Monday, March 24, 2014

Discrimination Against Older Women ... Time for a New Category?

It is well-known that Title VII of the Civil Rights Act prohibits discrimination in employment on the basis of sex, and the Age Discrimination in Employment Act prohibits discrimination on the basis of age (the individual must be age 40 or over to be covered).  Sex and age are each therefore considered to be “protected classes.”

Proving discriminatory treatment is all about comparing how the plaintiff was treated to how others who are not in the plaintiff’s protected class were treated.  So a female would have to show that males are treated more favorably, and an older person would have to show that younger people are treated more favorably.  But what about an employer that hires younger women and older men, but not older women?  When an older woman claims she was not hired because she is female, the employer can defeat the claim by pointing to its hiring of younger women. When she claims she was not hired because she is older, the employer can point to its hiring of older men.

The concept of discrimination based on sex stereotypes was typified by Price Waterhouse v. Hopkins, 490 U.S. 228 (1989).  In that case, a female who was denied partnership in an accounting firm introduced evidence such as comments that she was "overly aggressive, unduly harsh, difficult to work with and impatient with staff," that she was "macho," that she "overcompensated for being a woman," needed "a course at charm school" and should "walk more femininely, talk more femininely, dress more femininely, wear make-up, have her hair styled, and wear jewelry." In addressing the issues of stereotypes, Justice Brennan wrote:

[i]n the specific context of sex stereotyping, an employer who acts on the basis of a belief that    a woman cannot be aggressive, or that she must not be, has acted on the basis of gender.

Price Waterhouse, 490 U.S. at 249. Justice Brennan went on to state more broadly that: 

[b]y focusing on [the plaintiff's] specific proof, . . . we do not suggest a limitation on the possible ways of proving that stereotyping played a motivating role in an employment decision.

Id. At 251-52. 

But the courts have not been as willing to consider the ways in which older women suffer discrimination.  The question is whether older women suffer their own discrimination based on the combination of their age and sex.  This is sometimes called “intersectional” discrimination, because it intersects two forms of discrimination.  It is also sometimes called “sex-plus,” because the discrimination occurs because she is female, plus another category, age. 

One commentator noted:

one only has to look as far as the television in one's home to see an example of how the merging point of sexism and ageism has really affected older women in a very unique, and unfortunately, very negative way... Women over age forty are regarded as "'too old' and 'too unattractive' to anchor the         news." While for "male anchors, 'gray hair and ... wrinkles are  considered marks of distinction, ...for women they're the kiss of death.’”

Nicole B. Porter,“Sex Plus Age Discrimination: Protecting Older Women Workers,” 81 DENVER UNIVERSITY LAW REVIEW 79 (2003).  The same author remarked:

While most of us love our grandmothers and have very fond memories of her, how many of us can say that the image conjured up in our heads was one of a powerful, independent, intelligent, and capable woman? Compare that image to one of our grandfathers, or other older men we know, who are much more likely to be running our businesses and our government,  and it is easy to see how society marginalizes older women.

The “sex-plus” discrimination theory was first recognized by the U.S. Supreme Court in Phillips v. Martin Marietta Corp., 400 U.S. 542 (1971).  In that case, the defendant refused to hire the plaintiff because she had pre-school age children.  It even had an official policy to that effect, but imposed no such limitation on the hiring of men.  When Phillips sued and alleged sex discrimination, the company won by pointing out that the vast majority of applicants it hired for the position were women, albeit women without pre-school age children.  The Supreme Court disagreed, holding that the company violated Title VII by having one hiring policy for men and another for women. 

This same rationale was used to strike an employer policy barring the hiring of married female flight attendants but not unmarried male flight attendants (Sprogis v. United Air Lines, Inc., 444 F.2d 1194, 1196 (7th Cir. 1971), and discrimination against black women as a separate category (Jefferies v. Harris County Cmty. Action Ass'n, 615 F.2d 1025 (5th Cir. 1980)).

But sex plus age is a more difficult concept, in some cases because some courts suggest that such a theory would require forming a subclass by combining two laws, Title VII and the ADEA into one claim.  Johnson v. Napolitano, 2013 U.S. Dist. LEXIS 45032 (S.D.N.Y. March 28, 2013) refused to recognize an “age plus” claim.  Smith v. Bd. of County Comm'rs of Johnson County, 96 F.Supp.2d 1177, 1187 (D. Kan. 2000) noted that no district court has explicitly adopted an age-plus-gender theory of liability under the ADEA.  

