In Beacom v. Oracle America, Inc., the United States Court of Appeals for the Eight Circuit considered retaliation claims under Sarbanes-Oxley and Dodd-Frank.

The essence of the matter was a business unit of Oracle switched revenue projection methods from a “bottoms-up” method to a “top-down” method. Plaintiff Beacom claimed he repeatedly voiced concerns to his supervisor about the new projection method. Beacom testified he was concerned that “the wrong, incorrect, non-fact-based expectations were being sent up through the management chains, which would be the foundation of an expectation sent to” Wall Street, and that these inaccurate projections contributed to Oracle’s decline in stock value.

The truth of the matter, according to the Court, is the business unit was only a few sales away from meeting projections.

In January 2012, Beacom and his supervisor attended a conference in New York City. The supervisor told Beacom he had increased his projection from $25 million to $30 million. Beacom then “challenged” the supervisor’s practice of “intentionally forecasting false revenue commitments.” Soon after, Beacom met with an HR representative to express concerns that the forecasts were setting the wrong expectation for shareholders.

The supervisor and the HR representative decided to fire Beacom in March (to avoid interrupting Oracle’s fiscal quarter). On March 5, 2012, Oracle terminated Beacom on the basis of poor performance and insubordination.

Beacom sued Oracle under the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act, alleging Oracle wrongly terminated him in retaliation for his complaints about Webster’s revenue projections. The district court granted Oracle’s motions for summary judgment. Beacom appealed.

Sarbanes-Oxley prohibits a publicly traded company from discharging an employee in retaliation for providing information to a supervisor or another person in the company with investigative authority about any conduct which the employee reasonably believes constitutes a violation of certain provisions of securities laws or any provision of Federal law relating to fraud against shareholders.

The 8th Circuit found that Beacom must establish that a reasonable person in his position, with the same training and experience, would have believed Oracle was committing a securities violation. According to the Court, the business unit missed its projections by no more than $10 million. The Court said Beacom—an Oracle salesperson and shareholder—would understand the predictive nature of revenue projections. And, he would understand that $10 million is a minor discrepancy to a company that annually generates billions of dollars. The Court found these facts compel the conclusion that Beacom’s belief that Oracle was defrauding its investors was objectively unreasonable. As a result, the district court did not err in granting summary judgment to Oracle on the Sarbanes-Oxley claim.

The 8th Circuit further stated Dodd-Frank prohibits an employer from discharging a whistleblower for “making disclosures that are required or protected under the Sarbanes-Oxley Act of 2002.” The 8th Circuit held since Beacom did not make a disclosure protected under Sarbanes-Oxley, his claim under Dodd-Frank failed.