[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]



 
                     PRIVATE SECTOR WHISTLEBLOWERS:
                ARE THERE SUFFICIENT LEGAL PROTECTIONS?

=======================================================================

                                HEARING

                               before the

                 SUBCOMMITTEE ON WORKFORCE PROTECTIONS

                              COMMITTEE ON
                          EDUCATION AND LABOR

                     U.S. House of Representatives

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

              HEARING HELD IN WASHINGTON, DC, MAY 15, 2007

                               __________

                           Serial No. 110-37

                               __________

      Printed for the use of the Committee on Education and Labor


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      http://www.gpoaccess.gov/congress/house/education/index.html



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                    COMMITTEE ON EDUCATION AND LABOR

                  GEORGE MILLER, California, Chairman

Dale E. Kildee, Michigan, Vice       Howard P. ``Buck'' McKeon, 
    Chairman                             California,
Donald M. Payne, New Jersey            Ranking Minority Member
Robert E. Andrews, New Jersey        Thomas E. Petri, Wisconsin
Robert C. ``Bobby'' Scott, Virginia  Peter Hoekstra, Michigan
Lynn C. Woolsey, California          Michael N. Castle, Delaware
Ruben Hinojosa, Texas                Mark E. Souder, Indiana
Carolyn McCarthy, New York           Vernon J. Ehlers, Michigan
John F. Tierney, Massachusetts       Judy Biggert, Illinois
Dennis J. Kucinich, Ohio             Todd Russell Platts, Pennsylvania
David Wu, Oregon                     Ric Keller, Florida
Rush D. Holt, New Jersey             Joe Wilson, South Carolina
Susan A. Davis, California           John Kline, Minnesota
Danny K. Davis, Illinois             Bob Inglis, South Carolina
Raul M. Grijalva, Arizona            Cathy McMorris Rodgers, Washington
Timothy H. Bishop, New York          Kenny Marchant, Texas
Linda T. Sanchez, California         Tom Price, Georgia
John P. Sarbanes, Maryland           Luis G. Fortuno, Puerto Rico
Joe Sestak, Pennsylvania             Charles W. Boustany, Jr., 
David Loebsack, Iowa                     Louisiana
Mazie Hirono, Hawaii                 Virginia Foxx, North Carolina
Jason Altmire, Pennsylvania          John R. ``Randy'' Kuhl, Jr., New 
John A. Yarmuth, Kentucky                York
Phil Hare, Illinois                  Rob Bishop, Utah
Yvette D. Clarke, New York           David Davis, Tennessee
Joe Courtney, Connecticut            Timothy Walberg, Michigan
Carol Shea-Porter, New Hampshire

                     Mark Zuckerman, Staff Director
                   Vic Klatt, Minority Staff Director
                                 ------                                

                 SUBCOMMITTEE ON WORKFORCE PROTECTIONS

                LYNN C. WOOLSEY, California, Chairwoman

Donald M. Payne, New Jersey          Joe Wilson, South Carolina,
Timothy H. Bishop, New York            Ranking Minority Member
Carol Shea-Porter, New Hampshire     Tom Price, Georgia
Phil Hare, Illinois                  John Kline, Minnesota


                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on May 15, 2007.....................................     1
Statement of Members:
    Wilson, Hon. Joe, ranking minority member, Subcommittee on 
      Workforce Protections......................................     3
        Prepared statement of....................................     4
    Woolsey, Hon. Lynn C., Chairwoman, Subcommittee on Workforce 
      Protections................................................     1
        Prepared statement of....................................     2

Statement of Witnesses:
    Chinn, Lloyd B., partner, Proskauer Rose LLP.................    40
        Prepared statement of....................................    41
    Devine, Thomas, legal director, Government Accountability 
      Project....................................................    45
        Prepared statement of....................................    46
    Fairfax, Richard, Director of Enforcement, Occupational 
      Safety and Health Administration...........................    17
        Prepared statement of....................................    20
    Moberly, Richard E., assistant professor of law, Cline 
      Williams Research Chair, University of Nebraska College of 
      Law........................................................    32
        Prepared statement of....................................    34
        Internet address to ``Unfulfilled Expectations: An 
          Empirical Analysis of Why Sarbanes-Oxley Whistleblowers 
          Rarely Win,'' by Richard E. Moberly, 49 William and 
          Mary Law Review (abstract).............................    39
    Simon, John..................................................    14
        Prepared statement of....................................    16
    Wigand, Dr. Jeffrey..........................................     6
        Prepared statement of....................................     9


 PRIVATE SECTOR WHISTLEBLOWERS: ARE THERE SUFFICIENT LEGAL PROTECTIONS?

                              ----------                              


                         Tuesday, May 15, 2007

                     U.S. House of Representatives

                 Subcommittee on Workforce Protections

                    Committee on Education and Labor

                             Washington, DC

                              ----------                              

    The subcommittee met, pursuant to call, at 2 p.m., in Room 
2175, Rayburn House Office Building, Hon. Lynn Woolsey 
[chairwoman of the subcommittee] Presiding.
    Present: Representatives Woolsey, Payne, Bishop of New 
York, Shea-Porter, Wilson, Price, and Kline.
    Staff Present: Aaron Albright, Press Secretary; Tylease 
Alli, Hearing Clerk; Lynn Dondis, Senior Labor Policy Advisor 
for Subcommittee on Workforce Protections; Michael Gaffin, 
Staff Assistant, Labor; Peter Galvin, Senior Labor Policy 
Advisor; Jeffrey Hancuff, Staff Assistant, Labor; Thomas Kiley, 
Communications Director; Joe Novotny, Chief Clerk; Robert 
Borden, Minority General Counsel; Steve Forde, Minority 
Communications Director; Ed Gilroy, Minority Director of 
Workforce Policy; Rob Gregg, Minority Legislative Assistant; 
Richard Hoar, Minority Professional Staff Member; Victor Klatt, 
Minority Staff Director; Jim Paretti, Minority Workforce Policy 
Counsel; Molly McLaughlin Salmi, Minority Deputy Director of 
Workforce Policy; Linda Stevens, Minority Chief Clerk/Assistant 
to the General Counsel; and Loren Sweatt, Minority Professional 
Staff Member.
    Chairwoman Woolsey. A quorum is present. The hearing of the 
Workforce Protection Subcommittee on Private Sector 
Whistleblowers: Are There Sufficient Legal Protections, will 
now come to order. Pursuant to committee rule 12(a), any Member 
may submit an opening statement in writing, which will be made 
part of the permanent record.
    I now recognize myself, followed by Ranking Member Joe 
Wilson, for an opening statement.
    I want to thank all the witnesses for coming today, to 
testify on whether current legal protections are sufficient to 
protect whistleblowers, especially those laws that are 
administered by the Department of Labor. And I want to 
especially thank both Dr. Wigand and Mr. Simon for appearing 
here today. You are going to tell your stories. Being a 
whistleblower is very difficult, and I know that your lives 
have changed in ways you can never have imagined when you first 
made your decision to come forward.
    Today you are among friends. This week is Whistleblowers 
Week. We want to celebrate your actions and praise the 
substantial public service that you have provided, all at a 
considerable sacrifice to yourselves and your families.
    We also want to learn from you because you know far better 
than we do what additional protections are needed so that 
people like yourselves will be encouraged to report 
illegalities, safety and health violations, and fraud and abuse 
when the situation makes it necessary.
    The idea for this hearing was generated by a full committee 
hearing held on the Sago mine disaster on March 28th, 2007, 
just a couple of months ago. At that hearing we heard testimony 
about the blacklisting faced by miners who speak up about 
safety and health risks in the mines. This is true even though 
they should be protected by MSHA, and they find that their very 
jobs are threatened if they come forward.
    But as our witnesses today will illustrate, miners are not 
alone in having to deal with such problems. Over the years 
Congress has indicated its clear intent to protect 
whistleblowers by passing over 30 statutes prohibiting 
retaliation against employees who report a myriad of problems, 
from environmental spills to health and safety violations, to 
corporate fraud.
    However, while the laws may have made some things better, 
they have not eliminated intimidation, harassment, blacklisting 
and other forms of retaliation. Often the laws themselves are 
inconsistent and certainly not always user friendly.
    Let me give you one example. Mr. Fairfax's office at OSHA 
administers 14 whistleblower provisions. Under these laws 
complainants have either 30, 60, 90 or 180 days to file their 
claim, depending on the statute that they are filing under. 
These statutes of limitation are very short, sometimes creating 
insurmountable hurdles, especially for someone who has just 
been demoted or fired from a job not for performance, but 
because he or she may have complained about an unsafe condition 
at work.
    It is as though in legislating we have created protections 
or the expectation of protection without ensuring that these 
protections are accessible.
    Today we will explore the issues and at least begin to 
answer some important questions: Do we need to expand the laws 
to cover employees currently not covered. Are there procedural 
and other hurdles in the law that we need to change so 
complainants can successfully bring their claims forward? Do we 
need to look more closely at how these laws are being 
administered, including OSHA's Department of Enforcement? And 
what is the need for resources in order to process 
whistleblower claims in a timely manner?
    I am looking forward to all of your testimony, and with 
that I defer to Ranking member Joe Wilson for his opening 
statement.
    [The statement of Ms. Woolsey follows:]

Prepared Statement of Hon. Lynn C. Woolsey, Chairwoman, Subcommittee on 
                         Workforce Protections

    I want to thank all our witnesses for coming today to testify on 
whether current legal protections are sufficient to protect 
whistleblowers, especially those laws that are administered by the 
Department of Labor.
    And I want to especially thank both Dr. Wigand and Mr. Simon for 
appearing here today to tell their stories. Being a whistleblower is 
very difficult, and I know your lives have changed in ways you could 
never have imagined when you first made your decision to come forward.
    Today, you are among friends. This week is Whistleblowers' Week.
    We want to celebrate your actions and praise the substantial public 
service you have provided--all at considerable sacrifice to yourselves 
and your families.
    We also want to learn from you because you know far better than we 
do what additional protections are needed so that people like 
yourselves will be encouraged to report illegalities, safety and health 
violations; and fraud and abuse when necessary.
    The idea for this hearing was generated by a Full Committee hearing 
held on the Sago Mine Disaster on March 28, 2007.
    At that hearing, we heard testimony about the blacklisting faced by 
miners who speak up about safety or health risks in the mines. This is 
true even though they should be protected by MSHA (the Mine Safety and 
Health Act) if they came forward.
    But as our witnesses today will illustrate, miners are not alone in 
having to deal with such problems.
    Over the years, Congress has indicated its clear intent to protect 
whistleblowers by passing over 30 statutes prohibiting retaliation 
against employees who report on a myriad of problems, from 
environmental spills to health and safety violations to corporate 
fraud.
    However, while the laws may have made some things better, they have 
not eliminated intimidation, harassment, blacklisting and other forms 
of retaliation.
    And often, the laws themselves are inconsistent and certainly not 
always user friendly.
    Let me give you one example. Mr. Fairfax's office at OSHA 
administers 14 whistleblower provisions. Under these laws, complainants 
have either 30, 60, 90 or 180 days to file their claim depending on the 
statute they are filing under.
    These statutes of limitations are very short and sometimes create 
insurmountable hurdles, especially for someone who has just been 
demoted or fired from a job---not for performance--but because he or 
she may have complained about an unsafe condition at work.
    It is as though in legislating, we may have created protections or 
the expectation of protection without ensuring that they are 
accessible.
    Today, we will explore the issues and at least begin to answer some 
important questions.
    Do we need to expand the laws to cover employees currently not 
covered?
    Are there procedural and other hurdles in the law that we need to 
change so complainants can successfully bring their claims forward?
    And do we need to look more closely at how these laws are being 
administered, including OSHA's Department of Enforcement need for more 
resources in order to process whistleblower claims in a timely manner?
    I am looking forward to everyone's testimony,
    With that, I defer to Ranking Member Joe Wilson for his opening 
statement.
                                 ______
                                 
    Mr. Wilson. Good afternoon. I would like to thank Chairman 
Woolsey for convening this hearing and welcome our witnesses to 
the subcommittee. At the outset I would also like to thank 
Chairman Woolsey for restoring a sense of fairness to these 
hearings with the witness ratio.
    I believe this hearing to explore the Occupational Safety 
and Health Administration's work will be very informative for 
our panel, and I thank you, the witnesses, for being here 
today. I look forward to your testimony on the whistleblower 
programs for which OSHA is responsible.
    OSHA administers 14 statutes in the whistleblower program. 
The range of issues covered under the programs stem from the 
Occupational Safety and Health Act, OSHA's core competency, if 
you will, to the newly passed AIR 21 legislation. In addition, 
several environmental laws are covered under this program.
    With the addition of the relatively new and far-reaching 
Sarbanes-Oxley Act, I am sure that some have questioned the 
wisdom of housing all of these programs at OSHA. That said, I 
am encouraged by the statistics demonstrating OSHA's 
performance in investigating whistleblower-related claims. On 
average OSHA is dispensing 2,000 whistleblower claims annually, 
mainly in the OSHA and Sarbanes-Oxley arena. At the heart of 
these programs is the issue of whether or not an employer 
retaliated against a whistleblower.
    For example, if an employee correctly brought to light a 
concern about safety, environmental hazards, or financial 
irregularities and then was fired, received a demotion, or had 
his or her pay cut, this is a clear example of retaliation that 
the law seeks to protect against.
    However, it is not always crystal clear. I know this 
firsthand from my National Guard service of 31 years as a staff 
judge advocate to assist Guard members in reemployment rights 
and reducing discrimination and retaliation against Guard 
member service.
    In the work of the investigators at OSHA to determine if 
action taken by management is retribution or if the employee 
simply is disgruntled, for example, there are two sides to 
every story, and each side has a right to be heard. The 
testimony we will hear today will highlight how these actions 
are reviewed and how a determination is made about the true 
motivation between the actions of employers and employees 
alike.
    I look forward to hearing from our witnesses about this 
very important program.
    Chairwoman Woolsey. Thank you, Congressman.
    [The statement of Mr. Wilson follows:]

    Prepared Statement of Hon. Joe Wilson, Ranking Minority Member, 
                 Subcommittee on Workforce Protections

    Good afternoon. I'd like to thank Chairwoman Woolsey for convening 
this hearing and welcome our witnesses to the subcommittee. At the 
outset, I would also like to thank Chairwoman Woolsey for restoring 
some sense of fairness to these hearings with the witness ratio. I 
believe this hearing to explore the Occupational Safety and Health 
Administration's work will be very informative for our panel, and I 
look forward to your testimony on the whistleblower programs for which 
OSHA is responsible.
    OSHA administers 14 statutes in the whistleblower program. The 
range of issues covered under the program stem from the Occupational 
Safety and Health Act--OSHA's core competency, if you will--to the 
newly passed AIR 21 legislation. In addition, several environmental 
laws are covered under this program. With the addition of the 
relatively new and far-reaching Sarbanes-Oxley Act, I am sure that some 
have questioned the wisdom of housing all these programs at OSHA.
    That said, I am encouraged by the statistics demonstrating OSHA's 
performance in investigating whistleblower-related claims. On average, 
OSHA is dispensing 2,000 whistleblower claims annually, mainly in the 
OSHA and Sarbanes-Oxley arena.
    At the heart of all of these programs is the issue of whether or 
not an employer retaliated against a whistleblower. For example, if an 
employee correctly brought to light a concern about safety, 
environmental hazards, or financial irregularities and then was fired, 
received a demotion, or had his or her pay cut, this is a clear example 
of retaliation that the law seeks to protect against. However, it is 
not always this crystal-clear. I know this first hand from my National 
Guard Service as Staff Judge Advocate to assist Guard members in re-
employment rights and reducing discrimination against Guard member 
service.
    It is the work of the investigators at OSHA to determine if action 
taken by management is retribution or if the employee simply is 
disgruntled, for example. There are two sides to every story and each 
side has a right to be heard. The testimony we'll hear today will 
highlight how these actions are reviewed and how a determination is 
made about the true motivation behind the actions of employers and 
employees alike.
    I look forward to hearing from our witnesses about this important 
program.
                                 ______
                                 
    Chairwoman Woolsey. Without objection, all Members will 
have 14 days to submit additional materials or questions for 
the hearing record.
    I would now like to introduce our very distinguished panel 
of witnesses that are here with us this afternoon. I will 
introduce you all in the order that you are seated and in the 
order that you will speak.
    Jeffrey Wigand has a distinguished background, and his 
honors and activities are too numerous to name. Dr. Wigand may 
be best known for his courageous activities in exposing Big 
Tobacco. But in 1998, he founded Smoke-Free Kids, Inc., and has 
spent the better part of a decade speaking out on the dangers 
of tobacco consumption, especially for children.
    Dr. Wigand received his B.A., master's and Ph.D. From the 
State University of New York at Buffalo and also received a 
master's in teaching from the University of Louisville. He also 
received honorary degrees from Worcester Polytech, the Medical 
Society of Nova Scotia, and Connecticut College.
    John Simon is from Lake Villa, Illinois, and a former 
trucker. He also acted courageously in exposing his former 
employer's illegal transportation practices. Mr. Simon is a 
graduate of Gray Lakes High School in Illinois.
    Richard Fairfax is the Director of Enforcement Programs at 
OSHA at the Department of Labor. He is a certified industrial 
hygienist and has been at OSHA for 30 years. Mr. Fairfax 
received his B.A. From California Polytech University and his 
masters from Humboldt State University.
    Lloyd Chinn is a partner at Proskauer Rose in New York 
practicing in the areas of labor and employment law. Mr. Chinn 
received his B.S. From Georgetown University and his law degree 
from New York University.
    Richard Moberly is an assistant professor and the Cline 
Research Chair at the University of Nebraska College of Law 
where he teaches employment law and evidence. Professor Moberly 
is the author of a study on OSHA's handling of whistleblowers' 
claims under the Sarbanes-Oxley Act. He received his B.A. from 
Emory University and his law degree from Harvard Law School.
    Tom Devine is the legislative director of the Government 
Accountability Project, a leading organization representing the 
rights of whistleblowers. Mr. Devine has written extensively 
about whistleblower laws and has worked with whistleblowers for 
over two decades. Mr. Devine received a B.A. From Georgetown 
University, and his law degree from Antioch School of Law.
    Now, many of you don't know how we do this, so just before 
you get started, I want to talk to you about the lights and how 
this all works. We have a lighting system. They are in front of 
you right there. We have a 5-minute rule, and everyone, 
including the Members up here, are limited to 5 minutes of 
presentation and questioning.
    The green light is illuminated when you begin to speak. 
When you see the yellow light, it means you have 1 minute 
remaining. When you see the red light, it means your time has 
expired and you need to conclude your testimony. We will not 
cut you off in midsentence, midthought, but we may cut you off 
in the middle of a long paragraph.
    Please be certain as you testify to turn on the speaker on 
the microphone and speak into it, because it is right in front 
of you, and we will be acting weird up here if you haven't. So 
we want to hear you.
    Now we will hear from our first witness Dr. Wigand.

