Whistleblowing in the Workplace

Transcription

1 Whistleblowing in the Workplace May 4, Market Street, 42 nd Floor Philadelphia, PA 19103

2 Ballard Briefing Whistleblowing in the Workplace May 4, 2011 Speakers: David S. Fryman Partner, Labor and Employment Group John C. Grugan Partner, Corporate and Government Investigations and White Collar Defense Group Materials: Program PowerPoint 1 Presenter Profiles 2 Labor and Employment Group 3 Corporate and Government Investigations and White Collar Defense Group 4 Firm Information 5

3 Whistleblowing In The Workplace May 4, 2011 David S. Fryman John C. Grugan Ballard Spahr LLP Four Focuses How Federal Law Encourages Whistleblowing How State Law Follows, Differs From Federal Law Anti-Retaliation Under Federal, State law How Employers Should Respond To Whistleblowers 2

4 Existing Federal Statutes Encouraging Whistleblowing Sarbanes-Oxley Act Securities Exchange Act False Claims Act 3 New Amendments to the False Claims Act Fraud Enforcement and Recovery Act of 2009 (FERA) Scope of protected activity expanded Addresses indirect retaliation Protects employees, contractors, agents 3 year statute of limitations 4

5 State False Claims Acts New Jersey Delaware Pennsylvania 5 Dodd-Frank Whistleblower Provisions Whistleblower who: Provides original, independently derived information Leading to recovery of monetary sanctions in excess of $1 million Entitled to between 10% and 30% of amount recovered 6

6 Ineligible to Recover under Dodd-Frank Person who learned information through performance of SEC-mandated audit Criminally culpable (if convicted) Employees of : regulatory agencies DOJ self-regulatory organizations Public Company Accounting Oversight Board any law enforcement organization 7 Universe of Claims Expanded Under Dodd-Frank Insider trading Ponzi schemes Foreign Corrupt Practices Act 8

7 Dodd-Frank Protects Against Retaliation Whistleblower who prevails in retaliation or discrimination action entitled to: Reinstatement at same status Compensation in amount of back pay with interest Reimbursement for litigation costs 9 What to Expect We expect our Whistleblower Program to generate significant tips from individuals with direct knowledge of serious securities law violations. 10

8 What to Expect FCPA Between 2004 and 2009, enforcement of FCPA and related anticorruption laws by DOJ and SEC increased 800% FCPA trails only terrorism as a DOJ enforcement priority False Claims Act Successful whistleblowers average high awards 11 Whistleblowing Statutes Pennsylvania Pennsylvania Whistleblower Law (43 P.S et seq.) New Jersey Conscientious Employee Protection Act (CEPA) (N.J.S.A. 34:19-1 et seq.) 12

9 Pennsylvania Whistleblower Law Does not provide protection to employees of private employers... or does it? 13 Pennsylvania Whistleblower Law Any other body... which is funded in any amount by or through the Commonwealth or political subdivision authority. 14

10 Recent Case: Pennsylvania Davis v. Point Park University,WDPA, November 30, Pennsylvania Whistleblower Law Protected Employee Conduct Public employer may not discharge, threaten or otherwise discriminate or retaliate against an employee who: Makes a good faith report to the employer or an appropriate authority about an instance of wrongdoing or waste, or Is requested by an appropriate authority to participate in an investigation, hearing or inquiry. 16

11 Pennsylvania Whistleblower Law Employee must sue within 180 days of violation Possible damages include Reinstatement Back pay Reinstatement of benefits and seniority rights Actual damages Litigation costs Reasonable attorney s fees Civil liability for individual violators of $ Pennsylvania Whistleblower Law Statutory Defense for Employers Employer may argue that it would have taken the same employment action for separate and legitimate reasons, which are not merely pretextual. 18

12 Pennsylvania: Backdoor Whistleblower Claims Wrongful Discharge: Violation of Public Policy Narrow exception to the at-will employment doctrine. 19 New Jersey CEPA CEPA applies to: All employers, public and private 20

13 New Jersey CEPA Employees Covered Any individual who performs services for and under the control and direction of an employer for wages 21 New Jersey CEPA Protected Employee Conduct Employer may not discharge, suspend or demote an employee who: Discloses or threatens to disclose to a supervisor or a public body Provides information to or testifies before any public body Objects to or refuses to participate in any activity, policy or practice 22

