Whistleblower Digest
DAMAGES AND OTHER REMEDIES
SPECIAL DAMAGES
[Last Updated March 5, 2015]
FEDERAL COURT DECISIONS
INJUNCTIVE AND DECLARATORY RELIEF IS NOT AVAILABLE UNDER DODD-FRANK ACT, SECTION 78u-6(h), BUT IS AVAILABLE UNDER SARBANES-OXLEY ACT, SECTION 1514A
In Kshetrapal v. Dish Network, LLC , No. 14-cv-3527 (S.D.N.Y. Feb. 27, 2015) (2015 WL 857911; 2015 U.S. Dist. LEXIS 24573) (case below 2014-SOX-23), the Plaintiff conceded that his Dodd-Frank Act, 15 U.S.C. § 78u-6(h) claim for compensatory damages could not be maintained because he could not recover for damages for conduct occuring before the effective date of the Dodd-Frank Act. The Plaintiff, however, argued that he could maintain the complaint to seek injunctive and declaratory relief with respect to continuing harassment. The court found that injunctive and declaratory relief is not available under Section 78u-6(h). The court, however, noted that the Plaintiff was not without remedy because such relief is available under the Sarbanes-Oxley Act provision at 18 U.S.C. § 1514A.
DAMAGES FOR EMOTIONAL DISTRESS ARE AVAILABLE UNDER THE SOX WHISTLEBLOWER PROVISION; DISTRICT COURT HAS DISCRETION TO REDUCE JURY'S AWARD BASED ON COMPARISON TO AWARDS IN COMPARABLE CASES
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 Appellants argued that damages for emotional distress are not permissible under the whistleblower provisions of the Sarbanes-Oxley Act. The Fourth Circuit rejected this argument because 18 U.S.C. § 1514A(c)(1) expressly entitles a prevailing employee to "all relief necessary to make [her] whole." In this regard, the Fourth Circuit joined the Fifth Circuit and the Tenth Circuit in holding that emotional distress damages are available under the statute. Halliburton, Inc. v. Admin. Review Bd. , 771 F.3d 254, 266 (5th Cir. 2014); Lockheed Martin Corp. v. Admin. Review Bd. , 717 F.3d 1121, 1138 (10th Cir. 2013). The court also afforded deference to the Administrative Review Board's history of upholding non-pecuniary compensatory damages in Sarbanes-Oxley Act whistleblower cases, citing Menendez v. Halliburton, Inc. , ARB Nos. 12-026, ALJ No. 2007-SOX-5 (ARB Mar. 15, 2013) (reissued with corrected caption Mar. 20, 2013) (2013 WL 1282255, at *11), aff'd sub. nom. . Halliburton, Inc. v. Admin. Review Bd. , 771 F.3d 254, 266 (5th Cir. 2014). The court found that the district court had not abused its discretion when reducing a jury's award for emotional distress to $100,000 when comparing the jury's damages assessment to awards in comparable cases.
[Editor's note: The court cited the ARB's Menendez decision using ARB Case Nos. 09-002 and 09-003 in the case citation. However, those case numbers were an error on the caption of the ARB's decision as originally issued on March 15, 2013. The ARB reissued the decision on March 20, 2013, with a correction to show the ARB Case No. as 12-026.]
NONECONOMIC COMPENSATORY DAMAGES ARE AVAILABLE UNDER SOX
In Halliburton v. Administrative Review Board, USDOL , No. 13-60323 (5th Cir. Nov. 12, 2014) (per curiam) (case below ARB Nos. 12-026, ALJ No. 2007-SOX-5), the ARB had affirmed the ALJ's alternative award of $30,000 to the complainant for emotional distress and reputational harm. Halliburton contended on appeal that such "noneconomic compensatory damages" (i.e., emotional distress and reputational harm) are not available under SOX. The court, reviewing the text of SOX, relevant caselaw, the policies underlying SOX and its common law background relating to damages, held that "the plain language of SOX's text relating to remedies for retaliation affords noneconomic compensatory damages." Id . at 22.
DAMAGES; DAMAGES FOR LOSS TO REPUTATION MAY BE AWARDED
Damages for loss to reputation may be awarded under the "make whole" remedy of the whistleblower provision of the Sarbanes-Oxley Act . Hanna v. WCI Communities, Inc. , No. 04-80595-CIV (S.D. Fla. Dec. 2, 2004).
DAMAGES; DAMAGES FOR LOSS TO REPUTATION MAY NOT BE AWARDED
In Murray v. TXU Corp. , 2005-WL-1356444 (N.D.Tex. June 7, 2005), the district court held that the remedies portion of the SOX whistleblower provision at 18 U.S.C. § 1514A does not provide for reputational injury.
DAMAGE TO REPUTATION
In Mahony v. Keyspan Corp. , No. 06CV00554 (E.D.N.Y. Mar. 12, 2007) (case below 2004-SOX-24), the Defendant sought to have the Plaintiff's request for reputational damages striken on the ground that "special damages" under SOX do not include reputational damages, citing in support Murray v. TXU Corp. , 03 CV 0888, 2005 U.S. Dist. LEXIS 10945 *8 (N.D.Tex.2005). The court stated that it disagreed with the Murray court's interpretation. Rather, the court found that § 1514A(c)(2)(C) comprises an illustrative list of the types of special damages that may be recovered rather than an exhaustive list. The court indicated that it agreed with the reasoning of the court in Hanna v. WCI Communities, Inc. , 348 F.Supp.2d 1332 (S.D.Fla.2004), where the court held that the SOX whistleblower provision includes damages for loss of reputation.
ADMINISTRATIVE LAW JUDGE DECISIONS
TIMELINESS OF REQUEST FOR SPECIAL DAMAGES; TOO LATE TO REQUEST AFTER THE CLOSE OF THE EVIDENTIARY HEARING
In Jayaraj v. Pro-Pharmaceuticals, Inc. , 2003-SOX-32 (ALJ Feb. 11, 2005), the ALJ granted the Respondent's motion to strike the Complainant's post-hearing request for stock options where the hearing had lasted four days and provided an opportunity to present evidence on all issues, including relief, and there had been no discussion or agreement to delay evidence on relief to a post-trial hearing should the Complainant prevail on the underlying claim.
Back to top