Whistleblower Law Blog

Trial Begins Next Month for Hollywood Effects Artist Alleging that Ascent Media Group Terminated His Employment Because He Reported Workplace Drug Use by Its Creative Director

August 31, 2012

Andrew MacDonald, an award-winning visual effects director, will go to trial next month in Los Angeles Superior Court against Ascent Media Group (AMG). MacDonald alleges that in 2009 he was terminated after he reported to AMG management “open and notorious drug abuse at the office during working hours” by then-AMG creative director Alex Frisch, best known for his work as visual effects supervisor on the Pirates of the Caribbean movies. MacDonald argues that Frisch posed a threat to public safety and health because of his erratic and aggressive behavior in the workplace while on drugs. MacDonald claims that AMG’s decision to terminate him for reporting Frisch’s workplace drug use violated public policy.

In Fall 2008, AMG merged visual post production studio RIOT with Method Studios. When these two studios were combined, Frisch emerged as the top creative director of the expanded Method, and MacDonald became the executive creative director. During contract negations with AMG’s president, MacDonald brought up his concerns regarding Frisch’s alleged drug abuse and his inability to head the department. He was at the time told not to undermine Frisch because AMG had invested a lot of money to execute the merger.

According to MacDonald, Frisch’s drug use was well-known by others in the office, who nicknamed Frisch the “Powder Donut Man” and “Cokey the Clown, Our Fearless Leader,” because of his cocaine use. In March 2009, when AMG management asked MacDonald if he had any actual proof of Frisch’s drug use, he jokingly asked if the company “needed [him]… to video-tape the bathroom in order to prove that his concern was well-founded.” The next morning, MacDonald was terminated by AMG for allegedly videotaping the bathroom. MacDonald denies having done so and believes AMG terminated him because he reported Frisch’s unlawful drug use.

The Employment Law Group® law firm has an extensive nationwide whistleblower practice  representing employees who have been victims of retaliation.

Dept. of Labor’s Administrative Review Board (ARB) Clarifies Distinction Between Integrated Enterprise and Joint Employer Tests for Establishing Vicarious Liability under the Surface Transportation Assistance Act (STAA) Whistleblower Provision

August 30, 2012

The Department of Labor’s Administrative Review Board (ARB) recently issued an opinion in Myers v. AMS/Breckenridge/Equity Group Leasing 1, ARB No. 10-144, ALJ Nos. 2010-STA-7 and 8 (ARB Aug. 3, 2012).  In Myers, the ARB reversed the ALJ’s decision finding the Respondent vicariously liable under a Surface Transportation Assistance Act (STAA) whistleblower complaint as a “joint employer”.

The case involved a payroll firm (AMS) for an Arizona-based trucking company, New Rising Fenix, Inc. (NRF).  NRF hired Complainants Keona Myers and Russell Baxter and controlled much of their work assignments.  NRF eventually terminated Myers and Baxter after they complained about a malfunctioning vehicle they used in their work and later contacted the Arizona Department of Public Safety about their concerns.  Following this, the two workers filed an OSHA complaint under STAA and eventually amended their complaint to pursue AMS instead of NRF.

The ALJ found that Myers’ and Baxter’s termination was in violation of the STAA whistleblower provision and found AMS vicariously liable as a “joint employer.”  However, on appeal, the ARB reversed the ALJ after considering whether the two companies had sufficient relatedness for vicarious liability under either the “integrated enterprise test” or the “joint employer test”.

The ARB noted that for cases involving an “integrated enterprise”, a corporation may be found to be liable without knowing participation because the action of one corporate entity is also necessarily the act of both entities.  However, the ARB found that, here, the issue of vicarious liability turned on joint employer liability, not the issue of integrated enterprise as the Complainant did not suggest, nor did the ALJ find, that AMS and NRF were so integrated.

Under the joint employer test, the employing companies are assumed to be separate entities and are deemed as joint employers if the companies share or co-determine the essential terms and conditions of a worker’s employment.

In Myers, according to the ARB, AMS was not a joint employer as it has never exercised its “contractually reserved power” to control Myers’ and Baxter’s work.  Accordingly, the ARB found that “AMS was simply a single corporate ‘person’ under the STAA” and, therefore, AMS did not violate the STAA when NRF decided to terminate the whistleblowers on account of their protected activity.