                  STATEMENT OF JEFFREY WIGAND

    Mr. Wigand. Good afternoon. First of all, I have to say it 
is unusual for me to read something. I generally speak 
extemporaneously, so in order to maintain the 5-minute time 
limit, I am going to read my testimony.
    Chairman Woolsey and distinguished members of the 
subcommittee, thank you for providing me with the opportunity 
to appear before you as you seek to strengthen the protections 
of whistleblowers. I am here today at your invitation to 
describe a rather extreme version of what can happen to a 
worker in the private sector who tries to serve public 
interests and his moral conscience, but instead runs afoul of 
corporate retaliation of the most vicious and pervasive kind.
    My name is Jeffrey Wigand, and you may know me as the 
central character of the Hollywood movie The Insider, which 
documented for millions of American viewers the unremitting, 
inhumane, cruel and soul-wrenching daily pressure that can be 
brought to bear against a whistleblower and whose truth-telling 
comes at the highest possible personal price.
    Nineteen years ago I began living the American dream. After 
a quarter of a century as a senior executive at medical and 
health care industry companies, working mostly for Fortune 50 
firms, I secured a senior executive position, and I regarded as 
the apex of my ambitions the post of a research executive vice 
president of one of the world's largest tobacco companies.
    My employer, Brown & Williamson, recruited me with the 
promise that they intended to use my scientific expertise in 
biochemistry to engineer a so-called safer cigarette. Naively, 
I believed the cover story and accepted an executive job, which 
at one point paid over $300,000 in salary and afforded a first-
class lifestyle in Kentucky for me, my wife, and two young 
children.
    However, I soon came to discover that my trust had been 
badly misplaced, and B&W did not want to have a safer 
cigarette. Instead, I lived in a bizarre upside-down world 
where lawyers interpreted science, and where the first and 
foremost corporate goal, besides increasing profits, was to 
hide any scientific or clinical evidence linking tobacco to any 
of its negative pervasive effects, and in a longstanding shadow 
corporate world nicotine was not addictive, cigarettes were not 
health-threatening, black was not white, and I was living a 
lie.
    As my long written testimony outlines, when the company's 
top executives began deliberately editing minutes of scientific 
meetings, I had reached a personal crossroads and a moment of 
truth. I privately started investigating health issues relating 
to the use of tobacco products, the role of cigarette design 
and nicotine delivery, and the insidious marketing of tobacco 
to children. The more I learned, the more I had difficulty 
looking at myself in the mirror every morning and answering the 
questions of my two young children.
    Nevertheless, despite my growing disillusionment I was 
living handsomely, and initially I did not want to disrupt the 
comfortable lifestyle I had built for my family. Finally, 
however, a confrontation with the ranking B&W executive of the 
continued use of Coumarin, an additive in pipe tobacco, brought 
all my longstanding internal conflicts to a head. I wrote an 
internal memo about the toxicological data concerning Coumarin, 
the pressing need for the company to assume its moral 
responsibility by removing a dangerous chemical agent from its 
products.
    When the ranking executive with whom I had clashed over 
this issue was promoted to chief executive officer and chairman 
of the company, I was summarily fired.
    Alone in a State where no lawyer wanted to challenge the 
political and economic muscle of B&W, I had to negotiate my own 
severance package; I had to retain the health care benefits due 
to the serious health problems experienced by one of my little 
girls.
    But it wasn't the end of the story, not by a long shot. In 
1993, B&W sued me for allegedly violating my secrecy agreement 
by telling another employee the amount of my salary and 
severance package. The company immediately dropped my health 
care coverage, stopped paying my severance. They would 
reinstate my health coverage I so desperately needed only if I 
agreed to a Draconian, all-encompassing secrecy agreement which 
would preclude me from ever revealing anything that I knew, 
learned or observed about the inner workings of the company. 
They used my daughter's health against me. But I reluctantly 
signed the agreement.
    About that time I received a Federal subpoena from the 
Department of Justice to relate to them what I knew about the 
so-called fire safe cigarettes or reduced ignition propensity 
cigarettes that have a value of saving between 800 and 1,000 
lives a year.
    Shortly after that the Food and Drug Administration began a 
historic probe into the tobacco industry. Congress, too, under 
the leadership of Mr. Waxman, now Senator Wyden and the late 
Congressman Mike Synar also started their own congressional 
investigations. I informed congressional staff who contacted me 
that I could only respond to them and provide them advice under 
subpoena.
    What came next changed the course of my life and that of my 
family. Two anonymous phone calls were received after I 
reported my congressional contacts to B&W, as I was required to 
do by the contract I just executed. My daughters were 
threatened with physical harm if I cooperated with any outside 
inquiry.
    Increasingly isolated professionally, frightened as anyone 
could be, I contacted the local FBI office, which installed a 
trap and trace line on my phone, and despite the attempted 
intimidation, I became disgusted after watching the April 1994 
testimony of the seven tobacco executives who all testified 
that nicotine wasn't addictive and that smoking was no more 
dangerous than eating Twinkies, in the words of one of the smug 
tobacco CEOs. I realized the issue was at a critical juncture 
and that I had to act.
    After being contacted by the FDA official, I secretly 
visited their headquarters in Rockville, Maryland, going 
through unmarked entrances. My code name for these visits was 
``Research.'' Only a small handful of people including the then 
Commissioner David Kessler were aware of my presence.
    I also consulted secretly with ABC News on a much-
publicized hour-long special over the role of nicotine and 
cigarette manufacturers, over which Phillip Morris later sued 
the network. ABC caved and settled the suit. And finally in 
August of 1995, I agreed to an interview with CBS 60 Minutes to 
reveal what I knew and understood about the workings of the 
tobacco industry.
    As is common knowledge now, the transcript of that 
interview was leaked in advance of its broadcast. B&W filed 
suit against me for alleged theft of trade secrets in violation 
of my confidentiality agreement. I started routinely receiving 
threats, and CBS provided armed security, opening my mail, 
starting my car in the morning, and escorting my daughters to 
school. I was living the unenviable lifestyle of a federally 
protected witness, but the government was not helping safeguard 
my life or that of my family.
    Later when I was subpoenaed to give State-related 
depositions in the class action brought by the State of 
Mississippi, B&W pushed the Kentucky court to order me to be 
held in contempt if I testified in another State. I testified 
anyway. When I returned to Kentucky, I was met by Federal 
marshals, and thankfully that night I did not end up in jail.
    When will this Kafkaesque nightmare end, I kept asking 
myself. My health was affected, my moods darkened. Meanwhile, 
the horrendously long years were taking a toll on both me and 
my family. I had become a professional pariah. My once 
distinguished scientific and corporate career lay in ruins. I 
was teaching high school at one-tenth of what I earned at B&W 
in previous years.
    The constant pressure and ostracism was too great and too 
much for my wife, who divorced me after 10 years,
    remarried, and took my daughters to live in another State. 
Nevertheless, B&W continued its lawsuit against me----
    Chairwoman Woolsey. Dr. Wigand, I am going to give you half 
a minute. You have got to sum it up. Nobody else gets that kind 
of time.
    Mr. Wigand. I was intent on reading and not paying 
attention. I am sorry. Please excuse me.
    During the 4-year ordeal I was not protected by any 
whistleblower statute, and I had no recourse except the truth. 
You are in a position to change that situation, which is from 
one form or another for literally hundreds of corporate and 
Federal whistleblowers around the country, many who have gone 
through the hellish life-changing experience like mine. Many of 
them have been ruined professionally, emotionally or 
financially. Please change this gaping hole in the 
whistleblower laws.
    Thank you for your attention. I am pleased to answer any 
questions you might have, and please excuse my overuse of time.
    [The statement of Mr. Wigand follows:]

                Prepared Statement of Dr. Jeffrey Wigand

    Thank you for giving me this opportunity to testify before this 
Subcommittee on my experience with breaking ranks with the tobacco 
industry--and more specifically with my former employer Brown & 
Williamson (B&W). I speak as an insider who spent more than four years 
as a high level senior executive in the industry and as one who has 
seen the inner most secrets of the industry. In this testimony, I 
provide a detailed chronology the events that led up to my decision to 
come forward with what I knew. As you will see, the road was neither 
easy nor short, and the decision to come forward transpired after a 
considerable amount of time witnessing immoral and illegal actions. For 
me, the decision to come forward was not an immediate response--an 
``epiphany.'' Rather, the decision to come forward was a process. I do 
believe that if laws were put in place to protect persons who likewise 
decide to come forward, their road would be an easier, shorter one. And 
obviously, if we can make it quicker and easier for someone to come 
forward, then we can help to mitigate and forestall the harm caused by 
the wrongdoing.
    I want to make very clear that I am able to be here today--not 
because I was protected by any whistleblower statute--but because of 
the tremendous courage of so many people. There is a debt of gratitude 
that I will never be able to repay: to my own daughters, to my 
students, to the lawyers who risked their reputations, assets and own 
personal safety for the search for truth and justice, and to all of 
those who held an unwavering belief in me and the truth.
    Essentially, I was hired by B&W to manage the development of a 
safer cigarette. I came from the medical/health care industry, working 
for 25 years as a senior executive for such companies as Pfizer, Merck 
and Johnson & Johnson. I was accordingly steeped in the mindset of 
using science to search for the truth, to make products better and to 
improve the quality of life and to save lives. I found the position at 
B&W attractive because it enabled me to use my expertise to develop a 
``safer'' cigarette, and hence to use my skills and experience to 
address a product that, when used as intended, kills. Thus the 
consequences of my research were profound. The position at B&W was also 
attractive to me because my wife and two young daughters, ages 2 and 2 
months, had family in Louisville and we felt we could have a good life 
there.
    I accepted B&W's offer in November 1988. I began working for B&W in 
January 1989, as its Vice-President of Research and Development in its 
corporate headquarter offices in Louisville, Kentucky. At this time, 
B&W was a subsidiary of BATUS, the US holding company but, for all 
intents and purposes, a direct subsidiary of BAT Industries, formerly 
British-American Tobacco Company, the second largest tobacco company in 
the world. At B&W, I focused on learning all aspects of tobacco science 
and chemistry and directed the development of a product, code-named 
``Airbus'' that was a non-traditional nicotine-delivery device that 
could cause less disease.
    My first discomforting experience with B&W was early on. As part of 
my corporate orientation, I was sent to one of B&W's outside corporate 
counsels, Shook, Hardy & Bacon, located in Kansas City, Missouri. For 3 
days, I was told that the research from numerous Surgeon General 
Reports and other eminent public health scientific publications on the 
human hazards of tobacco was based on flawed science, and that there 
were no studies linking tobacco use to negative health consequences. 
The attorneys at Shook, Hardy & Bacon also argued that nicotine was not 
addictive, and therefore that tobacco use was an autonomous act. This 
was the first time in my career that I had lawyers interpret the 
science for me. In fact, during my initial hiring interviews with B&W's 
executives, they unequivocally expressed that nicotine was highly 
addictive and that tobacco use caused a myriad of debilitating and 
fatal diseases. Indeed, it was at these interviews where I first heard 
the mantra ``we are in the nicotine delivery business and tar is the 
negative baggage.'' However, the lawyers were asking me to effectively 
ignore these comments, not to mention the scientific research that is 
replete with findings about the adverse health consequences caused by 
tobacco. Although I returned to corporate headquarters after this part 
of my orientation confused, I was not deterred from developing a safer 
product.
    In September of 1989, I was part of a Research Policy Group meeting 
held in Vancouver, British Columbia, where all the high level senior 
managers of research and development from BAT and BAT-affiliated 
companies had gathered to develop strategic research priorities and 
tactical programs. Over the course of several days, we discussed how to 
make a safer product, how to test a safer product, how to address the 
passive smoke issue, the feasibility of a reduced ignition propensity 
or ``fire safe'' cigarette, and many other scientific topics. We all 
knew and articulated that nicotine was addictive and that tobacco use 
was responsible for a myriad of adverse health consequences. We also 
expressed the belief that, although we might be able to develop a 
``safer'' product, we could never deliver one that was completely 
unsafe. The meeting generated twelve pages of detailed minutes 
memorializing the summary of scientific discussions, as well as follow-
up programs to achieve key projects.
    I circulated a copy of the meeting minutes to my immediate 
supervisor, T. Sandefeur, Jr., the COO/President as a ``FYI.'' When the 
minutes of the Vancouver meeting reached the other senior executives of 
the company, they were clearly distressed. Then, in a move that shocked 
me, Thomas Sandefeur, with the agreement of the Chairman/CEO Ray 
Pritchard and General Counsel Mick McGraw, ordered in-house product 
liability counsel, J. Kendrick Wells, III to rewrite the minutes, even 
though he had not attended the meeting. Wells completely altered the 
minutes removing any reference to the discussions that had taken place 
and included only an abbreviated follow-up program. He reduced 12 pages 
of meeting minutes into 2 and one half pages of vanilla. The intent of 
attorney Wells was to destroy any content in the document that would 
aid an adversary in litigation and undermine the five decades of legal, 
technical and PR obfuscation.
    In January 1990, the Chairman of BAT, Sir Patrick Sheehy, summoned 
all the scientists who had been at the Vancouver meeting, along with 
the product litigation attorneys from each of the companies, to a 
meeting in New York. At that meeting, we were informed by the BAT 
Solicitor General, Stuart Chalfen and attorney Nick Cannar, that a 
lawyer would be placed at every sequence of scientific communication 
and research. This meant that any communications, discussions, reports 
or notes would be subject to attorney review prior to becoming a 
permanent document with limited distribution. An elaborate system of 
mandated lawyer vetting, sequestering and altering scientific documents 
was instituted as a result of this meeting. In addition, all safer-
cigarette work was transferred and all further work on that project was 
transferred overseas to the Southampton R&D facility in the UK.
    As I continued to work at B&W, I realized that the company was not 
interested in making safer products, but only in new finding new 
adolescent consumers and maximizing profits. Disturbingly, I learned 
that the culture of the tobacco industry was one in which great 
importance was placed on keeping the public ignorant about the 
addictive and lethal nature of tobacco products. The industry most 
wanted to protect its fundamental legal and PR platform that tobacco 
use was not addictive, that tobacco use was a free, consumer choice, 
and that tobacco use was not the source of the scientifically linked 
morbidity and mortality.
    So, even after only a year at B&W, I was in a quandary as to what 
to do with what I knew. But I stayed for three more years. Indeed, I 
did not make the decision to come forward even after witnessing how 
lawyers helped B&W to obfuscate the truth to the public. Why? I had a 
wife, two young daughters, one of whom had a serious medical condition 
requiring good medical insurance coverage, and a mortgage. And there 
were perks with my $300,000 a year job, including a car, and all of the 
usual amenities of a successful executive's position. I was also keenly 
aware by now of how the industry intimidated defectors, paying legions 
of lawyers to attack their credibility in an effort to stop their 
behavior. I wanted no part of that and wanted to protect my family. My 
intent was to transition back to the healthcare industry for I had 
realized I had made a major error in my career. The truth is, had I 
been assured that my family and I would be adequately protected, I 
probably would have come forward at this point. But as you will learn, 
my decision to come forward came much later, after witnessing more 
disturbing events, and experiencing further turmoil.
    So, I continued to work at B&W, knowing full well about the fraud 
that they were perpetrating on the public. I began to investigate 
health issues relating to the use of tobacco products, including the 
role played by additives and cigarette design on nicotine deliveries, 
the premature deaths caused by tobacco use, and the marketing of 
tobacco to children. The more I learned, the more I had difficulty 
looking in the mirror. But there was no obvious outlet to which I could 
turn, I had a duty to my family. All things considered, I decided that 
it was best not to rock the boat.
    But something significant happened in August 1992. I received a 
draft copy of a National Toxicology Program (NTP) report on Coumarin. 
The report classified Coumarin as a carcinogen.
    In 1954, the FDA banned the use and importation of Coumarin and 
deleted it from the GRAS list because of its demonstrated animal 
toxicity. Although the industry finally removed Coumarin during the 
1986-1988 time period, they have a long history of using Coumarin in 
their products. Importantly, when the industry removed Coumarin during 
the 1986-1988 time period, they only removed this ingredient from 
cigarettes. Coumarin, in other words, was still used in other tobacco 
products such as pipe tobacco. Why did the industry continue to use 
Coumarin in other products, even though they removed it from 
cigarettes? The answer is simple. They did not have to. An FDA 
regulation requires tobacco companies to disclose a list of all 
additives used in the manufacturing of cigarettes, and cigarettes 
alone, to the Department of Health and Human Services (US Code: Title 
15, Chapter 36, 1965, Cigarette Labeling and Advertising Act). Thus, 
tobacco companies do not have to disclose additives in pipe tobacco, 
chew or other any other form. So, B&W continued to use Coumarin in pipe 
tobacco. Their rationale was simple but disturbing. They reasoned that 
since the law did not require the disclosure of ingredients in non-
cigarette products, then they could use any ingredient in these 
products, including known carcinogens, with impunity. They felt no 
moral obligation to make their product ``safer'' by removing known 
carcinogens.
    After the 1992 NTP report came out, I went to my supervisor, Mr. 
Sandefeur, the COO/President of B&W. I had been to Mr. Sandefuer many 
times before on issues of health and safety. We had many disagreements 
including the use of the company's mantra ``hook 'em young, hook 'em 
for life,'' and the impropriety of lawyer interference in science, 
among many others. When I urged Mr. Sandefeur that Coumarin should be 
removed from all of B&W's products, he instructed me to go back to the 
lab and find a substitute for Coumarin. But he also told me that 
despite evidence that Courmarin was a carcinogen, it would not be 
removed from pipe tobacco because it would affect the taste of the 
product and negatively impact sales and profits.
    It was at this time that I constructed a memorandum that included 
the NTP's findings, a recital of the 1954 FDA ruling, and the validated 
toxicological data. Also included in the memo, was the argument that 
the company was bound by a moral imperative that, when possible and 
feasible, products should be designed so that their potential to create 
harm is mitigated. This final issue caused me to be fired in March of 
1993 when Mr. Sandefuer was promoted to Chairman/CEO of the company.
    When I was terminated, being a ``whistleblower'' was the last thing 
on my mind. All I wanted was to forget my experiences at B&W. Albeit, I 
expected the company to adhere to the termination provisions in my 
employment agreement, which included severance benefits, continued 
health care benefits and retirement benefits among other provisions. 
Much to my dismay, the company did not honor the totality of the 
agreement. Consequently, I searched for a lawyer in the state of 
Kentucky to represent me in a contract law matter but could not find 
one who would oppose B&W. So I was forced to negotiate my own severance 
package. I ended up with two years of salary and health coverage. The 
company also voluntarily agreed to void the non-compete clause in my 
1988 employment contract, provide out-placement services, and eliminate 
any off-set against future earnings.
    Then in September 1993, B&W sued me in a Kentucky court for 
allegedly violating the boiler-plate provisions of the secrecy 
provision of my employment agreement by telling another employee my 
annual salary. With the filing of the lawsuit, the company immediately 
stopped my health coverage and severance pay. B&W agreed to drop the 
law suit and reinstate my benefits and salary if and only if I agreed 
to a new, draconian secrecy agreement without any further 
consideration. This new agreement prevented me from discussing anything 
I knew about the internal workings of the company without the presence 
of a B&W lawyer or without the prior vetting of my statements by some 
such lawyer. I felt I had no choice and signed the agreement as my 
daughter's health care was at risk.
    The decision to sign the new agreement was made at the same time I 
received a DOJ CID (Civil Investigative Demand)--a kind of federal 
subpoena--from the Justice Department on the issue of fire-safe 
cigarettes. Pursuant to the new secrecy agreement, I provided testimony 
in the CID in the presence of a B&W lawyer from the firm of Kirkland 
and Ellis.
    In January 1994, I began working with CBS/60 Minutes on a ``fire 
safe cigarette'' investigative report. Mr. Lowell Bergman, a producer 
for CBS, received a box of some 2400 R&D documents from an anonymous 
source. These documents encompassed the period of 1954 through June 
1976 on the ``reduced ignition propensity physics of a natural 
incendiary device.'' Mr. Bergman asked me to interpret the substance of 
these documents for 60 Minutes. I agreed. I was paid $ 12,000.00 for 
this work that spanned two weeks of sorting, ordering and interpreting 
the R&D documents. The documents demonstrated that, in June 1976, 
Philip Morris (PM) had developed and tested in a CPT (Consumer Product 
Test) at a 95 % confidence level, a reduced ignition propensity 
cigarette equal in taste, cost, and aesthetics of their leading brand, 
Marlboro. PM called the project ``Hamlet * * * to burn or not to 
burn.''
    Disturbingly, but not surprisingly, PM decided against 
manufacturing these ``fire safe'' cigarettes. In fact, because there 
was no law mandating them to manufacture these ``safer'' cigarettes, PM 
decided to shelve project Hamlet. This decision to shelve the project 
was made notwithstanding the fact that a ``fire safe'' cigarette could 
prevent approximately 800-1,000 deaths each year, as well as the 
economic losses due to cigarette-created fires (cigarettes are the 
single largest contributor to fire losses). Clearly, the morally 
responsible course of action would have been to manufacture this 
product. But PM refrained from this course of action because there was 
do legal compulsion to do. This was deja vu. PM's tactic was the same 
one used by my former employer, B&W, when confronted with the decision 
not to use Coumarin. Just as PM did not make their cigarettes ``fire 
safe'' because they did not have to, B&W did not remove Coumarin from 
its pipe tobacco because it did not have to. Each company felt no moral 
imperative to reduce harm.
    As I read these documents, I became aware of the culture of 
deception within the industry. I recognized names on these documents as 
persons that I had heard speak when I was attending scientific meetings 
in 1989-1991. At these meetings, these individuals were adamant that it 
was not feasible to make fire safe cigarettes, and that the 
responsibility for cigarette-caused fires rests with the furniture, 
clothing and fabric industries. The CBS/60 Minutes aired the program in 
April 1995 entitled ``Up in Smoke.'' I continued to keep my story to 
myself.
    In February 1994, the FDA began to explore the establishment of a 
regulatory authority over tobacco products. In addition, the U.S. 
Congress, under the leadership of Representatives Henry Waxman, Mike 
Synar (now deceased) and Ron Wyden (now a Senator), initiated its own 
tobacco inquiry. I was contacted by numerous Congressional staff 
members seeking my help in this investigation. Ultimately, they wanted 
me to testify. Because of my secrecy agreement, I told the 
Congressional staff that I would need to be served with a subpoena. 
Nevertheless, I began to help Congress to understand tobacco science. 
After numerous contacts with members of the Congress, I contacted B&W 
to apprise them of these conversations, pursuant to the terms of the 
new contract that I recently signed to re-instate my severance package.
    What came next changed the course of all future actions and changed 
my family. Two anonymous phone calls were received after I reported the 
Congressional contacts to the Company that threatened the safety of my 
young daughters with physical harm if I cooperated with anyone about 
the internal workings of B & W. As a result, I went to the local FBI 
who installed a ``trap and trace'' on my phone line. Two threats made 
to my phone were isolated, and from that day forward, I never made 
further contact with the company, except in a Court of Law.
    In April 1994, I watched the 7 heads of major U.S. tobacco 
companies, including Mr. Sandfeur, testify before Congress under oath 
that nicotine was not addictive and smoking was no more dangerous than 
eating Twinkies. This was really the ``last straw'' as they say. I 
realized that if I remained silent, I was a bystander to harm and I was 
no different from the industry executives. It was at this time that I 
felt I had to take action. So, in May 1994, I began to secretly share 
my knowledge with the FDA. Because I was concerned of a repeat 
retaliation and was convinced that the tobacco industry would try to 
derail any FDA investigation, I insisted that my cooperation with the 
FDA would need to be confidential and secret, limited in number of 
participants and directly with the then Commissioner, Dr. David 
Kessler. I traveled to the FDA offices in Rockville, Maryland under 
assumed names and going through unmarked entrances. My code name was 
``Research.'' I taught the FDA all aspects of cigarette design, tobacco 
chemistry, high-nicotine genetically engineered tobacco (Y-1) and 
numerous other subjects. I served as a navigator to documents the FDA 
had acquired. For some time, I ``covertly'' disclosed what I knew. 
However, two subsequent events transpired that compelled me to publicly 
disclose what I knew. Both of these events put me in contact with more 
internal documents which, once again, revealed a pattern of immoral and 
illegal actions by the industry.
    In early 1995, I became a non-testifying technical expert for ABC, 
which was being sued for libel by Phillip Morris ($10 Billion). ABC, on 
its newsmagazine program, Day One, aired a segment that stated that 
nicotine was addictive and that the industry ``spiked'' nicotine in its 
tobacco products in order to maintain an adequate delivery of addictive 
nicotine. I was one of the limited experts who were allowed to see all 
the PM produced documents in the discovery process. I am still bound by 
a TRO from this action. The lawsuit was settled in August, 1995, with 
ABC's unusual apology to PM, just a month after Disney announced it was 
acquiring ABC/Capital Cities.
    In June 1995, a professor of cardiology at the University of 
California San Francisco, Dr. Stanton Glantz, contacted me. Dr. Glantz 
was a recipient of a cache of tobacco documents smuggled out of B&W by 
Merrill Williams, a paralegal filing clerk who had worked at a highly 
secure section of the R&D facility during the time that I was employed 
by B&W. Dr. Glantz was publishing 7 scientific papers on the contents 
of the documents in the peer reviewed JAMA publication. He shared with 
me the documents that spanned 1950 through the 1980s for technical 
review and authentication purposes. They mirrored my exact experiences 
while I was at B&W and provided me with the first opportunity to see 
reports and documents that I had never seen while at B&W although I had 
asked to do so repeatedly. There it was in black and white: how the 
tobacco industry knew that tobacco was lethal but totally disregarded 
public health and safety; how it had used additives to boost nicotine's 
addictiveness; how lawyers controlled the flow of technical documents 
and how they manipulated the science and hid the truth.
    After these experiences I decided to rid my conscience of the 
burden that I carried and decided to share the internal workings of B&W 
with the American public via CBS/60 Minutes and reset my moral compass. 
So, on August 5, 1995, my family I and agreed to an interview with 60 
Minutes at CBS. We agreed that I would maintain custody and control of 
the taped interview until I had arranged for competent legal counsel, 
had my affairs in order until they arranged for physical security for 
my family, upon the airing of the show.
    However, CBS began to question whether my interview should be 
aired. Somehow, B&W found out about the interview. In October, someone 
with access to my interview transcript leaked it to the media. After 
learning about the interview, B&W threatened to sue CBS for billions, 
under the legal principle of ``tortuous interference,'' if CBS decided 
to air the interview. During this time, Lawrence and Robert Tisch were 
the principal owners of CBS via Loews Corporation, which also owned 
Lorillard Tobacco Company. The Chairman at Lorillard was Andrew Tisch, 
the son of Lawrence Tisch. Tisch the junior was one of the seven CEOs 
who had testified before Congress in 1994. He was also under 
investigation by the DOJ for perjury at the April 1994 Congressional 
hearings. To further complicate matters, Lorillard was conducting a 
multi-million dollar product transfer from B&W. Additionally, 
Westinghouse tendered an offer to acquire CBS.
    The interview was cancelled in October 1995, and the retaliation 
from B&W began shortly thereafter.
    B & W filed suit against me in Kentucky for theft of trade secrets 
for violating my confidentiality agreement. I started receiving threats 
and armed security was provided. A security detail lived with us every 
minute--opening the daily mail, starting the car in the morning, 
escorting my daughters to school and me to work. Ultimately, the school 
where I was teaching was forced to place a sheriff's deputy at my 
classroom door due to recurrent daily threats.
    In November 1995, I was served with my second CID subpoena from the 
U.S. Department of Justice, and I was also subpoenaed by the State of 
Mississippi to testify in the State's civil suit against the tobacco 
industry. When I traveled to Mississippi for depositions in both 
hearings, I stayed with my attorney, Dickie Scruggs. His home had to be 
swept for electronic eavesdropping devices and armed Mississippi State 
Police patrolled the home all night.
    B&W continued its campaign of legal intimidation to stop me from 
giving the Mississippi deposition, by going to both the Mississippi 
Supreme Court and Kentucky District Court to stop the testimony. The 
Mississippi Supreme Court allowed the deposition to go forward. The 
four hour deposition was laden with threats, and the Mississippi Court 
ordered it to be sealed. In contrast, the Kentucky court ordered me to 
be held in contempt if I testified. I testified anyway. When I returned 
to Kentucky after giving my depositions, I was met by Federal Marshals 
and thankfully did not have to go to jail. I went back to teaching.
    In January 1996, my sealed Mississippi deposition found its way to 
the Wall Street Journal, which despite a threatened lawsuit by B&W, 
published the deposition on its front page and put it on its internet 
site. In addition, B&W, using private investigators, a prominent 
publicist, and some of the largest law firms spent millions to smear my 
reputation with a 500 page dossier marketed to all the major media 
outlets. The local Louisville paper published these smears, and despite 
continued security, I still managed to receive death threats with a 
live Israeli armor piercing bullet that was placed in my mail box in 
January 1996 with another threat directed at my daughters. The pressure 
was too much for my wife who notified me she would be filing for 
divorce after 10 years of marriage.
    Meanwhile, B&W continued its lawsuit against me in the Kentucky 
court. Legions of the company's lawyers deposed me for 11 days, and the 
local Kentucky Court threatened to hold my attorneys in contempt for 
protecting my rights.
    B&W's lawsuit against me finally ended on June 20, 1997. Thirty 
nine state Attorneys General sued Big Tobacco, and were in the final 
stages of $368 billion settlement with the industry. The Attorneys 
General threatened to walk away from settlement discussions and sue in 
each state unless B&W dropped their suit against me. So, B&W 
reluctantly dropped their lawsuit against me at the eleventh hour. 
Since that date, I have been free to speak the truth about the hazards 
of tobacco to children in a classroom setting, to governmental 
officials, to Ministers of Health throughout the world addressing the 
``denormalization'' of tobacco, and to agencies such as the WHO and 
CDC. I have also testified in select tobacco litigation cases such as 
the 1998 DOJ RICO case, the Dutch litigation on additive regulations 
and various state tort cases.
    However, even though B&W promised to drop their suit against me as 
a condition of the Master Settlement Agreement, I continue to suffer 
the repercussions of my decision. For example, when I became a public 
figure for the coordinated move to make Charleston, SC smoke-free, my 
car and front door of my condo were marked with a black indelible 
marker with slurs and threats. When I testified against the legal 
misdeeds of the Kansas City law firm Shook, Hardy and Bacon, a member 
of the firm used ``pretexting'' while I was a visiting scholar in 
ethics at Auburn University seeking transcripts and information about 
my lectures to the students after I testified under oath about how 
Shook et. al. committed a fraud on the public. And although B&W agreed 
to give me a positive performance evaluation when I was terminated, it 
was very difficult for me to earn gainful employment after I decided to 
speak to CBS 60 Minutes. This was the first time in my career that I 
had difficulty finding a job.
    During this four-year ordeal, I was not protected by any 
whistleblower statute and had no recourse against the Company, except 
for the truth. And as you have learned, my decision to come forward did 
not happen at the instant I witnessed wrongdoing, but rather was the 
result of a long and painful process. This process began with 
experiencing how corporate attorneys vetted and destroyed documents, 
and with witnessing how a corporate executive refused to remove a known 
carcinogen from a product merely because doing so would ``impact 
sales.'' Yet, even though these two events should have compelled me to 
speak out, they did not. I endured further discomfort, realizing that I 
had been lied to as I read the company's documents, and witnessing my 
former boss lie under oath to Congress. To be sure, I spoke out when I 
did, because, at this point, I had to. Quite literally, I could no 
longer look in the mirror. But I do think that had there been 
protection for me and my family, my decision would have come sooner 
than it did. I have delineated in this testimony, my concern for my 
family and my fear of retaliation were the principal driving forces of 
why my decision to come forward was ``delayed.''
    This is why the Paul Revere Freedom to Warn Act is needed. The Act 
would provide potential whistleblowers with a psychologically 
comforting counterweight to the fear of retaliation that naturally 
accompanies the decision to come forward.
    Thank you for allowing me to testify today.
                                 ______
                                 
