Section 806 protects "whistleblowers" of publicly traded companies, by prohibiting employers from discriminating or retaliating against an employee who engages in protected activity under the Act. Section 806 was enacted, in pertinent part, as follows:
§ 1514A. Civil action to protect against retaliation in fraud cases
(a) Whistleblower protection for employees of publicly traded companies.–No company with a class of securities registered under section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 781) , or that is required to file reports under section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(d)), or any officer, employee, contractor subcontractor, or agent of such company, may discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment because of any lawful act done by the employee–
(1) to provide information, cause information to be provided, or otherwise assist in an investigation regarding any conduct which the employee reasonably believes constitutes a violation of section 1341, 1343, 1344, or 1348, any rule or regulation of the Securities and Exchange Commission, or any provision of Federal law relating to fraud against shareholders, when the information or assistance is provide to or the investigation is conducted by–
[Page 34]
(A) a Federal regulatory or law enforcement agency;
(B) any Member of Congress or any committee of Congress; or
(C) a person with supervisory authority over the employee (or such other person working for the employer who has the authority to investigate, discover, or terminate misconduct); or
(2) to file, cause to be filed, testify, participate in, or otherwise assist in a proceeding filed or about to be filed (with any knowledge of the employer) relating to an alleged violation of section 1341, 1343, 1344, or 1348, any rule or regulation of the Securities Exchange Commission, or any provision of Federal law relating to fraud against shareholders.
(B) ENFORCEMENT ACTION.--
(1) IN GENERAL. –A person who alleges discharge or other discrimination by any person in violation of subsection (a) may seek relief under subsection (c), by –
(A) filing a complaint with the Secretary of Labor; or
(B) if the Secretary has not issued a final decision within 180 days of the filing of the complaint and there is no showing that such delay is due to the bad faith of the claimant, bringing an action at law or equity for de novo review in the appropriate district court of the United States, which shall have jurisdiction over such an action without regard to the amount in controversy.
18 U.S.C. § 1514A.
To establish a prima facie case under SOX, Plaintiffs must show that (1) they engaged in protected activity; (2) the employer knew of the protected activity; (3) they suffered an unfavorable personnel action; and (4) circumstances are sufficient to suggest the protected
[Page 35]
activity was a contributing factor in the unfavorable action. 49 U.S.C. § 42121(b)(2)(B)(iii); Collins v. Beazer Homes USA, Inc., 334 F. Supp. 2d 1365, 1375 (N.D. Ga. 2004) (citations omitted). Temporal proximity is sufficient to raise an inference of causation. Collins, 334 F. Supp. 2d at 1375-76. The employer may avoid liability if it can demonstrate by clear and convincing evidence that it "would have taken the same unfavorable personnel action in the absence of [protected] behavior." 49 U.S.C. § 42121(b)(2)(B)(iv); Collins, 334 F. Supp. 2d at 1376.
Plaintiffs contend they were terminated in retaliation for reporting two incidents of fraud within the plant to Harris. First, they told Harris about a "fraudulent insurance scheme" by a supervisory employee, J. C. Hernandez, perpetrated with the approval of their HR supervisor, Angela Colquitt, whereby Hernandez falsely requested that individuals he identified as his wife and son (who were in fact his sister and nephew) be added to his company-provided health insurance as dependents. Second, they told Mr. Harris that Colquitt and Denise Dimas produced a fake social security card for an employee, Francisco Hernandez, in order to satisfy I-9 form requirements. Plaintiffs allege these fraudulent activities necessarily involved the use of mail or the internet, and thus the reporting of this mail (section 1341) and wire (section 1343) fraud is protected activity under SOX.
[Page 36]
In their Motion for Summary Judgment, Defendants first contend that Plaintiffs cannot sustain their SOX claims because they did not engage in protected activity within the meaning of SOX. Additionally, Defendants argue that even assuming Plaintiffs engaged in protected activity within the meaning of SOX, Plaintiffs' SOX claims must fail because Defendants can establish that Plaintiffs would have been terminated regardless of the activity. For the reasons discussed below, the Court finds summary judgment inappropriate for Defendants.
To establish a violation of SOX, Plaintiffs must first show by a preponderance of the evidence that they engaged in "protected activity." SOX protects employees who provide information which the employee "reasonably believes constitutes a violation of section 1341 [mail fraud], 1343 [wire fraud], 1344 [bank fraud], or 1348 [securities fraud], any rule or regulation of the Securities and Exchange Commission, or any provision of Federal law relating to fraud against shareholders." 8 U.S.C. § 1514A(a)(1). Defendants argue that the only "fraud" reports covered by this provision are those "relating to fraud against shareholders." Therefore, Defendants maintain that since Plaintiffs' reports of mail fraud and wire fraud did not relate to "fraud against shareholders," those reports are not protected activity under the statute. Plaintiffs respond that a plain reading of the statutory provision makes clear that it applies to an employee's reporting of mail and/or wire fraud
[Page 37]
regardless of whether that fraud relates to fraud against shareholders.
