finding “a literal interpretation of the statute [§ 1514A] does not lead to an ‘absurd result’ ” and “rejecting] as contrary to the statute the Secretary’s ‘suggestion’ that district courts apply preclusion principles to effectuate a goal of efficiency.”
How later courts described this case
- finding “a literal interpretation of the statute [§ 1514A] does not lead to an ‘absurd result’ ” and “rejecting] as contrary to the statute the Secretary’s ‘suggestion’ that district courts apply preclusion principles to effectuate a goal of efficiency.”
- noting that courts will not accept an interpretation that would “thwart the statute’s obvious purpose” or “lead to an absurd result”
- “Congress unquestionably has the right to create a complainant-friendly statutory scheme that affords no deference to non- final agency findings.”
- noting that courts will not adopt an interpretation of a statute that leads to an “absurd result”
Written by the judges who cited it.
The opinion
PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
DAVID R. STONE,
Plaintiff-Appellant,
v.
INSTRUMENTATION LABORATORY
COMPANY; BRIAN DURKIN; ANN
DEFRONZO; RAMON BENET,
Defendants-Appellees,
and
No. 08-1970
INSTRUMENTATION LABORATORY SPA,
Defendant.
GOVERNMENT ACCOUNTABILITY
PROJECT; NATIONAL WHISTLEBLOWER
LEGAL DEFENSE AND EDUCATION
FUND,
Amici Supporting Appellant.
2 STONE v. INSTRUMENTATION LABORATORY COMPANY
DAVID R. STONE,
Plaintiff-Appellant,
v.
INSTRUMENTATION LABORATORY
COMPANY; BRIAN DURKIN; ANN
DEFRONZO; RAMON BENET,
Defendants-Appellees,
and
No. 08-2196
INSTRUMENTATION LABORATORY SPA,
Defendant.
GOVERNMENT ACCOUNTABILITY
PROJECT; NATIONAL WHISTLEBLOWER
LEGAL DEFENSE AND EDUCATION
FUND,
Amici Supporting Appellant.
Appeals from the United States District Court
for the District of Maryland, at Baltimore.
William D. Quarles, Jr., District Judge.
(1:07-cv-03191-WDQ)
Argued: September 23, 2009
Decided: December 31, 2009
Before NIEMEYER and SHEDD, Circuit Judges,
and Mark S. DAVIS, United States District Judge for the
Eastern District of Virginia, sitting by designation.
STONE v. INSTRUMENTATION LABORATORY COMPANY 3
Vacated and remanded by published opinion. Judge Davis
wrote the opinion, in which Judge Niemeyer and Judge Shedd
joined.
COUNSEL
ARGUED: Adam Augustine Carter, EMPLOYMENT LAW
GROUP, PC, Washington, D.C., for Appellant. Robert
Michael Shea, MORSE, BARNES-BROWN & PENDLE-
TON, PC, Waltham, Massachusetts, for Appellees. ON
BRIEF: R. Scott Oswald, EMPLOYMENT LAW GROUP,
PC, Washington, D.C., for Appellant. Scott J. Connolly,
MORSE, BARNES-BROWN & PENDLETON, PC, Wal-
tham, Massachusetts, for Appellees. Richard R. Renner,
NATIONAL WHISTLEBLOWER LEGAL DEFENSE AND
EDUCATION FUND, Washington, D.C.; Thomas Devine,
Legal Director, Kasey Dunton-Dermont, GOVERNMENT
ACCOUNTABILITY PROJECT, Washington, D.C., for
Amici Supporting Appellant.
OPINION
DAVIS, District Judge:
In this appeal, we address the interpretation of a provision
of the Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1514A, gov-
erning the filing of whistleblower lawsuits in federal district
court. The parties acknowledge that the Sarbanes-Oxley Act
expressly provides a United States District Court jurisdiction
to entertain a whistleblower action. However, they disagree as
to whether a whistleblower plaintiff, during the pendency of
an administrative appeal of an Administrative Law Judge’s
("ALJ") ruling, has the right to a de novo proceeding in dis-
trict court. In the absence of guidance from this Court, or
other circuit courts, the district court granted the defendants’
4 STONE v. INSTRUMENTATION LABORATORY COMPANY
motion to dismiss the district court action in favor of remand
to the appropriate administrative body for further proceedings.
In light of the language of the statutory provisions at issue, we
reverse the district court and remand for further proceedings
consistent with this opinion.
I.
