District Court Decides to Reject SOX Claim on Several Grounds

The U.S. District Court for the Northern District of Illinois issued a ruling in Hill v. Komatsu America Corp. that involved the dismissal of a Sarbanes-Oxley Act retaliation claim on summary judgment on multiple grounds.

The plaintiff in the case raised concerns to the CEO of the Komatsu America Corp. that the company’s repair and maintenance program it was offering to distributors and product end users was not sufficiently funded. Within about a month, the plaintiff was fired after an unrelated investigation over improper expense reporting and for bringing his wife along on company business without first getting approval to do so.

The plaintiff filed a wrongful termination lawsuit, but the court granted Komatsu America Corp’s motion to dismiss on four separate grounds:

  • The court determined that a concern of low funds in the repair and maintenance reserve was not the same action as a suggestion of securities fraud, and that the plaintiff did not suggest the state of those funds was being misrepresented to shareholders.
  • The defendant was not aware the plaintiff was engaging in a protected activity because he had not previously reported there was any illegal action taking place in the company.
  • The plaintiff did not demonstrate that his expression of concern about the state of the funds was somehow related to his termination.
  • Even if the plaintiff had established proof of this concern being related to his termination, he still would have been terminated in the absence of protected activity because of his violations of the company’s expense and travel policy.

For more information and guidance on handling whistleblower claims within your business or organization, speak with a dedicated attorney at Whistleblower Law for Managers in Dallas, Texas.