Other cases, such as Arnett v. Aspin, 846 F. Supp. 1234 (E.D. Pa. 1994), have found that sex plus age can be considered a claim under Title VII without the ADEA.  In that case, the plaintiff alleged that she was discriminated against as an older woman since she was passed up for a transfer to a position that was given to younger women or men over the age of forty.  In Barnett v. PA Consulting Group, 715 F.3d 354 (D.C. Cir. 2013), the older female had the highest performance ratings, yet was let go after being told that she didn't "fit" the group's needs any more.  A younger male with lower ratings was retained. The court held that a jury should be allowed to consider those facts.  Both  DeAngelo v. Dental EZ, Inc., 738 F. Supp. 2d 572, 578-79 (E.D. Pa. 2010) and Foley v. Eckhart Richard-Allan Med. Inbus., 1995 U.S. Dist. LEXIS 20663 (C.D. Cal., Nov. 14, 1995) recognized and analyzed a combined age/gender discrimination claim).

It is noteworthy that the Equal Employment Opportunity recognizes intersectional discrimination as a feature of Title VII:

Title VII prohibits discrimination not just because of one protected trait (e.g., race), but also because of the intersection of two or more protected bases (e.g., race and sex). For example, Title VII prohibits discrimination against African American women even if the employer does not dscriminate against White women or African American men.

 Likewise, Title VII protects Asian American women from discrimination based on stereotypes and assumptions about them “even in the absence of discrimination against Asian American men or White women.” The law also prohibits individuals from being subjected to discrimination because of   the intersection of their race and a trait covered by another EEO statute – e.g., race and disability,or race and age.

EEOC Compliance Manual 915.003 (April 19, 2006) at § 15-IV-C.

In conclusion, although the ADEA is intended to prohibit age discrimination and that Title VII is intended to prohibit sex discrimination, the effectiveness of existing legislation in protecting older women as a subgroup is questionable. Given that the possibility of legislative change is quite dismal, we will continue to be faced with court decisions addressing intersectional sex and age claims in a piecemeal fashion.

     - This blog was written by Elizabeth L. Newman.  Please contact her at

Wednesday, March 19, 2014

Whistleblower Protection Advisory Committee (WPAC) meets

Last week, the Department of Labor's Whistleblower Protection Advisory Committee (WPAC) met at the Frances Perkins Building, DOL's headquarters. The Occupational Safety and Health Administration (OSHA) selected the WPAC in 2012 to represent a diverse group of leaders from labor, business and the public.  The committee members came together for two days, one devoted to workgroup meetings, and the other for a full committee meeting.

Pictured here is the Assistant Secretary of OSHA, Dr. David Michaels, addressing the WPAC members. 

