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Total Articles: 74

DOL Flip-Flop: SOX's Anti-Retaliation Provisions Apply to Overseas Conduct After All

In a late-August decision with potentially far-reaching implications for foreign and multinational employers, the United States Department of Labor Administrative Review Board (ARB) held that the Sarbanes-Oxley Act's (SOX) whistleblower provisions have extraterritorial application—in apparent contradiction of appellate court and indeed prior ARB case law.

Good Faith Belief in Employee’s Wrongdoing Serves as Defense Against Retaliation Claim

A recent Fourth Circuit Court of Appeals ruling may offer employers in North and South Carolina another defense against an employee’s retaliation claim: No liability for adverse action against an employee based on the employer’s genuine belief that the employee made a false complaint of discrimination.

Supreme Court Set to Decide Whether Dodd-Frank Protects Internal Whistleblowers

On June 26, 2017, the U.S. Supreme Court agreed to review whether the Dodd-Frank Act’s whistleblower anti-retaliation provisions protect employees who only complain internally to their employer, but do not complain directly to the U.S. Securities and Exchange Commission. In doing so, the Court may resolve a more than year old split among the circuit courts over what actions an employee must take in order to be considered a “whistleblower” for the purposes of Dodd-Frank’s whistleblower protections.

Supreme Court to Hear Internal Whistleblowing Case

The US Supreme Court has agreed to hear Digital Realty Trust, Inc. v. Somers (Docket No. 16-1276), a case that should settle the question of whether the anti-retaliation provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank) applies to internal whistleblowers. The federal circuits are split on whether those employees who fail to report violations of securities laws to the Securities and Exchange Commission (SEC) are protected by Dodd-Frank's whistleblower provision. However, regardless of the jurisdiction in which an employer operates, it should engage in best practices with respect to internal or external whistleblowing.

Circuit Split Over Protection Afforded By Dodd-Frank Whistleblower Provision Widens

In Somers v. Digital Realty Trust, 15-17352 (9th Cir. March 8, 2017), a split Ninth Circuit Court of Appeals widened an existing circuit court split by ruling that Section 21F of the Dodd-Frank Act (“DFA”) protects individuals who make internal disclosures as well as those who make disclosures to the Securities and Exchange Commission (“SEC”).

9th Circuit Decision Protects Internal Whistleblowing Under Dodd-Frank

The 9th Circuit Court of Appeals has issued a decision that individuals who complain internally, but who do not make an external complaint to the Securities and Exchange Commission (SEC), are protected whistleblowers under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank). In Somers v. Digital Realty Trust Inc., the 9th Circuit deepens the existing circuit split between the 2nd and 5th Circuit Courts of Appeals regarding the definition of whistleblower under Dodd-Frank.

Whistleblowing General Counsel Wins $11 Million Against Ex-Employer

A federal jury in California has awarded nearly $11 million in damages to the former general counsel of Bio-Rad Laboratories in a whistleblower retaliation lawsuit involving potential bribery in China. The claim was brought under the Sarbanes-Oxley Act of 2002 (SOX).

Ex-GC Awarded $8 Million For Retaliatory Firing

A California federal jury awarded Sanford Wadler, former General Counsel of Bio-Rad Laboratories, $8 million for his claims against his former employer under the whistleblower provisions of Sarbanes-Oxley (SOX) and the Dodd-Frank Acts (DFA). This case implicates a number of key issues confronting companies and their in-house legal teams, including: (1) protections and scope of the attorney-client privilege; (2) what constitutes protected activity from an in-house attorney or compliance officer; (3) the importance of consistent and timely performance critiques; and (4) preparing adverse employment decisions to be scrutinized by a judge, jury, or arbitrator. The case also highlights the existing split among federal courts regarding what constitutes a “whistleblower” under the DFA.

SEC Whistleblower Update: New Enforcement Actions for ‘Chilling’ Language in Severance Agreements

The Securities and Exchange Commission (“SEC”) continues to actively enforce Rule 21F-17 under the Securities Exchange Act of 1934, which provides that “no person may take any action to impede an individual from communicating directly with the Commission staff about a possible securities law violation, including enforcing, or threatening to enforce, a confidentiality agreement ... with respect to such communications.”[1] In its most recent actions, the SEC charged companies with violating Rule 21F-17 by including language in severance agreements that specifically prohibited former employees from communicating disparaging information about the company to the SEC and that prohibited former employees from voluntarily communicating with or contacting any governmental agency in connection with a complaint or investigation.

