The National Whistleblowers Center (NWC) has filed an amicus curiae (“friend of the court”) brief in a precedent-setting whistleblower tax case pending before the U.S. Tax Court. The case, Insinga v. Commissioner of Internal Revenue, alleged that the IRS delay in ruling on whistleblower reward cases was tantamount to a denial of claims.

The NWC is asking the Court to apply the Administrative Procedure Act to tax whistleblower cases. This Act permits the Court to find that the IRS has “unreasonably delayed” ruling on whistleblower cases and to order the IRS to commence issuing rulings on the large backlog of whistleblower cases.


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Today, attorney Stephen Kohn (Executive Director of the National Whistleblowers Center) and I are filing an amicus brief with the U.S. Department of Labor’s Administrative Review Board (ARB). The brief urges the ARB to affirm a decision of an Administrative Law Judge (ALJ) in favor of Christopher Bala, a signalman for the PATH railway that

By a 3-2 vote on a major case, the Department of Labor’s Administrative Review Board (ARB) has limited the application of the Sarbanes-Oxley Act (SOX) whistleblower protection outside the boundaries of the United States. The case is Villanueva v. Core Laboratories, NV, ARB No. 09-108, ALJ No. 2009-SOX-6 (ARB Dec. 22, 2011) (en banc).  The decision is particularly disappointing after the ARB had called for supplemental briefing. Stakeholders on both sides, including the National Whsitleblowers, submitted amicus briefs setting out the applicable caselaw, legislative history, and contextual effects of this important legal issue.  Unlike prior decisions that summarily dismissed any extraterritorial application of SOX’s whistleblower protection (such as the Canero and Ede), this time the ARB had full briefing of the relevant considerations and the majority still resists protecting whistleblowers from other countries.

Last August, I posted to this blog a description of the Villanueva case and the amicus brief submitted by NWC and the National Employment Lawyers Association (NELA). The brief argues that SOX should protect tax whistleblower William Villanueva, even though he worked for Core Lab’s subsidiary in Columbia. Core Laboratories NV is a publicly traded company based in Houston, Texas. It provides services to the petroleum industry. For 16 years, William Villanueva worked as CEO of Saybolt Columbia, Core’s subsidiary. On page 3, the ARB noted that “Saybolt Colombia does not register securities under Section 12 or file reports [with the SEC].” This fact became immaterial after the ARB’s well-considered decision in Johnson v. Siemens Building Technologies, ARB No. 08-032, ALJ No. 2005-SOX-0151 (ARB March 31, 2011). In Johnson, the ARB held that SOX has always protected the employees of subsidiaries of publicly traded companies.

In 2008, Villanueva sent emails to corporate executives in Houston reporting how other company executives were engaged in tax-transfer schemes that falsely transferred profits to low-tax Curacao, an island in the Caribbean Sea. He also reported that Core Lab’s accountants in Columbia were making false claims to evade the Columbian value added tax (VAT). After Villanueva refused to sign a false tax return, Core fired him.

Villanueva filed a complaint with the Department of Labor (DOL) claiming that he was fired in retaliation for raising his concerns. He claimed that his discharge violated the 2002 SOX law. An administrative law judge (ALJ) dismissed the case without a hearing on grounds that Villanueva worked outside the U.S. Villanueva appealed to the ARB. Earlier this Summer, the ARB asked for amicus briefs on the effect of the U.S. Supreme Court’s decision in Morrison v. National Australia Bank, 130 S. Ct. 2869 (2010).

On page 5, the Villanueva majority notes that the president of Saybolt Latin America (an intermediate Core subsidiary) fired Villanueva in a letter “written in Spanish[.]” While reading this phrase, I had the sense that the ARB majority was motivated not so much by the remedial purpose of SOX as by the administrative inconvenience of helping whistleblowers from different cultures. On page 29, Judge E. Cooper Brown noted the majority’s concern, on page 10, about how its decisions could be enforced extraterritorially. Certainly, I would agree that the Department of Labor (DOL) ALJs are overworked. To me, however, the solution should not be to limit DOL services to whistleblowers in this country, but rather to explain how the remedial purpose of SOX requires protection of whistleblowers throughout the world, and then ask Congress to authorize the hiring of the necessary ALJs and enforcement attorneys.

