On February 2, 2016, the Third Circuit affirmed the dismissal of a long-running SOX whistleblower suit filed by Jeffrey Wiest, a former accounts payable manager for Tyco Electronics.  The decision is the first in which the Third Circuit has defined the “contributing factor” causation standard for SOX retaliation cases and provides helpful guidance on the issue.

Plaintiff Jeffrey Wiest alleged that Tyco terminated his employment in retaliation for complaining about the company’s excessive spending on corporate retreats in June and October 2008.  Tyco, no stranger to allegations of excessive spending, saw its CEO Dennis Kozlowski convicted in 2005 for looting nearly $100 million from Tyco, including lavish spending at company retreats.  For purposes of the appeal, the Third Circuit assumed that Wiest’s complaints were protected under SOX.

The key question on appeal was whether Wiest had identified any evidence in the record from which a jury could conclude that Wiest’s complaints were a “contributing factor” in the termination of his employment.  Recognizing that it had not yet addressed the contributing factor element in a SOX retaliation case, the Third Circuit adopted the standard articulated by the Fourth, Fifth, and Tenth Circuits:  “any factor, which alone or in combination with other factors, tends to affect in any way the outcome of the decision.”  The court further explained that circumstantial evidence in the form of close temporal proximity between protected activity and an adverse action could establish causation, and that, conversely, causation could be severed by the passage of a significant amount of time, or by a legitimate intervening event.

Applying the standard to Wiest’s claim, the Third Circuit held that there was no genuine issue of material fact as to whether Wiest’s complaints were a contributing factor in his termination 10 months later.  Not only did temporal proximity not support Wiest’s claim, several legitimate intervening events undermined it:  (1) he received “praise and commendations” both during and after his protected activity; (2) in 2009, several employees complained that Wiest had used inappropriate sexual language and had engaged in inappropriate sexual activity with subordinates; (3) the HR professional who investigated the complaints against Wiest, and ultimately recommended Wiest’s dismissal, had no knowledge of Wiest’s protected activity; (4) Wiest’s colleagues in the accounting department who participated in the same protected activity as Wiest did not receive any negative treatment; and (5) the employees who Wiest claimed were frustrated with him due to his protected activity were no longer employed by Tyco at the time of HR’s investigation, as Tyco had sold the business unit.  These undisputed facts, according to the Third Circuit, negated any inference that Wiest’s protected activity was a contributing factor in his termination as a matter of law.

The Third Circuit further held that, even if Wiest could establish that his protected activity was a contributing factor in his termination, Tyco met its burden to demonstrate by “clear and convincing evidence” that it would have terminated Wiest’s employment even in the absence of the protected activity.  The court rejected Wiest’s only challenge to Tyco’s defense—that termination was an unreasonably severe punishment for his transgressions, and that, but for his protected activity, he would have received a more lenient form of discipline—stating that it would not second-guess human resources decisions, and Wiest had failed to come forward with any evidence “casting doubt on the integrity of the investigation.”

The Third Circuit’s decision in Wiest provides useful guidance to companies defending SOX or Dodd-Frank whistleblower cases because it lays out a number of different arguments that employers may use to negate an inference that an employee’s alleged whistleblowing was a contributing factor in an adverse employment action.  As many whistleblower claims ultimately are subject to motions for summary judgment, this Court provides a thoughtful roadmap as to what an employer must demonstrate to avoid trial and win a case on summary judgment.