Court of Appeals strikes down SOX whistleblowing claim

The Court of Appeals has rejected a Sarbanes-Oxley whistleblower retaliation case, holding that the plaintiff did not bring his claim within the 180-day deadline under the statute. The Court also issues a separate holding that the statute of limitations begins to run when plaintiff has reason to know that management's continued refusal to rehire the terminated plaintiff following a layoff means he will never be rehired again.

The case is Mehrotra v. U.S. Department of Labor, issued on August 11, nearly two years after oral argument. This is a petition for review following an adverse ruling from the U.S. Department of Labor. Plaintiff, a project manager in GE’s Power division, filed two internal complaints raising compliance concerns in October 2018. Several months later, GE told him he would be laid off in June 2019 due to a reduction-in-force. Post-layoff, defendant allowed him to apply for other positions within the company, but he was rejected for dozens of them, more than 50 positions. He claimed these rejections were also retaliatory. Plaintiff filed his SOX complaint with OSHA on December 17, 2020, alleging that GE had blacklisted him, terminated him, denied him benefits, failed to rehire and promote him, all in retaliation for his internal complaints. 

Under the 180-deadline under SOX, plaintiff's claim is untimely. Defendant told plaintiff about the layoff on April 29, 2019. Plaintiff had until October 2019 to file his SOX complaint, but he did not do so until December 2020. The claim was untimely.

The real story here is plaintiff's argument that defendant's refusal to hire him post-layoff was also retaliatory. But the Court of Appeals (Sullivan, Park and Robinson [dissenting]) holds that claim is also untimely. Plaintiff argued that each time GE rejected one of his applications, a new retaliatory act occurred. Some of those applications were rejected after June 20, 2020, which would put them within 180 days of his December 17 OSHA filing. But the majority holds that the alleged “blacklisting” was the underlying retaliatory action. By March 16, 2020, Mehrotra had applied unsuccessfully for roughly 50 positions and had actually complained to GE that he was being blacklisted. At that point, the court said, he knew or should have known that GE was refusing to rehire him. This means the later unsuccessful applications could not revive the expired claims. 

Over Judge Robinson's dissent, the majority writes, "where the alleged adverse action is a blacklisting or companywide refusal to rehire, an employee is unlikely to receive definitive and unequivocal notice of the adverse action taken against him. In such cases, the claim accrues when it 'was apparent or should have been apparent that a complainant’s former employer was refusing to rehire [him].'” In other words, it should have been clear to the plaintiff that GE was not going to rehire him, that plaintiff's realization triggered the statute of limitations. The Court adds, "Based on the record before them, the [Administrative Law Judge] and [Administrative Review Board] properly concluded that Mehrotra knew or should have known of GE’s refusal to rehire him by March 16, 2020 – the date on which he filed an internal complaint with GE after unsuccessfully applying to fifty open positions." 

In dissent, Judge Robinson writes, "A cause of action for retaliation requires an adverse action and accrues when the employee learns of it, and successive refusals to rehire are discrete events." In other words, "An unexpressed intent not to hire is not an adverse action." Judge Robinson adds,

A retaliatory, uncommunicated, and unexercised intent not to rehire someone is a proverbial tree falling in the woods: nobody hears it. Evidence of such an intent may establish the retaliatory motive for a refusal to hire, but where that intent has not been communicated to the employee, some action, such as passing over the employee in response to an actual application for a position, is an essential element of a cause of action for retaliation under SOX. Until the uncommunicated and unexercised intent leads to an actual adverse action, no cause of action arises under SOX, and no limitations clock starts ticking.

Plaintiff argued that the Supreme Court's decision in National Railroad Passenger Corp. v. Morgan (2006) saves his claim. In Morgan, the Court held that each discrete discriminatory act starts its own limitations clock. Morgan holds that refusal to hire is a discrete act. This is a decent argument. But the majority instead relies on another Supreme Court case, Delaware State College v. Ricks (1981), reasoning that a later consequence of an earlier discriminatory decision doesn't restart the limitations period. The later applications were merely consequences of the earlier blacklisting. As for the continuing violation argument under Morgan, that doctrine generally does not apply to a series of discrete employment actions. Otherwise, the court reasoned, an employee could keep a stale claim alive simply by repeatedly applying for jobs and getting rejected.

