Whistleblower Law Blog
Last year, we wrote about a report from the U.S. Attorney General that reviewed protections provided to whistleblowers employed by the FBI. At the time, that report recommended, among other fixes, the following: (1) awarding compensatory damages to whistleblowers who suffered retaliation; (2) expanding the list of persons to whom protected disclosures could be made; and (3) equalizing whistleblowers’ access to witnesses within the agency. When the Attorney General released the report, then-Ranking Member of the Senator Judiciary Committee Chuck Grassley and Oregon Senator Ron Wyden expressed optimism that the report was a step in the right direction. More recently, Chairman Grassley and Ranking Member Patrick Leahy of the Senate Judiciary Committee introduced the Federal Bureau of Investigation Whistleblower Protection Enhancement Act of 2015.
Chairman Grassley stated that the new bill, introduced in December 2015, “expands outlets for protected disclosures and improves processes to halt reprisal.” Senator Leahy echoed Grassley’s statements, saying the bill would “help to ensure that FBI employees are able to blow the whistle on waste, fraud, or abuse at the FBI and not face personal repercussions when they do.”
In a report released November 30, 2015, the Government Accountability Office found that the IRS Whistleblower Office had recovered $2 billion in tax revenue that would have been lost without the efforts of whistleblowers. But despite this success, the GAO concluded that the IRS Whistleblower Office is plagued by administrative issues, and recommended that Congress pass new employment protections for tax whistleblowers.
The Tax Relief and Health Care Act of 2006 created the Whistleblower Office within the IRS. It manages and tracks claims made under two programs, one for claims of under $2 million (26 U.S.C. 7623(a)) and the other for claims of more than $2 million (26 U.S.C. 7623(b)). The 7623(b) program was also created by the Tax Relief and Health Care Act of 2006.
Tax whistleblowers have helped the IRS collect nearly $2 billion in additional revenue since the first 7623(b) claim was paid in 2011 under the expanded program that awards whistleblowers between 15 percent and 30 percent of collected proceeds. Since that time, the Whistleblower Office has awarded more than $315 million to whistleblowers.
On January 5, 2016, former Viacom Vice President for Financial Planning and Analysis Nataki Williams filed suit under the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Wall Street Reform and Consumer Protection Act against the entertainment company. In her complaint filed in federal court in the Southern District of New York, Williams claims that Viacom fired her in retaliation for questions she raised about a scheme in which Viacom allegedly sought to avoid paying taxes on licensing rights to the “Teenage Mutant Ninja Turtles” (TMNT) franchise.
Viacom acquired the international licensing rights to TMNT in 2009 from The Mirage Group and 4Kids Entertainment. Williams alleges that shortly after Viacom acquired the licensing rights, Viacom concocted a scheme to attribute TMNT’s revenue to the Netherlands to avoid the U.S. tax burden. TMNT is owned by a Netherlands-based entity, but Williams asserts that all of TMNT’s business took place in New York. She further claims that a Netherlands-based employee was tasked with making immaterial changes to draft contracts in order to legitimize business contacts outside of New York. Williams’ superiors were allegedly in on the scheme, joking that they do not “look good in orange.”
Whistleblowers are a legal class of persons who expose what they reasonably believe to be unlawful activity to a person or entity that has the power to correct that wrongdoing. A number of laws at both the federal and state level protect whistleblowers from retaliation. These protections exist because whistleblowers often expose fraud or other unlawful activity that would otherwise remain undisclosed. The Department of Labor’s Occupational Safety & Health Administration, for example, enforces the anti-retaliation provisions of twenty-two different statutes that protect employees in the private sector. The United States Office of Special Counsel enforces the Whistleblower Protection Act, which covers most, but not all, civilian employees of the federal government. In recent years, whistleblower protections have been extended, through the National Defense Authorization Act of 2013, to employees of government contractors who disclose fraud or mismanagement related to a contract with the federal government. And in 2014, the Supreme Court extended the anti-retaliation provisions of the Sarbanes-Oxley Act to employees of contractors who provide services to publicly held companies.
But there are limits to the many protections that already exist for whistleblowers. The WPA, for example, specifically excludes members of the Intelligence Community. Members of the Intelligence Community are covered instead under the Intelligence Community Whistleblower Protection Act, which lacks an anti-retaliation provision. Even Presidential Policy Directive 19, which President Obama signed in October 2012 to provide some protection from retaliation to those serving in the Intelligence Community, fails to provide a private right of action to an aggrieved employee. And in recent years, there have been a number of cases involving whistleblower retaliation in the Department of Veterans Affairs.