Earlier this week, I submitted comments to DOL’s new rules for SOX cases that reflect the changes enacted in the Dodd-Frank Act.  On pages 5-6, I urged the DOL to adopted a new rule that makes clear that SOX has the same extraterritorial reach as the SEC’s enforcement authority. It makes no sense that U.S. securities law would require publicly traded companies to file reports that accurately reflect the state of the entire business — including foreign operations — and then deny protection to employees operating within those foreign operations who raise concerns about the propriety of company operations and reports. Hopefully, DOL leadership will see this wisdom and correct this policy in their final SOX regulations.

In the continuation of this blog entry, I discuss the majority opinion’s reasoning and the insights of the two dissents.  I also provide a tip for SOX practitioners with extraterritorial issues.


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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

Privacy Act Protections for Whistleblowers At Risk

On Tuesday, October 4, 2011, the National Whistleblower Center filed a friend of the court brief with the U.S. Supreme Court in support of the plaintiff in a Privacy Act case, Federal Aviation Administration v. Cooper, No. 10-1024. The Supreme Court is currently reviewing whether the Privacy Act permits the recovery of damages for non-pecuniary harm, such as mental and emotional injuries, under the Act’s “actual damages” provision. 5 U.S.C. § 552a(g)(4)(A).

In the lower court, the Ninth Circuit held that the plaintiff was entitled to seek damages for emotional distress. The government, however, has appealed to the Supreme Court to seek a reversal claiming that the term “actual damages” should be narrowly construed to limit Privacy Act damages suits to recovery of out of pocket losses or economic harm caused by the government’s willful or intentional violation of the Act.

Whistleblowers who report wrongdoing by Federal agencies and government officials frequently are subject to violations of privacy. It cannot be over-stated how vital avenues of legal redress, including rights available under the Privacy Act, are to those courageous employee-whistleblowers, both actual and potential, who put the public good before their own careers and who face violations of their privacy as a result of taking unpopular positions. Protecting the privacy of these individuals is an essential component in encouraging employees to reveal severe abuses of power and dangerous industrial practices. Even under the best of circumstances, whistleblowers run enormous risks and suffer retaliation for reporting wrongdoing. If the Privacy Act does not provide remedies for actual non-pecuniary harms (such as for emotional distress and humiliation), then whistleblowers face even greater disincentives to expose misconduct or violations of law.


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The National Whistleblowers Center (NWC) and the National Employment Lawyers Association (NELA) filed an amicus brief this week in Villanueva v. Core Laboratories NV, a case pending at the U.S. Department of Labor’s Administrative Review Board (ARB). The brief argues that SOX should protect whistleblower William Villanueva, even though he worked for Core’s subsidiary

The National Whistleblowers Center (NWC) joined with 26 other organizations to submit an amicus brief to the National Labor Relations Board (NLRB). At stake is the right of employees to join together for collective and class actions. This long-recognized right is under attack by forced arbitration agreements in which companies demand that all their employees

On behalf of the National Whistleblowers Center (NWC), David Colapinto and I filed a friend-of-the-court brief last week arguing that the Sarbanes-Oxley Act (SOX) can protect corporate whistleblowers who make disclosures through the media. We filed the brief with the U.S. Court of Appeals for the Ninth Circuit in the case of Tides v. The Boeing Company, Case No. 10-35238. The brief examines the history of how whistleblowers have used the public attention of the media to spur government action on matters of public concern. In the 1970’s, Congress began enacting statutes to protect whistleblowers. Courts and the Department of Labor quickly recognized that when whistleblowers use media outlets to raise their safety concerns, their use of the media can and should be protected. It is now one of the recognized ways in which whistleblowers can “cause” information to be disclosed to law enforcement agencies and others who can correct violations or set enforcement policy. This case law was well developed when Congress enacted SOX in 2002, and is fully consistent with the legislative purposes behind SOX.

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In April, I wrote here about the request of the Department of Labor’s Administrative Review Board (ARB) for amicus (friend of the court) briefs on whether the Sarbanes-Oxley Act (SOX) protects employees of subsidiaries.  The National Whistleblowers Center (NWC) joined with the National Employment Lawyers Association and the Government Accountability Project to submit an amicus