Case details

Attorney fired after reporting potential bribery scandal: suit

SUMMARY

$7960000

Amount

Verdict-Plaintiff

Result type

Not present

Ruling
KEYWORDS
FACTS
In February 2013, plaintiff Sanford Wadler, the general counsel for BioRad Laboratories, sent a memo to Bio-Rad’s audit committee asking for an investigation into senior management involved in a possible bribery scandal in China. He alleged that senior management’s involvement would have been a violation of the Foreign Corrupt Practices Act. After a four-month investigation, no direct evidence of misconduct was found. In June 2013, Wadler was terminated from his position. Wadler sued Bio-Rad Laboratories Inc.; the company’s chief executive officer, Norman Schwartz; the company’s co-founder, Alice Schwartz; and board members Deborah Neff, Louis Drapeau, and Albert Hillman. Wadler alleged that the defendants’ actions constituted whistleblower retaliation. The case only continued against Norman Schwartz and Bio-Rad. Plaintiff’s counsel contended that although a four-month investigation found no direct evidence of misconduct, Wadler’s act of reporting his concerns was a protected whistleblower activity under the Sarbanes-Oxley Act. However, counsel argued that the CEO of Bio-Rad, Mr. Schwartz, retaliated against Wadler for reporting his concerns about senior management. Specifically, plaintiff’s counsel asserted that Mr. Schwartz concocted a negative review after Wadler was terminated to provide a legitimate reason for Wadler’s termination. In a sworn declaration to the Department of Labor, Mr. Schwartz called the subject negative review a “true and correct copy” of Wadler’s performance evaluation. However, plaintiff’s counsel argued that although the review was dated April 15, 2013, nearly two months before Wadler was fired, the document’s metadata showed that it was created on July 9, 2013, more than a month after Wadler was fired. Thus, counsel contended that Mr. Schwartz created the document after the fact to justify firing Wadler and that Mr. Schwartz would have kept on lying about it had the data not revealed the true date of the file’s creation. Plaintiff’s counsel noted that Bio-Rad’s head of human resources submitted a sworn declaration to the Department of Labor stating that she and Mr. Schwartz, together, had looked at the negative performance review before Wadler was fired in June 2013. However, plaintiff’s counsel argued that the sworn declaration was an untruth and impossibility since the head of Human resources admitted that there was nothing in the human resources file at all reflecting any problems with Wadler, nor any warnings or progressive discipline actions against Wadler, as the company’s policy contemplated, and that the file only contained a recent and very positive review. Thus, counsel argued that the alleged negative performance review was not in existence until July 2013, after Wadler was fired. In addition, plaintiff’s counsel contended that the head of human resources admitted to giving Wadler a misleading and false compensation survey in February 2013, saying his salary was in line with general counsels like himself, but omitted that she had shared with Mr. Schwartz days earlier that Wadler’s overall compensation was substantially below other similarly-situated general counsels. According to plaintiff’s counsel, the corporate executives (Mr. Schwartz, Drapeau and the head of human resources) all admitted at trial, in contrast to prior sworn testimony, that they had secretly decided by early March 2013 to fire Wadler and hid that from him until the actual firing in early June 2013. Counsel noted that the company alleged that Wadler was fired, in large part, because he, unlike anyone else there, yelled at co-workers. However, plaintiff’s counsel argued that there was the evidence showing that many, many company executives (including Mr. Schwartz) yelled at other employees. Regardless, the alleged yelling was not mentioned in Wadler’s human resources file, the firing memo, or even the allegedly faked performance review. In addition, plaintiff’s counsel contended that Drapeau, a board member and head of the independent audit committee to whom Wadler properly and confidentially submitted his whistleblower report, admitted on cross-examination that he thought Wadler was “absolutely correct” and “courageous” in making the report and request for investigation Counsel also contended that within days of Wadler making the report, Drapeau secretly shared the confidential whistleblower report with Mr. Schwartz, despite the fact that the report was about Mr. Schwartz himself. Counsel further contended that Drapeau admitted on cross-examination that Mr. Schwartz later gave him the falsely-dated performance review, as if it was real, in October 2013 and that Drapeau did not know, nor was ever told, that the review was indeed false. Bio-Rad’s counsel contended that Wadler was terminated for his alleged increasingly unruly and argumentative behavior, which allegedly included yelling at colleagues and pounding his fist on tables. Counsel also contended that another reason for the termination was that Wadler failed to notify his colleagues of critical information for Securities and Exchange Commission filings. Defense counsel argued that Mr. Schwartz had started drafting Wadler’s evaluation back in April 2013 and that none of the information contained in the document was false. Counsel argued that Mr. Schwartz could have written the earlier date on the review because he started the review using handwritten notes months before and then created the digital file afterward “to memorialize” it. In regard to Wadler’s alleged whistleblower report, defense counsel argued that Wadler lied about searching online for employment lawyers before submitting his report to the audit committee. Thus, counsel argued that Wadler concocted unsupported allegations against the company to exploit whistleblower protection laws. Defense counsel added that Wadler exploited the company’s vulnerable position while the company was under investigation for bribery in Russia, Thailand and Vietnam. (The company ended up settling the criminal charges and civil claims with the Department of Justice and Securities and Exchange Commission for $55 million in 2014.) In response, plaintiff’s counsel contended that the lawyers hired to investigate the China Foreign Corrupt Practices Act issues admitted that they thought the investigation called for by Wadler in his whistleblower complaint was “warranted” and that at the end, even before Wadler was fired, the investigating lawyers conceded that they had only looked at three percent of all of the relevant documents, but that there were red flags — such as widespread corruption in China generally, incomplete documents, etc. — that justified the inquiry., Wadler sought recovery of $35 million in total damages, including $2.96 million in economic losses, $5.33 million in future economic losses, and $27 million in punitive damages.
COURT
United States District Court, Northern District, San Francisco, CA

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