In this episode, Matt Kelly and I continue our exploration of the fallout from the recent Supreme Court decision in Digital Realty Trust v. Somers in light of the filing by BioRad in its appeal of the whistleblower award to its former General Counsel, Sanford Wadler. Wadler had internally reported allegation of FCPA violations by the company in China to its Board of Directors. Wadler was later terminated and filed suit claiming his termination had been in retaliation for his whistleblowing efforts. The jury agreed with him and he was awarded approximately $11MM in damages, including damages under Dodd-Frank.

Last week, BioRad filed notice in its appeal of the Digital Realty Trust v. Somers decision and asked for approximately $3MM in damages awarded to Wadler be thrown out as they were based on Dodd-Frank. There was no evidence that Wadler has whistleblown to the SEC, although there was evidence he reported as required under SOX. We explore three issues which the case raises:

  1. That employees must go to SEC and not report internally first.
  2. The inherent conflict between corporate legal departments and corporate compliance departments.
  3. Whether companies can require, on pain of termination, employees to report internally first through internal company policy and whether companies would then terminate such internal whistleblowers.

For more information on these issues see Matt Kelly’s blog post Supreme Court Whistleblower Ruling, Already in Play 

See Tom Fox’s blog post Whistleblowers at the Supreme Court-Part II: Impact of the Somers Decision