by Stephen Kohn
Lost Overtime Pay: Blackburn v. Martin, 982 F.2d 125 (4th Cir. 1992).
“Make Whole” Remedy: Most laws mandate that an employee who prevails in a retaliation case be made fully “whole.” Under this remedy, “compensation shall be equal to the injury” and the “injured party is to be placed, as near as may be, in the situation he would have occupied if the wrong had not been committed.” Albemarle Paper Co. v. Moody, 422 U.S. 405, 418–19 (1975), quoting from Wicker v. Hoppock, 6 Wall. 94 (1867).
Promotions: Edwards v. Hodel, 738 F.Supp. 426 (D. Col. 1990).
Punitive Damages: Smith v. Wade, 461 U.S. 30 (1983); BMW v. Gore, 517 U.S. 559 (1996) (explaining constitutional standards for calculating); Parexel International v. Feliciano, 2008 U.S. Dist. LEXIS 98195 (E.D. Pa. 2008); Weidler v. Big J. Enterprises, 953 P2d 1089 (N.M. App. 1997); Howard v. Zack, 637 N.E.2d 1183 (Ill. App. 1994); Anderson v. Amtrak, 2009-FRS-3 (Dept. of Labor ALJ, Aug. 26, 2010).
Reinstatement: Reeves v. Claiborne County, 828 F.2d 1096 (5th Cir. 1987).
Restoration of Pension: Blum v. Witco Chemical Corp., 829 F.2d 367 (3rd Cir. 1987).
Restoration of Seniority: Sands v. Runyon, 28 F.3d 1323 (2nd Cir. 1994).
Special Damages: Neal v. Honeywell, 191 F.3d 827 (7th Cir. 1999).
Stock Options: Hobby v. Georgia Power Co., Civil Action No. 1:01-cv-1407 (N.D. Georgia, Feb. 15, 2006).
“Tort Liability” for First Amendment Claims filed under 42 U.S.C. § 1983: Carey v. Piphus, 435 U.S. 247 (1978).
REDUCTION IN AMOUNT OF DAMAGES
Mitigation and Reduction of Damages: Damages can be reduced if an employee fails to “mitigate” the harm caused by the retaliatory discharge. For example, courts have reduced awards where an employee failed to seek other comparable employment after being fired. Similarly, an unconditional offer of reinstatement can act to cut off back pay liability. If an employee obtains a new job after being fired, wages from that new job can be deducted from a back pay award. Phelps Dodge Corp. v. NLRB, 313 U.S. 177 (1941); Tubari Ltd. v. NLRB, 959 F.2d 451 (3rd Cir. 1992) (explaining the mitigation rule); Grocer Co. v. Holloway, 874 F.2d 1008 (5th Cir. 1989); Donovan v. Commercial Sewing, Inc., 562 F.Supp. 548 (D. Conn. 1982) (offers of reinstatement).
TAX ISSUES
Taxes: Under current law back pay, punitive damages, and compensatory damages may be subject to taxation. The Attorney Fee Civil Rights Act exempts employees from being taxed on the attorney fees awarded to their counsel. 26 U.S.C. § 62(a) (20) and (e). As part of the settlement process, employees can have their companies establish tax deferred compensation or annuity plans that help reduce the amount of tax. These plans were approved in the Tax Court case of Childs v. Commissioner of Internal Revenue, 103 T.C. 634 (1994).
Rule 27: Make the Boss Pay Attorney Fees
The major cases interpreting the statutory fee provisions contained in most whistleblower protection laws are set forth in the practice tips cited at the end of Rule 27. The best single source of information on how to prepare a fee petition to ensure that attorneys are paid at a fair market value and compensated for all reasonable time are set forth in the numerous rulings decided under the Civil Rights Attorney Fee Act, 42 U.S.C. § 1988. Precedents decided under this act are regularly applied to other civil rights, employment, and whistleblower laws that also contain statutory fee provisions. Perdue v. Kenny, 130 S.Ct. 1662 (2010) (“virtually identical language appears in many fee shifting statutes”). Attorney fees are generally not available under state common law remedies. If filing a claim under a statute, review the specific language and ensure that there is a fee provision.
Rule 28: Hold Companies Accountable for Paying Hush Money
The case record for the Macktal case is docketed at the U.S. Department of Labor Office of Administrative Law Judges, Case Number 86-ERA-26. The appeals court case is Macktal v. Secretary of Labor, 923 F.2d 1150 (5th Cir. 1991). The hearings on the Macktal were published by the U.S. Senate Subcommittee on Nuclear Regulation, Hearings on Secret Settlement Agreements Restricting Testimony at Comanche Peak Nuclear Power Plant, Senate Hearing No. 101-90 (May 4, 1989).
