In a warning to plaintiffs’ counsel who seek emotional distress damages for alleged whistleblower retaliation under Florida law, the Eleventh Circuit in Smith v. Psychiatric Solutions, Inc., 750 F.3d 1253 (11th Cir. May 6, 2014) has created a Hobson’s choice: forcing plaintiff-employees either to forego potential emotional distress damages available under state law or risk paying prevailing party attorneys’ fees and costs to the defendant.

Plaintiff Leslie Smith sued her former employer and its owners for retaliation under Section 806 of SOX and the Florida Whistle-Blower Act (“FWA”).   While SOX contains an employee prevailing party provision and no specific emotional distress remedy, the WFA authorizes a court to award fees and costs to the prevailing party and provides for emotional distress damages.  Because Smith could not establish a prima facie case under either statute, the district court granted her former employer summary judgment; and, after summary judgment was upheld on appeal, the district court awarded prevailing party attorneys’ fees to Smith’s former employer under the FWA.

The question on appeal was whether a prevailing party employer may recover attorneys’ fees when SOX does not authorize an award of fees to a prevailing party defendant.  In affirming the attorneys’ fees award, the Eleventh Circuit rejected the employee’s arguments that: (i) SOX and the FWA were in conflict; and, (ii) therefore, the latter was preempted.  In so doing, the Eleventh Circuit concluded that there was no conflict because SOX “neither authorizes a defendant to recover attorneys’ fees nor prevents a defendant from recovering fees that are elsewhere authorized.”  Therefore, SOX’s attorney fee provision did not preempt the FWA provision.

Although the Eleventh Circuit noted that an employee’s attorneys’ fee risk can be eliminated by foregoing an FWA claim, the Court did not comment on the fact that there was a consequence for the elimination of the risk.  Some courts have not allowed for the recovery of emotional distress damages under SOX because emotional distress is not included within the list of recoverable compensatory damages under SOX.  Thus, in Florida, the employee’s leverage of seeking uncapped emotional distress damages under the FWA is something employees will need to forego if they are risk adverse to paying attorneys’ fees if their case is deemed meritless.

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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.