    Chairwoman Woolsey. Mr. Simon. Thank you.

                    STATEMENT OF JOHN SIMON

    Mr. Simon. Hello. Good afternoon. My name is John Simon. I 
am a single father, a homeowner, and I live in Illinois. I 
began working as a commercial truck driver in 1986. In November 
of 2004, I was hired to drive for a fuel-hauling company called 
Sancken Trucking. I was to haul jet fuel to four States and 
regional, national and international airports.
    My employer told me that I should not keep a daily driver's 
log the DOT required. I was supposed to keep such a log to keep 
myself from getting in trouble regarding my on-duty time, my 
break time.
    I told my employer, Sancken Trucking, that it was wrong to 
keep me from filling out the DOT log. I could not get them to 
change their company policy. I called the Federal Motor Carrier 
Safety Administration in Springfield, Illinois. I was told that 
if I did not fill out these documents properly, that I would be 
held responsible.
    Sancken still refused to change their policy. I was told I 
needed to do things the way they wanted it done, how they 
wanted it done, and when they wanted it done. A few weeks later 
I filed a written complaint with FMCSA and with OSHA after 
being demoted to a 40 percent less-pay job, and I was told by 
my boss that I was going to be put in a position that was the 
most dangerous job in the company. In January 2005 I was 
injured at work, received workers' compensation benefits. I was 
off work for about 6 weeks.
    In March 2005, the FMCSA audited my employer for compliance 
with DOT safety regulations. I tried to return to work when my 
doctor cleared me to return after my injuries healed. I 
reported back to work just as the DOT audit of my employer was 
being completed. I was fired the next day.
    On April 8th I filed a complaint with OSHA because I 
believe I was fired for filing complaints with FMCSA and OSHA. 
OSHA dismissed my claim, and about 2 months later I hired an 
attorney who requested a hearing before an administrative law 
judge from the Department of Labor.
    A hearing took place before Judge Leland of the Department 
of Labor in September 2005. On January 11th, 2006, Judge Leland 
issued a recommended order ordering me back pay, other damages 
and attorneys' fees. He also ordered Sancken Trucking to 
immediately reinstate me. The law requires that the 
reinstatement is immediate, even if an appeal is taken to the 
Department of Labor Administrative Review Board.
    I informed Sancken Trucking that I received the order of 
reinstatement to my previous position at my previous rate of 
pay. I tried to return to work. They refused my reinstatement. 
Instead, they told me that I was going--I am sorry, I skipped 
ahead. I am a little nervous, if you can tell.
    They refused to reinstate me; instead told me I was going 
to be treated like a new employee at less pay and no benefits, 
and my schedule was going to be changed, in violation of Judge 
Leland's order.
    My attorney asked the Office of the Solicitor of Labor to 
bring a civil suit to enforce Judge Leland's order reinstating 
me. On May 24th, 2006, the Solicitor's Office filed a suit for 
an injunction forcing Sancken Trucking to reinstate me. During 
this process I was without health insurance benefits that I 
received when I was with Sancken.
    On August 17th the judge issued an injunction order to 
order Sancken Trucking to comply with Judge Leland's order 
reinstating me to my former position at my former rate of pay. 
When I reported back to work, it appeared that Sancken Trucking 
was going to make it difficult as possible for me to work 
there.
    I chose to leave the trucking industry. I was tired of 
fighting. I already had another employment position which now 
offered me health insurance.
    The periods of unemployment since my discharge have imposed 
a terrible financial burden on me and my family. The periods 
when I was without health insurance, the long periods of 
unemployment, and loss of my job, the stress of the legal 
proceedings and waiting for the final decision for such a long 
time have caused me great emotional distress. I was recently 
released from my last employment position because of my 
experience with Sancken Trucking. My boss told me that he could 
not get past what had happened between Sancken Trucking and I, 
so he had to let me go. I was the hardest worker he had ever 
met, never missed a day, but I still had to leave.
    Chairwoman Woolsey. Would you sum up? Thank you.
    Mr. Simon. In the law there is a part, the immediate 
reinstatement needs to be enforced. It took 9 months for that 
to be enforced, and that is just too long.
    [The statement of Mr. Simon follows:]

                    Prepared Statement of John Simon

    My name is John Simon and I reside in Lake Villa, Illinois. I am a 
single father of a teenage daughter, a homeowner and a whistleblower. I 
began working as a commercial truck driver in 1986. In November of 
2004, I was hired to drive for a small fuel hauler called Sancken 
Trucking.
    My employer told me that I should not keep a daily driver's log. 
DOT regulations required that I keep such a log, recording my on-duty 
time, driving time and break time. I told my employer that it was wrong 
not to keep the DOT log. I notified the Federal Motor Carrier Safety 
Administration's office in Springfield, Illinois that my employer told 
me not to keep a daily log. A few weeks later I filed a written 
complaint with FMCSA and a written complaint with OSHA.
    In January 2005, I was injured at work and received workers 
compensation benefits. I was off work for about 6 weeks. In March 2005, 
the FMCSA audited my employer for compliance with DOT Safety 
Regulations. I tried to return to work when my doctor cleared me to 
return after my injuries healed. I reported back to work just as the 
DOT audit of my employer was being completed. I was fired on the next 
day, March 11, 2005.
    On April 8, 2005, I filed a complaint with OSHA because I believed 
I was fired for filing complaints with the FMCSA and OSHA. OSHA 
dismissed my claim about 2 months later. I hired an attorney who 
requested a hearing before an administrative law judge from the 
Department of Labor. A hearing took place before Judge Leland of the 
Department of Labor in September 2005.
    On January 11, 2006, Judge Leland issued a recommended order 
awarding me back pay, other damages, and attorney fees. He also ordered 
Sancken Trucking to immediately reinstate me. The law requires that the 
reinstatement is immediate, even if an appeal is taken to the 
Department of Labor's Administrative Review Board.
    On January 16, 2006, I informed Sancken Trucking that I had 
received the order reinstating me to previous position and my provision 
rate of pay and that I wanted to return to work. They refused to 
reinstate me. Instead they told me that I was going to be treated like 
a new employee with less pay and a different schedule in violation of 
Judge Leland's order that I be reinstated to my previous position.
    My attorney asked the Office of the Solicitor of Labor to bring a 
civil suit to enforce Judge Leland's order reinstating me. On May 24 
2006, the Solicitor's Office filed suit for an injunction forcing 
Sancken Trucking to reinstate me. During this process I was without the 
health insurance benefits I had received when I worked for Sancken 
Trucking. On August 17, 2006, a Judge issued an injunction ordering 
Sancken Trucking to comply with Judge Leland's order reinstating me to 
my former position at my former rate of pay. When I reported back to 
work it appeared that Sancken Trucking was going to make it as 
difficult as possible for me to work there. I chose to leave the 
trucking industry. I was tired of fighting. I already had other 
employment with health insurance but at lesser rate of pay than Sancken 
Trucking had promised me.
    The periods of unemployment since my discharge have imposed a 
terrible financial burden on my family and me. The periods when I was 
without health insurance, the long periods of unemployment, the loss of 
my job, the stress of the legal process and waiting for a final 
decision for such long time have caused me great emotional distress.
    I was recently released from my last employment position because of 
my past experiences with Sancken Trucking. My boss told me that he 
could not get past what had happened between Sancken Trucking and 
myself.
    Although I won a recommended decision from the administrative law 
judge in January 2006, no final decision has yet been issued. The law 
requires the Secretary of Labor to issue a final decision in trucking 
whistleblower cases within 120 days after the hearing. I understand 
that the Department of Labor's Review Board is taking 2\1/2\ to 3 years 
to decide cases after the administrative law judges issue decisions in 
cases that have had full hearings. This means that I will have to wait 
another year or more for a final order. If Sancken Trucking appeals 
further, or if the ARB sends the case back to the ALJ, it may be 3 or 
years more before my case is over and I can put this behind me.
    Employees who discharged for refusing to break the law or filing 
complaints cannot afford to wait for the Administrative Review Board to 
take two and a half to three years to decide cases. They have bills to 
pay and families to support. I lost thousands of dollars due to Sancken 
Trucking firing me. I have run up large balances on my credit cards and 
tapped all of my savings just to survive. I have recently spoken with 
several realtors because I may need to sell my home in order to avoid 
bankruptcy. I cannot explain to my 15-year old daughter why we may have 
to sell our home.
    Had I known then what I know now, I may not have blown the whistle 
on my employer. I just don't know what I would have done. I may have 
just quit and moved on. But Sancken Trucking would likely still be 
violating the federal truck safety regulations.
    The process needs to be reformed so that the Department of Labor's 
Review Board decides cases promptly and within the 120-day period 
prescribed in the law. Procedures need to put in place so that when an 
employer disobeys an order for reinstatement an enforcement action is 
brought promptly so the employee is guaranteed wages during the appeal 
process. Finally, employers who violate the truck driver whistleblower 
law should be subject to punitive damages, which will work as incentive 
for them to obey the law.
                                 ______
                                 
    Chairwoman Woolsey. Mr. Fairfax.

