Verfuerth v. Orion Energy Systems, Inc.

65 F. Supp. 3d 640, 39 I.E.R. Cas. (BNA) 559, 2014 U.S. Dist. LEXIS 156620, 2014 WL 5682514
CourtDistrict Court, E.D. Wisconsin
DecidedNovember 4, 2014
DocketCase No. 14-C-352
StatusPublished
Cited by8 cases

This text of 65 F. Supp. 3d 640 (Verfuerth v. Orion Energy Systems, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Wisconsin primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Verfuerth v. Orion Energy Systems, Inc., 65 F. Supp. 3d 640, 39 I.E.R. Cas. (BNA) 559, 2014 U.S. Dist. LEXIS 156620, 2014 WL 5682514 (E.D. Wis. 2014).

Opinion

DECISION AND ORDER

WILLIAM C. GRIESBACH, Chief Judge.

Plaintiff Neal Verfuerth filed a 96-page complaint alleging 14 claims arising out of the termination of his employment as CEO of Defendant Orion Energy Systems, Inc. The Defendant has filed a motion seeking dismissal of some of these claims. As for the remaining claims, the Defendant moves to strike them on the grounds that they do not comply with Rule 8. For the reasons given below, the motions will be granted.

I. Background

Neal Verfuerth started Orion Energy in 1996 and became the company’s CEO in 2005, shortly before it went public in 2007. At one point, Verfuerth divorced his wife, and the company agreed to reimburse him for his legal expenses. Eventually (it will suffice to say) Verfuerth did not see eye-t'o-eye with the company’s board of directors. On September 27, 2012, at a special meeting of the board, the board removed Verfuerth as the company’s CEO and made him “chairman emeritus,” which was designed as an honorary, merely advisory role. It also offered him the option of resigning. Plaintiff resigned in October 2012. On November 8, Verfuerth sent an email titled “Whistleblower Filing”, to several board members, describing the email as a complaint pursuant to the company’s whistleblower policy as well as the Sar-banes-Oxley Act. (Compl., ¶ 392.) The [643]*643same day, the board terminated Plaintiffs employment for cause. In a letter to Plaintiff, which was copied to the board, the CFO, and counsel, the board chairman explained that the termination was the result of:

1. Your acts of dishonesty, misappropriation and conversion of Company funds in connection with your retention of the Company’s “reimbursement” to you of $90,000 of attorney’s fees (grossed-up for taxes). These attorney fees were claimed by you to have been incurred in connection with your divorce, but you have not paid these fees to your divorce attorney and you have not accounted for such fees, even after the October 22 written request to do so.
2. Your serial violations of the terms and conditions of your September 27, 2012 Board Directives letter (including after the Company’s October 22 written warning to you) as a result of your: a. Disparagement of John Scribante Contacting Scott Jensen to obtain information about the Company’s significant shareholders
Contacting shareholders in an attempt to form a dissenting shareholders group.

(Compl. ¶ 537).

Soon after being terminated, Plaintiff forwarded a copy of his “whistleblower” email to an attorney for the Securities and Exchange Commission, which had been conducting an investigation of the company for other matters apparently unrelated to this action. In March 2014 he commenced this action. Further facts are set forth below, where relevant.

II. Analysis

In ruling on a motion to dismiss, I must construe all well-pleaded facts and draw all inferences in the light most favorable to the nonmoving party. Reynolds v. CB Sports Bar, Inc., 623 F.3d 1143, 1146 (7th Cir.2010). In order to survive a motion to dismiss, a plaintiff must allege “sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). And while all reasonable inferences and facts must be viewed in favor of the nonmovant, I need not accept as true any legal assertions or recital of the elements of a cause of action “supported by mere conclusory statements.” Alam v. Miller Brewing Co., 709 F.3d 662, 666 (7th Cir.2013).

A. Dodd-Frank Act

Plaintiffs second claim asserts that Orion retaliated against him for making complaints about possible securities law violations. Orion argues that Plaintiff never complained to the SEC in the manner established by the Dodd-Frank Act itself, and thus he cannot be entitled to its protections.

The Act, passed in 2010, defines a whis-tleblower as “any individual who provides ... information relating to a violation of the securities laws to the Commission, in any manner established by rule or regulation by the Commission.” 15 U.S.C. § 78u-6(a)(6). And according to the implementing regulations, a whistleblower must either submit his information to the www.sec.gov website or by mailing a “Form TCR” to the Office of the Whistle-blower in Washington, DC. 17 C.F.R. § 240.21F-9(a). Plaintiff concedes that he does not qualify as a “whistleblower” under the Act.

Even so, Plaintiff argues that the Act is ambiguous and that the SEC’s own guidance would deem him a whistleblower entitled to the anti-retaliation provisions of the [644]*644Act. The statute’s anti-retaliatión provision states:

[n]o employer may discharge, demote, suspend, threaten, harass, directly or indirectly, or in any other manner discriminate against, a whistleblower in the terms and conditions of employment because of any lawful act done by the whistleblower—
(i) in providing information to the Commission in accordance with this section;
(ii) in initiating, testifying in, or assisting in any investigation or judicial or administrative action of the Commission based upon or related to such information; or
(iii) in making disclosures that aré required or protected under the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201 et seq.), this chapter, including section 78j-l(m) of this title, section 1513(e) of Title 18, and any other law, rule, or regulation subject to the jurisdiction of the Commission.

15 U.S.C. § 78u-6(h)(l)(A).

In short, the anti-retaliation provision states that employers may not take adverse action against a “whistleblower” for: (i) reporting activity to the SEC, (ii) participating in judicial or administrative action, or (iii) making disclosures required or protected by the Sarbanes-Oxley Act or other securities laws.

The alleged ambiguity arises from the SEC’s comments to its final rule implementing the Act, where the SEC explained “the third category includes individuals who report to persons or governmental authorities other than the Commission.” SEC Securities Whistleblower Incentives and Protections, 76 Fed.Reg. 34300-01, at *34304, 2011 WL 2293084 (2011). Some district courts have agreed that the anti-retaliation provision is ambiguous and have given deference to the SEC’s apparent belief that one can be entitled to whistle-blower protections even if one does not qualify as a whistleblower under the Act.

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Bluebook (online)
65 F. Supp. 3d 640, 39 I.E.R. Cas. (BNA) 559, 2014 U.S. Dist. LEXIS 156620, 2014 WL 5682514, Counsel Stack Legal Research, https://law.counselstack.com/opinion/verfuerth-v-orion-energy-systems-inc-wied-2014.