4thOn May 20, 2016, the Fourth Circuit affirmed the decision of the ARB, finding that a former employee of Deltek, Inc. (Company) was retaliated against in violation of Section 806 of SOX and entitled to four years’ worth of front pay.  Deltek, Inc. v. Dep’t of Labor, No. 14-cv-2415 (unpublished).

Dinah Gunther (Plaintiff), a former financial analyst, allegedly believed her employer was deliberately subjecting invoices to baseless disputes in an effort to hide a telecommunications budget shortfall and obfuscate the true financial condition of the IT Department.  She reported her concerns to company officials, and complained that she was being subject to adverse treatment following her complaints.  In a meeting with in-house counsel and the Vice President of Human Resources on the day she returned to work following a leave of absence, she said she believed she was being retaliated against.  She made a secret recording during that meeting, which the Company learned of at a later date.  The following day, the Company terminated her employment.  The Company’s proffered reason for the termination was Plaintiff’s purportedly confrontational and disruptive conduct during and after the meeting.

Following her discharge, Plaintiff filed a complaint with the DOL under Section 806 of SOX.  An ALJ found that the Company retaliated against her and awarded her four years of front pay and required the Company to maintain its tuition reimbursement program for Plaintiff.  The front pay award amounts to $300,352 and the tuition reimbursement benefits are valued at $30,000.  The ARB affirmed, and the Company appealed to the Fourth Circuit.  The Fourth Circuit affirmed in whole.  It found there was substantial evidence to support the conclusion that Plaintiff’s protected activity contributed to Plaintiff’s termination.  With regard to damages, the court disagreed with the Company that the front pay award was speculative.

The Dissent criticized the Majority on both its causation- and damages-related findings.  The Dissent was concerned that the Majority rubberstamped the decision of the lower tribunal, failing to account for the Company’s explanations for discharging Plaintiff.  It also found that the damages awarded were “rankly speculative” and amounted to a windfall.

This decision underscores the risk of oversized front-pay awards in SOX cases and highlights the degree to which some courts may defer to the ARB and ALJs.

Posted in SOX Whistleblower Decisions
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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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