Lawson v. Fmr Co., Inc.

LAWSON; Hosang M. Jonathan Jackie Plaintiffs,

Zang, Appellees/Cross-

Appellants, Co., LLC, Corp.; FMR FMR

FMR f/k/a Fidelity

Inc.; Corp., FMR Invest d/b/a LLC, Fidelity

ments; In FMR d/b/a Fidelity

vestments; Brokerage Ser Fidelity Investments;

vices, LLC, d/b/a

Fidelity Management & Research Defendants, Appel

Company,

lants/Cross-Appellees.

No. 10-2240. Appeals,

United States Court

First Circuit. 3, 2011.

Heard Oct.

Decided Feb. Zang pro

Jonathan M. se. Rieser, Mary Attorney, J. with whom M. Smith, Labor, Patricia Solicitor of Jennifer Brand, Solicitor, and Jonathan S. Associate Rees, Acting T. Counsel for Whistleblower brief, Secretary Programs, were on for of Labor as amicus curiae. Cahn, Counsel,

Mark D. Rich- General Counsel, Humes, ard M. Associate General Karr, and Thomas Assistant General J. Counsel, on brief for the Securities and Exchange Commission as amicus curiae. LYNCH, Judge, Before Chief THOMPSON, HOWARD and Circuit Judges.

LYNCH, Judge. Chief interlocutory appeal This is from the denying district court’s order a Rule 12(b)(6) separate motion dismiss two but pro- related cases under the whistleblower tection provision of section 806 of the Sar- 2002(SOX), banes-Oxley Act of codified at 18 U.S.C. 1514A. See Lawson v. FMR LLC, (D.Mass.2010); F.Supp.2d 12(b)(6). It important Fed.R.Civ.P. raises questions impression. of first plaintiffs, Hosang Jackie Lawson Zang, brought separate and Jonathan M. alleging suits unlawful retaliation corporate employers, private which are Nemser, Paul E. with whom Wilfred J. companies that act under contract as ad Benoit, Jr., LLP, Eugene Goodwin Proctor managers visers to and of mutual funds Scalia, Gibson, Schulp, Jennifer J. organized Company under the Investment brief, Dunn & Crutcher LLP were on for Act of 1940. Because the two suits shared appellants/cross-appellees. defendant, LLC, a common FMR and both Conrad, Kawka, Robin S. Shane B. Na- question raised the same scope Center, Inc., Litigation tional Chamber employees subject under Goldsmith, Butler, Wendy Willis J. C. 1514A, district court addressed both Day, Jones on brief for Chamber of Com- Lawson, single cases in a order. America, merce of the United States of F.Supp.2d at 144.

amicus curiae. The district court concluded that Talwani, Segal

Indira with whom Roit within provision man, LLP, brief, appellee/cross- was on SOX section 806 extends its be- appellant Hosang yond Jackie Lawson. “employees” “public” companies section) Fidelity Man agement companies). in the (as defined those terms entered into companies have agement private also the encompass Fidelity mu with certain of the contracts subcon- contractors or that are funds to serve as investment advisers tual companies. Id. to those tractors investment advisers or sub-advisers. As this that 163. Concerned funds, Fidelity Management broad, the district too thought could be subject provisions companies are limitation, not found a imposed then court 1940, 15 Advisers Act of the Investment must be text, in the seq. Fidelity § et The Man 80b-1 U.S.C. “relating to fraud violations reporting subsidiaries, di are agement companies We Id. 159-60. shareholders.” against rectly indirectly, of FMR LLC. differently and re- interpret the statute verse. employment was terminated Zang’s he

July September 2005. On I. Occupational complaint a with filed (OSHA) of Safety Health & Administration Background (DOL), on Department of Labor based former suing are their plaintiffs Both 1514A(b)(l)(A), a which allows 18 U.S.C. private which are employers, alleges discharge who or discrimi- person management ser- advising or provide in violation of to seek nation Fidelity family of by contract vices by filing complaint relief a Secre- mutual funds. has, turn, tary Secretary of Labor. The par- delegated responsibility mutual funds are not enforcement for Fidelity suit, Secretary are investment com- to the Assistant for 1514A ties either Safety the Investment Health. See 67 organized Occupational under panies (Oct. 2002). 65,008, 65,008 Fed.Reg. 80a- Company Act of U.S.C. 3(a)(1). They registered Zang alleged with the Se- that he had been terminated (SEC) companies in Exchange by Fidelity Management Commission curities and about inac- reports raising to file under sec- retaliation for concerns required and are 15(d) Exchange registration Act in a revised of the Securities curacies draft tion 78o(d). (1934 Act), Fidelity for certain funds. statement of 1934 reasonably believed Zang alleged funds are owned that he The mutual not owned or con- violated several federal and are these inaccuracies shareholders with, any of the laws. by, or affiliated securities trolled Fidelity companies. The funds defendant Zang’s complaint, find- OSHA dismissed Fidelity single a Mutual are overseen employee within ing that he was covered Trustees; super-majority Board of Fund is, 1514A(a), he was meaning independent members are of the Board’s by the whistleblow- employee an “covered” unusual advisers. As is not of the funds’ en- protections, but that he had not er under the Invest- among organized funds gaged protected by in conduct that subsec- Act, Fidelity funds Company ment objected hearing Zang tion. and had own. no of their have Judge an Law before Administrative (ALJ). Fidelity Management compa- Fidelity Zang employed by was Plaintiff decision, contend- summary and later nies moved Management & Research Co. Zang was not Inc., among things, other Co., ing, formed as a FMR which was allowing limited employee. After Re- a covered subsidiary Fidelity Management & issue, granted the ALJ discovery on the (collectively, Fidelity Man- search Co. Fidelity companies operate under the summary for the Man- trade name decision agement companies on that basis and dis- Fidelity Investments. Lawson filed SOX Mgmt. & Research Zang missed. v. Fid. complaints employer against her and its Co., 2007-SOX-00027, No. 2008 WL parent pursuant with OSHA Labor Mar. (Dep’t ALJ 1514A(b)(1)(A) in 2006 while she was 2008). employed. alleged still retaliation She 1514A(a), the ALJ con Interpreting raising primarily her for concerns being an merely cluded that of a relating accounting methodologies. to cost privately to a held contractor fund was employment in resigned Septem She her “emp within the term insufficient to come ber that she had been claiming con loyee.” structively discharged. year One after

