The New Whistleblower's Handbook

by Stephen Kohn

  University of Nebraska College of Law Professor Richard Moberly explained the maze confronting most whistleblowers as follows: “The complex combination of federal and state statutory protection and the tort of wrongful discharge provide inconsistent antiretaliation protection that depends substantially on whether the whistleblower is the ‘right’ type of employee who works for the ‘right’ type of employer in the ‘right’ type of industry. Protection also depends upon whether the employee reported the ‘right’ type of misconduct in the ‘right’ way.” Richard Moberly, “Protecting Whistleblowers by Contract,” 79 University of Colorado Law Review 975 (2008). See also Stephen Kohn, Concepts and Procedures in Whistleblower Law (Westport, CT: Quorum Books, 2001) and Federal Whistleblower Laws and Regulations (Washington, DC: National Whistleblower Center, 2009).

  The loopholes that face many employees was well stated in Bricker v. Rockwell, 1991 U.S. Dist. LEXIS 18965 (E.D. Wash.), where he noted that a “gap in coverage” had “caught” a well-deserving whistleblower in “limbo.” After highlighting the credibility of the whistleblower and his “compelling evidence of health and safety problems,” the court found that the “system” “failed him miserably.” The whistleblower’s case was thrown out of court.

  Rule 3: Follow the Money

  Checklist 1 lists the major state and federal qui tam or rewards-based whistle-blower laws. Rules 6–12 set forth details on how to utilize the major qui tam and rewards laws available to whistleblowers.

  Currently twenty-nine states, the District of Columbia, and several major cities have local versions of the False Claims Act. Because of the effectiveness of these laws and federal incentives encouraging states to enact FCAs modeled on the federal law, the number of local FCAs is growing.

  The legislative history of the FCA is set forth in three critically important Senate reports. The first explains in detail the history of the FCA and the impact of the 1986 amendments that revived the law. See S. Rep. 99-345, 99th Cong., 2nd Sess. (1986). This Senate Report remains the most authoritative source for interpreting the FCA.

  A second major source of information is the legislative history of the False Claims Act Correction Act of 2008. See S. Rep. 99-345, 99th Cong., 2nd Sess. (1986); S. Rep. 110-507, 110th Cong., 2nd Sess. (2008). Although this law did not pass, many of its provisions were approved (either in whole, in part, or in a modified form) by Congress in three separate laws. See the Fraud Enforcement and Recovery Act, Public Law No. 111-21, § 4 (May 20, 2009); the Patient Protection and Affordable Care Act, Public Law No. 111-148, § 10104(j)(2) (March 23, 2010); and the Dodd-Frank Act, Public Law No. 111-203, § 1079A (July 21, 2010).

  The third report explains the meaning of the FCA amendments included in the Fraud Enforcement and Recovery Act of 2009. See S. Rep. No. 111-10, 111th Cong., 1st Session (2009).

  U.S. Department of Justice, Civil Division, Fraud Statistics—Overview: Oct. 1, 1987 –Sept. 30, 2016, These statistics are updated annually. Published at www.doj.gov/civil/frauds (FCA statistics).

  The early legislative history of the FCA can be found at: Cong. Globe, 37th Cong., 3d Sess., 952-958 (1863); “Report of the House Committee on Government Contracts,” March 3, 1863; H. R. Rep. No. 2, 37th Cong., 2d Sess., pt. ii—a, pp. xxxviii–xxxix (1862). President Lincoln signed the original FCA into law on March 2, 1863. See Statutes at Large, 37th Congress, Sess. II, Chapter LXVII (March 2, 1863).

  On April 1, 1943, the House voted to repeal the FCA. The repeal would have been readily approved, but for a prolonged filibuster by Senator William Langer (Rep., N. Dak.). During the filibuster Senator Langer put into the Congressional record information on the legislative purposes and cases pending under the FCA. See Volume 89 of the Congressional Record, Senate debates between July 8 and Dec. 17, 1943. Langer’s central arguments in opposition to repealing or gutting the FCA are set forth in his “Minority Views” to Senate Report 291, Part 2, 78th Cong. 1st Session (June 25, 1943) and in the Congressional Record on pp. 7437–45 (July 8, 1943), pp. 7576–79 (Sept. 15, 1943), pp. 7601–7 (September 17, 1943). Senator James Murray (Montana) also spoke out against the repeal. Congressional Record pp. 7575–76 (Sept. 15, 1943), pp. 7609–10 (Sept. 17, 1943). Senator Joel Bennett Clark (Missouri) also condemned the repeal. See Congressional Record pp. 7611–14 (Sept. 17, 1943). In the House of Representatives, Congressman Vito Marcantonio (New York) and Louis Miller (Missouri) opposed the repeal. See Congressional Record pp. 10846– 49 (Dec. 17, 1943).

