US Supreme Court Expands Protections For Employee Whistleblowers in Lawson v. FMR

Charles W. Miller & Associates

Last month, the United States Supreme Court issued a ruling that provided for more protection for whistleblowers that work for private contractors of public companies in Lawson v. FMR. The six to three decision expanded the protections of the federal Sarbanes-Oxley Act of 2002, which was established to promote accountability from publicly traded companies following a wave of scandals around that time.In Lawson, Jackie Hosang Lawson was employed as a Senior Director of Finance for Fidelity Brokerage Services, LLC. Fidelity Brokerage was related to the mutual fund corporation, Fidelity. Lawson eventually objected to the financial reporting practices of FMR, LLC, which was a Fidelity mutual fund advisor. In a whistleblower filing that she submitted to the Occupational Safety and Health Administration, which reviews Sarbanes-Oxley claims, Lawson argued that due to her objections, she suffered retaliation and was forced to resign. The case eventually went before the First Circuit, where Fidelity argued that Sarbanes-Oxley’s protections were meant to apply only to the employees of public companies, not their private contractors. The First Circuit agreed, in a divided opinion, and Lawson petitioned the Supreme Court.

The Sarbanes-Oxley Act states that “[n]o public company… or any… contractor of such company may [retaliate] against an employee… because of [a Sarbanes-Oxley protected activity].” However, a decision issued later by the Department of Labor’s Administrative Review Board (ARB) found that the employee of a contractor who acted as a whistleblower against a public company also received protection under the Act. The problem was that “employee” under the Act had no definition. In reading the rest of the Act, it was possible to come up with two definitions: one that applied just to employees of public companies, and another that applied to employees of contractors and agents.

In the Supreme Court decision, Justice Ginsburg wrote for the majority and was joined by Chief Justice Roberts, Justice Breyer, and Justice Kagan. Justices Scalia and Thomas joined the majority in principal part, but also dissented. The majority found that the broad goals of Sarbanes-Oxley were to safeguard investors in public companies and to restore trust in the financial markets. Interpreting “employees” to include employees of private contractors as protected whistleblowers would ensure that public companies were held accountable. Furthermore, the majority’s reading was consistent with interpretations of an air-carrier whistleblower statute, which Congress had used as a model for drafting Sarbanes-Oxley. The air-carrier whistleblower statute protected employees of contractors and subcontractors as well as employees of the carriers themselves.

Meanwhile, Justices Scalia and Thomas included a separate dissent, noting that while they agreed with the general conclusion, they avoided endorsing the majority’s “excursions” into the “swamps” of legislative history. Justices Sotomayor, Kennedy, and Alito dissented entirely, calling the majority’s interpretation a “stunning reach” and noting that the retaliation provision of Sarbanes-Oxley was very ambiguously worded. They feared that the majority’s interpretation could lead to absurd, unintended results.

Regardless of whether the majority’s interpretation was sound, it is encouraging that some employees will have more protection if they find that the company they work for is doing wrong.

Charles W. Miller & Associates is an Indiana and Kentucky plaintiffs law firm serving residents of Kentucky and Indiana. Located in Louisville, Kentucky, the firm provides representation in the areas of personal injury and employment law. If you need an Indiana or Kentucky employment law attorney, contact us today for a free consultation.

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