The U.S. Supreme Court soon will take up an appeal that will decide a crucial issue for whistleblowers.

The issue to be decided: How carefully will courts guard whistleblowers against retaliation?

The justices take up the question during the upcoming term, which starts in October.

The case involves Trevor Murray, who started work for UBS Securities in April 2011, the only research strategist for the company’s commercial mortgage-backed securities (CMBS) arm. Federal regulations dictate that such researchers come up with independent opinions, but Murray repeatedly was pressured to publish notes slanted in favor of his company’s strategies.

In December 2011, Murray reported the situation to his boss — twice — calling it unethical and illegal. Still, he received a positive annual performance review. Then, in early February 2012, he was fired. 

Murray filed a whistleblower complaint under the Sarbanes-Oxley Act (SOX) in August 2012, suing in 2014. In court, UBS contended that it had fired Murray for financial reasons. The SOX prohibits publicly traded companies like UBS from retaliating against their employees for engaging in protected activity, such as reporting violations of federal securities laws.

The district court ruled in favor of Murray, but the appeals court reversed, saying Murray should have had to show that UBS’s actions were intended as retaliation — not just that his report and his firing were connected.

This is technical, but it’s huge.

“The … requirement that plaintiffs prove the defendant’s intent in order to receive these protections would discourage would-be whistleblowers from taking the significant risk of coming forward to report financial frauds,” The Anti-Fraud (TAF) Coalition wrote in an amicus brief. “Unless reversed, the decision will insulate financial misconduct from detection and prosecution. Investors, financial markets, and potentially our entire economic system will suffer the negative consequences.”

Indeed, the fallout of weaker whistleblower protections could be widespread. 

Many will be watching this case; the intent interpretation differed from the rulings of four other federal appeals courts.

The lawyers at Keller Grover have three decades of experience representing whistleblowers and can advise potential whistleblowers about the best path forward from the very beginning, helping minimize the impact of reporting, protect their rights and achieve the best possible outcome. Keller Grover attorney Kate Scanlan is a member of TAF, which works to empower whistleblowers, and she chairs its Public Education Committee. If you have information about government fraud, contact us for a confidential, free consultation.

 

Whistleblower cases are complex, and they often pit laypeople — an everyday worker just trying to do the right thing — against well-heeled, powerful, experienced opponents. Several cases making headlines this year illustrate this scenario:

• Large railroads, such as Norfolk Southern, Union Pacific and others, face questions about their safety procedures following accidents and hundreds of whistleblower complaints during the past five years.
• A recently unsealed federal appeals court decision upheld dismissal of a whistleblower lawsuit against Johnson & Johnson because plaintiffs misused confidential records and tried to hide it.
• A whistleblower received the SEC’s largest-ever award, $279 million, for information that the Wall Street Journal reported was connected to bribery allegations against telecommunications giant Ericsson that the company paid $1.1 billion to settle.

These examples range broadly, but a common theme remains: Whistleblowers should engage knowledgeable and experienced attorneys early — even before any action is taken. Such attorneys (we offer free, confidential consultations) can help you navigate or sidestep potentially thorny issues.

Although the government has limited resources to pursue whistleblower cases, which may take years, there are provisions for whistleblowers to pursue cases on behalf of the government. For the first time ever, last year the federal government recovered more from these non-intervened cases than the cases it initiates or joins — more than half of total recoveries of $1.2 billion in fiscal 2022. Keller Grover has experience working with government lawyers in these cases and has successfully represented clients in non-intervened cases.

A whistleblower’s most valuable ally in any whistleblower case is experienced attorneys representing them.

In a 2016 speech, then-SEC Enforcement Director Andrew Ceresney spoke to that very issue.

“One thing I get asked about a lot is how we view whistleblower counsel,” he said. “…We welcome the involvement of counsel in whistleblower tips. While whistleblowers can engage with us without the assistance of counsel, counsel experienced in whistleblower representations can help with up-front triage of tips to identify those that have a nexus with the federal securities laws and that may have merit. And they can work with whistleblowers going forward to identify information that will be important to us and that will allow us to advance our investigations.”

Keller Grover provides confidential, free consultations to advise those who have observed suspected wrongdoing and can help you determine the best path forward from the very beginning, helping you minimize the impact of reporting, protect your rights and achieve the best possible outcome for your situation.