A conflict exists among the various courts which have addressed the issue as to whether this statutory provision limits protected activity under SOX to fraud "against shareholders." The Eleventh Circuit has not yet addressed the issue. Compare Livingston v. Wyeth, Inc., 2006 WL 2129794, *10 (M.D. N.C. July 28, 2006) ("To be protected under Sarbanes-Oxley, an employee's disclosures must be related to illegal activity that, at its core, involves shareholder fraud."); Bishop v. PCS Admin. (USA), Inc., 2006 WL 1460032, *9 (N.D. Ill. May 23, 2006) (finding that the phrase "relating to fraud against shareholder" must be read as applying to all violations enumerated under section 806); Marshall v. Northrup, 2005-SOX-0008, 2005 WL 4889013, *2 (ALJ June 22, 2005) ("Protected activity is defined under SOX as reporting an employer's conduct which the employee reasonably believes constitutes a violation of the laws and regulations related to fraud against shareholders."); Wengender v. Robert Half Int'l Inc., 2005-SOX-59, 2006 WL 3246887, *11 (ALJ March 30, 2006) ("SOX does not apply to . . . general allegations of fraud. . . . Rather, applicability of SOX is limited to specifically enumerated laws or regulations related to fraud against shareholders."); with Collins, 334 F. Supp. 2d at 1376 ("The threshold is intended to include all good faith and reasonable reporting of fraud."); Walton v. Nova Inf. Sys., 2005-SOX-1076; 2006-
[Page 38]
SOX-18 (ALJ March 29, 2006) (rejecting argument that report of violation or rule or regulation of the SEC must relate to fraud against shareholders).
In determining whether SOX only protects an employee's reporting of "shareholder" fraud, the Court begins with the language of the statute itself. See Harris v. Garner, 216 F.3d 970, 972 (11th Cir. 2000). The Court presumes that "a legislature says in a statute what it means and means in a statute what it says there." Conn. Nat'l Bank v. German, 503 U.S. 249, 253-54 (1992). If the words in the statute are plain and unambiguous, judicial inquiry is complete. Id. Only if the plain-meaning of the statute "produces a result that is not just unwise but is clearly absurd" will the Court not abide by the plain-meaning of the statutory text. CBS Inc. v. Prime Time 24 Joint Venture, 245 F.3d 1217, 1225 (11th Cir. 2001). It is unnecessary (and inappropriate) to rely upon the legislative history of a statute to derive Congress' intent when that intent is readily revealed by a plain reading of the statute. Shotz v. City of Plantation, Fla., 344 F.3d 1161, 1167 (2003) (citing Fed. Reserve Bank of Atlanta v. Thomas, 220 F.3d 1235, 1239 (11th Cir. 2000)).
The Court finds section 806 to be clear. Thus, fidelity to the plain meaning of the provision is required. The pertinent language of section 806 states that a publicly traded company may not retaliate against an employee who provides information that employee "reasonably believes constitutes a violation of section 1341 [mail
[Page 39]
fraud], 1343 [wire fraud], 1344 [bank fraud], or 1348 [securities fraud], any rule or regulation of the Securities and Exchange Commission, or any provision of Federal law relating to fraud against shareholders." 18 U.S.C. § 1514A(a)(1) (emphasis added). The statute clearly protects an employee against retaliation based upon that employee's reporting of mail fraud or wire fraud regardless of whether that fraud involves a shareholder of the company. The Court rejects Defendants' interpretation that the last phrase of the provision, "relating to fraud against shareholders," modifies each of the preceding phrases in the provision. Defendants seek to redraft the statute to read that the employee is protected only if he reasonably believes that the conduct constitutes a "violation of section 1341 [mail fraud] ‘relating to fraud against shareholders,' section 1343 [wire fraud] ‘relating to fraud against shareholders,'" etc.
Defendants' redrafting of the statute conflicts directly with the "doctrine of the last antecedent." That rule of statutory construction requires that the phrase "relating to fraud against shareholders" be applied only to the last antecedent, which is "any provision of Federal law." Thus, the statute protects reports of "mail fraud" and "wire fraud" in addition to "any provision of Federal law relating to fraud against shareholders." Under the doctrine of the last antecedent, relative and qualifying words, phrases, and clauses (here, the relative clause "relating to fraud
[Page 40]
against shareholder") are to be applied to the words or phrase immediately preceding them (here, "any provision of Federal law"), and are not to be construed as extending to or including others more remote (here, "section 1341 [mail fraud], 1343 [wire fraud]...."). See Barnhart v. Thomas, 540 U.S. 20, 26 (2003); Bingham v. United States, 724 F.2d 921, 926 n.3 (11th Cir. 1984) (citation omitted).
