The Inbox: June 20, 2014

| Zuckerman Spaeder Team

This has been a noteworthy week here at Suits by Suits for developments in the law concerning whistleblowers; in addition to our in-depth articles we published this week, we also saw the following developments:

  • The big news – which we tweeted about yesterday – is that the U.S. Supreme Court issued its opinion in Lane v. Franks, a case we’ve been watching with considerable interest.  In a unanimous (9-0) decision, the Supreme Court ruled that whistleblowers are protected against retaliation by their employers when they are called to testify in court about corruption, departing from past cases in which employees were held not to have First Amendment rights to discuss matters learned at their jobs.  Writing for the unanimous Court, Justice Sotomayor held that such testimony is in fact protected by the First Amendment because “Anyone who testifies in court bears an obligation, to the court and society at large, to tell the truth.”  We’ll be analyzing this decision in depth in the coming days.
  • The Supreme Court’s decision in Lane v. Franks comes on the heels of a survey conducted by the federal Office of Personnel Management showing that nearly 20% of federal employees are afraid of retaliation if they were to disclose “a suspected violation of any law, rule or regulation” by any government agency.  (61.2% affirmed that they felt free to disclose such violations without fear of reprisal.)  The Washington Post analyzed these results in the context of the ongoing controversy regarding the department of Veterans’ Affairs; the Acting Secretary of the VA, Sloan Gibson, has promised to protect any whistleblowers from reprisal.  Nevertheless, attorney Scott D. Gerber, writing in the Huffington Post, opines that the VA’s whistleblower protection program “is broken, too.”
  • Relatedly, the Wall Street Journal opined that recent activity and statements by the Securities and Exchange Commission (SEC) may signal that the agency is prepared to take stronger measures against employers who retaliate against whistleblowers.
  • Illustrating the SEC’s get-tough policy, earlier this week, it fined a hedge fund, Paradigm Capital Management, for retaliating against a whistleblower that reported alleged “improper transactions” by the hedge fund to the SEC.

Of course, not everything that happened this week involved whistleblowers; here are a few other Suits by Suits that may be of interest:

  • The U.S. Supreme Court granted certiorari in a case that will determine whether mortgage loan officers are “employed in a bona fide executive, administrative, or professional capacity” and thus exempt from mandatory overtime pay requirements.
  • Finally, the Washington Post documented the fallout over years’ worth of complants about American Apparel’s CEO Dov Charney (as well as photographer Terry Richardson) for multiple alleged instances of sexual misconduct.  Despite founding the company, the American Apparel board of directors ultimately suspended Charney for a 30-day cure period as required by contract before he can be terminated.  Charney’s bizarre conduct is alleged to include wandering through American Apparel offices in his underpants, masturbating in front of a (female) reporter, among other behvaiors that led one plaintiff to describe his leadership as a “reign of sexual terror.”  The Post also called out Richardson’s “aesthetic of hipster softcore pornography” (which it then documents by reproducing a half-dozen advertising shots of young-looking models).

Information provided on InsightZS should not be considered legal advice and expressed views are those of the authors alone. Readers should seek specific legal guidance before acting in any particular circumstance.

As the regulatory and business environments in which our clients operate grow increasingly complex, we identify and offer perspectives on significant legal developments affecting businesses, organizations, and individuals. Each post aims to address timely issues and trends by evaluating impactful decisions, sharing observations of key enforcement changes, or distilling best practices drawn from experience. InsightZS also features personal interest pieces about the impact of our legal work in our communities and about associate life at Zuckerman Spaeder.

Information provided on InsightZS should not be considered legal advice and expressed views are those of the authors alone. Readers should seek specific legal guidance before acting in any particular circumstance.