Yesterday, the Supreme Court decided Department of Homeland Security v. MacLean. MacLean was a Transportation Security Administration (TSA) employee who, without authorization, disclosed to a reporter the otherwise unpublicized termination of missions related to hijack prevention. He claimed he was disclosing a matter related to public safety. He was fired pursuant to regulations promulgated under the Homeland Security Act, 116 Stat. 2135. That Act provides that the TSA “shall prescribe regulations prohibiting the disclosure of information . . . if the Under Secretary decides that disclosur[e] would . . . be detrimental to the security of transportation.” 49 U. S. C. §114(r)(1)(C). Around the same time, the TSA promulgated regulations prohibiting the unauthorized disclosure of “sensitive security information.” MacLean was fired pursuant to that regulation. However, the Supreme Court held that the regulation at issue did not have the force of law.
Given the fact that this case involves facts peculiar to governmental entities, one might think it unimportant to non-governmental employers in general, or financial services employers in particular. However, we believe there are two takeaways:
The first takeaway is a reiteration that, contrary to oft-repeated arguments that the Court is pro-business, this case further shows that, with one idiosyncratic exception (Garcetti v. Ceballos, 547 U.S. 410 (2006)), the whistleblower has thus far consistently prevailed at the Supreme Court. Employers should take note of this fact in connection with litigation of False Claims Act, Sarbanes-Oxley, Dodd-Frank, and other whistleblower cases where retaliation might rear its head.
The second takeaway is the theory that not all regulations have the status of actionable laws. This could be an issue for a financial services firm that terminates a whistleblower for violating regulations applicable to the financial services industry.
A final point of interest: This was a 7-2 decision, with Justices Kennedy and Sotomayor dissenting. The majority was, thus, bipartisan, as was the dissent, at least in terms of judicial philosophy.