Tag: whistleblower protection

Supreme Court Upholds Corporate Whistleblower Protections in Landmark Ruling

Today, the U.S. Supreme Court issued a unanimous ruling holding that whistleblowers do not need to prove that their employer acted with “retaliatory intent” to be protected under the Sarbanes-Oxley Act (SOX). The decision in the case, Murray v. UBS Securities, LLC, has immense implications for a number of whistleblower protection laws.

“This is a major win for whistleblowers and thus a huge win for corporate accountability,” said leading whistleblower attorney David Colapinto, a founding partner of Kohn, Kohn & Colapinto.

“A ruling in favor of UBS would have overturned more than 20 years of precedent in SOX whistleblower cases and made it exceedingly more difficult for whistleblowers who claim retaliation under many similarly worded federal whistleblower statutes,” Colapinto continued.

“Thankfully, the Court was not swayed by UBS’ attempt to ignore the plain meaning of the statute and instead upheld the burden of proof that Congress enacted to protect whistleblowers who face retaliation,” added Colapinto.

In an amicus curiae brief filed in the case on behalf of the National Whistleblower Center, the founding partners of Kohn, Kohn & Colapinto outlined the Congressional intent behind the burden of proof standard in SOX.

“In crafting the unique ‘contributing factor’ test for whistleblowers, Congress left an incredibly straight-forward legislative history documenting the value of whistleblowers’ contributions, the risks and retaliation whistleblowers faced, the barriers the previous burden of proof presented for whistleblowers, and Congress’ explicit intention to lower that burden of proof for whistleblowers,” the brief states.

In the Court’s opinion, Justice Sonia Sotomayor likewise pointed to the Congressional intent of SOX’s contributing-factor burden of proof standard:

“To be sure, the contributing-factor framework that Congress chose here is not as protective of employers as a motivating-factor framework. That is by design. Congress has employed the contributing-factor framework in contexts where the health, safety, or well-being of the public may well depend on whistleblowers feeling empowered to come forward. This Court cannot override that policy choice by giving employers more protection than the statute itself provides.”

This article was authored by Geoff Schweller.

Copyright Kohn, Kohn & Colapinto, LLP 2024. All Rights Reserved.
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Women in Whistleblowing: The Intersection Between Women’s Rights and Federal Employee Whistleblower Protections

Introduction

Pew Research Center data found that 42% of women in the United States have suffered discrimination in the workplace on the basis of their gender. Although there are statutory frameworks in place prohibiting such discrimination, the threat of retaliation can make it exceedingly difficult for employees who are already experiencing discrimination and harassment to come forward as whistleblowers under these provisions. On top of the personal and professional risks inherent in whistleblowing, federal employee whistleblowers have been saddled with added burdens by the statutory framework: in addition to proving her substantive claims, a federal whistleblower of sex discrimination is required to demonstrate that she has exhausted certain administrative remedies before she can be heard by a jury of her peers.  Because workplace discrimination disproportionally affects women, ensuring expansive and effective whistleblower protections and remedies, particularly for women in federal employment, is undoubtedly a women’s rights issue. To celebrate Women’s History Month, this article highlights just a few of the remarkable women who have come forward as whistleblowers within this framework to make enormous strides in preserving, enforcing, and expanding crucial protections for future generations of women in the federal workplace.

Statutory Framework

Title VII of the Civil Rights Act of 1964 (“CRA”) prohibits discrimination by private employers based on race, color, religion, sex, or national origin, and further prohibits retaliation by forbidding discrimination against an employee who has “made a charge, testified, assisted, or participated in” a Title VII proceeding or investigation. In 1972, the Equal Opportunity Act (“EOA”) expanded Title VII’s coverage to include certain categories of federal employees, providing that all personnel actions taken in regard to these employees “shall be made free from any discrimination based on race, color, religion, sex, or national origin.” Many courts have interpreted the EOA to extend both the anti-discrimination and anti-retaliation provisions of the CRA to federal employees. However, in a report on whistleblowing conducted by Senator Patrick Leahy in 1978, it was noted that although some interpretations of the existing statutory framework had been generous to whistleblowers, many courts were still “reluctant to play a role in the whistleblower problem”

Thus, the Civil Service Reform Act (“CSRA”) was passed in an attempt to cement protections for federal whistleblowers, creating an office within the Merit Protections Board (“MSPB”) to bring retaliation claims on behalf of whistleblowers. However, by 1989 not a single corrective action had been brought on behalf of whistleblowers to the MSPB, which was seen as largely ineffectual. In 1989, the Whistleblower Protection Act was passed, which for the first time created an individual right of action for federal employee whistleblowers. As the law currently stands, a federal employee whistleblower may bring a discrimination claim that would have been appealable to the MSPB as a civil action in federal court after the relevant administrative agency has failed to take action for a certain amount of time.

