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Thorough investigation, documentation ward off whistleblower's claim


A federal appeals court ruling in a Sarbanes-Oxley Act whistleblower case, in which the plaintiff unsuccessfully alleged retaliation by his employer for his protected activity, provides firms with a good road map to addressing comparable claims, experts say.

A critical factor in the employer's favor, according to the 3rd U.S. Circuit Court of Appeals' Feb. 2 ruling in Jeffrey A. Wiest et al. v. Tyco Electronics Corp., was the company's thorough, impartial investigation of unrelated charges that led to Mr. Wiest's termination.

The case, originally filed in 2010, has a long history.

In 2013, the 3rd Circuit overturned a lower court ruling and held that Tyco Electronics Corp., which is now known as TE Connectivity Ltd., must face whistleblower claims brought by the former accountant, who charged he was fired in retaliation for pointing out improper accounting practices.

After further proceedings in the lower court, the case returned to the higher court, leading to the three-judge appeals panel holding unanimously that Tyco successfully established Mr. Wiest's firing was tied to inappropriate interactions with female employees, and not the alleged accounting practices.

“Wiest claims that he engaged in a six-month 'anguished field battle' during which he frustrated Tyco's management with his refusals as an accountant to process payments allegedly due from Tyco that, insofar as germane to this appeal, related to two Tyco employee and dealer meetings in resort settings,” the appeals court ruled.

Tyco, however, contended his involvement with the accounting issues “was minimal.”

The company said its human resources director, who had no knowledge of this protected activity, conducted more than eight months later an investigation into complaints about Mr. Wiest's alleged inappropriate relationships with female employees that were unrelated to the accounting issues.

Tyco demonstrated it would have taken the same action even in the absence of Wiest's accounting activity, “given the thorough, and thoroughly documented, investigation conducted by its human resources director,” said the ruling.

Mr. Wiest “failed to offer any evidence to establish that this protected activity was a contributing factor to any adverse employment action that Tyco took against him,” the appeals court ruled.

The ruling was a “very welcome advancement for employers,” particularly in the 3rd Circuit, said Steven J. Pearlman, a partner at law firm Proskauer Rose L.L.P. in Chicago.

“What struck me as very compelling, and very instructive for employers, is that the court was moved by the investigation that the company did before it made the decision to terminate the employee,” which was not “in any way tainted, or incomplete or otherwise improper,” Mr. Pearlman said.

“When undertaking an investigation, that investigation should be well- documented,” said A. Patricia Diulus-Myers, a principal at Jackson Lewis P.C. in Pittsburgh. “There can never be too much documentation and, in this case, the employer's documentation of their investigation into Mr. Wiest is what saved them in the end here,” she said.

Tyco “met its burden by showing through clear and compelling evidence that it would have fired him in the absence of protected activity,” said Mike Delikat, a partner at Orrick, Herrington & Sutcliffe L.L.P. in New York. “It'll be very helpful guidance to an employer as to how to potentially avoid whistleblower claims.”