14 New Jersey CEPA Written Notice Requirement Employee must bring the objected-to activity, policy or practice to the attention of a supervisor by written notice and must afford the employer a reasonable opportunity to correct the activity, policy or practice, unless: The employee is reasonably certain that the activity, policy or practice is known to one or more supervisors or where the employee reasonably fears physical harm as a result of the disclosure 23 New Jersey CEPA Employee must sue within 1 year of violation Possible damages include: All common law tort remedies Injunction against continuing violations Reinstatement of position, benefits and seniority Compensation for lost wages and benefits Reasonable costs and attorney s fees Punitive damages Civil liability of $10,000 for first violation and $20,000 for each subsequent violation 24

15 Recent Case: New Jersey Hester v. Parker, Superior Court of New Jersey, Appellate Division, April 14, 2011 Is the filing of a civil discrimination complaint considered whistleblowing activity under CEPA? 25 What to Do Ensure that you are prepared to handle a possible increase in reports of misconduct. 26

16 What to Do Create, distribute, and ensure receipt of FCPA guidelines. 27 What to Do Audit and ensure adherence to internal controls. 28

17 What to Do Train new employees regarding the FCPA and whistleblowing laws at the time of hiring and yearly training of all employees. 29 What to Do Maintain proper documentation. 30

18 What to Do Take steps to prevent retaliation. 31 Questions? 32

19 Presenter Profiles Practice Areas Litigation Labor and Employment Health Care Higher Education David S. Fryman Partner Direct: Fax: st Floor 1735 Market Street Philadelphia, PA Education George Washington University Law School J.D Lafayette College A.B Admitted To Practice Pennsylvania 1989 New Jersey 1989 David S. Fryman is a partner in the Litigation Department and a member of the Labor and Employment, Health Care, and Higher Education Groups. Mr. Fryman represents employers in all types of labor and employment matters, including labor arbitrations, employment discrimination, and breach of contract cases; National Labor Relations Act representation campaigns and unfair labor practice proceedings; ERISA and employee benefits litigation; restrictive covenant and trade secret cases; and advice and training on a broad range of day-to-day human resource issues. Mr. Fryman has represented three prominent research universities in proceedings involving graduate student unionization before the National Labor Relations Board and the Pennsylvania Labor Relations Board. In addition, Mr. Fryman has represented multinational corporations in race, sex, and age discrimination class actions filed by current and former employees, and ERISA class actions filed by plan participants. Mr. Fryman lectures on many employment and labor law topics, including sexual harassment, ADA/FMLA compliance, and union avoidance. Mr. Fryman is recognized in the 2007 through 2010 editions of Chambers USA: America s Leading Lawyers for Business, a directory built primarily on client interviews, as a leader in the field of labor and employment law. Mr. Fryman has received an AV Peer Review Rating from Martindale-Hubbell, an honor that indicates an attorney has reached the height of professional excellence. He has also been honored by The Legal Intelligencer and Pennsylvania Law Weekly as a Lawyer on the Fast Track, an award given to select young Pennsylvania lawyers whose achievements have distinguished them among their peers. Mr. Fryman has made substantial contributions through community service, as a committee member of the United Way of Southeastern Pennsylvania, and as a board member of the Arden Theatre Company. He is Board Chair of People s Emergency Center (PEC), which provides emergency shelter, transitional housing, and social services to homeless women, teenagers, and children. In 1997, Mr. Fryman was honored by PEC for his work in support of its mission. Ballard Spahr LLP

20 Presenter Profiles Mr. Fryman is admitted to the U.S. District Courts for the Eastern, Middle, and Western Districts of Pennsylvania and District of New Jersey; the U.S. Court of Appeals for the Third and Fifth Circuits; and the U.S. Supreme Court. Mr. Fryman is a graduate of Lafayette College (A.B. 1985) and George Washington University Law School (J.D., with honors, 1989). Ballard Spahr LLP