    STATEMENT OF RICHARD FAIRFAX, DIRECTOR OF ENFORCEMENT, 
         OCCUPATIONAL SAFETY AND HEALTH ADMINISTRATION

    Mr. Fairfax. Good afternoon, Chairman Woolsey, Ranking 
Member Wilson, distinguished members of the committee, ladies 
and gentlemen. Thank you for the opportunity to appear before 
you today to speak about OSHA's administration of the 
whistleblower provisions of 14 statutes, as you have mentioned 
previously.
    My name is Richard Fairfax. I am the Director of 
Enforcement Programs for the Occupational Safety and Health 
Administration, and I have served with OSHA since 1978.
    When the OSHA Act became law in 1970, OSHA's authority was 
limited to investigating whistleblower complaints under a 
single statute, that being the OSHA Act's whistleblower 
provision section 11(c).
    Currently our program employs 72 full-time investigators, 
and we enforce the provisions of 14 separate statutes. Also 
under OSHA there are 26 State plan states that operate their 
own programs pursuant to section 18 of the OSHA Act. In these 
State plan states, the States enforce their equivalent of 
section 11(c) of the OSHA Act. Federal OSHA enforces the 13 
other whistleblower statutes covered by Federal OSHA.
    As a little history, in the 1980s responsibility for the 
Surface Transportation Act of 1982, the International Safe 
Container Act of 1977, and the Asbestos Hazard Emergency 
Response Act of 1986 were delegated to OSHA. In 1997, under a 
memorandum of understanding with the Department's Wage and Hour 
Division, six environmental statutes in the Energy 
Reorganization Act were delegated to OSHA also. In 2001, the 
Wendell H. Ford Aviation Investment and Reform Act for the 21st 
Century was added; and finally in 2002, both the Sarbanes-Oxley 
Act and the Pipeline Safety Improvement Act were added.
    The general provisions of each statute are administered and 
enforced by the primary agency responsible for the substantive 
requirements of those acts, while OSHA administers only the 
whistleblower provisions.
    A whistleblower complaint under any of the 14 statutes is 
based on the belief by an employee that he or she has been 
retaliated against through an unfavorable personnel action for 
that employee's engagement in an activity protected by law. In 
some cases complainants can file under more than one statute.
    To establish a violation for any of 14 statutes, our 
investigators must find four elements of a prima facie case 
have been met. The four elements include protected activity: 
OSHA must establish that the complainant engaged in an activity 
protected by the statute; employer knowledge: OSHA must 
establish that a person involved in a decision to take adverse 
action was aware of or suspected that the complainant was 
engaged in a protected activity; adverse action: OSHA must 
establish that the complainant suffered some form of adverse 
employment action initiated by that employer. Finally, OSHA 
must establish a causal link or nexus between the protected 
activity and the adverse action.
    In investigating a whistleblower complaint under these 
statutes, the Department of Labor does not represent the 
complainant nor the respondent, but, in fact, is a neutral 
factfinder. Investigators must evaluate both the complainant's 
allegation and the respondent's nonretaliatory reason for the 
alleged adverse action.
    Consequently, our investigations can become quite 
complicated and lengthy and time-consuming as multiple 
interviews are often required, and evidence along with 
statements must be verified at each step of the way. If an 
investigator is unable to conclude that all the elements of a 
prima facie allegation have been established by the 
preponderance of the evidence, the case is dismissed.
    From the beginning of an investigation, the case can be 
settled at any time the parties are amenable to it. I will say 
OSHA makes every effort to settle these cases early on. An 
investigation consists of gathering the evidence by two 
principal means, interviewing the complainant and respondent as 
well as all their witnesses and then collecting whatever 
documentary evidence is offered.
    Once the investigative report is written, the Secretary's 
findings can be issued. The statutes require that the Secretary 
through OSHA either dismiss the case, find reasonable cause 
that a violation of the relevant statute has occurred--we call 
this a merit case--or approve a settlement. If reasonable cause 
is found before issuing findings, the investigator where 
appropriate broaches the subject again of settlement with the 
respondent. If the respondent is agreeable, settlement 
negotiations are initiated.
    In a merit case the remedies available vary according to 
the statute. Remedies not only involve relief for the 
individual who filed the complaint, but also address the impact 
of a violation on the entire workforce.
    Both complainants and respondents have the right to seek an 
administrative hearing under 11 of the 14 statutes where these 
cases are heard before a Department of Labor administrative law 
judge. After a decision is issued by an administrative law 
judge, either or both parties may appeal it to the 
Administrative Review Board, which is authorized to issue final 
orders for the Secretary of Labor.
    I would like to take just a few moments and talk about the 
program. Presently we average about 1,900 cases annually, and 
we only have 72 investigators. While the statutes I have 
described have prescribed time frames for completion of the 
investigation and the issuance of findings, we are seldom able 
to meet these time frames due the complexities of the 
investigative process.
    Despite the increased number of statutes and increasing 
number of complaints filed under the new statutes, the total 
number of complaints filed annually remains relatively steady 
at between 1,800 and 2,100 cases. The outcomes of OSHA's 
investigations in fiscal year 2006 are consistent with the 
past. Sixty-five percent were dismissed, 14 percent were 
withdrawn, 2 percent were merit cases. Of those, 66 were 
settled by OSHA, 28 percent we had settlements approved, and 6 
percent issued findings in favor of the complainant.
    In conclusion, I hope that my testimony has shed some light 
on the complex process by which whistleblower complaints are 
resolved, and I appreciate the opportunity to speak for you and 
will answer any questions you have.
    Chairwoman Woolsey. Thank you.
    [The statement of Mr. Fairfax follows:]
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Chairwoman Woolsey. Professor Moberly.

 STATEMENT OF RICHARD MOBERLY, ASSISTANT PROFESSOR, UNIVERSITY 
                   OF NEBRASKA COLLEGE OF LAW

    Mr. Moberly. Good afternoon. My name is Richard Moberly. I 
am assistant professor of law in the Cline Williams Research 
Chair at the University of Nebraska. I teach and write about 
whistleblower protection.
    In response to the question this hearing presents, my 
research indicates that whistleblowers have some legal 
protection, but the protection is likely insufficient. Over 30 
Federal statutes protect whistleblowers and relate to a variety 
of topics, including workplace safety, the environment, public 
health, and corporate fraud. However, these statutes provide 
only a relatively limited amount of protection because of their 
ad hoc and narrow approaches. Rather than protect any employee 
who reports any illegal activity, Federal statutes only protect 
whistleblowing related to a specific topic or statute, and then 
only if the whistleblower works for an employer covered by the 
statute.
    Even if the right type of illegal activity is reported, the 
whistleblower may or may not be protected, depending on how the 
employee blew the whistle. Some statutes only protect employees 
who formally participate in enforcement proceedings, while 
others protect employees who affirmatively report illegal 
activity or who refuse to engage in misconduct. Some statutes 
require reports to be made externally to the government, while 
others protect whistleblowers who report misconduct to their 
supervisors.
    The procedural requirements for a whistleblower to file a 
claim are varied as well. Some laws permit whistleblowers to 
file claims directly in Federal court, while others require 
whistleblowers to file claims with an administrative agency 
like OSHA. Some of these statutes permit only the agency to 
prosecute claims on an employee's behalf, while others permit 
employees to pursue their own claims.
    As Chairwoman Woolsey suggested, the statute of limitation 
for these laws vary from 30 to 300 days, which only compounds 
the confusion created by these multiple protections and 
procedures. Suffice it to say, one would never create this 
system from scratch.
    Whether a whistleblower is protected depends on the 
employer for which the employee works, the industry in which 
the employee works, the type of misconduct reported, the way in 
which an employee blew the whistle, and, under some statutes, 
the willingness of an administrative agency to enforce the law.
    Because of these nuances it is simply too easy for good-
faith whistleblowers to fall through the gaps created by these 
varied requirements, a situation that fails to encourage 
employees to blow the whistle and fails to protect them when 
they do.
    The problems with the current system are illustrated by the 
Sarbanes-Oxley Act of 2002, which applies to employees of 
publicly traded companies who report fraud. At the time it was 
passed, many expected that Sarbanes-Oxley would provide the 
broadest most comprehensive coverage of any whistleblower 
provision in the world. These expectations have not been 
realized. Employees rarely win Sarbanes-Oxley cases.
    In the act's first 3 years, only 3.6 percent of Sarbanes-
Oxley whistleblowers won relief after an OSHA investigation. 
Only 6.5 percent of whistleblowers won appeals in front of an 
administrative law judge. Subsequent statistics from OSHA 
indicate that not a single Sarbanes-Oxley whistleblower won a 
claim before OSHA in fiscal year 2006 out of 159 decisions made 
by the Agency during that year.
    My empirical study of Sarbanes-Oxley outcomes highlights 
more general problems. First, the legal and procedural nuances 
I detailed earlier don't have real bite. Employees who don't 
fall squarely within the law's narrow legal boundaries do not 
get protected. Under Sarbanes-Oxley, for example, ALJ 
determined that 95 percent of whistleblower cases failed to 
satisfy these boundary issues as a matter of law and dismissed 
those cases. Judges almost never hear the factual merits of 
whether retaliation occurred because an employee blew the 
whistle.
    Second, ALJs dismissed one-third of Sarbanes-Oxley cases 
because whistleblowers failed to satisfy the act's 90-day 
statute of limitations, demonstrating that such short statute 
of limitation periods can have drastic consequences.
    Third, retaliation cases are highly fact-intensive cases 
that require resources, time and expertise. Requiring an 
administrative investigation may not efficiently utilize 
government resources and may unduly delay justice under that 
act. As an example I detailed some of the problems with OSHA's 
enforcement of Sarbanes-Oxley in my written statement.
    As a result of these problems, rank-and-file employees 
likely cannot determine the protection available to them before 
blowing the whistle, which means that Federal law is not doing 
its job of encouraging employees to come forward with 
information about misconduct.
    Society cannot gain the enormous public benefits from 
whistleblowers who disclose health and safety issues and other 
corporate misconduct. To address these issues Congress should 
comprehensively examine the manner in which Federal law 
protects whistleblowers, and I have detailed specific 
recommendations in my written testimony. Thank you.
    Chairwoman Woolsey. Thank you.
    [The statement of Mr. Moberly follows:]

 Prepared Statement of Richard E. Moberly, Assistant Professor of Law, 
  Cline Williams Research Chair, University of Nebraska College of Law

