Turnaround Specialists

Michael York says he has to hand it to Gibson, Dunn & Crutcher’s Eugene Scalia. York, name partner at Reston, Virginia’s Wehner & York, won at trial for a former manager of FLYi, Inc., who was suing the now-defunct commuter airline. The case was only the third trial under the whistle-blower provisions of the 2002 Sarbanes-Oxley Act. But in an appeal that York calls “diabolical” and “amazingly creative,” Scalia, FLYi’s newly tapped appellate counsel, convinced the U.S. Department of Labor’s review board to toss the verdict, arguing that the SOX statute was never intended to protect whistle-blowers who report fraud that hasn’t materially hurt shareholders. In 2008 the U.S. Court of Appeals for the Fourth Circuit affirmed the board’s decision.

It’s not surprising that Scalia’s argument was well received: He was solicitor at the Labor Department when the SOX provision–which bans retaliation against employees who disclose conduct that violates securities laws–was drafted. As important, says FLYi’s then-general counsel, Richard Kennedy, Scalia knew precisely how to frame the issues that really mattered to the judges. “It was like calling in a surgical specialist,” Kennedy says.