21 Presenter Profiles Practice Areas Litigation Corporate and Government Investigations and White Collar Defense Insurance Dodd-Frank Education Temple University James E. Beasley School of Law J.D University of Pennsylvania B.A Admitted To Practice Pennsylvania 1999 New Jersey 1999 John C. Grugan Partner Direct: Fax: st Floor 1735 Market Street Philadelphia, PA John C. Grugan is a partner in the Litigation Department and a member of the Corporate and Government Investigations and White Collar Defense Group, the Insurance Group, and the Dodd-Frank Task Force. Mr. Grugan focuses his practice on representing parties in enforcement proceedings brought by the U.S. Securities and Exchange Commission, directing corporate internal investigations, and on complex civil litigation. In the area of SEC enforcement, Mr. Grugan regularly represents companies and individuals in matters in which insider trading, earnings management, accounting fraud, or other misconduct is alleged. He has significant experience conducting internal investigations on behalf of companies, their boards of directors, or their audit committees. Mr. Grugan is a frequent lecturer on the SEC enforcement process, conducting effective internal investigations, the attorney-client privilege in internal investigations, and directors and officers insurance coverage in government enforcement actions. Mr. Grugan s practice also focuses on complex civil litigation. He has represented large and mid-sized companies in a wide variety of matters, including securities litigation, False Claims Act litigation, litigation under the Racketeer Influenced and Corrupt Organizations Act, and contract disputes. In addition, he maintains an active insurance practice and regularly represents insurers against claims of bad-faith conduct. Before joining Ballard Spahr, Mr. Grugan was a law clerk to the Honorable James McGirr Kelly of the U.S. District Court for the Eastern District of Pennsylvania. He also served as a trial attorney in the U.S. Department of Justice Honor Program, Civil Division. Mr. Grugan is a member of the Pennsylvania and New Jersey Bars. He is admitted to practice before the U.S. Courts of Appeals for the Third and 10th Circuits, and the U.S. District Courts for the Eastern District of Pennsylvania and the District of New Jersey. Mr. Grugan is also a member of the American, Pennsylvania, and Philadelphia Bar Associations. From 2004 to 2006, he served as a member of the Ballard Spahr LLP

22 Presenter Profiles Criminal Justice Act Panel for the U.S. District Court for the Eastern District of Pennsylvania, through which he received appointments from the federal bench to represent indigent criminal defendants. Mr. Grugan serves as Vice President of Bala Cynwyd s civic association, the Neighborhood Club of Bala Cynwyd. He is a member of the Board of Directors of the Temple Law Alumni Association and a member of the Board of Governors of St. Joseph s Preparatory School. He was selected as a 2005 Leadership Honoree for the National Multiple Sclerosis Society and was a member of Leadership Philadelphia s 2009 class. He is a member of the FBI s 2010 Citizens Academy/ Community Partnership Program. In 2007, The Legal Intelligencer named Mr. Grugan a Lawyer on the Fast Track. Benchmark Litigation named Mr. Grugan a Future Star in the area of litigation for 2009 through At Ballard Spahr, he is Partner-in-charge of the Philadelphia office Hiring Committee. Mr. Grugan is a graduate of the University of Pennsylvania (B.A. 1992) and Temple University James E. Beasley School of Law (J.D., cum laude, 1998), where he was Editor-in-chief of the Temple Law Review and a member of the Moot Court Honor Board. Ballard Spahr LLP

23 Labor and Employment Group Description Labor and Employment Group Our Labor and Employment Group has experience in counseling and litigating an array of labor, employment, and ERISA matters in the public, private, profit, and nonprofit sectors and in representing a large variety of industries. The types of matters we handle regularly include: Representation of employers in collective bargaining negotiations; interest arbitration; private and AAA labor arbitration; NLRA and state labor law compliance issues; the labor implications of mergers, acquisitions, and asset purchases; strike prevention and control; union campaigns; union-free training of management and supervisors; and unfair labor practice proceedings before the NLRB and state labor boards Employment discrimination advice and defense of claims on grounds of protected class membership, such as age, race, gender, sexual orientation, disability, religion, national origin, and sexual harassment; and Equal Pay Act claims Preparation and defense of affirmative action plans under Executive Order and other federal and state laws, including advice on implementation of monitoring processes; plan analyses and drafting; and advice, counseling, and litigation over OFCCP audits ERISA and other employee benefits advice and litigation, including administrative claims appeals; breach of fiduciary duty claims; litigation of benefit claims and interference with protected rights; ERISA preemption; and plan design counseling for litigation avoidance and defense Defense of class action and collective action cases, including claims of wage and hour violations brought against employers Defense of at-will employment, wrongful discharge, and employment tort claims Design and implementation of corporate-wide HR and labor strategies and initiatives Ballard Spahr LLP

