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

The New Jersey Supreme Court heard arguments on Tuesday in a case where whistleblower Joyce Quinlan is asking for reinstatement of her $10 million jury verdict. An appellate court had vacated the verdict finding that Curtiss-Wright was justified in firing Quinlan for taking company documents for use in her litigation. The New Jersey Law Journal reports that the questions during oral argument suggest the state supreme court is likely to agree that whistleblowers cannot use company documents without the company's permission, even if those documents show that the company engaged in illegal discrimination. I hope the court's decision will make clear that:

• If the company permitted you to see the documents during work, then copying the documents is not theft if you leave the originals for the company.
• If the documents show the company engaged in illegal conduct, then it is against the public interest for the company to require employees to keep the documents secret.
• If a whistleblower sees documents while performing normal work duties and copies them for use in official government investigations or judicial proceedings, then making and using the copies is protected activity.
• If a company has a duty to provide documents in discovery and fails to do so, then the company should be punished and not the employee who caught them breaking the law.

If the New Jersey Supreme Court decides instead that company policies of confidentiality are more important than eliminating discrimination, then it will point to the need for a federal private sector whistleblower law that makes the scope of protected activity clear. The case is Quinlan v. Curtiss-Wright Corp., A-51-09 (64,728). The question presented is, "Was plaintiff’s removal of confidential documents from her employer for use in advancing plaintiff’s gender-discrimination lawsuit against the employer protected activity under the Conscientious Employee Protection Act?"
 

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Sherron Watkins became a Time Magazine Person of the Year in 2002 (with Cynthia Cooper of WorldCom and Coleen Rowley of the FBI) after blowing the whistle on Enron's house of cards. Now she has published a review of No One Would Listen, the new book by Harry Markopolos. Markopolos tried repeatedly, over nine years, to get the Securities and Exchange Commission (SEC) to investigate Madoff's fund. Markopolos figured out that it was a fraudulent Ponzi scheme, and told the SEC, but could not get them to lift a finger.

Watkins can relate. In her review published in Financial Times, Watkins says, "Both Markopolos and I were by turns dogged, shocked, frustrated and treated like pariahs." "No one would listen to me either," Watkins adds. "Unfortunately, whistleblowers who expose the emperor as having no clothes are usually ignored. The apparent success of the emperor – Madoff or Enron – and the power and popularity they enjoy can make them immune to dissenters."

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This month, the Missouri Supreme Court recognized and defined a tort claim for whistleblowers. The Court explained that the traditional "employment-at-will" doctrine is not static, and may be changed to reflect public policy. In Fleschner v. Pepose Vision Institute, P.C., the Court confirmed that Michelle Fleshner had a right to sue for wrongful discharge.  Fleshner claimed she was fired after she spoke with a wage and hour investigator for the U.S. Department of Labor. The Court remanded the case for a new trial due to the trial judge's failure to conduct a hearing on a juror's alleged anti-Semitic remarks. The Court also established that jurors should be instructed to find unlawful retaliation if retaliation was a "contributing factor" in the employer's adverse action. "No one can lawfully do that which tends to be injurious to the public or against the public good," the Court held.  The Court said public policy can come from the Constitution, statutes, regulations or governmental rules. "To find otherwise would allow employers to discharge employees, without consequence, for doing that which is beneficial to society," the Court explained. Missouri now protects employees for "refusing to violate the law," or for, "reporting wrongdoing or violations of law to superiors or public authorities."

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Tonight Participant Media kicks off its social action campaign for the film The Informant! with a panel discussion entitled “Anyone Can Whistle – The Essential Role of the Whistleblower in American Society.” A panel of whistleblowers will be discussing their own personal experiences and the importance of advocating for change. I cannot overstate the importance of citizen involvement in achieving meaningful protections for whistleblowers. You can do your part by Taking Action in support of H.R. 1507 which would protect all federal employee whistleblowers from retaliation.  You can also Support the Clemency Campaign for UBS whistleblower Bradley Birkenfeld by sending a letter and joining our new Facebook Cause page.

You can watch the event live online beginning at 7:00 pm EST tonight by clicking here.

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The LA Times reported last week on a series of trends in securities fraud. The $65 billion lost in the Madoff scandal highlights the huge losses millions of investors suffer as a result of corporate fraud.  Meanwhile, the new enforcement chief at the Securities and Exchange Commission (SEC) reports a dramatic rise in enforcement actions. The numbers of formal investigations and restraining orders have approximately doubled.  The total sum of restitution orders has more than doubled.

After serving his first year as the SEC's enforcement director, Robert Khuzami is now calling for improving the protections for whistleblowers, and even rewarding them for turning in their bosses or co-conspirators.  Khuzami proposes "cooperation agreements" that could assure whistleblowers that they will receive leniency or exemption from SEC enforcement action, or legal assistance in the event of prosecution. Khuzami is also calling for changes in the law to protect whistleblowers and even to reward them financially. "Whistle-blower laws provide a powerful incentive for people to come forward," Stephen M. Kohn told LA Times reporter Kathy M. Kristof.  Kohn is Executive Director of the National Whistleblowers Center. Kohn adds,  "The U.S. government has collected billions and billions of dollars as the result of the False Claims Act." Khuzami's call for a whistleblower reward recognizes what works.  The reward provided by the False Claims Act (FCA) has recovered billions of dollars for U.S. taxpayers.

