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

In 2002, Atlantic Coast Airlines (ACA) lured Stacy Platone away from her career position with the Airline Pilots Association (ALPA) to become a labor relations manager.  Platone soon noticed that the company was not billing the union for flight-loss time.  Flight-loss time arises when pilots miss flying time to attend meetings on behalf of the union.  Platone discovered that the company continued to pay the pilots, even though they did not fly.  She raised the issue to her superior in the company and was promptly fired.

Platone filed a whistleblower complaint with the U.S. Department of Labor. The company claimed it was not aware of Platone's concern, but the notes of an assistant to the director confirmed that Platone had raised the flight-loss issue in a meeting shortly before she was fired. An administrative law judge (ALJ) issued a decision finding that Platone had a reasonable basis to believe that company officials were involved in a fraud.  The ALJ also found that the company's director was not credible, and that he clearly knew about Platone's concern when he fired her.  In 2004, the ALJ ordered ACA to pay backpay and attorney fees.

ACA appealed to the Department of Labor's Administrative Review Board (ARB). Meanwhile, ACA changed its name to Flyi, Inc., and then went out of business. In 2006, the ARB reversed the ALJ and held that Platone had not been specific enough in raising her concern about fraud. The ARB held that when Platone raised the flight-loss issue, she had not specifically informed her boss that the company had created to acquiesced in a scheme to provide improper payments to the union officers.  The ARB required whistleblowers to be specific in raising their concerns about fraud.

Even though the company was out of business, Platone and her lawyers did a favor for whistleblowers by asking the federal Fourth Circuit to overturn the ARB decision.  Sadly, though, the Fourth Circuit approved the ARB decision. The court defered to the ARB's conclusion the Platone had only alerted management to a billing issue, and had not "specifically and definitively" implicated any fraud when she reported the issue.

The "definite and specific" standard for SOX whistleblowing is not in the SOX law.  It is a creation of the ARB.  The ARB used the same rule to overturn another ALJ decision in the very first SOX case. The Fourth Circuit also affirmed that ARB decision. See Welch v. Chao, 536 F.3d 269, 275-76 (4th Cir. 2008). This special SOX rule is a departure from prior ARB decisions in environmental cases that only required employee concerns to touch on and relate to the issues protected by law.  Does the ARB really mean to encourage law-breakers to fire workers at the first sign of conscience and backbone, before that worker can put all the pieces together to make a specific report of a violation?  Apparently yes.

The outcome in the Platone case exemplifies the way that the current ARB has undercut what Congress made clear in passing SOX and other whistleblower protections.  Hopefully, President-elect Obama will move quickly to appoint new members to the ARB, and to the federal circuits courts of appeals, to protect working people and restore a sense of the law's true purpose.

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The first thing I learned was how CPSIA whistleblower claims are likely to arise in conjunction with three other claims: (1) personal injury claims by consumer victims; (2) a False Claims Act (FCA) case on behalf of the governments who purchased the defective product; and (3) the enforcement action by the Consumer Product Safety Commission. NWC president Stephen M. Kohn explained how whistleblower attorneys could coordinate the whistleblower's participation in these actions.

The second thing I learned is that the Congressional Record contains clear expressions of the legislative intent to preserve any state causes of action, but prohibit any contracts that interfere with the whistleblower's rights under the law. See, for example, 154 Congressional Record S 7876, colloquy of Senators McCaskill and Pryor. The CPSIA also contains explicit inclusion of coverage for speech made in the course of the employee's duties (so it protects quality control workers who perform their duties "too well"), preliminary orders of reinstatement (if OSHA finds probably cause for a valid whistleblower claim), and jury trials for whistleblowers who opt out of the Department of Labor (DOL) process after 210 days. 15 U.S.C. Sections 2087(a)(1), 2087(b)(2)(A), 2087(b)(4). The definition of "manufacture" also includes importers (15 USC 2052), and other provisions of the CPSIA impose inspection and record keeping requirements that apply outside the territorial limits of the United States. These provisions, combined with the legislative history that arose from concern about defective products from overseas, should set the stage for adjudication of the extraterritorial effect of the whistleblower protection. 

