Author: JGL Law

On June 12, 2015, Jay Holland will participate in a panel discussion at the Maryland State Bar Association’s 2015 Annual Meeting in Ocean City, Maryland. The education session entitled “Blowing the Whistle: Handling Retaliation Cases Under Federal and State Law” explores the various anti-retaliation and whistleblower laws that apply in the workplace. Mr. Holland joins distinguished panelists, Brian Frosh, Maryland’s Attorney General and Ariana Wright Arnold, Shareholder at Jackson Lewis P.C. 

For more information on the event or to register online, visit the MSBA Annual Meeting website.

Oftentimes, the last thing on the mind of someone about to embark on a divorce is how to best posture his/herself in the event of contentious litigation. However, considering this position may be essential to the ultimate outcome of the divorce. Indeed, by commencing divorce litigation, the parties are essentially asking the Court to enter their homes, and decide, among other things, who is the better parent, who has the greater need for economic support, and who owned what property and when.

What makes preparing for divorce particularly unique is that the Court cannot glean these things merely by the claims of the parties, but must do so by reviewing the tangible evidence presented. For this reason, during the divorce process, the parties will engage in discovery whereby each party is obligated to produce documents and answer questions at the request of the other. These documents often include banking and credit card statements, emails, text messages, employment records, and other information. In the event that these documents are not in the possession of the producing party, the requesting party can subpoena them directly from the source (e.g. banks, employers, cellular carrier, etc.).

Each document will tell the Court a story about you and your spouse—whether you’re a big spender, whether your spouse is a hands-on parent, and a host of other personal details. Today’s world of text messaging, tweets, emails and status updates now offers the court a wealth of information about you. While this can be extremely useful in helping you create and dictate your own narrative, these new mediums can just as easily be used against you.

By taking a few simple and easy steps, you can begin to form your own narrative and control, to an extent, how the court may view you in relation to your case. Whether you’ve been considering a divorce for a significant period of time or have been blindsided by some marriage-ending event, the following are ways this digital age can work for you instead of against you:

1. Curb Your Texts and Emails: Even in the most amicable divorce, feelings will likely be running high on both sides. Unfortunately, getting a divorce often brings out the worst in even the most even-tempered people. That bitterness and resentment oftentimes finds its way into day-to-day communication. In today’s world, this means emails and text messages.

Written communications between you and your spouse, or you and your children (if they are old enough to email and text), are generally admissible evidence and can make its way into the court’s record. This is particularly true in matters involving custody. As such, this is not the forum to rant to your spouse about their shortcomings or to admit to all of yours. Written communication should only be for necessary matters. They should also be short and pertinent to the subject of the message.

Communication between you and your spouse should not run contrary to your ultimate goals in the divorce as well. For example, if you are requesting joint custody of your child(ren), but there are emails consistently showing that you and your spouse cannot get along or agree or that you continuously send bitter text messages to him/her, your position will be significantly undermined.

2. Change All of Your Passwords: In relationships, we share many things with our spouses, including personal information such as passwords. After all, what is a password when we share our homes, children and lives? However, as with many other things on this list, this information can and likely will be used against you. A spouse with access to your personal accounts can be more dangerous than any identity-thieving hacker. They can read emails to and from your family law attorney and potential witnesses. He or she can monitor movement in your personal accounts and credit card purchases. In the most extreme cases, they can even falsify text messages and emails, seemingly sent from your phone, email account, or on social media.

Upon realizing and accepting that divorce is inevitable, begin that separation by once again becoming a private person. Your soon-to-be-ex spouse should not have access to your computer, phone, tablet, email, social media accounts and banking/credit card accounts. As an extra precaution you may consider opening a new email account, solely for the purposes of communicating with counsel or your spouse during divorce proceedings.

3. Temporarily Disable Social Media Accounts: We all currently live in a culture where we are constantly available to everyone all of the time. We can share our opinions, major life moments, and day-to-day annoyances almost instantly. This constant need to share every detail of our lives can spell disaster in a divorce. In the same way that a disparaging email to your spouse can make you look uncooperative, a rant on social media, where your audience can be hundreds of mutual friends and acquaintances, will only serve to make you look like the dreaded “bad guy” in the relationship.