    Madam Chair and Members of the Subcommittee: Thank you for the 
invitation to appear before you to talk about whether there are 
sufficient legal protections for private-sector whistleblowers. I teach 
and write about whistleblower protection and I am honored to talk with 
you about this topic.
    The short answer to the question this hearing presents is that 
there are many protections for whistleblowers, but it is doubtful 
whether there are sufficient protections. In this testimony, I hope to 
explain the ways in which current protections fall short by focusing on 
four primary areas:
    1. The importance of encouraging and protecting whistleblowers in 
the private sector;
    2. A general description of private-sector whistleblower 
protection, particularly under federal law;
    3. Examples of whistleblower protection issues under the Sarbanes-
Oxley Act of 2002, to illustrate problems with the federal protection 
of whistleblowers; and
    4. Areas in which federal whistleblower protection should be more 
closely examined.
1. Whistleblowers Provide a Public Benefit
    A rationale often provided for protecting whistleblowers is one of 
``fairness,'' whistleblowers take a great risk by disclosing 
information about corporate misconduct, and it is unfair that they 
should be retaliated against because of their actions. While this 
justification has resonance, I want to focus on another rationale: 
whistleblowers provide a substantial public benefit.
    Private sector whistleblowers enhance corporate monitoring and 
improve corporate law enforcement. We need whistleblowers to report 
corporate misconduct in order to supplement the traditional methods of 
monitoring corporations. Employees know more than others who might 
discover corporate wrongdoing (such as the government or even an 
independent board of directors) because they are on-the-ground inside 
the corporation and, collectively, know everything about its inner 
workings.\1\ In fact, even with few corporate or legal incentives 
provided to whistleblowing employees, roughly one-third of fraud and 
other economic crimes against businesses are reported by 
whistleblowers.\2\
    Furthermore, almost all the benefits of a whistleblower's 
disclosure go to people other than the whistleblower: society as a 
whole benefits from increased safety, better health, and more efficient 
law enforcement. However, most of the costs fall on the whistleblower. 
There is an enormous public gain if whistleblowers can be encouraged to 
come forward by reducing the costs they must endure. An obvious, but 
important, part of reducing whistleblowers' costs involves protecting 
them from retaliation after they disclose misconduct.
2. Federal Whistleblower Protection for the Private Sector
    Despite the importance of protecting whistleblowers from 
retaliation, no uniform whistleblower law exists. Rather, protections 
for private sector whistleblowers consist of a combination of federal 
and state statutory protections, as well as state common law 
protections under the tort of wrongful discharge in violation of public 
policy. These uneven protections are often rightly labeled a 
``patchwork,'' because of the wide variance in the scope of protections 
each provides.
            a. Narrow Substantive Protections for a Broad Range of 
                    Industries
    Federal protections for whistleblowers take an ad-hoc, ``rifle-
shot'' approach. Rather than protect any employee who reports any 
illegal activity, federal statutes only protect whistleblowing related 
to a specific topic or statute, and then only if the whistleblower 
works for an employer covered by the statute.
    For example, the Surface Transportation Assistance Act of 1982 only 
protects whistleblowing related to the safety of commercial motor 
vehicles.\3\ The only employees who are protected are drivers of 
commercial motor vehicles, mechanics, or freight handlers who directly 
affect commercial motor vehicle safety in the course of their 
employment.\4\
    Even if the whistleblower reports the right type of illegal 
activity, statutes vary on whether the whistleblower will be protected 
depending upon how the employee blew the whistle. Some statutes appear 
to only protect employees who participate in proceedings related to 
violations of particular statutes,\5\ while others also protect 
employees who affirmatively report illegal conduct \6\ or who refuse to 
engage in illegal activity.\7\ Moreover, some statutes require reports 
to be made externally to the government,\8\ while others will protect 
whistleblowers who report misconduct to their supervisors.\9\
    These types of nuanced protections exist for a broad range of 
industries. More than 30 separate federal statutes provide anti-
retaliation protection for private-sector employees who engage in 
protected activities in a variety of areas, including workplace safety, 
the environment, and public health. Statutes protect employees who 
disclose specific violations in certain safety-sensitive industries, 
such as the mining,\10\ nuclear energy,\11\ and airline industries.\12\ 
Private sector employees may be protected if they disclose corporate 
fraud on the government \13\ or on shareholders.\14\ The list of 
protected employees ranges from the expected--employees who make claims 
under anti-discrimination statutes such as Title VII \15\--to the 
surprising--employees who participate in a proceeding regarding 
drinking water or who report an unsafe international shipping 
container.\16\
            b. A Wide Variety of Procedural Requirements
    The procedural requirements for whistleblowers to file a claim are 
as varied as the activities protected by the statute. Some statutes 
permit whistleblowers to file claims directly in federal court.\17\ 
Others require whistleblowers to file claims with administrative 
agencies, such as the Department of Labor. In fact, 14 statutes require 
whistleblowers to file with the Occupational Safety and Health 
Administration within the Department of Labor. Even among these OSHA 
statutes, the procedures vary depending on the type of claim. Some 
statutes, like the Occupational Safety and Health Act, permit only the 
agency to investigate and prosecute claims of retaliation on an 
employee's behalf. Others permit employees to pursue their own claims 
by requesting an administrative investigation, from which appeals can 
be made to an administrative law judge, then an administrative review 
board, and ultimately to a federal court of appeals. The Sarbanes-Oxley 
Act of 2002 has the additional procedural nuance of requiring 
whistleblowers to first file a claim with OSHA, but then permitting 
whistleblowers to withdraw their claim and file in federal district 
court if the agency does not complete its review within 180 days.
    Depending on the statute invoked by the whistleblower, the statute 
of limitations for claims can be 30 days,\18\ 60 days,\19\ 90 days,\20\ 
or 180 days.\21\ The statute of limitations for retaliation under 
employee discrimination statutes can reach 300 days.\22\
    The burdens of proof differ as well. Some retaliation cases require 
proof that the adverse employment action taken against the employee 
would not have occurred ``but for'' the employee's protected conduct. 
Others require only that the protected activity play a ``motivating,'' 
or even less onerously, a ``contributing'' factor in the adverse 
employment action. Statutes vary on the level of proof required for 
employers to rebut a prima facie case of retaliation, from 
preponderance of the evidence to clear and convincing evidence that the 
employer would have made the same decision absent any protected 
activity.
            c. Many, but not Sufficient, Protections
    Suffice it to say, one would never create this system from scratch. 
Instead, this network of protections has evolved on an ad hoc basis in 
order to support specific statutory schemes. Whether a whistleblower is 
protected depends upon the employer for whom the employee works, the 
industry in which the employee works, the type of misconduct reported, 
the way in which the employee blew the whistle, and, under some 
statutes, the willingness of administrative agencies to enforce the 
law.
    Indeed, given this grab bag of statutes, rank-and-file employees 
likely cannot determine the protection available to them without 
consulting an attorney before blowing the whistle. Not surprisingly, 
surveys demonstrate that most employees are unaware of the protections 
they may (or may not) receive should they report wrongdoing.\23\ If 
employees are not aware of or do not understand their protections, then 
these anti-retaliation provisions are not doing their job of 
encouraging employees to come forward with information about 
misconduct. Society cannot gain the enormous public benefits from 
whistleblowing. Thus, while there may be many legal protections for 
whistleblowers, it is doubtful whether there are sufficient 
protections.
3. The Sarbanes-Oxley Example
    One statute that might have fixed some of these problems was the 
Sarbanes-Oxley Act of 2002, which Congress passed in response to 
corporate scandals involving Enron, WorldCom, and others. Under 
Sarbanes-Oxley, employees of publicly-traded companies who report 
fraudulent activity may bring claims against any person who retaliates 
against them as a result of their disclosure. By protecting employees 
at publicly-traded companies, the hope was to provide protections to a 
much broader range of employees than had previously been protected by 
statutes focusing primarily on particular industries. At the time it 
was passed, many whistleblower advocates and legal commentators 
expected that Sarbanes-Oxley would provide the broadest, most 
comprehensive coverage of any whistleblower provision in the world.
            a. Whistleblowers Rarely Win
    These expectations have not been realized: employees rarely win 
Sarbanes-Oxley cases. I recently completed an empirical study of all 
Department of Labor Sarbanes-Oxley determinations during the first 
three years of the statute, consisting of over 700 separate decisions 
from administrative investigations and hearings.\24\ Only 3.6% of 
Sarbanes-Oxley whistleblowers won relief through the initial 
administrative process at OSHA that adjudicates such claims, and only 
6.5% of whistleblowers won appeals in front of a Department of Labor 
Administrative Law Judge. That's 13 whistleblowers at the OSHA level, 
and 6 at the ALJ level. Moreover, more recent statistics from OSHA 
indicate that not a single Sarbanes-Oxley whistleblower won a claim 
before OSHA in Fiscal Year 2006--out of 159 decisions made by the 
agency during that year.
    This low win rate for whistleblowers has two primary causes. First, 
administrative decision-makers focus an extraordinary amount of 
attention on whether the whistleblower is the ``right'' type of 
whistleblower. Did the whistleblower disclose the ``right'' type of 
misconduct, to the ``right'' type of person? Did the whistleblower work 
for the ``right'' type of company? Did the whistleblower provide a 
complaint precisely within the 90-day statute of limitations? ALJs 
determined that over 95% of Sarbanes-Oxley whistleblower cases failed 
to satisfy one or more of these questions as a matter of law. Thus, 
very few whistleblowers were actually provided the opportunity to 
demonstrate that they were the subject of retaliation.
    Second, at the initial OSHA investigative level, when OSHA found 
that an employee's claim actually satisfied all of Sarbanes-Oxley's 
legal requirements, OSHA still found for the employee only 10% of the 
time. This low win rate seems surprising, because Sarbanes-Oxley 
purposefully presents a very low burden of proof for employees once 
their prima facie case is met.
    By themselves, these statistics should give us pause, given the 
high expectations regarding the potential of Sarbanes-Oxley to provide 
relief to whistleblowers whose employers retaliate against them. But, 
as important, Sarbanes-Oxley's implementation illustrates broader 
problems with the federal ad hoc approach to whistleblower protection.
            b. Problems with Whistleblower Protection
    Boundary Problems. First, by only protecting certain types of 
disclosures and certain types of employees, federal law puts enormous 
pressure on whether the whistleblower's disclosure was the ``right'' 
kind of disclosure or the employee is the ``right'' type of employee. 
Not only is this difficult for employees to predict ahead of time, but 
it also requires line-drawing by decision-makers that can narrow the 
scope of the protections more restrictively than intended by Congress.
    Sarbanes-Oxley demonstrates this problem. The Act protects 
disclosures related to certain federal criminal fraud provisions as 
well as rules and regulations related to securities requirements. Also, 
the Act only protects employees of publicly-traded companies. My study 
revealed that administrative decision-makers frequently focused on 
these two legal requirements to dismiss cases, and often by reading the 
statute's boundaries very narrowly. For example, Sarbanes-Oxley 
protects any disclosure related to mail or wire fraud, without 
qualification. However, the DOL's Administrative Review Board has ruled 
that the disclosure of mail or wire fraud in general is not sufficient; 
the fraud disclosed by a whistleblower must be ``of a type that would 
be adverse to investors' interests.'' \25\ Similarly, ALJs have ruled 
that Sarbanes-Oxley does not protect employees of privately-held 
subsidiaries of publicly-traded companies unless the employee can 
pierce the corporate veil between the companies or demonstrate that the 
publicly-traded company actively participated in the retaliation.\26\ 
In this and other instances, such narrow interpretations leave good 
faith whistleblowers without protection if they report the wrong type 
of fraud or work for the wrong type of company.
    Procedural Hurdles. Procedural hurdles loom large for 
whistleblowers. For example, ALJs dismissed one-third of Sarbanes-Oxley 
cases because the whistleblower failed to satisfy Sarbanes-Oxley's 
relatively short 90-day statute of limitations. As I noted earlier, the 
limitations period of other federal whistleblower protection statutes 
ranges from 30 to 300 days. Short filing periods can have drastic 
consequences. Because most employees who file whistleblower claims 
allege that they lost their jobs,\27\ additional time to file claims 
would provide whistleblowers the ability to first take care of pressing 
responsibilities, such as finding another job and dealing with the 
upheaval of losing a primary source of income, before ultimately 
locating a competent attorney to file a claim.
    Investigating Claims. Third, retaliation cases are highly fact-
intensive cases that require resources, time, and expertise. Requiring 
an administrative investigation prior to an adjudicatory hearing may 
not efficiently utilize government resources. For example, when 
Sarbanes-Oxley was added to OSHA's responsibilities, OSHA did not 
receive any additional funding for cases that now consist of 
approximately 13% of OSHA's caseload. This lack of resources has led to 
lengthy delays to resolve cases: although the Act's regulations mandate 
that OSHA complete its investigation within 60 days, the average length 
of a Sarbanes-Oxley investigation in Fiscal Year 2005 was 127 days. 
Also, OSHA had primarily dealt with environmental and health and safety 
statutes prior to Sarbanes-Oxley. Asking the agency to discern the 
nuances of securities fraud seems well beyond its traditional scope. 
Moreover, OSHA investigators who must examine cases involving 14 
different laws may not adequately differentiate among provisions that 
often provide for different burdens of proof and substantive 
protections. Add to that internal OSHA procedures that did not give the 
whistleblower a full and fair opportunity to rebut an employer's 
allegations, and it should not be surprising that few Sarbanes-Oxley 
whistleblowers have been successful at the OSHA investigative stage of 
their claim. In short, the Sarbanes-Oxley results call into question 
OSHA's utility as an investigative body for whistleblower claims.
4. Areas to Examine
    There are two main types of questions to consider going forward. 
First, if you are satisfied with the current ``rifle-shot'' approach to 
whistleblower protection, are there ways in which it can be improved? 
Second, if the current model is not satisfactory, what would a 
different model look like?
            a. Improving the Current System
    Clarifying Broad Protections. In areas such as Sarbanes-Oxley, in 
which it can be demonstrated that administrative decision-makers or 
courts have narrowly read the protections that Congress already has 
granted, Congress could clarify the statute's broad reach. Passing 
legislation that clearly repudiates decisions narrowing an act's scope 
could alleviate the tendency of decision-makers to draw restrictive 
legal boundaries in whistleblower cases. Congress has repeatedly taken 
such an approach for federal employee whistleblowers when 
administrative and judicial rulings undermined the broad protections of 
the Civil Service Reform Act and, more recently, the Whistleblower 
Protection Act.\28\ Congress should similarly examine federal statutory 
protections for private sector whistleblowers.
    Lengthening the Statute of Limitations. The short statutes of 
limitations that currently exist are unrelated to the goals of 
whistleblower statutes and serve no real purpose other than to trip up 
unsuspecting whistleblowers after they have already taken the serious 
risk of coming forward with information about misconduct. Increasing 
statutes of limitations to at least 180 days would be an easy, but 
nonetheless extremely helpful, solution.
    Improving Transparency. The adjudication of whistleblower claims 
should be more transparent. For example, OSHA does not publish any of 
its statistics or decision-letters. I received them by asking OSHA 
directly and by submitting a Freedom of Information Act (FOIA) request. 
No information about monetary awards or settlements are publicly 
available and OSHA denied my FOIA request for this information. The 
Office of Administrative Law Judges puts its decisions on the internet, 
but does not compile any statistics about its results. Statutory 
requirements that employers post notices about the available 
whistleblower protections are inconsistent: some statutes have them, 
others do not. The lack of meaningful, public information about 
whistleblower provisions and cases interpreting them fails to provide 
employees sufficient guidance regarding whether they will be protected 
if they blow the whistle, and also undermines the public discourse 
about whether these protections are effective. The decisions, and the 
decision-making process, of administrative agencies need more public 
oversight.
            b. Implementing New Protections
    The Importance of Defining Legal Boundaries. The problems with the 
current system can inform decisions on the areas on which one should 
focus when implementing new protections. Given the problems with the 
current narrow boundaries of many whistleblower provisions, a new 
whistleblower law should protect whistleblowers for disclosing a broad 
range of illegal activities. But, as with everything, the devil is in 
the details. Should whistleblowers who report any illegal activity be 
protected? Or only activity that is illegal under federal law or some 
subset of federal laws? Should we require whistleblowers to be correct 
that the activity they report is, in fact, illegal, or should we 
protect whistleblowers who reasonably disclose misconduct in good 
faith, even if the misconduct is not actually illegal? Should we 
require whistleblowers to report illegal activity externally to a law 
enforcement officer, or should we protect whistleblowers who report 
misconduct internally to their supervisor?
    I am quite confident you understand that legal definitions and 
boundaries matter--it is what you debate everyday. My point is that for 
whistleblower protections in particular, the evidence demonstrates that 
the boundaries you draw will have real bite, for two reasons. The first 
relates to the nature of whistleblowing: whistleblowers take real 
risks, and the current topic-by-topic, ad hoc approach to protecting 
whistleblowers does not provide employees sufficient certainty 
regarding their protections as they decide whether to blow the whistle. 
Second, statutory boundaries particularly matter for whistleblower 
protections because of the manner in which whistleblower laws currently 
are administered: narrow protections only encourage, or in some 
instances, require administrative and judicial decision-makers to 
define whistleblowers out of protected categories. Agencies and courts 
currently spend too much time debating whether this is the ``right'' 
type of employee, the ``right'' type of report, or the ``right'' type 
of illegal activity, and not enough effort determining whether 
retaliation occurred. Broadly defining the legal boundaries of any new 
protection may enable decision-makers to focus on the important factual 
question of causation: was this employee retaliated against for 
reporting something illegal?
    Providing Structural Disclosure Channels. Finally, I urge you to 
examine other types of encouragement for whistleblowers. For example, 
in the Sarbanes-Oxley Act of 2002, Congress required publicly-traded 
companies to implement a whistleblower disclosure channel directly to 
the company's board of directors. This internal reporting mechanism can 
supplement anti-retaliation protections because it encourages reporting 
directly to individuals with the authority and responsibility to 
respond to information about wrongdoing. Procedural and structural 
modifications that encourage effective employee whistleblowing should 
be considered along with any reform of anti-retaliation 
protections.\29\
5. Conclusion
    From one perspective, whistleblowers demonstrate that employees can 
be effective as corporate monitors. At great risk to their careers, a 
few employee whistleblowers bravely attempt to expose wrongdoing at 
corporations involved in misconduct, such as Enron, WorldCom, Global 
Crossing, and others.
    Viewed differently, however, such isolated scandals also illustrate 
the difficulty of relying upon employees to function as effective 
corporate monitors. The financial misconduct at Enron and other 
companies lasted for years before being revealed publicly. Countless 
lower-level employees necessarily knew about, were exposed to, or were 
involved in the wrongdoing and its concealment--but few disclosed it, 
either to company officials or to the public. Thus, while 
whistleblowers who reveal corporate misconduct demonstrate employees' 
potential to monitor corporations, the fact that so few have come 
forward also confirm that this potential often is not fully realized.
    The challenge for policy-makers is to provide sufficient 
encouragement and protection for employees so that they can fulfill 
their essential role of corporate monitoring. Without employees willing 
to blow the whistle on corporate misconduct, we lose one key aspect of 
society's ability to monitor corporations effectively. Thorough and 
comprehensive statutory whistleblower protections will encourage 
private-sector whistleblowers and should be an integral part of our 
corporate law enforcement effort.
                                endnotes
    \1\ For a more complete discussion of the importance of employees 
as corporate monitors, see Richard E. Moberly, Sarbanes-Oxley's 
Structural Model to Encourage Corporate Whistleblowers, 2006 BYU L. 
REV. 1107, 1116-25.
    \2\ See Kathleen F. Brickey, From Enron to WorldCom and Beyond: 
Life and Crime After Sarbanes-Oxley, 81 Wash. U. L.Q. 357, 365 n.37 
(2003) (citing study reported in Jonathan D. Glater, Survey Finds 
Fraud's Reach in Big Business, N.Y. Times, July 8, 2003, at C3).
    \3\ See Surface Transportation Assistance Act of 1982, 49 U.S.C. 
Sec.  31105(a).
    \4\ See id.
    \5\ See, e.g., Clean Air Act of 1977, 42 U.S.C. Sec.  7622(a); 
Solid Waste Disposal Act of 1976, 42 U.S.C. Sec.  6971(a).
    \6\ See International Safe Container Act, 46 U.S.C. Sec.  1506(a).
    \7\ See, e.g., Surface Transportation Assistance Act of 1982, 49 
U.S.C. Sec.  31105(a); Energy Reorganization Act, 42 U.S.C. Sec.  
5851(a)(1)(B).
    \8\ See Records and Reports on Monetary Instruments Transactions, 
31 U.S.C. Sec.  5328.
    \9\ See Federal Mine Safety and Health Act, 30 U.S.C. Sec.  815(c).
    \10\ See Mine Safety and Health Act of 1977, 30 U.S.C. Sec.  
815(c).
    \11\ See Energy Reorganization Act, 42 U.S.C. Sec.  5851.
    \12\ See Wendell H. Ford Aviation Investment and Reform Act for the 
21st Century (AIR 21), 49 U.S.C. Sec.  42121.
    \13\ See False Claims Act, 31 U.S.C. Sec.  3730(h).
    \14\ See Sarbanes-Oxley Act of 2002, 18 U.S.C. Sec.  1514A.
    \15\ See Equal Employment Opportunity Act (Title VII), 42 U.S.C. 
Sec.  2000e-3(a).
    \16\ See Safe Drinking Water Act, 42 U.S.C. Sec.  300j-9; 
International Safe Container Act, 46 U.S.C. Sec.  1506.
    \17\ See, e.g., Federal Deposit Insurance Act, 12 U.S.C. Sec.  
1831j.
    \18\ See, e.g., Solid Waste Disposal Act, 42 U.S.C. Sec.  6971.
    \19\ See, e.g., International Safe Container Act, 46 U.S.C. Sec.  
1506.
    \20\ See, e.g., Sarbanes-Oxley Act of 2002, 18 U.S.C. Sec.  1514A.
    \21\ See, e.g., Energy Reorganization Act of 1974, 42 U.S.C. Sec.  
5851.
    \22\ See, e.g., Age Discrimination in Employment Act, 29 U.S.C. 
Sec.  626.
    \23\ TERANCE D. MIETHE, WHISTLEBLOWING AT WORK: TOUGH CHOICES IN 
EXPOSING FRAUD, WASTE, AND ABUSE ON THE JOB 54 (1999).
    \24\ See Richard E. Moberly, Unfulfilled Expectations: An Empirical 
Analysis of Why Sarbanes-Oxley Whistleblowers Rarely Win, 49 Wm. & Mary 
L. Rev. ___ (forthcoming 2007), available at http://ssrn.com/
abstract=977802.
    \25\ See Platone v. FLYi, Inc., No. 04-154, at 15 (ARB Sept. 29, 
2006).
    \26\ See Bothwell v. Am. Income Life, No. 2005-SOX-57, at 8 (Dep't 
of Labor Sept. 19, 2005); Hughart v. Raymond James & Assoc., Inc., 
2004-SOX-9, at 44 (Dep't of Labor Dec. 17, 2004).
    \27\ The study found that 81.8% (378/462) of Sarbanes-Oxley 
Complainants whose allegation regarding retaliation was discernable 
alleged that they were fired from their jobs as retaliation.
    \28\ See Whistleblower Protection Enhancement Act of 2007, H.R. 
985, 110th Cong. (2007).
    \29\ See Moberly, supra note 1, at 1141-78 (discussing the 
importance of implementing effective whistleblower disclosure 
channels).
                                 ______
                                 
    [Internet address to ``Unfulfilled Expectations: An 
Empirical Analysis of Why Sarbanes-Oxley Whistleblowers Rarely 
Win,'' by Richard E. Moberly, 49 William and Mary Law Review 
(abstract), follows:]

                    http://ssrn.com/abstract=977802

                                 ______
                                 
    Chairwoman Woolsey. Mr. Chinn.

       STATEMENT OF LLOYD CHINN, PARTNER, PROSKAUER ROSE

    Mr. Chinn. Madam Chairwoman, Ranking Member Wilson----
    Chairwoman Woolsey. Your microphone isn't on.
    Mr. Chinn. Madam Chairwoman, Ranking Member Wilson, members 
of this subcommittee, I am pleased to appear and testify before 
you today about the legal protections afforded to 
whistleblowers. I counsel and defend employers in employment 
matters. Often this representation focuses on the avoidance of 
whistleblower claims, or, failing the avoidance of those 
claims, litigation.
    The question before you today, whether there are sufficient 
legal protections for whistleblowers, and I would suggest that 
question might ought to be modified in the following fashion: 
Are there sufficient legal protections for whistleblowers 
consistent with employers' competitive and potentially 
profitable operations? And I would also add consistent with 
fairness and due process to employers.
    I am going to focus my remarks on the antiretaliation 
provisions in Sarbanes-Oxley. The antiretaliation provisions in 
Sarbanes-Oxley which were supported at the time of their 
enactment, I believe, by the Government Accountability Project, 
reflect a tried-and-true approach to whistleblowing in this 
country on a Federal level.
    Congress has chosen over the years when regulating a 
substantive legal area, if it feels that it is necessary to do 
so, it protects employees of employers in that regulated area 
by providing some sort of whistleblower action. Those 
whistleblower actions are designed to meet the goals, the 
overarching goals, of the substantive legislation at issue. 
They are not generalized whistleblower protections, nor are 
they meant to be.
    I should say as an aside, to the extent there are proposals 
before the committee to enact a general whistleblower statute, 
that is any employee who complains about anything and suffers 
anything harmful, as a result has a cause of action, a Federal 
cause of action. I would suggest that that would be legislation 
of a monumental scope, one that would provide a recipe for 
chaos and unintended consequences and would be far, far too 
broad to meet any particular legislative goals faced by the 
Congress.
    Such an act also would ignore the Federal protections that 
already exist and have been crafted to meet specific 
legislative goals. It would be a massive--provide a massive 
potential to overwhelm existing agencies and the Federal 
courts, would ignore State regulation where States have chosen 
to enact that sort of regulation, and ultimately it would 
result in extraordinary litigation costs for employers.
    Does that beeping mean I should stop talking?
    With respect to Sarbanes-Oxley, I think a few words are 
appropriate since Sarbanes-Oxley is one of our more recent 
federally enacted whistleblower statutes. I think it is very 
important for the committee to recognize and understand that 
the Sarbanes-Oxley antiretaliation provisions are very 
favorable as they are written today for employees. The burden 
of proof at the prima facie stage for establishing a causal 
connection between the protected activity and an adverse action 
is very low. An employee need only show a contributing factor; 
that is, that the protected activity was a contributing factor 
in the resulting adverse action. This is a very low burden.
    By contrast, in other employment litigation contexts, a 
plaintiff employee might need to show a determining factor, a 
significant factor, or at least a motivating factor.
    Contributing factor is a very low standard. Once an 
employee makes that showing, essentially an employer can only 
win if it can prove that it would have taken the same action 
anyway, notwithstanding the protected activity. And the 
regulations governing Sarbanes-Oxley require that that showing 
be by clear and convincing evidence. And for those who 
litigate, those words have meaning. That is a far higher burden 
than the preponderance of the evidence, the normal burden in 
civil cases.
    Another very favorable component of Sarbanes-Oxley for 
employees is that Sarbanes-Oxley in essence provides a choice 
of forum to the employee. Yes, the employee must start off with 
a complaint to OSHA, but if that complaint has not been fully 
adjudicated through all three levels of OSHA's review within 
180 days, the employee has the right to go to Federal court. 
The employer does not have that right; the employee does. As a 
practical matter the employee will always have this right 
because it will always take 180 days to exhaust all of those 
processes.
    Now, apart from the burdens of proof itself and the way in 
which a Sarbanes-Oxley plaintiff goes about proving his or her 
case, in our experience, in my firm's experience, OSHA performs 
thorough and competent investigations, particularly when 
compared to those investigations conducted by other Federal, 
State and local agencies with whom we deal on a regular basis 
representing employers.
    Chairwoman Woolsey. Mr. Chinn, could you wrap up? We are 
going to have Mr. Devine, and then we all have to go vote.
    Mr. Chinn. I will do so.
    In summing up I would just urge the committee that in 
addressing either a broad whistleblower protection or looking 
specifically at Sarbanes-Oxley, that it take into account the 
costs attendant to any such protections. While it is 
important--while whistleblowers serve an important role in 
society, as all the witnesses here agree, there are costs 
associated with these claims.
    Professor Moberly's paper makes clear under any regulatory 
regime regulating employment, the rate of failure of employees 
who bring claims is extraordinarily high. Those are meritless 
claims, and they are very expensive to litigate. I would ask 
that the committee keep those costs, the cost to litigate those 
claims, in mind in evaluating this subject. Thank you very 
much.
    Chairwoman Woolsey. Thank you. We can go further on that 
with questions.
    [The statement of Mr. Chinn follows:]

