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- The Insurance Benefits From Early Discovery Of Employee-Caused Losses
- The Inbox – When Suits Break Bad
- In Reversal of Fortune, Court of Appeals Finds Ambiguity in Executive’s General Release
- Faithless Fiduciary: What Happens WhenThe Employee Responsible For The Purchase Of D&O Coverage Also Commits Fraud?
- The Inbox – Trends in the C-Suite
- L’Oreal Lawyer Claims Company Fired Him When He Wouldn’t Pursue Problematic Patents
- Seeking Coverage Under Your D&O Insurance Policy: What Is A Claim And When Was It Made?
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- The Fashionable and the Furious: Dov Charney Seeks $40 Million from American Apparel
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Blogs We Like:
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Screw You Guys, I’m Going Home: What You Need To Know Before You Scream “I Quit,” Get Fired, Or Decide to Sue the Bastards
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Showing 66 posts in Whistleblowers.
After firing its head patent attorney, Steven Trzaska, L’Oreal is now under fire from Trzaska in New Jersey federal court. On April 16, 2015, Trzaska sued L’Oreal, claiming that his firing violated New Jersey’s Conscientious Employee Protection Act (“CEPA”).
In his complaint (available at Law360), Trzaska alleges that L’Oreal had a quota for its New Jersey office of 40 filed patent applications in 2014. But, Trzaska contends, an outside consultant had previously found that many of L’Oreal’s patent applications were purely cosmetic, saying that “the vast majority of its inventions were of low or poor quality.” Trzaska alleges that his superiors pressured him to file applications to meet the quota. However, he told them that “neither he nor the patent attorneys who reported to him were willing to file patent applications that the attorneys believed were not patentable.” Soon after, L’Oreal terminated him, saying that it was hiring a new “head of patents of the Americas.” Trzaska claims that this explanation was pretext and that the company in fact fired him because he refused to file applications that were not patentable.
How do Trzaska’s claims line up with CEPA? Read More ›
Craig Watts, a chicken farmer from North Carolina, recently brought a whistleblower complaint against Perdue, claiming that the poultry seller retaliated against him for bringing certain animal welfare claims to light. Mr. Watts owns the farm on which the chickens are raised, but, according to the Government Accountability Project, the terms and conditions of the farm operations are strictly governed by the poultry giant. The Food Integrity Campaign (a program operated by the Government Accountability Project) filed the action on behalf of Mr. Watts, defending his right to speak out about the conditions on the farm, which Watts claims run far “afowl” of Perdue’s marketing claims of “cage-free” and “humanely-raised” chickens. After publicizing the conditions on his farm, Watts was placed on a performance improvement plan and is routinely subjected to surprise audits of his farm.
A former executive at L.A.’s Fashion Institute of Design and Merchandising is seeing red over the school’s termination of her employment, which allegedly came after she demanded more diverse branding in the school’s publications. Tamar Rosenthal filed a civil rights complaint in Los Angeles Superior Court alleging that the school, seemingly interested only in shades of white, opposed her attempts to showcase student diversity on the website and explicitly advised her not to showcase gay, black or non-white students in any school publications. According to My News LA, the complaint further alleged that Ms. Rosenthal’s supervisors created an “ultra-conservative, anti-Arab and anti-Muslim political atmosphere in the school’s front office.” Read More ›
The Sarbanes-Oxley Act’s whistleblower protection provision, 18 U.S.C. § 1514A, allows a wrongfully terminated whistleblower to recover “all relief necessary to make [her] whole.” 18 U.S.C. § 1514A(c)(1). The statute then goes on to say that compensatory damages include reinstatement, back pay, and “special damages,” including expert fees and reasonable attorneys fees. In an opinion issued this week, the Fourth Circuit held that Sarbanes-Oxley damages don’t just include these enumerated damages. Rather, an employee can obtain other compensation for harm, including emotional distress damages. Jones v. SouthPeak Interactive Corp. of Delaware, Nos. 13-2399, 14-1765 (4th Cir. Jan. 26, 2015).
