SOX Whistleblower Awarded $2.7 Million in Front Pay

October 3, 2016
Matthew LaGarde

A Sarbanes-Oxley Act (SOX) whistleblower was recently awarded $2.7 million in front pay alone after a jury determined that he had been retaliated against for opposing a publicly traded pharmacy company’s fraud against its shareholders. Combined with his $1.6 million award for back pay and other compensatory damages, the case represents one of the largest whistleblower retaliation awards to date and should help to embolden whistleblowers who are considering opposing illegalities in their own workplaces.

About the SOX Whistleblower Case 

Dr. Julio Perez was terminated by Progenics Pharmaceuticals in 2008 after he accused the company of committing fraud on its shareholders when it publicly announced that it was “pleased” with the progress of a drug it was developing, despite its knowledge that the drug’s most recent test phase had gone poorly. Dr. Perez filed a complaint with the Occupational Safety and Health Administration (OSHA) of the Department of Labor (DOL) in 2008 alleging retaliation in violation of SOX. SOX permits claimants to “kick out” their claim to federal court after 180 days if the DOL has not issued a final decision on the matter, and in November 2010, Dr. Perez removed his claim to the U.S. District Court for the Southern District of New York.

Following years of litigation, Dr. Perez emerged victorious and, in August 2015, was awarded $1.6 million in compensatory damages, including back pay for the years he had been out of work because of his retaliatory termination. The jury did not address the question of reinstatement, however, and an additional year of post-trial litigation over Dr. Perez’s damages took place before the court resolved the issue.

In addition to the $1.6 million in compensatory damages and $613,000 in prejudgment interest, the court issued an order on Aug. 30, 2016, awarding Dr. Perez approximately $2.7 million in front pay – i.e., the money Dr. Perez would have made going forward if he had been able to continue working for Progenics. SOX whistleblowers who succeed in proving their claims of retaliation are statutorily entitled to reinstatement. In this case, however, the court determined that reinstatement of Dr. Perez would have been impracticable because “manifest hostility exists between Dr. Perez and Progenics.”

In lieu of reinstatement, therefore, the court determined that Dr. Perez was entitled to front pay to make him whole for the damage Progenics caused him by prematurely terminating his employment.  Although Dr. Perez was terminated approximately eight years ago, he has been unable to secure comparable work, and the court found that his “prospects for future employment were unpromising in part due to the Defendant’s violation of his rights.”

Unpacking the Multi-Million Dollar Award

What was particularly remarkable about the award the court granted to Dr. Perez was that Dr. Perez, who was 58 years old at the time the court issued its decision, was granted front pay to run through his retirement at 66 years and 6 months. The defendant argued that front pay lasting eight years was speculative – i.e., there was no way of knowing that Dr. Perez would not have been terminated during that time (and, indeed, the defendant argued that he would have been) – but the court disagreed, finding instead that it should “assume, absent evidence to the contrary, that the illegally discharged employee would have continued working for the employer until he or she reached normal retirement age.”

All told, Dr. Perez will receive approximately $5 million for his retaliation he suffered at the hands of Progenics. While some may raise an eyebrow at this “windfall” – and it is certainly a successful result – it is important to bear in mind the extreme costs borne by whistleblowers like Dr. Perez. At the time of his termination, Dr. Perez was a highly successful professional, as evidenced by the court’s predictions that he would have made approximately $2.7 million (a rate that does not “anticipate promotions and only factor[s] in raises commensurate with previous pay increases”) in the eight years prior to his retirement. Instead, Dr. Perez has been out of work for several years and holds little hopes of obtaining comparable employment moving forward. Moreover, during the several years between his complaint and the verdict, Dr. Perez was left little to no income and faced a significant likelihood that he would end up receiving nothing from his case. Doyle Brunson’s description of professional poker players may apply well to whistleblowers: “It’s a hard way to make an easy living.”

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