On April 25, 2017, the Securities and Exchange Commission issued a Dodd-Frank whistleblower award of nearly $4 million, the first bounty award issued during the Trump administration. To maintain the whistleblower’s confidentiality, the SEC declined to disclose the organization involved. The agency did acknowledge, however, that the whistleblower submitted “detailed and specific information about serious misconduct and provided additional assistance during the ensuing investigation.” In its release, the SEC noted that enforcement actions like this one have resulted in more than $953 million in financial remedies against wrongdoers, and approximately $153 million in awards to whistleblowers. Continue Reading
On April 12, 2017, the Third Circuit partially revived a former in-house attorney’s whistleblower retaliation lawsuit against his previous employer. Danon v. Vanguard Group, Inc., No. 16-cv-2881.
Plaintiff, a former in-house tax lawyer, previously raised retaliation claims against the Company in New York State Court under the New York False Claims Act, alleging he was discharged in retaliation for informing senior employees of his belief that the Company was violating certain tax and corporate laws. The state court dismissed the case based on the plaintiff’s failure to demonstrate that the Company knew he was involved in any protected conduct at the time of his termination. Plaintiff then filed suit against the Company in the District Court for the Eastern District of Pennsylvania alleging whistleblower retaliation in violation of SOX, Dodd-Frank, and the Pennsylvania Whistleblower Law. His claims again were dismissed because the court determined he was precluded from asserting the Company’s knowledge of his allegedly protected conduct (we previously wrote about the SEC’s amicus brief to the district court in support of the plaintiff’s arguments here).
On February 1, 2016, the Northern District of Indiana ruled in a case brought under the Federal Railroad Safety Act (FRSA) that whether a whistleblower has fulfilled relevant administrative requirements prior to filing suit is a “condition precedent” rather than a “jurisdictional requirement.” King v. Ind. Harbor Belt R.R., 2017 U.S. Dist. LEXIS 43263 (N.D. Ind. Feb. 1, 2017).
Plaintiff, who was employed by the Indiana Harbor Belt Railroad (Company), filed a whistleblower retaliation claim under FRSA, a whistleblower protection statute that is similar in many respects to Section 806 of SOX. Like many other whistleblower protection statutes, the FRSA requires a whistleblower to file a complaint with OSHA within 180 days after the alleged retaliation occurred.
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).
On 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
On 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
On 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
On 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
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
In 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