The plaintiff in the case, Andrea Gail Jones, was the former chief financial officer of SouthPeak, a video game manufacturer. According to the opinion, in 2009, SouthPeak wanted to buy copies of a video game for distribution, but didn’t have the cash to buy the games up front. Instead, SouthPeak’s chairman, Terry Phillips, personally fronted Nintendo over $300,000. When SouthPeak didn’t record this debt, Jones raised a stink, eventually telling the company’s outside counsel that the company was committing fraud. The same day, the company’s board fired her. Read More ›
Last November, we covered the Supreme Court oral argument in the case of Department of Homeland Security v. MacLean. As a refresher, MacLean was an air marshal who was fired by the Transportation Security Administration (TSA) after he blew the whistle to MSNBC on the agency’s plan to cancel marshal missions to Las Vegas. After the argument, Prof. Steve Vladeck of American University predicted that the TSA would lose the case.
He was right. On Wednesday, the Supreme Court issued its opinion, in which it held in favor of MacLean. The TSA argued that it could fire MacLean because his disclosures were “specifically prohibited by law” in two ways: first, it had adopted regulations on sensitive security information, which applied to the information MacLean disclosed; second, a provision of the U.S. Code had authorized TSA to adopt those regulations. Chief Justice Roberts, writing for the Court, rejected both arguments.
As to the regulations, he wrote, Congress could have said that whistleblowers were not protected if their disclosures were “specifically prohibited by law, rule, or regulation,” but did not. Thus, its choice to only use the word “law” appeared to be deliberate. Further, interpreting the word “law” broadly “could defeat the purpose of the whistleblower statute,” because an agency could insulate itself from liability by promulgating a regulation that prohibited whistleblowing. And as to the argument that Congress-passed “law” prohibited the disclosure, Chief Justice Roberts wrote that the statute in question did not prohibit MacLean’s disclosures. Instead, it was the agency’s exercise of discretion, not the statute, that determined what disclosures were prohibited. Read More ›
In our last post, we counted down our most popular posts of 2014, from A-Rod to Walgreen. Now it’s time to take a look at the issues in executive disputes that are likely to draw plenty of attention in 2015.
1. Dodd-Frank Bounties and Whistleblower Litigation on the Rise
In November 2014, the SEC released its annual report on its Dodd-Frank whistleblower award program. The theme of the report is that Dodd-Frank is paying off – both for the SEC and for whistleblowing employees. The SEC reported that it issued whistleblower awards to more people in its 2014 fiscal year than in all previous years combined, including a $30 million bounty to one whistleblower in a foreign country. The number of whistleblower tips received continues to increase, and we expect news of more substantial awards in 2015. Meanwhile, litigation over various Dodd-Frank issues, such as whether a whistleblower claim is subject to arbitration, whether the shield against whistleblower retaliation applies overseas, and whether a whistleblower must report to the SEC in order to bring a retaliation claim, will continue to percolate in the federal courts.
2. The Supreme Court Weighs in on Employment Issues
A couple of key Supreme Court cases will address employee rights that apply across the board, from the C-suite to the assembly line. In Young v. United Parcel Service, the Court will decide whether, and in what circumstances, the Pregnancy Discrimination Act requires an employer that accommodates non-pregnant employees with work limitations to accommodate pregnant employees who have similar limitations. And in EEOC v. Abercrombie & Fitch Stores, Inc., the Court will address whether an employer can be liable under the Civil Rights Act for refusing to hire an employee based on religion only if the employer actually knew that a religious accommodation was required based on knowledge received directly from the job applicant. Read More ›
Who doesn’t love the year-end countdown? We’re here to offer you one of our own – our most-read posts in 2014 about executive disputes. The posts run the gamut from A (Alex Rodriguez) to Z, or at least to W (Walgreen). They cover subjects from sanctified (Buddhists and the Bible) to sultry (pornographic materials found in an executive’s email). Later this week, we’ll bring you a look at what to expect in 2015.
Without further ado, let the countdown begin!
8. The Basics: Dodd-Frank v. Sarbanes-Oxley
This post is an oldie but a goodie. It includes a handy PDF chart that breaks down the differences in the Dodd-Frank and Sarbanes-Oxley whistleblower laws. Each of these laws continues to be a hot-button issue for plaintiffs and employers.