24 Labor and Employment Group Description Preparation of, and advice and litigation concerning, employment agreements, executive compensation programs, restrictive covenants and trade secret agreements, and employment terminations Advice and litigation on behalf of public employers such as cities, states, school districts, authorities, and municipalities in traditional labor and employment matters, as well as under specialized labor laws regarding police, fire, and other personnel (e.g., Heart and Lung Act and civil service laws) Training of managers and employees on topics such as sexual harassment, EEO compliance, ADA, FMLA, chronic absenteeism, managing the difficult employee, health and safety compliance, hiring, interviewing, and wage and hour compliance Review and legal audit of personnel policies, manuals, and employment forms; formulation of personnel policies, such as FMLA and applicable state leave laws; sexual harassment; drug and alcohol abuse and testing; privacy rights; and ADA compliance Advice concerning OSHA and state health and safety laws, including compliance and self-audits; governmental investigations and citations; negotiations with OSHA; and litigation before the OSHRC and the courts Wage and hour investigations and FLSA advice Reduction in force design, counseling, and litigation, including WARN compliance, early- exit programs, severance pay, and effective use of releases Ballard Spahr LLP

25 Corporate and Government Investigations and White Collar Defense Group Description Corporate and Government Investigations and White Collar Defense Group As government scrutiny increases, corporate conduct becomes more visible. Our attorneys conduct internal investigations and represent clients facing actual or threatened government enforcement. We also represent clients in False Claims Act and other civil fraud litigation and administrative proceedings. In these sensitive and complex matters, the fully informed judgment of experienced attorneys is critical. Our lawyers have the background and experience to respond effectively to government investigations, running the gamut from regulatory actions, Inspectors General investigations, and state and federal grand juries to search warrants and warrantless searches. A number of our attorneys formerly worked at government agencies and understand first hand how to deal with them. When necessary, our attorneys know how to try cases. Among the seasoned veterans in our group are members of the prestigious American College of Trial Lawyers, former federal and state prosecutors, and former public defenders. Our attorneys include: the former Assistant Director of the Division of Corporation Finance at the SEC a former Enforcement Attorney for the U.S. Environmental Protection Agency the former Chief of Staff for the Federal Energy Regulatory Commission the former Chief Assistant District Attorney for the City of Philadelphia former Assistant U.S. Attorneys from two U.S. Attorneys offices a former states attorney from Miami-Dade County the former Criminal Healthcare Fraud Coordinator for the District of Delaware three former field attorneys for the National Labor Relations Board the former Chairman of the Nevada Gaming Commission Our clients include financial institutions, accounting firms, pharmaceutical and medical device manufacturers, hospitals, universities, defense contractors, energy companies, chemical manufacturers, utilities, and numerous other businesses, including Fortune 500 companies. We also represent individuals, including public officials, corporate directors, officers, managers, and other employees; and professionals, such as lawyers, doctors, and accountants. Government Investigations and White Collar Defense We represent clients at all stages of white collar criminal proceedings, from responding to grand jury subpoenas to trial, appeal, and post-conviction litigation. When retained during the investigative stage, our attorneys have a long track record of success in resolving the matter without the filing of any criminal charges. Ballard Spahr LLP

