SOX Whistleblowers Protection

PROTECTED ACTIVITY; REASONABLENESS OF PLAINTIFF’S BELIEF IN ACCOUNTING VIOLATION; DEFENDANT’S INTERNAL INVESTIGATION AS A RESULT

In Johnson v. Stein Mart, Inc., No. 3:06-cv-00341 (M.D.Fla. June 20, 2007)  the Employee Plaintiff had been hired as a Buyer at the Defendant’s corporate headquarters, and was later promoted to be a Planner, in which capacity she complained to management about (1) the collection of markdown allowances from vendors, (2) the changing of season codes on older inventory, and (3) the accounting for the value of inventory.

The Defendant argued that the Plaintiff failed to establish a prima facie case on the element of protected activity because she did not have a reasonable belief that these practices were illegal because she had no accounting background and had no knowledge of the Defendant’s accounting practices. The Defendant argued that its vendor markdown allowances and season code changes were in line with general industry practices. The district court rejected Defendant Stein Mart’s argument because the Defendant had treated the Plaintiff’s complaints reasonable enough to have warranted an internal investigation. 

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