The Employment Law Group® law firm is a leader in the field of whistleblower protection law and has an extensive nationwide whistleblower practice representing employees – including commercial motor carrier whistleblowers – who have exposed illegal activity by their employer and suffered retaliation.

Law360 Interviews Nicholas Woodfield on Federal Circuit’s Recent Decision to Limit Employees’ Right to Appeal Security Clearance Determinations

August 30, 2012

Nicholas Woodfield, principal of The Employment Law Group® law firm, was recently interviewed by Law360 regarding a recent Federal Circuit decision which held that national security concerns may limit the review of employment decisions made by federal agencies, even by employees who do not have access to classified information. The decision is widely anticipated to limit the ability of federal employees to contest adverse personnel decisions.

The decision, Berry v. Conyers, held that the Supreme Court’s decision in Department of the Navy v. Egan prohibits the Merits System Protection Board (MSPB) from reviewing a federal agency’s decision relating to an employee’s eligibility to hold a sensitive position, irrespective of whether the position explicitly requires having access to classified materials.

According to Mr. Woodfield, the “Federal Circuit majority’s discussion of what could be construed as sensitive information that implicates national security demonstrates just how elastic the category can be.”

For example, according to Woodfield, a distinction can be drawn “between an employee working in a commissary on a military base and an employee at a nearby 7-11 with the explanation that stock levels of certain unclassified items at the commissary, such as sunglasses, could hint at deployment orders to a particular region for an identifiable unit.”

“What the Federal Circuit uses as an example,” Woodfield continued, “is the perfect example of how the narrow limit set forth in Egan can be expanded to just about anything.  Ultimately, he noted, “you can use that creative logic to strip people of their rights.”

Regarding the issue of whether the Federal Circuit’s decision will be challenged, Woodfield observed that “if the employees do opt to pursue a further appeal, given the strength of the dissent, the case could be a good candidate for en banc review”.

At stake in the case “is essentially a battle between two philosophies,” Woodfield explained:

“The majority is saying national security should expansively trump personal rights,  the minority is saying national security should narrowly trump personal rights. Which way the Federal Circuit might hold on rehearing is anyone’s guess.”

The article, entitled “Fed. Circ. Limits Federal Workers’ Employment Appeal Rights”, appeared in the August 22, 2012 edition of Law360.

Department of Labor’s Administrative Review Board (ARB) Expands Procedural Protections for Whistleblowers by Adopting “Fair Notice” Pleading Standard for Assessing OSHA Whistleblower Complaints

August 30, 2012

Last month, in Evans v. United States Environmental Protection Agency, ARB No. 08-059, ALJ No. 2008-CAA-3 (ARB July 31, 2012), the Administrative Review Board (ARB) of the U.S. Department of Labor issued a decision rejecting heightened pleading standards previously announced by the U.S. Supreme Court in favor of a lower pleading standard for whistleblower complaints filed before the Occupational Safety and Health Administration (OSHA) and the DOL’s Office of Administrative Law Judges (OALJ).

In Aschroft v. Iqbal and Bell Atlantic Corp. v. Twombly, the Supreme Court held that a plaintiff’s complaint must allege sufficient facts to state a claim “that is plausible on its face” in order to withstand a motion to dismiss.  In its recent decision in Evans, the ARB rejected this “plausibility” standard, instead holding that administrative whistleblower complaints only need to “give fair notice of the protected activity and adverse action” in order to survive a motion to dismiss. Additionally, the ARB held that such plaintiffs are afforded “sufficient opportunity to amend or supplement” complaints which do not initially meet the “fair notice” threshold for sufficiency of complaints.

Factual and Procedural History

The plaintiff, Douglas Evans, worked as an Environmental Protection Specialist for the U.S. Environmental Protection Agency (EPA) and, in 2004, complained to the EPA Administrator alleging that the Agency had forced employees to engage in emergency response duties without the necessary experience and had assigned hazardous job duties to employees who did not have such duties in their prior job descriptions.  The EPA then suspended Evans in 2006 alleging that he had made threats of violence at work.  Following his suspension, Evans filed a complaint  with OSHA claiming that the EPA had retaliated against him in violation of several federal laws. Evens subsequently filed numerous amended complaints, each of which alleged further retaliation actions by the EPA in response to his initial complaint.

