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Judges Award Millions to Protect Future Whistleblowers

Lan Bell Lan Bell , 6/25/2018
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The wide world of companies retaliating against whistleblowers has gotten wider. Where companies formerly were slapped on the wrist, now jurists are putting real teeth into the Sarbanes-Oxley Act, especially Section 806.

 

Section 806 of the Sarbanes-Oxley Act, the whistleblower-protection clause, makes it illegal for any person — officer, worker, contractor, or sub-contractor — of a public company from retaliating against a worker for revealing perceived potential (or actual) violations of the categories of conduct in Section 806.

 

As defined in the act, retaliatory behavior could include firing, demotion, suspension, threats or harassment. A federal court recently held that just outing a whistleblower is actionable.

 

Remedies

 

1.    Reinstatement with the position and seniority the worker would have had if the discrimination had not happened,

2.    Back pay with interest,

3.    The worker is to be compensated for special damages due to the discrimination — litigation costs, expert witness costs and attorney fees — within reason.

 

Significant Cases

 

Bio-Rad Laboratories

 

A federal jury awarded Sanford Wadler almost $3 million in back pay and stock, plus another $5 million in punitive damages. Wadler was fired from the life science research business in June 2013.

 

Wadler claimed he was terminated for revealing possible FCPA violations. He told the court that he found paperwork revealing the company was sending free products to Chinese distributors. Bio-Rad said Wadler was hostile and erratic, and just didn’t grasp how the company did business in China.

 

The jury determined Wadler’s report was protected under the Sarbanes-Oxley Act. The jury also found the whistleblowing was a significant part of the reason he was fired.

 

 

Playboy

 

A federal jury ordered Playboy to award $6 million to a former accountant who they wrongfully fired for blowing the whistle. Catherine Zulfer, the whistleblower, discovered the CEO and CFO planned to pay themselves $1 million in bonuses without getting the board’s approval.

 

Zulfer went to Playboy’s general counsel as well as counsel with the Securities and Exchange Commission. The Chief Financial Officer, who was Zulfer’s direct boss, wasn’t happy. He stopped talking with her, kept her out of meetings and tripled her workload. The CFO put a plan in place to fire employees who had been employed by the entertainment company over ten years. Zulfer had spent three decades with the company and had consistently high reviews.

 

The jury determined Playboy had acted with malice and made the award.

 

Progenics Pharmaceuticals

 

A Progenics Pharmaceuticals chemist who won $1.6 million last year was awarded another $3.3 million. Julio Perez, who served as his own lawyer in the case surrounding his 2008 firing, had requested the judge to order Progenics to give him his job back.

 

District court judge Loretta Preska found in favor of Perez. She sustained a jury award of $1.67 million for retaliation, and an additional $613,000 in interest, and $2.7 million in front pay — the amount of money Perez should have received from that day, when he is 58 years old, until his future retirement in 2024.

 

The Takeaway

 

Section 806 of the Sarbanes-Oxley act is being used to level the playing field for protected workers. The results are nothing short of amazing, but vigilance, both by companies and workers, is a must to stop whistleblower harassment.

 

If you feel you have been unjustly treated because you are a whistleblower, contact an experienced employment lawyer for a free consultation.