Filed: May 12, 2014
Latest Update: Mar. 02, 2020
Summary: PUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 13-1849 PAUL H. FELDMAN, Plaintiff - Appellant, and MARTIN L. PERRY, Plaintiff, v. LAW ENFORCEMENT ASSOCIATES CORPORATION; ANTHONY RAND; JAMES J. LINDSAY; JOSEPH A. JORDAN; PAUL BRIGGS, Defendants – Appellees, and JOHN H. CARRINGTON, Defendant. Appeal from the United States District Court for the Eastern District of North Carolina, at Raleigh. W. Earl Britt, Senior District Judge. (5:10-cv-00008-BR) Argued: March 18, 2014 Decide
Summary: PUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 13-1849 PAUL H. FELDMAN, Plaintiff - Appellant, and MARTIN L. PERRY, Plaintiff, v. LAW ENFORCEMENT ASSOCIATES CORPORATION; ANTHONY RAND; JAMES J. LINDSAY; JOSEPH A. JORDAN; PAUL BRIGGS, Defendants – Appellees, and JOHN H. CARRINGTON, Defendant. Appeal from the United States District Court for the Eastern District of North Carolina, at Raleigh. W. Earl Britt, Senior District Judge. (5:10-cv-00008-BR) Argued: March 18, 2014 Decided..
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PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 13-1849
PAUL H. FELDMAN,
Plaintiff - Appellant,
and
MARTIN L. PERRY,
Plaintiff,
v.
LAW ENFORCEMENT ASSOCIATES CORPORATION; ANTHONY RAND;
JAMES J. LINDSAY; JOSEPH A. JORDAN; PAUL BRIGGS,
Defendants – Appellees,
and
JOHN H. CARRINGTON,
Defendant.
Appeal from the United States District Court for the Eastern
District of North Carolina, at Raleigh. W. Earl Britt, Senior
District Judge. (5:10-cv-00008-BR)
Argued: March 18, 2014 Decided: May 12, 2014
Before GREGORY, WYNN, and THACKER, Circuit Judges.
Affirmed by published opinion. Judge Gregory wrote the opinion,
in which Judge Wynn and Judge Thacker joined.
ARGUED: Adam Augustine Carter, EMPLOYMENT LAW GROUP, PC,
Washington, D.C., for Appellant. Amy Yager Jenkins, MCANGUS,
GOUDELOCK & COURIE, LLC, Mount Pleasant, South Carolina, for
Appellees. ON BRIEF: R. Scott Oswald, John T. Harrington, Jr.,
EMPLOYMENT LAW GROUP, PC, Washington, D.C.; Michael C. Byrne,
LAW OFFICES OF MICHAEL C. BYRNE, PC, Raleigh, North Carolina,
for Appellant. Helen F. Hiser, Mount Pleasant, South Carolina,
for Appellees.
2
GREGORY, Circuit Judge:
Plaintiff Paul Feldman, who asserts that he was unlawfully
terminated from his employment in retaliation for protected
activity under the Sarbanes-Oxley Act of 2002 (“SOX”), 18 U.S.C.
§ 1514A, appeals the district court’s grant of summary judgment
to Defendants Anthony Rand, James Lindsay, Joseph Jordan, Paul
Briggs, and Law Enforcement Associates Corporation (“LEA”).
Because we find that Feldman failed to sufficiently establish
that his alleged protected activities were a contributing factor
to his termination, we affirm.
I.
Sometime prior to 2001, Feldman became President of LEA, a
company that manufactures security and surveillance equipment. 1
He remained President and CEO until his termination on August
27, 2009. In 2005, LEA’s founder, John Carrington, pled guilty
to criminal export violations involving another company he
owned, and was ordered to refrain from certain export activities
for five years. Though Carrington remained a major stockholder,
he resigned from LEA’s Board of Directors (“Board”) and has not
1
We resolve any factual disputes and competing, rational
inferences in the light most favorable to Feldman, as the party
opposing summary judgment. Rossignol v. Voorhaar, 316 F.3d 516,
523 (4th Cir. 2003).
3
been an officer or employee of LEA since. During the relevant
time period, the Board consisted of two “Inside Directors” —
Feldman and Martin Perry — and three “Outside Directors” — Rand,
Lindsay, and Jordan.