   Prepared Statement of Lloyd B. Chinn, Partner, Proskauer Rose LLP

    Madame Chairwoman and members of the Sub-Committee, I am pleased 
and honored to be here today to testify about the legal protections 
that are offered to private sector whistleblowers.
    By way of introduction, I am a Partner in the Labor and Employment 
Section of the law firm Proskauer Rose LLP. Although I practice out of 
my firm's New York City office, I have handled employment matters in 
federal and state courts and administrative agencies around the 
country. My fifteen year legal career has been almost exclusively 
devoted to the representation of employers in employment matters, 
whether engaged in counseling for the purpose of avoiding employee 
disputes or litigating those disputes as they arise. Throughout, I have 
advised and represented clients in connection with litigating or 
avoiding retaliation and whistleblower claims. In recent years, my 
practice, at least in the for-profit sector, has focused on the 
representation of financial services firms.
    The issue before you today is whether there are sufficient legal 
protections for private sector whistleblowers, balanced, against, of 
course, the need for employers to run their businesses in a competitive 
and potentially profitable manner. I am going to focus my prepared 
remarks on the anti-retaliation provisions contained in the Sarbanes-
Oxley Act of 2002.
    Before discussing the Sarbanes-Oxley anti-retaliation provision as 
such, it is important to place that provision in context. Congress 
enacted Sarbanes-Oxley against the backdrop of the Enron debacle, a 
disaster born out of, among other things, fraudulent financial 
reporting which grossly overstated earnings and understated 
obligations. Given the breadth with which Enron stock had been held by 
pension and 401k funds as well as individual investors, Enron's fall 
was felt widely throughout the economy.
    Unlike Title VII of the 1964 Civil Rights Act, the Fair Labor 
Standards Act or Occupational Safety and Health Act, Sarbanes-Oxley is 
not a statute intended in the first instance to govern employee/
employer relations. As the preamble to Sarbanes-Oxley states, it is an 
Act ``to protect investors by improving the accuracy and reliability of 
corporate disclosures made pursuant to the securities laws, and for 
other purposes.'' To that end, Sarbanes-Oxley contained eleven titles, 
ranging from Title I, which established the Public Company Accounting 
Oversight Board to Title IV, which requires enhanced financial 
disclosures to enhancing various relevant criminal provisions in Titles 
IX and XI. As part of Sarbanes-Oxley's overall effort to protect 
investors in public companies from fraud, Congress enacted Section 806 
of the Act, titled, ``Protection for employees of publicly traded 
companies who provide evidence of fraud''. This anti-retaliation 
provision must not be mistaken for, or compared against, some sort of 
generalized whistleblower protection act. Indeed, the approach adopted 
in Sarbanes-Oxley is consistent with the federal government's oft-used 
approach of enacting targeted anti-retaliation protections that fit 
within the specific aims of the substantive legislation.
The Sarbanes-Oxley Anti-Retaliation Provisions Are Favorable To 
        Employees
    The anti-retaliation provisions contained in Sarbanes Oxley are 
unquestionably very favorable to employees. First and foremost, the 
burden of proof for a Sarbanes-Oxley whistleblower claim is extremely 
favorable to the claimant. To establish a prima facie case of 
retaliation, the employee need only establish that: (i) he ``engaged in 
a protected activity or conduct''; (ii) the respondent ``knew or 
suspected, actually or constructively, that the employee engaged in 
protected activity''; (iii) he ``suffered an unfavorable personnel 
action''; and (iv) the circumstances were sufficient to give rise to 
the inference that the protected activity was a contributing factor in 
the unfavorable action.'' \1\ According to at least one district court, 
``The words `a contributing factor' mean any factor which, alone or in 
connection with other factors, tends to affect in any way the outcome 
of the decision.'' \2\ By contrast, in other employment litigation 
contexts, a plaintiff-employee must establish that the impermissible 
consideration was a ``determining'' or a ``significant'' factor in the 
employer's decision, a unquestionably higher burden of proof.\3\
    According to the regulations promulgated under Sarbanes-Oxley, once 
an employee proves a prima facie case of retaliation, an employer can 
avoid liability only if it ``demonstrates by clear and convincing 
evidence that it would have taken the same unfavorable personnel action 
in the absence of the complainant's protected behavior or conduct.'' 
\4\ By contrast, in a mixed motive retaliation case under Title VII, an 
employer need only prove by a preponderance of the evidence that it 
would have taken the same action in the absence of the employee's 
protected conduct.\5\
    To engage in activity protected by the statute, a Sarbanes-Oxley 
complainant need only ``reasonably believe'' that his report describes 
a violation of the laws, rules and regulations set forth in the 
statute.\6\ By contrast, certain whistleblower statutes require an 
``actual violation'' of the statute, rule or regulation at issue.\7\
    In addition, as a practical matter, employees (unlike employers) 
have a choice of forum for their Sarbanes-Oxley retaliation claims--
they may choose whether to pursue a Sarbanes-Oxley whistleblower claim 
before OSHA or in federal court. A Sarbanes-Oxley complainant may:
    if the Secretary has not issued a final decision within 180 days of 
the filing of the complaint and there is no showing that such delay is 
due to the bad faith of the claimant, bring[ ] an action at law or 
equity for de novo review in the appropriate district court of the 
United States * * * \8\
    Given the time frames allotted for the various proceedings before 
OSHA, it would not be surprising to learn that many, if not most, 
claimants will have this option. OSHA has sixty (60) days from filing 
to issue a reasonable cause determination; the parties then have thirty 
(30) days to request review by an Administrative Law Judge; appeals 
from an ALJ's decision must be made to the Department of Labor's 
Administrative Review Board (``ARB'') within ten (10) days, and the ARB 
has 120 days to issue a final decision (which itself may be appealed to 
a Federal circuit court of appeals).\9\ As Professor Moberly has noted, 
the option to seek de novo review in federal court ``almost certainly 
will be available for employees, because it is unlikely that the entire 
process will be completed in that period of time.'' \10\
OSHA Performs Thorough Investigations
    Apart from the statute itself, based upon my law firm's experience 
with OSHA investigations of Sarbanes-Oxley retaliation claims, we 
believe that OSHA has generally conducted thorough investigations, and 
has certainly done so when compared to investigations conducted by 
other federal, state and local agencies with whom we routinely 
interact.\11\ Transferring jurisdiction over Sarbanes-Oxley retaliation 
claims from OSHA to another agency at this point would waste the 
experience and knowledge that OSHA has accumulated in handling these 
matters. And doing away with the requirement that Sarbanes-Oxley 
complainants first file with OSHA before going to federal court would 
leave to the already-overburdened federal courts the task of weeding 
out, in the first instance, the many Sarbanes-Oxley retaliation claims 
that are procedurally flawed.
Sarbanes-Oxley's Salutary Effects On The Workplace
    Apart from victories obtained by Sarbanes-Oxley plaintiffs, whether 
through OSHA or in federal court, Sarbanes-Oxley has had a salutary 
effect on the workplace. Section 301 of Sarbanes-Oxley mandates that 
public company audit committees:
    establish procedures for--(A) the receipt, retention, and treatment 
of complaints received by the issuer regarding accounting, internal 
accounting controls, or auditing matters; and (B) the confidential, 
anonymous submission by employees of the issuer of concerns regarding 
questionable accounting or auditing matters.\12\
    In other words, Sarbanes-Oxley mandated the creation of an avenue 
by which employees can raise certain issues without having to go 
through the company's executives. Moreover, apart from Sarbanes-Oxley's 
specific requirements in this regard, companies have adopted proactive 
policies requiring the investigation and resolution of complaints made 
pursuant to corporate codes of ethics. While it would be impossible to 
quantify, Sarbanes-Oxley has undoubtedly promoted a culture more open 
to and welcoming of internal complaints by employees.
Whistleblower Statutes Must Reflect A Balance Between Employee 
        Protections and Costs
    While the enactment of Sarbanes-Oxley has undoubtedly positively 
impacted investors in and employees of public companies alike, as with 
any statute regulating the workplace, Sarbanes-Oxley has also had 
costs. It is beyond dispute that for every meritorious case filed under 
any employment statute, there are far more cases that are not.\13\ The 
costs incurred by employers to defend such actions are staggering; the 
defense of a meritless case can range from five to seven figures. 
Moreover, there are certain employees who will abuse statutes such as 
Sarbanes-Oxley, viewing a complaint protected thereunder as providing 
guaranteed immunity from management or scrutiny. And because of the 
very favorable burdens of proof to employees under Sarbanes-Oxley, 
employers must be extraordinarily careful in managing employees who 
have engaged in protected activity, even those whose complaints are 
specious or in bad faith. Therefore, before considering any proposals 
to make Sarbanes Oxley even more favorable to employees, the attendant 
costs to employers must be considered.
A Brief Comment On Professor Moberly's Forthcoming Article
    In a forthcoming article entitled ``An Empirical Analysis of Why 
Sarbanes-Oxley Whistleblowers Rarely Win'' Professor Moberly asserts 
that Sarbanes-Oxley has ``failed to protect the vast majority of 
employees who filed a Sarbanes-Oxley retaliation claim'' because, in 
his view, they do not win often enough.\14\ He comes to this conclusion 
by comparing Sarbanes-Oxley ``win'' rates (before OSHA only, not in 
federal court) with the ``win'' rates of claimants under other 
employment statutes.\15\ The unstated premise necessary to this 
argument is that employers are, in fact, retaliating against employees 
in violation of Sarbanes-Oxley at the same (or greater) rate that 
employers violate other employment statutes. But Professor Moberly 
offers no support for any such hypothesis. (He, in fact, expressly 
disavows possessing any evidence to support such a claim).\16\
    In addition, much of Professor Moberly's criticism of the claimant 
``win'' rate with OSHA reflects a disdain for the statute's limited 
coverage in terms of employer types and protected activity. But that 
limited scope flows naturally from the statute's original purposes, 
discussed above. Indeed, by Professor Moberly's own analysis, if the 
employee losses accounted for by such issues are excluded, employees 
win at much higher rates (10.6 percent before OSHA and 55.6 percent 
before ALJ's).\17\
    Professor Moberly is also highly critical of the statute's 90 day 
statute of limitations, and claims that it is contrary to Sarbanes-
Oxley's purpose.\18\ In fact, a short limitations period is entirely 
consistent with the Act's purpose of protecting investors in public 
companies. If a company is engaged in securities fraud, and it is 
retaliating against putative whistleblowers who are trying to bring 
that conduct to light, it is indeed in the interests of investors that 
the fraud and retaliation be brought to light in an expeditious manner. 
Moreover, of the fourteen anti-retaliation statutes administered by 
OSHA, seven have a thirty (30) day limitations period, one has a sixty 
(60) day limitations period, three (including Sarbanes-Oxley) have 
ninety (90) day limitations periods; only three have periods greater 
than ninety (90) days.\19\ Thus, it can hardly be said that the 
Sarbanes-Oxley limitations period is ``restrictive'' (as asserted by 
Professor Moberly), relative to other similar statutes.
Conclusion
    The anti-retaliation provisions of Sarbanes-Oxley were enacted 
against a particular backdrop with a specific purpose, to protect 
investors in public companies. The statute, in its current form, is 
very favorable to employees who present valid claims. Based on the 
experience of Proskauer Rose, OSHA has done a relatively thorough job 
in investigating and handling these claims. And American corporations 
are taking actions internally to protect whistleblowers from 
retaliation. Notwithstanding these positives, significant costs are 
undoubtedly associated with Sarbanes-Oxley. Under these circumstances, 
there is no basis for Congress to amend the anti-retaliation provisions 
of Sarbanes-Oxley or otherwise alter its enforcement mechanisms.
                                endnotes
    \1\ 29 C.F.R. Sec. Sec.  1980.104 (b)(1), 1980.109(a) (emphasis 
added).
    \2\ Collins v. Beazer Homes USA, Inc., 334 F. Supp. 2d 1365, 1379 
(N.D. Ga 2004).
    \3\ See, e.g., Hazen Paper Co. v. Biggins, 507 U.S. 604, 610 
(1993)(to succeed on an age discrimination claim, a plaintiff must show 
that age was a determinative factor in adverse action); Woodson v. 
Scott Paper Co., 109 F.3d 913 (3d Cir. 1997) (jury must be instructed 
that improper motive must have had a determinative effect on the 
decision to fire in order for plaintiff to prevail on Title VII 
retaliation claim).
    \4\ 29 C.F.R. Sec. Sec.  1980.104 (b)(2) (emphasis added); 
1980.109(a); Platone v. Atl. Coast Airlines Holdings, Inc., 2003-SOX-27 
(ALJ Apr. 30, 2004), at 28, rev'd on other grounds, Platone v. FLYi, 
Inc., Case No. 04-154 (ARB Sept. 29, 2006).
    \5\ See, e.g., Kubicko v. Ogden Logistics Services, 181 F.3d 544 
(4th Cir. 1999) (if employer establishes by a preponderance of the 
evidence that it would have taken the same act adverse act in the 
absence of protected activity, Title VII retaliation claim fails).
    \6\ 18 U.S.C. Sec.  1514A(a)(1).
    \7\ See, e.g., Pail v. Precise Imps. Corp., 681 N.Y.S.2d 498, 500 
(1st Dep't 1998) (applying New York State's private employer whistle-
blower statute).
    \8\ 18 U.S.C. Sec.  1514A(b)(1)(B).
    \9\ 29 C.F.R. Sec. Sec.  1980.105(a),(c); 1980.109(c), 1980.110(c).
    \10\ Richard E. Moberly, Unfulfilled Expectations: An Empirical 
Analysis of Why Sarbanes-Oxley Whistleblowers Rarely Win, 49 Wm. & Mary 
L. Rev. (forthcoming Fall 2007) (manuscript at 12, on file with SSRN: 
http://ssrn.com/abstract=977802).
    \11\ Any suggestion that more thorough investigations by OSHA would 
necessarily favor complainants is nothing but pure speculation. Indeed, 
one could hypothesize various sets of facts in which a more thorough 
investigation would favor the employer. For example, while the timing 
of an adverse action as related to a complainant's protected activity 
might, on the surface, suggest a connection between the two, a more in-
depth analysis might reveal that the employer had planned the adverse 
action prior to learning of the protected activity, thus undermining 
any inference of retaliation.
    \12\ 15 U.S.C. Sec.  78j (m)(4).
    \13\ See, e.g., Moberly, Unfulfilled Expectations (manuscript at 
20).
    \14\ Moberly, Unfulfilled Expectations (manuscript at 2).
    \15\ Some of the comparisons offered by Professor Moberly are 
highly suspect. For example, comparing the rate at which the United 
States Equal Employment Opportunity commission finds ``reasonable 
cause'' to the rate at which OSHA finds ``reasonable cause'' is like 
comparing apples to oranges. A ``reasonable cause'' finding by OSHA, if 
not appealed, is a final determination on the merits. A ``reasonable 
cause'' finding by the EEOC has no such effect.
    \16\ Moberly, Unfulfilled Expectations (manuscript at 24) (``Thus, 
we do not know, and cannot determine, whether employees filed ``good'' 
or ``bad'' Sarbanes-Oxley cases.''); (see also manuscript 24 n. 128).
    \17\ Moberly, Unfulfilled Expectations (manuscript at 41)
    \18\ Id. at 49-51.
    \19\ The statutes other than Sarbanes-Oxley are the Occupational 
Safety and Health Act of 1970 Sec.  11(c), 29 U.S.C. Sec.  660 (30 
days); the Surface Transportation Assistance Act of 1982, 49 U.S.C. 
Sec.  31105 (180 days); the Asbestos Hazard Emergency Response Act of 
1986, 15 U.S.C. Sec.  2651 (90 days); the International Safe Container 
Act of 1977, 46 U.S.C. app. Sec.  1506 (60 days); the Safe Drinking 
Water Act of 1974, 42 U.S.C. Sec.  300j-9(i) (30 days); the Federal 
Water Pollution Control Act Amendments of 1972, 33 U.S.C. Sec.  1367 
(30 days); the Toxic Substances Control Act of 1976, 15 U.S.C. Sec.  
2622 (30 days); the Solid Waste Disposal Act of 1976, 42 U.S.C. Sec.  
7001 (30 days); the Clean Air Act of 1977, 42 U.S.C. Sec.  7622 (30 
days); the Comprehensive Environmental Response, Compensation, and 
Liability Act of 1980, 42 U.S.C. Sec.  9610 (30 days); the Energy 
Reorganization Act, 42 U.S.C. Sec.  5851 (180 days); the Wendell H. 
Ford Aviation Investment and Reform Act for the 21st Century (AIR21), 
49 U.S.C. Sec.  42121 (90 days); and the Pipeline Safety Improvement of 
2002 Sec.  6, 49 U.S.C. Sec.  60129 (180 days).
                                 ______
                                 
    Chairwoman Woolsey. Mr. Devine.

      STATEMENT OF TOM DEVINE, LEGAL DIRECTOR, GOVERNMENT 
                     ACCOUNTABILITY PROJECT

    Mr. Devine. Thank you.
    I would like to begin by responding to a few of the 
previous speaker's points. He said that as a general view 
whistleblower laws that protect complaints about anything would 
cause chaos. Of course, that is true; whistleblower laws 
protect those who exercise free speech rights to challenge 
abuses of power that betray the public trust. Let us be clear 
who we are talking about.
    Second, the gentleman said the SOX law is very favorable on 
paper. It is on paper. That is the problem. The Achilles heel 
is administration and due process rights to enforce those paper 
rights.
    Let me give you a few examples of the Achilles heels. The 
first one is the Occupational Safety and Health Administration. 
Just to illustrate the quality of work there, due to the volume 
of complaints, GAP has had to develop a manual on how 
whistleblowers can find their cases when OSHA loses them.
    During the investigation the Agency regularly engages in 
double standards on the right to counsel, access to evidence 
and the opportunity to rebut the other side's arguments. Then 
there is the other end of the administrative process, the 
Appeals Review Board. That reflects the legal system's lowest 
common denominator for appellate review. The members are minor 
league political appointees with 1-year terms, frequently 
without any subject matter expertise, who don't even move to 
Washington because they view their jobs as part time. They 
haven't returned any corporate whistleblower to the job since 
Sarbanes-Oxley was passed in 2002.
    GAP has helped about 4,000 people since I came there in 
1979. Every day we are called on by whistleblowers to answer 
questions about the facts of life with their rights. My 
testimony has a baker's dozen examples of those questions and 
the answers we must give if we are going to be honest. They are 
based on the three-part Department of Labor process highlighted 
today.
    Let me give you a few examples. First, who do these laws 
protect? Well, in any given industry, potentially any employee 
or almost no one. It is like a road with more potholes than 
pavement. The laws are generally tucked into specific laws such 
as environmental or occupational safety statutes. Any 
corporation potentially could violate those laws. So any 
corporate employee potentially has rights about some things, 
but about other more significant problems, they have none.
    For example, at a meatpacking plant a whistleblower can be 
protected for disclosing the runoff of fecally contaminated 
water into the river, but not for selling fecally contaminated 
meat or poultry that arrives on our families' dinner tables. Or 
a pharmaceutical company, you have rights if you challenge 
false statements to the shareholders, but not false statements 
to the government or the public for potentially lethal drugs 
like Vioxx, which killed 50,000 Americans from unnecessary 
heart attacks.
    Second, what am I protected from blowing the whistle 
against? Most law protects exposure of illegality or other 
actions to carry out the purposes of the statute. The Sarbanes-
Oxley eliminated that catch-all. So now the game is how illegal 
is illegal enough. Some of the early decisions have made a few 
factors to answer that. You must first prove that, one, the 
fraud itself is material or about sometimes 1 percent of the 
annual revenues; second, that the government actually will act 
to punish the misconduct; third, that the punishment will have 
a direct and specific impact on shareholders that lowers stock 
value. There is no protection for, quote speculation, also 
known as warnings. So much for knowing where you stand.
    Third, if I speak out, when will I be become a legally 
recognized whistleblower? That is a good question. It used to 
be that challenging corporate misconduct internally triggered 
rights as an essential preliminary step for responsible 
government disclosures, but under some recent decisions that 
coverage has been disqualified, which forces employees to 
ignore their employers and contact the government behind the 
company's back or else risk waiving their rights. That is not a 
healthy system.
    Well, how long do I have to act on my rights? Generally 30 
to 90 days. There is a doctrine called equitable tolling, but 
don't count on it. In one case DOL extended the deadline to a 
year; in another Mr. Henry Emanuel they threw out his case for 
being 43 days late.
    How long is this going to take? On paper, 30 to 90 days, 
but in our experience 2 to 3 years commonly, up to 14 years, 6 
years not uncommon. To illustrate, it took Labor 4\1/2\ years 
to tell Mr. Emanuel he was too late for his rights by filing 43 
days after a 30-day deadline.
    Madam Chair, again, we say that whistleblower laws can be 
divided into those that create a free speech cardboard shield 
or a metal shield. Anyone going into battle with a cardboard 
shield, no matter how impressively it is painted, is going to 
die. While conflict is always dangerous, with a metal shield 
you have a fighting chance to win.
    The current system is broken. It is a cardboard shield. It 
is time to get this right, and thank you for starting that 
process.
    Chairwoman Woolsey. Thank you.
    [The statement of Mr. Devine follows:]

    Prepared Statement of Thomas Devine, Legal Director, Government 
   Accountability ProjectPrepared Statement of Thomas Devine, Legal 
              Director, Government Accountability Project

