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Senate Approves the Motor Vehicle Safety Whistleblower Act

The United States Senate recently approved new legislation extending whistleblower rights and protections to the field of automotive safety.  In light of public outrage sparked by the General Motors defective ignition switches and Takada exploding airbags scandals—and the fact that the Department of Transportation was apparently caught flat-footed when the scandals broke—the Senate enacted legislation to encourage auto-industry insiders to come forward with information related to any motor-vehicle defect that is likely to cause unreasonable risk of death or serious physical injury.

The Motor Vehicle Safety Whistleblower Act (the “Act”) provides that a whistleblower is entitled to receive up to 30% of any settlement or adjudication by the Department of Transportation or the Department of Justice that results in monetary sanctions exceeding one million dollars.  Under the Act, a whistleblower means any employee or contractor of a (1) motor vehicle manufacturer, (2) part supplier, or (3) dealership who provides “original information” relating to any motor vehicle defect, noncompliance, or violation of any notification or reporting requirement that is likely to cause unreasonable risk of serious physical injury or death.  Information is “original” if it is based on the whistleblower’s independent knowledge or analysis and is not already known to the Department of Transportation or derived exclusively from a public proceeding.  Furthermore, conduct covered by the Act include events and violations that occur before the law is enacted.

The Act provides criteria for assessing the amount of the whistleblower share, such as the significance of the information and the degree of assistance provided by the whistleblower.  Unlike other whistleblower laws, such as the False Claims Act, which has a statutory minimum award of 15% of any recovery, the Motor Vehicle Safety Whistleblower Act does not have a mandatory floor.  In addition, the Act also requires whistleblowers to report the information internally prior to disclosing it to the federal government, unless the whistleblower fears retaliation or reasonably believes that the information had already been reported or is otherwise already known to the manufacturer, parts supplier, or dealer.

In addition, the Act provides limited protection to whistleblowers.  The federal government must keep the identity of the whistleblower secret unless it is required to disclose the whistleblower’s identity as part of a public proceeding related to an enforcement action.  Unfortunately, unlike other whistleblower laws, the Act does not have an anti-retaliation provision prohibiting a defendant from taking retaliatory action against a whistleblower or affording whistleblowers a cause of action if they are retaliated against.  That said, by enacting this legislation the federal government has made clear that public policy supports insiders coming forward with information about automobile defects.  This may provide basis for wrongful termination claims under state law.

The Act now heads to the House of Representatives for approval.  Once enacted, it gives the Secretary of the Department of Transportation 18 months to promulgate regulations to enforce the Act.  One area upon which the Secretary will hopefully provide additional guidance is how the whistleblower’s share will be determined and whether there should be a presumptive “floor” of at least a 15% share consistent with other whistleblower laws.

Expanding the rights of whistleblowers to the important area of automobile safety is a welcome development, particularly since the regulatory agencies charged with automobile safety need all the help they can get to stay abreast of events on the ground.