UNCLEAN HANDS; INVOLVEMENT BY COMPLAINANT IN POTENTIAL SOX VIOLATION PRIOR TO REPORTING IS NOT A BAR TO A SOX WHISTLEBLOWER COMPLAINT
In Ciavarra v. BMC Software, Inc., No. 4:07-CV-00413 (S.D.Tex. Feb. 7, 2008), the Plaintiff alleged that the Defendants had retaliated against him because he reported to his superiors at the company and to outside auditors that a $67million invoice was not properly recognizable as income because it was not collectible. The invoice would have been a factor in calculation of the Plaintiff's supervisor's bonus. The court denied the Defendants' motion to amend to their answer to the Plaintiff's SOX complaint to assert that the Plaintiff had unclean hands because he had stated in a pleading that he could "no longer" go along with the plan to recognize revenue from the invoice. The court wrote: "Regarding the unclean hands defense, Defendants cite no legal authority for their statement that a person who had any involvement in a potential Sarbanes-Oxley violation is barred from pursuing a retaliatory discharge claim if he later reports the alleged violation and, as a result, is discharged."
FRIVOLOUS OR BAD FAITH COMPLAINT; AWARD OF ATTORNEY'S FEES AND COSTS
The ARB declined to impose attorney's fees and costs against the Complainant under 49 U.S.C.A. § 42121(b)(3)(C) and 29 C.F.R. § 1980.110(e) where the complaint contained at least an arguable basis in law and where the Respondent did not make a convincing showing that the complaint or the appeal were brought for vexatious reasons. Reddy v. Medquist, Inc., ARB No. 04-123, ALJ No. 2004-SOX-35 (ARB Sept. 30, 2005).
ATTORNEY FEES FOR FRIVOLOUS OR BAD FAITH CLAIM
In Pittman v. Siemens AG, 2007-SOX-15 (ALJ July 26, 2007), the Respondent requested that it be awarded $1,000 in attorney fees under 29 C.F.R. § 1980.109(b). The ALJ agreed that the complaint was unmeritorious, but found that it was not completely frivolous and that the pro se Complainant demonstrated a deep belief in his claims. The ALJ therefore denied the request.
FRIVOLOUS CLAIM; ATTORNEY'S FEES; REASONABLE ATTEMPT TO EXPAND BOUNDARIES OF LAW
The Respondent requested attorney's fees pursuant to 29 C.F.R. § 1980.105(b) and 29 C.F.R. § 1980.106(a), which permit an ALJ to award attorney's fees when a complaint is frivolous or brought in bad faith. The Respondent alleged that the Complainant knew that the Employer was not a publicly traded company. The ALJ declined to award fees because the Complainant was proceeding pro se, she had made a non-frivolous complaint under OSHA or environmental protection laws, there was no evidence of bad faith or improper motives, and "[f]inally, given the relative newness of the Act and the limited body of interpretive case law, I find that it was not unreasonable for the Complainant to try to expand the boundaries of the law, which she did most creatively." Minkina v. Affiliated Physician's Group, 2005-SOX-19 (ALJ Feb. 22, 2005).
ATTORNEY FEE SANCTION; A WEAK CASE IS NOT NECESSARY A FRIVOLOUS CASE
In Grant v. Dominion East Ohio Gas, 2004-SOX-63 (ALJ Mar. 10, 2005), the ALJ declined to impose an attorney fee sanction against the Complainant under 29 C.F.R. § 1980.109(b). The ALJ observed that the strength of the case was in serious question, but found that it did not rise to the level of being frivolous. The ALJ noted that the Complainant had consulted an attorney, and that even though he did not have a strong case that he engaged in protected activity as defined by the Act, this did not mean that he did not have a sincere belief that a legitimate claim could be brought.
FRIVOLOUS COMPLAINT SANCTION; NEW LAW REGARDING WHICH PARAMETERS OF COVERAGE NOT YET WELL DEFINED
In Hopkins v. ATK Tactical Systems, 2004-SOX-19 (ALJ May 27, 2004), the Respondent moved for reimbursement of attorney fees up to $1,000 under 29 C.F.R. § 1980.110(b), which permits such a sanction if the ALJ determines that the complaint was frivolous or brought in bad faith. The ALJ reviewed an ALJ and an ARB decision interpreting a similar provision under the AIR21 whistleblower law, and interpretations of frivolous legal actions related to FRAP 38 and 28 U.S.C. § 1915(e)(2). Although she concluded that the complaint bordered on frivolous as a SOX complaint, it would not have been frivolous if properly filed under the environmental whistleblower statutes (the complaint about release of sludge by a water authority having been filed only under SOX). Although the pro se Complainant had not responded to the ALJ's order to show cause on jurisdiction, the ALJ observed that such a lack of response might evidence a concession that the case should be dismissed rather than continued pursuit of a frivolous claim. The ALJ also found lack of an assertion of prejudice by the Respondent, nor of bad faith, harassment or improper motives on the part of the Complainant. Most important in the ALJ's view was the fact that the SOX was relatively new and consequently its parameters are not certain. Thus, "it would be difficult to conclude that any complaint alleging that the reporting of wrongful activity by a publicly traded corporation [leading] to an adverse employment action ... would lack 'an arguable basis in law or fact.'" Slip op. at 9. The ALJ had dismissed the complaint on summary decision based in part on the failure of the complaint to relate to securities fraud.]
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