SDNY1In one of the first cases to address the standard governing a motion for summary judgment in a Dodd-Frank whistleblower retaliation case, Judge Jed S. Rakoff ruled that two former executives of Vista Outdoor Inc. (the Company) had failed to show that their terminations were causally connected to vague complaints about internal Company controls.  Vista Outdoor Inc. v. Reeves Family Trust, et. al., No. 16-cv-5766 (S.D.N.Y. Feb. 13, 2017).

Background

The Company terminated the Executives’ employment, asserting that they improperly entered into self-dealing transactions. The Executives then filed claims against the Company under Dodd-Frank’s anti-retaliation provision, alleging that the Company discharged them in retaliation for their complaints regarding the alleged ineffectiveness of the Company’s internal controls.  Notably, the complaints lacked a detailed explanation as to what exactly was improper about the Company’s internal controls and contained vague allusions to “SOX” with little or no explanation.  In support of their retaliation claim, the Executives pointed to certain text messages circulated amongst Company personnel which they alleged reflected “hostility and resentment” towards the Executives as a result of their complaints, and they relied upon the temporal proximity between their complaints and their terminations.

Ruling

The District Court granted the Company summary judgment on causation grounds, while also noting that any protected activity was questionable given the vagueness of the Executives’ complaints.  The court found that the text messages did not evidence “hostility and resentment,” and therefore could not establish a causal connection between the Executives’ complaints and their terminations.  The court also held that the timing of the Executives’ complaints—roughly two months before the Company planned to terminate them and three months before the actual terminations—similarly failed to establish a causal link.  The court noted that where a plaintiff relies solely on temporal proximity to prove causation, the protected activity and termination must be “very close,” and that district courts within the Second Circuit have consistently held under similar anti-retaliation provisions that the passage of more than two months is too long to allow for an inference of causation.

Implications

This is a valuable win for employers faced with Dodd-Frank whistleblower retaliation claims that are vulnerable to summary judgment on causation grounds, especially where the plaintiff relies on temporal proximity. It is also worth noting that the court adopted the same standard for proving causation based on temporal proximity to a Dodd-Frank retaliation claim as is applied under other federal statues, such as Title VII.

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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.

Photo of Pinchos Goldberg Pinchos Goldberg

Pinny Goldberg is a senior counsel in the Labor & Employment Law Department. Pinny represents employers in a broad array of matters before federal and state courts, FINRA and other arbitration panels, and administrative agencies, including the EEOC and its state equivalents, and…

Pinny Goldberg is a senior counsel in the Labor & Employment Law Department. Pinny represents employers in a broad array of matters before federal and state courts, FINRA and other arbitration panels, and administrative agencies, including the EEOC and its state equivalents, and in pre-litigation negotiations. Matters he works on include discrimination and harassment, wage and hour, wrongful discharge, whistleblowing and retaliation, covenants not to compete, breaches of fiduciary duty, unjust enrichment, and tort and contract claims.

In addition to handling litigation and dispute resolution, Pinny regularly advises clients on a wide variety of employment issues, including drafting, reviewing and revising handbooks and workplace policies. He also addresses questions and concerns related to hiring, wage and hour issues, employee leave, performance problems, terminations of employment, and separation agreements and releases.