A Win for Whistleblowers: The Ninth Circuit Expansively Interprets California’s Whistleblower Protection Act

March 22, 2023
Kayla Morin

The federal Court of Appeals for the Ninth Circuit recently handed workers a major victory. In Killgore v. SpecPro Professional Services, LLC, 51 F.4th 973 (9th Cir. 2022) the Ninth Circuit interpreted the California Whistleblower Protection Act (“CWPA” or “the Act”) to include broad protections for employees who blow the whistle on what they reasonably believe is illegal activity. California boasts the highest number of employees of any U.S. state, which means that this ruling may have significant implications for millions of workers.

Background in the Whistleblower Case

Aaron Killgore worked as a program manager for SpecPro, an environmental services firm that contracted with government agencies to prepare reports required under the National Environmental Policy Act (“NEPA”). One of these contracts tasked SpecPro with writing an environmental assessment for a branch of the U.S. Army Reserve that sought to use land near Conroe, Texas, for Blackhawk helicopter assault training missions. The proposed use of the land would allow the helicopters to land and refuel in Conroe, whereas previously it was believed the helicopters only hovered above the ground.

A three-person SpecPro team, including Mr. Killgore, William Emerson (Mr. Killgore’s supervisor), and Oskar Burger worked on the environmental assessment (“EA”) for the proposed Conroe action (“Conroe EA”). In preparing the EA, Mr. Killgore learned that the Conroe site had previously been used for missions that included landing and refueling, and he grew concerned that those exercises using motorized vehicles may have affected the environment in a variety of ways, including, for example, by causing potential oil spills or land erosion, by disrupting endangered species, or by impacting Native American land or artifacts.

However, Chief Laura Caballero, the Army Reserve’s Project Leader, instructed the SpecPro team that they needed to complete the EA within three months. She further instructed Mr. Killgore to omit information about the past use of the Conroe land from the EA and to ensure that the team did not discuss or document those issues in writing. Mr. Killgore was concerned that such omissions were illegal, and he told Chief Caballero that failing to report the past activities in Conroe violated NEPA and federal regulations. Chief Caballero reported Mr. Killgore’s pushback to Mr. Emerson, who told Mr. Killgore that SpecPro needed to heed to the client’s wishes. To that, Mr. Killgore responded that he was concerned that following Chief Caballero’s instructions ran afoul of NEPA. When several references to the past activities at Conroe made their way into a draft EA, Chief Caballero again reached out to Mr. Emerson about her concerns that Mr. Killgore and Mr. Burger were disobeying her instructions. SpecPro fired Mr. Killgore, and he brought suit in state court, alleging, inter alia, that SpecPro violated California’s Whistleblower Protection Act when it terminated him. The case was removed to federal court based on diversity jurisdiction. In his suit, Mr. Killgore argued that SpecPro retaliated against him for expressing his concerns that the company was engaging in illegal activity, and terminated him for refusing to participate in illegal activity.

The district court granted SpecPro’s partial motion for summary judgment on his retaliation and wrongful termination claims, and Mr. Killgore appealed. The Ninth Circuit noted that, in the absence of controlling authority from the state supreme court, it was required to predict how that court would decide the state law issue. Killgore, 51 F.4th at 982. Notably, in a prior case raising an issue of first impression under the CWPA, the Ninth Circuit had certified the question to the California Supreme Court, ­see Lawson v. PPG Architectural Finishes, 503 P.3d 659 (Cal. 2022), but here the Ninth Circuit based its decision on its own predictions about the law.

Legal Analysis of the California Whistleblower Protection Act Case

The California Whistleblower Protection Act bars employers from retaliating against employees for “disclosing information . . . to a government or law enforcement agency, to a person with authority over the employee or another employee who has the authority to investigate, discover, or correct the violation or noncompliance” if “the employee has reasonable cause to believe that the information discloses a violation of state or federal statute, or a violation of or noncompliance with a local, state, or federal rule or regulation.” Cal. Lab. Code § 1102.5(b). Employees are protected “regardless of whether disclosing the information is part of the employee’s job duties.”   Id. The CWPA also prohibits an employer from retaliating against an employee for the employee’s refusal to “participate in an activity that would result in a violation of state or federal statute, or a violation of or noncompliance with a local, state, or federal rule or regulation.”  Id. § 1102.5(c).

