Sarbanes-Oxley Whistleblower Provision – as Pled- Protects Disclosures to Congress, Federal Agencies & Supervisors, But Not to the Press

Nicolas Tides and Matthew Neuman both worked for Boeing in the State of Washington and both were concerned that Boeing’s practices violated the Sarbanes-Oxley Act. The two employees complained internally, on multiple occasions, that they believed the system in place at Boeing permitted unauthorized users to alter the company’s internal controls rating system. Tides and Neuman, subsequently and independently, spoke to the press about their concerns, even though they were aware of a corporate policy prohibiting such conduct. Boeing fired both employees for unauthorized disclosures to the press. Both sued, claiming violations of Sarbanes-Oxley’s whistleblower protections pursuant to 18 U.S.C. Section 1514A(a)(1).
Unfortunately for both Mr. Tides and Mr. Neuman, 18 U.S.C. Section 1514A(a)(1) explicitly sets forth a list of the three entities or people to whom a whistleblower may report a perceived violation of the law for purposes of the Sarbanes-Oxley whistleblower protection statute, and none of these included the press. The court in Tides v The Boeing Co., — F.4th —- (9th Cir. May 3, 2011), sets forth the statutory protection as extended to 1. Federal regulatory or law enforcement agencies, 2. Congress, or 3. A supervisor. See 18 U.S.C. Section 1514A(a)(1). Thus, when Boeing brought a motion claiming that these employees’ actions were not protected under the Sarbanes-Oxley whistleblower section above, because they disclosed to the press, the Ninth Circuit agreed with Boeing.
There is some saving grace for those who face retaliation for making complaints of illegal practices in the State of California. First, learn from the mistakes above and complain to a specified person or entity under the statute. Second, if the wrongdoing violates other statutes, look at the possibility of using other statutory remedies. Third, if the wrongdoing violates the general public policy of the State of California, consider whether you might have a common law public policy claim. Lastly, if your claim is under Sarbanes-Oxley, consider using a different provision of the statute, such as 18 U.S.C. Section 1514A(a)(2). This provision protects employees who “file, cause to be filed, testify, participate in, or otherwise assist in a proceeding filed or about to be filed (with any knowledge of the employer) relating to an alleged violation of” parts of Sarbanes-Oxley. The Ninth Circuit in this case did not reach the question of whether there would have been a claim had the employees in the Tides case used that statutory provision.

Jody LeWitter
July 18, 2011