Sanford S. Wadler, Plaintiff-Appellee,
Bio-Rad Laboratories, Inc., a Delaware Corporation; Norman Schwartz, Defendants-Appellants.
and Submitted November 14, 2018 San Francisco, California
from the United States District Court for the Northern
District of California D.C. No. 3:15-cv-02356-JCS Joseph C.
Spero, Magistrate Judge, Presiding
Kathleen M. Sullivan (argued) and William B. Adams, Quinn
Emanuel Urquhart & Sullivan LLP, New York, New York;
Karin Kramer, Andrew P. March, and John M. Potter, Quinn
Emanuel Urquhart & Sullivan, LLP, San Francisco,
California; for Defendants-Appellants.
Michael John von Loewenfeldt (argued), Kenneth P. Nabity, and
James M. Wagstaffe, Kerr & Wagstffe LLP, San Francisco,
California, for Plaintiff-Appellee.
Before: Susan P. Graber and Mark J. Bennett, Circuit Judges,
and Leslie E. Kobayashi, [*] District Judge.
panel vacated in part the district court's judgment after
a jury trial, affirmed in part, and remanded in a
whistleblower retaliation suit.
jury found that Bio-Rad Laboratories, Inc., and its CEO
violated the Sarbanes-Oxley Act, the Dodd-Frank Act, and
California public policy by terminating the employment of
Bio-Rad's former general counsel, Sanford Wadler, in
retaliation for his internal report that he believed the
company had engaged in violations of the Foreign Corrupt
Practices Act in China.
the SOX verdict, the panel held that the district court erred
in instructing the jury that statutory provisions of the FCPA
constitute rules or regulations of the SEC for purposes of
whether Wadler engaged in protected activity under SOX §
806. Because a properly instructed jury could return a SOX
verdict in favor of Wadler, the panel remanded for the
district court to determine whether a new trial was
respect to Wadler's California public policy claim, the
panel concluded that the district court's SOX
instructional error was harmless and therefore affirmed the
verdict and corresponding damages as to that claim.
additional issues in a contemporaneously-filed memorandum
disposition, the panel also vacated the district court's
Dodd-Frank verdict and remanded.
BENNETT, CIRCUIT JUDGE
whistleblower retaliation case, Bio-Rad Laboratories, Inc.
("Bio-Rad" or "the Company") and its CEO,
Norman Schwartz, appeal an $11 million jury verdict in favor
of Bio-Rad's former general counsel, Sanford
Wadler. The jury found that Defendants violated
the Sarbanes-Oxley Act ("SOX"), the Dodd-Frank Act,
and California public policy by terminating Wadler's
employment in retaliation for his internal report that he
believed the Company had engaged in serious and prolonged
violations of the Foreign Corrupt Practices Act
("FCPA") in China.
appeal, Defendants argue that the district court erred by
instructing the jury that statutory provisions of the FCPA
constitute "rule[s] or regulation[s] of the Securities
and Exchange Commission" ("SEC") for purposes
of whether Wadler engaged in "protected activity"
under SOX § 806, 18 U.S.C. § 1514A(a). We agree. We
reject, however, Bio-Rad's argument that no properly
instructed jury could return a SOX verdict in favor of
Wadler. Accordingly, we vacate the SOX verdict and remand for
the district court to determine whether a new trial is
respect to Wadler's California public policy claim, by
contrast, we conclude that the district court's SOX
instructional error was harmless and therefore we affirm the
verdict and corresponding damages as to that claim.
memorandum disposition filed this date, we conclude that the
instructional error was not harmless as to the SOX claim. We
also reject Bio-Rad's challenges to the district
court's evidentiary rulings and the sufficiency of the
evidence. Finally, we vacate with instructions to enter
judgment in favor of Bio-Rad as to the Dodd-Frank claim in
light of Digital Realty Trust, Inc. v. Somers, 138
S.Ct. 767, 778 (2018), which held that Dodd-Frank does not
apply to purely internal reports. We therefore also vacate
the portion of damages attributable solely to the Dodd-Frank
verdict, approximately $2.96 million plus interest.
we vacate in part, affirm in part, and remand for
consideration of whether a new trial is warranted as to the
view the evidence at trial in the light most favorable to the
verdict. Shafer v. Cty. of Santa Barbara, 868 F.3d
1110, 1115 (9th Cir. 2017), cert. denied, 138 S.Ct.
2582 (2018). Because the jury returned a verdict in favor of
Wadler on all claims, we review the pertinent facts adduced
at trial in the light most favorable to him.
trial centered on a memorandum that Wadler delivered to the
Audit Committee of Bio-Rad's Board of Directors in
February 2013 (the "Audit Committee Memo" or
"Memo") and Schwartz's subsequent decision to
terminate Wadler's employment in June 2013. Wadler stated
in the Memo that he believed Bio-Rad employees in China had
violated the FCPA's bribery and books-and-records
provisions, and that senior management was likely complicit.
factual basis for the Memo, and Wadler's reasons for
writing it, can be traced back to 2009. In that year,
Bio-Rad's internal audit team discovered that Bio-Rad
salesmen in Vietnam and Thailand had engaged in potential
FCPA violations. At Wadler's recommendation, Bio-Rad
hired FCPA attorney Patrick Norton of Steptoe & Johnson
reported his findings to Bio-Rad's Board of Directors in
September 2011. Specifically, Norton reported that he had
found evidence that Bio-Rad employees were violating the
FCPA's bribery and books-and-records provisions in
Vietnam, Thailand, and Russia. As for China, Norton reported
several "red flags," including "[v]ery high,
unexplained commissions" and a "history of
widespread corruption" in the country's medical
products market. Norton reported, however, that "no
evidence of improper payments" had been found to
date in China.
2012, Wadler and Schwartz received the results of a sales
documentation audit that had been initiated at the request of
Bio-Rad's licensor, Life Technologies, Inc. ("Life
Tech"). The audit, which covered the years 2006 to 2010,
revealed that Bio-Rad owed Life Tech around $30 million in
royalty obligations due to Bio-Rad's ...