Filed: Feb. 03, 2012
Latest Update: Feb. 22, 2020
Summary: 9, For instance, Congress could have more clearly enacted, defendants' interpretation of § 1514A(a) by extending the, provision's coverage only to an employee of such company. In Fleszar v. U.S. Dep't of Labor, 598, F.3d 912 (7th Cir.-30-, statutes.procedures under section 806 of SOX, 29 C.F.R.
United States Court of Appeals
For the First Circuit
No. 10-2240
JACKIE HOSANG LAWSON; JONATHAN M. ZANG,
Plaintiffs, Appellees/Cross-Appellants,
v.
FMR LLC, f/k/a FMR Corp.; FMR CO., INC.; FMR CORP., d/b/a
Fidelity Investments; FMR LLC, d/b/a Fidelity Investments;
FIDELITY BROKERAGE SERVICES, LLC, d/b/a Fidelity Investments;
FIDELITY MANAGEMENT & RESEARCH COMPANY,
Defendants, Appellants/Cross-Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Douglas P. Woodlock, U.S. District Judge]
Before
Lynch, Chief Judge,
Howard and Thompson, Circuit Judges.
Paul E. Nemser, with whom Wilfred J. Benoit, Jr., Goodwin
Proctor LLP, Eugene Scalia, Jennifer J. Schulp, and Gibson, Dunn &
Crutcher LLP were on brief, for appellants/cross-appellees.
Robin S. Conrad, Shane B. Kawka, National Chamber Litigation
Center, Inc., Willis J. Goldsmith, Wendy C. Butler, and Jones Day,
on brief for Chamber of Commerce of the United States of America,
amicus curiae.
Indira Talwani, with whom Segal Roitman, LLP, was on brief,
for appellee/cross-appellant Jackie Hosang Lawson.
Jonathan M. Zang pro se.
Mary J. Rieser, Attorney, with whom M. Patricia Smith,
Solicitor of Labor, Jennifer S. Brand, Associate Solicitor, and
Jonathan T. Rees, Acting Counsel for Whistleblower Programs, were
on brief, for the Secretary of Labor as amicus curiae.
Mark D. Cahn, General Counsel, Richard M. Humes, Associate
General Counsel, and Thomas J. Karr, Assistant General Counsel, on
brief for the Securities and Exchange Commission as amicus curiae.
February 3, 2012
LYNCH, Chief Judge. This interlocutory appeal is from
the district court's order denying a Rule 12(b)(6) motion to
dismiss two separate but related cases under the whistleblower
protection provision of section 806 of the Sarbanes-Oxley Act of
2002 (SOX), codified at 18 U.S.C. § 1514A. See Lawson v. FMR LLC,
724 F. Supp. 2d 141 (D. Mass. 2010); Fed. R. Civ. P. 12(b)(6). It
raises important questions of first impression.
The plaintiffs, Jackie Hosang Lawson and Jonathan M.
Zang, brought separate suits alleging unlawful retaliation by their
corporate employers, which are private companies that act under
contract as advisers to and managers of mutual funds organized
under the Investment Company Act of 1940. Because the two suits
shared a common defendant, FMR LLC, and both raised the same
question of the scope of employees subject to protection under
§ 1514A, the district court addressed both cases in a single order.
Lawson, 724 F. Supp. 2d at 144.
The district court concluded that the whistleblower
protection provision within SOX section 806 extends its coverage
beyond "employees" of "public" companies (as those terms are
defined in the section) to encompass also the employees of private
companies that are contractors or subcontractors to those public
companies.
Id. at 163. Concerned that this interpretation could
be thought too broad, the district court then imposed a limitation,
not found in the text, that the employees must be reporting
-3-
violations "relating to fraud against shareholders."
Id. 159-60.
We interpret the statute differently and reverse.
I.
Background
Both plaintiffs are suing their former employers, which
are private companies that provide advising or management services
by contract to the Fidelity family of mutual funds.
The Fidelity mutual funds are not parties in either suit,
and are investment companies organized under the Investment Company
Act of 1940, 15 U.S.C. § 80a-3(a)(1). They are registered with the
Securities and Exchange Commission (SEC) and are required to file
reports under section 15(d) of the Securities Exchange Act of 1934
(1934 Act), 15 U.S.C. § 78o(d). The mutual funds are owned by
their shareholders and are not owned or controlled by, or
affiliated with, any of the defendant companies. The Fidelity
funds are overseen by a single Fidelity Mutual Fund Board of
Trustees; a super-majority of the Board's members are independent
of the funds' advisers. As is not unusual among funds organized
under the Investment Company Act, the Fidelity funds have no
employees of their own.
Plaintiff Zang was employed by Fidelity Management &
Research Co. and later by FMR Co., Inc., which was formed as a
subsidiary of Fidelity Management & Research Co. (collectively, the
Fidelity Management companies). The Fidelity Management companies
-4-
have entered into contracts with certain of the Fidelity mutual
funds to serve as investment advisers or sub-advisers. As
investment advisers to the funds, the Fidelity Management companies
are subject to the provisions of the Investment Advisers Act of
1940, 15 U.S.C. § 80b-1 et seq. The Fidelity Management companies
are subsidiaries, directly or indirectly, of FMR LLC.
Zang's employment was terminated in July 2005. On
September 15, 2005, he filed a complaint with the Occupational
Health & Safety Administration (OSHA) of the Department of Labor
(DOL), based on 18 U.S.C. § 1514A(b)(1)(A), which allows a person
who alleges discharge or discrimination in violation of § 1514A(a)
to seek relief by filing a complaint with the Secretary of Labor.
The Secretary has, in turn, delegated enforcement responsibility
for § 1514A to the Assistant Secretary for Occupational Safety and
Health. See 67 Fed. Reg. 65,008, 65,008 (Oct. 22, 2002). Zang
alleged that he had been terminated by the Fidelity Management
companies in retaliation for raising concerns about inaccuracies in
a draft revised registration statement for certain Fidelity funds.
Zang alleged that he reasonably believed these inaccuracies
violated several federal securities laws.
OSHA dismissed Zang's complaint, finding that he was a
covered employee within the meaning of § 1514A(a), that is, he was
an employee "covered" by the whistleblower protections, but that he
had not engaged in conduct protected by that subsection. Zang
-5-
objected and had a hearing before an Administrative Law Judge
(ALJ). The Fidelity Management companies moved for summary
decision, contending, among other things, that Zang was not a
covered employee. After allowing limited discovery on the issue,
the ALJ granted summary decision for the Fidelity Management
companies on that basis and dismissed. Zang v. Fid. Mgmt. &
Research Co., No. 2007-SOX-00027,
2008 WL 7835900 (Dep't of Labor
ALJ Mar. 27, 2008).
Interpreting § 1514A(a), the ALJ concluded that merely
being an employee of a privately held contractor to a fund was
insufficient to come within the term "employee."1
Zang petitioned for review of the ALJ decision by the
DOL's Administrative Review Board (ARB).2 Zang then gave notice to
1
The ALJ also concluded that Zang would only be a covered
employee if the private Fidelity Management companies acted on
behalf of the public Fidelity funds as contractors or
subcontractors "in employment matters . . . when [they] terminated
[Zang's] employment." Zang v. Fid. Mgmt. & Research Co., No. 2007-
SOX-00027,
2008 WL 7835900, at *14 (Dep't of Labor ALJ Mar. 27,
2008). The ALJ concluded that the funds had no role in the
Fidelity Management companies' employment decisions and Zang had
not sufficiently alleged that the private Fidelity Management
companies had acted as the funds' "agent or contractor in regard to
employment matters" and dismissed his complaint.
Id. at *18. That
issue is not before us.
Zang also argued before the ALJ that the private Fidelity
Management companies and the public Fidelity funds should be
considered a "single integrated enterprise" for the purpose of
evaluating whether he was a covered employee under § 1514A(a).
Zang,
2008 WL 7835900, at *15. The ALJ rejected this argument,
id.
at *18, and that issue is also not before us.
2
The Secretary of Labor has delegated review of decisions by
DOL ALJs to the DOL's ARB. See 67 Fed. Reg. 64,272, 64,272-73
-6-
the DOL of his intention to file an action in federal court and
filed his complaint against the Fidelity Management companies in
the district court, terminating his appeal with the ARB. Under
SOX, a claimant may seek de novo review in federal district court
if the DOL has not issued a final decision on a complaint within
180 days of its filing.3 18 U.S.C. § 1514A(b)(1)(B).
Plaintiff Lawson was employed by Fidelity Brokerage
Services, LLC, a private subsidiary of FMR Corp., which was
succeeded by FMR LLC. Together these companies operate under the
trade name Fidelity Investments. Lawson filed SOX complaints
against her employer and its parent with OSHA pursuant to
§ 1514A(b)(1)(A) in 2006 while she was still employed. She alleged
retaliation against her for raising concerns primarily relating to
cost accounting methodologies. She resigned her employment in
September 2007, claiming that she had been constructively
discharged. One year after filing, Lawson notified OSHA that she
intended to seek review of her SOX claim in federal court. Her
claims, which had been consolidated, were closed by the DOL, and
she filed a complaint against her employers in the district court.
(Oct. 17, 2002).
3
The district court determined that although there was an
ALJ decision in Zang's case, because that decision was on review
with the ARB, it was not final. Lawson v. FMR LLC,
724 F. Supp. 2d
141, 151 (D. Mass. 2010). And since more than 180 days had elapsed
since his claim was filed with OSHA, his complaint was properly
before the district court.
Id. at 152. That portion of the
district court's opinion is not an issue on appeal.
-7-
The defendants, all private companies, filed motions to
dismiss under Rule 12(b)(6), arguing that the plaintiffs were not
covered employees under § 1514A(a) and, in the alternative, that
they had not engaged in protected activity under § 1514A(a)(1).
The district court denied the motions to dismiss as to the
plaintiffs' claims alleging retaliation in violation of § 1514A,
which is the subject of this appeal.4 Lawson,
724 F. Supp. 2d 141.
The district court held that the SOX whistleblower
protection provisions of § 1514A(a) extend to employees of private
agents, contractors, and subcontractors to public companies; that
the plaintiffs had sufficiently pleaded facts alleging that their
private company employers were "either contractors, subcontractors,
or agents of publicly held investment companies;" and that both
plaintiffs had sufficiently alleged that they had engaged in
protected activity under § 1514A(a)(1).
Lawson, 724 F. Supp. 2d at
163-65.
The defendants moved that the dispositive issue of
§ 1514A(a)'s applicability to the plaintiffs be certified for
interlocutory appeal under 28 U.S.C. § 1292(b). The district court
granted the motion, certified a "controlling question of law" to
this court, and stayed the cases before it. Lawson v. FMR LLC, 724
4
The district court granted the motions to dismiss as to the
plaintiffs' state law claims for wrongful discharge in violation of
public policy.
Lawson, 724 F. Supp. 2d at 167. The dismissal of
those claims is not a subject of this appeal.
-8-
F. Supp. 2d. 167, 169 (D. Mass. 2010). The defendants petitioned
this court for interlocutory review, and the plaintiffs each filed
cross-petitions urging this court to grant the appeal. We granted
the parties' cross-petitions for interlocutory review. Lawson v.
FMR LLC, No. 10-1944 (1st Cir. Oct. 25, 2010).
II.
Statutory Construction
We limit our review of the district court's order to the
question the court certified:
Does the whistleblower protection afforded by
Section 806(a) of the Sarbanes-Oxley Act, 18
U.S.C. § 1514A, apply to an employee of a
contractor or subcontractor of a public
company, when that employee reports activity
which he or she reasonably believes may
constitute a violation of 18 U.S.C. §§ 1341,
1343, 1344, or 1348; any rule or regulation of
the Securities and Exchange Commission; or any
provision of Federal law and such a violation
would relate to fraud against shareholders of
the public company?
Lawson, 724 F. Supp. 2d at 169; see also 28 U.S.C. § 1292(b).5
Our review is de novo, both because this is an appeal
from a denial of a Rule 12(b)(6) motion and because the issue of
5
Although the Supreme Court has held that under 28 U.S.C.
§ 1292(b), "appellate jurisdiction applies to the order certified
to the court of appeals, and is not tied to the particular question
formulated by the district court," Yamaha Motor Corp., U.S.A. v.
Calhoun,
516 U.S. 199, 205 (1996), we need not exercise our power
to go beyond the question certified, and do not do so here. See 16
Wright & Miller, Federal Practice and Procedure § 3929 (2d ed.
2011) ("Of course this power need not be exercised -- ordinarily
the question specified by the district court . . . will be the
focus of arguments on the merits.").