Kristof's article notes that the success of Khuzami's new proposal may hinge on what happens to the world's most famous corporate and tax fraud whistleblower, Bradley Birkenfeld.

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My friends at the Truck Safety Coalition provide the following information about public hearings on proposed new Hours-of-Service (HOS) rules. As part of the process of preparing for the new Hours of Service proposed rulemaking, the Federal Motor Carrier Safety Administration (FMCSA) is holding three public listening sessions to solicit comments.  The public can also submit comments to the docket if they are not able to attend the sessions.  The sessions are from 9 am - 5 pm or earlier if all participants wishing to express their view have done so.  They are:

1. January 19, Doubletree Hotel Crystal City National Airport (Commonwealth Ballroom), 300 Army Navy Dr., Arlington, VA;
2. January 22, Hyatt Regency DFW, International Pwy., DFW Airport, TX;
3. January 25, Doubletree LAX (Pacific Ballroom), 1985 East Grand Ave., El Segundo, CA.

If you are able to attend a listening session, please contact the Truck Safety Coalition at 703-294-6404.  (Speakers remarks are limited to 10 minutes each.)

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Professors Kevin Clermont and Stewart Schwab have published a study of how employees fare when they bring employment law claims in federal court. In Employment Discrimination Plaintiffs in Federal Court: From Bad to Worse? which is to be published in the Harvard Law & Policy Review, they summarize their findings by saying:

Compared to other plaintiffs, [employment discrimination plaintiffs] manage fewer resolutions early in litigation, and so they have to proceed to trial more often. They win a lower proportion of cases during pretrial and at trial. Then, more of their successful cases undergo appeal. On appeal, they have a harder time both in upholding their successes and in reversing adverse outcomes.

Clermont and Schwab find that when plaintiffs lose and appeal in employment cases, they have a ten percent (10%) chance of winning.  When employers appeal, they have a thirty percent (30%) chance of winning. San Antonio attorney Tom Crane suggests that this could explain why fewer plaintiffs are filing their employment discrimination claims in federal court. This is hardly the outcome Dr. Martin Luther King, Jr., hoped for when he organized the March on Washington to win passage of the Civil Rights Act.

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Washington attorney, former prosecutor and former SEC enforcer Dan Hurson has written an article of advice for middle managers who become targets of internal corporate investigations.  It is called, Memo to Middle Management: How to Avoid Becoming Road Kill In a Corporate Internal Investigation. He notes that big law firms love to take on internal investigations because they get to bill a deep pocket to loads of hours getting into a complex matter. The Securities and Exchange Commission (SEC) loves to have corporations do the investigation and hand them the results. One problem with this deferral to internal corporate investigations is that the top corporate officials calling the shots rarely want the investigation to find that they are personally at fault. So, internal investigations have an institutional bias to blame someone lower on the corporate food chain. If the internal investigation can blame the messenger, it will serve an added function of providing the pretext needed to fire the whistleblower.

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Judge Joan Zeldon of the Superior Court of the District of Columbia has denied a preliminary injunction sought by the National Football League Players Association (NFLPA). In doing so, she found that the agreement, and the employer's attempt to enforce it, went too far. Mary Moran sued the football players' union claiming sex discrimination and retaliation in her wrongful discharge. In response, the union asked for a preliminary injunction to enforce its confidentiality agreement.  The union claimed that Moran had already violated the agreement by telling her lawyers about her employment claims, and then again when she filed the lawsuit. It is now increasingly common for private sector employers to require confidentiality agreements, and to use them as swords against whistleblowers. Judge Zeldon wisely saw that, "Enforcing the parties’ Confidentiality Agreement in this way would appear to be a violation of public policy."

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I am pleased to report a favorable decision today from the U.S. Court of Appeals for the Fourth Circuit. In Stone v. Instrumentation Laboratory Co., No. 08-1970 (4th Cir. 12-31-2009), the Court reinstated David Stone's SOX case after a lower court dismissed it saying that it would be "absurd" to allow Stone to have a new trial after a Department of Labor administrative judge dismissed it.  The Court found that the language in the Sarbanes-Oxley Act (SOX), 18 U.S.C. Section 1514A(b)(1)(B), "to be plain and unambiguous." The Court added, "In applying preclusion principles, the district court strayed from the plain and unambiguous meaning of § 1514A(b)(1)(B). ... A plaintiff’s right to pursue such relief is not circumscribed in any manner by the statute." "By definition, de novo review entails consideration of an issue as if it had not been decided previously." The Court also rejected a comment by the former Secretary of Labor that urged against allowing complainants to retry their cases in federal court.  The National Whistleblowers Center and the Government Accountability Project joined together to file an amicus brief urging this result. Tom Devine and Kasey Dunton of GAP worked with me on that amicus brief.  Congratulations to Adam Carter of The Employment Law Group for this excellent result for his client.

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