47 Whistleblower's Action

• Library: Elements of Civil Causes of Action (SCBar) (2015 Ed.)

47 Whistleblower's Action¹

A. Definition

A "Whistleblower's action" is a suit against a public employer in which a public employee claims he or she has been subjected to an adverse personnel action in retaliation for exposing governmental wrongdoing.² Whistleblower claims are tort actions.³ The action was fashioned by the legislature when it enacted the South Carolina Whistleblower Act,⁴effective March 14, 1988. The Act does not apply retroactively.⁵ It was substantially and significantly amended in 1993, effective June 21, 1993, and applicable to any personnel actions taken after that date. The Act seeks to foster good government for the benefit of the public.⁶ It encourages employees to report wrongdoing as a matter of public policy by protecting their right to speak without fear of retaliation.⁷ It is a remedial act that is liberally construed to carry out its purposes.⁸ The action is tried without a jury and proper venue is in the court of common pleas of the county in which the employment action occurred.⁹

B. Elements

The elements of an action under the Whistleblower Act are: (1) the plaintiff is an employee; (2) the defendant is a public body; (3) the plaintiff suffered retaliation; (4) the retaliation was for filing a report with an appropriate authority; and (5) the report was of "wrongdoing."¹⁰

C. Elements Defined

1. Employee

The plaintiff must be an "employee" of a public body.¹¹ There is a long list of persons who are not employees.¹² That list includes: members, officers, or employees of the General Assembly;¹³ certain employees of the Governor¹⁴ and Lieutenant Governor;¹⁵ state elected public officials;¹⁶ judges and employees of the Judicial Department;¹⁷ members of state boards, commissions, councils, advisory councils, or committees;¹⁸ part-time professionals engaged in consulting or contract services;¹⁹ agency heads;²⁰ faculty and coaches at four-year post-secondary educational institutions;²¹ deputy directors;²² as well as miscellaneous other personnel.²³ Beyond those specific exceptions, a proper plaintiff under the Whistleblower Act is virtually anyone employed by a "public body" as defined by the Act.²⁴

The Federal District Court for South Carolina has held that the definition of "employee" does not extend to one who is a "public officer."²⁵ The court noted that South Carolina law has long distinguished between public officers and public employees,²⁶ and held that an enlisted member of the National Guard was clearly a public officer. One statutory definition of "public officer" that should be considered says the term means "... all officers of the State that have heretofore been commissioned and trustees of the various colleges of the State, members of various State boards and other persons whose duties are defined by law."²⁷

2. Public Body

The defendant in a Whistleblower action must be a "public body,"²⁸ a term that is broadly defined by the Act to include: "... a department of the State; a state board, commission, committee, agency, or authority; a public or governmental body or political subdivision of the State, including counties, municipalities, school districts, or special purpose or public service districts; an organization, corporation, or agency supported in whole or in part by public funds or expending public funds; or a quasi-governmental body of the State and its political subdivisions."²⁹ The definition does not include natural persons and, therefore, a Whistleblower Act claim may not be brought against a supervisor or fellow employee. ³⁰ While the Act generally does not apply to "nonpublic, private corporations"³¹"an organization, corporation, or agency supported in whole or in part by public funds or expending public funds" may still be considered a "public body" subject to the Act.

In Sutler v. Palmetto Elec. Coop.,³² the plaintiff argued that his employer — an electric cooperative — met the definition a public body because it received loans from a federal agency, the Rural Utility Service, at a "favorable interest rate" in exchange for providing electrical service in rural areas. The court, however, declined to hold that the loans constituted the "support" that would transform the company into a public body under the Whistleblower Act. The court also noted that the definition of "public body"³³under the South Carolina Freedom of Information Act (FOIA),³⁴ is identical to that in the Whistleblower Act.³⁵ For that reason the court relied heavily on the FOIA case of Weston v. Carolina Research & Dev. Foundation,³⁶ where the court decided that the Carolina Research and Development Foundation, an eleemosynary corporation incorporated as a nonprofit corporation under state statutes and operated exclusively for the benefit of the University of South Carolina was a public body for purposes of the FOIA. The South Carolina Supreme Court agreed with the trial judge that the FOIA would not apply to business enterprises that received payment from a public body in return for supplying specific goods or services in an arms-length transaction, but that when a block of public funds is diverted from a public body to a related organization, or when the related organization undertakes management of the expenditure of public funds, it is a public body governed by the FOIA.