    Madam Chair: Thank you for inviting my testimony. My name is Tom 
Devine, and since January 1979 I have served as legal director of the 
Government Accountability Project, a nonprofit, nonpartisan, public 
interest law firm dedicated to helping whistleblowers--those employees 
who exercise free speech rights to challenge illegality or other abuses 
of power that betray the public trust. Since we began 30 years ago, GAP 
has assisted over 4,000 whistleblowers. GAP has led outside campaigns 
that led to passage of numerous government, military, and corporate 
whistleblower protection laws. We represent whistleblowers in test 
cases of those statutes, and to investigate their dissent against 
alleged misconduct threatening the public. We steadily monitor 
implementation of whistleblower statutes and share our results through 
books, law review and popular articles, as well as congressional 
testimony. See, e.g., The Whistleblower's Survival Guide: Courage 
Without Martyrdom, and ``The Whistleblower Protection Act of 1989: 
Foundation for the Modern Law of Dissent,'' 51 Administrative Law 
Review 531 (1999).
    Since 2000 GAP has worked hard for whistleblower protection on the 
international level as a transparency cornerstone for globalization. 
For example, we teamed up with American University Law School to draft 
a model whistleblower protection law implementing the Organization of 
American States (OAS) Inter-American Convention Against Corruption. 
Over the last two years we have worked closely with officials at the 
United Nations and the African Development Bank to issue new 
whistleblower policies that for the first time protect public freedom 
of expression by employees at Intergovernmental Organizations. 
Currently we are completing work with the Tanzanian government's 
Prevention and Combating Corruption Bureau for a national whistleblower 
law to be introduced in that nation's Parliament this summer.
    Unfortunately, in all too many instances we cannot point to U.S. 
laws as the baseline for global best practices in whistleblower 
protection. While well intentioned, their roads have led to a 
professional hell on earth for whistleblowers who rely on legal rights. 
The system of corporate whistleblower laws has been dysfunctional at 
best, and frequently a trap that rubber stamps retaliation for all 
naive enough to assert their rights.
    Word spreads like wildfire in the employment grapevine at any 
institution when that occurs, and the lesson learned is unfortunate: 
don't work within the system. When corporate abuses of power betray the 
public trust, there are three choices other than professional suicide: 
look the other way, remain a silent observer, or go behind the 
company's institutional back to out-Machiavelli the Machiavelli's with 
an anonymous campaign. Blowing the whistle through established 
structural checks and balances is like ``committing the truth.'' One of 
America's most effective whistleblowers, Ernie Fitzgerald, coined that 
phrase, because you will be treated like you committed a crime. 
Corporate whistleblower law is a crazy-quilt of hit or (usually) miss 
protections generally tucked into specific public health and safety 
laws. With scattered exceptions, the lucky ones covered by the law 
generally are unemployed, while serving open-ended sentences as 
prisoners of an administrative law system with rigid, unforgiving 
deadlines to act on rights, despite unrealistically short deadlines and 
a convoluted maze of inconsistent bureaucratic procedures with 
decisions seldom less than two to three years. and most statutes 
without any chance for interim relief. This is professionally akin to 
patients who die while waiting for an operation or organ donor.
    The ultimate losers are the public. Two long-accepted truths are 
that secrecy is the breeding ground for corruption, and sunlight is the 
best disinfectant. Hand in hand with accountability, whistleblowing as 
the freedom to warn is at least as significant. Otherwise even the best 
leaders are ignorant of misdeeds, and those who fly blind are liable to 
crash. When whistleblowers have the freedom to warn, both corporate and 
government institutions can prevent avoidable disasters, before there 
is nothing left but damage control and finger pointing.
    In GAP's experience, since the 1980's whistleblowers have proved 
their importance to society again and again. To illustrate, investors 
believed whistleblowers over Nuclear Regulatory Commission rubber-
stamps and pulled the plug on plants that were accidents waiting to 
happen. At the Hanford nuclear waste site, after a contractor publicly 
announced the loss of 5,000 gallons of radioactive waste but reassured 
there was no danger of it reaching the public, whistleblowers exposed 
the truth: The real volume was 440 billion gallons. There already are 
trace readings of the wrong kind of radioactive ``hot'' water in the 
Columbia River water basin for the Pacific Northwest. Corporate 
whistleblowers at meat and poultry plants repeatedly exposed attempts 
to profit from fecally-contaminated products if the government 
deregulated. Their disclosures helped keep public health disasters such 
as the deadly Jack in the Box food poisoning tragedy from becoming the 
norm. Dr. Jeffrey Wigand's rock of the truth turned into a landslide 
that destroyed the tobacco industry's credibility and helped spark a 
global cultural sea change about cigarettes.
    Whistleblowers are the life blood for effective law enforcement. It 
is difficult to win criminal convictions without testimony from those 
who bear witness against corruption. Without protection for witnesses, 
anti-corruption campaigns are empty and lifeless. Whistleblowing 
disclosures to the SEC doubled normal rates during congressional Enron 
hearings. As SEC enforcement chief Stephen Cutler commented, ``Because 
of this phenomenon, among other reasons, we are learning of potential 
securities law violations earlier than ever before. Keep those cards 
and letters, not to mention emails, coming.'' This committee has 
serious work to do, or government officials like Mr. Cutler will be 
waiting for Godot. Profiles in Courage are the exception, not the rule.
    Every day at GAP we are called by whistleblowers asking us the 
facts of life if they rely on legal rights. Below are a baker's dozen 
examples of the questions we receive, and the answers we are forced to 
give if we want to be honest.
    While there are 32 federal laws offering scattered protection for 
corporate whistleblowers, the answers are for the most common 
scenarios--witness protection provisions through a three step 
Department of Labor process in enforcement clauses of 14 public health 
and safety laws.1 For simplicity, they will be referred to as the DOL-
administered laws. Although even these statutes are not consistent, as 
a rule their common features are an initial investigation by the 
Occupational Safety and Health Administration (OSHA), an opportunity to 
start with a clean slate at a due process hearing before an 
Administrative Law Judge (ALJ), and appellate review for the Secretary 
of Labor by an Administrative Appeals Board (ARB) which issues the 
final agency decision. In most cases employees can seek limited review 
by the relevant U.S. Court of Appeals. As seen below, even within the 
DOL- administered whistleblower model, there are numerous, significant 
variations, generally due to nothing more than when the particular 
statute was passed.
    1. Who do the corporate whistleblower laws protect? In any given 
industry, potentially any employee or almost no one. The limited 
subjects eligible for protection are like a road with more potholes 
than pavement. The 14 whistleblower statutes are part of the 
enforcement provisions for laws covering specific issues, most 
frequently public health and safety laws such as the Clean Air, Water 
or Superfund Acts. The list also includes truck (Surface Transportation 
Act, or STA) and airlines safety (AIR21), occupational safety generally 
and mine safety, and scattered narrow areas like safe cargo container 
and. Pipelines. Any corporation may violate environmental or 
occupational safety laws, so all employees have rights to challenge 
those particular types of misconduct. But for other potentially greater 
abuses of power, they may have none. No one can be sure without a 
lawyer to navigate.
    For example, an employee at a meat packing plant has free speech 
rights when challenging release of fecally contaminated water flowing 
into the river. But the same employee has no rights when challenging 
fecally contaminated meat and poultry that shows up on our families' 
dinner table. A truck driver is protected for challenging bad tires, 
but not illegal cargo. An employee of a pharmaceutical company has 
protection for disclosing false statements in financial reports to the 
shareholders. But there is none for challenging false statements to the 
government and the public about potentially lethal drug safety hazards, 
like the threat of unnecessary heart attacks from killer pain killers 
such as Vioxx that killed 50,000 Americans.
    2. What am I protected for blowing the whistle against? Most 
whistleblower statutes protect those who challenge illegality or take 
any other action to ``assist in carrying out the purposes'' of that 
particular law. The Sarbanes Oxley (SOX) law's early track record 
illustrates the risk of omitting the catchall phrase. In theory, SOX 
sweeps through industry distinctions by protecting those who challenge 
fraud, or any illegality that materially affects the shareholders' 
interest. But employees at privately-held subsidiaries of public 
corporations cannot count on having rights, and those working at a 
large corporation's international offices have none.
    Most frustrating under Sarbanes Oxley, it is not enough to blow the 
whistle on illegality. The question still has not been clearly 
answered, ``How illegal is illegal enough for free speech rights?'' 
Under some early decisions it also is necessary to prove that--1) the 
fraud itself is material (such as one percent of annual revenues); 2) 
the government would take action to punish the misconduct; and 3) the 
punishment would have a direct and specific impact on shareholders that 
lowers stock value. There is no protection for challenging any 
misconduct with ``speculative'' consequences. So much for knowing where 
you stand. And it's doubtful whether the law applies at all if the 
company requires submission of all disputes to a company-controlled 
system of arbitration as an employment condition.
    None of the laws have the well-established protected speech 
boundaries of the Whistleblower Protection Act for federal government 
workers that also are included in many state laws: illegality, gross 
waste, gross mismanagement, abuse of authority or a substantial and 
specific danger to public health or safety.
    3. If I speak out, when will I become a legally-recognized 
whistleblower? That's a good question. It used to be that challenging 
corporate misconduct triggered rights as an ``essential preliminary 
step'' for responsible disclosures to the government. But recent 
Surface Transportation Act decisions have disqualified protection for 
internal disclosures, forcing employees to contact the government 
behind their employer's back or else risk waiving their rights. To 
illustrate the consequences, the ARB recently canceled protection for a 
trucking employee who ``red tagged'' (required repairs before use) 
vehicles for safety violations. This adds significant, potentially 
unnecessary burdens for government enforcement units, where a 
corporation would have acted in good faith if employees had the freedom 
to warn of problems that may well have been honest mistakes.
    It also can have lethal consequences for the public. Examples of 
red tags are broken doors, inoperable lights, and defective brakes. (On 
a personal note, the latter is the same violation that caused my 
brother's death at 30 years old while waiting at a stop light--
depriving his wife, six month and three year old children of a father.)
    4. Am I protected for refusing to violate the law? Rarely. Unlike 
the Whistleblower Protection Act for government workers and an 
increasing number of state laws, in most DOL administered laws, you're 
only protected for making noise. If you try to walk the talk, you are 
walking the plank.
    5. How long do I have to act on my rights? It ranges from 30-90 
days in most DOL-administered statutes. In theory, the law could 
provide flexibility through a doctrine called ``equitable tolling.'' 
But don't count on it. In one case, DOL extended the deadline to a 
year. But in another dispute involving organic market employee Henry 
Immanuel, DOL threw out his case for being 43 days late.
    Mr. Immanuel's surreal ordeal is illustrative. Ironically, he was 
fired for blowing the whistle when an organic market threw five gallons 
of toxic industrial cleaner in a trash dumpster. Within 13 days he 
filed a reprisal complaint with the Maryland Occupational Safety and 
Health (MOSH) agency. After six months, they informed him that they 
were the wrong agency to handle the dispute. He then began a campaign 
asking government offices where he was supposed to defend his rights. 
Despite a series of false leads, he found out about OSHA and filed a 
complaint 73 days later. That was 43 days after the normal 30 day 
deadline. According to DOL, it was too late and there were no excuses. 
In order to avoid Mr. Immanuel, without explanation the ARB disregarded 
a series of prior rulings extending deadlines up to a year due to 
similar circumstances. Despite a legal doctrine that asserted the same 
rights in the wrong forum qualifies for deadline purposes, the ARB 
somehow asserted that he hadn't made the same ``precise'' complaint 
before the Maryland and federal OSHA's, again without explanation.
    In another recent decision, the ARB abandoned the longstanding 
doctrine of continuing violations. This means employees must file new 
lawsuits against each act of additional harassment within 30 days.
    6. How long will this case take? In theory, most statutes give the 
Department of Labor 90 days for a decision. In reality, expect to be 
twisting in the wind for at least two to three years. One vindicated 
Department of Energy whistleblower on radioactive releases at nuclear 
weapons facilities twisted for 14 years before the current political 
appointees reversed a series of preliminary victories that had kept 
getting sent back to perfect technicalities. Six years is not uncommon. 
To illustrate the double standard between deadlines for whistleblowers 
and deadlines for the government, it took the Labor Department 4.5 
years to tell Mr. Immanuel that he was too late to keep his rights by 
filing 43 days after the 30 day deadline.
    7. Can I get any interim relief while I'm waiting? In a few recent 
DOL-administered laws such as AIR21 and SOX, you can get a ruling for 
interim relief. But even then don't count on enforcing it. A recent 
court decision held that since employers cannot immediately appeal 
interim rulings, it would violate the company's due process rights for 
courts to enforce a DOL ruling that the employer defies.
    8. When it's all over, what are my chances of winning? Around one 
in twenty. This is the bottom line for whistleblowers. If there is no 
realistic chance of success, the law is a trap that offers legal 
wrongs, not rights. If there is not a fair chance to win, asserting 
your rights costs tens of thousands of dollars and drags out painful 
disputes for years--all to officially endorse the retaliation you are 
challenging by rubberstamping it. GAP regularly must ground 
whistleblowers in this reality.
    Professor Moberly's statistics on SOX results are representative 
for the DOL legal system generally, so they are worth emphasizing: 3.6% 
win rate at the OSHA level, 6.5% with Administrative Law Judges, and 
not a single case where the ARB has ordered retaliation to stop in over 
four and a half years.
    9. Will the government respect my rights on paper? The ARB seems to 
have a blind spot for congressional language. For example, the Board 
functionally has erased the common catchall provision providing 
protection for any action to assist the government ``to carry out the 
purposes'' of the relevant statute. Recent rulings on the STA truck 
safety law are illustrative. In one case, the ARB disregarded a 
driver's refusal to drive while impaired due to sleep deprivation--
specifically protected activity in that statute. Instead, it created a 
loophole with the explanation that the employee shouldn't have been 
hired in the first place.
    Despite unqualified statutory language banning any discrimination 
because of legally-protected activity, discrimination no longer counts 
until there is a victim. For example, companies can issue retaliatory 
warning letters, even though their effect is to mean the person can be 
fired for the next offense. That is the employment equivalent to saying 
nothing can be done when someone points a gun, until the bullet enters 
flesh and draws blood. The SOX language outlawing ``threats'' of 
retaliation apparently has vanished, although that type of harassment 
can have the worst chilling effect--de facto prior restraint.
    There is no way to predict how DOL will read the law in any 
particular case. Recent trucking decisions canceling protection for 
``essential preliminary steps'' to a disclosure reverse over two 
decades of case law, without explanation. This means those with jobs 
like safety inspectors, auditors or truck drivers proceed at their own 
risk when issuing reports or notices of violation that are the 
foundation for government disclosures.
    GAP has been frustrated by Kramer vs. Kramer type scenarios in the 
same case. In one instance the Secretary of Labor reversed an 
Administrative Law Judge and sent the case back to properly interpret 
the law in a scathing ruling. The ALJ issued a nearly identical 
opinion, and the next time up the decision was approved.
    10. What do I have to prove to win; what tests will I have to pass? 
It all depends on which law. Ten of the laws are governed by antiquated 
burdens of proof from 1974: an employee must prove that protected 
activity is the ``primary, motivating factor'' in order to establish a 
basic prima facie case. Then the burden of proof shifts, and the 
employer can still prevail if it proves by a preponderance of the 
evidence'' that it would have taken the same action for independent 
reasons. Under four recent DOL-administered whistleblower statutes, the 
more modern standards of the Whistleblower Protection Act apply: the 
employee only has to prove protected activity was a ``contributing [or 
relevant] factor'' for a prima facie case, and the employer must prove 
its independent justification with ``clear and convincing'' evidence.
    11. Will I be able to go to court for my day in court? For two of 
the 14 laws, yes. Under SOX an employee can go to court and start 
fresh, if the DOL administrative process has not produced a final 
ruling in 180 days and the delays are not due to the whistleblower's 
bad faith. Under the Energy Reorganization Act, nuclear energy and 
weapons workers have that same option if it takes DOL more than 360 
days. Under all the other DOL-administered statutes: no. Most of the 
DOL-administered laws provided limited review in U.S. Courts of 
Appeals, but not all. For example, for mine safety or OSHA violations, 
there is only review to internal commissions where an employee can ask 
the agency to change its mind.
    12. If I go to court, will a jury decide whether my rights were 
violated? In theory, that is possible under SOX, but no one has made it 
to a jury since the law's 2002 passage. The same is true for nuclear 
whistleblowers, although their access was not established until the 
2005 Energy Policy Act. The courts have warned they may not accept jury 
trials despite clear congressional intent, because of a technical error 
in drafting the law.
    13. When it's over, will I understand why I won or lost? Get 
serious. While there are exceptions, increasingly the rule is not to 
supply an answer or even hints about ``why'' any given conclusion was 
reached. The Board regularly keeps secret both the evidence and 
reasoning for its conclusions.
    No solution can be reliable unless it addresses a problem's causes. 
At the Department of Labor, there are two Achilles' heels are at the 
beginning and end of the process--the Occupational Safety and Health 
Administration (OSHA), and the Appeals Review Board (ARB). To put 
whistleblowers' frustrations at OSHA in perspective, due to the volume 
of complaints GAP had to develop a manual for how whistleblowers can 
find their cases when OSHA loses them. During the investigation, the 
agency regularly engages in double standards on the right to counsel, 
access to evidence and the opportunity to rebut the other side's 
arguments.
    The ARB has the final word for the Secretary of Labor after an 
administrative hearing. It reflects the legal system's lowest common 
denominator for appellate review. The members are political appointees 
selected by the Secretary of Labor for one year terms--effectively 
minor league patronage appointments without enough time to accumulate 
expertise even if they were qualified. They view their jobs as part 
time, frequently living in their home states except when they fly in 
for meetings and tell the career staff how to rule, without 
consistently first reading the staff's memoranda analyzing the record 
and the law. While the Office of Administrative Law Judges (OALJ) is 
well-respected, realistically it cannot overcome the legitimacy 
breakdown that surrounds it.
    In piecemeal fashion, Congress has been acting in good faith, if 
inconsistently, to protect corporate whistleblowers for over 30 years. 
The piecemeal inconsistencies reflect scattershot lessons learned, and 
demonstrate Congress' good faith in trying to improve whistleblower 
rights. But the system is broken. In the process, there has been an 
opportunity to learn many lessons.
    Our organization is available and pleased to assist staff to 
develop solutions, based on 28 years of frequently painful experience 
learning the reality behind free speech rights on paper. At GAP we 
divide whistleblower laws into cardboard and metal shields. Anyone 
going into battle with a cardboard shield, no matter how impressively 
it is painted, is doomed. While conflict is always dangerous, a person 
with a metal shield has a fighting chance to survive. The current 
system of corporate whistleblower laws is a cardboard shield.
    The result? The current corporate laws have created more victims 
than they have helped. The net impact of free speech laws has been to 
punish those who exercise that right, while creating a chilling effect 
in the process. Your leadership is long overdue. It is long past time 
to get it right, with a composite law that is coherent, consistent, 
comprehensive, and actually works.
                                 ______
                                 
