Earlier this year, a panel of the Ninth Circuit Court of Appeals affirmed a summary judgment in favor of an employer on a former employee’s Sarbanes-Oxley Act whistleblower retaliation claims, in Ramona Lum Rocheleau v. Microsemi Corporation, Inc., No. 15-56029 (9th Cir. Feb. 21, 2017).
The whistleblower, Ramona Lum Rocheleau, based her retaliation claim on her report that the company: (1) engaged in technical violations of the affirmative action requirements imposed by the Office of Federal Contract Compliance Programs (OFCCP); (2) misclassified Rocheleau and two other employees as independent contractors; and (3) asked Rocheleau to retroactively change hiring and recruiting data in violation of OFCCP regulations.
In its opinion, the Ninth Circuit noted that, in order to establish Sarbanes-Oxley retaliation claims, SEC regulations require that whistleblowers “possess a reasonable belief that the information [they] are providing relates to a possible securities law violation (or, where applicable, to a possible violation of the provisions set forth in [the Sarbanes-Oxley Act]) that has occurred, is ongoing, or is about to occur.” The Ninth Circuit also noted that, in addition to possessing a subjective belief that the conduct complained of violates a securities law, that belief must also be objectively reasonable under the circumstances. In order for a whistleblower to have an objectively reasonable belief that reported conduct violates a securities law, the whistleblower’s theory of the conduct must at least “approximate” the basic elements of a securities law violation.
The Ninth Circuit ultimately held that the conduct Rocheleau reported did not evidence an objectively reasonable belief that any violation of a securities law occurred. First, reporting violations of OFCCP regulations is not itself protected under the Sarbanes-Oxley Act (or the Dodd-Frank Act, for that matter). Moreover, under the circumstances, Rocheleau did not have an objectively reasonable basis to believe that those violations would result in serious losses to the company, and therefore, her report did not at least approximate the basic elements of a securities law violation. With respect to Rocheleau’s claim that she and other employees were misclassified as independent contractors, the Ninth Circuit held she could only reasonably believe a violation had occurred with respect to her own classification. Furthermore, a single misclassified worker is not material enough to satisfy the basic elements of a securities law violation. With respect to Rocheleau’s claim that she was asked to change hiring and recruiting data retroactively, she admitted during her deposition that she had neither done, nor been asked to do, any such thing.