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Whistleblower Litigation: New Developments and Strategies

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Whistleblower Litigation: New Developments and Strategies William F. Cronin Corr Cronin Michelson Baumagardner & Preece LLP 1001 Fourth Avenue, Suite 3900 – PowerPoint PPT presentation

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Title: Whistleblower Litigation: New Developments and Strategies


1
Whistleblower Litigation New Developments and
Strategies
William F. Cronin Corr Cronin Michelson
Baumagardner Preece LLP 1001 Fourth Avenue,
Suite 3900 Seattle, Washington 98154 www.corrcroni
n.com
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5
FEDERAL LAWS ENCOURAGING WHISTLE BLOW
6
False Claims Act 31 U.S.C. 3729(a)(1) (A-G)
  • Legislative Background
  • Enacted 1863
  • 1986 Amendments
  • 2009 Amendments - expands liability provisions
    and authority for Civil Investigative Demands
  • 2010 Amendments - weakened the public disclosure
    bar
  • Triggers
  • Knowing presentation of a false record to U.S.
    material to a claim
  • Knowing concealment to avoid or decrease an
    obligation to U.S.
  • Likely Targets
  • Health Care Suppliers
  • Pharmaceutical Companies
  • Defense Contractors

7
False Claims Act 31 U.S.C. 3729(a)(1) (A-G)
(Contd)
  • Threshold Issues
  • U.S. Intervention
  • Original source the relator allegations cannot
    be based on public disclosures unless relator was
    original source
  • Claims smuggling prohibited
  • Relief
  • Treble damages, statutory penalties and
    attorneys fees
  • Special Bounty
  • 15 to 25 of recovery or 25 to 30 if government
    declines to intervene
  • Determined by Court or by parties in settlement

8
2. Sarbanes-Oxley
  • Triggers
  • Securities registered under 12 of Exchange Act
    or filing reports under 15(d) of Exchange Act
  • Retaliating against employee for report to
    internal personnel (e.g., General Counsel), law
    enforcement, or SEC about mail fraud, securities
    fraud or fraud against shareholders
  • Threshold Issue
  • Employee who is subject to retaliation must file
    complaint with OSHA if OSHA fails to issue final
    agency order written 180 days may file complaint
    in U.S.D.C.
  • Relief
  • Order for back pay, attorneys fees,
    reinstatement, restoration of benefits
  • Bounty
  • None

9
3. American Recovery Reinvestment Act of 2009
  • Triggers
  • Retaliation for whistle blow to specified persons
    about
  • Gross mismanagement of recovery contract
  • Gross waste of recovery funds
  • Substantial danger to public health or safety
    from use of government funds
  • Abuse of authority related to use of funds or
  • Violation of law regarding use of recovery funds
  • Threshold Issues
  • Was the complaint a contributing factor to
    adverse action against employee
  • Employer must prove by clear and convincing
    evidence that complaint was not a contributing
    factor to adverse action
  • Relief
  • Compensatory damages, attorneys fees and
    reinstatement
  • Bounty
  • None

10
4. The Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010
  • Threshold Issues
  • Applies to publicly held companies
  • Employs a different original source rule
  • Excludes recovery for persons conducting SEC
    required audits
  • Relief
  • Doubles the back pay for an employee discharged
    for a Sarbanes-Oxley report
  • Bounty
  • 10 to 30 of award government receives for
    violation of commodities or securities law
  • Award must exceed 1 million
  • No opportunity for whistleblower to pursue action
    on behalf of government
  • SEC or CFIC determine amount of award

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13
The Expected Lawsuit Surge
  • In 2010, over 1000 qui tam lawsuits were pending
    awaiting an intervention decision by DOJ
  • The financial stakes are often enormous
  • Glaxo Smith Kline settlement (2010) 750 million
  • AstraZaneca settlement (2010) 520 million
  • Goldman Sachs settlement (2010) 550 million
  • The bounties have incentivized both professional
    bounty hunters, plaintiffs law firms, and
    employees