Restoring Decades-Old Precedent, the DOL Blows the Whistle on Fordham's "Fundamental Error"

On Friday, September 30, 2016, U.S. Department of Labor’s (DOL’s) Administrative Review Board (ARB) issued its highly anticipated decision in Palmer v. Illinois Central Railroad Company, ARB No. 16-035 (2016), correcting its much-criticized decision in Fordham v. Fannie Mae, ARB No. 12-061 (2014). In Fordham, the ARB held that, when analyzing whistleblower claims under the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century, commonly known as “AIR-21” framework, a fact-finder may not consider an employer’s evidence when determining whether the employee’s alleged protected activity was a contributing factor in the challenged adverse employment action. As predicted when Fordham was issued,1 this was particularly problematic for employers.

U.S. Securities and Exchange Commission Surpasses $100 Million in Awards Through Whistleblower Program

On August 30, 2016, the U.S. Securities and Exchange Commission (“SEC”) announced that it surpassed the $100 million mark in monetary awards for whistleblowers. Through the enactment of the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”), Congress established the whistleblower program to incentivize whistleblowers who possess “specific, credible and timely” information about federal securities laws violations to report information to the SEC.

SEC Cracks Down On Anti-Whistleblower Severance Agreements

The federal Securities and Exchange Commission (SEC) has issued six-figure fines to two different employers in the past several weeks, claiming that each crafted restrictive severance agreements that violated agency rules aimed at preventing companies from discouraging whistleblowing by current and former employees.

Sometimes a Complaint is Just a Complaint: Eighth Circuit Applies Reasonableness Standard to Reject Employee’s SOX Retaliation Claim

Earlier this summer, in Beacom v. Oracle, the U.S. Court of Appeals for the Eighth Circuit affirmed summary judgment dismissing the SOX and Dodd Frank Act claims of an employee who was fired from his Vice President position after he says that he complained about changes in his employer’s financial forecasting. The Court upheld dismissal of that claim based on the standard that a SOX plaintiff must prove that he “subjectively believe[d] the employer’s conduct violated a law relating to fraud against shareholders, and the employee’s belief must be objectively reasonable” (Emphasis added.) According to the Minnesota District Court that initially heard and dismissed Beacom’s claim and the Court of Appeals that affirmed, the plaintiff in this case could do neither.

SEC Fines Company $265,000 for Severance Agreements that Potentially Chilled Whistleblowers

Company agreements with employees continue to be under fire. In the latest example, the Securities and Exchange Commission has issued a cease-and-desist order against BlueLinx Holdings Inc. over the use of severance agreements the agency found improperly interfered with the rights of potential whistleblowers to obtain monetary rewards for reporting suspected illegal activity. The August 10, 2016, Order included a $265,000 fine and other specific non-monetary remedies against the company.

Severance, Confidentiality Agreements Must Not Limit Whistleblower Awards, SEC Orders

The Securities and Exchange Commission (SEC) has issued a cease and desist order targeting provisions in severance agreements that limit an employee's ability to cash in on a whistleblower award.

SEC Issues Cease-and-Desist Order Against Severance Agreement Clause Limiting Whistleblowers' Rights to Recover Bounty Awards

On August 10, 2016, the U.S. Securities and Exchange Commission issued a cease-and-desist Order and imposed remedial sanctions against a publicly traded company for including language in its severance agreements requiring outgoing employees to agree to waive recovery of any monetary award from the SEC after filing a whistleblower complaint with the agency. In BlueLinx Holdings, Inc., the SEC determined this waiver in the company’s severance agreements violated SEC Rule 21F-17(a) because it impermissibly would impede a whistleblower’s right to communicate directly with the SEC about a possible securities law violation.

Fourth Circuit Upholds Sarbanes-Oxley Whistleblower Retaliation Finding and Substantial Monetary Award

On May 20, 2015, a split Fourth Circuit panel ruled Deltek, Inc., a Virginia-based software and information services provider, must pay a terminated whistleblower four years of front wages and thirty thousand dollars ($30,000) in college tuition. In doing so, two thirds of the panel affirmed the U.S. Department of Labor’s Administrative Review Board’s determination upholding an Administrative Law Judge’s finding the company retaliated against Dinah R. Gunther, a former financial analyst, in violation of the Sarbanes-Oxley Act, holding these decisions were supported by substantial evidence and reached through application of the correct legal standards.

CFTC Awards $10 Million to Whistleblower

The US Commodity Futures Trading Commission (CFTC) has announced an award of more than $10 million to a whistleblower. The award is the largest made by the agency to date.