In 2008, An Administrative Law Judge (ALJ) dismissed Evans’ complaint, holding that Evans’ had not alleged facts sufficient to demonstrate that he engaged in any protected conduct.  The ARB affirmed this ruling in 2010 holding that Evans’ complaint failed to state a claim sufficient under the standards of Iqbal and Twombly standards.  Following the ARB’s dismissal, Evans sought a review from the Ninth Circuit Court of Appeals but the Ninth Circuit remanded the case for the ARB to decide the applicability of the Iqbal and Twombly pleading standard to OSHA whistleblower complaints.

ARB Adopts “Fair Notice” Standard, Notes “Materially [Different]” Nature of Administrative Whistleblower Complaints

In articulating the applicable standard for OSHA whistleblower complaints, the ARB noted that the “plausibility” standard required of complaints in federal court “materially differs” from administrative whistleblower complaints.  The ARB noted that such whistleblower complaints “are informal documents that initiate an investigation”, are “often filed…without the assistance of counsel”, and that OSHA regulations “expressly allow for investigatory complaints to evolve into complaints containing [a] prima facie claim.”

In short, the ARB concluded that because the Iqbal/Twombly standard previously applied by the ARB was “inappropriate given the nature of the administrative whistleblower process”, the ARB’s revised ruling concluded that such complaints that give “fair notice” of the protected activity and adverse employment action are sufficient to withstand a motion to dismiss for failure to state a claim.”

The ARB further articulated the de minimis detail required, holding that:

 “a sufficient statement of the claims need only provide (1) some facts about the protected activity, showing some “relatedness” to the laws and regulations of one of the statutes in our jurisdiction, (2) some facts about the adverse action, (3) a general assertion of causation and (4) a description of the relief that is sought.”

Greater Opportunity for Whistleblowers to Amend Administrative Complaints

On the issue of amending OSHA whistleblower complaints, the ARB emphasized the “need for an ALJ to liberally provide a whistleblower complainant an opportunity to amend” and that such an assessment “must be conducted in a manner consistent with informal administrative proceedings.”  Specifically, the ARB held that the “ALJ should not dismiss a complaint for failure to state a claim until he or she has allowed the complainant a sufficient opportunity to amend or supplement the claim(s) contained in the complaint.”  The ARB then remanded the case as the ALJ had not granted Evans such an opportunity to amend his complaint.

Impact on Whistleblowers

The ARB’s new standard will potentially make it easier for whistleblowers to bring retaliation claims under one of OSHA’s 21 statutes.  Additionally, employers may now find it more difficult to get the complaints of whistleblowers dismissed for being insufficiently plead.  The Evans decision is a procedural expansion in tandem with the ARB’s recent expansion of substantive protections for whistleblowers.

The Employment Law Group® law firm’s whistleblower attorneys have helped many clients file suit against employers that fraudulently bill the U.S. government, and have established favorable precedents under the retaliation provision of the False Claims Act.

SEC Issues $50,000 as Part of First Whistleblower Program Award

August 30, 2012

The Securities and Exchange Commission (SEC) announced last week that the first payout from the new SEC Whistleblower Program will be awarded to a whistleblower that helped the government stop a multi-million dollar fraud. The whistleblower will receive nearly $50,000, or thirty percent of the amount collected by the SEC.

While the SEC did not announce the name of the whistleblower or the company in question, the agency did announce that thanks to the documents and information provided by the whistleblower, the SEC was able to accelerate the investigation which led to a court ordering more than $1 million in sanctions. Thus far, approximately $150,000 has been collected, with nearly $50,000 set aside as a reward for the whistleblower.

SEC Chairman Mary L. Schapiro, who advocated the SEC Whistleblower Program, stated:

“The whistleblower program is already becoming a success… we’re seeing high-quality tips that are saving our investigators substantial time and resources.”

