Image of Does the Sarbanes-Oxley Act authorize jury trials?

Does the Sarbanes-Oxley Act authorize jury trials?

Jury Trials in Sarbanes-Oxley Whistleblower Cases

The Dodd-Frank Act (“Dodd-Frank”) amendments to Section 806 of SOX clarify the right to try a SOX whistleblower claim before a jury. See 18 U.S.C. 1514A(b)(2)(E) (“A party to an action brought under [Section 806] shall be entitled to trial by jury.”). Some recent verdicts suggest that SOX whistleblowers can obtain substantial damages. There is no cap on special damages under SOX.

One such whistleblower is Julio Perez, who recovered nearly $5 million in a SOX whistleblower retaliation case that he tried before a jury.[ii] Dr. Perez, a former senior manager of pharmaceutical chemistry for Progenics Pharmaceuticals Inc., developed a medication with his Progenics colleagues and representatives from another pharmaceutical company. During the drug’s clinical trials, Dr. Perez saw a confidential memo that contradicted the pharmaceutical companies’ public statements about the drug.

Dr. Perez reported to Progenics executives that he believed the company was committing fraud against its shareholders by making public representations about the drug that were inconsistent with the clinical-trial results. Later the same day, after Dr. Perez was locked out of Progenics’ computer system, the company’s CFO tracked him down to ask how he had obtained the confidential memo. Dr. Perez asked for time to discuss the issue with his lawyer, and the CFO assented. The next morning, however, the company’s CFO and general counsel met with Dr. Perez and fired him on the spot for misappropriating the confidential memo.

Dr. Perez then filed a SOX retaliation claim with OSHA. Progenics claimed that it terminated Dr. Perez’s employment because he refused to explain how he obtained the confidential memo. Dr. Perez argued that he received the document via interoffice mail, that the memo was widely distributed within the partner pharmaceutical company, and that his position generally granted him access to clinical-trial results.

OSHA did not substantiate his complaint and he removed his claim to federal court.  After years of contentious litigation, the case went to trial, and the jury awarded Dr. Perez $1.6 million in compensatory damages. The court’s award of back pay and front pay resulted in a total recovery of close to $5 million. Corporate Counsel published a story describing Dr. Perez’s seven-year ordeal, entitled How to Help a Whistleblower.

Another SOX whistleblower, Catherine Zulfer, also received a substantial award from a jury in March 2014.[iii] Ms. Zulfer was an accounting executive for Playboy Inc., her employer of more than three decades. Ms. Zulfer suspected that something was amiss when the company’s new CFO repeatedly instructed her to set aside $1 million for executive bonuses that had not been approved by the board of directors. Seeing no legitimate basis for discretionary bonuses on a year that Playboy suffered substantial losses, Ms. Zulfer suspected that the CFO and CEO were attempting to embezzle the money. So she refused to carry out the CFO’s orders, believing that it would be dishonest to shareholders and violate generally accepted accounting principles. Ms. Zulfer also reported her concerns to the company’s general counsel and outside SEC counsel.

Immediately thereafter, the Playboy CFO retaliated by ostracizing Ms. Zulfer, excluding her from meetings, forcing her to take on additional duties, and eventually terminating her employment. After a short trial, a federal jury in California awarded Ms. Zulfer $6 million in damages and ruled that she was also entitled to punitive damages. Ms. Zulfer and Playboy reached a settlement before a determination of punitive damages was made.

Finally, whistleblowers Shawn and Lena Van Asdale won substantial damages at trial and the Ninth Circuit affirmed the award.[iv] The Van Asdales, a married couple, both served as in-house counsel at International Game Technology (“IGT”), a position they continued to hold after the company merged with a rival game company, Anchor Gaming. Following the merger, the Van Asdales discovered that Anchor had withheld material information about its value, causing IGT to commit shareholder fraud by paying more than market value to acquire Anchor. The Van Asdales reported their concerns to their boss, who had served as Anchor’s general counsel prior to the merger. Both Van Asdales were fired shortly thereafter.

The Van Asdales filed a SOX claim, alleging that they had been terminated in retaliation for disclosing shareholder fraud related to IGT’s merger with Anchor. A federal jury in Nevada eventually awarded the Van Asdales $2.2 million in compensatory damages and $2.4 million in attorney’s fees. The Ninth Circuit affirmed the award.

