Increasingly, employers are adopting generic “confidentiality policies” which prevent employees from sharing any internal documents with persons outside of the company. But what if these internal documents implicate ongoing illegal activity by the employer? What if the employee, by remaining silent, faces criminal prosecution for remaining silent about illegal activity?
The rights of employees to “blow the whistle,” or to oppose unlawful activity, may often conflict with an employer’s internal confidentiality policies. Whether the employee’s right to blow the whistle usurps the employer’s right to strict confidence can be a thorny issue.
The Sixth Circuit has employed a six-factor test to determine whether an employee may provide confidential information which otherwise violates an employer’s internal confidentiality agreement. Those six factors include: (1) how the documents were obtained; (2) to whom they were given; (3) the content of the documents; (4) the reason they were produced; (5) the scope of the confidentiality agreement; and (6) whether the employee could preserve the evidence without violating the confidentiality agreement. Niswander v. Cincinnati Ins. Co., 529 F.3d 714 (6th Cir. 2008).
The employee in Niswander, an insurance adjuster, produced significant information from claims files to her attorney. The Sixth Circuit found that her actions in obtaining the documents were appropriate in light of her position, and giving them to an attorney was appropriate as well. However, the employer ultimately prevailed because much of the content of the information was unrelated to the legal claims she sought to pursue.
After Niswander, a few courts have criticized the vagueness and weight to be given to the various factors. For example, the New Jersey Supreme Court, in Quinlan v. Curtiss-Wright Corp., 204 N.J. 239, 248 (N.J. 2010), ruled that an employee may use 1,800 documents which she copied to support her lawsuit for gender pay equality. When the employer fired her for breaching the internal confidentiality agreement by using those documents in litigation, the jury found in her favor in a retaliation case. Boy, did they ever—a $10,649,117 total verdict, including $4,565,479 in punitive damages. Perhaps peculiarly, the Quinlan court held that copying and removing the documents was not protected activity, but using them in the deposition was protected activity. In other words, this “fruit from a poisonous tree” was still good fruit indeed.
What if the employee needs to report illegal activity to the United States in a Qui Tam (False Claims Act) case? Is there a difference when the government is involved? It appears so. The False Claims Act (FCA) makes it illegal to fire a person for providing documents to the government. 31 U.S.C. §3730(h). Some courts have held that claims to the government under the FCA trump any internal confidentiality agreement. See, e.g., United States v. Cancer Treatment Ctrs. Of Am., 350 F.Supp.2d 765, 773 (N.D. Ill. 2004). Indeed, under the FCA, and employee is supposed to provide information to the United States in secret because the government “must investigate the alleged fraud without tipping off investigation targets at a sensitive stage.” 31 U.S.FC. §3730(b); U.S. ex. Rel. Yesudian v. Howard Univ., 153 F.3d 731, 743 (D.C. Cir. 1998).
So, what are the recommendations for an employee who wishes to report ongoing illegal activity to a lawyer?
First, per Niswander, determine whether note-taking, as opposed to document production, may be sufficient information for counsel;
Second, if the employee fears the employer will destroy the documents, consider making an additional copy of the documents and storing them in a safe place at the employer’s worksite;
Third, if production of the documents to counsel is genuinely necessary for case evaluation, produce a narrow, limited sample and make sure those documents are strictly relevant to the claims to be asserted in a lawsuit;
Fourth, do not share the documents with family members, friends, or other employees. Instead, limit the production to attorneys only, labeling them “attorney client privileged” so as to indicate the closely held nature of the production; and
Fifth, if the matter is being produced to the government in furtherance of a False Claims Act case (Qui Tam), consider asking the government to seek an Ex Parte Order from a court allowing the documents to be reviewed by an impartial official. That provides an additional layer of respect for the documents.