Download Bio-Rad Fired GC Case a Perfect Storm of Whistleblowing, Eroding

corpcounsel.com | November 2, 2015
Bio-Rad Fired GC Case a Perfect Storm
of Whistleblowing, Eroding Privilege
From the Experts
Sue Reisinger
The continued stream of in-house counsel
and compliance officers becoming whistleblowers has advanced to the point “that it is
now a river,” according to attorney Gregory
Keating.
Keating, a partner at Choate Hall & Stewart
in Boston, says a recent ruling in a case brought
by ex-general counsel Sanford Wadler against
former employer Bio-Rad Laboratories Inc.
highlights three of the hottest whistleblower
topics.
First is the growing number of in-house lawyers who are whistleblowers, and all the concerns about eroding attorney-client privilege
that accompany such growth. “It is something
that raises a lot of tricky questions, to put it
mildly,” Keating concedes.
Second is the broadening theory of who
is liable in a retaliation suit. In the Bio-Rad
case, a federal court in San Francisco held that
members of a company’s board of directors
can be held individually liable under both the
Sarbanes-Oxley Act and the Dodd-Frank Wall
Street Reform and Consumer Protection Act.
Keating says the ruling of individual liability
appears to be a case of first impression among
federal courts.
And third is the widening of the field for
plaintiffs. The court agreed with the ousted GC that an employee is protected as a
whistleblower even if he complained only
internally and not to the U.S. Securities and
Exchange Commission or other government
agency. “A whole lot of federal courts have
struggled with this issue, and we have circuits
split on it,” Keating says. “My guess is it will be
decided by the Supreme Court, perhaps as
early as this term since the Berman case from
the Second Circuit is up for a cert petition.”
In Berman, the U.S. Court of Appeals for the
Second Circuit held that the internal whistleblower is entitled to the same levels of anti-
retaliation protection as anyone who turned
to the SEC for help.
Berman contrasts with an earlier Fifth
Circuit decision in Asadi v. G.E. Energy, as well
as with other district court rulings that have
held there is no retaliation protection unless a
whistleblower contacts an outside agency.
Keating, who has spent at least the last
five years tracking and analyzing changes in
whistleblower law, says companies “need to
focus on the legal changes because the gates
keep widening more and more in terms of the
scope of whistleblower protection.” Keating is
the management representative, appointed
by the Secretary of Labor, serving a second
term on the Department of Labor’s whistleblower protection advisory committee.
Keating does not represent Wadler, who
filed his case in May alleging that Bio-Rad fired
him after he told company leaders that he
had reason to believe the company engaged
in bribery in China, although an investigation
by an outside law firm turned up no evidence
of bribery. The company, through outside
law firm Latham & Watkins, denied Wadler’s
allegations.
The October decision in Wadler did not go
to the merits of the case and simply means
that the ex-GC can move forward with his case
against Bio-Rad.
But Keating says the ruling was a significant
and disturbing one. “It stands as a strong beacon for why companies should seriously look
at existing protocols and consider training
and periodic audits as well as monitoring of
activity in this area,” he adds.
Keating’s law firm announced last week
that because of the increasing changes in
whistleblower law, Keating would also head
a newly created whistleblower defense group
to help companies deal with the onslaught of
complaints. He already chairs Choate Hall’s
labor and employment group.
Reprinted with permission from the November 2, 2015 edition
of Corporate Counsel © 2015 ALM Media Properties,
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