However, Mr. Johnson's testimony regarding this email and the "CIP miscue" makes clear that he understood all of this to concern fraud on the patent office, not fraud on the shareholders. (Id. at Exh. A, p. 17- 23).
The evidence presented here indicates that Lena and Shawn Van Asdale both reported to Dave Johnson the suspiciousness of the Trask-Britt documents and the potential fraud those documents revealed. (Doc. #173, Exh. 2, p. 286). However, the potential for fraud reported was the potential for fraud on the patent office, not fraud on the shareholders. Nevertheless, as discussed above, the evidence of Shawn Van Asdale's communications with Ms. Brown and Mr. Pennington, could lead a reasonable jury to conclude that Mr. Van Asdale engaged in protected activity on these occasions, which satisfies this part of the first prong of Plaintiff's prima facie case.
Whether Plaintiffs had a subjective belief that was objectively reasonable
The relevant section of SOX provides that the whistleblower must "reasonably believe" that there has been a SOX violation. 18 U.S.C 1514(A)(a)(1); Collins, 334 F. Supp. 2d. at 1376. The court's review of the relevant published authorities reveals that "[t]he
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[reasonableness] threshold is intended to include all good faith and reasonable reporting of fraud, and there should be no presumption that reporting is otherwise, absent specific evidence." Collins at 1376 (citing to Sarbanes-Oxley legislative history). The legislative history makes clear that the "reasonable person" standard should be applied. See Legislative History of Title VIII of HR 2673: The Sarbanes Oxley Act of 2002, Cong. Rec. S7418, S7420 (daily ed. July 26, 2002), available at 2002 WL 32054527. In order for an employee to reasonably believe that a violation occurred, they must have a subjective and objectively reasonable belief that fraud occurred. See, e.g., Kalkunte v. DVI Financial Services, 2004-SOX-56 (ALJ July 18, 2005)(where ALJ determined that complainant, an attorney, had a reasonable belief that the alleged conduct constituted a covered violation). Under the subjective portion of the reasonableness requirement the employee must actually believe that the employer was in violation of the relevant law or regulations and under the objective portion of the reasonableness requirement the employee's belief must be objectively reasonable. See, e.g., Grant v. Dominion East Ohio Gas, 2004-SOX-63 (ALJ Mar. 10, 2005). Reasonableness is "determined on the basis of the knowledge available to a reasonable person in the circumstances with the employee's training and experience." Id.
Subjective belief
The court's analysis of the meeting with Mr. Johnson compels the conclusion that Lena Van Asdale did not engage in protected activity. However, even if her conduct in this meeting could be construed as protected activity her claim would still fail, because she testified that she had not reached a conclusion one way or another regarding whether fraud had been perpetrated on IGT's shareholders, and that the reason she was unsure was because she had not been permitted to do an investigation. (Doc. #182). Plaintiffs do not present any conflicting evidence that would create a genuine issue of material fact regarding whether Lena Van Asdale had a subjective belief that fraud had occurred. No reasonable jury could
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find, given the evidence currently before the court, that Ms. Van Asdale had a belief that fraud occurred. Her explicit testimony is that she had no belief one way or another.
Defendant does not contest that Shawn Van Asdale had a subjective belief that fraud had occurred.
Objectively reasonable belief
Defendant argues that because non-disclosure of the Trask-Britt documents would only indicate fraud if such disclosure was intentional, Shawn (and Lena), even if they both had a subjective belief that fraud had occurred, could not, as a matter of law, have an objectively reasonable belief unless they ruled out other non-fraudulent explanations for the non-disclosure. (Doc. #173). This argument asks too much. Were the court to adopt such a rule, then an attorney whistleblower would be required to investigate and rule out other possible explanations for what appears to be fraud before ever reporting the apparent fraud to any one at the company. The statute does not require this and no case law imposing such a requirement has been mentioned in Defendant's brief or called to the court's attention in another way. Thus, there remains a genuine issue of material fact regarding whether Shawn Van Asdale's belief that fraud had occurred was objectively reasonable.
(2) Employer Knew of the Protected Activity
The second prong in the Collins analysis requires Plaintiffs to show by a preponderance of the evidence that the employer knew of the protected activity. Collins, 334 F. Supp. 2d at 1375. In order to satisfy this prong the employee must show that he or she provided the information to some person at the company with supervisory authority over the employee. Id. at 1378.
The court does not agree that only complaints to those who actually made the termination decision can satisfy this prong. (Doc. #183, p. 11). The clear language of this prong does not impose such a requirement. Defendants do not dispute Plaintiff's contention
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that Ms. Brown and Mr. Pennington had supervisory authority over Shawn Van Asdale. (Doc. #177, p. 13).
(3) Plaintiff suffered an unfavorable personnel action
Defendant does not dispute that Plaintiffs meet this requirement. IGT terminated the employment of both Plaintiffs. (Docs. #177).
(4) Circumstances exist to suggest that the protected activity was a contributing factor to the unfavorable action.
To establish a prima facie SOX violation, Plaintiffs must also show that circumstances exist to suggest that the protected activity was a contributing factor to their terminations. In the absence of any direct evidence of retaliatory intent, courts looks to the timing of termination in determining whether circumstances exist to suggest that their protected activities were a contributing factor in their terminations. Collins, 334 F. Supp. 2d at 1379.
