Fired In-House Attorneys OK to Bring Whistleblower Case

By Neetal Parekh on August 17, 2009 | Last updated on March 21, 2019

The American Bar Association (ABA) reports that two in-house legal attorneys claiming that they were fired for raising questions about potential securities fraud have been given the nod to pursue their claims as a result of a federal appeals ruling in the 9th Circuit.

In a case of first impression, the 9th Circuit appellate court held that under the whistleblower provision of the Sarbanes-Oxley Act, the attorneys do not have to prove actual fraud to bring forward the case.   The 9th Circuit Court of Appeals clarified, stating that "the success, or failure,of the [] lawsuit does not depend on [the attorneys'] ability to show any actual fraud, only that they reasonably believed that fraud had occurred."

The married attorney duo, Shawn and Lena Van Asdale, served as in-house intellectual property attorneys for International Game Technology (IGT) between 2001 and 2004 and were let go after the company merged with slot machine company, Anchor Gaming.   They began asking questions about the validity of a patent held by Anchor, specifically alleging that patents acquired by IGT in the merger with Anchor were overvalued on IGT's financial statements.

The panel decision was unanimous and the court held that requiring whistleblowers to prove fraud would be inconsistent with Congress's aim of encouraging disclosure through the Sarbanes-Oxley Act.

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