The Employment Law Group® law firm is a leader in the field of whistleblower protection law and has an extensive nationwide whistleblower practice representing employees who have exposed illegal activity by their employer.

R. Scott Oswald, Managing Principal of The Employment Law Group® Law Firm, Selected for Inclusion in The Best Lawyers in America 2013

August 24, 2012

R. Scott Oswald, managing principal of The Employment Law Group, P.C., was recently selected by his peers for inclusion in The Best Lawyers in America® 2013 for his work in the area of Labor & Employment Litigation.

Over the course of three decades Best Lawyers has been regarded by both the public and by the legal profession as one of the most credible guides to legal excellence in the United Stated.  The selection process is based on a rigorous peer-review survived consisting of over 4 million confidential evaluations by lawyers throughout the country.

In addition to being described by The American Lawyer as “the most respected referral list of attorneys in practice,” inclusion by Best Lawyers is widely considered to be a significant honor because no fee or purchase is required and because of its transparent survey process in selecting recipients.

Mr. Oswald’s selection will be included in The Best Lawyers in America’s 19^th edition.

The Employment Law Group® law firm is a leader in the field of whistleblower law and has an extensive nationwide whistleblower practice representing employees who have exposed illegal activity by their employer.

Law360 Interviews R. Scott Oswald on Increase in Whistleblower Retaliation Claims Brought by Defense Contractors

August 23, 2012

R. Scott Oswald, managing principal of The Employment Law Group® law firm, was recently interviewed by Law360 regarding a reported increase in whistleblower retaliation claims brought by defense contractors.  The Law360 article credited the increased amount of reprisal complaints by defense contractors who to recent changes to federal law and regulations.

In addition to “changes to the law [that] may have added more protections,” Mr. Oswald also cited “the amount of defense-related work that’s been outsourced to private companies in connection with the war efforts in Iraq and Afghanistan [as another] also a key factor in the rise in defense contractor retaliation claims.”

Whistleblower attorney Oswald noted that “companies may use standards or practices that are perfectly acceptable in the private realm but don’t work when dealing with defense contracts.”  This often “puts employees in a bind [as] managers or executives may ask for classified information about projects they aren’t authorized to have access to, and take umbrage when a subordinate won’t comply with that request.”

“We have individuals who are paid by U.S. government contractors while at the same time take an oath to the U.S. government to maintain national security secrets, so there is this inherent conflict,” Oswald said.

Oswald pointed out the case of William Holowecki, a former Avaya Government Solutions security professional who confronted such a conflict when his manager requested classified information.

The Employment Law Group® represents Mr. Holowecki and recently filed a lawsuit against Avaya which alleges that the company ran afoul of the anti-retaliation provision of the False Claims Act by terminating him for voicing concern that security guards having access to restricted areas.  Holowecki also claims he was fired because he complained to his employer that failing to disclose the security guards’ access to restricted areas amounted to fraud against the U.S. government.  Finally, Holowecki alleged that Avaya terminated him on account of his refusal to disseminate classified material to a company manager.

According to attorney R. Scott Oswald, “employers would also be well-served to have a clearly articulated complaint procedure that requires managers to make higher-ups aware of potential violations and ensures that the company gets notified officially and directly about complaints.”

Without such a procedure, “a corporation may not be aware that there was has been a complaint because it is not brought to the attention of compliance or risk management professionals.”

Oswald also highlighted the importance complaint procedures for workers, saying that it is “important for employees to know that the company is going to effectively investigate, evaluate and remediate their complaints” as ensuring worker confidence in an employer’s handling of complaints makes workers less likely to seek out outside counsel or go to an outside government agency, and more likely to keep their complaints within the company.

The article, entitled “Defense Contractors Face Rising Wave Of Retaliation Claims”, appeared in the August 10, 2012 edition of Law360.

The Employment Law Group® law firm’s whistleblower attorneys  have helped many clients file suit against employers that fraudulently bill the U.S. government, and have established favorable precedents under the retaliation provision of the False Claims Act.

