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In a case that should give those companies violating federal law cause of concern, a jury recently ruled in favor of an employee who had been terminated for reporting suspected violations of the Foreign Corrupt Practices Act (“FCPA”). The jurors ultimately determined that the employee, the former general counsel of Bio-Rad Laboratories, was terminated for engaging in a protected whistleblower activity. As a result, Bio-Rad will now have to pay up, forking over millions in damages.
The case began back in June of 2013 when Sandy Wadler was fired as general counsel of Bio-Rad. He had just reported the potential bribery of Chinese officials to the company’s audit committee when the company’s CEO fired him. Wadler urged the audit committee to investigate, saying that he had reason to suspect members of senior leadership had engaged in activity that violated the FCPA.
Though Wadler argues he was terminated in retaliation for the FCPA reporting, the company claims there were other more serious issues at work. Bio-Rad argues that Wadler had a history of erratic behavior in the office, had yelled at colleagues and pounded his fists on tables. They also claim the CEO had begun documenting these problems months before he was ultimately terminated.
As proof of these alleged performance problems, Bio-Rad produced a performance review prepared by the CEO that was dated in April of 2013. Wadler was eventually terminated in June. Though this would seem to be rather convincing evidence, the problem was that the performance review was not actually prepared in April. An analysis of the document’s metadata showed that it was actually typed up in July, more than a month after Wadler had been fired. Bio-Rad claimed that the document was based on notes that were taken in April, but the jury was not convinced.
Instead, the jury was swayed by arguments from Wadler and his attorneys. They argued that Wadler had been fired for shedding light on a sensitive subject; the company was already facing FCPA investigations concerning several other countries. By terminating him in retaliation, Bio-Rad had violated the terms of the Sarbanes-Oxley Act of 2002, which protects the reporting of such concerns as whistleblower activity.
According to the jury, the fake performance review was a convincing piece of evidence that the termination was due to the FCPA reporting. The jury found that Bio-Rad had failed to prove by clear and convincing evidence that they would have fired Wadler regardless of the FCPA reporting. As a result, the jury awarded Wadler millions. To be precise, he was awarded $3 million in lost wages and stock options (which will be doubled to $6 million due to provisions of the Dodd-Frank Act) and an additional $5 million in punitive damages. That means Wadler will now walk away with approximately $11 million.
The case is an important one not only for Wadler, but also for other employees across the country who have witnessed incidents of potential corruption. The case shows that companies will be held to a high bar in the event of a retaliatory termination. The hope is that Wadler’s victory serves as an example to others, specifically employees who engage in compliance work who discover serious problems that are not being taken seriously within the company.
Source: “Jury Awards Bio-Rad’s Ex-GC $8M For Retaliatory Firing,” by Cara Bayles, published at Law360.com on February 6, 2017.
Source: “Bio-Rad Attorney Wins $11 Million in Whistleblower Trial,” by Nicholas Iovino, published at Courthousenews.com. on February 7, 2017.