Expressing Concerns About Billing Practices Not Enough To Establish SOX Whistleblower Violation

Platone v US Dep't of Labor, ___F.3d___(4th Cir. December 3, 2008), is an interesting SOX case which we do not report on that often. An employee who merely alerted management to billing discrepancies did not engage in protected conduct under the whistleblower protection provisions of the Sarbanes-Oxley Act of 2002 (SOX). Shortly after the employee began working for an airline as its manager of labor relations, she learned of billing discrepancies and discussed her concerns with her supervisor and other company managers. Two weeks later she was terminated, ostensibly for the conflict of interest that arose from her romantic relationship with a pilot who was also a high-ranking pilot's union member. The DOL's Administrative Review Board (ARB) ruled that, to be protected under SOX, allegations to management must relate "definitively and specifically to the categories of fraud or securities violations" listed in SOX; however, the ARB found, the employee failed to identify to company management why she believed the actions about which she expressed concerns violated securities laws and constituted a fraud. The Fourth Circuit affirmed, noting the first time the employee made an actual allegation of fraud was in her OSHA complaint. "[A] complainant must alert management to more than the fact that the company's near-term profits were affected by billing discrepancies in order to meet the standard of definitively and specifically alleging mail or wire fraud," the court wrote