EEOC’s Proposed (Anti) Retaliation Guidance: Is Your Whistleblower Response System Ready?

The EEOC’s January 21, 2016 “Draft Proposed Enforcement Guidance on Retaliation and Related Issues” continues the pattern of governmental agencies probing deeply into your whistleblower program. Whether or not the guidance remains exactly as drafted, it is a window into the EEOC’s view of an effective anti-retaliation system. And its message is clear: employers need an integrated response system that involves supervisors and managers throughout the process, removes psychological deterrents to reports of retaliation, responds promptly and expertly to allegations, and avoids retaliation during the investigation and afterward.

Former Employee’s SOX Whistleblower Claim Fails, Federal Appeals Court Rules

Finding a former employee failed to “put up” sufficient facts to support the nexus between his termination and whistleblower activity protected by the Sarbanes-Oxley Act (SOX), the federal appeals court in Philadelphia, in effect, has told him to “shut up,” affirming summary judgment unanimously in favor of the employer. Wiest et al. v. Tyco Electronics Corp., No. 15-2034 (3d Cir. Feb. 2, 2016). Moreover, the Court clarified that a “contributing factor” to a SOX retaliatory firing must affect the outcome of the adverse employment decision.

Third Circuit Affirms Summary Judgment in SOX Whistleblower Case Against Tyco

The 3rd Circuit Court of Appeals has affirmed the dismissal of a whistleblower retaliation claim against Tyco Electronics Corporation (Tyco) based on the Sarbanes-Oxley Act's anti-retaliation provisions. Aided by a thoroughly documented report from an HR director, the longstanding whistleblower case is winding down after several years of litigation (which yielded an earlier opinion regarding the scope of SOX whistleblower protections).

“Put Up or Shut Up:” The Third Circuit Denies Former Tyco Employee’s SOX Whistleblower Claim

There have been a series of legal battles since 2009 between Tyco Electronics Corp. and its former accounts payable manager, Jeffrey Wiest, fired for sexually harassing and engaging in inappropriate sexual relations with several female subordinates. In the latest skirmish, a Third Circuit panel unanimously backed Tyco, holding that Wiest was, in fact, discharged for sexual harassment and not for whistleblowing activity protected under the Sarbanes-Oxley Act.

Wal-Mart Hit With $31-Million Verdict for Firing Whistleblowing Pharmacist

A federal jury in New Hampshire has awarded more than $31 million in damages to a former Wal-Mart pharmacist who claims the nation's largest retailer fired her for raising safety concerns about how it filled prescriptions.

SEC Report Indicates Whistleblower Program Going Strong

Compliance professionals and attorneys received confirmation on Tuesday of what many have long expected: the U.S. Securities and Exchange Commission whistleblower program is steadily growing in scope and impact, and the SEC is taking more aggressive positions to obtain information from whistleblowers and protect informants from retaliation. These developments have profound implications for corporate business conduct and the compliance industry.

California Federal Court Adds to Debate over Scope of Dodd-Frank Act Anti-Retaliation Protection

In a decision perhaps overshadowed by the Second Circuit’s subsequent decision in Berman v. Neo@Ogilvy LLC, 14-4626 (2d Cir. Sept. 10, 2015) two days later, a district court in California has added to the growing split among federal courts on the scope of the Dodd-Frank Act’s anti-retaliation provision. In Davies v. Broadcom Corporation, 2015 U.S. Dist. LEXIS 122812 (C.D. Cal. Sept. 8, 2015), the U.S. District Court for the Central District of California dismissed the plaintiff’s DFA whistleblower claim, finding she was not a “whistleblower” under the Act as she had not contacted the Securities and Exchange Commission.

Second Circuit Rules That Internal Whistleblowers Are Protected Under Dodd-Frank

On Sept. 10, 2015 the U.S. Court of Appeals for the Second Circuit held, in a 2-1 decision, that the anti-retaliation provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) protects employees who report violations of securities laws only internally. The court’s decision in Berman v. Neo@Ogilvy LLC[1] conflicts with the U.S. Court of Appeals for the Fifth Circuit’s decision in Asadi v. G.E. Energy (USA), L.L.C.,[2] in which that court held that employees are protected from retaliation under Dodd-Frank only if they report securities law violations to the Securities and Exchange Commission (“SEC”). The scope of Dodd-Frank’s anti-retaliation provision is, therefore, poised for review by the U.S. Supreme Court.