A federal court discussed both Weston and Sutler in Woods v. The Boeing Co.³¹ The plaintiff argued Boeing was a "public body" for purposes of the Whistleblower Act because the South Carolina Legislature issued economic bonds worth millions of dollars to Boeing to build a plant. The court noted that the purpose of the law under which the bonds were issued was to foster economic development in the state. Therefore, the relationship between Boeing and the State was more analogous to that in Sutler. Boeing provided jobs to an area that would otherwise not have them and in exchange, under a negotiated agreement, received payments from the State. The court found that Boeing was not a public body because the quid pro quo condition was satisfied. However, the plaintiff contended that the Act applied pursuant to Weston because Boeing received a "block of funds en masse" and put them into the production of a facility it managed on behalf of its investors. The court agreed that Boeing received a "massive" amount of public money; but said it was not a "related organization" to the State. Unlike the Foundation in Weston, Boeing did not act as an agent of the State or operate for the sole benefit of the State, rather it used the money it received to carry out its business of manufacturing planes, not the business of the State. Thus, the court granted Boeing's motion to dismiss.

3. Retaliation³⁸

The Act does not specifically define "retaliation," but says that an employee may institute a civil action against the employing public body if that employee is "... dismissed, suspended from employment, demoted, or receives a decrease in compensation within one year after having timely reported an alleged wrongdoing ...".³⁹ Note that actionable retaliation under the Act is limited to the four listed actions, and that effectively defines retaliation.⁴⁰

The language of the statute would almost seem to suggest strict liability, that is, the statute says that if the employee experiences retaliation within one year after making a report he or she may institute a civil action. However, that is not the case, first, because a defendant may raise as an affirmative defense a statute that allows it to dismiss, suspend, demote, or decrease the compensation of an employee for causes independent of the filing of a report.⁴¹

Secondly, the South Carolina Supreme Court has suggested the third element implies causation. In Gastineau v. Murphy,⁴² the court said a defendant could not have fired the plaintiff in retaliation for making a report because his supervisor was unaware of his report when she fired him. That suggests that the alleged retaliation must have been caused by the report.

The fact that the decision of a supervisor to retaliate against an employee is ratified by a governing board does not remove the "taint" of the retaliatory action.⁴³

4. Filing a Report with an Appropriate Authority

To meet the fourth element, the plaintiff must show three things: (1) "timely" action; (2) a "proper" report; and (3) a report made to an "appropriate authority."

The Act requires timely reporting,⁴⁴ which it defines as " ... within 60 days of the date the reporting employee first learns of the alleged wrongdoing."⁴⁵ This presents to the defendant the potentially chagrining defense that, while it may have engaged in wrongdoing, the plaintiff learned about it more than 60 days before he or she reported it.

A proper report must be in writing,⁴⁶ must allege waste or wrongdoing and must include the date of disclosure, the reporting employee's name, the nature of the wrongdoing, and the date or range of dates on which the wrongdoing allegedly occurred.⁴⁷

The Act provides a very specific definition of "appropriate authority." The term means either the public body that employs the complainant or a local, state, or federal agency that has "jurisdiction over criminal law enforcement, regulatory violations, professional conduct or ethics, or wrongdoing."⁴⁸ The Act identifies several specific state agencies in the latter category: the South Carolina Law Enforcement Division, the Solicitor's Office, the State Ethics Commission, the State Auditor, the Legislative Audit Council, and the Office of Attorney General. The Act requires the entity that receives a report — if it is other than the public body that employs the complainant — to notify the employer of the report "as soon as practicable."

5. The Report Was of "Wrongdoing"⁴⁹

"Wrongdoing" means one of two things: an action that results in "substantial" abuse, misuse, destruction, or loss of substantial public funds or public resources or an allegation that a public employee has intentionally violated federal or state statutes or...