Gregory v. Nations Cabinetry, LLC (agency decision, January 29, 2026)
Gregory v. Nations Cabinetry, LLC (DOL ARB 2023-0049): CAA retaliation defense rejected and damages ordered on remand
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This is citable agency precedent from 2026, and it may have been appealed since. Ezel checks how it stands today and answers your situation, with citations.
Plain-English summary
Jeffrey Gregory, chief operating officer of Nations Cabinetry, raised internal concerns about operating a paint sprayer without a required permit and possible excess emissions. The ALJ found that protected activity motivated his termination but accepted the company’s defense that it would have fired him anyway for failing to support management. The Board held that internal environmental complaints are protected under the Clean Air Act. It reversed the defense finding because the ALJ overlooked shifting explanations, contrary evidence, and the close connection between Gregory’s protected complaints and the claimed lack of management support. The Board remanded for calculation of damages without setting an amount. Judge Burrell agreed on protected activity and motivating factor but would have upheld the employer’s defense under the substantial-evidence standard.
Decision snapshot
- Cited authorities: 42 U.S.C. § 7622(a); 29 C.F.R. § 24.102(b); 29 C.F.R. § 24.109(b)(2); 29 C.F.R. § 24.110(b)
- Outcome: The employer’s same-action defense was reversed; the case was remanded to calculate damages.
- Key point: An employer cannot establish that it would have fired a whistleblower anyway by relying on management friction that stems from the protected complaints themselves.
Full text (DOL official public release)
U.S. Department of Labor Administrative Review Board
200 Constitution Ave. NW
Washington, DC 20210-0001
IN THE MATTER OF:
JEFFREY L. GREGORY, ARB CASE NO. 2023-0049
COMPLAINANT, ALJ CASE NO. 2021-CAA-00001
ALJ PATRICK M. ROSENOW
v.
DATE: January 29, 2026
NATIONS CABINETRY, LLC,
d/b/a BJ TIDWELL CABINETRY,
RESPONDENT.
Appearances:
For the Complainant:
Thomas J. Crane, Esq.; Law Office of Thomas J. Crane; San Antonio,
Texas
For the Respondent:
Matthew C. Powers, Esq.; Graves, Dougherty, Hearon & Moody, P.C.;
Austin, Texas
Before JOHNSON, Chief Administrative Appeals Judge, and KAPLAN, BURRELL, and KIKO, Administrative Appeals Judges; BURRELL, Concurring in Part and Dissenting in Part
DECISION AND ORDER REVERSING AND REMANDING
This case arises under the employee protection provisions of the Clean Air
Act (the CAA) and its implementing regulations. 1 On August 29, 2023,
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Administrative Law Judge (ALJ) Patrick M. Rosenow issued a Decision and Order (D. & O.) finding that Complainant Jeffrey L. Gregory established that Respondent Nations Cabinetry, LLC engaged in unlawful retaliation against him in violation of the CAA. The ALJ further found that Respondent established an affirmative defense that it would have taken the same adverse action in the absence of
1 42 U.S.C. § 7622; 29 C.F.R. Part 24 (2025).
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Complainant’s protected activity. Because substantial evidence does not support the ALJ’s finding as to Respondent’s affirmative defense, we reverse.
BACKGROUND AND PROCEDURAL HISTORY
In December 2017, Respondent hired Complainant to serve as Chief
Operating Officer of Nations Cabinetry. 2 Complainant’s job description indicated
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that his responsibilities included “participat[ing] with the Senior Management of the Company in creating operational strategies and communicating such strategies to management and the ownership team” as well as “instituting systems that provide for effective internal management.” 3 Complainant was also responsible for
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“providing strategic leadership and oversight to all operations functions” and partnering with other members of management and the Board to “ensure that business processes are performed with the highest degree of ethics and integrity.” 4 3F
In addition to working with other members of the senior management team, Complainant was charged with liaising with Respondent’s corporate parent by “provid[ing] clear communication to Miami Nation Enterprises that ensure they are continually and accurately informed of the status of all operations at” Nations Cabinetry. 54F
Within a month of hiring Complainant, Respondent hired J.W. Coady to
serve as Chief Executive Officer. 6 Beginning early in their partnership,
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Complainant expressed concerns to Coady about various operational issues. On June 28, 2018, Complainant, at Coady’s direction, sent Coady an email laying out eight areas of concern he had with Respondent’s operations. 7 The first three topics
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related to Respondent’s compliance with state and federal environmental laws, including the company’s unlawful operation of equipment without a required permit and the company’s possible noncompliance with emission standards. 8 The other
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areas of concern ranged from staffing and purchasing decisions to communication between management and the plant floor. Complainant emphasized that the first three issues relating to environmental compliance and permitting, “not only hinder performance for myself and the plant but directly conflict with my personal and
2 D. & O. at 3.
3 RX 2 at 1 (Chief Operating Officer Job Description for BJ Tidwell Cabinetry). 4 Id. 5 Id. 6 D. & O. at 3. 7 Id. 8 Id.; CX 9 at 1 (Email from Jeffrey Gregory to JW Coady, dated June 28, 2018). 3
professional ethics.” 9 Complainant told Coady that these three issues had “a grossly
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negative impact” on him. 10 9F
In August 2018, Complainant spoke with Derek Douglas, the COO of Miami
Nation Enterprises (MNE), Respondent’s corporate parent, and expressed his concerns about Respondent’s environmental compliance, as well as other misgivings he had about Coady’s decisions. 11 Following this conversation, Coady called
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Complainant into his office to ask whether Complainant supported him and was on his team. 12 Complainant testified that during this conversation, Coady essentially
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threatened to fire him. 13 After being threatened with termination, Complainant
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ceased directly bringing up issues related to the company’s environmental compliance and permitting obligations. 14 13F
On March 1, 2019, Coady completed Complainant’s annual performance
review, which covered his performance during 2018. The performance review stated that “this was a year of 2 segments. Segment 1 was very disappointing . . . . Segment 2, after our final talk, was a strong self recalibration.” 15 The performance
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review noted that Coady had seen good progress with regard to Complainant “rebuilding trust at the senior level” but it was “a long road to rebuild.” 16
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On March 3, 2020, Complainant attended an MNE board meeting. Before the
meeting was called to order, Peter Murphy, the CEO of MNE asked Coady about the status of the environmental permits. Coady responded that he was working on it but still had outstanding items to complete before the permits could be finalized. 17 16F
When asked about the risk of running equipment without the required permit,
9 CX 9 at 1-2.
10 Id. at 2.
11 D. & O. at 3.
12 Id. at 8.
13 Id. at 10.
14 Id. at 9.
15 CX 18 at 3 (Performance Review of Jeffrey Gregory, dated March 1, 2019). In what is likely a typographical error, the D. & O. states that segment one covers the period from December 2018 through May 2019, dates that are also included in Respondent’s post-trial briefing, where they are erroneously described as “Mr. Gregory’s first six months. However, we note that the performance review is dated March 1, 2019 and indicates that it covers 2018. Additionally, Mr. Gregory’s first six months were late December 2017 through late June 2018, Accordingly, we view it as highly probable that “segment 1” refers to the period from Mr. Gregory’s hire in December 2017 through the middle of 2018. 16 Id. 17 D. & O. at 8. 4
Coady responded that it was not a big deal and if the company got caught, they would shut down the equipment, pay a fine, and move on. 18 Complainant was taken
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aback by this exchange because Coady had previously informed him that the company had already received preliminary approval for the equipment and was only waiting on final paperwork from the state. 19 Complainant resolved to reach out to
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MNE’s board of directors to discuss the issue and then, if necessary, reach out to state environmental regulators. 20 While at home, Complainant shared this incident
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with his wife as part of his regular practice of talking with her about workplace issues. 21
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On March 13, 2020, Complainant’s wife (hereinafter Kelly Gregory)
travelled—without Complainant’s knowledge or support—to MNE’s headquarters and met the following day with HR Director Gena Lankford in order to talk to Lankford about the environmental permitting issues as well as an unrelated workplace issue. 22 During this meeting Kelly Gregory brought up a litany of other
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grievances related to Coady’s management, in addition to expressing concerns related to the environmental permit and the emissions compliance issue. 23 Kelly
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Gregory also made the unsubstantiated allegation that Coady had misstated revenues by one to two million dollars. 24 A week later, Coady and HR Director
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Oscar Rodriguez called Complainant and informed him that he was being placed on leave effective immediately for failure to protect confidential information, in violation of his employment contract. 25 On March 31, 2020, Respondent terminated
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Complainant’s employment “based on [his] unauthorized disclosure of confidential Company information to [his] wife, Kelly Gregory, and [his] ongoing lack of support for Nation’s management and the direction of Nation’s business operations.” 26 25F
On April 22, 2020, Complainant filed a complaint against Respondent with
the Occupational Safety and Health Administration (OSHA). OSHA investigated the complainant and dismissed it on February 10, 2021. Complainant timely filed
18 Id.
19 Tr. 289.
20 D. & O. at 8.
21 Id.
22 Id. at 4; Tr. 491.
23 D. & O. at 4.
24 Id.
25 Id.; Ex. K to Resp. Mot. for Summ. Decision at 1-2, Gregory v. Nations Cabinetry, LLC, ALJ No. 2021-CAA-00001 (hereinafter Resp. Mot. for Summ. Decision). 26 D. & O. at 4; CX 12 at 1 (Jeffrey Gregory Termination Letter, dated March 31, 2020). 5
an objection and request for hearing with the Department of Labor’s Office of Administrative Law Judges.
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Complainant’s Reporting of Environmental Compliance Issues
A. The Makor Permit
The more significant of the two issues Complainant raised regarding Respondent’s compliance with environmental laws and regulations was the operation of a Makor paint sprayer without the permit required by the Texas Commission on Environmental Quality (TCEQ). The existence of this issue slightly predates Complainant’s employment with Respondent. On November 16, 2017, about a month before Complainant was hired, Respondent submitted a Permit Amendment Application to TCEQ in order to operate a Makor sprayer at Respondent’s plant located at 4600 W US Highway 90 in San Antonio, Texas. 27 26F
Shortly thereafter, on November 30, 2017, TCEQ provided a letter to Respondent identifying thirteen deficiencies (including 26 subparts) that needed to be corrected before the application could be considered administratively complete. 28 27F
The November 30 letter identified numerous inconsistencies with the
application and noted that “many critical representations are not current and are inconsistent.” 29 The letter further stated that “[d]ue to the widespread nature of the
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deficiencies identified in the application package,” Respondent should resubmit “an entire stand-alone permit application package.” 30 In the letter, Respondent was
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informed that a response must be provided to TCEQ by December 10, 2017, and failure to provide a response (or providing an incomplete response) would result in the application being voided. TCEQ’s letter was addressed to Oscar Rodriguez, Respondent’s HR Director who was acting as the point person for the permit application. Respondent did not timely correct the deficiencies identified by TCEQ and on December 13, 2017, TCEQ issued Respondent a letter indicating the permit application “has been voided and removed from the pending list.” 31 From this point
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until after Complainant was terminated, Respondent operated the Makor sprayer without the required permit.
Complainant first learned of the voided permit in early June 2018 when he,
through a mail mix-up, received a letter from TCEQ that had been intended for
27 RX 11 at 1.
28 Id. at 3.
29 Id. at 1.
30 Id. at 3.
31 Ex. J to Resp. Mot. for Summ. Decision, at 4.
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Rodriguez. 32 The letter—issued six months after the permit was voided—informed
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Respondent that a new permit application would be required due to the amount of time that had elapsed. 33 Complainant immediately brought this issue to the
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attention of Coady and was instructed to coordinate with Rodriguez. Shortly afterwards, on June 15, 2018, Complainant joined a call with Rodriguez and two employees of Source Environmental Sciences, Inc. (Source Environmental), a third- party firm contracted by Respondent to assist with environmental compliance issues. 34 During the call, Complainant expressed his concern that the Makor system
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was not allowed to operate now that the permit application was voided. 35 It was 34F
during this call that Complainant learned that the permit application had been voided more than six months, on December 13, rather than only a few days before. 36 35F
After Complainant and the Source Environmental consultants discussed and ruled out possible authorizations under which the Makor system could be operated, Rodriguez asked what the ramifications would be if Respondent continued operating the Makor system without a permit. 37 Rodriguez mentioned that a
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company he had previously worked at only received a letter of noncompliance in response to a similar issue. One of the consultants explained that “my experience is that when you operate without authorization, that’s a serious issue.” 38 At the
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conclusion of the call, Rodriguez suggested including Complainant in all communications between Respondent and Source Environmental going forward in order to help expediate the process of completing and resubmitting the permit application. 39 38F
Later that day, Complainant and Rodriguez called Coady to provide him with
an update on the permit application. During this call, Complainant informed Coady that “we’re in a position where we shouldn’t [be] running the Makor, because it’s not permitted.” 40 Complainant explained that even if an application could be
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32 Tr. 263.
33 Id.
34 Id. at 270.
35 CX 15 at 8-9 (June 15, 2018 Audio Transcript). 36 Id. at 11. 37 Id. at 13. 38 Id. 39 Id. at 19 (“I think that we make it a habit of including Jeff. This way, whether I’m available or not, Jeff is available.”). 40 Ex. F to Resp. Mot. for Summ. Decision at 23 (June 15, 2018 Audio Transcript). One June 15 recording between Complainant, Rodriguez, and Source Environmental was submitted to the ALJ at hearing. CX 15. A second June 15 recording between Complainant, Rodriguez, and Coady was submitted by Respondent as an exhibit to its motion for 7
resubmitted, there were multiple 30-day notice and comment and waiting periods that had to transpire before an interim permit would be issued, at which point the Makor sprayer could be lawfully operated again. 41 Coady asked if that meant that
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“tactically [sic] we’ve been running the Makor noncompliant,” which Complainant confirmed was the case. 42 Coady informed Complainant and Rodriguez that not
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running the Makor system was a “showstopper” and his priority was to “minimize any kind of time we’re noncompliant.” 43 After Coady left the call, Complainant and
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Rodriguez continued to discuss the possibility of running the Makor sprayer without the required permits:
Complainant: At the end of the day, it’s the question I
asked you and George on the phone. “Can I run the Makor?
Yes or no”. At the end of the day, that’s the piece. It’s up to
you and Roger and Chris and George to keep us compliant.
I just want to know, “Can we run?”
Rordriguez: The answer to that is yes. Can you run? Sure
you can.
Complainant: Well, not compliant, I can’t now.
Rodriguez: But that’s not what you asked. You asked, ‘Can
I run?’
