Whistleblower Protection Blog : Whistleblower Lawyer & Attorney : National Whistleblower Legal Defense and Education Fund : Whistleblower Protection, Fraud Claims : Washington DC

Dr. Aaron Westrick has won reinstatement of his claims under the California False Claims Act. Last Thursday, May 26, 2011, the California Court of Appeal for the Second District (in Los Angeles) issued its decision in State of California ex rel. Westrick v. Itochu International, Inc., Case No. B223053. On January 26, 2010, the Superior Court of Los Angeles County dismissed Westrick's complaint, holding that his complaint did not plead the allegations of fraud with specificity. The Court of Appeal has now reversed and reinstated Westrick's claims.

Dr. Westrick began his career as a police officer in Michigan. In 1982, he was shot by a fleeing burglar with a .357 Magnum from approximately five feet away. A Second Chance bulletproof vest, made of Kevlar, saved his life. Westrick subsequently earned a Ph.D. in sociology and criminal justice. In 1996, Second Chance hired Westrick as its director of research. On July 5, 2001, Dr. Westrick received a letter from the Japanese Toyobo Company stating that, “the strength of Zylon fiber decreases under high temperature and humidity conditions.” Dr. Westrick recognized that Zylon would degrade and that police officers would die while wearing "bullet-proof" vests made of Zylon. He asked his employer to recall its Zylon vests and have them tested.  In June 2003, Officer Tony Zeppetella of Oceanside, California, was killed when his $766 Zylon vest failed to stop two bullets. That same month, a police officer in Pennsylvania was seriously wounded when a bullet pierced his Zylon vest.

My colleague, Erik Snyder, presented Dr. Westrick's argument to the Court of Appeal. It was Erik's first oral argument. Based on this result, we can expect many more advances for whistleblower rights in Erik's legal career. Congratulations to Erik and Dr. Westrick.

For more information about Dr. Westrick's claims and the problems with Zylon, see this prior blog post. Some excerpts from the Court's new decision follow in the continuation of this blog entry.

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Today the U.S. Securities and Exchange Commission (SEC) issued its final rules under the Dodd-Frank Wall Street Reform and Consumer Protection Act. By a vote of 3-2, the SEC approved these final rules this morning. The SEC has released a fact sheet summarizing the new rules.

The outcome is a major victory for whistleblowers.  The SEC rejected proposals put forward by corporate attorneys asking that whistleblowers be barred from rewards unless they made their first disclosures about the violations to company officials. The SEC rules also protect whistleblowers from retaliation no matter whether they made their disclosures internally or externally.

The National Whistleblowers Center (NWC) has led a public advocacy campaign for months to urge the SEC to reject the industry proposals to gut Dodd-Frank. When the SEC's proposed rules were first published, the NWC issued an emergency Action Alert to mobilize opposition to what could have been the gutting of a landmark whistleblower protection act. Numerous citizens and organizations pounded the SEC with demands that they protect whistleblowers. The result is evident in today's final rule. The SEC cited NWC comments 44 times -- more than it cited to the comments of any other group.

In response, each of the Commissioners opened their doors to personally meet with the NWC staff attorneys and supporting experts we invited. The NWC also filed nine extensive formal comments refuting the Chamber of Commerce's misinformation and explaining how many of the proposed rules undermined whistleblower protection. The Commission listened.

Stephen M. Kohn, Executive Director of NWC, said, "The SEC refused to buckle under tremendous pressure from Wall Street lobbyists (led by the Chamber of Commerce) who worked overtime trying to undermine historic corporate whistleblower protections contained in the Dodd-Frank Act." Mr. Kohn's full statement today follows in the continuation of this blog entry.
 

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Rebuffing an open letter from the National Whistleblowers Center (NWC) asking for a face-to-face meeting, and brushing aside the potential consequences for the best whistleblower law ever enacted, three organizations filed a petition yesterday challenging the False Claims Act (FCA). The American Civil Liberties Union (ACLU), OMB Watch and the Government Accountability Project (GAP) filed the petition in the U.S. Court of Appeals for the Fourth Circuit in Richmond, Virginia. The case is ACLU v. Holder, Case No. 09-2086.

On March 28, 2011, the three-judge panel of the Fourth Circuit rejected the ACLU, OMB Watch and GAP challenge to the “seal” provision of the FCA. The FCA provides a reward program for whistleblowers who help the government recover money that companies obtain by fraud. The FCA provides for a temporary “seal” that shields the case from public disclosure while the government investigates the case to decide if it will intervene. The seal serves the government by preventing the fraudsters from getting wind of the government investigation. If companies knew the government was trying to prove they engaged in fraud, they might start destroying evidence that the government could later use to prove that fraud. The seal also protects the whistleblower from retaliation while the seal is in force. All FCA seals are temporary and will eventually be lifted so the public can see the claims made and the government's decision on whether to intervene. If a seal last for longer than sixty (60) days, it must be approved by the Court which considers whether it is in the public interest.

After the March 28 panel decision, the NWC issued an open letter to the ACLU, OMB Watch and GAP. The open letter asked for a face-to-face meeting with the the decision makers from these groups to discuss whether proceeding with this case was really in the public interest. The NWC letter warned that the challenge to the FCA threatened the right of whistleblowers to file claims confidentially and could  undermine America's "most effective whistleblower law."

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