While most people can resist ranting about their ex on social media, they are certainly not out of the woods. Social media is also an excellent way for others to track your ongoing actions, even if you remain completely inactive on the site. For example, a spouse seeking pendente lite (temporary) alimony who posts, or gets included in, pictures on Instagram or Facebook of their latest Hawaiian vacation, “checks-in” at high-end restaurants or is pictured wearing a new $300 accessory will undoubtedly hurt their claim of “need”. Even if these were gifts from third parties or a single splurge in an otherwise frugal period, you do not want to draw any negative attention on your spending habits.

As such, it is strongly urged that all social media accounts be temporarily disabled pending the conclusion of the litigation.

4. Do NOT Delete Any Accounts: Although temporarily disabling your accounts is a great way to mitigate your exposure on social media, your accounts are still evidentiary in nature. The destruction of evidence, called spoliation, either in anticipation of, or during litigation may leave you vulnerable to the Court making a negative inference against you, even if what was deleted was relatively minor.

In the event that a social media account cannot be temporarily disabled, the account should not be deleted, but merely allowed to remain inactive. Moreover, for some, it is important that they remain active on at least some social media websites for one reason or another. For example, many use professional websites, like LinkedIn, as a source of networking and job hunting. However, be mindful that any information there that is contrary to representations made to the Court may be used against you. Therefore, you must insure that your profile is an accurate reflection of exactly how you want to be perceived by the Court professionally.

5. Stop All Recreational Drug Use: With the recent decriminalization of marijuana in some jurisdictions, and the outright legality of it in others, recreational use of marijuana, and the societal shift toward how certain drug use is viewed in general, has just recently entered the realm of legal ambiguity. It may be the case that you and/or your spouse used marijuana, either individually or together, without it ever being an issue. However, once litigation has begun, particularly if visitation and/or custody are at issue, your actions and behaviors will be put under the scrutiny of the court. A divorce proceeding is simply not the appropriate arena in which to test whether the local judiciary will be as tolerant as some legislatures.

While some may argue that, at least when it comes to the use of marijuana, we are entering a more liberal era, drug usage, whether illegal, decriminalized or legal should stop immediately upon a filing for custody of visitation. Though your spouse may have never raised the issue before, it is still fair game and will likely only hurt your case if you continue to use it.

In the face of all of the turmoil and stress that comes along with a divorce, you must remember to stop and think before hitting the “send” button. Remember this important rule: never send, post or submit anything you wouldn’t want the presiding judge to later read. 

Eve Shuman, Esquire has practiced family law exclusively since graduating from Cornell Law School in 2010, and is experienced in a wide variety of matters, including prenuptial and postnuptial agreements, divorce, property distribution, child custody, parental access, spousal and child support, and interstate custody disputes.  Ms. Shuman is an attorney in JGL’s Family Practice Group in the Rockville Office.  She may be reached by email at eshuman@jgllaw.com.  

Christopher FitzPatrick, an associate in Joseph Greenwald & Laake’s Medical Malpractice Group, was elected the new President of the James C. Cawood, Jr. American Inns of Court in Annapolis. He will serve as President from July 2016 until July 2017.

An association of lawyers, judges and other legal professionals, the American Inns of Court was established to build and foster professional relationships. Members of the association span a wide spectrum of the legal profession. From law students to Supreme Court justices, members discuss fundamental and current legal issues, share experience and advice, and mentor those who are new to the profession.

As President, Mr. FitzPatrick will continue to further the traditions of the James C. Cawood, Jr. American Inns of Court as they pursue professional development, ethical inquiry and collegial relations.

Greenbelt, Md – Joseph, Greenwald & Laake is pleased to announce that Rama Taib-Lopez has joined the firm as an associate in the firm’s Family Law Practice Group. 

“We are very pleased to welcome Rama to the firm,” said Burt M. Kahn, managing director of Joseph, Greenwald & Laake. “She brings a fantastic combination of compassion and experience to better serve our family law clients.”