David Stone ("Stone" or "Appellant") was employed by
Instrumentation Laboratory Company ("ILC") from 1999
through 2006. ILC is in the business of developing, manufac-
turing, and distributing critical care and diagnostic instru-
ments, as well as other related products and services, for use
primarily in hospital laboratories. Stone began as an ILC
Sales Representative in 1999, was promoted to Sales Manager
in 2002, and was again promoted in 2005 to Director of
National Accounts. During his employment at ILC, Stone
received numerous accolades for his performance.1
As Director of National Accounts, one of Stone’s responsi-
bilities was working with Group Purchasing Organizations
("GPOs"), which are strategic affiliations of hospitals that
concentrate buying power in order to negotiate lower prices.
ILC had contracts with various GPOs requiring that, among
other things, ILC maintain a GPO membership database, offer
contractually negotiated prices and terms to GPO members,
and pay administrative fees to GPOs equal to three percent of
sales revenue generated from member purchases. ILC has
acknowledged in public disclosures to shareholders that GPOs
are a critical part of its distribution strategy.
After assuming his role as Director of National Accounts,
1
As the instant appeal challenges the district court’s dismissal under
Federal Rule of Civil Procedure 12(b)(6), "we accept as true all well-
pleaded allegations and view the complaint in the light most favorable to
[Stone]." Venkatraman v. REI Systems, Inc., 417 F.3d 418, 420 (4th Cir.
2005).
STONE v. INSTRUMENTATION LABORATORY COMPANY 5
Stone learned that Brian Durkin ("Durkin"), one of Stone’s
superiors at ILC, was not accurately tracking, reporting, and
paying the required administrative fees to GPOs. Durkin’s
omissions resulted in a multi-year cumulative liability of at
least half a million dollars and threatened ILC’s ability to sell
products to most of its customers. Stone’s Complaint asserts
that Durkin’s failure to maintain adequate internal controls
and track administrative fees resulted in ILC "misrepresenting
its financial condition to shareholders." (Compl. ¶ 70.)
Stone’s discovery regarding administrative fees prompted him
to perform additional investigation into ILC’s internal con-
trols, and such investigation revealed numerous weaknesses.
From September of 2005 until March of 2006, Stone
repeatedly voiced his concerns about deficient internal con-
trols and unpaid GPO fees to Durkin and two other ILC manag-
ers.2 Stone’s efforts were repeatedly met with resistance and
even unequivocal refusals to correct the problems. Stone con-
tends that Appellees retaliated against him after he brought
such deficiencies to light, and that such retaliation culminated
in Stone’s termination in March of 2006.
II.
A.
On June 19, 2006, pursuant to the Sarbanes-Oxley Act,
Stone filed a retaliation claim with the Occupational Safety
and Health Administration ("OSHA"), which hears such
claims on behalf of the Secretary of Labor ("the Secretary").
OSHA issued its preliminary findings on January 3, 2007,
more than 180 days after Stone’s claim was filed. Pursuant to
the governing regulations, Stone timely objected to OSHA’s
findings and requested a hearing before an ALJ. On March 1,
2
Stone’s Complaint names all three superiors as defendants: Brian
Durkin, Ann DeFronzo, and Ramon Benet. ILC and the individually
named ILC managers are referred to herein collectively as "Appellees."
6 STONE v. INSTRUMENTATION LABORATORY COMPANY
2007, Appellees filed a motion for summary decision before
the ALJ. In response, Stone moved to delay consideration of
such motion to permit him to take discovery. Stone’s motion
for discovery was denied,3 and the ALJ granted Appellees’
motion for summary decision on September 6, 2007. Stone
thereafter successfully petitioned the Administrative Review
Board ("ARB") for review of the ALJ’s order. On October 1,
2007, the ARB established a briefing schedule, which was
thereafter modified by the ARB on Stone’s motion.
On November 8, 2007, more than a month before Stone’s
initial brief was due under the modified briefing schedule,
Stone filed a notice with the ARB stating his intention to
bring a de novo action in federal district court. The ARB then
issued an order to show cause why the administrative appeal
should not be dismissed. After Appellees failed to respond,
and after receiving notice from Stone that he had in fact filed
suit in federal court, the ARB dismissed the administrative
appeal. Such dismissal was not based on the merits, but
appears to be an acknowledgment that, no "bad faith" having
been alleged by ILC, the ARB lost jurisdiction over the matter
once Stone’s complaint was filed in district court.
B.
