Allen Roberts Quoted in Article About Federal Express Whistleblower Case

Law360

Allen Roberts, a Member of the Firm's Labor and Employment practice and co-chair the Whistleblowing and Compliance Subpractice Group in the New York office, was quoted in an article titled "ARB Breaks New Ground In FedEx Whistleblower Case."

Following is an excerpt:

The U.S. Department of Labor's Administrative Review Board recently revived a whistleblower case brought by a Federal Express Corp. courier who said she was suspended for complaining about suspected mail fraud by a FedEx customer, a ruling lawyers say is the first in which the board has held that reports of third-party conduct can constitute protected activity under the Sarbanes-Oxley Act.

The ARB's July 8 ruling in Funke v. Federal Express Corp., which reversed an administrative law judge's conclusion that FedEx employee Heidi Funke had failed to prove that she engaged in protected activity, signals the board's ongoing mission to expand SOX's whistleblower protections, attorneys say.

"The ARB is out there leading the way in redefining what protected activities are, at least in the context of DOL proceedings," Allen Roberts said. "The DOL will remain the whistleblower's forum of choice."

An administrative law judge ruled in the Funke case in September 2008 that protected activity occurs when a worker reports conduct by their employer that the employee reasonably believes violates the laws and regulations related to fraud against shareholders. The ARB disagreed, ruling that the error in the judge's "overly narrow" definition of protected activity was twofold.

First, the board ruled, the alleged misconduct does not necessarily have to relate to shareholder fraud. Second, protected activity isn't circumscribed to disclosures about misconduct by the employer. Funke, who is still a FedEx courier, alerted dispatchers, customer service representatives, her manager and local law enforcement that a third party — a woman referred to in the ARB's ruling as "Ms. K" — was using FedEx as a conduit for suspected mail fraud.

Funke was chastised by a senior manager for informing law enforcement about FedEx operations and opening the company up to civil and criminal liability, according to the ARB decision. She was suspended for three days without pay and filed a SOX complaint with the U.S. Occupational Health and Safety Administration in January 2007.

FedEx argued, and the ALJ agreed, that SOX's whistleblower provisions only applied to workers who report misconduct by their employers. But the ARB held that the plain language of the statute does not contain a requirement that the misconduct be committed by the employer.