  Based on Langer’s actions the FCA was not repealed, but instead severely weakened. The amendments gutting the law were approved by Congress and signed into law by President Roosevelt on Dec. 23, 1943. See 57 Stat. 608.

  The Bradley Birkenfeld story has been widely reported in the international press. See Michael Bronner, “Telling Swiss Secrets: A Banker’s Betrayal,” Global Post (Aug. 5, 2010); Juan Gonzales, “UBS Whistleblower Bradley Birkenfeld Deserves a Statue on Wall Street, Not Prison Sentence,” New York Daily News (Jan. 6, 2010); David Hilzenrath, “Beware the Whistle: A Swiss Banker’s Saga Offers a Cautionary Tale,” Washington Post (May 16, 2010). The exchange between the court and the federal prosecutor is contained in the Sentencing Transcript, U.S. v. Birkenfeld, 08-60099-CR-Zloch (U.S. Dist. Court, S.D. Florida) (Aug. 21, 2009).

  Rule 4: Find the Best Federal Law

  The federal whistleblower laws, along with citations to major cases interpreting these laws, are set forth in Checklist 2.

  Congress periodically amends these laws, and the most recent version of the law should always be checked. Furthermore, courts are continuously interpreting statutes, and the most recent judicial interpretations must also always be checked. Lower courts often disagree over the interpretation of a law, and it is also important to check the specific judicial rulings relevant in the judicial district or court for which you may file a claim.

  AIRLINE SAFETY

  Aviation Investment and Reform Act, 49 U.S.C. § 42121. Department of Labor rules implementing this law are codified at 29 C.F.R. Part 1979. “Memorandum of Understanding between the Department of Labor and the FAA,” 67 Federal Register 55883 (2002). The rules governing administrative hearings are located at 29 C.F.R. Part 18.

  Clemmons v. Ameristar, 2004-AIR-11 (Dept. of Labor Administrative Review Board, May 26, 2010); Evans v. Miami Valley Hospital, 2006-AIR-22 (Dept. of Labor Administrative Review Board, June 30, 2009) (cases setting forth elements of airline whistleblower case).

  The U.S. Department of Labor Office of Administrative Law Judges compiles a comprehensive listing of whistleblower decisions under airline safety law. See www.oalj.dol.gov.

  BANKING AND FINANCIAL INSTITUTIONS

  12 U.S.C. § 1790b (credit unions); 12 U.S.C. 1831j (FDIC); 31 U.S.C. § 5228 (monetary transactions).

  CONSUMER FINANCIAL PROTECTION ACT OF 2012

  The Dodd-Frank Act created a new Bureau of Consumer Financial Protections. This bureau has jurisdiction over a wide range of consumer protection laws. See Martin Bishop, “Meet the New Boss: The Bureau of Consumer Financial Protection,” The CFSL Bulletin (July 23, 2010).

  The whistleblower protection provision for employees who make protected disclosures to the bureau, or concerning matters within the jurisdiction of the bureau, are set forth in Section 1507 of the Dodd-Frank Act, codified at 12 U.S.C. § 5567.

  The U.S. Department of Labor Office of Administrative Law Judges compiles a comprehensive listing of whistleblower decisions and will publish administrative rulings under this law. See www.oalj.dol.gov.

  CONSUMER PRODUCT SAFETY

  15 U.S.C. § 2051. The Department of Labor rules implementing this law are published at 29 C.F.R. Part 1983.

  The U.S. Department of Labor Office of Administrative Law Judges compiles a comprehensive listing of whistleblower decisions and will publish administrative rulings under this law. See www.oalj.dol.gov.

  CORRUPTION IN FEDERAL SPENDING/ENHANCEMENT OF CONTRACTOR PROTECTION ACT OF 2016

  Public Law No. 111-5, § 1
553 (2009). On January 3, 2013 Congress enacted a four-year “pilot program” and expanded the scope of this law to cover nearly all federal contracting. 47 U.S. § 4712. This law was made permanent on December 14, 2016, and is codified at 47 U.S.C. § 4712.

  CRIMINAL OBSTRUCTION OF JUSTICE/RICO

  18 U.S.C. § 1513(e) (criminal obstruction of justice law applicable to whistleblowers).

  Civil RICO, 18 U.S.C. § 1961–62 and 64. See Beck v. Prupis, 529 U.S. 494 (2000). In DeGuelle v. Camilli, 664 F.3d 192 (7th Cir. 2011) the Court permitted a whistleblower to file a Civil RICO case based on violations of § 1514(e).

  Dodd-Frank Act antiretaliation provision, 15 U.S.C. § 78u-6(h)(1).

