September 29, 2008
This article appeared in the September 29, 2008 edition of The Legal Intelligencer. Story by Gina Passarella.
A federal jury awarded a Coatesville, Pa., man nearly $1.8 million for a wrongful termination claim, finding his termination was in retaliation for his unwillingness to commit fraud.
In Feliciano v. Parexel International , the plaintiff, Oswaldo Feliciano, said he was fired in retaliation for his refusal to engage in illegal conduct. The action of the employer, Parexel International, a pharmaceutical research organization, and its division, Barnett International, violated the federal Sarbanes-Oxley Act and Pennsylvania public policy, Feliciano argued successfully.
The Eastern District of Pennsylvania jury awarded Feliciano $1.7 million in punitive damages under the violation of public policy, $50,000 in compensatory damages and $44,000 in back pay. The jury also awarded Feliciano’s IT consulting company and co-plaintiff, Innovative Media Machine, $45,000 for a breach of contract claim.
Before awarding Feliciano monetary damages, the jury found Parexel retaliated against him in violation of SOX and terminated him because he refused to engage in illegal conduct.
In a key ruling on the road to trial, U.S. District Court Judge J. Curtis Joyner had denied Parexel’s motion for summary judgment in July.
In a lengthy footnote to the order, Joyner said Feliciano provided enough evidence to support his claim that he was asked to engage in activity in violation of state law. That was enough to surpass the tough standards set up in an at-will state where an employer could fire a worker for any reason or no reason at all. Joyner said Feliciano fit within an exception to that rule, in which an employee who refuses to commit a crime at the request of his employer cannot be terminated for that refusal.
Paraxel had argued in its motion for summary judgment that the alleged activity — misappropriation of customer marketing lists — did not constitute a protected activity under SOX that would allow Feliciano to prove a retaliation claim under the act.
Joyner said the 3rd U.S. Circuit Court of Appeals hadn’t ruled on whether the act limits protected activity solely to fraud against shareholders. He said the few courts that have addressed the issue were mixed in their rulings. Joyner ruled the act protects an employee from retaliation for whistleblower reporting of fraud “regardless of whether it relates to ‘shareholder fraud.’”
According to court documents, Feliciano was concerned over the way data was collected at the pharmaceutical company for marketing lists and told a supervisor he thought the data may have been unlawfully obtained. Feliciano also declined to “pirate a Web site” at the request of one of his supervisors who wanted to gain information about a former employee who has sued the company and the supervisor.
Parexel had argued in the alternative that even if the activity was protected, Feliciano couldn’t prove that was why he was fired. Joyner disagreed and said a reasonable juror could find otherwise.
In its motion for summary judgment, Parexel argued it fired Feliciano for legitimate business reasons. The company said it was his creation of Innovative Media when he was a consultant for Parexel and then his continued involvement in the company once Feliciano was hired as a full-time employee for Parexel that became a conflict of interest. Feliciano had provided IT consultants to Parexel through his company.
Parexel said it fired the supervisor who Feliciano claimed illegally obtained information, proving his speaking out against her couldn’t have been the reason for his termination. The company fired him three months later for performance issues and a conflict of interest with his business, it said in court documents.
Feliciano argued he had told several people at Parexel about Innovative Media and did not try to hide his involvement. His attorney said the $45,000 in damages awarded to Innovative Media were for bills for consulting services Parexel never paid.
In his motion in opposition of summary judgment, Feliciano said Parexel condoned the supervisor’s behavior and fired him instead.
“Parexel fired Feliciano because, if it had to remove the membership records — the poisonous fruit — Barnett would have been out of business,” the motion stated. “Parexel also had to fire Feliciano because it needed someone who would do what he would not — work with the poisonous fruit.”
Feliciano argued the supervisor told him she was aware of his complaint against her and threatened his future at the company by saying that if he was against her, his career at Parexel would be short, according to court documents.
He argued that the supervisor was only fired after another employee filed a whistleblower letter that was investigated by an outside law firm and accounting firm. The employee that filed the letter was fired soon thereafter, according to court documents.
Michael J. Fortunato and Karen L. Palermo of Rubin Fortunato & Harbison represented Feliciano at trial. Fortunato said his practice is almost exclusively the representation of defendants, and he had recently defended a client in a whistleblower case this year. But when a prior client introduced him to Feliciano and two other former Parexel employees, he said he thought the conduct was too egregious not to take the case.
From a defense lawyer point of view, Fortunato thought the facts were clearly on his side and expected a settlement out of Parexel. That didn’t happen, however, and the three separate cases were all set for trial. Feliciano’s was the first to be tried and the other two are scheduled for next week and next month, respectively.
Pennsylvania has a strong at-will doctrine that is very favorable toward employers, Fortunato said, adding he knew it would be a tough case.
“We believe Pennsylvania citizens won’t tolerate a company firing an employee when the reason for firing the employee violated public policy,” he said.
While the jury declined to speak to the attorneys after the case, Fortunato said he thought the jury was convinced there was clear retaliation against Feliciano.
The majority of the verdict sheet dealt with the violations of public policy as opposed to violations under SOX. Fortunato said there is a split in law among the circuit courts as to whether SOX provides for compensatory damages, so he focused instead on the public policy issues.
Fortunato said he plans to file post-trial motions for interest and attorney fees. He said he thinks the defense would appeal the punitive damages ruling.
Morgan Lewis & Bockius partners Judith E. Harris and Jeremy P. Blumenfeld represent Parexel in all three of the cases by former employees.
In an e-mailed statement from Parexel, the company said it “disagrees strongly with the jury’s verdict and we intend to appeal.”
The eight-member jury was selected Sept. 8, and the plaintiffs gave their opening statement that day. One juror was excused a few days in over illness and both sides agreed to move forward with seven jurors. After about three hours of deliberation Sept. 15, the jury came back with a unanimous verdict. Joyner presided over the trial.
Fortunato said settlement discussions had occurred, but none were conducted during the course of the trial and there was no high-low agreement.
Feliciano used damages expert Andrew Verzilli as an expert witness and the defense used Pia DiGirolamo of the Center for Forensic Economic Studies as its damages expert.