Shawn Van Asdale
Here, Plaintiffs have not called the courts attention to any direct evidence of retaliatory intent. Although it is undisputed that Plaintiffs were not terminated until several months after the comments Shawn Van Asdale made to Mr. Pennington and many months after the comments he made to Ms. Brown, there is evidence that Mr. Johnson decided to terminate Mr. Van Asdale some time around Thanksgiving, not long after the November meeting he had with the Van Asdales. (Doc. #177, Exh. A, p. 57). Because the November meeting with Mr. Johnson did not constitute protected activity, the proximity of this meeting to his decision to terminate either Plaintiff lacks relevance and so cannot be considered. Moreover, the evidence of complaints to IGT officials other than Mr. Johnson is only relevant under this prong if Mr. Johnson knew of and considered the protected activity in making his termination decision. Ms. Brown testified at her deposition that she did not relay Shawn Van Asdale's comments to Mr. Johnson. (Doc. #173, Exh. 6, p. 47). Neither party has brought forth any facts regarding whether or not Mr. Pennington shared Shawn Van Asdale's
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comments with Mr. Johnson. Mr. Pennington's deposition is not attached as an exhibit to Defendant's motion, although counsel's declaration asserts that it is (Doc. #173, p. 2), and the portions of the deposition testimony attached by Plaintiff do not show that Mr. Pennington told Mr. Johnson about Shawn's comments to him. (Doc. #177, Exh. D). Plaintiffs' opposition focuses solely on the proximity in time between the November meeting with Johnson and Johnson's late November decision to fire Mr. Van Asdale (although he wasn't actually fired until later). Shawn Van Asdale has not met his burden of proof on this point. As such, his prima facie claim fails and summary judgment of his SOX claim is GRANTED for the Defendant.
Lena Van Asdale
Just as with Mr. Van Asdale, Plaintiffs have not called the court's attention to any direct evidence of retaliatory intent. Nor have Plaintiffs called the court's attention to any evidence indicating that Mr. Johnson decided to fire Ms. Van Asdale at the same time he made the decision to fire her husband. In fact, they have not called the court's attention to any evidence contradicting Mr. Johnson's testimony that at the time of Mr. Van Asdale's termination he "had absolutely no intentions ... about anything to do with Mrs. Van Asdale." (Doc. #61). Taking this as an undisputed fact, it compels the conclusion that the long lag between the time of Ms. Van Asdale's protected activity and the time of her termination indicates that her claimed protected activity was not a factor in her termination. The mere fact that in late November Mr. Johnson reached a conclusion regarding whether he wanted to terminate her husband's employment does not require an inference that he also decided to terminate her employment at that time. Moreover, as already stated, the evidences suggests that he did not decide to terminate her until much later. Ms. Van Asdale cannot meet her burden of proof on this element of her claim. Likewise, it is undisputed that she did not have the requisite mental intent of subjective belief that fraud occurred and that even if she had such intent her comments to Mr. Johnson do not qualify as protected activity. For
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these reasons, summary judgment in favor of Defendant is GRANTED as to Ms. Van Asdale's SOX claim.
F. Plaintiffs' State Law Claims
A federal court may retain jurisdiction of the pendant state claims even if the federal claims over which it had original jurisdiction are dismissed. See Brady v. Brown, 51 F.3d 810, 816 (9th Cir. 1995). Where the court has dismissed all claims over which the court has original jurisdiction the court may decline to exercise supplemental jurisidction. 28 U.S.C. § 1367(c)(3). "The decision to retain jurisdiction of state law claims is within the district court's discretion, weighing factors such as economy, convenience, fairness, and comity." Id.
Here, we think that retaining jurisdiction of the pendant state claims would not serve the economy or convenience of this court. Plaintiffs' state law claims are DISMISSED WITHOUT PREJUDICE.
CONCLUSION
For the reasons set forth above, Defendant's motion for summary judgment (Doc. #173) is GRANTED. Let judgment be entered accordingly.
DATED: June 13, 2007.
Robert A. McQuaid, Jr.
UNITED STATES MAGISTRATE JUDGE
[ENDNOTES]
1 Implicare: to infold or involve. See Webster's Third New International Dictionary, Unabridged1 , 1135 (4th ed. 1976).
2 implicate, Thesaurus.com. Roget's New Millennium™ Thesaurus, First Edition (v 1.3.1). Lexico Publishing Group, LLC. http://thesaurus.reference.com/browse/implicate (last visited Jun. 8, 2007)
3 Additionally, Defendants argue that where a plaintiff's alleged retaliation is based on a report to "the same supervisor he alleges was condoning and enforcing the illegal activity," the plaintiff's "wrongful termination claim fails on this basis alone." Rivera v. Nat'l R.R. Passenger Corp., 331 F.3d 1074, 1079 (9th Cir. 2003). Rivera, although a Ninth Circuit case, applies California State law on retaliatory discharge, not federal law relating to whistleblower claims under Sarbanes-Oxley or any other similar statute that affords protection for whistleblowers. As such, its analysis relies on California law, which is inapplicable to the SOX claims in this case. Neither party has called the court's attention to any federal law imposing such a requirement, and we decline to impose one here.
4 Plaintiff's declaration also states that "We told Mr. Johnson that the intentional non-disclosure of the Trask-Britt documents bore implications of fraud" and "Mr. Johnson seemed to understand the implications of what we were saying." (Doc. #177, Exh. E). Both of these statements use the word "implications" in the sense of something implied, not in the sense permitted under the case law. Further, although the second statement could be admissible since it does not contradict Shawn Van Asdale deposition testimony, the first statement contradicts the deposition testimony and so cannot create a genuine issue of material fact. The second statement also fails to raise a genuine issue of material fact since whether Mr. Johnson understood what Plaintiffs alleged only matters if they did something more than imply fraud.
5 "CIP" apparently mean "continuation in part." (Doc. #177, Exh. A, p. 5 21).