Show posts for: Whistleblowers

  • | Jason M. Knott

    Earlier this month, we blogged about an important decision by the U.S. Court of Appeals for the Second Circuit in Bechtel v. Administrative Review Board, a Sarbanes-Oxley whistleblower case.  In Bechtel, thecourt upheld the Department of Labor’s denial of a whistleblower claim, even though it found that the administrative law judge (“ALJ”) had applied the wrong legal standard. 

    So how did the ALJ get the law wrong?

    To understand the ALJ’s error, it’s important to understand how the governing law defines the burden of proof in a Sarbanes-Oxley case. 

  • | Jason M. Knott

    Based on the statistics, it is nearly impossible to win a whistleblower claim brought under the Sarbanes-Oxley Act.  In 2010, the Center for Public Integrity wrote that the U.S. Department of Labor, which administers those claims, had only upheld 25 out of the 1,091 claims brought since the Act was passed in 2002.  That’s only a 2% success rate. 

    Although Scott Bechtel’s case took a longer path than most, it is now another statistic on the side of failure.

  • | Jason M. Knott

    We’re not sequestering this week’s Suits by Suits news:

    • Novartis announced that it would rescind its agreement to pay its former chairman, Daniel Vasella, $78 million to keep him from working for competitors and sharing his experience with them.  According to the New York Times, the proposed payment sparked outrage in Novartis’s home country, Switzerland.  Vasella released a statement that was significantly more even-keeled than anything I would have written after losing $78 million.
    • In other departure news, American Airlines CEO Tom Horton will get a $20 million severance payment when his company’s merger with US Airways is finalized, reported the Dallas Morning News.  Plus he gets lifetime flight benefits, although the agreement doesn’t appear to prohibit the company from putting him in a middle seat in the back of the plane.
  • | Jason M. Knott

    As we’ve previously discussed in a number of posts, the Dodd-Frank Act of 2010 created a bounty program to reward whistleblowers who report useful information to the Securities & Exchange Commission (SEC), and also instituted new legal protections for whistleblowers.  The SEC’s Inspector General recently took a hard look at the SEC’s implementation of these reforms, and reported his conclusions in a 43-page audit report.

    So how’s the SEC doing?

  • | Jason M. Knott

    The Inbox

    Grab your glass of eggnog, light the fireplace, and peruse the latest in Suits by Suits:

    • Fox Business reports that a New York law firm is making a cottage industry out of lawsuits against company directors based on the Dodd-Frank Act’s “say-on-pay” provision, which requires an advisory shareholder vote on executive compensation once every three years.  The lawsuits by Faruqi & Faruqi, which a defense lawyer calls a “shakedown” effort, claim that companies aren’t giving their shareholders enough information to assess executive pay.  They haven’t resulted in awards to shareholders, but have resulted in some additional disclosures (and some legal fees to the plaintiffs’ counsel).
  • | Jason M. Knott

    With only two weeks to go until the Mayans’ end of days, what better way to spend your time than reading this week’s latest in Suits by Suits:

    • A store manager for American Apparel has sued Dov Charney, the company’s CEO, accusing him of assault.  UPI reports that the manager alleges that Charney called him nasty names and tried to rub dirt on his face at an industry convention.  Lawyers can get a bad rap, but I doubt anything like that has ever happened at the ABA’s annual meeting.
  • | Jason M. Knott

    As of now, SEC whistleblowers have a one-in-3,001 chance of receiving a whistleblower award.  That’s according to the latest annual report from the SEC’s Office of the Whistleblower, which was established to administer the whistleblower bounty program established by the Dodd-Frank Act of 2010.

    We’ve previously covered the only award made to date under the whistleblower program – a $50,000 payout, nearly 30% of what the SEC recovered in that particular case.  But what we didn’t know at the time was how many tips had actually been made to the SEC by potential whistleblowers. 

  • | Andrew P. Torrez

    On Thursday, a 4-3 majority of the Virginia Supreme Court held in VanBuren v. Grubb that individuals such as supervisors or managers could be sued as individuals and held personally liable for the common law tort of wrongful termination (also known as wrongful discharge) in addition to whatever corporate liability the employer may have.

    As a practical matter, this gives plaintiffs and their lawyers additional leverage when bringing suits that contain a cause of action for wrongful termination in Virginia by being able to name the former employee’s boss as a co-defendant.  From the boss's perspective, this decision means that you, personally, could be named as a defendant and ultimately forced to satisfy a judgment for improperly firing an employee from your own pockets -- not just your company's.  It also means that employers and their executives who operate in Virginia need to review their D&O insurance coverage with this potential exposure in mind.

    In short:  whether you're an executive or an employer, you need to know about this case and its implications on the employment relationship.

  • | Jason M. Knott

    In yesterday’s post, we promised to talk more about the potential conflict that defendants have identified in the Dodd-Frank Act’s whistleblowing provision, Section 922. 