Complainant: Okay, let me say, ‘Can I legally run?’ That’s
the question. That’s just a question for I guess all of us to
weigh in on. But at the end of the day, that’s all I was trying
to figure out.[ 44]
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Five days later, on June 20, 2018, Complainant emailed Coady to check on
the status of the permit application and let Coady know that he was “increasingly uncomfortable continuing to run the way we are without consent.” 45 This exchange
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summary decision. Ex. F, of Resp. Mot. for Summ. Decision. Both parties acknowledged at hearing that Ex. F was part of the record and available for review. See Tr. 273, 340-41. 41 Id. 42 Id. at 24. 43 Id. Both Gregory and Coady testified that, during this call, Coady said that not running the Makor would be a “showstopper.” D. & O. at 7-9; see also Tr. 51 (Coady testimony), 270 (Gregory testimony). 44 Ex. F to Resp. Mot. for Summ. Decision at 29-30. 45 CX 11 (Email from Jeffrey Gregory to JW Coady about the Makor, dated June 20, 2018). 8
occurred just a week before Complainant emailed Coady on June 28 with his list of workplace concerns. The first issue on that list was a lack of trust with HR based on “the significant lack of integrity shown by the HR manager” who he alleged was allowed “to conduct business with a completely different set of ethics, or lack thereof, than the rest of the organization.” 46 In his testimony, Complainant
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explained that this lack of trust related to the environmental issues. 47 The second
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issue on Complainant’s list was the Makor sprayer, which he stated was “[c]urrently running illegally[.]” 48 Complainant explained that running the Makor
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sprayer without a permit “has significant legal implications,” and that he had to “reach out continuously” to find out the status of the permit application even though he was responsible for the Makor equipment. 49 48F
On July 13, 2018, TCEQ sent Respondent a letter indicating that it had
received a new Permit Amendment Application, which was under review. The letter included eighteen issues (including 31 total subparts) that needed to be addressed before the application could be considered administratively complete. 50 As with 49F
earlier deficiency notices from TCEQ, the letter stated that the application contained “numerous inconsistent representations” and that “[d]ue to the widespread nature of the deficiencies identified in the application package submitted,” Respondent should resubmit an entire stand-alone permit application package. 51 The letter gave Respondent ten days to address the deficiencies in its
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application. Respondent failed to correct all of the deficient items in time and on August 6, 2018, TCEQ sent a letter to Respondent informing it that “the deficient items were not corrected and accordingly the application . . . has been voided and removed from the pending list.” 52 51F
In August 2018, after being rebuffed when he asked for additional status
updates from Rodriguez and Coady, Complainant spoke with Derek Douglas, the chief operating officer of MNE. 53 Complainant informed Douglas of the letters from
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TCEQ and that the Makor was running without a permit. 54 Complainant testified
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46 CX 9 at 1.
47 Tr. 356. Complainant testified that he “did not trust HR, specifically Oscar Rodriguez, to negotiate through that to get it done so [Respondent] could be in good standing with TCEQ and EPA[.]” 48 CX 9 at 1. 49 Id. 50 CX 4 at 1 (Letter from TCEQ to Oscar Rodriguez, dated July 13, 2018). 51 Id. at 1-3. 52 CX 2 at 1 (Letter from TCEQ to Oscar Rodriguez, dated August 6, 2018). 53 Tr. 279. 54 Id. 9
that shortly after this conversation, Coady called Complainant into his office and asked Complainant whether he supported him and was on his team. Coady also told Complainant that Douglas had suggested terminating him, which Complainant understood as a threat. 55 After this conversation, Complainant periodically emailed
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Coady and Rodriguez to ask about the status of the permanent application but otherwise stopped bringing it up. 56 Complainant testified that towards the end of
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2019 Rodriguez informed him that TCEQ had granted a preliminary approval and the company was only waiting on documents at that point. 57 Contrary to what
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Rodriguez was telling Complainant, however, during this period TCEQ sent multiple letters to Respondent outlining deficiencies with the re-submitted permit application; it would be years before a permit was issued. 58 57F
Neither Rodriguez nor Coady provided Complainant with any further
substantive updates about the status of the permit application process prior to the March 2020 board meeting during which Complainant overheard Coady updating MNE CEO Peter Murphy about the permit’s status. 59 Coady testified that the news
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that the permit application had not yet been submitted, coupled with what he viewed as Coady’s attempt to mislead Murphy about the severity of the issue, made him sick and left him ”deflated.” 6059F
B. Volatile Organic Compound (VOC) Emission Limits
The other environmental compliance issue that Complainant raised with
Respondent’s management was the calculation of volatile organic compound (VOC) emission figures and the company’s compliance with regulations governing the release of VOCs. Complainant testified that he became aware in January 2018 that the VOC emission calculations the company included in its permits applications were wrong. 61 Complainant learned about this when he pulled the air permits for
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both of Respondent’s locations as part of a standard assessment he was
55 Tr. 279-81.
56 D. & O. at 9.
57 Tr. 289.
58 CX 3 (Letter from TCEQ to Oscar Rodriguez, dated October 12, 2018). These letters were dated October 12, 2018; November 28, 2018; and January 4, 2019. A final permit was granted on April 12, 2021. 59 Tr. 304-06. 60 Tr. 305-08. 61 Tr. 254-62. Respondent contends that Complainant’s calculations were wrong and that Respondent, with the aid of its third-party compliance consults, properly calculated VOC emission rates. Because raising the issue is itself protected activity, it is not necessary for us to resolve this disagreement over whether Complainant or Respondent’s calculations were accurate. 10
conducting. 62 In the permits for the Timco plant, Respondent provided VOC
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emission calculations based on an eight-hour day with a run time of roughly seven hours per day. Despite what was included in the permits, the company was running VOC-releasing equipment 16 hours per day. 63 Complainant identified the same
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issue in the permit for the Highway 90 plant. 64 The result of running machinery
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significantly longer than the time specified in the permits was that each plant had VOC emissions that were—by Complainant’s calculations—“significantly higher than the allowable emissions that were identified on [the] permit.” 65 64F
Complainant initially raised this issue with Rodriguez, believing the error
with the calculations to be an oversight. 66 However, Rodriguez rebuffed
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Complainant, questioning why he was looking into this at all, given that environmental compliance was Rodriguez’ responsibility. 67 Following this,
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Complainant brought his concerns to Coady, who instructed Complainant to further investigate the matter, including by visiting TCEQ’s office in Houston to obtain historic permit documents. 68 After digging into the issue at Coady’s direction,
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Complainant reported his findings to Coady but found that Coady’s demeanor had shifted. Coady appeared less interested in looking into the issue or hearing what Complainant had been able to uncover, instead telling Complainant that resolving any environmental issue was the responsibility of the company’s third-party environmental compliance consultants. 69
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In the June 28, 2018 email concerning workplace concerns, the third issue
Complainant identified was the errors regarding VOC emission calculations. 70 69F
Complainant stated that the calculations he performed indicated that Respondent was “grossly out of compliance in both Timco and the main plant” and that his “efforts to bring this information forward so it can be corrected appeared to be dismissed.” 71 Complainant pointed out that Texas had “several open environmental
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regulatory compliance pressures,” which added to his concern. 72 Similarly, when
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62 Tr. 254-55.
63 Tr. 255.
64 Id.
65 Id.
66 Id. at 258.
67 D. & O. at 9; Tr. 258.
68 Tr. 261.
69 Tr. 262.
70 CX 9 at 1.
71 Id.
72 Id.
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Complainant spoke to Derek Douglas at MNE, he walked Douglas through his calculations on the VOCs and explained why he believed the plants were operating well above allowable emission levels. 73 After their conversation, Complainant did
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not hear back from Douglas on this topic. 74 As with the Makor permit, this issue
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resurfaced when Kelly Gregory travelled to MNE headquarters and mentioned it to Lankford.
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Complainant’s Relationship with Coady
Throughout Complainant’s employment with Respondent, there was a degree
of tension between Complainant and Coady. Although Complainant’s outspokenness regarding the Makor permit and the VOC calculations explains some of this friction, the record is clear that the two executives butted heads on a variety of topics unrelated to Complainant’s protected activity. Complainant testified that his disagreements with Coady, other than those relating to environmental compliance, included:• The timing and rollout of the company’s new DreamCraft line of cabinets;
• Coady’s demeanor and Coady’s decisions related to equipment investment;
• How to handle freight in the warranty budget; and
• Coady’s practice of providing floor workers with contradictory or confusing
directions. 75
74FAs the ALJ noted, this testimony was consistent with the June 28, 2018
email in which Coady, after identifying the environmental compliance issues, also identified (i) staffing decisions, (ii) purchasing decisions, (iii) communications given to shop floor workers; (iv) a lack of orders; and (v) the overextension of operations teams resources as sources of workplace stress for him. 76 Coady’s testimony, too,
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indicates that there was disagreement between Coady and Complainant on issues such as purchasing decisions, hiring decisions, and the decision to launch the DreamCraft furniture line. 7776F
In March of 2019, Coady provided Complainant with his first and only
performance review. The performance review covered 2018 and gave Complainant a 6 out of 10 as his overall rating. This overall score belied both Complainant’s underperformance during the first part of 2018 and the improvement that Complainant exhibited in the second half of the year. Multiple sections of the
73 Tr. 279.
74 Id.
75 D. & O. at 17.
76 CX 9 at 1-2.
77 Tr. 46.
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performance review, including “Functional Knowledge and Skills,” “Building Trust,” and “Collaboration” emphasized that Complainant had a disappointing first half of the year and a better second half. 78 Coady’s final comments in the rating section
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further emphasized this point. Coady wrote:
Jeff, this was a year of 2 segments. Segment 1 was very
disappointing. Its (sic) central theme was your way or no
way. This drove dissension across the team; polarized
people into varying camps and put you at odds with senior
management and the Board. . . . Segment 2, after our final
talk, was a strong self recalibration. You committed to
rebuilding trust at the senior level and addressing divides
in the business. I have seen good progress made in this
regard but it’s a long road to rebuild.[ 79]
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Although the performance review itself does not specify what behaviors
Complainant changed or which disagreements Complainant learned to keep quiet about between the first and second half of 2018, Complainant testified that “the only thing [he] changed” from the first half of the year to the second half was becoming “much more careful” about what he said relating to the Makor permit and other environmental compliance issues. 80 Complainant also testified that, in
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contrast to his change in approach when it came to the environmental issues, he continued to bring up his concerns about the DreamCraft line, his concerns about Coady’s response to a ransomware attack, and other disagreements. 81 One incident
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from the second part of 2018 that stands out occurred toward the end of the year when Coady unveiled the DreamCraft furniture line to a team of sales people. The unveiling did not go well and afterwards, Coady went to Complainant’s office and began verbally attacking him, at one point getting inches from his face. 82 81F
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Complainant’s Termination
On March 13, 2020, the week after the board meeting during which
Complainant heard Coady talking to Murphy about the Makor permit application,
78 CX 18 at 1-2. The comments in these sections included: “1st half was very disappointing … [y]ou made a commitment to me in July that I accepted, I want to see the current path continue;” “1st half of year you had a lot of missed opportunity to be a valued resourced to the team;” and “Team is on a nice pace right now . . . [e]arly direct style was heavily biased to your way and your team.” 79 Id. at 3. 80 Tr. 293. 81 Tr. 293-94. 82 D. & O. at 11; Tr. 303-04. 13
Complainant’s wife traveled—without Complainant’s knowledge or approval—to MNE’s headquarters in Oklahoma. 83 When she arrived at MNE’s offices, Kelly
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Gregory requested to meet with HR Director Lankford the following day. During this meeting, Kelly Gregory shared a number of grievances she had with Coady and Rodriguez. These complaints related to Coady’s handling of a ransomware attack, Coady’s decision not to invest in equipment upgrades, Rodriguez’s lack of qualifications, Coady’s hiring decisions, and the calculation of warranty revenue. 84
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Specifically, Kelly Gregory alleged that Coady may have been overreporting warranty revenue by as much as $1 million. 85 Kelly Gregory also talked to Lankford
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about Coady and Rodriguez’s handling of the Makor permit and the VOC emissions calculation. Kelly Gregory told Lankford that the exchange between Coady and Murphy at the March 2020 board meeting—specifically her husband’s distress over the exchange—was “what got [her] to the point [of] just showing up” at MNE’s headquarters. 86
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Six days later, Coady informed Complainant that he was suspended
indefinitely, effective immediately. Coady told Complainant that the suspension was for “failure to protect and support privileged and confidential meeting contained in a closed door board meeting . . . in violation of [his] signed employment contract.” 87 On March 31, 2020, Respondent terminated Complainant’s
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employment. In a letter to Complainant, Respondent stated that the decision to terminate Complainant was “based on your unauthorized disclosure of confidential Company information to your wife, Kelly Gregory, and your ongoing lack of support for Nation’s management and the direction of Nation’s business operations.” 8887F
On April 22, 2020, Complainant filed a complaint with the Occupational
Safety and Health Administration (OSHA) alleging that he was retaliated against in violation of the CAA. On February 10, 2021, OSHA dismissed the complaint. Complainant timely objected and requested a hearing before the Department of Labor’s Office of Administrative Law Judges (OALJ). Respondent filed a Motion for Summary Decision, arguing that (1) neither Kelly Gregory’s independent communications nor Complainants internal complaints could constitute protected activity under the CAA; (2) there was no genuine issue of material fact as to whether Complainant’s communications played any role in the decision to
83 D. & O. at 4.
84 D. & O. at 19; RX 10.
85 D. & O. at 18; RX 10.
86 RX 10 at 11 (Transcript of Conversation Between Kelly Gregory and Gena Lankford, dated March 14, 2020). 87 Ex. K to Resp. Mot. for Summ. Decision at 2; D. & O. at 4. 88 CX 12 at 1. 14
terminate him; and (3) there was no genuine issue of material fact as to whether Respondent would have taken the same adverse action even in the absence of Complainant’s protected activity. 8988F
The ALJ granted, in part, the Motion for Summary Decision, dismissing the
complaint insofar “as it relates to any alleged protected activity by Complainant’s spouse.” 90 The ALJ rejected Respondent’s argument regarding internal
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communications and the lack of genuine issues of material fact. Subsequently, the ALJ held a two-day hearing and issued a decision finding that Complainant had established that Respondent violated the CAA’s employee protection provisions by proving that protected activity was a motivating factor in Respondent’s decision to terminate Complainant’s employment, but Respondent had proven its affirmative defense that it would have taken the same adverse action in the absence of Complainant’s protected activity. 91 Complainant timely appealed the ALJ’s decision
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to the Board.
On appeal, Complainant argues that the ALJ erred when he found that
Respondent satisfied its burden of proving, by a preponderance of the evidence, that Respondent would have taken the same adverse action even in the absence of Complainant’s protected activity. 92 We agree.
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Respondent did not file a cross-appeal but nonetheless argues that the ALJ
erred when he held that Complainant’s internal complaints constitute protected activity under the CAA. 93 We disagree.
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89 Resp. Mot. for Summ. Decision.
