In a long-awaited ground-breaking decision, the District of Columbia Court of Appeals today held that an employer engages in unlawful retaliation when it adds a new demand for a release as a condition for concluding a consulting agreement. The case is Propp v. Counterpart International and LeLaulu, No. 07-CV-988 (D.C. Mar. 8, 2012).

Counterpart International is a nonprofit development organization. Brian Propp worked for Counterpart from 1995 to 2004. In 2001, Propp was promoted to General Director of Counterpart’s Humanitarian Assistance Program (CHAP). His duties included fundraising.  He also led the Counterpart Communities initiative which became known as his "brainchild." Lelei LeLaulu became Counterpart’s President and CEO in 2002.

In 2004, LeLaulu proposed to the Board that Propp be terminated due to a budget deficit in Propp’s program in Muldova and CHAP’s overall budget reduction.  The Board approved of the termination. Propp was the only person laid off. Before anyone told Propp about his termination, Congress voted to give Counterpart $12 million. In a later meeting with Propp to tell him about his termination, LeLaulu offered him an opportunity to receive three months’ severance pay in exchange for a release of all claims.  Propp refused. Nevertheless, the parties agreed to have Propp continue working for Counterpart as a contractor. LeLaulu sent an email to all staff saying that Propp would now be working on Counterpart Communities and other initiatives, but not on CHAP. A week later, Propp’s attorney sent Counterpart a letter asserting that Propp was opposing practices he believed were discriminatory. Counterpart and LeLaulu then became non-responsive to efforts to conclude the negotiations for a new contract. Instead, they insisted that Propp sign a release, and even gave him a 48-hour deadline to do so. Counterpart also abandoned the $12 million earmark from Congress. On October 7, 2005, Propp filed his lawsuit alleging discrimination and retaliation.

During discovery Counterpart admitted that “Defendants never engaged or otherwise permitted [Propp] to concentrate on Counterpart Communities and other strategic opportunities for the organization because [Propp] refused to sign a separation agreement and release.” The DC Superior Court still dismissed the lawsuit on summary judgment. Propp appealed only the decision that dismissed his retaliation claim. He argued that Counterpart and LeLaulu added the requirement for a release only after Propp opposed unlawful discrimination. Today, the DC Court of Appeals agreed that adding the requirement for a release was retaliatory and unlawful.


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This morning, the Supreme Court declined to hear two cases that raise a conflict among the circuits about whether the First Amendment protects government employees who refuse to make false statements.  The Court denied petitions for certiorari by David Bowie, a former official of the District of Columbia (DC) Office of Inspector General (OIG), and by Matthew Byrne, Police Chief of Middletown, New York.  Bowie had lost his First Amendment case in the District of Columbia Circuit.  Meanwhile, the Second Circuit held that Byrne had to answer Jason Jackler’s claim that he suffered retaliation for refusing to make false statements in an excessive force investigation.  The Supreme Court’s decision to avoid the issue means that public employees in New York, Vermont and Connecticut will have protection when they refuse to make false statements, but those in DC will not.  The rights of public employees in other states remains undecided.

The outcome for David Bowie is particularly troubling.  According to the Second Circuit, Bowie was the Assistant Inspector General of the Investigations Division at the OIG from November 1997 until his termination in August 2002. DC officials say they fired Bowie for performance problems. But Bowie says his termination was to punish him for supporting Emanuel Johnson, a subordinate whom the OIG fired over Bowie’s dissent. Bowie and Johnson had worked together in a class action race discrimination lawsuit against the Federal Bureau of Investigation (FBI). Inspector General Charles C. Maddox, told Bowie that FBI Assistant Director Jimmy C. Carter had threatened not to "provide any assistance or cooperation with the [OIG] in investigative matters" if Johnson was involved. Maddox ordered Bowie to fire Johnson, and Bowie complied in 2000. After Johnson filed a race discrimination complaint, DC’s attorney and the OIG’s attorney ordered Bowie to sign an affidavit about Johnson’s performance problems.  Bowie refused, citing "misstatements of fact" and "language that would convey impressions that [he] would not agree with." The OIG attorney invited Bowie to prepare his own affidavit, which Bowie did.  That affidavit cited one performance issue, called Johnson an otherwise "model investigator," and recounted how Bowie wanted to keep Johnson employed. The OIG decided not to use Bowie’s affidavit in defense of Johnson’s claim. Thereafter, Bowie’s performance appraisal’s dropped, he was removed from a high-profile investigation, and a subordinate was promoted to a superior position. Management criticized Bowie for "not stepping up to the plate" and for overprotectiveness toward his subordinates. Eventually, Maddox fired Bowie in 2002.


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This week, the National Labor Relations Board (NLRB) issued a major decision holding that employees have an inalienable right to bring collective and class action lawsuits. The National Whistleblowers Center (NWC) joined with the National Employment Lawyers Association (NELA) and other groups in an amicus brief to urge the NLRB to reach this decision.

