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Posts Tagged ‘whistleblower’

Was That An Out-Of-Bounds Whistle?

Posted on: February 23rd, 2018

By: Samuel Y. Edgerton, III

On Wednesday, February 21, 2018 the U.S. Supreme Court settled a split of opinion between the Ninth and Fifth Circuit Court of Appeals. The issue before the high court concerned the definition of the term “whistleblower” under the Dodd-Frank Act.

In March 2017, the Ninth Circuit found that former Digital Realty executive Paul Somers was entitled to whistleblower protection under Dodd-Frank after being discharged because he complained to upper management that a senior vice president had eliminated some internal corporate controls. These eliminations allegedly constituted a violation of the Sarbanes-Oxley Act.  However, in 2013, a Fifth Circuit ruling in a similar case, Asadi v. G.E. Energy, found that to be eligible for protection under Dodd-Frank as a recognized “whistleblower,” the employee must show that they took their complaint to the SEC, per the specific wording of the statute.

Mr. Somers’s San Francisco based employer appealed the Ninth Circuit’s ruling to the high court, as it was undisputed that Mr. Somers had not reported to the SEC, but reported elsewhere.

In ruling for a definition of a whistleblower as those who report to the SEC, the Supreme Court excluded Dodd-Frank whistleblower protections to those only reporting at their place of work.

The high court ruling is instructive on two fronts: It means that whistleblower definitions in the enabling statute are to be strictly construed. The high court opinion also suggests quite strongly that lower courts and federal agencies cannot ignore unambiguous language in an enforcement statute and expand the definitional meaning on their own.

Score one for the strict constructionist! The Ninth Circuit was out of bounds.

As stated by Justice Kagan during oral argument last November, “you have this definitional provision, and it says what it says.”

If you have any questions or would like more information, please contact Sam Edgerton at [email protected].

Leaked DOJ Memo Unearths New Strategy in Qui Tam Cases

Posted on: February 13th, 2018

By: Samantha L. Skolnick

On January 10, 2018, an internal Department of Justice memorandum (the “Granston Memo”) was leaked to the public, turning heads. The Granston Memo included an in-depth analysis of the DOJ’s position on evaluating dismissals pursuant to the False Claims Act (FCA). The Granston memo outlined the DOJ’s position on FCA claims brought by whistleblowers. Under the FCA, a whistleblower may bring what is known as a “qui tam” action on behalf of the government, which potentially allows said whistleblower to receive a share of any government recovery.  The Granston memo is particularly significant, as it provides those faced with claims of False Claims Act violations with insight into the DOJ’s stance on a range of factors for dismissing these qui tam actions.

Under the FCA, the Attorney General can dismiss a whistleblower’s qui tam action, so long as the whistleblower is given the opportunity to be heard. 31 U.S.C. § 3730(c)(2)(A). Despite this provision, the DOJ noted that this dismissal option has not been actively utilized by the DOJ.  The Granston Memo specifically addresses seven enumerated circumstances where the DOJ should be considering moving to dismiss these qui tam actions:

(1) curbing meritless qui tams;

(2) preventing parasitic or opportunistic qui tam actions;

(3) preventing interference with agency policies and programs;

(4) controlling litigation brought on behalf of the United States;

(5) safeguarding classified information and national security interests;

(6) preserving governmental resources; and

(7) addressing egregious procedural errors.

Of course, the factors above are not mutually exclusive or exhaustive. The DOJ could move to dismiss these actions for multiple or other reasons.

The Granston Memo also sheds light on the increased number of whistleblower filings per year, which appears to have triggered this concern by the DOJ of the underutilized dismissal provision of the FCA. Indeed, the Granston memo mentions the possible negative consequences of the Government’s failure to use the dismissal provision, including generating adverse decisions which affect the government’s ability to enforce the FCA.

Companies or persons facing FCA claims should be particularly aware of the Granston memo, and should argue to the DOJ and/or to the whistleblower themselves that any such claim is subject to dismissal based on the seven factors above. In some circumstances where the government has decided not to intervene, the whistleblower can obtain permission and voluntarily dismiss a qui tam action.

For more information, contact Samantha Skolnick at [email protected]

SEC Pays First Whistleblower Under Dodd-Frank

Posted on: August 23rd, 2012

By: Ben Mathis

The SEC announced that it has paid $50,000 in the first whistleblower bounty. This program is a year old program and was authorized by the Dodd-Frank financial reform act. Is it the first of more to come? See attached article:

SEC Pays Out First Whistleblower Reward

Georgia Court Raises Standard for Whistleblower Actions

Posted on: July 30th, 2012

By: Kelly Morrison

The Georgia Court of Appeals, in Fulton County v. Colon,  recently issued a ruling on whistleblower lawsuits, which may significantly narrow the scope of actions that can be brought against governmental entities by disgruntled employees. 

The Court of Appeals held that whistle-blower protection is limited to complaints which are related to a state-funded program or operation under the jurisdiction of the public employer. 

This opinion increases the burden on would-be plaintiffs, by forcing them to point to complaints related to a program that is funded at least in part by the state, instead of making generalized allegations of fraud, waste, or abuse.