The Ninth Circuit reversed the district court’s holding that Mr. Killgore’s reporting of his concerns to Mr. Emerson, his supervisor, did not constitute protected activity. The district court had reasoned that because Mr. Emerson did not have “the authority to investigate, discover, or correct the violation or noncompliance,” as someone in the Army Reserve would, that Mr. Killgore’s disclosure was not protected. The Ninth Circuit rejected this restrictive interpretation of the law, and predicted that California courts would hold that the Act protects disclosures to either a “person with authority over the employee” or a person with “the authority to investigate, discover, or correct the violation or noncompliance.” Accordingly, because Mr. Emerson had authority over Mr. Killgore—including the authority to terminate him, which he exercised—Mr. Killgore’s disclosures to him constituted protected activity. The Ninth Circuit found this interpretation aligned with California precedent and was “consistent with the broad remedial purpose” of the Act. Killgore, 51 F.4th at 985.

Relatedly, the Ninth Circuit rejected the district court’s finding that Mr. Killgore’s disclosures to Chief Caballero were not protected. The district court had held that Mr. Killgore could not establish that these disclosures were protected under the CWPA because (1) such disclosures were part of Mr. Killgore’s normal job duties and (2) Chief Caballero was involved in the illegal activity. The Ninth Circuit reversed, noting that the statute explicitly protects employees who report wrongdoing “regardless of whether disclosing the information is part of the employee’s job duties.”   Cal. Lab. Code § 1102.5(b). It also found that carving out disclosures to those engaged in wrongdoing conflicted with several California state appellate court decisions that found that such disclosures were protected.

After determining that Mr. Killgore’s disclosures were protected, the Court of Appeals turned to whether he had “reasonable cause to believe” that his disclosures indicated “a violation of . . . federal statute.”   Cal. Lab. Code § 1102.5(b). In concluding that he did, the court rejected the district court’s reasoning that an EA was merely a “forward looking” document that need not include information about the past activity on a site. Killgore, 51 F.4th at 989. In fact, the court noted, NEPA and its attendant regulations dictate that EAs must discuss “the environmental impacts of the proposed action and alternatives,” 40 C.F.R. § 1501.5(c)(2), including “effects on the environment that result from the incremental effects of the action when added to the effects of other past, present, and reasonably foreseeable actions,”  id. § 1508.1(g)(3). In light of these requirements, the court found that there was a factual question as to whether Mr. Killgore held a reasonable belief that omitting information regarding past landings and refueling operations at Conroe ran afoul of federal law.

The Ninth Circuit discussed two final issues that built on its expansive interpretation of the CWPA. First, it noted that Mr. Killgore’s concern that SpecPro could not meet Chief Caballero’s rushed three-month deadline could constitute part of his protected activity. Though the court agreed that simply expressing concern about meeting a deadline was not protected activity, Mr. Killgore’s concern about the deadline “reflected a broader concern that the team was being forced to prepare a noncompliant and incomplete report that unlawfully excluded the prior helicopter operations.”  Killgore, 51 F.4th at 990. Second, it rejected the district court’s analysis that Mr. Killgore could not have reasonably believed that SpecPro was engaged in a violation of NEPA because he was fired before the EA was completed and any illegality came to fruition. The Ninth Circuit found this argument contrary to the Act’s plain language, which bars retaliation if an employer “believes that the employee . . . may disclose information” about illegality. Cal. Lab. Code. § 1102.5(b). Thus, the Act protects employees from retaliation if the employer anticipates they may disclose information about illegal activity, which means that employers cannot “escape liability” by “fir[ing] the potential whistleblower before completing the illegal act.”  Killgore, 51 F.4th at 991.

Finally, the Ninth Circuit affirmed the district court’s grant of summary judgment on Mr. Killgore’s claim that he was retaliated against for refusing to participate in illegal activity. The appellate court agreed that Mr. Killgore had not presented evidence that he refused to work on the report, but that he worked on the report up until the day he was terminated.

Implications for Whistleblowers

Killgore clarifies that, in the view of the Ninth Circuit, the California Whistleblower Protection Act provides strong protections for whistleblowers. Its key holdings include:

  • Employees’ disclosures are protected when they disclose to either a person with authority over them or to someone with the authority to remedy the violation;
  • A protected disclosure can include a disclosure to a person involved in the alleged unlawful conduct;
  • A protected disclosure can include a disclosure made in the course of an employee’s normal job duties;
  • “Reasonable belief” under the CWPA should be broadly construed; and
  • An employer need not complete its illegal activity for whistleblower protections to kick in.

