Companies launch internal investigations based on information that comes from a variety of sources, including newspaper articles, government requests for information and information bubbling up from within the organization that makes its way to the legal department. These issues can be spotted by the compliance department or raised in an internal audit. An internal investigation can also arise from information shared by employees, some of whom report issues of concern with no hint of adversity and others who raise issues as whistleblowers.
When issues are raised by individual employees who qualify as whistleblowers, companies should proceed carefully given the risk of corporate liability for retaliation. Equally important is the manner in which a company investigates the substance of whistleblower allegations. A properly handled investigation is critical not only for avoiding retaliation litigation—it can also often make the difference between aggressive criminal and regulatory enforcement action or an alternative resolution with the government.
Sometimes the internal investigation reveals not only that a whistleblower’s allegations are unfounded, but also that the whistleblower’s conduct, either in relation to the complaint or otherwise, is problematic. Although there is always a risk of a retaliation suit, companies are able to make justified employment decisions when warranted.
In Livingston v. Wyeth, Mark Livingston, a training director at a vaccine facility, alleged that Wyeth had failed to comply with a Food and Drug Administration (FDA) consent decree. Wyeth’s internal investigation did not find any wrongdoing and the facility was ultimately certified as being in compliance with the FDA’s requirements. Shortly after the investigation, human resources reached out to Livingston regarding his inappropriate workplace behavior. Following an altercation with the director of human resources at a party, Livingston was terminated. He filed a retaliation suit, claiming that he was fired as a result of his earlier complaints. Wyeth argued that he was fired because of a long history of aggressive and disruptive misconduct. According to Wyeth, numerous employees had asked for transfers or resigned as a result ofLivingston’s “abusive language and inappropriate behavior.” The court upheld the dismissal of Livingston’s suit, holding that his conduct was not protected under the Sarbanes Oxley Act. However, the court also went on to say that even if Livingston’s whistleblower activity was protected, Wyeth’s employment decision would have been justified by his continued misconduct.