Sarbanes-Oxley Whistleblower Provision — Prima Facie Case and Defenses

From Livingston v. Wyeth, Inc., 2008 U.S. App. LEXIS 6088 (4th Cir. Mar. 24, 2008):

[T]o establish a cause of action under 18 U.S.C. § 1514A [Section 806 of the Sarbanes-Oxley Act of 2002, Pub. L. No. 107-204, 116 Stat. 745, 802-04 (2002)], [the plaintiff] must show, in the context of this case, by a preponderance of the evidence that (1) he provided information or a complaint to a [corporate] supervisor or to one authorized to investigate and correct misconduct; (2) the information or complaint regarded conduct that he reasonably believed constituted a violation of an enumerated statute or any regulation promulgated by the Securities and Exchange Commission relating to fraud; 1 (3) his employer discharged him or took other unfavorable personnel action against him; and (4) his providing the information or making the complaint was a contributing factor to his discharge or other adverse employment action taken by [the corporation].

Moreover, [(5)] the statute requires [the plaintiff] to have held a reasonable belief about an existing violation, inasmuch as the violation requirement is stated in the present tense: a plaintiff's complaint must be "regarding any conduct which [he] reasonably believes constitutes a violation of [the relevant laws]." 18 U.S.C. § 1514A(a)(1) (emphasis added). In an analogous context, we have construed the reasonable belief of a violation to allow for a reasonable belief that the violation not only (1) "has happened" but also (2) "is in progress." Jordan v. Alternative Resources Corp., 458 F.3d 332, 340-41 (4th Cir. 2006) (construing the retaliation provision in Title VII, 42 U.S.C. § 2000e3(a)), cert. denied, 127 S. Ct. 2036 (2007). As we amplified in Jordan, "the employee must have an objectively reasonable belief that a violation is actually occurring based on circumstances that the employee observes and reasonably believes." Id. at 341. We rejected the claim, however, that a reasonable belief that a violation has occurred or is in progress can include a belief that a violation is about to happen upon some future contingency. See id. at 340-41.

Once [the plaintiff] establishes his cause of action, [the corporation] can nonetheless defeat his claim for relief if it shows, by clear and convincing evidence, that it would have taken the adverse employment action against him even in the absence of his providing the information or making the complaint. See 49 U.S.C. § 42121(b)(2)(B)(iv).

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