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www.americanbar.org | www.abacle.org
Title: Handling Whistleblower Claims: New
Opportunities Create More Complex and Emerg...
www.americanbar.org | www.abacle.org
SOX 806 – Who is Covered?
• Company that registers a class of securities
under Sectio...
www.americanbar.org | www.abacle.org
SOX 806 – Who is Covered?
• A nationally recognized statistical rating
organization
•...
www.americanbar.org | www.abacle.org
“Officer, Employee, Contractor,
Subcontractor or Agent”
• Lawson v. FMR, No. 12-3 (Ma...
www.americanbar.org | www.abacle.org
Impact of Lawson
• What is the statute’s reach?
– Employees of 5,000 public companies...
www.americanbar.org | www.abacle.org
Sarbanes-Oxley Protected Conduct
• Sylvester v. Parexel Int’l, LLC, ARB 07-123,
2011 ...
www.americanbar.org | www.abacle.org
Sarbanes-Oxley Protected Conduct
• Will federal courts adopt Sylvester?
– Weist v. Ly...
www.americanbar.org | www.abacle.org
Dodd-Frank Act Protected Conduct
• 3 employment anti-retaliation provisions:
Securiti...
www.americanbar.org | www.abacle.org
Dodd-Frank Act Protected Conduct
• Does it protect internal disclosures?
– No -- Asad...
www.americanbar.org | www.abacle.org
Mandatory Arbitration
• SOX claims are exempt from mandatory
arbitration
• Dodd-Frank...
www.americanbar.org | www.abacle.org
Forum Selection
• Kick-out provision in SOX may become more
attractive due to recent ...
www.americanbar.org | www.abacle.org
Protections for Employees of
Government Contractors
• Broader scope of protected cond...
www.americanbar.org | www.abacle.org
NDAA Whistleblower Provisions
• Sections 827 and 828 of NDAA became
effective July 20...
www.americanbar.org | www.abacle.org
NDAA Whistleblower Provisions
• Employee-favorable causation standard
• Requires exha...
www.americanbar.org | www.abacle.org
Hot Topics
• Settlement issues
– DOL review of confidentiality clauses
• Parallel inv...
www.americanbar.org | www.abacle.org
Whistleblower Filings at OSHA
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Handling Whistleblower Claims: New Opportunities Create More Complex and Emerging Issues for Employment Lawyers

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The panel will explore in depth the fast-changing legal landscape for whistleblowers while offering practical insight on the latest issues. Topics covered will include: latest developments on forum and claim selection for relaxed burdens of proof; financial incentives and other remedies; managing thorny confidentiality issues; handling highly public whistleblower cases; contingent labor as whistleblowers; mandatory arbitration (or not); and key recent cases defining the scope of protected activities.

Published in: Law, Business, Career
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Handling Whistleblower Claims: New Opportunities Create More Complex and Emerging Issues for Employment Lawyers

