Connecticut Light & Power Co. v. Secretary of the United States Department of Labor

Citation: 85 F.3d 89Docket: No. 776, Docket 95-4094

Court: Court of Appeals for the Second Circuit; May 31, 1996; Federal Appellate Court

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The Secretary of Labor determined that an employer's settlement agreement, which restricted an employee's access to judicial and administrative bodies, violated Section 210 of the Energy Reorganization Act of 1974 (ERA). The employer appealed, arguing that former employees are not protected under the ERA, that offering a settlement does not constitute adverse action, and that the statute of limitations had expired. The court upheld the Secretary's decision.

John Delcore, employed by W.J. Barney Corporation as a general electrical foreman from July 1985 to September 1987, was terminated on September 14, 1987. Following his termination, Delcore filed complaints with the Nuclear Regulatory Commission (NRC) regarding various allegations. He later initiated a state court action against Barney and Connecticut Light and Power Company (CLP) for wrongful termination and other claims, which was subsequently removed to federal court.

In December 1988, negotiations for a settlement between Delcore and CLP began, resulting in a proposal on February 8, 1989, that included provisions limiting Delcore’s ability to report misconduct to regulatory agencies. Concerns about the agreement were raised by Delcore's attorney, leading to the termination of negotiations by CLP on April 25, 1989. Delcore then filed a complaint with the Department of Labor on May 11, 1989, asserting that the settlement offer contained illegal provisions that infringed upon his rights to free speech and reporting safety violations. The District Director declined to intervene, stating the issue was tied to ongoing litigation.

The Department of Labor declined to assist Delcore because more than thirty days passed since the alleged discrimination before the complaint was filed. Delcore appealed this decision to an Administrative Law Judge (ALJ). In his hearing memorandum and during the March 1990 hearing, Delcore’s attorney argued that discriminatory behavior was ongoing throughout settlement negotiations from December 1988 to April 25, 1989. Delcore contended that the continuous offer of a settlement containing offensive provisions constituted a violation, asserting that the Respondents' insistence on these provisions indicated a policy to force the Claimant to waive essential rights. The attorney emphasized that the negotiations were not a one-time offer but involved multiple discussions and counteroffers, culminating in an April 1990 letter from the Respondents terminating negotiations.

On April 24, 1990, the ALJ ruled in favor of the defendants, concluding that Section 210 did not apply because Delcore's employment had ended in September 1987, and the complaint was untimely since the settlement offer was made in February 1989. The ALJ also found that Delcore failed to prove retaliatory actions by CLP or Barney. Delcore appealed again, and on April 19, 1995, Secretary of Labor Robert Reich rejected the ALJ’s decision, determining that Delcore qualified as an employee and the discrimination stemmed from the employment relationship. The Secretary deemed the restrictive provisions contrary to public policy and recognized the termination of settlement negotiations as a separate violation. Furthermore, the Secretary ruled Delcore’s complaint was timely and ordered CLP and Barney to cease discrimination, disseminate the decision, and compensate Delcore for costs. CLP subsequently appealed the Secretary’s decision.

The action is based on Section 210 of the Energy Reorganization Act (ERA), which protects employees from employer discrimination related to complaints about safety violations. Section 210 prohibits employers, including NRC licensees and their contractors, from discharging or discriminating against employees for engaging in specific activities, such as initiating proceedings or providing testimony related to safety concerns. A key issue is whether Delcore qualifies as an 'employee' under this section, given that he was terminated more than a year prior to the dispute. 

The Secretary of Labor concluded that Delcore should be considered an employee because the alleged discrimination was linked to his prior employment. This interpretation is supported by the broad remedial purpose of the ERA and relevant legislative history, which indicates a flexible definition of 'employee.' The Secretary’s interpretation aligns with principles from analogous statutes that include former employees when the discrimination is related to the employment relationship. 

In affirming the Secretary's findings, it was determined that the alleged discrimination involved improper gag provisions in a settlement agreement, arising from Delcore's previous employment. CLP's argument that the discriminatory actions were unrelated to the employment relationship was rejected, reinforcing the continuity between employment disputes and subsequent litigation. The Secretary's conclusions were deemed substantially supported by evidence.

The analysis centers on whether a settlement agreement's gag provisions, which aimed to limit an employee's ability to cooperate with judicial and administrative proceedings, constituted adverse action under Section 210 of the Energy Reorganization Act (ERA). The provisions in question would have prohibited Delcore from acting as a voluntary witness, required him to resist compulsory process, and restricted his communications with the Nuclear Regulatory Commission (NRC). The Secretary found these provisions to be excessively restrictive and a violation of Section 210. Citing a memorandum from the NRC general counsel, the Secretary emphasized that Section 210 protects employees engaging in protected activities, making any attempt to waive these rights for financial gain illegal. The Secretary also drew parallels with the Mine Safety and Health Act of 1977, advocating for a broad interpretation of the ERA’s protective scope. 

