SOX Whistleblowers Protection

As reported today by SoxAttorney and others, this week the Fourth Circuit Court of Appeals has held that an employee was an “employee prevailing” on his Sarbanes-Oxley Act (SOX) whistleblower claim when his case was resolved via an offer of judgment pursuant to Federal Rule of Civil Procedure 68. The employee, who worked as a vice president and project manager for a publicly traded commercial real estate developer, filed suit in federal district court asserting he was terminated in retaliation for reporting what he believed was securities fraud.  The employer countered that he was terminated for poor performance. Prior to the close of discovery, the employee accepted the employer’s offer of judgment in the amount of $130,000.00, and the court clerk entered judgment in favor of the employee in that amount. The court then awarded the employee $325,484.08 in attorneys’ fees and costs.

On appeal, the employer asserted that the employee was not eligible for attorneys’ fees and costs under SOX because he did not prevail on the merits of his claim. The Fourth Circuit disagreed. In terms of statutory text, the court concluded that, although SOX does not use the term “prevailing party,” as commonly used in other federal fee-shifting statutes, the jurisprudence developed with respect to that term was applicable in determining whether the employee was an “employee prevailing” on his SOX claim.  See Grissom v The Mills Corp.

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