USDOL/OALJ: Sarbanes-Oxley ("SOX") Whistleblower Digest: Procedure Before and Review By Federal Courts

Sarbanes-Oxley Act (SOX)
Whistleblower Digest
PROCEDURE BEFORE AND REVIEW BY FEDERAL COURTS
[Last Updated Mar. 5, 2015] Table of Contents

Amendment of Complaint
Declaratory Judgment
Discovery
Party Not Named in Administrative Complaint
Judicial Notice of Administrative Record
Jury Trial
Justiciable Issues
Recusal
Standard of Review
Short and Plain Statement of the Case
Statute of Limitations
Summary Judgment
Trial Management

Amendment of Complaint

FEDERAL COURT DECISIONS

SOX AND CFPA RETALIATION CLAIMS WERE NOT IMPERMISSIBLY DUPLICATIVE CLAIMS OF EARLIER DODD-FRANK CLAIM WHERE WAITING PERIODS FOR FILING DE NOVO ACTION HAD NOT YET EXPIRED

In Murray v. UBS Securities, LLC , No. 14-cv-927 (S.D.N.Y. Feb. 24, 2015) (2015 WL 769586; 2015 U.S. Dist. LEXIS 22024), Plaintiff had filed suit in district court alleging termination in violation of Dodd-Frank, and on the same day filed complaints with the USDOL alleging termination in violation of SOX and the CFPA. The latter statutes' anti-retaliation provisions require that complaints first be filed with the Secretary of Labor, but allow complainants to file actions in federal court if no decision has been rendered by DOL within, respectively, 180 and 210 days. Plaintiff suggested that he would seek leave to amend his Dodd-Frank complaint by adding his SOX and CFPA claims once the necessary period had elapsed. Plaintiff did not amend that complaint, but rather filed a claim shortly after the court's opinion compelling arbitration of Plaintiff's Dodd-Frank claim. The new claim was based on Plaintiff's rights to bring SOX and CFPA claims de novo due to the failure of DOL to act. The court held that because the statutory waiting periods barred suit on Plaintiff's SOX and CFPA claims at the time of his earlier Dodd-Frank suit, Plaintiff's current claims were not impermissibly duplicative.

AMENDMENT OF FEDERAL COURT ACTION TO INCLUDE SOX COMPLAINT ONLY AFTER 180 DAY WAITING PERIOD EXPIRED; ALTHOUGH FRCP 15(c) APPLIED LITERALLY WOULD RELATE THE SOX CLAIM BACK TO THE DATE OF THE ORIGINAL COMPLAINT AND DEPRIVE DISTRICT COURT OF JURISDICTION, COURT OF APPEALS CONSTRUED AMENDMENT AS SUPPLEMENTAL PLEADING TO CURE DEFECT

In Feldman v. Law Enforcement Associates Corp. , No. 13-1849 (4th Cir. May 12, 2014) (2014 WL 1876546), the 4th Circuit, prior to consideration of the merits of the appeal, noted an appellate court's special objection to evaluate not only its own subject matter jurisdiction but also that of the lower courts, even where the parties are prepared to concede jurisdiction, and examined whether there had been an exhaustion of administrative remedies in this case. The Plaintiff's initial complaint under the Americans With Disabilities Act had been filed prior to expiration of the required 180-day waiting period for filing an original SOX action in federal district court; but his amended complaint had been filed more than 180 days after he filed his OSHA complaint. The court considered whether, under FRCP 15(c), the amended complaint asserting the SOX claim related back to the date of the original complaint, and if so, had the district court properly exercised jurisdiction? The court found that under FRCP 15(c) the complaint did relate back, at which point the district court did not have jurisdiction over the SOX complaint. The Plaintiff, however, could not have filed the amendment to add the SOX complaint until the 180 period expired. Although the ADA complaint had been filed more than four months before the amendment, the Plaintiff had clearly indicated his intention to make the amendment once the SOX district court action became ripe. The court held that FRCP 15(c) should not be applied so mechanically as to prevent the SOX claim to proceed: "[W]e construe the present complaint as a supplemental pleading under Rule 15(d), thereby curing the defect which otherwise would have deprived the district court of jurisdiction under Rule 15(c)." Slip op. at 18 (citations omitted).

AMENDMENT OF EXISTING DISTRICT COURT ACTION TO INCLUDE ERA WHISTLEBLOWER COMPLAINT; NO PREJUDICE SHOWN DESPITE PLAINTIFF'S DEPOSITION HAVING ALREADY BEEN TAKEN WHERE DEFENDANTS WERE ON NOTICE THAT PLAINTIFF INTENDED TO ADD THE ERA COMPLAINT UNDER 42 U.S.C. § 5851(b)(4) IF DOL DID NOT TIMELY RENDER A FINAL DECISION

Under 42 U.S.C. § 5851(b)(4), if one year has passed from the filing of an employee's ERA whistleblower complaint with OSHA without a final decision from the Secretary of Labor, the employee may file an action in federal district court. In Richardson v. Fluor Corp. , No. 13-cv-01908 (N.D. Cal. Feb. 5, 2014) (2014 WL 492344), the Plaintiff timely filed an ERA whistleblower complaint on October 5, 2012 claiming that he had been discharged for speaking out about the unsafe work performed by a union steward, rather than for the reasons stated by the Defendants related to the Plaintiff's claustrophobia. The Plaintiff later filed a disability discrimination complaint in federal district court alleging that the Defendants failed to accommodate his claustrophobia and improperly terminated his employment in violation of the Americans With Disabilities Act and the California Fair Employment and Housing Act. In his first amended complaint, the Plaintiff did not allege an ERA whistleblower complaint, but stated that he "expressly reserves the right to amend this complaint to seek relief from this court if, after October 5, 2013, no final decision had yet been made on his OSHA complaint." After the year had passed without action on the ERA administrative complaint, the Plaintiff sought leave from the district court to file a second amended complaint to add a claim under the ERA and include certain new allegations. The Defendants opposed the motion.

The court noted that: "Rule 15(a)(2) of the Federal Rules of Civil Procedure provides that leave to amend a complaint should be 'freely given when justice so requires.' Fed. R. Civ. P. 15(a)(2). The Ninth Circuit has repeated counseled that Rule 15 'is to be applied with extreme liberality.' Eminence Capital, LLC v. Aspeon, Inc. , 316 F.3d 1048, 1051 (9th Cir. 2003). Four factors are commonly used to determine the propriety of a motion for leave to amend. These are: bad faith, undue delay, prejudice to the opposing party, and futility of amendment. Ditto v. McCurdy , 510 F.3d 1070, 1079 (9th Cir. 2007) (citing Foman v. Davis , 371 U.S. 178, 182 (1962))." Slip op. at 4.

