On October 15, 2024, the U.S. Court of Appeals for Third Circuit declined to enforce a preliminary reinstatement order issued by OSHA in favor of two purported whistleblowers under SOX, holding that the former employees lost Article III standing after they abandoned the administrative process to instead challenge their terminations though a separate civil action in federal court.  Gulden v. Exxon Mobil Corp., No. 23-1859.

Background

This case relates to OSHA’s October 2022 order requiring ExxonMobil Corp. to immediately rehire two computational scientists who alleged that they were discharged in retaliation for leaking to the media their concerns about improper conduct by the Company.  The scientists then initiated a lawsuit for injunctive relief in the U.S. District Court for the District of New Jersey seeking enforcement of OSHA’s preliminary reinstatement order after the Company refused to comply. 

As we previously reported, in April 2023 the district court granted the Company’s motion to dismiss after determining that it lacked subject-matter jurisdiction to enforce preliminary reinstatement orders.  The scientists then timely appealed to the Third Circuit.

While the scientists were trying to enforce the preliminary order in federal court, the administrative adjudication remained active and had been ongoing for more than 1,150 days.  In June 2024, the scientists exercised their rights under SOX’s “kick-out” provision, which allows whistleblowers to sue in federal court if their administrative complaint is not resolved within 180 days.  The ALJ dismissed the administrative proceeding on July 2, 2024.  The Company then moved to dismiss the Third Circuit appeal on mootness grounds.

Court’s Reasoning and Decision

The Third Circuit held that the scientists could not enforce the preliminary reinstatement order because it was extinguished when the administrative proceeding was dismissed, which resulted in them losing Article III standing to bring a claim seeking to enforce the order.

Although the scientists had the requisite injury-in-fact because the Company refused to comply with the reinstatement order, they could not satisfy the redressability requirement.  The Court explained that “the statutory and regulatory limitations of the Department of Labor’s powers leave no doubt that a preliminary reinstatement order does not survive dismissal of the underlying administrative proceeding – especially after a SOX whistleblower elects to sue in federal court.” 

Implications

This decision appears to underscore that federal courts are unlikely to enforce preliminary reinstatement orders issued by OSHA and will instead wait until a final order is issued after the completion of the administrative process.

Posted in OSHA Administration, SOX Whistleblower Decisions
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Photo of Steven J. Pearlman Steven J. Pearlman

Steven J. Pearlman is a partner in the Labor & Employment Law Department, where he is Head of the Restrictive Covenants, Trade Secrets & Unfair Competition Group and Co-Head of the Whistleblowing & Retaliation Group.

Employment, Restrictive Covenant & Trade Secret, and Whistleblower…

Steven J. Pearlman is a partner in the Labor & Employment Law Department, where he is Head of the Restrictive Covenants, Trade Secrets & Unfair Competition Group and Co-Head of the Whistleblowing & Retaliation Group.

Employment, Restrictive Covenant & Trade Secret, and Whistleblower Practice. Steven’s national practice focuses on defending companies in federal and state courts and in arbitration fora against the full spectrum of employment-related claims, including claims of executives; restrictive covenant violations; employee raiding; theft of trade secrets; whistleblower retaliation under the Sarbanes-Oxley Act, the Dodd-Frank Act and similar state laws; and wage-and-hour violations, including class, collective and PAGA actions.

Steven has successfully handled trials in multiple jurisdictions; prevailed in seeking and defending against applications for temporary restraining orders and preliminary injunctions; defended one of the largest Illinois-only class actions in the history of the federal courts in Illinois (over 90k putative class members); and prevailed following his oral arguments before federal and state appellate courts. He brings his litigation experience (beginning in 1998) to bear in counseling clients to minimize risk and avoid or prepare for success in litigation.

Investigations. Reporting to boards of directors, their audit committees, CEOs and in-house counsel, Steven conducts sensitive investigations and has the unusual experience of testifying in federal court in connection with investigations. His investigations have involved complaints of sexual harassment involving C-suite officers; systemic violations of employment laws and company policies; and fraud, compliance failures and unethical conduct.

Thought Leadership and Accolades. Steven was named Lawyer of the Year for Chicago Labor & Employment Litigation in the 2023 edition of The Best Lawyers in America. He is a Fellow of the College of Labor and Employment Lawyers. Chambers has reported:

  • Steven is “one of the best in the country and has a lot of experience”;
  • Steven is as an “outstanding lawyer” who is “very sharp and very responsive,” a “strong advocate,” and an “expert in his field”;
  • He is thoughtful, attentive and demonstrates an acute understanding of matters top of mind for business-minded general counsel; and
  • “He is someone who can navigate the twists and turns of litigation without difficulty.”

Steven was 1 of 12 individuals selected by Compliance Week as a “Top Mind.” Earlier in his career, he was 1 of 5 U.S. lawyers selected by Law360 as a ”Rising Star Under 40” in the area of employment law and 1 of “40 Illinois Attorneys Under Forty to Watch” selected by Law Bulletin Publishing Company. Steven is a U.S. Library of Congress Burton Award Winner for “Distinguished Legal Writing.”

Steven was appointed to Law360’s Employment Editorial Advisory Board and selected as a Contributor to Forbes.com. He has appeared on Bloomberg News (television and radio) and Yahoo! Finance, and is often quoted in leading publications such as The Wall Street Journal. The U.S. Chamber of Commerce has engaged Steven to serve as lead counsel on amicus briefs to the U.S. Supreme Court and federal circuit courts of appeal.

In 2024, Steven received the Excellence in Pro Bono Service Award from the United States District Court for the Northern District of Illinois and the Chicago Chapter of the Federal Bar Association.

Read more about Steven J. Pearlman
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Photo of Margo Richard Margo Richard

Margo R. Richard is an associate in the Labor Department and a member of the Employment Litigation & Counseling Group.

Margo attended Loyola University New Orleans College of Law, where she graduated Cum Laude with a Law, Technology, and Entrepreneurship Certificate. While in…

Margo R. Richard is an associate in the Labor Department and a member of the Employment Litigation & Counseling Group.

Margo attended Loyola University New Orleans College of Law, where she graduated Cum Laude with a Law, Technology, and Entrepreneurship Certificate. While in law school, Margo served as a teaching and research assistant to Professor Masai McDougall. She competed as a team member of the American Bar Association Moot Court Team, a coach of the Mardi Gras Invitational Moot Court Team, and was selected for membership into the Order of Barristers. Margo was also a member of the Loyola Law Review, Phi Delta Phi Legal Honor Society, and Black Law Students Association.

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