Defendants' proposed interpretation also conflicts with the supplementary rule that "[w]here the modifier is set off from two or more antecedents by a comma, the supplementary ‘rule of punctuation' teaches that the comma indicates the drafter's intent that the modifier relate to more than the last antecedent." Bingham, 724 F.2d at 926 n.3 (citation omitted). Here, the drafters did not set off "relating to fraud against shareholders" with a comma. Instead, they chose to set off from the preceding phrases the entire last phrase, "any provision of Federal law relating to fraud against shareholders," with a comma. This indicates the drafters' intent that this entire last phrase stand alone rather than intending for a part of it to be stretched to modify each of the phrases preceding the comma.
Although the doctrine of the last antecedent "is not absolute and can assuredly be overcome by other indicia of meaning, [the Supreme Court has] said that construing a statute in accord with this rule is quite sensible as a matter of grammar." Barnhart, 540 U.S. at 26 (citations and internal quotations omitted); see also, Bingham,
[Page 41]
724 F.3d at 926 n.3 (The doctrine of the last antecedent and its supplementary rule of punctuation are "not absolute rules."). Here, the Court finds no other indicia of meaning in the statute. If the drafters meant for section 806 to only protect employees who report fraud against shareholders, then they could have easily done so by inserting a comma before "relating to fraud against shareholders." The drafters, however, did not do so. Therefore, the Court finds that reporting alleged violations of mail fraud or wire fraud does not have to relate to shareholder fraud in order to be protected activity under the statute. Accordingly, Plaintiffs' reports of fraud in this case constitute protected activity under SOX.
The Court further finds that genuine issues of material fact exist as to whether Plaintiffs "reasonably believed" that the conduct they reported constituted mail and/or wire fraud. Additionally, the Court finds that genuine issues of material fact exist as to whether they suffered unfavorable personnel actions as a result of reporting such fraudulent activity and whether those actions would have been taken in the absence of their reporting of such activity. Accordingly, Defendants' Motion for Summary Judgment on Plaintiffs' SOX claims is denied.
D. State Law Claims
[Page 42]
Defendants also seek summary judgment on Plaintiffs' state law claims for negligent retention and punitive damages. Plaintiffs allege that ConAgra wrongfully retained Colquitt when it "knew, or in the exercise of reasonable care should have known" of Colquitt's "propensities" to "violate the law [to] commit acts of discrimination and fraud" and to commit "willful violations of law." (First Am. Compl. ¶¶ 99-100.) Plaintiffs further allege that ConAgra's wrongful retention of Colquitt entitles them to an award of punitive damages.
In order to sustain a claim for negligent retention, Plaintiffs must show that ConAgra knew or should have known of Colquitt's propensity to discriminate, harass, and commit fraud, and that it was foreseeable that Colquitt would engage in such misconduct. See Cox v. Brazo, 165 Ga. App. 888, 889, 303 S.E.2d 71, 73 (Ct. App. 1983). Plaintiffs have identified absolutely no such evidence, and their conclusory allegations do not support their negligent retention claims. Because Plaintiffs have provided no evidence to show that ConAgra knew or should have known of Colquitt's propensity to discriminate, Defendants are entitled to summary judgment on Plaintiffs' claims for negligent retention.
Because Plaintiffs' negligent retention claims fail, their state law claims for punitive damages also fail. See e.g., Bank One, N.A. v. American, 271 Ga. App. 483, 486, 610 S.E.2d 103, 106 (Ct. App. 2005) (claim for punitive damages must fail where underlying tort claim was dismissed); Clarke v. Cox, 197 Ga. App. 83, 84, 397
[Page 43]
S.E.2d 598, 600 (Ct. App. 1990) ("[P]unitive damages are not supportable where the tort is not proved."). Therefore, Defendants' Motion for Summary Judgment on Plaintiffs' state law claims is granted.
E. FLSA Claims
Defendants also move for summary judgment on Plaintiffs' FLSA Claims for unpaid overtime compensation. This Court has addressed these claims in its previous Order on Plaintiffs' Motion for Partial Summary Judgment, wherein the Court denied Defendants' motion and granted Plaintiffs' motion as to liability only [Doc. 43].
