stewart, Stewart Law Office, P.C., Norton, VA, Julie C. Dudley, United States Attorneys Office, Roanoke, VA, for Plaintiffs.

Joseph M. Rainsbury, Leclair Ryan Flippin Densmore, Mark E. Feldmann, Glenn Feldmann Darby & Goodlatte, Arthur Patrick Strickland, Arthur P. Strickland PC, Roanoke, VA, for Defendants.

MEMORANDUM OPINION

GLEN E. CONRAD, District Judge.

David E. Welch brings this action pursuant to 18 U.S.C. § 1514A against Cardinal Bankshares Corporation, asserting that an order of reinstatement issued by an Administrative Law Judge should be enforced by this court. The petition for enforcement was filed on July 6, 2006. The case is currently before the court on defendants' motion to dismiss.¹ For the following reasons, the court will grant the defendants' motion to dismiss.

BACKGROUND

David E. Welch ("Welch") was employed as the Chief Financial Officer of Cardinal Bankshares Corporation ("Cardinal") from February of 1999 until he was terminated on October 1, 2002. Welch then filed a complaint with the Occupational Safety & Health Administration (OSHA), U.S. Department of Labor, alleging that he was terminated in retaliation for engaging in activities protected by the Corporate and Criminal Fraud Accountability Act of 2002, Title VII of the Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley").

OSHA denied Welch's complaint, and Welch filed an appeal with the Office of the Administrative Law Judges (ALJ), U.S. Department of Labor. After holding a hearing, the ALJ issued a "Recommended Decision and Order" (?DO) on January 29, 2004. On February 3, 2004, the ALJ issued an "Erratum," which stated that his RDO "is not, nor was it intended to be, a `final' order from which an appeal to the Administrative Review Board may be taken." (Erratum).

Two days later, Cardinal filed an appeal with the Administrative Review Board (ARB), United States Department of Labor. In its appeal, Cardinal asserted that it was appealing a "final" order of the ALJ. (Final Decision and Order Dismissing Petition for Review without Prejudice at 2). After the ARB dismissed the petition for appeal, Cardinal appealed to the United States Court of Appeals for the Fourth Circuit. That appeal was also dismissed.

On February 15, 2005, the ALJ issued a "Supplemental Recommended Decision and Order Awarding Damages, Fees, and Costs" (SRDO). That order "recommended" that Cardinal be ordered to reinstate Welch. (Supplemental Recommended Decision and Order Awarding Damages, Fee, and Costs at 25). Cardinal appealed the order to the ARB on February 25, 2005. Over eighteen months later, the parties are still awaiting the decision of the ARB.

In August of 2005, Welch filed a motion with the ALJ asking that monetary sanctions be imposed upon Cardinal for failure to comply with the preliminary reinstatement order. The ALJ declined to impose sanctions, basing his refusal on the premise that Sarbanes-Oxley whistleblower proceedings could only be enforced in the United States District Court.

Welch then filed a motion for a preliminary injunction in this court on September 14, 2005, to enforce the ALJ's order of reinstatement. Upon motion of the defendant, the court dismissed the action on January 4, 2006. The court based its ruling upon the conclusion that there were unresolved questions as to whether the ALJ's SRDO was intended as an "order" of reinstatement.² Welch v. Cardinal Bankshares Corp., 407 F.Supp.2d 773, 777 (W.D.Va.2006). As a result of this disposition, the court did not reach the issue of whether it would have the authority to enforce a preliminary order of reinstatement. Id. at n. 2. The court subsequently denied the plaintiffs motion to alter or amend its order, reasserting its earlier conclusions. Welch v. Cardinal Bankshares Corp., 2006 WL 197039 (W.D.Va. 2006). In that opinion, the court further noted that if the ARB would review a motion to stay the effect of the SRDO, the court's order would be without prejudice to any new motion to enforce a preliminary order of reinstatement. Id.

Welch filed a motion with the ALJ for clarification of the order of reinstatement, which the ALJ denied, claiming that he lacked jurisdiction. Welch then filed a motion with the ARB to confirm that a preliminary order had been issued. On March 31, 2006, the ARB entered an order confirming that the ALJ's order was a "preliminary order of reinstatement." Cardinal's motion to stay the order was denied by the ARB on June 9.