    As we’ve previously discussed, Section 922 changed whistleblower law in two important ways.  First, it created a bounty program, under which qualified whistleblowers can receive payments from the SEC for submitting information about violations of the securities laws.  In the first fourteen months of the program, the SEC has handed out the grand total of one award.

    Second, Dodd-Frank enhanced the legal remedies for whistleblowers who are victims of retaliation, expanding the scope of prior protections found in the Sarbanes-Oxley Act of 2002 and creating new ones.

    Employers, however, have identified a tension in Section 922 that they are seeking to use to defeat whistleblower retaliation claims. 

  • | Jason M. Knott

    The Dodd-Frank Act, passed in 2010, has been a hot issue on the campaign trail.  One provision of Dodd-Frank that hasn’t gotten a lot of play, politically speaking, is Section 922 – the law’s whistleblower protection provision.

    But in the federal courts, Dodd-Frank whistleblower law is heating up.  We previously covered how a New York federal court allowed one such whistleblower’s claim to proceed.  Now, the District of Connecticut brings us the case of Kramer v. Trans-Lux Corp.

  • | William A. Schreiner, Jr.

  • | Jason M. Knott

    For a baseball player, batting .100 won’t get you into the Hall of Fame.  But for Rosanne Ott, a former Black Hawk helicopter pilot turned portfolio manager, batting .100 kept her case alive.  See Ott v. Fred Alger Mgmt., Inc., No. 11 Civ. 4418 (LAP) (S.D.N.Y. Sept. 27, 2012).

    Ott sued her former employer Fred Alger Management (“Alger”), associated companies, and Alger’s CEO/CIO for alleged violations of the Investment Advisors Act, breach of contract, and the Dodd-Frank Act’s whistleblower provisions.  She also filed a derivative claim against the CEO/CIO on behalf of Alger’s shareholders for breach of fiduciary duty.  In her 10-count, 65-page amended complaint, Ott alleged that Alger had adopted a trading policy for her fund (the Health Sciences Fund) that allowed other Alger funds to make better trades at her fund’s expense.  

    Alger and the other defendants moved to dismiss.  For four counts, Ott didn’t respond, and for five others, the district court decided that she had not adequately alleged supporting facts.  That left only her whistleblower claim, based on the anti-retaliation provision of the Dodd-Frank Act, 15 U.S.C. § 78u-6(h)(1)(A)(i).  (Say that cite three times fast.) 

  • | Jason M. Knott

    News in suits by suits for you to ponder once you’ve tired of reading about replacement refs and bacon:

    • Every law librarian I know is a kind, mild-mannered person who would never dream of threatening to bash you with a crowbar.  But Donald Raymond, formerly of Southern Illinois University, was accused of making such a threat, and was fired shortly after the allegation.  Karen Sloan at the National Law Journal writes that Raymond sued his employer after his termination, and that his case has now survived a motion to dismiss. 
  • | Jason M. Knott

    Section 922 of the Dodd-Frank Act of 2010 has received a lot of attention in legal circles.  That provision established a whistleblower program under which a person who voluntarily provides the Securities & Exchange Commission with information about an employer’s wrongdoing can receive an award.    To help strengthen the program, Section 922 also protects whistleblowers from retaliation for disclosing information that they report directly to the SEC. 

    On August 21, the SEC announced its first payment of a whistleblower award under the new program.  

  • | Jason M. Knott

    Many of the cases we talk about here on Suits by Suits are breach of contract cases brought by executives against their former employers.  Sometimes, however, the employer turns the tables, bringing an action against a former executive for breaching its confidences.  When that happens, the executive can find himself owing the company a lot of money, rather than the other way around.

    Such was the fate of a former lawyer for Toyota named Dimitrios Biller, the subject of the Ninth Circuit’s recent opinion in Biller v. Toyota Motor Corp., 668 F.3d 655 (9th Cir. 2012).  

  • | Jason M. Knott

    Tariq Hassan, the former Chief Procurement Officer for JP Morgan Chase (JPMC), is taking the bank to court.  In a suit filed June 15, he claims that JPMC fired him for investigating a “kickback scheme” involving the bank’s vendor management office and IT department.  Then, Hassan says, JPMC’s Chief Executive Officer, Jamie Dimon, and others at JPMC badmouthed him to Citigroup Global Markets when that company was considering hiring him, and Citigroup retaliated further against him for his whistleblowing by not hiring him.

We cover a broad range of issues that arise in employment disputes. Occasionally, we also spotlight other topics of relevant legal interest, ranging from health care to white-collar defense to sports, just to keep things interesting.

Led by Jason Knott and Andrew Goldfarb, and featuring attorneys with deep knowledge and expertise in their fields, Suits by Suits seeks to engage its readers on these relevant and often complicated topics. Comments and special requests are welcome and invited. Before reading, please view the disclaimer.

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Contributing Editors

Jason M. Knott
Email | +1 202.778.1813


Andrew N. Goldfarb
Email | +1 202.778.1822