March 17, 2015

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November 22, 2014

Fifth Circuit Court Affirms Halliburton Retaliated Against Whistleblower

The Fifth Circuit Court of Appeals affirmed a U.S. Department of Labor Administrative Review Board ruling that found the firm retaliated against whistleblower Anthony Menendez. Menendez questioned some of Halliburton’s accounting practices. Later, he submitted a confidential complaint with the Securities and Exchange Commission

Menendez filed a complaint under Section 806 of the Corporate and Criminal Fraud Accountability Act of 2002, Title VIII of the Sarbanes - Oxley Act (SOX) on May 8, 2006. The Department of Labor Administrative Law Judge dismissed Menendez’s complaint after finding Halliburton did not retaliate against Menendez after he engaged in SOX-protected activity.

The Department of Labor Administrative Review Board remanded the case on appeal after finding the Administrative Law Judge made a error concluding that Halliburton’s breach of Menendez’s confidentiality with regard to his complaint filed with Halliburton’s audit committee was not adverse action.

Bert Cornelison, Halliburton's general counsel, sent an e-mail that identifying Menendez as the whistleblower behind the SEC's investigation. Coworkers began to avoid Menendez and treat him differently. The SEC closed its investigation without taking action

The Department of Labor determined Halliburton’s conduct constituted illegal retaliation under the 2002 Sarbanes-Oxley Act, which prohibits retaliation against staffers that report certain kinds of suspected wrongdoing.

November 7, 2014

Rolling Stone Magazine Interview with JP Morgan Chase Whistleblower

by Sven Magnussen

Matt Taibbi, Rolling Stone Magazine, published a story on a JP Morgan Chase whistleblower, Alayne Fleischmann. Fleischmann is a lawyer who worked in JP Morgan Chase's mortgage securities department. Fleishmann alleges JP Morgan Chase executives were warned about securities fraud with respect to the packaging of mortgage backed securities. Worthless securities were packaged with fraudulently obtained mortgages and sold to an unsuspecting public with the full knowledge and approval of senior executives with JP Morgan Chase.

U.S. Attorney General Eric H. Holder, Jr. settled the civil matter for $9 billion with JP Morgan Chase and has refused to file criminal charges.

October 10, 2014

SCOTUS To Review a Whistleblower Case for the First Time

by Sven Magnussen
In 2003, Robert MacLean disclosed proposed Transportation Security Administration operational changes that he believed would have reduced aviation security. He was fired on in 2006 and then claimed whistleblower protections

The U.S. Court of Appeals for the Federal Circuit overturned a MSPB ruling that upheld the termination of Robert MacLean, a former TSA air marshal, and remanded the case back to the MSPB. The federal government has appealed the unanimous U.S.C.A. for the Federal Circuit decision to the U.S. Supreme Court. Neal Katyal, Hogan Lovells U.S. LLP, Washington D.C., briefed the Supreme Court defending Robert MacLean’s rights as a whistleblower.

October 6, 2014

U.S. Federal Government Employees Eligible as Relators in False Claims Act Lawsuits

by Sven Magnussen

Little v. Shell Exploration & Production Co. et al., Civ. A. No. 11-20320 (5th Cir. July 31, 2012) the Fifth Circuit held that two U.S. federal government employees were not deprived of standing because of their employment status as auditors under the False Claims Act.

In Little v. Shell Exploration & Production Co. et al., Civ. A. No. 11-20320 (5th Cir. July 31, 2012), the Fifth Circuit answered the question "[i]s a federal employee, even one whose job it is to investigate fraud, a 'person' under the False Claims Act such that he may maintain a False Claim Act violation lawsuit as a relator on behalf of the United States of America?"

Little was a Senior Auditor and Arnold, his co-relator, was a Supervisory Auditor. Both worked for the Minerals Management Service (MMS), a former agency within the Department of the Interior that administered leases for Defendant Shell. Part of MMS' function was to detect fraud in the royalty programs. While employed by MMS, the two relators reported to their supervisor that Shell had deprived the U.S. of royalties by taking unauthorized deductions for certain expenses. Having received no response to their report, the two relators filed a qui tam action in 2006 alleging that Shell had defrauded the Department of the Interior of at least $19 million between 2001 and 2006.

After the government declined to intervene in the case, Shell was served and promptly moved for summary judgment. The district court granted summary judgment in favor of Shell and the relators timely appealed. On appeal, Shell and the government unsuccessfully argued that 31 U.S.C. § 3730(b)(1)'s subsection heading - "Actions by private persons," restricts the pool of potential relators under the FCA to only non-governmental persons. The U.S. Government filed an amicus curiae brief siding with Shell on the issue.

Acknowledging that there is somewhat of a circuit split on the issue, the Fifth Circuit, however, disagreed and found that the statutory text and legislative history of the False Claims Act, as well as simple logic did not support such a limitation. Employees of the U.S. federal government may bring claims under the Federal False Claims Act in the Fifth Circuit.