Jackie Lawson and Jonathan Zang believe that the 1st Circuit U.S. Court of Appeals misinterpreted the law. They appealed the court’s decision in Lawson v. FMR LLC and filed a brief with the Supreme Court arguing that the Sarbanes-Oxley Act’s whistleblower provision was misread, resulting in the conclusion that the anti-retaliation protections do not reach workers of private contractors for public companies.
Lawson and Zang worked for Fidelity investment advisory companies that were essentially contractors of the publicly traded company Fidelity Investments. In 2005, they challenged misleading, factually inaccurate statements made by private contractors of Fidelity Investments. Fidelity took adverse actions against Lawson that constituted a constructive termination, and Zang was fired in June 2005. Lawson and Zang filed complaints with an appropriate government agency.
The plaintiffs sued Fidelity, claiming that they were retaliated against in violation of the Sarbanes-Oxley Act’s whistleblower provisions. The district court denied Fidelity’s motion to dismiss and raised the legal question of whether the act’s whistleblower provisions extend to employees of private companies that are contractors of public companies. The Court of Appeals said it did not. The plaintiffs appealed to the U.S. Supreme Court, arguing that the Court of Appeals misread the law.
The Sarbanes-Oxley Act reflects Congress’s response to the famous Enron and WorldCom financial scandals in providing protection to shareholders and the public from fraud and misleading accounting practices. It contains a provision to protect whistleblowers from retaliation. The law says that no company required to file reports to the SEC may take an adverse action against any officer, employee or contractor who reports misconduct.
The plaintiffs argue that the plain language of the act protects employees of contractors and employees of publicly traded companies and point to the Department of Labor’s inclusion of employees of contractors in its whistleblower statute. Fidelity says the intention of the act is to protect only employees of the public company and not employees of the contractor and points to the provision’s headline, “Whistleblower Protection for Employees of Publicly Traded Companies,” as proof that the act offers protection only to direct employees of the public companies.
We hope that the U.S. Supreme Court clearly defines how far the Sarbanes-Oxley ‘s whistleblower provisions extend. If you have questions about blowing the whistle, call a Dallas whistleblower attorney.