Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Sunday, June 10, 2012

Modesitt on Whistleblower Protection

The Garcetti Virus, by Nancy M. Modesitt, University of Baltimore - School of Law, was recently posted on SSRN.  Here is the abstract:

In an era where corporate malfeasance has imposed staggering costs on society, ranging from the largest oil spill in recorded history to the largest government bailout of Wall Street, one would think that those who uncover corporate wrongdoing before it causes significant harm should receive awards. Employees are particularly well-placed to uncover such wrongdoing within companies. However, rather than reward these employees, employers tend to fire or marginalize them. While there are statutory protections for whistleblowers, a disturbing new trend appears to be developing: courts are excluding from the protection of whistleblowing statutes employees who report wrongdoing as part of their jobs. Under this doctrine, the internal safety inspector who uncovers illegal behavior while performing his duties and reports it to his boss can legally be fired for blowing the whistle.

This Article explains how this doctrine, the job duties exclusion, was developed by the Federal Circuit over a decade ago to limit claims brought by federal employees under the federal Whistleblower Protection Act. Flawed at its inception, the doctrine languished, with no states adopting it until the Supreme Court’s decision in Garcetti v. Ceballos. In Garcetti, the Court applied the job duties exclusion to a claim brought under the First Amendment. Even though Garcetti involved a constitutional, not a statutory, claim, the decision has given new life to the doctrine developed by the Federal Circuit. Since Garcetti, courts have begun applying the job duties exclusion to state statutory whistleblower claims, placing protections for employees at grave risk. This Article examines this developing trend, explaining how Garcetti has had an impact on what is fundamentally a state statutory interpretation issue. It identifies the flaws of the job duties exclusion as first articulated, the reasons why state courts should not apply it to state whistleblower protection statutes, and recommends that legislatures amend statutory protections to ensure that employees who do the right thing and report corporate malfeasance are protected against retaliation.

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