New England Biz Law Update
Chantilly, Va. (AP) A whistleblower who alleged that she was fired for exposing a scheme to funnel extra pay to leaders of the pilots’ union for Atlantic Coast Airlines recently won a claim against the airline under the Sarbanes-Oxley Act.
Stacy Platone, who had been the airline’s manager for labor relations until she was fired last year, was awarded back pay and attorneys’ fees by an administrative law judge who heard the case. The exact amount of back pay she is eligible to receive has not yet been determined.
In her complaint, Platone said she discovered that some members of the pilots’ union were abusing a provision the labor agreement that allowed them to collect pay on days they did not fly if they were involved with union business. She said she alerted her superiors to the alleged fraud, which the ruling indicates cost the airline as much as $25,000 a month, but was told to ignore the issue.
“Instead of being praised for finding an abuse, she was fired,” said Platone’s lawyer, Michael M. York, of Vienna, Va.
Platone’s complaint was just the third to receive a favorable judge’s ruling since Sarbanes-Oxley was enacted in July 2002, York said.
The 32-page opinion in Platone v. Atlantic Coast Airlines, 2003-SOX-27, is available at http://www.oalj.dol.gov/public/wblower/decsn/03sox27a.htm.
(For a related article on a separate whistleblower victory under Sarbanes-Oxley, click here.)
‘Reasonable’ Suspicions
Under Sarbanes-Oxley, whistleblowers do not have to prove fraud occurred, nor do they have to prove they were fired solely because of their whistleblowing. Instead, they must prove that they have a reasonable belief that fraud was occurring and that their whistleblowing was a contributing factor to their dismissal.
In her ruling, Department of Labor Administrative Law Judge Linda Chapman wrote that Platone’s “suspicions were reasonable, and that she had good grounds to believe that a fraud was being perpetrated on the airline as well as (Atlantic Coast’s) stockholders.”
Chapman also indicated that “the events surrounding (Platone’s) disclosure of her findings … buttress a conclusion that she had indeed uncovered fraudulent activity.”
The airline will appeal the ruling, said spokesman Rick DeLisi. He said a previous administrative review by the Occupational Safety and Health Administration had found Platone’s claim to be meritless.
“We believe (the judge’s) decision is inconsistent with facts and law that should have governed this case,” DeLisi said.
DeLisi said the airline investigated the claims when they were raised and “we are comfortable that there was no evidence of any improper conduct” as alleged by Platone.
Chapman’s ruling indicates that some pilots were increasing their pay by up to 20 percent as a result of the alleged fraud and that the extra payments were costing the airline $20,000 and $25,000 a month.
The alleged fraud occurred in late 2002 and early 2003 as Atlantic Coast was seeking concessions from its pilots as it prepared to dramatically alter its business plan.
Atlantic Coast, which draws its business flying small jets under the banners of United Express and Delta Express, was seeking to become an independent, low-fare airline called Independence Air, and new labor contracts were crucial to show the airline could keep its costs under control under its new business plan.
