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Recent Kramer Decision in Favor of a Dodd-Frank Whistleblower Likely to Strengthen Anti-Retaliation Lawsuits Brought by Financial Whistleblowers, Law360 Reports


Law360 recently indicated in its lead story the broad implications of the recent ruling in Kramer v. Trans-Lux for financial whistleblowers.  The Kramer decision marked the first time a Dodd-Frank whistleblower’s retaliation claim has survived a motion to dismiss when, earlier this week, a federal judge embraced an expansive definition of whistleblower under Dodd-Frank.

The Kramer decision joins three other court decisions that have focused on the anti-retaliation provisions of Dodd-Frank as the latest in a series of decisions that broadly interpret who qualifies as a whistleblower.  According to Law360’s report, many whistleblower advocates believe that the Kramer decision will result in an uptick in the filing of whistleblower claims against employers.

These developments are favorable for financial whistleblowers who face retaliation from their employers for reporting fraud or illegal conduct because by filing a retaliation claim under Dodd-Frank rather than the Sarbanes-Oxley Act, plaintiffs have a longer statute of limitations and may bring their claims directly in federal court without having first to proceed through an administrative process at the Department of Labor.

In sum, the Kramer decision will serve as additional authority for employees who seek to bring Dodd-Frank complaints after having suffered retaliation when reporting violations to their employers internally, as well as to the Securities and Exchange Commission (SEC).

The article, “Dodd-Frank Whistleblower Ruling May Spark Retaliation Suits” appeared in the September 27, 2012 edition of Law360.

The whistleblower who brought the suit, Richard Kramer, is represented by The Employment Law Group® law firm’s Nicholas Woodfield and R. Scott Oswald.

Law360 Quotes Nicholas Woodfield on First-of-Its-Kind Ruling in Whistleblower Protection Case under Dodd-Frank

Law360 recently reported in its lead article on Kramer v. Trans-Lux Corp. , the first court decision allowing a Dodd-Frank Act retaliation suit to survive a motion to dismiss.  In the article, Law360 quoted Nicholas Woodfield, principal at The Employment Law Group® law firm and attorney for Richard Kramer, the whistleblower who brought the lawsuit.

Mr. Kramer, a former executive for Trans-Lux, was fired after reporting to the company’s board of directors and the Securities and Exchange Commission that his supervisors has run afoul of the company’s pension plan.

Trans-lux had argued that Kramer was not a whistleblower as defined in the Dodd-Frank law.  The court, however found that Kramer was protected by against retaliation as a whistleblower and that “Trans-lux’s interpretation would dramatically narrow the available protections to potential whistleblowers.”

Kramer’s attorney, Mr. Woodfield told Law360 that he is “pleased” with the decision and that he regards it as “a fair decision that accurately reflects the goals of the legislators in implementing Dodd-Frank.”  Woodfield also noted that “whether Mr. Kramer will prevail at trial is another issue, but [the decision] fairly recognizes that it was the intent of Congress to protect [whistleblowers] like him.”

The article, “Judge Backs Broad Whistleblower Definition Under Dodd-Frank” appeared in the September 26, 2012 edition of Law360.

The Employment Law Group® law firm has an extensive nationwide whistleblower practice representing employees who have been victims of retaliation.

Whistleblower Protection Enhancement Act (WPEA) Passes House, Bill Set to Strengthen Protections for Federal Employees

Today the U.S. House of Representative enacted the Whistleblower Protection Enhancement Act (WPEA). The U.S. Senate will likely enact it through unanimous consent in the near future.  Below is a summary of the legislation.

The Employment Law Group® (TELG) supports the passage of the Whistleblower Protection Enhancement Act (WPEA), S. 743 / H.R. 3289. This legislation will help employee-side counsel protect federal employees from unlawful retaliation. The WPEA strengthens protections for employees who disclose waste, fraud, and abuse in 10 critical areas.

