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Carmody and Bailey Victorious in Eighth Circuit Appeal of United States Department of Education Ruling on Whistleblower Claim Under American Recovery and Reinvestment Act of 2009

January 26, 2014 by Brunini Law

In 2012, the Secretary of the United States Department of Education (“DOE”) entered an Order finding that Business Communications, Inc. (“BCI”) retaliated in violation of the whistleblower provisions of the American Recovery and Reinvestment Act of 2009 (“ARRA”) in terminating an employee after he made wage-related complaints. The DOE ordered BCI to pay back wages and to reinstate the former employee.   On behalf of BCI, Steve Carmody and Cody Bailey appealed the DOE’s Order to the United States Court of Appeals for the Eighth Circuit.  Carmody and Bailey argued that the DOE deprived BCI of its constitutional right to due process by ordering BCI to pay damages and to reinstate the former employee without allowing BCI an opportunity for a hearing to defend itself.  Likewise on behalf of BCI, Carmody and Bailey also argued that the whistleblower provisions of ARRA, found in section 1553, are facially unconstitutional because they do not allow for a due-process hearing.  The Eighth Circuit ruled in favor of BCI, granting BCI’s petition for review and vacating the Secretary of Education’s Order.  The Court held that “minimum due process for BCI in this context requires either a pre- or post-deprivation hearing that provides BCI with the opportunity to confront adverse evidence and cross examine adverse witnesses.”  The Court further held that “BCI’s due process rights were violated because the DOE never provided BCI a hearing and because the post-deprivation procedures available under § 1553 do not provide any opportunity for BCI ‘to confront and cross examine adverse witnesses,’ thereby depriving BCI of an essential element of due process.”

Practice Attorneys

  • Cody C. Bailey
  • Stephen J. Carmody

Practice Groups

  • Commercial Litigation
  • Construction
  • Environmental Law
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