Plaintiff may challenge her termination under Due Process Clause

This appeal raises a complex issue relating to res judicata. Lawyers know about res judicata; the general public not so much. But this doctrine -- which prevents you from bringing the same lawsuit in different courts -- is important when it happens to your case. 

The case is Rosenthal v. Roosevelt Island Operation Corp., issued on August 10. This dispute has been going on for six years. Plaintiff was the President and CEO of the Roosevelt Island Operating Corporation, which governs Roosevelt Island. When she was fired, defendants claimed she had made racially and sexually offensive remarks, an allegation that plaintiff denied, prompting her to file an Article 78 petition. In those expedited proceedings, the parties are usually denied discovery and the state court normally resolves the case on the papers, including affidavits and exhibits, determining whether the challenged governmental action was arbitrary and irrational. The judge dismissed the Article 78 petition, holding that the "determination to terminate petitioner clearly was not irrational" given the comments that were cited as justification for her termination. The state court said the proper forum to challenge the factual basis for plaintiff's termination is a plenary action in state court, where you can take depositions and pursue other discovery.

Plaintiff thus filed suit in state court, which also ruled against her on the motion to dismiss relating to her discrimination claims, finding the Article 78 dismissal was a final judgment on the merits. But State Supreme Court only dismissed plaintiff's Section 1983 claims without prejudice, stating the claims should have been filed in the Court of Claims, which hears cases against the State of New York. Or, Supreme Court said, plaintiff could refile these claims against the defendants in their individual capacities, which is what she did in proceeding to federal court on a liberty interest claim arising from the Due Process Clause of the Fourteenth Amendment. 

But the federal court dismissed the Section 1983 claim on res judicata grounds. Under res judicata, you cannot relitigate the same unsuccessful claim in a different court, even if that claim was not asserted in the first lawsuit, so long as it relates to the claims that were actually dismissed. The reason the Court of Appeals reinstates this case is that the state court only dismissed plaintiff's Section 1983 claim without prejudice, which means you can file the same claim again in a different court. Dismissals without prejudice are not "a final determination on the merits." 

This is a new issue for the Court of Appeals (Sack, Perez and Preska [D.J.]), which believes the state's highest court would endorse this reasoning on what is traditionally a state law issue. The Second Circuit states:

We recognize that our own precedent has not squarely addressed such a scenario. In our view, however, the New York Court of Appeals has resolved precisely this conundrum by adopting the relevant Restatement exception permitting a plaintiff to refile specific claims—notwithstanding a final judgment on the merits as to other claims arising from the same transaction—where “[t]he court in the first action has expressly reserved the plaintiff’s right to maintain the second action.”  

. . .  

In other words, while a final judgment on the merits normally extinguishes all other claims arising from the same transaction, a concurrent dismissal without prejudice for some claims preserves a plaintiff’s ability to refile those specific claims in a second action. That is precisely what the Plenary Judgment did by dismissing Rosenthal’s § 1983 claim without prejudice and inviting Rosenthal to refile that specific claim in a different court. 

Nor does the unsuccessful Article 78 case present a res judicata problem. That dismissal only said that plaintiff could not prove her termination was arbitrary and capricious. But the Article 78 court did say the right proceeding for plaintiff was a plenary action with discovery in a different court. The Second Circuit states, "Even if the Article 78 proceeding were considered to have impliedly adjudicated Rosenthal’s discrimination claims, as the New York State Supreme Court later concluded and the Appellate Division since agreed, it is settled law that a 'judgment in a ‘pure’ Article 78 proceeding,' such as this one, 'does not preclude, under the doctrine of res judicata, a later section 1983 damages claim based on the same set of facts.'”

