Truth and Consequences: The Current State of Whistleblowing and Retaliation in America

Posted on 09-16-2013 by
Tags: Real Law

Brought to you by the Real Law Editorial Team

Book and other titles sometimes find their way into everyday language. For example, it’s not surprising to hear references such as “catch-22” (originally “catch-18” but changed shortly before the publication of Joseph Heller’s acclaimed 1961 novel), “the perfect storm” (from Sebastian Junger’s gripping 1997 account of a devastating nor’easter) and “an inconvenient truth” (which is not from a book but rather from the 2006 documentary film about former Vice President Al Gore’s campaign to educate citizens about global warming).

Coincidentally, as we’ll see, all those borrowed catchphrases can apply to an aspect of what has surely become the high-stakes story of the year (and perhaps of many years to follow): the spotlight that has come to rest on the subject of whistleblowing and its consequences.

Beyond the Headlines

The scorching revelations orchestrated by former NSA contractor Edward Snowden and ongoing developments relating to information provided by Chelsea Manning (formerly U.S. Army Pfc. Bradley Manning), who was recently sentenced to 35 years in prison for her part in releasing a vast trove of classified documents to the public via Wikileaks, are grabbing headlines and stirring a much-needed public debate. But those in the legal profession and corporate America are well aware that the complexities and impact of whistleblowing and retaliation run much deeper. They are a growing matter in employment and labor circles, where many are concerned with taming seemingly out-of-control whistleblowing retaliation claims.

Those claims have risen dramatically nationwide over the last two decades. The U.S. Equal Employment Opportunity Commission (EEOC) alone saw the number of charges filed that included alleged retaliation almost quadruple between 1992 and 2012, from just over 10,000 to almost 38,000 or roughly 38 percent of all EEOC claims filed. That puts retaliation ahead of both race (34 percent) and gender (31 percent) as the charge most frequently filed with the federal agency.

Moreover, the surge in retaliation claims has been accompanied by an ever-growing list of multimillion-dollar awards and settlements. Those are in addition to other costs incurred, including everything from investigating whistleblower allegations, which can frequently run in the six-figure and sometimes seven-figure range, to high-priced attorney fees and the cost of litigation itself. Indirect costs through lost productivity, missed business opportunities and damage control push that dollar value much higher.

An Expert’s View

How and why have matters ended up this way? For answers, we can turn to Gregory Keating, a Boston-based shareholder and co-chair of the Whistleblowing and Retaliation Practice Group at Littler Mendelson P.C., the world’s largest law firm devoted exclusively to representing management in every aspect of employment and labor law. He is also the author of a national treatise on the subject of whistleblowing and retaliation, which is now in its fourth edition and soon to be released in a fifth.

“There are four main factors that are causing the situation we’re in right now,” says Keating. He lists an ongoing judicial expansion of rights and remedies available to whistleblowers, new legislation and case law that has dramatically tipped the scales in favor of employees in retaliation suits, increased enforcement efforts by government agencies in the wake of numerous high-profile scandals, and enhanced public awareness of whistleblowing generally.

The combined impact of those factors prompts Keating to reach for the same awestruck and alarmed metaphor that Sebastian Junger used for his book. As it turns out, it’s actually a very old expression. Nevertheless, “the perfect storm” effectively conveyed the gravity of the situation under Junger’s scrutiny—as it does when Keating uses the phrase to describe how various events have come together to create what for many is a grave and worrying scenario.

Taking Stock

Admittedly, there’s a catch: measures to protect whistleblowers are necessary and important in a democratic society. But is that reconcilable with where such measures seem to lead, as reflected by the current reality? Are we left with a catch-22 conundrum?

The answers to those questions are complicated. Still, what troubles people like Keating is that continuing to follow the path we’re on seems untenable. “What I’ve seen over the last decade in particular,” he explains, “is an accelerating expansion of the use of the term ‘whistleblower’ to encompass more and more situations. At the Department of Labor, for example, there can be no question that the lens for taking in who qualifies as a whistleblower has grown dramatically over the last five years.”

That prompts a conclusion that’s framed in a manner similar to the way Al Gore presented the subject of climate change. Keating’s view, which can be likened to an uncomfortable truth, is that matters related to whistleblowing and alleged retaliation have reached a point at which something must be done to restore a sense of balance.

There are signs that might be happening.

Before the Courts

Two recent cases and another slated to be argued before the Supreme Court suggest there could be a change in the prevailing wind that has so far favored employees in retaliation suits.

The first case, University of Texas Southwestern Medical Center v. Nassar, is notable for various reasons. In it, the Supreme Court overturned a Fifth Circuit Court decision. Explains Keating: “For the first time, the court adopted a narrow, strict interpretation of the significant third element required of any retaliation case: causation. And I say ‘for the first time’ because there were at least five prior opinions from the high court, going back to 2006, in which the justices had adopted the most liberal interpretation of how you state a claim for retaliation.”

He adds: “In the case of Nassar, not only did the Court eschew the traditional view, but Justice Kennedy went out of his way to note the significance of the causation standard in his opinion, given its ‘central importance to the fair and responsible allocation of resources in the judicial and litigation systems.’”

The second case that energizes Keating is Asadi v. G.E. Energy (USA), L.L.C., in which the U.S. Court of Appeals for the Fifth Circuit affirmed a lower court decision holding that the plaintiff was not a whistleblower as defined by the federal Dodd-Frank Wall Street Reform and Consumer Protection Act.

Keating’s take on Asadi is spirited. “The Fifth Circuit said, ‘No. No, no, no. We’re going to look at the plain language of the statute, and it requires someone to go to the SEC. Just because an individual came forward and said, you know, I think things are wrong here and you’re not doing it right and there’s financial fraud going on, that doesn’t make that person a Dodd-Frank whistleblower.’ So, once again we’ve got emerging clarification about where to draw the proper line regarding a protected activity.”

Signs of a New Direction

Keating is most excited by the potential outcome of a case that’s scheduled to be heard by the country’s highest court. “The Supreme Court is poised to hear Lawson v. FMR LLC, in which you have the Department of Labor suggesting that Sarbanes-Oxley should apply to not only publicly traded companies, which is what the language of the statute provides, but also to all of the contractors and subcontractors to a publicly traded company. Think about it: we’re talking about increasing the spectrum of individuals covered as whistleblowers by hundreds and hundreds of thousands, if not millions, if that interpretation is adopted.”

What gives Keating hope about Lawson is that the court agreed to hear the case on the heels of its decision in Nassar. “It gives me optimism that the tide may be turning, that the Supreme Court may be gently and gradually taking the rudder and moving the ship into less turbulent waters.” He adds: “We may be seeing an indication of a more moderate approach from our highest court, which will inevitably trickle down and temper other decisions in retaliation cases.”

In other words, such decisions could be early indications of an approaching “tipping point,” to use another catchphrase (from the title of Malcolm Gladwell’s bestselling book). The expression refers to the critical juncture at which the accumulation of minor changes triggers a new and irreversible development—something that many watching the current state of whistleblowing and retaliation in America would like to see happen sooner rather than later.

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