In a recent Employment Law 360 article (subscription required), Lloyd Chinn, co-head of Proskauer’s Whistleblowing & Retaliation Group, commented on upcoming decisions from the Tenth and Third Circuit Court of Appeals that may address the U.S. Department of Labor Administrative Review Board’s employee-friendly interpretation of “protected activity” under SOX’s whistleblower provisions.

The Tenth Circuit in Lockheed Martin Corp. v. Dep’t of Labor, No. 11-cv-9524 (argued Sept. 19, 2012) may address Lockheed Martin’s challenge to a February 2011 ARB ruling stating that employee complaints do not have to implicate shareholder fraud to constitute protected activity under SOX.  Proskauer submitted an amicus brief on behalf of the U.S. Chamber of Commerce supporting Lockheed’s appeal. 

The Third Circuit may also address the scope of protected activity under SOX.  In Wiest v. Lynch, No. 11-cv-4257 (argued Oct. 5, 2012), the plaintiff claims (relying on recent ARB precedent) that the trial court incorrectly held that SOX protected activity must “definitively and specifically” relate to one of several laws set forth in SOX.  

Whether the Third and Tenth Circuits will follow current ARB decisions remains to be seen, but a rebuke of ARB precedent would not be surprising because the ARB’s current interpretation of the statute is inconsistent with SOX’s overall purpose.  District courts have already begun to depart from ARB precedent regarding the scope of protected activity.  Indeed, Proskauer recently reported on a notable district court decision where the court held that a SOX whistleblower must allege that his complaint bears some relation to shareholder fraud.  Our recent post on this case can be accessed here.