Split Appeals Court Decision May Set Stage for Supreme Court Review of Dodd-Frank Whistleblower Provision

A federal appeals court ruling on the Dodd-Frank Wall Street Reform and Consumer Protection Act (“DFA”) may prompt U.S. Supreme Court review as to when an employee whistleblower is entitled to the benefits of the anti-retaliation provisions of the DFA.

Second Circuit Rules Internal Whistleblowers Are Protected Under Dodd-Frank

The U.S. Court of Appeals for the Second Circuit created a federal appellate split today when it revived a Dodd-Frank Act retaliation claim by an ex-finance director, who was responsible for the company’s financial reporting and compliance with accounting standards. The court held that he was protected even though he only raised claims of accounting fraud internally with his employer, but did not report them to the Securities and Exchange Commission (SEC or the Commission) before he was terminated.

Dodd-Frank Whistleblower Protections Addressed by 2nd Circuit

The 2nd Circuit Court of Appeals has ruled that the Dodd-Frank Wall Street Reform and Consumer Protection Act's whistleblower protections may apply even if an employee did not disclose any violations directly to the Securities and Exchange Commission (SEC), but only disclosed information internally. The Berman v. Neo@Ogilvy LLC decision, which affects employers in New York, Connecticut and Vermont, is the latest to take an expansive view of Dodd-Frank's whistleblower protections.

Second Circuit Expands Protections for Internal Whistleblowers

As we forecast in our August 2015 post, “The SEC’s Interpretative Guidance on Internal Whistleblowing Under the Dodd-Frank Act,” a federal court of appeals today issued a decision in line with the U.S. Securities and Exchange Commission’s (SEC) interpretation that the Dodd-Frank Wall Street Reform and Consumer Protection Act protects an individual who reports a violation of securities laws only internally before suffering an adverse employment action. If the decision stands, the split of authority among the courts of appeals resulting from the decision sets the stage for an appeal to the Supreme Court of the United States.

Recent Cases Recognize Limits to Employees’ Attempts at Self-Help to Support Retaliation Claims

Two recent cases from opposite coasts confirm that employees do not have an unfettered right to steal their employer’s documents notwithstanding the documents’ potential relevance to a whistleblower retaliation claim.

SEC Continues its Efforts to Make Dodd-Frank Whistleblowing Easier

The Securities and Exchange Commission (SEC) recently issued interpretative guidance intended to advance the agency's position that a whistleblower is entitled to the anti-retaliation protections of the Dodd-Frank Wall Street Reform and Consumer Protection Act after making an internal complaint regarding possible securities law violations, even if the individual does not report directly to the SEC. The SEC's interpretation comes as no surprise, as it has taken this litigation stance since issuing its first Dodd-Frank regulation in 2011. The release of an official agency interpretation on August 4, 2015 may be the SEC's attempt to convince the courts to adopt its view. If the courts do, internal whistleblowers would have the benefit of Dodd-Frank's procedural process and remedies in addition to those under the Sarbanes-Oxley Act of 2002 (SOX).

Fifth Circuit Rejects SOX Whistleblower Claims Not Raised in Administrative Complaint; Adopts Liberal "Reasonable Belief" Pleading Standard With Respect to Protected Conduct

Executive Summary: On July 31, 2015, the Fifth Circuit issued a decision that may have both a positive and negative impact on employers defending whistleblower retaliation claims under the Sarbanes Oxley Act (SOX). In this decision, the court held that a former employee could not proceed with the portion of his whistleblower retaliation claim that was based on protected activity he did not identify in his administrative complaint to the Occupational Safety and Health Administration (OSHA). However, the court reinstated the former employee's claims that were based on activity that he did report in his administrative complaint, finding that the lower court applied an overly restrictive pleading requirement in dismissing the claims. The Fifth Circuit adopted the more liberal pleading standard established by the U.S. Department of Labor (DOL) Administrative Review Board (ARB) in May 2011 – rendering it far easier for whistleblowers to advance their retaliation claims beyond the pleading stage, into the discovery phase, and potentially on to trial by jury.

The SEC’s Interpretative Guidance on Internal Whistleblowing Under the Dodd-Frank Act

On August 4, 2015, the U.S. Securities and Exchange Commission (SEC) issued an interpretive rule stating that whistleblowers who report misconduct internally—not just those who report to the SEC—are protected by the anti-retaliation provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act. This guidance is the SEC’s first formal pronouncement on the scope of the Dodd-Frank retaliation provision, and it comes at a time when the potential looms for a possible split among the federal courts of appeals on this important issue.