90 Order on Respondent’s Motion for Summar Decision and Complainant’s Motion to Strike at 6, Gregory v. Nations Cabinetry, LLC, ALJ No. 2021-CAA-00001 (ALJ Nov. 8, 2021). 91 D. & O. at 20-21. 92 Comp. Br at 21. 93 Ordinarily, the Board adheres to the principle that a “party who neglects to file a cross appeal may not use his opponent’s appeal as a vehicle for attacking a final judgment in an effort to diminish the appealing party’s rights thereunder.” Booker v. Exelon Generation Co., LLC, ARB No. 2022-0049, ALJ No., 2016-ERA-00012, slip. op at 18-19 n.134 (ARB Sept. 21, 2023). However, in light of the legal question raised concerning the scope of protected activity under the CAA, the Board has proceeded to address the issue. See Booker, ARB No. 2022-0049, slip. op at 18-19 n.134 (addressing legal issue that a party raised without filing a cross-appeal); see also Avlon v. Am. Express Co., ARB No. 2009-0089, ALJ No. 2008-SOX-00051, slip op. at 5 (ARB Sept. 14, 2011) (Order Denying Reconsideration) (“While issues . . . may be considered waived, courts can exercise discretion to ‘consider waived arguments’ when it is ‘necessary . . . or where the argument presents a question of law . . . .’”) (citations omitted). 15
JURISDICTION AND STANDARD OF REVIEW
The Secretary of Labor has delegated authority to the Board to hear appeals
from ALJ decisions and to issue agency decisions in cases arising under the CAA. 94 93F
In CAA cases, the Board reviews questions of law presented on appeal de novo and reviews the ALJ’s factual findings under a substantial evidence standard. 95 94F
Substantial evidence is “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” 96 95F
DISCUSSION
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Clean Air Act Legal Standards
Under the CAA’s employee protection provisions, an employer may not
“discharge any employee or otherwise discriminate against any employee with respect to his compensation, terms, conditions, or privileges of employment because the employee” engaged in protected activity. 97 To prevail in a retaliation case under
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the CAA, a complainant must prove by a preponderance of the evidence that they engaged in protected activity and that the protected activity was a motivating factor in the adverse employment action taken against them. 98 If a complainant meets
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this burden of proof, the respondent may avoid liability if it proves by a preponderance of the evidence that it would have taken the same adverse action in the absence of the complainant’s protected activity. 99 98F
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Complainant’s Protected Activity
On appeal, Respondent argues that Complainant’s alleged protected activity
is best characterized as “internal complaints” and that such complaints do not constitute protected activity under the CAA. 100 Respondent raised the same
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94 Secretary’s Order No. 01-2020 (Delegation of Authority and Assignment of Responsibility to the Administrative Review Board), 85 Fed. Reg. 13,186 (Mar. 6, 2020). 95 Fagan v. Dep’t of the Navy, ARB No. 2023-0006, ALJ No. 2021-CER-00001, slip op. at 6 (ARB Feb. 28, 2024); 29 C.F.R. § 24.110(b) (“The ARB will review the factual findings of the ALJ under the substantial evidence standard.”). 96 Jones v. Exclusive Jets, LLC, ARB No. 2023-0034, ALJ No. 2022-AIR-00003, slip op. at 9 (ARB Dec. 31, 2024) (quoting Mazenko v. Pegasus Aircraft Mgmt., ARB No. 2021-0032, ALJ No. 2019-AIR-00001, slip op. at 10 (ARB June 18, 2024) (quoting Universal Camera Corp. v. NLRB, 340 U.S. 474, 477 (1951))). 97 42 U.S.C. § 7622(a). 98 29 C.F.R. § 24.109(b)(2). 99 Id. 100 Respondent’s Brief (Resp. Br.) at 6. 16
argument in its motion to dismiss filed below. Respondent argued that “under the caselaw of the Fifth Circuit, the statutory language of the Clean Air Act still excludes internal complaints from the scope of protected activity.” 101 In his Order
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on Respondent’s Motion for Summary Decision and Complainant’s Motion to Strike (Order on Summary Decision), the ALJ rejected this argument, noting that the Secretary of Labor and the Administrative Review Board have “consistently issued decisions recognizing internal complaints as protected activity.” 102 The ALJ further
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noted that this view is the one that Circuit Courts have “almost unanimously” adopted. 103
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Respondent now asks us to find that the ALJ erred on this issue and, as a
result, Complainant did not engage in protected activity and cannot prove a prima facie case of unlawful retaliation. As this is a pure question of law, we review the ALJ’s decision de novo.
The statutory text of the Clean Air Act makes it unlawful to retaliate against
an employee because the employee has:
(1) commenced, caused to be commenced, or is about to
commence or cause to be commenced a proceeding under
this chapter or a proceeding for the administration or
enforcement of any requirement imposed under this
chapter or under any applicable implementation plan,
(2) testified or is about to testify in any such
proceeding, or
(3) assisted or participated or is about to assist or
participate in any manner in such a proceeding or in any
other action to carry out the purposes of this chapter.[ 104] 103F
Neither the statute nor its implementing regulations define “proceeding” or “any other action to carry out the purposes of this chapter.” Nonetheless, the Secretary of Labor, the Administrative Review Board, and the federal courts have all interpreted these terms broadly such that they cover intracorporate or other “internal”
101 Resp. Mot. for Summ. Decision. at 2.
102 Order on Respondent’s Motion for Summary Decision and Complainant’s Motion to Strike at 6, Gregory v. Nations Cabinetry, LLC, ALJ No. 2021-CAA-00001 (ALJ Nov. 8, 2021). 103 Id. 104 42 U.S.C. § 7622(a); see also 29 C.F.R. § 24.102(b). 17
complaints relating to public health or the environment. 105 We have recognized that
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“proceeding” “encompasses all phases of a proceeding that relate to public health or the environment, including the initial statement of the employee that points out a violation, whether or not it generates a formal or informal ‘proceeding’.” 106 105F
Federal courts have taken the same view as the Secretary and the
Administrative Review Board. In one decision analyzing identical language in the Clean Water Act, the Third Circuit recognized that the Secretary’s interpretation of “proceeding” to cover intracorporate complaints “gives effect to the intent of Congress.” 107 In another decision involving then-identical 108 language from the
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Energy Reorganization Act (ERA), the Eleventh Circuit observed that, other than the Fifth Circuit, every circuit to address the scope of protected activity under the environmental statutes “has agreed with the Secretary’s interpretation that . . . when an employee makes informal complaints, such acts constitute protected activity.” 109
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In support of its claim that internal complaints are not protected under Fifth
Circuit case law, Respondent cites a single decision: Macktal v. U.S. Department. of Labor, an ERA case decided in 1999. 110 The Fifth Circuit’s decision in Macktal was
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based on Brown & Root v. Donovan, an earlier decision in which the Fifth Circuit held that the ERA as then written did not protect purely internal reports. 111 110F
Respondent’s reliance on Macktal and Brown & Root is misplaced. We have
105 See generally Iwaseczko v. Teton Cnty. Weed & Pest Control Dist., ARB No. 2022- 0059, ALJ Nos. 2018-ACA-00001, 2019-ACA-00002, slip op. at 19-22 (ARB Aug. 14, 2025) (discussing how the concept of a “proceeding” in whistleblower protection statutes has evolved over time). 106 Sasse v. Off. of the U.S. Att’y, U.S. Dep’t of Just., ARB No. 2002-00077, ALJ No. 1998-CAA-0007, slip op. at 11 (ARB Jan. 30, 2004) (citation omitted). 107 Passaic Valley Sewerage Comm’rs v. U.S. Dep’t of Lab., 992 F.2d 474, 480 (3d Cir. 1993). 108 In 1992, Congress passed the Energy Policy Act, which amended the ERA to clarify that it protects whistleblowers who make internal complaints. See Stone & Webster Eng’g Corp. v. Herman, 115 F.3d 1568, 1576 (11th Cir.1997) (“The legislative history of the 1992 Energy Policy Act, too, makes clear that Congress intended the amendments to codify what it thought the law to be already. Congress sought “to explicitly provide whistleblower protection for nuclear industry employees [who] (1) notify their employer of an alleged violation rather than a federal regulator.””). 109 Bechtel Const. Co. v. Sec’y of Lab., 50 F.3d 926, 931 (11th Cir. 1995). 110 Resp. Br. at 14-15 (citing Macktal v. U.S. Dep’t of Lab., 171 F.3d 323 (5th Cir. 1999)). 111 Brown & Root, Inc. v. Donovan, 747 F.2d 1029, 1035 (5th Cir. 1984) (“The structure of the ERA indicates that section 5851 is designed to protect “whistle blowers” who provide information to governmental entities, not to the employer corporation.”). 18
previously recognized that “Brown & Root is applicable only to the ERA and did not purport to interpret” the Clean Air Act or the other environmental whistleblower laws under which the Board issues final decisions. 112 Additionally, after Brown &
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Root was decided, Congress passed the 1992 Energy Policy Act, which amended the ERA to explicitly cover intracorporate complaints. The Fifth Circuit has acknowledged that, by passing this amendment, “Congress clarified by statute that Brown & Root was incorrect in holding that complaints to employers were not protected under 42 U.S.C. § 5851.” 113 Other circuits have also recognized that the
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legislative history of the 1992 Energy Policy Act “makes clear that Congress intended the amendments to codify what it thought the law to be already.” 114 113F
Put simply, the Fifth Circuit’s Brown & Root line of cases neither applies to
the Clean Air Act, nor does it remain good law following Congress’ 1992 amendments to the ERA. Respondents do not cite, nor have we found, any more recent decision in which the Fifth Circuit adhered to its previous view regarding the scope of protected activity under either the ERA or the CAA. When Complainant repeatedly raised concerns to Rodriguez, Coady, and Douglas about the company operating the Makor sprayer without the required permit and the miscalculation of VOC emissions, his actions fell squarely within the scope of protected activity under the CAA.
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Respondent’s Affirmative Defense
The central issue on appeal is whether substantial evidence supports the
ALJ’s finding that Respondent would have taken the same adverse action against Complainant even in the absence of his protected activity. 115 In his decision, the
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112 Willy v. Coastal Corp., ALJ No. 1985-CAA00001, slip op. at 7, 1994 WL 897203 (Sec’y June 1, 1994). 113 Willy v. Admin. Rev. Bd., 423 F.3d 483, 489 n.11 (5th Cir. 2005); see also Stone & Webster Eng’g Corp., 115 F.3d at 1576 (“Congress sought ‘to explicitly provide whistleblower protection for nuclear industry employees [who] (1) notify their employer of an alleged violation rather than a federal regulator.’”) (quoting H.R. No. 102–474(VIII), at 78, reprinted in 1992 U.S.C.C.A.N.1953, 2282, 2296). 114 Stone & Webster Eng’g Corp., 115 F.3d at 1576 (“The legislative history of the 1992 Energy Policy Act, too, makes clear that Congress intended the amendments to codify what it thought the law to be already.”). 115 See 29 C.F.R. § 24.109(b)(2). In his discussion of Respondent’s affirmative defense, the ALJ correctly stated the required legal showing that a respondent must make: to prove by a preponderance of the evidence that the respondent would have taken the same adverse action in the absence of the complainant’s protected activity. Although we have frequently referred to this as a “same action” defense, the ALJ refers to this as an “inevitable adverse action” defense. We point this out because there are circumstances where the inquiry into whether an adverse action was inevitable and the inquiry into whether a respondent would have taken the adverse action in the absence of protected activity are not identical. 19
ALJ considered Respondent’s various explanations of why it terminated Complainant, all of which Respondent argued would have led them to terminate Complainant even in the absence of his protected activity. The ALJ concluded that three of the reasons proffered by Respondent were not credible. 116 Specifically, the
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ALJ rejected Respondent’s arguments that it would have terminated Complainant because of (i) a March 2020 incident in which he used the word “crap” in an office email; (ii) an April 2018 incident in which Complainant either tapped or kicked another employee from behind; and (iii) Complainant’s regular disclosure of confidential information to his wife. 117 Nonetheless, the ALJ concluded that a
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fourth explanation proffered by Respondent—that Complainant failed to support Coady and respect his authority as the company’s final decision maker—was corroborated by the evidence and sufficient for Respondent to carry its burden of proving an affirmative defense. 118 We review this finding under a substantial
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evidence standard.
As the Supreme Court has stated, “[s]ubstantial evidence is more than a
mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” 119 Under this standard, the ”threshold for
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such evidentiary sufficiency is not high.” 120 Additionally, when reviewing decisions
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under a substantial evidence standard, the Board is precluded from “deciding the facts anew, making credibility determinations, or re-weighing the evidence.” 121 120F
The Board is not, however, required to put on blinders and look only at the
evidence that supports the ALJ’s decision. As the Supreme Court has recognized, a determination as to whether a decision is supported by substantial evidence must “take into account whatever in the record fairly detracts from its weight.” 122 121F
We have also made clear that a “single piece of evidence will not satisfy the substantiality test if the [adjudicator] ignores, or fails to resolve, a conflict created
Nonetheless, reviewing the decision as a whole, we are satisfied that the ALJ applied the correct legal standard when analyzing Respondent’s same action affirmative defense. 116 D. & O. at 12-16. 117 Id. 118 Id. at 17-20. 119 Consol. Edison Co. of New York v. NLRB, 305 U.S. 197, 229 (1938). 120 Biestek v. Berryhill, 587 U.S. 97, 103 (2019). 121 Stone & Webster Const., Inc. v. U.S. Dep’t of Lab., 684 F.3d 1127, 1133 (11th Cir. 2012) (quoting Moore v. Barnhart, 405 F.3d 1208, 1211 (11th Cir. 2005)). 122 Bobreski v. J. Givoo Consultants, Inc., ARB No. 2009-0057, ALJ No. 2008-ERA- 00003, slip op. at 8-9 (ARB June 24, 2011) (quoting Universal Camera Corp., 340 U.S. at 488). 20
by countervailing evidence.” 123 Additionally, we have recognized that “evidence is
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not substantial if it is overwhelmed by other evidence or if it really constitutes mere conclusion.” 124 Lastly, although the threshold for evidentiary sufficiency under this
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standard of review is not high, a reviewing court need not have a “definite and firm conviction” that an error has been committed in order to reverse. 125 124F
In his analysis of Respondent’s affirmative defense, the ALJ made conclusory
statements without reference to any evidence that could support such conclusions, based his determination largely on two short answers provided during the hearing, and failed to consider overwhelming countervailing evidence. Accordingly, we find that the ALJ’s conclusion that “[h]ad Complainant never mentioned the Makor permit, but engaged in the remainder of his actions, the outcome would have been the same” is not supported by substantial evidence. 126 125F
A. The ALJ Failed to Consider Respondent’s Shifting Explanations for
Complainant’s Termination
As detailed in the ALJ’s decision, Respondent now offers four different
explanations as to why it decided to terminate Complainant. Not all of these reasons were provided at the outset, however. On March 20, 2020, when Coady called Complainant into his office and suspended him, Coady told Complainant that he was being suspended for failing to “protect and support privileged and confidential information” in violation of [his] signed employment contract. 127 126F
During this initial conversation, Coady provided no other justification for the suspension. About two weeks later, Respondent provided Complainant with a termination letter that reiterated that his termination was based on his unauthorized disclosure of confidential information and added a second reason: Complainant’s ongoing lack of support for the company’s management and the direction of its business operations. 128 Only a month letter, in a letter to the Texas
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Workforce Commission in response to Complainant’s application for unemployment benefits, additional justifications emerged. This letter, which was written by Rodriguez, mentioned the 2018 incident in which Complainant either kicked or tapped a coworker, Complainant’s more recent use of the word “crap” in an email
123 Bobreski, ARB No. 2009-0057, slip op at 9 (quoting Dorf v. Bowen, 794 F.2d 896, 901 (3d Cir. 1986)). 124 Bobreski, ARB No. 2009-0057, slip op. at 8 (quoting Dalton v. U.S. Dep’t of Lab., 58 F. App’x 442, 445 (10th Cir. 2003)). 125 See Dickinson v. Zurko, 527 U.S. 150, 162 (1999) (contrasting the substantial evidence standard with the clearly erroneous standard of review). 126 D. & O. at 20. 127 Ex. K to Resp. Mot. for Summ. Decision. 128 CX 12 at 1. 21
exchange, the accusations Kelly Gregory made to Lankford, and Complainant’s “proclivity to disclose [the] Company’s confidential and propriety information.” 129 128F
The letter concluded that Complainant’s termination was due to his “negligent disclosure and release of confidential business information, mismanagement of his position, false allegations of fraud, and past misconduct and transgressions.” 130 The 129F
letter made absolutely no mention of Complainant’s alleged failure to support Coady. Although not a record produced by the Company, OSHA conducted an investigation of Complainant’s claim and determined that “Respondent’s decision to terminate Complainant’s employment was because Complainant improperly disclosed confidential business information to his wife.” 131
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In its post-hearing brief, Respondent cited each of the foregoing reasons as
justifications for why it terminated Complainant (and as reasons why it would have terminated Complainant even in the absence of his protected activity). 132131F
Respondent’s focus, however, was on Complainant’s purported breaches of confidentiality which it described as “wide-ranging” and “most egregious[].” 133 132F
The ALJ rejected the first three proferred reasons (the tap/kick, the cursing
incident, and the breaches of confidentiality) as wholly lacking in credibility. 134 133F
We give ALJ credibility determinations “great deference” and rely on them unless they are “inherently incredible or patently unreasonable.” 135 Here, the ALJ found
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that “[n]either Coady nor Rodriguez were particularly credible in their testimony about” cursing in the workplace. 136 Similarly, when considering testimony from
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both Rodriguez and the employee who was allegedly kicked, the ALJ found that “Rodriguez’s testimony is inconsistent” with that of the employee who was kicked and, to the extent the two accounts of the tap/kick differed, the other witness’ account was more credible. 137 Most damningly, the ALJ found that it “appears
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129 Ex. D-7 To Comp. Response to Resp. Mot. for Summ. Decision. 130 Id. 131 Sec’y’s Findings, Case #6-1550-20-062, Occupational Safety and Health Admin. (Oct. 18, 2021). 132 Resp. Post-Hearing Br. at 13-19. 133 Id. at 13, 19; Resp. Mot. for Summ. Decision at 12. 134 D. & O. at 13, 15, 16. 135 See, e.g., Cottier v. Bayou Concrete Pumping, LLC, ARB No. 2020-0069, ALJ No. 2019-STA-00046, slip op. at 15 (ARB Jan. 18, 2022); Kanj v. Viejas Band of Kumeyaay Indians, ARB No. 2012-0002, ALJ No. 2006-WPC-00001, slip op. at 6 (ARB Aug. 29, 2012) (quoting Caldwell v. EG&G Def. Materials, Inc., ARB No. 2005-0101, ALJ No. 2003-SDW- 00001, slip op. at 12 (ARB Oct. 31, 2008)). 136 D. & O. at 13. 137 Id. at 14. 22
much more likely that” that both the kicking incident and the reprimand for using the word “crap” were “opportunity[ies] to build a case against Complainant.” 138 137F
Although the ALJ did not find Coady or Rodriguez’s testimony about confidentiality issues to be particularly incredible, he noted that both Coady and Rodriguez testified that during Complainant’s employment the Company did not have a formal policy about confidential information. 139 The ALJ further determined that Coady
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understood that Complainant and his wife discussed business-sensitive information and Coady even had conversations with Complainant about matters involving confidential information “with the knowledge, if not the intent, that Kelly Gregory was present.” 140
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Despite finding that multiple explanations put forward by Respondent were
incredible, the ALJ made no mention of how Respondent’s proffered explanations shifted over time. In the context of determining causation, we have held that “shifting explanations for an employer’s adverse action often indicate that its asserted legitimate reasons are pretext. 141 We have made the same observation
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when it comes to an employer’s same action defense. 142 Courts have similarly
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recognized that “the fact that an employer offers shifting explanations for its challenged personnel action can itself serve to demonstrate pretext.” 143 In one case
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that was affirmed by the Fifth Circuit, we affirmed an ALJ decision finding pretext when an employer gave shifting reasons for its termination of a complainant starting with its first filing with the Texas Workforce Commission just a few weeks after the employee’s termination. 144143F
When Coady, acting at the behest of MNE CEO Peter Murphy, suspended
Complainant, Coady stated that the suspension (which would quickly segue into a termination) was being imposed because Complainant failed to protect confidential information. Before long, that straightforward explanation morphed into a laundry list of different justifications. One new justification was added when Respondent provided Complainant with a termination letter. A few more were unveiled when
