Employers who are sued in Sarbanes-Oxley whistleblower cases need to win in the first round. This is because a SOX whistleblower who establishes “reasonable cause” is permitted an extraordinary remedy: reinstatement to his or her job, prior to any hearing on the merits.
But this remedy (of “preliminary reinstatement”) is now in a state of doubt. In a welcome (from the standpoint of employers) decision last week, Bechtel v. Competitive Technologies Inc.,[FOOTNOTE 1] the 2nd U.S. Circuit Court of Appeals ruled that the remedy was unenforceable. Judge Jacobs stated that, in the context of SOX, permitting judicial enforcement of preliminary orders of reinstatement could lead to “a generally ridiculous state of affairs,” and Judge Leval held that the statute “does not make complete sense.”
