The Ninth Circuit held today that the whistleblower provision of the Sarbanes-Oxley Act, 18 U.S.C. § 1514A(a)(1) (“SOX”), protects employees of publicly-traded companies who disclose certain information to three recipients: (1) federal regulatory and law enforcement agencies; (2) Congress; and, (3) employee supervisors. These three recipients are specifically enumerated in the law. The Court held that “leaks to the media are not protected.” See, Tides v. Boeing Co., 9th Cir., No. 10-35238, (5/3/11)
The plaintiffs alleged that their disclosures of perceived SOX violations to a newspaper were protected under § 1514A(a)(1) because reports to the media may inevitably “cause information to be provided” to Congress, federal law enforcement or regulatory agencies. The Ninth Circuit refused to adopt such an inevitable disclosure doctrine under SOX. Rather, the Court relied on the plain language of the statute when it wrote:
If Congress wanted to protect reports to the media under § 1514A(a)(1), it could have listed the media as one of the entities to which protected reports may be made.
The decision is a victory for publically-traded employers since plaintiffs’ arguments could have lead to a significant expansion of SOX. Employers should continue to monitor the case to see if the Ninth Circuit’s decision will be appealed.