In January 2007, Matthew Neumann and Nicholas Tides (plaintiffs) began working as auditors in Boeing's IT Sarbanes-Oxley ("SOX") Audit group. The IT SOX Audit group was housed within Boeing's Corporate Audit organization and was responsible for helping the company comply with SOX's requirement of an annual assessment of internal controls and procedures for financial reporting.
Tides and Neumann felt that tensions were high in the IT SOX Audit group because management feared that Deloitte & Touche (Boeing's external auditor) might declare a "material weakness" in the company's internal controls. Tides and Neumann began separately expressing concerns about this perceived pressure and several deficiencies in Boeing's auditing practices that they viewed as potential violations of SOX. They both believed that the system permitted unauthorized users to alter the ratings given to the company's internal controls.
In late April 2007, Andrea James, a reporter with the Seattle Post - Intelligencer, began contacting Tides' and Neumann's work phones asking each of them to speak with her about an article she was writing on Boeing's compliance with SOX. At the time, Boeing had a policy PRO-3439, which required employees to refer "[i] nquiries of any kind from the news media" to the communications department and also prohibited the release of company information without prior review by that department.
In late May 2007, James contacted Neumann who agreed to speak about Boeing's compliance with SOX. James e-mailed Neumann an excerpt of a draft of her article. Neumann responded that the excerpt looked good and sent James the text of an e-mail warning Boeing employees about communications with the media. Tides sent James e-mails and internal documents that detailed internal controls concerns.
On July 17, 2007, the Post-Intelligencer published the article "Computer security faults put Boeing at risk." coauthored by James. The article detailed a threatening company culture among employees involved in SOX compliance, a record of poor internal audit results, and an internal allegation that audit results were being manipulated.
Boeing conducted an investigation and both Tides and Neumann admitted to speaking to the media. They were suspended indefinitely. An Employee Corrective Action Review Board voted unanimously to terminate Tides and Neumann.
Following their terminations, Neumann and Tides filed SOX whistle-blower complaints with the Occupation Safety and Health Administration. They filed suit alleging that they were terminated for reporting violations of SOX and other securities laws. The district court granted Boeing's motion for summary judgment. Neumann and Tides appealed.
Judicial Opinion
SILVERMAN, Circuit Judge
SOX's whistleblower provision, 18 U.S.C. § 1514A, protects employees of publicly-traded companies from discrimination in the terms and conditions of their employment when they take certain actions to report conduct that they reasonably believe constitutes certain types of fraud or securities violations.
The plaintiffs contend that their disclosures of perceived SOX violations to the Post-Intel Veneer were protected under § 1514A (a) (1) because reports to the media may eventually "cause information to be provided" to members of Congress or federal law enforcement or regulatory agencies. We decline to adopt such a boundless interpretation of the statute. Members of the media are not included. 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. Or, it could have protected "any disclosure" of specified information, as it did with the Whistleblower Protection Act, 5 U.S.C. § 2302. But it took neither course, opting instead to limit protected activity to employees who raise certain concerns of fraud or securities violations with those authorized or required to act on the information.
When Congress wants to protect the disclosure of any information to any entity, it knows how to do so. The Whistleblower Protection Act prohibits retaliation against government employees and job applicants for "any disclosure of information" that the employee or applicant reasonably believes constitutes "a violation of any law, rule, or regulation, or ... gross mismanagement. a gross waste of funds, an abuse of authority, or a substantial and specific danger to public health or safety" as long as "such disclosure is not specifically prohibited by law and if such information is not specifically required by Executive order to be kept secret in the interest of national defense or the conduct of foreign affairs." Relying on this language, courts and administrative bodies have interpreted the Whistleblower Protection Act to protect government employees who expose wrongdoing to members of the press. But the expansive language of that Act stands in stark contrast to the limiting text of § 1514A (a)(1). While the Whistleblower Protection Act protects "any disclosure" without limitation or qualification, § 1514A (a)(1) is not so generous.
If, as the plaintiffs contend, the disclosure of information to the media is protected on the ground that it may ultimately fall into the hands of a member of Congress or a federal regulator. then virtually any disclosure to any person or entity would qualify as protected whistlebiower activity, provided the information pertains to one of the statutorily-defined categories of unlawful conduct set forth in § 1514A(a)(1). We decline to afford such an expansive meaning to the statutory language.
Affirmed.
Case Questions
1. What mistake did the two Boeing employees make in raising their concerns?
2. What should they have done?
3. What is the difference between the SOX whistle-blower statutory protections and the protections available for federal government employees?