For Immediate Release
Contact: Kelly Hoffman 202-314-2054 or Kelly.Hoffman@NFIB.org
Washington, D.C., March 4, 2014 – Karen Harned, executive director of the NFIB Small Business Legal Center, issued the following statement on today’s Supreme Court ruling in the case Lawson v FMR LLC. In this case the Supreme Court had to decide whether an employee of a privately held company is protected from retaliation by Section 806 of the Sarbanes-Oxley Act. NFIB’s amicus brief argued that the Sarbanes-Oxley Act was never intended to apply to privately held companies and that imposing the Sarbanes-Oxley whistleblower protections on private companies would have added unbearable costs and regulations to small businesses. However, the Court held that whistleblower protection extends to employees of a public company’s private contractors and subcontractors.
“We are disappointed in the Court’s ruling on this case. By forcing private companies to comply, with the Sarbanes-Oxley Act, the court is downplaying the reality that this decision gives plaintiff’s attorneys additional incentives to pursue aggressive litigation against independent companies. In a country already dealing with a frivolous lawsuit problem, the last thing we need is to open the door for ex-employees to begin suing under a law that Congress never intended to apply to small business. While we are displeased with the Court’s decision, the NFIB Small Business Legal Center will continue to defend the interests of mom-and-pop companies throughout the country.”
The plaintiffs, Jackie Lawson and Jonathan Zang, brought a lawsuit against their former employer, FMR LLC, a subcontractor of Fidelity Investments (Fidelity), alleging that the company unlawfully fired them in retaliation for filing complaints.
Zang and Lawson each filed separate actions against their former employer in district court. They alleged that the defendants violated “whistleblower” protection sections of the Sarbanes-Oxley Act by taking retaliatory actions against them. The district court found in favor of the plaintiffs, ruling that the whistleblower provisions extended to employees of private agents, contractors, and subcontractors to public companies and that the plaintiffs had engaged in protected activity under the statute. The defendants appealed to the U.S. Court of Appeals for the First Circuit, which reversed the decision. Oral arguments at the Supreme Court began on November 12, 2013.