Connecticut Light & Power v. Secretary of Labor, 85 F.3d 89 (2nd Cir. 1996) (upholding cause of action based on illegal hush money settlement).
Jon Bauer, “Buying Witness Silence: Evidence-Suppressing Settlements and Lawyers’ Ethics,” 87 Oregon Law Review 481, 493 (2008) (listing examples of restrictive settlements that interfered with the public’s ability to learn about serious safety issues).
Town of Newton v. Rumery, 480 U.S. 386 (1987) (Supreme Court case on public policy under contract law).
EEOC v. Astra USA, 94 F.3d 738 (1st Cir. 1996); EEOC v. Cosmair, 821 F.2d 1085 (5th Cir. 1987) (enjoining corporation from using settlement agreements to prevent employees from disclosing information to the EEOC); In re JDS Uniphase Corp. Securities Litigation, 238 F.Supp.2d 1127 (N.D. Calif. 2002) (enjoining use of “confidentiality agreements to chill former employees from voluntarily participating in legitimate investigations into alleged wrongdoing”); U.S. ex rel Longhi v. Lithium Power, 575 F.3d 458 (5th Cir. 2009) (refusing to enforce employee release of FCA claims). U.S. v. Purdue Pharma, 600 F.3d 319 (4th Cir. 2010) (upholding release of FCA claims when government had prior knowledge of the frauds disclosed by employee).
Gilmer v. Interstate, 500 U.S. 20 (1991) (leading case upholding enforcement of mandatory arbitration of employment disputes); EEOC v. Waffle House, 534 U.S. 279 (2002) (arbitration agreement did not prevent federal agencies from filing lawsuits to defend employees); Doyle v. DOL, 285 F.3d 243 (3rd Cir. 2002) (waiver of rights to file nuclear whistleblower claim unenforceable).
The Securities and Exchange Commission has enforced strict rules prohibiting restrictions on employee whistleblowing. See Office of Compliance Inspections and Examinations, “Examining Whistleblower Rule Compliance, Vol. VI National Examination Risk Alert Issue 1 (October 24, 2016) (explaining Commission decisions on restrictive agreements and warning companies of various improper contractual methods being employed to prevent or intimidate employees from contacting SEC or applying for rewards), posted at www.sec.gov/ocie/announcement/ocie-2016-risk-alert-examining-whistleblower-rule-compliance.pdf.
The SEC has sanctioned companies for having employees sign restrictive non-disclosure agreements. See e.g., In the Matter of KBR, Inc., SEC File No. 3-16466 (April 1, 2015); In the Matter of NeuStar, SEC FIle No. 3-17736 (Dec. 19, 2016); In the Matter of BlueLinx Holding, SEC File No. 3-17371 (Aug. 10, 2016); In the Matter of SandRidge Energy, SEC File No. 3-17739 (Dec. 20, 2016).
Rule 29: Politics Is Poisonous
The Department of Labor–administered laws (including OSHA and the whistleblower laws that permit employees to file in federal court) are discussed in Rule 4.
The laws covering federal employees (including the Office of Special Counsel and the Merit Systems Protection Board) and the laws governing national security whistleblowers are discussed in Rule 14. The Inspector General of the Intelligence Community’s procedural rules for reviewing whistleblower cases are available online at www.dni.gov/files/documents/ICIG/C_Employee_ERP_Regs.pdf.
The case of Dr. Marcus is contained in the decisions of the Department of Labor and the case file of the DOL Office of Administrative Law Judges in Case Number 1992—Toxic Substances Control Act Case No. 5. The Inspector General Act that sets forth the authority of the IGs is Title 5 U.S.C. Appendices §§ 3 and 7.
The whistleblower reward laws are discussed in Rules 1–3 (general); Rule 4 (FIRREA); Rule 6 (False Claims Act); Rule 7 (IRS/Tax); Rule 8 (securities, commodities); Rule 9 (Foreign Corrupt Practices); Rule 10 (Auto safety); Rule 11 (Act to Prevent Pollution from Ships/ocean pollution); Rule 12 (wildlife trafficking).
Other independent remedies are discussed in Rule 4 (covering all major federal laws); Rule 5 (state protections); and Rule 13 (First Amendment).
Rule 30: Never Forget: Whistleblowing Works
The statistical studies that scientifically document the
effectiveness of whistle-blowing as a means of uncovering fraud or misconduct are identified in the references for the handbook’s introduction. In addition to these, see Winters v. Houston Chronicle, 795 S.W.2d 723, 727–33 (Tex. 1990) (concurring opinion of Justice Lloyd Doggett); Charles S. Clarke, “Whistleblowers,” 7 The CQ Researcher 1059 (Congressional Quarterly, Inc. 1997). Transparency International, “Whistleblowing: An Effective Tool in the Fight against Corruption,” Policy Position # 01/2010 (Berlin 2010) (available online at www.transparency.org).
