District Court Properly Dismissed ex-Sales Manager’s Whistleblower Claims: Charter
The 5th U.S. Circuit Court of Appeals should deny plaintiff-appellant Darrell Seybold’s challenge of the district court’s “proper dismissal” of his complaint that purports to state a whistleblower claim “without any blowing of the whistle” and his breach of contract claim “without any contract,” said Charter Communications’ answering brief Wednesday (docket 23-10104). Seybold alleged in his opening brief April 3 that he was terminated for exposing Charter’s unlawful cooking of the books, in violation of the whistleblower protections in the 2002 Sarbanes-Oxley (SOX) Act (see 2304040022).
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
In light of Seybold’s former sales role, it’s notable he doesn’t allege he had any involvement in, or access to, Charter’s preparation of its “public financial disclosures or its non-public accounting or financial information,” said Charter’s brief. The reality is, Seybold was terminated in February 2020 not for exposing Charter’s alleged crimes but “for a history of unprofessional conduct,” it said.
The U.S. District Court for the Northern District of Texas properly granted Charter’s motion to dismiss Seybold’s first amended complaint, saying he failed to cure the “court-identified deficiencies” in his original complaint, said Charter’s brief. SOX forbids a publicly traded company from retaliating against an employee for reporting to a government agency or supervisor, it said.
To state a SOX retaliation claim, Seybold was required to allege facts showing he engaged in activity protected by the statute and that Charter knew “he engaged in that protected activity,” said Charter’s brief. He was also required to show he suffered an “unfavorable personnel action," and the protected activity “was a contributing factor to that unfavorable action,” it said. Yet Seybold “was unable to allege facts plausibly showing the first two elements,” it said.
Seybold's first amended complaint “failed to comply with the district court’s explicit instruction to allege what he actually reported” to Charter in the way of the company’s unlawful or unethical activity, said Charter’s brief. That’s why the district court properly dismissed Seybold’s SOX claim with prejudice, it said. The district court granted Charter’s motion to dismiss, agreeing Seybold “did virtually nothing to address, let alone correct,” the “fatal pleading deficiency” the court twice instructed him to correct, it said.
The district court also correctly applied “settled law” to dismiss Seybold’s breach of contract claim, said Charter’s brief. The alleged contract at issue was Seybold’s commission plan, it said. The plan’s “disclaimers,” including it wasn’t to be construed as a contract of any kind, “were fatal to this claim because no contract existed,” it said.