He explained how President Obama's budget proposed to increase the funding and staffing of OSHA's Directorate of Whistleblower Protection Programs (DWPP). If the budget is approved, DWPP will increase its budget from $17 million to $21.2 million, and it will increase its staff from 131 to 158.  This number of staff people reflects both the 14 staff at DWPP and 117 who work for the Regional Directors around the country. Dr. Michaels indicated that some of the new staff would be assigned cases arising from particular laws. In any event, the report indicates an administration commitment to apply increased funding to reduce the backlog and make the whistleblower protectin program more effective. Dr. Michaels described OSHA's lawsuit against AT&T for suspending 13 workers who reported injuries and its order against Gaines Motor Lines awarding over $1 million to four truck driver whistleblowers. He also reported on plans to develop a dedicated whistleblower training staff, something OSHA has never had before.Dr. Michaels announced that he intends to renew the WPAC's charter and make new appointments (which could be re-appointments of the current members) with staggered terms. Richard Mendelson, the acting director of DWPP, announced that last year they cut the backlog by 134 cases.  They received 2,920 new complaints and closed 3,081. They are still working on developing centralized statistics that will hopefully provide more detail. Appeals of Section 11(c) dismissals are now taking an average of 249 days. They now have 43 pending appeals. They are working on an outreach plan, promulgating regulations, and expanding the alternative dispute resolution (ADR) pilot program. The find that OSHA's early resolution program, in which OSHA staff are more directly involved, is a more effective ADR program.
 The Transportation Industry Work Group reported inconsistent application of OSHA policy on disclosing information during investigations. It noted that OSHA's organization into autonomous regions makes it harder to obtain uniform application of DWPP policy.  The group sought consensus on a call for protection of workers who report injuries some time after the injury occurred. Some, but not all, the management side representatives were in agreement with this principle.My favorite quote of the day came from a representative of the Federal Aviation Administration.  He explained how the FAA follows OSHA determinations in AIR-21 whistleblower cases.  If OSHA finds retaliation occurred, then the FAA can impose a civil penalty on the employer for suppressing safety concerns.  This representative, whose name I did not catch, explained how American airlines depend on worldwide networks of pilots and mechanics.  He was concerned that in one case, OSHA denied protection because the airline had assigned the employee to work outside the U.S.  He said that OSHA's failure to protect all the employees of U.S. airlines, "can have a very large impact on the industry." He called for application of AIR-21 to employees of U.S. airlines throughout the world.In the time set aside for public comments, I offered to the attenders the opportunity to purchase the program of the Fall Seminar of the National Employment Lawyers Association (NELA), calledShining The Light On Whistleblower & Retaliation Claims. I also offered my Whistleblower Flyer for Low-Income Workers Clinics, and my chart of federal whistleblower protections. Given the open microphone, no one else chose to speak -- curious for a whistleblower meeting.WPAC Chair, Emily Spieler, noticed that several of the working groups reported (1) issues of data collection and metrics, (2) underreporting problems, (3) training concerns and (4) needing a process for handling issues not within the scope of any one working group.  She suggested that if issues cannot be resolved by consensus within a working group, they could be brought to the full committee for resolution. She also noticed that there is room for further inter-agency work and memoranda of understanding (MOUs). Finally, Nancy Lessin asked that the committee listen to the stories of actual whistleblowers "whose lives are wrecked by retaliatory behavior." She would find such stories more moving than statistics.By Richard Renner 

Tuesday, March 11, 2014

Why Does the EEOC Stiff Discrimination Victims When it Comes to Reimbursing their Attorneys’ Travel Time?

Let’s say a federal employee initiates the EEO complaint process and she retains an attorney.  Let’s also say that during the process the parties engage in mediation, or they proceed to a hearing, or the attorney deposes witnesses.  Finally, let’s say that these proceedings – the mediation, the hearing, or the depositions – require that the attorney travel out of her office either within the same city, to a neighboring city (Baltimore and Washington, D.C., for example, or Stockton, CA and San Francisco), or to a different state altogether.

If, after all of this work, the employee prevails on her complaint and receives relief either through a decision or a settlement, she will be entitled to recover the attorney fees reasonably incurred securing that relief.  Included in those fees are the time expended by the attorney at the mediation, at the hearing, and taking the necessary depositions.  We would assume, then, that the time the attorney spent traveling to these sites would also be fully reimbursed.  If that’s your assumption, you’re wrong, according to the EEOC.  Why the EEOC treats travel time differently than other attorney time is a question without an easy answer.

The origin of the EEOC’s thinking on this issue begins in 1988, with its decision in Hooper v. DLA, EEOC Appeal No. 01873384 (May 6, 1988).  In Hooper, the Agency issued a final decision finding that the employee had been the victim of discrimination when he was not promoted.  The employee applied for attorney fees, and the Agency reduced the time spent in travel by 50%.  The employee appealed, and this is how the EEOC decided the issue:

 Travel - The Commission has in the past held that attorneys are not entitled to fees for time spent in travel. See William S. Avery v. Tennessee Valley Authority, EEOC Appeal No. 01831755 (October 18, 1985). However, federal case law supports reimbursement for travel time at the full hourly rate, Henry v. Webermeier, 738 F.2d 188 (7th Cir. 1984), or (more commonly) at a reduced rate. See United States v. Marengo County Commission, 667 F. Supp. 786 (S.D. Ala. 1987), McPherson v. School District #186, 465 F. Supp. 749 (S.D. Ill. 1978). In light of the case law and because we find the agency's 50 percent reduction in the hourly rate to be reasonable, the Commission affirms the agency's award of $47.50 per hour for travel.

