The Second Circuit clarified the burden-shifting framework applicable to whistleblower retaliation claims under the Sarbanes-Oxley Act ("SOX") earlier this week. SOX prohibits employers from retaliating against employees who "provide information...or otherwise assist in an investigation regarding any conduct which the employee reasonably believes constitutes a violation of" certain laws, rules, and regulations addressing various types of fraud. 18 U.S.C. § 1514A.
In Bechtel v. Administrative Review Board et al., the
plaintiff worked as the vice president of technology
commercialization for Competitive Technologies, Inc.
("CTI") and was fired after he complained about CTI's
alleged non-compliance with certain legal requirements and refused
to sign company financial disclosure forms. The plaintiff filed a
SOX whistleblower complaint with the Occupational Safety and Health
Administration ("OSHA"). Although OSHA initially found in
plaintiff's favor, an administrative law judge ultimately
dismissed the complaint, and the Department of Labor's
Administrative Review Board ("ARB") affirmed that
dismissal. The plaintiff appealed to the United States Court of
Appeals for the Second Circuit.
In determining that the ARB did not abuse its discretion, the
Second Circuit, consistent with its sister circuits, held that, to
prevail in a SOX whistleblower retaliation claim, "an employee
must prove by a preponderance of the evidence that (1) she engaged
in protected activity; (2) the employer knew that she engaged in
the protected activity; (3) she suffered an unfavorable personnel
action; and (4) the protected activity was a contributing factor in
the unfavorable action. If the employee establishes these four
elements, the employer may avoid liability if it can prove by clear
and convincing evidence that it would have taken the same
unfavorable personnel action in the absence of that protected
behavior." Applying that burden-shifting framework, the Second
Circuit affirmed the ARB's decision that the plaintiff had not
satisfied his burden of proving by a preponderance of the evidence
that his protected activity was a contributing factor in his
termination.
Although this articulation of the SOX standard is consistent with
other circuits, the Bechtel decision marks the first time
the Second Circuit has explicitly adopted it.
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