  1. 1. www.americanbar.org | www.abacle.org Title: Handling Whistleblower Claims: New Opportunities Create More Complex and Emerging Issues for Employment Lawyers MARCH 20, 2014 |
  2. 2. www.americanbar.org | www.abacle.org SOX 806 – Who is Covered? • Company that registers a class of securities under Section 12 of the 1934 Securities and Exchange Act • Company that is required to file reports with the Securities Exchange Commission under Section 15(d) of the 1934 Act • A subsidiary or affiliate whose financial information is included in the consolidated financial statement of one of these
  3. 3. www.americanbar.org | www.abacle.org SOX 806 – Who is Covered? • A nationally recognized statistical rating organization • Any “officer, employee, contractor, subcontractor or agent of such company or nationally recognized statistical rating organization”
  4. 4. www.americanbar.org | www.abacle.org “Officer, Employee, Contractor, Subcontractor or Agent” • Lawson v. FMR, No. 12-3 (Mar. 4, 2014) – SOX protects employees of a public company's private contractors and subcontractors (and their babysitters) – Essentially same decision as ARB decision Spinner v. David Landau & Assocs. LLC, No. 10-111 (ARB May 31, 2012), but did not defer to ARB – Majority declined to adopt (but did not rule out) limiting principles
  5. 5. www.americanbar.org | www.abacle.org Impact of Lawson • What is the statute’s reach? – Employees of 5,000 public companies – Employees of 6 million private companies – Untold millions of employees of public company employees and officers • Impact on mutual fund industry and law and accounting firms, private businesses generally • Steps private companies should take to prevent SOX claims • Can OSHA handle?
  6. 6. www.americanbar.org | www.abacle.org Sarbanes-Oxley Protected Conduct • Sylvester v. Parexel Int’l, LLC, ARB 07-123, 2011 WL 2165854 (May 25, 2011) – Protected conduct not limited to disclosures of shareholder fraud and C need not prove each element of fraud (scienter, materiality, etc.) – Disclosure about a potential violation protected – Abandons prior ARB’s Platone decision requiring that disclosure “definitively and specifically relate” to a violation of one of the categories of fraud or SEC rule violations – Iqbal/Twombly pleading standard does not apply to claims filed at OSHA
  7. 7. www.americanbar.org | www.abacle.org Sarbanes-Oxley Protected Conduct • Will federal courts adopt Sylvester? – Weist v. Lynch, 710 F.3d 121 (3rd Cir. 2013) – Lockheed Martin Corp. v. Administrative Review Bd., 717 F.3d 1121 (10th Cir. 2013) – But see Gauthier v. Shaw Group, Inc., 2012 WL 6043012 (W.D.N.C. 2012); Andaya v. Atlas Air, Inc., 2012 U.S. Dist. LEXIS 78654, at *10 (S.D.N.Y. 2012); Nielsen v. AECOM Tech. Corp., 2012 WL 6200613 (S.D.N.Y. 2012)
  8. 8. www.americanbar.org | www.abacle.org Dodd-Frank Act Protected Conduct • 3 employment anti-retaliation provisions: Securities Exchange Act, Commodity Exchange Act (“SEA”), Consumer Financial Protection Act • Under SEA, protected activity if: – Provided information to the SEC ; – Provided assistance in any SEC; – Made required or protected disclosures under the Sarbanes-Oxley Act of 2002 . . .
  9. 9. www.americanbar.org | www.abacle.org Dodd-Frank Act Protected Conduct • Does it protect internal disclosures? – No -- Asadi v. G.E. General (USA), L.L.C., 720 F.3d 620 (5th Cir. 2013) – Yes – a number of district court have adopted a contrary position, including two opinions post-Asadi – Yes – SEC filed Second Circuit amicus brief
  10. 10. www.americanbar.org | www.abacle.org Mandatory Arbitration • SOX claims are exempt from mandatory arbitration • Dodd-Frank Act claims appear to be subject to mandatory arbitration – Murray v. UBS Securities, LLC, No. 2:12-cv- 05914-KPF (S.D.N.Y. Jan. 27, 2014)
  11. 11. www.americanbar.org | www.abacle.org Forum Selection • Kick-out provision in SOX may become more attractive due to recent jury verdicts – Zulfer v. Playboy (C.D.Ca. 2014) $6M – Jones v. Southpeak Interactive (E.D.Va. 2013) $178,500 in compensatory damages reduced to $123,000
  12. 12. www.americanbar.org | www.abacle.org Protections for Employees of Government Contractors • Broader scope of protected conduct under the False Claims Act’s anti-retaliation provision post- 2009 FCA amendments – Protects “other efforts to stop 1 or more violations of [the FCA]” • Post-Nassar, courts are imposing a “but for” causation standard
  13. 13. www.americanbar.org | www.abacle.org NDAA Whistleblower Provisions • Sections 827 and 828 of NDAA became effective July 2013 • Broad scope of protected conduct – Gross mismanagement, gross waste, abuse of authority; – violations of law, rule, or regulation relating to contracts, including competition for a contract; or – substantial and specific danger to public health or safety
  14. 14. www.americanbar.org | www.abacle.org NDAA Whistleblower Provisions • Employee-favorable causation standard • Requires exhaustion at agency OIG • 210-day kick-out provision • Damages include reinstatement, backpay, compensatory damages, and attorney fees and costs.
  15. 15. www.americanbar.org | www.abacle.org Hot Topics • Settlement issues – DOL review of confidentiality clauses • Parallel investigations • OSHA enforcement trends • September 2013 OSHA order awarding $1.9 million to a former CFO • Managing thorny confidentiality issues • Extraterritoriality
  16. 16. www.americanbar.org | www.abacle.org Whistleblower Filings at OSHA

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