Florida Employment Law Blog : Florida Employment Lawyer & Attorney : Epstein Becker Green Law Firm : Immigration, Discrimination, Labor, FLSA : Serving Miami, Fort Lauderdale, Florida

An employee claiming whistleblower protection under the Sarbanes-Oxley Act must have actually believed that his company’s conduct was illegal in order to state a claim under the Act, according to a recent decision by the Eleventh Circuit Court of Appeals, Gale v. U.S. Department of Labor, Case No. 08-14232 (11^th Cir., June 25, 2010).

The case arose when Michael Gale was terminated from his employment at World Financial Group (“WFG”). Gale filed a whistleblower complaint with the Occupational Safety and Health Administration, which enforces the SOX whistleblower provisions. Gale alleged that he was terminated because he opposed decisions made by company officers relating to waste and misuse of corporate funds, and because he raised concerns regarding the alleged violation of SEC rules and regulations. 

Under SOX, a publicly traded company and its officers are prohibited from discharging an employee for providing information to a supervisory authority about conduct that the employee “reasonably believes” constitutes a violation of federal laws against mail fraud, wire fraud, bank fraud, securities fraud, any SEC rule or regulation, or any provision of federal law relating to fraud against shareholders. 18 U.S.C. § 1514A(a)(1). 

OSHA dismissed Gale’s complaint on the grounds that WFG was not a covered employer.  Gale appealed the decision to an administrative law judge of the Department of Labor, who allowed pre-hearing depositions. During his deposition, Gale testified that he was “uncomfortable” with some of the practices he observed and “expressed reservations” about them, but that he did not actually believe the company was engaging in illegal or fraudulent activities. The ALJ recommended that WFG’s motion for summary decision be granted on the grounds that Gale could not prove that he reasonably believed WFG’s practices were illegal or fraudulent. The Administrative Review Board agreed with the ALJ and granted WFG’s motion. Gale appealed the ARB's decision to the Eleventh Circuit. 

The question presented in Gale was what “reasonably believes” means. In answering this question, the Eleventh Circuit joined several other federal circuit courts in holding that the term encompasses both a subjective and an objective component. That is, the employee must actually believe that the employer’s conduct was illegal, and his belief must be objectively reasonable under a “reasonable person” standard.  The court noted that it has employed the same standard in the context of other retaliation statutes such as Title VII. 

Because Gale did not actually believe his employer’s conduct was illegal, the Eleventh Circuit affirmed the ALJ’s summary decision in favor of WFG. The court did not have to reach the question of whether a reasonable person would have believed WFG’s practices were illegal or fraudulent. 

For employers in the Eleventh Circuit, Gale is a reminder of the importance of both components of a retaliation case. Whether a belief is “objectively reasonable” is often a difficult question, and one that may not be amenable to a summary judgment motion. But where an employer is fortunate enough to obtain an admission from a plaintiff that she did not actually believe her employer’s conduct was illegal – or in the case of a Title VII sexual harassment case, that she did not actually perceive the harassment as sufficiently severe or pervasive to alter the terms and conditions of her employment – defending a retaliation case becomes a piece of cake. 

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 The U.S. Supreme Court ruled yesterday that Title VII's anti-retaliation provision’s protection extends to an employee who answers questions during an employer’s internal investigation.

 The case, Crawford v. Metropolitan Gov't of Nashville (January 26, 2009) involved an employee (Crawford) who, in the course of an internal investigation into rumors of sexual harassment by the school district's employee relations director (Hughes), reported that Hughes had sexually harassed her. The employer took no action against Hughes, but soon fired Crawford for alleged embezzlement.

Crawford sued, claiming that the employer retaliated againt for her report of Hughes’s behavior in violation of Title VII's anti-retaliation provision (42 U. S. C. §2000e–3(a)), which makes it unlawful “for an employer to discriminate against any . . . employe[e]” who (1) “has opposed any practice made an unlawful employment practice by this subchapter”(opposition clause), or (2) “has made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing under this subchapter” (participation clause). The court granted the employer summary judgment, and the Sixth Circuit Court of Appeals affirmed, holding that the opposition clause demanded “active, consistent” opposing activities, whereas Crawford had not initiated any complaint prior to the investigation; and finding that the participation clause did not cover the employer's internal investigation because it was not conducted pursuant to a Title VII charge pending with the Equal Employment Opportunity Commission.

The Supreme Court reversed, holding that the anti-retaliation provision’s protection extends not only to employees who speak out about discrimination not on their own initiative, but also those who answer questions during an employer’s internal investigation.  The court reasoned that because “oppose” is undefined by the statute, it carries its ordinary dictionary meaning of resisting or contending against, and includes taking no action at all to advance a position beyond disclosing it.  Thus, a person can “oppose” by responding to someone else’s questions.  The court concluded that nothing in the statute requires a "freakish" rule protecting an employee who reports discrimination on her own initiative but not one who reports the same discrimination in the same words when asked a question.

For Florida employers, Crawford is not groundbreaking, as the Eleventh Circuit had already indicated (if not expressly held) that an employee's participation in his employer's internal investigation is protected activity under the opposition clause of Title VII.  See EEOC v. Total Sys. Serv., Inc., 221 F.3d 1171, 1174 (11th Cir. 2000).  But Crawford does clarify this point of law, and also makes clear that answering questions in the course of an investigation can constitute "opposition" just as surely as a complaint that triggers an internal investigation. 

On the other hand, Crawford does not change the rule in the Eleventh Circuit that to establish a prima facie case of retaliation under the opposition clause of Title VII, a plaintiff must show that she had a good faith, reasonable belief that the employer was engaged in unlawful employment practices. This standard has both a subjective and an objective component. A plaintiff must not only show that she subjectively (that is, in good faith) believed that her employer was engaged in unlawful employment practices, but also that her belief was objectively reasonable. See Little v. United Technologies, Carrier Transicold Division, 103 F.3d 956 (11th Cir. 1997).

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