Ariel Cudkowicz Quoted in the National Law Journal
"1st Circuit: Bad Business Decisions Don't Necessarily Constitute Shareholder Fraud"

Ariel Cudkowicz was quoted in the February 11, 2009 article, "1st Circuit: Bad Business Decisions Don't Necessarily Constitute Shareholder Fraud," published in the National Law Journal online. The article discussed the First U.S. Circuit Court of Appeals ruling in the Day v. Staples Inc. case. The court found that an employee's lawsuit about a financially inefficient corporate process did not qualify for the Sarbanes-Oxley Act (SOX) of 2002's whistleblower protection provisions. Ariel explained that the First Circuit analyzed the case by referring to the SOX statute and determining whether Staples had violated any rules or regulations of the U.S. Securities and Exchange Commission (SEC) or committed mail, wire, securities or bank fraud according to their legal definitions. He noted that the Staples decision informs employers and employees that "internal disputes about processes or efficiencies" don't rise to the level of protection under the whistleblower provision of SOX. According to Ariel, "An important takeaway, regardless of the nature of an employee complaint, is if you take it seriously and respond to the employee, you can essentially give yourself a defense under the whistleblower provisions."

Ariel pointed out that the Staples decision has important implications for Massachusetts lawyers because it says that Staples' code of ethics is not a contract under Massachusetts' law. Additionally he added, "This decision gives further guidance to employers under what circumstances a policy such as a code of ethics will or will not be considered a contract"