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.

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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 Forbes.com. 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.