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The Employment Law Group, P.C. produces this blog to provide general news and information about the field of employment law; the blog does not contain any legal advice upon which you should rely or act. If you need advice on a particular issue or problem, please contact an attorney. Use of this Web site does not create an attorney-client relationship between you and The Employment Law Group.

Supreme Court Revisits the Scope of SOX

What does a fisherman’s criminal destruction of undersized fish have to do with the scope of federal whistleblower laws? The U.S. Supreme Court will soon tell us, after hearing oral arguments last week in Yates v. United States.

In deciding whether a fish is a “tangible object” as that term is used in the Sarbanes-Oxley Act (SOX), the justices will again signal how broadly they’re willing to apply SOX — a topic they last visited in March in Lawson v. FMR LLC, a sweeping decision that turned one section of SOX into something like a general-purpose whistleblower protection law.

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Justices Balk at Regulatory End Run Around the WPA

NOTE: A version of this post first appeared on Law360.com. The author, R. Scott Oswald, is managing principal of The Employment Law Group, P.C.

Supreme CourtHere’s the problem with telling the justices of the U.S. Supreme Court that they’re wrong: They always get the last word.

And the last word in Department of Homeland Security v. MacLean — based on today’s oral arguments in the case, at least — now seems likely to be a rejection of the Obama Administration’s contention that federal agencies may strip employees of their rights under the Whistleblower Protection Act of 1989 (WPA) simply by issuing regulations that forbid certain types of disclosure.

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Supreme Court Weighs Scope of Whistleblower Protection Act

The U.S. Supreme Court next week will hear arguments in Department of Homeland Security v. MacLean, a case that could determine whether government officials are free to punish whistleblowers who disclose information that’s been labeled as “sensitive” — even if the information was never listed for protection by any law.

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FINRA Warns Firms Not to Bar Employee Whistleblowing

The Financial Industry Regulatory Authority — a self-policing arm of the securities industry — reminded its member firms not to ask their employees to sign confidentiality agreements that forbid reporting possible wrongdoing to FINRA itself, or to industry regulators such as the U.S. Securities and Exchange Commission.

FINRA may discipline firms that add such provisions to agreements with their employees, it said in a new regulatory notice. FINRA also said that any language that bars employees from sharing certain documents outside their firm can’t stop employees from giving the same documents to regulators.

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SEC Gives $300K to Whistleblower Working in Audit/Compliance

The U.S. Securities and Exchange Commission said it awarded more than $300,000 to a whistleblower who first reported wrongdoing internally — but then went to the feds after being ignored for four months.

The SEC typically doesn’t reveal details about the people who receive awards under the Dodd-Frank Act, since the law grants confidentiality to whistleblowers, but the agency said this was its first-ever payout to a person who worked in a company’s audit or compliance areas.

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ARB Allows Whistleblower to Challenge Arbitration of Retaliation Claim

The U.S. Department of Labor’s Administrative Review Board (ARB) said it would hear an airline whistleblower’s appeal of a decision forcing her into arbitration with her former employer, saying the delay of arbitration might jeopardize her rights under the the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (AIR 21) — and therefore could undermine AIR 21 itself.

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SEC Brings First Action on Whistleblower Retaliation

The U.S. Securities and Exchange Commission (SEC) said it filed — and promptly settled, for $2.2 milllion — its first-ever charges against a company for retaliating against a whistleblower who reported wrongdoing under the Dodd-Frank Act.

The SEC charged Paradigm Capital Management Inc., a hedge fund advisory firm, with engaging in prohibited principal transactions and then removing a head trader from his regular responsibilities after he reported the conflict of interest to the SEC.

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Third Circuit Sides With Whistleblowers in Split on FCA Pleading

A federal appeals court said that the False Claims Act (FCA) does not require whistleblowers to list “representative samples” of fraudulent transactions in order to proceed with a FCA claim, deepening a  judicial split that won’t be resolved until the U.S. Supreme Court weighs in.

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First Amendment Protection: The Start of a Comeback?

NOTE: A version of this post first appeared on Law360.com. The author, R. Scott Oswald, is managing principal of The Employment Law Group, P.C.

Supreme CourtWith Lane v. Franks, the U.S. Supreme Court has backed off slightly from the absolutism of a 2006 decision that limited the free-speech rights of public employees — and, in the process, has created a framework that may allow more moderation in future cases.

At one level the Court’s holding yesterday — that the First Amendment can protect government workers from punishment for testifying under oath about job-related matters — was unremarkable, even obvious.

But while Justice Sonia Sotomayor offered her 9-0 opinion mainly as a clarification of Garcetti v. Ceballos, which denies government employees constitutional protection for “speech made pursuant to [their] official duties,” she also added two new considerations that promise to bring more workplace speech under the First Amendment’s shield:

  • Whether an employee is acting on a civic obligation to “society at large”
  • Whether allowing retaliation would discourage important types of whistleblowing

In so doing, Lane hearkened back to the more employee-centric balancing test of 1968’s Pickering v. Board of Ed. of Township High School Dist. 205, Will Cty., which had stood mostly undisturbed until the 5-4 ruling in Garcetti.

