Ex-GC sues Bio-Rad, alleging retaliation for blowing the whistle

The former general counsel for Bio-Rad (NYSE:BIO) accused the company and CEO Norman Schwartz of firing him in retaliation for blowing the whistle on alleged violations of the Foreign Corrupt Practices Act in China.

Sanford Wadler, who was general counsel and executive vice president when Bio-Rad sacked him in June 2013, alleged that he was fired right before the company was slated to present findings from its investigation into bribery in Russia, Thailand and Vietnam. Bio-Rad later agreed to a $55 million settlement with the U.S. Justice Dept. and the Securities & Exchange Commission, which found that it paid $7.5 million in bribes to drum up some $35 million in profits.

Although the SEC said that the company “self-reported its misconduct and extensively cooperated during the investigation,” Wadler alleged that the company stonewalled his efforts to uncover evidence of similar bribery in China.

“After learning of his employer Bio-Rad’s involvement in extensive bribery occurring in Russia, Thailand, and Vietnam, Wadler investigated evidence of similar violations of the Foreign Corrupt Practices Act in China, where corruption is notoriously endemic. Key Bio-Rad officers and directors wanted Wadler to turn a blind eye to this misconduct or sweep it under the rug, but he refused. Instead, and following his mandatory duties under federal securities laws as the company’s chief legal officer, Wadler investigated this potential criminal activity and reported it up the ladder,” he alleged in his May 27 complaint.

“When Wadler reasonably began to believe that the conspiracy to violate the FCPA went all the way to the top of the corporate hierarchy, he reported his concerns to the company’s audit committee. Then, just shortly before Bio-Rad was scheduled to present to the SEC and DOJ regarding the company’s investigation into potential FCPA violations, the company fired Wadler precisely because he refused to be complicit in its wrongdoing. A company is not allowed to attempt to silence whistleblowers in this manner,” Wadler alleged.

Bio-Rad countered that Wadler was fired “because of his abusive and damaging conduct during the months preceding the termination – conduct that alienated other members of management and subordinates alike and caused disruption and embarrassment to the company,” according to court documents, and asked Chief Magistrate Judge Joseph Spero of the U.S. District Court for Northern California to toss the suit.

Spero ruled Oct. 23 that the claims against the company and Schwartz will stand, dismissing the claims against the company’s board. Yesterday, the judge also denied Bio-Rad’s bid for an early appeal of that ruling.

“The court finds that an immediate appeal will not materially advance the ultimate termination of this litigation but rather, will delay resolution of this case. Even if defendants were to prevail on appeal on the issues for which they seek certification, plaintiff’s retaliation claims – including his Sarbanes-Oxley claims against Bio-Rad and its CEO, Norman Schwartz – will need to be litigated and will likely require that the parties engage in very similar discovery. Consequently, an interlocutory appeal will not allow the parties to avoid protracted litigation and will simply create the prospect of 2 separate appeals,” Spero wrote.

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