A senior Labor Department lawyer contends she faces removal from her job after objecting to Labor Secretary Eugene Scalia’s intervention in a pay discrimination case against Oracle, a tech giant with close White House connections.
Oracle has a lot at stake in the case, which originated in the Obama administration: potentially hundreds of millions of dollars in back pay for female, African-American and Asian-American employees who the department said were paid less than white and male counterparts.
Ordinarily such a case would be left to career employees. But Janet Herold, who has overseen the litigation, asserts in a complaint filed last week with a federal investigative agency that Mr. Scalia broke with normal department practice in seeking a settlement and abused his authority, according to her lawyers.
A Labor Department official with knowledge of the Oracle case said he had heard a similar account. The official said Ms. Herold had told him that a superior informed her shortly before the case went to trial last year that Mr. Scalia intended to settle it for less than $40 million.
The official said Ms. Herold, the Labor Department’s regional solicitor based in Los Angeles, had promptly informed colleagues of this development and told them that she had raised objections to the offer because she considered the amount too low.
Debra Katz, a lawyer for Ms. Herold, would not comment on the settlement discussions or other details of her complaint but said, “It is Ms. Herold’s practice, which she always follows, to keep relevant colleagues and staff updated in live time about all settlement offers conveyed and received in her cases.”
A Labor Department spokeswoman said Mr. Scalia had done nothing irregular or improper in the Oracle case. While he had routine internal discussions about the case, she said, “Secretary Scalia has never had any communications with Oracle or its attorneys concerning the department’s litigation against the company.”
Asked whether other officials had discussions with Oracle on Mr. Scalia’s behalf, the spokeswoman said the department “does not comment on ongoing litigation or improperly disclosed settlement negotiations.” She said the department was continuing to pursue the case against Oracle.
Deborah Hellinger, an Oracle spokeswoman, declined to say whether the company had interacted with top Labor Department officials about a possible settlement since Mr. Scalia became secretary, but said, “Anyone who followed the trial observed firsthand that D.O.L.’s case lacked all evidence and merit.”
The White House did not respond to questions about the handling of the Oracle case.
According to Ms. Katz, Ms. Herold’s complaint states that Mr. Scalia became involved in the case shortly after his confirmation last September, and that he requested a memo from Ms. Herold about the case in November. Ms. Herold objected to his involvement on more than one occasion, Ms. Katz said.
She said in a statement that the documentary evidence included in Ms. Herold’s complaint, along with “the anticipated testimony of career service attorneys at D.O.L.,” will show that Mr. Scalia’s actions “in intervening in the Oracle litigation were improper.”
According to Alexis Ronickher, another lawyer for Ms. Herold, Mr. Scalia sought to reassign Ms. Herold to a job in Chicago with the Occupational Safety and Health Administration that does not involve litigation, her expertise, a few weeks after she raised renewed concerns about his intervention. Ms. Ronickher said her client was told of Mr. Scalia’s intention to transfer her in a meeting with her supervisors last month, and told that she would be dismissed if she turned down the assignment.
Asked about those contentions, the Labor Department said it “declines to comment on personnel matters.”
Ms. Herold’s complaint was filed with the federal Office of Special Counsel, which investigates retaliation against whistle-blowers. The complaint has three components, according to Ms. Katz. In the first, a formal report under a whistle-blower statute, Ms. Herold accuses Mr. Scalia of abuse of authority and gross mismanagement. The second is a charge of retaliation against Ms. Herold for objecting to Mr. Scalia’s intervention in the Oracle case. The third is a charge that Mr. Scalia discriminated against her because he saw her as ideologically aligned with the Obama administration.
If the Office of Special Counsel finds merit to Ms. Herold’s complaint, it could ask the department to stand down on her reassignment.
The Labor Department spokeswoman rejected the idea that Ms. Herold had observed any behavior that would prompt whistle-blowing. “Ms. Herold is not a whistle-blower and at no time has the department engaged in retaliation against her,” the Labor Department spokeswoman said.