Prior to joining Joseph, Greenwald & Laake, Taib-Lopez served as a clerk for a Domestic Relations Magistrate at the Circuit Court for Baltimore City and practiced family law, immigration law, and criminal defense in Annapolis, Maryland.

She earned her bachelor’s and law degrees from the University of Maryland. 

If you own a business, there’s a good chance you’ve been faced with the independent contractor vs. employee dilemma. The decision isn’t always an easy one to make and since an incorrect designation can have significant negative consequences, it’s best not to decide in haste or purely on the basis of economics. Here are some things to consider the next time the issue comes across your desk:  

First, while economics often argue in favor of an independent contractor designation, you do not get to “choose” whether your hire is an independent contractor or an employee. They are one or the other based on the job they were hired to do and the method in which they are required or permitted to do it.

Second, as noted above, the ramifications of improperly designating an employee as an independent contractor can be significant and far reaching. An improper designation can result in the business being held liable for unpaid Federal and state withholding taxes, overtime and minimum wage obligations, all of which could generate penalties and interest. Moreover, an improper designation can affect eligibility for employment benefits and may lead to a disqualification of certain benefit plans.

Finally, there is no single, definitive standard for determining whether someone is an employee or an independent contractor. The analysis can change depending on which governmental agency is involved. For example, the Internal Revenue service has factors they consider determinative which are not necessarily the same factors that will be considered by the state agencies in charge of wage and hour or unemployment matters. While the various factors tend to hover around the same basic central themes, they are not identical. So what’s the conscientious business owner who just wants to get the decision right supposed to do? In Maryland anyway, they might want to consider starting with the test that is used by several state agencies, often referred to as the “ABC Test.” Unfortunately, in this case ABC is not an acronym, so the letters don’t actually help in remembering what’s involved with an independent contractor test. Still, with only three factors to consider, the ABC Test is relatively straightforward, making it a good place to begin. Under the ABC test, you are hiring an employee unless all three of the following are true:

A. The individual performs the job free of control and direction;

B. The individual is engaged in an independent business of the same nature; and

C. The work is outside of the usual course of business of the employer or performed outside of any place of business of the employer.

Since the ABC test takes a conservative approach, if your circumstances satisfy the test, your work is likely done and you can feel confident that your new hire is an independent contractor. If you don’t satisfy all three of the requirements of the ABC Test, it does not necessarily mean you have an employee- employer relationship; but if you don’t meet the standards of the ABC Test, you should not even consider designating a new hire as an independent contractor without analyzing the situation and the applicable law in more detail.

For more information on legal questions effecting your business, contact JGL’s business lawyer, Jerry Miller.

 

Got an innovative idea? Starting a new business?  Decided to incorporate? Now what?!

One of the first decisions a budding entrepreneur encounters when starting a new business is where to incorporate their new venture.  In my corporate and business law practice, I tend to point clients in one of two directions, either their home state (the state where the business operates), or Delaware.  For this article we will assume the home state of the entrepreneur is the State of Maryland.

I frequently hear from clients that their “friend” told them they MUST incorporate their new business in Delaware.  Many entrepreneurs will state they were told Delaware has lower incorporation costs, tax benefits, and a sophisticated body of corporate law. Some of these statements are true, while others depend on your specific situation.

Let’s weed through the noise and analyze the factors for the basis of incorporating a business in Maryland or Delaware.

First, let’s examine the costs.

Costs to Incorporate[1]

State of Maryland

• Initial Fee: $100.00 filing fee plus $20.00 fee for organization/capitalization
• Annual: $300.00 Personal Property Tax

State of Delaware

• Initial Fee: $89.00
• Annual: Minimum of $175.00 Delaware Franchise Tax

Additional Fees if incorporating in Delaware but operating a business in Maryland

State of Delaware

• Annual: $50.00-$219.00 depending on company (Note that Delaware requires an in-state registered agent for filings and to receive service of process)

State of Maryland

• Initial Fee: $100.00 Foreign Business Qualification fee
• Annual: $100.00 Name Registration fee
               $300.00 Personal Property Tax

