New York businesses faced new liabilities last year when the U.S. District Court for the Southern District of New York allowed for employees to sue under the anti-retaliation section of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) if they reported alleged misconduct within the company. Other courts had ruled that the anti-retaliation section only applied to whistleblowing reporting to the Securities and Exchange Commission (SEC). Now, the U.S. Supreme Court has added a new avenue for certain employees to bring retaliation claims. In a 6-3 decision in Lawson v. FMR, __ U.S. __ (2014), the U.S. Supreme Court recently expanded the whistleblower anti-retaliation protections of the Sarbanes-Oxley Act of 2002 (SOX) to include employees of privately held contractors who perform work for public companies.
Sarbanes-Oxley Act
Plaintiffs Jackie Hosang Lawson and Jonathan M. Zang are former employees of private subsidiary companies of FMR LLC which contracted to advise and manage mutual funds for Fidelity Investments. Lawson allegedly raised concerns over Fidelity’s cost accounting methodologies with respect to overstatements of expenses associated with operating the mutual funds. She claims to have faced numerous adverse actions including being constructively discharged ultimately. Zang alleges he was fired as retaliation for voicing concerns of inaccuracies within a draft SEC registration statement.