The Defendants claimed prejudice because they had already deposed the Plaintiff. The court rejected the claim noting that the Defendants were aware of the Plaintiff's intention to add the ERA complaint. The court, however, directed that the Defendants be given a limited opportunity to depose the Plaintiff regarding his new claim in order to ameliorate any prejudice. The Defendants next claimed bad faith, not on the ground that the Plaintiff was seeking a tactical advantage, but rather on the ground that he should have alleged certain facts earlier and that some of the new allegations contradicted his deposition testimony. The court examined the challenged allegations. The court found no bad faith relating to the proposed amendments, but disallowed one set of allegations relating to whether the Defendant-Employer breached the implied covenant of good faith and fair dealing when it did not offer or pay any severance benefits, because those allegations had no bearing on the Plaintiff's existing claims or the ERA claim in particular.

The Defendants also alleged that the Plaintiff had failed to meet and confer in good faith prior to filing the motion to amend, as required by the court's standing order. The court found that both parties had failed to engage in a meaningful discussion regarding the Plaintiff's proposed amended complaint and warned that further transgressions of any order of the court may result in sanctions.

AMENDMENT OF COMPLAINT; DISTRICT COURT GRANTED PLAINTIFF LEAVE TO AMEND COMPLAINT TO ADD SOX WHISTLEBLOWER CLAIMS WHERE SHE HAD PREVIOUSLY FILED A SECTION 1514A COMPLAINT WITH OSHA AND HAD BEEN GRANTED "PERMISSION" TO BRING A DE NOVO ACTION IN DISTRICT COURT

In Newman v. Metro. Life Ins. Co., et al. , No 12-10078-DJC, 2013 WL 951779 (D. Mass Mar. 8, 2013), the Federal District Court dismissed in part Plaintiff's complaint alleging numerous violations of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132, et seq. ; the whistleblower provisions of Sarbanes-Oxley ("SOX"), 18 U.S.C. § 1514A; the whistleblower protections under the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank"); and the Securities Exchange Act of 1934. Plaintiff, a former employee of Lehman Brothers, Inc. ("LBI"), alleged in her complaint that she was fired for reporting LBI's ERISA and SOX violations to the Department of Labor and the Securities and Exchange Commission.

Although the Newman court dismissed several of Plaintiff's claims on other grounds, it granted Plaintiff's motion for leave to amend the complaint to add additional SOX whistleblower claims and denied her motion to amend the complaint to add additional ERISA, Dodd-Frank, and Securities Exchange Act claims. The court granted Plaintiff's motion to add SOX whistleblower claims to her complaint because she previously filed a complaint with the Secretary of Labor pursuant to 18 U.S.C. § 1514A(b)(1)(A) and received permission to file a de novo action in Federal District Court. However, the Court did not allow Plaintiff to add her ERISA, Dodd-Frank, and Securities Exchange Act claims because she failed to provide a proposed amended complaint or articulate the basis for these additional claims.

Declaratory Judgment

FEDERAL COURT DECISIONS

DECLARATORY JUDGMENT DENIED WHERE MATTER WAS STILL PENDING BEFORE DOL

UNDECIDED ISSUE OF RECOUPMENT OF WAGES PAID UNDER REINSTATEMENT ORDER WHERE EMPLOYER SUCCESSFULLY DEFENDS CLAIM OR REINSTATEMENT ORDER

In Competitive Technologies, Inc. v. Bechtel , No. 3:08-CV-1339 (D.Conn. July 6, 2009), the Plaintiff had filed an action seeking a declaratory judgment that it had not violated the whistleblower provision of the SOX in not selecting the Defendant's employer to provide consultancy services. The Plaintiff also sought reimbursement of wages and benefits paid to the Defendant in compliance with a court order enforcing a DOL reinstatement order that had been subsequently vacated on appeal. The court granted the Defendant's motion to dismiss, without prejudice, as to both counts.

The request for declaratory judgment arose out of the Defendant's filing with OSHA of a SOX complaint alleging that the Plaintiff had blacklisted him by not awarding a contract to his new employer in retaliation for his filing of an earlier SOX complaint. Eventually the complaint was re-filed in federal district court, upon which the Plaintiff filed its motion for declaratory judgment. The Defendant then filed a motion to dismiss the second SOX complaint with the ALJ, and the Plaintiff decided not to oppose the Defendant's motion to dismiss the Plaintiff's claim for a declaratory judgment. The Defendant, however, later filed a third SOX complaint with OSHA alleging that he had been coerced into dismissing the second SOX complaint. In response, the Plaintiff filed with the district court a supplemental response to the motion to dismiss the declaratory judgment action, renewing its request for declaratory judgment.

The court found that the Defendant had not sought to revive his SOX complaint before the court. In regard to the third SOX complaint, it was still pending before DOL, and therefore the affirmative relief sought by the Plaintiff would be denied without prejudice.

In regard to the second count, which was based on a state unjust enrichment law, the court found it premature to rule because the question of whether a company that has successfully defended against a SOX retaliatory discharge claim or a related preliminary reinstatement order may recoup wages paid in compliance with that order was still a live issue before DOL. The court, therefore, declined to entangle itself in an already complex legal matter.

Discovery

FEDERAL COURT DECISIONS

DISCOVERY; STANDING OF DEFENDANT TO FILE MOTION TO QUASH SUBPOENA SERVED ON CELL PHONE PROVIDER FOR PRIVATE PHONE RECORDS OF NON-PARTY OFFICER

In Johnson v. U.S. Bancorp , No. C11-cv-02010 (W.D. Wash. Dec. 27, 2012 ) (2012 WL 6726523) (case below ALJ No. 2010-SOX-37), the Plaintiffs served a subpoena on AT&T for the personal cell phone records of a non-party officer of U.S. Bancorp. The Defendants moved to quash. The Plaintiffs argued that the Defendants did not have standing unless they can assert a legitimate privacy interest in the cell phone records. The Defendants argued that the officer used his personal cell phone for U.S. Bank business and therefore the bank has standing to protect its own confidential business information that may be revealed through release of the officer's personal phone calls. The court found that "[a] party has standing to challenge a subpoena issued to third parties where its own interests may be implicated" and that the Defendants have standing in this case. The court limited the subpoena to phone records to the timeframe in which the officer allegedly contacted another bank, finding that the Plaintiffs had not adequately articulated the relevance of phone records outside this timeframe. The Defendants also argued that the production of the phone records would subject its officer -- and his friends, family and business acquaintances -- to embarrassment and harassment, and requested that they be permitted to redact personal telephone numbers. The court denied redaction, but directed the Plaintiffs not to call any of the phone numbers disclosed, and directed the parties to enter into a protective order limiting disclosure to counsel and to persons necessary for and associated with the litigation. Finally, the court did not find persuasive the Defendants' argument that the officer would undoubtedly be deposed, and therefore the Plaintiffs had other means of obtaining the information they sought.

