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On February 3, 2012, two judges of the U.S. Court of Appeals for the First Circuit dismissed the SOX whistleblower claims of Jackie Lawson and Jonathan Zang. The case is Lawson v. FMR, LLC, Case No. 10-2240 (1^st Cir. 2012). To justify this dismissal, the two judge majority held that the SOX whistleblower statute was not remedial, that it is but a “relatively small part” of SOX, that the Department of Labor (DOL) deserves no deference in SOX cases, and that the SOX whistleblower protection does not apply to the employees of contractors of publicly traded companies. Judge Thompson, dissenting, got it right. Judges Lynch and Howard got it very wrong.

On the February 7, 2012, episode of Honesty Without Fear, I interviewed Indira Talwani, the attorney who represents Jackie Lawson. Thankfully, she has filed a petition for rehearing and asked the First Circuit to reverse its decision. We did not have enough time to cover all the issues raised in the decision. I am doing so here and now in this blog.

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Yesterday, the National Whistleblowers Center filed an amicus, or friend of the court, brief with the U.S. Court of Appeals for the Third Circuit in its case of Wiest v. Lynch, Case No. 11-4257. The main issue is whether the Court should adopt the ARB's broad "reasonable belief" standard for determining protection activity, or whether it should affirm the district court's narrow "definitively and specifically" standard. The brief also argues that Wiest's internal complaints should be protected under SOX's participation clause, and that he had no duty to inform management about the basis for his reasonable belief.  The Third Circuit adopted a similar broad scope of protection under the Clean Water Act in Passaic Valley Sewerage Comm. v. U.S. Department of Labor, 992 F.2d 474, 478-79 (3rd Cir. 1993). Hopefully, it will do the same for the Sarbanes Oxley Act (SOX).  This should be easier after the ARB issued its good decision in its Sylvester case.

Stephen M. Kohn, Executive Director of the National Whistleblowers Center (NWC) is the lead attorney for the brief.

UPDATE: The Third Circuit has scheduled oral argument in this case for the morning of September 25, 2012, in Philadelphia, Pennsylvania.  Available here are:

July 21, 2011, district court order of dismissal

November 15, 20122, district court order denying reconsideration

January 25, 2012, brief of appellant

February 15, 2012, NWC amicus brief

April 23, 2012, brief of appellees

April 30, 2012, Chamber of Commerce amicus brief

May 7, 2012, reply brief of appellant

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