On February 12, 2014, in Villanueva v. United States Department of Labor, the Fifth Circuit Court of Appeals held that in order to engage in protected activity under SOX, the whistleblower must report conduct that he/she reasonably believes amounts to a violation of one of the six categories of U.S. laws listed in the statute.
Accordingly, the Fifth Circuit dismissed a case brought by a Colombian national formerly employed in Colombia by Saybolt de Colombia Limitada who alleged that he was retaliated against after reporting a tax scheme which was in violation of Colombian law.
The court concluded that the “focus” of Villanueva’s complaints concerned violations of Colombian tax law, and because Villanueva failed to show that he had engaged in protected activity, the Fifth Circuit found it “unnecessary” to consider whether Section 806 applies extraterritorially.
In August, the Second Circuit rendered another employer friendly decision holding that Dodd-Frank’s anti-retaliation protections do not apply extraterritorially and dismissed an action brought by a former Taiwanese compliance officer of a U.S. company’s subsidiary in Asia who alleged that she was fired after reporting alleged corruption to her superiors.
Although a number of courts have held that the non-retaliation provisions of SOX and Dodd-Frank do not apply extraterritorially and would constitute an unwarranted intrusion into local employment and labor law protections, non-US residents and citizens can and have qualified for Dodd Frank bounties, making international corporate compliance programs, open doors and training critically important.