Since Hooper, which was decided almost 30 years ago, the EEOC has adhered to its “50% rule” without any further analysis.  See Santiago v. DHS, EEOC Appeal No. 0720100038, p. *13 (March 2, 2011) (“the Commission has taken the position that the rate for an attorney's travel time should be reduced by 50 percent”); Brown v. Justice, EEOC Appeal No. 0120072877, footnote 6 (February 25, 2009) (“[t]he Commission has long held that the attorney's hourly rate should be reduced by fifty percent (50%) for travel time”).

What the EEOC has never done, not in Hooper and not since, is explain why “the rate for an attorney’s travel time should be reduced by 50%”.  The Supreme Court has articulated some principles underlying the calculation of attorney fees in civil rights cases in which the plaintiff has prevailed through decision or settlement.  First, the purpose of awarding attorney fees to plaintiffs who prevail is to ensure “effective access to the judicial process for persons with civil rights grievances”. Hensley v. Eckerhart, 461 U.S. 424, 429 (1983).  This has been uniformly interpreted to mean that because many discrimination plaintiffs lack the finances to pay qualified attorneys to take their case, competent attorneys are not likely to take these kinds of cases if they cannot be assured of receiving an award if they prevail.

The second principle is that because an award of attorney fees is paid by the employer, the successful attorney is supposed to ensure that all of the hours claimed were reasonably expended, and were not duplicative, redundant, or unnecessary.  As the Court put it,

 Counsel for the prevailing party should make a good-faith effort to exclude from a fee request hours that are excessive, redundant, or otherwise unnecessary, just as a lawyer in private practice ethically is obligated to exclude such hours from his fee submission.  “ . . . Hours that are not properly billed to one’s client also are not properly billed to one’s adversary pursuant to statutory authority.”

Hensley, 461 U.S. at 434.

Considered in this context, the EEOC’s decision to reduce an attorney’s travel time is difficult to understand.  An attorney who travels from one place to another, regardless where the other place is and how much time it takes to get there and back, would be working on matters for which she can bill (and be paid) if she remained in the office.  That is the underlying reason why attorneys bill their clients for their travel time: not because they are working while they are traveling, but because they would be working for this or another client if they were not traveling.

Surprisingly, this precise point was made in the very cases, McPherson and Henry, which the EEOC cited in its 1988 decision approving the reduction.  In McPherson, the district judge believed that a 50% reduction was appropriate notwithstanding his observation that an attorney was surrendering the opportunity to earn fees during any travel time:

The fee statute clearly intends for an attorney to be compensated for all time reasonably spent on the case. This follows from the fact that a lawyer’s time is his stock in trade. Mr. Julian states in his affidavit that he was working on the case while commuting. Even if he were not, an argument can be made that an attorney should be compensated for travel time since he must be away from the office and cannot utilize the time for other billable matters.

465 F.Supp. at 758.  Despite this unassailable logic, the judge agreed to a 50% reduction for no apparent reason.    

An additional difficulty with the Commission’s reliance upon McPherson is Henry, which the Commission cited as expressing the view that travel time should be reimbursed at the “full hourly rate”.  In Henry, the Seventh Circuit (Judge Posner) held that: 

 When a lawyer travels for one client he incurs an opportunity cost that is equal to the fee he would have charged that or another client if he had not been traveling. That is why lawyers invariably charge their clients for travel time, and usually at the same rate they charge for other time, except when they are able to bill another client for part of the travel time (a lawyer might do work for client A while flying on an airplane to a meeting with client B). And if they charge their paying clients for travel time they are entitled to charge the defendants for that time in a case such as this where the plaintiffs have shown a statutory right to reasonable attorneys' fees. . . .

The presumption, which the defendants have not attempted to rebut, should be that a reasonable attorney's fee includes reasonable travel time billed at the same hourly rate as the lawyer's normal working time.

738 F.2d at 194.  The Seventh Circuit includes Illinois; McPherson was decided in the Southern District of Illinois, six years before the Seventh Circuit’s decision in Henry.  The Commission’s casual analysis that Henry and McPherson cancel each other out is preposterous: after Henry, McPherson was no longer valid law.

There is no question that some courts have awarded only partial fees for travel time by successful attorneys.  But that’s not the issue.  With respect to federal employees, it is the job of the EEOC to ensure that the federal government does not discriminate against its employees.  When a federal employee is able to prove to the EEOC’s satisfaction that she was the victim of discrimination or reprisal, it makes no sense for the very agency that is supposed to vindicate her rights to penalize her attorney by not fully compensating her for her efforts.

