In a recent Employment Law360 article (subscription required), Steve Pearlman, co-head of Proskauer’s Whistleblowing & Retaliation Group, commented on the Third Circuit Court of Appeals’ decision in Wiest v. Lynch, No. 11-cv-4257, 2013 U.S. App. LEXIS 5345 (3d Cir. March 19, 2013), adopting the U.S. Department of Labor Administrative Review Board’s interpretation of “protected activity” under SOX’s whistleblower provisions.  

The Third Circuit found that the district court erred in holding that SOX protected activity must “definitively and specifically” relate to one of several laws set forth in SOX, stressing that “[a]n employee must establish not only a subjective, good-faith belief that his or her employer violated a provision listed in SOX, but also that his or her belief was objectively unreasonable.”  The Third Circuit also held that, to be protected, communications need not relate to an existing violation. 

Noting the risks attendant to this ruling, Pearlman stated:

This creates a risk within the Third Circuit of opening the floodgates to cases where it is highly tenuous that there’s been a violation of one of the laws in Section 806.

Pearlman also explained:

The ruling doesn’t translate to a death knell for defense motions for summary judgment based on protected activity in SOX whistleblower cases, but it does repudiate a standard that had been more friendly to employers.

We will monitor the aftermath of this decision and keep you posted.