A recent Bloomberg story, “SOX Act No Bar to Fee Award for Defendants Who Prevailed on State Whistle-Blower Claim,” reports that because the Sarbanes-Oxley Act doesn’t preempt a state whistle-blower statute that allows courts to award attorneys’ fees to prevailing defendants, a health care employer that defended a fired worker’s retaliation claims under the SOX Act and the Florida Whistle-Blower Act may recover about $54,000 in legal fees, the U.S. Court of Appeals for the Eleventh Circuit ruled.

Affirming the fee award to Psychiatric Solutions Inc., Premier Behavioral Solutions Inc. and Gulf Coast Treatment Center Inc., the Eleventh Circuit said although the SOX Act is silent regarding legal fees for prevailing defendants, the federal law doesn’t prevent employers that prevail on whistle-blower claims filed jointly under the SOX Act and state law from recovering attorneys’ fees under state law.

“[W]e are persuaded that when a prevailing defendant-employer has moved for attorneys’ fees, Sarbanes-Oxley’s fee provision has no application,” the court said.  “It neither authorizes a defendant to recover attorneys’ fees nor prevents a defendant from recovering fees that are elsewhere authorized.  The [SOX Act] in no way interferes with a court’s ability to award a prevailing defendant attorneys' fees under the FWA [Florida Whistle-Blower Act].”

“[W]hile the FWA authorizes courts to award fees to prevailing defendants, this alone does not frustrate the federal objectives underlying Sarbanes-Oxley,” Judge Arthur L. Alarcon wrote.  “Fee awards under the FWA are discretionary, so judges need not award prevailing defendants fees if they determine doing so might deter employees from bringing meritorious whistleblower actions in the future,” the court said.  “Further, aggrieved employees can themselves eliminate the risk they may be held liable for a prevailing defendant-employer’s attorneys’ fees by forgoing an FWA claim and alleging only a Sarbanes-Oxley claim.”