On September 30, 2013, OSHA awarded more than $1.9 million to a former CFO of Clean Diesel Technologies, Inc. (the Company) (based in Ventura, California) who is not identified in OSHA’s press release.  This award is based on OSHA’s finding that the Company violated Section 806 of SOX by discharging the CFO in retaliation for his warning the board of directors about financial concerns raised by a proposed merger. 

Background

In late March 2010, the former CFO allegedly provided information to the Company’s board of directors based on his/her belief that there was a conflict of interest involving the chair of the board of directors.  According to OSHA, the CFO believed a proposed merger was detrimental to the Company, important financial information was withheld from board members, and the conflict of interest violated internal controls and the Company’s code of ethics.  The CFO filed a SOX whistleblower retaliation complaint with OSHA in April 2010, a week after he/she was discharged.  OSHA’s investigation found the complaint to be meritorious. 

The Relief OSHA Ordered

In its September 30 Order, OSHA ordered the Company to:

  • pay the complainant more than $486,000 in lost wages, bonuses, stock options and severance pay;
  • pay over $1.4 million in compensatory damages for pain and suffering, damage to career and professional reputation, and lost 401(k) employer matches and expenses;
  • post OSHA’s findings in a Form 8-K submission to the SEC;
  • expunge all files and computerized data systems of disciplinary actions related to the complainant’s termination;
  • post the order and a notice to workers at all Company locations and on its internal website; and
  • pay reasonable attorney’s fees.

Implications

OSHA’s press release expresses its intent to “send a clear message to publicly traded companies that silencing those who try to do the right thing as unacceptable.”  The sheer size and range of relief OSHA seeks to require through its preliminary order exposes that goal in a loud and clear way.  Query what implications including OSHA’s findings in a Form 8-K may have, and whether the Company will appeal this preliminary order.  We will keep our readers updated as events unfold.

Posted in OSHA Administration
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Photo of Steven J. Pearlman Steven J. Pearlman

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

Employment, Restrictive Covenant & Trade Secret, and Whistleblower…

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

Employment, Restrictive Covenant & Trade Secret, and Whistleblower Practice. Steven’s national practice focuses on defending companies in federal and state courts and in arbitration fora against the full spectrum of employment-related claims, including claims of executives; restrictive covenant violations; employee raiding; theft of trade secrets; whistleblower retaliation under the Sarbanes-Oxley Act, the Dodd-Frank Act and similar state laws; and wage-and-hour violations, including class, collective and PAGA actions.

Steven has successfully handled trials in multiple jurisdictions; prevailed in seeking and defending against applications for temporary restraining orders and preliminary injunctions; defended one of the largest Illinois-only class actions in the history of the federal courts in Illinois (over 90k putative class members); and prevailed following his oral arguments before federal and state appellate courts. He brings his litigation experience (beginning in 1998) to bear in counseling clients to minimize risk and avoid or prepare for success in litigation.

Investigations. Reporting to boards of directors, their audit committees, CEOs and in-house counsel, Steven conducts sensitive investigations and has the unusual experience of testifying in federal court in connection with investigations. 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.

Thought Leadership and Accolades. Steven was named 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 has reported:

  • Steven is “one of the best in the country and has a lot of experience”;
  • Steven is as an “outstanding lawyer” who is “very sharp and very responsive,” a “strong advocate,” and an “expert in his field”;
  • He is thoughtful, attentive and demonstrates an acute understanding of matters top of mind for business-minded general counsel; and
  • “He is someone who can navigate the twists and turns of litigation without difficulty.”

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 U.S. Library of Congress Burton Award Winner for “Distinguished Legal Writing.”

Steven was appointed to Law360’s Employment Editorial Advisory Board and selected as a Contributor to Forbes.com. He has appeared on Bloomberg News (television and radio) and Yahoo! Finance, and is often 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.

In 2024, Steven received the Excellence in Pro Bono Service Award from the United States District Court for the Northern District of Illinois and the Chicago Chapter of the Federal Bar Association.

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