On July 6, 2006, Welch filed a petition to enforce the order of reinstatement with this court. After the motion was filed, the United States filed a motion to intervene as co-plaintiff, which was granted. A joint motion to intervene as co-defendants was filed on behalf of individual directors of Cardinal, J. Howard Conduff, Jr.; William R. Gardner, Jr.; Kevin D. Mitchell; R. Leon Moore; A. Carole Pratt; Dorsey H. Thompson; and G. Harris Warner, Jr. That motion was also granted. In addition, the American Association of Bank Directors moved to file an amicus curiae brief, and the motion was granted.³ The case is now before the court on the defendants' motion to dismiss, which the court will grant for the following reasons.

DISCUSSION

The case is currently before the court on the defendants' motion to dismiss. The defendants claim that this court does not have subject matter jurisdiction to enforce the ALJ's order, arguing that the order of reinstatement was a preliminary order, and this court can only enforce final orders of the Secretary of Labor.

It is undisputed that this court has jurisdiction to enforce a final order of the Secretary. See 49 U.S.C. § 42121(b)(5); 49 U.S.C. § 42121(b)(6). The first issue the court must consider is whether the order issued by the ALJ on February 15, 2005 is a preliminary order of reinstatement or a final order of the Secretary. The court agrees with the ARB's prior determination of March 31, 2006, and concludes that an order issued by the ALJ is a "preliminary order of reinstatement." (Order at 4). As noted by the ARB, the Regulations state that "the decision of the administrative law judge will be inoperative unless and until the Board issues an order adopting the decision, except that a preliminary order of reinstatement will be effective while review is conducted by the Board." 29 C.F.R. § 1980.110(b). This language clearly implies that the order of the ALJ is a "preliminary order of reinstatement." Thus, the next issue for the court is whether this court has jurisdiction to enforce such a preliminary order of reinstatement.

A federal district court has limited jurisdiction; the court can only hear a case if it has been granted jurisdiction by statute. Bell v. New Jersey, 461 U.S. 773, 777, 103 S.Ct. 2187, 76 L.E d.2d 312 (1983); see also Intl Sci. & Tech. Inst., Inc. v. Inacom Communications, Inc., 106 F.3d 1146, 1151 (4th Cir.1997). In analyzing statutory grants of jurisdiction, the court must first consider the "cardinal canon" of statutory construction: "courts must presume that a legislature says in a statute what it means and means in a statute what it says there." Conn. Nat'l Bank v. Germain, 503 U.S. 249, 253-54, 112 S.Ct. 1146, 117 L.Ed.2d 391 (1992). The starting point for statutory construction is therefore the plain language of the statute itself. Offshore Logistics, Inc. v. Tallentire, 477 U.S. 207, 236, 106 S.Ct. 2485, 91 L.Ed.2d 174 (1986).

To provide for whistleblower protection, the Sarbanes-Oxley Act incorporates procedures for adjudicating complaints of another whistleblower protection statute, the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (AIR21). See 18 U.S.C. § 1514A(b)(2) (citing 49 U.S.C. § 42121(b)). Relying on these two statutes, the defendant claims that there are just three situations in which jurisdiction is conferred upon the district court. First, a person alleging discharge may file an action for de novo review in the district court if the Secretary has not issued a final decision within 180 days of the filing of the complaint. 18 U.S.C. § 1514A(b)(1)(3). Second, the Secretary of Labor may file a civil action in the district court to enforce an order entered under 49 U.S.C. § 42121(b)(3). 49 U.S.C. § 42121(b)(5). Third, a person on whose behalf an order was entered may file a civil action in the district court to enforce an order entered under 49 U.S.C. § 42121(b)(3). 49 U.S.C. 42121(b)(6). According to the defendant, jurisdiction of this court must be construed narrowly, and the jurisdictiongranting provisions do not apply to preliminary orders.

Based upon these three provisions and principles of statutory construction, the court concludes that the statutory grants of jurisdiction in 49 U.S.C. § 42121(b)(5) and 49 U.S.C. § 42121(b)(6) clearly fail to grant jurisdiction to this court over preliminary orders of the ALJ⁴ These sections provide that the district court can enforce Department of Labor rulings when a person has failed to comply with an order issued under 49 U.S.C. § 42121(b)(3). That paragraph, "Final Order," provides that "[n]ot later than 120 days after the date of conclusion of a hearing under paragraph (2), the Secretary of Labor shall issue a final order providing the relief prescribed by this paragraph or denying the complaint." 49 U.S.C. § 42121(b)(3). Paragraph (2) closes with the instruction that, if a hearing is not requested within the allotted time period, "the preliminary order shall be deemed a final order that is not subject to preliminary review."⁵ 49 U.S.C. § 42121(b)(2). Paragraphs (5) and (6) specifically provide for enforcement of orders issued under paragraph (3...