-9-
statutory interpretation is one of law. See U.S. ex rel. Hutcheson
v. Blackstone Med., Inc.,
647 F.3d 377, 383 (1st Cir. 2011);
Carnero v. Bos. Scientific Corp.,
433 F.3d 1, 4 (1st Cir. 2006).
A. Construction of the statute
1. Text of § 1514A(a)
This case turns on the interpretation of SOX's
whistleblower protection provision, codified at 18 U.S.C. § 1514A.
It "is a relatively small part of the Sarbanes-Oxley Act which is
composed of many separate statutes and statutory schemes aimed at
achieving the Act's investor-protection goals."
Carnero, 433 F.3d
at 5.
We start our analysis with the particular subsection at
issue before considering other relevant text in the statute, both
in the section and elsewhere. Section 806 of SOX reads in
pertinent part:
SEC. 806. PROTECTION FOR EMPLOYEES OF PUBLICLY
TRADED COMPANIES WHO PROVIDE EVIDENCE OF
FRAUD.
(a) In General. -- Chapter 73 of title
18, United States Code, is amended by
inserting after section 1514 the following:
"§ 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. 78l), or that is
required to file reports under section 15(d)
of the Securities Exchange Act of 1934 (15
-10-
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 [mail fraud], 1343 [wire fraud], 1344
[bank fraud], or 1348 [securities or
commodities fraud], 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 provided to or
the investigation is conducted by–
"(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 and Exchange
Commission, or any provision of Federal law
relating to fraud against shareholders."
-11-
Sarbanes-Oxley Act of 2002, Pub. L. No. 107-204, § 806, 116 Stat.
745, 802-03 (emphasis added).6 The interpretation of the
emphasized language in the text of subsection (a) is in dispute.
The parties agree only that this provision extends
whistleblower protection to employees of "public companies" -- that
is, those with a class of securities registered under section 12 of
the 1934 Act or those that file reports with the SEC pursuant to
section 15(d) of the 1934 Act. While literally one of these two
categories encompasses companies with publicly traded stock, we use
the term "public companies" as a shorthand for both categories
because companies required to file reports with the SEC pursuant to
section 15(d), such as the Fidelity mutual funds, are "public" in
the sense that they have issued securities that may be sold to the
public and are required to make periodic reports to their
investors. The question is whether Congress intended the
whistleblower provisions of § 1514A also to apply to those who are
employees of a contractor or subcontractor to a public company and
6
Section 1514A(a) has since been amended by Congress. This
is the unamended text in force at all pertinent times here.
-12-
who engage in protected activity.7 No court of appeals has ruled
on this issue.8
7
As the case comes to us, the plaintiffs' employers are not
acting as agents for employment purposes of the Fidelity mutual
funds, which are public companies but have no employees. Their
employers' contracts with those funds are not for employment
purposes.
Some opinions by the DOL ARB and by DOL ALJs have indicated
that an employee of a non-public company may be able to proceed
against his or her employer under § 1514A where such a non-public
employer is a contractor, subcontractor, or agent to a public
company for employment purposes -- that is, where the non-public
company retaliates against its own employee at the public company's
behest. See Klopfenstein v. PCC Flow Techs. Holdings, Inc., No.
04-149,
2006 WL 3246904, at *10 (Dep't of Labor ARB May 31, 2006);
Zang,
2008 WL 7835900, at *14; but see Johnson v. Siemens Bldg.
Techs., Inc., No. 08-032,
2011 WL 1247202, at *12 (Dep't of Labor
ARB Mar. 31, 2011) (stating that Klopfenstein should be read as
stating the broader proposition that a private company can be held
liable under § 1514A where such private company would be considered
a public company's agent under common law agency principles, not
only when the private company is the public company's agent for
employment purposes).
Again, neither plaintiff argues before us that we are faced
with a situation where a private company acts as a contractor,
subcontractor, or agent of a public company for employment purposes
and retaliates against its own employee at the direction of the
public company. We express no opinion on the scope of § 1514A(a)'s
coverage in such a situation.
8
In Carnero v. Bos. Scientific Corp.,
433 F.3d 1 (1st Cir.
2006), we held that § 1514A did not have extraterritorial effect.
In order to reach the question of extraterritoriality, we
"assume[d], for present purposes, but without deciding" that the
plaintiff in that case was a covered employee of the public company
Boston Scientific Corporation (BSC), even though he was employed by
BSC's foreign subsidiaries.
Id. at 6. However, we also stated
that "[n]either party . . . contest[ed] that [the plaintiff] was a
covered employee of BSC for purposes of seeking whistleblower
relief under" SOX; instead they focused all of their arguments on
the extraterritorial reach of section 806.
Id. The issue of
whether § 1514A(a) covers employees of companies which are under
contract to public companies was not presented to us in Carnero.
The only other reported district court opinion addressing
this question rejected the argument accepted by the district court
-13-
The defendants argue that § 1514A(a) provides that no
public company -- or any officer, employee, contractor,
subcontractor, or agent of that company -- may discriminate against
an employee of such public company for engaging in protected
whistleblowing activity. The defendants read the listing of
"officer, employee, contractor, subcontractor, or agent" in
§ 1514A(a) as identifying who is barred from taking retaliatory
action against the employees of public companies, but not as
extending coverage to those enumerated entities' own employees.
The plaintiffs contend that the covered "employee" who is
given whistleblower protection includes both the employees of
public companies and those who are the employees of those public
companies' officers, employees, contractors, subcontractors, or
agents.
While different readings may be given the term "employee"
within the emphasized language of the text of § 1514A(a) itself as
to whether the protected employee refers only to employees of the
here. In Brady v. Calyon Sec. (USA),
406 F. Supp. 2d 307 (S.D.N.Y.
2005), the court concluded that the reference to "any officer,
employee, contractor, subcontractor, or agent of such company" in
§ 1514A(a) "simply lists the various potential actors who are
prohibited from engaging in discrimination on behalf of a covered
employer."
Id. (quoting Minkina v. Affiliated Physicians Grp., No.
2005-SOX-00019,
2005 WL 4889024, at *5 (Dep't of Labor ALJ Feb. 22,
2005)) (internal quotation marks omitted).
Two unreported district court cases have also addressed the
question. See Ervin v. Nashville Peace & Justice Ctr., No. 07-
0832,
2008 WL 4449920, at *7 (M.D. Tenn. Sept. 29, 2008); Rao v.
Daimler Chrysler Corp., No. 06-13723,
2007 WL 1424220, at *3 (E.D.
Mich. May 14, 2007).
-14-
public companies, principles of statutory interpretation lead us to
interpret § 1514A(a) in favor of such a limitation. The title of
section 806 and the caption of § 1514A(a) are statements of
congressional intent which go against plaintiffs' interpretation.
Other provisions of SOX also support and are more consistent with
the defendants' reading and inconsistent with the plaintiffs'
reading. Our reading of "employee" as excluding from coverage
employees of officers, employees, contractors, subcontractors, and
agents of public companies is also strongly confirmed by the pre-
passage legislative history of this section and other sections of
SOX and the purpose of the legislation. Further confirmation is
provided by the later actions of Congress in rejecting a bill meant
to amend SOX and in congressional acceptance of other amendments.
That the immediate text within § 1514A(a) may be read
differently as to the scope of the protected "employees" as a
matter of grammar needs little discussion. In our view, the more
natural reading is the one advanced by the defendants. Each side
has an argument that had Congress just added a few words, its
intent would have been clearer,9 and none of these arguments
resolve the case. That intent does become clearer if one looks
9
For instance, Congress could have more clearly enacted
defendants' interpretation of § 1514A(a) by extending the
provision's coverage only to "an employee of such company." Or
Congress could have clearly enacted the plaintiffs' interpretation
by defining "employee" or explicitly adding coverage of employees
of advisers to investment companies organized under the Investment
Company Act of 1940.
-15-
beyond the immediate phrases in subsection (a). Both circuit
precedent and Supreme Court precedent require that we examine the
broader statutory framework, including particularly the nearby
language, Comm'r v. Lundy,
516 U.S. 235, 250 (1996); United States
v. Ozuna-Cabrera,
663 F.3d 496, 499 (1st Cir. 2011), and the title
and caption, Bhd. of R.R. Trainmen v. Balt. & Ohio R.R. Co.,
331
U.S. 519, 529 (1947); Berniger v. Meadow Green-Wildcat Corp.,
945
F.2d 4, 9 (1st Cir. 1991).
We conclude that only the employees of the defined public
companies are covered by these whistleblower provisions; the clause
"officer, employee, contractor, subcontractor, or agent of such
company" goes to who is prohibited from retaliating or
discriminating, not to who is a covered employee and so does not
violate the rule against rendering superfluous any statutory
language. The text of § 1514A(a) first identifies covered
employers: those with a class of securities registered under
section 12 of the 1934 Act or those that file reports with the SEC
pursuant to section 15(d) of the 1934 Act. Such public companies
may not retaliate10 against their own employees who engage in
protected activity. Section 1514A(a) then enumerates a list of
representatives of such employers, including those who are
10
We use the term "retaliate" to cover "discharge, demote,
suspend, threaten, harass, or in any other manner discriminate
. . . in the terms and conditions of employment." 18 U.S.C.
§ 1514A(a).
-16-
contractors or subcontractors, and they are also barred from
retaliating against employees of the covered public-company
employer who engage in protected activity.
The plaintiffs and their amici argue that, because
§ 1514A(a) forbids retaliation by "any officer, employee,
contractor, subcontractor, or agent" of a public company, that
provision must forbid retaliation against an employee of a
contractor, subcontractor, or agent to a public company. But
plaintiff Lawson and plaintiffs' amici also reject the district
court's limiting principle for their broad reading. As a matter of
logic, the conclusion does not follow from its premise. As a
matter of language, the argument ignores its implication: if an
employee of "any" contractor, subcontractor, or agent is protected,
Congress must, by the same reasoning, have intended to protect the
employee of "any" officer or employee of a public company. This
argument both creates anomalies and provides very broad coverage.
Section 1514A(a)'s list of company representatives
serves, instead, to ensure an employee of a public company is
covered under the provision if he or she were harassed by officers,
other employees, or contractors or subcontractors to the public
company for reporting fraud in that public company.11
11
As said, our interpretation does not render the listing
clause superfluous but gives it meaning.
One of our sister circuits has, in addition, hypothesized a
particular fact situation. In Fleszar v. U.S. Dep't of Labor,
598
F.3d 912 (7th Cir. 2010), cert. denied,
131 S. Ct. 423 (2010),
-17-
2. The title of section 806 and the caption of
§ 1514A(a)
Both the title of SOX section 806, within which
§ 1514A(a) is housed, and the caption of § 1514A(a) itself are
explicit guides to the limits on the meaning of the textual phrase
within § 1514A(a). Section 806 states it concerns "Protection for
Employees of Publicly Traded Companies Who Provide Evidence of
Fraud." From that alone, it would be odd to read § 1514A(a) as
covering employees of private companies. It is unlikely Congress
intended the term "Civil action to protect against retaliation in
fraud cases" in the heading of § 1514A to be broader than the terms
of the "Protection" discussed in the title of section 806.
Congress did not rest there. It repeated the limitation
"Whistleblower protection for employees of publicly traded
companies" in the caption in the first line of the text of subpart
Judge Easterbrook observed, in dicta, that "[t]he idea behind" the
provision listing contractors, subcontractors, and agents in
§ 1514A(a) as entities by whom retaliation cannot take place "is
that a covered firm, such as IBM, can't retaliate against
whistleblowers by contracting with an ax-wielding specialist (such
as the character George Clooney played in 'Up in the Air')."
Id.
at 915; see also Kalkunte v. DVI Fin. Servs., Inc., No. 2004-SOX-
00056,
2005 WL 4889006 (Dep't of Labor ALJ July 18, 2005), aff'd,
Nos. 05-139, 05-140,
2009 WL 564738 (Dep't of Labor ARB Feb. 27,
2009) (holding that the complaining employee of a public company
could bring a § 1514A action against such company's private
contractor where the contractor managed the public company's
operations and retaliated against the complainant). We merely note
this and have no need to comment further.
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(a) of § 1514A. This double limitation strongly works against
plaintiffs' interpretation.
Supreme Court, as well as circuit, law requires that we
consider the title and the caption of the section under which the
language appears. See Bhd. of R.R.
Trainmen, 331 U.S. at 529;
Ozuna-Cabrera, 663 F.3d at 499 n.3;
Berniger, 945 F.2d at 9. It is
certainly true that "the title of a statute and the heading of a
section cannot limit the plain meaning of the text." Bhd. of R.R.
Trainmen, 331 U.S. at 528-29. This is not our issue: the caption
of § 1514A(a) does not in any way contradict the plain text, but
sheds light on the meaning of the text. The Supreme Court has been
clear that titles and captions should be used "[f]or interpretive
purposes . . . when they shed light on some ambiguous word or
phrase."
