Court Refuses to Enforce Whistleblower Reinstatement

May 8, 2006 ( - The US District Court for the Western District of Virginia has denied a former employee's motion to enforce an order for his former employer to reinstate his job under Sarbanes-Oxley whistleblower provisions.

According to the court’s opinion, “Simply stated, the administrative procedures employed during the course of this case, the various incidents of the administrative process, and the impreciseness of the language employed in various opinions and orders all coalesced so as to give rise to confusion and uncertainty.”

The court said it believed Cardinal Bankshares Corporation was not given sufficient and timely notice that it was expected to immediately reinstate David Welch as Chief Financial Officer of Cardinal, and that its remedy was to apply to the Administrative Review Board (ARB) for relief pending appeal.

After he was terminated, Welch filed a complaint with the Occupational Safety & Health Administration (OSHA) alleging he was retaliated against for engaging in protected activities under the Corporate and Criminal Fraud Accountability Act of 2002, Title VII of the Sarbanes-Oxley Act of 2002, according to the court document. OSHA denied the complaint, and Welch filed an appeal with the Department of Labor’s Office of Administrative Law Judges (ALJ).

According to the court, the ALJ first issued a document that said it was ordered that Cardinal reinstate Welch and that the order would become final unless a petition of review was filed with the ARB.   However, the ALJ issued another document saying the order was not a final order under which an appeal to the ARB may be taken.   When Cardinal filed an appeal to the ARB, it was dismissed.

Almost two weeks later, the ALJ issued another order that said it was “recommended” that Cardinal “be order to” reinstate Welch.   Cardinal filed an appeal of this order with the ARB, and a decision has not been made on that appeal.

Six months later, when Welch filed a motion with the ALJ to impose sanctions on Cardinal for failure to comply with the preliminary order, the ALJ denied the motion saying the order was intended to be final and could only be enforced by a US district court.

For this reason, the court said it was not clear that the ALJ intended the order to be final until six months after Cardinal filed its appeal.   The court determined it was unfair to require Cardinal to reinstate Welch given the confusion.   In addition, “it is not unreasonable to expect the ALJ to state a ruling in clear, coherent, and unambiguous terms,” the court said.

The opinion in Welch v. Cardinal Bankshares Corporation is here .