Gordon Stroh v. Saturna Capital Corp. ( 2018 )


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  •                            NOT FOR PUBLICATION                           FILED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,
    2
    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)
    3
    (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.
    4