Courts Conducting the Whistleblowing


Whistleblowing is prevalent in the news. Edward Snowden and Bradley Manning captured our attention. As more claims emerge from workplaces, additional whistleblowing lawsuits are challenging the courts to define and interpret the many relevant laws.

Asadi v. GE Energy (USA)

Khaled Asadi raised concerns through GE Energy's internal channels about the company engaging in bribery in violation of the Foreign Corrupt Practices Act. Almost immediately afterward, Asadi received a negative employment performance review and was encouraged to accept a demotion. He refused. One year after reporting the alleged bribery, Asadi was fired. He sued, claiming retaliation under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010’s whistleblower-protection provision. GE argued that Asadi was not a whistleblower under Dodd-Frank because he never reported a securities law violation to the Securities and Exchange Commission (SEC). This summer, the U.S. Court of Appeals agreed with GE.

Internal reporting requirement

Another question raised by recent litigation is whether a tipster must report internally and to the SEC. The final draft of the SEC whistleblower office’s rules is unclear. At one point, it says reports must be made to the SEC and in another that they may be made to other officials and departments. The U.S. Court of Appeals in the Asadi case held that a whistleblower must file a report with the SEC to be eligible for the law’s protections. Although internal reports are not mandated by the SEC’s rules, they are encouraged because the courts consider whether a tipster filed an internal report when determining the size of the bounty award.

Pursuing whistleblowers with the Espionage Act

For more than 25 years, the U.S. government has pursued various whistleblowers by claiming violations of the Espionage Act. In a recent decision in U.S. v. Stephen Kim, a district court ruled that prosecutors don’t need to prove that information revealed by a whistleblower is damaging to the United States or advantageous to a foreign government. Stephen Kim, a former State Department official was accused of disclosing intelligence about North Korea's nuclear program to Fox News. Legal pundits fear that this decision could turn every government whistleblower into a spy in violation of the Espionage Act.

To blow or not to blow the whistle on government misconduct is a courageous decision.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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