SOX CASE; FRCP 56(d) DISCOVERY REQUESTS

In Xie v. Hospira, Inc. , No. 10 C 6777, 2011 WL 1575530 (N.D. Ill. Apr. 27, 2011) (case below ALJ No. 2010-SOX-32), The plaintiff sued his former employer, contending that it retaliated against him for reporting alleged violations of the Sarbanes-Oxley Act by his immediate supervisor. The defendant moved for summary judgment. In response, the plaintiff, who was proceeding pro se , filed a Rule 56(d) affidavit seeking additional discovery to enable him to respond to the defendant's motion. The defendant opposed the plaintiff's request. The court granted in part and denied in part the defendant's discovery requests.

The defendant contended that summary judgment was proper because: (1) the plaintiff did not engage in protected activity; (2) the plaintiff could not show that his rebuttal was a contributing factor in his discharge; and (3) individually named defendants could not be held personally liable as a matter of law. Accordingly, the plaintiff had to explain how the discovery he sought would allow him to raise a genuine issues of fact with respect to these arguments. The court addressed each discovery request individually and granted part of the requests.

DISCOVERY RULING COMPELING PARTIES TO CONFER REGARDING DISCRETE SEARCH TERMS FOR ESI AND "CONFIDENTIAL" DESIGNATION ON DOCUMENTS

In Trusz v. UBS Realty Investors LLC , No. 3:09 CV 268 (D.Conn Sept. 7, 2010), the plaintiff filed a motion to compel the production of electronically stored information alleging that the defendant's production of over 4 million pages of documents in response to the discovery order was a "document dump." The Court found that the issues raised in the motion largely could have been eliminated had counsel actually conferred with each other about refining search terms. The Court ordered the parties to have an in-person conference "in order to ascertain if there are more discrete search terms, or combinations of search terms, that can applied by defendant, so that the volume of documents produced are substantially less that 1.8 million, with the expectation that as a result, a significantly higher percent of the documents captures by the searches will be relevant." Trusz at 5. Due to the sheer volume of documents, the Court also ordered counsel for the respective parties "to confer further regarding what is the most efficient manner, in terms of costs and time, to review the four million pages produced by defendants to remove the confidential designation." Id . at 9. In the absence of any agreement, the Court ordered the matters to be addressed by a Special Master.

DISCOVERY SANCTIONS; INADVERTENT FAILURE TO DISCLOSE A SINGLE EMAIL

In Van Asdale v. International Game, Technology , No. 3:04-CV-00703-RAM (D.Nev. Dec. 8, 2009), a United States Magistrate Judge found that the Plaintiffs' failure to properly disclose an email in discovery, and their disclosure of that email to a third party in violation of the court's sealing order, did not rise to a level justifying terminating sanctions where the failure to disclose appeared to be inadvertent, the information disclosed to the third party provided little significant information not already available to the public, and only minimal harm had been done to the Defendant's litigation position.

SANCTIONS FOR FAILURE TO TIMELY PRODUCE MEDICAL RECORDS

In Skidmore v. ACI Worldwide, Inc. , No. 8:08CV1 (D.Neb. July 8, 2009), an action for wrongful discharge unde the Sarbanes-Oxley Act, the court affirmed the order of the Magistrate Judge granting the Defendant's motion for reasonable attorneys fees and costs in connection with a motion to compel production of the Plaintiff's medical records. The court found that the Magistrate had acted within his discretion and that the Plaintiff had not shown that the Magistrate's findings were clearly erroneous or contrary to law.

According to the Magistrate's order, Skidmore v. ACI Worldwide, Inc. , No. 8:08-cv-00001 (May 8, 2009), the Defendant had sought the medical records prior to a scheduled deposition of the Plaintiff. After several months of communication, counsel conferred and agreed that the records were relevant and would be produced. However, the Plaintiff sought to obtain the records himself. The records were not produced until several months later, on the very day the Defendant filed a motion to compel. The Defendant filed a motion for costs under FRCP 37(a). The Magistrate noted that under this rule, sanctions were required unless a specific exception existed. The Magistrate found that the Defendant had made good faith attempts to obtain the discovery without court action, and that the Plaintiff's explanation for the delay (busy schedules of both the Plaintiff and his counsel) did not substantially justify the failure to produce. See also Skidmore v. ACI Worldwide, Inc. , No. 8:08-cv-00001 (Apr. 30, 2009) (magistrate's order granting motion to compel discovery).

DEPOSITION OF HIGH-RANKING CORPORATE OFFICIAL; PROTECTIVE ORDER

In Parmer v. Wells Fargo & Co. , No. 07-cv-02061 (D.Colo. May 15, 2009), an U.S. Magistrate Judge granted the Defendant's motion for a protective order to prevent the deposition of the Defendant's General Auditor. In the Findings of Fact, the Magistrate found that Wells Fargo had recently merged with Wachovia, and that the named deponent had been appointed the Chief Auditor and Executive Vice President for the newly merged company, and would be heavily involved in the reorganization and combining of the two separate workforces. The Magistrate cited the FRCP Rule 26(c) standard contained in Thomas v. International Business Machines , 48 F.3d 478 (10th Cir. 1995), regarding the issuance of a protective order in regard to the deposition of a high-level corporate official. The Magistrate wrote:

In that case, the Tenth Circuit relied on the following facts in upholding the protective order: (1) the deposition imposed "severe hardship" on the deponent, (2) the reasons for the deposition were of little relevance to the plaintiff's lawsuit, (3) the deponent lacked personal knowledge about the plaintiff, (4) nothing in the record demonstrated that the defendant failed to make individuals with knowledge available, and (5) the last minute nature of the deposition. Id . at 483-84.

The Magistrate found that in the case before him, while the Plaintiff timely noticed the General Auditor's deposition, the other four factors considered by the Tenth Circuit were applicable. The General Auditor had a very heavy time commitment, frequent travel, and lengthy meetings with the CEO and a member of the Board of Directors, or other peers on the company's operating committees. The Magistrate found that preparing for and attending a deposition would severely impact not only the named deponent's ability to get his job done, but also the schedules of the senior executives and Board members with who he meets regularly. Thus, the deposition would impose a "severe hardship" on both the named deponent and the operation of the Defendant's business.

The Magistrate, upon review of the Plaintiff's complaint, found that her SOX complaint was not related to the subject matter on which the deposition was noticed (whether the audit committee acted appropriately), and that neither the named deponent nor any member of the audit committee were listed among the SOX retaliators. The Magistrate further found that even if the topics for deposition were relevant to the complaint, there were other employees who had first-hand knowledge of the issues. The Magistrate found that the named deponent did not have personal knowledge of the key issues on which the Plaintiff sought to depose him on, and that the Defendant had offered to make available for deposition individuals who did have first-hand knowledge about those issues. The Magistrate found that the Plaintiff should have first deposed those individuals.