7. When Employment Relationships Break Bad
America may have bidden adieu to Walter White and his pals on Breaking Bad, but employment relationships continue to spin off in some very unpleasant ways. Such was the case with Stephen Marty Ward, who ended up in federal prison after he threatened his employer with disclosure of its trade secrets, as we covered in this post. Read More ›
Recently, in a government investigation by the civil division of a United States Attorney’s Office, an employee of a private company was deposed pursuant to a Civil Investigative Demand (CID). The employee, on the advice of counsel, refused to answer questions on certain topics and invoked the Fifth Amendment right against compulsory self-incrimination (she “took the Fifth” in common shorthand). Several days later, she was fired by her employer for taking the Fifth. (The employer claimed that it wanted to show cooperation with the government’s investigation and taking the Fifth is viewed as being non-cooperative.) When I recounted this story to my non-lawyer fiancée, he was outraged and wondered how could her employer do such a thing? Wasn’t this retaliation? Didn’t she have a clear wrongful termination claim against her employer? Good questions. While most, if not all, states (and the federal government) have enacted provisions to protect employees who blow the whistle on illegal activity from retaliatory discharge, is there any protection from discharge for an employee of a private company who chooses to keep mum to protect herself?
The short answer is no.
In our Bill of Rights, No. 5, it is written that “[n]o person … shall be compelled in any criminal case to be a witness against himself.” Although the text limits the right to stay silent in a criminal case, it is generally accepted that a witness may assert the right in any context in which the witness fears his/her statements may later be used against him/her. Thus, as an American I have the right to refuse to answer questions or offer information which I fear could incriminate me. [A full discussion of the scope of Fifth Amendment protection is beyond the scope of this post. To learn more about the Fifth Amendment protections against self-incrimination, I refer the reader to The Privilege of Silence, authored by my fellow Zuckerman Spaeder attorneys Steven M. Salky and Paul B. Hynes and available here.] Read More ›
A whistleblower generally shouldn’t break the law in order to prove his claims. Indeed, the Whistleblowers Protection Blog says that this is a “basic rule,” and cautions that an employee who breaks the law while whistleblowing in order to get evidence will suffer from attacks on his credibility and may even be referred for criminal prosecution. However, the parameters of this rule aren’t always so easy to follow, as the Supreme Court heard last week in the case of Department of Homeland Security v. MacLean.
The MacLean case arose from a warning and text message. In July 2003, the Transportation Security Administration (TSA) warned MacLean, a former air marshal, and his colleagues about a potential plot to hijack U.S. airliners. Soon after, however, the TSA sent the marshals an unencrypted text message, canceling all missions on overnight flights from Las Vegas. MacLean was concerned about this reduction in security, and eventually told MSNBC about it. The TSA then issued an order stating that the text message was sensitive security information (SSI). When it found out that MacLean was the one who disclosed the message to MSNBC, it fired him.
MacLean didn’t take this while reclining; he challenged his dismissal before the Merit Systems Protection Board. But he lost. The Board decided that TSA didn’t violate the federal Whistleblower Protection Act by firing MacLean for his disclosure, because MacLean’s disclosure violated a TSA regulation that prohibited employees from publicly disclosing SSI. Read More ›
On September 22, the Securities and Exchange Commission announced its largest award to date under its whistleblower program: $30 million. The SEC said that the whistleblower, who lives in a foreign country, came to it with valuable information about a “difficult to detect” fraud.
In the order determining the award (which is heavily redacted to protect the identity of the whistleblower), the SEC commented that the claimant’s “delay in reporting the violations” was “unreasonable.” In arguing for a higher bounty, the claimant contended that he or she was “uncertain whether the Commission would in fact take action.” This argument, however, didn’t support a “lengthy reporting delay while investors continued to suffer losses.” Read More ›
Taiwan and Manhattan’s Foley Square are separated by 7,874 miles, and Taiwanese citizen Meng-Lin Liu couldn’t bridge the distance in federal court. Liu sought to recover in Manhattan under the Dodd-Frank Act’s anti-retaliation provision (15 U.S.C. § 78u‐6(h)(1)). However, on August 14, the Second Circuit, which sits in Foley Square, affirmed the dismissal of his whistleblower retaliation claim. Liu v. Siemens AG, No. 13-4385-cv (2d Cir. Aug. 14, 2014).
As we previously described here, Liu’s case was relatively simple. He alleged that he repeatedly told his superiors at Siemens in Asia, and the public, that Siemens was violating the Foreign Corrupt Practices Act (FCPA). As a result, he claimed, Siemens demoted him, stripped him of his responsibilities, and eventually fired him with three months left on his contract. Read More ›