While this statutory framework provides critical tools for female whistleblowers to come forward and expose sex discrimination in the workplace, the accessibility of these tools remains particularly limited for federal employees who are required to go through the MSPB’s arduous administrative procedures before being heard in federal court, all the while often suffering continued discrimination and harassment at work. Thus, the real thrust of the work to protect female whistleblowers has been accomplished not by the provisions of the law but by those individual women brave enough to come forward and fight extensive legal battles to enforce, cement, and expand those provisions.

The Right to a Jury Trial for Federal Whistleblowers

Among the shortcomings of the statutory framework seeking to protect whistleblowers of sex discrimination in the federal workplace is an ambiguity in the scope of the individual right of action. The text of the statute explicitly gives the district court jurisdiction over discrimination claims arising under, inter alia, the Civil Rights Act. Therefore, it remains unclear whether a “mixed case”– which includes both discrimination claims and related non-discrimination retaliation claims – must remain within agency jurisdiction, or whether the entire mixed case, including the whistleblower retaliation claims, can be heard by a federal jury. This crucial gap in the legislation has been directly remedied by individual female whistleblowers.

In 1999, Dr. Duane Bonds was serving as Deputy Chief of the Sickle Cell Disease Branch of the Division of Blood Diseases and Resources within the NIH, where she was a highly prominent medical researcher. Throughout her employment, Dr. Bonds experienced repeated sexual harassment at the hands of her male supervisor. In retaliation for reporting the harassment to the EEOC, Dr. Bonds was removed from her position and demoted. In her new position, Dr. Bonds discovered that human DNA had been improperly used in NIH projects. She escalated these concerns over the objections of her supervisor, who retaliated by submitting negative performance reviews which caused her removal from the project. Dr. Bonds again filed a complaint with the EEOC in 2005, alleging that the removal constituted unlawful discrimination and retaliation. Throughout the complaint and investigation process, Dr. Bonds experienced continued sex discrimination and harassment in her workplace and was ultimately terminated in 2006. Dr. Bonds initiated a final EEOC complaint in 2007, detailing the extensive discrimination and whistleblower retaliation she had experienced. With no administrative action taken within the statutorily determined time frame, Bonds filed her case with the District Court.

Because it included both discrimination and claims of retaliation for protected whistleblowing activity, Bonds’ case was considered a “mixed case,” and the district court struggled with the question of jurisdiction under the CSRA, ultimately dismissing the claims citing failure to exhaust administrative remedies. In her appeal to the 4th Circuit, Dr. Bonds argued that mixed cases like hers must be treated as a single unit and heard in combination in either an administrative proceeding or in federal court. The 4th Circuit agreed, granting Bonds and other whistleblowers in her situation the right to a federal jury trial, on both her CSRA discrimination and WPA retaliation claims.

In determining this jurisdictional question, the 4th Circuit cited to a D.C. Circuit case which held in favor of another female whistleblower bringing both discrimination and retaliation claims. In this case, Kiki Ikossi – an electrical engineer at the Navy Research Lab – suffered continuous discrimination by her employer on the basis of age, gender, and national origin, stunting her career progression. Dr. Ikossi fought the misconduct in federal court, where the D.C. Circuit found that interpreting the law to require a whistleblower’s retaliation claims to be held up in administrative proceedings would be adverse to Congress’ intent to have discrimination and retaliation claims settled “expeditiously.” The Court noted that the regulatory structure surrounding mixed cases had become “extremely complicated,” and that access to a judicial forum for complainants of sexual discrimination in the federal workplace was critical to the legislative purpose, otherwise such claims would “languish undecided in the administrative machinery.”

The decisions on mixed case jurisdiction secured by Dr. Ikossi and Dr. Bonds have been cited by numerous other circuit courts, further expanding protections for federal employee whistleblowers facing sex discrimination in the workplace. On the basis of this precedent, Bunny Greenhouse – a high ranking official at the Army Corps of Engineers who discovered and exposed egregious contracting fraud by the Department of Defense – was able to take her case of whistleblower retaliation to federal court in the District of Columbia. Under pressure of a federal trial, the Army agreed to settle the case for nearly $1 million in restitution. After the settlement, Ms. Greenhouse made an impassioned statement: “I hope that the plight I suffered prompts the Administration and Congress to move dedicated civil servants from second-class citizenry and to finally give federal employees the legal rights that they need to protect the public trust.”

Among many other female whistleblowers who have helped to shape the law as it stands today, Dr. Ikossi, Dr. Bonds, and Ms. Greenhouse’s lengthy legal battles paved the way for future whistleblowers of gender discrimination to have their claims heard by a federal jury of peers rather than a politically appointed federal agency. The whistleblowing community is indebted to these women who were willing to take significant personal, professional, and financial risks to expose sex discrimination in the workplace, and to ensure future whistleblowers remain protected.

