E.D. Wisconsin: SOX Does Not Protect Whistleblower Complaints Based On Immaterial, Routine Events

On August 25, 2016, the Eastern District of Wisconsin granted the Defendant's Motion for Summary Judgment on its former CEO's SOX whistleblower claim.  The court ruled that Plaintiff's complaint to the Board of Directors did not implicate any securities violations or fraud, and was not a protected disclosure where it was the Board itself Plaintiff was complaining about.  The court also ruled that Plaintiff's own actions suggested he condoned the conduct on which he purported to blow the whistle.  Verfuerth v. Orion Energy Systems, Inc., No. 14-cv-352.

Background.  According to Plaintiff, there were numerous ways in which Company was being mismanaged.  For instance, he alleged that the Company's outside counsel had submitted inflated bills for much of its work.  Additionally, Plaintiff accused the Board of committing ethical violations.  Plaintiff also allegedly had concerns regarding an old lawsuit between the Company and a former employee that had been concluded.