* Trial lawyer Jeffrey Norris had been fired in 2009
* One email to Washington Post, another had secret report
* Earlier emails questioned Mark Cuban's patriotism
* US appeals court says new evidence should be reviewed
By Jonathan Stempel
April 10 (Reuters) - A longtime U.S. Securities and Exchange Commission trial lawyer who was fired for sending inappropriate emails deserves a chance to get his job back by presenting medical evidence that those actions won't happen again, a federal appeals court ruled.
Tuesday's decision by the U.S. Federal Circuit Court of Appeals in Washington, D.C. overturned an arbitrator's ruling upholding the August 2009 dismissal of Jeffrey Norris, a 17-1/2 year SEC veteran.
Norris had been fired for sending three emails in late 2008, including one to the Washington Post espousing political views, one containing a confidential report about suspicious activity, and an internal email demeaning SEC support staff.
He had earlier been suspended for two weeks in 2007 for emails questioning the patriotism of Mark Cuban, the billionaire owner of the Dallas Mavericks basketball team, for his apparent backing of a movie suggesting that the government planned the Sept. 11, 2001 attacks as a pretext to go to war with Iraq.
Cuban is defending himself against SEC civil insider trading charges into his sale of Mamma.com shares.
Norris argued that his 2008 emails were influenced by personal matters including his wife becoming disabled, his daughter suffering from Asperger's Disorder, and his own suffering from Attention Deficit Hyperactivity Disorder.
But he said that by the time of the November 2010 arbitration, his circumstances had improved, and his psychiatrist believed the email activity was unlikely to recur.
The arbitrator found that Norris would deserve to regain his job "if sympathy were the sole deciding factor," but that the SEC had the right to fire him based on what it knew at the time.
Writing for a three-judge Federal Circuit panel, however, Judge Timothy Dyk said Congress intended that arbitrators like Norris' review "all aspects" of a case, including new evidence suggesting the original penalty might be too harsh.
"We hold that where new evidence in mitigation of the penalty imposed is presented," Dyk wrote, "the evidence must be considered in determining whether the agency's imposed penalty was reasonable."
The court ordered the arbitrator to consider whether Norris' dismissal struck "a responsible balance within tolerable limits of reasonableness."
Michael Kator, a lawyer for Norris, said he hopes the SEC will reinstate his client, whom he said is in his 50s.
"It's a nice decision," he said. "It resolves an important issue in civil service law that was ambiguous: whether post-removal medical evidence could be considered in determining an appropriate penalty. It's important to be able to say the reasons that an action was taken are no longer valid."
SEC spokesman John Nester declined to comment.
Norris' emails to Cuban were detailed in a 2011 report by then-SEC Inspector General David Kotz that cleared the regulator of misconduct in its probe of Cuban's trades. Kotz found that Norris was not involved "in any way" in that investigation.
The case is Norris v. SEC, U.S. Federal Circuit Court of Appeals, No. 2011-3129.