Stone’s Sarbanes-Oxley Act whistleblower suit was filed in
the United States District Court for the District of Maryland
on November 26, 2007. On March 27, 2008, Appellees timely
filed a motion to dismiss pursuant to Federal Rule of Civil
Procedure 12(b)(6). After the matter was fully briefed, on July
1, 2008, the district court granted such motion based on pre-
clusion principles, finding that the ALJ’s ruling was a "final
3
Stone had previously agreed, during a telephone status conference, that
discovery would be stayed pending the ALJ’s ruling on the motion for
summary decision. Notwithstanding such inconsistent positions, there is
no allegation that Stone acted in "bad faith" to delay the administrative
process.
STONE v. INSTRUMENTATION LABORATORY COMPANY 7
judgment on the merits" for purposes of collateral estoppel.
(J.A. 168-69.) In so ruling, the court rejected Stone’s claim
that he did not have a "full and fair opportunity to litigate his
claims before the ALJ" and indicated that permitting Stone to
pursue relief in federal district court would be "wasteful."
(J.A. 169.) The district court did, however, "issue a manda-
mus to the [Department of Labor] to re-instate proceedings"
and further ordered the ARB "to rule on the merits of Stone’s
appeal within 90 days . . . ." (J.A. 169.)
Although the district court granted the motion to dismiss
and ordered further administrative proceedings, it did not dis-
miss the civil action before it, opting instead to stay the pro-
ceedings. Stone thereafter sought certification to file an
appeal to this Court, but that motion was ultimately denied.
Stone declined to further prosecute his administrative appeal
before the ARB because he believed that the filing of his
complaint in district court divested the ARB of jurisdiction.
Based on Stone’s failure to prosecute, the ARB entered a final
order of dismissal and Stone thereafter obtained a final judg-
ment from the district court on his dismissed whistleblower
claim. Stone now appeals the dismissal of his district court
action.
III.
A.
The instant appeal presents a question of statutory interpre-
tation, which is a question of law that we review de novo.
United States v. Turner, 389 F.3d 111, 119 (4th Cir. 2004).
Appellant argues that the plain meaning of the relevant statute
could not be clearer, and that as a Sarbanes-Oxley whistle-
blower complainant he is entitled to a de novo review in fed-
eral district court because the Secretary did not reach a "final
decision" within 180 days, as required by the Sarbanes-Oxley
Act. In contrast, Appellees contend that the language of the
Sarbanes-Oxley Act and its regulations do not abrogate the
8 STONE v. INSTRUMENTATION LABORATORY COMPANY
district court’s long-recognized power to apply principles of
preclusion to avoid duplicative litigation. Both sides agree
that there is no apparent guidance from federal circuit courts
on the proper interpretation of the relevant provision of this
relatively new statute.4
"When interpreting statutes we start with the plain lan-
guage." U.S. Dep’t of Labor v. N.C. Growers Ass’n, 377 F.3d
345, 350 (4th Cir. 2004). Under the first and "cardinal canon"
of statutory construction, "courts must presume that a legisla-
ture says in a statute what it means and means in a statute
what it says." Conn. Nat’l Bank v. Germain, 503 U.S. 249,
253-54 (1992). Accordingly, when a statute is unambiguous,
"this first canon is also the last: ‘judicial inquiry is com-
plete.’" Id. at 254 (quoting Rubin v. United States, 449 U.S.
424, 430 (1981)); United States v. Pressley, 359 F.3d 347,
349 (4th Cir. 2004). Courts will not, however, adopt a "literal"
construction of a statute if such interpretation would thwart
the statute’s obvious purpose or lead to an "absurd result."
Chesapeake Ranch Water Co. v. Board of Comm’rs of Calvert
County, 401 F.3d 274, 280 (4th Cir. 2005).
Only when a statute is silent or ambiguous regarding the
precise question at issue is it appropriate to defer to an admin-
istrative agency’s interpretative regulations and only then if
such interpretation is reasonable. Midi v. Holder, 566 F.3d
132, 136-37 (4th Cir. 2009); Yashenko v. Harrah’s NC Casino
4
The court below noted the lack of case law interpreting the relevant
Sarbanes-Oxley Act provision and cited to two district court cases, one of
which squarely addressed the question before the district court. (J.A. 166-
68.) See Allen v. Stewart Enters., No. 05-4033 (E.D. La. Apr. 6, 2006)
(unpublished) (giving preclusive effect to the ALJ’s ruling on the plain-
tiff’s administrative whistleblower claim and granting a petition for man-
damus that effectively remanded the case to the ARB for further
proceedings); Hanna v. WCI Cmtys., Inc., 348 F. Supp. 2d 1322 (S.D. Fla.
