Whistleblowers and Company Documents: Sometimes Less is More

Our whistleblower clients frequently ask us: What company documents can I take? What can I show you? For us as lawyers, the question is (as we’ve written about before): Is there anything in this pile of paper (or on these thumb drives) that we can’t examine at all?

For lawyers unfamiliar with the False Claims Act or the SEC and IRS whistleblower programs, questions involving whistleblowers and company documents can be especially daunting. The wrong answer can subject a relator with otherwise valid claims to dismissal. A mistake also could expose the client and lawyer to substantial sanctions. You don’t want to mess up a potential case before it even begins.

Fortunately, courts have provided some guidance on the issue of whistleblowers and company documents. They generally have done so in False Claims Act cases where the government has not intervened. In these cases, employers and whistleblowing former employees often fight over whether employees had a right to take documents and the scope of what was taken. Companies sometimes file counterclaims against relators (for example, for theft of property).

Competing Interests: Company Property Rights Versus Public Policy

The basic framework as developed by the courts is this (leaving aside for the moment the special issue of privileged documents):

• • Companies have a legitimate property interest in the emails, papers, and other documents generated by their employees.

• • These property interests are routinely recognized by courts, particularly in the context of former employees trying to use these materials to start up a new business or work for a competitor. (Think trade secrets.)

• • However, a company’s property interests can be overridden by other interests, such as statutorily-protected whistleblowing activity.

• • The government has a right to use its powers to collect evidence of criminal wrongdoing (for example, by subpoena or search warrant); companies cannot use a property rights argument to suppress that evidence.

• • Similarly, the FCA empowers relators (acting to further the government’s interest in fighting fraud) to pass along company documents as evidence. Indeed, the statute requires relators to convey to the government everything they know about the problem, including any supporting documentation. Government investigators expect relators to not only describe suspected fraud but to support their account with relevant documents, where available.

• • So, there is a tension between competing values. On the one hand, a company has property interests in its documents; on the other, there is a strong public interest in allowing the government to access to documents that are evidence of fraud. Courts have weighed these competing interests and provided helpful guidance to whistleblowers and their attorneys.

• • Courts generally have approved situations where relators have kept copies of relevant documents that they would have seen in the ordinary course of their business. Doing so is protected by statutory rights under the FCA or other similar laws.

• • Often an employer will argue that the removal of documents violates an express confidentiality agreement or a common-law duty of loyalty. Neither of these arguments trumps whistleblower protections when a court determines that an employee is acting reasonably.

• • Courts generally do not approve, however, of relators who go snooping around the company looking for evidence that they normally wouldn’t have the right to see.

• • Court generally do not approve of a whistleblower who removes the only copy of a document from the premises (for example, an original where there are no copies). (This is rare in the electronic age, but is still possible.)

• • This dividing line makes sense as a matter of “rough justice.” Even though the False Claims Act and other whistleblower programs encourage whistleblowers to gather evidence of fraud, courts have not been comfortable blessing unrestricted snooping by employees.

Whistleblowers and Company Documents: Don’t Go Too Far

So, in practical terms, we typically advise clients to give us what they have in their “wingspan” and nothing else. In other words, if it’s a document that you saw or would normally see in the ordinary course of your work, it’s probably okay to share that with us.

But–there’s always a “but” in the law–we have to give clients special instructions with respect to anything potentially privileged. How to handle such documents is a topic worthy of an entire additional article. The basic approach is that we quarantine any documents where we think there’s an arguable claim of privilege, and we come back to them only if necessary. If we need to, we will often engage separate “taint” counsel for that purpose, so we don’t run any risk of disqualifying ourselves. The unfortunate corollary to this rule is that it is very risky for in-house counsel to serve as a False Claims Act relator as much of what they work on is privileged.

A recent case out of the 11th Circuit Court of Appeals, Brown Jordan International et al. v. Carmicle, is consistent with this general approach described in the bulleted points above. Although it was not a False Claims Act case, the dispute between a former employee and employer revolved around the employee having accessed other employees’ email accounts (which did not have personalized passwords). Gaining access using a universal password, the former employee found evidence of wrongdoing, which he then reported to compliance. But the tables were turned when the investigation ultimately focused on him for having improperly obtained the information. He was fired, and the courts upheld the firing.

So there’s a lot of nuance in this issue. If you’re not sure, err on the conservative side. Or get advice first. Good advice can keep you safely in the zone of “protected activity” under the applicable whistleblower laws without having to worry about later claims by the employer of document theft and the like.