Sixth Circuit Changes Course on Proof Required to Show Protected Whistleblower Activity Under SOX

The Sarbanes-Oxley Act (SOX) provides anti-retaliation protection to whistleblowers who engage in “protected activity.” To engage in protected activity under SOX, the whistleblower must provide information to the Securities and Exchange Commission (SEC) or another law enforcement agency, to Congress or one of its members, or to a “person with supervisory authority” over the whistleblower. The information must pertain to “any conduct” which the whistleblower “reasonably believes” constitutes a violation of at least one of six federal fraud laws enumerated under SOX. These laws are:

District Court Holds False Claims Act Applies to Employee Allegedly Terminated for Engaging in Protected Activity Against Unrelated Former Employer

In a matter of first impression, the U.S. District Court for the Western District of Pennsylvania in Cestra v. Mylan Inc. No. 15-0873 (E.D. Pa., May 22, 2015) held that the antiretaliation provision of the False Claims Act applies to an employer who terminates an employee for engaging in protected conduct against an unrelated entity.

SEC Brings First Enforcement Action Targeting Language Contained in Confidentiality Agreements

As we reported in a previous post, “SEC Investigating Companies’ Employment Contracts That Restrict Whistleblowing,” the U.S. Securities and Exchange Commission (SEC) has been vocal about its concerns regarding the effects of confidentiality provisions on the agency’s enforcement efforts and on the rights of whistleblowers, and has even asked several companies for years of employment contracts, nondisclosure agreements, and other documents formed with their employees. Chief of the SEC Office of the Whistleblower Sean McKessy said that his office would be on the lookout for contracts that have a chilling effect on employees’ bringing allegations of wrongdoing to the SEC’s attention. According to a 2014 Law 360 article, McKessy warned “If we find that kind of language, not only are we going to go to the companies, we are going to go after the lawyers who drafted it.”

SEC Investigating Companies’ Employment Contracts That Restrict Whistleblowing

The U.S. Securities and Exchange Commission (SEC) may soon be investigating the agreements companies make with their employees. According to a February 25, 2015 Wall Street Journal report, the SEC has sent requests to several companies asking for years of employment contracts, nondisclosure agreements, and other documents imposing confidentiality obligations on employees.

OSHA Issues Amended Procedures for Handling Retaliation Complaints Under the Sarbanes-Oxley Act

On March 5, 2015, OSHA issued amended procedures for the handling of retaliation complaints under Section 806 of the Sarbanes-Oxley Act of 2002. The amended procedures, now effective, govern employee protection claims. By way of background, on November 3, 2011, an interim final rule (“IFR”) governing these provisions and requesting comment was published in the Federal Register, 76 FR 68084. Pursuant to the IFR, five comments were received.

2014 -- A Record-Setting Year for Whistleblowers

2014 was a record-breaking year for whistleblowers, including both the U.S. Department of Justice’s prosecution of cases under the False Claims Act (FCA) and the U.S. Securities and Exchange Commission’s prosecution of cases under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).

Supreme Court Delineates Federal Whistleblower Protections in TSA Disclosure Case

On January 21, 2015, the Supreme Court of the United States decided whether a federal air marshal, who publicly disclosed that the Transportation Security Administration (TSA) had decided to cut costs by removing air marshals from certain flights, was entitled to whistleblower protection. According to the Court’s ruling, the air marshal’s disclosure did not fall under an exception to the whistleblower law for disclosures that are “specifically prohibited by law.” In a majority opinion written by Chief Justice Roberts, the Court ruled, 7-to-2, that the air marshal’s disclosure was not “specifically prohibited by law,” but rather was specifically prohibited by a regulation. Department of Homeland Security v. MacLean, No. 13–894, Supreme Court of the United States (January 21, 2015).

Whistleblower Protection Extends To Federal Workers Who Violate Agency Regulations

Today the U.S. Supreme Court held that an agent of the Transportation Security Administration (TSA) who disclosed information that was prohibited by TSA regulations, was nonetheless protected under the Whistleblower Protection Act. The Court’s reasoning centered around the fact that “regulations” are not “laws.” DHS v. MacLean.

5th Circuit Takes Expansive View of SOX

While I was starting a week long trial in the Southern District of Texas, the 5th Circuit was taking a wide, pro-employee view of Sarbanes Oxley. In Halliburton v. Administrative Review Board (5th Cir. 11.12.14) the Court was faced with an unusual factual case.