Id. at 529; see also
Berniger, 945 F.2d at 9 ("It is well
established that a statute's title may aid in construing any
ambiguities in a statute."). The title and the caption each
contain the phrase, "employees of publicly traded companies," which
supports the reading that the use of the term "employees"
underneath refers to "employees of publicly traded companies."
The Supreme Court has addressed a case presenting a
similar question to the one here. INS v. Nat'l Ctr. for
Immigrants' Rights, Inc. (NCIR),
502 U.S. 183 (1991). At issue was
a regulation entitled "Condition against unauthorized employment,"
the text of which referred to "[a] condition barring employment."
-19-
8 C.F.R. § 103.6(a)(2)(ii) (1991). The parties disagreed whether
the word "employment" in the text referred to employment generally
or more narrowly to unauthorized employment.
NCIR, 502 U.S. at
189. The Court ruled that "[t]he text's generic reference to
'employment' should be read as a reference to the 'unauthorized
employment' identified in the paragraph's title."
Id. We follow
the same reasoning as to § 1514A(a): the "generic reference" to
"employee" in the text "should be read as a reference to" the
"employees of publicly traded companies" identified in that
subsection's caption.12
Plaintiffs' fallback is to their argument that the title
and the caption do not mean what they say. Just as the term
"publicly traded companies" is a shorthand for the two categories
of covered companies, plaintiffs argue that the title and caption
are no more than a second shorthand meant to include all employees
possibly covered in the text. That is not the proper reading, and
is contradicted by the plain words of the title of section 806 and
12
Our reading is entirely consistent with the principles of
construction applied and the result reached in United States v.
Ozuna-Cabrera,
663 F.3d 496 (1st Cir. 2011). There we rejected an
argument that the text "without lawful authority" in 18 U.S.C.
§ 1028A(a)(1) was equivalent to "without authorized permission" and
that the defendant's construction was somehow supported by the
statute's title: "Aggravated identity theft." In Ozuna-Cabrera,
the title was entirely consistent with our rejection of the
defendant's more defendant-friendly construction. In this case,
the title and caption are even clearer in support of our reading.
Further, the text we considered in Ozuna-Cabrera provided no
ambiguity which would have warranted resort to the rule of lenity,
which is used only in criminal cases.
-20-
the caption of § 1514A(a). The title and caption are not ambiguous
and their purpose in being there was not to add to any ambiguity in
the text but to clarify. See Fla. Dep't of Revenue v. Piccadilly
Cafeterias, Inc., 128 S. Ct. 2326, 2336 (2008) (relying on
subchapter's title -- "Postconfirmation matters" -- to undermine
respondent's argument that a statute within that subchapter covered
preconfirmation transfers); Almendarez-Torres v. United States,
523
U.S. 224, 234 (1998) (title of amendment, reinforced by its
legislative history, clarified amendment's meaning). We do not
think there is any ambiguity left. But if there were, other rules
of statutory interpretation would lead us to the same result.
3. Other textual provisions of SOX
The choice by Congress to provide limited coverage in
§ 1514A(a) was not inadvertent, as shown by its choices elsewhere
in SOX. Other provisions of SOX as of the time of enactment
reinforce our view of the meaning of § 1514A(a) in several
respects. Congress enacted only limited whistleblower protection
in § 1514A(a). Where it wished to enact broader whistleblower
protection elsewhere, it explicitly did so. But it chose
different, more limited language for the coverage provision of
§ 1514A(a) than when it intended expanded coverage.
Congress also was explicit elsewhere than in its choice
of language in § 1514A(a); where it intended to regulate non-public
entities, it did not use language equivalent to the text of
-21-
§ 1514A(a). It is also clear that Congress made choices about
different regulatory mechanisms for different entities, and
intended the coverage of § 1514A(a), which creates a private right
of action, not to be so broad as to include employees of non-public
companies. For example, it subjected accountants and lawyers to
different regulatory mechanisms.
First, when Congress intended to enact broader
whistleblower protection in SOX itself in sections other than
§ 1514A, it did so clearly. In Carnero, we described section 1107
of SOX as "[t]he other whistleblower provision found in
[SOX]."
433 F.3d at 10; see also Glynn v. EDO Corp.,
536 F. Supp. 2d 595,
616 (D. Md. 2008) (describing section 1107 as serving to "deter[]
retaliation against whistleblowers"). Section 1107 is entitled
"Retaliation Against Informants" and adds this language to 18
U.S.C. § 1513:
(e) Whoever knowingly, with the intent to
retaliate, takes any action harmful to any
person, including interference with the lawful
employment or livelihood of any person, for
providing to a law enforcement officer any
truthful information relating to the
commission or possible commission of any
Federal offense, shall be fined under this
title or imprisoned not more than 10 years, or
both.
SOX § 1107, 116 Stat. at 810 (emphasis added). This language
requires neither a public company, nor an employment relationship,
nor a securities law violation to trigger coverage. The scope of
§ 1514A(a) is, by contrast, conspicuously narrow. See Barnhart v.
-22-
Sigmon Coal Co., Inc.,
534 U.S. 438, 452 (2002) ("[W]hen 'Congress
includes particular language in one section of a statute but omits
it in another section of the same Act, it is generally presumed
that Congress acts intentionally and purposely in the disparate
inclusion or exclusion.'" (quoting Russello v. United States,
464
U.S. 16, 23 (1983))).
Second, in other portions of SOX, where Congress intended
separate provisions of the Act to apply to employees of private
entities, it said so explicitly. By contrast, the title of section
806 and the caption of § 1514A(a) explicitly refer to publicly
traded companies. SOX contains a number of provisions, described
below, which directly and explicitly regulate the activities of
entities other than publicly traded companies. Further, Congress
expressly set up different regulatory schemes, which varied with
the persons or entities involved. For example, Title I of SOX
establishes the Public Company Accounting Oversight Board, which
regulates "public accounting firms that prepare audit reports for
issuers, brokers, and dealers." 15 U.S.C. § 7211(c)(1); see also
id. §§ 7211-7220. Title II ensures the independence of outside
auditors. See
id. §§ 7231-7234.
In another example, section 307 of SOX directs the SEC to
issue rules governing the professional conduct of attorneys -- both
in-house and outside counsel -- who appear before it in the
representation of issuers. See
id. § 7245. Moreover, Title VI,
-23-
"Commission Resources and Authority," details the SEC's authority
to censure or bar outside securities professionals from practice
and defines conditions under which a person can be barred from
practicing as a broker, investment adviser, or dealer. See
id.
§§ 78d-3, 78o, 80b-3.
Further, Title V, "Analyst Conflicts of Interest,"
defines codes of conduct for outside securities analysts and
requires disclosures of conflicts of interest. See
id. § 78o-6.
And Title VII, "Studies and Reports," requires the Comptroller
General and the SEC to perform various studies, including on
securities violations by securities professionals, defined as
"public accountants, public accounting firms, investment bankers,
investment advisers, brokers, dealers, attorneys, and other
securities professionals practicing before the Commission." SOX
§ 703(a)(1), 116 Stat. at 798.
Congress has been clear in SOX when it intends to
regulate private entities and has been explicit. By contrast, the
limited language within the text of § 1514A(a) and the title and
caption show that Congress did not intend coverage to reach beyond
employees of public companies. The Supreme Court has directed us
to be particularly attentive to such language choices in
interpreting the securities laws. See Cent. Bank of Denver, N.A.
v. First Interstate Bank of Denver, N.A.,
511 U.S. 164, 176 (1994)
(refusing to impose aiding and abetting liability under § 10(b) of
-24-
the 1934 Act because "Congress knew how to impose aiding and
abetting liability when it chose to do so"); Blue Chip Stamps v.
Manor Drug Stores,
421 U.S. 723, 734 (1975) (limiting Rule 10b-5
cause of action to actual purchasers and sellers of securities in
part because "[w]hen Congress wished to provide a remedy to those
who neither purchase nor sell securities, it had little trouble in
doing so expressly"); SEC v. Tambone,
597 F.3d 436, 444-45 (1st
Cir. 2010) (en banc) (court must honor the differential
draftsmanship of Congress).
Plaintiffs argue that surely Congress meant to cover all
whistleblowers and their reading is required by Congress's purpose.
Not so. These distinctions and differentiated approaches to multi-
faceted problems drawn by Congress, including the coverage
limitation in § 1514A(a) to public companies, are consistent with
the problems which led to the enactment of SOX. Congress's primary
concern in enacting SOX was not the activities of the advisers to
mutual funds organized under the Investment Company Act, like the
Fidelity funds here. Indeed, Congress knew that investment
companies like the Fidelity mutual funds often do not have their
own employees, but only a Board of Trustees, and are often advised
and managed by private entities, like the defendants. See Jones v.
Harris Assocs. L.P.,
130 S. Ct. 1418, 1422 (2010) ("A separate
entity called an investment adviser creates the mutual fund, which
may have no employees of its own."); Burks v. Lasker,
441 U.S. 471,
-25-
480-81 (1979); S. Rep. No. 91-184, at 4 (1969) (accompanying the
Investment Company Amendments Act of 1970) ("Mutual funds, with
rare exception, are not operated by their own employees. Most
funds are formed, sold, and managed by external organizations,
[called ‘investment advisers,’] that are separately owned and
operated."). And if they have no employees, they are not subject
to § 1514A. This is not anomalous. Congress in the Investment
Company Act deliberately created this separation between investment
companies and their advisers.13 See 15 U.S.C. § 80a-1(b)(2)
(declaring as a policy rationale for the Investment Company Act the
prevention of conflicts of interest between investment companies
and advisers).
Had Congress intended to extend § 1514A whistleblower
coverage protections to the employees of private companies that
have contracts to provide investment advice to funds organized
under the Investment Company Act, it would have done so explicitly
13
Investment advisers and their employees are regulated by
the securities laws, and they may be prosecuted for violations of
these laws. See 15 U.S.C. § 80b-6 (making it unlawful for
investment advisers to, among other things, defraud their clients
or prospective clients). In fact, the SEC's study of violations of
securities laws by securities professionals required by SOX section
703 demonstrates that the SEC has been active in prosecuting
violations of securities laws by investment advisers. See SEC,
Study and Report on Violations by Securities Professionals 6
(2003), available at http://www.sec.gov/news/studies/sox703report
.pdf/ (finding that in SEC actions that reached finality between
January 1, 1998, and December 31, 2001, 264 investment advisers or
persons associated with investment advisers had been found to have
violated securities laws).
-26-
in § 1514A(a) not only in the text of § 1514A(a), but also in the
title and caption under which the text is found. Elsewhere in SOX,
Congress did specifically address investment companies and
investment advisers, and made it explicit when it intended coverage
and when it did not. See, e.g., 15 U.S.C. § 7263 (exempting
"investment compan[ies] registered under" section 8 of the
Investment Company Act from certain SOX provisions);
id. § 80b-3(e)
(titled "Investment Advisers" and amending the Investment Advisers
Act).
The broader reading of § 1514A(a) offered by plaintiffs
would provide an impermissible end run around Congress's choice to
limit whistleblower protection in that subsection to the employees
of two categories of companies the title and caption call "publicly
traded companies."
4. SOX's reference to the Wendell H. Ford Aviation
Investment and Reform Act for the 21st Century
The whistleblower protection provision of the Wendell H.
Ford Aviation Investment and Reform Act for the 21st Century (AIR
21), 49 U.S.C. § 42121, was a model for at least portions of the
whistleblower protection provision of § 1514A, which incorporates
the procedures and burden-shifting framework of AIR 21. See 18
U.S.C. § 1514A(b)(2)(A) ("An action under paragraph (1)(A) shall be
governed under the rules and procedures set forth in section
42121(b) of title 49, United States Code.");
id. § 1514A(b)(2)(C)
-27-
("An action brought under paragraph (1)(B) shall be governed by the
legal burdens of proof set forth in section 42121(b) of title 49,
United States Code.").
The legislative history of SOX also refers to AIR 21.
See S. Rep. No. 107-146, at 30 (2002) (additional views of Sen.
Hatch, et al.) (stating that an amendment to the bill containing
eventual § 1514A made that provision "consistent with [AIR 21] in
which we provided whistleblower protections to another class of
non-government employees[;] . . . we thought it best to track those
protections as closely as possible"). The tracking of these
protections operates against plaintiffs' interpretation.
The pertinent section of AIR 21 is entitled "Protection
of employees providing air safety information" and states that
"[n]o air carrier or contractor or subcontractor of an air carrier
may discharge an employee or otherwise discriminate against an
employee with respect to compensation, terms, conditions, or
privileges of employment because the employee (or any person acting
pursuant to a request of the employee)" engaged in protected
whistleblowing activity. 49 U.S.C. § 42121(a) (emphasis added).14
There are several important differences between the
whistleblower provision of AIR 21 and that of SOX, which operate
14
See S. Rep. No. 105-278, at 22 (1998) (stating that the
whistleblower protection of AIR 21 "would provide employees of
airlines, and employees of airline contractors and subcontractors,
with statutory whistleblower protection").
