United States: Third Circuit Applies Employee-Friendly Burden Shifting Test To FRSA Whistleblower Retaliation Claim

In the first appellate decision to address the Federal Rail Safety Act (FRSA) burden-shifting standard, since the law was amended in 2007, the Court of Appeals for the Third Circuit applied the employee-plaintiff friendly two-part test first established to adjudicate whistleblowing claims in the airline industry in Araujo v. New Jersey Transit Rail Operations, Inc., No. 12-2148 (3d Cir. Feb. 19, 2013)

This same burden-shifting framework, which the appellate panel intentionally described as employee friendly, applies to whistleblower claims brought by: employees, contractors and subcontractors of air carriers (Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (AIR-21), 49 U.S.C. § 42121); publicly traded companies (Sarbanes Oxley, 18 U.S.C. § 1514A(b)(2)(c)); nuclear power industries (Energy Reorganization Act (ERA), 42 U.S.C. § 5851(b)(3); railroad carriers (FRSA, 49 U.S.C. § 20109(d)(2)(A)); employees who refuse to operate a vehicle (Surface Transportation Assistance Act (STAA), 49 U.S.C. § 31105); and, non-federal employees who report concerns about the use of stimulus funds (American Recovery and Reinvestment Act of 2009 (ARRA), Pub. L. No. 111-5, § 1553(c)(1)).

AIR-21 Burden Shifting Framework

FRSA, enacted to promote safety in railroad operations, was substantially amended in 2007 to expand the law's anti-retaliation measures and vest the Department of Labor with enforcement authority. Those amendments imported the AIR-21 whistleblower rules and procedures, including a two-part burden-shifting test that the Third Circuit characterized as "much more protective of plaintiff-employees" and "much easier for a plaintiff to satisfy than the McDonnell Douglas standard."

Unlike McDonnell Douglas, the AIR-21 framework: (1) allows an employee to establish a prima facie case by showing that the protected activity was merely a "contributing factor," not a motivating factor; and (2) places a "steep" burden on the employer to demonstrate by "clear and convincing evidence" that it would have taken the same adverse action even absent the protected activity. 49 U.S.C. § 42121(b)(2)(B)(i)-(ii).

This is in stark contrast to the much easier McDonnell Douglas defense burden that requires an employer to articulate simply a non-discriminatory reason, which then requires the plaintiff to establish by a preponderance of the evidence that the employer's proffered reason was a pretext. The McDonnell Douglas methodology never shifts the burden of proof to the employer, much less the burden to establish its defense by "clear and convincing evidence."

Araujo Facts and Analysis

Araujo, an employee of New Jersey Transit (NJT), reported suffering an emotional injury the day after witnessing a fatal electrocution of a construction crew member for which he might have borne some responsibility. After Araujo reported his injury and was deemed medically unable to work as a result, NJT filed disciplinary charges against him related to the fatal accident. Araujo was suspended without pay and a hearing resulted in a time-served suspension without pay. Araujo first filed a complaint with the OSHA Office of Whistleblower Protection, which found that his discipline was retaliatory and awarded him $569,587 in damages. After NJT objected to the award, Araujo filed a complaint in federal court demanding a jury trial on his FRSA retaliation claim.

1. Prima Facie Case – Contributing Factor

In describing the minimal burden a plaintiff bears under the AIR-21 method of proof, the Court explained that a "contributing factor" is "any factor, which alone or in connection with other factors, tends to affect in any way the outcome of the decision." It further held that an employee is not required to demonstrate a retaliatory motive on the employer's part, commenting that this "greatly reduces an employee's burden in making a prima facie case." In addition, it observed that a prima facie case may be established based solely on circumstantial evidence. Temporal proximity of the adverse action to the employee's protected activity can be used to show the protected activity was a contributing factor to the adverse action.

2. Employer's Burden: Clear & Convincing Evidence

The Court repeatedly "emphasize[d] the steep burden that employers face" in meeting the "clear and convincing" burden of proof as distinguished from the McDonnell Douglas burden of going forward by articulating a legitimate, non-discriminatory reason for the adverse action. The Court rejected the District Court's reasoning that NJT had met the clear and convincing standard by pointing to evidence that Araujo had violated the company's rules because an employee's rule violation does not "shed any light on whether NJT's decision to file disciplinary charges was retaliatory." The Court pointed to Araujo's assertion that he was following company practice, that he did not concede a rule violation, and that even if he did violate the rules he presented evidence that the employer's actual practice differed from its written rules. These created issues of fact for a jury to decide.

Impact on Whistleblower Retaliation Claims

The Third Circuit's opinion makes it much more difficult for employers to dismiss FRSA retaliation claims at the summary judgment stage, where all facts must be viewed in the light most favorable to the employee. Indeed, the Third Circuit repeatedly observed that Araujo did not have "an overwhelming case of retaliation" and that his "evidence is entirely circumstantial," but it was nonetheless sufficient to meet the plaintiff-employee friendly AIR-21 burden-shifting framework.

Moreover, because the same burden shifting approach is used to weigh claims under Sarbanes Oxley and safety laws covering employees in nuclear, airline, commercial vehicle industries, as well as the use of stimulus funds, Araujo will apply equally to them as well. Indeed, the Third Circuit's thorough analysis of the AIR-21 burden-shifting framework is consistent with other Courts of Appeals that have addressed the same framework. See e.g., Allen v. Admin. Review Bd., 514 F.3d 468, 476 (5th Cir. 2008) (recognizing the Sarbanes Oxley whistleblower "burden-shifting framework is distinct from the McDonnell Douglas burden-shifting framework"); Formella v. United States Dept of Labor, 628 F.3d 381, 389 (7th Cir. 2010) (finding the STAA applies the AIR-21 burden shifting standard that is "more favorable to the complaining employee"); Addis v. Dept of Labor, 575 F.3d 688, 690-691 (7th Cir. 2009) (addressing ERA whistleblower claim and recognizing the burden-shifting framework is "intended to replace the traditional McDonnell Douglas formulation of retaliation" and that it allows an employee to "shift the burden to [the employer] with a lesser showing than plaintiffs must make in the traditional McDonnell Douglas employment action"); Johnson v. Stein Mart, Inc., 440 Fed. Appx. 795, 801 (11th Cir. Fla. 2011) (finding the McDonnell Douglas burden-shifting framework does not apply to Sarbanes Oxley whistleblower claims and applying the "clear and convincing" standard).


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