Court Denies Extraterritorial Application of the Dodd-Frank Act's Whistleblowing Provisions

On August 14, 2014, in Liu Meng-Lin v. Siemens AG, a three-judge panel of the United States Court of Appeals for the Second Circuit unanimously held that the whistleblowing provision of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (“the Dodd-Frank Act”), does not protect a foreign worker employed abroad by a foreign corporation where all events related to the disclosures occurred abroad. (Liu Meng-Lin v. Siemens AG, 2d. Cir., Docket No. 13-4385, Decided August 14, 2014).

SEC Brings First Whistleblower Anti-Retaliation Enforcement Action

On June 16, 2014, the U.S. Securities and Exchange Commission (SEC) resolved its first whistleblower retaliation enforcement action. The SEC’s order against Paradigm Capital Management, Inc. is the first-ever enforcement action brought by the agency under the anti-retaliation provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Employers should take note of the order and prepare for similar enforcement actions by the SEC over the coming months and years.

Employers Defending Against SOX Whistleblower Actions Should Prepare for a Long Ride

Employers defending against Sarbanes-Oxley Act (SOX) whistleblower retaliation claims should be prepared for a long and potentially onerous litigation process, even if the claims lack merit. A recent district court decision vividly illustrates this point.

Supreme Court Expands Sarbanes-Oxley Whistleblower Protection to Employees of Private Companies

David Dubberly was recently featured in Midlandsbiz for his article on Supreme Court Expands Sarbanes-Oxley Whistleblower Protection to Employees of Private Companies.

The Supreme Court and Congress Are Thinking About Whistleblower Protection — Are You?

Recent activity at the federal level — including a U.S. Supreme Court decision this month and an increase in congressional funding for the Occupational Safety and Health Administration (OSHA) — points to greater protection for employees who report wrongdoing or violations by their employers. With such high-level attention being paid to whistleblower protection by the judiciary, regulators, and lawmakers, these developments should serve as a reminder to all companies to ensure that proper policies and procedures are in place for handling whistleblower complaints.

Supreme Court Dramatically Expands Coverage of Sarbanes-Oxley Whistleblower Protections

In Lawson v. FMR LLC, the U.S. Supreme Court held that the whistleblower protections found in the Sarbanes-Oxley Act (SOX) protect from retaliation employees of privately held contractors and subcontractors of publicly traded companies—and not just those employed directly by a public company.

Supreme Court Expands SOX Whistleblower Protection

Yesterday, in a 6-3 vote, the U.S. Supreme Court issued a landmark decision greatly expanding the whistleblower protections of the Sarbanes-Oxley Act (SOX) to cover employees of private entities contracting with publicly-traded companies.

Supreme Court Expands Scope of Sarbanes-Oxley Whistleblower Liability

This morning the Supreme Court of the United States issued its opinion in Lawson v. FMR LLC, No. 12-3, holding that the whistleblower protections of the Sarbanes-Oxley Act of 2002 protect not only the employees of regulated public companies but also the employees of contractors and subcontractors of those companies. By reaching into the workforces of companies that are not themselves regulated by Sarbanes-Oxley, but merely do business with regulated companies, the Court, through this decision, has vastly increased the scope of potential whistleblower claims. This increased scope will likely result in more Sarbanes-Oxley whistleblower litigation and, in particular, more litigation against non-public companies.

“Entirely Comfortable” With a “Monster”: A Striking Decision From an Unlikely Source About Excessive Fines Under the FCA

As we have discussed before, whistleblower and retaliation decisions—including from the Supreme Court of the United States—have created an increasingly whistleblower-friendly body of law that unifies courts across the ideological spectrum. Bunk v. Gosselin World Wide Moving, a recent decision from the Fourth Circuit Court of Appeals in Richmond, long considered an employer-and business-friendly court, is a striking addition to that body of law. Bunk interprets the civil penalties provision of the False Claims Act (FCA) broadly to allow exceptionally large fines.

5th Circuit's View on Extraterritorial Application of SOX? Not Yet

One of the many issues still to be decided for whistle-blowing claims under Sarbanes Oxley is how far does the law extend, if at all, for conduct outside the United States.

On a “Clear and Convincing Day”: The Administrative Review Board Gives Employers Some Helpful Guidance

As we have discussed in earlier posts, the Administrative Review Board (ARB) has, over the last couple of years, issued a number of opinions signaling a decidedly employee-friendly interpretation of the whistleblower statutes under its purview. One example was the original 2012 ARB decision in Zinn v. American Commercial Lines. In the closing days of 2013, however, the ARB issued another opinion in Zinn that handed a victory to the employer in the case. The opinion also provides guidance to all employers on how to satisfy the Sarbanes-Oxley Act requirement that an employer present “clear and convincing” evidence that it would have taken the same action against a whistleblower absent any protected activity.

