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#ACIProcFraud
AdvancedForumonWhistleblowerLitigation
Jordan A. Thomas
Partner
Labaton Sucharow LLP
Plaintiff Views — Prepa...
#ACIProcFraud
Topics
Retaliation Cases
• Assessing potential retaliation claims
• Key distinctions between SOX and Dodd-
F...
#ACIProcFraud
Topics
Reward Cases
• Leading reward programs
• Assessing potential reward claims
Advice for Plaintiff’s Cou...
#ACIProcFraud
RETALIATION CASES
#ACIProcFraud
Potential Impact of
Retaliation Claim on Reward Claim
• Avoid breaching the seal
• Prepare to address discov...
#ACIProcFraud
Assessing Potential
Retaliation Claims
• Assess all potential retaliation claims
• 22 plus federal whistlebl...
#ACIProcFraud
Key Factors in Assessing
Potential Claims
• Damages
• Scope of protected whistleblowing
• Causation standard...
#ACIProcFraud
Assessing Potential
Retaliation Claims
• DOL enforces more than 22 whistleblower laws (nuclear
safety, airli...
#ACIProcFraud
OSHA ComplaintDeterminations
FY 2005-FY2014
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
FY2005 FY2006 FY2007...
#ACIProcFraud
SOX Protected Conduct
• Sylvester v. Parexel Int’l, WL 2165854 (ARB May 25,
2011) adopted by 2d, 3d, 5th, an...
#ACIProcFraud
Section 929A Dodd-Frank
Protected Conduct
• Providing information to the SEC in
accordance with § 922;
• Ini...
#ACIProcFraud
Distinctions Between SOX and
Dodd-Frank
#ACIProcFraud
FCA Protected Conduct
• Broader scope of protected conduct post-2009
FCA amendments
• Protects actions in fu...
#ACIProcFraud
NDAA Protected Conduct
• Covers employees of nearly all
government contractors
• Excludes contractors of Int...
#ACIProcFraud
DistinctionsBetween FCAandNDAA
FCA Anti-Retaliation Provision Sections 827 and 828 of NDAA
Coverage Employee...
#ACIProcFraud
Forum Selection
• DOL
• Obtain early discovery from investigation
• Preliminary reinstatement
• Favorable AR...
#ACIProcFraud
Common Law Wrongful Discharge
• Federal statutory remedy typically precludes a
wrongful discharge claim
• Ma...
#ACIProcFraud
Recent Verdicts
• $6M Zulfer v. Playboy Enterprises Inc.,
JVR No. 1405010041, 2014 WL
1891246 (C.D.Cal. 2014...
#ACIProcFraud
Proving Retaliation
• Statements of animus
• Deviation from company policy or
practice
• Failure to investig...
#ACIProcFraud
REWARD CASES
#ACIProcFraud
Leading Reward Programs
#ACIProcFraud
Leading Reward Programs
• Federal and state FCAs
• SEC and CFTC
• IRS
• FIRREA
#ACIProcFraud
Assessing Potential
Reward Claims
#ACIProcFraud
Advice for Plaintiff’s Counsel
#ACIProcFraud
Advice for Responsible
Organizations
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Plaintiff views — preparing for the fallout from private litigation insights into the litigation landscape and prospects for privately represented whistleblowers

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The proliferation of whistleblower retaliation and reward laws has created a complex maze of claims and remedies. This panel of plaintiff attorneys will examine issues that frequently arise in whistleblower cases including:

Identifying whistleblower rewards claims and formulating a strategy to maximize damages
Litigating non-intervened FCA cases
The scope of protected conduct under the False Claims Act, the Sarbanes-Oxley Act and the Dodd-Frank Act
Preserving retaliation claims while pursuing reward claims
Trends in jury verdicts in federal and state whistleblower litigation and practice tips for litigating and trying whistleblower retaliation claims
Key procedural distinctions between SOX, FCA and Dodd-Frank whistleblower protection

Published in: Law
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Plaintiff views — preparing for the fallout from private litigation insights into the litigation landscape and prospects for privately represented whistleblowers