-28-
against plaintiffs' interpretation. The text of AIR 21 has greater
clarity. Further, AIR 21 contains an inherent, textual limiting
principle. It does not extend broadly to any contractor or
subcontractor, instead § 42121 defines "contractor" to mean "a
company that performs safety-sensitive functions by contract for an
air carrier."
Id. § 42121(e). This limitation on the term
"contractor" excludes from coverage employees of all other
contractors and subcontractors.
By contrast, plaintiffs' broader and unlimited
construction of "employee" in § 1514A(a) would provide protection
to employees of any contractor or subcontractor. It is true that
AIR 21 explicitly went beyond employees of airlines, but only to
employees of a limited class of contractors and subcontractors:
those who perform "safety-sensitive functions." That limited
expansion serves AIR 21's purpose of protecting the safety of
travelers by focusing on those contractors and subcontractors
responsible for safety. No such limitation is built into SOX or
into plaintiffs' expansive reading. Defendants' reading, by
contrast, is self-limited.
Second, the text of AIR 21 does not pose the
interpretative problems posed by plaintiffs' proposed construction
of § 1514A(a): excessive breadth and the extension of coverage to
employees of employees and employees of officers. In § 1514A(a),
Congress chose to employ different language from what it used in
-29-
§ 42121(a), undercutting plaintiffs' argument that because AIR 21
purportedly covers employees of contractors, so should § 1514A.
Further, in AIR 21, Congress did not consider the subject
matter of the complaints -- air safety information -- to be an
adequate limitation on the creation of whistleblower liability in
the air carrier business, so it limited the definition of the
relevant contractors. Congress did not in SOX consider the subject
matter of the complaints to be the only limiting principle, nor to
be sufficient in itself to narrow the range of contractors. The
plaintiffs' reading is broader than Congress's intended reach.15
5. Contrast with language of other whistleblower
protection statutes
Our reading of § 1514A(a) stands on the text of SOX
itself. If more were needed, we also find support in the contrast
with whistleblower provisions in other statutes. In contrast with
the language of § 1514A(a), we note two other, earlier, federal
whistleblower protection statutes which explicitly extend coverage
to employees of contractors to the entities regulated by those
15
Because we conclude that the text of § 1514A(a) is
unambiguous in limiting whistleblower protection to employees of
public companies and reverse the district court, we do not reach a
conclusion on the district court's proposed limiting principle.
The district court stated that the phrase "relating to fraud
against shareholders" in § 1514A(a)(1) modifies the entire clause
"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". See
Lawson, 724 F. Supp. 2d at 159-60.
That proposed limiting principle addresses the scope of protected
activity, not the scope of employee coverage.
-30-
statutes. That Congress was clear in extending coverage to
employees of contractors in those statutes confirms our
understanding of § 1514A(a) as not extending so far.
The Nuclear Whistleblower Protection provision of the
Energy Reorganization Act, 42 U.S.C. § 5851(a)(1), states that
"[n]o employer may discharge any employee or otherwise discriminate
against any employee with respect to his compensation, terms,
conditions, or privileges of employment because the employee (or
any person acting pursuant to a request of the employee)" engaged
in protected whistleblowing activity. The provision defines
"employer" as, among other things, "a licensee of the [Nuclear
Regulatory] Commission or of an agreement State under" the Atomic
Energy Act of 1954,
id. § 5851(a)(2)(A), "a contractor or
subcontractor of such a licensee or applicant" for a license,
id.
§ 5851(a)(2)(C), and "a contractor or subcontractor of the
Commission,"
id. § 5851(a)(2)(E).
Similarly, the whistleblower protection provision of the
Pipeline Safety Improvement Act of 2002, 49 U.S.C. § 60129(a)(1),
states that "[n]o employer may discharge any employee or otherwise
discriminate against any employee with respect to his compensation,
terms, conditions, or privileges of employment because the employee
(or any person acting pursuant to a request of the employee)"
engaged in protected whistleblowing activity. That statute goes on
to define "employer" as "a person owning or operating a pipeline
-31-
facility,"
id. § 60129(a)(2)(A), or "a contractor or subcontractor
of such a person,"
id. § 60129(a)(2)(B).
The whistleblower protection provisions of both the
Energy Reorganization Act and the Pipeline Safety Improvement Act
are explicit in defining which entities and which of those
entities' representatives are covered employers. We view the fact
that Congress was not similarly explicit in extending coverage to
the employees of contractors, subcontractors, and agents in
§ 1514A(a) as evidence that Congress did not intend such coverage
to exist.
6. Other canons of construction
Our reading of § 1514A is further confirmed by canons of
construction mandated by Supreme Court opinions regarding both
securities laws and the relationship between investment companies
and their advisers.
The Court has admonished the lower federal courts not to
give securities laws a scope greater than that allowed by their
text. See, e.g., Stoneridge Inv. Partners, LLC v. Scientific-
Atlanta, Inc.,
128 S. Ct. 761, 772 (2008) ("[T]he jurisdiction of
the federal courts is carefully guarded against expansion by
judicial interpretation." (quoting Am. Fire & Cas. Co. v. Finn,
341
U.S. 6, 17 (1951))); Pinter v. Dahl,
486 U.S. 622, 653 (1988)
("The ascertainment of congressional intent with respect to the
scope of liability created by a particular section of the
-32-
Securities Act must rest primarily on the language of that
section."). While many of these cases are in the context of the
implied private right of action under § 10(b) of the 1934 Act, the
rule that we are to "assume that Congress meant what it said" when
it enacts legislation applies throughout the Code, including SOX.
Pinter, 486 U.S. at 653.
Plaintiffs incorrectly argue that since the statute has
some remedial purposes, those purposes must be as broad as
plaintiffs say, and it must be assumed Congress chose the mechanism
of a broad private right of action rather than other mechanisms to
effectuate remedies. Plaintiffs essentially argue that the actual
text must give way in favor of a broader reading to effectuate
those broad remedial purposes. That is not the law. While the
Court has stated that "securities laws combating fraud should be
construed 'not technically and restrictively, but flexibly to
effectuate [their] remedial purposes,'" Herman & MacLean v.
Huddleston,
459 U.S. 375, 386-87 (1983) (quoting SEC v. Capital
Gains Research Bureau, Inc.,
375 U.S. 180, 195 (1963)), it has also
admonished that "[t]he broad remedial goals of [a securities law]
are insufficient justification for interpreting a specific
provision 'more broadly than its language and the statutory scheme
reasonably permit.'"
Pinter, 486 U.S. at 653 (quoting Touche Ross
& Co. v. Redington,
442 U.S. 560, 578 (1979)). Here, plaintiffs'
reading is broader than the statutory scheme permits. Further, as
-33-
discussed later, plaintiffs' interpretation goes far beyond the
problems Congress wished to remedy.
In Janus Capital Group, Inc. v. First Derivative Traders,
131 S. Ct. 2296 (2011), the Court held that the fact that an
investment adviser to a mutual fund exercised significant influence
over its client fund and prepared SEC prospectuses on behalf of the
fund did not make the adviser subject to liability under SEC Rule
10b-5 for statements made in those prospectuses, despite the
adviser's "uniquely close" relationship with the fund. The Court
stated that the mutual fund (an investment company under the
Investment Company Act of 1940) and the adviser (an investment
adviser under the Investment Adviser Act of 1940) were "legally
separate entities" and that "[a]ny reapportionment of liability in
the securities industry in light of the close relationship between
investment advisers and mutual funds is properly the responsibility
of Congress and not the courts."
Id. at 2304.
Although there is a close relationship between the
private investment adviser defendants and their client mutual
funds, as pointed out by the plaintiffs and the SEC as amicus
curiae, the two entities are separate because Congress wanted it
that way. Had Congress intended to ignore that separation and
cover the employees of private investment advisers for
whistleblower protections, it would have done so explicitly in
§ 1514A(a). However, it did not.
-34-
Finally, the rule of lenity has no place in our
interpretation of § 1514A(a), for several reasons. Application of
the rule of lenity is restricted to the interpretation of criminal
statutes. Bifulco v. United States,
447 U.S. 381, 387 (1980) (The
rule of lenity "applies . . . to interpretations of the substantive
ambit of criminal prohibitions [and] . . . to the penalties they
impose."). Section 1514A is not a criminal provision and imposes
no criminal penalties; instead it provides for compensatory civil
damages. 18 U.S.C. § 1514A(c). In addition to the inapplicability
of the rule of lenity vel non, it would not apply here in any event
because there is simply the lack of "grievous ambiguity" left after
considering the text, structure, history, and purpose needed to
invoke the rule. As the Supreme Court has recognized, "the rule of
lenity only applies if, after considering text, structure, history,
and purpose, there remains a grievous ambiguity or uncertainty in
the statute such that the Court must simply guess as to what
Congress intended."16 Barber v. Thomas,
130 S. Ct. 2499, 2508-09
(2010) (citation omitted) (quoting Muscarello v. United States, 524
16
Furthermore, interpretative principles applied to
immigration cases have no application here. Cf. INS v. St. Cyr,
533 U.S. 289, 320 (2001) (reciting "the longstanding principle of
construing any lingering ambiguities in deportation statutes in
favor of the alien" (quoting INS v. Cardoza-Fonseca,
480 U.S. 421,
449 (1987)) (internal quotation marks omitted)); INS v. Errico,
385 U.S. 214, 225 (1966) (stating that the Court resolved doubt in
the interpretation of an immigration statute in favor of the alien
"because deportation is a drastic measure and at times the
equivalent of banishment or exile" (quoting Fong Haw Tan v. Phelan,
333 U.S. 6, 10 (1948))).
-35-
U.S. 125, 139 (1998), and
Bifulco, 447 U.S. at 387) (internal
quotation marks omitted) (quoted in United States v. Gerhard,
615
F.3d 7, 22 (1st Cir. 2010)).
B. Legislative history
Turning from the statutory language and principles of
statutory interpretation which alone require us to reject
plaintiffs' interpretation, we also confirm our understanding of
the text by examining the legislative history. See Samantar v.
Yousuf,
130 S. Ct. 2278, 2287 & n.9 (2010) (using legislative
history to confirm the Court's sense of a statute's plain meaning);
Phillips v. Pembroke Real Estate, Inc.
459 F.3d 128, 143 n.12 (1st
Cir. 2006).
1. Contemporaneous legislative history
The contemporaneous legislative history consists of a May
6, 2002, Senate committee report for a bill containing what became
§ 1514A and statements in the Congressional Record by Senator
Leahy, a sponsor of that bill. We address each in turn.
The Corporate and Criminal Fraud Accountability Act of
2002, S. 2010, 107th Cong. (2002), was incorporated into SOX as
Title VIII and contained the provision that would become § 1514A.
The report of the Senate Judiciary Committee accompanying the
Corporate and Criminal Fraud Accountability Act makes clear that
Congress's primary concern was the Enron debacle, which involved
the stock of a highly visible publicly traded company. See S. Rep.
-36-
No. 107-146, at 2-5 (2002) (discussing Enron's collapse, its
aftermath, and the need for reform).
The same committee report states that what became § 1514A
"would provide whistleblower protection to employees of publicly
traded companies,"
id. at 13, and that eventual § 1514A was
intended to "provide whistleblower protection to employees of
publicly traded companies who report acts of fraud to federal
officials with the authority to remedy the wrongdoing or to
supervisors or appropriate individuals within their company,"
id.
at 18-19. These statements and others in the report accord with
our interpretation. Only employees of publicly traded companies
are mentioned; employees of private companies are not.
Senator Leahy stated that the provision that would
eventually be codified as § 1514A "would provide whistleblower
protection to employees of publicly traded companies who report
acts of fraud," 148 Cong. Rec. S1787 (daily ed. Mar. 12, 2002)
(pre-enactment statement), and that "[a]lthough current law
protects many government employees who act in the public interest
by reporting wrongdoing, there is no similar protection for
employees of publicly traded companies who blow the whistle on
fraud and protect investors,"
id. at S1788;17 see also 149 Cong.
17
In the same remarks, Senator Leahy stated more broadly that
"[o]ur laws need to encourage and protect those who report
fraudulent activity that damages investors in publicly traded
companies." 148 Cong. Rec. S1788 (daily ed. Mar. 12, 2002).
Plaintiffs contend that this statement supports a broad reading of
-37-
Rec. S1725 (daily ed. Jan. 29, 2003) (statement of Sen. Leahy)
(post-enactment) (§ 1514A "was intentionally written to sweep
broadly, protecting any employee of a publicly traded company who
took such reasonable action to try to protect investors and the
market").
