We have previously reported on the Dodd-Frank whistleblower action brought by Bio-Rad’s former General Counsel, Sanford Wadler, who alleged he was fired for exposing FCPA violations regarding the company’s operations in China. That suit went to trial in January 2017 and, after only three hours of deliberation, a jury awarded Wadler $2.96 million in back wages and $5 million in punitive damages. Wadler had sought $8 million in lost wages, and $27 million in punitive damages (1% of the company’s net worth). Among other things, the jury found that (1) Wadler reasonably thought the company’s Chinese team had violated the FCPA, and (2) the Bio-Rad CEO would not have terminated Wadler for legitimate reasons if Wadler had not reported his FCPA beliefs to the company’s audit committee. Before trial, the court ruled Wadler was allowed to use evidence and information that would otherwise be privileged, on the basis that (1) federal common law permits the use of otherwise privileged information, and (2) Sarbanes-Oxley preempts California’s attorney-client privilege rules.
Prior to trial, defendants Bio-Rad and its CEO filed a motion for judgment as a matter of law, which the Court denied. Following the jury verdict, the defendants renewed their motion for judgment as a matter of law and filed, in the alternative, a motion for a new trial on the grounds that the verdict was against the weight of the evidence. On May 10, 2017, the Magistrate Judge denied defendants’ motions. Order Denying Defendants’ Motions, Wadler v. Bio-Rad Labs., Inc., No. 15-cv-02356-JCS (N.D. Cal. May 10, 2017), appeal docketed, No. 17-16193 (9th Cir. June 8, 2017). The chief magistrate judge held that the jury’s findings were supported by substantial evidence, punitive damages were available even though punitive damages are not provided for in Dodd-Frank, and Dodd-Frank protected Wadler’s activity even though he did not report his information to the SEC (which is currently the subject of a circuit split before the Supreme Court).