Since at least November 1, 2007, an “extraordinarily
palpable” split existed between the Inside Directors and the
Outside Directors, J.A. 4282, due in some part to the fact that
Carrington planned to sell LEA without first giving Feldman an
opportunity to buy it, as well as the Board’s decision not to
approve a written employment contract that would have increased
Feldman’s salary. The tension deepened after Feldman confirmed
in December 2007 that Carrington owned fifty percent of a
company called SAFE Source, to which LEA had shipped some of its
products in 2005 or 2006. SAFE Source exported these products
overseas, but because Carrington was still banned from making
exports, Feldman became concerned that the exports were illegal.
The issue of LEA’s business with SAFE Source arose in a
December 27, 2007 Board meeting, but the parties dispute exactly
what was said and by whom. There are competing versions of the
meeting minutes, but a majority of the Board — the Outside
Directors — adopted the version produced by Mark Finkelstein, a
lawyer Rand hired for the company, over the version produced by
Eric Littman, another LEA attorney. Feldman asserts that he
objected that Finkelstein’s minutes were falsified. Feldman
4
further contends that he saw Rand and Finkelstein meet with
Carrington immediately after the meeting, and suspects that they
informed Carrington of his intention to report the issue to the
government. On January 14, 2008, Feldman and Perry wrote the
United States Department of Commerce about the potentially
illegal exports, resulting in a federal investigation and a raid
of SAFE Source’s headquarters shortly thereafter.
A number of other conflicts subsequently arose between
Feldman and Appellees. In February or March 2008, Feldman
relocated LEA’s headquarters from Youngsville, North Carolina to
Raleigh, North Carolina, claiming that it benefitted the company
in various ways. The Outside Directors viewed this act as
insubordinate since Feldman entered the new lease on office
space without their prior approval. At some point in 2008, the
Outside Directors also took issue with the financial information
and meeting agendas they received from Feldman, asserting that
the requested information was either not provided or was
insufficient. At a March 13, 2008 Board meeting, Finkelstein
became LEA’s primary counsel, while Littman remained on as LEA’s
securities counsel. Finkelstein submitted various bills for his
legal services on May 1, 2008, but Feldman considered them
fraudulent because they were for services rendered prior to
March 13, 2008, and he refused to pay.
5
In April 2009, Feldman and other LEA representatives met
with Joseph and Barbara Wortley, LEA shareholders who were
threatening to sue LEA over a contractual dispute. When Joseph
Wortley expressed dissatisfaction with the Board, Feldman
replied that the Board “could do more to help the company,” and
that “he too wished they would do more.” J.A. 4285. At a July
27, 2009 meeting with Joseph Wortley and Wortley’s son, Feldman
further stated that the Outside Directors were loyal to
Carrington rather than to the company. Shortly after this
meeting, Feldman wrote a letter to the Outside Directors urging
them to resign from the Board. Lastly, in July or August 2009,
Feldman and Perry reported to the Department of Commerce their
suspicion that LEA was involved in insider trading because
several prominent North Carolina politicians were shareholders.
On August 26, 2009, Rand told Perry that the Outside
Directors planned to terminate Feldman at the Board meeting
scheduled for the next day because they had lost confidence in
him and because of the Wortley situation. However, Rand told
Perry that the Outside Directors wanted Perry to stay on at LEA.
Perry advised Feldman of the conversation, and neither he nor
Feldman attended the August 27, 2009 Board meeting. Feldman’s
6
employment was terminated at that meeting, and Perry’s
employment was terminated on September 23, 2009. 2
Feldman asserts that in the months just prior to his
termination, he successfully led negotiations to secure a $225
million contract with the Department of Homeland Security
(“DHS”), and that, only ten days before firing him, LEA reported
record income and a 260% increase in sales. Appellees counter
that the substantive work on the DHS contract was done by
another employee, and that LEA had record income in 2009 only
because they unexpectedly received an unsolicited job from the
Census Bureau worth roughly $7.3 million. Aside from this
particular contract, Appellees claim LEA was a break-even
business that was not doing well during the last years of
Feldman’s leadership.
