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Fired employment plaintiffs fueling rise in whistleblower claims

With more attention being given to corporate rule-breaking and stronger laws supporting those who report it, employment lawyers are seeing more workers claiming that they lost their jobs because they complained about wrongdoing in the workplace.

While special federal laws like Sarbanes-Oxley and Dodd-Frank protect whistleblowers in specific industries, employment lawyers say workers in all types of jobs are claiming whistleblower status — from hospital employees complaining about patient safety to hourly workers blowing the whistle on employers who are not paying overtime to both public and private employees who complain rule-bending is hurting the public.

“It’s white hot. This is as hot of an area as you can get right now,” said Steven J. Pearlman a partner at Seyfarth Shaw in Chicago who co-chairs his firm’s whistleblower team.

A firefighter in New Jersey recently won a $3.5 million verdict after arguing to a jury that the reason he was passed over for promotion to lieutenant was because he complained about safety concerns when he was ordered to enter a building with low air levels and ordered to clean up hazardous material at a hospital.

The longer length of time people are now out of work between jobs has been helping to push employment litigation in general, and retaliation claims have been leading the trend in the past several years.

“As retaliation claims become more and more prevalent, whistleblower-type claims are expanding,” said David Scher, a principal of the Employment Law Group in Washington, D.C., a national employment litigation firm that represents employees.

Some defense lawyers say the trend has become so popular that plaintiffs’ attorneys latch onto a theme of the justice-seeking workplace crusader whenever possible to make plaintiffs more palatable to juries.

“Everybody is a whistleblower now,” lamented management attorney Portia R. Moore, a partner at Davis, Wright, Tremaine in Seattle. “That’s how plaintiffs’ [counsel] are getting sympathy for an otherwise unlikeable plaintiff.”

New awareness

With the airwaves full of stories of the accountant who noticed the company was cooking the books to the officer who stood up to misconduct in the military, attorneys say a big reason there are more whistleblowers is a new awareness of whistleblowers and the rights they have.

“People’s consciousness has been raised about whistle-blowing. Employers should be very worried about these cases and take them more seriously,” said plaintiffs’ attorney Susan Ritz of Ritz, Clark & Ben-Asher in New York.

The economic and regulatory environment post-bailout and mortgage crisis has made people less tolerant of corruption and more willing to come forward, said Jean Hyams, an employment attorney who represents plaintiffs.

A whistleblower generally does not have to prove he or she was right, or that the company actually violated a law; a whistleblower only has to prove a reasonable belief that the conduct was a violation of the law.

“A lay person doesn’t have to say, ‘I think what you’re doing is a violation of this health and safety code,’ but can say, ‘You’re not providing masks and you’re asking us to work with toxic materials,’” said Hyams, a partner at Dickson, Levy, Vinick, Burrell, Hyams in Oakland, Calif.

The whistleblower’s lawyer, however, does have to point to a statute covering the conduct complained about.

Defense lawyers say that is not difficult at all.

“There are a tremendous number of whistleblower statutes. Forty-six states have their own whistleblower statutes and there’s a federal False Claims Act, Sarbanes-Oxley, [and] also scores of other types covering environmental, trucking, transportation and other activities,” Pearlman said.

How easy or difficult it is to sue an employer for whistleblower retaliation often hinges on state law.

In Virginia, for example, “you have to have an express statute. It’s very, very difficult,” Scher said.

Seattle plaintiffs’ employment attorney D. Jill Pugh has turned away more than one potential whistleblower client thanks to a state supreme court ruling last September that dismissed a lawsuit by a worker fired after complaining that a co-worker was driving drunk in a company car.

“My office is not taking much unless there is a statutory basis” for a whistleblower claim, Pugh said.

But in more employee-friendly California, if there is no statute on point attorneys can rely on two sources: a state labor statute and common law claims.

“As a plaintiffs’ lawyer, it’s nice to have options. We either have a claim under a catch-all retaliation statute or a common law claim for wrongful termination in violation of public policy. We’ll bring both together,” said Mark Venardi, a plaintiffs’ side employment attorney in Walnut Creek, Calif., who noted that punitive damages are also available.

In New York, lawyers look to other sources.

“Public policy in New York isn’t going to get you anywhere, but some courts have looked to promissory estoppel based on an employee handbook … and implied breach of contract arising out of a written policy,” Ritz said.

The handbook or policy must say that employees are encouraged to complain if they see something wrong and that the employer will not retaliate based on complaints.

Jurors can relate

Whistleblower claims may have also gained in popularity because they present a story to which juries can relate.

“These cases can really get a jury incensed and pose a very substantial risk,” Pearlman said.

Retaliation claims have fewer legal restrictions than other types of claims, such as age discrimination, which only covers workers over 40, and sex harassment, which requires severe or pervasive conduct.

Aside from portraying a sympathetic plaintiff who is looking out for the public good, the story of an employee punished for complaining about a work policy is a more universal experience than, say, gender or race discrimination.

“Retaliation and retribution is a concept that isn’t that foreign to many people in their daily lives,” Pearlman said.

Plaintiffs’ lawyers say they have an easier time picking jurors if they are telling a story that everyone can understand.

“When bringing a harassment or discrimination claim, you want people who have a more empathetic approach to the world. With a whistleblower claim, you can do very well with a bunch of authoritarian people on a jury, because those people expect rules to be followed. They’re offended by anyone who is a rule-breaker,” Hyams said.

Unlike discrimination claims, in which jurors may not have had a personal experience to draw from, almost everyone has experienced some form of retaliation.

“What’s great about whistleblower claims is that just about everybody relates to it. Intuitively, everybody understands: ‘If I did that, or if someone in my family did that, I would get terminated’ or ‘Yep, I’ve seen things go wrong at my place of work, but I kept my mouth shut,’” Venardi said.

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