On June 27, 2018, the U.S. Court of Appeals for the Third Circuit affirmed the dismissal on summary judgment of a SOX whistleblower retaliation claim, concluding that the Plaintiff’s purported belief that the Defendant had committed fraud was not objectively reasonable. Westawski v. Merck & Co., No. 16-4075, 2018 WL 3159093 (3d Cir. June 27, 2018).
Plaintiff Joni Westawski was a research analyst at Merck & Co. She was assigned to oversee a diabetes-related study for grocery chain H-E-B and its health insurance benefits administrator, Blue Cross Blue Shield of Texas (“BCBS”). After Merck hired an outside market research firm, DrTango, to conduct the research project, Westawski complained that DrTango was more expensive than other research firms and that Merck had only hired DrTango because one of its scientists had close relationships with executives of BCBS. After Merck terminated Westawski’s employment in a restructuring, she filed a whistleblower retaliation suit under Section 806 of SOX.
The district court granted Merck summary judgment on Westawski’s SOX whistleblower claim, holding that she could not show that she engaged in protected activity because no reasonable person in her position could have believed that the concerns she raised amounted to a violation of one of the laws enumerated in Section 806 of SOX. (We posted about the district court’s decision here.)
The Third Circuit affirmed the district court’s grant of summary judgment to Merck, holding that “[e]ven assuming Merck selected DrTango and paid it a premium to conduct a study for H-E-B so Merck could improve its business relationship with Blue Cross [Blue Shield of] Texas, Westawski fails to explain how that is fraud.” Westawski, 2018 WL 3159093, at *2. Westawski’s “vague” assertions that the payments to DrTango were some form of “bribe,” “inducement,” or “quid pro quo” were not enough to demonstrate that her complaints “relate in an understandable way” to any of Section 806’s enumerated forms of fraud. Id. (citation omitted).
The Third Circuit’s decision is an important reminder that even applying the “reasonable belief” standard articulated by the Administrative Review Board in Sylvester v. Parexel, the plaintiff’s alleged protected activity must “relate in an understandable way” to one of the enumerated forms of fraud set forth in Section 806 of SOX.