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Lamb v. Rockwell Automation Inc.

United States District Court, E.D. Wisconsin

April 7, 2017

LISA LAMB, Plaintiff,


          J.P. Stadtmueller U.S. District Judge

         1. INTRODUCTION

         Plaintiff Lisa Lamb (“Lamb”) brought this action against her former employer, Defendant Rockwell Automation, Inc. (“Rockwell”), alleging whistleblower retaliation in violation of the Sarbanes-Oxley Act of 2002 (“SOX”), 18 U.S.C. § 1514A, and the Dodd-Frank Wall Street and Consumer Protection Act of 2010 (“Dodd-Frank”), 12 U.S.C. § 1454. (Docket #1). The Dodd-Frank claim was dismissed by the Court on August 12, 2016 on Rockwell's motion to dismiss. (Docket #15). On January 30, 2017, Rockwell filed a motion for summary judgment as to Lamb's remaining claim under SOX. (Docket #24). The motion is fully briefed and, for the reasons stated below, it will be granted.


         Federal Rule of Civil Procedure (“FRCP”) 56 provides that the court “shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see Boss v. Castro, 816 F.3d 910, 916 (7th Cir. 2016). A fact is “material” if it “might affect the outcome of the suit” under the applicable substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute of fact is “genuine” if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id. The court construes all facts and reasonable inferences in the light most favorable to the non-movant. Bridge v. New Holland Logansport, Inc., 815 F.3d 356, 360 (7th Cir. 2016). The court must not weigh the evidence presented or determine credibility of witnesses; the Seventh Circuit instructs that “we leave those tasks to factfinders.” Berry v. Chicago Transit Auth., 618 F.3d 688, 691 (7th Cir. 2010). The party opposing summary judgment “need not match the movant witness for witness, nor persuade the court that her case is convincing, she need only come forward with appropriate evidence demonstrating that there is a pending dispute of material fact.” Waldridge v. Am. Hoechst Corp., 24 F.3d 918, 921 (7th Cir. 1994).

         3. RELEVANT FACTS

         SOX generally protects an employee from reprisal after she reports fraud or violation of a rule or regulation of the Securities and Exchange Commission (“SEC”) by a co-worker. See 18 U.S.C. § 1514A(a). The instant case grows from Lamb's claim that she was a whistleblower as to fraudulent conduct by her supervisor and was eventually terminated as a result. Rockwell, by contrast, says that Lamb was fired because she violated its internal policies and was not meeting her job expectations. The focus of Rockwell's motion, however, is not on why she was terminated but on its contention that she was not a whistleblower as defined in SOX. Because the Court agrees with Rockwell on this threshold question, it need not recite the facts which are relevant only to the other aspects of Lamb's claim. The facts set forth below are presented in the light most favorable to Lamb.

         Rockwell is a global provider of industrial automation, power, control, and information solutions. Lamb worked at Rockwell in various information technology capacities from 1988 until her termination in 2013. In 2011, she transitioned to a position relating to the Systems, Applications, and Products processing system (“SAP”). SAP is an integrated electronic system designed to streamline various business transactions and processes company-wide. Based on an employee's role and rank, she is granted privileges to access and modify certain data in SAP.

         To ensure that a given employee has SAP access that is sufficient but not greater than necessary to perform her job-what the parties call “segregation of duties” (“SOD”)-Rockwell employs Governance Risk and Compliance (“GRC”) software. GRC establishes rules that identify certain constellations of access privileges that represent a risk of harm to the company or its legal compliance efforts, such as when an employee has privileges to both create and review her work. The rules are designed to prevent one employee from obtaining such pervasive access to Rockwell's data as to facilitate fraud or theft of confidential business information. The system can identify persons that meet the rule definitions so that their privileges can be evaluated and then either disabled or approved by management.

         Like many other companies, Rockwell employs “controls” teams to customize the GRC rules in an iterative process that analyzes the operation of the rules over time to ensure they are working properly and efficiently. The controls teams sometimes received tasks from the internal audit department, which would review their work and develop action plans for improvement. These plans were logged in the Internal Controls Corrective Action Tracking System (“IC-CAT”). An IC-CAT functioned like an outstanding work order that could be closed once the goals set out in it had been achieved.

         Lamb's team, the IT internal controls team, worked specifically with SAP access privileges of IT department users and how those privileges related to internal control over financial reporting for purposes of SOX compliance. In order to better understand Lamb's role, it is important to observe the relevant requirements drawn from SOX. The statute provides that a qualifying corporation, like Rockwell, must file periodic reports with the SEC. 15 U.S.C. § 7241. The reports are required to be certified by high-level corporate officers, including the principal executive officer and principal financial officer. Id. § 7241(a). Those officers must certify, among other things, that they have reviewed the report and that, based on their individual knowledge, the report does not contain any untrue statement or material omission. Id. § 7241(a)(1)-(2). Additionally, the signatory officers must certify that they are responsible for developing internal controls for their company that “ensure that material information relating to the issuer and its consolidated subsidiaries is made known to such officers by others within those entities.” Id. § 7241(a)(4)(B). The officers must also report their conclusions about the effectiveness of these internal controls. Id. § 7241(a)(4)(D). Further, Section 7262 requires that Rockwell's annual reports contain an assessment of the effectiveness of its internal controls as they relate to the accuracy and completeness of financial reporting. Id. § 7262(a). When a public accounting firm prepares an audit report for the company, that firm must report on and attest to the assessment the company made of its financial reporting controls. Id. § 7262(b).

