Panel Finds that Sarbanes-Oxley Act Does Not Preempt Florida's Whiste-Blower Act

Smith v. Psychiatric Solutions, Inc., et al., No. 13-12785, from NDFla

 

Senior Circuit Judge Alarcon (9^th Cir.) with Circuit Judge Tjoflat and Senior Circuit Judge Cox.

 

Summary: The plaintiff sued her former employer for retaliatory discharge, asserting violations of the Sarbanes-Oxley Act of 2002 and the Florida Whistle-Blower Act (FWBA).  The district court granted summary judgment for the employer and awarded nearly $54,000 in attorney’s fees under the FWBA to the defendant.  The district court also denied the plaintiff leave to seek sanctions under 28 U.S.C. § 1927, denied her motion for Rule 11 sanctions, and awarded the defendants the costs it incurred opposing her Rule 11 motion.

 

The plaintiff contended that the FWBA’s fee provision conflicted with the Sarbanes-Oxley fee provision, and was therefore preempted, and that, in any event, fees were improper under the FWBA.  On the preemption issue, Plaintiff argued that since Sarbanes-Oxley did not authorize an award of fees to a prevailing defendant, it preempted FWBA’s fee-award provisions.  The panel concluded, however that Sarbanes-Oxley simply required courts to award fees to prevailing defendants, but did not prohibit them from granting fees to a successful defendant. 

 

The panel also concluded, under an abuse of discretion standard, that the FWBA fee award was proper, that the award to the defendant of the costs incurred opposing Plaintiff’s Rule 11 motion was justified, and that the denial of Plaintiff’s motion for sanctions under 28 U.S.C. § 1927—which was filed more than 21 months after the filing deadline set by the district court had passed—was appropriate.

 

The panel thus affirmed the district court’s order.