Mississippi Federal Court Denies Summary Judgment On SOX Whistleblower Claim

On February 12, 2018, the United States District Court for the Northern District of Mississippi recently denied a motion for summary judgment in a SOX whistleblower claim where the defendant company alleged that it terminated the plaintiff pursuant to a reduction-in-force (RIF). Hendrick v. ITT Engineered Valves, LLC, No. 16-cv-204.

Background. Plaintiff began working as Operational Excellence Manager at a company that was considering a RIF to respond to a decline business. Recognizing that he may lose his job, Plaintiff offered to management that he take off Fridays off to reduce expenses. Later that month, Plaintiff allegedly observed fraudulent inventory figures. Plaintiff photographed the proof of the alleged fraud and gave the pictures to a co-worker, who submitted an anonymous ethics complaint. Three hours after the report was filed, Plaintiff was informed that his job was being restructured, and Plaintiff interpreted this as a demotion. Plaintiff then e-mailed management about the alleged fraud. He and his co-worker who submitted the anonymous ethics complaint were both terminated months later. The organization cited a RIF as its reason for the layoffs. Plaintiff filed suit alleging he was terminated because of his co-worker's anonymous ethics complaint in violation of SOX.

Rulings. The company moved for summary judgment, arguing that because Plaintiff failed to identify any fraudulent activity that would qualify as a protected activity. Specifically, it argued that Plaintiff never accused the company of any SOX violation and failed to articulate his...