The federal False Claims Act (FCA) (37 U.S.C. 3729-3733) contains a whistleblower provision that “protects employees who pursue, investigate, or otherwise contribute to an action exposing fraud against the government.” Yuhasz v. Brush Wellman, Inc., 341 F.3d 559, 566 (6th Cir. 2003).

The FCA’s whistleblower provision, 37 U.S.C. 3730(h)(1), was recently amended to expand the scope of conduct protected under the statute. This amendment was one of a number of amendments to the FCA contained in the Fraud Enforcement Recovery Act of 2009, which was signed by the President on May 20, 2009.

In Yuhasz, the Sixth Circuit took a narrow position holding that a whistleblower was not entitled to protection from termination/retaliation unless he could establish that his employer actually knew he was taking action in furtherance of his own private qui tam claim or assisting in an FCA action brought by the government. This narrow standard resulted in many FCA whistleblower claims being dismissed. The language in the amended statute, however, substantially broadens the coverage afforded to whistleblowers.

Under the new version of the statute, it is illegal to discriminate or retaliate against an employee (as well as contractor or agent) because that person took lawful action in furtherance of efforts to stop violations of the FCA from occurring. Thus, it is my prediction that fewer FCA whistleblower claims will be dismissed because they cannot meet the exacting standard required by the Sixth Circuit in Yuhasz. This is good news for employees who blow the whistle on government fraud.

An issue that I see frequently in sexual harassment cases is fear on the part of the victim that she will be retaliated against if she reports the sexual harassment she is experiencing. A recent case from the Sixth Circuit Court of Appeals illustrates that absent proof of a “credible threat of retaliation” the employee’s failure to report sexual harassment may result in dismissal of the employee’s claim. Gallagher v. C.H. Robinson Worldwide, Inc., — F.3d —-, 2009 WL 1423967 (6th Cir. May 22, 2009). 09a0184p-06.pdf

According to the Sixth Circuit’s decision in Gallagher, an employee’s subjective fears of confrontation, unpleasantness or retaliation do not alleviate the employee’s duty to report the sexual harassment to the employer. In the Gallagher case, the employee argued that she did not complain to her employer about the sexual harassment that she suffered at the hands of her supervisor because she feared repercussions. The employee even bypassed a 1-800 anonymous tip number. As a result the court determined that the plaintiff could not establish a supervisor hostile work environment claim.

Thus, the lesson is that even though an employee fears retaliation, failure to report sexual harassment to the employer so that the harassment can be addressed will likely mean that the employee is left without a remedy, unless, of course, a real threat of retaliation can be established by the employee. Furthermore, employees should remember that retaliation for complaining about sexual harassment is illegal. So any retaliation meted out against the complaining employee will give rise to an independent claim of retaliation. In sum, it is my opinion that it is far better to complain than to remain silent when faced with this situation.

A question that I get from time to time is whether a finding that an employee is disqualified from receiving unemployment benefits (e.g., due to misconduct) prohibits the employee from bringing a lawsuit for race, age, or sex discrimination, for example. The short answer is, “no”. Importantly, Tennessee’s unemployment compensation statute contains an express provision that prohibits the application of collateral estoppel principles, which generally bar the relitigation of a factual finding made against a party in a prior proceeding involving the same parties.

Tenn. Code Ann. § 50-7-304(k) is the relevant statute and it provides as follows:

No finding of fact or law, judgment, conclusion, or final order made with respect to a claim for unemployment compensation under this chapter may be conclusive in any separate or subsequent action or proceeding in another forum, except proceedings under this chapter, regardless of whether the prior action was between the same or related parties or involved the same facts.

Not many cases have addressed the statute. Perhaps because the statute is quite clear. But a couple of cases that have addressed the statute include Mangrum v. Wal-Mart Stores, Inc., 950 S.W.2d 33, 37 (Tenn. Ct. App. 1997) in which the Tennessee court of appeals held that T.C.A. § 50-7-304(k) precluded application of collateral estoppel principles in a subsequent age discrimination case, and Featherston v. Charms Co., 2005 WL 1364621 (W.D.Tenn. May 10, 2005), in which the district court cited to the statute to hold that under Tennessee law, neither the findings of the Unemployment Appeals Tribunal nor the Board of Review had any preclusive affect on the parties in an FMLA case.

Occasionally I will work on a case for one of my clients with an attorney associated with another firm. I do this to benefit my client by providing the best representation possible. This is because many attorneys specialize in a discrete or obscure area of the law and they have special talent and knowledge that can benefit my client. Of course, the client usually wonders how the attorneys fees will be paid and divided in this situation.

Tennessee’s Rules of Professional Conduct contain an express provision concerning the splitting of fees among attorneys who do not work in the same firm. Click here.

Under RPC 1.5(e), a division of a fee between lawyers who are not in the same firm may be made only if:

(1) the division is in proportion to the services performed by each lawyer or, by written consent of the client, each lawyer assumes joint responsibility for the representation;

(2) the client is advised of and does not object to the participation of all the lawyers involved; and,

(3) the total fee is reasonable.

As Comment [5] to RPC 1.5 provides, “[a] division of fee facilitates association of more than one lawyer in a matter in which neither alone could serve the client as well, and most often is used when the fee is contingent and the division is between a referring lawyer and a trial specialist.” Interestingly, Comment [5] also states that RPC 1.5 “does not require disclosure to the client of the share that each lawyer is to receive.” But as a practical matter, I see no reason to refuse to disclose the fee division if asked for this information by a client.