This article was written by Alice K. Jump, a partner with the Firm.
In a major ruling under the whistleblower provisions of the Sarbanes Oxley Act (“SOX”), the Supreme Court, in a 6-3 decision, extended the statute’s anti-retaliation provisions to employers of privately held contractors or subcontractors who perform work for public companies. The decision significantly expands the scope of SOX’s whistleblower protection and will likely generate more claims from employees who assert that they have suffered adverse employment consequences because they reported corporate wrongdoing.
The case, Lawson v. FMR LLC et al., 571 U.S. __(2014), involved claims by employees of a privately owned investment advisor that provided advisory and management services to the Fidelity family of mutual funds. The advisor was not a publicly traded company but the funds were. Plaintiffs alleged that they were fired in retaliation for raising concerns about overstated expenses and inaccurate SEC filings. The lower courts dismissed the action on the ground that the plaintiffs were not employees of a company with publicly traded shares. In a majority opinion, authored by Justice Ginsburg, the Supreme Court reversed, holding that SOX’s statutory language, as well as its remedial purposes, mandated a finding that employees who worked for contractors or subcontractors of a public company were also covered by the statute. The Court specifically mentioned lawyers and accountants as categories of employees who should be protected from retaliation for reporting wrongdoing about their employers when engaged in work for a public company. The dissent, authored by Justice Sotomayor, warned that the Court’s interpretation was overly broad and could lead to instances where babysitters and construction workers could bring a SOX claim against an employer if that employer had an ongoing contract with a public company.
Lawson raises issues of how to define a contractor or subcontractor. It also leaves open the question of what kind of wrongdoing will give rise to a SOX anti-retaliation claim. In the near term, however, it is clear that the scope of SOX has expanded and both employers and employees who work on matters related to public companies should consider the statute when confronted with a potential whistleblowing claim.
This article is intended only as a general discussion of these issues. It is not considered to be legal advice or relied upon. We would be pleased to consider providing additional details or advice about specific situations. For additional information on this topic, please feel free to contact Alice Jump who regularly counsels and litigates for clients in the employment, financial services, partnership and real estate areas and who has particular experience in whistleblowing claims.
Congratulations to RPL Partners Heidi Reavis and Neil Parent on their thought-provoking article featured on pages 25-30 of The Word to the Wise Issue of EDGE Magazine: “How the ‘Smartest Guy in the Room’ Can Be the Stupidest Guy on the Planet: Five of the Costliest Legal Mistakes You Can Make.”
RPL Partner Nicole Page joined RPL Client Engel Entertainment at this year’s Realscreen Summit during late January in Washington, DC. Realscreen Summit is the pre-eminent global market and conference for the unscripted entertainment industry.
RPL Partner Heidi Reavis will be participating on a panel hosted by The Netherland-America Foundation, Nauta Dutilh International Law Firm and the Consulate General of The Netherlands in New York entitled “Cultural Competence: How it Improves Business Results.” The panel is scheduled for Monday, March 10, 2014. To attend, please click here to RSVP.
RPL congratulates Jillian Schlesinger on the opening of her award-winning documentary, Maidentrip, at the IFC Center in New York on January 17, 2014. Maidentrip follows Dutch teen Laura Dekker, who won a controversial battle with Dutch authorities for permission to set off, at the age of fourteen, on a two-year voyage as the youngest person ever to sail around the world alone. This highly-acclaimed film will be shown at the IFC Center from January 17 through January 23. For a list of other locations and dates, please click here.
RPL congratulates RPL Client Park Slope Productions on the series premiere of “Best Funeral Ever,” on TLC. “Best Funeral Ever” airs on Mondays at 10p.m. EST.
RPL congratulates Anna Holmes on the publication of her new book, “The Book of Jezebel.” Anna, editor of “The Book of Jezebel,” also co-founded the popular women’s blog Jezebel in 2007, which she oversaw until July 2010. “The Book of Jezebel” is an encyclopedic guide to feminism, pop culture, fashion, sex, politics, and much more. To find out more about the book and how to order a copy click here.
RPL Partners Alice Jump, Mark Moore, Neil Parent and Heidi Reavis deliver informative Presentation to members of the European American Chamber of Commerce, professional Mediators and others at the Yale Club on the subject of alternatives to litigation: ”Alternative Dispute Resolution: Understanding the ADR Process in the US Legal System.”
RPL client Pragda LLC will host a two day film program at New York University’s King Juan Carlos I of Spain Center, 53 Washington Square South, Suite 201, on October 18-19, 2013, entitled “Spain in Crisis: The Spanish Crash and the “Indignados” Movement.” This film program will focus on the Spanish crisis from the eyes of journalists and the most notorious artists.