Addressing a SOX whistleblower retaliation claim, the Fourth Circuit in Jones v. SouthPeak Interactive Corp. of Delaware recently rendered a determination favorable to employee-whistleblowers on two separate fronts.
First, the Court addressed the applicable statute of limitations. The employer argued that because the claim sounded in the nature of fraud, a two-year statute of limitations applied. The Fourth Circuit disagreed. Since the employee-whistleblower asserted a claim of retaliation, not fraud, the Court concluded that the federal “catch-all” four-year statute of limitations governs SOX retaliation claims.
Second, the Court addressed the scope of damages to which employee-whistleblowers are entitled. Consistent with prior determinations by the Fifth and Tenth Circuits, the Fourth Circuit determined that emotional distress damages are available under SOX. The Court relied on statutory language providing that a prevailing employee “shall be entitled to all relief necessary to make the employee whole” to conclude that the scope of relief includes damages not specifically enumerated by the statute.
Both aspects of the Fourth Circuit’s ruling should give employers facing prospective SOX liability pause. The duration during which exposure lies may be significant, and the scope of potential liability may be substantially broader than otherwise predicted.
Jones v. SouthPeak Interactive Corp. of Del., Case Nos. 13-2399 and 14-1765 (4th Cir. Jan. 26, 2015)