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Whistleblowing to Media Not Protected Under SOX 806

Melissa Klein Aguilar | February 22, 2010

Employers and employees take note: Another district court ruling sheds light on what is and isn't protected whistleblowing activity under Section 806 of Sarbanes-Oxley.

The U.S. District Court for the Western District of Washington has dismissed whistleblower claims brought by two former compliance auditors of the Boeing Company who were fired in 2007 after leaking information to a reporter.

"Congress has made clear that while SOX was intended to protect whistleblowers, only certain types of whistleblowing would be afforded protection. Leaking documents to the media is not one of them," Judge John Coughenour wrote in the Feb. 9 opinion (hat tap to lawyers at Katten Muchin Rosenman, who wrote about the case in this alert and provided CW a copy of the decision).

The plaintiffs, Nicholas Tides and Matthew Neumann, former Boeing audit IT SOX auditors, made several complaints during their employment to supervisors about perceived auditing deficiencies. Concluding that Boeing's auditing culture was "unethical and that the work environment was hostile to those who sought change," Tides and Neumann eventually contacted a reporter from the Seattle Post-Intelligencer and provided her with information and documents about the deficiencies. They were fired soon after.

SOX Section 806 protects employees against retaliation from employers when the employee provides information or assistance to "(A) a Federal regulatory or law enforcement agency; (B) any Member of Congress or any committee of Congress; or (C) a person with supervisory authority over the employee (or such other person working for the employer who has the authority to investigate, discover, or terminate misconduct)."

The Court concluded that SOX doesn't prohibit termination for disclosures to the media. Whether or not the men engaged in any activity protected by SOX, Boeing was entitled to terminate them for leaking confidential documents to the media, the court ruled.

"Boeing has shown by clear and convincing evidence, that Tides and Neumann would have been dismissed independently of any activity protected under SOX," Coughenour wrote.

The court disagreed with the plaintiffs' argument that Boeing's reliance on the media disclosures to fire them was "merely a pretext," and that the firings were a response to protected activity such as complaints to their supervisors.

In its decision, the Court considered the case of Van Asdale v International Game Technology—which Compliance Week previously reported on—in which the Ninth Circuit held that a reasonable fact-finder could determine that the asserted grounds for dismissal of the plaintiffs, in-house intellectual-property attorneys for a gaming-machines company, were pretextual. Coughenour said the grounds for dismissal in the case "were not vague and unsupported as they were in Van Asdale."