Blowing the Whistle on the Whistleblower: When a Whistleblower Takes Confidential Documents

As you may have read in our previous blog post, prudent employers should embrace the “righteous whistleblower” in service of their culture of compliance. But what is an employer to do when a whistleblower has engaged in “unrighteous” conduct, such as stealing proprietary or confidential documents? The issue of improperly removed or retained company documents arises in a large percentage of whistleblower retaliation cases and can present significant problems for employers that need to safeguard information for business or legal reasons.

First Circuit Dismisses FCA Claim For Failure To Plead Fraud With Particularity And Denies Further Amendments Of Complaint

On December 6, 2013, in U.S. ex rel. Helen Ge, M.D. v. Takeda Pharmaceutical Company Limited (No. 13-1088), the First Circuit Court of Appeals affirmed the dismissal of Dr. Helen Ge’s qui tam actions against her former employer, Takeda Pharmaceutical Company (Takeda). Ge claimed that Takeda terminated her employment when she complained about improper reporting of “adverse events” related to several drugs that Takeda sold. The court dismissed her qui tam actions, which she brought under the federal False Claims Act (FCA), on the basis that Ge failed to plead fraud with particularity. The court also affirmed the denial of Ge’s requests to amend her complaints.

Keyboard Filing - Being a Whistleblower Just Got a Lot Easier

It will be interesting to see what the response is to today's announcement by the Department of Labor that complaints under any of the 22 federal whistleblowing statutes that OSHA enforces may now be filed on line.

Sarbanes Oxley in the Supreme Court Dock

And on the Supreme Court docket for next term after the Court's grant of certiorai of a 1st Circuit decision which applied a narrow definition to the coverage of the first major financial regulatory act. Lawson v. FMR, LLC. (1st Cir. 2.3.12) . The case's page on Scotus blog is here.

Break the Law. Blow the Whistle. Go to Prison. Get $104 Million.

Employees now have 104 million more reasons to blow the whistle on unethical conduct.

Why Employers Don't Like Statutes Creating Causes of Action

One of the responses by the employer community to almost any proposed statutory cause of action is not that it supports employers who engage in whatever conduct is going to be prohibited, but that by adding yet another statutory cause of action, there is yet one more way for a lawsuit to be brought.

Employer’s Actions Have Unintended Consequences in Texas Whistle-Blower Case

In one of the most dramatic and convoluted scenarios ever seen in a whistle-blower case, a doctor has been disciplined by a medical board; a hospital administrator has been jailed; two nurses have been fired, criminally charged, acquitted, and then awarded $750,000; and a local sheriff has been removed from office and sentenced to jail, with a subsequent lengthy felony-probation. Employers who do not believe that recent legislative changes related to whistle-blower claims (Dodd-Frank Act, Sarbanes-Oxley, and state-based whistle-blower statutes) have begun to change the landscape of employment-related cases should take the time to read this story.

SEC Adopts Final Whistleblower Rules – Creating Strong Incentives for Whistleblowers and Expanding Whistleblower Protection from Retaliation

On May 25, 2011, the Securities and Exchange Commission (the “SEC”), in a divided 3-2 vote, adopted final rules to implement the whistleblower bounty program and anti-retaliation provisions enacted as a part of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). The final rules will become effective 60 days following their publication in the Federal Register.

SEC Issues Final Whistleblower Rules

On May 25, the SEC issued final rules implementing the whistleblower provisions of the Dodd-Frank Act (which are codified at Section 21F of the Exchange Act). Under the rules, the SEC will pay a “bounty” to whistleblowers who voluntarily provide the SEC with original information about a possible securities law violation that leads to a successful enforcement action resulting in monetary sanctions of over $1 million. The amount of the award can range from 10% to 30% of the monetary sanctions, as determined by the SEC in its discretion, based on factors listed in the rules.

Dodd-Frank Meaningfully Expands Whistleblower Protection

The financial reforms in the Dodd-Frank Wall Street Reform and Consumer Protection Act (“the Dodd-Frank Act”) passed in 2010 contain sweeping expansions to the protections and incentives given to employees who report violations of federal securities laws. In addition to enhancing existing whistleblower protections, the Act now allows individuals who provide “original information” regarding securities laws violations to the SEC or CFTC sanctions to recover up to 30% of the amount sanctioned. This “bounty” may give employees an incentive to bypass internal ethics and compliance controls which emphasize early internal reporting and remedial action, in favor of going straight to the government in order to reap a potentially lucrative financial reward.