  1. 1. #ACIProcFraud AdvancedForumonWhistleblowerLitigation Jordan A. Thomas Partner Labaton Sucharow LLP Plaintiff Views — Preparing for the Fallout from Private Litigation: Insights into the Litigation Landscape and Prospects for Privately Represented Whistleblowers Jason Zuckerman Principal Zuckerman Law July 28, 2015 Tweeting about this conference?
  2. 2. #ACIProcFraud Topics Retaliation Cases • Assessing potential retaliation claims • Key distinctions between SOX and Dodd- Frank whistleblower protection • Whistleblower protection for employees of government contractors • Trends in jury verdicts • Claim and forum selection
  3. 3. #ACIProcFraud Topics Reward Cases • Leading reward programs • Assessing potential reward claims Advice for Plaintiff’s Counsel Advice for Responsible Organizations
  4. 4. #ACIProcFraud RETALIATION CASES
  5. 5. #ACIProcFraud Potential Impact of Retaliation Claim on Reward Claim • Avoid breaching the seal • Prepare to address discovery about communications with regulators • If employer offers to settle retaliation claim, whistleblower risks potential waiver of reward claim • For current employees, difficult balance between protecting confidentiality and proving employer knowledge of whistleblowing
  6. 6. #ACIProcFraud Assessing Potential Retaliation Claims • Assess all potential retaliation claims • 22 plus federal whistleblower law enforced by OSHA • Employees of government contractors • False Claims Act, 31 USC 3730(h) • Sections 827 and 828 of 2013 NDAA, 10 U.S.C. § 2409 and 41 U.S.C. § 4712 • State whistleblower statutes • State common law wrongful discharge • Punitive damages
  7. 7. #ACIProcFraud Key Factors in Assessing Potential Claims • Damages • Scope of protected whistleblowing • Causation standard • “Contributing factor” versus “but for” causation • Administrative Exhaustion • Preliminary Reinstatement • Statute of Limitations • Claim splitting and collateral estoppel
  8. 8. #ACIProcFraud Assessing Potential Retaliation Claims • DOL enforces more than 22 whistleblower laws (nuclear safety, airline safety, transportation safety, SOX, consumer product safety, etc.) • Most of the DOL whistleblower laws follow employ this procedural scheme: • File at OSHA (SOL varies from 30 to 180 days) • OSHA investigates and under some of the laws, can order preliminary reinstatement • Discovery and hearing before ALJ • Appeal to ARB • Appeal to Circuit Court of Appeals • Some of the laws have a “kick out” provision
  9. 9. #ACIProcFraud OSHA ComplaintDeterminations FY 2005-FY2014 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 Kick-Out Withdrawn Dismissed Se led Other
  10. 10. #ACIProcFraud SOX Protected Conduct • Sylvester v. Parexel Int’l, WL 2165854 (ARB May 25, 2011) adopted by 2d, 3d, 5th, and 6th Circuits • Disclosure of potential violation protected • A complaint need not allege shareholder fraud to receive SOX’s protection • Reasonable belief standard does not require complainants to have told management or the authorities why their beliefs are reasonable • SOX complainants no longer need to show that their disclosures “definitively and specifically” relate to the relevant laws • SOX complainants need not establish criminal fraud
  11. 11. #ACIProcFraud Section 929A Dodd-Frank Protected Conduct • Providing information to the SEC in accordance with § 922; • Initiating, testifying in, or assisting in any investigation or judicial or administrative action of the SEC based upon or related to such information; or • Disclosing information required or protected by SOX, the 1934 Act, and any other law, rule, or regulation subject to the jurisdiction of the SEC.
  12. 12. #ACIProcFraud Distinctions Between SOX and Dodd-Frank
  13. 13. #ACIProcFraud FCA Protected Conduct • Broader scope of protected conduct post-2009 FCA amendments • Protects actions in furtherance of a qui tam action and “other efforts to stop 1 or more violations of [the FCA]” • Young v. CHS Middle E., LLC, 2015 WL 3396790 (4th Cir. May 27, 2015) • protect[s] employees while they are collecting information about a possible fraud, before they have put all the pieces of the puzzle together • Need not prove actual FCA violation • Higher burden for “duty speech” claims
  14. 14. #ACIProcFraud NDAA Protected Conduct • Covers employees of nearly all government contractors • Excludes contractors of Intelligence agencies • Broad scope of protected conduct • Violation of law, rule, or regulation relating to federal contracts, including competition for or negotiation of a contract; • Gross mismanagement, gross waste of federal funds, abuse of authority; or • substantial and specific danger to public health or safety
  15. 15. #ACIProcFraud DistinctionsBetween FCAandNDAA FCA Anti-Retaliation Provision Sections 827 and 828 of NDAA Coverage Employee, contractor, or agent Employee of a contractor, subcontractor, or grantee Protected Conduct Lawful acts done by the employee, contractor, agent or associated others 1) in furtherance of an action under the FCA or 2) other efforts to stop 1 or more violations -Violation of law, rule, or regulation related to a federal contract -Gross mismanagement of a federal contract or grant -Gross waste of federal funds -Abuse of authority relating to a federal contract or grant -Substantial and specific danger to public health or safety Administrative Exhaustion File directly in federal court Must file initially at OSHA; can remove to federal court after 210 days Causation Standard “But for” causation Contributing Factor Jury Trial Y Y Damages Double back pay, reinstatement, special damages (emotional distress damages and harm to reputation), attorney fees Back pay, reinstatement, special damages, attorney fees Statute of Limitations 3 years 3 years
  16. 16. #ACIProcFraud Forum Selection • DOL • Obtain early discovery from investigation • Preliminary reinstatement • Favorable ARB rulings • Less formal pleading requirement and evidentiary rules • Federal Court • Higher risk of summary judgment • Jury trial and uncapped compensatory damages • Supplemental claims
  17. 17. #ACIProcFraud Common Law Wrongful Discharge • Federal statutory remedy typically precludes a wrongful discharge claim • Many states do not apply a reasonable belief standard and instead require a showing of an actual violation • Causation standard is far more onerous than contributing factor (in some states, it is sole cause) • No fee-shifting
  18. 18. #ACIProcFraud Recent Verdicts • $6M Zulfer v. Playboy Enterprises Inc., JVR No. 1405010041, 2014 WL 1891246 (C.D.Cal. 2014) • $2.2M in damages and $2.4M in fees Van Asdale v. Int'l Game Tech., 549 F. App'x 611, 614 (9th Cir. 2013)
  19. 19. #ACIProcFraud Proving Retaliation • Statements of animus • Deviation from company policy or practice • Failure to investigate or sham investigation • Placing whistleblower under microscope • Shifting or contradictory explanations • Post hoc justifications
  20. 20. #ACIProcFraud REWARD CASES
  21. 21. #ACIProcFraud Leading Reward Programs
  22. 22. #ACIProcFraud Leading Reward Programs • Federal and state FCAs • SEC and CFTC • IRS • FIRREA
  23. 23. #ACIProcFraud Assessing Potential Reward Claims
  24. 24. #ACIProcFraud Advice for Plaintiff’s Counsel
  25. 25. #ACIProcFraud Advice for Responsible Organizations

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