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SDNY Awards Front Pay in Sarbanes-Oxley Whistleblower Retaliation Case

By | September 21, 2016

Perez v. Progenics Pharmaceuticals, Inc., involved a case where Plaintiff Perez drafted a memo to Progenics’ general counsel and his department head, accusing Progenics of committing fraud by publishing a false press release related to the status of clinical trials for a drug under development.  Progenics fired Perez the next day in August 2008. Shortly thereafter, Perez filed a complaint with the Department of Labor claiming he was terminated in violation of the Sarbanes-Oxley Act in retaliation for whistleblowing. After the claim was litigated without resolution, Perez filed in complaint in the Southern District of New York.  The trial was held in 2015, and the jury award Perez over $1.6 million.

Following trial, the Court considered Perez’ motion for reinstatement of employment at Progenics. The Court stated reinstatement was not feasible due to manifest hostility between Perez and Progenics.  Instead, the Court granted Perez’ motion for reinstatement in the form of an order for “front pay” in an amount over $2.7 million.  The Court did so because, among other things, it found Perez had no reasonable prospect of obtaining comparable alternative employment.  The amount of the award was based on a conservative estimate of expected earnings based on Perez’ age at the time of the verdict until a reasonable retirement age.

The Court’s opinion cites only two cases when analyzing the propriety of a front pay award, neither of which involved a Sarbanes-Oxley retaliation case. Section 806 of the Sarbanes-Oxley Act does however provide that a successful litigant in a retaliation case is entitled to “all relief necessary to make the employee whole.”

Hat tip to Matt Kelly of Radical Compliance for highlighting this case. Matt has a very interesting analysis from a compliance perspective.

Contact Steve Quinlivan for more information.