STAY ON DISCOVERY PENDING RESOLUTION OF POTENTIALLY DISPOSITIVE MOTION

In Skidmore v. ACI Worldwide, Inc. , No. 8:08-CV-00001 (D.Neb. Sept. 9, 2008) (case below 2007-SOX-77), the court granted a stay of discovery pending resolution of the defendant's motion for judgment on the pleading because a short stay would not prejudice the plaintiff, and because both the parties and the court could conserve resources in regard to an outstanding discovery dispute pending the outcome of the potentially dispositive motion for judgment on the pleading.

Party Not Named in Administrative Complaint

FEDERAL COURT DECISIONS

EXHAUSTION OF ADMINISTRATIVE REMEDIES; WHERE OSHA COMPLAINT PUT INDIVIDUAL DEFENDANTS ON NOTICE THAT IT WAS BEING ALLEGED THAT THEY HAD VIOLATED SOX, EXHAUSTION REQUIREMENT WAS MET EVEN THOUGH THE OSHA COMPLAINT DID NOT CLEARLY NAME THE INDIVIDUALS AS RESPONDENTS IN THE ADMINISTRATIVE PROCEEDING

In Jones v. Southpeak Interactive Corp. of Delaware , No. 13-2399 (4th Cir. Jan. 26, 2015) (2015 WL 309626; 2015 U.S. App. LEXIS 1114), the Appellee's original SOX complaint filed with OSHA, Southpeak Interactive was named as the respondent. The complaint mentioned the company's chief executive and the complaint's chairman as persons who were alleged to have violated the Act, but did not specifically identify them as respondents. After OSHA had not issued a final decision within 180 days of the complaint, and the Appellee filed a complaint in federal district court, the chief executive and the chairman were named as defendants. The Appellants argued that the Appellee had not exhausted administrative remedies in regard to the named individuals. The Fourth Circuit held that the administrative complaint satisfied the exhaustion requirement. The record did not suggest that the Appellee was trying to circumvent the SOX exhaustion requirement. The complaint filed with OSHA was substantially similar to the complaint filed in district court, and the alleged harm of a retaliatory discharge was identical. The OSHA complaint plainly identified the individuals as persons who allegedly violated the Act who the complaint was being filed against. The court found that nothing more precise was required for the form of the OSHA complaint, and that OSHA's subsequent treatment of the complaint could not take away the Appellee's opportunity to seek recourse. The record showed no doubt that the individuals were well aware of the allegations against them and that it had been alleged that they personally had violated the Act. The court found that it would not have been surprising, therefore, when the Appellee named them in the instant civil action.

INFORMAL PLEADING RULE; SUFFICIENT INFORMATION IN HEADING AND BODY OF ADMINISTRATIVE COMPLAINT TO FIND THAT PARENT COMPANY WAS NAMED AS A DEFENDANT

In Jones v. Home Federal Bank , No. 1:09-cv-003366-CWD (Jan. 15, 2010) (case below 2009-SOX-32), the parent company Defendant moved to be dismissed from the Plaintiff's federal court action because it had not been named as a Defendant in the administrative complaint filed with OSHA. The Chief Magistrate Judge, although acknowledging authority requiring specific naming of defendants in the OSHA complaint to put OSHA on notice of which parties are to be investigated, denied the motion because the administrative complaint had identified the Complainant's employer as the subsidiary, and identified the parent company with an asterisk and note to the heading of the complaint. The magistrate judge found this sufficient under the informal complaint requirements. The judge found other information within the heading of the administrative complaint that supported this conclusion, such as phone numbers and addresses. The judge also found that the parent had received notice of the administrative action and its potential liability in a letter from OSHA. The body of the complaint also specifically alleged that the parent company controlled employment and other decisions of the subsidiary and that the companies were so interrelated as to constitute one entity.

NAMING OF DEFENDANTS BEFORE DISTRICT COURT NOT NAMED IN ADMINISTRATIVE PROCEEDINGS

In Levi v Anheuser-Busch Co., Inc. , No. 08-00398 (W.D.Mo. Oct. 27, 2008) (case below ARB Nos. 06-102, 07-020, 08-006, ALJ Nos., 2006-SOX-37 and 108, 2007-SOX-55), the district court declined to permit the Plaintiff to proceed in a SOX claim against Defendants who were not named in the prior administrative proceedings. The court also found that proceeding against such Defendants would be barred by SOX's 90 day limitations period.

EXHAUSTION OF ADMINISTRATIVE REMEDIES; ALLEGED FAILURE TO PROPERLY NAME INDIVIDUAL DEFENDANT IN COMPLAINT TO OSHA

In Morrison v. MacDermid, Inc. , No. 07-cv-01535 (D.Colo. Sept. 16, 2008), a member of the Defendant's board of directors alleged that the Plaintiff did not exhaust the administrative remedies required by the Act prior to filing his complaint with the federal courts because the Complainant did not properly name him in the complaint to the DOL. The court, however, found that the Plaintiff's pro se complaint to OSHA had put the director on sufficient notice that he might be named in the Plaintiff's SOX lawsuit.

MOTION TO AMEND COMPLAINT TO ADD DEFENDANT; AMENDMENT MUST SUPPORT CAUSE OF ACTION; LIMITATIONS PERIOD IS NOT 18O DAY PERIOD FOR FILING OF COMPLAINT WITH DOL, BUT LIMITATIONS PERIOD FOR FRAUD ACTIONS

In Ellis v. Commscope, Inc. of North Carolina , No. 3:07-cv-01938-G (N.D.Tx. Sept. 11, 2008) (case below 2007- SOX-85), the Complainant moved before the district court to amend his complaint to add the corporate parent company as a defendant. That company opposed the motion on several grounds. First, the company argued that the proposed amendment failed to state a claim upon which relief could be granted because he allegedly did not plead scienter, which is a necessary element of a SOX whistleblower claim alleging fraud on shareholders. The court found the Plaintiff's complaint, however, was not merely a formulaic recitation of the elements of a cause of action. Second, the company argued that the proposed amendment failed to state a claim upon which relief could be granted because it never employed the Plaintiff, did not handle day-to-day operations and therefore could not have been involved in management or employment relations of the originally named defendant. The court found, however, that the facts pled showed that officials from the parent company terminated the Plaintiff and that the parent and the Plaintiff had an employment agreement. Third, the company argued that the Plaintiff's effort to name it as a defendant was untimely, coming about eight months after he gave notice that he would be removing his complaint from the DOL to federal court. The court, however, found that SOX does not require a plaintiff to file a district court action "promptly" after giving notice the ALJ or the ARB. The court applied the limitations period for fraud actions under 28 U.S.C. § 1658(b)(1) and (2), which requires filing of the action no later than the earlier of (1) two years after the discovery of he facts constituting the claim, or (2) five years after the violation.