Feldman filed suit against LEA, Rand, Lindsay, Jordan, and
Carrington on January 8, 2010, asserting a claim under the
Americans with Disabilities Act (“ADA”) as well as state claims
2
After learning of his pending termination, Feldman went to
the hospital on August 26, 2009 claiming that he might be having
a transient ischemic attack. Perry, who had a history of
multiple sclerosis, went to the hospital on August 27, 2009,
where he was diagnosed as having suffered an acute multiple
sclerosis flare. Perry did not return to work thereafter, and
when he failed to respond to LEA’s inquiries about when he would
return, LEA sent him a letter on September 23, 2009 stating that
they had to conclude from his lack of response that he had
voluntarily quit.
7
for civil conspiracy and wrongful termination. Perry had sued
separately, and they consolidated their complaints on April 16,
2010. On June 7, 2010, Feldman and Perry amended the complaint, 3
adding their respective SOX claims that had since become ripe.
The court granted in part and denied in part a motion to
dismiss, and all that remained at issue was their ADA and SOX
claims, Perry’s state law claims, and a counterclaim by LEA.
Feldman argues that he was unlawfully fired in retaliation
for engaging in activities protected under SOX between late
December 2007 and early May 2008. These activities include:
(1) reporting to the Board and the federal government about the
potentially illegal exports with SAFE Source; (2) objecting to
falsified Board meeting minutes; (3) objecting to leaks of
information by the Outside Directors to Carrington; (4)
objecting to and refusing to pay Finkelstein’s legal bills; and
(5) notifying the government of suspected insider trading.
The district court granted summary judgment to Appellees
and held that plaintiffs failed to make a prima facie showing of
their SOX claims because they did not sufficiently prove that
the alleged protected activities 4 were a contributing factor to
3
The amended complaint also added Briggs as a defendant.
On March 10, 2011, Carrington was dismissed as a defendant.
4
The court held that plaintiffs had not sufficiently shown
that their report of suspected insider trading was protected
(Continued)
8
their respective terminations. The court therefore found that
it need not decide whether LEA could show that it would have
terminated Feldman and Perry otherwise, but noted that LEA had a
legitimate business reason for its actions. Feldman timely
appealed, arguing that the court erred by holding that the
activities were not contributing factors to his termination and
by failing to decide whether Appellees had sufficiently shown
that he would have been fired regardless. This Court has
jurisdiction pursuant to 28 U.S.C. § 1291.
II.
The Sarbanes-Oxley Act protects whistleblowers of publicly-
traded companies by prohibiting employers from retaliating
against employees who have provided information about
potentially illegal conduct. Welch v. Chao, 536 F.3d 269, 275
(4th Cir. 2008). SOX specifically provides that:
no [publicly traded] company, or any officer [or]
employee . . . of such company . . . may discharge
. . . an employee . . . because of any lawful act done
by the employee . . . to provide information . . . or
otherwise assist in an investigation regarding any
conduct which the employee reasonably believes
constitutes a violation of section 1341 [mail fraud],
1343 [wire fraud], 1344 [bank fraud], or 1348
[securities fraud], any rule or regulation of the
activity under SOX, but assumed without deciding that the
remaining four activities did constitute protected activity.
9
Securities and Exchange Commission, or any provision
of Federal law relating to fraud against shareholders,
when the information or assistance is provided to or
the investigation is conducted by (A) a Federal
regulatory or law enforcement agency; (B) any Member
of Congress or any committee of Congress; or (C) a
person with supervisory authority over the employee
(or such other person working for the employer who has
the authority to investigate, discover, or terminate
misconduct) . . . .
18 U.S.C. § 1514A(a).
We apply a burden-shifting framework to SOX whistleblower
claims incorporated from the Whistleblower Protection Program of
the Wendell H. Ford Aviation Investment and Reform Act for the
21st Century (“AIR 21”), 49 U.S.C. § 42121(b). Welch, 536 F.3d
at 275. The plaintiff must first establish a prima facie case
by proving, by a preponderance of the evidence, that: “(1) she
engaged in protected activity; 5 (2) the employer knew that she
engaged in the protected activity; (3) she suffered an
unfavorable personnel action; and (4) the protected activity was
5
In Welch, we held that in order to establish that he
engaged in protected activity, “an employee must show that his
communications to his employer ‘definitively and specifically
relate[d]’ to one of the laws listed in § 1514A.” 536 F.3d at
275 (internal citations omitted). The Department of Labor has
since concluded that this standard is applied too strictly, and
that “the critical focus is on whether the employee reported
conduct that he or she reasonably believes constituted a
violation of federal law.” Sylvester v. Parexel Int’l LLC, ARB
Case No. 07-123,
2011 WL 2165854, at * 15 (Dep’t of Labor May
25, 2011) (emphasis in original). In light of our holding that
Feldman did not satisfy the fourth prima facie prong, we need
not clarify here where Welch stands since Sylvester was decided.