George Chuzi

Wednesday, March 5, 2014

Supreme Court's Lawson decision is a landmark for whistleblowers

Yesterday, the U.S. Supreme Court issued its first decision about the whistleblower protection in the Sarbanes-Oxley Act (SOX). In Lawson v. FMR, the Court decided that corporate fraud whistleblowers are protected when they raise concerns about violations of SEC accounting rules, even if they work for a contractor of a publicly traded company.

Justice Ginsberg wrote the majority opinion, joined by Justices Breyer, Kagan and Chief Justice Roberts. Her opinion goes farther by explaining the importance of deciding cases based on the remedial purpose of the law. For SOX, that purpose was to, “safeguard investors in public companies and restore trust in the financial markets following the collapse of Enron Corporation[.]” Justice Ginsberg made this line the first line of her opinion, giving emphasis to the idea that the Court should help Congress reach the goals of the law.

Here is what I wrote in a prior blog post about how this case got to the Supreme Court:

Lawson had worked for the Fidelity organization for years, and she raised concerns about its cost accounting methods. These methods obviously affect the reports filed with the SEC. In 2006, while still working for Fidelity, she filed a whistleblower retaliation claim with OSHA. In September 2007, while her complaint was still pending with OSHA, she resigned and claimed that she was constructive discharged by Fidelity. In 2008, she brought her retaliation case to the U.S. District Court in Massachusetts. Zang let his case proceed further to a decision by an Administrative Law Judge (ALJ). He appealed to the Administrative Review Board (ARB) and then brought his case to the same court as Lawson’s case. The Fidelity companies made motions to dismiss, which the judge denied. The judge, however, granted special permission for the defendants to appeal before the case proceeded any further.

On appeal, the Secretary of Labor and the SEC both filed amicus briefs urging the Court of Appeals to agree that the Sarbanes-Oxley Act (SOX) covers Lawson and Zang.

On February 3, 2012, two judges of the U.S. Court of Appeals for the First Circuit dismissed the SOX whistleblower claims of Jackie Lawson and Jonathan Zang. The case is Lawson v. FMR, LLC, 670 F.3d 61 (1st Cir. 2012). To justify this dismissal, the two judge majority held that the SOX whistleblower statute was not remedial, that it is but a “relatively small part” of SOX, that the Department of Labor (DOL) deserves no deference in SOX cases, and that the SOX whistleblower protection does not apply to the employees of contractors of publicly traded companies. Judge Thompson, dissenting, got it right.
On page 2, Justice Ginsberg recognizes that at the motion to dismiss level, courts must take “the allegations of the complaint as true[.]” The Supreme Court did not require any special pleading, and did not apply the Iqbal or Twombly decisions.

On page 3, the Court sets out the purpose of SOX from the Senate Report No. 107-146. That purpose is to, “prevent and punish corporate and criminal fraud,protect the victims of such fraud, preserve evidence of such fraud, and hold wrongdoers accountable for their actions.” Congress was concerned that Enron had a “corporate code of silence” that “discourage[d] employees from reporting fraudulent behavior[.]” The lack of a whistleblower protection was “a significant deficiency[.]” On page 21, the Court said, “affording whistleblower protection to mutual fund investment advisers is crucial[.]”

Perhaps because Justice Scalia’s opinion disputed the whole idea of congressional intent, Justice Ginsberg noted in the first footnote that the Senate record was written by Senators Leahy (Democrat) and Grassley (Republican), and adopted by the whole Senate with “unanimous consent[.]”

On pages 8 and 26, Justice Ginsburg lauded the dissent in the First Circuit written by Judge Ojetta Rogeriee Thompson. This dissent said the First Circuit had “impose[d] an unwarranted restriction on the intentionally broad language of [SOX]” and “bar[red] a significant class of potential securities-fraud whistleblowers from any legal protection.” Quoting 670 F.3d 61 at 83. This is a nice honor for the new appellate judge who got it right.

