Tyco Electronics Corporation filed a Petition for Rehearing En Banc with the Third Circuit on April 2, 2013 asking the court to reconsider its March 19 decision in Wiest v. Lynch, No. 11-cv-4257, 2013 U.S. App. LEXIS 5345 (3d Cir. Mar. 19, 2013).  The Tyco petition rightly takes the Wiest majority to task on a variety of grounds and relies in large measure on the very thorough and persuasive dissent written by Circuit Judge Jordan. 

As we previously reported in our March 25, 2013 post, the Wiest decision put the Third Circuit at odds with a number of its sister circuits in significant respects, most notably in its rejection of any requirement that alleged SOX-protected misconduct “definitively and specifically” relate to one of the categories of wrongdoing specified in Section 806 of SOX.  The Wiest majority justified departing from substantial existing precedent in this regard by giving Chevron deference to the U.S. Department of Labor’s Sylvester v. Parexel International LLC, No. 07-123 (ARB May 25, 2011) decision. 

The Wiest dissent forcefully rebutted the majority’s view, pointing out that, in rejecting the “definitively and specifically” standard, the Wiest majority provided little guidance as to what a whistleblower must say or do to invoke the protections of Section 806.  The dissent emphasized the need to focus on the whistleblower’s actual communications and whether they put the employer on notice of an alleged violation of one of the enumerated SOX provisions.  To do otherwise, as the dissent stated, opens the door to claims premised on nothing more than “after-the-fact spin.”  The dissent also criticized the majority’s decision to defer to the ARB’s Sylvester decision, observing that federal courts should not ignore established federal court precedent every time an executive agency decides to change its mind. 

The Tyco petition focuses on several aspects of the Wiest majority decision, including:

  • its rejection of the any requirement that, in order for a whistleblower to have held a “reasonable belief” that the employer violated a SOX-protected law, rule or regulation, his communication of that belief must have “definitively and specifically” pointed to such a violation;
  • its decision to defer to the ARB’s rejection of its prior test for assessing the adequacy of a SOX claim, particularly given that the ARB’s decision arose in the context of a SOX claim pursued exclusively through the DOL’s administrative process, not in a de novo federal court action, as is the case in Wiest; and,
  • the fact that the Third Circuit has chosen to diverge from the decisions of nine other Courts of Appeals.

While obtaining en banc review is never easy, the Wiest majority decision certainly, in our opinion, merits it.  If the Third Circuit denies review, the issues in Wiest would seem ripe for Supreme Court review.