On February 22, 2018, the Tenth Circuit Court of Appeals reversed a district court’s grant of summary judgment against Plaintiff who claimed that his employment was terminated in violation of the SOX whistleblower protection provision.  The court concluded that genuine issues of material fact existed as to whether Plaintiff actually believed that the complained-of conduct was unlawful and whether the complaints were a contributing factor in Plaintiff’s termination. Genberg v. Porter, No. 16-cv-1368.

Background.  Plaintiff was an executive at a biopharmaceutical company.  In March 2010, he sent a pair of e-mails to the company’s board of directors, which alleged, among other things, that the CEO was engaged in insider trading.  The board hired an attorney to investigate, and the investigation found no evidence of insider trading but allegedly uncovered that Plaintiff had been involved in an attempt to acquire the company.  Allegedly on that basis, the board discharged Plaintiff.  Plaintiff proceeded to sue the CEO under SOX in the United States District Court for the District of Colorado, arguing that the e-mails constituted protected activity.  The district court granted the employer’s motion for summary judgment, holding that at least one of Plaintiff’s two e-mails had not been protected by SOX because it did not “definitively and specifically” relate to a violation of one of the laws enumerated in Section 806 of SOX.

Rulings.  The Tenth Circuit reversed the district court, ruling that the lower court had incorrectly applied the “definitively and specifically” standard when it should have applied the standard articulated by the Administrative Review Board in Sylvester v. Parexel, No. 07-123 (ARB May 25, 2011).  The court wrote, “[the district court’s] statement of the burden was incorrect, for the Administrative Review Board of the Department of Labor has explicitly disavowed the definitive and specific evidentiary standard… [and] [u]nder Chevron deference, we follow the Administrative Review Board’s interpretation if it is based on a permissible construction of an ambiguous statute.”  Further, the Tenth Circuit found that genuine factual disputes existed as to whether Plaintiff’s e-mails contributed to the decision to terminate his employment.  The court reasoned that the temporal proximity between the e-mails and the board’s decision to discharge the Plaintiff meant that a reasonable factfinder could potentially conclude that the e-mails had been a contributing factor in the decision.

Implications.  The Tenth Circuit’s opinion is another example of a court deferring to the ARB’s standard in Sylvester, which lowers the burden for a plaintiff who seeks to demonstrate that he or she engaged in protected activity under SOX.

Photo of Steven J. Pearlman Steven J. Pearlman

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

Steven’s practice covers the full spectrum of employment law, with a particular…

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

Steven’s practice covers the full spectrum of employment law, with a particular focus on defending companies against claims of employment discrimination, retaliation and harassment; whistleblower retaliation; restrictive covenant violations; theft of trade secrets; and wage-and-hour violations. He has successfully tried cases in multiple jurisdictions, and defended one of the largest Illinois-only class actions in the history of the U.S. District Court for the Northern District of Illinois. He also secured one of only a few ex parte seizures orders that have been issued under the Defend Trade Secrets Act, and obtained a world-wide injunction in federal litigation against a high-level executive who jumped ship to a competitor.

Reporting to boards of directors, their audit committees, CEOs and in-house counsel, Steven conducts sensitive investigations and has testified in federal court. 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.

Steven was recognized as 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 describes Steven as an “outstanding lawyer” who is “very sharp and very responsive,” a “strong advocate,” and an “expert in his field.” 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 Burton Award Winner (U.S. Library of Congress) for “Distinguished Legal Writing.”

Steven has served on Law360’s Employment Editorial Advisory Board and is a Contributor to Forbes.com. He has appeared on Bloomberg News (television and radio) and Yahoo! Finance, and is regularly 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. He was appointed to serve as a Special Assistant Attorney General for the State of Illinois in employment litigation matters. He has presented with the Solicitor of the DOL, the Acting Chair of the EEOC, an EEOC Commissioner, Legal Counsel to the EEOC and heads of the SEC, CFTC and OSHA whistleblower programs. He is also a member of the Sedona Conference, focusing on trade secret matters.