On March 4, 2014, the U.S. Supreme Court issued a decision in Lawson v. FMR LLC expanding the class of persons protected under the anti-retaliatory provisions set forth in the Sarbanes Oxley Act of 2002 ("SOX"). The Court held that the whistleblowing protections contained in 18 U.S.C. § 1514 applied to employees of private contractors and subcontractors of public companies as well as the employees of public companies. Although SOX and other laws regulate the conduct of investment advisors, auditors, lawyers, and accountants who work with public companies, only § 1514 protects such individuals from retaliation by their employers for complying with the reporting requirements of SOX. Plaintiffs worked for different parts of privately held FMR LLC, which provided management and advisory services to the Fidelity family of mutual funds.

Accenture’s motion to dismiss O’Mahony’s claims was denied by Judge Marrero.Was suit properly brought in U.S. Courts?Section 1514(a)(1) of SOX provides “whistleblower” protection to employees who provide information concerning what the employee reasonably believes is securities fraud or certain other kinds of illegal conduct. See 18 U.S.C. § 1514(a)(1). Defendants argued that this section should not apply “beyond the territorial jurisdiction of the United States” in accordance with the Second Circuit decision of Kollias v. D & G Marine Maintenance, 29 F.3d 67, 70 (2d Cir. 1994).

SOX Claimants Must Exhaust Their Administrative RemediesBefore an employee may assert a claim in federal court under the Act, the employee must file a complaint, within 90 days of the date on which the violation occurs, with the DOL’sOccupational Safety and Health Administration (“OSHA”) to afford that agency the opportunity to resolve the claims administratively. 18 U.S.C. § 1514(b)(1)(A); 29 C.F.R. § 1980.103(c). In Bridges v. McDonald’s Corp., 2009 WL 5126962 (N.D. Ill. Dec. 21, 2009), a federal judge dismissed the complainant’s SOX claims against her supervisor while allowing the same claims to proceed against the company.

ed a Circuit split and clarified the whistleblower’s burden under SOX is to prove that the protected activity was merely a contributing factor to the retaliatory act.As previously reported, the purported whistleblower in the case before the Court was hired in 2011 as a research analyst in a financial firm’s commercial mortgage-backed securities business. A federal jury awarded the purported whistleblower $903,300 in 2017 after finding that he had been unlawfully terminated for reporting that two trading desk managers were attempting to impact the independence of his research reports related to commercial mortgage-backed securities in violation of the securities laws. On appeal by the financial institution employer, the Second Circuit overturned the jury’s verdict, holding that whistleblower-plaintiffs must show under SOX that their employer acted with retaliatory intent in taking the alleged employment action. In particular, the Second Circuit interpreted the word “discriminate” in 18 U.S.C § 1514(A), which reads that no publicly traded company “may discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment” because of an employee’s protected activity, to impose a “retaliatory intent” requirement.After granting cert, the Court disagreed, holding that a whistleblower claiming retaliation under SOX need only prove that the protected activity was a contributing factor in the employer’s adverse action—not that the employer acted with “retaliatory intent.” In its opinion, the Court noted that SOX’s text does not support a requirement to show retaliatory intent, reasoning that the term “discriminate” in SOX’s catchall provision does not impose a “retaliatory intent” requirement for whistleblower-plaintiffs because of the word’s placement and ordinary meaning. Rather, the Court held that SOX only requires proof of intent to “take some adverse employment action against the whistleblowing employee ‘becau

Grab coffee and/or stretch before proceedingLet’s start with the Sarbanes Oxley Act of 2002 (SOX). SOX contains a provision, 18 U.S.C. § 1514(a), that prohibits publicly-traded companies from retaliating against their employees for providing, causing to be provided, or assisting in investigating information: [R]egarding any conduct which the employee reasonably believes constitutes a violation of section 1341, 1343, 1344, or 1348, or any rule or regulation of the Securities Exchange Commission, or any provision of Federal law relating to fraud against shareholders, when the information or assistance is provided to…a person with supervisory authority over the employee. 18 U.S.C. § 1514A(a)(1).

