United States: California District Court Addresses Whistleblower's Self-Help

In Erhart v. BofI Holding, Inc., Case No. 15-cv-02287, (S.D. Cal. Feb. 14, 2017), a bank's internal auditor reported alleged misconduct to federal agencies, engaged in self-help discovery by appropriating the bank's confidential information, and allegedly widely disseminated such information. When the bank alleged that this conduct violated the parties' confidentiality agreement and state and federal law, the employee countered that his appropriation and disclosures were protected by whistleblower statutes.  As discussed below, the court held that: (i) the employee's disclosures to the government were protected; (ii) his alleged disclosures to the media were not; and (iii) any additional protection of his appropriation and disclosure of confidential information may turn on whether his actions were reasonably necessary to pursue whistleblower claims.


Charles Erhart worked as an internal auditor for BofI Federal Bank ("BofI"). In January and February of 2015, Erhart contacted the SEC to report alleged misconduct at BofI, including an alleged failure to disclose information in response to an SEC subpoena.

In March of 2015, Erhart contacted BofI's principal regulator, the Department of the Treasury, to report alleged wrongdoing. Next, Erhart filed a lawsuit against BofI, alleging that it retaliated against him for reporting unlawful conduct, in violation of California and federal whistleblower protection statutes.  The following day, a national newspaper published an article titled Ex-Auditor Sues Bank of Internet and BofI's share price dropped 30 percent.

BofI countersued Erhart, alleging that he violated California law, the Computer Fraud and Abuse Act, and his confidentiality agreement with BofI by disseminating its confidential information. Erhart asserted numerous affirmative defenses premised on the assertion that his actions constituted protected activity pursuant to various whistleblower statutes.  BofI sought to extinguish Erhart's affirmative defenses via summary judgment.

Determining Whether a Purported Whistleblower's Appropriation and Disclosure of Confidential Information is Protected

Erhart admitted that he sent BofI's confidential information to his personal email account and downloaded BofI's files to his personal computer. He printed copies of BofI documents, including customer bank account information and internal audit reports.  Erhart also emailed his mother a spreadsheet containing customer social security numbers and used his girlfriend's computer to access BofI documents.

Erhart asserted that his appropriation and disclosure of BofI's confidential information was protected by state and federal whistleblower statutes. He argued that BofI could not enforce the parties' confidentiality agreement or pursue its tort claims against him because his conduct was protected by California Labor Code Section 1102.5 (which prohibits retaliation for reporting a violation of the law), the Sarbanes–Oxley Act, the Dodd-Frank Act, and several other federal whistleblower statutes.  The court determined the viability of Erhart's defenses by balancing potentially competing interests – public policy in favor of private parties' freedom to contract and public policies that may protect Erhart's disclosures.  The court administered this balancing test in five contexts, Erhart's: (1) communications with the Government; (2) alleged disclosure to the press; (3) self-help appropriation of BofI documents; (4) transmission of confidential information to family members; and (5) disclosure of confidential information in the complaint he filed in court.

Communications with the Government

The court held that California Labor Code Section 1102.5 and federal whistleblower statutes protect Erhart's ability to report believed wrongdoing to the SEC and the Department of the Treasury. Specifically, the parties' confidentiality agreement could not bar Erhart's communications with the SEC because doing so would violate 17 C.F.R. § 240.21F-17's prohibition against "enforcing, or threatening to enforce, a confidentiality agreement" to impede communication with the SEC (the court's opinion states that Erhart contacted the SEC and "disclosed confidential information."  However, the court did not specify whether Erhart provided BofI documents to the SEC).  Accordingly, the parties' confidentiality agreement was found unenforceable as to Erhart's communication with the SEC and the Department of the Treasury.

Alleged Disclosure to the Press

The court required minimal analysis to find that media leaks are not protected by California or federal law. Therefore, while BofI had not yet established that Erhart leaked confidential information to the press, if it could, Erhart would liable.

Self-Help Appropriation of Employer Documents for the Employee's Use

The court urged a "nuanced," "qualified" approach to Erhart's self-help discovery of BofI's documents. The Erhart court acknowledged prior cases enforcing confidentiality agreements against employees who argued that their self-help discovery was protected by whistleblower retaliation statutes.  The court recognized JDS Uniphase Corp. v. Jennings, 473 F. Supp. 2d 697 (E.D. Va. 2007), where a federal court applied California law and held that a whistleblower cannot pilfer "an employer's proprietary documents in violation of their contract merely because it might help them blow the whistle on an employer's violations of law, real or imagined." The Erhart court also cited Cafasso, U.S. ex rel. v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1062 (9th Cir. 2011), where the Ninth Circuit declined to adopt a whistleblower-based exception to confidentiality agreements and upheld summary judgment in favor of an employer's claim against an employee for breaching their confidentiality agreement.  In addition to the cases cited by Erhart, the U.S. Department of Labor Administrative Review Board has affirmed the dismissal of a SOX whistleblower retaliation claim on the grounds that the employee's secret tape recording and downloading of company data violated the company's employee handbook. See Galinsky v. BOA, No. 11-057 (ARB Oct. 31, 2012).

However, despite the lack of precedent supporting such a holding, the court determined that Erhart may be able to show that his appropriation should be protected if he establishes that such appropriation was limited to the documents necessary to support his whistleblower claims.  Notably, the court added that Erhart can only hope to prevail if he can demonstrate that the "removal of the documents was reasonably necessary to support [his] allegations of wrongdoing."  Further, the court suggested that the jury may also determine that Erhart can only prevail if his beliefs of wrongdoing were reasonable.

Transmission of Confidential Information to Family Members

The court held that Erhart's potential liability for sending BofI's confidential information to his mother and accessing such information on his girlfriend's computer would turn on Erhart's reasoning for his actions. If Erhart felt compelled to take these measures to protect relevant information from destruction, then his actions could be considered protected activity.  However, if Erhart's transmission of BofI information was not entirely related to his whistleblower reports or he did not have a reasonable concern that such information would be destroyed, then BofI would prevail.

Disclosure in the Court Complaint

Similar to the above analysis, the court held that protection of Erhart's disclosure of confidential information in the court complaint hinged on whether such disclosure was reasonably necessary to pursue his claims. The court noted that Erhart is required to include factual allegations of wrongdoing in order to state a whistleblower retaliation claim.  Therefore, if he limited his disclosure to information necessary to state a claim, then his disclosure could be protected.  However, if, as BofI claims, Erhart intended to inflict harm on BofI and benefit short sellers by disclosing confidential information, his disclosures would not be protected.


While Erhart v. BofI Holding, Inc. is a district court case, so it does not create binding precedent, it gives employers additional insight into how federal courts in California may approach whistleblower disclosure and self-help appropriation issues.  This decision sends a clear message to purported whistleblowers that they do not have the right to disclose confidential information to the press.  However, with respect to an employee's ability to engage in self-help appropriation, Erhart goes against prior decisions by holding that an employee may be able to engage in limited self-help to the extent necessary to support their allegations.  It remains to be seen whether any other court will adopt such a standard.  Further, Erhart only went so far, as it warns employees that broad or indiscriminate self-help is likely to result in liability.

California District Court Addresses Whistleblower's Self-Help

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.