10
a contributing factor in the unfavorable action.” 6 Allen v.
Admin. Review Bd.,
514 F.3d 468, 475-76 (5th Cir. 2008)
(internal citations omitted). See 29 C.F.R. § 1980.109(a); 49
U.S.C. § 42121(b)(2)(B)(iii). If the employee meets this
burden, the defendant must then “rebut the employee’s prima
facie case by demonstrating by clear and convincing evidence
that the employer would have taken the same personnel action in
the absence of the protected activity.”
Welch, 536 F.3d at 275
(citing § 42121(b)(2)(B)). Feldman’s appeal centers on the
fourth prima facie prong and his claim that the burden shifted
to Appellees to prove that they would have terminated him
6
Notably, we relied in Welch on a four-part standard which
frames the fourth element as requiring a prima facie showing
that “[t]he circumstances were sufficient to raise the inference
that the protected activity was a contributing factor in the
adverse decision.” See Welch, 536 F.3d at 275. However, the
regulation cited in Welch relates to a complainant’s burden to
allege a legally sufficient whistleblower retaliation claim at
the investigatory stage. See 29 C.F.R. § 1980.104. “As other
circuits and the [Administrative Review Board (“ARB”)] have
noted, however, at the evidentiary stage, the fourth element
requires the complainant to prove by a preponderance of the
evidence that the ‘protected activity was a contributing factor
in the adverse action,’ 29 C.F.R. § 1980.109(a), and not merely
show that ‘[t]he circumstances were sufficient to raise the
inference that the protected activity was a contributing factor
in the adverse action,’ 29 C.F.R. § 1980.104(e)(2).” Bechtel v.
Admin. Review Bd., U.S. Dep’t of Labor,
710 F.3d 443, 448 n.5
(2d Cir. 2013) (emphasis in original) (internal citations
omitted). In this case, wherein we consider Feldman’s claims on
summary judgment, we therefore apply the contributing factor
element as articulated in § 1980.109(a). See Livingston v.
Wyeth, Inc.,
520 F.3d 344, 351 (4th Cir. 2008) (citing 49 U.S.C.
§ 42121(b)(2)(B)).
11
regardless. Before turning to the merits, however, we must
first address whether the district court properly exercised
jurisdiction over this claim.
III.
In order to obtain relief under SOX, a plaintiff must file
a complaint with the Secretary of Labor through his designee,
the Occupational Safety and Health Administration (“OSHA”). See
§ 1514A(b)(1)(A); 29 C.F.R. § 1980.103. If the Secretary has
not issued a final decision within 180 days of the filing of the
complaint, and there is no showing that the delay is due to any
bad faith by the plaintiff, the plaintiff may file suit in
federal district court, “which shall have jurisdiction over such
an action without regard to the amount in controversy.”
§ 1514A(b)(1)(B). “The Supreme Court has indicated that a
statute requiring plaintiffs to exhaust administrative remedies
before coming into federal court may be either jurisdictional in
nature or non jurisdictional, depending on the intent of
Congress as evinced by the language used.” Ace Prop. & Cas.
Ins. Co. v. Fed. Crop Ins. Corp., 440 F.3d 992, 996 (8th Cir.
2006) (citing Weinberger v. Salfi,
422 U.S. 749 (1975)). For
the purposes of this appeal, we assume, without deciding, that
the requirement to exhaust one’s administrative remedies as
12
provided for in § 1514A is jurisdictional. 7 See Stone v.
Instrumentation Lab. Co., 591 F.3d 239, 240 (4th Cir. 2009)
(“[T]he Sarbanes-Oxley Act expressly provides a United States
District Court jurisdiction to entertain a whistleblower
action.”); Stone v. Duke Energy Corp.,
432 F.3d 320, 322-23 (4th
Cir. 2005) (“Section 1514A(b)(1)(B) confers jurisdiction on a
district court when a qualifying complainant files his complaint
there.”)
