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Can I Be Sued for Whistleblowing?
Most whistleblowers do not face lawsuits by their current or former employers; however, it can happen. While such lawsuits exist, many of them are unlikely to succeed.
Courts Use “Public Policy” To Reject Lawsuits Against Whistleblowers
In general, courts are cautious about permitting lawsuits against whistleblowers for their actions in supporting their reports of illegal activities. Courts have held that the False Claims Act and other whistleblower laws reflect a prevailing public policy in favor of citizens providing evidence of fraud to the Government. Consequently, courts often dismiss lawsuits against whistleblowers to prevent their chilling effects that would deter individuals from reporting fraud to the Government.
Common Grounds for Lawsuits
Lawsuits against whistleblowers typically revolve around the disclosure of confidential company information to the Government. Two common grounds for such lawsuits are breach of contract and breach of fiduciary duty. These are often based on provisions within employment or separation agreements that require employees not to disclose their company's confidential information.
When evaluating lawsuits in the context of False Claims Act cases, courts typically follow one of two approaches: (1) dismissing lawsuits based on public policy considerations, or (2) allowing only those lawsuits that are “independent” of the False Claims Act claim. Independent lawsuits seek remedies unrelated to False Claims Act liability, such as damages incurred because the whistleblower shared documents unrelated to the fraud. Since many employer lawsuits are not truly independent and aim to penalize employees for reporting information to the Government, they are often dismissed.
Enhanced Protections for SEC Whistleblowers
Whistleblowers reporting fraud to the SEC benefit from stronger protections. SEC Rule 21F-17(a) states “[n]o person may take action to impede an individual from communicating directly with the Commission staff about a possible securities law violation, including enforcing, or threatening to enforce, a confidentiality agreement... with respect to such communications.” In other words, employers are prohibited from enforcing confidentiality agreements against whistleblowers who report fraud to the SEC, including by suing the whistleblower for breach of contract.
Reducing Your Risk of Being Sued
To guard against potential lawsuits, whistleblowers should:
Take only documents you are authorized to access.
Taking documents that exceeds your authorized access could risk claims of misappropriation or liability under the Computer Fraud and Abuse Act which prohibits individuals from accessing computers “without authorization or exceeding authorized access.”
Generally, avoid privileged documents, such as those containing communications with an attorney.
With limited exceptions, Government agencies will not review privileged materials and often require whistleblowers to remove privileged documents from anything they send to the Government. As a result, it is difficult to argue taking privileged materials was “reasonably necessary” to support a whistleblower tip. Given the sacred nature of the attorney-client privilege, courts often allow the employer to pursue claims for taking these documents.
Collect only documents essential to support your whistleblower claims, focusing on those relevant to the underlying fraud you are reporting.
Some courts have allowed employers to pursue lawsuits against employee whistleblowers for taking documents when retaining those documents was not “reasonable” i.e., where the whistleblower took documents and disclosed information that were not relevant to their claims. For example, an issue may arise if a whistleblower copied the contents of his entire laptop or email history, or downloaded thousands of documents, regardless of whether those documents were relevant to his fraud claims.
This article provides a brief overview of the complex issues surrounding the acquisition and retention of company documents to support a whistleblower claim. If you are a whistleblower considering such actions, it is strongly advised to consult an experienced whistleblower attorney for further guidance.