Grab coffee and/or stretch before proceedingLet’s start with the Sarbanes Oxley Act of 2002 (SOX). SOX contains a provision, 18 U.S.C. § 1514(a), that prohibits publicly-traded companies from retaliating against their employees for providing, causing to be provided, or assisting in investigating information: [R]egarding any conduct which the employee reasonably believes constitutes a violation of section 1341, 1343, 1344, or 1348, or any rule or regulation of the Securities Exchange Commission, or any provision of Federal law relating to fraud against shareholders, when the information or assistance is provided to…a person with supervisory authority over the employee. 18 U.S.C. § 1514A(a)(1).

His SOX complaint alleged an effort to cover up the false approval of fire safety designs. The district court dismissed the complaint, relying in part on prior opinions of the Second Circuit and other courts, stating that a plaintiff “must definitively and specifically relate to one of the listed categories of fraud or securities violations in 18 U.S.C. § 1514(a)(1).” The Second Circuit rejected this prior line of cases in light of Sylvester v. Parexel Int’l LLC, ARB No. 07-123, 2011 WL 2165854, at *14-15 (ARB May 25, 2011) (en banc), in which the Administrative Review Board of the Department of Labor abrogated the “definitively and specifically” standard in favor of one that focused on the employee’s reasonable belief that the conduct violated one of the provisions listed in § 1514(a)(1).

A point that was made in a ruling issued this week by Judge Richard G. Seeborg. In Perez v. e-Smart Technologies, Inc.,U.S. Dist. Ct. Case No. C 14-00835 RS (May 14, 2014), the former Chief Operating Officer (COO) of the defendantasked to intervene in an action by the Secretary of Labor against the defendant under the Sarbanes-Oxley Act whistleblower protectionprovisions, 18 U.S.C. § 1514. The Secretary had found that the COO had been constructively discharged bythe defendantas a result of his complaints about the accuracy of a public filing that the defendanthad been preparing to submit to the Securities and Exchange Commission.

Plaintiff proceeded to file a SOX whistleblower claim with OSHA, and kicked his complaint out to the U.S. District Court for the Southern District of New York after an ALJ at the DOL dismissed it.The Court’s Ruling Judge Forrest granted the Company’s motion to dismiss the complaint pursuant to Rule 12(b)(6) (and on other bases), ruling that Plaintiff failed to engage in protected activity. The court began by making it clear that: The Second Circuit has found that to constitute “protected activity,” the employee’s communications must definitively and specifically relate to one of the listed categories of fraud or securities violations in 18 U.S.C. § 1514(a)(1). (emphasis added) (citing Vodopia v. Koninklijke Phillips Elecs., N.V., 398 F. App’x 659 (2d Cir. Oct. 25, 2010)).

On October 17, 2006, Menendez resigned, stating that he believed Halliburton had demoted him by requiring him to report to a lower ranking officer.Sarbanes-Oxley Act (SOX)On May 8, 2006, Menendez filed a complaint with the Department of Labor under Section 806 of the Corporate and Criminal Fraud Accountability Act of 2002, Title VIII of SOX, accusing the company of using improper accounting practices to distort its financial statements and mislead investors. Menendez further claims Halliburton retaliated against him in violation of the SOX whistleblower provisions after he reported his concerns to the SEC and Halliburton’s Audit Committee.Section 806 of SOX, 18 U.S.C. Sec. 1514(A), provides that:No company with a class of securities registered under section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 78l), or that is required to file reports under section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(d), or any officer, employee, contractor, subcontractor, or agent of such company, may discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment because of any lawful act done by the employee –(1) to provide information, cause information to be provided, or otherwise assist in an investigation regarding any conduct which the employee reasonably believes constitutes a violation of section 1341, 1343, 1344, or 1348, anyrule or regulation of the Securities and Exchange Commission, or any provision of Federal law relating to fraud against shareholders, when the information or assistance is provided to or the investigation is conducted by –(A) a Federal regulator