In a SOX whistleblower decision, the U.S. Court of Appeals for the Sixth Circuit embraced a number of employer-favorable legal standards that the Administrative Review Board (ARB) recently rejected.  Riddle v. First Tennessee Bank, National Association, No. 11-cv-6277, 2012 U.S. App. LEXIS 18684 (6th Cir. Aug. 31, 2012) (unpublished).  Significantly, the Sixth Circuit blessed limitations on protected activity, including that the fraud must “definitely and specifically” relate to one of the categories exhaustively set out in Section 806 of SOX and be “material.”  In what appears to be a first-impression ruling, moreover, the court also narrowly construed the scope of “bank fraud” with respect to Section 806.  What’s more, on the causation front, the court adopted the oft-cited Title VII standard that courts do not sit as “super-personnel departments,” and applied a pretext analysis (from which the ARB also recently has strayed). 


Defendant-Appellee First Tennessee Bank (the Bank) employed Plaintiff-Appellant Richard Riddle as a Corporate Security Investigator.  Riddle’s manager had concerns about his performance.  Those concerns heightened in December of 2008, when Riddle was assigned to investigate an employee after a regular security audit allegedly uncovered that he made cash advances on his corporate credit card (he allegedly was giving gift cards as gratuities to other employees).  During the investigation, Riddle allegedly learned that this was an acceptable practice in a division of the company.  But he nevertheless reported to several superiors that the employee violated the Bank Bribery Act.  Riddle’s superiors, however, apparently concluded that the alleged practice was not insider abuse.  Riddle made it clear that he disagreed with the Bank’s alleged actions and intended to escalate his complaints.  Other than attempting to transfer out of the Corporation Security Department and seek other employment, however, Riddle did not pursue the matter further.

On January 7, 2009, Riddle’s manager issued him a “written performance counseling” referencing various alleged performance failures during the December 2008 investigation.  The manager cited Riddle’s failure to discuss the case with appropriate members of management, familiarize himself with the guidelines, appropriately communicate at all stages of the investigation, and exercise proper judgment.  On April 23, 2009, after commencing another investigation, Riddle told a group of employees during a presentation that filing an Electronic Incident Report was the equivalent to filing a police report.  The Bank found this assertion contrary to its policies and ultimately terminated his employment. 

Riddle filed a SOX whistleblower retaliation claim in the U.S. District Court for the District of Tennessee, asserting he was discharged in retaliation for investigating and complaining of fraud.  The District Court granted the Bank summary judgment and the Sixth Circuit affirmed.

The Court’s Rulings

Protected Activity:  The Sixth Circuit determined Riddle had not engaged in protected activity because he did not report a violation of the bank fraud statute referenced in Section 806 of SOX (18 U.S.C. § 1344).  In so ruling, the court explained that an employee’s complaint must “definitively and specifically” relate to one of the six enumerated categories of Section 806:  mail fraud, wire fraud, bank fraud, securities fraud, any rule or regulation of the SEC, or any provision of federal law relating to fraud against shareholders.  The court highlighted the absence of the Bank Bribery Act from this exhaustive list.  In a similar regard, the court noted Riddle’s testimony that the employee he was investigating believed it was “common practice” to purchase gift cards for other bank employees.  As such, the court reasoned that the individual could not have knowingly executed a scheme to defraud the bank by means of false or fraudulent pretenses, and Riddle could not have had a reasonable belief to the contrary.  The court also concluded that the alleged violation of the Bank Bribery Act did not amount to shareholder fraud, noting Riddle’s lack of a “reasonable belief that the company intentionally misrepresented or omitted certain facts to investors, which were material and which risked loss.” 

Causation:  In addition, the court ruled that Riddle’s alleged protected activity was not a contributing factor in the decision to terminate his employment.  Riddle argued that the alleged temporal proximity between his alleged protected activity and his termination was sufficient to raise an inference that the protected activity was a contributing factor.  But the court stressed that the last alleged protected activity occurred almost four months prior to the date of Riddle’s termination, which “is not so strong here to carry the day by itself.”  The court also found that the Bank would have discharged Riddle even if he did not engage in protected activity, and stressed that that it would not sit as a “super personnel department[] to second guess an employer’s facially legitimate business decisions.”  In addition, the court stated that Riddle bore the burden of proving that the Bank’s provided a legitimate, non-retaliatory reason for discharging him was pretextual, and that he failed to do so.


This decision is a significant win for employers because of the ways it markedly differs from recent ARB decisions, like Sylvester v. Parexel International LLC, No. 07-123 (ARB May 25, 2011), which liberally interpret the scope of protected activity.  Moreover, this decision is valuable to employers because it is consistent with other recent federal circuit court decisions that employ a causation analysis in SOX whistleblower cases that is similar to what is used in Title VII cases.

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Photo of Steven J. Pearlman Steven J. Pearlman

Steven J. Pearlman is a partner in the Labor & Employment Law Department and Co-Head of the Whistleblowing & Retaliation Group and the Restrictive Covenants, Trade Secrets & Unfair Competition Group.

Steven’s practice covers the full spectrum of employment law, with a particular…

Steven J. Pearlman is a partner in the Labor & Employment Law Department and Co-Head of the Whistleblowing & Retaliation Group and the Restrictive Covenants, Trade Secrets & Unfair Competition Group.

Steven’s practice covers the full spectrum of employment law, with a particular focus on defending companies against claims of employment discrimination, retaliation and harassment; whistleblower retaliation; restrictive covenant violations; theft of trade secrets; and wage-and-hour violations. He has successfully tried cases in multiple jurisdictions, and defended one of the largest Illinois-only class actions in the history of the U.S. District Court for the Northern District of Illinois. He also secured one of only a few ex parte seizures orders that have been issued under the Defend Trade Secrets Act, and obtained a world-wide injunction in federal litigation against a high-level executive who jumped ship to a competitor.

Reporting to boards of directors, their audit committees, CEOs and in-house counsel, Steven conducts sensitive investigations and has testified in federal court. His investigations have involved complaints of sexual harassment involving C-suite officers; systemic violations of employment laws and company policies; and fraud, compliance failures and unethical conduct.

Steven was recognized as Lawyer of the Year for Chicago Labor & Employment Litigation in the 2023 edition of The Best Lawyers in America. He is a Fellow of the College of Labor and Employment Lawyers.  Chambers describes Steven as an “outstanding lawyer” who is “very sharp and very responsive,” a “strong advocate,” and an “expert in his field.” Steven was 1 of 12 individuals selected by Compliance Week as a “Top Mind.” Earlier in his career, he was 1 of 5 U.S. lawyers selected by Law360 as a “Rising Star Under 40” in the area of employment law and 1 of “40 Illinois Attorneys Under Forty to Watch” selected by Law Bulletin Publishing Company. Steven is a Burton Award Winner (U.S. Library of Congress) for “Distinguished Legal Writing.”

Steven has served on Law360’s Employment Editorial Advisory Board and is a Contributor to He has appeared on Bloomberg News (television and radio) and Yahoo! Finance, and is regularly quoted in leading publications such as The Wall Street Journal.

The U.S. Chamber of Commerce has engaged Steven to serve as lead counsel on amicus briefs to the U.S. Supreme Court and federal circuit courts of appeal. He was appointed to serve as a Special Assistant Attorney General for the State of Illinois in employment litigation matters. He has presented with the Solicitor of the DOL, the Acting Chair of the EEOC, an EEOC Commissioner, Legal Counsel to the EEOC and heads of the SEC, CFTC and OSHA whistleblower programs. He is also a member of the Sedona Conference, focusing on trade secret matters.