Fiscal 2015 was arguably the most successful year in the short history of the whistleblower program at the Securities & Exchange Commission: In the 12 months ended September 30, almost 4,000 tips were received from whistleblowers around the world — a record number — and more than $37 million was paid out in rewards.
The whistleblower program was created by the Dodd-Frank Act of 2010: Under the statute, people who report securities violations may be eligible for a reward if the SEC uses their information to recover more than $1 million for taxpayers.
The 2015 tallies are reported in the SEC program’s new annual report. Beyond the monetary rewards being paid to whistleblowers, the report highlights a number of steps taken by the SEC to help insiders who share information about corporate wrongdoing.
Senator Claire McCaskill (D-MO) asked the Navy for a briefing on the case of an admiral who avoided disciplinary action despite an investigation finding that he retaliated against staff members he erroneously suspected of being whistleblowers.
In an October 26, 2015 letter to Secretary of the Navy, Ray Mabus, McCaskill said she was disturbed to learn that Rear Admiral Brian Losey was not being “held accountable” for retaliatory actions taken against subordinates cited in a Department of Defense Inspector General report. McCaskill’s letter followed an October 21, 2015 Washington Post article that reported the Navy’s decision not to discipline Losey for violating whistleblower protection laws and to promote him. The article did note that the Navy issued Losey a “letter of counseling” asking him to be “thoughtful and careful” when handling such matters in the future, but not finding any wrongdoing on his part.
On Monday morning the U.S. Supreme Court will hear arguments on the rules federal employees must follow when they’re forced out of their jobs by discrimination or retaliation.
The case in question, Green v. Brennan, is about legal deadlines. That sounds technical, but really it boils down to simple justice. If the Court affirms a lower judgment, it will become far too easy to deprive federal workers of their day in court.
Fourth Circuit Holds that Suit Alleging Racial Discrimination Does Not Bar Later Suit for Unlawful FRSA Retaliation
The U.S. Court of Appeals for the Fourth Circuit, in Lee v. Norfolk Southern Ry. Co., 802 F.3d 626 (4th Cir. 2015), held that a plaintiff who alleged his suspension resulted from racial discrimination was not barred from claiming in another lawsuit that his employer suspended him as retaliation for refusing to ignore safety regulations, in violation of the Federal Railroad Safety Act (FRSA).
In Lee, the defendant, Norfolk Southern Railway, suspended the plaintiff, Charles Lee, for six months in 2011 for allegedly consuming beer on the job. Lee’s duties for Norfolk Southern included inspecting rail cars for possible safety hazards. Lee sued Norfolk Southern under 42 U.S.C. § 1981, alleging that his suspension resulted from racial discrimination. According to Lee, his white supervisor consumed alcohol on the job and did not face adverse consequences. Lee also alleged that his white co-workers received promotions under a collective bargaining agreement while his African-American co-workers did not, and he claimed that he faced harassment because of his race. Lee eventually lost that lawsuit on summary judgment.
Two Office of Special Counsel investigations into whistleblower cases recently resulted in settlements. In October 2015, the OSC reported that the Army settled a claim filed by Teresa Gilbert. The next month, the OSC announced that the Department of Veterans Affairs settled claims brought by David Tharp.
Gilbert worked as a civilian infection control analyst at the Womack Army Medical Center in Fort Bragg, North Carolina. In January 2014, she reported concerns to the Joint Commission about infection control problems at the Medical Center. During the Commission’s investigation, Gilbert’s supervisors prevented her from participating in the investigation. After its investigation, the Commission found that the hospital was not following required protocols. Shortly thereafter, in April 2014, the Army began an internal investigation based on the Commission’s findings. Gilbert provided information to the Army investigators. As a result of both investigations, various senior employees at the hospital were disciplined.
In a memorandum issued on September 15, 2015, Deputy Attorney General Sally Quillian Yates declared an end to the U.S. Justice Department’s historical leniency on white-collar crime, repudiating the so-called Holder Doctrine — also known as “Too Big to Jail.”
The Holder Doctrine grew out of a June 1999 memorandum written by Eric H. Holder Jr., who at the time served as Deputy Attorney General in the Clinton Administration. Holder later became U.S. Attorney General under President Obama.
Although Holder never recommended leniency for corporate wrongdoers, he instructed prosecutors to consider the “collateral consequences” that could result from pursuing criminal charges against large corporations — and, by extension, the bigwigs who run them. The instability caused by such prosecutions could end up harming “innocent third parties” such as shareholders and employees, he warned; over time, this fear extended to possible damage to the U.S. economy, especially in the case of financial institutions.