  1. Protecting all lawful disclosures of waste, fraud, and abuse. The WPEA addresses court decisions that have narrowed the scope of protections Congress intended. For example, employees now are not protected for blowing the whistle in the course of their job duties. Final passage of the law would eliminate protections for some of the most important positions in government. Federal auditors, safety inspectors, and other employees with health and safety roles should be encouraged to perform their jobs diligently and with the public interest in mind. An efficient whistleblower law encourages employees to work within the chain of command to resolve problems early and effectively.
  2. Deterring retaliation through disciplinary actions. The WPEA also furthers congressional intent by restoring the government’s ability to seek disciplinary actions against employees who engage in unlawful retaliation. The WPEA establishes a “significance motivating factor” test, which will allow government agencies to effectively enforce the whistleblower law and protect employees by deterring wrongdoing.
  3. Providing full and fair relief for victims of unlawful retaliation. The WPEA strengthens the remedies for whistleblowers who prevail in their retaliation claims. The legislation provides for compensatory damages, which will allow employee’s counsel to seek full and fair relief for employees who suffer from sustained harassment in addition to adverse personnel actions. The need for this reform is highlighted by recent whistleblower cases at the Bureau of Alcohol, Tobacco, Firearms, and Explosives. Law enforcement officers and other employees may believe their careers have been stifled because of their protected whistleblowing. In such cases, correcting a personnel record may be insufficient to make an employee whole, and the availability of compensatory damages is a better remedy for combating the stigma that too often is associated with conscientious whistleblowing.
  4. Holding agencies accountable for retaliatory investigations. The WPEA further strengthens the remedies available for whistleblowers and provides a strong deterrent to retaliatory investigations by allowing employees to recover damages or costs associated with an agency “witch hunt.”
  5. Extending whistleblower protections to all TSA employees. The WPEA covers a loophole in existing law that exempts Transportation Security Officers from the whistleblower protections afforded to other employees. The 50,000+ employees at the nation’s airports should feel confident that they will be protected from retaliation for speaking out against threats to aviation security.
  6. Promoting scientific integrity in government operations. The WPEA explicitly protects government scientists and other professionals for disclosures related to the integrity of the scientific process.
  7. Allowing the prosecutor to shape the law. The WPEA would give the Office of Special Counsel greater authority to shape the whistleblower law by allowing the OSC to file friend of the court briefs in important cases.
  8. Ensuring that whistleblower protections supersede agency non-disclosure agreements. The WPEA makes it a prohibited personnel practice for an agency to impose a non-disclosure agreement on an employee if the agreement does not explicitly state that the employee’s rights under the whistleblower law supersede the terms of the agreement. This provision is necessary to inform employees of their statutory rights and encourage lawful disclosures of misconduct and waste.
  9. Enhancing diversity in appellate review of whistleblower claims. The WPEA established a two-year period in which whistleblower protection claims may be heard by the regional appellate courts in addition to the U.S. Court of Appeals for the Federal Circuit. This will improve the development of the law.
  10. Informing employees of their rights and protections. The WPEA requires each agency Inspector General to designate a Whistleblower Protection Ombudsman.

Collectively, these reforms will make the Whistleblower Protection Enhancement Act stronger than at any point in its history, and provide employee-side attorneys with all the tools they needs to effectively fulfill their mission to protect employees from unlawful retaliation.

The Employment Law Group® law firm’s whistleblower attorneys have helped many clients file suit against employers that fraudulently bill the U.S. government, and have established favorable precedents under the retaliation provision of the False Claims Act.

Kramer v. Trans-Lux Corp., First Dodd-Frank Claim to Survive Motion to Dismiss in Federal Court

On Tuesday, September 25, the U.S. District Court for the District of Connecticut ruled that the definition of “whistleblower” under the Dodd-Frank Act encompasses individuals who make disclosures required or protected under the Sarbanes-Oxley Act or the Securities Exchange Act of 1934.  Plaintiff’s Richard Kramer’s case against former employer Trans-Lux is the first Dodd-Frank claim to survive a motion to dismiss in federal court.  Kramer v. Trans-Lux Corp., 3:11cv1424 (D. Conn. Sept. 25, 2012).   Scott Oswald and Nick Woodfield, principals with The Employment Law Group, represent Mr. Kramer.


Kramer served as Vice President of Human Resources and Administration for Trans-Lux for eighteen years.  He reported to Chief Financial Officer Angel Toppi.  Kramer and Toppi comprised Trans-Lux’s pension plan committee.  Trans-Lux’s pension plan requires at least three members on the committee, and Kramer repeatedly advised Toppi that the committee needed at least one additional member.  Toppi repeatedly rejected Kramer’s advice.  In addition to serving on the committee, Toppi served as the sole trustee of the pension plan.  Kramer was concerned that this created a conflict of interest.

On four occasions between 2008 and 2011, Trans-Lux amended its pension plan.  On two of those occasions the two-person committee approved the amendments, although the plan requires approval by a three-person committee.  In addition, Toppi failed to bring the 2009 amendments to the board of directors for approval and failed to file them with the SEC.

In March 2011, Toppi ordered Kramer not to notify the Pension Benefit Guaranty Corporation that the company had missed a contribution.  This notification would have resulted in an immediate penalty to Trans-Lux.  Later that month, Kramer notified Trans-Lux executives of all his concerns with Trans-Lux’s failure to adhere to its pension plan.  In May 2011, he brought his concerns to the board of directors’ audit committee.  Finally, he sent two letters to the SEC, notifying them of Trans-Lux’s violations.

