Over the past week, the U.S. Securities and Exchange Commission (“SEC”) announced two multi-million dollar awards to whistleblowers who provided the SEC with information in ongoing investigations. Continue Reading
The ARB recently concluded that a former program manager was entitled to recover more than $250,000 in back pay and benefits under Section 806 of SOX based on his discipline and constructive discharge. The ARB clarified that a complainant may have engaged in protected activity by complaining of a failure to comply with state wage payment laws where his or her complaint in that regard is based on a reasonable belief that the employer is committing fraud by making a knowing misrepresentation or misstatement of material facts. Dietz v. Cypress Semiconductor Corp., ARB No. 15-017, 3/30/16 (released 4/6/16). Continue Reading
On April 4, 2016, the U.S. Commodity Futures Trading Commission (CFTC) issued its third and largest award, of more than $10 million, as part of its Dodd-Frank whistleblower program. As was the case with the CFTC’s two previous awards of $240,000 and $290,000—announced in May 2014 and September 2015, respectively—the Agency did not provide details about the whistleblower or the information that led to the enforcement action. Continue Reading
On April 7, 2016, after just three hours of deliberations following a three-week trial, a federal jury dismissed False Claims Act (“FCA”) claims against Abbott Laboratories brought by a whistleblowing former employee. The jury concluded that the company did not improperly market bile duct stents for off-label uses in vascular procedures. Continue Reading
On March 28, 2016, the U.S. Securities and Exchange Commission (“SEC”) filed an amicus brief in a whistleblower lawsuit brought by a former in-house attorney against Vanguard Group (the “Company”). The case is Danon v. Vanguard Group, Inc., Civ. A. No. 15-6864 (E.D. Pa.). Continue Reading
On March 17, 2016, the Eastern District of Kentucky dismissed whistleblower counter-claims against Allstate Insurance Company (“Company”), ruling that Defendant Kevin Keefe’s (“Plaintiff”) SOX claim was untimely and that his Dodd-Frank claim failed to allege a causal connection between the alleged whistleblowing and any alleged adverse employment action. Allstate Ins. Co. v. Zeefe, No. 15-159. Continue Reading
OSHA recently released its final rule implementing the whistleblower provisions of the Consumer Financial Protection Act of 2010 (“CFPA”). The following are the key features of the rule:
- Deadline for Filing a Complaint: A complaint must be filed within 180 days of the alleged retaliation. OSHA’s rule notes that such a complaint need not conform to the pleading standards for complaints filed in federal district court. 29 CFR Part 1985.103. Instead, the complaint must only “alert OSHA to the existence of the alleged retaliation and the complainant’s desire that OSHA investigate the complaint.”
- Investigation of Complaints: After a complaint is filed, OSHA will conduct a confidential investigation to determine whether there is reasonable cause to believe that retaliation has occurred. OSHA only will investigate if the complaint states a prima facie case that the protected activity was a contributing factor in the adverse employment action. Even if OSHA finds reasonable cause to believe that the complainant’s alleged protected activity was a contributing factor in the adverse employment action, however, OSHA will not conduct an investigation if the employer can demonstrate by clear and convincing evidence that it would have made the same employment decision absent the employee’s protected activity. 29 CFR Part 1985.104.
- OSHA’s Findings/Order: On the basis of all information obtained in its investigation, the OSHA Assistant Secretary will issue within 60 days of the filing of a complaint written findings as to whether there is reasonable cause to believe that there was a violation of the Dodd-Frank whistleblower provision. If the Assistant Secretary finds that reasonable cause exists, he/she will also issue a preliminary order providing relief to the complainant, which may include reinstatement or compensatory damages. The findings and/or preliminary order will inform the parties of the right to appeal the decision before an Administrative Law Judge (ALJ). 29 CFR Part 1985.105.
- Appeal to ALJ: Either party may file an appeal of OSHA’s findings and/or order within thirty of days of receipt of the findings and/or order. Additionally, the respondent may seek reasonable attorneys’ fees, not to exceed $1,000, from an ALJ if the respondent alleges that the complaint was frivolous or brought in bad faith. 29 CFR Part 1985.106. An ALJ will review OSHA’s findings and/or order de novo in accordance with the rules of practice and procedure for administrative hearings before the Office of Administrative Law Judges. 29 CFR Part 1985.107.
- Appeal to the ARB: Either party may file a written petition for discretionary review with the ARB within 14 days of the ALJ’s decision. The ARB then has thirty days to decide whether to grant review of the case. If it does not grant review, the ALJ’s decision becomes final. 29 CFR Part 1985.110.
- Settlement: The parties may voluntarily settle their dispute, subject to approval by OSHA/the ALJ/ the ARB, depending on the stage of the proceedings at the time of settlement. 29 CFR Part 1985.111.
- Judicial Review and Enforcement: Within 60 days of an ALJ or ARB final order, either party may file a petition for review of the order in the United States Court of Appeals for the circuit in which the violation allegedly occurred or the circuit in which the complainant resided on the date of the violation. 29 CFR Part 1985.112. A party may also bring a civil action for enforcement of orders or settlement agreement terms, or bring an original de novo action in the United States district court for the district in which the violation was found, under certain circumstances. 29 CFR Parts 1985.113 & 1985.114.
The foregoing are substantially similar to the rules applicable to claims under Section 806 of SOX. The arguably relaxed standard and other features arguably are likely to encourage complainants’ counsel to pursue claims through the DOL’s adjudicative system.
On February 18, 2016, the ARB dismissed a former employee’s whistleblower retaliation claim under Section 806 of SOX, concluding that he failed to show that his protected activity contributed to the decision to terminate his employment, noting. The ARB noted that Complainant threatened a co-worker and failed to attend a required counseling program before his employment was terminated. Folger v. SimplexGrinnell, LLC, ARB Case No. 15-021 (Feb. 18, 2016). Continue Reading
On March 8, 2016, the SEC announced payment of nearly $2,000,000 in whistleblower bounty awards to three tipsters. (The order granting the award can be accessed here.) The largest of the three awards, approximately $1,800,000, went to a whistleblower who provided original information that prompted the SEC to open an investigation. The other two whistleblowers provided information after the investigation began, and will each receive approximately $65,000. All three whistleblowers have chosen to remain anonymous.
In connection with this award, Sean McKessy, Chief of the SEC’s Office of the Whistleblower, said, “We’re seeing a significant uptick in whistleblower tips over prior years, and we believe that’s attributable to increased public awareness of our program and the tens of millions of dollars we’ve paid to whistleblowers for information that helped us bring successful enforcement actions.”
According to a MarketWatch report, Eric Hunsader of Nanex LLC has identified himself as is the recipient of a more than $700,000 Dodd-Frank whistleblower bounty award. According to Hunsader, the information he provided to the SEC led to a $5 million fine of the New York Stock Exchange. Continue Reading