Court Awards Sarbanes-Oxley Whistleblowers $2.2M

A ten-day trial ended this week with a federal court jury concluding that Shawn and Lena Van Asdale, former in-house attorneys for slot machine manufacturer International Gaming Technology (IGT), had been illegally fired in retaliation for raising concerns about possible shareholder fraud in IGT’s $1.4 billion acquisition of Anchor Gaming in 2001.  After raising these concerns the Reno-based couple was terminated by IGT in 2004, citing Mr. Van Asdale’s allegedly poor job performance and Ms. Van Asdale’s subsequent request for access to sensitive information the company believed could benefit her husband.  The jury awarded the couple a combined $2.2 million for IGT’s violations of the whistleblower-protection provisions of the Sarbanes-Oxley Act.

This couple’s victory is also significant because the district court had earlier granted summary judgment to IGT on the grounds that the Van Asdales, as in-house counsel for the company, would have to reveal information protected by the attorney-client privilege in order to pursue their claims under Sarbanes-Oxley’s whistleblower provisions.  The 9^th Circuit Court of Appeals reversed the district court in 2009 in a decision that made it clear that the Sarbanes-Oxley Act’s whistleblower provisions protect in-house attorneys, like other employees, from retaliation for raising concerns about fraud on shareholders.  The 9^th Circuit noted that a district court could take measures to minimize the disclosure of privileged information while also allowing such cases to proceed, thus furthering the law’s purpose of protecting employees who report securities fraud.