Reported / Citable
Background
Michael Tupac was the new-car sales manager at Park Place Motorcars Arlington from October 2020 until his termination in November 2022. Asbury Automotive Group had acquired the dealership in 2020. The dealership’s general manager, Malcolm Gage, made the termination decision.
In 2022, Tupac’s counsel raised concerns with Asbury about Clicklane, an online car-buying tool that Asbury promoted as enabling customers to purchase vehicles “100% online.” Tupac then submitted an SEC tip alleging fraud related to Clicklane. He contended that Texas customers still had to physically sign paperwork and that the process took longer than advertised. The record showed that Tupac had not reviewed Asbury’s SEC filings and had a history of workplace and performance problems, including attendance, commission, customer-service, confidentiality, and odometer-related issues.
The Court’s Holding
The court granted summary judgment for Asbury, Asbury Arlington MB, and Gage on Tupac’s sole Sarbanes-Oxley retaliation claim under 18 U.S.C. § 1514A. Tupac did not create a genuine dispute that he engaged in protected activity because the evidence did not show he subjectively and objectively reasonably believed the reported conduct violated securities law, SEC rules, or federal law concerning fraud against shareholders.
The court also held that Tupac failed to show his SEC-related activity contributed to his discharge. His assertions of shifting termination explanations and an unsigned termination form did not create a factual dispute. Separately, the defendants established by clear and convincing evidence that they would have terminated him anyway because of his two-year record of performance and misconduct issues. Tupac was ordered to take nothing, and his claims were dismissed.
Key Takeaways
- A Sarbanes-Oxley whistleblower claimant must have a subjectively and objectively reasonable belief that the reported conduct falls within the statute’s protected categories.
- Allegations about an online sales process did not, on this record, support a reasonable belief of fraud material to Asbury shareholders.
- Even assuming a prima facie case, an employer may prevail by clearly and convincingly showing it would have made the same decision absent the alleged protected conduct.
Why It Matters
The decision underscores that a Sarbanes-Oxley retaliation claim requires more than a complaint labeled as securities fraud. Employees must connect the complained-of conduct to a reasonably perceived violation involving securities, SEC rules, or shareholder fraud.
For employers, contemporaneous evidence of independent performance and misconduct concerns can be decisive, particularly where the record supports the same-decision defense.