Bottom line: the plaintiff's Section 1983 due process claim may proceed in federal court even though her related claims were twice dismissed in state court. 

Bivens claim survives appellate review

The greatest loophole in constitutional law is that there is no statute that allows you to sue federal officials for a constitutional violation. If you want to sue state and local officials, you can invoke 42 U.S.C. 1983, but there is no Section 1983 claim against federal officials, and the Supreme Court has recognized such claims against federal defendants on three occasions and has repeatedly said it will not recognize new claims. But this plaintiff does have a claim against federal prison defendants because her case is close enough to one of the cases recognized by the Supreme Court as legitimate.

The case is Cicchiello v. Warden, Danbury Correctional Facility, a summary order issued on August 11. Plaintiff is an inmate a federal correctional institution. In her Eighth Amendment claim, she asserts that, as a 73 year-old inmate with a known heart condition, the 100 degree heat inside the jail poses a risk to her health. The case was dismissed because it does not fall within the three kinds of cases that the Supreme Court recognizes as legitimate against federal defendants.

In 1971, the Supreme Court ruled in the Bivens case that, even without a federal counterpart to Section 1983, the Constitutional implies a constitutional claim for civil rights victims suing federal defendants if there are no other remedies available to the plaintiff, such as an in-house administrative remedy, even if the administrative remedy will not get you the damages that a federal lawsuit would, and even if the administrative remedy does not allow for discovery and other procedural protections afforded to federal litigants. One of these days -- and I have been predicting this for years -- the Supreme Court is going to do away with Bivens claims altogether and leave it to Congress to enact a Section 1983 statute for claims against federal defendants. But until that happens, some Bivens claims will survive dismissal. This is one of them.

The Second Circuit (Menashi, Merriam and Cronan [D.J.]) says that plaintiff's case resembles Carlson v. Green, 446 U.S. 14 (1980, where the federal inmate asserted a constitutional claim that the jail was deliberately indifferent to serious medical needs. If plaintiff is able to amend her lawsuit on remand to assert that the jail knew she had a serious medical condition, then this lawsuit will be among the rare Bivens cases that will survive dismissal.  

To give you a sense how hard it is to bring a Bivens claim these days, plaintiff also claims that defendants subjected her to an unlawful strip search. There is no such claim in the Supreme Court arsenal that resembles this one. While one of the three positive Bivens claims in the Supreme Court said a plaintiff could sue federal defendants for a home search in violation of the Fourth Amendment, that case is not this one, as this one took place inside a federal prison, and everyone knows that jail cases are different than all other civil rights cases because courts defer to the expertise of prison officials. The strip search claim is dismissed for good. 

State and local law makes it illegal to videotape inside police station houses

The Second Circuit last year asked the New York Court of Appeals to weigh in on whether you have a right to record video inside the publicly accessible lobbies of police station houses. The New York Court of Appeals answered that question in the negative, and that ruling now allows the Second Circuit to reject a claim brought by public interest organizations.

The case is Reyes v. City of New York, issued on August 6. Videotaping and recording police activity is one way that civil rights organizations try to keep tabs on law enforcement. But, while everyone has video recording equipment in their pocket these days, that does not mean the law is there for them. It is not.

As I summarized this case back when it first reached the Second Circuit, "The plaintiff in this case sued the City of New York, challenging its policy against video-recording in police facilities, including station house lobbies. He posts his interactions with the police on YouTube, but these videos have gotten him arrested. He claims these arrests violate the First Amendment." Hence plaintiff's challenge to the rules prohibiting such videotaping.

The district court granted plaintiffs a preliminary injunction under state and local law, determining plaintiffs were likely to win their challenge to a NYPD policy prohibiting such video recording. Since the case raised an esoteric issue under state law, the Second Circuit asked the New York Court of Appeals to issue a ruling. The adverse ruling from New York's highest court requires the Second Circuit (Raggi, Kearse and Kahn) to vacate the preliminary injunction. 