Examining the fees alone, initially, it may be slightly less expensive to incorporate in Delaware rather than Maryland; however, I encourage my clients to look at the long term picture. The fees a Maryland business that is incorporated in Delaware would pay at the outset are higher considering they must still register with the Maryland State Department of Assessments and Taxation as a “Foreign Business,” receive approval to operate in Maryland and pay a qualification fee of $100.00.   Additionally, on an annual basis, a Maryland business that is incorporated in Delaware must pay Delaware a franchise tax of at least $175.00 as well as Resident Agent fees that range from $50.00 to $219.00. However we are not done yet; in addition to the Delaware fees, annual fees charged by the State of Maryland include a name registration fee of $100.00 and a personal property tax of $300.00.  Many readers may respond with the question, “but don’t I make up for these additional incurred costs as a Delaware corporation by not having to pay Maryland corporate income taxes?” This is a common misconception. Yes, Delaware has no corporate income tax but a business operating in Maryland while incorporated in Delaware will pay and continue to pay Maryland corporate income taxes every year. 

Body of corporate law  

The best argument for incorporating in Delaware is the same reason that the majority of large U.S. corporations, publicly traded or privately held, are incorporated in the State of Delaware: they have a special court system, known as the Chancery Court, with judges that oversee a well-developed body of business law.  Many large corporations prefer this system because they are frequently involved in complex litigation, which in Delaware is decided by Chancery Court judges rather than juries.  Additionally, Delaware’s vast corporate legal precedents (created by previous litigation) are attractive for investors because it has a clear standard for what fiduciary duties a Board of Directors owes to the corporation. However, just because Delaware is a business-friendly state doesn’t necessarily make it right for you.

Thoughts to consider

One of the main considerations for where to incorporate depends on the financing of the new venture.  If an entrepreneur plans on raising money in the near future, you can bet a venture capital company is going to dictate where you incorporate your business. The old adage, “Whoever has the gold makes the rules,” will generally apply with deals involving venture capital companies.  However, if you plan to fund your new business by applying for financing from a bank, by applying for an SBA loan, or by simply bootstrapping as your grow, then incorporating in Maryland may be a better option as you will be able to avoid the additional costs associated with Delaware corporations.

When starting your own business, always think about the logistics of operating a business. For the average business, starting a company in Delaware can be much more burdensome than the benefit is worth.  I would rather have an entrepreneur focus on the business instead of worrying about the additional hassle (and costs!) associated with incorporating in Delaware.  

* Please note that each business situation is different. You should always seek legal advice before making a decision about where to incorporate when starting a business.

Greenbelt, Md – Joseph, Greenwald & Laake is pleased to announce that Matthew E. Kreiser has joined the firm as an associate in the firm’s Labor & Employment Law Practice Group.

“We are very pleased to welcome Matthew to the firm,” said Burt M. Kahn, managing director of Joseph, Greenwald & Laake. “He is an asset to the firm’s Employment Law practice, especially because of his knowledge of the False Claims Act and experience with public policy.”

Before his employment at JGL, Kreiser held a number of positions in public policy development, analysis and advocacy. He has advocated for the interests of hospitals and community-based healthcare providers at both the state and federal levels. He also interned with the United States Sentencing Commission in its office of Education and Sentencing Practice, where he helped analyze issues concerning courts’ use of the Federal Sentencing Guidelines, composing in-depth policy analysis of the problems associated with court-ordered restitution against individuals convicted of possession of child pornography under the Mandatory Victims Restitution Act of 1996.

Kreiser earned his law degree from the University of Miami School of Law and his bachelor’s degree from the Ohio State University.

As a labor and employment attorney, I am often asked by potential clients if they have a viable claim against their employer for being subjected to a “hostile working environment.” And why would they not? Many people feel they are subjected to difficult working conditions, and the word “hostile” is a loaded term, perceived to be attention grabbing and capable of capturing interest. Although it sounds like an all-encompassing claim, the law has very particular requirements to satisfactorily allege that one was, indeed, subjected to an unlawful, hostile working environment.