“[I]t is the ‘special obligation’ of appellate courts to
evaluate not only their own subject matter jurisdiction ‘but
also [the jurisdiction] of the lower courts in a cause under
review, even though the parties are prepared to concede it.’”
7
Although it does not appear that any federal circuit court
has yet reached this issue, several district courts have held
that a plaintiff’s failure to exhaust his remedies under § 1514A
deprives the district court of jurisdiction. See, e.g., Nieman
v. Nationwide Mut. Ins. Co., 706 F. Supp. 2d 897, 907 (C.D. Ill.
2010); JDS Uniphase Corp. v. Jennings,
473 F. Supp. 2d 705, 710
(E.D.Va. 2007); Murray v. TXU Corp.,
279 F. Supp. 2d 799, 802
(N.D. Tex. 2003). Moreover, the Department of Labor suggested
as much when it denied a complainant’s motion to withdraw his
claim from the agency proceedings and file a de novo lawsuit in
federal district court, stating that “[v]oluntary withdrawal
would be inconsistent with the general principle of exhaustion
of administrative remedies and could arguably run contrary to
Complainant’s expressed intent by depriving the district court
of jurisdiction.” Nixon v. Stewart & Stevenson Services, Inc.,
2005-SOX-1,
2005 WL 4889007, at *5 (Dep’t of Labor Feb. 16,
2005). We need not and do not answer this question here,
however, because we hold for the reasons explained below that
the district court properly exercised jurisdiction over
Feldman’s SOX claims, even assuming that a failure to exhaust
does impose a jurisdictional bar.
13
Interstate Petroleum Corp. v. Morgan, 249 F.3d 215, 219 (4th
Cir. 2001) (internal citations omitted) (second alteration in
original). “[W]e must consider questions regarding jurisdiction
whenever they are raised, and even sua sponte.”
Id. (citing
Plyler v. Moore,
129 F.3d 728, 731 n.6 (4th Cir. 1997)).
Feldman’s initial complaint was filed before the required 180-
day waiting period expired, but his amended complaint was filed
more than 180 days after he filed his OSHA complaint. Although
neither party raised the issue, we therefore requested
supplemental briefing to address the following question:
Does Feldman’s amended complaint, wherein he asserts
his claim under the Sarbanes-Oxley Act of 2002, relate
back to the date of the original complaint under Fed.
R. Civ. P. 15(c), and if so, did the district court
properly exercise jurisdiction over this claim?
Under Rule 15(c), an amended pleading relates back to the
date of the original pleading when “the amendment asserts a
claim or defense that arose out of the conduct, transaction, or
occurrence set out — or attempted to be set out — in the
original pleading.” Fed. R. Civ. P. 15(c)(1)(B). Thus, when a
pleading relates back under Rule 15(c), the amended pleading is
considered to have been filed on the date that the original
pleading which it replaces was filed.
In this case, Feldman filed his OSHA complaint alleging
that LEA had violated the whistleblower protections of SOX on
November 17, 2009. He therefore could only obtain de novo
14
review of this claim in federal court if, in the absence of any
bad faith on his part, the Secretary had not issued a final
decision within 180 days, that is, by May 16, 2010. Although
Feldman filed his initial lawsuit more than four months prior to
this date, there is no dispute that the Secretary never issued a
final decision. In a motion filed on March 23, 2010, Feldman
indicated that he intended to amend his complaint to add the SOX
claim once it became ripe, and Appellees expressly agreed to the
inclusion of this claim in the plaintiffs’ amended complaint.
Upon reviewing both complaints, it is evident that, under
Rule 15(c), the SOX claim raised in the amended complaint arises
out of the conduct, transactions, and occurrences set out in the
first complaint. Feldman’s initial complaint details his
reports about SAFE Source and also his claim that he and Perry
told Paul Briggs, LEA’s Chief Financial Officer at the time,
that they intended to report their suspicions of insider trading
to the government. The complaint then alleges that Rand,
Lindsay, Jordan, and Carrington thereafter “undertook a campaign
to discredit, undermine, intimidate, and retaliate against
Feldman for his report to the federal government and for his
ongoing cooperation with the resulting federal investigations.”