Given these strong protections, whistleblowers in California should ordinarily consider bringing a claim under the California Whistleblower Protection Act in addition to any relevant federal statutes, which have varied protections. Many federal whistleblower retaliation protections share some similarities with the California statute, but in some respects may be less robust.

The retaliation provision of the Sarbanes-Oxley Act of 2002 (“SOX”), 18 U.S.C. § 1514A, for example, protects employees of publicly-traded companies who disclose information to federal regulatory or law enforcement agencies, a member or committee of Congress, or “a person with supervisory authority over the employee (or such other person working for the employer who has the authority to investigate, discover, or terminate misconduct,” that the employee “reasonably believes constitutes a violation” of federal securities laws. 18 U.S.C. § 1514A(a)(1). Thus, like the CWPA, SOX protects whistleblowers who make internal reports, and similarly requires only a reasonable belief that the alleged employer conduct is illegal. Though the interpretation of SOX varies in different federal courts of appeals, courts have generally also held, as the Ninth Circuit did in construing the CPWA, that disclosures in anticipation of illegal conduct—not just illegal conduct that has already transpired—constitute protected activity. See, e.g., Wiest v. Lynch, 710 F.3d 121, 133 (3d. Cir. 2013) (“It would frustrate [the purpose of SOX] to require an employee, who knows that a violation is imminent, to wait for the actual violation to occur when an earlier report possibly could have prevented it.”).

The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) also includes an anti-retaliation provision that protects employees who report potential securities laws violations, but its scope is more limited. 15 U.S.C. § 78u-6(h). Dodd Frank protects whistleblowers who provide information to the SEC, participate in SEC judicial or administrative actions, or make disclosures required or protected under SOX or “any other law, rule, or regulation subject to the jurisdiction of the [SEC].”  15 U.S.C. § 78u-6(h). Dodd-Frank whistleblowers must similarly “reasonably believe” that the information they provide to the SEC “relates to a possible violation of the federal securities law.”  17 C.F.R. § 240.21F-2(d)(1)(ii). However, pursuant to a 2018 Supreme Court decision, whistleblowers are only protected if they provide such information to the SEC—internal reports are not protected. Digital Realty Tr., Inc. v. Somers, 138 S. Ct. 767, 772-73 (2018) (“To sue under Dodd-Frank’s anti-retaliation provision, a person must first ‘provide information relating to a violation of the securities laws to the Commission.’”) (quoting 18 U.S.C. § 78u–6(a)(6)) (cleaned up).

Finally, the False Claims Act (“FCA”), which prohibits the submission of false claims to the federal government, contains an anti-retaliation provision that is frequently invoked against employers that have contracts or other financial relationships with the government. 31 U.S.C. § 3730(h). The FCA protects employees who are retaliated against “because of lawful acts done in furtherance” of an FCA action or “other efforts to stop 1 or more violations” of the FCA. 31 U.S.C. § 3730(h)(2). This broad language means that, like the CWPA and SOX, the FCA protects employees who report violations internally. The statute itself does not define protected activity, and courts are split as to what reports are protected. The Fraud Enforcement and Recovery Act of 2009 (“FERA”) added the “other efforts to stop 1 or more violations” language, which some courts have read to expand what constitutes protected activity. The Fourth Circuit, for example, uses an “objective reasonableness” standard when defining protected activity. See United States ex rel. Grant v. United Airlines Inc., 912 F.3d 190, 201 (4th Cir. 2018) (“Under this standard, an act constitutes protected activity where it is motivated by an objectively reasonable belief that the employer is violating, or soon will violate, the FCA.”); see also Singletary v. Howard Univ., 939 F.3d 287, 295-96 (D.C. Cir. 2019). Other courts are less clear. The Eleventh Circuit has yet to decide whether to apply an “objective reasonableness” standard to protected activity or to stick with a pre-amendment requirement the employee’s disclosures raise a “distinct possibility” of FCA litigation. Schinnerer v. Wellstar Health, Inc., No. 1:22-CV-383-TWT, 2022 WL 11964527, at *3 (N.D. Ga. Oct. 20, 2022).

Conclusion

The Ninth Circuit’s decision in Killgore underscores California’s strong protections for whistleblowers, which are as or more robust than many of their federal counterparts. California employees should consult an attorney to identify the full panoply of whistleblower claims they might be able to pursue against an employer.

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