Plaintiffs point to the committee report's background
discussion as supporting their position. The report decries
retaliation against whistleblowers at Enron, a publicly traded
company. See S. Rep. 107-146 at 4-5. But the report also
discusses retaliation against employees at Arthur Andersen, a
private entity which was both a consultant to Enron and its
"independent" auditor. See
id. at 3. The report states that "[i]n
a variety of instances . . . corporate employees at both Enron and
Andersen attempted to report or 'blow the whistle' on fraud, but
they were discouraged at nearly every turn."
Id. at 4-5. The
report also cites the fact that an "Andersen partner was apparently
removed from the Enron account when he expressed reservations about
the firm's financial practices in 2000" as an "example" of "a
culture, supported by law, that discourage[d] employees from
reporting fraudulent behavior."
Id. at 5.
the statute: if the point of § 1514A is to protect investors in
publicly traded companies, then it makes sense that the statute
would protect whistleblowers who report fraud at such companies,
even if a whistleblower is the employee of such a company's
contractor or agent. We disagree that Congress meant to cast so
broad a net.
-38-
Congress's concern about Arthur Andersen was addressed by
special provisions as to accountants. See SOX tit. I, 116 Stat. at
750-71 ("Public Company Accounting Oversight Board"); SOX tit. II,
116 Stat. at 771-75 ("Auditor Independence"). The committee's
concerns regarding the integrity and independence of accountants
and auditors are addressed in SOX by virtue of these provisions,
and not by an expansive definition of "employee" in § 1514A(a).
2. Post-enactment legislative activity
After SOX's enactment, there have been two relevant
attempts to amend the Act, one successful, the other not. As the
Court said in North Haven Board of Education v. Bell,
456 U.S. 512
(1982), "[a]lthough postenactment developments cannot be accorded
'the weight of contemporary legislative history, we would be remiss
if we ignored these authoritative expressions concerning the scope
and purpose of'" previous enactments.
Id. at 535 (quoting Cannon
v. Univ. of Chi.,
441 U.S. 677, 686 n.7 (1979)); see also Goncalves
v. Reno,
144 F.3d 110, 133 (1st Cir. 1998) ("[S]ubsequent
legislative developments, although never determinative in
themselves, can be 'significant' clues to congressional intent."
(quoting INS v. Cardoza-Fonseca,
480 U.S. 421, 430 (1987))).
We turn to the failed effort to expand the term
"employee" in § 1514A(a).18 In 2004, Senator Fitzgerald introduced
18
We acknowledge that "failed legislative proposals are 'a
particularly dangerous ground on which to rest an interpretation of
a prior statute.'" United States v. Craft,
535 U.S. 274, 287
-39-
in the Senate a bill entitled the Mutual Fund Reform Act of 2004
(MFRA). S. 2059, 108th Cong. (2004). Section 116(b) of MFRA would
have amended § 1514A(a) to explicitly cover employees of investment
advisers to mutual funds. As amended by MFRA, § 1514A(a) would
have read:
Whistleblower Protection for Employees of
Publicly Traded Companies and Registered
Investment Companies -- No company with a
class of securities registered under section
12 of the Securities Exchange Act of 1934 (15
U.S.C. 78l), 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
that is an investment adviser, principal
underwriter, or significant service provider
(as such terms are defined under section 2(a)
of the Investment Company Act of 1940 (15
U.S.C. 80a-2(a)) of an investment company
which is registered under section 8 of the
Investment Company Act of 1940, 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–
(2002) (quoting Pension Benefit Guar. Corp. v. LTV Corp.,
496 U.S.
633, 650 (1990)). However, the Court has used failed attempts to
amend statutory language as aids to understanding Congress's
intent. See, e.g., FDA v. Brown & Williamson Tobacco Corp.,
529
U.S. 120, 144 (2000) ("Congress considered and rejected bills that
would have granted the FDA" jurisdiction to regulate tobacco.); N.
Haven Bd. of Educ. v. Bell,
456 U.S. 512, 534 (1982) ("Congress has
refused to pass bills that would have amended § 901 to limit its
coverage of employment discrimination.").
-40-
S. 2059, 108th Cong. § 116(b) (emphasis added). MFRA was referred
to the Senate Committee on Banking, Housing, and Urban Affairs, but
it was never reported out of that committee.19
Defendants argue that MFRA is evidence that Congress did
not believe § 1514A(a) covered employees of private contractors to
public companies; if it did, then MFRA's amendment would have been
superfluous. We are more cautious, because there is no statement
in MFRA's legislative history regarding its sponsors' understanding
of section 116(b) or of § 1514A(a).20 Cf. Seatrain Shipbuilding
Corp. v. Shell Oil Co.,
444 U.S. 572, 596 (1980) (considering
legislative history discussing why Congress chose to amend a
certain provision in one way but not another, and stating "while
the views of subsequent Congresses cannot override the unmistakable
intent of the enacting one, such views are entitled to significant
weight" (citations omitted)). The Supreme Court has stated that
"[c]ongressional inaction lacks persuasive significance because
several equally tenable inferences may be drawn from such inaction,
19
MFRA was also introduced in the House in 2004 as H.R. 4505
and referred to the Subcommittee on Capital Markets, Insurance and
Government Sponsored Enterprises. It was never reported out of
that subcommittee.
20
The only statements regarding MFRA's whistleblower
protection amendment in the Congressional Record are general. See,
e.g., 150 Cong. Rec. S794 (daily ed. Feb. 10, 2004) (statement of
Sen. Fitzgerald) ("[MFRA] puts the interests of investors first by:
. . . instituting Sarbanes-Oxley-style provisions for independent
accounting and auditing, codes of ethics, chief compliance
officers, compliance certifications, and whistleblower
protections.").
-41-
including the inference that the existing legislation already
incorporated the offered change."
Craft, 535 U.S. at 287
(alteration in original) (quoting Cent. Bank of Denver,
N.A., 511
U.S. at 187) (internal quotation marks omitted). At most, this is
a clue, but far from conclusive.
Later, Congress did amend § 1514A(a). In 2010 the Dodd-
Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank)
amended § 1514A by explicitly extending whistleblower coverage to
employees of public companies' subsidiaries and employees of
statistical rating organizations. Section 1514A(a) as amended by
Dodd-Frank reads:
No company with a class of securities
registered under section 12 of the Securities
Exchange Act of 1934 (15 U.S.C. 78l), or that
is required to file reports under section
15(d) of the Securities Exchange Act of 1934
(15 U.S.C. 78o(d)) including any subsidiary or
affiliate whose financial information is
included in the consolidated financial
statements of such company, or nationally
recognized statistical rating organization (as
defined in section 3(a) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c), or any
officer, employee, contractor, subcontractor,
or agent of such company or nationally
recognized statistical rating organization,
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–
18 U.S.C. § 1514A(a), as amended by Pub. L. No. 111-203 §§ 922(b),
929A, 124 Stat. 1376, 1848, 1852 (2010) (emphasis added).
-42-
The report of the Senate Committee on Banking, Housing,
and Urban Affairs accompanying Dodd-Frank explains that section
929A of that Act amended § 1514A(a) "to make clear that
subsidiaries and affiliates of issuers may not retaliate against
whistleblowers." S. Rep. No. 111-176, at 114 (2010). The
committee believed such a clarification was necessary because
"[t]he language of [§ 1514A(a)] may be read as providing a remedy
only for retaliation by the issuer, and not by subsidiaries of an
issuer." Id.21
Furthermore, Senator Cardin, in remarks introducing an
amendment to Dodd-Frank that became section 922(b) of that Act,
explained that "Section 1514[A] delineates which companies are
covered by [SOX] and what actions are prohibited. The
Cardin-Grassley amendment expands the provision to include
employees of the rating companies." 156 Cong. Rec. S3349 (daily
ed. May 6, 2010). In the course of these remarks, Senator Cardin
characterized § 1514A(a) as enacted by SOX as
extend[ing] whistleblower protections to
employees of any company that is registered
under the SEC Act of 1934 or that is required
to file reports under section 15(d) of the
21
As described later, the fact that DOL had issued what were
non-substantive procedural regulations says nothing about
congressional intent in SOX, enacted years earlier. That fact also
is irrelevant to the Dodd-Frank amendments because Congress said
its concern was to clarify § 1514A(a), and it said nothing about a
regulation from DOL, much less one that did not and could not
purport to provide a substantive interpretation of the SOX language
at issue.
-43-
same act. The whistleblower provisions of the
Sarbanes-Oxley Act protect employees of the
publicly traded companies from retaliation by
giving victims of such treatment a cause of
action which can be brought in Federal court.
Id. Notably, Senator Cardin's statement again confirms that the
covered employees are only those of publicly traded companies.
Dodd-Frank's successful amendments of § 1514A(a) are not
subject to the rule of judicial wariness about legislative
inaction. Rather, these later actions by Congress are entitled to
some weight as an expression of Congress's understanding of
§ 1514A(a)'s meaning, which is consistent with our interpretation.
III.
No Deference Owed to Agency Positions
Congress chose not to give authority to the SEC or the
DOL to interpret the term "employee" in § 1514A(a). So there is no
basis for Chevron deference. See Chevron, U.S.A., Inc. v. Natural
Res. Def. Council, Inc.,
467 U.S. 837, 843 (1984). Because the
term "employee" in § 1514A(a) is not ambiguous, we would not defer
to an administrative agency's contrary determination, even had
Congress delegated authority to the agency. See Nat'l Ass'n of
Home Builders v. Defenders of Wildlife,
127 S. Ct. 2518, 2534
(2007) ("[D]eference is appropriate only where 'Congress has not
directly addressed the precise question at issue' through the
statutory text." (quoting
Chevron, 467 U.S. at 843); Saysana v.
Gillen,
590 F.3d 7, 16 (1st Cir. 2009) (because statutory language
-44-
before the court "is unambiguous, there is nothing for the agency
to interpret -- no gap for it to fill -- and there is no
justification for resorting to agency interpretation to address an
ambiguity"); Succar v. Ashcroft,
394 F.3d 8, 22-24 (1st Cir. 2005)
(declining to defer to agency's interpretation of statute where
statute's text is clear).
Here, independently, no deference is owed for the other
reasons we discuss. The DOL, supported by the SEC, makes a
threefold argument in favor of plaintiffs' interpretation. First,
as to the particular OSHA regulations regarding coverage under
§ 1514A(a), the Secretary of Labor admits these regulations are
entitled to no deference, and the defendants agree, for the reasons
we state below.22 OSHA has promulgated regulations regarding
§ 1514A in its capacity as the body with delegated authority to
22
We accepted in dicta in Day v. Staples, Inc.,
555 F.3d 42,
54 & n.7 (1st Cir. 2009), that certain DOL regulations concerned
with a two-part test for what constituted "reasonable belief" under
SOX were entitled to Chevron deference. That test was also
contained in the relevant case law. Day did not concern the issue
here, nor the regulation relied on here. That statement in Day was
not necessary to the holding in that case but was rather dicta, nor
was the holding in the case concerned with the precise regulations
at issue here. Day is easily distinguishable, and that dicta in
Day is not binding on this panel. Kosereis v. Rhode Island,
331
F.3d 207, 213 (1st Cir. 2003).
Beyond that, the Secretary of Labor has disclaimed Chevron
deference for the regulations at issue. In addition, the notice of
final rulemaking promulgating them states that the procedural
regulations are "not intended to provide statutory
interpretations." 69 Fed. Reg. 52104, 52105 (Aug. 24, 2004).
-45-
enforce its provisions.23 These regulations purport to "implement[]
procedures under section 806" of SOX, 29 C.F.R. § 1980.100(a)
(2009), and they construe § 1514A(a)'s coverage provisions in
plaintiffs' favor, see
id. § 1980.101-.102.24
These regulations,
id., are not entitled to Chevron
deference, as the Secretary admits. See
Chevron, 467 U.S. at 842-
43. In addition, in promulgating the rules, the DOL made it clear
the rules were not interpretations of the Act. In the notice of
23
Section 1514A delegates to the Secretary of Labor the
authority to enforce the statute through formal adjudication. See
18 U.S.C. § 1514A(b)(1) ("A person who alleges discharge or other
discrimination by any person in violation of subsection (a) may
seek relief under subsection (c) by . . . filing a complaint with
the Secretary of Labor . . . ."). The Secretary delegated
enforcement responsibility for § 1514A to the Assistant Secretary
of Occupational Health and Safety, see 67 Fed. Reg. at 65,008, and
review of decisions by ALJs to the DOL's ARB, see 67 Fed. Reg. at
64,272-73.
24
The regulations in effect at the pertinent times in this
case state that
"[n]o company or company representative may
discharge, demote, suspend, threaten, harass
or in any other manner discriminate against
any employee with respect to the employee's
compensation, terms, conditions, or privileges
of employment because the employee, or any
person acting pursuant to the employee's
request, has engaged in any of the activities
specified in paragraphs (b)(1) and (2) of this
section."