138 Id. at 14, 15.
139 Id. at 16.
140 Id.
141 Clemmons v. Ameristar Airways, Inc., ARB No. 2008-0067, ALJ No. 2004-AIR-00011, slip op. at 9 (ARB May 26, 2010). 142 Douglas v. Skywest Airlines, Inc., ARB Nos. 2008-0070, 2008-0074, ALJ No. 2006- AIR-00014, slip op. at 14-16 (ARB Sept. 30, 2009) (observing that “an employer’s shifting explanations for its adverse action may be considered evidence of pretext . . . .”). 143 Vieques Air Link, Inc. v. U.S. Dep’t of Lab., 437 F.3d 102, 110 (1st Cir. 2006). 144 Clemmons, ARB No. 2008-0067, slip op. at 8-9, aff’d sub nom Ameristar Airways, Inc. v. Admin. Rev. Bd., U.S. Dep’t of Lab., 650 F.3d 562, 569 (5th Cir. 2011). 23
Respondent was communicating with the Texas Workforce Commission. And when litigation began, Respondent put forth the full list of justifications, claiming that everything from a two-year old horseplay incident to Kelly Gregory’s surreptitious trip to corporate headquarters were reasons why Respondent terminated Complainant’s employment.
The ALJ, however, makes no mention of how these justifications changed
over time, not even to say that he found Respondent’s shifting explanations to be justified by something other than Respondent throwing everything at the wall in the hope that at least one non-retaliatory explanation would stick. This was a mistake. Respondent’s shifting explanations are strong evidence of pretext and should have been considered by the ALJ. The ALJ’s failure to address the evolving nature of Respondent’s rationale for terminating Complainant is particularly damning in light of the ALJ finding that all but one of the reasons presented during litigation were not credible. Although the dissent points out that the most egregious examples of shifting reasons tend to be when an “employer’s subsequent reasons plainly contradict prior reasons,” 145 our precedent is clear that continuously adding
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new justifications for an adverse action, even if an employer does not abandon any of its earlier justifications, can be evidence of pretext. 146 Respondent’s reasons,
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although not mutually exclusive, relate to unconnected incidents that occurred almost two years apart. In our view, this represents a high degree of inconsistency, even if Respondent has not abandoned any of its prior justifications. 147 146F
It is notable that the sole reason the ALJ found to be credible—
Complainant’s failure to support management—was conspicuously missing from much of the previous documentation of Complainant’s termination. Although it was included in the termination letter, it was not given as a reason when Coady suspended Complainant nor was it mentioned in the letter reasons Respondent
145 Infra, at 58.
146 See, e.g. Clemmons, ARB No. 2008-0067, slip op. at 8-9 (finding pretext where an employer provided a terminated employee with one reason, provided an additional reason during the OSHA investigation, and provided two additional reasons in an appeal to the TWC, all within two months of terminating the employee). 147 Respondent’s different explanations (Complainant’s use of a swear word, the kicking incident, breaches of confidentiality, and failure to support leadership) are not explanations “whose only difference lay in their level of generality,” which the Fifth Circuit has not generally considered to be inconsistent. Minnis v. Bd. of Sup’rs of La. State Univ. & Agr. & Mech. Coll., 620 F. App’x 215, 220 (5th Cir. 2015) (citing Hamilton v. AVPM Corp., 593 F. App’x 314, 322 (5th Cir. 2014)). 24
provided to the Texas Workforce Commission. This partial absence from previous documentation is additional evidence of pretext that the ALJ failed to consider. 148 147F
B. Complainant’s Alleged Failure to Support CEO Coady is Part and Parcel
of Complainant’s Protected Activity
Assuming, arguendo, that Respondent’s claim that it terminated
Complainant because of his failure to support Coady is not pretextual, that would still be insufficient for Respondent to prevail on its same action defense. This is because the central issues on which Complainant failed to support Coady were the environmental compliance concerns, i.e., Complainant’s protected activity. Our precedent makes clear that “[w]hen an employer applies an otherwise legitimate criterion in such a way that it interferes with the exercise of specific whistleblower rights, . . . the employer acts in violation of the employee protection provision of the corresponding statute.” 149 The same applies to an employer’s
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affirmative defense. The record in this case demonstrates that although Complainant and Coady disagreed on a wide range of issues, it was Complainant repeatedly bringing up his concerns about environmental compliance issues that was seen by Respondent as the most serious instance of failing to support Coady.
The strongest evidence of this comes from Complainant’s performance review.
As previously discussed, the performance review was prepared by Coady and describes a year in two parts. The first part of the year was “disappointing” and marked by “dissension,” with Complainant insisting on his way or no way. 150 149F
The second half of the year, by contrast, was a “strong self recalibration” during which Complainant “committed to rebuilding trust at the senior level and addressing the divides in the business.” 151 In the evaluation, Coady was clear that
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he had “seen good progress made in this regard.” 152 So what changed from the first
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half of the year to the second half of the year? Complainant testified that “the only thing [he] changed” from the first part of the year to the second part was becoming “much more careful” about what he said relating to the Makor permit and other environmental compliance issues. 153 Respondent does not challenge that the middle
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of 2018 is when Complainant’s protected activity ceased: Coady testified that
148 See Bobreski, ARB No. 2009-0057, slip op at 19 (stating that pretext can be shown by “demonstrating that the proffered reasons were conspicuously missing from previous documentation.”). 149 Timmons v. Franklin Elec. Coop., ARB No. 1997-0141, ALJ No. 1997-SWD-00002, slip op. at 7 (Sec’y Dec. 1, 1998). 150 CX 18 at 3. 151 Id. 152 Id. 153 Tr. 293. 25
August 2018 is the last time he had any conversation with Complainant regarding environmental compliance matters. 154 Additionally, in both its pre- and post-
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hearing briefing before the ALJ, as well as its brief filed with the Board, Respondent goes to lengths to emphasize that Complainant did not continue to discuss environmental compliance with Coady or other members of management beyond August 2018. Just as importantly, Respondent does not contest that Complainant continued to butt heads with Coady on other issues (most notably the DreamCraft cabinet line) after August 2018.
Despite this, the ALJ summarily rejects the view that Complainant backed
off on the permit and VOC issues but continued to clash with Coady on other topics, stating that it is “unsupported in the record.” 155 We cannot agree. The ALJ cites
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Complainant’s testimony that, following Coady’s threat to terminate him, he “was much more careful what I said and did regarding those circumstances, those things, the permits and different things like that and lo and behold, it actually improved my evaluation.” 156 This response came immediately prior to Complainant stating that
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the environmental permits were “the only thing [he] changed.” 157 In context, the
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most natural reading of “and different things like that” is as a reference to the VOC emission calculations and ancillary environmental issues relating to the air permits.
The ALJ’s conclusion that it is “more likely that Complainant tried to hold
his tongue, not just as to the permit but as to all areas” is unsupported by the evidence and directly contradicted by the very next paragraph of his decision. As the ALJ notes, both Complainant and Coady testified at length about an incident in which Coady “verbally attacked” Complainant after a presentation demonstrating the DreamCraft line to the sales team that went poorly. 158 In Complainant’s
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recounting of this incident, after this presentation, “Coady rushed into his office and got within six inches of his face and threatened to fire [Complainant] if they couldn’t get it done right.” 159 What is notable about this incident is that occurred not during
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Complainant’s troublesome first segment of 2018 but at the end of 2018, during the period Coady described as a “strong self recalibration.” 160 The ALJ made no effort to
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154 Tr. 78.
155 D. & O. at 10.
156 Tr. 293.
157 Id.
158 D. & O. at 9.
159 Id.
160 The exact date of the DreamCraft unveiling, after which Coady verbally attached Complainant, is not entirely clear from the record. Complainant testified that it was “towards the end of” 2018. Tr. 303. Complainant also stated that it was “the latter part of 26
address, let alone resolve, the contradiction between a performance review that praised Complainant’s performance during the second part of 2018 with uncontroverted evidence that Complainant and Coady continued to disagree—in some instances vehemently—on matters unrelated to the protected activity in the second segment of 2018 and beyond.
The dissent claims that the record does not show hostility from Coady in
response to Complainant expressing his concerns about the Makor permit. 161 160F
We disagree. The heated exchange between Coady and Complainant following the latter’s call to Douglas to discuss his environmental concerns is but one example of Complainant’s protected activity resulting in hostility. And although Respondent alleges that the content of that call to Douglas covered more than just the environment compliance issues, Complainant offered uncontroverted testimony that during the start of his employment he would talk to Douglas “at least once a week, if not multiple times a week[.]” 162 This accords with Complainant’s job description
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that listed keeping the board and the corporate parent appraised of the status of all operational issues as one of his responsibilities. Neither party has suggested that these earlier calls provoked the same negative reaction from Coady. These regular calls between Complainant and Douglas also cast doubt on the ALJ’s framing of the August 2018 call as Complainant going “over Coady’s head to complain to Douglas.” 163 Respondent is unable to explain what made the August 2018 call—
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during which Complainant brought up the Makor permit and VOC calculations— different from all the other calls that did not result in threats to terminate Complainant.
The dissent also argues that substantial evidence supports the claim that
Respondent and its senior management were diligently working toward getting the Makor permitted. 164 This argument misses the mark for two reasons. The first is
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that an “employer cannot ‘cure’ protected activity or erase that it occurred by admitting to wrongdoing, by apologizing, or by agreeing with the employee about a safety concern.” 165 Additionally, even if this claim is only intended to show that
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’18, maybe the beginning of ’19.” TR. 408. Regardless of the exact date, it is clear that the incident took place after Complainant’s “strong self recalibration.” 161 Infra, at 33 (“[W]hen Complainant brought concerns about Makor to Coady and Rodriguez, they accepted and appreciated his concerns[.]”). 162 Tr. 286. 163 D. & O. at 19. 164 Infra, at 34 (“The dialogue between Coady, Rodriguez, and Complainant in the second call demonstrates a degree of cooperation and urgency concerning getting the Makor permitted”). 165 Jones, ARB No. 2023-0035, slip op. at 14-15 (quoting Sewade v. Halo-Flight, Inc., ARB No. 2013-0098, ALJ No. 2013-AIR-00009, slip op. at 8 (ARB Feb. 13, 2015)). 27
Respondent and its management did not take issue with Complainant raising concerns about environmental permitting and thus discount Complainant’s protected activity as a source of friction between him and Coady, it misstates what exactly Coady and Complainant disagreed on when it came to the Makor permit. The disagreement relating to the permit did not stem exclusively (or even primarily) from the (in)sufficiency of Respondent’s efforts to get a new permit in place but from Respondent’s decision to unlawfully operate the Makor sprayer after the existing permit lapsed and before a new permit was obtained.
