Firm Denies Fired VP| Is a Whistleblower

SAN FRANCISCO (CN) - A biotech company that was fined for bribing foreign governments last year asked a judge to dismiss a former vice president's lawsuit claiming the company fired him for reporting misconduct.

Sanford Wadler sued his former employer, Bio-Rad Laboratories, and its board of directors in May for allegedly violating whistleblower-protection laws by canning him for not going along with a cover-up of bribery in China.

Wadler, who served as Bio-Rad's general counsel for almost 25 years, claims he began investigating the company's misdoings in China after learning that overseas employees and agents bribed government officials in Russia, Thailand and Vietnam to win public contracts to sell medical diagnostic equipment.

In 2014, Bio-Rad agreed to pay $55.1 million in fines for violating the Foreign Corrupt Practices Act under a nonprosecution agreement with the SEC and Justice Department, according to an SEC report.

In its motion to dismiss Wadler's lawsuit, Bio-Rad argued that Wadler does not qualify for whistleblower protection and that its board of directors can not be held liable for alleged whistleblower retaliation.

During a hearing on the motion Friday, Bio-Rad urged the judge to adopt a narrow interpretation of the words "whistleblower" and "employer" in the Dodd-Frank and Sarbanes-Oxley Acts, which prohibit retaliation against whistleblowers.

Although Wadler reported his concerns to superiors and auditors hired by the company to investigate the bribery allegations, Bio-Rad maintains that whistleblower protections only apply to those who share information with the SEC.

"Wishing they had conducted a more thorough investigation does not make him a whistleblower," said Bio-Rad's attorney Linda Inscoe.

Wadler's counsel Kevin Clune countered that his client's refusal to go along with a cover-up of illegal activities ensures him whistleblower protection under the law.

Bio-Rad further contended Wadler can not sue the company's board of directors for firing him because the directors are neither an "employer" nor "agents" of the employer. The narrow definition of "employer" excludes the board of directors from liability, Inscoe insisted.

"Terminating is clearly conducting an act on behalf of the corporation," Clune countered, adding it would set a bad precedent if the court found a board of directors could not be held liable for firing whistleblowers.

U.S. Magistrate Judge Joseph Spero said Congress may not have intended to grant boards of directors immunity from liability for retaliation when it passed whistleblower protection laws in 2002 and 2010.

"How can it possibly be that the highest-level individuals in the company can be fired by the board of directors, and it was the intent of Congress that those individuals that conducted that would be immune, even though some much lower-level employee could be held liable," Spero asked. "That makes zero sense to me."

However, the judge also indicated he found merit in Bio-Rad's argument that Wadler's claims against the board were not timely because Wadler failed to name all the directors or the fact that they fired him in his original complaint to the U.S. Department of Labor.

"It doesn't say anything about what any of the board members did," Spero said of the Labor Department complaint. "It just says these are the board members. It doesn't say they did anything wrong."

Spero said if board members were not notified they could be sued for firing Wadler when the complaint was filed, then his claims against the directors may be considered untimely.

"I believe because the board was aware they fired him and served with notice of the complaint, that satisfies the requirements," Clune replied.

Before concluding the hearing, Spero honed in on two key issues he wants clarified prior to ruling on Bio-Rad's motion to dismiss - the definitions of "employer" and "whistleblower" under the Dodd-Frank and Sarbanes-Oxley Acts.

Spero asked both parties to submit supplemental briefings on the legislative history of both laws by Sept. 25 to help ascertain Congress' intent when it drafted the language and definitions for those statutes.

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