The CPSIA has some explicit exclusions, and a penalty provision for filing frivolous claims. So, hopefully, practitioners will avoid filing whistleblower claims from the excluded areas, such as automobiles, alcohol, food, pesticides, boats, firearms, medical devices and tobacco. There are other laws that regulate these products, but they do not have whistleblower protections. However, CPSIA does include other laws enforced by the CPSC, and these would regulate gasoline containers, hazardous substances in household products, flammable fabrics, poison prevention, refrigerator safety (requiring latches that can be opened from the inside), and the Virginia Graeme Baker Pool and Spa Safety Act (passed October 7, 2008). Keep in mind that the CPSIA is just one of 16 laws that have whistleblower protections enforced by DOL. If the protected activity involves the release of toxic substances, for example, the Toxic Substances Control Act (TSCA) might apply (but it has a 30 day statute of limitations).

The CPSIA contains a requirement requiring businesses to self-disclose potential hazards. It might be easier to prove that the whistleblower has a reasonable basis to believe that a product has a potential hazard, rather than an actual defect.

Nilgun Tolek, of OSHA's whistleblower program, explained that her office is busy developing regulations for the Federal Rail Safety Act (FRSA) and National Transit Systems Security Act of 2007 (NTSSA). Also, her office is expected to issue final regulations for the environmental whistleblower laws by January 19, 2009. So, we should not expect CPSIA regulations to issue anytime soon. When they are issued, they are likely to be final interim rules, with an invitation to submit comments within 60 days. Still, OSHA has already started receiving whistleblower complaints under this law. She notes that CPSIA covers not only finished products, but also component parts of consumer products. She notes that OSHA policy is not to accept employer claims of confidentiality or trade secrets at face value, and parties can request "non-public disclosure" of OSHA records while their cases are pending at any level. See
http://www.osha.gov/dep/oia/whistleblower/Revised_interim_guidelines.html

Jason Zuckerman of The Employment Law Group in Washington, DC, discussed tips from his experience in representing whistleblowers, including how to collect and preserve witness statements (by getting affidavits early) and workplace documents (by storing them on the employer's premises, without taking them off-site when doing so violates the employer's policies). He urged whistleblowers to file supplemental complaints when they encounter new adverse actions during a pending whistleblower claim. He noted that employer claims of trade secrets are limited by 29 CFR 70.26, which provides for disclosure of documents provided to OSHA unless they meet certain requirements.

I presented a checklist of five steps (with notes for each one) to preserve the whistleblower's right to get a jury trial in federal court. I also provided a template for OSHA whistleblower complaints.

Debbie Katz, of Katz, Marshall & Banks in Washington, and Michael D. Kohn, General Counsel of NWC, discussed discovery and deposition tactics that they find useful in winning whistleblower cases. These include being thoughtful of the order of depositions, and planning ahead of the deposition for the issues on which the witness might be most useful. 

David Colapinto, of NWC, and Tom Devine, of the Governmental Accountability Project, discussed some of the ways in which judges have too narrowly construed the Sarbanes-Oxley (SOX) law. Attenders agreed that we wanted to cooperate in sharing legal research and briefs to address controversial issues when they first arise. Stephen Kohn presented a pitch to make stronger arguments about the modified burdens of proof. He explained that courts and legislatures started developing standards of proof out of a recognition that the wrong party sometimes wins legal cases. The burdens of proof steer the courts as to which error they should accept more often. For example, we accept that some criminals will escape conviction so long as no innocent people are wrongfully convicted. So, the burden of proof in criminal cases is "beyond a reasonable doubt." In the CPSIA, Congress requires whistleblowers only to show that the protected activity is a "contributing factor" for the adverse action. Then, the law requires the employer to show that it would have imposed the same adverse action in the absence of any protected activity, by "clear and convincing evidence." Together, these standards show that Congress felt the traditional burdens made it too difficult for whistleblowers to win. They adjusted the burdens so that the courts would accept some bad employees winning, so long as no genuine whistleblowers lost. We need to make this clear to judges.

The NWC plans to repeat this seminar, and is willing to travel to conduct this training in other parts of the country, or in other countries. Stephen Kohn reported on his trip to Hungary to promote whistleblower laws as a means to build transparency in government contracting.

Finally, participants agreed that we need to build a larger base of citizen interest and activism on whistleblower issues. Anyone who wants to receive action alerts from NWC can sign up at:
http://www.whistleblowers.org