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Sixth Circuit: Whistleblowers May Sue, Despite Arbitration Clause

A federal appeals court said two whistleblowers may sue their former employer for unlawful retaliation under the False Claims Act (FCA), despite having contracts that required arbitration of disputes — and despite a federal law that favors such arbitration requirements.

In U.S. ex rel. Paige v. BAE Systems Technology Solutions & Services, Inc., the U.S. Court of Appeals for the Sixth Circuit held that the FCA retaliation claims of Matt Paige and Jim Gammon were not related to their employment contracts — and therefore weren’t governed by the arbitration clause, which covered issues “arising from” those contracts.

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Rule 345 Provides a New Shield for IRS Whistleblowers

A U.S. Tax Court judge on Tuesday allowed three whistleblowers to hide their identities in court for reasons that ranged from death threats to a fear of professional ostracism.

The rulings by Judge Diane L. Kroupa appear to be the the first decisions publicly reached under the Tax Court’s Rule 345, which in 2012 established a formal procedure for tax whistleblowers to request anonymity.

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Whistleblower Nurse Reaps $15 Million Reward in Amedisys Fraud Settlement

The U.S. Department of Justice announced settlements with several healthcare companies accused of fraud — including a massive $150 million deal with Amedisys Inc. in which the government resolved seven lawsuits with the giant homecare provider, leading to more than $26 million in payouts to whistleblowers and a jackpot for U.S. taxpayers.

The largest whistleblower reward, more than $15 million, went to April Brown, an Alabama nurse and single mother who was fired by Amedisys after she questioned its Medicare billing practices.

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MSPB: Cat’s Paw Doctrine Protects Federal Whistleblowers

The Merit Systems Protection Board (MSPB) adopted the U.S. Supreme Court’s 2011 formulation of “cat’s paw” liability to find that the Transport Security Administration (TSA) acted illegally when it fired an employee who blew the whistle on lax airport security measures.

The MSPB’s decision in Aquino v. Department of Homeland Security was its first formal application of the cat’s-paw doctrine to the Whistleblower Protection Act (WPA), which forbids retaliation against whistleblowers working for the federal government. Previous board decisions had reached a similar result using a different theory; the switch should help MSPB actions to survive appeal in federal court.

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ARB Affirms Punitive Damages for Two Whistleblowers

The U.S. Department of Labor’s Administrative Review Board (ARB) affirmed judgments against two transportation companies that fired employees who had reported health and safety issues — confirming in each case that the violation was grievous enough to trigger punitive damages.

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Supreme Court Says SOX Can Fit Almost Anyone

NOTE: A version of this post first appeared on Law360.com.  The author, R. Scott Oswald, was counsel of record on an amicus curiae brief filed in this case.

Supreme CourtIn deciding Lawson v. FMR LLC, the first whistleblower case they have heard under the Sarbanes-Oxley Act (SOX), the justices of the U.S. Supreme Court agreed that the law’s ambiguous anti-retaliation provision offered two alternatives, both somewhat unappealing:

  • Either it doesn’t protect a large class of whistleblowers — in many cases, the people most likely to discover financial wrongdoing;
  • Or it protects virtually anyone hired by a publicly traded company or by its employees, either directly or indirectly, and forbids reprisal for a huge range of fraud reports.

Led by Justice Ruth Bader Ginsburg, a 6-3 majority unflinchingly chose the broader interpretation, instantly giving SOX “a stunning reach,” in the words of a dumbfounded dissent by Justice Sonia Sotomayor.

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First Circuit Says Title VII Offers Workers a Broad Shield

A federal appeals court ruled that Title VII of the Civil Rights Act of 1964 offers employees broad protection against reprisal when they oppose workplace discrimination — even if they didn’t originally claim that an employer’s bias violated Title VII.

Saying it “cannot accept” a lower court’s dismissal of a retaliation claim by a female firefighter in Puerto Rico, the U.S. Court of Appeals for the First Circuit found no merit in the idea that Title VII covers only retaliation against complaints citing that law.

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Burrage v. U.S. — Can a Heroin Dealer Help to Clarify Whistleblower Law?

It’s rare for a criminal appeal — let alone the appeal of a heroin dealer’s sentence for his client’s ill-fated drug binge — to guide our understanding of whistleblower protection laws.

Yet there, on January 27, was the U.S. Supreme Court’s unanimous judgment in Burrage v. United States, a mandatory-minimum drug case that ended up parsing the retaliation provisions of Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act (ADEA), and more.

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Obama Administration Asks Supreme Court to Review MacLean Decision

The Obama administration asked the U.S. Supreme Court to review a lower court’s 2013 ruling that a former federal air marshal could claim he was illegally fired for leaking sensitive information to the media.

The case, MacLean v. Department of Homeland Security, raises technical — but critically important — questions about the scope of the Whistleblower Protection Act (WPA), which forbids most retaliation against federal employees who disclose suspected illegal or dangerous acts by the government.

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