Gordon Stroh v. Saturna Capital Corp. ( 2018 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS DEC 24 2018
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
GORDON SCOTT STROH, No. 17-35607
Plaintiff-Appellant, D.C. No. 2:16-cv-00283-TSZ
v.
MEMORANDUM*
SATURNA CAPITAL CORPORATION,
Defendant-Appellee.
Appeal from the United States District Court
for the Western District of Washington
Thomas S. Zilly, District Judge, Presiding
Argued and Submitted December 3, 2018
Seattle, Washington
Before: GRABER, McKEOWN, and CHRISTEN, Circuit Judges.
Gordon Stroh appeals the exclusion of certain evidence from his trial. The
jury unanimously concluded his termination from Saturna Capital was not
retaliatory under the Sarbanes Oxley Act, 18 U.S.C. § 1514A. The parties are
familiar with the facts, so we do not repeat them here. We have jurisdiction under
28 U.S.C. § 1291. We review for abuse of discretion the district court’s
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
evidentiary rulings. Harper v. City of Los Angeles, 533 F.3d 1010, 1030 (9th Cir.
2008).
The district court excluded evidence related to the Saturna Capital
Chairman’s directive that certain employees install a backup computer system on
his yacht and withhold certain information from the FBI if questioned. The district
court based exclusion on its finding that the system was never installed and that the
FBI never questioned the employees. Yet, Sarbanes Oxley protects
whistleblowing regardless of whether the reported securities violation actually
occurred. See Van Asdale v. Int’l Game Tech., 577 F.3d 989, 1000 (9th Cir. 2009)
(holding that a covered whistleblower need only demonstrate a reasonable belief
that the “conduct being reported violated a listed law”). Although it was an abuse
of discretion to exclude this evidence, the exclusion was harmless. In light of the
totality of evidence presented at trial, it is highly unlikely that the admission of this
evidence and any accompanying instruction would have changed the verdict. See
Harper, 533 F.3d at 1030 (holding that “[a] new trial is only warranted when an
erroneous evidentiary ruling ‘substantially prejudiced’ a party” (quoting Ruvalcaba
v. City of Los Angeles, 64 F.3d 1323, 1328 (9th Cir. 1995))). There was
overwhelming evidence that Stroh’s reporting of this incident was not a
“contributing factor” in his termination: (i) Stroh received an $80,000 bonus after
the incident; (ii) Stroh threatened to quit unless he received a thirty percent raise,
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and never mentioned any concerns about this incident or the firm’s regulatory
compliance before leaving; and (iii) Stroh encouraged other members of the legal
department to quit to increase his bargaining leverage. See Van Asdale, 577 F.3d
at 996.
The district court also excluded an internal compliance report written by
Stroh in 2006 and evidence related to Saturna Capital’s dealings with two entities
purportedly linked to terrorist financing. The district court did not abuse its
discretion with respect to its exclusion of the 2006 report because the report
presented a risk of prejudice that clearly outweighed any probative value, which
was minimal in light of the significant passage of time between the incidents
involving the report and Stroh’s termination in 2014. See Fed. R. Evid. 403. As to
the terrorist financing evidence, the district court concluded that the lack of proven
ties to terrorist financing rendered this evidence irrelevant. This rationale once
again runs afoul of Van Asdale. See 577 F.3d at 1000. However, the district court
offered an alternative ground for exclusion under its interpretation of Lawson v.
FMR LLC, 571 U.S. 429 (2014). Stroh’s opening brief did not address this issue
and did not argue that the district court erred based on the alternate holding. “We
have . . . held that the failure of a party in its opening brief to challenge an alternate
ground for a district court’s ruling given by the district court waives that
challenge.” Rodriguez v. Hayes, 591 F.3d 1105, 1118 n.6 (9th Cir. 2010)
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(emphasis omitted) (citing United States v. Kama, 394 F.3d 1236, 1238 (9th Cir.
2005); and MacKay v. Pfeil, 827 F.2d 540, 542 n.2 (9th Cir. 1987)). Thus, Stroh
has waived his challenge to this alternate ground for exclusion, and “the district
court’s disposition of [that issue] neither will be reviewed nor disturbed by this
court.” MacKay, 827 F.2d at 542 n.2. Regardless, even if we presumed error,
excluding this evidence was harmless. See Harper, 533 F.3d at 1030.
AFFIRMED.
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