One does not have to in employment law or qui tam practice very long before being confronted with a situation along the following lines:
An employee comes to the lawyer for representation in a whistleblower situation. The employee provides the attorney with documents from the employer that the employee considers to be confidential. The employee had legitimate access to the documents, but had not sought the employer’s permission to remove the documents. The lawyer’s review of the documents establishes that they contain no information protected by the attorney-client privilege or any other privilege recognized in Virginia. The only sense in which the documents are confidential is that the employer does not wish anyone outside the company to know of the contents of the documents. Were litigation pending, the documents would be subject to discovery. However, at this time, neither party has filed a lawsuit.
a. What are the attorney’s obligations regarding the documents: must he notify the employer, must he return the documents, and may he use the information?
The above hypothetical is from Virginia Legal Ethics Opinion 1786, and any lawyer interested in qui tam practice under the Virginia Fraud Against Taxpayers Act or the Federal False Claims Act should pay careful attention both to this opinion and to this area of law.
In formulating its answer, the Committee identified four factors as important ethical considerations: (1) the nature of the documents, (2) the nature of the sources of the information, (3) the method used by the client to gather the information, and (4) whether the attorney directed the client to gather the information.
The first thing the Committee pointed out is that the attorney can only use the information if Virginia Ethics Rules 3.4(a) and 4.4 are not violated. Rule 3.4(a) provides that
A lawyer shall not obstruct another party’s access to evidence or alter, destroy, or conceal a document having evidentiary value for the purpose of obstructing another party’s access to evidence. A lawyer shall not counsel or assist another person to do any such act.
If the potential relator removed the only originals from his or her employer, Virginia lawyers would clearly have a duty to take corrective measures. Just what those corrective measures are would depend on the specifics of each situation. Where the potential client is still employed by the potential defendant, the first and most obvious step is to have them replace the documents.
A much more difficult situation arises where the aspiring plaintiff/relator no longer has access to his or her former place of employment. The deliberations required in each instance for lawyers practicing in this area must focus on discerning when the duty of confidentiality applies and when the attorney is within one of the exceptions outlined in the rule. It is also important to note that Virginia Ethics Rule 8.4(a) prevents a lawyer from using another person as an instrumentality to accomplish something the lawyer herself could not do ethically.
The attorney must consider both confidences (i.e., information protected by the attorney/client privilege) and secrets (i.e., information the client has asked to be kept inviolate or that may embarrass or be detrimental to the client) in deciding whether the situation presents an exception to the duty of confidentiality.
Where the potential privilege is a creature of statute, one should of course look for a statutory exception. For example, HIPAA–which must be the most feared statute in the medical community, as well as the least understood–provides specific exceptions for whistleblowers who clandestinely copy and remove patient files that prove fraud, provided they have a reasonable belief that fraud is occurring and provided they share the records only with professionals for the purposes of learning whether fraud has been committed. See, 45 C.F.R. § 164.502(j).
The Committee also specifically cited the False Claims Act, and the duty it places on the lawyer and the plaintiff to file the original suit under seal, and keep all information pertaining to the suit confidential for a directed period of time. Where a specific whistleblower statute precludes the lawyer from sharing the information the opposing party, Virginia Ethics Rules 3.4(a) and 4.4 would not require the lawyer to breach that legal duty, the Committee found.
LEO 1786 simply deals with the lawyer’s duties and risks–what risks are there for the clients and potential whistleblowers?
Lest any potential qui tam relator think there is little to no risk to blowing the whistle, he or she should read the recent Virginia case of JDS Uniphase v. Jennings, 473 F.Supp.2d 697 (E.D.Va. 2007). JDSU filed suit against its former employee for breach of contract, breach of fiduciary duty, conversion, and violation of the Virginia Uniform Trade Secrets Act. Jennings had copied documents during his employment in order to provide support, he claimed, for a potential whistleblower claim under Sarbanes-Oxley.
In ruling against Jennings and granting summary judgment to JDSU, the Court’s analysis seemed to focus on the fact that it was a Sarbanes-Oxley-style claim and as a result, the documents could easily be subpoenaed or obtained via a document request once the matter was in litigation. Moreover, Sarbanes-Oxley exists, in large part, to prevent companies from destroying documentation of wrongdoing.
It seems likely that the Court might not make the same ruling in a False Claims Act action. The sorts of materials a whistleblower might want to document and copy in a False Claims case might not be subject to statutory protection like the materials Jennings copied in JDS Uniphase.
Finally, it is quite important to note that Judge Ellis concludes his opinion with the following:
Although summary judgment on JDSU’s breach of contract claim must be granted as to liability, the extent of the breach and the appropriate remedy remains to be determined. In particular, it remains to be determined (i) which, if not all, of the documents Jennings removed are proprietary within the meaning of the PIA, (ii) whether any remedy besides return of the documents to JDSU is appropriate, and (iii) whether JDSU intends to pursue its other causes of action in this matter.
Thus, defendants must still show damages as a result of the breach.
The simple fact is that, in the absence of specific statutory protections such as those provided for in HIPPA, the merits of the underlying claim factor into the level of risk that a potential whislteblower faces for copying and collecting documents during his or her employment.
This writer has yet to see a published opinion in which an employer had a viable counterclaim against a whistleblower who copied and documented actual fraud in the workplace. In other words, employers who have violated the False Claims Act, or the Virginia Fraud Against Taxpayers Act and are sued by an employee armed with enough evidence to support the claim, have bigger fish to fry. Such employers tend to spend little time worrying about the copying of documents.
Despite cases such as JDS Uniphase, employees who feel threatened by the fraudulent activity of their employer are going to continue to take steps to protect themselves and their interests. The fact that there are risks–potentially even severe ones–is not likely to serve as a deterrent, because they understand that they face severe risks either way.
ZAK
Cook & Kitts, PLLC
https://www.cookkitts.com
zkitts@cookkitts.com