“Hostile work environment” is not specifically enumerated as a possible claim under Title VII[1] or Maryland’s Fair Employment Practices Act[2], (“FEPA”). Rather, a “hostile working environment” is a legal term of art that both the United States Supreme Court[3] and the Maryland Court of Appeals[4] have held is actionable under Title VII. Title VII makes it unlawful for an employer to discriminate against any individual with respect to their compensation, terms, conditions, or privileges of employment because of an individual’s immutable characteristic (e.g., sex, gender, race, color, etc.), which are enumerated in the statute.[5] “Since an employee’s work environment is a term or condition of employment, Title VII creates a hostile working environment cause of action.[6]”  However, Title VII does not protect all forms of behavior that may create an unpleasant place for one to work.

Ultimately, the issue boils down to whether they were subjected to conduct and behavior in the workplace that Title VII is designed to protect. This is where the “jerk boss” or “rude coworkers” rule comes in to play.[7] “Title VII was not intended to eliminate every instance of vulgarity, rudeness, or insensitivity”[8] in the workplace, so not all instances of objectionable behavior are actionable under Title VII.  For example, in the Fourth Circuit:

• Rude or callous behavior is not necessarily actionable under Title VII;[9]
• “Condescending” or “belittling behavior” (e.g., tone of voice, facial expressions, mannerisms, etc.) and personality conflicts, standing alone, are not generally actionable under Title VII; and
• Comments concerning one’s personal hygiene, appearance, or the qualities of one’s children premised upon inaccurate assumptions about race (a protected characteristic under Title VII)—although crude and ignorant—are not covered under Title VII.[10]

In order to have an actionable claim for an unlawful hostile working environment under Title VII and Maryland’s FEPA statute, one must demonstrate that the workplace harassment, based on the protected characteristic, was (1) unwelcomed; (2) based on the protected characteristic; (3) subjectively and objectively severe or pervasive enough to alter the conditions of employment and create an abusive atmosphere; and (4) imputable to the employer.[11] Generally speaking, prongs one and two are relatively easy to establish, and the courts will also often assume that he or she subjectively perceived their work environment to be abusive.[12] Courts, therefore, often focus on whether the abusive and harassing conduct was objectively and sufficiently severe or pervasive and that the aggrieved conduct was imputable to the employer.

In considering a hostile work environment claim, the Fourth Circuit evaluates all of the circumstances surrounding the conduct, considering: (1) the frequency of the discriminatory conduct; (2) its severity; (3) whether it is physically threatening or humiliating, or a mere offensive utterance; and whether it unreasonably interferes with an employee’s work performance.[13] The perspective the court takes is that of a “reasonable person” in the potential client’s position.[14] However, the harassment need not be both severe and pervasive; thus, the more severe the conduct, the less pervasive it needs to be.[15] In fact, at least one court in the Fourth Circuit has found that a single incident of harassment that is sufficiently severe can give rise to employer liability.[16]  Additionally, courts in the Fourth Circuit have held that harassing behavior by an employee’s direct supervisor, who has significant authority over the employee’s day-to-day duties and possesses the ability to influence her career, to be objectively more severe than the same behavior by a fellow employee.[17]  

Lastly, a potential employee’s complained of harassment must be imputable to his or her employer to establish liability.[18] An employer is liable for unlawful harassment by the employee’s supervisor or co-worker only “if [the employer] knew or should have known about the harassment and failed to take effective action to stop it.”[19] Once an employer has notice, then it must respond with corrective action designed to end the complained of workplace harassment.[20]

While it may oftentimes be extremely stressful to work in a difficult environment, as can be seen, there is sometimes a divide between common notions of a hostile work environment and whether the courts will deem it to give rise to a cause of action. Because every case is different, careful analysis is necessary to evaluate the merits of whether a case falls under the “jerk boss” rule or is an actionable claim under Title VII.

