New York Law Review

Tag: Whistleblower Law

  • Tipaldo v. Lynn, 18 N.Y.3d 201 (2011): Whistleblower Protection and the Meaning of “Good Faith” Reporting

    18 N.Y.3d 201 (2011)

    A public employee who reports alleged misconduct is deemed to have acted in “good faith,” even if the report was not made directly to the appointing authority, where reporting to the authority would have been impractical or would likely impede resolution of the matter.

    Summary

    In Tipaldo v. Lynn, the New York Court of Appeals addressed a whistleblower claim under Civil Service Law § 75-b. The plaintiff, a high-ranking official in the New York City Department of Transportation (DOT), reported alleged bid-rigging by his superiors, the Commissioner and Deputy Commissioner. The court held that the plaintiff satisfied the statute’s “good faith” reporting requirement, even though he did not directly report the misconduct to his superiors (the “appointing authority”), because doing so would have been impractical. The court also determined that the plaintiff was entitled to prejudgment interest on his back pay award because the law sought to make whistleblowers whole.

    Facts

    John Tipaldo, an Acting Assistant Commissioner for Planning and Engineering at the NYC DOT, discovered a scheme by Commissioner Christopher Lynn and First Deputy Commissioner Richard Malchow to award a signage contract in violation of public bidding rules. Tipaldo informed his immediate supervisors and, shortly thereafter, reported the alleged misconduct to the DOT’s Office of the Inspector General. Tipaldo claimed Lynn and Malchow retaliated against him, eventually demoting him from his position. He sued under Civil Service Law § 75-b, alleging retaliation for reporting improper governmental activity.

    Procedural History

    Tipaldo sued in 1997. The trial court granted the defendants’ motion for summary judgment, finding that Tipaldo failed to comply with Civil Service Law § 75-b by not reporting the misconduct to the appointing authority before contacting the Inspector General. The Appellate Division reversed, holding Tipaldo’s actions met the “good faith” reporting requirement. After a trial on damages, the trial court awarded Tipaldo back pay but denied prejudgment interest. The Appellate Division modified the judgment to include prejudgment interest and ordered Tipaldo’s reinstatement to the same or an equivalent position. The Court of Appeals granted leave to appeal from the Appellate Division’s judgment.

    Issue(s)

    1. Whether Tipaldo made a “good faith effort” to comply with the reporting requirements of Civil Service Law § 75-b(2)(b)?
    2. Whether prejudgment interest is available under Civil Service Law § 75-b and Labor Law § 740(5)?

    Holding

    1. Yes, because reporting directly to the appointing authority (who were the alleged wrongdoers) would have been impractical under the circumstances.
    2. Yes, because the intent of the law is to make a whistleblower whole.

    Court’s Reasoning

    The Court of Appeals first addressed the “good faith” reporting requirement of Civil Service Law § 75-b(2)(b). The statute requires employees to make a “good faith effort to provide the appointing authority…the information to be disclosed” before reporting to outside agencies, unless there is imminent danger. The Court recognized the “good faith” provision affords courts the discretion to evaluate the employee’s actions. The Court considered the specific context of the case; the appointing authorities were the individuals accused of wrongdoing. The Court reasoned that strict adherence to the requirement would be counterproductive: “In cases such as this — where the appointing authority is the one engaging in the alleged misconduct — an employee’s good faith effort to report the misconduct should be evaluated with attention to the employee’s practical inability to report to the appointing authority.” Furthermore, the Court emphasized that it was important that “employees in situations like plaintiff’s should not be required to report to the appointing authority where such a report would prove impractical and possibly impede prompt resolution of the matter.” The Court found that Tipaldo’s actions, including reporting to his supervisors and then the Inspector General, demonstrated good faith, given his practical inability to report to the appointing authority directly. The court found, “an overall view of his actions demonstrates good faith compliance with Civil Service Law § 75-b.”

    Next, the Court considered whether prejudgment interest was available. Civil Service Law § 75-b(3)(c) incorporates the remedies found in Labor Law § 740(5), which includes compensation. The court found that the remedies available, viewed as a whole, indicated an intention to make the whistleblower whole. Quoting its previous decisions, the Court cited Matter of Aurecchione v New York State Div. of Human Rights, where it concluded that “a liberal reading of the statute is explicitly mandated to effectuate the statute’s intent.” The Court found that prejudgment interest was properly awarded because it was consistent with this purpose to fully compensate victims and make the employee whole.

  • Remba v. Federation Employment and Guidance Service, 76 N.Y.2d 801 (1990): New York Whistleblower Law Requires Substantial Public Safety Risk

    Remba v. Federation Employment and Guidance Service, 76 N.Y.2d 801 (1990)

    To trigger the protection of New York’s Whistleblower Law (Labor Law § 740), the reported violation must present a substantial and specific danger to the public health and safety.

    Summary

    Remba, an employee, claimed she was fired for refusing to participate in fraudulent billing practices. She argued this violated the Whistleblower Law. The New York Court of Appeals affirmed the dismissal of her claim, holding that the statute requires the reported violation to create a substantial and specific danger to public health and safety, not merely involve financial impropriety. The court emphasized that while fraudulent billing is wrong, it does not inherently pose the type of risk the Whistleblower Law was designed to address. Any expansion of whistleblower protection must come from the legislature.

    Facts

    The plaintiff, Remba, alleged she was discharged from her employment at Federation Employment and Guidance Service because she objected to and refused to participate in what she believed were fraudulent billing practices directed towards New York City.

    Procedural History

    The lower court dismissed Remba’s claim. The Appellate Division affirmed the dismissal. The New York Court of Appeals granted leave to appeal and affirmed the Appellate Division’s order.

    Issue(s)

    Whether Labor Law § 740(2)(c), the Whistleblower Law, protects an employee who is discharged for objecting to and refusing to participate in fraudulent billing, when such billing does not present a substantial and specific danger to public health and safety.

    Holding

    No, because Labor Law § 740(2)(c) is triggered only by a violation of a law, rule, or regulation that creates and presents a substantial and specific danger to public health and safety.

    Court’s Reasoning

    The Court of Appeals reasoned that Labor Law § 740(2)(c), similar to § 740(2)(a), requires a violation that poses a substantial and specific danger to public health and safety. The court reviewed the legislative history and determined that fraudulent billing, while potentially illegal, does not inherently create the type of danger the statute was intended to address. The court cited previous cases, such as Leibowitz v. Bank Leumi Trust Co., which involved fraudulent banking activities, and Vella v. United Cerebral Palsy, which involved improper purchasing practices, as examples of conduct that did not meet the threshold for whistleblower protection under the statute. The court acknowledged criticisms of the statute for not providing sufficient safeguards against retaliatory discharge but stated that any additional protection must come from the legislature, citing Sabetay v. Sterling Drug. The court stated, “Plaintiff maintains that she was discharged because she objected to, and refused to participate in, defendant’s purported fraudulent billing of New York City, and that such retaliatory action is prohibited under Labor Law § 740 (2) (c) (the “Whistleblower” Law). This contention is unavailing, however, primarily because we agree with the Appellate Division that Labor Law § 740 (2) (c), like section 740 (2) (a), is triggered only by a violation of a law, rule or regulation that creates and presents a substantial and specific danger to the public health and safety.” The court made clear a difference between a law violation and a public health and safety issue.