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Jeffrey A. Wiest, et al v. Thomas J. Lynch

July 21, 2011


The opinion of the court was delivered by: Pratter, J.



Jeffrey Wiest has sued his former employer, Tyco Electronics Corp. ("Tyco"), along with a number of Tyco officers and management-level employees namely, Thomas Lynch, Terrence Curtin, Charles Post, and Charles Dougherty. In Count I of his Complaint, Mr. Wiest alleges that the Defendants violated the anti-retaliation provision of the Sarbanes-Oxley Act of 2002 ("SOX"), Pub. L. No. 107-204, § 806(a), 116 Stat. 745, 802 (codified at 18. U.S.C. § 1514A (2006)), by retaliating and discriminating against him after he engaged in allegedly protected activity. In Counts II and III of the Complaint, Mr. Wiest asserts state law claims of intentional infliction of emotional distress and wrongful termination. In Count IV, Plaintiff's wife, Laura Wiest ("Mrs. Wiest"), asserts a state law claim for loss of consortium.

The Defendants have moved to dismiss the entire Complaint. For the reasons set forth below, their motion will be granted.


The Court has original subject matter jurisdiction over the SOX claim pursuant to 28 U.S.C. § 1331, and supplemental jurisdiction over the state law claims pursuant to 28 U.S.C. § 1367.


For the purposes of a motion to dismiss, all facts alleged in the complaint are considered to be true. On that basis, the facts are as follows.

Mr. Wiest is a former employee of Tyco. Before his termination in April 2010, Mr. Wiest had worked for 31 years in Tyco's accounts payable department. Throughout his employment, Mr. Wiest had consistently received high ratings in his job performance reviews, especially in the areas of "integrity" and "ethics and values." He received an "impact bonus" in July 2008 for his "significant achievements and continuing focus on 'doing the right thing.'" Compl. Exs. B, C.

Tyco is a wholly-owned subsidiary of Tyco Electronics Ltd. ("Tyco Ltd."), a publicly traded Swiss corporation. Until 2007, Tyco Ltd. was a subsidiary of Tyco International, Ltd. ("Tyco International"). Tyco Ltd. was separated from Tyco International in the wake of a highly-publicized 2002 corporate scandal involving Tyco International's former CEO, Dennis Kozlowski, that resulted in Mr. Kozlowski's 2005 conviction for allegedly receiving $81 million in unauthorized bonuses. The last several years of Mr. Wiest's employment at Tyco were allegedly extremely stressful as a result of the Kozlowski scandal, pressure to reduce costs, and Mr. Wiest's personal medical issues.

Beginning in mid-2007, Mr. Wiest refused to process certain event expenditures that he felt were improper because they did not meet reimbursement or payment standards set by the accounting department, violated rules and regulations promulgated by the Securities and Exchange Commission ("SEC") or tax laws and regulations, or otherwise raised ethical concerns. Among the expenses Mr. Wiest refused to process without further review of the proper tax or accounting treatment were expenses associated with two events that took place in mid-2008, one at the Atlantis Resort in the Bahamas ("the Atlantis event"), the other at the Venetian Resort in Las Vegas ("the Venetian event"). In both cases, Mr. Wiest sent email communications to his supervisors regarding the need for further tax or accounting analyses of the expenses, and, in the case of the Venetian event, formal approval by appropriate parties before the payments could be processed.*fn1 Plaintiff was particularly concerned because he felt that there were similarities between some of the expenses associated with the two events and the type of expenditures for which Mr. Kozlowski was eventually prosecuted.

After further review of the expenses associated with the Atlantis event, Tyco's tax department found that the event costs had been improperly categorized as business expenses, and instead would have to be treated as award income to the employees who attended the event. Tyco's management decided to go ahead with the event, treat the costs as award income to the attendees, and cover the resulting tax liability by "grossing up" the attendees' bonuses.*fn2 After receiving detailed information and a revised event agenda, the tax department concluded that the Venetian event costs had been properly categorized as business expenses.

Mr. Wiest also refused to process the payment for expenses associated with an event held in late 2008 at the Wintergreen Resort in Virginia ("the Wintergreen event") because proper approval of the expenses by Defendant Lynch had not been obtained in accordance with the requirements set out in Tyco's Delegation of Authority policy. Defendant Terrence Curtin, Tyco's CFO, approved the expenses on Mr. Lynch's behalf via email, but failed to comply with Mr. Wiest's email request that he copy Mr. Lynch on the email so that Mr. Lynch would be aware that Mr. Curtin had approved the expenses in his absence. Mr. Wiest then emailed his own supervisor, Douglas Hofsass, reiterating the need to make Mr. Lynch aware of the expenses being approved. The payment was eventually processed, but Mr. Wiest never found out whether formal approval by Mr. Lynch had been obtained.