Joseph, Greenwald & Laake principal, Brian Markovitz, was quoted in Law360 discussing the Sixth Circuit judges unanimous decision on April 20 not to re-hear en banc a three-judge panel’s decision to revive a federal False Claims Act case accusing a Tennessee hospital of overbilling Medicare and Medicaid for unnecessary medial procedures. Joseph, Greenwald & Laake is representing whistleblower Robert Whipple. The article quotes Markovitz as stating, “the ruling made clear ‘the entire Sixth Circuit felt that the decision made by the panel was correct and that this case should go forward on the merits.’”

 

As parents, we are concerned about the safety, health and welfare of our children.  We will do almost anything in order to protect them and provide for their best interests.  We seek the best neighborhoods with the lowest crime rates in order to ensure that our children will obtain the best education possible in a safe environment.  We also select the best doctors to care for our children in times of illness, take financial measures to ensure future success and wealth for our children by maintaining bank accounts on their behalf, or perhaps establishing college savings plans and obtaining a life insurance policy for their benefit in our absence.  However, what is often left out of the equation is the importance of obtaining a will in order to designate who will take care of our children in the future if we are no longer around. 

A last will and testament does not simply serve as a vehicle for the disposal of one’s estate, but it is also the instrument for designating a legal guardian for minor children.  The natural parents of a child are automatically deemed to be the guardians of their minor children.   Therefore, if the mother of the child passes away, typically the father of the child will be granted legal guardianship of the minor child, and vice versa.  However, if the other natural parent is not alive, is simply unwilling to serve, or is proven to be unfit to act as guardian of the minor child, then the court will appoint someone else to serve as the minor child’s guardian. 

If you designate a guardian for your minor children in your will, then the court will give deference to your designation. However, it is important to note your designation is not foolproof.  When you designate a guardian in your legal will you are stating your preference as to who you  would like to care for your child upon your (and presumably your spouse’s) passing, but your preferential designation is ultimately subject to the court’s approval. 

Why doesn’t the court always comply with one’s guardian designation? Practically speaking, people, as well as their circumstances, are always subject to change.   Consider the circumstance where a young couple prepares a will when their child is a newborn and they designate their trusty college roommate as the guardian.   However, a decade later, the trusty college roommate is now a raging alcoholic, leading a life that is less than desirable for raising a child, or is even imprisoned.  If this is the case, and this information is brought to light in the guardianship proceeding, then the Court will make a determination as to the fitness of the designated guardian in the will and does not have to comply with your designation.

Even though the designation is not foolproof, it is well worth the effort to have an estate planning attorney draft your will so that you have peace of mind knowing that you have done everything in your power to identify who you believe to be a proper guardian to care for your children– as opposed to leaving this major decision up to the courts, who are the least familiar with you, your children and your values.

 

Amendments to False Claims Act expanded remedies for retaliation against contractors and others.

Hillary Clinton came in for criticism when word emerged that she’d bypassed her government email account while running the State Department in favor of her private account. But Corporate America is in no position to criticize, we learn in this special section—mixing of private and company email is rampant, and dangerous. We also investigate the difficulties liberal marijuana laws raise for employers and changes in federal whistleblower-protection laws.

On May 29, 2009, Congress enacted the Fraud Enforcement and Recovery Act of 2009 to expand the reach of the Civil False Claims Act, 31 U.S.C. 3730, et. seq., and safeguard taxpayer funds. In doing so, Congress amended Section 3730(h) of the Civil False Claims Act (FCA), the anti-retaliation provision, to broaden protections for whistleblowers who alert their employers and/or the government about the misuse of taxpayer funds. Following these amendments, Congress sharpened the FCA’s enforcement teeth to not only recoup taxpayer money but also to further encourage the reporting of fraudulent conduct in an effort to help the government combat fraud and abuse in the administration of its programs.

The U.S. government is one of the world’s largest consumers and the single largest purchaser of goods and services within the United States. The FCA authorizes the government to recover monetary damages from parties who file fraudulent claims for payment when supplying it with goods or services. Actions under the FCA can be initiated either by the government or via a qui tam action. See 31 U.S.C. 3730(b)-(d); see also Mann v. Heckler & Koch Defense (4th Cir. 2010) (a qui tam action is brought by a private party “in the name of the United States”).

