The ARB recently affirmed an ALJ’s decision that American Commercial Lines Inc. (the “Company”) did not violate the whistleblower protection provision in Section 806 of SOX where the Company demonstrated by clear and convincing evidence that its decision to discharge employee Angelina Zinn, who was an in-house attorney, was based on her insubordination.  Zinn v. American Commercial Lines Inc., ARB Case No. 13-021 (ARB Dec. 17, 2013).

Background.  The Company, a publicly traded marine transportation and manufacturing company, employed Zinn as a corporate attorney.  Zinn alleged that the Company terminated her employment because she had alerted her supervisors of purported failures to properly vet a subcontractor and report the vetting failure and a change in the Company’s general counsel to the SEC.  Zinn asserted that she was retaliated against because, shortly after her complaint, the Company reduced her responsibilities, required her to take a drug test, subjected her to increased job performance monitoring and standards, and ultimately terminated her employment.

The ARB’s Ruling.  The ARB affirmed the ALJ’s determination that the Company was not liable under the SOX whistleblower provision because it established, by clear and convincing evidence, that it would have discharged Zinn regardless of any whistleblowing activity.  The ARB adopted the argument that the termination decision was based on Zinn’s insubordination and failure to complete work assigned to her by the Company’s Senior Vice President and General Counsel.  The evidence on which the ARB relied included an e-mail exchange in which Zinn stated that she would not complete her work and told the General Counsel, “I can’t respect you.”  With respect to Zinn’s allegation that she was improperly required to take a drug test, the ARB accepted the ALJ’s conclusion that Zinn was administered the test in accordance with Company policy after she appeared to be under the influence at work.  The ARB also accepted the ALJ’s finding that Zinn’s hours were reduced at her request and that, after she received a negative drug test, the Company monitored her performance in order to encourage better performance.

Implications.  This decision shows that while employers face a “clear and convincing evidence” standard in establishing that they would have taken the challenged adverse action regardless of protected activity, that standard can be readily satisfied through evidence establishing employee misconduct or insubordinate behavior.  Of course, the likelihood of prevailing on a causation defense increases where employers implement and follow clear policies and carefully document employee conduct that violates those policies. 

Photo of Steven J. Pearlman Steven J. Pearlman

Steven J. Pearlman is a partner in the Labor & Employment Law Department, where he is Head of the Restrictive Covenants, Trade Secrets & Unfair Competition Group and Co-Head of the Whistleblowing & Retaliation Group.

Employment, Restrictive Covenant & Trade Secret, and Whistleblower…

Steven J. Pearlman is a partner in the Labor & Employment Law Department, where he is Head of the Restrictive Covenants, Trade Secrets & Unfair Competition Group and Co-Head of the Whistleblowing & Retaliation Group.

Employment, Restrictive Covenant & Trade Secret, and Whistleblower Practice. Steven’s national practice focuses on defending companies in federal and state courts and in arbitration fora against the full spectrum of employment-related claims, including claims of executives; restrictive covenant violations; employee raiding; theft of trade secrets; whistleblower retaliation under the Sarbanes-Oxley Act, the Dodd-Frank Act and similar state laws; and wage-and-hour violations, including class, collective and PAGA actions.

Steven has successfully handled trials in multiple jurisdictions; prevailed in seeking and defending against applications for temporary restraining orders and preliminary injunctions; defended one of the largest Illinois-only class actions in the history of the federal courts in Illinois (over 90k putative class members); and prevailed following his oral arguments before federal and state appellate courts. He brings his litigation experience (beginning in 1998) to bear in counseling clients to minimize risk and avoid or prepare for success in litigation.

Investigations. Reporting to boards of directors, their audit committees, CEOs and in-house counsel, Steven conducts sensitive investigations and has the unusual experience of testifying in federal court in connection with investigations. His investigations have involved complaints of sexual harassment involving C-suite officers; systemic violations of employment laws and company policies; and fraud, compliance failures and unethical conduct.

Thought Leadership and Accolades. Steven was named Lawyer of the Year for Chicago Labor & Employment Litigation in the 2023 edition of The Best Lawyers in America. He is a Fellow of the College of Labor and Employment Lawyers. Chambers has reported:

  • Steven is “one of the best in the country and has a lot of experience”;
  • Steven is as an “outstanding lawyer” who is “very sharp and very responsive,” a “strong advocate,” and an “expert in his field”;
  • He is thoughtful, attentive and demonstrates an acute understanding of matters top of mind for business-minded general counsel; and
  • “He is someone who can navigate the twists and turns of litigation without difficulty.”

Steven was 1 of 12 individuals selected by Compliance Week as a “Top Mind.” Earlier in his career, he was 1 of 5 U.S. lawyers selected by Law360 as a ”Rising Star Under 40” in the area of employment law and 1 of “40 Illinois Attorneys Under Forty to Watch” selected by Law Bulletin Publishing Company. Steven is a U.S. Library of Congress Burton Award Winner for “Distinguished Legal Writing.”

Steven was appointed to Law360’s Employment Editorial Advisory Board and selected as a Contributor to Forbes.com. He has appeared on Bloomberg News (television and radio) and Yahoo! Finance, and is often quoted in leading publications such as The Wall Street Journal. The U.S. Chamber of Commerce has engaged Steven to serve as lead counsel on amicus briefs to the U.S. Supreme Court and federal circuit courts of appeal.

In 2024, Steven received the Excellence in Pro Bono Service Award from the United States District Court for the Northern District of Illinois and the Chicago Chapter of the Federal Bar Association.