Tides v. the Boeing Co.
32 I.E.R. Cas. (BNA) 129, 2011 U.S. App. LEXIS 8980, 644 F.3d 809 (2011)
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Rule of Law:
The whistleblower protection provision of the Sarbanes-Oxley Act, 18 U.S.C. § 1514A(a)(1), only protects an employee's disclosure of potential fraud or securities violations to federal agencies, Congress, or supervisors. Disclosures made to the media are not protected activity under this section.
Facts:
- Matthew Neumann and Nicholas Tides worked as internal auditors in Boeing’s IT Sarbanes-Oxley (SOX) Audit group.
- Beginning in February 2007, Neumann and Tides raised concerns with their managers about pressure to rate internal controls as 'effective' and about auditing practices they believed violated SOX.
- In May 2007, Neumann met with a reporter from the Seattle Post-Intelligencer and discussed his concerns regarding Boeing's SOX compliance.
- In July 2007, after receiving a negative performance review, Tides also contacted the reporter and forwarded her internal work emails and company policy documents.
- On July 17, 2007, the Post-Intelligencer published an article detailing alleged computer security faults and manipulated audit results at Boeing.
- Boeing investigated the source of the information and discovered that Neumann and Tides had communicated with the reporter in violation of company policy.
- Boeing's Employee Corrective Action Review Board unanimously voted to fire both men for violating policies that required referring media inquiries to the communications department and prohibited releasing company information without approval.
- Boeing terminated Neumann and Tides in late September and early October 2007, respectively.
Procedural Posture:
- Matthew Neumann and Nicholas Tides filed separate SOX whistleblower complaints with the Occupational Safety and Health Administration (OSHA).
- After OSHA failed to issue a decision within the statutory timeframe, Neumann and Tides filed separate complaints in the U.S. District Court, alleging retaliatory termination in violation of 18 U.S.C. § 1514A(a)(1).
- The district court consolidated the two cases.
- Boeing moved for summary judgment against the plaintiffs.
- The district court granted summary judgment in favor of Boeing, concluding the disclosures to the media were not protected activity under the statute.
- Neumann and Tides, as appellants, appealed the district court's decision to the U.S. Court of Appeals for the Ninth Circuit, with Boeing as the appellee.
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Issue:
Does the whistleblower protection provision of the Sarbanes-Oxley Act, 18 U.S.C. § 1514A(a)(1), protect an employee from retaliation after disclosing information about alleged corporate misconduct to the news media?
Opinions:
Majority - Silverman, Circuit Judge
No. The whistleblower protection provision of the Sarbanes-Oxley Act does not protect employees who disclose information to the media. The plain language of § 1514A(a)(1) is unambiguous and expressly limits protection to disclosures made to one of three specific categories of recipients: 1) a federal regulatory or law enforcement agency; 2) a member or committee of Congress; or 3) a supervisor or other authorized person within the company. The media is not included in this enumerated list. The court rejected the plaintiffs' argument that a media leak could 'cause information to be provided' to a protected entity, reasoning that such a boundless interpretation would render the specific list of recipients in the statute meaningless. The court contrasted the narrow language of SOX with the much broader language of the Whistleblower Protection Act, which protects 'any disclosure' and has been interpreted to include the media, demonstrating that Congress knows how to provide such broad protection when it intends to. The legislative history, while not necessary for the decision, reinforces the conclusion that Congress intended to protect disclosures only to those with the authority to remedy the wrongdoing.
Analysis:
This decision strictly construes the whistleblower protections under Sarbanes-Oxley, establishing a bright-line rule that limits protected disclosures to the specific channels enumerated in the statute. It clarifies for employees and employers that leaking information to the media, even about legitimate concerns of fraud, is not a protected activity under § 1514A(a)(1) and can be grounds for termination. The ruling emphasizes the importance of statutory text and the principle of 'expressio unius est exclusio alterius,' potentially discouraging whistleblowers from going public for fear of losing legal protection. This case highlights the critical difference between internal or governmental reporting, which is protected, and public disclosure, which is not.