Appellant’s Supplemental Br. 34-36; see id. 55-56. It further
alleges that this retaliatory campaign included the production
15
of falsified Board meeting minutes and leaks of information to
Carrington.
By comparison, Feldman’s second complaint alleges that he
engaged in protected activity under SOX by, among other things,
reporting his concerns about SAFE Source to the Board and the
government, asking Board members to affirm that they did not
leak information to Carrington, objecting to the falsification
of meeting minutes, and reporting suspected insider trading. It
cannot be seriously doubted that this SOX claim arises out of
the same conduct, transactions, and occurrences as the first
complaint. Thus, under Rule 15(c), the second complaint does
relate back to the date of the first complaint, at which point
the court did not have jurisdiction over Feldman’s SOX claim.
However, we have previously held that “the filing of a
supplemental pleading is an appropriate mechanism for curing
numerous possible defects in a complaint.” Franks v. Ross, 313
F.3d 184, 198 (4th Cir. 2002) (internal citations omitted).
Feldman concedes that he should have presented his SOX claim in
a supplemental pleading under Rule 15(d), pursuant to which the
court may “permit a party to serve a supplemental pleading
setting out any transaction, occurrence, or event that happened
after the date of the pleading to be supplemented.” Fed. R.
Civ. P. 15(d). Considering a similar circumstance, the Eighth
Circuit has held that “[e]ven when the District Court lacks
16
jurisdiction over a claim at the time of its original filing, a
supplemental complaint may cure the defect by alleging the
subsequent fact which eliminates the jurisdictional bar.”
Wilson v. Westinghouse Elec. Corp, 838 F.3d 286, 290 (8th Cir.
1988) (internal citations omitted).
In Wilson, a plaintiff alleging that his employer refused
to rehire him in violation of the Age Discrimination in
Employment Act filed suit without waiting the required 60 days
after filing his claim with the Equal Employment Opportunity
Commission. Id. at 289. He sought to cure this jurisdictional
defect by filing a supplemental complaint under Rule 15(d)
reasserting the claim after the 60 days passed, but the district
court dismissed the claim on the ground that the pleading
related back to the date of the first complaint under Rule
15(c).
Id. The Eighth Circuit rejected this “hypertechnical
interpretation of Rule 15(c),”
id. at 290, as it resulted in a
“procedural mousetrap” in which the premature assertion of the
claim became an “irretrievable mistake that bars jurisdiction
for the duration of th[e] lawsuit,”
id. at 289. The court thus
held that “[w]hile the District Court was clearly unable to
exercise jurisdiction over Wilson’s rehire claim upon the filing
of his original complaint, the expiration of the 60-day waiting
period was exactly the kind of event occurring after firing that
17
Wilson should have been allowed to set forth in a supplementary
pleading under Fed. R. Civ. P. 15(d).” Id. at 290.
Likewise, although Feldman presented his SOX claim in the
form of an amended pleading, he clearly sought and was allowed
by the court — with Appellees’ consent — to add this claim due
to the fact that the 180-day waiting period had since expired.
Because “we are not required to apply the doctrine of relation
back so literally as to carry [a claim] to a time within the
[requisite waiting period] so as to prevent the maintenance of
the action in the first place,” Security Ins. Co. of New Haven,
Connecticut v. United States ex rel. Haydis, 338 F.2d 444, 449
(9th Cir. 1964), we construe the present complaint as a
supplemental pleading under Rule 15(d), thereby curing the
defect which otherwise would have deprived the district court of
jurisdiction under Rule 15(c). See United States v. C.J. Elec.
Contractors, Inc.,
535 F.2d 1326, 1329 (1st Cir. 1976) (citing
Security Ins. Co.). See also Mathews v. Diaz,
426 U.S. 67, 75
(1976) (treating a plaintiff’s pleadings as properly
supplemented under Rule 15(d) in light of the defendant’s
stipulation that the jurisdictional prerequisites were satisfied
while the case was pending in the district court); Fed. R. Civ.
P. 8(e) (“Pleadings must be construed so as to do justice.”)
18
Finding that the district court had jurisdiction over Feldman’s
SOX claim, we now turn to the merits of his appeal. 8
IV.
