SOX Whistleblower Protections Do Not Extend to Employees Who Leak Misconduct to News Media
Tides involved two employees of Boeing’s internal SOX audit group who, after being contacted by a newspaper reporter, disclosed to the reporter company documents and discussed perceived problems with Boeing’s auditing practice and pressure exerted on them to render positive audit results. After being discharged for violating Boeing policies concerning the disclosure of internal company information and handling inquiries from the news media, both employees filed SOX whistleblower complaints with OSHA. After OSHA failed to issue a final decision within the mandated 180-day period, the employees exercised their right to proceed de novo in federal court. The District Court granted Boeing’s motion for summary judgment and on appeal, the Ninth Circuit affirmed.
Under § 1514A, a publicly traded company may not retaliate against an employee for providing information regarding conduct that the employee reasonably believes constitutes securities fraud, a violation of any rule or regulation of the SEC, or a violation of any federal law relating to fraud against shareholders to (i) a federal regulatory or law enforcement agency, (ii) any member or committee of Congress or (iii) a supervisor or company manager authorized to investigate such misconduct. The plaintiffs in the Tides case argued that their release of information to the news media would ultimately result in a regulatory investigation and therefore constituted protected activity under SOX. The Ninth Circuit rejected this argument, relying on the plain meaning of § 1514A and holding that only the direct disclosure of information to one of the three enumerated classes was protected activity giving rise to a SOX whistleblower claim.
SOX is one of 21 federal statutes, covering such industries as the environmental, financial, rail, airline, energy and food industries, that include explicit whistleblower protections under the original jurisdiction of OSHA. Each of the statutes contain similar investigatory and adjudicatory procedures and rely a common, evolving body of federal administrative jurisprudence. Although the description of protected activity necessarily differs among the various statutes, the Ninth Circuit’s holding in Tides will stand as persuasive authority for narrowly construing the scope of protected whistleblower activity.
Under § 1514A, a publicly traded company may not retaliate against an employee for providing information regarding conduct that the employee reasonably believes constitutes securities fraud, a violation of any rule or regulation of the SEC, or a violation of any federal law relating to fraud against shareholders to (i) a federal regulatory or law enforcement agency, (ii) any member or committee of Congress or (iii) a supervisor or company manager authorized to investigate such misconduct. The plaintiffs in the Tides case argued that their release of information to the news media would ultimately result in a regulatory investigation and therefore constituted protected activity under SOX. The Ninth Circuit rejected this argument, relying on the plain meaning of § 1514A and holding that only the direct disclosure of information to one of the three enumerated classes was protected activity giving rise to a SOX whistleblower claim.
SOX is one of 21 federal statutes, covering such industries as the environmental, financial, rail, airline, energy and food industries, that include explicit whistleblower protections under the original jurisdiction of OSHA. Each of the statutes contain similar investigatory and adjudicatory procedures and rely a common, evolving body of federal administrative jurisprudence. Although the description of protected activity necessarily differs among the various statutes, the Ninth Circuit’s holding in Tides will stand as persuasive authority for narrowly construing the scope of protected whistleblower activity.
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