Apparently, Mr. Wiest continued to express his concerns regarding various other expenditures until September 2009, when he began to suspect that individuals on Tyco's management team were frustrated with his challenges to event expenditures, especially the head of the business unit that hosted the Atlantis, Venetian, and Wintergreen events, Defendant Charles Dougherty. Mr. Wiest alleges that his suspicion was bolstered when he noticed that his co-workers and supervisors were acting differently around him, and Susan Wallace of Tyco's human resources department called him in for a meeting on September 17, 2009. During the meeting, Ms. Wallace informed Mr. Wiest that she was initiating an investigation into allegations that he had (1) failed to properly report baseball tickets he had received from Mr. Hofsass in August 2009 as a vendor gift in violation of company policy; (2) made sexually suggestive comments to co-workers; and (3) engaged in an improper relationship with another Tyco employee ten years earlier. Mr. Wiest questioned the seriousness of the allegations, but was not allowed to respond to the allegations during the meeting. He was also unable to receive any additional information from Mr. Hofsass.

On September 29, 2009, after inquiring about the status of the investigation, Mr. Wiest was told that "it was at a very serious stage." Compl. ¶ 78. The next morning, he was told that he should not bother with a scheduled performance review. As a result of the stress of the investigation, Mr. Wiest says he went home sick later that day, and went on medical leave until he was terminated seven months later, on April 1, 2010.

Mr. Wiest filed an administrative complaint with the Occupational Safety and Health Administration on November 24, 2009, alleging that the Defendants had violated 18 U.S.C. § 1514A by retaliating against him for engaging in protected activity. The Secretary of Labor made no final determination within 180 days of the date Mr. Wiest filed his administrative complaint. Mr. Wiest filed suit in federal court on July 7, 2010.*fn3


A Rule 12(b)(6) motion to dismiss tests the sufficiency of a complaint. Conley v. Gibson, 355 U.S. 41, 45-46 (1957). Although Rule 8 of the Federal Rules of Civil Procedure requires only "a short and plain statement of the claim showing that the pleader is entitled to relief," Fed. R. Civ. P. 8(a)(2), in order to "give the defendant fair notice of what the . . . claim is and the grounds upon which it rests," Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal quotation marks omitted) (alteration in original) (quoting Conley, 355 U.S. at 47), the plaintiffmust provide "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. (citation omitted). Specifically, "[f]actual allegations must be enough to raise a right to relief above the speculative level . . . ." Id. (citations omitted). The question is not whether the claimant will ultimately prevail but whether the complaint is "sufficient to cross the federal court's threshold." Skinner v. Switzer, 131 S. Ct. 1289, 1296 (2011) (citation omitted). To survive a motion to dismiss, the plaintiff must plead "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009); see also Matrixx Initiatives, Inc. v. Siracusano, 131 S.Ct. 1309, 1323 (2011).

In ruling on a motion to dismiss, "a court must consider only the complaint, exhibits attached to the complaint, matters of public record, as well as undisputedly authentic documents if the complainant's claims are based upon these documents." Mayer v. Belichick, 605 F.3d 223, 230 (3d Cir. 2010). Although the Court must accept as true all factual allegations in the complaint and view those facts and draw all reasonable inferences in the light most favorable to the non-moving party, Revell v. Port Auth. of N.Y. & N.J., 598 F.3d 128, 134 (3d Cir. 2010), the Court does not have to accept as true "unsupported conclusions and unwarranted inferences," Baraka v. McGreevey, 481 F.3d 187, 195 (3d Cir. 2007) (internal quotation marks and citation omitted), or the plaintiff's "bald assertions" or "legal conclusions," Hunt v. U.S. Tobacco Co., 538 F.3d 217, 227 (3d Cir. 2008) (internal quotation marks and citation omitted).


I. SOX Retaliation Claim

Mr. Wiest alleges that the Defendants' investigation of the allegations of past misconduct by him was a retaliatory unfavorable personnel action taken by them in response to his alleged protected activities of challenging certain payment requests and refusing to process the challenged requests. Mr. Wiest further alleges that the manner in which the investigation was conducted led to his constructive discharge on September 30, 2009.

Under SOX, a covered entity and its agents may not discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment because of any lawful act done by the employee --

(1) to provide information, cause information to be provided, or otherwise assist in an investigation regarding any conduct which the employee reasonably believes constitutes a violation of section 1341 [mail fraud], 1343 [wire fraud], 1344 [bank fraud], or 1348 [securities fraud], any rule or regulation of the Securities and Exchange Commission, or any provision of Federal law relating to fraud against ...

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