On page 9, the Supreme Court makes clear that a split between one circuit and the Department of Labor is sufficient to grant certiorari. In my 2012 amicus brief asking the Supreme Court to accept this case, I had argued that it took the Fifth Circuit 21 years to recognize its error in Brown & Root v. Donovan, 747 F.2d 1029 (5th Cir. 1984) (denying protection to internal whistleblowing at nuclear power plants). “If we had to wait 21 years for correction of the decision below, untold financial scandals would grow unnecessarily large while employees were discouraged from raising concerns.” When the Supreme Court granted “cert” on May 20, 2013, it did not give its reasons. Now it has opened to the door to review in cases where a circuit disagrees with the Department of Labor. On page 28, note 21, Justice Ginsburg drives this point home saying, “the courts of appeals are not, of course, the only lodestar for determining whether a proposition of law is plainly established.”

On page 9, Justice Ginsburg reaches her main conclusion quickly. When SOX says “no … contractor … may discharge … an employee,” the natural meaning is that the contractor cannot fire its own employees. It is too bad that the First Circuit majority could not read this text for its natural meaning. “[W]e presume the operative language means what it appears to mean[.]” Page 10.

On pages 12-13, Justice Ginsburg reviews each of the ways SOX refers to “the employee” and “the employer” and concludes that Congress clearly meant to protect employees from discharges by their own employers. Prof. Eric Schnapper, who represented Lawson and Zang at the Supreme Court, developed this argument in rich detail in his merit brief. It is nice to see his insightful and detailed legal analysis pay off in the text of the majority opinion.

While I was confident, especially after the oral argument, about the outcome of this main issue, there was another important issue raised in the Lawson case. The First Circuit had said that it would not give deference to the views of the government agencies. Lawson challenged this holding and asked the Supreme Court to give deference to the ARB’s decision in Spinner. Justice Ginsburg declined to do that. In footnote 6, she recognizes that the dissent felt that the SEC should have any deference in SOX cases. She explains that since the Court agrees with the ARB’s conclusion that SOX does protect the employees of contractors, there is no need to decide what weight the ARB’s decision would have. Still, the SEC itself signed onto the federal government’s brief that said the Department of Labor should have deference in whistleblower issues. She says this, “view is hardly surprising given the lead role played by the DOL in administering whistleblower statutes.”

So while we do not have a formal holding giving Chevron deference to the DOL, we do have very quotable language here about why DOL should have deference. I suggest that we actually got something better than deference. Whistleblowers have a Supreme Court pronouncement that the remedial purpose of the law is the polestar for interpretation. On page 14, the majority opinion gives a clear enunciation of this principle:

There would be a huge hole, on the other hand, were the dissent’s view of §1514A’s reach to prevail: Contractors’ employees would be disarmed; they would be vulnerable to retaliation by their employers for blowing the whistle on a scheme to defraud the public company’s investors, even a scheme engineered entirely by the contractor. Not only would mutual fund advisers and managers escape §1514A’s control. Legions of accountants and lawyers would be denied §1514A’s protections. Instead of indulging in fanciful visions of whistleblowing babysitters and the like, the dissent might pause to consider whether a Congress, prompted by the Enron debacle, would exclude from whistleblower protection countless professionals equipped to bring fraud on investors to a halt. [Citations omitted.]

On page 16, the opinion states, “Our textual analysis of [SOX] fits the provision’s purpose.” That purpose is, “to ward off another Enron debacle.” Page 17.

This logic will help whistleblowers win a wide range of legal issues. Even in those few cases where the ARB has ruled against whistleblowers, such as on extraterritoriality, this reasoning can still be used on behalf of whistleblowers. This is a point I raised in my amicus briefs at the cert stage, and in the NELA and GAP amicus on the merits. The main heading of my cert stage amicus told the Court that, “protecting the employees of contractors is necessary to achieve the remedial purpose of SOX.”

The employers made much of their red herring arguments about how far a literal application of SOX might reach. They complained about giving protection to the personal employees of corporate executives. Justice Ginsburg noted that the DOL has long recognized SOX coverage for the employees of contractors, but this parade of horribles has not come to pass. On page 15, she says, “The issue, however, is likely more theoretical than real.” “Few housekeepers or gardeners, we suspect, are likely to come upon and comprehend evidence of their employer’s complicity in fraud.” In NELA’s amicus brief, we addressed this issue by saying, “The issue of whether a particular employee can provide information that reasonably relates to securities violations addresses the scope of protected activity, not coverage.” 