FEDERAL DISTRICT COURT JURISDICTION; RESPONDENT NOT NAMED IN THE ADMINISTRATIVE COMPLAINT

In Hanna v. WCI Communities, Inc. , No. 04-80596-CIV. (S.D. Fla. Nov. 18, 2004), the district court dismissed the action against an individual who had been mentioned but not listed as a named Respondent. in the original administrative complaint filed with DOL, thereby depriving DOL of the opportunity to issue a final decision within 180 days of the filing of the administrative complaint. The court rejected the Plaintiff's assertion that his claim should not be dismissed against this individual because he had been identified in the original DOL complaint as having a role in the Plaintiff's termination. The court wrote:

Mr. Hanna's argument misunderstands the purpose of filing an administrative complaint under the Sarbanes-Oxley Act's procedural framework. ...[T]he Act requires an aggrieved employee to file an administrative complaint to "afford OSHA the opportunity to resolve the allegations administratively." Willis v. VIE Financial Group, Inc. , No. 04-435, 2004 U.S. Dist. LEXIS 15753 (E.D. PA. Aug. 6, 2004) (citing 18 U.S.C. § 1514A(b)(1)(A); 29 C.F.R. § 1980.103(e)). Mr. Hanna's failure to name Mr. Eure in his administrative complaint failed to afford OSHA the opportunity to resolve Mr. Hanna's allegations through the administrative process. Even if the court assumed that Mr. Eure was placed on notice that he had allegedly violated the law, that notice has no consequence as to whether OSHA was placed on notice that it was required to investigate Mr. Eure's actions in this case.

Judicial Notice of Administrative Record

FEDERAL COURT DECISIONS

JUDICIAL NOTICE; FEDERAL COURT CAN TAKE JUDICIAL NOTICE OF DOL ADMINISTRATIVE RECORD

A federal district court can take judicial notice of the DOL administrative record in a SOX whistleblower proceeding. McClendon v. Hewlett-Packard Co. , 2004 WL 1421395 (D.Idaho June 9, 2005) (case below ALJ No. 2005-SOX-3).

Jury Trial

FEDERAL COURT DECISIONS

NO RIGHT TO JURY TRIALS ON SOX CLAIMS

In Van Asdale v. International Game Technology , No. 3:04-CV-00703-RAM (D. Nev. Apr. 13, 2010), the plaintiffs were former corporate counsel for the defendant who sued the defendant for their dismissals which they allege were done in retaliation for their protected activity of reporting suspected IGT shareholder fraud to federal authorities. Before the court was plaintiffs' Motion for Certification of the Nevada Supreme Court and/or for Reconsideration, which the court denied. On plaintiff's Motion to Retax Costs and Fees, the court granted in part and denied in part.

The court granted the defendant's Motion to Strike Jury Demand. At issue was whether plaintiff's were entitled to a jury trial on their § 1514A claims. The defendant argued that nothing in the language of SOX provides a right to a jury or indicates any intent by Congress to create a right to a jury trial for a SOX claim. In contrast, the plaintiffs contended that the statutory text of SOX provides a right to jury trial. The plaintiffs primarily argued that the statutory language "all relief necessary to make the employee whole" supports classifying the damages under SOX as "restitutionary," which makes them legal rather than equitable in nature. The Court rejected this argument and concluded that the statutory text of § 1514A does not imply a statutory jury right. The court cited to two cases that have specifically addressed this SOX statutory language and concluded that the intended purpose of such remedies are equitable in nature and does not imply a statutory jury right. See Walton v. Nova Info. Sys ., 514 F. Supp.2d 1031, 1034 (E.D. Tenn. 2007) and Schmidt v. Levi Strauss & Co ., 621 F.Supp.2d 796, 804 (N.D.Cal. 2008).

NO RIGHT TO JURY TRIAL ON SOX CLAIMS

In Skidmore v. ACI Worldwide, Inc ., No. 8:08CV01 (D.Neb. July 20, 2010), the District Court granted the defendant's motion to strike, pursuant to Fed.R.Civ.P. 39(a)(2), the plaintiff's demand for a jury trial on a SOX claim.

NO RIGHT TO JURY TRIAL IN SOX WHISTLEBLOWER CASE

In Schmidt v. Levi Strauss & Co. , No. 5:05-cv-01026 (N.D.Cal. Mar. 28, 2008), the court granted the Defendant's motion to strike the Plaintiff's jury demand in a SOX whistleblower case. The court struck the demand without prejudice to renew if later legal authority supports such a demand. However, the court reviewed the sparse caselaw from other district courts on jury demands in SOX cases, reviewed the applicable legislative history, and analyzed the matter under the Seventh Amendment, and concluded that such a right did not exist.

JURY TRIAL; WHETHER A RIGHT TO A TRIAL BY JURY IS FOUND IN THE SOX WHISTLEBLOWER PROVISION

In McClendon v. Hewlett-Packard Co. , 2004 WL 1421395 (D.Idaho June 9, 2005) (case below ALJ No. 2005-SOX-3), the Defendant moved to strike the Plaintiff's demand for a jury trial in regard to an ERISA employee protection claim. The Plaintiff had also filed a SOX employee protection claim, and the Defendant's motion was based on the assumption that the court had granted a motion to dismiss or summarily adjudicate the SOX claim. The court, however, had denied summary adjudication of the SOX claim, and therefore denied the motion to strike the demand for jury trial.

[Editor's note: implicit in this ruling is the assumption that a jury trial is available in a SOX claim; however, the court did not specifically address this question].

JURY TRIAL; WHETHER A RIGHT TO A TRIAL BY JURY IS FOUND IN THE SOX WHISTLEBLOWER PROVISION

In Murray v. TXU Corp. , 2005-WL-1356444 (N.D.Tex. June 7, 2005), the district court struck the Plaintiff's motion for a jury trial on his SOX employee protection claim. The Defendant moved to strike the demand for a jury trial on the ground that the SOX only provides for equitable relief. The court rejected the Plaintiff's contention that the SOX's reference to an "action at law" implied a right to a jury trial. The court also rejected the Plaintiff's contention that he was entitled to a jury trial because he seeks legal claims of exemplary damages and reputational injury, the court finding that neither of those types of relief are available under the SOX whistleblower provision. Finally, the court also rejected the Plaintiff's contention that the legislative history supported a right to a jury trial. The court, however, stated that it would consider use of an advisory jury if requested by the parties.

