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News

9th U.S. Circuit Court of Appeals,
Labor/Employment

Feb. 27, 2019

9th Circuit trims damages, but plaintiff declares victory

A 9th U.S. Circuit Court of Appeals panel vacated $3 million of an $11 million whistleblower verdict on Tuesday, but upheld other damages for the company’s former general counsel.

9th Circuit trims damages, but plaintiff declares victory
Judge Mark J. Bennett

A 9th U.S. Circuit Court of Appeals panel vacated $3 million of an $11 million whistleblower verdict on Tuesday but upheld other damages for the company's former general counsel.

Attorneys for plaintiff Sanford S. Wadler say the ruling is still a victory for their client. Wadler v. Bio-Rad Laboratories Inc., 2019 DJDAR 1500 (9th Cir., filed June 8, 2017).

Writing for the unanimous panel, Judge Mark J. Bennett upheld $2.96 million in compensatory damages. But he vacated a doubling of that award under the Dodd-Frank Act, saying the court's interpretation of the rules was contradicted by a recent case, Digital Realty Trust, Inc. v. Somers, 138 S. Ct. 767, 778 (2018).

The ruling also upholds $5 million in punitive damages against the company for firing Wadler in violation of California public policy, leaving $7.96 million in compensatory and punitive damages in place, according to the opinion.

"This is absolutely a victory," said Michael von Loewenfeldt, a partner at Wagstaffe von Loewenfeldt Busch & Radwick LLP who argued the case in the 9th Circuit on behalf of the plaintiff. "We won the pieces that were still open to us to win."

"Bio-Rad is pleased that the Ninth Circuit set aside the judgment on two of the three claims against it and directed the lower court to reduce damages by nearly $3 million," Kathleen M. Sullivan, a partner at Quinn Emanuel Urquhart & Sullivan LLP who argued for the defendants, said in an email. "Bio-Rad is evaluating its further appellate options as to the sole remaining claim."

Wadler was Bio-Rad's general counsel. He worked for the company for more than 24 years until being fired in 2013. He sued in the Northern District of California in 2015, alleging the Hercules-based life sciences company retaliated against him for reporting alleged violations of the Foreign Corrupt Practices Act to his superiors and criticizing a subsequent internal investigation.

Bio-Rad paid $55.1 million to federal regulators to settle bribery and other claims under the Act related to violations in Russia, Vietnam and other countries. But the company claimed Wadler's dismissal was due to unrelated work performance issues, saying he had become increasingly angry and erratic.

A federal jury disagreed in 2017, finding Wadler engaged in protected activities and Bio-Rad failed to present sufficient evidence it fired him for other reasons.

Wadler's team "knew going in" to November oral arguments they would lose the Dodd-Frank claim due to Digital Realty, von Loewenfeldt said. The U.S. Supreme Court ruled months earlier "Dodd-Frank does not apply to purely internal reports," as Bennett wrote.

The claims under Sarbanes-Oxley were remanded back to the lower court "to determine if a new trial is warranted" on those claims. Bennett agreed with Bio-Rad that the statutory provisions did not constitute "regulations of the Securities and Exchange Commission," as the jury was told.

"We reject, however, Bio-Rad's argument that no properly instructed jury could produce a SOX verdict in favor of Wadler," he added.

This was Bennett's first published opinion on the court. But the fairly straightforward, technical ruling did not provide much insight into the thoughts of the new judge.

A member of the conservative Federalist Society, Bennett was confirmed by the U.S. Senate in July. But all 27 Senate votes against him came from Republicans, largely due to actions he took as attorney general of Hawaii.

This includes his opposition to District of Columbia v. Heller, 554 U.S. 570 (2008), a decision finding an individual has the right to bear arms under the Second Amendment. Bennett also joined Hawaii in a 26-state opposition to the plaintiffs in Citizens United v. FEC, 558 U.S. 310, 366-67 (2010), a campaign finance case seen as a major victory by business groups.

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Malcolm Maclachlan

Daily Journal Staff Writer
malcolm_maclachlan@dailyjournal.com

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