April 24, 2017

April 24, 2017

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April 21, 2017

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Third Circuit Revives In-House Attorney’s Whistleblower Claim

On April 12, 2017, the Third Circuit partially revived a former in-house attorney’s whistleblower retaliation lawsuit against his previous employer.  Danon v. Vanguard Group, Inc., No. 16-cv-2881.

Plaintiff, a former in-house tax lawyer, previously raised retaliation claims against the Company in New York State Court under the New York False Claims Act, alleging he was discharged in retaliation for informing senior employees of his belief that the Company was violating certain tax and corporate laws.  The state court dismissed the case based on the plaintiff’s failure to demonstrate that the Company knew he was involved in any protected conduct at the time of his termination.  Plaintiff then filed suit against the Company in the District Court for the Eastern District of Pennsylvania alleging whistleblower retaliation in violation of SOX, Dodd-Frank, and the Pennsylvania Whistleblower Law.  His claims again were dismissed because the court determined he was precluded from asserting the Company’s knowledge of his allegedly protected conduct (we previously wrote about the SEC’s amicus brief to the district court in support of the plaintiff’s arguments here).

Plaintiff appealed the dismissal of his Dodd-Frank claim to the Third Circuit.  The Third Circuit reversed, concluding that while the state court had considered whether he had adequately pled his whistleblower claim, it had not actually determined whether, in fact, the Company knew about his allegedly protected activities.  Further, the Court noted that Plaintiff’s federal complaint alleged Company knowledge, and thus did not suffer from the safe defects as his state court complaint.  The court vacated the dismissal of the Dodd-Frank claim, and remanded for further proceedings.

The Third Circuit court has yet to address the critical underlying issue, raised by the Company in October of 2016, of whether an employee who complains internally but neglects to raise complaints with the SEC is protected from retaliation under Dodd-Frank.  Now that the district court must consider the merits of the claim on remand, the Third Circuit will likely confront the issue.

As noted, this case involves an attorney whistleblower—a dynamic that carries its own set of risks.  Links to our prior posts about the complexities of litigation brought by attorney whistleblowers can be accessed here.

© 2017 Proskauer Rose LLP.

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About this Author

Steven J Pearlman, Labor Employment Law Firm, Proskauer Law firm
Partner

Steven Pearlman is a partner in the Labor & Employment Law Department and co-head of the firm's Whistleblowing & Retaliation Group, resident in the Chicago office. Steven’s practice focuses on defending complex employment litigation involving claims of discrimination and harassment, wage-and-hour laws and breaches of restrictive covenants (e.g., non-competition agreements). He has successfully tried cases to verdict before judges and juries in Illinois, Florida and California, and defended what is reported to be the largest Illinois-only class action in the history of the U.S....

312-962-3545
Harris M Mufson, Class/Collective Action Attorney, Proskauer
Associate

Harris Mufson is a senior associate in the Labor & Employment Law Department and a member of the Employment Litigation & Arbitration and Whistleblowing & Retaliation Groups.

Adept at counseling clients at every turn of the litigation process, Harris represents employers in a variety of industries, including financial services, health care, entertainment, sports and legal, with respect to a wide range of labor and employment law matters. These include compensation disputes, employment discrimination and retaliation, whistleblowing, sexual harassment, wrongful discharge, defamation, breach of contract, non-competition agreements and wage-and-hour issues. He regularly appears in state and federal courts, as well as in proceedings before the American Arbitration Association, the Financial Industry Regulatory Authority, JAMS, the Equal Employment Opportunity Commission, and other federal and state agencies.

212.969.3794
Associate

McKenzie Wilson is an associate in the Labor & Employment Law Department. She assists clients in a wide variety of employment law matters, including discrimination and retaliation lawsuits at the state and federal levels.

Before joining Proskauer, McKenzie served as a judicial law clerk to Chief Justice Stuart Rabner of the New Jersey Supreme Court.

973-274-3250