Qui tam actions are brought by whistleblowers, referred to as “relators,” on behalf of the government, and are the most common enforcement mechanism of the FCA. Those cases are filed under seal and served on the attorney general and the U.S. attorney in the jurisdiction in which the case is filed. At the conclusion of an investigation, the government may elect to “intervene” in the case and take the lead in litigating, settle it or choose to “decline” to intervene, in which case the relator may bring the case on behalf of the government. In a qui tam action, whether intervened or not, it is the government’s damages at issue; not the relator’s.

The FCA also contains anti-retaliation protections for whistleblowers. When Congress passed the major provisions of the FCA encouraging whistleblowers to report fraud, there was common-sense recognition that whistleblowers—and in particular employees of government contractors—would be at great risk of retaliatory actions if and when their employers learned they blew that whistle. The anti-retaliation provisions of the FCA are intended to provide full relief to the whistleblower for his or her damages resulting from the retaliatory acts of their employer for reporting fraud. So the relator’s damages are at issue, not the government’s.

Following the passage of the Fraud Enforcement and Recovery Act of 2009 (FERA), Congress broadened the scope of the FCA’s anti-retaliation protections by expanding the list of protected persons and activity covered, and created a uniform three-year statute of limitations from the date of the retaliation. Previously, the anti-retaliation protections only applied when the whistleblower was engaged in conduct (e.g., investigating) directly in furtherance of an actual action under the FCA, the employer knew about the employee’s investigation, and then retaliated against the employee as a result.

EXPANDED COVERAGE
While the prior iteration covered only employees and only acts in furtherance of filed or to be filed FCA claims, the FERA amendments expanded the scope of covered persons to “employees, contractors, agents or associated others,” and expanded the protected conduct to “lawful acts … in furtherance of an action under this section or other efforts to stop one or more violations of th[e statute].”

So if there was any doubt before as to whether internal reporting to company officials to stop a violation suffices as protected activity under the act, the FERA amendments dispensed with the issue. The FERA amendments also included a specific prohibition against retaliation against persons based on their association with a whistleblower.

As a result of the FERA amendments, a retaliation action can be initiated on multiple types of relationships outside of the traditional employer-employee context. Significantly, independent contractors, who make up a significant portion of the government contractor workforce, are protected from retaliation under the FERA amendments. Moreover, recently a number of courts have found that the amendments now permit individual liability against those who retaliate against a whistleblower by removing the reference to retaliation “by [an] employer.” See e.g., Huang v. Rector (W.D. Va. 2013); Aryai v. Forfeiture Support Associates LLC, (S.D.N.Y 2012).

Overall, most courts that have had the opportunity to review FERA’s amendments to Section 3730(h) have made clear that they view the amendments as having increased the scope of the protections afforded to whistleblowers. But some courts have maintained deference to pre-FERA amendments precedents when deciding whether an individual has taken “steps in furtherance” of an action under the FCA.

For example, district courts in the Fourth and Fifth circuits acknowledged that the FERA amendments to Section 3730(h) were, indeed, intended to broaden the scope of protected activity by whistleblowers. Yet courts in these circuits have taken a narrow approach and relied on pre-FERA precedent in holding that relators must show they engaged in some form of conduct (e.g. investigations, inquiries, etc.) that could lead to the “distinct possibility” of a viable FCA qui tam claim. See e.g., Layman v. MET Labs., (D. Md. 2013); United States ex. rel. George v. 
Boston Scientific Corp., (S.D. Texas 2012).

These decisions appear to ignore the intent behind the FERA amendments by tying protected activity to bringing a qui tam case, when FERA plainly disposed of that requirement. However, for cases in those jurisdictions there appears to be a higher burden for a whistleblower to succeed on a retaliation claim.

