Extraterritorial Application of SOX Whistleblower Law
Some courts have held that SOX whistleblower protection does not apply extraterritorially, but in certain circumstances, the whistleblower protection provision of SOX can apply to covered employees working outside the United States. One of our attorneys prevailed in defeating a dispositive motion in a SOX case on the issue of extraterritoriality where the employee of a US public company worked abroad but 1) blew the whistle to senior management working in the US headquarters and 2) management in the US office played a role in the decision to terminate the whistleblower’s employment.
Recently the ARB held in Perez v. Citigroup, Inc., ARB No. 2017-0031, ALJ No. 2015-SOX-00014 (ARB Sept. 30, 2019) (per curiam) that Section 806 does not apply extraterritorially and that applying Section 806 outside the United States could lead to conflict with the laws of foreign nations and potentially inconsistent results for employees. According to the current ARB, the key factor to consider is the location of the employee’s permanent or principal worksite.
However, the ARB that served during the Obama Administration took a broader view of SOX extraterritorial jurisdiction and interpreted the scope of SOX protection in light of the purpose of the statute. In particular, the Obama-era ARB held in Blanchard v. Exelis Systems Corp., ARB No. 15-031, ALJ No. 2014-SOX-20 (ARB Aug. 29, 2017) that Section 806 of SOX is a securities statute (not just an employment statute) and therefore there is no presumption limiting its application to U.S. territory. Judge Brown concluded: “It is by analyzing the Sarbanes-Oxley Act as a whole that one finds Congress’s intent to protect both domestic and foreign-based employees of U.S. domestic or foreign publicly traded companies who ‘blow the whistle’ on activity the employee reasonably believes violates one or more of the ‘predicate’ acts or provisions of Section 806, provided the alleged wrongdoing of which the employee complains involves U.S. domestic violations of the ‘predicate’ act or provision unless the ‘predicate’ act/provision itself extends its reach extraterritorially.”
In January 2018, the Second Circuit affirmed the dismissal of a SOX whistleblower case where the plaintiff Paul Ulrich, a United States citizen who sometimes interacted with Moody’s United States managers, was an overseas permanent resident working for a foreign subsidiary of Moody’s, and the alleged wrongdoing and protected activity took place outside the United States. The non-precedential order in Ulrich v. Moody’s Corp. is available here.
In a SOX case litigated in the Southern District of New York, the court permitted an employee of Accenture working in France to proceed with her claim. O’Mahony v. Accenture Ltd and Accenture LLP, 07 Civ. 7916 (S.D.N.Y. Feb. 5, 2008). The plaintiff alleged that the retaliation against her occurred in the United States and the conduct about which she complained, a scheme to evade social security taxes owed to France, also occurred in the United States. Weighing the pertinent material acts (the commission of the alleged fraud and the decision by Accenture LLP to retaliate against O’Mahon) against the fact that O’Mahony was employed in France and that Accenture SAS allegedly carried out the retaliation against O’Mahony at the command of Accenture LLP, the court found that “the center of gravity of the alleged misconduct was located within the United States.”
Remedies for SOX Whistleblowers
Top-Rated SOX Whistleblower Lawyers
We have assembled a team of leading whistleblower lawyers to provide top-notch representation to Sarbanes-Oxley (SOX) whistleblowers. Recently Washingtonian magazine named two of our attorneys top whistleblower lawyers. U.S. News and Best Lawyers® have named Zuckerman Law a Tier 1 Law Firm in the Washington D.C. metropolitan area.
The 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 schedule a free preliminary consultation, click here or call us at 202-262-8959.
- Matt Stock is a Certified Public Accountant, Certified Fraud Examiner and former KPMG external auditor. As an auditor, Mr. Stock developed an expertise in financial statement analysis, internal controls testing and fraud recognition, and he uses his auditing experience to help whistleblowers investigate and disclose complex financial frauds to the government and obtain damages for retaliation. He is lead author of SEC Whistleblower Program: Tips from SEC Whistleblower Attorneys to Maximize an SEC Whistleblower Award.
- Both Bachman and Zuckerman served in senior positions at the Office of Special Counsel, where they oversaw investigations of whistleblower retaliation claims and whistleblower disclosures, and enforced the Whistleblower Protection Act.
- Eric Bachman has substantial experience litigating precedent-setting employment cases. His wins include a $100 million settlement in a disparate impact Title VII class action and a $16 million class-action settlement against a major grocery chain. Having served as Special Litigation Counsel in the Civil Rights Division of the Department of Justice and as lead or co-counsel in numerous jury trials, Bachman is ready to go the distance to obtain the relief that you deserve.
- Bachman and Zuckerman served on the Department of Labor’s Whistleblower Protection Advisory Committee, which makes recommendations to the Secretary of Labor to improve OSHA’s administration of federal whistleblower protections.
- Jason Zuckerman was recognized by Washingtonian magazine as a “Top Whistleblower Lawyer” in 2017, 2015, 2009, and 2007, selected by his peers to be included in The Best Lawyers in America® in the category of employment law (2011-2017), and selected by his peers to be listed in SuperLawyers (2012 and 2015-2017) in the category of labor and employment law. Zuckerman is rated 10 out of 10 by Avvo, based largely on client reviews, and rated AV Preeminent® by Martindale-Hubbell based on peer reviews.
- The firm has published extensively on whistleblower rights and protections and regularly speaks nationwide at seminars and continuing legal education conferences. We blog about new developments in whistleblower law at the Whistleblower Protection Blog.
Lawyers Representing SEC Whistleblowers Worldwide
In addition to representing whistleblowers in SOX retaliation actions, we represent whistleblowers in Dodd-Frank whistleblower reward matters. Click here to learn more about the SEC whistleblower program and click here to find out how the SEC can bring enforcement actions against international schemes.