Companies entrust their in-house attorneys with sensitive and confidential information in order to obtain legal advice on important matters. Thus, when an in-house attorney turns on his or her employer, the repercussions can be significant.
In a recent case involving just this situation, a jury awarded Sanford Wadler, the former general counsel for Bio-Rad Laboratories, an $8 million verdict for wrongful termination. The jury found that Wadler raised concerns about violations of the Foreign Corrupt Practices Act (FCPA) at Bio-Rad, and that the company violated the Sarbanes-Oxley Act and California public policy when it terminated him after he raised those concerns.
With attorney fees and doubling of back pay under the Dodd-Frank Act, Bio-Rad will owe Wadler $14.5 million, unless it succeeds in overturning the verdict in post-trial motions or on appeal.
In defending the case, Bio-Rad argued that it fired Wadler not because he raised FCPA issues—which were investigated and found meritless—but because he misunderstood business dealings in China and obstructed a corporate securities filings.
At trial, Bio-Rad’s CEO relied on a negative review of Wadler’s performance to justify the termination. The company had also used this negative review in defending its decision before the Department of Labor.
But it turned out that the review was backdated: the review was dated April 2013, but metadata suggested that it was not created until a month after Wadler was fired in June 2013. The CEO said that he drafted the review from handwritten notes that he had later discarded. Given the verdict, however, the jury might well have discredited this testimony and determined that the review was created after the fact.
Because of the sensitivity of the relationship between a company and its in-house lawyers, employment litigation with attorneys can also present a number of interesting issues concerning company confidences and the attorney-client privilege.
In our next post, we’ll take a look at how those issues were resolved in the Wadler case.