Canadian Lawyer InHouse

ING ISTLE RAUD claims when he complained and brought it to management's attention, he was disciplined and later fired. So he sued under the whistleblower protections of U.S. Code title 18, s. 1514A, which prevents a publicly traded company from taking retaliatory action against an employee who reports fraud against shareholders. The Wallender suit alleges compensation of the company's then-chief operating officer, Keith Creel, was tied to the share price. The complaint alleges "Martin told employees at Harrison Yard he had a green light carte blanche from Creel to implement his schemes for using false records to show lower than actual dwell time at Harrison Yard." CNR's law firm declined to comment on the case. A spokesman says CNR's policy is not to comment on ongoing litigation, but added "CN vigorously denies the allegation that its termination of Timothy Wallender for cause violated the whistleblower provi- sions of the Sarbanes-Oxley Act." The Wallender case is a typical whistleblower action. The Occupational Safety and Health Administration of the U.S. Federal Department of Labor is responsible for whistleblowing under more than 20 U.S. statutes, including Sarbanes. In 2013, there were 2,920 whistleblowing complaints and 173 cases were filed under Sarbanes protections. There have been more than 1,700 Sarbanes whistleblowing cases filed since 2006. Last year OSHA dealt with 251 Sarbanes cases. Two were held to have merit, 38 settled, 142 were dismissed, 25 were kicked out, and 44 withdrawn. There has been an uptick in settlements over the past few years. That's because U.S. lawyers say initially whistleblower jurisprudence was narrowly interpreted following the introduction of protections in Sarbanes, which was rooted in the financial frauds of WorldCom and Enron Corp. in the late 1990s, but that is changing due to new laws and changes in processes. Kathleen Clark, a law professor at Washington University Law and an attorney who focuses on whistleblower suits, says initially "the statutory protections for whistleblowers was more of an illusion than a reality." That's because OSHA was tasked with first receiving the cases. If they don't act in 180 days, cases can transfer to the federal District Court. "While OSHA had a lot of experience with workplace safety, it didn't have experience with financial fraud," Clark explains. "OSHA was frankly hostile to claims of whistleblowers seeking protections." But that's changing. She says when President Barack Obama was elected, he appointed different people to be administrative law judges under OSHA. Clark says they "are adopting legal principles and interpreting the law in a way that is frankly very favorable toward whistleblowers and quite a challenge for management." Moreover, the recent Dodd-Frank amendments sought to fix some of the weak nesses canadianlawyermag.com/inhouse February 2014 31

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