The ARB recently affirmed an ALJ’s decision that American Commercial Lines Inc. (the “Company”) did not violate the whistleblower protection provision in Section 806 of SOX where the Company demonstrated by clear and convincing evidence that its decision to discharge employee Angelina Zinn, who was an in-house attorney, was based on her insubordination.  Zinn v. American Commercial Lines Inc., ARB Case No. 13-021 (ARB Dec. 17, 2013).

Background.  The Company, a publicly traded marine transportation and manufacturing company, employed Zinn as a corporate attorney.  Zinn alleged that the Company terminated her employment because she had alerted her supervisors of purported failures to properly vet a subcontractor and report the vetting failure and a change in the Company’s general counsel to the SEC.  Zinn asserted that she was retaliated against because, shortly after her complaint, the Company reduced her responsibilities, required her to take a drug test, subjected her to increased job performance monitoring and standards, and ultimately terminated her employment.

The ARB’s Ruling.  The ARB affirmed the ALJ’s determination that the Company was not liable under the SOX whistleblower provision because it established, by clear and convincing evidence, that it would have discharged Zinn regardless of any whistleblowing activity.  The ARB adopted the argument that the termination decision was based on Zinn’s insubordination and failure to complete work assigned to her by the Company’s Senior Vice President and General Counsel.  The evidence on which the ARB relied included an e-mail exchange in which Zinn stated that she would not complete her work and told the General Counsel, “I can’t respect you.”  With respect to Zinn’s allegation that she was improperly required to take a drug test, the ARB accepted the ALJ’s conclusion that Zinn was administered the test in accordance with Company policy after she appeared to be under the influence at work.  The ARB also accepted the ALJ’s finding that Zinn’s hours were reduced at her request and that, after she received a negative drug test, the Company monitored her performance in order to encourage better performance.

Implications.  This decision shows that while employers face a “clear and convincing evidence” standard in establishing that they would have taken the challenged adverse action regardless of protected activity, that standard can be readily satisfied through evidence establishing employee misconduct or insubordinate behavior.  Of course, the likelihood of prevailing on a causation defense increases where employers implement and follow clear policies and carefully document employee conduct that violates those policies.