    Chairwoman Woolsey. We have a series of votes. We will be 
back in about a half hour. So get up and stretch your legs, but 
we will be back.
    [Recess.]
    Chairwoman Woolsey. We are back in order. And as long as I 
am the first person to ask questions anyway, I will get started 
so you guys can get on with your lives. There will be other 
Members coming back, but once the day is over for voting, 
people just sort of disappear. So don't be disappointed if we 
don't have the full committee back here.
    So I am going to begin with you, Mr. Devine, because we 
ended with you. So I am going to start with you. I mean, how do 
you respond to critics who claim that most whistleblower cases 
are without merit, and that profitability should trump freedom 
of speech? What is your response to that?
    Mr. Devine. In our experience, about a third of the--I 
should preface it, Madam Chair, that we are a small 
organization that doesn't have the funds to regularly meet 
payroll, so we have to be very careful who we represent. The 
only thing we really have going for us is credibility. And if a 
whistleblower is a phony, camouflaging their own hidden agendas 
or misconduct, and we champion them, no one would take 
seriously the other people we help. That is the key question 
for us. And in our experience, about a third of the people who 
contact us have valid whistleblower claims out of the totals.
    And it is not that everyone else is in bad faith; they may 
have another dispute that is really more discrimination, race 
and sex, or a personality conflict where they were treated 
unfairly, but not a whistleblower case. The whistleblower 
statutes that have worked have generally had between a 25 and 
33 percent success rate for decisions on the merits, and that 
is pretty much consistent with our experience. That is why 
Professor Moberly's statistics are so disappointing, where 
anywhere from an eighth to a fourth of really the bottom--the 
bottom level for a statute that is functional in terms of 
results.
    Chairwoman Woolsey. That leads me right into asking you, 
Mr. Chinn, how do you consider a program successful if there is 
a 5 percent favorable decision towards employees, and then that 
means 95 percent favorable towards the employer? How does that 
turn into success?
    Mr. Chinn. Well, Madam Chairperson, I would say that the 
first question really is to what degree was there unlawful 
conduct, in this context retaliation?
    Chairwoman Woolsey. You have said that, but the statistics 
have to say that 95 percent of the people that come before and 
used Sarbanes-Oxley, they are not--95 percent of them are not 
doing it for the wrong reasons and are not out of step. I mean, 
what is missing in this picture that the other good cases are 
being thrown out?
    Mr. Chinn. Um-hmm. Well, I don't know that that proposition 
is correct, Madam Chairperson, with all due respect, that is 
that good cases are being thrown out. Sarbanes-Oxley was 
enacted for a very specific reason, and it does have very 
specific requirements with respect to protected activity.
    Chairwoman Woolsey. Would anybody else up here like to 
respond to that? Because I think you--you are supporting 
something that is not working. How does that work, Mr. Fairfax, 
with you? I mean, if you have an agency that is--your workload 
has increased considerably, you have got only what, two more 
employees, and how can you possibly be effective?
    Mr. Fairfax. I actually think we are very effective. Our 
merit rate--we count our merit rate as any case where we issue 
a finding of merit or that we settle on behalf of the 
complainant. Remember, as I said in my testimony, we are 
working all the time with the complainant and the respondent, 
and throughout the phase of the investigation we are meeting 
with them. And if we think we are going forward with a merit 
case, we encourage them to try to settle the case. That saves 
people time and money across the board. More times than not 
these cases are settled. So when you add up where we issue a 
merit finding, and then you add up where we settle the case, 
right now we are right at around 22 percent as what we would 
include as a merit case.
    Chairwoman Woolsey. So, Professor Moberly?
    Mr. Moberly. One of the concerns I have with including 
settlements as merit rates is that we have no idea what these 
cases are settled for. So the settlement rate, I think, is kind 
of a red herring when you look at it. I have asked for that 
information from OSHA. OSHA has a regulatory--under their own 
regulations a responsibility to oversee settlements to make 
sure they are fair and adequate and reasonable. And they have 
denied my Freedom of Information Act request for that 
settlement information, which I think would let us look more 
deeply at whether these cases are successfully resolved with 
settlement.
    Chairwoman Woolsey. Okay. We will be back.
    Mr. Kline?
    Mr. Kline. Thank you, Madam Chair. Thank the witnesses for 
being here today.
    I know that my colleagues and I had discussed a number of 
these questions, and they haven't come back from votes yet, so 
I am going to skip around just a little bit. I am looking at 
this chart. Do you folks have this thing?
    Mr. Fairfax, this is percentage of meritorious cases by 
year.
    Mr. Fairfax. Yes, I have a copy of it.
    Mr. Kline. It looks to be--in your testimony you mentioned 
something like 23 percent were considered meritorious. As I am 
looking at this across the years from 2000 to 2006, it looks 
like they are always in the twenties.
    Mr. Fairfax. Yep.
    Mr. Kline. Regardless of administration, regardless of 
party, we are running somewhere in the twenties of cases that 
are considered meritorious; is that right?
    Mr. Fairfax. That is correct. And that actually goes back 
30 years we have been consistent in that range.
    Mr. Kline. Okay. That is good. I was going to ask, because 
my chart stops here at 2000, which would have been the last 
year of the Clinton administration. So interesting to see that 
we have stayed pretty much consistent administration to 
administration. And this is, I think your testimony was, 
something like 1,800 to 2,100 cases?
    Mr. Fairfax. Correct.
    Mr. Kline. Is that----
    Mr. Fairfax. Yeah. We average probably around 1,900, but 
1,800 to 2,100 cases per year. And that has been consistent for 
the last 5 or more years.
    Mr. Kline. Okay. We have gone through this issue of 
sometimes they are settled, you reach a settlement; sometimes 
they are withdrawn to go to court; is that correct?
    Mr. Fairfax. In some statutes, sir, the complainant can 
take them directly to court.
    Mr. Kline. Okay. Let us talk about that aspect of it, where 
the complainant, in order to seek a remedy by Federal court, 
withdraws the complaint.
    Mr. Fairfax. They don't actually withdraw the complaint. 
They withdraw it essentially from us. Under the Sarbanes-Oxley 
and the Environmental Energy Resource Act, the complainants 
can--if we haven't resolved it within a certain time period, 
they can pull the case back and take it back to Federal court.
    Mr. Kline. Do you continue to track these cases?
    Mr. Fairfax. Yes, we do.
    Mr. Kline. And do you have any information on how those 
cases have come out?
    Mr. Fairfax. The last data I looked at it was not very 
successful. I don't have the actual numbers, but I didn't feel 
it was very successful. I thought our success rate of settling 
these case or finding merit was better.
    Mr. Kline. Thank you.
    Professor Moberly, have you got some sort of sense of what 
the appropriate win rate should be? I mean, you have been 
somewhat critical of what seems to be a low win rate, I think 
the Chairwoman said 5 percent or something. What should it be?
    Mr. Moberly. Well, under EEOC investigations it is closer 
to 10 percent. It depends on if you look at under claims that 
are filed in Federal court, those claims usually resolve at 
about 13 or 14 percent. So, you know, these are--Sarbanes-Oxley 
cases tend to be resolved at a rate three or four times less 
than what we see in comparable other employment statutes.
    Mr. Kline. So 15 percent or something like that is what 
you----
    Mr. Moberly. I think Mr. Devine already made a statement 
that he thought, you know, 25 to 30 percent we see under other 
claims. I think the False Claims Act is somewhere in that range 
as well.
    Mr. Kline. Okay. So we are sort of groping for a number 
here. In your studies, again staying with you, Professor 
Moberly, you don't count cases which settle. Do I understand 
that right?
    Mr. Moberly. That is correct. I just count cases that have 
gone all the way through the administrative process.
    Mr. Kline. Why don't you count those? It looks like we are 
getting an incomplete picture if you don't count those.
    Mr. Moberly. Sure. And I am pretty clear in my paper why I 
don't count those. And the reason is--the reason, I explained 
to Chairwoman Woolsey, is I don't have any information. You 
know, employers and employees settle cases for all sorts of 
reasons, some of which are unrelated to merit. Nuisance value. 
And unless we know the amounts for which those cases are 
settled, it doesn't make sense to include them as automatically 
meritorious for employees. Employees may be out of work. It may 
be 6 months into their----
    Mr. Kline. Or not meritorious would be the other side of 
that; is that right?
    Mr. Moberly. That is very true. Yes.
    Mr. Kline. So if you are looking at a total number of 
cases, 1,800, 1900 cases, if we were looking at the OSHA 
example of Mr. Fairfax, some percentage of those get settled, 
you are just disregarding those completely, but you are taking 
the percentage of the total number; is that correct?
    Mr. Moberly. No, sir, that is not.
    Mr. Kline. You are dropping those out?
    Mr. Moberly. The settlements and withdrawals are dropped 
out of the numerator or denominator. These are cases that have 
just been resolved completely by OSHA or ALJ and the win rate 
for those cases.
    Mr. Kline. Got you.
    Thank you, Madam Chair.
    Chairwoman Woolsey. Thank you.
    Mr. Bishop.
    Mr. Bishop. Thank you, Madam Chair.
    Witnesses, thank you very much for all your testimony.
    Professor Moberly, you said--I think I am going to 
paraphrase you--that this is not the system we would create if 
we were creating a system from scratch. Briefly, can you 
outline the system we would create if we were creating one from 
scratch?
    Mr. Moberly. I think what the current system demonstrates 
is that these narrow ad hoc protections serve to define 
whistleblowers out of protection; that agencies at least and 
courts also focus on these kind of boundary issues so that we 
never get to the claim of whether someone was retaliated 
against. The courts and agencies spend a lot of time focusing 
on is this the right type of employee? Did they make the right 
type of disclosure? Did they do it in the right way? Did they 
tell the right person? So the first thing you would have to do 
is, I think, broaden those definitions so that they don't 
become land mines for whistleblowers, and they actually provide 
true encouragement. So broader overall protections.
    I think an easy and very helpful solution would be to 
increase the statute of limitations for these provisions across 
the board. The various numbers from 30 days to 300 days, I 
think, are potentially disastrous for employees. And a longer 
statute of limitations purposes, I think--longer statute of 
limitations period would serve the purposes a little better.
    And I think there could be more transparency in the 
process. I had to file a Freedom of Information Act request 
just to get decision letters from OSHA to find out what 
happened on these cases, and those could be made more 
available.
    Mr. Bishop. Thank you very much.
    Mr. Chinn, I know you were taking notes, but could you 
comment on Professor Moberly's very brief outline of a system 
that we would create from scratch, what your assessment of it 
would be?
    Mr. Chinn. I would be happy to do that, Congressman Bishop. 
With respect to--well, first of all, I am not exactly sure what 
is being proposed. Definitions should be broadened. I am not 
sure on a statute-by-statute basis or as Professor Moberly is 
proposing, some sort of Unified Whistleblower Protection Act.
    Mr. Bishop. Let us assume he is proposing a unified 
whistleblower protection.
    Mr. Chinn. Okay. With that assumption in mind, I think that 
that is a very radical proposal and would be something akin to, 
in terms of scope, to the enactment of Title 7. And if you are 
going to make that sort of step, it seems to me that there 
would be some sort of findings necessary before you would go to 
that, as opposed to anecdotal horrors, which can be matched, I 
assure you, Congressman, with anecdotal horrors of meritless 
cases taking up tremendous sums of money, or people misusing 
the statutes for protection, even in the two-thirds of the 
times seen by Mr. Devine.
    If we are going to now federalize and nationalize a 
whistleblower protection program that would protect everyone 
who in any job who complains about anything, I think that would 
be a recipe for chaos, and it would ignore the carefully 
targeted, drafted legislation that exists today. And it would 
also ignore the State protections that exist on a State-by-
State basis throughout the country.
    Mr. Bishop. I am sure you don't agree with this, but the 
carefully targeted legislation that you described is 
legislation that has failed to protect people. So either there 
is something wrong with the way it has been crafted, or there 
is something wrong with the way it is administered.
    Mr. Chinn. Well, Dr. Wigand described his case as an 
extreme example, and I would suggest that concluding that a 
national Uniform Whistleblower Protection Act--the enactment of 
such an act based on extreme examples would be bad policy.
    Mr. Bishop. What about Mr. Simon's example? Would you find 
that to be an extreme?
    Mr. Chinn. No. But I think Mr. Simon fits within a current 
statute. Mr. Simon's complaint is the way in which he has been 
dealt with, and there may well be answers to that, but those 
answers fall far short, in my humble opinion, of requiring a 
national Whistleblower Protection Act.
    Mr. Bishop. Okay. I am going to run out of time, and I want 
to ask Mr. Fairfax a question. You say you have 1,900 cases 
annually, with 72 investigators. Professor Moberly's testimony 
included a statistic that now 13 percent of your caseload is 
Sarbanes-Oxley issues, which prior to 2002 was not a factor for 
you, and yet there has been no increase in staff. And so my 
question to you is the unit that handles this within OSHA, is 
it adequately staffed? Would you benefit, would the system 
benefit, from additional investigators?
    Mr. Fairfax. Thank you. Actually, I think we do a good job 
with what we have. I mean, while the number of Sarbanes-Oxley 
cases has gone up a little bit since it was enacted, the number 
of cases under section 11(c) of the OSHA statute have 
decreased. So the balance has been there. We are really only 
averaging 25, maybe 30 cases per year per investigator, which 
is considerably less than what we averaged for our compliance 
officers that do our inspections. So, you know, I look at the 
data, and I evaluate it, and I look at the number of cases, and 
I look at our workload spread across the country, and I think 
we are pretty well balanced out and have the resources to do 
it.
    Mr. Bishop. Thank you.
    Would the Chairman indulge me for one additional question?
    Chairwoman Woolsey. Yes.
    Mr. Bishop. Why do you think your non-Sarbanes-Oxley cases 
have declined?
    Mr. Fairfax. We have been looking at that for years, 
because they have steadily been going down since probably the 
late 1990s. I don't have an answer why they have been going 
down. You know, maybe we are out there enough, and enough 
people know about the provision under section 11(c) of the OSHA 
Act. But I don't have an answer off the top of my head for 
that.
    Mr. Bishop. Thank you very much. Thank you all.
    Chairwoman Woolsey. While we are waiting for the Ranking 
Member to come, I will give him a little bit more time by 
asking a question. I would like to ask Dr. Wigand and Mr. 
Simon, you know, most people aren't as brave as the two of you. 
I mean, they just aren't made that way. And so what I would 
like to know from you is what actions--what actions should be 
taken that would encourage workers to speak out from your 
perspective, starting with Dr. Wigand?
    Mr. Wigand. I think if there was some legal framework that 
provides a psychological comforting counterweight to the fear 
and the retaliation. To tell the truth, you need bodyguards is 
an extreme, I agree, but when you take on the tobacco industry, 
you take on a $45 billion industry that has unlimited resources 
and had five decades of fraud. Would I have liked to have had 
some entity that would have provided for me legal, 
psychological, marital and other types of support? One, it 
probably would have made it a little bit easier. Number two, it 
may have made it a lot earlier. And if it was earlier, there 
may have been a lot more lives that were saved. I did not have 
that available.
    As they characterized, my case may be extreme, but I think 
it is extreme for all people who find that what their actions 
get back is extreme retaliation. The retaliation of Mr. Simon 
was no different than the retaliation of me. It is retaliation 
for telling the truth, and we need protection to tell the 
truth.
    Chairwoman Woolsey. Mr. Simon?
    Mr. Simon. I think through my experience, and that is all I 
can base any of this on is my experience in all of this, that 
the companies were not in any way, even after the hearing at 
Federal AL--the ALJ, they sided on my behalf after the hearing, 
and there was no financial responsibility on the employer's 
part. They weren't held to any type of, I guess, reason to try 
to settle the case or to want to settle the case. If there 
could be a way that they are immediately responsible once it 
gets to a certain point, like after a hearing, that they are 
going to either put the employee back to work at a profitable 
position for them and the employee, or some other way they are 
held financially responsible, they are not going to do 
anything, in my opinion. They are going to just basically laugh 
at you, like they did to me, and throw you out of their office.
    Chairwoman Woolsey. Sorry. Mr. Devine?
    Mr. Devine. Madam Chair, I would say there are four 
cornerstones for an effective solution. The first is no 
loopholes coverage for all who disclose evidence challenging 
abuses of power that betray the public trust. The second is 
consistent procedures that incorporate modern burdens of proof 
so everybody has the same rules to prevail. The third is first-
class due process rights so you get a genuine day in court. And 
the fourth is if you win, that it matters; results that will 
eliminate the prejudice when you win, both on the interim or 
the final levels.
    And I feel that it is necessary to respond to a few of Mr. 
Chinn's comments, because he said this will be a very radical 
proposal. Well, you know, I thought freedom of speech is what 
defined our country. This is freedom of speech where it counts. 
Radical to whom?
    Second, he said that having a national law with a 
consistent, coherent set of rights would be bad policy. Quite 
frankly, coherence replacing chaos, I think, is good policy. I 
think that objection flunks the laugh test.
    And third, he said that, well, we shouldn't do this because 
some people might abuse their rights. Well, in that case I 
guess we should cancel all the our rights, because they can all 
be abused.
    And if we are talking about the costs, let us weigh the 
costs of frivolous lawsuits to the costs for society when a 
corporation abuses its power. And if the view of the corporate 
sector is we need to make a record of the full extent of the 
price that society has paid for corporate abuses of power, I 
say let us get started.
    Chairwoman Woolsey. Thank you.
    Mr. Wilson?
    Mr. Wilson. Thank you, Madam Chairman.
    Mr. Chinn, there has been testimony that OSHA is 
interpreting Sarbanes-Oxley as a statute incorrectly or too 
narrowly. What would be your opinion as an analysis of 
Sarbanes-Oxley?
    Mr. Chinn. Well, I think, first of all, there are a number 
of decisions out there from OSHA; there are now court decisions 
as well. Some of the decisions that are cited by Professor 
Moberly or by Mr. Devine are not any way controlling. They are 
just part of the body of case law that is developing. I think 
in general, though, the decisions are consistent with the 
overall purposes of the act.
    What is complained about here, for example, the statute of 
limitations, which--by the way, the statute of limitations for 
a retaliation claim under Sarbanes-Oxley is not at all out of 
line with the other 13 statutes or 14 total statutes 
administered by OSHA. The complaint that there are decisions 
dismissing cases for being untimely, well, that is what a 
statute of limitations is for. The complaint that there are 
decisions dismissing claims brought by employees of private 
employers, well, that is what the statute says. So I don't 
think--those are complaints about the legislation. Those are 
complaints that don't recognize that the legislation was 
enacted with a particular purpose in mind, the purpose to 
protect investors. It was not, as is being discussed today 
among some of the panelists, a general whistleblower protection 
statute.
    So I think that the interpretations, I mean, some of them 
conflict, and that is normal, just like district court opinions 
around the country will conflict until they simmer up and 
create decisions in circuits, and ultimately the Supreme Court 
rules. But I think that they are generally consistent with the 
text of the act, the text of the regulations promulgated under 
the act, and the intent of the act.
    Mr. Wilson. And, Director Fairfax, thank you for your 
service. And I indeed have represented workers in regard to 
retaliation, and it has always been a terrific experience when 
people get a job back. But how does OSHA define a win?
    Mr. Fairfax. We define it as we do an investigation. If we 
think we have a merit case that we are developing, we approach 
the respondent after talking with the complainant about 
settling the case. We look at a win as a case that we settle, a 
case that we issue findings of merit on, or in some cases the 
parties get together themselves, through a union or whatever, 
and they settle a case that comes back to us to approve. We 
count that as a win also. So those three areas we count as 
successful outcomes for the complainant, or a win for us.
    Mr. Wilson. And we appreciate that very much.
    Additionally, there is several areas of unsettled law that 
OSHA is attempting to address. Can you explain what those are 
and when you think they will be settled by the courts?
    Mr. Fairfax. I am not sure what you are asking, unsettled.
    Mr. Wilson. This is in Sarbanes-Oxley specifically.
    Mr. Fairfax. One of the ones I am most familiar with is 
dealing with employees of U.S. corporations that are overseas. 
We have some, I guess, lawsuits, I guess, if you will, on those 
cases, and we are pursuing them through. We haven't settled 
those cases yet. That is the one I am most familiar with of the 
two or three.
    Mr. Wilson. And do you have any anticipation when this may 
be resolved, or is there a role of Congress to clean up----
    Mr. Fairfax. No, it is working its way through the courts. 
I would think sometime this year I would hope.
    Mr. Wilson. And, Mr. Chinn, as a practicing attorney with 
Sarbanes-Oxley whistleblower cases, it is my understanding you 
also practice in other areas. Can you outline some of the 
differences that a complainant would experience with Sarbanes-
Oxley as, say, an EEOC complaint alleging discrimination?
    Mr. Chinn. Sure. Be happy to. A Sarbanes-Oxley complainant 
faces a very different, much more favorable burden of proof 
than does a Title 7 discrimination plaintiff. As I mentioned in 
my opening remarks, a Title 7--well, a Sarbanes-Oxley 
plaintiff, to satisfy a prima facie case, need only demonstrate 
that the protected activity was a contributing factor. Under 
Title 7, for example, if you are pursuing the burden-shifting, 
pretext-type analysis under Title 7, an employee will have to 
show that the prohibited factor, let us say one's age or--well, 
Title 7, I am sorry, one's gender, one's sex, one's race was a 
determinative factor in the outcome. That is a much higher 
burden than the burden placed on a Sarbanes-Oxley plaintiff.
    Sarbanes-Oxley plaintiff, in effect, as I mentioned 
earlier, has a choice of forum. Because 180 days is such a 
brief period of time, once 180 days elapses, Sarbanes-Oxley 
plaintiff can remain before OSHA. If the Sarbanes-Oxley 
plaintiff thinks that that is a good place to be, that is where 
the plaintiff can stay, the complainant can stay. If the 
complainant wants to change venue at that point and go to 
Federal court--and the employer doesn't have that right; only 
the employee does. And that, too, is different in the sense 
from Title 7 litigation. One must obtain a right to sue before 
one can go to court. Now, as a practical matter, on a 
statistical basis those are typically granted, but they must be 
granted in order to go to Federal court. You don't have an 
automatic right to go at the expiration of a period of time.
    Mr. Wilson. Thank you.
    Chairwoman Woolsey. Well, I thank you all for coming. I 
particularly thank you, Dr. Wigand and Mr. Simon. You have 
shared your stories with us. Your courage is amazing. What you 
did and what you continue to do is vitally important. Your 
testimony today actually could encourage others to come forward 
to report instances of illegality in the workplace. And at the 
same time, your testimony could encourage OSHA to redouble its 
efforts to administer the laws that are in effect and under 
their jurisdiction on a timely, fair basis.
    This week is Whistleblowers Week in Washington. There are 
many events taking place designed to highlight and promote good 
government and protection for whistleblowers who choose to 
speak out. I am sure all of us--well, I am sure certainly most 
of the witnesses will all celebrate the important role that the 
whistleblower community played earlier this year in securing 
the passage of H.R. 985, the Whistleblower Enhancement Act, 
which extends whistleblower protections to Federal employees 
who work on national securities matters, and very importantly 
provides explicit protection to Federal employees who report 
instances of Federal research being suppressed or distorted for 
political reasons.
    It is with regard to private employment that many laws have 
been enacted to protect whistleblowers. They were passed with 
the best of intentions. But this hearing today has illustrated 
to me that we have a distance to go with regard to 
whistleblowers in the private sector. The laws differ one from 
another in substantial respects. Deadlines for filing 
complaints are extremely short. Complaints get dismissed at a 
high rate. Cases are taking too long to be resolved. And too 
many whistleblowers are still suffering severe consequences for 
telling the truth.
    It is clear that we all need to change things, and today's 
hearing to me is a new beginning. Laws to protect 
whistleblowers have always received bipartisan support here in 
the Congress. No matter what side of the aisle we are on, we 
recognize that it benefits everyone in this country, and 
particularly workers, when they are able to report 
illegalities.
    I hope all the members of this subcommittee can work 
together to explore legislative and other options to ensure 
that when workers come forward, we have meaningful protections 
and procedures in place for them. I thank you for coming, and 
this hearing is adjourned.
    [Whereupon, at 4:18 p.m., the subcommittee was adjourned.]

                                 
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