That Respondent’s decision to keep operating the Makor without a valid
permit was a major source of friction was first evident during the June 15, 2018 call between Complainant and Rodriguez when Complainant had to explain to Rodriguez that his concern was not whether he could practically run the Makor but whether he could legally run it. 166 Any doubt over the source of Complainant’s
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discontent should have been put to rest when Complainant emailed Coady five days after that call to say that he was “increasingly uncomfortable continuing to run [the Makor] the way we are without consent.” 167 And, returning once again to the June
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28, 2018 email, Complainant explained that one of his concerns was that the Makor sprayer was “[c]urrently running illegally[.]” 168 Even if we were to overlook the
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repeated deficiencies with Respondent’s subsequent permit applications and grant that the company was making a diligent and good-faith effort to obtain a new permit as expeditiously as possible, it is no mystery why these efforts did not redress Complainant’s unease. 169 Complainant was responsible for ensuring that
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operations were conducted in an ethical (and, by extension, lawful) manner and was uncomfortable with Respondent’s decision to continue operating the Makor sprayer without a permit. Although Respondent’s management may have wanted to, as Coady put it, “minimize any kind of time we’re noncompliant,” they were ultimately willing to illegally operate the Makor sprayer until a permit could be obtained and this was what caused tension between Complainant and management. Thus, although we agree with the dissent’s characterization that the “tone of Complainant’s communications had changed between June 15 and June 20, 2018,” we view this as evidence that Complainant’s primary concern was not simply that the Makor permit lapsed, but that Respondent choose to continue running the
166 Ex. F to Resp. Mot. for Summ. Decision at 29-30. 167 CX 11. 168 CX 9 at 1. 169 The 31 deficiencies that were identified by TCEQ in its July 31, 2018 letter concerning Respondent’s re-submitted permit application (many of which were carried over from previous submissions), coupled with the length of time it took for Respondent to properly complete the permit application, cast doubt on Respondent’s characterization that it was working diligently and expeditiously to get a permit in place either after the prior permit lapsed or after TCEQ voided the permit amendment application. 28
equipment without the legally required permit. 170 169F
The record, along with the testimony credited by the ALJ, paints a rather
clear picture: Complainant, after being threatened with termination in August 2018 for going over Coady’s head to report environmental compliance issues, held his tongue on those issues. He continued, however, to speak his mind when it came to product decisions and the variety of other issues over which he and Coady disagreed. As his end of year performance review shows, this was perfectly fine from Coady’s perspective. Dropping the Makor permit and VOC issues but continuing to clash over the DreamCraft line and issues like payroll and purchasing was sufficient for Coady to describe the second half of the year as a period during which Complainant committed to and made good progress in rebuilding trust and addressing divides. The only conclusion that can reasonably be drawn from this is that Complainant’s “ongoing lack of support for Nation’s management” was really an ongoing lack of support for Nation’s management’s approach to handling the illegally operating Makor sprayer and VOC calculations. The unlawful operation of the Makor sprayer and the potentially inaccurate VOC calculations were the issues that “put [Complainant] at odds with senior management and the Board” as Coady put it in Complainant’s performance review. And those were the issues that resurfaced during the board meeting and got Kelly Gregory “to the point of just showing up” at MNE’s headquarters. 171 170F
When an employer gives a reason for termination that is “reducible in
essence to the problem of inconvenience” caused by a complainant’s protected activity, it does not meet its burden of showing that it would have taken the same adverse action in the absence of the complainant’s protected activity. 172 Because
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Respondent’s assertion that it terminated Complainant over his failure to support management is really an assertion that it terminated Complainant over his failure to support management in its (mis)handling of the permitting issues, Respondent did not make the showing required to prevail on its same action defense.
C. The ALJ’s Finding that Complainant’s Lack of Support for Management
was a Result of His Desire to be CEO is Conclusory
Despite the significant evidence demonstrating that Complainant’s protected
activity was the primary source of friction between him and management, the ALJ reaches the conclusion that it was actually Complainant’s frustration over not being
170 Infra, at 37.
171 Ex. I. to Resp. Mot. for Summ. Decision.
172 Cf. Passaic Valley Sewerage Comm’rs, 992 F.2d at 481 (affirming a Board decision finding for a complainant where his alleged personality problem and deficiency of interpersonal skills was reducible in essence to the problem of the inconvenience caused by his pattern of complaints). 29
made CEO that produced the friction between him and Coady. 173 This is not
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supported by substantial evidence. In support of this view, the ALJ points to two brief excerpts from Complainant’s testimony. While being cross-examined, Complainant was asked about his role as COO:
Q) In fact, [you’re] the second highest ranking officer of the company, right?
A) Yes. Well, in title, yes.
This one-line answer was described by the ALJ as “among the most probative
evidence in the case” that “explains [Complainant] and his spouse’s actions.” 174 173F
Although it is reasonable to interpret this response as evidence that Complainant felt that he was being sidelined as the company’s COO, the ALJ provides no explanation of how it relates to Complainant’s alleged failure to support leadership. Afterall, the ALJ credited Ignacio Gonzales’ and Joshua Morones’ testimony that Complainant never voiced any resentment or disagreement on the shop floor. 175 174F
On top of this, the evidence indicates that Complainant’s view that he was being sidelined as COO is closely tied to his protected activity. Complainant’s responsibilities, as detailed in his employment forms, included ensuring that “business processes are performed with the highest degree of ethics and integrity.” 176 Complainant was also responsible providing “clear communication to
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Miami Nation Enterprises that ensure they are continually and accurately informed of the status of all operations” at the Company. 177 Complainant was doing exactly
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that when he reported serious environmental compliance violations first to his immediate supervisor and then to COO Douglas only to be threatened with termination and asked where his loyalties lie. Although this was not the only issue where Complainant felt his experience and views were being minimized, it is neither surprising nor particularly telling that a COO who was rebuked when carrying out essential compliance functions would feel like a COO in title only.
The ALJ also quoted another exchange from Complainant’s testimony, this
one regarding the DreamCraft line:
Q) It sounds like your interactions with Mr. Coady about this DreamCraft
product line were fairly contentious. Is that right?
A) Only because he made them that way.
173 D. & O. at 19-20.
174 Id. at 17.
175 Id. at 19.
176 RX 2 at 1.
177 Id.
30
For one thing, we note that this response does not relate to Complainant’s
supposed frustration over not being named CEO. Additionally, as the ALJ notes, Coady in his testimony identified Complainant as the one responsible for the friction between the two of them. 178 That the CEO and COO each blamed the other
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is hardly noteworthy. We cannot agree that Complainant blaming Coady for the disagreements between the two of them has any probative value as to Respondent’s affirmative defense. These two exchanges, when considered alongside all the other evidence in this case, do not rise to the level of “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” 179 178F
D. The ALJ Failed to Consider Significant Countervailing Evidence
As the Supreme Court has recognized, a reviewing tribunal’s determination
of whether evidence is substantial must “take into account whatever in the record fairly detracts from its weight.” 180 Because of this requirement, the Board has made
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clear that “the substantial evidence standard does not require us to affirm the ALJ's findings of fact merely because there is evidence in the record which would justify them, without taking into account other - contrary - evidence in the record.” 181 180F
The ALJ failed to consider the significant evidence that contradicts his findings. 182 181F
A review of the evidentiary record shows that the ALJ did not discuss or evaluate the following evidence in his D. & O.:
• Complainant’s job description, which included communicating with MNE to
keep the parent company accurately informed of the status of all operations
at Nations Cabinetry;
• Complainant regularly calling Douglas prior to the August 2018 call in which
environmental compliance issues were discussed;
178 D. & O. at 18; Tr. 73-74.
179 Consol. Edison Co. of New York, 305 U.S. at 229. 180 Bobreski, ARB No. 2009-0057, slip op. at 8-9 (quoting Universal Camera Corp., 340 U.S. at 488). 181 Poulter v. Cent. Cal Transp., LLC, ARB No. 2018-0056, ALJ No. 2017-STA-00017, slip op. at 12 (ARB Aug. 18, 2020) (quoting Dalton v. Copart, Inc., ARB No. 2001-0020, ALJ No. 1999-STA-00046, slip op. at 7 (ARB July 19, 2001)). 182 In a footnote, the ALJ states that “I have reviewed and considered all testimony and exhibits admitted into the record. Reviewing authorities should not infer from my specific citations to some portions of witness testimony and items of evidence that I did not consider those things not specifically mentioned or cited.” D. & O. at 2. A single footnote stating that evidence not mentioned or cited in the decision was nonetheless considered does not alter the substantial evidence standard under which we review findings of fact. 31
• The timing of Complainant’s disagreements with Coady over the DreamCraft
line and other issues, and how that timing fits with Complainant’s “strong
self recalibration;”
• Kelly Gregory’s explanation of why she travelled to MNE headquarters at the
time she did;
• The reasons for terminating Complainant that Respondent included in its
communications with the Texas Workforce Commission; and
• How Respondent’s explanation for why it terminated Complainant shifted
over time.
Our review of the record convinces us that the ALJ’s finding that Respondent
would have terminated Complainant even in the absence of his protected activity is not supported by substantial evidence. The ALJ failed to consider the shifting nature of Respondent’s explanations for terminating Complainant, all but one of which he found to be wholly pretextual. The ALJ further failed to consider how Complainant’s protected activity was the predominant source of the tension between Complainant and Coady. Finally, the ALJ’s finding that it was Complainant’s supposed desire to be CEO that caused tension that would later be characterized as a failure to support management is unsupported by the record when viewed as a whole.
CONCLUSION
Because the ALJ’s decision is not supported by substantial evidence, we
REVERSE the ALJ’s finding that Respondent established by a preponderance of the evidence that it would have taken the same adverse action in the absence of Complainant’s protected activity, and we REMAND this matter for the purpose of calculating damages.
SO ORDERED.
RANDEL K. JOHNSON
Chief Administrative Appeals Judge
ELLIOT M. KAPLAN
Administrative Appeals Judge
PHILIP G. KIKO
Administrative Appeals Judge
32
Judge Burrell, Concurring in Part and Dissenting in Part:
Respectfully, I concur in part and dissent in part from my colleagues.
With the majority, I would affirm the ALJ’s findings of protected activity and motivating factor as supported by substantial evidence. Parting from my colleagues’ order reversing and remanding for damages, I would also affirm the ALJ’s findings concerning Respondent’s same-action defense as supported by substantial evidence in the record.
In a matter decided after hearing, the Board’s job is not to reweigh evidence
or sit in the shoes of the ALJ as arbiter of fact. Under the Clean Air Act (CAA), the Board reviews an ALJ’s findings for substantial evidence. 183 As the United States
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Supreme Court has noted, “[t]he threshold for such evidentiary sufficiency is not high.” 184 Substantial evidence is “‘more than a mere scintilla.’ It means—and
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means only—‘such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.’” 185 Under the substantial evidence rule, a
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reviewing court does not rule as they would if they had been the fact-finder. Neither does the court decide that there is another finding contrary to the ALJ’s finding which is supported by substantial evidence. 186 The Board is not a super-personnel
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department weighing Respondent’s decision-making at various points and deciding whether some business decision was the fairest or most business savvy. 187 We 186F
simply review the ALJ’s findings and the record to determine whether those findings are supported by substantial evidence of the record as a whole.
As the majority states, the CAA outlines specific obligations for a successful
complainant to prove. To prevail, a complainant must show that protected activity was a motivating factor in the adverse action. 188 Even so, a respondent may avoid
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183 29 C.F.R. § 24.110(b). The ARB reviews an ALJ’s legal conclusions de novo. Saporito v. Progress Energy Serv. Co., ARB No. 2011-0040, ALJ No. 2011-ERA-00006, slip op. at 4 (ARB Nov. 17, 2011). 184 Biestek, 587 U.S. at 102-03. 185 Id. (citing and quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)). 186 See Henrich v. Ecolab, Inc., ARB No. 2005-0030, ALJ No. 2004-SOX-00051, slip op. at 7-8 (ARB June 29, 2006); Sharpe v. Supreme Auto Transp., ARB No. 2017-0077, ALJ No. 2016-STA-00073, slip op. at 5 (ARB Dec. 23, 2019). 187 See Gale v. Ocean Imaging & Ocean Res., Inc., ARB No. 1998-0143, ALJ No. 1997- ERA-00038, slip op. at 13 (ARB July 31, 2002); Jones v. U.S. Enrichment Corp., ARB Nos 2002-0093, 2003-0010, ALJ No. 2001-ERA-00021, slip op. at 17 (ARB Apr. 30, 2004). 188 29 C.F.R. § 24.109(b)(2). 33
relief if it can show by a preponderance of evidence that it would have taken the same adverse action in the absence of protected activity. 189 188F
There is no genuine dispute here that Complainant’s grievances to
management in 2018 about the Makor permit constitute protected activity. However, as the ALJ found, differences between Complainant and Respondent went well beyond Makor. Complainant was fired on March 31, 2020. The ALJ found that mixed motives were at issue and that Respondent had shown by a preponderance of the evidence that it would have fired Complainant even if he had not engaged in protected activity concerning the Makor. 190 Respondent considered Complainant’s
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conduct as a whole as not supporting senior leadership. 191 Certain events in 2020
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pushed that tension over the edge. Respondent had lost confidence in Complainant’s ability to be a functioning part of the team. For the reasons below, I would find substantial evidence supports the ALJ’s finding.
-
Respondent Was Working to Get the Makor Permitted Before and After
Complainant’s Employment with RespondentComplainant on appeal argues that Respondent’s warnings in 2018,
performance evaluation in 2019, and ultimate termination in 2020 for not supporting management should be construed as Complainant not supporting management (J.W. Coady and Oscar Rodriguez) in re addressing the Makor permit rather than not supporting management on matters unrelated to Makor. 192 191F
Respondent counters, among other arguments, that they did not retaliate against Complainant because of his Makor complaints. Rather, it was Complainant’s nonsupport on matters unrelated to Makor that resulted in his suspension and termination. 193 Respondent’s position is supported by the record. As the ALJ cited,
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when Complainant brought concerns about Makor to Coady and Rodriguez, they accepted and appreciated his concerns but explained that it was being handled by third-party consultants (Source Environmental) and Rodriguez as point man. 194 193F
Respondent further argues Complainant’s Makor complaints were “so remote in time” that there is a significant temporal gap between the protected activity in 2018
189 Id.; Martin v. Akzo Nobel Chem., Inc., ARB 2002-0031, ALJ No. 2001-CAA-00016, slip op. at 4 n.3 (ARB July 31, 2003). 190 D. & O. at 17-21. 191 Id. at 10-12, 17-21. 192 Complainant’s Brief (Comp. Br.) at 23-25, 28. 193 Resp. Br. at 9-11. 194 D. & O. at 7, 8-9; Tr. 50 (“we would do whatever it took to get the Makor compliant”), Tr. 53 (Oscar was point person on Makor), Tr. 65 (Oscar Rodriguez worked with Source Environmental on permit). 34
and Complainant’s termination in 2020. 195 Additionally, the record shows that
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Respondent had been in the process of obtaining a permit for Makor since 2017 before Complainant started working for Respondent. 196 This process was completed
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in 2021. 197
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A. June 15, 2018 Phone Calls between Complainant, Respondent, and Source
Environmental
The ALJ cites or references two June 15, 2018 recorded phone calls between
Complainant, Respondent, and Source Environmental wherein they discuss recent developments in the Makor permit and getting the necessary documentation for permitting. 198 Complainant suggests that during the second call, Coady showed a
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lack of concern for Makor compliance when he stated not using Makor would be a “showstopper.” 199 Reviewing cited portions of the transcript in full confirms
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management’s effort to obtain the permit. Management acknowledged that the Makor spray machine was not in compliance, and there was a small amount of remaining documentation needed to complete the submission. The dialogue between Coady, Rodriguez, and Complainant in the second call demonstrates a degree of cooperation and urgency concerning getting the Makor permitted. 200 Complainant
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and others were to get the data to Source Environmental and Rodriguez to file the necessary documents to resubmit material to the Texas Commission on Environmental Quality (TCEQ):
JW Coady:
Okay. So what are we saying? Tactically, we’ve been
running the Makor noncompliant.
195 Resp. Br. at 9-10; D. & O. at 7.
196 Resp. Br. at 9. TCEQ had issued a construction permit in October 2017 but this had lapsed on or about December 13, 2017. RX 11 (Nov. 30, 2017 letter from TCEQ indicating that it had received Respondent’s November 16, 2017 Permit Amendment Application, and it was under review, listing several deficiencies); Resp. Mot. for Summ. Decision, Ex. J (Dec. 13, 2017 letter from TCEQ). 197 Tr. 213. 198 D. & O. at 8. One June 15 recording between Complainant, Rodriguez, and Source Environmental was submitted to the ALJ at hearing. CX 15. A second June 15 recording between Complainant, Rodriguez, and Coady was submitted by Respondent as an exhibit to its motion for summary decision. Ex. F, of Resp. Mot. for Summ. Decision. Both parties acknowledged at hearing that Ex. F was part of the record and available for review. Tr. 273, 340-41. 199 Comp. Br. at 8, 12. 200 Ex. F to Resp. Mot. for Summ. Decision, at 21. 35
Jeffrey Gregory:
Yeah, it looks like this . . . From what they were
saying on the phone, this permit actually died on the
13th of December, and the timeframe between
December and . . .
