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.
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, here and here.
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