14
At the end of a criminal rainbow, there is no
pot of gold.
The hunter when he understands his prey its
easier for him to find them.
15
Recent Whistle Blow Lawsuits Handled by CCMBP
  • CFO suing biotech company
  • Engineer at Hanford Nuclear Reservation suing
    contractor
  • Airline pilot suing commercial airline
  • Airline maintenance supervisor suing commercial
    airline
  • Public Housing Authority employee suing Public
    Housing Authority

16
A Recommended Strategy for the Whistle Blow
Lawsuit
  • Do Not Treat As A Typical Employment Lawsuit
  • Is plaintiff a crusader?
  • Has plaintiff put career at stake?
  • Does the whistle blow have merit?
  • Will this lawsuit morph?
  • Take The Whistle Blowers Deposition Early
  • Line Up Ex-Employees As Witnesses
  • Scrutinize Whistle Blowers Working History Prior
    To Employment With You
  • Be Cautious About The Undocumented Problem
  • Find A Champion Within The Company
  • Who has been hurt?
  • Who stood up for the workers?

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18
ATT MOBILITY LLC v. CONCEPCION, ET
UX. Supreme Court of the United States No. 09-893
  • William F. Cronin
  • Corr Cronin Michelson Baumagardner Preece LLP
  • 1001 Fourth Avenue, Suite 3900
  • Seattle, Washington 98154
  • www.corrcronin.com

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20
KEY FACTS IN CONCEPCION
  • The Concepcions entered into a wireless services
    contract with ATT Mobility for which ATT
    advertised a free cell phone. ATT Mobility in
    subsequent billings included a sales tax charge
    for the cell phone.
  • The Concepcions filed a class action complaint in
    the U.S.D.C for the Southern District of
    California alleging ATT had engaged in false
    advertising and fraud by charging a sales tax on
    cell phones advertised as free.
  • The Concepcions had agreed to arbitrate disputes
    with ATT Mobility and to waive rights to class
    action relief.

21
KEY FACTS IN CONCEPCION (Contd)
  • The arbitration agreement was consumer friendly
  • In the event the parties proceed to arbitration,
    the agreement specifies that ATT must pay all
    costs for nonfrivolous claims that arbitration
    must take place in the county in which the
    customer is billed that, for claims of 10,000
    or less, the customer may choose whether the
    arbitration proceeds in person, by telephone, or
    based only on submissions, that either party may
    bring a claim in small claims court in lieu of
    arbitration and that the arbitrator may award
    any form of individual relief, including
    injunctions and presumably punitive damages. The
    agreement, moreover, denies ATT any ability to
    seek reimbursement of its attorneys fees, and,
    in the event that a customer receives an
    arbitration award greater than ATTs last
    written settlement offer, requires ATT to pay a
    7,500 minimum recovery and twice the amount of
    the claimants attorneys fees.
  • ATT
    Mobility LLC v. Concepcion, et ux,
    563 U.S. ___, (2011)

22
KEY FACTS IN CONCEPCION (Contd)
  1. The U.S.D.C for the Southern District of
    California and the Ninth Circuit concluded that
    the arbitration agreement and class action waiver
    were unenforceable under Californias Discover
    Bank rule. In Discover Bank, the California
    Supreme Court had declared that agreements to
    arbitrate in which consumers waive class action
    relief are unconscionable and unenforceable under
    California law.

23
WHAT THE SUPREME COURT DECIDED IN CONCEPCION
  1. States cannot condition enforcement of
    arbitration agreements on availability of class
    action relief.
  2. Class action waivers in agreements to arbitrate
    are enforceable, and any contrary state law or
    policy is pre-empted by the Federal Arbitration
    Act.

24
FUTURE QUESTIONS
  1. Will businesses increase their use of arbitration
    agreements with consumers?
  2. Does rationale apply to employment agreements?
  3. Must arbitration clauses be as consumer-friendly
    as ATT Mobility's?
  4. What will Congress do?
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