CONCLUSION
For the reasons stated above, Defendants' Motion for Summary Judgment [Doc. 30] is granted in part and denied in part.
IT IS SO ORDERED, this 11th day of June, 2007.
CLAY D. LAND
UNITED STATES DISTRICT JUDGE
[ENDNOTES]
1 The Court previously ruled on Plaintiffs' FLSA claims for unpaid overtime compensation. See Order on Plaintiffs' Motion for Partial Summary Judgment [Doc. 43] (granting Plaintiffs' Motion for Partial Summary Judgment on their FLSA claims as to liability but finding triable issues of fact regarding damages).
2 See Hairston v. Gainesville Sun Publ'g Co., 9 F.3d 918, 918-19 (11th Cir. 1993) (for summary judgment purposes the court must view the facts in the light most favorable to the non-moving party and draw all inferences in favor of that party).
3 The Athens poultry facility was operated by ConAgra Poultry Company, a subsidiary of ConAgra. In June of 2003, ConAgra announced the sale of its poultry company to Defendant Pilgrim's Pride, and in November 2003, Pilgrim's Pride acquired the poultry company's assets and liabilities.
4 Employers are required to verify the identity and eligibility of all employees working in the United States using the I-9 form. Once completed, the employer must keep the form in the employees' files for INS inspection.
5 ConAgra allowed employees and supervisors in the production area of the plant to get one pair of boots each year at ConAgra's expense. One of Reyna's job duties was to issue vouchers to employees so that they could obtain these boots. On one occasion, Colquitt required Reyna to give her several boot vouchers even though HR employees were not allowed to get boots.
6 Plaintiffs question whether Harris actually took notes during his initial meeting with them. Plaintiffs point to the fact that his notes were dated September 5, 2003, a date that was not only weeks after the initial meeting took place, but also a date when Reyna was vacationing out of state.
7 Plaintiffs also seem to assert that ConAgra is strictly liable for Colquitt's alleged harassment based on a tangible employment action theory. Under a tangible employment action theory, when a supervisor engages in harassment which results in an adverse "tangible employment action" against the employee—such as discharge, demotion, or undesirable reassignment—the employer is automatically held vicariously liable for the harassment. Frederick v. Sprint/United Mgmt Co., 246 F.3d 1305, 1311 (11th Cir. 2001) (citations omitted). Even assuming Plaintiffs could proceed on such a theory in this case, Plaintiffs have not presented sufficient evidence for a reasonable jury to find that there is a causal link between the alleged harassment and Plaintiffs' terminations and therefore cannot establish employer liability based on an adverse tangible employment action theory. See Hulsey, 367 F.3d at 1245 (the essential aspect of the tangible employment action theory is that the tangible adverse employment action, i.e., a plaintiff's termination, was causally related to the alleged harassment) (citing Ellerth, 524 U.S. at 753); Cotton v. Cracker Barrel Old Country Store, Inc., 434 F.3d 1227, 1231 (11th Cir. 2006).
Plaintiffs have raised no issues of fact establishing that they were terminated (as opposed to being harassed) because of their race or national origin. Moreover, there is no evidence that Colquitt, the harassing supervisor, made the decision to terminate Plaintiffs or even recommended Plaintiffs' discharge. See Walton v. Johnson & Johnson, 347 F.3d 1272, 1282 n.7 (11th Cir. 2003) (no evidence that the harassing supervisor "played a role in the decision to terminate [plaintiff]."). Because Colquitt's harassment is not causally related to Plaintiffs' termination, Plaintiffs cannot establish that a tangible employment action was taken. Because no tangible employment action was taken, ConAgra may raise the affirmative Faragher/Ellerth defense. See Ellerth, 524 U.S. at 765.
8 ConAgra's policy prohibiting discrimination and harassment in the workplace provides, in pertinent part:
Consistent with ConAgra Foods' continuing belief that the hiring of employees and their progress within the company should be based solely on qualifications and demonstrated performance, I wish to make clear that ConAgra Foods is committed to maintaining a work environment that is free of discrimination. In keeping with this commitment, our company will not tolerate harassment of its employees by anyone, including managers, co-workers, vendors or customers of ConAgra Foods.
. . .
All ConAgra Foods employees are responsible for helping assure that we avoid harassment. An employee who believes he or she has been the subject of harassment should immediately report it to his or her supervisor, department manager or to Nancy Cohen, Director of Human Resources.
9 Section 806 of SOX is specifically entitled the Corporate and Criminal Fraud Accountability Act of 2002, Title VIII of the Sarbanes-Oxley Act of 2002 (Public Law 107-204), 18 U.S.C. § 1514A, ("SOX" or "Act") as implemented by 29 C.F.R. Part 1980.