2004) (finding that OSHA’s preliminary findings do not have preclusive
effect, but suggesting that the result may be different after an ALJ con-
ducts a hearing and issues a ruling).
STONE v. INSTRUMENTATION LABORATORY COMPANY 9
Co., 446 F.3d 541, 549 n.1 (4th Cir. 2006). If the plain lan-
guage of the statute resolves the question and "the intent of
Congress is clear, that is the end of the matter; for the court,
as well as the agency, must give effect to the unambiguously
expressed intent of Congress." Chevron U.S.A. Inc. v. Natural
Res. Def. Council, Inc., 467 U.S. 837, 842-43 (1984).
B.
The Sarbanes-Oxley Act provides employees of publicly
traded companies with whistleblower protection, prohibiting
employers from terminating, or otherwise retaliating against,
such employees when they report "potentially unlawful con-
duct" that has occurred or is in progress, Welch v. Chao, 536
F.3d 269, 275 (4th Cir. 2008); Livingston v. Wyeth, Inc., 520
F.3d 344, 352 (4th Cir. 2008). Specifically, section 806 of the
Act, titled "Civil action to protect against retaliation in fraud
cases," provides:
No [publicly-traded company], or any officer,
employee, . . . or agent of such company, may dis-
charge, demote, suspend, threaten, harass, or in any
other manner discriminate against an employee in
the terms and conditions of employment because of
any lawful act done by the employee—
(1) to provide information . . . the employee reason-
ably believes constitutes a violation of section 1341
[mail fraud], 1343 [wire fraud], 1344 [bank fraud],
or 1348 [securities fraud], any rule or regulation of
the Securities and Exchange Commission, or any
provision of Federal law relating to fraud against
shareholders, when the information or assistance is
provided to . . .
. . . a person with supervisory authority over the
employee . . . .
10 STONE v. INSTRUMENTATION LABORATORY COMPANY
18 U.S.C. § 1514A(a); see also Welch, 536 F.3d at 275; Liv-
ingston v. Wyeth, Inc., 520 F.3d 344, 351 (4th Cir. 2008). In
order to pursue an alleged violation of § 1514A(a), an
employee or former employee of a publicly traded company
must adhere to the procedure set forth in § 1514A(b), which
states than an aggrieved individual may seek relief by:
(A) filing a complaint with the Secretary of Labor;
or
(B) if the Secretary has not issued a final decision
within 180 days of the filing of the complaint and
there is no showing that such delay is due to the bad
faith of the claimant, bringing an action at law or
equity for de novo review in the appropriate district
court of the United States, which shall have jurisdic-
tion over such an action without regard to the
amount in controversy.
18 U.S.C. § 1514A(b)(1) (emphasis added).
The Department of Labor’s ("DOL") regulations imple-
menting § 1514A set forth the procedure governing the
administrative review process for such whistleblower claims
as well as the procedure for notifying the DOL of a complain-
ant’s intent to file suit in federal court for lack of a "final"
administrative decision within 180 days. To the extent that
such regulations fill in procedural gaps left by the statute and
do not conflict with statutory language, we afford them defer-
ence. See Yashenko, 446 F.3d at 549 n.1 (quoting Chevron,
467 U.S. at 844) ("We review legislative regulations (those
filling explicit gaps in the statute) to ensure they are not ‘arbi-
trary, capricious, or manifestly contrary to the statute,’ while
reviewing interpretive regulations (those clarifying terms and
provisions of the statute) for reasonableness.").
The first DOL administrative ruling on a Sarbanes-Oxley
whistleblower claim takes the form of preliminary OSHA
STONE v. INSTRUMENTATION LABORATORY COMPANY 11
findings, which can thereafter be challenged before an ALJ.
29 C.F.R. § 1980.106(a). The ALJ’s decision on such a chal-
lenge "will contain appropriate findings, conclusions, and an
order . . . ." Id. § 1980.109(a). A complainant can further chal-
lenge an adverse ALJ ruling through the filing of a "petition
for review" with the ARB. Id. § 1980.110(a). If the ARB does
not accept the petition for review, then the "decision of the
[ALJ] will become the final order of the Secretary . . . ." Id.
§ 1980.110(b). If, however, the ARB accepts a complainant’s
petition for review, "the decision of the administrative law
judge will be inoperative unless and until the Board issues an
order adopting the decision . . . ." Id. (emphasis added).5
After the Secretary issues a final decision, the Act provides
that such decision can be appealed directly to the appropriate
circuit court of appeals. See 18 U.S.C. § 1514A(b)(2)(A); 49
U.S.C. § 42121(b)(4). However, if a "final" administrative
decision has not been timely issued and a complainant desires
de novo review in district court, the DOL regulations provide
that a complainant must file a "notice of his or her intention
to file such a [federal] complaint." 29 CFR § 1980.114(b).
