3rd Circuit Affirms Dismissal in Long-Running Weist SOX Whistleblower Case
On February 2, 2016, the Third Circuit affirmed the dismissal of the SOX whistleblower retaliation claim in the closely watched case of Weist v. Tyco Electronics Corp., No. 15-2034. We have posted on key events during the life of this case for several years, here (covering the district court’s grant of summary judgment), here (analyzing the Third Circuit’s opinion regarding questions concerning protected activity), and here (reviewing the Company’s request for en banc review). The Third Circuit provided an instructive analysis on key causation issues in this most recent opinion.
In 2008, Plaintiff, a manager in the Company’s accounts payable department, allegedly began raising internal concerns regarding expenses and invoices submitted in connection with company events, including a $350,000 event at a Bahamas resort with mermaid greeters, costumed pirates and fire dancers. Plaintiff alleged that the reporting of the expenditures violated Company policies or federal tax laws. In August 2009, eight months after Plaintiff’s last complaint, employees allegedly raised concerns regarding Plaintiff’s workplace conduct to Human Resources. A Human Resources employee unfamiliar with Plaintiff’s complaint conducted an investigation and recommended termination of his employment. Following his discharge, Plaintiff brought suit under Section 806 of SOX alleging, among other things, that he was subject to an investigation and subsequently terminated because of his internal complaints. The U.S. District Court for the Eastern District of Pennsylvania granted the Company summary judgment on causation grounds and Plaintiff appealed to the Third Circuit.
The Third Circuit’s Decision
A unanimous panel of the Third Circuit affirmed the District Court’s grant of summary judgment in favor of the Company, concluding that Plaintiff did not present evidence demonstrating a causal connection between his protected activity and discharge. As an initial matter, the court noted that its application of the “contributing factor” standard in the context of a claim under Section 806 of SOX was a matter of first impression in the Circuit. It defined a contributing factor as “any factor, which alone or in combination with other factors, tends to affect in any way the outcome of the decision.” Applying that standard, the court analyzed the temporal proximity between the alleged protected activity and the adverse action, finding that the inference of causation was minimal because of a ten-month gap in time. The court further stressed that the record “overwhelmingly demonstrate[d]” intervening events between the protected activity and the termination decision. For example, the Company praised Plaintiff’s performance before and after his protected activity. Likewise, the court noted that members of Human Resources investigating sexual harassment complaints against Plaintiff were not aware of his protected activity. Also, the court relied on the uncontroverted facts demonstrating that Plaintiff’s colleagues who engaged in similar protected activity were not treated adversely.
In addition, the court determined that the District Court’s grant of summary judgment was appropriate because the Company it established that it would have terminated Plaintiff’s employment even in the absence of protected activity. The court emphasized that its role was not to second-guess an employer’s termination decision that followed from a thorough investigation. Indeed, the court noted the absence of evidence casting doubt on the integrity of the investigation.
This decision is particularly useful to employers seeking to capitalize on both aspects of a causation defense in a SOX whistleblower retaliation case. And it underscores the value of conducting thorough investigations, as the court was reluctant to second-guess the employer’s informed termination decision.