Door Dash wins free speech case against New York City

New York City enacted a law requiring that third-party delivery platforms, like Door Dash, share customer information with the restaurants whose food they are delivering. Door Dash challenged this requirement as a First Amendment violation, under the coerced speech principle. Door Dash wins the case.

The case is Door Dash, Inc. v. City of New York, issued on August 5. Door Dash gets all the customer information when someone requests a food delivery. The restaurant only gets the customer's first name, last initial, and the order contents, i.e., what food the customer ordered. New York City passed a law in 2021 requiring that Door Dash share the customer information with the restaurants because customer data is "one of the most important tools restaurants can use to develop marketing strategies and customer relations." While Door Dash got all the customer details, the restaurants were unable to communicate directly with those customers as part of their business strategy. At least that was the logic behind the law, which amounted to a gift to the restaurant industry.

The First Amendment does not just protect street protesters and artists. It also protects companies and bars coerced speech. This case involves coerced speech, because the NYC law forced Door Dash to share certain business information with the restaurants. 

Under the case law, a state "may compel a commercial speaker to disclose (1) purely factual and uncontroversial information (2) about the terms under which his services will be available, so long as the disclosure is (3) reasonably related to the State's interest and (4) not unjustified or unduly burdensome." Not the clearest guidelines, but in sum, it means the government can defend such coerced speech in a commercial context only if the speech is "about the goods or services the speaker may offer." In practice, it means that laws requiring restaurants to disclose calorie counts and employers to issue anti-discrimination notices are legal. The Court of Appeals (Wesley, Carney and Park) further reasons:

The disclosure here—customers’ personal information—is not information “about” Marketplace. Information about Marketplace might, for instance, describe the commissions restaurants pay, how the Platforms rank and display restaurants, or the grounds on which they may deactivate a restaurant’s account. See, e.g., Uber Techs., Inc. v. City of Seattle, 168 F.4th 1202, 1216–17 (9th Cir. 2026) (holding, in the alternative, that an ordinance requiring third-party platforms to inform their couriers of the grounds for account deactivation satisfied Zauderer because the notice “concerns only the service provided”). The Customer Data Law, by contrast, compels the disclosure of each customer’s name, number, email address, delivery address, and order contents. § 20-563.7. Those are facts about third parties who use Marketplace, not about Marketplace itself.

Good news, bad news for police misconduct plaintiff

The Second Circuit has ordered a new trial in a malicious prosecution case upon finding the district court improperly excluded recordings that could have undermined the credibility of the plaintiff and his key witness. The court also rejected the police officers’ argument that they were entitled to judgment as a matter of law on the plaintiff’s unlawful-search claim

The case is McClarin v. City of New York, issued on July 13, more than a year following oral argument, demonstrating the complexity of this case. The case arose from a 2015 police investigation in Brooklyn, where officers received information that plaintiff was holding Samantha Miranda captive and abusing her. The officers entered plaintiff's apartment without a warrant, believing they were responding to an emergency. But Plaintiff and Miranda claimed the officers forced their way into the apartment and  pressured Miranda into implicating plaintiff. The charges against plaintiff were dismissed, and this lawsuit followed. Following trial, the jury awarded plaintiff $115,000 in compensatory damages and $775,000 in punitive damages.

The officers seek judgment as a matter of law, citing Rule 50, arguing the jury had no factual basis to rule for plaintiff because they responded to an exigent circumstances that dispensed with the need for a warrant. But the Court of Appeals (Kearse, Raggi and Kahn) affirms the verdict and says the jury had a basis to find for plaintiff because it could have found the officers did not treat the situation as an emergency. The officers spent considerable time dealing with unrelated suspects before going to plaintiff's apartment, and some officers acknowledged that they did not regard the situation as an "emergency" or "urgent." That's the good news for plaintiff. 

