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Feldman v. Law Enforcement Associates Corp.

United States Court of Appeals, Fourth Circuit

May 12, 2014

PAUL H. FELDMAN, Plaintiff - Appellant,

Argued, March 18, 2014

Page 340

Appeal from the United States District Court for the Eastern District of North Carolina, at Raleigh. (5:10-cv-00008-BR). W. Earl Britt, Senior District Judge.


Adam Augustine Carter, EMPLOYMENT LAW GROUP, PC, Washington, D.C., for Appellant.

Amy Yager Jenkins, MCANGUS, GOUDELOCK & COURIE, LLC, Mount Pleasant, South Carolina, for Appellees.


R. Scott Oswald, John T. Harrington, Jr., EMPLOYMENT LAW GROUP, PC, Washington, D.C.; Michael C. Byrne, LAW OFFICES OF MICHAEL C. BYRNE, PC, Raleigh, North Carolina, for Appellant.

Helen F. Hiser, Mount Pleasant, South Carolina, for Appellees.

Before GREGORY, WYNN, and THACKER, Circuit Judges. Judge Gregory wrote the opinion, in which Judge Wynn and Judge Thacker joined.


Page 341

GREGORY, Circuit Judge

Plaintiff Paul Feldman, who asserts that he was unlawfully terminated from his employment in retaliation for protected activity under the Sarbanes-Oxley Act of 2002 (" SOX" ), 18 U.S.C. § 1514A, appeals the district court's grant of summary judgment to Defendants Anthony Rand, James Lindsay, Joseph Jordan, Paul Briggs, and Law Enforcement Associates Corporation (" LEA" ). Because we find that Feldman failed to sufficiently establish that his alleged protected activities were a contributing factor to his termination, we affirm.


Sometime prior to 2001, Feldman became President of LEA, a company that manufactures security and surveillance equipment.[1] He remained President and CEO until his termination on August 27, 2009. In 2005, LEA's founder, John Carrington, pled guilty to criminal export violations involving another company he owned, and was ordered to refrain from certain export activities for five years. Though Carrington remained a major stockholder, he resigned from LEA's Board of Directors (" Board" ) and has not

Page 342

been an officer or employee of LEA since. During the relevant time period, the Board consisted of two " Inside Directors" -- Feldman and Martin Perry -- and three " Outside Directors" -- Rand, Lindsay, and Jordan.

Since at least November 1, 2007, an " extraordinarily palpable" split existed between the Inside Directors and the Outside Directors, J.A. 4282, due in some part to the fact that Carrington planned to sell LEA without first giving Feldman an opportunity to buy it, as well as the Board's decision not to approve a written employment contract that would have increased Feldman's salary. The tension deepened after Feldman confirmed in December 2007 that Carrington owned fifty percent of a company called SAFE Source, to which LEA had shipped some of its products in 2005 or 2006. SAFE Source exported these products overseas, but because Carrington was still banned from making exports, Feldman became concerned that the exports were illegal.

The issue of LEA's business with SAFE Source arose in a December 27, 2007 Board meeting, but the parties dispute exactly what was said and by whom. There are competing versions of the meeting minutes, but a majority of the Board -- the Outside Directors -- adopted the version produced by Mark Finkelstein, a lawyer Rand hired for the company, over the version produced by Eric Littman, another LEA attorney. Feldman asserts that he objected that Finkelstein's minutes were falsified. Feldman further contends that he saw Rand and Finkelstein meet with Carrington immediately after the meeting, and suspects that they informed Carrington of his intention to report the issue to the government. On January 14, 2008, Feldman and Perry wrote the United States Department of Commerce about the potentially illegal exports, resulting in a federal investigation and a raid of SAFE Source's headquarters shortly thereafter.

A number of other conflicts subsequently arose between Feldman and Appellees. In February or March 2008, Feldman relocated LEA's headquarters from Youngsville, North Carolina to Raleigh, North Carolina, claiming that it benefitted the company in various ways. The Outside Directors viewed this act as insubordinate since Feldman entered the new lease on office space without their prior approval. At some point in 2008, the Outside Directors also took issue with the financial information and meeting agendas they received from Feldman, asserting that the requested information was either not provided or was insufficient. At a March 13, 2008 Board meeting, Finkelstein became LEA's primary counsel, while Littman remained on as LEA's securities counsel. ...

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