by Brian Mahany
Arbitration clauses are where many of the big legal battles are being waged these days. Employers and businesses want to force workers to arbitrate their claims. While there are sometimes advantages to arbitration, in many cases the arbitration clauses are biased against workers. We don’t automatically disfavor arbitration, however it has to be reasonable and give all parties the opportunity to fairly present their case. A federal court in Alexandria, Virginia last week ruled that an arbitration clause forcing workers to arbitrate whistleblower claims under the false claims act was unenforceable. This is a major win for workers and against bad employers.
According to the court’s opinion, Robert Winston and Allen Wheeler were contract firearms instructors in Afghanistan. They worked for a defense department contractor called Academi. After witnessing other company officials falsifying records, the two reported the fraud to their supervisor. The next day they were fired. If that wasn’t bad enough, the company reportedly also had their names placed on a government “Do Not Use” list effectively preventing them from working in Afghanistan.
Both men filed a false claims act complaint. Academi asked the court to dismiss the case because the men had previously signed an independent contractor agreement which required false claim complaints to go to arbitration.
In a well reasoned opinion, the court refused to send the workers claims to arbitration.
As noted before, arbitration can sometimes save parties time and money. The rules, however, have to be fair. In this case, the court found that the arbitration clause prevented the men from conducting any discovery. In other words, the company prevented anyone making a complaint against it from seeking documents to prove their case. In the words of the judge, “It will be difficult, if not impossible, to prove those claims without the allegedly falsified documents. And it will be difficult, if not impossible, to obtain those documents without discovery. ”
The agreement also required the men to pay all attorneys fees and costs regardless of the outcome. Congress, however, clearly stated that was not the case in false claims actions.
For all practical purposes, the arbitration clause required by the company made it physically and economically impossible for the men to win.
Although the men will still have to prove their case, at least they can do so in a fair and neutral forum.
Filing a false claims act case or defending against retaliation can be difficult. In a perfect world, businesses would welcome knowing when someone is doing illegal. Honest businesses do. Unfortunately, retaliation occurs frequently and not every whistleblower is received with welcome arms. For that reason, Congress gave the courts the ability to pay cash awards to whistleblowers who provide valuable information. Typically, they receive 20 to 25% of whatever is collected by the government.
If you have believe you have a claim, let us know right away. Generally only the first whistleblower who comes forward gets to share in the recovery.
Mahany & Ertl – America’s Fraud Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine; Minneapolis, Minnesota and San Francisco, California. Fraud recovery available in many jurisdictions.
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