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.