TheCorporateCounsel.net

I blogged earlier this week about a record-setting whistleblower award. A case that’s on the SCOTUS docket may affect the ability of future whistleblowers to establish claims. Here’s Kevin LaCroix at D&O Diary:

The U.S. Supreme Court has agreed to take up a case that will address the question of whether or not a claimant alleging that his employer fired him in retaliation for whistleblowing must prove that the employer acted with retaliatory intent. The court’s consideration of the case has important implications for claimants under the Sarbanes-Oxley Act’s anti-retaliation provisions, because claimants could face significantly greater difficulty in establishing their claims if they must prove that the employer acted with subjective intent to retaliate. The case could also have important implications for retaliation claims under other federal whistleblower protection laws. The Court’s May 1, 2023, order agreeing to take up the case can be found here.

Kevin gives background on the case & the cert petition, and discusses the potential impact:

The Second Circuit’s requirement of a showing of retaliatory intent “significantly raised the threshold for Sarbanes-Oxley whistleblower plaintiffs,” as the Seyfarth Shaw law firm put it in a memo published just after the Second Circuit issued its opinion. As the memo also noted, “a potentially significant number of cases will not meet the requirement” for the claimant to show retaliatory intent.

Moreover, this case not only has important implications for SOX whistleblowers; a number of other federal statutory provisions have anti-retaliation provisions that operate similarly to the provisions in SOX. As Senators Grassley and Widen put it in their amicus brief, at least 17 other federal statutes have “virtually identical whistleblower protection” provision, and so the Second Circuit’s holding, if not addressed, could significantly affect the level of protection available under a variety of whistleblower statutes.

The Supreme Court will hear argument on the case in the fall and it will likely issue its ruling in the case in early 2024. The case will be interesting to watch as it could significantly affect the difficulty for whistleblower plaintiffs to establish claims that they were retaliated against for the whistleblower activities.

When it comes to the big award that the SEC announced last week, the Financial Times Alphaville has a “low-confidence bet” that it was tied to the WhatsApp probe, which also happened to be the subject of an SEC announcement yesterday, and Bloomberg reported that the SEC is continuing to investigate “off-channel communications” at other brokers.

– Liz Dunshee