29 C.F.R. § 1980.102(a) (2009). The regulations define "company
representative" to mean "any officer, employee, contractor,
subcontractor, or agent of a company,"
id. § 1980.101, and
"employee" to mean "an individual presently or formerly working for
a company or company representative, an individual applying to work
for a company or company representative, or an individual whose
employment could be affected by a company or company
representative,"
id.
-46-
final rulemaking promulgating these regulations, OSHA repeatedly
states that "[t]hese rules are procedural in nature and are not
intended to provide interpretations of the Act." 69 Fed. Reg.
52,104, 52,105 (Aug. 24, 2004). In this case, the DOL has
explicitly stated that "[t]he Department of Labor does not have
substantive rulemaking authority with respect to section 1514A" and
thus the Secretary of Labor does not seek Chevron deference "for
her procedural regulations."
We also conclude that these particular OSHA regulations
are not entitled to Skidmore deference for several reasons,
including that the text of the statute does not permit even that
level of deference. See Skidmore v. Swift & Co.,
323 U.S. 134, 140
(1944). Congress has made the choice and not given the agency a
role. Further, "the Skidmore standard entails . . . a
sliding-scale approach under which the degree of deference accorded
to an agency interpretation hinges on a variety of factors, such as
'the thoroughness evident in [the agency's] consideration, the
validity of its reasoning, [and the] consistency [of its
interpretation] with earlier and later pronouncements.'" Doe v.
Leavitt,
552 F.3d 75, 81 (1st Cir. 2009) (alterations in original)
(quoting
Skidmore, 323 U.S. at 140). Moreover, as the Supreme
Court has stated, an agency's statutory "interpretation is
'entitled to respect' only to the extent it has the 'power to
persuade.'" Gonzales v. Oregon,
546 U.S. 243, 256 (2006) (quoting
-47-
Skidmore, 323 U.S. at 140). The notice of final rulemaking here
contains no reasoning to support OSHA's construction of the
coverage provisions of § 1514A(a), saying only that "OSHA believes
that [its regulations] accurately reflect the statutory language."
69 Fed. Reg. at 52,105-06. OSHA's reading, which it states is not
a statutory interpretation, lacks the "power to persuade." We also
note that the DOL's amicus brief does not argue that these
particular OSHA regulations should be accorded Skidmore deference,
nor does the SEC.
Second, if there were an on-point holding of the ARB, it
might be entitled to some deference as to any ambiguity in the
statute. The point is irrelevant for two reasons. First, we find
no ambiguity, so no deference is owed. Cf. Welch v. Chao,
536 F.3d
269, 276 n.2 (4th Cir. 2008) (according deference to a decision of
the ARB interpreting § 1514A because the statute expressly
delegated to the Secretary of Labor authority to enforce the
statute by formal adjudication and the Secretary delegated that
power to the ARB). Second, there is in any event no ARB decision
on point,25 and the ALJ in the Zang case, at the level below the
25
In Johnson v. Siemens Building Technologies, Inc., the
complainant brought a claim of retaliation under § 1514A against
her employer, a subsidiary of a publicly traded company. The ARB
disposed of the case by holding that § 1514A(a) as enacted by SOX
covered employees of subsidiaries of public companies. In dicta to
which no deference could be owed, the ARB stated that SOX's
"legislative history demonstrates that Congress intended to enact
robust whistleblower protections for more than employees of
publicly traded companies."
2011 WL 1247202, at *12.
-48-
ARB, reached a conclusion consistent with ours. See Zang,
2008 WL
7835900.
We have considered the arguments in the amicus briefs of
the DOL and SEC, but we owe no deference to the positions stated
there. The SEC has no rulemaking or enforcement authority as to
§ 1514A, so its interpretation of that provision, in any form,
would be owed no deference in any event. See Hoffman Plastic
Compounds, Inc. v. NLRB,
535 U.S. 137, 143-44 (2002); FLRA v. U.S.
Dep't of the Navy,
941 F.2d 49, 55 (1st Cir. 1991). The arguments
advanced by the DOL, which does have authority to enforce § 1514A,
see 18 U.S.C. §§ 1514A(b)(1), 1514A(b)(2)(A); 49 U.S.C. § 42121(b),
mirror the textual arguments of the plaintiffs and are not based on
the DOL's "specialized experience."
Skidmore, 323 U.S. at 139. In
addition, we view the text of § 1514A(a) as clear.
IV.
Conclusion
If we are wrong and Congress intended the term "employee"
in § 1514A(a) to have a broader meaning than the one we have
arrived at, it can amend the statute. We are bound by what
Congress has written.
Reversed and remanded with instructions to dismiss the
actions. No costs are awarded.
-- Dissenting Opinion Follows –-
-49-
THOMPSON, Circuit Judge, dissenting. Because my
colleagues impose an unwarranted restriction on the intentionally
broad language of the Sarbanes-Oxley Act, employ a method of
statutory construction diametrically opposed to the analysis this
same panel employed just weeks ago, take pains to avoid paying any
heed to considered agency views to which circuit precedent compels
deference, and as a result bar a significant class of potential
securities-fraud whistleblowers from any legal protection, I
dissent.
Accepting the allegations in the complaint as true,
plaintiffs Lawson and Zang are ex-employees of private companies
that contract to advise or manage the publicly held Fidelity-brand
mutual funds. The mutual funds themselves have no employees. Both
plaintiffs blew the whistle on putative fraud by the mutual funds,
and both were fired (actually or constructively) by their
employers.
The Sarbanes-Oxley Act purports to protect securities-
fraud whistleblowers. Specifically, § 806 of the Act provides that
"[n]o company with a class of securities registered under section
12 of the Securities Exchange Act of 1934 (15 U.S.C. § 78l), 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
-50-
any other manner discriminate against an employee in the terms and
conditions of employment because of any lawful act done by the
employee" to report activity the employee reasonably suspects to be
securities fraud. 18 U.S.C. § 1514A(a) (prior to amendment by the
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010).
For present purposes, it is undisputed that the Fidelity
mutual funds fall under § 806, that the plaintiffs' employers
contracted with the Fidelity mutual funds, and that the plaintiffs'
employers discharged the plaintiffs — their employees. In other
words, in each case a "contractor . . . of such company . . .
discharge[d] . . . an employee."
Id. One might think our inquiry
would end here: Sarbanes-Oxley's whistleblower-protection provision
by its terms applies. According to the majority, however, one
would be incorrect.
The majority engage in a faulty statutory-interpretation
exercise, one whose wrongness is perhaps best highlighted through
contrast with our recent decision in United States v. Ozuna-
Cabrera,
663 F.3d 496 (1st Cir. 2011). In Ozuna-Cabrera, we held
that application of the "Aggravated Identity Theft" statute is not
restricted to situations involving traditional theft.
Id. at 501.
This is how our analysis went:
First, we looked to the plain language of the statute and
noted that it contained no restriction limiting the statute's
application to situations involving theft.
Id. at 498-99.
-51-
Instead, the statute contained only the broad phrase "without
lawful authority."
Id. Second, we looked to the statutory
framework, noting that the phrase "without lawful authority" was
used in the statutes criminalizing both identity fraud and
aggravated identity theft.
Id. at 499. Because identical language
appeared in both, related statutes, only one of which referenced
theft at all (albeit in the title), we deemed it unlikely that
Congress intended the phrase to import the elements of common-law
theft.
Id. Third, in a footnote, we looked to the statutory title
(which, again, referenced theft) and noted that "we do not rely on
the titles of statutory enactments in plumbing their meaning . . .
at the expense of the text itself."
Id. at 499 n.3 (internal
quotation marks removed). We also noted that it was by no means
clear that the word "theft" in the title was intended to limit the
effective language of the statute.
Id. (citing United States v.
Godin,
534 F.3d 51, 59 (1st Cir. 2008)). Fourth and finally, we
looked at legislative history and noted that implicitly restrictive
references to "theft" could not limit the scope of broad statutory
language.
Id. at 500. More specifically, nothing in the
legislative history explicitly suggested "that Congress intended to
so narrowly restrict the statute's reach."
Id. Instead, the
legislative history "demonstrate[d] that Congress intended [the
statute] to address a wide array of" conduct.
Id. Applying this
-52-
same analysis to the present case produces a very different result
than the one the majority reach.
First, looking to the plain language of the statute, one
can only conclude that there is no restriction limiting the
statute's application to employees of publicly held companies.26
As I have already pointed out, boiling the statute down to its
relevant syntactic elements, it provides that "no . . . contractor
. . . may discharge . . . an employee." 18 U.S.C. § 1514A(a). The
statute does not limit its coverage to "an employee of a publicly
held company" — it just refers broadly to "an employee."
In fact, the majority's interpretation offends a
longstanding rule of statutory interpretation, violating the
statutory language by rendering the word "contractor" in the
statute superfluous. See, e.g., United States v. Ven-Fuel, Inc.,
758 F.2d 741, 751-52 (1st Cir. 1985) (providing that "no
construction should be adopted which would render statutory words
or phrases meaningless, redundant or superfluous"). The majority
suggest that the word "contractor" might be intended only to refer
to so-called "ax-wielding specialists" that public companies bring
26
In addition to our own recent decision in Ozuna-Cabrera,
a days-old Supreme Court decision has just reaffirmed the
impropriety of imposing extra-textual limitations on statutes:
where "[t]here is no indication in the text . . . that the
[statute] excludes [particular] workers from . . . coverage," the
reasonable conclusion is "that Congress did not limit the scope of
[the statute]'s coverage." Pac. Operators Offshore, LLP v.
Valladolid, No. 10-507,
2012 WL 75045, at *8 (U.S. Jan. 11, 2012).
-53-
in to lay off employees. Maj. Op. 17 n.11; see also Fleszar v.
U.S. Dept. of Labor,
598 F.3d 912, 915 (7th Cir. 2010) (employing
the term "ax-wielding specialist" and providing the example of "the
character George Clooney played in 'Up in the Air'"). If that is
indeed the case, it is a mystery why Congress did not say so
specifically. But more importantly for present purposes, when ax-
wielding specialists actually fire public-company employees they
are acting as agents (rather than mere contractors) of the public
company. And § 806 specifically lists agents as covered entities,
just like contractors. The word "contractor," therefore, must be
doing something else. In the end, then, not only do the majority
impose extratextual limitations on § 806, but they also effectively
evict the word "contractor" from the statute.27 This is simply
wrong. See
Ven-Fuel, 758 F.2d at 751-52.
Second, looking to the statutory framework, one sees that
Congress explicitly enacted narrower whistleblower protection
elsewhere in Sarbanes-Oxley, that Congress was explicit where it
intended to regulate public entities only, and that Congress's
choices about different mechanisms for different entities support
the plaintiffs' reading of the Act. Cf. Maj. Op. 21-22 (noting
that Congress explicitly "enact[ed] broader whistleblower
27
The majority state correctly that their interpretation does
not render superfluous the phrase "officer, employee, contractor,
subcontractor, or agent of such company" — but that is not my
point. Maj. Op. 16. My point, which remains unrebutted, is that
their interpretation renders superfluous the word "contractor."
-54-
protection elsewhere . . . was explicit . . . where it intended to
regulate non-public entities . . . [and] made choices about
different regulatory mechanisms for different entities").
An example of Congress's enactment of narrower
whistleblower protection appears in Sarbanes-Oxley § 501, which
bars "a broker or dealer and persons employed by a broker or
dealer" from retaliating against "any securities analyst employed
by that broker or dealer or its affiliates." 15 U.S.C. § 78o-
6(a)(1)(C). Congress could have similarly narrowed the definition
of "employee" in § 806, but it chose not to do so. We should honor
that choice.28 Limone v. United States,
579 F.3d 79, 105 (1st Cir.
2009); see also Pac. Operators,
2012 WL 75045, at *6 ("Congress'
decision to specify, in scrupulous detail, exactly where the other
subsections of § 1333 apply, but to include no similar restriction
. . . in § 1333(b), convinces us that Congress did not intend" to
so limit § 1333(b).).
An example of Congress's specific reference to publicly
held companies appears in § 806 itself. Section 806 specifically
invokes companies "with a class of securities registered under
28
Moreover, the majority's contrary example of broader
whistleblower protection elsewhere in Sarbanes-Oxley is wrong. Not
only is the referenced provision (§ 1107, enacted at 18 U.S.C.
§ 1513) actually narrower than § 806 in some respects — for
example, it covers whistleblowing only to police, not to work
supervisors — but it also does nothing to protect whistleblowers.
In essence, it is nothing more than a criminal obstruction-of-
justice statute targeted at wrongdoers, not a whistleblower-
protection statute targeted at the wronged.
-55-
section 12 of the Securities Exchange Act of 1934 (15 U.S.C.