  DISCRIMINATION LAWS

  All of the major antidiscrimination laws (i.e., laws that prohibit discrimination based on race, sex, religion, age, disability, national origin, labor union activities, minimum wage violations, etc.) contain antiretaliation provisions that protect employees who “blow the whistle” on discriminatory practices, testify in discrimination cases, or file complaints protected under law. Citations to the antiretaliation provisions of these laws are set forth in Checklist 2. Because of the large number of cases filed under these laws, courts often rely upon case precedent decided under laws such as Title VII of the Civil Rights Act or the National Labor Relations Act as authority in whistleblower cases.

  DODD-FRANK WALL STREET REFORM AND CONSUMER PROTECTION ACT

  See Handbook Rule 8 and Checklist 7 (“Dodd-Frank, Wall Street, and FCPA ‘Q&As’”).

  Public Law No. 111-203 (2010) is the entire Dodd-Frank Act, including all whistleblower protection and enhanced antifraud provisions. The legislative history of Dodd-Frank is set forth in S. Rep. 111-176, 2nd Session 111th Congress (2010). The securities whistleblower provisions are codified at 15 U.S.C. § 78u-6. The commodities whistleblower provisions are codified at 7 U.S.C. § 26. The SEC’s rules on filing securities qui tam claims are codified at 17 C.F.R. Parts 240 and 249.

  The Dodd-Frank Act contained two provisions designed to protect employees who exposed potential securities law violations from retaliation or wrongful discharge. The two laws overlap. First, Dodd-Frank amended the existing corporate whistleblower protection law, the Sarbanes-Oxley Act, better know as the “SOX.” SOX remains the cornerstone for protecting most corporate whistleblowers. It explicitly prohibits mandatory arbitration, provides a strong administrative remedy, and permits employees to remove their cases to federal court and obtain a jury trial. The law has a 180-day statute of limitations. Some courts have given the SOX enhancements contained in the Dodd-Frank Act retroactive effect. Leshinsky v. Telvent GIT, S.A., 873 F.Supp.2d 582 (S.D.N.Y. 2012).

  Dodd-Frank included a second new law protecting corporate employees who provided information to the Securities and Exchange Commission and/or engaged in other protected activities. This law has a broader definition of protected disclosure and permits employees to directly file claims in federal court. It has a two-year statute of limitations and provides for double back pay. However, it is not clear whether or not this law also prohibits mandatory arbitration. Consequently, employees who have signed arbitration agreements should initially use the SOX remedy. Both the SOX law and the new Dodd-Frank law are nonexclusive, and can potentially be joined into one lawsuit. But before they are joined it is absolutely necessary for an employee to initially file the SOX case before the Department of Labor and exhaust administrative remedies.

  The SEC has sanctioned companies for retaliating against whistleblowers or requiring employees to sign nondisclosure agreements that interfere with an employee’s right to communicate with government investigators. See, In the Matter of BlackRock, Inc., SEC Administrative Filing 3-17786 (January 17, 2017) ($340,000 sanction for restrictive language in severance agreements); In the Matter of SandRidge Energy, Administrative Proceeding No. 3-17739 (December 20, 2016) ($1.4 million penalty for retaliating against whistleblower); In the Matter of KBR, Administrative File No. 3-16466 (April 1, 2015) ($130,000 sanction for requiring employees to sign restrictive nondisclosure agreements as part of the company’s compliance program). The SEC has also filed amicus briefs supporting whistleblowers in retaliation cases. These include Verble v. Morgan Stanley, No. 15-6397 (6th Cir., Feb. 4, 2016); Berman v. Neo@Ogilvy LLC, 14-4626 (2nd. Cir., Feb. 6, 2015); Liu Meng-Lin v. Siemens AG, No. 13-4385 (2nd Cir., Feb. 20, 2014).

  EMPLOYMENT CONTRACTS/UNION GRIEVANCE PROCEDURES

  Wright v. Universal Maritime Service, 525 U.S. 70 (1998) and Lingle v. Norge Division of Magic Chef, 486 U.S. 399 (arbitration of claims covered under a union contract).

  The National Labor Relations Board and the Department of Labor OSHA division entered into a Memorandum of Understanding concerning retaliation cases for employees who raise workplace safety concerns on January 12, 2017.

  ENVIRONMENTAL LAWS

  Clean Air Act, 42 U.S.C. § 7622.

  Comprehensive Environmental Response (Superfund), 42 U.S.C. § 9610.

  Pipeline Safety Improvement Act, 49 U.S.C. § 60129.

  Safe Drinking Water Act, 42 U.S.C. 300j-9(i).

  Solid Waste Disposal Act, 42 U.S.C. § 6971.

  Surface Mining Act, 30 U.S.C. § 1293.

  Toxic Substances Control Act, 15 U.S.C. § 2622.

  Water Pollution Control Act, 33 U.S.C. § 1367.

