Seminal Decision Could Make it Harder for Publicly Traded Employers to Defeat Sarbanes-Oxley Whistleblower Claims

Long awaited in Sarbanes-Oxley Act (SOX) whistleblower circles, on October 9, 2014 the U. S. Department of Labor’s Administrative Review Board (ARB) issued a split 2-1 panel decision in Fordham v. Fannie Mae, ARB No. 12-061, reversing in part and remanding an administrative law judge’s post-hearing dismissal of a former employee’s Section 806 whistleblower retaliation claim. The ARB’s decision in Fordham is significant because it addresses squarely, and at length, how ALJs and OSHA investigators should apply the separate and two-stage burden of proof required under Section 806 whistleblower retaliation claims. The result of the ARB’s Fordham decision likely will energize the plaintiffs’ bar, and could make it more difficult for covered employers – and their contractors and subcontractors based on Lawson v. FMR LLC – to obtain dismissals of SOX Section 806 whistleblower retaliation claims, whether at the investigatory stage or following a full-blown evidentiary hearing before an ALJ. If the ARB’s decision is appealed but withstands judicial review, Fordham v. Fannie Mae could lead to a sea change in publicly traded employers’ and their contractors’ and subcontractors’ involvement in, and potential exposure to, SOX whistleblower claims.