In House - The FindLaw Corporate Counsel Blog

When to Settle a Whistleblower Suit?

There is no one-size-fits-all for when to settle a lawsuit, especially when it comes to whistleblower cases.

Whistleblower suits, in many cases, have the added pressure of government enforcement. And unless you have more resources than the kingdom of Amazon, the government can outspend you in litigation.

That had something to do with why two Utah companies folded for $1.2 million in a whistleblower case. Money and timing were keys to settling the suit, but then there were also the intangible factors.

Money

Creative Times Dayschool Inc., and Big-D Construction Corp., two construction companies, agreed to pay to settle claims that they cheated to win a small business contract. Neither company admitted wrongdoing in the case.

A former Big-D employee blew the whistle on the firm in 2011, alleging they violated a Small Business Administration program. The suit alleged Creative Times qualified for the program and won the contract, but Big-D did most of the work.

That was illegal, the plaintiff alleged, because Big-D did not qualify for the program. The company probably knew it, and could have resolved the case before it began.

But there was another consideration that played out in another court a year earlier. It pretty much started the whole mess.

Timing

In 2010, the whistleblower was sentenced to three years in prison for stealing from Big-D. Bart Andersen served about 14 months of the sentence, which included work release.

He was also ordered to pay $145,000 in restitution to the company. Now he will receive a portion of the settlement in the whistleblower case.

Whistleblowers may recover up to 30 percent of a recovery when the government pursues it. In Andersen's case, it will probably be less than $145,000 -- plus interest.

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