Are We Seeing An Expansion of Whistleblower Litigation?


By: Mark C. Stephenson

Whistleblower recoveries are on the rise in regulatory and judicial proceedings. On the regulatory front, the Occupational Safety and Health Administration (OSHA) Whistleblower Program was launched in 2011 and had jurisdiction over claims made under the whistleblower protection provisions of 17 federal statutes, now grown to 22 statutes. The other major regulatory program, the Securities and Exchange Commission (SEC) Whistleblower Program, was launched in 2011. In total to date, the SEC has awarded over $154 million to 44 whistleblowers since 2011. Of that, in 2016, the SEC awarded $26 million to ten individuals and $22.5 million to a recipient who aided in uncovering accounting fraud at Monsanto. In 2017, the SEC has already awarded nearly $18 million to a number of individuals.

The OSHA Whistleblower Program has been active as well and, in April 2017, ordered Wells Fargo to pay $5.4 million to a former branch manager, who claimed that he had been fired immediately after he reported alleged misconduct to his supervisors and the bank’s ethics. OSHA found that the whistleblower’s reports were protected under the Sarbanes-Oxley Act and the Consumer Financial Protection Act of 2010 and were “at least a contributing factor in her termination.” Wells Fargo has announced that it will fight OSHA’s order. This award is the largest OSHA has made and includes a substantial amount for compensatory damages.

These results rival those reported in recent court verdicts and settlements. New Jersey’s Conscientious Employee Protection Act, commonly called CEPA, is one of the country’s most liberal whistleblower protection statutes and allows a CEPA plaintiff to seek compensatory and bad faith damages. A recent survey of available CEPA verdicts and settlements from 2005 to the present determined that for the 26 matters reported, there was a total award of just over $44 million and an average award of about $1.7 million.

This history of growing success by whistleblower plaintiffs suggests that we can expect these claims only to rise, to involve significant litigation costs and present a substantial risk of a significant award if the result is unfavorable. Additional complications under the OSHA Whistleblower Program can complicate a defendant company’s operations, In the Wells Fargo matter, OSHA ordered the bank to immediately rehire its whistleblower plaintiff. The bank’s appeal from OSHA’s findings does not stay the reinstatement order. As a result, Wells Fargo faces new exposure to post-reinstatement claims of retaliation even as it defends against those that make up OSHA’s case. Whistleblower complaints are a very serious matter that needs to be brought to senior management’s attention immediately, who in turn should make retaining competent counsel a first step in planning how best to respond.

If you have any questions or would like more information, please contact Mark C. Stephenson at [email protected].