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Top-10 Whistleblower Law Decisions for 2014

Posted  January 5, 2015

By the C|C Whistleblower Lawyer Team

Here is our look-back at the top-10 whistleblower law decisions for 2014.

10.  SOX Whistleblower Reach — What it takes to make out a whistleblower retaliation claim under the Sarbanes-Oxley Act got a little clearer thanks to the Second Circuit decision in Nielsen v. AECOM Technology Corp. There, the Court wrestled with exactly what kind of complaint a whistleblower needs to make to be protected under the statute enacted in the wake of the mighty Enron debacle. In doing so, the Court provided some useful guidance on the type of whistleblower this law was really designed to target.

9.  Job Applicants — The whistleblower retaliation provisions of the False Claims Act offer broad relief to “employees” who are terminated, suspended, harassed or otherwise discriminated against by their employers for engaging in protected whistleblowing activity. Congress amended the statute in 2009 to expand these provisions beyond employees to also reach “contractors” and “agents” of a company. In Vander Boegh v. EnergySolutions, Inc., the Sixth Circuit considered whether these provisions also extend to job applicants. The appeals court ruled they do not. For the Court, it was not even a close call.

8. Outing a Whistleblower — And yet another important decision on the scope of the whistleblower retaliation provisions of the Sarbanes-Oxley Act. This one by the Fifth Circuit Court of Appeals in Halliburton, Inc. v. Administrative Review Board. Before the Court was the question of whether Halliburton’s outing of an employee who complained to the SEC violated the whistleblower protections afforded under the statute. The Administrative Review Board of the Department of Labor found that it did. The Fifth Circuit agreed.

7.  Mandatory Arbitration– Mandatory arbitration clauses are all the rage these days with more and more companies insisting on these provisions in their dealings with customers and employees and courts doing very little to keep them in check. But when it comes to mandatory arbitration and whistleblower retaliation claims under the False Claims Act, at least one appeals court has drawn a line (albeit a thin one) in the sand. In Paige v. BAE Systems, the Sixth Circuit reversed the district court and refused to compel arbitration. It found the whistleblower retaliation claims were “completely separate” from and not “contemplated” by the whistleblowers’ employment contracts and thus outside the reach of the arbitration clause contained in those contracts.

6. Pleading Specificity — In Foglia, ex rel. U.S. v. Renal Ventures Management, LLC, the Third Circuit held it would join three other circuit courts in rejecting a more restrictive view of what qui tam relators must allege in order to survive challenges to their False Claims Act complaints. In doing so, the Third Circuit’s decision has deepened the divide among the circuit courts, with four circuit courts taking a more restrictive view on the minimum facts whistleblowers must state in their complaints.

5.  Whistleblower’s Finder’s Fee– Under the qui tam provisions of the False Claims Act, a whistleblower who files an action that ultimately leads to a government recovery is entitled to a generous portion of the proceeds — anywhere from 15 to 30 percent. There is no discretion in making an award. It is mandated by statute. The question remains, whether whistleblowers are still entitled to the statutory award if the complaint they file lacks enough factual specificity or relies on facts or legal theories the government does not ultimately adopt. According to the Eighth Circuit in Rille v. PricewaterhouseCoopers, these whistleblowers should still be paid their fair share of the pie.

4.  First-to-File Bar– Under the so-called “first-to-file” rule, a whistleblower is precluded from bringing a False Claims Act case if one based on the same underlying facts is already pending. This pressure to be first to the courthouse forces whistleblowers to make a tradeoff between the speed and quality of their False Claims Act filing. In United States ex rel. Sun v. Baxter Healthcare Corp., the First Circuit gave its view on just how much of a tradeoff whistleblowers should be required to make.

3.  Ag-Gag Laws– In Animal Legal Defense Fund v. Otter, Chief Idaho District Court Judge B. Lynn Winmill dealt a mighty blow to proponents of the so-called “Ag-Gag” laws several states have passed in recent years to ensure what goes on in factory farms, stays in factory farms. At issue in the case is the constitutionality of the Idaho statute and whether — in criminalizing undercover investigations and videos at these facilities — it violates the Free Speech and Equal Protection Clauses and is preempted by federal whistleblower laws. Judge Winmill did not rule on these ultimate issues. He did, however, squarely deny the State’s motion to dismiss the lawsuit, raising serious questions as to the ultimate viability of these anti-whistleblower laws.

2.  Attorney-Client Privilege — In Barker v. Columbus Regional Healthcare System, Inc., Middle District of Georgia Judge Clay D. Land ruled the defendants had waived the attorney-client privilege by affirmatively asserting as a defense a good faith belief their conduct was lawful. What makes the decision especially notable is it was made in the context of a False Claims Act case, where intent is a principal element. It thus presents quite the quandary for defendants going forward in these kinds of cases. You can argue you did not knowingly defraud the government but in doing so, you might have to disclose what your lawyers had to say about it all.

1.  SOX Whistleblower Retaliation– While it has always been clear the whistleblower retaliation protections of the Sarbanes-Oxley Act applied to employees of public companies, it has been unsettled whether those protections would also apply to employees of nonpublic contractors working for public companies. In Lawson v. FMR LLC, the Supreme Court ruled employees of private contractors and subcontractors can also be protected whistleblowers under SOX.

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