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What level of detail is required in a Sarbanes-Oxley complaint?

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What level of detail is required in a Sarbanes-Oxley retaliation complaint filed at OSHA?

A SOX complaint filed at OSHA need not plead every element of the claim in detail, but it must provide “fair notice” of the claim, which entails a showing of: 1) some facts about the protected activity; 2) some facts about the adverse action; 3) an assertion of causation, and 4) a description of the relief or damages sought by the whistleblower.[i]

SOX whistleblower complaints filed at OSHA require less detail than claims filed in federal court. In other words, a SOX whistleblower need not meet the plausibility pleading standard that applies to actions filed in federal court.[ii]  But if the whistleblower anticipates removing the SOX claim to federal court, it may be advisable to file a detailed complaint. In particular, the complaint should plead every adverse action and each distinct category of protected activity.  An amended SOX complaint filed in federal court can include “more specific allegations naturally originating from those” in the original OSHA complaint.  Sharkey v. J.P. Morgan Chase & Co., 805 F. Supp. 2d 45, 53 (S.D.N.Y. 2011).

Pleading Standard for SOX Whistleblower Claims

As summarized recently by a New York district judge in DHIR v. Carlyle Group Employee Co., No. 16-cv-06378 (SDNY 2017), a SOX whistleblower complaint need only put defendants on notice of the claim:

The primary purpose of the Sarbanes-Oxley exhaustion requirement is to provide OSHA “an opportunity to issue a final decision with respect to the plaintiffs’ claims against [that entity].” Bridges v. McDonald’s Corp., 2009 WL 5126962, at *3 (N.D. Ill. Dec. 21, 2009). Moreover, “there are no pleading requirements for whistleblower actions” under Sarbanes-Oxley. Wadler v. Bio-Rad Laboratories, Inc., 141 F. Supp. 3d 10005, 1012 (N.D. Cal. 2015); 29 C.F.R. § 1980.103(b) (“No particular form of complaint is required.) Complaints in OSHA proceedings are “not expected to meet the standards of pleading that apply to claims filed in federal court under Rule 12(b)(6),” so long as the whistleblower gives the opposing party “fair notice” of the charges against it. In The Matter Of: Douglas Evans v. U.S. Envtl. Prot. Agency, 2012 WL 3164358 (DOL Adm. Rev. Bd., July 31, 2012), at *6.

[i] Johnson v. The Wellpoint Companies, Inc., ARB No. 11-035, ALJ No. 2010-SOX-38 (ARB Feb. 25, 2013).

[ii] Sylvester v. Parexel Int’l. LLC, ARB No. 07-123, ALJ Nos. 2007-SOX-39 & 42 (ARB May 25, 2011).

In McFadden v. Deutsche Bank, ARB No. 2022-0002, ALJ No. 2021-SOX-00023 (ARB Jan. 26, 2022) (per curiam), the ALJ granted Respondent’s motion to dismiss Complainant’s SOX retaliation complaint.  On appeal, ARB, exercising de novo review, reversed and remanded. The ARB observed that federal court heightened pleading standards are not applied in SOX administrative hearings.  The ARB stated:

The Board has held that ALJs should not apply the heightened pleading standard used in federal courts in SOX whistleblower complaints and that motions to dismiss SOX complaints for failure to state a claim are “highly disfavored.”  The fair notice requirement is not a demanding standard.  We note that complainants file their initial complaints before OSHA in an informal manner and that OSHA amplifies those complaints through investigations. While OSHA’s findings are part of the record, parties have the benefit of a de novo hearing before the ALJ. For these reasons, we have held that “ALJs should freely grant parties the opportunity to amend their initial filings to provide more information about their complaint before the complaint is dismissed,” especially when “it appears that a complaint may be saved by the allegation of additional facts.”  Otherwise, complainants would have to be mindful of the pleading standards when filing their complaint with OSHA, which would be “inappropriate given the nature of the administrative whistleblower complaint process.”  Accordingly, “[d]ismissal without leave to amend is improper unless it is clear, upon do novo review, that the complaint could not be saved by any amendment.” We therefore determine that the ALJ’s order of dismissal was not warranted.  Rather, the ALJ should have provided Complainant leave to amend her complaint to satisfy the pleading requirements of a SOX claim before the OALJ. While Complainant failed to respond to the Motion to Dismiss, thus leading the ALJ to understandably conclude that the motion was unopposed, the record nonetheless demonstrates that the issue with the pleadings could be rectified with additional information.

Slip op. at 4-5 (footnotes omitted).

SOX Whistleblower Retaliation

Sarbanes-Oxley Whistleblower Retaliation Attorneys

The SOX whistleblower lawyers at Zuckerman Law have substantial experience litigating Sarbanes Oxley whistleblower retaliation claims and have achieved substantial recoveries for officers, executives, accountants, auditors, and other senior professionals.  To learn more about corporate whistleblower protections, see our Sarbanes-Oxley Whistleblower Protection FAQ.

Click here to read client testimonials about the firm’s work in SOX whistleblower matters and other employment-related litigation.

To schedule a free preliminary consultation, click here or call us at 202-262-8959.

Leading whistleblower law firm Zuckerman Law has written extensively about whistleblower protections and is quoted frequently in the media on this topic. A sample of those blog posts and articles appears below:

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Categories: Corporate Whistleblower Protection and Retaliation Laws , Sarbanes Oxley Whistleblower ProtectionLaw , Sarbanes-Oxley whistleblower law , Sarbanes-Oxley whistleblower lawyers , SEC Whistleblower Lawyers , Whistleblower Retaliation

About the author

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Jason Zuckerman, Principal of Zuckerman Law, litigates whistleblower retaliation, qui tam, wrongful discharge, and other employment-related claims. He is rated 10 out of 10 by Avvo, was recognized by Washingtonian magazine as a “Top Whistleblower Lawyer” in 2015 and selected by his peers to be included in The Best Lawyers in America® and in SuperLawyers.