         At Rockwell, the GRC rules Lamb's team developed were designed to root out SAP users in the IT department with SOD conflicts that presented a high risk as to Rockwell's financial data. The GRC reports the team generated were used by management and Rockwell's external auditors as part of their review of Rockwell's internal controls over financial reporting. Lamb's expert, Norman Marks (“Marks”), opined that the GRC reports were a “key control” in this process, which is a control procedure that is relied upon to prevent or detect a material error or omission in financial statements filed with the SEC. Put simply, a key control is one that is important to SOX compliance procedures.

         In her decades with Rockwell, Lamb had garnered extensive experience with managing privileged access, whether in SAP or its predecessor system. She had participated in “countless” audits and meetings on the topic, and she had produced documentation on privileged access. See (Docket #51 ¶ 20). She also was the “most highly privileged user in IT on the mainframe side.” (Docket #39 ¶ 3).

         When she moved to the SAP team in 2011, Lamb worked under Mary Clement (“Clement”) as her immediate supervisor, and Mary Ward (“Ward”) as Clement's supervisor. The turning point for this suit occurred on June 28, 2012. That day, Clement asked Lamb to disable certain rules within GRC that were used to identify SAP users in the IT department with high-risk SOD conflicts. Lamb did not want to make the changes. She told Clement that she was “uncomfortable” making the changes and said, “I don't want to do that.” Clement testified that she thought Lamb simply did not understand the changes she wanted to be made. Clement did not understand Lamb to be saying that disabling the rules would harm the company's internal controls relating to SOX compliance.

         Although she did not make it plain to Clement at the time, Lamb now asserts that disabling the rules as Clement asked was “not proper” because it would hide users in the IT department with high-risk SOD conflicts, which “left Rockwell vulnerable to a lot of risk.” (Docket #51 ¶ 24). Part of Lamb's discomfort was that the particular GRC rules in question were a key control used to keep management and auditors apprised of risk to Rockwell's financial data. Rather than identify over-privileged users and remediate the SOD conflict by downgrading the user's access or getting approval for it from management, it appeared that Clement wanted to simply disable the rules, effectively masking those users.

         Lamb alleges that Clement wanted to make these rule changes because she was under a deadline imposed by an IC-CAT to resolve thousands of outstanding SOD conflicts. Lamb claims that in order to avoid reproach by Ward's supervisor and Rockwell's Controller, Dave Dorgan (“Dorgan”), Clement sought to conceal the problem by eliminating high-risk users from the GRC reports, which Dorgan reviewed and then passed along to his superiors and the auditors. Lamb contends that Clement's actions violated Rockwell's internal procedures for reviewing privileged access and SOD conflicts. They would also “preclude an assessment of internal control over financial reporting as ‘effective'” because the GRC reports would not have any information about these high-risk users, and therefore the auditors and corporate officers looking at the reports would not have all the information they needed to make an informed assessment of the company's internal controls. Id. ¶ 33. Thus, Lamb believes that Clement's request would lead to violations of the above-described SOX provisions.[1]

         Later that day, Lamb went to speak with Ward about the proposed changes. She asked why the changes were being made without approvals and or “request for change” record. She did not mention any concerns about the integrity of Rockwell's internal controls over financial reporting which she raises in this lawsuit. Ward responded that the controls group for the IT department has the ability to change it own rules. Lamb now disagrees, stating that a request for change was required for “every Production change, with no exceptions.” Id. ¶ 30. Despite this, Lamb made the GRC rule changes as Clement requested on June 28.

         After June 28, 2012, Lamb and Clement's relationship soured. As Lamb tells it, Clement “began to find issues with Lamb that were in many cases fictitious and in retaliation because Lamb did not agree with Clement's approach to resolving SOD conflicts.” (Docket #52 ¶ 28). Clement became hostile and “started badmouthing Lamb with her co-workers.” Id.

         Rockwell portrays Lamb as an employee who clung to the outdated procedures she employed in her prior position in the company. It also claims that she was not timely completing her tasks. Lamb counters that she was not provided proper training and that Clement was assigning her tasks without meaningful guidance, apparently to ensure Lamb's failure. The relevant parties-Lamb, Clement, and Ward-had several meetings around this time to discuss Lamb's performance. Because the Court's disposition below does not touch on whether Lamb was performing her job to expectations, the Court will bypass the parties' vigorous disputes on the topic. It is enough to say that Clement and Ward became critical of Lamb's work.

         In mid-March 2013, Clement met with Lamb to discuss Lamb's goals going forward. Lamb became upset by the goals, arguing that they were unrealistic. Clement believed that Lamb was disrespectful during the meeting, and so Senior Human Resources Representative Sheri Anklam (“Anklam”) met with Lamb shortly thereafter to caution her that insubordination would not be tolerated and would in the future result in discipline.

         In late March, Anklam, Clement, and Ward met with Dorgan and Rockwell's Vice President of Law, Marc Kartman (“Kartman”), to discuss Lamb's employment. Rockwell asserts that a performance improvement plan (“PIP”) was developed during this meeting and presented to Lamb on March 28, 2013. During the meeting, Clement told Lamb that if she did not want to participate in the PIP, she could resign with a severance package. Lamb thought the PIP was unwarranted.

         After this meeting, Lamb initiated Rockwell's Employee Issue Resolution (“EIR”) process, which is used to help human resources staff and other managers to review employment-related decisions, to appeal her PIP. Nothing in Lamb's submissions as part of the EIR process mentioned her concerns about SOX violations or other fraud. After an initial meeting with Clement, Ward, and ...

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