A longstanding but rarely tested corner of whistleblower law flew to the forefront this month in the form of a decision by the U.S. Supreme Court.

We get into the specifics below, but here’s the underlying lesson: In today’s legal environment, whistleblowers benefit greatly from retaining counsel with a thorough understanding of the law and a solid track record of communicating with the U.S. Department of Justice.

Understanding the decision requires a bit of background. We often help whistleblowers here at Keller Grover, so here’s a quick recap of the general process: Our lawyers help False Claims Act whistleblowers to confidentially alert the DOJ to alleged fraud against the government. The government prosecutes the case in court, and whistleblowers can get up to 30 percent of recouped funds.

But sometimes, the DOJ declines to pursue a case. In those instances, the whistleblowers (or “relators”) are free to proceed on behalf of the government with what’s known as a qui tam action. Notably, recoveries from these “non-intervened” FCA cases topped $1.2 billion in fiscal 2022, more than half of total recoveries.

So what’s the problem? 

For a long time, if the government declined a case, it stayed out of the case. But in recent years, amendments have allowed the government to intervene later — even to the point of dismissing a case despite the objections of the whistleblower.

That’s exactly the situation that landed this question before SCOTUS. And, in an opinion released June 16, the court sided with the government, affirming its broad discretion to intervene later and dismiss a case, even if the whistleblower disagrees.

However — it’s important to note that this right is rarely exercised, and we don’t expect that to change following this decision. The decision wasn’t a complete surprise. Again, it simply underscores the need for expert counsel.

But it can be informative to understand the particulars. In the case at issue, a whistleblower named Jesse Polansky alleged that compliance solutions provider Executive Health Resources was helping its health care clients misclassify patient treatments in order to get higher Medicare reimbursements. After the government declined to intervene, Polansky filed a qui tam action. The case spent years in discovery; then the government decided that the burdens of the suit outweighed its potential benefits and filed for dismissal, which a District Court granted.

The Supreme Court opinion upheld lower court rulings that, as long as the government first moves to intervene in a case, then offers notice and an opportunity for a hearing, dismissal may take place. 

“And here, the Government gave good grounds for thinking that this suit would not do what all qui tam actions are supposed to do: vindicate the Government’s interests,” the opinion syllabus stated. “Absent some extraordinary circumstance, that sort of showing is all that is needed for the Government to prevail on a motion to dismiss.”

That’s why communication must happen early and often. Counsel that has a firm grasp on whistleblower law and is skilled at communicating with the DOJ about its view of non-intervened cases can make a world of difference for whistleblowers.

Keller Grover attorney Kate Scanlan has been watching these issues closely; she’s a member of The Anti-Fraud (TAF) Coalition, which works to empower whistleblowers, and is chair of TAF’s Public Education Committee. We will continue to follow any further developments.

If you want advice about how to handle suspected fraud, contact Keller Grover for a free and confidential consultation. With our proven track record of advocating for whistleblowers, we can help you understand all your options, protections, and best next steps. In more than 25 years litigating fraud and employment cases, Keller Grover has recovered billions for its clients.

 

The California Supreme Court this month ruled that employees who report labor law violations to an employer or agency that already knew about the violation is a protected disclosure under state whistleblower law.

The ruling in a case brought by the state’s Labor Commissioner means that whistleblowers who report “already known” violations are subject to anti-retaliation protection. The state’s Labor Code prohibits employers from retaliating against employees for “disclosing information” concerning suspected violations of the law either internally or to government or law enforcement agencies.

But in this case, the state Court of Appeals initially ruled in favor of the defendant, a nightclub that terminated the employment of a bartender and threatened to report her to immigration authorities after she told the owner she hadn’t been paid for her last three shifts. 

The appeals court ruled the bartender had not made a “disclosure,” and thus was afforded whistleblower protection, because the term “disclose” means “the revelation of something new, or at least believed by the discloser to be new, to the person or agency to whom the disclosure is made.” The appeals court explained that the owner of the nightclub, “was at least aware of — if not responsible for — the non-payment of wages” and that an “employee’s report to the employee’s supervisor about the supervisor’s own wrongdoing is not a ‘disclosure’ and is not protected whistleblowing activity, because the employer already knows about his or her wrongdoing.”