Oscar Rodriguez:
June.
Jeffrey Gregory:
. . . and June was the timeframe to basically go back
and say, “Why did it die? What can we do to keep it
from dying”? And then the deadline in June was,
“We missed that. What do we do to keep it from
dying?” timeframe.
JW Coady:
So now we’re resubmitting.
Jeffrey Gregory:
Now we have to resubmit.
Oscar Rodriguez:
We’ve always been in the mode of resubmitting.
When the application was rejected from the state
initially, we started the process again to gather up
all of the data. We just happened to miss the June
13th deadline. The June 13the deadline, the
significance with that was reapplying with a fee of
$1,100. The fee-
JW Coady:
The $1,100 doesn’t bother me. Not running the
Makor, that bothers me. That’s a showstopper,
right? There’s the challenge. I just need to get all
this paperwork done, file whatever fee. I think if
there’s a way to expedite, pay more, I'm interested
in that. We need to get this thing moving and going,
minimize any kind of time we’re noncompliant.
We’ve got to get our heads around what does that
mean for continuing to serve our customers, keep the
business moving, which it’s disappointing to hear,
36
really what I'm hearing. We’ve got an issue now with
the Makor. And have had for a while, yes. All right.
JW Coady:
So job one, we’ve got to get after all this paperwork,
get it over to George [of Source Environmental], get
these drawings, get the resubmission going, ask him
about any kind of ability to expedite for extra money.
Sometimes states have that, sometimes they don’t.
Don’t know. It doesn’t hurt to ask. And see how fast
we can get this thing moving through the process.
I’ll be back in the office Monday morning, and we’ll
do a huddle and see where our heads are at, and
what’s our plan to finish going forward. We’ve got to
figure that one out. Right? Did I miss anything?
Oscar Rodriguez:
Nope. 201
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Coady, Rodriguez, and Complainant concluded this portion of the meeting with a game plan for getting the data together for resubmission through Source Environmental. The effort on June 15 from all involved seemed cordial. It was known that Makor was not compliant, but they were collecting and assembling data for the submission to TCEQ and discussing cost-effective alternatives to address the problem.
B. The Record Demonstrates Respondent’s Significant Efforts to Obtain the
Necessary Permit
Following the June 15 call, Respondent submitted a filing with TCEQ in late
June or early July (hereinafter June 30, 2018). 202 On July 13, 2018, TCEQ replied
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by letter to Rodriguez stating that they had identified deficiencies and asked for responses within ten days, July 23, 2018, or the application would be voided. 203
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Respondent submitted a response to the listed deficiencies but that, too, was rejected by TCEQ. On August 23, 2018, Respondent’s third-party contractor, Source Environmental, submitted a new permit amendment application.
201 Ex. F to Resp. Mot. for Summ. Decision, at 24-25. 202 The record contains a July 13, 2018 response from TCEQ to Respondent in reference to Respondent’s “Permit Amendment Application” but does not provide the date of the submission to which it is responding. CX 4. Parties do not contest the June 30 date. 203 CX 4. 37
The dialogue between Respondent and TCEQ continued throughout 2018. 204 203F
Respondent submitted data and answered inquiries. TCEQ responded with comments and additional data requests. On October 12, 2018, TCEQ wrote a letter to Rodriguez stating that they needed significant additional information to complete their review. 205 TCEQ acknowledged the technical difficulty in obtaining a permit:
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Permitting a wood cabinet manufacturing facility is a
complex process requiring a thorough understanding of: all
emission generating processes at the site; the emission
generating equipment used at the site. The building
ventilation system; location and size of building and
individual room openings where emissions may escape to
the atmosphere; an understanding of emission capture as
it relates to the building, rooms within the building, and
individual process equipment such as paint booths; as well
as emission calculation and air dispersion modeling
techniques.[ 206]
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TCEQ asked for the requested information within 30 days.
Shortly thereafter, the effort to obtain the permit encountered difficulty.
Respondent had to void the permit application in late 2018. 207 It is not clear what
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efforts took place thereafter in 2019. A permit was obtained in 2021. 208
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-
Complainant’s Efforts to Undermine Senior Leadership
A. Complainant’s June 20 and June 28, 2018 Emails to Coady
The tone of Complainant’s communications had changed between June 15
and June 20, 2018. As noted above, Complainant and Respondent discussed the permit on June 15. At the conclusion of the June 15 meeting, individuals were to get the data to Rodriguez and Source Environmental for filing by the end of the month. Some tension manifested between the phone calls of June 15 and Complainant’s June 20 email informing Coady that Rodriguez is not responding to him. Complainant wrote in his June 20 email:
204 CX 6 (TCEQ air quality permit dated Oct. 18, 2017); CX 1 (email correspondence between Respondent and TCEQ in the fall 2018); CX 4; CX 3. 205 CX 3. 206 Id. 207 CX 1. 208 Tr. 213. 38
JW,
I wanted to check in and see if you have heard anything
from Oscar on the Makor? I haven’t heard anything yet and
am increasingly uncomfortable continuing to run the way
we are without consent. Would you please check in with
Oscar and see if he has made any progress on the permit
and let me know what I can do to assist?
Thanks so much!!
JG 209
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Coady responded to Complainant’s email that he had contacted Rodriguez and felt they will have the information by the end of the week. 210 Coady continued that
209F
management will work with Source Environmental to get documents filed correctly.
Jeff
I just spoke with Oscar, he feels we will have all our info
ready by end of week. We will work with outside resources
to ensure we get all material documents filed correctly.
Thanks
JW 211 210F
Coady’s response is consistent with his testimony. Coady did not rebuff Complainant’s concerns on Makor but declined Complainant’s request for involvement vis-à-vis Rodriguez and Source environmental—answering that “we” will work with Source Environmental to get the permit material submitted. 212 211F
The record shows that Respondent did submit documents to TCEQ on or about June
209 CX 10 (Email exchange between Jeffrey Gregory and JW Coady, dated June 20, 2018). 210 Id. 211 Id. Complainant sent his email to Coady at 9:00 a.m. on June 20. At 2:42 p.m. on June 20, Coady responded to Complainant with the above email. Also at 2:42 p.m., Complainant immediately forwarded Coady’s response to his wife’s personal email address. Id. 212 Id.; see also D. & O. at 9; Tr. 108-09 (Coady answering ALJ’s question that it was reasonable for Complainant to be concerned but they were working on it with Rodriguez and Source Environmental; Source Environmental does the measurements and calculations). 39
30, consistent with the goal discussed in the June 15 call. 213 While Complainant
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grieved that Rodriguez was not answering Complainant’s calls and Complainant was not able to evaluate Rodriguez’s progress on Makor, there is no indication that Rodriguez was to report to Complainant. Rather, it is undisputed that Respondent placed Rodriguez as point on Makor. 214 Respondent had been working on Makor
213F
permitting before Complainant had started employment with Respondent. Yet, Complainant believed he was in charge of or responsible for Makor as COO. 215 214F
Coady promptly responded to Complainant’s email but did not take up Complainant’s cue to intervene with Rodriguez on Complainant’s behalf. The ALJ found “Coady and Rodriguez essentially told him they understood his concerns, but compliance was not his job and they were managing the issue without his help.” 216
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Shortly thereafter, Complainant sent Coady a June 28, 2018 email with the
subject line “Exercise # 2 update.” 217 The email began with Complainant’s
216F
introspection as to what creates stress in the workplace outside of normal business operations. Complainant outlined for Coady eight categories of grievances with two to three subcategories per category.
In the email, Complainant displayed his increasing hostility toward
Rodriguez and Rodriguez’s role in Makor. Just as with the June 20 email, the ALJ correctly found that the June 28 email contained protected activity 218 but was also
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correct that it reveals Complainant’s mindset toward senior leadership. 219 218F
Category # 1 was Complainant’s “lack of trust” of Rodriguez and his ethics “or
lack thereof.” 220 Complainant identified in Category # 2 Makor’s current non-
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compliant status 221 discussed previously on June 15 and June 20 but repeated that
220F
213 Supra note 202.
214 Supra note 194.
215 CX 9; see infra note 226 (June 28 email). 216 D. & O. at 9; see also Tr. 108-09. 217 CX 9. 218 D. & O. at 8-9. That Complainant’s motive was to get rid of management does not prevent his communication from constituting protected activity. Id. at 7 n.22. 219 Id. at 10, 17. 220 CX 9. 221 Complainant characterizes Makor as running “illegally.” Coady testified that it was not running illegally or unlawfully. Tr. 50, 65-68. Respondent had an open amendment application that had been rejected numerous times in 2018. Id. at 50. 40
he had received “no communication” from Rodriguez. Complainant continued that he believed he was responsible for equipment including Makor, but:
I must reach out continuously to find out what the progress
is. This has significant legal implications that I have no
control to address, which is completely outside my
standard of doing business.[ 222]
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Complainant felt Rodriguez was being “favored” and “allowed to conduct business” contrary to Complainant’s vision for the company. 223 Category # 3 is a related issue
222F
of volatile organic compounds (VOC) and the integrity of information to and from Source Environmental. 224223F
Complainant’s June 28 email as a whole demonstrates that Complainant
wanted more power to execute and influence business outcomes. 225 Under a heading
224F
“Staffing operations area,” Complainant placed himself and his reputation at the helm of staffing. He states:
Again, this is an area that I will ultimately be accountable
for and I am not in control of how to execute my strategies.
All decisions are made by the CEO. I believe I was hired for
and have a reputation for achieving results. I have
extensive experience with staffing operations and I am not
currently permitted to make those decisions.[ 226]
225F
Complainant had similar charges in re Coady’s leadership in areas of “purchasing items and improvements.” 227 Complainant wrote in the email:
226F
I have not been permitted to make decisions regarding
needs/wants though I am operating inside budget. I have
After Complainant was terminated, he informed TCEQ of his concerns on the
Makor. They investigated but took no action. Tr. 215, 362; RX 12 (July 17, 2020 letter from TCEQ stating “[n]o violations are being alleged as a result of the investigation”). 222 CX 9; Resp. Br. at 9. 223 CX 9. 224 Coady testified that Source Environmental was the expert on VOC data. Tr. 53. Sherwin Williams sent data to Source Environmental. Id. at 52-54. Source Environmental ran the numbers and performed the calculations. Id. at 51-52. 225 D. & O. at 17. 226 CX 9. 227 Id. 41
been responsible for maintaining budgets for 10+ years yet
I do not have the control to make purchases that aid in
achieving the strategic vision even when I am inside the
parameters of the budget itself.[ 228]
227F
Complainant further objected that Coady as CEO was discussing items directly with shop floor employees which sent mixed signals and interfered with Complainant’s control over day-to-day operations. Complainant concluded that Coady’s involvement “undermines [Complainant’s] influence on my team.” 229 228F
Although the June 28 email was addressed to the CEO and sent to Coady’s
email, Complainant challenged the CEO’s leadership in many respects. Complainant concluded his email to the Coady with the sentence:
Connect with me when you would like to review any or all
of these. Also, please note that my intent is to provide
insight into my thoughts so that we may develop a tighter
relationship in moving the organization forward as a
team.[ 230]
229F
These emails confirm both of the ALJ’s findings: that Complainant was
concerned with running Makor as is without a permit as well as that Respondent perceived Complainant’s tone as hostile toward Coady’s and Rodriguez’s leadership. The ALJ described the email as follows:
In the [June 28] email, [Complainant] complains about
Rodriguez’s lack of ethics, being overridden by the CEO on
staffing decisions, being prevented from making
purchasing decisions, inconsistent directions to staff from
leadership, being unable to tactically manage operations,
and poor personnel resource allocations. Complainant
explained he was frustrated by being held accountable for
execution but restricted from performing the job he was
hired to do.[ 231]
230F
228 Id.
229 Id.
230 Id. After Complainant wrote the June 28, 2018 email, he forwarded it to his personal email account the same day. 231 D. & O. at 17. 42
B. Complainant Undermined Coady in Meeting with MNE COO
Complainant’s charge against Respondent’s senior leadership was confirmed
in an event that took place several weeks after Complainant’s June 28 email. Complainant took his grievances against Coady and Rodriguez to Derek Douglas, COO of Respondent’s parent company, Miami Nations Enterprise, in or around August 2018. As with the June emails, the parties concede that Complainant raised concerns as to how Makor was being handled. 232 However, the ALJ found that
231F
Complainant raised more than the Makor to Douglas in August 2018. 233 232F
Complainant conveyed to Douglas his criticism of CEO Coady, including Coady’s direction on DreamCraft, Coady’s spending decisions, Coady’s interactions with shop-floor workers, and Coady’s creating havoc with customers. 234 233F
Douglas sided with Coady. As the ALJ stated “Douglas told him Coady was in
charge and he needed to get in line.” 235 Both Coady and Complainant testified that
234F
Douglas responded that it was important for Complainant to support the CEO and the way he chose to run the plant and not go around his back. 236 Complainant
235F
acknowledged that Douglas instructed Complainant of his role vis-à-vis Coady’s role as CEO. 237
236F
232 Id. at 10. Complainant did not record this phone call or enter a transcript into the record if a recording exists. Accordingly, the record is less clear on the contents of the discussion. 233 Id. at 3, 7-8, 10, 17. Complainant conceded that there were non-environmental topics in the conversation with Douglas that Douglas felt were undermining Coady’s role as CEO. Tr. 352-53. 234 D. & O. at 17; see also Tr. 349-52, 355 (Complainant communicated his disagreement with Coady’s veering off course), Tr. 59, 77 (Coady testified that Douglas discussed with him Complainant’s concerns about Coady’s providing directions on the shop floor). 235 D. & O. at 20. 236 Tr. 59-60, 280-81, 349-50. 237 Tr. 351.
Q: Well, you already testified that Mr. Douglas explained to
you what your role was vis-a-vis the CEO, correct?
A: In his view, yes.
Q: And so at least as far --- are you saying that Mr. Douglas did
not have authority to articulate the board’s position on these
issues?
A: No, what I’m saying is as I view my responsibility to Mr.
Douglas, the board, the 500 people that worked at the
organization, my responsibility was to bring up risk and risk
mitigation. When we were putting the livelihood of 500 people
and their direct dependence in play by languishing around
DreamCraft at the time we did and not being able to produce,
43
After the meeting, Douglas informed Coady about Complainant’s attempt
with the comment that if Complainant were undermining you as CEO, we should let him go. 238 Coady met with Complainant to discuss the Douglas meeting.
237F
Coady did not terminate Complainant’s employment but sought to ensure that Complainant would work with management as opposed to against them. 239 238F
Complainant agreed to support Coady as part of the resolution going forward. 240 239F
C. The ALJ’s Finding that Complainant Wanted to be CEO
The Douglas meeting follows the substance of the June 28 email.
Complainant, as COO, was not on board with the direction of the company. Respondent received Complainant’s grievances as not supporting the CEO’s leadership. 241 The ALJ summarized Coady’s testimony:
240F
[Coady] was purchasing processing equipment and
Complainant thought they should be purchasing painting
equipment. Complainant didn’t agree with hiring, wage
rates, shipping, or the structure of the company.
Complainant wanted to outsource a lot of material. [Coady]
wanted to do more in-house. Douglas told [Coady] one of
the things Complainant was complaining about was that
[Coady] was giving directions on the shop floor.[ 242]
241F
The ALJ observed that when Coady decided to open a new product line,
DreamCraft, around February 2018, Complainant “deeply disagreed” with this decision and believed that resources should be directed at current product line problems. 243 In a separate incident over DreamCraft, Complainant testified that
242F
creating havoc with our customers, havoc with our shipping,
havoc with our production environment, I felt like it was my
obligation to move those risks and issues forward because they
weren’t being heard by Mr. Coady.
