[For decisions discussing whether reputational damages are available under SOX, see SOX Digest, Special Damages.]
PREJUDGMENT INTEREST ON BACK PAY AWARD; FEDERAL POST-JUDGMENT INTEREST RATE STATUTE IS APPROPRIATE GUIDE FOR RATES
In Parexel International Corp. v. Feliciano, No. 04-cv-3798 (E.D.Pa. Dec. 4, 2008) (case below 2005-SOX-13), a jury had found that the Defendant retaliated against the Plaintiff in violation of the whistleblower provision of the SOX and terminated his employment in violation of state public policy law. The jury awarded $44,000 in back pay on the two claims. The Plaintiff then moved to mold the judgment to include prejudgment interest. The court held that the Plaintiff was entitled to prejudgment interest on the SOX claim, and that the appropriate guide for the applicable interest rate is the rate contained in the federal post-judgment interest rate statute at 28 U.S.C. § 1961(a), because among other reasons, it is easy to determine the rate using the rate charts in the statute, and because the rates are a suitable approximation of a return on a risk free investment during the back pay period.
PURPOSE OF SOX'S REMEDIAL PROVISIONS IS RESTITUTION RATHER THAN COMPENSATION
In Schmidt v. Levi Strauss & Co., No. 5:05-cv-01026 (N.D.Cal. Mar. 28, 2008), the court in considering the type of remedy at stake in a SOX whistleblower complaint for purpose of deciding whether that provision of SOX includes a right to a jury trial, held that "the purpose of 1514A's remedial provisions is restitution rather than compensation." Slip op. at 9. The court stated that even though the section also provides for certain monetary awards, such remedies appear to be restitutionary or otherwise incidental to or intertwined with the injunctive relief. According to the court, the provision does not permit a broad claim for compensatory or special damages, but particularly for (1) back pay with interest, and (2) compensation for any special damages sustained as a result of the discrimination. The relief is restitutionary in nature because it seeks to restore plaintiffs to their status quo had the retaliation not occurred. It does not represent discretionary monetary relief.
ADMINISTRATIVE REVIEW BOARD DECISIONS
BACK PAY; DISSOLUTION OF COMPANY CUTS OFF ENTITLEMENT TO BACK OR FRONT PAY; UNCERTAINTIES RESOLVED AGAINST DISCRIMINATING PARTY
In Kalkunte v. DVI Financial Services, Inc., ARB Nos. 05-139, 05-140, ALJ No. 2004-SOX-56 (ARB Feb. 27, 2009), the ALJ found that reinstatement was impossible because the Employer was no longer in business, and awarded back and front pay for a period of time past when the Employer had gone out of business. The ARB found that dissolution of the company was a superseding intervening cause that cut off the Complainant's entitlement to back or front pay. The Complainant was a contract attorney for the Employer. The legal department closed its doors in October 2004, but the last employee was not terminated until December 2004. The ARB set December 2004 as the terminal point for the back pay award based on the principle that "uncertainties in establishing the amount of back pay to be awarded are to be resolved against the discriminating party." McCafferty v. Centerior Energy, 1996-ERA-6, slip op. at 26-27 (Sec'y Sept 24, 1997).
DAMAGES FOR PAIN, SUFFERING, MENTAL ANGUISH AND HUMILIATION
In Kalkunte v. DVI Financial Services, Inc., ARB Nos. 05-139, 05-140, ALJ No. 2004-SOX-56 (ARB Feb. 27, 2009), the ARB affirmed the ALJ's award of $22,000 for "pain, suffering, mental anguish, the effect on her credit [because of her loss of employment] and the humiliation that she suffered." The ARB noted that although damage to credit may not be legally compensable, the balance of the award was supported by the evidence and was within the ALJ's discretion.
ADMINISTRATIVE LAW JUDGE DECISIONS
DAMAGES; 401K PLAN; COMPLAINANT NOT YET ELIGIBLE WHEN FIRED
In Platone v. Atlantic Coast Airlines Holdings, Inc., 2003-SOX-27 (ALJ July 13, 2004), the Complainant had not yet worked long enough for the Employer to be eligible to participate in a 401K plan when she was fired. The ALJ declined to award damages for 401K participation had the Complainant stayed in the Respondent's employ because there was no way to know whether the Complainant would have participated and, if so, how much she would have elected to have placed in the plan from her salary.
DAMAGES; FLIGHT BENEFITS
In Platone v. Atlantic Coast Airlines Holdings, Inc., 2003-SOX-27 (ALJ July 13, 2004), the Complainant asserted that her back pay award should include the value of free and discounted airline travel provided to Respondent's employees. The ALJ declined to make this award because of the difficulty of assigning value to the benefit, because there was no way to know how often the Complainant would have taken advantage of it, and because the benefit did not accrue under the Respondent's program.