In a unanimous decision, the Supreme Court overturned the appeals court ruling, concluding that the word “disclose” should not be so narrowly interpreted and that the bartender made a protected disclosure under the state Labor Code and was wrongfully retaliated against as a whistleblower.

The Supreme Court ruling comes with some limitations. While the nightclub did not participate in the case, amicus curiae contended that the Court’s new reading of “disclose” threatens “to convert everyday workplace disputes into whistleblower cases.” The Court responded that the Labor Code protections apply only where the disclosing employee “has reasonable cause to believe that the information discloses a [legal] violation. … This clause imposes a requirement of objective reasonableness and excludes from whistleblower protection disclosures that involve only disagreements over discretionary decisions, policy choices, interpersonal dynamics, or other nonactionable issues.”

The court also noted that employers accused of whistleblower retaliation can rebut the charge by “demonstrat[ing] by clear and convincing evidence that the alleged [retaliatory] action would have occurred for legitimate, independent reasons even if the employee had not” made a protected disclosure.

If you believe you’ve been retaliated against by your employer for making a whistleblower disclosure by reporting a violation of law to your company or a regulatory agency, we can help you better understand your rights, protections and options.

Keller Grover’s labor attorneys pursue justice for workers who have been treated unfairly by their employers, advocating for clients whose issues may pertain to wage theft, discrimination, harassment, and wrongful termination matters. Our attorneys are also experienced and knowledgeable about state and federal whistleblower laws and protections. This combination makes us uniquely qualified to represent whistleblowers. Contact us today for a free, confidential consultation.

 

We’ve told you before about the potential for fraud in government programs intended to protect the “Blue Economy” and how the False Claims Act enables whistleblowers to report wasteful spending on federal programs designed to protect the environment. 

However, other whistleblower programs besides the FCA can help safeguard the environment, even if the individuals or corporations involved aren’t contracted by the federal government.

Blowing the whistle on shipping pollution

The International Convention for the Prevention of Pollution from Ships (MARPOL) is the main international convention covering marine pollution by ships. The United States in 1980 passed the Act to Prevent Pollution from Ships (APPS), which makes it a crime to knowingly violate provisions of MARPOL. 

Much like the FCA, APPS includes whistleblower provisions that give workers incentives to report shipping pollution. In fact, the law states that an amount up to 50% of the fine issued to violators of the MARPOL protocol can be paid to whistleblowers who gave information leading to conviction.

Whistleblowers were responsible for more than three-fourths of APPS prosecutions during 1993-2017, according to a law firm analysis of 100 cases that was published by Whistleblower Network News. In those cases, the United States obtained over $270 million in sanctions from polluters and paid 206 whistleblowers more than $33 million in rewards,

Given the nature of shipping pollution – for example, only a handful of employees would be aware of illegal dumping of hazardous waste such as oily bilge water in an open body of water, miles from shore – it’s not surprising how many cases involved whistleblower information. In addition to cargo ships and crude oil tankers, cruise ships are also susceptible to violating MARPOL through discharges of sewage or other wastewater.

Ship workers who have witnessed or have knowledge of illegal practices at sea that lead to pollution can become APPS whistleblowers, even if they aren’t U.S. citizens.

A financial angle to climate change

Interestingly, the Securities and Exchange Commission’s whistleblower program could indirectly help counteract climate change. Here’s how:

The SEC has proposed rule changes that would require publicly traded companies to include certain climate-related disclosures in their registration statements and periodic reports, including information about climate-related risks that are reasonably likely to have a material impact on their business and disclosure of their greenhouse gas emissions.

If a corporation isn’t disclosing accurate information about climate risks to their business, or how much greenhouse gas it’s releasing, investors aren’t only misled, but the public lacks a true picture of how the company is contributing to climate change.

If the rule changes are approved, false climate disclosures would violate securities law. Whistleblowers can report violations to the SEC through its whistleblower program, which awards 10% to 30% of the money collected by the government in a successful prosecution.

What do I do if I have information about fraud?

Consulting with a whistleblower attorney is important to ensure your rights are protected and to determine whether you have a basis for a lawsuit. If you are considering reporting any wrongdoing to the government, it’s critical to consult with a knowledgeable attorney to better understand your rights and the potential outcomes of becoming a whistleblower. 

Keller Grover has decades of experience helping whistleblowers through the process from start to finish. Contact us today for a free, confidential consultation.