26 Corporate and Government Investigations and White Collar Defense Group Description We handle virtually every type of federal criminal case, including criminal antitrust, government procurement fraud, environmental crimes, financial fraud, and health care fraud. We represent clients in matters involving the Foreign Corrupt Practices Act, securities fraud, public corruption, export violations, tax, and immigration, as well as in suspension, debarment, and exclusion proceedings. Our skill and reputation for success in trying criminal cases serve as a powerful basis for negotiating the best possible resolutions for our clients. Although we regularly handle high-profile cases, most of our matters never go to litigation or become publicly known. Instead, our lawyers resolve matters without charges filed, lawsuits brought, or reputations harmed. We also help clients anticipate and respond to unexpected crises, such as the execution of criminal or administrative search warrants or government investigations arising from catastrophic industrial accidents. Our lawyers pride themselves on working efficiently, getting up to speed quickly, being acutely sensitive to the client's needs in very difficult situations, and applying creativity in reaching the optimal solution. Government Regulatory Enforcement We frequently represent clients in enforcement and regulatory actions initiated by the SEC, stock exchanges, and the Financial Industry Regulatory Authority. Several of our attorneys have worked as staff members at the SEC, giving them invaluable insight as they guide clients through the regulatory requirements of federal and state securities laws. Corporate and Foreign Internal Investigations Conducting internal investigations is a major part of our practice. Our attorneys work quickly and effectively to deliver critical information to boards of directors, audit committees, legal counsel, senior management, and other corporate sponsors. We have experience conducting internal investigations in such highly regulated industries as health care and defense contracting, as well as for potential securities and environmental violations, and possible violations of internal codes of conduct and ethics. We advise strategically on employment issues, remedial measures, and government disclosures. We know how burdensome and disruptive investigations can be to the workplace. Our attorneys work closely with clients to address issues revealed by an internal investigation to reduce corporate risk. Ballard Spahr LLP

27 Corporate and Government Investigations and White Collar Defense Group Description Receiverships Attorneys in our group have served as court-appointed receivers by state and federal courts throughout the country, including the U.S. District Court for the Southern District of New York, Central and Southern Districts of California, and the District of Nevada. These receiverships have involved actions brought by the SEC, FTC, and state regulatory agencies to terminate ponzi schemes, FOREX scams, and deceptive trade practices. Compliance Programs and Preventative Counseling We have significant experience establishing, refining, and strengthening clients' compliance and ethics programs, employee training, personnel practices, and corporate structure and governance. A well-designed and -managed compliance program can help prevent situations that trigger a government investigation and mitigate consequences if one occurs. We provide practical advice tailored to the key issues facing boards and management of publically held companies and companies preparing to go public, as well as their executives, directors, audit committees, and other committees, on the areas listed below. Corporate Governance and Securities We advise clients on all aspects of corporate governance compliance, including SEC, Sarbanes-Oxley, and stock exchange regulatory requirements. We assist clients with issues relating to the formation and functions of board committees and assessments as part of ongoing compliance efforts. We also advise and assist clients during the due diligence process with respect to M&A transactions and securities offerings, review of internal controls, and best practices for corporate boards. Antitrust We draft antitrust compliance policies and conduct training for employees and officers; advise clients on the antitrust implications of planned business combinations, acquisitions, and joint ventures; and work with clients to revise pricing policies. Energy We advise clients on all aspects of federal and state regulation of electric and gas facilities and services, as well as alternative energy and nuclear facilities. One of our attorneys previously served as vice president and counsel to a renewable energy company. Ballard Spahr LLP

28 Corporate and Government Investigations and White Collar Defense Group Description Environmental We assist clients with regulatory compliance matters before federal and state agencies, offer compliance advice and auditing, and develop environmental management and corporate sustainability policies. Health Care We help health care providers and pharmaceutical companies develop compliance programs and advise on issues related to federal and state health care laws and regulations, including Medicare false claims and other billing issues, Stark and anti-kickback matters, HIPAA, Medicare Part D, and other federal and state health care reform initiatives. We also counsel on preventive measures, conduct independent internal reviews, and advise on government inquiries and subpoenas. International We advise on compliance with the Foreign Corrupt Practices Act (FCPA) and the Foreign Investment and National Security Act of 2007 (FINSA) and represent companies with respect to matters under the Patriot Act, Export Control Act, and anti-money-laundering regulations. Labor and Employment Our attorneys advise clients on compliance with all labor and employment laws, including those in connection with reductions in force, corporate transactions, employee classification, employee manuals, and policy reviews. Our internal investigation experience encompasses employee complaints of harassment, discrimination, retaliation, improper pay practices, and whistleblower complaints. A well-designed and implemented compliance program can prevent and detect issues that trigger a governmental investigation, as well as mitigate their consequences. When allegations do arise, our attorneys often resolve government inquiries and investigations without prosecution, penalty, or other public action. Civil and Administrative Litigation Our practice handles civil and administrative litigation that can arise as a consequence of government investigations. We defend corporations against securities fraud class actions, handle treble damage antitrust suits, and represent clients in suspension/debarment/exclusion proceedings. We also deal with Ballard Spahr LLP

