Reporting kickbacks and irregularities are protected activities
STEVEN Babyak worked as a regional sales manager for Cardiovascular Systems, Inc., a medical device manufacturer. Throughout his three years at the company, he was consistently rated a top sales manager. Babyak complained to upper management, human resources and corporate legal counsel that the company may be violating several laws, including illegal kickbacks to doctors, irregularities in its financial reporting (Sarbanes Oxley Act violations), promotion of their medical devices for uses or procedures not approved by FDA, and patient safety.
Babyak claimed that his complaints upset his superiors and he was told to stop complaining. Thereafter, his sales territory was reduced, though his quota was increased by nearly half of his old quota. These affected his sales, compensation and bonuses. After complaining once more to management, he was fired on June 1, 2015. He sued the employer for Whistleblower Retaliation and Wrongful Termination in Violation of Public Policy.
The California Whistleblower Protection Act protects employees from being retaliated against after reporting to a government agency that their employer has violated a state or federal law. This law also protects employees who report of a suspected violation internally (for instance, to a supervisor within the organization) or externally to “any public body” conducting a hearing or investigation. Employees are protected if they truly believed the conduct they complained about was unlawful, even if it was not. The employer is also prohibited from retaliating against an employee who refuses to participate in activities that violate the law.
How does an employee prove to the court that the employer has engaged in illegal retaliation?
First, it must be shown that the employee engaged in a protected activity, such as report to management or a government agency about suspected violations.
Second, it must be shown that the employer subjected the employee to an adverse employment action, such as a demotion or termination.
Finally, it must be shown that there is a ‘causal link’ between the conduct of employee and the employer. A causal link may be established if the employer knew that the employee engaged in protected activity, and immediately after fired the employee.
During trial, the employer defended Babyak’s firing as due to a legitimate business reason. Babyak was purportedly fired because he verbally attacked his supervisor during a meeting, and that the company could no longer work with him.
The 12 jurors who heard the case decided in favor of the employee and awarded him $2.7 million in compensatory damages for lost earnings and other non-economic damages. After a second day of deliberation, the jury awarded an additional $22.4 million in punitive damages against the employer, after finding that the employer’s conduct was “reprehensible.”
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