Bio-Rad Whistleblower Protected for “Reasonable” Incorrect Claim

Bio-Rad Whistleblower

After only three hours of deliberation, a federal jury in San Francisco determined that Bio-Rad, a life science company, retaliated against its former General Counsel, Sanford Wadler, for reporting violations of the Foreign Corrupt Practices Act (FCPA). Wadler alleged he was fired for reporting possible FCPA violations after he found for reporting documents showing Bio-Rad’s distribution of free products in China. Wadler was fired from the company in June 2013.

In November 2014, Bio-Rad was ordered to pay $55 million in fines after a Department of Justice (DOJ) and Securities Exchange Commission (SEC) found that they had in fact violated the FCPA by making improper payments to officials in Russia, Thailand, and Vietnam in order to win business.

Sarbanes-Oxley Act

The investigation held by the DOJ and SEC found no evidence of violations of FCPA in China, as Wadler’s whistleblower allegations had suggested. The court held that the whistleblower’s belief was nevertheless reasonable and protected under the Sarbanes-Oxley Act (SOX). SOX is meant to protect consumers and investors who rely on employee information to guarantee honest business practices.

The Sarbanes-Oxley Act prohibits a publicly traded company, or any contractor or agent of such company, from retaliation against an employee who blows-the-whistle on what she reasonably believes to be a violation of statutes prohibiting mail fraud, wire fraud, bank fraud, securities fraud, any rule or regulation of the Securities and Exchange Commission (SEC), or any provision of Federal law relating to fraud against shareholders. Successful whistleblowers are entitled to recover their attorneys’ fees and costs under SOX.

The jury found that Wadler’s whistleblower report about his suspicions in February 2013 was a contributing factor in his termination, therefore violating SOX. Although in trial Bio-Rad claimed the whistleblower was fired for being erratic and hostile, Metadata showed that their unfavorable review was fabricated in July 2013, a month after the whistleblower’s termination. Wadler’s December 2012 review was mostly positive.

The court found that the whistleblower was entitled to $2.9 million in lost wages and stock options, which was then doubled according to the Dodd-Frank Act, which Wadler had also brought a claim under. The Dodd-Frank Act prohibits employers generally from retaliating against whistleblowers who disclose information required under SOX, as well as any other law, rule, or regulation under the jurisdiction of the SEC.