Court Opinion

ID: 4354154
Source: CourtListenerOpinion
Date Created: 2018-12-24 21:00:46.498123+00
Date Added: 2024-06-11T14:46:13.427263
License: Public Domain

NOT FOR PUBLICATION                           FILED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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