The Department of Justice publishes its press releases, which extensively document the amount of money the United States recovers as a result of whistle-blower disclosures under the False Claims Act. The recoveries cited in this Rule are derived from these releases. See U.S. Department of Justice, Civil Division, Commercial Litigation Branch, Press Releases, published at: www.doj.gov/civil/press/index.
The case record for the Jane Turner case is found at: Turner v. Gonzales, 421 F.3d 688 (8th Cir. 2005) and the case file in the United States District Court for the District of Minnesota (Minneapolis Division). Dan Browning, “Ex-Agent Wins Lawsuit Against FBI,” Minneapolis Star Tribune (Feb. 5, 2007); Tad Vezner, “Former FBI Agent Wins Suit,” Pioneer Press (Feb. 6, 2007).
The Final Rule: Remember July 30, 1778
Letters of Delegates to Congress, 1774-1789, Paul H. Smith, editor (Washington: Library of Congress/Government Printing Office, 1976–2000): Examination of John Grannis by subcommittee of the Marine Committee (March 25, 1777); Letter from Congress to Marven and Shaw (July 31, 1778) (transmitting resolution from Congress).
Journals of the Continental Congress (Washington: Government Printing Office, 1908): Vol. VII, p. 202 (report from Marine Committee after examination of Grannis), p. 204 (suspension of Hopkins); Vol. X, p. 13 (dismissal of Hopkins); Vol. XI, p. 713, p. 732 (first resolution of the United States declaring “duty of all persons” to disclose “earliest information” of “misconduct” to “proper authority;” pp. 732–33 (vote to pay Warren whistleblowers’ “reasonable expenses” and to release documents concerning Hopkins to the whistleblowers); Vol. XIV, p. 627 (approved payment of “fourteen hundred and eighteen dollars and 9/90” for the defense of whistleblowers Shaw and Marven. Monies paid to Sam Adams, which included the fees owed to William Channing).
The Warren sailors originally approached a member of the Continental Congress, Robert Treat Paine, a signer of the Declaration of Independence and a delegate from Taunton, Mass. Paine apparently advised the whistleblowers to file their concerns directly with Congress. See Grannis to Paine (Feb. 11, 1777). See Letters of Delegates to Congress, explanatory note to Letter from Grannis to Marine Committee dated March 25, 1777.
John G. Coyle, “The Suspension of Esek Hopkins, Commander of the Revolutionary Navy, Vol. XXI, The Journal of the American Irish Historical Society 193 (1922) (reprints original petition from the Warren sailors and the individual statements each of the sailors had delivered to Congress).
Edward Field, Esek Hopkins, Commander-in-chief of the Continental Navy during the American Revolution, 1775–1778, Master Mariner, Politician, Brigadier-General, Naval Officer and Philanthropist (Preston & Rounds: Providence, 1898).
A full list of the qui tam reward laws enacted by the First Congress of the United States are listed in the Testimony of Stephen M. Kohn before the House of Representatives Committee on Oversight and Government Reform, hearing on “Restoring the Power of the Purse: Legislative Options” (December 1, 2016), available at https://oversight.house.gov/wp-content/uploads/2016-12-01-NWC-Kohn-Testimony.pdf.
Whitney v. California, 274 U.S. 357 (1927) (concurring opinion of Justice Brandeis).
International Toolkit: Taking the Profits out of Corruption
INTRODUCTION TO STATUS OF WHISTLEBLOWERS WORLDWIDE
The United States and more than 140 other nations have approved the United Nations Convention against Corruption, which contains two mandates for the protection of whistleblowers. Article 32 prohibits retaliation against witnesses. Article 33 urges nations to enact “domestic” legislation to “provide protection” against “unjust treatment” for any person who reports evidence of corruption to “competent authorities.” The convention is available at www.unodc.org/unodc/en/treaties/CAC/index.html.
Council of Europe, Civil Law Convention on Corruption. Article 9 requires European countries to protect whistleblowers. The text of the convention is published (in multiple languages) at www.coe.int/en/web/conventions/full-list/-/conventions/treaty/174.
The council has approved general protections for whistleblowers as part of its anti-corruption convention and has a web page setting forth its position on whistle-blowing: www.coe.int/t/dghl/standardsetting/cdcj/Whistleblowers/protecting_whistleblowers_en.asp.
Based on input from numerous anticorruption and whistleblower advocacy groups, Transparency International created a set of principles recommended for effective whistleblower laws. These recommendations are posted at www.transparency.org/files/content/activity/2009_PrinciplesForWhistleblowingLegislation_EN.pdf.
