Marissa A. Mastroianni

Subscribe to Marissa A. Mastroianni's Posts

On October 17, 2017, the Tenth Circuit overturned the ARB’s decision in favor of complainant for want of protected activity under SOX.  Dietz v. Cypress Semiconductor Corp., No. 16-9529 (Oct. 17, 2017).  This decision rolled back the ARB’s expansive determination that a company violated federal mail and wire fraud laws by implementing a mandatory bonus plan that failed to comply with state wage payment laws.

Background.  Complainant worked for another entity before it was acquired by the Company.  Offer letters were sent to some of the prior company’s employees, including Complainant, which included compensation information.  The offer letters, however, omitted the fact that some of the employees would be subject to an alternative compensation plan (the “Design Bonus Plan”).  The Design Bonus Plan involved a mandatory wage deduction, which would later be recuperated based on the performance of the affected employees’ projects.  The Company did not start making the deductions until approximately nine months after the prior company’s employees started working for the Company.  Training sessions about the Design Bonus Plan were also offered.  In April 2013, after one of the training sessions, Complainant emailed his supervisor to discuss his concerns about the legality of the Design Bonus Plan and also discussed this with the General Counsel.   Additionally, Complainant complained that the Design Bonus Plan took employees by surprise.  Shortly thereafter, the Company disciplined Complainant and allegedly required him to write memos regarding his alleged errors.  Two months later, Complainant informed the Company that he intended to resign.  Instead of beginning the Company’s turnaround process (designed to retain employees), he was scheduled to attend a meeting two days later.

The Southern District of Florida recently denied a Rule 12(b)(6) motion to dismiss a former employee’s Sarbanes-Oxley and Dodd-Frank whistleblower retaliation claims, finding that the plaintiff sufficiently alleged that she had an objectively reasonable belief regarding alleged securities violations.  Thomas v. Tyco Int’l Mgmt. Co., LLC, No. 16-cv-80501 (Mar. 31, 2017).  This case is noteworthy because it takes an expansive view of the scope of protected activity under SOX with respect to complaints involving internal controls and data security.

Background.  Plaintiff was a former Manager of Financial Reporting for the Company.  She allegedly learned during her employment that an applicant for a manager position misrepresented her educational qualifications in her resume.  Additionally, she allegedly believed that the applicant did not have sufficient training in generally accepted accounting principles (“GAAP”).  According to her complaint, despite raising these concerns with her direct supervisor, the Company hired the applicant for the new manager position.  Plaintiff claimed that the new manager was responsible for reporting $4 billion per year to the Company’s headquarters and ultimately to the SEC.  Plaintiff also allegedly began doubting the reliability of a new monthly “tie-out” process the Company used to ensure that the financial data in the Company’s ledger system was consistent with the consolidated financial data reported to the SEC.  In December 2013, Plaintiff filed a complaint with the internal ombudsman regarding the new manager’s credentials and the tie-out process.  The ombudsman found no wrongdoing.  In March 2014, Plaintiff filed a whistleblower retaliation complaint with OSHA.  In May 2014, her employment was terminated on the grounds that she allegedly improperly accessed another employee’s records.

The Northern District of New York recently denied a Rule 12(b)(6) motion to dismiss a former employee’s Dodd-Frank whistleblower retaliation claim, finding that the plaintiff sufficiently alleged that he had an objectively reasonable belief with respect to alleged securities violations and causation.  McManus v. Tetra Tech Construction, Inc., No. 16-cv-894 (May 11, 2017).