We review a court’s order granting summary judgment de
novo. Hill v. Lockheed Martin Logistics Mgmt., Inc., 354 F.3d
277, 283 (4th Cir. 2004). Summary judgment should be granted
only when “there is no genuine issue as to any material fact and
the movant is entitled to judgment as a matter of law.” Fed. R.
Civ. P. 56(c). Further, summary judgment must be entered
against “a party who fails to make a showing sufficient to
establish the existence of an element essential to that party’s
case, and on which that party will bear the burden of proof at
trial.” Celotex Corp. v. Catrett,
477 U.S. 317, 322-23 (1986).
“A contributing factor is ‘any factor, which alone or in
combination with other factors, tends to affect in any way the
outcome of the decision.’” Allen, 514 F.3d at 476 n.3 (citing
Klopfenstein v. PCC Flow Techs. Holdings, Inc., ARB Case No. 04-
8
In response to our inquiry, Appellees argue alternatively
that if the second complaint does not relate back to the first
complaint, then the SOX claim is barred by a two-year statute of
limitations borrowed from 28 U.S.C. § 1658(b). Even if
Appellees are correct that we should impute a limitations period
from § 1658(b), a question that we do not decide here, this
reasoning would force the Court into a “legal merry-go-round.”
Security Ins. Co., 338 F.2d at 446. As did the Ninth Circuit,
see
id., we reject this circuitous approach.
19
149, 2006 WL 3246904, at * 13 (Dep’t of Labor May 31, 2006)).
“This element is broad and forgiving,” Lockheed Martin Corp. v.
Dep’t of Labor,
717 F.3d 1121, 1136 (10th Cir. 2013), and
“[t]his test is specifically intended to overrule existing case
law, which requires a whistleblower to prove that his protected
conduct was a ‘significant’, ‘motivating’, ‘substantial’, or
‘predominant’ factor in a personnel action in order to overturn
that action,” Marano v. Dep’t of Justice,
2 F.3d 1137, 1140
(Fed. Cir. 1993) (construing the contributing factor standard in
a Whistleblower Protection Act case and citing explanatory
statements from the congressional record). “Temporal proximity
between the protected activity and the adverse action is a
significant factor in considering a circumstantial showing of
causation,” Tice v. Bristol-Meyers Squibb Co., 2006-SOX-20,
2006
WL 3246825, at *20 (Dep’t of Labor Apr. 26, 2006) (internal
citations omitted), and “[t]he causal connection may be severed
by the passage of a significant amount of time, or by some
legitimate intervening event,” Halloum v. Intel Corp., ALJ No.
2003-SOX-7, 2004 DOLSOX LEXIS 73, at *13 (Dep’t of Labor Mar. 4,
2004).
In this case, Feldman argues that the court imposed an
improperly onerous burden on him to prove that his protected
activities solely or substantially caused his termination. We
agree that Feldman need not show that the activities were a
20
primary or even a significant cause of his termination.
However, he has nonetheless failed to satisfy his rather light
burden of showing by a preponderance of evidence that the
activities tended to affect his termination in at least some
way. Firstly, Feldman concedes the complete absence of temporal
proximity here, and his most significant protected activity, his
reports regarding SAFE Source, occurred roughly twenty months
before his termination. Such a lengthy gap in time weighs
against a finding that it is more likely than not that the
alleged protected activities played a role in his termination.
See Fraser v. Fiduciary Trust Co. Int’l, No. 04 Civ. 6958 (PAC),
2009 WL 2601389, at *6 (S.D.N.Y. Aug. 25, 2009) (ten month gap
defeated the contributing factor element).
Secondly, and most significantly, Feldman admits that the
Outside Directors considered him to have thrown them under the
bus during his meetings with the Wortleys. Tellingly, Feldman’s
termination came less than one month after his July 27, 2009
meeting with Joseph Wortley and his son, in which he told them
that the Outside Directors were loyal to Carrington and “were
basically worthless.” J.A. 1057-35. He then wrote the Outside
Directors telling them it would be in LEA’s best interest if
they resigned, and stating that Wortley would sue them if they
did not do so. Feldman’s conduct in the meetings with the
Wortleys, whom he was supposed to convince not to sue LEA, and
21
his subsequent letter to the Outside Directors undoubtedly
constitute a legitimate intervening event further undermining a
finding that his long-past protected activities played any role
in the termination. Accordingly, this legitimate intervening
event, coupled with the passage of a significant amount of time
after Feldman’s alleged protected activities, severs the causal
connection. See Halloum, 2004 DOLSOX LEXIS 73, at *13.