The notice must be provided fifteen days in advance of filing
the federal suit, and should be filed with "the [ALJ] or the
[ARB], depending on where the proceeding is pending." Id.
(emphasis added).
With the above statutory and regulatory backdrop, we now
turn to the central question before us — whether the district
court had authority to dismiss Stone’s complaint by applying
preclusion principles.
5
We defer to the DOL’s established procedure for processing and ruling
on an administrative whistleblower claim, and such procedure necessarily
defines what constitutes a "final decision" of the Secretary. Such defer-
ence to the DOL’s reasonable implementation of the Sarbanes-Oxley Act
is appropriate regardless of whether the court views the DOL’s procedural
scheme as merely "filling explicit gaps in the statute" or "clarifying" the
phrase "final decision" as used in the statute. Yashenko, 446 F.3d at 549
n.1.
12 STONE v. INSTRUMENTATION LABORATORY COMPANY
C.
The relevant portion of the Sarbanes-Oxley whistleblower
statute states that an aggrieved individual may bring "an
action at law or equity for de novo review in the appropriate
district court of the United States" if a final decision has not
been issued by the Secretary of Labor within 180 days after
the filing of an administrative complaint. 18 U.S.C.
§ 1514A(b)(1)(B). Starting, as we must, with the text of the
statute, we find the above quoted language to be plain and
unambiguous. It is undisputed that, here, the Secretary did not
issue a final decision within 180 days and that Stone followed
the procedure set forth in the regulations to exercise his statu-
tory right to seek relief in district court.
Although the action in district court was properly filed and
the court acknowledged its jurisdiction over the suit, in grant-
ing Appellees’ motion to dismiss, the district court relied on
its inherent power to apply preclusion principles, issue a man-
damus, and order the DOL to re-instate administrative pro-
ceedings. (J.A. 168-69.) The district court explained that
because Stone had "a full and fair opportunity to litigate his
claims before an ALJ, which resulted in a final judgment on
the merits, it would be wasteful to relitigate the[ ] claims" in
district court. (J.A. 169.) In reaching such conclusion, the dis-
trict court relied in part on the Secretary’s public comments
on § 1514A, as well as on a similar finding by an out of cir-
cuit district court in Allen v. Stewart Enterprises, Inc., No. 05-
4033 (E.D. La. Apr. 6, 2006) (unpublished).
In applying preclusion principles, the district court strayed
from the plain and unambiguous meaning of
§ 1514A(b)(1)(B). The district court need not have reached
any DOL interpretive regulations, or the Secretary’s com-
ments to such regulations, to define a complainant’s right to
a de novo review in district court. The text of the statute is
clear — if the DOL has not reached a final decision within the
time period established by Congress, a complainant has the
STONE v. INSTRUMENTATION LABORATORY COMPANY 13
statutory right not merely to undefined relief in another
forum, but to "de novo review" in federal district court. 18
U.S.C. § 1514A(b)(1)(B). A plaintiff’s right to pursue such
relief is not circumscribed in any manner by the statute.
Appellees argue, however, that although the statute does
not preclude a plaintiff from seeking such relief, nothing in
the text of the statute, its procedural regulations, or its legisla-
tive history, "abrogate[s] the District Court’s long-recognized
power to prevent needless duplicative litigation by applying
collateral estoppel." (Appellees’ Brief 17.) Although we agree
that district courts generally have the ability to give preclusive
effect to final administrative rulings, Collins v. Pond Creek
Mining Co., 468 F.3d 213, 217 (4th Cir. 2006), we reject
Appellees’ interpretation of the instant statute since such con-
struction reads out of the statute the phrase "de novo review."
18 U.S.C. § 1514A(b)(1)(B). As we have previously stated,
"[b]y definition, de novo review entails consideration of an
issue as if it had not been decided previously."United States
v. George, 971 F.2d 1113, 1118 (4th Cir. 1992); see Betty B
Coal Co. v. Director, Office of Workers’ Compensation Pro-
grams, United States Dep’t of Labor, 194 F.3d 491, 499 (4th
Cir. 1999) ("The sum of a de novo review and a de novo pro-
cess is a new adjudication."). Accordingly, although the stat-
ute does not expressly state that a district court’s ability to
apply preclusion principles is "abrogated," the statute
expressly requires the district court to consider the merits
anew. Taking steps that, in effect, defer to the agency is in
direct conflict with the statute’s mandate that the district court
consider the issue "as if it had not been decided previously."