JURY TRIAL; SCANT AUTHORITY ON WHETHER JURY TRIAL MAY BE DEMANDED ON A SOX WHISTLEBLOWER CLAIM

In Fraser v. Fiduciary Trust Co. , 417 F.Supp.2d 310 (S.D.N.Y. 2006), the court denied the Defendant's motion to strike a jury trial demand for a SOX whistleblower claim without prejudice to bring the motion again prior to trial. The court observed that SOX was silent as to whether a litigant could demand a jury trial, and that it had only found one published decision which considered that issue, Murray v. TXU Corp. , 03 Civ. 0888 (N.D.Tex. June 7, 2005). In Murray the court struck the jury demand. The Fraser court deferred a dispositive ruling on the issue based on the possibility that other courts will have considered the issue if at a later junction the motion was again filed.

Justiciable Issues

FEDERAL COURT DECISIONS

COURT OF APPEALS HELD THAT THE SECRETARY OF LABOR'S DECISION TO INVESTIGATE AND PROSECUTE A COMPLAINT UNDER SOX IS NOT SUBJECT TO ALJ OR JUDICIAL REVIEW
In Fleszar v. U.S. Dept. of Labor , No. 09-2423 (7th Cir. Mar. 23, 2010) (cases below 2007-SOX-30; 2008-SOX-16), the Court of Appeals held that the Administrative Review Board properly ruled that a former employee could not pursue a claim that her former employer, the American Medical Association, fired her for whistleblowing activity in violation of SOX. The Department of Labor declined to investigate the former employee's claim against her employer because the employer is a nonprofit membership organization that does not issue stocks and, therefore, is not covered by SOX. The administrative law judge agreed as did the ARB in making the agency's final decision.

On appeal the former employee argued that the ALJ should have ordered the Secretary of Labor to conduct an investigation; however, the Court of Appeals disagreed holding that the decision of the Secretary of Labor as to whether to investigate and prosecute a complaint concerning a violation of the SOX whistleblower-protection provision is not subject to review by an ALJ, nor is it open to judicial review. Prosecutorial decisions are committed to agency discretion. See 20 C.F.R. § 1980.109(a); 5 U.S.C. § 701(a)(2)

NO SUBJECT MATTER JURISDICTION IN FEDERAL COURT WHERE PLAINTIFF FAILED TO FOLLOW THE ADMINISTRATIVE PROCEDURES UNDER SOX

In Nieman v. Nationwide Mutual Insurance Co. , No. 09-3304 (C.D. Ill. Apr. 8, 2010), an employee brought an action in state court against his employer, its affiliates, and certain management personnel, alleging that he "suffered various adverse employment actions in violation of common law and constitutional protections against retaliation and/or discrimination." After removal to federal court, the defendants filed a motion to dismiss in part. The District Court held that it did not have jurisdiction over a SOX whistleblower claim where the employee did not follow the required administrative procedures. In this case, Plaintiff admitted that he did not follow the administrative procedures proscribed by SOX. The Court reasoned that it did not have subject matter jurisdiction over his claims because following the administrative procedures prescribed by § 1514A is necessary to give a federal court jurisdiction over the claim.

Recusal

FEDERAL COURT DECISIONS

NO PROTECTED ACTIVITY OR CAUSATION UNDER SOX; NO JUDGE ERROR IN FAILING TO RECUSE
In Fraser v. Fiduciary Trust Co. Int'l , No. 09-4188-cv (2d Cir. Oct. 14, 2010)(unpublished)(case below 2003-SOX-28), the pro se plaintiff appealed from an award of summary judgment in favor of the defendants on his claim of retaliatory discharge for protected whistleblowing activity in violation of § 1514A of SOX Act. The Court of Appeals held that summary judgment was appropriately entered primarily because the plaintiff failed to show that he engaged in protected activity and that the alleged protected activity was a pretext for retaliation. The Court found that the plaintiff's retaliation claims failed as a matter of law under the McDonnel Douglas Corp. v. Green , 411 U.S. 792, 802-05 (1973) burden shifting framework and the SOX burden shifting framework. S ee 49 U.S.C. § 42121(b)(2)(B); see also 18 U.S.C. § 1514A(b)(2)(C). (Some sister circuits have found that the frameworks are not identical).

Fraser submitted that the district judge erred in failing to recuse himself after learning that he and the defendant were both members of the Lower Manhattan Development Corporation. The Court of Appeals review is limited to plain error, see United States v. Carloton , 534 F.3d 97, 100(2d. Cir. 2008), which the court did not identify in this case. The district judge ceased his work with the Corp in 2005 and had no recollection of ever meeting the defendant.

Standard of Review

FEDERAL COURT DECISIONS

COURT OF APPEALS APPLIES "CAPRICIOUS AND ARBITRARY" STANDARD TO REVIEW AND UPHOLDS ARB DECISION UNDER SOX
In Klopfenstein v. Admin. Review Bd . , 10-60144 (5th Cir. Nov. 23, 2010)(per curiam)(unpublished)(case below ARB Nos. 07-021, -022, ALJ No. 2004-SOX-11), a former employee appealed an ARB decision, 2009 WL 6546648, which affirmed an ALJ's decision that his termination did not violate the whistleblower protection provisions of Sarbanes-Oxley. The Court of Appeals reviewed the ALJ's conclusions under the "highly deferential arbitrary and capricious standard, which focuses on whether any agency articulated a rational connection between the facts and the decision made.'" Klopfenstein at. 2. The Court of Appeals held that there was substantial evidence to support the ALJ's findings that the decision to terminate the employee was not the result of an employee purported whistleblowing regarding discrepancies with inventory balance sheets. The Court of Appeals, therefore, concluded that the ARB's decision was not arbitrary or capricious and denied the employee's petition for review.

Short and Plain Statement of the Case

FEDERAL COURT DECISIONS

COURT'S SUA SPONTE REVIEW OF COMPLAINT FILED WITH REQUEST TO PROCEED IN FORMA PAUPERIS
In Brantley v. Title First Titling Agency , No. 1:11-cv-864 (S.D.Ohio Feb. 2, 2012) (2012 WL 349180), adopted Brantley v. Title First Titling Agency , No. 11-cv-864 (S.D.Ohio Apr. 10, 2012), a magistrate judge sua sponte reviewed the plaintiffs' complaint to determine, inter alia, whether the complaint should be dismissed because it was frivolous, malicious, failed to state a claim upon which relief may be granted, or sought monetary relief from a defendant who is immune from such relief, where the pro se plaintiffs sought to proceed in forma pauperis . The magistrate observed that the pro se complaint was difficult to decipher, but found that it asserted, inter alia, a SOX whistleblower complaint against their own attorney for allegedly unethical conduct in the pursuit of a federal action for predatory lending and treachery by the Bank of America. The magistrate also interpreted the complaint as seeking removal of a state action to federal court on the basis that the state court judge who ruled on the SOX action failed to uphold the integrity and independence of the judiciary, and that their own attorney failed to zealously represent them. The magistrate found that removal of the action was the defendant's prerogative, not the plaintiff's. The magistrate recommended that the complaint be dismissed because the plaintiffs had failed to state a claim upon which relief may be granted for a violation of the SOX whistleblower statute, 18 U.S.C. 1514A, because the complaint failed to allege that the plaintiffs were employees of a publically-traded company, that they engaged in protected activity, or that they suffered any adverse action.

