#ACIProcFraud

Advanced Forum on Whistleblower Litigation

Jordan A. ThomasPartnerLabaton Sucharow LLP

Plaintiff Views — Preparing for the Fallout from Private Litigation: Insights into the Litigation Landscape and Prospects for Privately Represented Whistleblowers

Jason ZuckermanPrincipalZuckerman Law

July 28, 2015

Tweeting about this conference?

#ACIProcFraud

Topics

Retaliation Cases• Assessing potential retaliation claims• Key distinctions between SOX and Dodd-

Frank whistleblower protection•Whistleblower protection for employees

of government contractors• Trends in jury verdicts• Claim and forum selection

#ACIProcFraud

Topics

Reward Cases• Leading reward programs•Assessing potential reward claimsAdvice for Plaintiff’s CounselAdvice for Responsible Organizations

#ACIProcFraud

RETALIATION CASES

#ACIProcFraud

Potential Impact ofRetaliation Claim on Reward Claim• Avoid breaching the seal

• Prepare to address discovery about communications with regulators

• If employer offers to settle retaliation claim, whistleblower risks potential waiver of reward claim• For current employees, difficult balance

between protecting confidentiality and proving employer knowledge of whistleblowing

#ACIProcFraud

Assessing Potential Retaliation Claims•Assess all potential retaliation claims• 22 plus federal whistleblower law enforced by

OSHA• Employees of government contractors• False Claims Act, 31 USC 3730(h)• Sections 827 and 828 of 2013 NDAA, 10

U.S.C. § 2409 and 41 U.S.C. § 4712• State whistleblower statutes• State common law wrongful discharge• Punitive damages

#ACIProcFraud

Key Factors in AssessingPotential Claims•Damages• Scope of protected whistleblowing•Causation standard• “Contributing factor” versus “but for” causation

•Administrative Exhaustion•Preliminary Reinstatement• Statute of Limitations•Claim splitting and collateral estoppel

#ACIProcFraud

Assessing Potential Retaliation Claims• DOL enforces more than 22 whistleblower laws (nuclear

safety, airline safety, transportation safety, SOX, consumer product safety, etc.)

• Most of the DOL whistleblower laws follow employ this procedural scheme:• File at OSHA (SOL varies from 30 to 180 days)

• OSHA investigates and under some of the laws, can order preliminary reinstatement

• Discovery and hearing before ALJ

• Appeal to ARB

• Appeal to Circuit Court of Appeals

• Some of the laws have a “kick out” provision

#ACIProcFraud

OSHA Complaint Determinations FY 2005-FY 2014

#ACIProcFraud

SOX Protected Conduct

• Sylvester v. Parexel Int’l, WL 2165854 (ARB May 25, 2011) adopted by 2d, 3d, 5th, and 6th Circuits• Disclosure of potential violation protected• A complaint need not allege shareholder fraud to

receive SOX’s protection• Reasonable belief standard does not require

complainants to have told management or the authorities why their beliefs are reasonable

• SOX complainants no longer need to show that their disclosures “definitively and specifically” relate to the relevant laws

• SOX complainants need not establish criminal fraud

#ACIProcFraud

Section 929A Dodd-Frank Protected Conduct• Providing information to the SEC in accordance

with § 922;

• Initiating, testifying in, or assisting in any investigation or judicial or administrative action of the SEC based upon or related to such information; or

• Disclosing information required or protected by SOX, the 1934 Act, and any other law, rule, or regulation subject to the jurisdiction of the SEC.

#ACIProcFraud

Distinctions Between SOX and Dodd-Frank

#ACIProcFraud

FCA Protected Conduct

• Broader scope of protected conduct post-2009 FCA amendments

• Protects actions in furtherance of a qui tam action and “other efforts to stop 1 or more violations of [the FCA]”

• Young v. CHS Middle E., LLC, 2015 WL 3396790 (4th Cir. May 27, 2015)• protect[s] employees while they are collecting information about a possible fraud, before

they have put all the pieces of the puzzle together

• Need not prove actual FCA violation

• Higher burden for “duty speech” claims

#ACIProcFraud

NDAA Protected Conduct

• Covers employees of nearly all government contractors• Excludes contractors of Intelligence agencies

• Broad scope of protected conduct• Violation of law, rule, or regulation relating to federal contracts,

including competition for or negotiation of a contract;

• Gross mismanagement, gross waste of federal funds, abuse of authority; or

• substantial and specific danger to public health or safety

#ACIProcFraud

Distinctions Between FCA and NDAA

#ACIProcFraud

Forum Selection

• DOL• Obtain early discovery from investigation

• Preliminary reinstatement

• Favorable ARB rulings

• Less formal pleading requirement and evidentiary rules

• Federal Court• Higher risk of summary judgment

• Jury trial and uncapped compensatory damages

• Supplemental claims

#ACIProcFraud

Common Law Wrongful Discharge

• Federal statutory remedy typically precludes a wrongful discharge claim

• Many states do not apply a reasonable belief standard and instead require a showing of an actual violation

• Causation standard is far more onerous than contributing factor (in some states, it is sole cause)

• No fee-shifting

#ACIProcFraud

Recent Verdicts

•$6M Zulfer v. Playboy Enterprises Inc., JVR No. 1405010041, 2014 WL 1891246 (C.D.Cal. 2014) •$2.2M in damages and $2.4M in fees

Van Asdale v. Int'l Game Tech., 549 F. App'x 611, 614 (9th Cir. 2013)

#ACIProcFraud

Proving Retaliation

• Statements of animus• Deviation from company policy or

practice • Failure to investigate or sham

investigation• Placing whistleblower under microscope• Shifting or contradictory explanations• Post hoc justifications

#ACIProcFraud

REWARD CASES

#ACIProcFraud

Leading Reward Programs

#ACIProcFraud

Leading Reward Programs

• Federal and state FCAs

• SEC and CFTC

• IRS

• FIRREA

#ACIProcFraud

Assessing Potential Reward Claims

#ACIProcFraud

Advice for Plaintiff’s Counsel

#ACIProcFraud

Advice for Responsible Organizations