[i] 18 U.S.C. 1514A(b)(2)(E).

[ii] See Perez v. Progenics Pharm., Inc., 965 F. Supp. 2d 353, 359 (S.D.N.Y. 2013).

[iii] Zulfer v. Playboy Enters. Inc., JVR No. 1405010041, 2014 WL 1891246 (C.D. Cal. Mar. 5, 2014).

[iv] Van Asdale v. Int’l Game Tech., 549 F. App’x 611, 614 (9th Cir. Sept. 27, 2013).

 

SOX Whistleblower Protection Law

We represent corporate whistleblowers nationwide in high-stakes whistleblower retaliation cases and have obtained substantial recoveries for CEOs, CFOs, auditors, accountants, risk managers, CISOs, and other executives and senior professionals.  We have recovered more than $15 million for corporate whistleblowers and have obtained settlements in excess of one million dollars in at least five SOX matters. Click here to read reviews from senior executives and professionals that we represented in whistleblower retaliation matters.

To learn more about the Sarbanes-Oxley corporate whistleblower protection law, download our free guide Sarbanes-Oxley Whistleblower Protection: Robust Protection for Corporate Whistleblowers.SOX whistleblower protection

SEC Whistleblower Attorneys

We are also one of the leading law firms representing whistleblowers worldwide before the SEC, and indeed our attorneys represented whistleblowers at the SEC before the enactment of the Dodd-Frank Act. We helped shape the SEC rules implementing the SEC Whistleblower Program, and have represented whistleblowers in disclosing a wide range of violations of federal securities laws, including:

See our recent article in Forbes: One Billion Reasons Why The SEC Whistleblower-Reward Program Is Effective.  If you have information you would like to report to the SEC, contact an experienced SEC whistleblower attorney at Zuckerman Law for a free, confidential consultation by calling 202-262-8959.

To learn more about the SEC Whistleblower Program, download our free guide SEC Whistleblower Program: Tips from SEC Whistleblower Attorneys to Maximize an SEC Whistleblower Award.

Qualifying for an SEC Whistleblower Award: Tips for SEC Whistleblowers

 

5 Tips for SEC Whistleblowers and Lessons Learned from SEC Whistleblower Awards

SEC Whistleblower Program and SEC Whistleblower Awards

Why Hire Leading Whistleblower Law Firm Zuckerman Law

  • Our team includes a Certified Public Accountant, Certified Fraud Examiner and former KPMG external auditor.  Prior to becoming a lawyer, Matt Stock developed an expertise in financial statement analysis, internal controls testing and fraud recognition.  He uses his auditing experience to help IRSCFTC and SEC whistleblowers investigate and disclose complex financial frauds to the government.
  • Both Eric Bachman and Jason Zuckerman were appointed by the Secretary of Labor to serve on the Department of Labor’s Whistleblower Protection Advisory Committee, which makes recommendations to improve OSHA’s administration of federal whistleblower protections.
  • Bachman and Zuckerman also served in senior positions at the U.S. Office of Special Counsel, the federal agency charged with protecting whistleblowers in the federal government.  At OSC, they oversaw investigations of whistleblower claims and enforced the Whistleblower Protection Act.
  • Jason Zuckerman was recognized by Washingtonian magazine as a “Top Whistleblower Lawyer” in 2015, 2009, and 2007 selected by his peers to be included in The Best Lawyers in America® in the category of employment law (2011-2017), and selected by his peers to be listed in SuperLawyers (2012 and 2015-2017) in the category of labor and employment law.  is rated 10 out of 10 by Avvo, based largely on client reviews, and rated AV Preeminent® by Martindale-Hubbell based on peer reviews.
  • Eric Bachman has substantial experience litigating precedent-setting employment cases.  His wins include a $100 million settlement in a disparate impact Title VII class action and a $16 million class action settlement against a major grocery chain.  Having served as Special Litigation Counsel in the Civil Rights Division of the Department of Justice and as lead or co-counsel in numerous jury trials, Bachman is trial-tested and ready to fight for you to obtain the relief that you deserve.
  • The firm has published extensively on whistleblower rights and protections, and regularly speaks nationwide at seminars and continuing legal education conferences.  We blog about new developments in whistleblower law at the Whistleblower Protection Blog.