29 Corporate and Government Investigations and White Collar Defense Group Description professional boards, including legal, medical, and accounting licensing boards, and ethics commissions. Civil False Claims/Qui Tam Defense We have extensive experience in litigating False Claims Act cases brought either directly by the government or on behalf of the government by qui tam whistleblowers. The group has defended numerous matters for health care service providers, managed-care companies, pharmaceutical manufacturers, defense contractors, universities, and research institutions. International Issues: Foreign Corrupt Practices Act, Arms Export Control Act, and International Traffic in Arms Regulations (ITAR) Our attorneys assist clients in navigating the requirements of the Foreign Corrupt Practices Act. This includes counseling on the accounting provisions of the act as well as its antibribery provisions. We handle matters involving international export compliance, such as the Arms Export Control Act and the International Traffic in Arms Regulations (ITAR). We draft directed disclosure responses and voluntary disclosures on behalf of clients for the State Department, advise on ITAR and Export Control matters as they relate to foreign persons, conduct compliance programs in Export Control/ITAR matters, and represent clients in investigations involving the Department of Commerce, Customs Border Protection, and Federal Bureau of Investigation. Ballard Spahr LLP

30 Firm Overview General Firm Information Atlanta Tel: Fax: Peachtree Street Suite 1000 Atlanta, GA Baltimore Tel: Fax: East Lombard Street 18th Floor Baltimore, MD Bethesda Tel: Fax: Montgomery Lane 7th Floor Bethesda, MD Denver Tel: Fax: th Street, Suite 2300 Denver, CO Las Vegas Tel: Fax: North City Parkway Suite 1750 Las Vegas, NV Los Angeles Tel: Fax: Century Park East Suite 800 Los Angeles, CA New Jersey Tel: Fax: Lake Drive East, Suite 200 Cherry Hill, NJ Ballard Spahr LLP is a national firm of more than 475 lawyers in 13 offices across the country. Our attorneys provide counseling and advocacy in more than 40 areas within intellectual property, litigation, business and finance, real estate, and public finance. We represent a diverse cross-section of clients that range from large public companies and privately held corporations to government agencies and nonprofit organizations. Our practices span the life sciences and technology, energy, health care, and other sectors that are driving innovation and growth in today s marketplace. The firm s mission is straightforward: to provide nothing less than excellence in every legal representation. Our client focus is absolute. We help clients achieve success as they define it. We respect and anticipate their needs, take action to keep them informed, and devise forward-thinking solutions to get the most favorable results. This is Ballard Spahr s pledge. Practices Antitrust Bankruptcy, Reorganization and Capital Recovery Business and Finance Investment Management Mergers and Acquisitions/Private Equity Securities Transactional Finance Consumer Financial Services Corporate and Government Investigations and White Collar Defense Employee Benefits and Executive Compensation Energy and Project Finance Environmental Family Wealth Management Franchise and Distribution Government Relations, Regulatory Affairs and Contracting Health Care Intellectual Property Patents Trademarks and Copyrights Trade Secrets Entertainment and Media Intellectual Property Litigation International Labor and Employment Ballard Spahr LLP

31 Firm Overview Philadelphia Tel: Fax: Market Street, 51st Floor Philadelphia, PA Phoenix Tel: Fax: East Washington Street Suite 2300 Phoenix, AZ Salt Lake City Tel: Fax: One Utah Center, Suite South Main Street Salt Lake City, UT San Diego Tel: Fax: West A Street, Suite 1150 San Diego, CA Washington, DC Tel: Fax: th Street, N.W. Suite 1000 South Washington, DC Wilmington Tel: Fax: North Market Street 11th Floor Wilmington, DE Litigation Accounting and Professional Liability Appellate Complex Commercial Litigation Construction Dispute Resolution Consumer Class Action Litigation Consumer Financial Services Intellectual Property Litigation Product Liability and Mass Tort Securities Litigation P3/Infrastructure Public Finance Real Estate Construction Eminent Domain Housing Planned Communities and Condominiums Real Estate Development Real Estate Finance Real Estate Leasing Real Estate Tax Resort and Hotel Zoning and Land Use Tax Nonprofit Organizations Tax Credits Water Rights Industries Communications Higher Education Insurance Life Sciences/Technology Initiatives Climate Change and Sustainability Distressed Real Estate Financial Institutions Reform Health Care Reform Ballard Spahr LLP