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Total Articles: 28

DOL Flip-Flop: SOX's Anti-Retaliation Provisions Apply to Overseas Conduct After All

In a late-August decision with potentially far-reaching implications for foreign and multinational employers, the United States Department of Labor Administrative Review Board (ARB) held that the Sarbanes-Oxley Act's (SOX) whistleblower provisions have extraterritorial application—in apparent contradiction of appellate court and indeed prior ARB case law.

Supreme Court to Hear Internal Whistleblowing Case

The US Supreme Court has agreed to hear Digital Realty Trust, Inc. v. Somers (Docket No. 16-1276), a case that should settle the question of whether the anti-retaliation provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank) applies to internal whistleblowers. The federal circuits are split on whether those employees who fail to report violations of securities laws to the Securities and Exchange Commission (SEC) are protected by Dodd-Frank's whistleblower provision. However, regardless of the jurisdiction in which an employer operates, it should engage in best practices with respect to internal or external whistleblowing.

Ex-GC Awarded $8 Million For Retaliatory Firing

A California federal jury awarded Sanford Wadler, former General Counsel of Bio-Rad Laboratories, $8 million for his claims against his former employer under the whistleblower provisions of Sarbanes-Oxley (SOX) and the Dodd-Frank Acts (DFA). This case implicates a number of key issues confronting companies and their in-house legal teams, including: (1) protections and scope of the attorney-client privilege; (2) what constitutes protected activity from an in-house attorney or compliance officer; (3) the importance of consistent and timely performance critiques; and (4) preparing adverse employment decisions to be scrutinized by a judge, jury, or arbitrator. The case also highlights the existing split among federal courts regarding what constitutes a “whistleblower” under the DFA.

Sometimes a Complaint is Just a Complaint: Eighth Circuit Applies Reasonableness Standard to Reject Employee’s SOX Retaliation Claim

Earlier this summer, in Beacom v. Oracle, the U.S. Court of Appeals for the Eighth Circuit affirmed summary judgment dismissing the SOX and Dodd Frank Act claims of an employee who was fired from his Vice President position after he says that he complained about changes in his employer’s financial forecasting. The Court upheld dismissal of that claim based on the standard that a SOX plaintiff must prove that he “subjectively believe[d] the employer’s conduct violated a law relating to fraud against shareholders, and the employee’s belief must be objectively reasonable” (Emphasis added.) According to the Minnesota District Court that initially heard and dismissed Beacom’s claim and the Court of Appeals that affirmed, the plaintiff in this case could do neither.

Fourth Circuit Upholds Sarbanes-Oxley Whistleblower Retaliation Finding and Substantial Monetary Award

On May 20, 2015, a split Fourth Circuit panel ruled Deltek, Inc., a Virginia-based software and information services provider, must pay a terminated whistleblower four years of front wages and thirty thousand dollars ($30,000) in college tuition. In doing so, two thirds of the panel affirmed the U.S. Department of Labor’s Administrative Review Board’s determination upholding an Administrative Law Judge’s finding the company retaliated against Dinah R. Gunther, a former financial analyst, in violation of the Sarbanes-Oxley Act, holding these decisions were supported by substantial evidence and reached through application of the correct legal standards.

EEOC’s Proposed (Anti) Retaliation Guidance: Is Your Whistleblower Response System Ready?

The EEOC’s January 21, 2016 “Draft Proposed Enforcement Guidance on Retaliation and Related Issues” continues the pattern of governmental agencies probing deeply into your whistleblower program. Whether or not the guidance remains exactly as drafted, it is a window into the EEOC’s view of an effective anti-retaliation system. And its message is clear: employers need an integrated response system that involves supervisors and managers throughout the process, removes psychological deterrents to reports of retaliation, responds promptly and expertly to allegations, and avoids retaliation during the investigation and afterward.

“Put Up or Shut Up:” The Third Circuit Denies Former Tyco Employee’s SOX Whistleblower Claim

There have been a series of legal battles since 2009 between Tyco Electronics Corp. and its former accounts payable manager, Jeffrey Wiest, fired for sexually harassing and engaging in inappropriate sexual relations with several female subordinates. In the latest skirmish, a Third Circuit panel unanimously backed Tyco, holding that Wiest was, in fact, discharged for sexual harassment and not for whistleblowing activity protected under the Sarbanes-Oxley Act.