PLEADING REQUIREMENTS; DISORGANIZED AND INDEFINITE COMPLAINT; COURT WILL NOT WASTE ITS TIME SEARCHING FOR THE LEGAL THEORY OF THE COMPLAINANT

In Stone v. Duke Energy Corp. , No. 3:03-CV-256 (W.D.N.C. Feb. 11, 2004), the court dismissed the Plaintiff's Sarbanes-Oxley Act whistleblower complaint for failure to contain "a short and plain statement of the claim" as required by FRCP 8 and failure to present claims in separate counts for clear presentation of the matters set forth as required by FRCP 10. The court wrote that it would "not waste its time searching through Plaintiff's disorganized and indefinite Complaint for a prima facie case. See, e.g., Cass v. Richard Joshua Tobacco Co., Inc., 1998-WL-834856, *2 (M.D.N.C. 1998) ('The Complaint . . . is a rambling fount of senseless writing . . . . [which] lacks sufficient factual allegations for the court to wade through the ramblings in search of a possible legal theory.')."

ADEQUACY OF COMPLAINT UNDER FRCP 8(a); INCOMPREHENSIBLE AND VERBOSE COMPLAINT

In Powers v. NWA, Inc. , No. 05-2468 (W.D.Tenn. Feb. 23, 2006), the district court required the Plaintiff to file an amended complaint where the original complaint failed to comply with FRCP 8(a)(1) (short and plain statement of grounds for jurisdiction) and FRCP 8(a)(2) (short and plain statement of the claim showing that the pleader is entitled to relief). Although it was apparent that the complaint was being brought under the whistleblower provision of the SOX, the complaint failed to identify which of 45 named parties were the Plaintiff's employer or company representative who allegedly retaliated against the Plaintiff for whistleblowing activities, the complaint asserted many other counts apparently not arising under the SOX, it was unclear whether any of the other counts provided a basis for federal subject matter jurisdiction, and it was unclear which administrative proceedings discussed in the complaint were at issue before the district court. The court characterized the complaint as incomprehensible, and found the pleading to be so verbose that it could not clearly identify the claims of the pleader nor adjudicate the claims understandingly on the merits. The court provided specific instructions on what, as a minimum, would be required in the amended complaint.

Statute of Limitations

FEDERAL COURT DECISIONS

SOX RETALIATORY DISCHARGE SUIT IN FEDERAL COURT IS GOVERNED BY FOUR YEAR STATUTE OF LIMITATIONS UNDER 28 U.S.C. § 1658(a), AND NOT THE TWO YEAR STATUTE OF LIMITATIONS UNDER 28 U.S.C. § 1658(b)(1)

In Jones v. Southpeak Interactive Corp. of Delaware , No. 13-2399 (4th Cir. Jan. 26, 2015) (2015 WL 309626; 2015 U.S. App. LEXIS 1114), after more than 180 days passed without a final order from OSHA on her SOX complaint, the Appellee notified OSHA that she was electing to file a federal lawsuit. The Appellee waited nearly two years to file the federal suit, which was a little less than three years after her termination from employment. The district court held that the SOX claim was timely because it was commenced within the four-year statute of limitations under 28 U.S.C. § 1658(a). On appeal, the Appellants argued that the two-year limitations period set forth in § 1658(b)(1) applied. The Fourth Circuit rejected the Appellants' argument, finding that the SOX complaint alleged, not fraud as covered by § 1658(b), but retaliatory discharge. In a SOX retaliatory discharge case, the whistleblower is not required to prove that the employer's conduct was, in fact, a legally actionable fraud. The court recognized that the Appellee's complaint approximated the basic elements of a section 10(b) securities fraud claim, but noted that the retaliation complainant is not under an obligation to establish scienter. The court therefore held that Section 1658(a) controls, and that because the Appellee brought her suit within that Section 1658(a)'s four-year window, her claim was timely.

Summary Judgment

FEDERAL COURT DECISIONS

SUMMARY JUDGMENT; PLAINTIFF PRESENTED SUFFICIENT EVIDENCE TO RAISE GENUINE ISSUE OF MATERIAL FACT

In McEuen v. Riverview Bancorp, Inc. , No. 12-cv-5997 (W.D.Wash. Dec. 19, 2013), the Defendant moved for summary judgment on the Plaintiff's SOX Section 806 complaint on the ground that the Plaintiff had not established a prima face case that she was engaged in protected activity, or that such conduct was a contributing factor in her termination from employment. The Defendant also argued that clear and convincing evidence showed that the Plaintiff would have been terminated for violation of bank policy (using an external hard drive at work) regardless of any alleged protected activity. The court denied the motion. The court noted that the Ninth Circuit had adopted the "definitively and specifically" standard for protected activity, but that the Third Circuit had recognized and given deference to the ARB's decision in Sylvester v. Parexel Int'l LLC , ARB No. 07-123, 2011 WL 216854 (ARB 2011), in which the ARB had rejected the "definitive and specific" standard. The court, however, did not find it necessary to consider whether the Ninth Circuit might adopt the Sylvester rule, as the Plaintiff presented sufficient evidence of protected activity to survive summary judgment. Moreover, the Plaintiff presented sufficient evidence of temporal proximity and facts suggesting that she had permission to use an external hard drive at work, to allow a fact finding to reasonably determine that the asserted policy for termination was pretext for unlawful retaliation for the Plaintiff's reporting of bank fraud.

SUMMARY JUDGMENT STANDARD - DEFENDANT'S BURDEN IS HIGHER IN SOX CASES - PLAINTIFF NEED ONLY DEMONSTRATE A PRIMA FACIE CASE

In Leshinksy v. Telvent GIT, S.A. , No. 10-cv-4511, 2013 WL 1811877 (S.D.N.Y. May 1, 2013), the court reviewed the framework for reviewing a summary judgment motion in a SOX case. The court recited the general framework for deciding a FRCP 56 motion, but noted that "[i]t is now well accepted that courts should construe Section 806 broadly." Slip op. at 10 (citation omitted). The court noted the burden shifting framework for Section 806 cases, and held:

At the summary judgment stage, a plaintiff need only demonstrate that a rational factfinder could determine that Plaintiff has made his prima facie case. Assuming a plaintiff does so, summary judgment is appropriate only when, construing all of the facts in the employee's favor, there is no genuine dispute that the record clearly and convincingly demonstrates that the adverse action would have been taken in the absence of the protected behavior. Thus, the defendant's burden under Section 806 is notably more than under other federal employee protection statutes, thereby making summary judgment against plaintiffs in Sarbanes-Oxley retaliation cases a more difficult proposition.

