Fired In-House Attorneys OK to Bring Whistleblower Case
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.
- Court sets standards for Sarbanes whistleblower suits (Reuters)
- Van Asdale v. Int'l. Game Tech. (FindLaw's U.S. Ninth Circuit Court of Appeals Blog)