Wal-Mart Hit With $31-Million Verdict for Firing Whistleblowing Pharmacist

A federal jury in New Hampshire has awarded more than $31 million in damages to a former Wal-Mart pharmacist who claims the nation's largest retailer fired her for raising safety concerns about how it filled prescriptions.

California Federal Court Adds to Debate over Scope of Dodd-Frank Act Anti-Retaliation Protection

In a decision perhaps overshadowed by the Second Circuit’s subsequent decision in Berman v. Neo@Ogilvy LLC, 14-4626 (2d Cir. Sept. 10, 2015) two days later, a district court in California has added to the growing split among federal courts on the scope of the Dodd-Frank Act’s anti-retaliation provision. In Davies v. Broadcom Corporation, 2015 U.S. Dist. LEXIS 122812 (C.D. Cal. Sept. 8, 2015), the U.S. District Court for the Central District of California dismissed the plaintiff’s DFA whistleblower claim, finding she was not a “whistleblower” under the Act as she had not contacted the Securities and Exchange Commission.

Dodd-Frank Whistleblower Protections Addressed by 2nd Circuit

The 2nd Circuit Court of Appeals has ruled that the Dodd-Frank Wall Street Reform and Consumer Protection Act's whistleblower protections may apply even if an employee did not disclose any violations directly to the Securities and Exchange Commission (SEC), but only disclosed information internally. The Berman v. Neo@Ogilvy LLC decision, which affects employers in New York, Connecticut and Vermont, is the latest to take an expansive view of Dodd-Frank's whistleblower protections.

Fifth Circuit Rejects SOX Whistleblower Claims Not Raised in Administrative Complaint; Adopts Liberal "Reasonable Belief" Pleading Standard With Respect to Protected Conduct

Executive Summary: On July 31, 2015, the Fifth Circuit issued a decision that may have both a positive and negative impact on employers defending whistleblower retaliation claims under the Sarbanes Oxley Act (SOX). In this decision, the court held that a former employee could not proceed with the portion of his whistleblower retaliation claim that was based on protected activity he did not identify in his administrative complaint to the Occupational Safety and Health Administration (OSHA). However, the court reinstated the former employee's claims that were based on activity that he did report in his administrative complaint, finding that the lower court applied an overly restrictive pleading requirement in dismissing the claims. The Fifth Circuit adopted the more liberal pleading standard established by the U.S. Department of Labor (DOL) Administrative Review Board (ARB) in May 2011 – rendering it far easier for whistleblowers to advance their retaliation claims beyond the pleading stage, into the discovery phase, and potentially on to trial by jury.

Sixth Circuit Changes Course on Proof Required to Show Protected Whistleblower Activity Under SOX

The Sarbanes-Oxley Act (SOX) provides anti-retaliation protection to whistleblowers who engage in “protected activity.” To engage in protected activity under SOX, the whistleblower must provide information to the Securities and Exchange Commission (SEC) or another law enforcement agency, to Congress or one of its members, or to a “person with supervisory authority” over the whistleblower. The information must pertain to “any conduct” which the whistleblower “reasonably believes” constitutes a violation of at least one of six federal fraud laws enumerated under SOX. These laws are:

OSHA Issues Amended Procedures for Handling Retaliation Complaints Under the Sarbanes-Oxley Act

On March 5, 2015, OSHA issued amended procedures for the handling of retaliation complaints under Section 806 of the Sarbanes-Oxley Act of 2002. The amended procedures, now effective, govern employee protection claims. By way of background, on November 3, 2011, an interim final rule (“IFR”) governing these provisions and requesting comment was published in the Federal Register, 76 FR 68084. Pursuant to the IFR, five comments were received.

Whistleblower Protection Extends To Federal Workers Who Violate Agency Regulations

Today the U.S. Supreme Court held that an agent of the Transportation Security Administration (TSA) who disclosed information that was prohibited by TSA regulations, was nonetheless protected under the Whistleblower Protection Act. The Court’s reasoning centered around the fact that “regulations” are not “laws.” DHS v. MacLean.

5th Circuit Takes Expansive View of SOX

While I was starting a week long trial in the Southern District of Texas, the 5th Circuit was taking a wide, pro-employee view of Sarbanes Oxley. In Halliburton v. Administrative Review Board (5th Cir. 11.12.14) the Court was faced with an unusual factual case.

Employers Defending Against SOX Whistleblower Actions Should Prepare for a Long Ride

Employers defending against Sarbanes-Oxley Act (SOX) whistleblower retaliation claims should be prepared for a long and potentially onerous litigation process, even if the claims lack merit. A recent district court decision vividly illustrates this point.

