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Proskauer Whistleblower Defense

3d Cir.: Dodd-Frank Anti-Arbitration Provisions Do Not Apply To Dodd-Frank Whistleblower Retaliation Claims

Posted in Dodd Frank

On December 8, 2014, the Third Circuit ruled that Dodd-Frank’s anti-arbitration provisions do not invalidate pre-dispute arbitration agreements with respect to whistleblower retaliation claims brought pursuant to the anti-retaliation provision in Dodd-Frank, 15 U.S.C. §78u-6(h)(1)(A).  Khazin v. TD Ameritrade Holding Corp., No. 14-689, –F.3d–, 2014 WL 6871393 (3d Cir. 2014). Continue Reading

Cal. App. Court Finds in Favor of “Whistleblower” Who Never Blew the Whistle

Posted in State-Specific Whistleblower Claims

In Diego v. Pilgrim United Church of Christ, — Cal.Rptr.3d —-, 2014 WL 6602601 (Cal. App. 4 Dist.) (available here), the California Court of Appeal determined that Cecilia Diego (Plaintiff) could pursue a common law public policy retaliation claim against her former employer, Pilgrim United Church of Christ (the Church), based on her allegations that the Church discharged her because it believed she complained of public safety issues to a government agency, even though she never actually complained. Continue Reading

Video Interview: Discussing the Fifth Circuit Ruling on Outing Whistleblowers with LXBN TV

Posted in SOX Whistleblower Decisions

Following up on our post, Steven J. Pearlman, co-chair of Proskauer’s preeminent Whistleblowing & Retaliation practice group, spoke with Colin O’Keefe of LXBN on the Fifth Circuit’s decision that outing a whistleblower constitutes adverse employment action.  The interview focuses on the background of the case and what the ruling means for employers.

Eleventh Circuit Limits Scope of FCA Whistleblower Suit

Posted in False Claims Act

Late last month, a three-judge panel of the Eleventh Circuit Court of Appeals reinstated portions of a former executive’s False Claims Act (“FCA”) whistleblower action against Health Management Associates Inc. (“HMA”), alleging that the company engaged in an illegal to generate referrals of Medicare and Medicaid patients to its facilitates.

In its ruling, the Eleventh Circuit affirmed the dismissal of plaintiff-relator Michael Mastej’s claims relating to events in 2008 and 2009.  It only reversed the Middle District of Florida’s dismissal of Mastej’s allegations concerning events in 2007.  The district court had dismissed his claims for failure to satisfy the heightened pleading standards of Rule 9(b) of the Federal Rules of Civil Procedure. Continue Reading

Lloyd Chinn Joins Solicitor of Labor For Whistleblower Discussion

Posted in Best Practices

This morning, Lloyd Chinn, co-Chair of Proskauer’s Whistleblowing & Retaliation Group, joined a distinguished panel, including Solicitor of Labor M. Patricia Smith, on a panel discussing the DOL’s recently expanded Whistleblower Protection Program and its recently modified procedures for investigating and adjudicating whistleblower claims.   The expert panel offered practical insights on litigating before the DOL and explored the considerations involved in deciding whether to invoke the “kick out” provisions that allow litigants to bring claims under DOL-enforced statutes in federal court.

Sixth Circuit Dismisses Whistleblower’s Claims Made By Job Applicant

Posted in False Claims Act

This week, the U.S. Court of Appeals for the Sixth Circuit ruled that a job applicant lacks standing to bring whistle-blower claims under the Energy Reorganization Act and the False Claims Act (“FCA”) because those laws’ retaliation provisions apply only to employees.  The Sixth Circuit is the first Court of Appeals to address this issue. Continue Reading

Highlights of SEC’s 2014 Annual Report

Posted in SEC

On November 17, 2014, the Securities and Exchange Commission’s Office of the Whistleblower (“OWB”) released its fourth Annual Report on the Dodd-Frank Whistleblower Program to Congress, which details information on OWB’s activities and bounty payouts for the fiscal year, as described in our posts on the 2012 and 2013 Annual Reports.

In its 2014 report, the SEC highlights that since the inception of the whistleblower program in 2011, the Commission has granted awards to a total of fourteen whistleblowers, and nine of these awards were issued in 2014.  The SEC also stressed that the magnitude of the award payments was “record-breaking” in 2014 in that it authorized an award of more than $30 million in September 2014.  In addition, the SEC pointed out that it brought its first enforcement action against an employer for retaliating against a whistleblower under Dodd-Frank’s anti-retaliation provision. Continue Reading

5th Circuit: Outing Whistleblower Equals Adverse Action

Posted in SOX Whistleblower Decisions

On November 12, 2014, in Halliburton, Inc. v. Admin. Review Bd., 5th Cir. No. 13-cv-60323, the Fifth Circuit affirmed an ARB’s decision that disclosing the identity of a whistleblower may constitute an “adverse action” under Section 806 of SOX.  This decision presents a number of risks for employers—even when they are acting conscientiously and in good faith—and is mandatory reading for in-house employment counsel and compliance professionals. Continue Reading

Court Follows 5th Circuit Asadi Decision, Dismisses Dodd-Frank Whistleblower Claim

Posted in Dodd Frank

The U.S. District Court for the Eastern District of Wisconsin in Verfuerth v. Orion Energy Systems, Inc., No. 14-cv-352 (E.D. Wis. Nov. 4, 2014) recently ruled that the Dodd-Frank whistleblower protection provision does not protect employees who only report alleged violations of the securities laws internally.  In dismissing a former CEO’s whistleblower retaliation claim, the court followed the Fifth Circuit’s decision in Asadi v. F.E. Energy (USA), L.L.C., 720 F.3d 620 (5th Cir. 2013) and held that the text of the statute requires that a “whistleblower” report an alleged violation to the SEC to be covered by Dodd-Frank’s whistleblower protection provision. Continue Reading

Study: Does The Existence Of Whistleblowers In Enforcement Actions Mean Greater Penalties?

Posted in DOJ, SEC

According to an academic study published on October 6, 2014 by Andrew C. Hall, Gerald S. Martin, Nathan Y. Sharp, and Jaron H. Wilde, the presence of whistleblowers may have a meaningful impact on the outcomes of enforcement actions brought by the SEC and DOJ.  The study involved an analysis of the effect of whistleblowers on enforcement actions for alleged financial misrepresentation, as measured by regulatory penalties (and criminal prison sentences).  The study’s authors reviewed the outcomes of SEC and DOJ enforcement actions between 1978 and 2012 associated with alleged financial misrepresentation.  According to the study, the involvement of whistleblowers in enforcement actions is associated with an average penalty of $90.16 to $92.88 million higher than when no whistleblower is involved.   The study also found that whistleblower involvement is associated with executives and employees at firms being fined $50.22 to $56.50 million more than in actions without whistleblowers. Continue Reading