The Sarbanes-Oxley whistleblower protection provision shields in-house attorneys, even if they haven't proved fraud occurred--and even if bringing the claim will violate attorney-client privilege, the 9th Circuit ruled.
Two former in-house attorneys, husband and wife Shawn and Lena Van Asdale, filed suit against Nevada-based gaming machine company International Game Technology (IGT), claiming it fired them in retaliation for calling out a possible shareholder fraud that occurred during a 2001 merger with Anchor Gaming.
The 9th Circuit also asserted that in-house counsel shouldn't be barred from bringing wrongful termination suits, even if the claim necessitates a breach of attorney-client privilege regarding other company litigation.
"The bar has been set low for the purpose of stating a claim," says Patrick Hicks, a shareholder at Littler Mendelson. "As long as the employee has a subjective belief [fraud occurred] that is objectively reasonable, they can state a claim and survive summary judgment."
The court's threshold for Lena's claim was even lower, says David Greenhaus, a partner at Jackson Lewis. While Shawn made specific statements about the suspected fraud, Lena only said the company might need to do an investigation. "She wasn't saying, 'Yes, there was fraud,'" he says. "All she was saying was, 'Something's fishy. Let's investigate the possibility.'"
Question of Privilege