Copyright Kohn, Kohn & Colapinto, LLP 2023. All Rights Reserved.
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Dodd-Frank Whistleblower Protection: For America Only

Sheppard Mullin 2012

 

The U.S. District Court for the Southern District of New York has held that thewhistleblower protection provisions of the Dodd-Frank Act do not apply outside the United States, even where the employee alleged he was terminated for raising compliance concerns under U.S. international law. Specifically, the court found that Dodd-Frank did not protect an employee of Siemens in China who alleged he was terminated in retaliation for raising compliance concerns under the U.S. Foreign Corrupt Practices Act (FCPA). The decision will strike many observers as remarkable, since the extraterritorial provisions of the FCPA itself have been construed so broadly. The opinion in the case, Liu v. Siemens AG, Civ. No. 13 Civ. 317 (WHP) Slip Op. (S.D.N.Y. Oct. 21, 2013), may be viewed online here.

The plaintiff in the case, Meng-Lin Liu, a resident of Taiwan, was employed by Siemens China as a Division Compliance Officer. Siemens China is a subsidiary of Siemens AG, a German company whose American Depositary Receipts trade on the New York Stock Exchange. After Liu raised anti-bribery compliance concerns at Siemens China, his employment contract was terminated in 2010. After his termination he reported possible violations of the FCPA to the U.S. Securities and Exchange Commission under the SEC’s whistleblower program.

Liu then brought action against Siemens under the Dodd-Frank anti-retaliation provision, which provides as follows:

No employer may discharge, demote, suspend, threaten, harass, directly or indirectly, or in any other manner discriminate against, a whistleblower in the terms and conditions of employment because of any lawful act done by the whistleblower . . . in making disclosures that are required or protected under the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201 et seq.), [the Securities Exchange Act of 1934 (15 U.S.C. § 78a et seq.)], section 1513(e) of Title 18, and any other law, rule, or regulation subject to the jurisdiction of the [SEC].

15 U.S.C. § 78u-6(h)(l)(a). The Dodd-Frank Act defines “whistleblower” as “any individual who provides . . . information relating to a violation of the securities laws to the [SEC], in a manner established, by rule or regulation, by the [SEC].” 15 U.S.C. § 78u-6(a)(6).

Siemens moved to dismiss the case for failure to state a claim, arguing (among other things) that the anti-retaliation provision is not applicable outside the United States. Liu argued that by using the phrases “any individual” and “no employer,” the statute evinces an intent to protect whistleblowers wherever they are. The Court rejected Liu’s hypothesis, stating that the statute is silent regarding whether it applies extraterritorially. That silence, said the Court, “invokes a strong presumption against extraterritoriality.” Liu, Slip Op. at 5. Consequently, the Court dismissed Liu’s claim.

Interestingly, the Court also rejected the idea that the anti-retaliation provision must protect foreign whistleblowers since the statute in essence creates foreign whistleblowers. The Court stated that “[t]he fact that a person outside the United States may be a “whistleblower” under Dodd-Frank does not compel the conclusion he is protected by the Anti-Retaliation Provision. Slip Op. at 6.

An earlier holding by the U.S. Court of Appeals for the 5th Circuit took a different approach but reached a similar result in July 2013. In that case, Asadi v. GE Energy, 720 F.3d 620 (5th Cir. 2013), the Court ruled that a GE Energy employee in Iraq who was terminated after reporting potential anti-bribery compliance concerns to his employer (but not to the SEC) did not qualify as a whistleblower under Dodd-Frank, and thus was not protected by the anti-retaliation provision. The Asadi opinion may be viewed online here. Interestingly, the lower court in Asadi reasoned (like the Liu court) that Asadi was not protected from retaliation because the Dodd-Frank anti-retaliation provisions are not extraterritorial. SeeAsadi v. GE Energy, 2012 U.S. Dist. LEXIS 89746 (S.D. Tex. 2012). The Fifth Circuit, reviewing the case de novo, declined to review that reasoning and based its holding on the inapplicability of the “whistleblower” definition. Asadi, id. at note 13.

The effects of these rulings warrant careful attention. For example, corporations involved in international business may wish to look closely at their own anti-retaliation policies and be careful to tailor them properly. While we would expect courts to continue to examine the limits on whistleblower retaliation under Dodd-Frank, the Asadiholding is not binding outside the Fifth Circuit, and the Liuholding is not binding outside the Southern District of New York.

Separately, it will be interesting to see whether the number of foreign whistleblowers is affected by these holdings. The SEC reported that in Fiscal Year 2012, it fielded over 3,000 whistleblower allegations. See U.S. Securities and Exchange Commission, Annual Report on the Dodd-Frank Whistleblower Program, Fiscal Year 2012, available online here. Of those, 115, or 3.8 percent, were FCPA-related allegations, and thus have inherently international fact patterns. Id. at Appendix A. If Dodd-Frank does not protect foreign whistleblowers or those who do not file formal allegations with the SEC, that may cause a chilling effect on the number of reports in the future.

Article by:

Lawrence M. Braun

Of:

Sheppard, Mullin, Richter & Hampton LLP