Bio-Rad headquarters in Hercules, California. (Photo: Jason Doiy/ALM)
Rod Sorensen, managing partner of the Silicon Valley office of Payne & Fears, a regional labor and employment defense litigator for technology companies, closely watched the whistleblower retaliation lawsuit between Bio-Rad Laboratories Inc. and its fired general counsel Sanford Wadler.
The case closed this week with a jury verdict awarding Wadler more than $10 million in damages, including $5 million in punitive damages from Bio-Rad.
The high-profile suit in the U.S. District Court in the Northern District of California was presided over by Magistrate Judge Joseph Spero and involved Kerr & Wagstaffe as plaintiff’s counsel and Latham & Watkins and Quinn Emanuel Urquhart & Sullivan on defense.
Sorensen spoke to ALM about the verdict’s upcoming impact on whistleblowers and their employers for an edited Q&A.
Q: What effect will this verdict have for whistleblowers and, in turn, how will that affect your clients?
A: It’s certainly reasonable to expect an uptick in whistleblower claims. This was a high-profile case with an eight-figure verdict. It’s also important to keep in mind that there have been other high-profile whistleblower cases. For example, last November, a San Francisco County Superior Court jury awarded a former Wyndham Vacation Ownership employee $20 million in punitive damages for being fired after she raised complaints about potential fraud.
Q: Did that verdict produce a noticeable uptick in whistleblower claims?
A: You’re not going to see 20 new cases filed tomorrow. What you’ll see is a trend in individuals becoming more comfortable bringing a whistleblower claim.
Q: How does that affect your clients?
A: They need to be aware that whistleblower claims are going to continue, and they absolutely have to have procedures in place. That includes policies that allow for complaints to be made, as well as training for managers so they know how to handle those claims once made. It’s important to emphasize the company’s policy of not retaliating against whistleblower claims, including those that may seem to lack merit when made.
Q: For your clients, what’s the most important part of this verdict?
A: What’s significant about this case is that it involved the company’s general counsel. Companies generally do not view their general counsel or in-house legal department members as whistleblowers. Their view is it’s the job of the legal department to raise concerns and help find solutions for problems.
Companies also view their attorneys as being bound by ethical restrictions that would preclude the disclosure of concerns they may raise, while providing legal advice. California Business and Professions Code Section 6068 requires attorneys to “maintain inviolate the confidence, and at every peril to himself or herself to preserve the secrets, of his or her client.”
The reality , however, is that general counsel and other lawyers in the legal department are employees. And as the Bio-Rad case illustrates, they have many of the same rights that nonlegal employees have, including the ability to claim they were wrongfully terminated in retaliation for engaging in whistleblower activities. And the Bio-Rad case illustrates the fact and highlights this dual role. On the one hand, attorneys. On the other hand, employees.
Q: Focusing locally, in the past 15 years, Wells Fargo has received dozens of whistleblower retaliation lawsuits from employees who claim they were wrongfully terminated after reporting misconduct to their supervisors. Will the Bio-Rad verdict impact those lawsuits in any way?
A: I suspect the cases differ in a variety of ways from Bio-Rad. For example, I suspect they do not involve evidence of a backdated performance review. That said, I’m confident that in my next mediation in a whistleblower case, the other side, the mediator—probably both—will point to the Bio-Rad case in order to highlight the dangers of having a jury decide whether or not a company retaliated against a whistleblower. The reality is, more than ever, jurors distrust corporations. Take a look at the recent presidential campaign. Both candidates tried to tap into this sentiment that large companies wield too much power. Take a look at the new administration. President [Donald] Trump issued an executive order aimed at scaling back Dodd-Frank [Wall Street Reform and Consumer Protection Act]. Those efforts are not expected to lessen the Dodd-Frank whistleblower protections.
Q: So the message is that going to a jury trial for this sort of thing is a huge risk?
A: Absolutely. More than not, jurors are employees. Jurors bring their own bias to any case.
Q: Regarding the recent news about a fired Akin Gump Strauss Hauer & Feld partner who tried to sell a sealed copy of a False Claims Act lawsuit, is there a fear of corruption inside the government from your clients?
A: No, I don’t see concerns. This appears to be a rogue act by someone who was not employed by the government at the time.
Q: Right, but he previously worked for the U.S. Department of Justice and the worry from some lawyers who have worked with him is that this might not be the first time he’s done this.
A: I think it’s very reasonable to assume that aspect of it is going to be looked into very deeply, including records of monies he’s received. But there’s always going to be bad actors on some basis. I don’t see this as part of an overall trend or evidence of somehow enhanced distrust of the government.