On page 23, Justice Ginsburg says that if the Court is wrong, “Congress can easily fix the problem by amending [SOX.]” Having participated in many efforts to get Congress to amend laws to better reflect their remedial purposes, I would not say it is so easy. Sometimes the political winds align and Congress does act, such is with the Lilly Ledbetter Fair Pay Act of 2009. I am still waiting on Congress to correct the restrictive holdings in Garcetti v. Ceballos, Gross v. FBL and now University of Texas Southwestern Medical Center v. Nassar.

On page 24, the Court states, “The potential impact on shareholders of false or misleading registration statements needs no elaboration.” This sentence makes what I think is an obvious point: all concerns about the correctness of SEC filings are protected. Many companies have tried to argue that employee concerns are not protected unless the meet the company’s threshold of significance. For big companies, that threshold is a surprisingly high dollar amount. With this sentence, I hope that such arguments will no longer let companies off the hook for retaliating against those who raise concerns they consider to be too small. If it is big enough to cause retaliation, then it is big enough for SOX to correct.

On page 29, the Court’s majority opinion concludes with a finding that SOX and AIR 21 should be interpreted together. “The provisions’ parallel text and purposes counsel in favor of interpreting the two provisions consistently.” I hope this is a step toward a unified body of whistleblower law. Given that such laws serve “parallel” remedial purposes, it is logical that decisions under one law should apply to others. The Supreme Court has unified the law for awards of attorney’s fees, and whistleblower protection would be another area that deserves the efficiency and efficacy of becoming a single body of law.

Justice Scalia, joined by Justice Thomas, wrote a concurring opinion to take issue with a few of the statements made in the majority opinion by Justice Ginsburg. First, he disagrees with the whole idea of congressional “intent.” He lambasts use of the Senate Report because, “[m]any of them almost certainly did not read the report[.]” He presumes they did not agree with it. I noticed that in another decision written by Justice Scalia, he reached the right outcome without ever mentioning the law’s remedial purpose. Staub v. Proctor Hosp., 131 S. Ct. 1186 (2011). There, a jury held that Vincent Staub lost his job because of his need for leave to attend to his Army Reserves duties. Congress passed the Uniformed Services Employment and Reemployment Rights Act (USERRA) to protect service members, and encourage people to enlist through the promise of government protection of their jobs. However, one would never know this purpose from reading Justice Scalia’s opinion. For this reason, I am glad that Justice Ginsburg wrote the majority opinion for Lawson, and not Justice Scalia. Justice Scalia also disagrees with using AIR 21 to interpret SOX, and he rejects the idea of any “limiting principl[e]” as the text provides no basis for any limitation.

Justice Sotomayor wrote a dissent, in which Justices Alito and Kennedy joined. She recognizes in her first paragraph that SOX has a “core purpose” to “safeguard investors in public companies.” On page 20, she calls this “a laudable purpose.” So on the issue of whether the Supreme Court should consider a law’s remedial purpose, the vote is 7-2 in favor. However, Justice Sotomayor is moved by the employers’ claims of how contractor coverage can lead to “absurd results.” Apparently, she would not only change the language of SOX to limit the whistleblower protection, but she would have the Supreme Court adopt an interpretation that excludes all employees of all contractors. She thinks SOX “is ambiguous.” Page 3. This is a conclusion that even the First Circuit majority did not reach. It does give her freedom to explore the tools the Court would use to resolve an ambiguity. Sadly, she is more concerned about the possibility of a rare “absurd” application than she is about the many, many employees of contractors who raise issues at the core of SOX’s objectives. On page 12, she expresses concern that the majority decision creates,
a sweeping source of litigation[.]

On page 14, her dissent notes that SOX, “protects the reporting of a variety of frauds—not only securities fraud,but also mail, wire, and bank fraud.” She neglects to note that some SOX cases can involve violations of SEC rules that have nothing to do with any fraud at all. Still, she recognizes that the majority decision opens coverage to “a large class of employees[.]”

Many congratulations to Lawson’s attorneys, Prof. Eric Schnapper of Seattle and Indira Talwani of Boston. R. Scott Oswald was the lead author of NELA’s and GAP’s amicus brief, assisted by Kelly Kruse, Michael Anderson, Tom Devine, Rebecca Hamburg and myself. Together, this team effort has advanced whistleblower rights with legal principles that will resonate for years to come.

By Richard Renner