George, 971 F.2d at 1118.6
6
We recognize that in reviewing de novo questions of law when there
is final agency action we sometimes defer to the agency’s statutory inter-
pretation. See, e.g., Welch, 536 F.3d at 276 ("Under the Administrative
Procedure Act . . . [w]e review questions of law de novo, giving deference
to the ARB’s interpretation of § 1514A."). However, the procedural pos-
ture of this matter, involving the initiation of a new case in district court
14 STONE v. INSTRUMENTATION LABORATORY COMPANY
To further clarify the import of Congress’s establishment of
a right to "de novo review," we have previously discussed in
detail the difference between preclusive findings of state ALJs
on § 1983 claims, and non-preclusive findings of state ALJs
on Title VII claims. Rao v. County of Fairfax, Va., 108 F.3d
42, 45 (4th Cir. 1997); Layne v. Campbell County Dept. of
Social Servs., 939 F.2d 217, 219 (4th Cir. 1991). Such distinc-
tion exists because the language and legislative history of
Title VII establish that administrative findings are entitled to
a level of deference that is "something less than preclusion."
Rao, 108 F.3d at 45; see University of Tenn. v. Elliott, 478
U.S. 788, 795-99 (1986) (recognizing Congress’s authority to
create a statutory scheme that does not afford preclusive
effect to prior administrative fact finding).
Here, the controlling statute does not provide that a district
court give any deference to prior administrative findings but
instead requires performance of a de novo review.7 Accord-
due to the absence of final agency action, is starkly different from Welch,
and similar cases, where an agency’s final decision is reviewed by this
Court in the first instance. Tellingly, here, not only is there no final agency
action to which to defer, but a district court’s review under
§ 1514A(b)(1)(B) is not review of a question of law, it is consideration of
the Sarbanes-Oxley complaint as if the complaint had been filed initially
in district court. As we noted in Welch, deference is appropriate when it
appears that Congress expects the agency to speak with the force of law,
but nothing in § 1514A(b)(1)(B) suggests that Congress intended non-final
agency actions, or the Secretary’s comments regarding how a district court
will conduct de novo review, "to speak with the force of law." Id. at 276
n.2 (quoting United States v. Mead Corp., 533 U.S. 218, 229 (2001)).
7
Appellees argue that even though the ALJ’s ruling was not the DOL’s
"final decision," as per the controlling regulations, it was "final" for pur-
poses of collateral estoppel. See E.I. Du Pont de Nemours & Co. v. Rich-
mond Guano Co., 297 F. 580, 583 (4th Cir. 1924) (indicating that a federal
district court’s ruling can have preclusive effect while an appeal is pend-
ing). We need not, however, reach the question of whether an ALJ’s rul-
ing, while being appealed administratively, can have preclusive effect in
federal court because even if preclusion principles are generally applicable
STONE v. INSTRUMENTATION LABORATORY COMPANY 15
ingly, deferring to the administrative agency, even if more
efficient, is in direct conflict with the unambiguous language
of the Sarbanes-Oxley Act. Astoria Federal Sav. & Loan
Ass’n v. Solimino, 501 U.S. 104, 108 (1991) ("Courts do not,
of course, have free rein to impose rules of preclusion, as a
matter of policy, when the interpretation of a statute is at
hand[,] . . . [and] the question is not whether administrative
estoppel is wise but whether it is intended by the legisla-
ture.").
D.
As the plain language of § 1514A(b)(1) mandates a de novo
review by the district court which will, if an ALJ has already
issued a ruling, likely result in some duplication of efforts, we
next consider whether such literal interpretation of the statute
leads to an "absurd result." Chesapeake Ranch Water Co., 401
F.3d at 280; see Aremu v. Dep’t of Homeland Security, 450
F.3d 578, 583 (4th Cir. 2006) ("[A] court must, if possible,
interpret statutes to avoid absurd results.").