SEC Proposes Rules to Implement Whistleblower Incentives & Protection Program

On November 3, 2010, the Securities and Exchange Commission (the “SEC”) issued proposed rules to implement the whistleblower provisions added to Section 21F of the Securities Exchange Act of 1934 by the Dodd-Frank Wall Street Reform and Consumer Protection Act enacted on July 21, 2010 (the “Dodd-Frank Act”). Under the proposed rules, the SEC will pay awards to eligible whistleblowers who voluntarily provide the SEC with original information leading to the successful enforcement by the SEC of a federal court or administrative action in which the SEC obtains monetary sanctions in excess of $1 million. If all of these criteria are met, a whistleblower could be eligible for an award ranging between 10 and 30 percent of the amount of monetary sanctions obtained by the SEC. Proposed Section 21F provides a complete and self-contained set of rules relating to the whistleblower program, as more fully described below.

One Stop Shopping for Whistleblowers.

A hat tip to Today's Workplace, the blog of the Outten & Golden firm, for their link to OSHA's new whistleblower website, Office of the Whistleblower Protection Program.

Financial Reform Passes - Major Whistleblowing Changes as Well

Thanks to Jacob Zuckerman at the Employment Law Group for his on the spot reporting about the new whistleblowing provisions contained in the major financial bill that was passed earlier today. See Dodd-Frank Bill Provides Robust Whistleblower Protection, including a link to a download of all the whistleblower provisions contained in the legislation.

ARB Needs Your Help on SOX Coverage of Subsidiaries.

Well, that may be a bit of an overstatement, but the Administrative Review Board, which gets the final appellate say at the administrative level of Sarbanes Oxley claims has asked the Assistant Secretary of OSHA and the SEC, and it appears other amici, to submit briefs addressing four specific questions:

Sarbanes-Oxley’s 90-Day Statute of Limitations Not Triggered By Conditional Firing.

An employee alleging a violation of the Sarbanes-Oxley Act (SOX) must file a complaint within 90 days from the date of that alleged violation. That 90-day period begins to run from the date on which the complainant knows or reasonably should know that the complained-of act has occurred. In whistleblower cases under SOX, the 90-day statute of limitations runs from the date on which the employee receives “final, definitive, and unequivocal notice” of an adverse employment decision. As defined in SOX, the term “unequivocal” means that the notice is not ambiguous, and is free from misleading possibilities.

Awful New Whistleblower Law Affects Huge Swath of Employers.

With almost no fanfare, Congress has stomped and gouged employers – again. It has passed a new law that will affect a significant proportion of the American economy and create new "rights" (translation: opportunities to sue) for employees. Called the Consumer Product Safety Improvement Act of 2008 (Safety Improvement Act), the law provides broad protections to employees of manufacturers, private labelers, distributors, and retailers, who make complaints relating to consumer product safety.

Changes In Obscure Law Could Affect Your Business

The Surface Transportation Assistance Act (STAA) is a law that doesn't receive a lot of coverage, but which potentially affects many companies. Because of recent changes that broaden the STAA, a lot more companies could be receiving unpleasant lessons in the statute.

The Critical Role Of HR In Sarbanes-Oxley Compliance.

Human Resources managers should never underestimate the importance of their role in Sarbanes-Oxley compliance. Too often, publicly-traded companies focus their Sarbanes-Oxley compliance efforts on financial reporting only, i.e., as a function of the Accounting and Legal departments. But the full participation of Human Resources can be critical in the corporation's efforts to comply with SOX.

Another Whistleblower Law To Worry About.

Whistleblowers now have a much bigger incentive to cry foul if they believe your company – or you – are pulling one over on the IRS. Under a tough new law passed by Congress in December 2006, whistleblowers now have a statutory right to collect a large bounty if they report tax fraud and the IRS ends up collecting money. This new law will undoubtedly lead to more claims filed by disgruntled employees who believe they have evidence of foul play in your workplace.

Hospitality: Coast Guard Gets Complaint, Employee Gets Fired, Riverboat Gets Sued.

Whistleblower claims have been on the rise for several years. A host of state and federal laws protect employees against reprisal for reporting allegedly illegal conduct by their employers to the appropriate governmental agencies. But a riverboat casino recently was hit with a case alleging a new twist in these laws. Several employees complained to the Coast Guard about a decision made by the Coast Guard, not the employer.