Circuit Split Clouds Definition of “Whistleblower” under Dodd-Frank Act, Complicating Corporate Compliance

829-Brower_GregjohnsonGuest Commentary

by Greg Brower and Brett W. Johnson, Snell & Wilmer LLP*

A recent decision by the U.S. Court of Appeals for the Second Circuit further complicated the issue of when an employee can be considered a whistleblower under the Dodd-Frank Act. In Berman v. Neo@Ogilvy, the Second Circuit reversed a district court decision that the plaintiff was not a whistleblower, concluding that the governing definition of “whistleblower” was not the one found in the language of Dodd-Frank, but was the broader one found in a subsequently adopted SEC rule. This interpretation runs counter to a 2013 decision from the Fifth Circuit, Asadi v. G.E. Energy, LLC, and sets up a circuit split that the Supreme Court may be asked to resolve. Continue reading

Eleventh Circuit Has Opportunity in “U.S. v. Clay” to Reshape Prosecutors’ & Courts’ Approach on Criminal Intent

11th CircuitOn Friday, October 2, the U.S. Court of Appeals for the Eleventh Circuit will hear oral arguments in a closely followed criminal health-care fraud case, U.S. v. Clay. Earlier this year, Washington Legal Foundation published a Legal Backgrounder on the case and its broader ramifications, Clay v. United States: When Executives Receive Jail Time for Ordinary Business Decisions.

In Clay, federal prosecutors converted a contract dispute between a medical services provider, WellCare Health Plans, and the State of Florida Agency for Healthcare Administration (AHCA) into a criminal action. The company had interpreted a complex state law regarding the repayment of Medicaid premiums to the state in a manner that was contrary to AHCA’s interpretation. AHCA’s interpretation was not memorialized in a state regulation or guidance document. Despite this lack of guidance, federal prosecutors indicted WellCare and its executives for health care fraud. The company entered into a deferred-prosecution agreement, leaving the executives to fend for themselves. Continue reading

D.C. Circuit Weighs in, Once Again, on Privileged Corporate Documents in “KBR” Case

829-Brower_GregjohnsonGuest Commentary

by Greg Brower and Brett W. Johnson, Snell & Wilmer LLP*

Government contractors won another round in a long-running battle over the discoverability of internal investigation documents. On August 11, the United States Court of Appeals for the D.C. Circuit found, for a second time in the same case, that the district court erred in ordering the production of documents, concluding that the district court’s decision was contrary to both the circuit’s own precedent and the United States Supreme Court’s holding in Upjohn v. United States.

Back in March of 2014, in United States of America ex rel. Harry Barko v. Halliburton Company, et al., defendant Halliburton’s subsidiary, Kellogg, Brown & Root (“KBR”) and other defendants filed a petition for writ of mandamus seeking to reverse a district court’s order that certain reports created as part of an internal investigation were not privileged and should be produced in discovery. A three-judge panel of the D.C. Circuit reversed the decision, but remanded the matter back to the district court to consider other potential arguments in favor of production. For more on this decision by the circuit court, see our June 30, 2014 WLF Legal Pulse commentary here. Continue reading

The Supreme Court’s NOT Top 10: Cases the Justices Wrongly Rejected Last Term

supreme courtThe usual spate of articles by Supreme Court scribes pronouncing the Roberts Court staunchly pro-business were noticeably sparser as the latest term ended. When journalists are reduced to using the Obamacare and same-sex marriage cases as their main exhibits to prove the Supreme Court’s supposed pro-business tilt, you know it wasn’t a banner year for business.

Of course there were a few notable losses (King v. Burwell itself, Oneok, and Texas Dept. of Housing come to mind). But the fact that free enterprise did not fare well this term had comparatively little to do with the decisions the Supreme Court issued. Rather, business civil liberties suffered more overall from the various state supreme court and federal courts of appeals cases that the high court left on the cutting-room floor.

The tally that follows comprises more than just the cases of a disappointed cert seeker. WLF did not participate in more than half of the examples discussed below. However, the cert petitions mentioned here are all cases where free enterprise, individual and business civil liberties, or rule of law interests were at stake. From the free-market vantage point, it once again appears that the Court did not make enough room on its docket for cases implicating significant liberty interests. By choosing a lighter load, the Court allows legal uncertainty to linger, lower-court disobedience to fester, adventuresome new legal theories to propagate, and injustices implicating millions, if not billions, of dollars to prevail.       Continue reading

SCOTUS Fishing for a Way to Overturn Conviction in “Yates” without Tossing Law Overboard

supreme courtIt is notoriously difficult—if not foolish—to predict the outcome of a Supreme Court case from the questions the justices pose at oral argument. The case of Yates v. U.S., concerning a commercial fisherman who was convicted and sentenced under the Sarbanes-Oxley Act, is no exception.