 

Related articles

• Former Avaya Government Solutions Employee Claims He Suffered Retaliation and Termination for Blowing the Whistle on Unauthorized Security Practices (employmentlawgroupblog.com)
• R. Scott Oswald and David Scher, Principals of The Employment Law Group , Publish Article on Expanded False Claims Act Liability for Improper Healthcare Kickbacks under The Patient Protection and Affordable Care Act (PPACA) (employmentlawgroupblog.com)

Morgan Stanley Complex Risk Officer Alleges Whistleblower Retaliation

August 16, 2012

Earlier this month Clifford Jagodzinski, a former risk manager for Morgan Stanley Smith Barney LLC, filed a complaint in the United States District Court for the Southern District of New York alleging that the financial services firm terminated him in  April 2012 in retaliation for reporting questionable trading practices.

According to Jadozinski’s complaint, he informed his superiors that not only was Morgan Stanley “[bilking] investors” to drive up commissions. He also reported that other employees were involved in improper trading practices, some financial advisors were failing to register their home offices as alternate worksites, and one company advisor was abusing drugs. Although Jadozinski’s supervisor initially praised him for filing these reports, he was told soon after to hold off on his investigations. Morgan Stanley terminated Jadozinski after he informed that the firm should report its improper trading practices to the Financial Industry Regulatory Authority (FINRA).

Jagodzinski is seeking reinstatement to his former position and over $1 million in damages.

The Employment Law Group® law firm has an extensive nationwide whistleblower practice  representing employees who have been victims of retaliation.

Union Pacific Railroad Agrees to Pay Whistleblower $38,000 to Settle Allegations of Retaliating Against Him for Reporting a Work-Related Injury

August 03, 2012

Omaha, Nebraska-based Union Pacific Railroad Co. has agreed to pay an employee $38,561.92 in punitive damages for violating the whistleblower provision for the Federal Railroad Safety Act when it retaliated against an employee who reported a work-related injury.

An investigation conducted by the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) found that after two coupled cars came apart on July 8, 2011, the employee, a switchman in Union Pacific’s Topeka, Kansas yard, suffered the loss of two teeth and several facial lacerations when he was struck by cars being moved. After the employee reported the injury, the railroad company issued him with a ten day unpaid suspension, even though evidence showed that the employee was not at fault.  Employees that had not reported injuries either were not disciplined or received lesser penalties.

In addition to paying the $38,561.92 settlement, Union Pacific must remove disciplinary references from the employee’s personnel record and post a notice throughout the Kansas City Service Unit informing employees of their whistleblower rights.

The Employment Law Group® law firm has an extensive nationwide whistleblower practice  representing employees who have been victims of retaliation.

Former Avaya Government Solutions Employee Claims He Suffered Retaliation and Termination for Blowing the Whistle on Unauthorized Security Practices

July 24, 2012

According to Law360, a former employee of Avaya Government Solutions, William Holowecki, recently filed a whistleblower lawsuit against Avaya in the U.S. District Court for the Eastern District of Virginia.  Mr. Holowecki alleges that Avaya terminated his employment in retaliation for revealing what he claims were fraudulent reports that Avaya sent to federal agencies, in violation of the False Claims Act.

Mr. Holowecki alleges that Avaya eliminated his position as an information systems security officer in retaliation for his discovery and reporting of false reports that Avaya allegedly made to a government contractor relating to unauthorized access to restricted facilities at Avaya’s Virginia location.  Holowecki alleges that Avaya’s failure to report the security violations was in violation of its government contracts and, as a consequence, resulted in the government paying claims under the false information – a violation of the False Claims Act.  Mr. Holowecki’s suit also claims that Avaya fired him because of his refusal to allow unauthorized employees access to classified information.

In addition to claiming that Avaya terminated his employment because of his protected activities as a whistleblower under the FCA, Holowecki also claims that the company violated the Age Discrimination in Employment Act (ADEA) by replacing him with a younger and allegedly less-qualified employee.

Mr. Holoweck is seeking reinstatement to his prior position, as well as back pay and damages.  Mr. Holowecki is represented by attorneys at The Employment Law Group® law firm.

The Employment Law Group® law firm focuses in the areas of employment law and whistleblower protection law, has helped many clients file suit against employers that fraudulently billed the U.S. government, and has established favorable precedents under the retaliation provision of the False Claims Act.