§ 78l)" or "required to file reports under section 15(d) of the
Securities Exchange Act of 1934 (15 U.S.C. § 78o(d))." The section
goes on to list a number of other covered entities, including
contractors. It also uses the modifier "of such companies" at one
point to refer to, e.g., contractors, but notably not to refer to
employees. In fact, the section does not limit the word
"employees" in any way. Again, we should honor Congress's choice
to employ broad language.
Limone, 579 F.3d at 105.
And the majority's own examples of Congress's electing to
apply different mechanisms to different entities highlight the
correctness of a broad reading of § 806. The majority note that
"[e]lsewhere in SOX, Congress did specifically address investment
companies and investment advisers." Maj. Op. 27. The first
example they look to is a provision that exempts investment
entities (including mutual funds and mutual fund advisers) from
certain, specific requirements of the Act. See 15 U.S.C. § 7263.
No such exemption appears in § 806, and the absence of an exemption
surely suggests that Congress intended to protect the employees of
mutual fund advisers.29 The majority's second example — 15 U.S.C.
§ 80b-3 — deals with the "Registration of investment advisers" and
says nothing of whistleblowers. Maj. Op. 27. The existence of a
29
Indeed, as the majority note, Congress "made it explicit
when it intended coverage and when it did not." Maj. Op. 27
(emphasis added).
-56-
section tailored to investment advisers hardly exempts such
entities from Sarbanes-Oxley's broader provisions — like § 806.
After all, Congress knew how to exempt investment entities when it
wanted to do so. See 15 U.S.C. § 7263.
Third, the statute's title and caption do not compel a
limited reading of its language; instead, the majority's strained
reading comes "at the expense of the text itself."
Ozuna-Cabrera,
663 F.3d at 499 n.3. I have already explained how nothing in
either the text or the context of § 806 actually supports the
limitation conjured by the majority. A few words in a title are
not sufficient to change that rock-solid fact. That insufficiency
is especially glaring where, as here, the title does not purport to
apply any explicit limitations (e.g., "whistleblower protection for
employees of pubic companies only") but merely describes a specific
and common application of a more generally applicable statute.30
Cf.
Ozuna-Cabrera, 663 F.3d at 500 ("aggravated identity theft" may
commonly apply to "criminals who actually steal other people's
identities," but this is only one application of a broad statute).
Under Ozuna-Cabrera and other circuit precedent, see, e.g., Mass.
Ass'n of Health Maint. Orgs. v. Ruthardt,
194 F.3d 176, 180 (1st
Cir. 1999), the title gets the majority nowhere.
30
I repeat: the title contains no "explicit guides to the
limits" on § 806. Maj. Op. 18.
-57-
Fourth, nothing in the legislative history of Sarbanes-
Oxley indicates congressional intent to limit whistleblower
protection to employees of public companies. Instead, the
legislative history all refers positively to extending
whistleblower protection in order to encourage the reporting of
securities fraud.
According to Sarbanes-Oxley's Senate conference report
(Section I, titled "PURPOSE") a key purpose of the chapter that
includes § 806 is "to protect whistleblowers who report fraud
against retaliation by their employers." S. Rep. No. 107-146, at
*1 (2002). There is no mention of any limitation on which
employers are covered. The breadth of this specific purpose
comports with the Act's overall purpose: "to prevent and punish
corporate and criminal fraud, protect the victims of such fraud,
preserve evidence of such fraud, and hold wrongdoers accountable
for their actions."
Id. Indeed, this very court has endorsed a
broad understanding of the Act's purpose, noting that "[t]he
§ 1514A whistleblower provision thus serves to 'encourage and
protect [employees] who report fraudulent activity that can damage
innocent investors in publicly traded companies'" and that "[i]t
also aimed 'to provide federal protection to private corporate
whistleblowers.'" Day v. Staples, Inc.,
555 F.3d 42, 52 (1st Cir.
2009) (alteration in original) (quoting S. Rep. No. 107-146, at *17
(2002), and Carnero v. Bos. Scientific Corp.,
433 F.3d 1, 11 (1st
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Cir. 2006)). Again, extending whistleblower protection to
employees of contractors fits both with the specific
whistleblower-protection purpose of Sarbanes-Oxley and with its
broader anti-fraud purpose.
Moreover, none of the legislative history the majority
rely on actually evidences any congressional intent to limit the
scope of § 806's whistleblower protection. All of the statements
the majority highlight denote intent to protect employees of
publicly traded companies. See Maj. Op. 37-38. Such protection is
a wholly uncontroversial and undisputed effect of § 806.31 The
question is whether protection is limited to employees of public
entities only. And none of the majority's sources — indeed, no
source at all — expresses any intent to restrict § 806 so
narrowly.32 Cf.
Ozuna-Cabrera, 663 F.3d at 500 ("Without question,
31
Also uncontroversial and undisputed is the majority's
discussion in its "Legislative History" section of Congress's
addressing "concern about Arthur Andersen" with "special provisions
as to accountants." Maj. Op. 39. In addition to being
uncontroversial and undisputed, however, Sarbanes-Oxley's special
provisions as to accountants are irrelevant here.
32
The majority's reference to Senator Cardin's statement is
a textbook example of their imputing an intent to limit where none
is evident. Specifically, Senator Cardin's statement says that
"[t]he whistleblower provisions of the Sarbanes-Oxley Act protect
employees of the publicly traded companies," 156 Cong. Rec. S3349
(daily ed. May 6, 2010); the majority say this statement "confirms
that the covered employees are only those of publicly traded
companies." Maj. Op. 44 (emphasis added). As I point out above,
the word "only" would indeed indicate limiting intent — if it
appeared in Senator Cardin's statement (or, for that matter, in
absolutely any relevant legislative materials whatsoever). But it
does not, so neither does any limiting intent.
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Congress harbored concerns over criminals who actually steal other
people's identities. There is nothing to suggest, however, that
Congress intended to so narrowly restrict the statute's reach.").
It is strange that the same circumstance — lack of congressional
intent to limit broad statutory language — could cut so differently
in two different cases.
And the majority's reliance on subsequent legislative
history is entirely misplaced. Not only does their reading of the
whistleblower provision's subsequent amendment defy their own
faulty logic, but they also ignore the administrative backdrop
against which Sarbanes-Oxley was amended by Dodd-Frank.
On the first point, the majority's read of Dodd-Frank
defeats their overall conclusion as a matter of simple grammar. On
the one hand, they say that the phrase (from 18 U.S.C. § 1514A) "No
[public company], or any . . . contractor . . . of such company,
may discharge . . . an employee" does not extend protection to
employees of contractors. On the other hand, they say that the
phrase (from the same section, post-Dodd-Frank) "No [public
company] . . . or nationally recognized statistical rating
organization . . . may discharge . . . an employee" does apply to
employees of ratings companies. Maj. Op. 42 (noting that Dodd-
Frank "explicitly extend[ed] whistleblower coverage to . . .
employees of statistical rating organizations"). In these phrases,
"contractor" and "rating organization" are syntactic equivalents
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and should therefore be given equal effect. The statute plainly
protects both employees of contractors and employees of rating
companies.
As to the majority's ignoring the administrative
backdrop, let us start with the well-settled proposition that the
courts, when construing a statute, assume that at the time of the
statute's enactment, Congress was aware of courts' and agencies'
interpretations of existing law. Lorillard v. Pons,
434 U.S. 575,
580 (1978) ("Congress is presumed to be aware of an administrative
or judicial interpretation of a statute and to adopt that
interpretation when it re-enacts a statute without change."). At
the time of Dodd-Frank, the Department of Labor (which is
statutorily tasked with administratively adjudicating § 806
whistleblower claims, see 18 U.S.C. § 1514A(b)(1)) had issued
notice-and-comment regulations explicitly providing that § 806
applied to employees of contractors of public companies. 29 C.F.R.
§ 1980.101 (2009) (defining "employee" as "an individual presently
or formerly working for a company or company representative" and
"company representative" as, e.g., "any . . . contractor . . . of
a company"). In enacting Dodd-Frank in 2010, then, Congress had a
miles-wide opening to nip Labor's regulation in the bud if it had
wished to do so. It did not. To the (very limited) extent
subsequent legislative history tells us anything here, it tells us
that the majority are incorrect.
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So if circuit precedent has any kind of methodological
value then the majority go about things exactly backwards in this
case. To reiterate: contrary to this panel's analysis in Ozuna-
Cabrera, the majority ignore the text of § 806, take a myopic view
of the section's context, wrongly inflate the section's title into
operative law, and attribute a limiting intent to legislative
history that in reality supports a broad reading of the statute.
Again, the majority are wrong.33
To the extent the majority rely on analogous statutes,
they get that wrong, too. There is indeed evidence that Sarbanes-
Oxley was based in part on the Wendell H. Ford Aviation Investment
and Reform Act for the 21st Century ("AIR"). See S. Rep. 107-146,
at *26 (2002). The relevant provision of AIR is entitled
"Discrimination against airline employees," and reads, "[n]o air
carrier or contractor or subcontractor of an air carrier may
33
The majority's result seems to be driven by § 806's "very
broad coverage." Maj. Op. 17. But very broad coverage was the
precise goal of § 806. See Maj. Op. 37 n.17 (considering
legislative history supporting broad whistleblower coverage, then
rejecting that history by ipse dixit). The majority also refer
obliquely to "anomalies" that would occur if we were to give § 806
the broad scope Congress intended; however, they never identify
what those "anomalies" are. Maj. Op. 17. I, for one, can discern
no "anomalies" in a determination that § 806 protects
whistleblowers against retaliation by their employers. If the
majority consider anomalous the unlikely scenario where an employee
of, say, office superstore Staples manages to spot and report
securities fraud in the course of, say, printing and binding a
public company's financial reports, I see no reason why that
employee should not be a protected whistleblower as a matter of
either law or policy.
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discharge an employee or otherwise discriminate against an
employee." 49 U.S.C. § 42121(a). This structure perfectly
parallels § 806's: "[n]o company . . . or any . . . contractor [or]
subcontractor . . . of such company, may discharge . . . or in any
other manner discriminate against an employee." Just as in § 806,
AIR does not specify whether it protects employees of carriers only
or whether it protects employees of contractors and subcontractors
as well. The majority conclude that AIR protects employees of
carriers, contractors, and subcontractors, but that § 806 protects
only employees of public companies, primarily because — in the
majority's view, notwithstanding the broad language passed by the
legislative branch and the considered interpretation of the
executive branch — § 806 would be excessively broad.34 Maj. Op. 28-
29. This is judicial overreaching of the highest order.35
34
AIR, according to the majority, is not excessively broad
because it includes a subsection that narrowly defines
"contractor." But the majority's reliance on AIR's narrower
provision as the example proving that § 806's apparently broader
provision is actually narrower than AIR's is a logical Escher
stairway — it's just as nonsensical as it sounds. That AIR has a
limiting definition means AIR is narrow. That § 806 has no
limiting definition means § 806 is broad. Logic and grammar
preclude any contrary conclusion. And the same reasoning
demonstrates that the majority cannot properly rely on analogous
whistleblower statutes that include limiting definitions. See Maj.
Op. 31-32 (discussing the Energy Reorganization Act, 42 U.S.C.
§ 5851(a)(1), and the Pipeline Safety Improvement Act, 49 U.S.C.
§ 60129(a)).
35
Indeed, during this appeal's pendency, the Supreme Court
has again reaffirmed the impropriety of judges' limiting the scope
of a statute's coverage for policy reasons: "'[I]f Congress'
coverage decisions are mistaken as a matter of policy, it is for
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Other basic principles of statutory interpretation
support a broad reading of § 806 and undermine the majority's
reasoning. These principles are: (1) that we broadly interpret
remedial statutes; (2) that we narrowly interpret criminal and
immigration statutes; and (3) that we presume a statute will not
create a right of action by implication. The relevance of these
principles here is not immediately apparent, so I will explain.
First, courts generally adhere to the principle that
"[r]emedial statutes are liberally construed to suppress the evil
and advance the remedy." 3 Norman J. Singer & J.D. Shambie Singer,
Sutherland Statutory Construction § 60:1 (7th ed. 2010); accord
Dudley v. Hannaford Bros. Co.,
333 F.3d 299, 307 (1st Cir. 2003)
(citing Tcherepnin v. Knight,
389 U.S. 332, 336 (1967)). It should
be achingly clear at this point that § 806 is remedial in nature;
specifically, it aims to remedy the evil of companies' firing
employees for reporting putative securities fraud. Where the
statutory language supports a broad reading that comports with that
remedial purpose, precedent calls for courts to implement that
broad reading. See
Dudley, 333 F.3d at 307. The majority
inexplicably fail to heed this call.
Second, at the opposite end of the interpretative
spectrum is the so-called rule of lenity, an "ancient rule of
Congress to change them. We should not legislate for them.'" Pac.
