Renee Phillips, a senior associate in the New York office, is a member of the employment law group. Ms. Phillips’ practice includes a full range of employment litigation and counseling, with particular emphasis on Sarbanes-Oxley/Dodd-Frank whistleblower issues.
Ms. Phillips has successfully defended employers in federal and state court litigations as well as administrative proceedings and arbitrations involving claims of discrimination, harassment, wrongful termination, Sarbanes-Oxley whistleblowing, trade secret misappropriation and other employment-related claims. She regularly counsels employers on a variety of employment-related issues and assists clients in creating and implementing human resources policies, whistleblower policies, negotiating and drafting executive contracts, restrictive covenants and other employment agreements, and conducting internal investigations.
Ms. Phillips is the co-author of the first treatise to be published on the subject of Sarbanes-Oxley/Dodd-Frank whistleblower law. She regularly writes and speaks on whistleblower and other employment topics.
In Berman V. Neo@Ogilvy LLC, 1:14-cv-523 (Dec. 4, 2014), Judge Gregory Woods of the Southern District of New York dismissed a Dodd-Frank whistleblower retaliation claim on the ground that internal reporting is not protected under the statute. In so holding, the court rejected the reasoning of a majority of district courts to address the issue to date (including several Southern District of New York decisions), as well as the SEC’s interpretation of the statute, and instead adopted the reasoning of the Fifth Circuit in Asadi v. GE Energy (USA), L.L.C. and a minority of district courts, which have held that “the language of the statute unambiguously requires that a person provide information to the [SEC] in order to qualify as a whistleblower under the Act.” You can find our prior blog posts on the split over this issue here (March 4, 2014), here (January 28, 2014), here (October 3, 2013), and here (July 18, 2013).
Thus, until the Second Circuit and other Circuit courts weighs in on this issue, the answer of whether internal reporting is protected under Dodd-Frank may hinge largely upon which district judge is assigned the case.
Recently, there’s been a wave of Fair Labor Standards Act (“FLSA”) rulings adverse to employers in the adult entertainment industry. Early this year, a Southern District of New York judge approved an $8 million settlement for a class of dancers at an adult establishment who alleged that they were misclassified as independent contractors. See In re: Penthouse Executive Club Compensation Litigation, Case No. 1:10-cv-01145, 2014 U.S. Dist. LEXIS 5864 (S.D.N.Y. Jan. 14, 2014). And just last month, the court in Hart, et al. v. Rick’s Cabaret Int’l, Inc., Case No. 1:09-cv-03043, 2014 U.S. Dist. LEXIS 160264 (S.D.N.Y. Nov. 14, 2014) which previously had held that dancers at the New York club were employees under the FLSA, denied a motion to decertify the class and awarded almost $11 million in damages to the dancers for FLSA violations.
The SEC released its Fiscal Year 2014 Annual Report (the “Report”) to Congress on the Dodd-Frank Whistleblower Program on November 18, 2014. The Report analyzes the tips received over the last twelve months by the SEC’s Office of the Whistleblower (“OWB”), provides additional information about the whistleblower awards to date, and discusses the Office’s efforts to combat retaliation against whistleblowers.
On November 12, 2014, the Fifth Circuit affirmed a Department of Labor finding that Halliburton retaliated against a whistleblower by including his name in a document preservation notice. The court also held that emotional distress damages are available under SOX.
In Halliburton, Inc. v. Administrative Review Board, the whistleblower, Anthony Menendez, claimed that he was ostracized and isolated in violation of SOX after Halliburton’s General Counsel sent out a litigation hold notice stating that the SEC had opened an investigation into concerns raised by Menendez about alleged accounting improprieties. Menendez had previously raised these concerns internally to management.
On September 22, 2014, the SEC announced its largest whistleblower award to date under its Dodd-Frank whistleblower bounty program. It awarded $30-$35 million to an anonymous whistleblower who the Commission said provided original information about an ongoing fraud that would otherwise have been difficult to detect. That information led to the successful enforcement of an SEC action as well as unspecified related actions. The SEC stated that the whistleblower’s award would have been even higher if he/she had not unreasonably delayed in coming forward, though the agency did not apply the unreasonable delay consideration as severely as it otherwise would have because some of the delay occurred before the whistleblower program’s inception.
OSHA’s Whistleblower Protection Advisory Committee (“WPAC”) met on September 3-4, 2014. David Michaels, Assistant Secretary of Labor, OSHA, addressed the Committee and discussed recent results and initiatives of OSHA’s whistleblower program. Some highlights:
A California appellate court recently held that employers are always required to reimburse employees for mandatory use of their personal cell phones, even if they do not incur any additional expense for doing so. The case is Cochran v. Schwan’s Home Services Inc., Court of Appeal of the State of California, Second Appellate District, Divisions Two, Case No. B247160 (August 12, 2014). A copy of the opinion can be found here.
Last week, in Liu v. Siemens, AG, the Second Circuit held that the Dodd-Frank Act’s whistleblower retaliation provision (15 U.S.C. 78u-6(h)(1)) does not apply extraterritorially, in the first Second Circuit decision to address the international scope of Dodd-Frank’s whistleblower protections against retaliation. Liu, a citizen and resident of Taiwan, was a compliance officer for Siemens China Ltd., a wholly owned subsidiary of Siemens AG. Siemens AG is a German corporation with shares listed on the New York Stock Exchange. Liu claimed Siemens wrongfully terminated his employment in retaliation for reporting that Siemens China Ltd. employees were making improper payments to Chinese officials in North Korea and China in connection with the sale of medical equipment in those countries, in violation of the Foreign Corrupt Practices Act (“FCPA”).
Last week, the Second Circuit upheld a district court’s dismissal of a plaintiff’s Sarbanes-Oxley (“SOX”) whistleblower claim – but not before rejecting the “definitively and specifically” standard on which the district court’s decision relied. Nielsen v. AECOM Tech. Corp., No. 13-235-cv (2d Cir. Aug. 8, 2014).
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