CLP argued that the controversy arose not from employment discrimination but from Delcore’s post-termination lawsuit, which alleged wrongful termination. This assertion was dismissed as it overlooked the connection between the settlement agreement and Delcore's employment. CLP further contended that proposing a settlement with such provisions could not be considered adverse action since Delcore could reject it. However, this perspective was deemed overly simplistic and inconsistent with the ERA's expansive protective intent. Ultimately, the Secretary concluded that imposing these gag provisions was an adverse action against Delcore's statutory rights, thus breaching the ERA's anti-discrimination provisions, regardless of the context of litigation.

The Secretary’s interpretation regarding the timeliness of Delcore’s complaint is affirmed as permissible. Under the ERA, employees have thirty days from the occurrence of a violation to file a complaint. CLP argues that Delcore’s complaint is time-barred since it was filed after thirty days from the receipt of the settlement agreement. However, the Secretary of Labor determined that the relevant date is CLP’s April 25th letter, which ended negotiations and thus the complaint is not time-barred. The limitations period typically starts when an employee learns of the employer's final decision, but in this case, the adverse action stems from a prolonged negotiation tactic rather than a single decision.

The concept of a "continuing violation" is applicable, which states that if a timely charge is filed concerning any discriminatory action related to a broader policy, other actions taken under that policy can also be considered timely. Delcore claims that CLP's actions constituted a discriminatory policy aimed at limiting employees' rights to report safety violations. CLP acknowledges this policy as common practice.

To satisfy the continuing violation standard, two prongs must be met: first, proof of an underlying discriminatory policy and a related action taken within the statutory period, and second, that the discriminatory actions persisted during the limitations period. Delcore meets the first prong by demonstrating that the settlement negotiations were part of a discriminatory policy, and the second prong is fulfilled as the negotiations continued until April 25, 1989, when CLP revoked the settlement agreement. CLP's argument, which attempts to limit the adverse action's duration to the receipt of the settlement agreement, overlooks ongoing demands made during negotiations to restrict Delcore’s rights. Thus, both prongs of the continuing violation exception are satisfied, validating the timeliness of Delcore’s complaint.

CLP contends that its offer, made on February 8, 1989, remains effective only while open, and it was extinguished by a counteroffer from Delcore’s attorney in a letter dated March 28, which criticized the proposal as overly restrictive. CLP argues that this counteroffer triggered the limitations period for any alleged violation. However, it is established that a mere request for modifications does not constitute a rejection of the original offer. On February 9, 1989, defendants’ counsel had indicated that the proposed settlement should be reviewed by Mr. Delcore in its original form, allowing for subsequent modifications. Therefore, the March 28 letter was not a rejection but a request for modifications, meaning the proposed settlement remained valid until CLP revoked it on April 25, 1989. The ruling emphasizes that the violation encompasses the entire negotiation process rather than a specific offer. The Secretary correctly determined that the complaint was timely because the last discriminatory act occurred within the statutory period when CLP retracted its settlement offer. Consequently, CLP's settlement agreement was found to violate Section 210, specifically due to provisions that would restrict Mr. Delcore’s participation in judicial or administrative proceedings involving CLP or related entities. The terms of the proposed settlement included clauses preventing Mr. Delcore from voluntarily appearing as a witness or party in such proceedings and requiring him to resist any compulsory process compelling his involvement, with certain exceptions for activities related to events occurring post-execution of the agreement.

Mr. Delcore is permitted to communicate with the United States Nuclear Regulatory Commission (NRC) regarding any information from his employment at the Millstone Station that he believes could negatively impact public health and safety. Such communications must be made in a way that minimizes exposure to parties other than the NRC, although he will not be liable for disclosures made by the NRC unless he actively encouraged those disclosures. A recent issue arose concerning the interpretation of settlement negotiations under the Energy Reorganization Act (ERA), where the Secretary found a violation resulting from breaking off negotiations, which was deemed improper as it had not been litigated by the parties involved. 

In October 1993, a regulation was enacted prohibiting any employment agreement from restricting an employee’s ability to report potential violations to the NRC, with the understanding that this regulation was instituted post-events in question. The decision was analyzed based on the law applicable in 1990. The dissenting opinion argued against the notion of a right to settlement for Delcore; however, the main opinion emphasizes that employees should be free from discriminatory actions that undermine their statutory rights to communicate with regulatory bodies, illustrating that indirect pressures from employers can still obstruct these rights. The opinion aligns with previous rulings regarding the importance of safeguarding communication channels between employees and regulatory agencies.