The effort to reassign Ms. Herold was reported this week by Bloomberg Law.
The discrimination case against Oracle arises from an enforcement action by the Labor Department’s Office of Federal Contract Compliance Programs, which monitors whether government contractors like Oracle are following federal anti-discrimination laws.
In a trial in December, the Labor Department team, led by Ms. Herold, said that Oracle was paying female employees up to 20 percent less than males and that it was paying Asian- and African-American employees between 10 and 30 percent less than white employees in three job categories.
The categories account for about two-thirds of the employees at Oracle’s headquarters in Redwood City, Calif., according to the department. The government’s expert witness in the case testified that back pay owed to workers as a result of the discrimination from 2013 through 2018 came to between $300 million and about $800 million. The amount could be higher today because the government asserts that the violations have continued since then.
The first phase of the trial was held in an administrative trial court, but the judge in the case has yet to rule.
One current and one former Labor Department official with knowledge of the case said that the department’s scrutiny of the work of Ms. Herold’s legal team increased significantly after Mr. Scalia took over as labor secretary. The officials said that Solicitor Kate O’Scannlain, the Labor Department’s top lawyer, began making line edits in legal briefs that the team planned to file in court, which she had not previously done. One of the officials said that it was reasonable for her to take an interest in important court filings but that he was surprised that Ms. O’Scannlain, who supervises hundreds of lawyers, would involve herself on such a granular level.
According to two former Labor Department officials with knowledge of the case, President Trump’s first labor secretary, Alexander Acosta, rebuffed a request by Oracle’s chief executive, Safra Catz, who had been a member of Mr. Trump’s transition team, to discuss the case in early 2018. Mr. Acosta told Oracle that the company should discuss the case with the Labor Department’s legal office following a longstanding custom in which the solicitor’s office handles litigation, those officials said.
The Labor Department had no comment on that account.
M. Patricia Smith, the Labor Department solicitor under President Barack Obama from 2010 to 2017, said in a text message that the two labor secretaries she served under did not directly involve themselves in settlement negotiations in cases that the department had brought. She said that Thomas E. Perez, Mr. Obama’s second labor secretary, would weigh in on the broader legal questions at stake in a negotiation but that “this number vs. that number was left to the litigators.”
Ms. Smith said that it was not unusual for lawyers to send her drafts of briefs in important cases but that she would have commented only on the overall arguments, not word choice and grammar.
A current official and a former official with knowledge of the case described Oracle as aggressive from the get-go in dealing with the Labor Department in the matter. Not long before the trial began, the judge admonished Oracle for its “scorched earth” strategy of raising an “undifferentiated mass of what mostly appear to be meritless objections.”
Oracle has long been proactive in trying to influence legislation and regulation in Washington, spending $8.2 million on federal lobbying last year, according to the Center for Responsive Politics. And its top executives have built something rare among their tech industry peers: a close relationship with President Trump and his administration.
When Ms. Catz, the chief executive, joined the Trump transition team, most tech executives were still sizing up the incoming administration. “I plan to tell the president-elect that we are with him and are here to help in any way we can,” she said before a meeting between Mr. Trump and tech chief executives in December 2016.
Bloomberg News has reported that at a dinner in April 2018, Ms. Catz spoke with Mr. Trump about Oracle’s yearslong fight with Amazon and other companies over a $10 billion Pentagon cloud computing contract, though the Pentagon later announced that Oracle was out of the running because it hadn’t met the minimum requirements for the project.
The company’s executive chairman, Larry Ellison, hosted a fund-raiser for President Trump this year at his estate in Rancho Mirage, Calif. And the two men discussed the malaria drug hydroxychloroquine as a potential treatment for the coronavirus, according to a person familiar with the discussion. Mr. Trump came to be an evangelist for the drug, despite a lack of scientific evidence about its efficacy for such use.