The bad news for plaintiff is the verdict is gone and there will be a new trial over an evidentiary ruling that the Second Circuit holds was an abuse of discretion. There were recordings of conversations between plaintiff and Miranda; the officers said these records could have impeached the testimony of plaintiff and Miranda because they included statements about Miranda's expected testimony and the possibility that she would receive money in exchange for her testimony. While the trial court excluded these recordings because they were not disclosed prior to trial, Rule 26 does not require pretrial disclosure of evidence that will be used solely for impeachment. What also helps the police on appeal is that the recordings gave defense counsel ammunition for attacking plaintiff's credibility, as plaintiff denied making certain statements to Miranda, who in turn gave testimony that placed an innocent gloss on their conversations. Had the jury heard the recordings, they might have resolved credibility issues against plaintiff, resulting in a verdict for defendants. 

We have an important ruling on malicious prosecution claims. The officers said plaintiff cannot win this claim because they had probable cause on other charges against him. That argument works in false arrest claims, but not malicious prosecution claims, the Court of Appeals holds. Probable cause for one offense does not necessarily defeat a malicious-prosecution claim involving another offense. In Posr v. Doherty, 944 F.2d 91 (2d Cir. 1991), the Court of Appeals held that "the existence of probable cause to support one charge does not necessarily preclude a claim of malicious prosecution on another charge." In Janetka v. Dabe, 892 F.2d 187 (2d Cir. 1989), the Court held that where the defendant was convicted of disorderly conduct but acquitted of resisting arrest, the unfavorable termination on the disorderly-conduct charge did not preclude a finding of liability for malicious prosecution of the resisting-arrest charge.

Excessive force claim returns to the district court for further review

In this case, the plaintiff found himself back in jail after violating parole. While in jail, he claims, CO's beat him up, Hence this lawsuit asserting excessive force. The trial court denied defendants' motion for summary judgment, but the officers appealed to the Second Circuit, which teaches us again what happens when your civil rights lawsuit raises an esoteric issue that the courts have not definitively resolved in prior cases.

The case is Farrington v. Poole, issued on August 6. Excessive force claims come in two forms. If you are convicted of a crime and incarcerated at state prison, then it's an Eighth Amendment case, where you have to show the officer inflicted unnecessary and wanton pain that would amount to cruel and unusual punishment. To win such a claim, the plaintiff must show the officer subjectively and objectively intended to inflict such harm. But if you are a pretrial detainee, not yet convicted of anything, your excessive force claim is governed by the Fourteenth Amendment, which carries a more lenient standard for the plaintiff, who only has to show the force was purposely or knowingly employed in an objectively unreasonable manner. 

Here's the problem: plaintiff was once convicted of a crime, but he was eventually released from jail on parole. But he violated parole, pleading guilty to that violation at the parole hearing. So he returned to jail, but not state prison. He instead went to the Albany County Jail, where he claims the officers subjected him to excessive force. Parole violators who bring these claims are in a constitutional gray area. Some courts say their claims are governed under the more lenient Fourteenth Amendment. Other courts say these are really Eighth Amendment cases because they have already been convicted of a crime in the past. 

The Second Circuit (Cabranes, Livingston and Menashi) holds that, since plaintiff pled guilty to a parole violation, this is an Eighth Amendment case, not a Fourteenth Amendment case. In resolving the summary judgment motion in plaintiff's favor, the trial court said this was really a Fourteenth Amendment case, as it was not brought to the trial court's attention that plaintiff actually pled guilty to the parole violation. Since plaintiff's case must be resolved under the Eighth Amendment, the case returns to the district court to review the motion for summary judgment again under the more defendant-friendly legal standard. 

The Court of Appeals does not definitively decide whether inmates accused of violating parole who also claim excessive force are Eighth or Fourteenth Amendment plaintiffs. That issue will be decided in some future case. The Court does not have to resolve that issue here because plaintiff's case is clearly an Eighth Amendment case, as he pled guilty to parole violation. In concurrence, Judge Menashi surveys the district court rulings in this area and says that even those accused of violating parole, even if they are not yet convicted of violating parole, are Eighth Amendment plaintiffs, as they have already been convicted of some crime in the past, which is why they ultimately got parole to start with.