  The environmental whistleblower laws are all administered by the Department of Labor. The discussion of DOL procedures at the beginning of Rule 4 is applicable to these cases.

  The Department of Labor rules implementing these laws are codified at: 29 C.F.R. Part 24 (environmental); 29 C.F.R. Part 1981 (pipeline). The rules governing Department of Labor adjudications are codified at 29 C.F.R. Part 18. The Interior Department has jurisdiction over the Surface Mining Act, 30 C.F.R. § 865.

  Collins v. Village of Lynchburg, 2006-SDW-3 (Dept. of Labor Administrative Review Board, March 30, 2009) (elements of proof Safe Drinking Water case); Hamilton v. PBS Environmental, 2009-CER-3 (Dept. of Labor Administrative Review Board, Oct. 19, 2010) (elements of proof Superfund case).

  The U.S. Department of Labor Office of Administrative Law Judges compiles a comprehensive listing of whistleblower decisions under the environmental whistleblower laws. See www.oalj.dol.gov.

  FIRST AMENDMENT PROTECTIONS FOR PUBLIC EMPLOYEES

  See Handbook Rule 13.

  Most states have also enacted specific laws protecting state and local government employees, and some states include government workers under their Whistleblower Protection Act statutes. State legal protections for government workers should always be considered as an alternative or supplement to a government whistleblower claim, especially after the U.S. Supreme Court’s decision in Garcetti v. Ceballos, 547 U.S. 410 (2006) (a 5-4 ruling that limited the scope of protected activity in First Amendment employment cases).

  FINANCIAL INSTITUTIONS ANTI-FRAUD ENFORCEMENT ACT (FIRREA)

  The FIRREA whistleblower provision is codified at 12 U.S.C. §§ 4201–23.

  Major federal lawsuits under FIRREA: United States of America vs. The Bank of New York Mellon Corporation, 941 F. Supp. 2d 438, 451 (S.D.N.Y. 2013); United States ex rel. O’Donnell v. Bank of America, No. 12-01422 (S.D.N.Y. filed Oct. 24, 2012); United States v. Wells Fargo, No. 12-7527 (S.D.N.Y. filed Oct. 9 2012).

  Nan S. Ellis, et al., “Use of FIRREA to Impose Liability in the Wake of the Global Financial Crisis: A New Weapon in the Arsenal to Prevent Financial Fraud,” Vol. 18 University of Pennsylvania Journal of Business Law 119 (2016).

  FOOD SAFETY

  Hearings before the U.S. House of Representatives, Committee on Energy and Commerce, Subcommittee on Oversight and Investigations, “The Salmonella Outbreak: The Continued Failure to Protect the Food Supply” (February 11, 2009). The hearing record includes extensive testimony and documentation regarding the Peanut Corporation of America’s handling of the contaminated peanut butter scandal.

  News articles on the peanut butter contamination scandal: ABC News, �
�Former Manager Says Peanut Plant Complaints Ignored” (February 17, 2009), abc-news.go.com; Michael Moss, “Peanut Case Shows Holes in Safety Net,” New York Times (February 9, 2009); Darren Perron, WCAX-TV, “Vt. Family Sues Over Salmonella” (February 9, 2009); Corky Siemaszko, “Peanut Corporation Whistleblower: Rates, Cockroaches Roasted with Peanut Butter,” New York Daily News (February 9, 2009); Around the Nation, “Peanut Recall Prompts FEMA to Replace Meals,” Washington Post (February 7, 2009); Associated Press, “FDA: Georgia Plant Knowingly Sold Peanut Butter Tainted with Salmonella” (February 6, 2009); Times Wire Services, “Schools, Disaster Victims May Have Gotten Tainted Peanut Butter,” Los Angeles Times (February 5, 2009); AFP, “U.S. Launches Criminal Probe in Peanut Better Health Scandal” (January 30, 2009).

  Although too late for the victims of the Peanut Corporation of America’s misconduct, the peanut butter scandal, along with a series of other food contamination incidents, resulted in Congress passing the Food Safety Modernization Act during the last days of the lame duck session in December 2010. After more than twenty years of missed opportunities, employees who blew the whistle on food safety violations on FDA-regulated foods finally obtained protection. See Renee Johnson, Food Safety in the 111th Congress: H.R. 2749 and S.510, Congressional Research Service (October 7, 2010). The official bill, H.R. 2751, passed on December 21, 2010, and is codified at 21 U.S.C. § 399d.

  On December 21, 2010, Congress enacted the FDA Food Safety Modernization Act. This law contained a strong whistleblower antiretaliation provision modeled on the Sarbanes-Oxley and Airline Safety whistleblower laws. See H.R. 2751. The whistleblower provision is codified at 21 U.S.C. § 399d.