As soon as Kramer expressed his concerns, Trans-Lux executives began to retaliate against him.  They reprimanded him, reassigned his subordinates to other executives, stripped him of his responsibilities, and finally terminated him.

“Whistleblower” Under Dodd-Frank

Trans-Lux argued in its motion to dismiss that Kramer did not report Trans-Lux’s violations in the manner that the SEC requires, and therefore did not meet the definition of a “whistleblower.”  Kramer argued that individuals who make disclosures  that are required or protected under the Sarbanes-Oxley Act or the Securities Exchange Act of 1934 meet this definition regardless of the manner in which they make their disclosure.

The court agreed with Kramer’s argument, citing to a final rule promulgated by the SEC on August 12, 2011.  The court explained:

Trans-Lux’s interpretation would dramatically narrow the available protections available to potential whistleblowers. In order to have provided information in the manner provided by the SEC, an individual would have either had to submit the information online, through the Commission’s website, or by mailing or faxing a Form TCR (Tip, Complaint or Referral). Mailing a regular letter is insufficient…. Such a reading seems inconsistent with the goal of the Dodd-Frank Act, which was to “improve the accountability and transparency of the financial system,” and create “new incentives and protections for whistleblowers.”

The court found that Kramer’s disclosures were required under Sarbanes-Oxley and relate to violations of securities laws and therefore are protected under Dodd-Frank regardless of the manner in which they were made.  The court further clarified that the Dodd-Frank Act expands the protections of Sarbanes-Oxley, and that this expansion is a permissible construction of the statute.

Related U.S. District Court Decisions

On April 3, 2012, the U.S. District Court for the Middle District of Tennessee confirmed that the term “whistleblower” includes individuals who make internal disclosures of security law violations, as long as the disclosures are made in accordance with the “certain laws within the SEC’s jurisdiction.”  Nollner v. S. Baptist Convention, Inc., 852 F. Supp. 2d 986, 993 (M.D. Tenn. 2012).  However, the court found that plaintiffs Ron and Beverly Noller were not whistleblowers under Dodd-Frank, because their employer does not issue stock and was not subject to the SEC’s jurisdiction.   Id. at 997.

On May 4, 2011, the U.S. District Court for the Southern District of New York reached the same decision as the Noller court regarding internal disclosures and therefore granted plaintiff Patrick Egan leave to amend his complaint to include a claim for retaliation under Dodd-Frank.  Egan v. TradingScreen, Inc., 10 CIV. 8202 LBS, 2011 WL 1672066 (S.D.N.Y. May 4, 2011).

On June 28, 2012, the U.S. District Court for the Southern District of Texas declined to decide whether plaintiff Khaled Asadi met the definition of a “whistleblower” under Dodd-Frank for making protected disclosures under Sarbanes-Oxley.  Asadi v. G.E. Energy (USA), LLC, CIV.A. 4:12-345, 2012 WL 2522599 (S.D. Tex. June 28, 2012).  Instead, the court decided that the statute did not protect plaintiff Asadi’s disclosures because they occurred outside of the United States.  Id.

Richard Kramer is represented by The Employment Law Group law firm’s Nicholas Woodfield and R. Scott Oswald.

Department of Labor Orders Ohio Company to Reinstate and Pay Whistleblower $270,000

Dana Holdings Corp., an Ohio based company that supplies driveline, sealing and thermal management technologies for passenger, commercial and off-highway vehicles, has been ordered by the U.S. Department of Labor to reinstate a financial analyst and pay him $274,922.47 in compensatory damages in order to settle a whistleblower lawsuit filed under the Sarbanes-Oxley Act of 2002.

The employee alleges that he was terminated in February 2009 in retaliation for raising concerns regarding inaccuracies in the company’s customer information assessment system database, which could in turn lead to inaccuracies in the company’s annual financial reports.

Nick Walters, the Department of Labor’s Occupational Safety and Health Administration’s (OSHA) regional administrator in Chicago, stated:

“The Sarbanes-Oxley Act provides protection to workers who report alleged violations of federal laws relating to fraud against shareholders… This case clearly shows the department’s commitment to ensuring that individuals are provided the protections and relief afforded by the law, and sends a message that retaliatory actions will not be tolerated.”

In addition to reinstating the former financial analyst and paying him compensatory damages, Dana Holdings must expunge all adverse references related to the discharge from the employee’s personnel record and must train all employees and post a notice regarding the Sarbanes-Oxley Act’s whistleblower provision.

The Employment Law Group® law firm has an extensive nationwide whistleblower practice  representing employees who have been victims of retaliation.