Feldman nonetheless urges us to find that the asserted
protected activities played some role in his termination from
his proffered evidence of recurring retaliatory animus. For
instance, he claims that the leak of information to Carrington
after his reports regarding SAFE Source is proof of retaliatory
animus. Certainly, Feldman’s reporting about SAFE Source was
the activity that was most likely to prompt retaliation against
him, as it resulted in a federal investigation. Still, most
damaging to his claim, Feldman does not dispute that Perry also
reported the impropriety but was asked to remain at LEA. Given
the fact that Perry was urged to stay despite participating in
the very same conduct, Feldman has not shown that it is more
likely the case than not that this particular activity played a
role in his termination. With respect to the remaining
activities, there was indeed animus between Feldman and the
Outside Directors after Feldman’s conduct, but he has not shown
that the animus was a retaliatory response to his activities.
22
Instead, he acknowledges that the acrimony began nearly two
months before his first activity, and has offered no evidence
that his conduct changed the bitter status quo in any way.
Feldman further attempts to show recurring retaliatory
animus by asserting that the Outside Directors deviated from
LEA’s policies after his protected activities by requiring him
to obtain prior approval before entering a new lease, falsifying
Board meeting minutes, and asserting that he had produced
insufficient financial information. Firstly, Feldman himself
argued on appeal that the Outside Directors expressed concerns
about entering a new lease in November 2007, before any alleged
protected activity occurred, and that they opposed the move only
because they thought it would upset Carrington. Thus, by
Feldman’s own assertions, the change in policy regarding his
ability to enter a new lease was based on a desire to appease
Carrington, rather than a desire to retaliate against him for
conduct that had yet to occur. Feldman’s claim that LEA changed
its policies by falsifying its minutes is also unavailing
because Littman and Finkelstein had produced competing versions
of the meeting minutes starting from the November 1, 2007 Board
meeting, again before any alleged protected activity.
With respect to the Board’s dissatisfaction with the
financial information that Feldman provided, he has offered no
evidence to refute Littman’s testimony that there was no per se
23
policy on what had to be provided, but rather a practice where
the Board could contact himself, Littman, or Briggs when they
wanted further information. Thus, even if the Outside Directors
became unhappy with the information Feldman provided after his
alleged protected activity, their indication that they wanted
more information is consistent with the only record evidence as
to the Board’s practices for accessing financial information.
Lastly, Feldman argues that his strong work performance and
the company’s successes during his tenure are further proof that
his termination was in retaliation for protected conduct.
Assuming that LEA was successful during this time because of
Feldman’s efforts, he has offered no evidence that LEA
considered him to have a strong performance record. See Smith
v. Flax, 618 F.2d 1062, 1067 (4th Cir. 1980) (age discrimination
case explaining that an employee’s perception of himself is
irrelevant, and “[i]t is the perception of the decision maker
which is relevant.”) Further, LEA did not cite substandard
performance as the reason for Feldman’s termination, but rather,
insubordination. Feldman disputes that he was insubordinate,
but we do not decide whether LEA’s reason for terminating him
was wise, fair, or correct, nor do we “sit as a kind of super-
personnel department weighing the prudence of employment
decisions made by firms charged with employment discrimination.”
24
DeJarnette v. Corning Inc., 133 F.3d 293, 299 (4th Cir. 1998)
(internal citations omitted).
The contributing factor standard in SOX cases is indeed
meant to be quite broad and forgiving. However, under the
particular circumstances presented here, the standard would
simply be toothless if we held that a preponderance of the
evidence shows that these long-past activities affected
Feldman’s termination given the lengthy history of antagonism
and the intervening events which caused the Outside Directors to
view Feldman as insubordinate. Feldman has not successfully
established the contributing factor element of his prima facie
case, and we therefore need not consider whether Appellees can
show by clear and convincing evidence that he would have been
fired regardless of any protected activities. Accordingly,
Appellees are entitled to judgment as a matter of law.
V.
For the aforementioned reasons, the district court is
AFFIRMED.
25
