2d Circuit Vacates Summary Judgment Dismissal of SOX Retaliatory Discharge Whistleblower Lawsuit

In Yang v. Navigators Group, Inc., No. 16-77-CV, 2016 WL 7436485 (2d Cir. Dec. 22, 2016) (Summary Order), the court vacated an award of summary judgment in favor of defendant Navigators Group, Inc. on plaintiff’s claim of retaliatory discharge for protected whistleblowing activity in violation of Section 806 of the Sarbanes-Oxley Act (“SOX”).

The law:

To defeat summary judgment, a plaintiff alleging retaliatory discharge in violation of SOX must adduce facts sufficient to support a prima facie case: (1) her engagement in protected activity, (2) defendant’s awareness of same, (3) plaintiff’s suffering unfavorable personnel action, and (4) the protected activity contributing to the unfavorable action. If a plaintiff carries the burden, the defendant employer can still secure a favorable judgment by showing no genuine dispute that the record clearly and convincingly demonstrates that the employer’s adverse action would have been taken even in the absence of protected activity.

Initially, the court rejected the district court’s conclusion that plaintiff “did not engage in protected activity by communicating concerns regarding Navigators’ investment risk models because, [e]xcluding Plaintiff’s own deposition testimony and statements made in her own Declaration, insufficient evidence supported her claim.”


Yang’s own testimony as to the communications at issue constituted admissible evidence and, thus, should not have been excluded from consideration in reviewing defendant’s summary judgment motion. … To the contrary, the testimony should have been viewed in the light most favorable to Yang, in which circumstances it sufficed to give rise to a genuine dispute of material fact as to protected activity that precluded summary judgment.

The court cited authority for the proposition that allegations are not insufficient to survive summary judgment merely because they were “self-serving”.


As to the fourth (contributing factor) element, the court explained;

Viewed most favorably to Yang, the record shows that she was terminated approximately two weeks after she told Navigators’ general counsel that Navigators’ proxy statement might contain misrepresentations regarding the adequacy of the company’s risk models and how frequently the company’s risk management subcommittees met. Such temporal proximity between protected activity and unfavorable personnel action can support a prima facie inference that the protected activity was a contributing factor to the termination. … The district court acknowledged the temporal proximity of Yang’s protected activity and her termination but concluded nonetheless that the presence of a “legitimate intervening basis”—an allegedly disorganized and incoherent presentation by Yang to Navigators’ senior executive team—sufficed to defeat Yang’s prima facie case. …

Assuming arguendo that a legitimate intervening basis could defeat an inference from temporal proximity, Yang and her supervisors here offered substantially different accounts of her October 26, 2012 presentation to Navigators’ executive team. On such a record of conflicting accounts by interested parties, a court must assume that the factfinder will assess credibility and draw inferences in favor of Yang.

Finally, the court pointed to inconsistencies in defendants’ description of her performance as further support of its conclusion: “[W]hile Navigators now cites generalized performance concerns to justify her termination, Yang was never told of such concerns while employed at Navigators, and was informed she was fired only because she did not fit into Navigators’ culture and failed to take a hands on approach to her position. … Yang has thereby adequately placed these issues in dispute such that a reasonable factfinder could conclude her protected activity contributed to her termination.”

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