The Centre for Media Pluralism and Media Freedom publishes an online overview of whistleblower protections in all European Union countries at http://journalism.cmpf.eui.eu/maps/whistleblowing.
The Council of Europe has approved general protections for whistleblowers as part of its anticorruption convention and has a web page setting forth its position on whistleblowing: www.coe.int/t/dghl/standardsetting/cdcj/Whistleblowers/protecting_whistleblowers_en.asp.
The Organisation for Economic Co-Operation and Development (OECD) published “Whistleblower Protection: Encouraging Reporting,” an overview of international whistleblower laws in its publication CleanGovBiz (July 2012). The article is available at www.oecd.org/cleangovbiz/toolkit/50042935.pdf.
Simon Wolfe, et al., Not Measuring Up: PIDA Now Rates Poorly against International Standard. Thompson Reuters Foundation (2016). This detailed report is critical of the British whistleblower protection law. It reviews how the law works in practice and compares it with various international standards viewed as necessary for whistleblower protection.
“America Pays Millions to Whistleblower at BHP; We Hound Them from Their Jobs,” Sydney Morning Herald (August 29, 2016). The article describes problems facing Australian whistleblowers.
Information on the murder of South African whistleblower Jimmy Mohlala is available at www.dailymail.co.uk/news/article-3121989/Widow-murdered-2010-South-Africa-Fifa-World-Cup-whistle-blower-Jimmy-Mohlala-says-husband-alive-today-hadn-t-exposed-multimillion-dollar-stadium-fraud.html#ixzz4MK4PIoyh.
Articles discussing the status of international whistleblower protections are available at https://euobserver.com/justice/121873 (European Union rejects whistle-blower protections); http://knowledgeofindia.com/list-of-whistleblowers-in-india/ (whistleblower from India killed); http://mg.co.za/article/2009-01-05-anc-whistleblower-killed (South African whistleblower killed); www.ifex.org/philippines/2005/03/30/whistleblower_murdered/ (whistleblower in Philippines killed).
Public Law 112-208 (December 14, 2012) is a U.S. law imposing sanctions on Russia due to the death of whistleblower Sergei Leonidovich Magnitsky.
On July 27, 2000, the U.S. Senate ratified the Inter-American Convention against Corruption. Article III (8) of that Convention stipulates that the United States, and other countries that ratified the agreement, create “Systems for protecting public servants and private citizens who, in good faith, report acts of corruption, including protection of their identities, in accordance with their Constitutions and the basic principles of their domestic legal systems” (www.oas.org).
The following cases hold that international whistleblowers cannot obtain onthe-job protection under U.S. whistleblower laws: Carnero v. Boston Scientific Corp., 433 F.3d 1 (1st Cir. 2006) (international employee not covered under Sarbanes-Oxley Act wrongful discharge law); Liu Meng-Lin v. Siemens AG, 763 F.3d 175 (2nd Cir. 2014) (international employee not covered under Dodd-Frank Act antiretal
iation law).
FOREIGN CORRUPT PRACTICES ACT
The Foreign Corrupt Practices Act, 15 U.S.C. § 78m and § 78dd-1, et seq.
The Department of Justice (DOJ) resource page on the FCPA is located at www.justice.gov/criminal-fraud/foreign-corrupt-practices-act.
The legislative history of the FCPA is published by the DOJ at www.justice.gov/criminal-fraud/legislative-history.
The best source of information explaining the requirements of the FCPA is the Resource Guide to the U.S. Foreign Corrupt Practices Act, published by the Criminal Division of the DOJ and the Enforcement Division of the Securities and Exchange Commission (SEC). A copy of this guide is available at www.whistleblowers.org.
Resources for understanding the FCPA, including translations of how the law works in more than ten languages, are published at www.kkc.com/laws%2c-statues-and-regulations/foreign-corrupt-practices-act and www.globalwhistleblower.org.
The FCPA statute is translated into fifty languages at www.justice.gov/criminal-fraud/statutes-regulations.
The SEC publishes a list of FCPA prosecutions at www.sec.gov/spotlight/fcpa/fcpa-cases.shtml.
The following articles provide additional information and perspectives on FCPA.
Bryan Cave, “Alert: The Implications for FCPA Enforcement of the SEC’s New Whistleblower Rules” (June 22, 2011); available at www.bryancave.com.
Philip M. Nichols, “The Neomercantilist Fallacy and the Contextual Reality of the Foreign Corrupt Practices Act,” 53 Harvard Journal on Legislation 203 (Winter 2016) (broad scope of FCPA).
Daniel Grimm, “Traversing the Minefield: Joint Ventures and the Foreign Corrupt Practices Act,” 9 Virginia Law and Business Review 91 (2014) (broad reach of FCPA).