Operators,
2012 WL 75045, at *9 (quoting Herb's Welding, Inc. v.
Gray,
470 U.S. 414, 427 (1985)).
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statutory construction that penal statutes should be strictly
construed against the government . . . and in favor of the persons
on whom penalties are sought to be imposed." 3 Singer, Sutherland
Statutory Construction § 59:3. In Ozuna-Cabrera, a criminal case,
we held that this principle had no place because the text did not
support the defendant's proposed limitations.
See 663 F.3d at 498-
99. Now, in a context where we are supposed to default to breadth
and reject narrowness, the majority nevertheless impose analogous
extratextual limitations. This is precisely backwards.
In fact, in rejecting a broad reading of § 806 and
imposing a narrow one, the majority rely in significant part on
cases where (unlike here) narrow interpretations were absolutely
appropriate under the rule of lenity. For example, in I.N.S. v.
Nat'l Ctr. for Immigrants' Rights, Inc. (NCIR),
502 U.S. 183
(1991), the Supreme Court narrowed the scope of the word
"employment" as used in a statute imposing restrictive bond
conditions on aliens embroiled in removal proceedings.36 In other
words, by narrowing the types of employment that immigrants could
not undertake while out on bond, the Court benefitted them and
thereby honored the rule of lenity. NCIR does not by any means
36
The rule of lenity applies to immigrants in removal
proceedings as well as defendants in criminal proceedings. See,
e.g., I.N.S. v. St. Cyr,
533 U.S. 289, 320 (2001) (relying on "'the
longstanding principle of construing any lingering ambiguities in
deportation statutes in favor of the alien'" (quoting I.N.S. v.
Cardoza-Fonseca,
480 U.S. 421, 449 (1987))).
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suggest that a restrictive interpretation is appropriate to strip
intentionally broad legal protections from whistleblowers.37
Third and last is the presumption against implied rights
of action. The majority repeatedly cite cases expressly applying
this principle as if these cases somehow support limiting explicit
causes of action, too. Here is a list of several such cases on
which the majority wrongly rely: Janus Capital Grp., Inc. v. First
Derivative Traders,
131 S. Ct. 2296, 2303 (2011) (holding that a
mutual fund adviser may not be found liable for a mutual fund's
violation of SEC Rule 10b-5, in part because of "the narrow scope
that [courts] must give the implied private right of action");
Stoneridge Inv. Partners, LLC v. Scientific-Atlanta, Inc.,
128
S. Ct. 761, 772 (2008) (noting that courts should limit the scope
of implied rights of action because judicial creation of such
remedies "runs contrary to the established principle that '[t]he
jurisdiction of the federal courts is guarded against expansion by
judicial interpretation'" (quoting Cannon v. Univ. of Chi.,
441
U.S. 677, 746-47 (1979) (Powell, J., dissenting))); Cent. Bank of
Denver, N.A. v. First Interstate Bank of Denver, N.A.,
511 U.S.
37
Let me be perfectly clear: my point is that the majority
are wrong to rely on cases subject to the rule of lenity. And
despite disclaiming any reliance on the rule, the majority still
rely on cases where the rule applies. Compare Maj. Op. 19-20
(providing that the majority "follow the same reasoning" as NCIR),
with Maj. Op. 35 (providing that "the rule of lenity has no place
in our interpretation of § 1514A(a)").
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164, 176 (1994) (holding that the implied right of action under SEC
Rule 10b-5 does not extend to aiders and abetters because "Congress
knew how to impose aiding and abetting liability when it chose to
do so"); Blue Chip Stamps v. Manor Drug Stores,
421 U.S. 723, 734
(1975) (limiting the availability of the implied right of action
under Rule 10b-5 to actual purchasers and sellers of securities, in
part because "[w]hen Congress wished to provide a remedy to those
who neither purchase nor sell securities, it had little trouble
doing so expressly"). Here, we are not faced with an implied right
of action that should be applied narrowly; instead, we are dealing
with a statute that expressly creates a broad right of action for
employee-whistleblowers who suffer retaliation at their employers'
hands. By rejecting Congress's intentional breadth, the majority
undermine the legislative process in precisely the same way that
the Supreme Court has warned against time and time again in the
context of implied rights of action. That they do so by
restricting a broad statute rather than expanding a narrow statute
is beside the point: they are still usurping Congress's lawmaking
role in our system of government.
Even more egregious, though, is the majority's conclusion
— after thirty-five pages construing a statutory provision to which
they say "different readings may be given," Maj. Op. 14 — that the
statute is "not ambiguous" and even "clear" in imposing a
limitation on the word "employee" that appears nowhere in the
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statute's text.
Id. at 44, 49. This peculiar determination38
appears to be nothing more than a mechanism for rejecting the views
of multiple federal agencies39 that come into daily contact with the
Sarbanes-Oxley Act and its whistleblower provision, and for
downplaying this court's earlier determination that agency views
are entitled to deference. In fact, the clearest thing about the
statute is its breadth, as the Department of Labor's regulations
confirm.
As I've mentioned above, the Department of Labor has
adjudicatory authority over Sarbanes-Oxley whistleblower
complaints.40 18 U.S.C. § 1514A(b)(1). To exercise that authority,
the Department of Labor has promulgated regulations regarding
Sarbanes-Oxley. 29 C.F.R. § 1980-100 et seq. The regulations
specifically provide that Sarbanes-Oxley's whistleblower protection
extends to employees of contractors of public companies.
Id.
38
The determination is peculiar, in part, because of the
basic principle that a court will generally look beyond a statute's
text only when interpreting ambiguous statutes. See, e.g., Gen.
Motors Corp. v. Darling's,
444 F.3d 98, 108 (1st Cir. 2006) (noting
that "we . . . will only look behind the plain language to the
legislative history if we find the statute ambiguous" (internal
quotation marks omitted)).
39
Although my dissent limits its discussion to the Department
of Labor's regulations, the Securities and Exchange Commission,
too, has filed an amicus brief in this case urging the same broad
interpretation of § 806.
40
Congress has not given Labor substantive rule-making
authority, but this does not matter for reasons I will discuss
shortly.
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§ 1980.101. On this point, Labor found the statute as clear as I
do: the regulations proclaim that they are non-interpretative, 69
Fed. Reg. 52104, 52105 (Aug. 24, 2004), so Labor must have thought
the statute simply means what it says: "[n]o . . . contractor . . .
of such company[] may discharge . . . an employee" for reporting
fraud. 18 U.S.C. § 1514A(a). And we have previously held that the
regulations are entitled to Chevron deference,
Day, 555 F.3d at 54
& n.7, meaning that we should honor Labor's read of the statute
unless it is arbitrary and capricious or contrary to law. Chevron
U.S.A., Inc. v. Natural Res. Def. Council, Inc.,
467 U.S. 837, 844
(1984).
Again, all this would seem to end our inquiry. Not only
does Sarbanes-Oxley § 806 by its terms protect employees of
contractors of public companies, but the agency that handles every
§ 806 whistleblower complaint has issued formal regulations
recognizing that straightforward interpretation, and this court has
held that the regulations are owed deference. But, somehow, the
authority of all three branches of government does not win the day:
the majority disregard Congress's broad language, reject the
agency's regulations out of hand, and do their best to neutralize
this court's decision in Day by labeling it both distinguishable
and dicta. Maj. Op. 45 n.22.
Here is what we said in Day: "Both the DOL regulations,
which are entitled to Chevron deference, and the caselaw establish
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that the term 'reasonable belief' has both a subjective and
objective component. We agree."
Day, 555 F.3d at 54. We then
went on to explain why the regulations were due Chevron deference,
noting among other things that "Congress explicitly delegated to
the Secretary of Labor authority to enforce § 1514A by formal
adjudication."
Id. at 54 n.7. This is not the stuff of dicta. We
did not merely "accept . . . that certain DOL regulations . . .
were entitled to Chevron deference," Maj. Op. 45 n.22 — we stated
affirmatively that they were, explained our reasoning on the point,
and relied on the conclusion in reaching our result. And our broad
statement may not have been "concerned with the precise regulations
at issue here,"
id., but it did not purport to involve precise
regulations; instead, it spoke sweepingly of Labor's regulations
regarding § 1514A. If Day remains good law then it controls here
and we owe deference to Labor's regulations.
That said, we need not go so far as to apply Chevron
deference here. While the Department of Labor does suggest that
Day compels some degree of deference, it concedes that the
regulations are properly due something less than Chevron deference.
Naturally, the Skidmore doctrine comes to mind.
In Skidmore v. Swift & Co.,
323 U.S. 134, 140 (1944), the
Supreme Court held that considered agency views — even informal
ones — should provide guidance to the courts to the extent those
views have the "power to persuade." We have applied the Skidmore
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rule to agencies' views in cases "'where statutory circumstances
indicate no [congressional] intent to delegate general authority to
make rules with force of law.'" Navarro v. Pfizer Corp.,
261 F.3d
90, 99 (1st Cir. 2001) (quoting United States v. Mead Corp.,
533
U.S. 218, 237 (2001)). Here we have such a case. Even though
Labor lacks statutory authority to issue substantive rules
regarding § 806, and even though Labor has labeled its regulations
non-interpretative, under Skidmore we still cannot just throw its
considered views out the window.
Nevertheless, the majority conclude that Skidmore has no
place here. First, they say, the statute is unambiguous and,
therefore, Labor can add nothing to its construction. Maj. Op. 44.
On the heels of the majority's lengthy statutory-interpretation
analysis, this claim holds no water. A statute that is susceptible
of multiple interpretations and whose meaning requires over thirty
pages to explain is neither clear nor unambiguous by definition.
See, e.g., 2A Singer, Sutherland Statutory Construction § 45:2
("Ambiguity exists when a statute is capable of being understood by
reasonably well-informed persons in two or more different
senses."). And if the statute is not, in fact, unambiguous, then
Skidmore deference is in play.
In guiding judicial inquiry into the appropriate level of
respect we should give Labor's views, Skidmore requires
consideration of "the thoroughness evident in [Labor's]
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consideration, the validity of its reasoning, [and] its consistency
with earlier and later pronouncements."
Skidmore, 323 U.S. at 140.
First, contrary to the majority's determination that Labor provided
"no reasoning," Maj. Op. 48, Labor spent a paragraph explaining
that the language of § 806, taken literally, extends protection to
employees of contractors of public companies. See 69 Fed. Reg. at
52,105-06. The majority never convincingly overcome the agency's
simple application of basic grammar to the statute,41 and so can
only pretend it isn't there.
Continuing with the other Skidmore factors, the agency's
reasoning is valid because the statute's plain language does extend
coverage to employees of contractors (as I have explained above).
And as for consistency, for as long as the regulations have existed
they have consistently extended protection to employees of
contractors of public companies. Compare 29 C.F.R. § 1980.101
(2003), with 29 C.F.R. § 1980.101 (2011), as amended by 76 Fed.
Reg. 68,084 (Nov. 3, 2011). The majority cannot claim the same
consistency in this court's jurisprudence. Compare
Day, 555 F.3d
at 52, 54 & n.7 (noting that § 806 aims to "prohibit[] employers
41
In fact, the majority implicitly acknowledge the validity
of Labor's grammatical reading earlier in their opinion, when they
say it merits "little discussion" that the statute "may be read
differently as to the scope of the protected 'employees' as a
matter of grammar." Maj. Op. 15. If Labor's paragraph applying
the basic rules of language to the statute constitutes "no
reasoning," then one wonders how to characterize the majority's
"little discussion."
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from retaliating against employees" and "to encourage and protect
employees who report fraudulent activity," and holding that the
Labor regulations "are entitled to Chevron deference" (internal
quotation marks and brackets omitted)), with Maj. Op. 45 n.22.
Because all three Skidmore factors weigh in Labor's favor, we owe
deference to the Department of Labor's regulations. And that means
§ 806 extends whistleblower protection to employees of contractors
of public companies.
To sum the whole thing up, § 806 plainly protects
whistleblower employees of contractors of public companies; digging
deeper into the section's context and legislative history only
confirms the breadth of § 806's protections; considered agency
views further support a broad read of the statute; and the majority
have had to work very hard to reject not only our own precedent but
also the views of the other branches of government, to say nothing
of grammar and logic. The simple answer to the certified question
from the district court42 is yes. For these reasons, I dissent.
42
"Does the whistleblower protection afforded by § 806(a) of
the Sarbanes-Oxley Act, 18 U.S.C. § 1514A, apply to an employee of
a contractor or subcontractor of a public company, when that
employee reports activity which he or she reasonably believes may
constitute a violation of 18 U.S.C. §§ 1341, 1343, 1344, or 1348;
any rule or regulation of the Securities and Exchange Commission;
or any provision of Federal law and such a violation would relate
to fraud against shareholders of the public company?"
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