Supreme Court Expands Sarbanes-Oxley Whistleblower Protection to Employees of Private Companies

David Dubberly was recently featured in Midlandsbiz for his article on Supreme Court Expands Sarbanes-Oxley Whistleblower Protection to Employees of Private Companies.

Supreme Court Dramatically Expands Coverage of Sarbanes-Oxley Whistleblower Protections

In Lawson v. FMR LLC, the U.S. Supreme Court held that the whistleblower protections found in the Sarbanes-Oxley Act (SOX) protect from retaliation employees of privately held contractors and subcontractors of publicly traded companies—and not just those employed directly by a public company.

Supreme Court Expands SOX Whistleblower Protection

Yesterday, in a 6-3 vote, the U.S. Supreme Court issued a landmark decision greatly expanding the whistleblower protections of the Sarbanes-Oxley Act (SOX) to cover employees of private entities contracting with publicly-traded companies.

Supreme Court Expands Scope of Sarbanes-Oxley Whistleblower Liability

This morning the Supreme Court of the United States issued its opinion in Lawson v. FMR LLC, No. 12-3, holding that the whistleblower protections of the Sarbanes-Oxley Act of 2002 protect not only the employees of regulated public companies but also the employees of contractors and subcontractors of those companies. By reaching into the workforces of companies that are not themselves regulated by Sarbanes-Oxley, but merely do business with regulated companies, the Court, through this decision, has vastly increased the scope of potential whistleblower claims. This increased scope will likely result in more Sarbanes-Oxley whistleblower litigation and, in particular, more litigation against non-public companies.

5th Circuit's View on Extraterritorial Application of SOX? Not Yet

One of the many issues still to be decided for whistle-blowing claims under Sarbanes Oxley is how far does the law extend, if at all, for conduct outside the United States.

Keyboard Filing - Being a Whistleblower Just Got a Lot Easier

It will be interesting to see what the response is to today's announcement by the Department of Labor that complaints under any of the 22 federal whistleblowing statutes that OSHA enforces may now be filed on line.

Sarbanes Oxley in the Supreme Court Dock

And on the Supreme Court docket for next term after the Court's grant of certiorai of a 1st Circuit decision which applied a narrow definition to the coverage of the first major financial regulatory act. Lawson v. FMR, LLC. (1st Cir. 2.3.12) . The case's page on Scotus blog is here.

Break the Law. Blow the Whistle. Go to Prison. Get $104 Million.

Employees now have 104 million more reasons to blow the whistle on unethical conduct.

ARB Needs Your Help on SOX Coverage of Subsidiaries.

Well, that may be a bit of an overstatement, but the Administrative Review Board, which gets the final appellate say at the administrative level of Sarbanes Oxley claims has asked the Assistant Secretary of OSHA and the SEC, and it appears other amici, to submit briefs addressing four specific questions:

Sarbanes-Oxley’s 90-Day Statute of Limitations Not Triggered By Conditional Firing.

An employee alleging a violation of the Sarbanes-Oxley Act (SOX) must file a complaint within 90 days from the date of that alleged violation. That 90-day period begins to run from the date on which the complainant knows or reasonably should know that the complained-of act has occurred. In whistleblower cases under SOX, the 90-day statute of limitations runs from the date on which the employee receives “final, definitive, and unequivocal notice” of an adverse employment decision. As defined in SOX, the term “unequivocal” means that the notice is not ambiguous, and is free from misleading possibilities.

Awful New Whistleblower Law Affects Huge Swath of Employers.

With almost no fanfare, Congress has stomped and gouged employers – again. It has passed a new law that will affect a significant proportion of the American economy and create new "rights" (translation: opportunities to sue) for employees. Called the Consumer Product Safety Improvement Act of 2008 (Safety Improvement Act), the law provides broad protections to employees of manufacturers, private labelers, distributors, and retailers, who make complaints relating to consumer product safety.

The Critical Role Of HR In Sarbanes-Oxley Compliance.

Human Resources managers should never underestimate the importance of their role in Sarbanes-Oxley compliance. Too often, publicly-traded companies focus their Sarbanes-Oxley compliance efforts on financial reporting only, i.e., as a function of the Accounting and Legal departments. But the full participation of Human Resources can be critical in the corporation's efforts to comply with SOX.
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