Id. at 351-52.
238 Tr. 59-60; id. at 280-81.
239 Id. at 59-60, 77 (Coady’s testimony), id. at 280 (Complainant’s testimony). 240 Id. at 280-81 (Complainant testified that Coady said: “Are you on my team? Are we all on the same page,” those kinds of things and then ultimately said, “Derek told me everything you said. I don’t understand why you wouldn’t come to me first.”). 241 D. & O. at 18. 242 Id. at 18; Tr. 46-48. 243 D. & O. at 3, 17. 44
Coady verbally attacked him and got within six inches of his face and threatened to fire him over this grievance. 244 243F
The ALJ found that Complainant was under the impression for a time that
he was in line for the CEO position before Coady was hired as CEO. The ALJ stated as follows:
The evidence paints a relatively clear picture that after
Complainant talked to Douglas and was hired, he
anticipated becoming CEO or at least having a significant
say in both the strategic and tactical management of the
company.[ 245]
244F
The ALJ cited comments from Complainant’s answer to a question asking
whether he was second-in-charge, to which he responded “yes, Well, in title,” alluding to the point that Complainant believed his de facto position might be leader. 246 Other references gave the appearance that Coady’s decision-making on
245F
DreamCraft was the cause of the hostility “only because [Coady] made it that way.” 247 The ALJ treated these comments as confirming Complainant’s desire to be
246F
CEO. The ALJ found these answers to be the “most probative evidence in the case.” Complainant’s desire to be CEO “distill[s] his litany of complaints and [his] relationship with Coady and explains his and his spouse’s actions.” 248 247F
These incidents support the ALJ’s finding that Complainant had an agenda
for more power in the company. 249 Complainant’s attitude toward Coady and
248F
Rodriguez is confirmed by the tone of his communications in the emails and with Douglas. While these events contain protected activity, this protected activity is repetitive of what Respondent had known before Complainant had been hired—that running Makor required a change to Respondent’s permit to be in compliance. Respondent was not retaliatory toward Complainant on Makor; Respondent was receptive to his concerns. Respondent placed that effort with Rodriguez and Source Environmental. Respondent was in the process of submitting documents to TCEQ. In fact, though Complainant may have been out of the loop because of his conflicts with Rodriguez, Respondent and Source Environmental submitted permit documents on June 30, 2018—in line with the goal discussed in the June 15 phone
244 Id. at 11; Tr. 302-03.
245 D. & O. at 19.
246 Id. at 18 (emphasis in original).
247 Id. (emphasis in original).
248 Id. at 17-18.
249 Id. at 18, 19-20.
45
calls. What Respondent, Coady, and Douglas were concerned with was Complainant’s conduct towards senior leadership and ongoing lack of support of Coady.
-
Events in 2019
A. Performance Evaluation in March 2019
Respondent’s perception that Complainant did not support the company’s
senior leadership was reiterated in Complainant’s 2018 performance evaluation in March 2019. 250 In that evaluation, Coady marked down Complainant for failing to
249F
support the vision of senior leadership during the first half of 2018 but noted that he improved in the second half of 2018. Coady provided as follows in the “building trust” section:
Trust is earned and very quickly spent. 1st half was very
disappointing—team was divided, focus was at individual
level and in no way moved Nations forward. I did not feel
that as COO you were supporting me through actions or
words. You made a commitment to me in July that I
accepted, I want to see the current path continue.[ 251]
250F
The ALJ recounted Coady’s testimony:
In March 2019, [Coady] gave Complainant a poor
evaluation. It was based on Complainant’s divisive
behavior, his unwillingness to support the direction of the
company, and his building cliques around people. When he
was reviewing his new closet line at the board meeting
Complainant objected that they were expanding too
quickly and should focus on what they were already
doing.[ 252]
251F
Complainant argued to the ALJ that his complaints about the Makor permit were responsible for the low rating, but the ALJ found that predicate to be unsupported by the record. 253 To the contrary, there were grievances with the CEO’s leadership
252F
including Coady’s decision to pursue DreamCraft. The ALJ also cited Coady’s testimony that “[i]n [the] summer of 2018, they suffered a ransomware attack. He
250 CX 18.
251 Id.
252 D. & O. at 18.
253 Id. at 10.
46
thought they should continue to ship, using hard copy paperwork to manually load the trucks, and continue supplying product to customers. Complainant disagreed.” 254 This difference created significant pressure between Coady and
253F
Complainant. 255 254F
The majority relies upon the fact that Coady’s performance review cites to
poor performance in the first half of 2018 but includes a comment about improved performance in the second half of 2018. 256 Complainant’s theory is that he
255F
continued to raise all of his other grievances in the second half of 2018 but stopped raising Makor complaints because he felt that he had been threatened in August 2018 with termination for raising Makor complaints to Douglas. 257 Thus, according
256F
to Complainant, Respondent’s problems with his performance overlap with Makor protected activity but not with non-Makor grievances.
There are a few problems with Complainant’s argument. The ALJ was correct
to reject it. 258 First, the majority places too much weight on Coady’s general
257F
timeline in 2019 and not enough weight on the undisputed fact that these non- Makor heated disputes did happen. Coady’s reflection on the timing of the 2018 events when writing the performance review in 2019 is loose. Upon review of the actual dates, many of the significant events took place in the second half of the year. The Makor protected activity took place in June 2018 and the Douglas undermining CEO event took place in August 2018. 259 258F
Second, the majority relies upon Complainant’s testimony that a significant
blowup over DreamCraft took place in the second half of 2018 and should have been noted in Coady’s performance review for the second half if non-Makor events were a significant component of the performance problems. 260 Complainant’s testimony on
259F
the dates for this blowup are vague and shifting. Complainant states “Judge, I can’t
254 Id. at 18.
255 RX 10 at 9, 10 (Kelly Gregory stating to the parent company that divisions between the two almost resulted in Complainant losing his job). 256 Supra, at 11-12. 257 D. & O. at 10-11. 258 Id. at 10-11. 259 If the Douglas meeting took place in August, Coady’s cite to a July reconciliation in the performance review appears to be off. Tr. 59, 77 (Coady explaining that he had a meeting to improve Complainant’s performance on undermining him with shop floor employees around August 2018 after a meeting with Douglas). 260 Supra, at 25-26. 47
say that I remember. It [hostile interaction at DreamCraft’s unveiling 261] was 260F
towards the end of 2018” but Complainant is not clear on which month. 262 261F
Later, Complainant testifies the heated exchange with Coady over DreamCraft’s unveiling could have been the beginning of 2019 but he could not remember. 263 262F
Elsewhere, he testified more confidently that DreamCraft disputes “persisted all the way through 2019 and the beginning of 2020.” 264 The ALJ correctly rejected
263F
Complainant’s argument on the timing of non-Makor performance problems.
Third, the performance review itself is consistent with blowups and poor
performance also taking place in the second half as well. It states that Complainant’s conduct was worse in the first half but improved in the second half, not that Complainant behaved perfectly without incident in the second half of 2018. 265 From Coady’s perspective, he could have viewed Complainant’s effort to
264F
exclude him from managing shop floor employees or going over his head to undermine his role as CEO more poignant in Complainant’s insubordination than the ongoing DreamCraft conflicts. The point relevant to Complainant’s appeal is that the heated exchanges: (1) occurred, (2) were not related to Makor, and (3) were a significant, ongoing problem and one of many examples of Complainant’s undermining and not supporting Coady as CEO.
B. Protected Activity Post-August 2018
After August 2018, Complainant’s grievances on Makor dissipated. The ALJ
noted a “direct contradiction” between Complainant and Respondent as to whether complaints about Makor continued into 2019. 266 The ALJ cited Complainant’s lack
265F
of evidence for expressed complaints on Makor in 2019 while there is an abundance of evidence, including multiple tape recordings and emails, from Complainant for complaints on Makor in mid-2018. 267 Ultimately, the ALJ concluded there were
266F
some passing references about the Makor permits after August 2018 into 2019. 268 267F
261 Complainant had strong objections to Coady’s pursuing the DreamCraft line in early 2018 when Coady came on board. D. & O. at 3, 17. This was a source of tension. There was also a heated exchange during the unveiling of DreamCraft. Id. at 11. 262 Tr. 303. 263 Tr. 408-09. 264 Id. at 367. 265 CX 18 (“you made a nice correction in 2d half of year on receiving input and redirecting your focus.”); Resp. Br. at 3 (“Mr. Gregory still faced ‘a long road to rebuild.’”). 266 D. & O. at 9. 267 Id. at 9; Id. at 6 & n.19 (noting that there were some comments about the last protected activity being in August 2018 when Complainant spoke to Derek Douglas). 268 Id. at 9. 48
Complainant testified that his communications sometime between September and November of 2019 were casual, “minor” follow-up questions on Makor, and did not elicit any threat of termination or hostility. 269 268F
-
Events in 2020
This brings us to 2020 and the main events triggering Complainant’s
suspension and termination. The following constitutes additional substantial support for the ALJ’s findings that Respondent would have terminated Complainant’s employment in the absence of protected activity concerning Makor.A. March 3, 2020 Board Meeting and Kelly Gregory’s Drive to MNE Headquarters Respondent held a board meeting on March 3, 2020. 270 Complainant, Coady, 269F
and Peter Murphy (CEO of the parent company MNE) were present. According to Complainant’s testimony, shortly before the meeting began, Coady answered Murphy’s question on the status of the Makor permit by affirming that they were still in the process of getting approval. 271 According to Complainant’s testimony,
270F
this was the last straw, he went home, became ill, and discussed the issue with his wife, Kelly Gregory. 272 271F
Ten days after the board meeting, Complainant’s wife inexplicably left her
house at 11:00 pm for a twelve-hour drive to MNE headquarters in Oklahoma. 273272F
Kelly Gregory located the HR director, Gena Lankford, and was able to schedule a meeting the next day. Mrs. Gregory recorded the meeting. Taking her cues from Complainant’s notes from the Board meeting and communications with her husband, 274 she unloaded on Coady’s and Rodriguez’s moral turpitude, competence,
273F
and leadership. The ALJ summarized Complainant’s grievances with senior leadership:
• The Makor permit
• Investing in DreamCraft rather than equipment to meet current demand
• Investing in a new closet line when unable to support current products
• Implementing a hiring freeze when workforce couldn’t meet current demand
269 Tr. 429.
270 RX 4 (slide deck for Board meeting).
271 D. & O. at 9.
272 Id. at 8.
273 RX 10 at.4; Tr. 249.
274 RX 5 (Complainant’s notes from meeting).
49
• Continuing to operate when ransomware brought the computers down
• Describing a significant ransomware attack as a “software glitch”
• Running short of cash because of ransomware and DreamCraft decisions
• Reporting that down days were taken for the rodeo when they were in reality
for low sales
• Reprimanding Complainant for reporting problems to Douglas
• Repeatedly threatening to fire Complainant
• Spending $30,000 on unsuccessful paycheck implementation
• Purposefully misapplying freight on warranties and overstating revenue by
$1-2M 275
274F
As reported through Kelly Gregory, Complainant had severe disagreements
with and a lack of confidence in Respondent’s leadership, specifically criticizing Coady’s and Rodriguez’s honesty among other faults. The ALJ found that Complainant’s wife’s statements “corroborat[e]” Complainant’s view of Coady’s mismanagement of the company. 276 The ALJ found “[t]he record is clear that the
275F
allegations she made to [Lankford] came from Complainant.” 277 Summarizing,
276F
Kelly Gregory reported that Complainant believed Coady was not competent to run the business, was abusive, and that the company, under current leadership, was engaging in fraudulent activity. 278 Kelly Gregory stated:
277F
. . . and this isn’t about him against JW or anything else.
But I’m going to look you straight in the face and tell you,
JW, he’s not qualified and he’s blowing snow over most of
these people.[ 279]
278F
She continued:
Put [Coady] in a room by himself and ask him to do the
math on anything, truly. Ask him to show his work and
then I’ll be a little exaggerating, but he doesn’t know. He
throws out words. He’s a phrase guy. . . .[ 280]
279F
275 D. & O. at 19.
276 Id. at 12.
277 Id. at 20; Id. at 4 (Mrs. Gregory “presented a series of grievances her husband had discussed with her about Coady’s mismanagement.”). 278 Id. at 18. 279 RX 10 at 10. 280 Id. at 10. 50
She urged Lankford to keep her investigation confidential because if someone tells Coady or Rodriguez before Monday, “all the lies will be covered up and you won’t find anything out.” 281 280F
According to Mrs. Gregory, Coady was responsible for people leaving
Respondent:
. . . I’m going to tell you straight up right now, if [Coady]
has a breath, you’re screwed . . . Because he will throw
anybody under the bus.[ 282]
281F
She then went on an extended discussion as to how Coady “threw Josh [Marones] under the bus.” 283 Josh is the son-in-law of Kelly Gregory and Complainant. 284
282F 283F
She summarized Respondent’s poor business decisions and Coady’s spending
capital:
Also, [Coady] lied about equipment expenses and things
like that. So essentially he was saying that they invested,
it was like 60 million dollar revenue, 58 million dollar
revenue comes from BJ Tidwell, the rest from DreamCraft,
maybe. And there’s essentially been no money invested in
upgrading equipment that’s 35 years old, that’s breaking
down on a daily basis. I mean, it’s sort of been the JW show
on that side and really just not smart investing in the
money making side of the machine.[ 285]284F
In 2018, Respondent suffered a ransomware event that paused operations.
Complainant and Coady disagreed as to how to inform customers. 286 From Mrs.
285F
Gregory’s statement, the void between Coady and Complainant on the ransomware incident was so severe that Complainant thought he might be fired for conflicting with what Coady wanted to do. 287286F
281 Id. at 27.
282 Id. at 28.
283 Id. at 29-31.
284 Id.
285 Id. at 14.
286 Id. at 9; Tr. 89-90.
287 RX 10 at 9.
51
Kelly Gregory provided extended comments about “scary money spending”
and spending additional money on new product lines on top of that extravagant spending: 288 287F
. . . [Complainant] said we can’t make money on
DreamCraft right now. He said, first of all, he said none of
our customers even like JW. They can’t stand him, because
he’s such an asshole. He’s me, mine, I, me, mine, I and he’s
so rude to them that nobody wants to do business with him
and he’s investing all of this money into something that
isn’t selling. Why are we not building the business that is
selling? So that then we can put money into what we want
to build on. Then let’s do DreamCraft. He [Complainant]
says, I’m not saying let’s not do it [DreamCraft], but why
are we doing that when we’ve got machines that are older
than my kids. That are breaking down, that are supporting
the business. So that actually was the closet line, that’s
why I write it in there. That’s when he started crying.[ 289]
288F
Mrs. Gregory identified alleged financial malfeasance concerning calculating
warranty revenue. 290 As the ALJ summarized, Complainant’s complaint was that
289F
mismanagement resulted in a million-dollar fraud for overreporting warranty revenue. 291
290F
Complainant’s complaints were not limited to Coady. Lankford asked Kelly
Gregory if Complainant had tried to speak to Oscar Rodriguez. She replied Oscar was a big part of the problem, too, 292 that Rodriguez would do whatever Coady told
291F
him to do, 293 and that “Oscar is completely unqualified. I wish you would go spend
292F
some time with him.” 294 According to Complainant’s wife, Oscar was mismanaging
293F
paycheck administration, headcounts, and other personnel management. 295 294F
288 Id. at 14.
289 Id. at 15.
290 Id. at 17.
291 D. & O. at 18; see also RX 10 at 17-18, 20-21; RX 5. 292 RX 10 at 5. 293 Id. at 6. 294 Id. at 15. 295 Id. at 15-16. 52
Complainant’s wife discussed Makor as one of the grievances involving
Rodriguez. 296 She recounted a short summary of the mid-2018 conversations
295F
discussed above. She reported that Coady had said at the Board meeting, in response to Murphy’s question about the status, that the problem with getting the permit “was the third-party vendor’s fault and that it was all being taken care of.” 297 Since Complainant had been out of the loop, Kelly Gregory conceded
296F
Complainant’s knowledge was incomplete. But as far as Complainant was aware, the Makor permit was being “glossed over . . . and nothing has been done since then
[2018] . . . but now that may not be true, to be fair.” 298 Kelly Gregory acknowledged
297F
that Complainant had first-hand knowledge in 2018 but was not involved in more recent activity and did not know the current status of efforts taken by Respondent, third-party vendors, or TCEQ. 299 298F
Kelly Gregory had a number of good things to say about Complainant.