Leshinksy , supra, slip op. at 10-11 (citation omitted).

SUMMARY JUDGMENT; SHAM AFFIDAVIT RULE MUST BE APPLIED WITH CAUTION

In Van Asdale v. International Game Technology , No. 07-16597 (9th Cir. Aug. 13, 2009), the Plaintiffs-Appellants were in-house intellectual property attorneys who in a meeting with a Vice President of Product Development discussed whether fraud on the Patent Office might constitute a defense in any future litigation relating to due diligence in a merger negotiation. The district court found that this was not protected activity under SOX, and granted summary judgment. The court of appeals, however, found that the evidence was not unconverted, and that an affidavit of one of the Plaintiffs raised an issue of fact on whether the discussion also concerned the possibility that shareholders had been harmed by an intentional withholding of information prior to a merger about potential problems with the validity of a patent. The district court had disregarded the Plaintiff's affidavit based on a finding that it contradicted his deposition testimony.

The court of appeals acknowledged the general rule that a party cannot create an issue of fact by an affidavit contradicting his prior deposition testimony - and that the "sham affidavit" rule is necessary to maintain the principle that summary judgment is designed to secure the just, speedy and inexpensive determination of actions. Nonetheless, the court cautioned that the rule should not be used when deciding summary judgment motions to make credibility determinations or weigh conflicting evidence, and that aggressive invocation of the rule could ensnare litigants who had simply been confused in their deposition testimony. Thus, the Ninth Circuit has fashioned two limitations: the sham affidavit rule requires a finding of actual sham; and the inconsistency must be clear and unambiguous. In the instant case, neither of the two conditions had been satisfied. The line of questioning in the deposition had provided the Plaintiff the opportunity to provide only cursory testimony regarding the issue, and his subsequent declaration was a legitimate attempt to explain or clarify. The court also found indicia in the testimony suggesting that it was not inconsistent. While this was ultimately a question for a jury, the court found that the Plaintiff's declaration was sufficient to raise a genuine issue of material fact regarding whether the Plaintiffs' collectively engaged in protected activity under SOX.

SUMMARY JUDGMENT; "SHAM AFFIDAVIT DOCTRINE"

In Blagrave v. Nutrition Management Services Co. , No. 05-6790 (E.D.Pa. July 8, 2008) (case below 2005-SOX-75), the court granted partial summary judgment in favor of the Defendant in regard to alleged protected activity under SOX that was not supported by any evidence of record other than the Plaintiff's own declaration filed in opposition to the motion for summary judgement. The court found the declaration incompetent under the "sham affidavit doctrine." The court found that the declaration was offered solely to defeat the summary judgment motion, and that the Plaintiff had failed to offer any explanation as to why the information set forth in his declaration was not disclosed in his answers to detailed questions asked of him at two depositions or in response to interrogatories. The court also granted summary judgment in regard to alleged protected activity on which the Plaintiff had failed to cite any evidence that he complained to his superior about those matters. The court, however, denied summary judgment in regard to matters in which a genuine issue of material fact existed as whether the Plaintiff could make out a prima facie case.

SUMMARY JUDGMENT; SHAM AFFIDAVIT RULE AS PREVENTING CREATION OF GENUINE ISSUE OF MATERIAL FACT

In Van Asdale v. International Game, Technology , No. 3:04-CV-00703-RAM (D.Nev. June 13, 2007), the Plaintiffs, who were in-house intellectual property attorneys for the Respondent, alleged that they met with the Defendant's General Counsel to express their views on the invalidity of a patent held by a company which the Defendant was considering acquiring by merger, and to express concern that fraud had occurred. The Magistrate Judge granted summary judgment against the Plaintiffs on this alleged act of protected activity because the deposition testimony of one of the Plaintiffs indicated that the potential for "fraud" related to fraud against the patent office rather than fraud against shareholders. Citing the "sham" affidavit rule, the Magistrate refused to permit the Plaintiffs to create a genuine issue of material fact by submitting a declaration stating that the Plaintiff whose deposition testimony had been cited had referenced a need to investigate for fraud on the shareholders. See also Van Asdale v. International Game, Technology , No. 3:04-CV-00703-RAM (D.Nev. Aug. 10, 2007) (Order [denying reconsideration]).

Trial Management

FEDERAL COURT DECISIONS

TRIAL JUDGE'S DISCRETION IN MANAGING TRIAL; ORDER LIMITING TIME FOR PRESENTATION OF EACH SIDE'S CASE

In Thanedar v. Time Warner, Inc. , No. 08-20734 (5th Cir. Nov. 3, 2009) (unpublished) (ALJ No. 2006-SOX-79), the appellant objected on appeal that the district court's order limiting the appellees to 8 hours and the appellant to 17 hours at trial deprived him of due process and a fair trial. Because the appellant did not raise an objection before the trial judge, the court of appeals applied a plain error standard of review. The court wrote:

"[A] district judge has broad discretion in managing his docket, including trial procedure and the conduct of trial." Sims v. ANR Freight Sys., Inc. , 77 F.3d 846, 849 (5th Cir. 1996). In setting the amount of time for trial, the district court considered each party's estimate of the time needed. The court continually reminded both parties of the time used and the time remaining for presentation of each side's case. The court also offered suggestions to Thanedar on how to focus his questioning of witnesses so as to preserve his time. We find no evidence in the record that the order was issued or enforced in a manner that deprived Thanedar of due process.

PRECLUSION ORDER BASED ON WHISTEBLOWER'S VEXATIOUS LITIGATION

In Thanedar v. Time Warner, Inc. , No. 08-20734 (5th Cir. Nov. 3, 2009) (unpublished) (ALJ No. 2006-SOX-79), the appellant argued that the district court's preclusion order - which prevented him from filing any motions, actions, or complaints in that district court that directly or tangentially raised an issue adjudicated in the instant case without first obtaining leave of the court - violated his due process rights and was not based on any evidence of record. The Fifth Circuit noted:

It is well-settled that a plaintiff's pro se status does not give him a "license to harass others, clog the judicial machinery with meritless litigation, and abuse already overloaded court dockets." Farguson v. MBank Houston, N.A. , 808 F.2d 358, 359 (5th Cir. 1986). There is no constitutional right to prosecute frivolous actions, and preclusion orders are appropriate tools for deterring vexatious filings. Kaminetzky v. Frost Nat'l Bank of Houston , 881 F. Supp. 276, 277-78 (S.D. Tex. 1995). When issuing such an order, however, a court must ensure that it is "tailored to protect the courts and innocent parties, while preserving the legitimate rights of litigants." Farguson , 808 F.2d at 360.

The court found that in the instant case there had been an ample basis for the preclusion order based on the appellant's behavior in a prior Title VII lawsuit and in his litigation tactics in the instant SOX claim, and that the district court's order had been narrowly tailored.