By Brandi O. Brown, J.D.
An accountant who claimed that, by challenging certain departmental expenditures, he embarked upon an "anguished field battle" that eventually led to his termination could not revive his Sarbanes-Oxley Act (SOX) retaliation claim on appeal. Causation was an insurmountable problem given the lack of temporal proximity as well as evidence that the causal chain was severed. Individuals who were involved in a subsequent investigation into his alleged inappropriate comments were unaware of his protected activity, and colleagues who were more involved than the plaintiff in the SOX-protected activity did not face adverse actions. Moreover, the employer established that it would have discharged him even if he had not engaged in protected behavior. Therefore, the Third Circuit affirmed summary judgment in his employer’s favor (Wiest v. Tyco Electronics Corp.
, February 2, 2016, Greenberg, M.).
Challenged invoices and expenses.
A 30-year Tyco employee and the highest-ranking member of its accounts payable department, the plaintiff was “administratively” terminated in March 2010. However, he claimed that he was actually discharged months earlier, when Tyco made the preliminary decision to fire him. According to the employee, his firing came about at least in part because of his protected activity in 2008, when he challenged expenses and invoices submitted in connection with events held by the company’s wireless business unit. His pushback commenced an "anguished field battle" that embarrassed and frustrated members of the Tyco hierarchy, he contended.
According to Tyco, however, his termination had nothing to do with the questioned expenditures; rather, he was discharged following an investigation into complaints from coworkers. Specifically, Tyco’s HR director received a call from the employee's supervisor stating that he had received complaints that the employee made inappropriate sexual comments to other employees. The investigation uncovered several improper sexual remarks by the employee. At least three women reported feeling uncomfortable around him and "trapped" by him. The HR director also learned that female colleagues had created an alert system to apprise one another of the employee's whereabouts. Those women were unaware of his SOX-protected activity.
The HR director made the preliminary decision to discharge the employee but, before a final meeting could occur, he went out on short-term disability and never returned to work. He was administratively terminated. The employee sued, claiming he was discharged in retaliation for his reports of improper expenditures. But the district court dismissed, finding he failed to show he had engaged in a protected activity.
A Third Circuit panel reversed, holding that corporate whistleblowers are protected under the SOX whistleblower provision if they demonstrate a “reasonable belief” that securities laws are being violated. On remand, the employee’s claims against several individually named defendants were dismissed, but the district court rejected Tyco’s argument that the employee failed to properly plead an adverse employment action or sufficient causal connection. However, the district court granted the employer’s subsequent motion for summary judgment, finding insufficient evidence from which a jury could conclude his protected activity was a contributing factor in his discharge.
Rejecting the employee’s poorly considered "law of the case" argument, the appeals court evaluated whether the employee suffered adverse actions sufficient to support his retaliation claim. It was willing to assume, for purposes of temporal proximity, that the HR director's initial discharge determination amounted to an adverse employment action; however, it found a reasonable jury could not conclude that his protected activity was a contributing factor to that action.
First, any inference of causation that could be "gleaned" from the 10-month period between the protected activity and the HR director’s discharge determination was "minimal,” the appeals court said. Second, the intervening events would sever any causal connection that might have existed. The record showed not only that the employee had received praise and commendations both during and subsequent to his protected activity, but also that neither the HR director nor any of the individuals who prompted the investigation into his inappropriate sexual comments knew of that protected activity. Moreover, none of his colleagues—who were just as involved or even more
involved in the SOX-protected activity—faced any adverse treatment. Also, the business unit whose expenditures were called into question was no longer part of the company by the time of the investigation into his own misconduct; nor were the managers whose feathers were ostensibly ruffled by his whistleblowing. Those "uncontroverted facts negate any possible inference of causation,” the appeals court found.
Moreover, Tyco demonstrated that it would have taken the same actions had the employee not engaged in protected activity. The employer initiated its investigation into the employee’s inappropriate conduct after receiving multiple complaints, and it found “ample” support for those complaints. Although the employee questioned the severity of the corrective action, the appeals court noted it was not its role “to second-guess a human resources decision that followed a thorough investigation.” And the employer did not violate SOX by failing to first provide a disciplinary warning or impose a probationary period instead.