You’re gonna be interested in this week’s Suits by Suits news – I guarantee it:
2013 has been a banner year for followers of the Sarbanes-Oxley whistleblower protection provision, 18 U.S.C. § 1514A. As we’ve previously discussed on Suits by Suits, the Supreme Court will decide in its next term whether Sarbanes-Oxley protects employees of privately-owned corporations, in Lawson v. FMR, LLC. The Third Circuit also recently held, in Wiest v. Lynch, that an employee does not have to allege that he “definitively and specifically” reported a known legal violation in order to state a Sarbanes-Oxley claim.
Most recently, on Tuesday, the Tenth Circuit held that an employee is protected under Sarbanes-Oxley for reporting misconduct even when the misconduct does not involve a fraud against shareholders (Lockheed Martin Corp. v. Administrative Review Board, Department of Labor).
The facts of Lockheed involve tawdry letters, military affairs, and humiliation in the workplace.
Yesterday, the Supreme Court announced that it will hear the case of Jackie Hosang Lawson and Jonathan Zang, two former Fidelity employees who seek to reverse the dismissal of their Sarbanes-Oxley whistleblower claims. In this post last week on Suits by Suits, we outlined Lawson and Zang’s petition to the Court and described the long odds that petitioners face when they ask the Supreme Court to review their cases. The U.S. government also didn’t do Lawson and Zang any favors when it told the Court that it shouldn’t take their case. Now that Lawson and Zang have bucked the odds, they might be feeling like they bought that lucky PowerBall ticket.
The Court has outlined the question presented by Lawson and Zang’s case as follows:
Section 806 of the Sarbanes-Oxley Act, 18 U.S.C. § 1514A, forbids a publicly traded company, a mutual fund, or “any ... contractor [or] subcontractor ... of such company [to] ... discriminate against an employee in the terms and conditions of employment because of” certain protected activity. (Emphasis added). The First Circuit held that under section 1514A such contractors and subcontractors, if privately-held, may retaliate against their own employees, and are prohibited only from retaliating against employees of the public companies with which they work.
. . .
Is an employee of a privately-held contractor or subcontractor of a public company protected from retaliation by section 1514A?
To prevail, Lawson and Zang must convince the Court that the answer is yes.
Only a handful of employment cases make it all the way to the Supreme Court’s august chambers at One First Street. That’s largely because the Court has discretion whether or not to review cases decided by lower courts of appeals. Thousands of unhappy litigants file petitions for writ of certiorari every year, asking for review from the highest court in the land. Almost all are turned away.
Tomorrow, the Court will consider whether to accept an appeal by Jonathan Zang and Jackie Lawson in a case that has significant implications for the Sarbanes-Oxley whistleblower protection provision, 18 U.S.C. § 1514A. Section 1514A, which was passed as a response to the Enron and other financial scandals of the early 2000s, prohibits public companies, as well as “any other officer, employee, contractor, subcontractor, or agent of such company,” from retaliating against “an employee” for protected activity. The issue in Zang and Lawson’s case is whether Section 1514A protects employees of privately-held companies, if those companies are working as contractors for public companies.
As you probably know, we here at Suits by Suits have been fascinated by the strange case of Kirby Martensen, the former Oxbow Group executive who alleged that he was kidnapped and falsely imprisoned by billionaire William Koch. We teased for you last week that Koch’s motion to dismiss, to strike, and in the alternative to transfer venue of the case from California to Colorado was denied, and the case will proceed.
Now, we’ve gotten our hands on the judge’s decision and had a chance to review it in depth; particularly if you’re a civ pro geek like me, it’s worth a read. Even if you’re not, the decision helps any potential litigant -- and really, isn’t that all of us? -- understand where we can expect to sue or be sued. Read on....
In the first part of this series, we raised the question of whether a public employee’s rights under the First Amendment to the Constitution – primarily the right to speak freely on public issues – is limited by the fact that she works for the government. It’s the curious mix of the Constitutional rights we all enjoy, and the duty of the government to act as an employer when it hires and manages people to get things done. We looked briefly at how the Supreme Court addressed this issue: in short summary, public employees keep their rights to free speech on issues of public concern – but when they are speaking as part of their official duties, or their speech creates a disruptive atmosphere for the government agency, the employee can be fired for speaking out.
Two recent cases dealing with deputy attorneys-general illustrate this difficult intersection between public employment and speech. In both cases, the attorneys – a breed not known for silence – lost their jobs for speech: one for speaking out, and the other for refusing to speak when she was told to do so. Let’s see how their cases against their public employers are faring.
Some days when I look over the possible stories here, they’re filled with disputes between attorneys. It almost makes me think that my fellow editors at Suits-by-Suits and me are the only attorneys that can get along. Most of the time, at least.
Because if you are, or have ever dealt with, Attornicus Americanus, then you know two things about our profession: 1) we don’t like to be told to be quiet when we have something important to say; and 2) even worse, though, is telling us we have to say something that we don’t want to say. The two cases at issue in this two-part series feature lawyers working for the government who were in just those situations, and were fired. We look at recent interesting developments in their claims for retaliation. In passing, too, we’ll note what one of these lawyers was fired for saying, and what the other lawyer was fired for refusing to say.
All in all, these are posts about whistleblowing and retaliation claims by public employees – and not just attorneys, either. The public nature of the employment here is important because government employees keep some of their First Amendment rights to free speech when they go to work for the government. The government employer, for its part, has some limited right to limit its employees’ speech in order to get its mission accomplished. So before we turn to the two cases, a brief tour through the First Amendment rights of public employees is in order.
April showers bring May flowers, which, as the old joke goes, usually bring these. At Suits by Suits, however, April brought a mix of interesting stories involving non-compete agreements, the mechanics of employment contracts, and all sorts of other topics:
Who doesn’t like all-expense-paid trips to the Atlantis Resort, the Venetian Hotel, or the Wintergreen Resort? A recent decision from a federal court of appeals gives us the answer: Jeffrey Wiest, an accountant for Tyco Electronics Corporation.
In Wiest v. Lynch, the Third Circuit tackled Wiest’s whistleblower claim, brought after he refused to approve corporate expenditures for conferences at luxurious lodgings.
Late last week, Rutgers announced that it reached a $475,000 settlement with former men’s basketball coach Mike Rice and that no cause for Rice’s termination would be provided. Recently-publicized videotapes show Rice at practices hitting, kicking and throwing basketballs at his players and taunting them with obscenities and anti-gay slurs (not to be confused with this shocking video of Middle Delaware State women’s basketball coach Sheila Kelly throwing toasters at her players). The announcement came more than two weeks after Rutgers President Robert Barchi told reporters that Rice was fired, but not for cause. And that announcement came several months after Rice was suspended from work for three days, following an internal investigation by outside counsel, resulting in this report.
As the regulatory and business environments in which our clients operate grow increasingly complex, we identify and offer perspectives on significant legal developments affecting businesses, organizations, and individuals. Each post aims to address timely issues and trends by evaluating impactful decisions, sharing observations of key enforcement changes, or distilling best practices drawn from experience. InsightZS also features personal interest pieces about the impact of our legal work in our communities and about associate life at Zuckerman Spaeder.
Information provided on InsightZS should not be considered legal advice and expressed views are those of the authors alone. Readers should seek specific legal guidance before acting in any particular circumstance.
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