In a rare win for employers in the realm of Sarbanes-Oxley (“SOX”) litigation, a 4thCircuit judge recently ruled against an employee who claimed that his reporting of his firm’s illegal conduct was a contributing factor to his 2009 firing. While the full effect of this decision is far from clear, this case may help employers stave off retaliation claims by whistleblowers in the future.

Feldman v. Law Enforcement Associates Corp. et al. is an important decision because a plaintiff rarely fails to meet the relatively low standard necessary to survive summary judgment in SOX whistleblower claims. In order to succeed, all a plaintiff must do is show that his protected activity under SOX was a contributing factor to his finding. Traditionally, this burden has been a low one, with many courts requiring little actual evidence from the employee. While this case is a bright spot for employers, the effect it will have on future litigation may be mitigated due to the specific facts of the case. InFeldman, the former president of the corporation, who had a historically acrimonious relationship with the board of directors, was fired nearly 20 months after reporting possible illegal conduct to government regulators. The case may be narrowly interpreted as an example of the difficulty of succeeding on a claim with a long delay between the reporting of a violation and the claimed retaliation. The precedential value of this case is unclear at this point, but decisions such as Feldman are always a welcomed occurrence for employers.

Kelley Drye has substantial experience in SOX claims, and we will keep you informed of any developments that occur in this area.