Third Circuit Affirms Summary Judgment in SOX Whistleblower Case Against Tyco
Author: Marta Moakley, XpertHR Legal Editor
February 9, 2016
The 3rd Circuit Court of Appeals has affirmed the dismissal of a whistleblower retaliation claim against Tyco Electronics Corporation (Tyco) based on the Sarbanes-Oxley Act's anti-retaliation provisions. Aided by a thoroughly documented report from an HR director, the longstanding whistleblower case is winding down after several years of litigation (which yielded an earlier opinion regarding the scope of SOX whistleblower protections).
The plaintiff in the case was employed as an Accounts Payable Manager, overseeing the processing and payment of expense reimbursements for various business units within Tyco. The employee became concerned with the opulence of two corporate events, including one in the Bahamas and one in Virginia.
The employee offered evidence of emails in which he was involved in discussions of approval for the events. He alleged that Tyco "discharged him in retaliation for protected disclosures relating to fraudulent accounting practice, attempted shareholder fraud, and lack of compliance with United States Generally Accepted Accounting Principles." The employee's claims evoked past scandals at Tyco, which had resulted in prison terms for a former CEO and a former CFO in 2005.
Within weeks of his communications regarding the corporate events, the employee:
- Was recognized for his 30 years of service to Tyco;
- Received the maximum possible "Impact Bonus;" and
- Received the highest possible rating at his annual performance review.
Approximately eight months after the employee's activities regarding the corporate events, the employer's HR director received a number of complaints against the employee alleging sexual harassment and other workplace misconduct. After an investigation, the HR director recommended termination of the employee's employment.
The 3rd Circuit cited the "thorough, and thoroughly documented, investigation conducted" by the employer's HR director. Three female employees relayed information concerning multiple unwanted sexual remarks and reported feeling "trapped" when the employee approached them. Three additional employees reported witnessing the sexual remarks, and two other employees stated that they were aware of the employee's engaging in inappropriate relationships with subordinates.
The 3rd Circuit reasoned that the employee:
- Failed to offer any evidence to establish that his protected activity was a contributing factor (i.e., "any factor, which alone or in combination with other factors, tends to affect in any way the outcome of the decision") to his termination; and
- Even if the employee would have met his burden of proof, the employer demonstrated that it would have taken the same disciplinary action in the absence of his activities.
The 3rd Circuit remained unconvinced by the employee's further challenge that the termination was an "unreasonably harsh punishment," explaining in its decision that it is not "our role to second-guess a human resources decision that followed a thorough investigation."
Although this is a unanimous decision by a three-judge panel, the case may not be over: the employee may petition for a hearing before the full panel of the 3rd Circuit.