Disinformation is a vital tool of espionage.1 In the law business, however, it is not such a good thing. One area where this phenomenon threatens is where in-house lawyers turn whistleblowers and whether they have actionable claims against their former employers. Because of the whistleblower provisions of federal statutes such as Dodd-Frank,2 recent case law,3 and various articles written on this subject,4 there has been a fair amount of disinformation as to whether lawyers are free to rat on their clients and then also profit thereby. This article will tour the landscape of this area and attempt to bring some focus and/or light as to what the right answer is (or, at least, should be).
Where Were We?
The starting point for this subject is (or must be) Balla v. Gambro.5 In that case, the general counsel (Roger Balla) of Gambro, Inc., an Illinois-based company that was the subsidiary of a Swedish company, Gambro AB, learned that a German affiliate was about to ship dialyzers into the United States which did not comply with Food and Drug Administration (FDA) regulations. Believing that the machines posed possibly life threatening injuries (or worse), Balla went to Gambro’s U.S. president and persuaded him to block the shipment. Subsequently, the president changed his mind and green-lighted the dangerous dialyzers. When Balla learned of that latter action, he confronted the president, telling him he would do whatever was necessary to stop the shipment (as well as any sales) of the dialyzers. The president thereupon fired Balla; the next day, Balla ratted on his former company to the FDA.
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