GENERAL LEGAL BURDENS OF PROOF APPLICABLE TO SOX WHISTLEBLOWER COMPLAINTS
In Allen v. Administrative Review Bd., USDOL, No. 06-60849, ___ F.3d ___, 2008 WL 171588 (5th Cir. Jan. 22, 2008) (case below ARB No. ARB No. 06-081, ALJ Nos. 2004-SOX-60 to 62), the Fifth Circuit Court of Appeals provided an overview of the legal burdens of proof applicable to Sarbanes-Oxley Act whistleblower complaints, following in large part the interpretative caselaw developed by the ARB:
The legal burdens of proof set forth in [AIR21], 49 U.S.C. § 42121(b), govern SOX whistleblower actions. 18 U.S.C. § 1514A(b)(2)(C). To prevail, an employee must prove by a preponderance of the evidence that (1) she engaged in protected activity; (2) the employer knew that she engaged in the protected activity; (3) she suffered an unfavorable personnel action; and (4) the protected activity was a contributing factor in the unfavorable action. ...
If the employee establishes these four elements, the employer may avoid liability if it can prove "by clear and convincing evidence" that it "would have taken the same unfavorable personnel action in the absence of that [protected] behavior." 49 U.S.C. § 42121(b)(2)(B)(iv). This "independent burden-shifting framework" is distinct from the McDonnell Douglas burden-shifting framework applicable to Title VII claims. ...
Slip op. at 9-10 (citations and footnotes omitted). The Court noted that an employee is entitled to relief only if the employee demonstrates that the protected activity was a contributing factor in the unfavorable personnel action alleged in the complaint, 49 U.S.C. § 42121(b)(2)(B)(iii), and held that the term "demonstrates" means to prove by a preponderance of the evidence. Slip op. at n.1.
The Court also held that the Burlington Northern & Santa Fe Railway Co. v. White, 126 S. Ct. 2405 (2006), definition of "unfavorable personnel action" applies to SOX whistleblower claims -- i.e., a plaintiff must show that a reasonable employee would have found the challenged action materially adverse, which in this context means it well might have dissuaded a reasonable worker from engaging in the protected activity.
EVIDENTIARY FRAMEWORK; PLAINTIFF'S BURDEN OF PROOF
In Collins v. Beazer Homes USA, Inc., __ F.Supp.2d __, 2004 WL 2023716 (N.D.Ga. Sept. 2, 2004), the court summarized a plaintiff's burden in establishing a SOX whistleblower cause of action under 11th Circuit law as follows:
Under the statutory framework, a plaintiff in federal court must show by a preponderance of the evidence that the plaintiff's protected activity was a contributing factor in the unfavorable personnel action alleged in the complaint. 49 U.S.C. § 42121(b)(2)(B)(iii).13 That is, the plaintiff must show by a preponderance of the evidence that (1) she engaged in protected activity; (2) the employer knew of the protected activity; (3) she suffered an unfavorable personnel action; and (4) circumstances exist to suggest that the protected activity was a contributing factor to the unfavorable action. Proximity in time is sufficient to raise an inference of causation. The defendant 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, 2004 WL 2023716 * 7 (citations and footnotes omitted).
SOX ANALYSIS, GENERALLY
In Bechtel v. Competitive Technologies, Inc., ARB No. 06-010, ALJ No. 2005-SOX-33 (ARB Mar. 26, 2008), the ARB remanded where the ALJ's decision, although thorough and mostly well reasoned, had applied the wrong legal standards under SOX, which was still a new law when the ALJ rendered her decision. The ARB summed up the proper analysis as follows:
the ALJ should determine whether Bechtel established by a preponderance of the evidence that his protected activity was a contributing factor in CTI's decision to fire him. If Bechtel meets his burden of proof, the ALJ should then determine whether CTI established by clear and convincing evidence that it would have taken unfavorable action against Bechtel absent his protected activity. If CTI meets this burden, then it will avoid liability under the SOX. If CTI does not, and providing that Bechtel has established his protected activity as a contributing factor of his discharge, then the ALJ should consider appropriate remedies under the SOX. See 18 U.S.C.A. § 1514A(c).
USDOL/OALJ Reporter at 7.
ELEMENTS OF SOX CAUSE OF ACTION
The legal burdens of proof set forth in AIR21, 49 U.S.C.A. § 42121(b), govern SOX actions. Accordingly, to prevail, a complainant must prove that: (1) the complainant engaged in a protected activity; (2) the respondent knew that the complainant engaged in protected activity; (3) the complainant suffered an unfavorable personnel action; and (4) the protected activity was a contributing factor in the unfavorable action. Reddy v. Medquist, Inc., ARB No. 04-123, ALJ No. 2004-SOX-35 (ARB Sept. 30, 2005).
SUMMARY JUDGMENT; COMPLAINANT'S RESPONSIVE BURDEN
A complainant must show the existence of a material issue of fact on an essential element of the SOX cause of action if challenged to do so on a motion for summary judgment. Reddy v. Medquist, Inc., ARB No. 04-123, ALJ No. 2004-SOX-35 (ARB Sept. 30, 2005).
