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By Yin Wilczek
Aug. 3 — Corporate directors are not “employers” that can be sued under Dodd-Frank's whistle-blower anti-retaliation provisions, Bio-Rad Laboratories Inc. argued July 28.
In a bid to dismiss former general counsel Sanford Wadler's anti-retaliation lawsuit, the company also told the U.S. District Court for the Northern District of California that Wadler wasn't a whistle-blower for purposes of the Dodd-Frank Wall Street Reform and Consumer Protection Act because he didn't provide any information to the Securities and Exchange Commission or other law enforcement agencies.
The court has scheduled a Sept. 4 hearing on Bio-Rad's motion to dismiss.
Wadler's lawsuit, filed in May, alleged that he was fired for reporting bribery concerns related to China. The lawsuit names the company, Bio-Rad Chief Executive Officer Norman Schwartz and several board members as defendants.
According to the complaint, the former GC alleged that he brought his suspicions to Bio-Rad's audit committee in February 2013. Wadler said he was fired in June 2013, shortly before the company was scheduled to present its internal investigation findings to the SEC and the Justice Department, because “he refused to be complicit in its wrongdoing.”
In November 2013, Bio-Rad entered into a non-prosecution agreement to pay $55 million to the SEC and the DOJ to resolve allegations that it failed to prevent its subsidiaries from making improper payments to officials in Russia, Thailand and Vietnam.
In its motion to dismiss, Bio-Rad asserted that Wadler was fired because of his “abusive and damaging conduct” that “caused disruption and embarrassment” to the company.
It also argued that its directors' only alleged involvement was that they voted on Wadler's dismissal as a board. The company argued that individual directors cannot be held liable under Dodd-Frank and the Sarbanes-Oxley Act's anti-retaliation provisions.
“Indeed, Bio-Rad has been unable to locate a single Sarbanes-Oxley or Dodd-Frank whistleblower anti-retaliation case in which a director was held liable individually as a defendant, or any precedent indicating that directors can be liable under these provisions, including as agents, for acts taken in their capacity as directors of the companies they serve,” the company said in the filing.
Meanwhile, Bio-Rad acknowledged that the federal courts disagree as to whether an informant must make a report to the SEC to be an eligible whistle-blower under Dodd-Frank. However, it also argued that the statute's language is clear that only those who have tipped off the SEC are whistle-blowers who can sue for retaliatory acts.
“Since there is nothing inherently ambiguous about the definition of whistleblower, the plain language controls, and there is no need to resort to other forms of statutory interpretation, including determining the appropriate weight to give guidance the SEC has issued on the subject,” it said.
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The filing is available at http://www.bloomberglaw.com/public/document/Wadler_v_BioRad_Laboratories_Inc_et_al_Docket_No_315cv02356_ND_Ca/1.
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