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News from the Courts: 4th Circuit Whistleblower Decision

by | Jan 16, 2018 | News From The Courts

News from the Courts: On December 7, 2017, the U.S. Court of Appeals for the 4th Circuit issued its decision in Flynn v. Securities and Exchange Commission,  No. 16-2122.  In one of the later decisions to arise under the recently-expired all-circuit review provision for federal sector whistleblower reprisal claims.

Flynn was issued under the all-circuit review pilot program originally created by the Whistleblower Protection Enhancement Act of 2012 (WPEA) and extended in 2014, as previously analyzed in this blog.  This all-circuit review provision lasted for five years, but expired in late 2017. The Flynn court discussed the legislative intent behind all-circuit review, and noted that this case was a matter of first impression in the 4th Circuit.

Mr. Flynn, an SEC employee, raised concerns about violations of two SEC rules, and was subsequently fired by the SEC.  Flynn filed a whistleblower reprisal complaint at the Office of Special Counsel, which declined to prosecute.  Flynn then filed an Independent Right of Action appeal at the Merit Systems Protection Board.  The MSPB administrative judge found that Flynn had not made any protected whistleblowing disclosures.  Flynn petitioned the Board for review, but the then-two member Board could not agree on a decision, leaving the administrative judge’s decision in place.  Flynn then appealed to the 4th Circuit.

On appeal, the 4th Circuit remanded part of the case for further adjudication.  The court first held that although the legal definition of “rule” for “violation of law, rule or regulation” is not clear, the “SEC rules” at issue, though commonly referred to as “rules”, were actually in the Code of Federal Regulations and so were “regulations” covered by the Whistleblower Protection Act.  The 4th Circuit held that one of Flynn’s two protected disclosures did not disclose a “violation” of the regulation, because the regulation in question set non-mandatory guidelines that the SEC “should” meet.  Because the first regulation was “aspirational and discretionary”, it was impossible for the SEC’s failure to meet those standards to be a violation of regulation.

The 4th Circuit, however, held that the MSPB administrative judge had erred in dismissing the second protected disclosure argument.  The second SEC rule cited by Flynn did contain mandatory “shall” language; however, the MSPB administrative judge had glossed over that argument in the decision below.  The court held that the MSPB administrative judge erred in failing to analyze Flynn’s second claim, and so remanded the case back to the MSPB for further proceedings.

If you believe that you have been retaliate\d against because of protected whistleblowing, please feel free to contact [nap_names id=”FIRM-NAME-6″] & [nap_names id=”FIRM-NAME-4″] to request an initial consultation.