Staples Wins Ruling Over Alleged Whistleblower

(CN) - The 1st Circuit denied whistleblower protection to a Staples employee who claimed he was fired for reporting accounting fraud.

Kevin Day's first job out of college lasted less than three months. He worked for office-supply retailer Staples as a reverse logistics analyst, directing returned products from the store back to the warehouse.

Day had three major complaints with the way Staples did business. He claimed:

- Staples gave financial credits to customers without proper documentation;

- The reverse logistics department under-issued credits to contract customers; and

- The department canceled and re-issued pickup orders, which could allow couriers to overbill Staples.

Day claimed the final of his three points was done intentionally by his manager, Mary-Ellen Julio, in order to improve her personal work statistics.

Julio recommended that Day be fired for poor performance, including his recommendation of a competitor's product to a customer.

Day went to the Human Resources Department to report that Julio was forcing him to participate in fraudulent activity against the company's shareholders.

Day sued for whistleblower protection under the Sarbanes-Oxley Act, but the district court dismissed the case, determining that "plaintiff's belief that he had uncovered fraud was not reasonable."

Judge Lynch of the Boston-based federal appeals court affirmed the district court's ruling.

"A generalized allegation of inaccuracy in accounting is insufficient to establish a reasonable belief in violation of generally accepted accounting principles," Lynch wrote, "much less a reasonable belief in shareholder fraud."

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