This

Mike DeGuelle

In a landmark ruling in favor of corporate whistleblowers, the U.S. Court of Appeals for the Seventh Circuit gave the green light to Michael DeGuelle’s RICO claim of retaliation. The court’s opinion gives life to a provision in the 2002 Sarbanes-Oxley Act (SOX) that makes it a felony to retaliate against whistleblowers who provide information about corporate fraud to law enforcement officers. I reported earlier on the Seventh Circuit’s extraordinary decision last year to appoint a prominent Chicago corporate and pro bono lawyer to represent DeGuelle in this appeal. DeGuelle’s prior lawyer abandoned his case after the district court dismissed it in 2010.

Mike DeGuelle sent me a message about his victory:

This is a giant step in the right direction for protecting the rights of employees who refuse to participate in unlawful conduct at work and then suffer retaliation. I did the right thing by reporting unlawful conduct to law enforcement. Finally, it is safe to do the right thing for no reason other than because it is the right thing to do. In this case, the court put the rights of the American people ahead of the greed of corporate America. This is an outstanding court decision for all workers to celebrate in the ongoing struggle to take back our country from the greed of corporations that have corrupted American values.


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Handbook Cover

The NWC is proud to announce the release of the second edition of The Whistleblower’s Handbook: A Step-by-Step Guide to Doing What’s Right and Protecting Yourself. This second edition includes a new 20–page checklist on the procedures for obtaining Dodd-Frank Act rewards from the Securities and Exchange Commission (SEC). The checklist covers the SEC’s regulations that went into effect on August 11, 2011, and provides insights on how whistleblowers can use the new regulations to maximize their potential rewards. See pages 276-296.

The new edition also explains how whistleblowers can use the Dodd-Frank Act to blow the whistle on violations of the Foreign Corrupt Practices Act (FCPA). The FCPA prohibits companies traded in the United States from bribing officials in other countries. The SEC can require that companies caught violating the FCPA “disgorge” the monies received through the violation. As the SEC penalty can be much greater than the amount of the bribe itself, the whistleblower’s reward of 10 to 30 percent of the SEC recovery can also be very large. Whistleblowers anywhere in the world can now submit anonymous reward claims for reporting corruption of local officials. See pages 30-32 and 294-295.

Other new features of the second edition include:

  • How to navigate opportunities to report violations to internal channels and the SEC. Pages 280-281.

  • Tips for employees of corporate compliance and internal audit departments. Page 282.

  • Examples of the types of corporate misconduct that violate SEC rules and can become the basis for Dodd-Frank rewards. Pages 292-293.

  • Managing retaliation claims under both the Dodd-Frank Act and the Sarbanes-Oxley Act (SOX). Page 290.


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On July 25, 2011, one of the nation’s leading whistleblower attorneys, Stephen M. Kohn, will share compelling insights from his newly-released book, The Whistleblower’s Handbook: A Step-by-Step Guide to Doing What’s Right and Protecting Yourself at the Mid-Manhattan New York Public Library. The author talk and book signing will be hosted by “Author @ the Library,” from 6:30 pm to 8:30 pm.
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Stephen M. Kohn, Executive Director of the National Whistleblowers Center (NWC), published an op-ed article in today’s New York Times.The article tells the story of Captain John Grannis, and nine other sailors of the Continental Navy. The full story is contained in The Whistleblower’s Handbook. The actual documents from the Continental Congress are

Today the Supreme Court issued a landmark decision that prohibits employers from retaliating against a whistleblower’s family members or other associates. The decision in Thompson v. North American Stainless LP is unanimous, and reverses an en banc decision of the Sixth Circuit Court of Appeals in Cincinnati, Ohio. The decision makes clear that victims of retaliation do not have to show that they themselves engaged in any “protected activity.” Instead, they must show that they are “person[s] aggrieved” by unlawful retaliation. The Supreme Court declines to identify any “fixed class of relationships for which third-party reprisals are unlawful.” Instead, courts will have to decide the application in each case, based upon “the particular circumstances.” In the decision, the Supreme Court relies heavily on its 2006 decision in Burlington N. & S. F. R. Co. v. White, 548 U. S. 53. The Court today reiterates that employers are not allowed to take any action that would dissuade a “reasonable worker” from engaging in protected activity. The Court recognizes that this standard “must be construed to cover a broad range of employer conduct.” The Court said that it is “obvious” that allowing employers to fire a fiance would discourage employees from raising concerns about violations of the law.

Until recently, I thought this issue had been well settled.  The EEOC had long held that employers may not retaliate against those associated with others who engaged protected activity. Courts, including the Sixth Circuit, had agreed that spouses, for example, had a right to sue when they suffered retaliation prompted by the other spouse’s protected activity.  See, for example, EEOC v. Ohio Edison, 7 F.3d 541 (6th Cir. 1993). The National Labor Relations Board (NLRB) had also held that retaliation against relatives was against the law. See NLRB v. Advertisers Mfg. Co., 823 F.2d 1086, 1088-89 (7th Cir. 1987). Since then, a series of more hostile appellate court decisions have barred such claims. Today, that era of hostility is over.


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