And yet, after today’s argument (transcript here), it appears that some members of the Court are grappling for a way to overturn Yates’s conviction without completely rewriting the statute.

Three years after Mr. Yates received an administrative fine for harvesting undersized fish, the U.S. Attorney indicted him for destroying a “record, document, or tangible thing” under the “anti-shredding” provision of Sarbanes-Oxley. The “tangible things” at issue, the government insisted, were undersized red grouper Yates evidently ordered crew members to throw overboard.

Although the government seemingly got the better of the statutory interpretation argument today, a number of justices appeared uncomfortable with the breadth of the government’s application of the statute. While conceding that the government made some good arguments, Justice Alito nevertheless told the government’s attorney, “[Y]ou are really asking the Court to swallow something that is pretty hard to swallow.” Many justices were concerned that the statute contains a 20-year maximum sentence and applies to any matter within the jurisdiction of any department or agency of the United States.

red grouper

red grouper

Even more troubling, the government attorney informed the Court that once a decision is made to prosecute, the U.S. Attorney’s Manual recommends that the “prosecutor should charge the offense that’s the most severe under the law.” That assertion drew concern from many justices, including Justice Scalia, who responded that if that is the DOJ’s position, then the Court would need to be much more careful about how extensively and broadly it construes severe statutes in the future. Justice Kennedy even went so far as to question whether the Court should even mention the concept of prosecutorial discretion ever again.

For his part, Justice Breyer exhibited keen interest in void-for-vagueness objections to the statute, expressing his concern that the language of the anti-shredding provision is so broad that it encourages arbitrary and discriminatory enforcement. Although counsel for Yates did not devote very much space to that issue in his merits briefs, that was precisely the issue that WLF focused on as amicus curiae.

Also published by on WLF’s contributor site

Eleventh Circuit Ruling a Welcome Judicial Pushback against Criminal Enforcement of Regulations

strickly skillz

On a balmy late August day in Orlando, Florida, nearly a dozen Orange County police officers, some dressed in ballistic vests and masked helmets, swept into Strictly Skillz barbershop with their guns drawn. As their colleagues blocked off the parking lot entrances and exits, the officers declared that the shop was closed and ordered its patrons to leave, depriving the shop of business and perhaps deterring future patrons. Two barbers and the owner were handcuffed. A plain-clothed member of the raiding party demanded to see the barbershop’s business license.

Yes, you read that correctly. On August 21, 2010, a veritable SWAT team of heavily armed police conducted a warrantless inspection to check for barbers’ licensing violations. The Florida Department of Business and Professional Regulation (DBPR) inspector soon determined that Strictly Skillz barbers were properly licensed (which, as you’ll learn below, they already knew), so the police uncuffed the detained barbers and owner and left the shop.

The owner and three barbers sued a number of the officers involved for violating their Fourth Amendment rights against unreasonable search and seizure, and a federal district court denied the defendants’ motion for summary judgment on qualified immunity grounds. On September 16, the U.S. Court of Appeals for the Eleventh Circuit issued a strongly worded opinion affirming the lower court (Berry v. Leslie). The ruling provides a forceful reminder that the Fourth Amendment protects businesses (and their employees) from overzealous regulatory inspections. Continue reading

The Supreme Court’s NOT Top 10: October 2013 Term Cases the Justices Wrongly Passed Over

supreme courtThe Supreme Court press and other court observers have spilled a lot of ink this past month discussing the cases the Supreme Court took and decided during October Term 2013. Relatively little was said about the cases the court chose not to decide—and it passed over some doozies. But as Rush drummer and lyricist Neil Peart put it so eloquently, “If you choose not to decide, you still have made a choice.”

Pro-Business? Journalists like to portray the Roberts Court as particularly business friendly (see, e.g., here , here, and here; but see here), but businesses asked the Court to take plenty of cases this past term that it instead declined. When the Court denies cert in cases of such importance to business at the same time that it has a historically light docket, it can hardly be said to be pro-business. Companies crave legal certainty, so even if the Court took these cases and decided them against business interests, many times simply settling contested questions would be better than leaving them up in the air.

Wanted: More Business Cases. The Court needs to hear more business cases than it currently is, for at least two reasons. First, the unprecedented proliferation of new regulations by this administration has given rise to many more conflicts of the kind that produce Supreme Court cases. Second, to the extent the Clinton-and-Obama-appointee-dominated lower courts are predisposed against business litigants (or, more charitably, deciding close questions consistently against them), businesses will appeal more cases to the Supreme Court when they believe a lower court has denied them justice. Of course the Supreme Court justices take neither of these criteria into consideration when assessing individual cases, but surely these factors matter when assessing whether the Court leans in favor of business in forming its docket. Continue reading