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.

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Title: Handling Whistleblower Claims: New
Opportunities Create More Complex and Emerging
Issues for Employment Lawyers
MARCH 20, 2014 |

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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

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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”

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“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

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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?

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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

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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)

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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 . . .

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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

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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)

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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

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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

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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

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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.

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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

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Whistleblower Filings at OSHA