Bank of America Lawsuit Shows Why Whistleblower Practitioners Should Think Beyond Federal Protections

March 20, 2018
Matthew LaGarde

A California jury awarded a former Bank of America employee over $550,000 in February – and that was before it determined its punitive damages award. The verdict demonstrates that there may be additional routes of recovery available to whistleblowers outside the confines of the federal whistleblower statutes.

The Facts of the Bank of America Lawsuit

The San Francisco jury rendered a verdict in favor of Salma Aghmane, a former Bank of America (BofA) client manager who alleged that BofA had terminated, blacklisted, and defamed her after a family member became confused about repayment of a personal loan. According to Ms. Aghmane, she loaned her cousin approximately $12,800 to assist her cousin in moving to the United States from Morocco. Ms. Aghmane’s cousin later agreed to share her account information so that Ms. Aghmane could transfer funds to repay the debt from her cousin’s account to her own account. After Ms. Aghmane did so, her cousin misunderstood this transaction and reported that the money had been withdrawn from her account fraudulently. Rather than listen to Ms. Aghmane’s explanation – which her cousin would have corroborated – BofA terminated her and subsequently reported her for fraud to Early Warning Services (EWS), a provider of fraud prevention services. EWS then sent a letter to all of the major banks stating that Ms. Aghmane had been involved in fraudulent activity. This letter caused Chase Bank to rescind a job offer it made to Ms. Aghmane. As evidenced by this series of events, being identified as involved in fraud effectively rendered Ms. Aghmane unemployable in the banking industry.

The Claims Against Bank of America

Ms. Aghmane filed a lawsuit in which she asserted several claims against BofA in response to this treatment, including blacklisting and defamation. California is one of about 30 states with a statutory prohibition against blacklisting. See Cal. Lab. Code §§ 1050–1053. Specifically, California law states, “Any person . . . who, after having discharged an employee from the service of such person . . . by any misrepresentation prevents or attempts to prevent the former employee from obtaining employment, is guilty of a misdemeanor.” Cal. Lab. Code § 1050. Ms. Aghmane alleged that by wrongly reporting her to EWS as having committed fraud, BofA had prevented her from obtaining employment in her industry. She also alleged that BofA’s actions in reporting her to EWS, causing EWS to send a letter to all major banks, constituted unlawful defamation.

The Jury’s Decision

The jury agreed and awarded Ms. Aghmane $192,600 in damages for future lost earnings, $305,734 for past lost earnings, $50,000 in damages for emotional distress, and $10,000 in damages for defamation. The jury also found that BofA was liable for punitive damages and recessed to deliberate the amount of punitive damages Ms. Aghmane should be awarded. According to Law360, before the jury returned the next day to render its verdict on the punitive damages award, the parties entered into a confidential settlement.

Implications for Employees

While Ms. Aghmane was not herself a whistleblower, the verdict in her case could have implications for individuals who oppose wrongdoing by their employers. Whistleblowers are often victims of blacklisting and defamation, and many anti-retaliation statutes contain express prohibitions against blacklisting. See, e.g., SOX Protections Extended to Post-Employment Activities (Mar. 23, 2015) (blacklisting prohibited by the Sarbanes-Oxley Act); Eighth Circuit Upholds DOL Award of Emotional Distress Damages for Blacklisted Truck Safety Whistleblower (Jan. 17, 2014) (blacklisting prohibited by the Surface Transportation Assistance Act). Although these statutes provide some protection, there are several reasons practitioners counseling whistleblowers should consider the possibility of alleging violations of state-based defamation or blacklisting laws. Claims brought under federal whistleblower statutes often have shorter statutes of limitations, which a whistleblower may have missed by the time she contacts an attorney, but a claim under state law might still be viable. Even if there is no limitations issue, most federal whistleblower statutes, if they permit punitive damages at all, artificially constrain such awards with low caps. Further, not all federal whistleblower statutes entitle a claimant to bring her claim in federal court, meaning that the whistleblower may not be able to present her claim to a jury. This verdict is thus a helpful reminder for whistleblower practitioners that they should be prepared to develop claims outside the narrow confines of federal statutory law.