For the most part, most people go to Complainant to handle their problems rather than Coady because Complainant was helpful but Coady was abusive and always swearing. 300 299F
B. Suspension Recording and Termination Letter
Respondent acted swiftly after the Kelly Gregory meeting. Roughly one week
later, on March 20, 2020, Complainant was called into a suspension meeting pending further investigation into allegations made by Kelly Gregory. 301 300F
Coady informed Complainant that he just completed a phone call with the Board’s attorney and Murphy, and he had to suspend Complainant indefinitely:
For failure to protect and support privileged and
confidential information contained in a closed door board
meeting . . . in violation of your signed employment
contract dated December 1st, 2017.[ 302]
301F
Complainant expressed dismay and asked what information he divulged. Coady explained that he was not privy to all of the details, but Kelly Gregory had
296 Id. at 5, 11.
297 Id. at 13.
298 Id.
299 Id. at 12-13.
300 Id. at 18, 19.
301 RX 13.
302 Id.
53
delivered the information to the Board in person. Complainant asked follow-up questions, but Coady did not have answers only that:
Private information that was only in that board meeting
somehow got to your wife. Your wife somehow got that to
the board. There will be an investigation and we’ll go from
there. You know what I know.[ 303]
302F
Most of the facts necessary for Complainant’s case arise from the hostility and
interaction between Coady and Complainant. Yet, the suspension in part came from the parent company—to whom Kelly Gregory had complained roughly one week earlier. The ALJ observed:
Complainant testified Coady told him “I just got off the
phone with Peter Murphy and our lawyers. Effective
immediately, you are suspended for distributing
confidential information.” Complainant agreed that both
Coady and Rodriguez appeared to be surprised by the call
and suspension and did not believe either was involved in
any sort of effort to get him placed on suspension.[ 304]
303F
In fact, Coady seemed to have a bit of sympathy for Complainant during the suspension meeting, stating “I wish if there was a problem you would have fricking come to me . . . .” 305 304F
The suspension meeting was followed by an investigation and termination on
March 31, 2020. 306 The termination letter stated that Complainant was being
305F
terminated for violating company confidentiality as well as the ongoing lack of support for Respondent’s management and the direction of Respondent’s business operations. 307 It states:
306F
The decision to terminate your employment is based on
your unauthorized disclosure of confidential Company
information to your wife, Kelly Gregory, and your ongoing
lack of support for Nation’s management and the direction
of Nation’s business operations. It is the opinion of the
303 Id.
304 D. & O. at 11.
305 Id. (citing transcript of suspension phone call). 306 CX 12. 307 Id. 54
Company’s management that we must go in a different
direction at this time.[ 308]
307F
The ALJ summarized Coady’s testimony concerning the investigation and
final termination decision, which the ALJ found to be consistent with Complainant’s account:
[Coady] had conversations with the attorney for the board,
Gena Lankford, and Peter Murphy. Their discussions were
around the allegations that Kelly Gregory had made to
Lankford and the four-page document she left. He
primarily answered questions about the allegations. They
asked if [Coady] had lost confidence in Complainant and
his answer was yes, because of the false allegations. He
also noted Complainant’s repeated lack of support for the
direction he wanted to take the company. Complainant
would begrudgingly go off and make a half-hearted attempt
to get something done. He had no objection to Complainant
raising the risks of a decision, but the false allegations he
made regarding financial misgivings and wrongdoings
were beyond the pale. Complainant was also at odds with
Rodriguez and Dobson, the vice-president of sales.
Complainant would make it very well-known to his team
or to the shop team his dissatisfaction with the company
direction and in fact would undermine his decisions. On the
final conversation with Peter Murphy, they agreed to
terminate Complainant, having been advised by the
corporate counsel.
Even if Kelly Gregory had not gone to Lankford, he believes
Complainant would still have been terminated, because his
performance was declining and he was continuing his
behavior of not supporting the direction of the company.
The termination came right on the heels of Kelly Gregory’s
trip because she asserted financial wrongdoing, along with
accusing him of foul language and a litany of other
complaints. The company attorneys looked into it and there
was no basis for it.[ 309]
308F
308 Id.
309 D. & O. at 11; Tr. 46-47.
55
C. Substantial Evidence Supports the ALJ’s Findings that Respondent Would
Have Terminated Complainant for Failing to Support Senior Leadership
Even in the Absence of Protected Activity
The above constitutes substantial evidence supporting the ALJ’s finding that
Respondent had proven its same-action defense that it would have suspended and terminated Complainant for not supporting Respondent’s leadership even if he had not made the complaint concerning the Makor. This evidence is found in: (1) the tone of Complainant’s communications to Coady and Douglas, (2) the testimony of Complainant, Coady, and Rodriguez showing the conflicts between Complainant and Respondent on non-Makor topics; (3) Respondent’s prior warning to Complainant about supporting management and Complainant’s poor performance review for lack of support; (4) the Kelly Gregory incident reflecting Complainant’s acidic views toward senior leadership and Respondent’s immediate reaction thereafter; (5) the suspension record; and (6) the termination letter showing that after an investigation, Respondent decided to fire Complainant for, among other reasons, “ongoing lack of support” for management.
There is no doubt that Makor was a part of Complainant’s reporting.
Yet, Complainant’s grievances and conduct went far beyond the Makor permit and rose to the level of challenging Respondent’s basic business direction, competence, and leadership. The ALJ cited Coady’s perception that Complainant’s false allegations (through Kelly Gregory and Complainant’s notes) regarding financial wrongdoing were “beyond the pale.” 310 There was undisputed significant tension
309F
between Complainant’s vision for corporate spending and Coady’s direction. The record, including Complainant’s testimony, shows two bitter interactions in particular that nearly resulted in Complainant’s termination: (1) spending and the DreamCraft line and (2) differences in how to mitigate the fallout from the ransomware attack. Complainant testified that Coady verbally attacked him and got within six inches of his face and threatened to fire him following a DreamCraft dispute. 311 As the ALJ noted this was “notably . . . unrelated to the Makor
310F
permit.” 312 Kelly Gregory reported that Complainant’s disagreement with Coady
311F
regarding decision-making after the ransomware attack almost got him fired. 313 312F
This is supporting evidence how hostile the non-Makor disputes became between Complainant and Coady. Respondent cited Complainant in 2018 and again in his 2019 performance review for not supporting the CEO and senior leadership. 314 313F
310 D. & O. at 11.
311 Supra note 244.
312 D. & O. at 11; see also id. at 17 (citing Complainant’s testimony in the ALJ’s same- action defense analysis). 313 RX 10 at 9, 17. 314 D. & O. at 10-11. 56
The record strongly supports the ALJ’s finding that Kelly Gregory’s communications precipitated Complainant’s suspension, the investigation into that complaint, and ultimately, Complainant’s termination from employment. 315 314F
From a causal lens in March 2020, the protected activity concerning Makor
was old. As early as fall 2017, before Complainant started his employment with Respondent, Respondent had known about and was in the process of addressing the Makor problem. As noted above, these efforts to obtain a permit for Makor align with Complainant’s concerns on compliance. Respondent appreciated Complainant’s voicing concerns on Makor. 316 Respondent was working on submitting
315F
documentation to TCEQ through Rodriguez and Source Environmental. 317 316F
Coady explained to the Board in March of 2020 that they had hired a new third- party consultant to obtain the permit. 318 The premise that the company, making
317F
such an effort at getting a permit for compliance before and after Complainant’s protected communications, would retaliate against one of their employees for identifying the very goal they were working to accomplish is counterintuitive and not particularly well placed in this record. 319
318F
The ALJ rejected the argument that Respondent’s frustration with
Complainant was pretext for retaliation for protected activity:
The evidence paints a relatively clear picture that after
Complainant talked to Douglas and was hired, he
anticipated becoming CEO or at least having a significant
say in both the strategic and tactical management of the
company. When Coady took over, his expectations were
frustrated. That frustration became much more
pronounced as he watched Coady make what in his view
were a series of bad decisions that constituted existential
threats to the company and its employees. Complainant
chafed at being told the decisions were above his level of
authority and he needed to support them, whether he
315 Id. at 12.
316 Supra notes 194, 214, and 216.
317 Id.; supra notes 196-97.
318 D. & O. at 9; RX 10 at 13.
319 Cf. Dafoe v. BNSF Ry. Co., 164 F. Supp. 3d 1101, 1115 (D. Minn. 2016) (finding BNSF Railway responded positively to the employee’s safety complaints, which undermined the employee’s retaliation claim); Reid v. Neighborhood Assistance Corp. of Am., 749 F.3d 581, 589 (7th Cir. 2014) (declining to find an inference of retaliatory intent where complaints did not escalate for six months prior to termination but became less serious and termination was immediately preceded by an intervening event unrelated to complaints). 57
agreed with them or not. He went over Coady’s head to
complain to Douglas and was told the same thing. In short,
Coady and Douglas’ citation to their dissatisfaction with
Complainant’s failure to support the CEO is fully
supported by the evidence and not a pretext without
substantiation.[ 320]
319F
In reversing the ALJ’s decision, the majority emphasizes that Respondent
shifted reasons for terminating Complainant, and this is evidence of pretext. 321 320F
I disagree. When presented with Complainant’s serrated views of Coady’s and Rodriguez’s incompetence, lack of honesty, and financial malfeasance through Mrs. Gregory, Respondent suspended him pending an investigation for violating company confidentiality rules. An investigation followed, and the termination letter included both a violation of company confidentiality and added the ongoing lack of support of Coady and Rodriguez. Respondent’s reasons never contradicted this core component. 322
321F
Complainant filed a claim of retaliation for whistleblowing in violation of the
CAA. That Complainant’s entire personnel file was introduced into the litigation in responding to Complainant’s claim of retaliation is not grounds for a finding that Respondent’s reasons were evidence of pretext. The majority’s argument misstates what constitutes “shifting reasons” for purposes of supporting a finding of pretext. When the employer’s subsequent reasons plainly contradict prior reasons, courts are on better footing for deeming “shifting reasons” as evidence of pretext. 323 322F
320 D. & O. at 19-20; Resp. Br. at 10-11.
321 Supra, at 20-24.
322 The majority cites Respondent’s letter to Texas Workforce Commission in response to Complainant’s request for unemployment benefits. Supra, at 20-21. According to the majority, Respondent’s answer exhibits shifting reasons. In its response, Respondent provided broad language for Complainant’s discharge including “discharge from his position
. . . for misconduct connected to his job. . . [discharge for] past misconduct and transgressions.” Rodriguez Dep. Ex., C (April 27, 2020 Letter to Texas Workforce Commission). The letter signed by Rodriguez is consistent with the March 20, 2020 suspension and March 31, 2020 termination reasons given by Respondent and relied upon by the ALJ. Wesolowski v. Napolitano, 2 F. Supp. 3d 1318, 1345 (S.D. Ga. 2014) (granting summary judgment where proffered non-discriminatory reasons did “not give the Court any pause, nor could it for any rational fact finder, that . . . testimony is so inconsistent as to imply that Defendant’s stated reasons are pretexts for retaliation”); cf. Hale v. Husfelt, 772 F. App’x 782, 784 (11th Cir. 2019) (no pretext shown when employer first stated it wanted to “go in a different direction” but then gave additional reasons in response to plaintiff’s express request for more specific feedback about his performance). 323 An employer’s inconsistent explanations for an employment decision “cast doubt” on the truthfulness of those explanations. Gee v. Principi, 289 F.3d 342, 347-48 (5th Cir. 2002); see also Pate v. Chilton Cnty. Bd. of Educ., 853 F. Supp. 2d 1117, 1133 (M.D. Alab. 2012) 58
Courts do not generally treat expanding or cumulative reasons as “shifting reasons” for purposes of circumstantial evidence supporting a finding that the employer’s reasons were pretextual. 324 Here, Respondent never contradicted these bases of
323F
violating confidentiality and ongoing lack of support of senior leadership. Rather Respondent’s litigation briefing, including abusive language and inappropriate physical contact, is an expansion upon Respondent’s contemporaneous suspension and termination reasons. 325 324F
(“The new reasons relied on in litigation must plainly contradict the reasons relied on at the time of the decision to be found to be pretextual. The reasons must contradict each other, and not merely be cumulative.”); see generally Bechtel Constr. Co., 50 F.3d at 935 (“During the proceeding, the ALJ asked Bechtel whether Nichols’ job performance or medical condition of arthritis were issues in the case. Bechtel indicated that they were not, attributing his dismissal rather to his attitude, his “gung ho nature.” Yet, on appeal, petitioner’s argument is cast entirely as if the layoff was due to poor job performance, exacerbated by Nichols’ arthritic condition. Given that, on the record, Bechtel has indicated that these issues were not factors in Nichols’ termination, we will not now consider them.”). 324 Musser v. Paul Quinn Coll., 944 F.3d 557, 564 (5th Cir. 2019) (“It is true that ‘[a]n employer’s inconsistent explanations for an employment decision’ may give rise to an inference of pretext in some cases. But in those cases, the employers gave fundamentally different reasons for their decisions on appeal than they did in the district court or before litigation commenced.”) (internal citations omitted); Tidwell v. Carter Prods., 135 F.3d 1422, 1428 (11th Cir. 1998) (holding that additional, but undisclosed, reasons for an employer’s decision do not demonstrate pretext); Zaben v. Air Prod. & Chem., Inc., 129 F.3d 1453, 1458-59 (11th Cir. 1997) (concluding that the plaintiff failed to show pretext where, although the employer offered differing explanations for its decision, its reasons were not necessarily inconsistent). 325 Minnis, 620 F. App’x at 220 (“We conclude, though, that proof of an employer’s reasons becoming more detailed as the dispute moves beyond the initial notice to an employee and enters into adversarial proceedings, is insufficient to create a jury question regarding pretext absent an actual inconsistency.”). 59
In conclusion, I would hold substantial evidence supports the ALJ’s finding
that Respondent would have terminated Complainant’s employment in the absence of protected activity. The Makor permit, while constituting a part of Complainant’s grievances, was not part of the overall problem Respondent had with Complainant’s rejecting leadership decisions and direction. Kelly Gregory’s meeting exacerbated and substantiated Respondent’s perception of Complainant’s conduct—for which he had been warned multiple times. With serious allegations against senior leadership having been found to be without merit, Respondent had lost confidence in Complainant’s ability to be part of the company and decided to part ways. I would affirm the ALJ’s opinion and deny the petition.
THOMAS H. BURRELL
Administrative Appeals Judge
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