Corporate Counsel Weekly™ helps corporate lawyers get the big picture on the legal challenges facing corporations today. Practitioners can discover trends on the horizon and stay alert to the full...
By Yin Wilczek
April 3 — A law firm that represents whistle-blowers April 3 asked United Airlines to revise a confidentiality agreement that the firm says “gags” employees who participate in internal investigations.
In a letter, Katz, Marshall & Banks LLP said it was unlawful for the airline to require employees involved in internal investigations to agree not to discuss the investigation or any information they provide during the investigation with anyone other than United management, their union representatives and their legal counsel.
Employees who violate the agreement face discipline up to and including termination, KMB noted in its letter.
The law firm represents 13 former United flight attendants who were fired for refusing to work in July on a flight from San Francisco to Hong Kong after the pilot discovered the words “BYE BYE” in large letters on the plane's fuselage.
The workers have filed a retaliation complaint against United under the federal aviation whistle-blower protection law. The Occupational Safety and Health Administration is investigating the complaint.
United spokeswoman Mary Ryan told Bloomberg BNA that she “cannot comment further on the details of this pending litigation, but we intend to defend United against it vigorously.”
KMB's letter comes two days after the Securities and Exchange Commission announced a settled administrative action against Kellogg Brown & Root Inc. for impeding whistle-blower activity through a confidentiality agreement.
KMB partner David Marshall told BBNA that Sean McKessy, chief of the SEC's Whistleblower Office, was copied on the letter to United.
The law firm also said it has asked the Federal Aviation Administration to review similar agreements used by other airlines in internal investigations following recent aviation disasters.
In its letter, the law firm told United that its confidentiality terms, when “used in an internal investigation focusing on United’s compliance with federal securities laws, or even in an investigation of other conduct that might implicate securities laws due to United’s representations to its shareholders about its business practices,” would “clearly impede a witness in communicating with the SEC about perceived securities violations.”
“For this reason alone the company should immediately revise its confidentiality agreement, as KBR agreed to do…in settlement of the SEC’s enforcement action,” the firm said.
Marshall told BBNA that he suspects more employees and their counsel will be providing copies of similar agreements to the SEC now that the commission has taken action on one of them.
The attorney noted that neither the FAA nor OSHA have language in their regulations that mirror 1934 Securities Exchange Act Rule 21F-17(a), which states that employers may not “take any action to impede” their workers from contacting the SEC about possible securities violations, “including enforcing, or threatening to enforce, a confidentiality agreement” with respect to the worker's communication with the agency.
However, the FAA and OSHA can take action against employers for retaliating against workers who contact the agencies about aviation safety issues or about unlawful retaliation, he said.
Marshall urged the FAA to use its rulemaking powers to promulgate regulations like Rule 21F-17(a). He also suggested that the FAA could enhance air safety by making “absolutely sure” that the airlines do not “in any way engender among their employees the feeling that they cannot freely discuss their concerns, or raise those concerns with various government agencies or with Congress.”
“There is no reason whatsoever that the FAA should not require airlines to revise such agreements in the way KBR did this week in settlement of the SEC action,” he said. “That, combined with aggressive enforcement of the prohibitions on retaliation against airline employees for speaking out or even refusing to fly when appropriate, would certainly make for safer skies.”
To contact the reporter on this story: Yin Wilczek in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Ryan Tuck at email@example.com
The letter to United is available at http://op.bna.com/ccw.nsf/r?Open=sbon-9vclfw.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)