8thOn June 6, 2016, the Eighth Circuit affirmed the Minnesota District Court’s grant of summary judgment on SOX and Dodd-Frank whistleblower retaliation claims based on the plaintiff’s failure to establish a reasonable belief that the defendant employer engaged in fraud on shareholders.


Plaintiff Vincent Beacom (“Plaintiff”), a former Vice President of Sales for the Americas at the Company, alleged his employment was terminated in retaliation for complaining that the Company’s quarterly sales revenue projections were improperly calculated when his supervisor allegedly departed from a “bottom-up” projection method and instead opted for a “top-down” projection method that Plaintiff alleged lead to inaccurate sales projections by approximately $10 million.  Plaintiff claimed these missed sales goals were due to the allegedly improper projections and that these misses caused the Company’s stock to decline.

After his employment was terminated, Plaintiff filed SOX and Dodd-Frank whistleblower retaliation claims in the District of Minnesota.  The District Court granted the Company summary judgment on those claims, ruling that Plaintiff failed to show he engaged in protected activity under SOX.  It found that Plaintiff did not subjectively believe and could not have had an objectively reasonable belief that “[m]issing a revenue forecast by less than four hundredths of a percent of total revenue” violated the federal securities laws.

The Eighth Circuit affirmed, holding that Plaintiff “would understand the predictive nature of revenue projections . . . [a]nd, he would understand that $10 million is a minor discrepancy to a company that annually generates billions of dollars.”  The court therefore found that Plaintiff’s “belief that [the Company] was defrauding its investors was objectively unreasonable, even under the less-stringent Sylvester standard.”  It further held that since Dodd-Frank prohibits an employer from discharging a whistleblower for “making disclosures that are required or protected under [SOX],” then Plaintiff’s Dodd-Frank claim also failed because he did not make a SOX-protected disclosure.

This is an important win for employers, as they may rely on it to show that an employee lacks a reasonable belief where claims are based on amounts that would be immaterial to shareholders.