Texas District Court Dismisses SOX Whistleblower Claim For Lack of Protected Activity

On March 21, 2017, the Northern District of Texas dismissed a former employee’s whistleblower retaliation claim on the ground that her allegations of fraud were too far removed from potentially harming the shareholders of a publicly-traded company to be covered under SOX’s anti-retaliation protections. Brown v. Colonial Savings, F.A., No. 4:16-cv-00884 (N.D. Tex. Mar. 21, 2017).

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U.S. Supreme Court Passes On Opportunity To Address Scope of Dodd-Frank “Whistleblower” Provision

US Supreme CourtOn Monday, March 20, 2017, the U.S. Supreme Court denied a Petition for Writ of Certiorari in Verble v. Morgan Stanley Smith Barney, LLC. (No. 16-946), thereby declining an opportunity to resolve a conflict amongst circuit courts as to whether Dodd Frank’s anti-retaliation protections extend to employees who do not report an alleged securities violation to the SEC. Continue Reading

Ninth Circuit — Dodd-Frank Protects Internal Whistleblowers

United States Court of Appeals Ninth Circuit SealOn March 8, 2017, a split three-judge panel of the Ninth Circuit Court of Appeals affirmed a Northern District of California decision declining to dismiss a Dodd-Frank whistleblower retaliation claim because the plaintiff did not report his concerns to the SEC. Somers v. Digital Realty Trust, 15-17352 (9th Cir. March 8, 2017).  The Ninth Circuit thus aligned itself with the Second Circuit on this issue while the Fifth Circuit came to the opposite conclusion. Continue Reading

Maryland District Court Dismisses SOX and Dodd Frank Whistleblower Claims

MD sealOn March 1, 2017, the District of Maryland dismissed a Dodd Frank whistleblower retaliation claim because the plaintiff failed to allege that he had complained directly to the SEC about a violation of securities laws, and dismissed the plaintiff’s SOX whistleblower retaliation claim because the complaint did not allege that the employer was a publically traded company.  Olekanma v. Wolfe, No. 15-0984 (D. Md. March 1, 2017). Continue Reading

SEC Reduces Whistleblower Bounty Based On Culpability And Delayed Reporting

secOn February 28, 2017, in an Order almost entirely devoid of detail, the SEC announced that a whistleblower will receive 20% of any monetary sanctions collected in an enforcement action commenced as a result of the whistleblower’s tip. The SEC is giving this “reduced” award while acknowledging that the whistleblower (1) was “culpable” in the securities violation at issue, and (2) unreasonably delayed reporting the company’s wrongdoing to the agency. Continue Reading

Florida Private Sector Whistleblower Must Show Actual Violation of Law

MD FLa

The Middle District of Florida recently held that to establish a prima facie case under the Florida Private Whistleblower Act (FWA), § 448.102(3), Fla. Stat., a plaintiff must show an actual violation of a law, rule or regulation. Graddy v. Wal–Mart Stores E., LP, No. 5:16-CV-9-OC-28PRL (M.D. Fla. Feb. 14, 2017). Continue Reading

California District Court Addresses Whistleblower’s Self-Help

CA FlagIn Erhart v. BofI Holding, Inc., Case No. 15-cv-02287, (S.D. Cal. Feb. 14, 2017), a bank’s internal auditor reported alleged misconduct to federal agencies, engaged in self-help discovery by appropriating the bank’s confidential information, and allegedly widely disseminated such information. When the bank alleged that this conduct violated the parties’ confidentiality agreement and state and federal law, the employee countered that his appropriation and disclosures were protected by whistleblower statutes.  As discussed below, the court held that: (i) the employee’s disclosures to the government were protected; (ii) his alleged disclosures to the media were not; and (iii) any additional protection of his appropriation and disclosure of confidential information may turn on whether his actions were reasonably necessary to pursue whistleblower claims. Continue Reading

S.D.N.Y. Dismisses Dodd-Frank Whistleblower Retaliation Claim

SDNY1In one of the first cases to address the standard governing a motion for summary judgment in a Dodd-Frank whistleblower retaliation case, Judge Jed S. Rakoff ruled that two former executives of Vista Outdoor Inc. (the Company) had failed to show that their terminations were causally connected to vague complaints about internal Company controls.  Vista Outdoor Inc. v. Reeves Family Trust, et. al., No. 16-cv-5766 (S.D.N.Y. Feb. 13, 2017). Continue Reading

Proskauer to Present on Modern Whistleblower Retaliation Law and the SEC Bounty Program at Bloomberg’s BNA Webinar

On Friday, March 3, 2017, Proskauer Partner Steve Pearlman will present on key aspects of modern whistleblower retaliation law, SEC enforcement actions involving “pre-taliation,” and the SEC Office of the Whistleblower bounty program. Pearlman is the co-head of the Whistleblowing & Retaliation Group.  He will join co-panelist Sean X. McKessy, Partner, Phillips & Cohen LLP, the first-ever Chief of the SEC Office of the Whistleblower.

The program will explain common claims and defenses and related issues under the whistleblower protection provisions of Sarbanes-Oxley, Dodd-Frank and similar whistleblower laws. This includes issues of (i) coverage, (ii) protected activity, (iii) causation, and (iv) damages.  Additionally, the program will cover the SEC’s involvement in whistleblower retaliation litigation in an amicus capacity and the SEC’s enforcement of Dodd-Frank’s prohibition on “pre-taliation.”  Finally, the program will address the functioning of the SEC Office of the Whistleblower, including its approach to whistleblower tips and trends in issuing bounty awards.

To register for the program, click here.

 

Proskauer to Present on Managing Whistleblowing Employees at ABA Midwinter Meeting

On Thursday March 23, 2017 at 9:00 a.m., Lloyd Chinn will speak on “Practical Advice and Tips for Managing Whistleblowing Employees: Where Do We Go After the Volcano Blows?” at the 2017 Midwinter Meeting of the ABA Section of Labor and Employment Law’s Employment Rights and Responsibilities Committee in Puerto Vallarta, Mexico. Chinn is a partner in Proskauer’s Labor & Employment Law Department and co-head of the Whistleblowing & Retaliation Group. He will join co- panelists Stacey A. Campbell, Campbell Litigation, P.C., Virginia “Ginger” Hardwick, Hardwick & Benfer LLC, and Gary Noah Savine, The Law Office of G. Noah Savine, Ltd.

This panel will tackle the challenges that employers and employees face when a whistleblower reports misconduct. Topics include subtle retaliation that can be actionable (such as “outing” a whistleblower), investigating a whistleblower’s disclosures without investigating the whistleblower’s motive, and holding a whistleblower accountable for performance problems without giving rise to a retaliation claim.

To register for the program, click here.

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