Employer Affirmative Defense in SOX Whistleblower Cases
Once a SOX whistleblower has proven that SOX protected conduct was a contributing factor in the decision to take an adverse action, an employer can avoid liability only if it proves clearly and convincingly that it would have taken the same adverse employment action even if the employee had not engaged in protected activity.[i] This is knows as the same-decision or same-action defense.
The operative phrase here is “would have.” An employer fails to meet its burden if it establishes merely that it could have taken the same adverse action. “Clear and convincing” evidence can be quantified as establishing the probability of a fact at issue “in the order of above 70%.”[ii]
DOL ALJs assess the same-action affirmative defense using three discrete components.[iii]
- First, the employer’s evidence must meet the plain meaning of “clear” and “convincing.” The employer must present a “highly probable,” unambiguous explanation for the adverse employment action. As the Supreme Court has held, evidence is clear and convincing only if it “immediately tilts the evidentiary scales in one direction.”
- Second, the employer’s evidence must subjectively indicate that the employer “would have” taken the same adverse action absent the employee’s protected activity.
- And finally, material facts that the employer relied on to take the adverse personnel action must not change in the hypothetical absence of the protected activity. Here, the court evaluates how relevant facts would have differed without the protected activity.
That said, the employer bears this onerous burden only if an employee establishes that their protected activity contributed to the employer’s decision to take the adverse action against them.
For instance, an employer may rely on evidence that:
- the whistleblower recently performed poorly or otherwise gave the employer reason to take action;
- the employer’s reason for taking the adverse action materialized before the company allegedly engaged in misconduct or the employee blew the whistle; or
- the whistleblower’s personnel file supports the employer’s explanation and details the employer’s intent to take the adverse action.
A sham investigation of a whistleblower instigated in response to the whistleblowers’ protected conduct (also known as a retaliatory investigation) will not enable the employer to establish a same-decision defense. See, e.g., Genberg v. Porter, 882 F.3d 1249 (10th Cir. 2018).
“[W]here the protected activity is virtually inseparable from the basis for the imposition of discipline, the fact finder must be careful to assure that the employer has met the high clear and convincing affirmative defense standard.” Brousil v. BNSF Railway Co., ARB No. 16-025, -031, ALJ No. 2014-FRS-163 (ARB July 9, 2018) (citing Abdur-Rahman v. DeKalb Cnty, ARB Nos. 08-003, 10-074; ALJ Nos. 2006-WPC-002, -003 (ARB Feb. 16, 2011)(alleged insubordination included protected safety concerns); Smith v. Duke Energy Carolinas, LLC, ARB No. 11-003, ALJ No. 2009-ERA-007 (ARB June 20, 2012)(protected disclosures exclusively led to disciplinary investigation); Henderson Wheeling & Lake Erie Ry., ARB No. 11-013, ALJ No. 2010-FRS-012 (ARB Oct. 26, 2012)(termination letter referenced protected activity); see also Smith v. Duke, ARB No. 14-027, ALJ No. 2009-ERA-007 (ARB Feb. 25, 2015)(Royce, J. dissenting); Speegle v. Stone & Webster, ARB No. 11-029-A, ALJ No. 2005-ERA-006, slip op. at 15, n.97 (ARB Jan. 31, 2013).
“[B]ecause a respondent’s affirmative defense burden is high, and because ‘it is a fact intensive determination, involving questions of intent and motivation’ for taking adverse action, resolving this issue on summary decision is challenging.” Kao v. Areva Inc., ARB No. 16-090, ALJ No. 2014-ERA-00004 (ARB Apr. 30, 2018).
 Colorado v. New Mexico, 467 U.S. 310 (1984).
[i] See Menendez v. Halliburton, Inc., ARB Case Nos. 09-002, 09-003, 2011 WL 4915750, at 6 (Sept. 13, 2011).
[ii] Palmer v. Canadian National Railway, ARB No. 16-035 at 57.
[iii] Speegle v. Stone & Webster Construction, Inc., ARB Case No. 13-074, 2014 WL 1758321 (ARB Apr. 25, 2014).
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