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Menendez Redux: Halliburton Whistleblower Finally Gets Retaliation Award

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The U.S. Department of Labor’s Administrative Review Board (ARB) revisited a long-running case, once again ruling against Halliburton, the oilfield services giant, for retaliating against a whistleblower who reported accounting irregularities to the U.S. Securities and Exchange Commission (SEC).

The ARB awarded financial executive Anthony Menendez $30,000 in damages, plus costs and lawyers’ fees.

In its previous ruling in the case, Menendez v. Halliburton, Inc., the ARB in 2011 had reversed a lower tribunal’s 2008 dismissal and found that Halliburton’s traumatic “outing” of Mr. Menendez to his colleagues as an SEC whistleblower could qualify as retaliation under the Sarbanes-Oxley Act of 2002 (SOX).

The ARB sent the case back to the lower judge to determine whether Halliburton’s action had a retaliatory motive and, if so, whether the company could defend itself by showing “clear and convincing evidence” that it would have acted against Mr. Menendez anyway.

On both questions the ARB prescribed standards that were likely to favor Mr. Menendez — a signal that the board, under the Obama administration, favored broad protection for SOX whistleblowers.

Nevertheless the case bounced right back to the ARB, leading to the latest ruling on March 20, 2013.

Despite the ARB’s earlier order, the lower judge once again dismissed Mr. Menendez’s case, rejecting as “metaphysically impossible” the idea that Halliburton could provide evidence to prove a hypothetical scenario.  Instead, the judge seized on an alternate phrasing in the ARB’s order and found that Halliburton had provided “clear and convincing evidence” that its unveiling of Mr. Menendez had “legitimate business reasons.”

Fully expecting to be overruled, however, the judge also supplied two fallback findings in favor of Mr. Menendez — one awarding him just $1,000 in damages, and an alternative that awarded him $30,000 in damages.

In March the ARB fulfilled the judge’s prophecy and entered judgment for Mr. Menendez, giving him the higher damages amount.

Without such an award, the ARB said, Mr. Menendez would have no remedy for retaliation by Halliburton that “so poisoned his work environment that he felt compelled to resign from the job he had loved.”

The board cited Section 806 of SOX, which requires that protected employees who experience retaliation get “all relief necessary to make [them] whole.”

The new ruling breaks little new ground, but reiterates all the lessons of the 2011 ARB decision:

  • A SOX whistleblower is protected from retaliation even if, as in this case, his allegations don’t turn up any clear wrongdoing.
  • An employer’s action that causes only intangible harm to an employee (being shunned by colleagues, for instance) is still an adverse action.
  • To be unlawful, an adverse action must have been motivated at least in part by retaliation for a protected activity (i.e., SOX whistleblowing)
  • A company may defend itself by claiming that the adverse action would have happened anyway, but it has the burden of showing “clear and convincing evidence.”
  • A whistleblower can receive monetary damages for intangible harm.

Read the entire decision at the Department of Labor Web site.

The Employment Law Group® law firm has an extensive nationwide whistleblower practice representing employees who have been victims of retaliation.

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