Client Reviews from Executives and Senior Professionals in SOX Whistleblower Retaliation Matters

  • “Jason is the consummate professional when it comes to SOX retaliation claims. He is, without question, one of the most deeply knowledgeable, technical, and astute attorneys in this very specialized body of law. During one of the most difficult times in my professional career, Jason not only provided exceptional legal guidance, but equally as important, he provided emotional support that was vital to my family and me. Jason ran circles around the “major national law firm” team that was assigned to defend my employer. In fact, Jason made them look silly at times. Jason always advocated my best interests, not his own.  Jason is not only an exceptional attorney who helped my family to achieve a favorable outcome, but he is a friend. I’ve worked with major law firms throughout my career and when it comes to SOX and employment law matters, there is not a finer, more talented attorney than Jason Zuckerman.”
  • “Jason is everything you could possibly ask for an an attorney: highly intelligent, thoughtful, and extraordinarily knowledgeable in his specialty of the law. In a very short period of time Jason was able to assimilate a laundry list of details and offer a compelling strategy on how to effectively proceed.  Moreover, he is extremely responsive.”
  • “Jason did an exceptional job in quickly understanding the intricacies of my case, grasping not only his field of expertise of employment law, but also the violations of law and SEC Regulations that were central to my dispute. The overall strategy he utilized insured that opposing counsel was challenged and made clear that this case would simply not proceed based on a timetable convenient to them. Jason is thorough, accurate and seemingly working at all hours based on phone calls and correspondence. Fortunately Jason has a very down to earth personality, understands issues readily and can convey in understandable language current “legal” circumstances and probable outcomes. I would easily and thoroughly recommend Jason for issues related to a Sarbanes-Oxley or employment related dispute.”
  • “I selected Jason to handle my case after consulting with three other lawyers because of his extensive SOX experience and negotiation skills. My decision paid off as he easily surpassed all of my expectations. He quickly analyzed the merits of my case and aggressively engaged my former employer to reach a favorable settlement, avoiding years of potential litigation. He was responsive, professional, ethical and a great advocate on my behalf. I truly believe that I could not have found a better lawyer to represent my interests. He would be the first person I would recommend if a colleague or friend were to ever need similar services. Put simply, Jason is a top notch lawyer who works tirelessly to achieve a positive outcome for his clients. It’s easy to see why he is regarded as an expert in the field.”
  • “When I sought out a DC-based attorney to represent me, I expected a competent attorney who would get me through my sexual harassment lawsuit. What I didn’t expect was to find someone like Jason: a truly outstanding attorney who made me feel like a priority, paid close attention to detail, and brought enormous expertise to the table. I chose to hire Jason to represent me after consulting seven other lawyers — and from day one, Jason was the only one who it clear that he actually cared about me and my case.   I cannot be happier that I chose Jason. He represented me with professionalism and fearlessness every step of the way. Jason always made me feel like a priority, even though he was busy with other cases/clients simultaneously. He never rushed me or pressured me, and kept me “in the loop” the entire time while we were dealing with the opposing side.”
  • “Jason Zuckerman is the most focused, thoughtful and aggressive attorneys I have ever known, let alone had the pleasure to have on my side in a highly complex legal case. He brought well-honed legal insights and a rapid pace to our legal preparations. He forcefully brought those preparations to the opposing side, which gave them little choice but to engage with us until a positive settlement was reached. In addition, we found Jason to be extremely responsive at every step, even if it required working past midnight. His character is beyond reproach and his dedication through the entire process was unwavering. If I ever need someone in my legal court again, I won’t hesitate for even a second, before I seek Jason’s support.”

Leading whistleblower law firm Zuckerman Law has written extensively about whistleblower protections and is quoted frequently in the media on this topic. A sample of those blog posts and articles appears below:

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Avatar of Jason Zuckerman

Jason Zuckerman, Principal of Zuckerman Law, litigates whistleblower retaliation, qui tam, wrongful discharge, and other employment-related claims. He is rated 10 out of 10 by Avvo, was recognized by Washingtonian magazine as a “Top Whistleblower Lawyer” in 2015 and selected by his peers to be included in The Best Lawyers in America® and in SuperLawyers.