Flynn v. United States Securities & Exchange Commission
877 F.3d 200
| 4th Cir. | 2017Background
- Rory Flynn, an SEC Associate General Counsel, raised concerns (Oct 2012–May 2013) that the Adjudication office was not complying with SEC Rules of Practice 201.900(a) and 201.900(b).
- Flynn argued Rule 900(a) created mandatory timelines for Commission decisions and Rule 900(b) required detailed status reports when timelines slipped; he tried internal remedies and met with chairwomen.
- Flynn was terminated in May 2013 by his supervisor, who cited poor performance and inability to cooperate with senior managers.
- Flynn pursued corrective action through the Office of Special Counsel, then appealed to the Merit Systems Protection Board (MSPB); an Administrative Judge found Flynn made no protected disclosures under 5 U.S.C. § 2302(b)(8).
- The MSPB did not issue a precedential decision (deadlocked Board), and Flynn sought review in the Fourth Circuit under the Whistleblower Protection Enhancement Act’s expanded venue provision.
- The Fourth Circuit affirmed denial as to Rule 900(a) disclosures, found the AJ failed to analyze Rule 900(b) adequately, and remanded for further proceedings limited to the 900(b) claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Flynn’s disclosures about Rule 900(a) violations were "protected disclosures" under 5 U.S.C. § 2302(b)(8) | Flynn: Rule 900(a) imposes enforceable deadlines; noncompliance is a violation, so his disclosures were protected | SEC: Rule 900(a) is advisory/aspirational guidance not creating mandatory obligations; no reasonable belief of a violation | Held: AJ and court: Rule 900(a)’s language is permissive ("should", "to the extent possible") and discretionary; a reasonable observer could not conclude a violation — disclosure not protected. |
| Whether Flynn’s disclosures about Rule 900(b) status-report deficiencies were protected | Flynn: Rule 900(b) requires the General Counsel to apprise the Commission with specific information; failure to do so is a rule violation | SEC: (at least before Board) argued AJ could resolve any Rule 900(b) issues; on appeal relied on AJ’s analysis | Held: Court: AJ did not meaningfully analyze Rule 900(b) (which uses mandatory "shall"); decision vacated as to this claim and remanded for further proceedings. |
| Whether alleged procedural/evidentiary errors (discovery limits, excluded exhibits, missing credibility findings) require reversal | Flynn: These errors deprived him of a fair chance to show the agency wouldn’t have fired him absent disclosure | SEC: Errors did not affect outcome because AJ concluded no protected disclosure existed | Held: Court declined to address these now because they pertain to the agency’s defense (clear-and-convincing stage) and had no bearing on the AJ’s threshold ruling; AJ may revisit them on remand if Rule 900(b) claim succeeds. |
| Proper remedy for AJ’s failure to address Rule 900(b) | Flynn: Remand for full consideration and development of record | SEC: Board could resolve on review; on appeal urged deference to AJ’s decision | Held: Court remanded to AJ/MSPB to analyze Rule 900(b) claim and permit further fact development rather than decide the claim itself. |
Key Cases Cited
- Kloeckner v. Solis, 568 U.S. 41 (establishing MSPB/appeal framework under CSRA)
- Dep’t of Homeland Sec. v. MacLean, 135 S. Ct. 913 ("law" in § 2302(b)(8) means statutes)
- Chambers v. Dep’t of the Interior, 602 F.3d 1370 (Fed. Cir.) (prima facie elements and burden-shifting in whistleblower cases)
- Kingdomware Techs., Inc. v. United States, 136 S. Ct. 1969 ("shall" ordinarily creates mandatory obligation)
- Patterson v. Commissioner of Social Security Admin., 846 F.3d 656 (4th Cir.) (remand preferred where agency failed to develop record)
- Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 (discussing mandatory meaning of "shall")