In support of the contention that it would be "absurd" to
permit de novo review in district court following a full hear-
in such scenario, here, Congress’s creation of the statutory right to "de
novo review" in district court would trump such general rule. See id. at
583 (indicating that the lower court’s finding only has preclusive effect
when, on appeal, "it is not . . . tried de novo, but the record made below
is simply re-examined and the judgment is either vacated or affirmed
. . . ."); see also Restatement (Second) of Judgments § 83(4) (1982) ("An
adjudicative determination of an issue by an administrative tribunal does
not preclude relitigation of that issue in another tribunal if according pre-
clusive effect to determination of the issue would be incompatible with a
legislative policy that: (a) The determination of the tribunal adjudicating
the issue is not to be accorded conclusive effect in subsequent proceed-
ings; or (b) The tribunal in which the issue subsequently arises be free to
make an independent determination of the issue in question.") (emphasis
added); id. cmt. a ("The application of this Section is subject to statutory
provisions that may, expressly or by implication, govern the res judicata
effect of the determinations of a particular tribunal.") (emphasis added).
16 STONE v. INSTRUMENTATION LABORATORY COMPANY
ing before an ALJ, Appellees rely in part on the Secretary of
Labor’s comments to the regulations implementing
§ 1514A(b)(1). After explaining that the text of the Sarbanes-
Oxley whistleblower provisions is "unique" because it creates
the possibility that a complainant will turn to a district court
while an appeal is pending before the ARB, the Secretary
opines:
The Secretary believes that it would be a waste of
the resources of the parties, the Department, and the
courts for complainants to pursue duplicative litiga-
tion. The Secretary notes that the courts have recog-
nized that, when a party has had a full and fair
opportunity to litigate a claim, an adversary should
be protected from the expense and vexation of multi-
ple lawsuits and that the public interest is served by
preserving judicial resources by prohibiting subse-
quent suits involving the same parties making the
same claims. . . . Therefore, the Secretary anticipates
that Federal courts will apply [preclusion] principles
if a complainant brings a new action in Federal court
following extensive litigation before the Department
that has resulted in a decision by an administrative
law judge or the Secretary. Where an administrative
hearing has been completed and a matter is pending
before an administrative law judge or the Board for
a decision, a Federal court also might treat a com-
plaint as a petition for mandamus and order the
Department to issue a decision under appropriate
time frames.
Procedures for the Handling of Discrimination Complaints
Under Section 806 of the Corporate and Criminal Fraud
Accountability Act of 2002, Title VIII of the Sarbanes-Oxley
Act of 2002, 69 F.R. 52104, 52111-12 (Aug. 24, 2004)
(emphasis added). The Secretary goes on to note that although
public comments to the regulations suggested that the DOL
"specifically incorporate preclusion principles" into the regu-
STONE v. INSTRUMENTATION LABORATORY COMPANY 17
lations, such step was not taken because "there is no statutory
basis for including preclusion principles in the[ ] regulations
. . . ." Id.
Notwithstanding the Secretary’s "anticipation" on how
courts will interpret and apply § 1514A(b)(1), the Secretary’s
invitation to transform a right to de novo review in district
court into a request for mandamus cannot be squared with the
statutory language chosen by Congress. Although, in the eyes
of the Secretary, Congress’s decision to permit duplication of
efforts is problematic, neither Appellees nor the Secretary
present a compelling argument as to why such duplication is
"absurd." Congress unquestionably chose an aggressive time-
table for resolving whistleblower claims and reasonably cre-
ated a cause of action in an alternative forum should the DOL
fail to comply with such schedule.8 A natural result of the
aggressive timeframe is that efforts will be duplicated when
the DOL engages in a thorough, yet administratively non-
"final", process that fails to resolve the administrative case
within the prescribed timeframe. Neither the Secretary nor the
courts have the authority to engage in creative interpretation
of the statute to avoid duplication of efforts, even if the goal
for doing so is laudable. See Lamie v. U.S. Trustee, 540 U.S.
526, 538 (2004) (indicating that the Court’s "unwillingness to
soften the import of Congress’ chosen words even if [the
Court] believe[s] the words lead to a harsh outcome is long-
standing" and results from both deference to the Legislature’s
supremacy and recognition of the fact that members of Con-
gress typically vote based on a bill’s language).
8
The benefit of the aggressive timetable established by Congress does
not inure solely to the benefit of complainants, as § 1514A presents com-
plainants an extremely limited window to file a claim, providing that a
whistleblower action "shall be commenced not later than 90 days after the
date on which the violation occurs." 18 U.S.C. § 1514A(b)(2)(D). The fact
that the statute requires both the DOL and the complainant to act swiftly
further evidences the weight Congress placed on the timely resolution of
whistleblower claims.