Zang petitioned for review of the ALJ filing, Lawson notified OSHA that she in by decision Administrative Re DOL’s tended to seek review her SOX claim (ARB).2 Zang gave view Board then no claims, in federal court. Her which had tice the DOL of his intention to .file an consolidated, by been were closed action in federal court filed his com DOL, complaint and she a against filed plaint against Fidelity Management her employers in the district court. court, companies in the district terminat defendants, private companies, The all appeal SOX, his the ARB. with Under filed motions to dismiss under Rule may a claimant de novo seek review in 12(b)(6), federal if plaintiffs district court the DOL has not arguing that were on a complaint issued final with decision not under covered days filing.3 of its 18 U.S.C. and, alternative, they in the had not 1514A(b)(1)(B). engaged in protected activity under 1514A(a)(1). The district court denied employed by Plaintiff was Fi- Lawson the motions to as to the Services, LLC, plaintiffs’ dismiss delity Brokerage private claims subsidiary Corp., alleging retaliation violation FMR which was suc- 1514A, Together ceeded FMR LLC. subject these which is the ap- this Zang pose 1. The evaluating ALJ also concluded that would whether he was a covered 1514A(a). employee private be a employee Zang, covered if the under 2008 WL Fidelity companies Management acted on be- rejected at ALJ argu- *15. The this public Fidelity ment, half *18, funds as contractors id. at and that issue is also not employment or "in subcontractors matters before us. [they] [Zang's] ... when employ- terminated Co., Zang Mgmt. Secretary delegated ment.” v. Fid. & Research 2. The of Labor has re- 2007-SOX-00027, No. 2008 WL view of decisions DOL ALJs to the DOL’s 27, 2008). (Dep’t 64,272, 64,272-73 *14 (Oct. of Labor ALJ Mar. Fed.Reg. ARB. See 67 ALJ 2002). concluded that the funds had no role in Fidelity Management companies’ employ- Zang ment had sufficiently decisions and although 3. The district court determined that alleged private Fidelity Management that the case, Zang’s there was an ALJ decision companies “agent had acted as the funds' or was because that decision on review with the regard employment contractor matters” ARB, LLC, it was not final. Lawson v. FMR complaint. and dismissed Id. at his *18. (D.Mass.2010). F.Supp.2d And That issue us. is not before days elapsed since more than 180 had since OSHA, Zang argued complaint before the his claim was filed also ALJ that his private Management properly Fidelity was district before the court. Id. at public Fidelity portion should 152. opin- funds be considered That of the district court’s "single integrated enterprise” appeal. pur- ion is not an issue on af- Lawson, Does whistleblower F.Supp.2d peal.4 806(a) of the Sar- forded Section the SOX held that district court Act, 1514A, banes-Oxley ap- 18 U.S.C. provisions of a contractor or ply to an private extend to public company, subcontractor of a when contractors, subcontractors to agents, activity employee reports which he plaintiffs had companies; that reasonably may or believes consti- she alleging facts sufficiently pleaded §§ tute a violation of 18 U.S.C. employers were “ei private company 1348; regula- rule or subcontractors, contractors, agents ther Exchange tion of the Securities and companies;” investment publicly held Commission; Feder- any provision sufficiently had plaintiffs that both al law and such a violation would relate in protected engaged had alleged pub- shareholders of the to fraud 1514A(a)(1). Lawson, activity under company? lic at 163-65. F.Supp.2d Lawson, 169; F.Supp.2d at see also 28 disposi- moved that the The defendants 1292(b).5 U.S.C. 1514A(a)’s applicability issue of tive novo, Our review is de both because this interlocutory be certified for plaintiffs a a appeal is an from denial of Rule 1292(b). under 28 U.S.C. appeal 12(b)(6) motion and because the issue of motion, certified granted district court statutory interpretation is one of law. See of law” to this “controlling question a Med., rel. Hutcheson v. Blackstone U.S. ex court, stayed the cases before it. (1st Inc., 377, Cir.2011); 647 F.3d LLC, 167, F.Supp.2d. FMR Lawson v. Corp., 433 F.3d Carnero v. Bos. (D.Mass.2010). peti- The defendants Scientific (1st Cir.2006). 1, 4 review, interlocutory this court for tioned cross-petitions plaintiffs each filed and the A. the statute Construction grant appeal. court to We