The retaliation provisions of the amended Section 3730(h) include significant remedies for prevailing plaintiffs and entitle employees to recover damages for retaliatory acts taken by the employer after the employee has engaged in protected activity. Recoverable damages include reinstatement, two times back pay plus interest and “compensation for any ‘special damages’ sustained as a result of the discrimination, including litigation costs and reasonable attorneys’ fees.” The remedies provision is intended to be a particularly powerful deterrent to unlawful retaliation. United States ex rel. Chandler v. Hektoen Inst. for Med. Research, (N.D. Ill. 1999).

It is now well-settled that the term “special damages” includes an award of pain and suffering. For example, in Hammond v. Northland Counseling Center Inc., (8th Cir. 2000), the court held that not only were pain and suffering damages recoverable under Section 3730(h), but that those damages were recoverable even without a showing of economic loss. Similarly, in Neal v.Honeywell, (7th Cir. 1999), the court held that the employee was able to recover compensation for emotional distress caused by an employer’s retaliatory conduct as “special damages.”

HIGHER AWARDS IN OFFING?
Because of the broadened scope of retaliation claims under the FCA post-FERA, higher awards may be in the offing for an employer’s retaliatory conduct—especially if accompanied by expert testimony—for emotional distress as “special damages” under the FCA. Looking toward the future, it is quite likely that more FCA retaliation cases will be brought (both with and without qui tam claims). Those cases could see significant emotional distress damages recovered as a result of the retaliation—especially since there is no cap on these damages, unlike the cap for noneconomic damages under Title VII of the Civil Rights Act.

Although other provisions of the FERA amendments apply retroactively for qui tam cases, the recent amendments to the anti-retaliation protections of Section 3730(h) do not apply retroactively prior to the date of the FERA enactments. See Pub. L. No. 111-21, 4(f) (2009).

Congress’ recent amendments to Section 3730(h) were enacted to expand the protections afforded to whistleblowers. While a minority of courts have chosen to align with pre-FERA precedent, most have not and rule consistent with Congress’ clear intent to broaden the scope of protected activity and afford whistleblowers more protection under the anti-retaliation provisions. Good news for whistleblowers and bad news for those who retaliate in violation of the FCA.

 

Reprinted with permission from the April 13, 2015 issue of The National Law Journal. Copyright 2015 ALM Media Properties LLC. Further duplication without permission is prohibited. All rights reserved.

Maryland State Bar Association’s Litigation Section presents:

TROs and Injunctions in Federal and State Court: Practice Tips and Pitfalls to Avoid

Presenters:
The Honorable Benson E. Legg (U.S. District Court) (ret.)
The Honorable Michael D. Mason (Circuit Court for Montgomery County)
Matthew Fader, Esq. (Deputy Chief, Civil Litigation, Maryland Attorney General’s Office)
Timothy F. Maloney, Esq. (Principal, Joseph, Greenwald & Laake, P.A.)

Temporary Restraining Orders and Preliminary Injunctions are increasingly used litigation tools to protect the rights of parties pending the outcome of litigation.  This program will offer attendees a “nuts and bolts” primer on seeking and defending TROs and PIs in both State and Federal Courts.  Our panelists have both the experience and perspective to make this a meaningful and valuable event for our attendees.

Date:
Monday, May 18, 2015

Location:
Columbia Sheraton Hotel 10207 Wincopin Circle, Columbia, MD 21044

Cost:
$25.00 for members of Litigation, Labor & Employment and Young Lawyers Sections
$35.00 for all other MSBA Members

Time:
6:00 – 7:00 p.m. Reception (Appetizers and Cash Bar)
7:00 – 9:00 p.m. Program

Registration Deadline:
Wednesday, May 13, 2015

Co-Sponsored by:
MSBA, Labor and Employment and
Young Lawyers Sections

TO REGISTER, THIS FORM AND CHECK MUST BE RECEIVED BY THE MSBA NO LATER THAN MAY 13, 2015:

OR REGISTER ONLINE NO LATER THAN MAY 13, 2015
http://www.msba.org/sections/litigation/TRO-InjunctionProgram.aspx

Program Chair:
Jonathan P. Kagan, 410-216-7900
Kagan@kaganlawgroup.com

Program Committee:
Hon. Michael A. DiPietro
Jeffrey P. Bowman
Michael S. Steadman, Jr.