Verfuerth v. Orion Energy Systems, Inc.
Verfuerth, the founder and former CEO of Orion, had disputes with Orion’s board of directors, involving outside counsel's billing practices, potential patent infringement, potential conflicts of interests involving a board member, violations of internal company policy, such as consumption of alcohol at an informal meeting, the board’s handling of a defamation suit by a former employee, and the fact that the chairman of Orion’s audit committee allowed his CPA license to expire. The board ignored his advice to disclose those matters to stockholders. Orion removed Verfuerth as CEO, citing high rates of management turnover. The board conditionally offered Verfuerth emeritus status. Verfeurth declined. The parties were unable to negotiate his severance package. The board fired him for cause, citing misappropriation of company funds in connection with his divorce, disparagement of the new CEO, and attempts to form a dissident shareholder group. Verfuerth filed suit, claiming that his complaints to the board were “whistleblowing” and that, by firing him, Orion violated the Sarbanes‐Oxley Act, 18 U.S.C. 1514A(a), and the Dodd‐Frank Act, 15 U.S.C. 78u‐6.e. The Seventh Circuit affirmed summary judgment for Orion. An executive who advises board members to disclose a fact that the board already knows about has not “provide[d] information” about fraud.. Nothing in any federal statute prevents a company from firing its executives over differences of opinion. View "Verfuerth v. Orion Energy Systems, Inc." on Justia Law