18 STONE v. INSTRUMENTATION LABORATORY COMPANY
Regardless of whether the DOL has, in practice, found it
unrealistic to comply with Congress’s aggressive timetable,9
Congress plainly has the authority, in balancing speed against
resources, to rationally weigh timeliness as a more compelling
concern and provide that proceedings begin anew in district
court if the DOL is unable to reach a final decision within 180
days. See Elliott, 478 U.S. at 799 n.7 ("Congress of course
may decide, as it did in enacting Title VII, that other values
outweigh the policy of according finality to . . . administrative
factfinding."). If the aggressive statutory timetable is unwork-
able in practice, the remedy must be provided by Congress,
not the courts, as we do not reweigh policy determinations
made by the legislature. See Lamie, 540 U.S. at 538 (high-
lighting longstanding policy of deferring to words chosen by
Congress); United States v. Noland, 517 U.S. 535, 541 n.3
(1996) ("[Defendant] may or may not have a valid policy
argument, but it is up to Congress, not this Court, to revise
[the statutory framework].").
We therefore find that a literal interpretation of the statute
does not lead to an "absurd result." In so finding, we reject as
contrary to the statute the Secretary’s "suggestion" that dis-
trict courts apply preclusion principles to effectuate a goal of
efficiency. First, as noted above, the plain text of the statute
expressly provides a complainant the right to de novo review.
Second, the DOL’s own regulations acknowledge that a dis-
trict court action may be filed while an appeal is pending
before the ARB. See 29 CFR § 1980.114(b) (requiring that the
ARB be notified of intent to file a federal suit if an ALJ’s rul-
ing is on appeal to the ARB). Third, even though preclusion
principles are generally favored, "[c]ourts do not, of course,
have free rein to impose rules of preclusion" if it was not
intended by the legislature. Astoria, 501 U.S. at 108. Fourth,
9
The ARB noted in a footnote to its November 15, 2007 Order to Show
cause that: "As is the usual case, by the time the Board received the peti-
tion for review, the 180-day period for deciding the case had already
expired." (J.A. 105.)
STONE v. INSTRUMENTATION LABORATORY COMPANY 19
any contention that Congress’s decision, to permit what may
amount to duplicative review, is "absurd" is countered by the
reality that Sarbanes-Oxley whistleblower cases involve fact
patterns where time is of the essence since the fortunes of the
investing public may be at stake. Both a complainant that has
suffered adverse job consequences and the public therefore
have a strong interest in Congress aiding whistleblower plain-
tiffs, even if in so doing Congress’s scheme may be less effi-
cient than the scheme contemplated by the Secretary.10
IV.
In summary, the plain language of § 1514A(b)(1)(B) unam-
biguously establishes a Sarbanes-Oxley whistleblower com-
plainant’s right to de novo review in federal district court if
the DOL has not issued a "final decision" and the statutory
180-day period has expired. Here, regardless of whether the
ALJ conducted a hearing or issued findings, it is undisputed
that: (1) the administrative process did not yield a "final deci-
sion" for purposes of § 1514A(b)(1)(B) at the time Stone
exercised his right to file suit in district court; and (2) the 180-
day period established by Congress expired prior to Stone fil-
ing suit. Therefore, notwithstanding the Secretary’s view on
the soundness of Congress’s decision to create a framework
allowing for duplication of efforts, such framework is pre-
cisely what Congress reasonably and unambiguously provided
for in the controlling statute.
Accordingly, even if the 180-day statutory period is argu-
ably both overly aggressive and not the most efficient use of
administrative and judicial resources, Stone was entitled to de
10
Appellees, grafting onto an argument advanced by the Secretary, 69
F.R. at 52111, further argue that a literal interpretation of
§ 1514A(b)(1)(B) would lead to an absurd result, not in this case, but in
cases where the ARB issues a final decision more than 180 days after the
administrative complaint was filed. We decline to reach such fact pattern
not currently before us.
20 STONE v. INSTRUMENTATION LABORATORY COMPANY
novo review in the court below. In the absence of any guid-
ance from this court, or any other circuit court, as well as in
the face of the Secretary’s comments inviting district courts
to remand cases to the ARB, the district court understandably
erred in applying preclusion principles. As stated above, we
reject the Secretary’s interpretation and invitation to district
courts to apply preclusion principles because Congress
expressly provided for de novo non-deferential review in dis-
trict court. A literal interpretation of the statute’s plain lan-
guage does not lead to an absurd result since Congress
unquestionably has the right to create a complainant-friendly
statutory scheme that affords no deference to non-final agency
findings.
For the reasons stated herein, we reverse the district court’s
order granting Appellees’ motion to dismiss, vacate the entry
of final judgment, and remand to the district court for further
proceedings consistent with this opinion.
VACATED AND REMANDED