SAN FRANCISCO (CN) — A federal jury Monday awarded the former general counsel of Bio-Rad Laboratories $8 million in back pay and damages — which will increase to $11 million — for whistleblower retaliation involving potential bribery in China.
The jury awarded Sanford “Sandy” Wadler $2.96 million for economic losses and $5 million in punitive damages. Because the Dodd-Frank Act allows double back pay damages for whistleblower retaliation, the back pay award will increase to $5.92 million, bringing the total to nearly $11 million.
The jury of five women and four men returned the verdict Monday afternoon a few hours after starting deliberations at the end of a three-week trial.
Wadler sued Hercules-based Bio-Rad Laboratories and its CEO Norman Schwartz in May 2015, claiming he was fired in June 2013 for reporting potential bribery in China, in violation of the Foreign Corrupt Practices Act.
“We are very gratified that the jury unanimously upheld my client's whistleblower rights," Wadler's attorney James Wagstaffe said Monday. “We hope this will send a message that corporations need to respond appropriately to whistleblower claims."
Wadler sought $35 million — $2.96 million in economic losses, $5.33 million in future economic losses and $27 million in punitive damages.
The jury found that Wadler engaged in a protected activity when he sent a memo to Bio-Rad's audit committee in February 2013 calling for an investigation into a possible bribery scandal in China that could involve senior management.
Although a four-month investigation found no direct evidence of misconduct, Wadler argued that the act of reporting his concerns was a protected whistleblower activity under the Sarbanes-Oxley Act of 2002.
During the trial and closing arguments, Bio-Rad's attorney John Potter said Wadler was not fired for trying to expose misconduct, but because of increasingly unruly and quarrelsome behavior, which included yelling at colleagues and pounding his fist on tables. Potter said Wadler's failure to notify colleagues of critical information for Securities and Exchange Commission filings was another reason for his termination.
However, the jury found Bio-Rad and its CEO failed to prove by” clear and convincing evidence” that it would have fired Wadler “based on wholly legitimate reasons” if the former general counsel had not reported the bribery allegations.
Wagstaffe said a “fake job review” was a major piece of evidence that helped tip the scale.
In a sworn declaration to the Department of Labor, Bio-Rad CEO Schwartz called the negative review a "true and correct copy" of Wadler's performance evaluation. The review was dated April 15, 2013, nearly two months before Wadler was fired on June 7. But the document’s metadata showed it was created on July 9, more than a month after Wadler was fired.
Schwartz said he probably wrote the earlier date because he started the review in handwritten notes months before, and created the digital file afterward, “to memorialize it.”
During his closing argument, Wagstaffe called the “fabricated” job review “a despicable lie.” He said Schwartz created the document after the fact to justify firing Wadler, and that Schwartz would have kept lying about it had data not revealed the true date of the file's creation.
Potter retorted in his final appeal to the jury that Schwartz had started drafting the evaluation back in April and that none of the information contained in the document was false.
Potter also attempted to cast doubt on Wadler's credibility, telling jurors that the former general counsel "lied through his teeth" about searching online for employment lawyers before he submitted his report to the audit committee.
The Bio-Rad attorney accused Wadler of concocting unsupported allegations against the company to exploit whistleblower protection laws and shield himself "from his own incompetence."
Potter claimed Wadler exploited the company's vulnerable position while it was under investigation for bribery in Russia, Thailand and Vietnam. The company ended up settling criminal charges and civil claims with the Department of Justice and SEC for $55 million in 2014.
During closing arguments Monday, attorneys on both sides spent hours attacking the credibility of each other’s witnesses, telling jurors to discount large swaths of testimony as coming from untrustworthy sources.
But the jury concluded that Wadler's reporting of potential bribery was a protected activity and that the report was a "substantial motivating reason" for his termination.
Wagstaffe said his client will likely file a motion for attorneys’ fees as well, which should be worth another several million dollars.
Bio-Rad spokeswoman Tina Cuccia could not be reached by phone and did not return an email seeking comment Monday evening.
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