urging this in- parties’ cross-petitions for granted the 1. Text of LLC, FMR terlocutory Lawson v. review. This case turns on the (1st 2010). 25, Oct. No. 10-1944 Cir. protection provision, SOX’s § 1514A. It “is a codified at 18 U.S.C. II. relatively part of the Sarbanes-Ox small Statutory Construction composed many sepa ley Act which is statutory aimed rate statutes and schemes review of the district We limit our achieving investor-protection the Act’s the court question to the court’s order Carnero, 433 F.3d at 5. goals.” certified: court," Corp., U.S.A. v. Cal- Yamaha Motor granted the motions to The district court 4. houn, plaintiffs' state law claims as to the dismiss wrongful discharge (1996), violation of we need not exercise our L.Ed.2d 578 Lawson, F.Supp.2d certified, at 167. The policy. go beyond question power subject a of those claims is not dismissal Wright & here. See 16 and do not do so appeal. this Miller, Practice and Procedure Federal ("Of (2d ed.2011) power course this need Supreme held that Although Court has speci- ordinarily question be exercised — 1292(b), "appellate juris- under 28 U.S.C. focus court ... will be the fied the district applies the order certified diction merits.”). arguments on the partic- appeals, and is not tied to court of question the district formulated ular analysis particular with when the information or assistance is We start our investigation considering provided oth- or the is con- subsection at before issue statute, by— ducted er relevant in the both text 806 of section and Section elsewhere. “(A) regulatory or law Federal part: in pertinent SOX reads agency; enforcement EM- SEC. 806. PROTECTION FOR “(B) any or Member TRADED PLOYEES OF PUBLICLY any Congress; committee of or COMPANIES WHO PROVIDE EVI- “(C) person supervisory with au- FRAUD. DENCE OF (or thority over the (a) In of title Chapter 73 General.— person working other for the em- Code, United States is amended ployer authority who to in- has inserting section 1514 the follow- after discover, vestigate, or terminate ing: misconduct); or “ protect Civil 1514A. action to “(2) file, filed, testify, to be cause retaliation fraud cases in, participate or otherwise assist in

“(a) protection for em- Whistleblower proceeding about to filed filed or be (with ployees companies.— any knowledge of the employer) No a class of relating securities to an alleged violation of section registered under section 12 of the Secu- rule (15 regulation rities Act of Exchange Securities 781), Commission, is required reports Exchange any provi or that to file 15(d) relating under of Ex- sion of Federal law to fraud section the Securities (15 78o(d)), against shareholders.” change Act of 1934 U.S.C. officer, contractor, any employee, or Sarbanes-Oxley Act of Pub.L. No.

subcontractor, or agent compa- of such (em- 107-204, 806, 116 Stat. 802-03 demote, ny, may discharge, suspend, added).6 phasis The of the harass, threaten, or man- any in other emphasized in the text of subsec- against employee ner discriminate an (a) dispute. tion is in employ- the terms conditions of parties only that agree provi- The this any ment because of lawful act done sion extends whistleblower employee— is, of employees “public companies”—that “(1) information, provide cause with a registered those class of securities provided, information to be other- or under section of the 1934 Act or those regard- wise in an investigation assist reports that pursuant file with the SEC ing any employee conduct which the 15(d) of Act. section the 1934 While literal- reasonably a vio- believes constitutes ly of categories encompasses one these two fraud], lation of section [mail stock, companies with we fraud], fraud], [wire [bank “public companies” use the term a as or 1348 or [securities commodities categories shorthand for both because fraud], any regulation rule or companies required reports to file with Commission, Exchange 15(d), Securities and pursuant SEC to section such as the or of any provision Fidelity funds, Federal law relat- “public” mutual are in the shareholders, against they to fraud sense that have issued securities that 1514A(a) pertinent 6. has Section since been amended at all here. force times by Congress. This is the text in unamended against employee an required are criminate public may be sold of protected for public company engaging investors. reports to their periodic to make whistleblowing The activity. intend- defendants is whether question “officer, listing employee, con- provisions of 1514A read the ed the whistleblower tractor, subcontractor, agent” employees are to those who apply also to 1514A(a) as who public identifying to a is barred or subcontractor of a contractor taking retaliatory ac- action protected from engage and who company not employees public companies, ruled on but as appeals court of has tivity.7 No extending to those enumerated this issue.8 employees. own entities’ argue that The defendants that company plaintiffs no contend covered provides public —or contractor, is officer, “employee” given who whistleblower employee, subcontrac- dis- includes tor, company may of that both agent — us, plaintiffs’ em- have extraterritorial effect. In order to reach the case comes As employ- acting agents ployers not for question extraterritoriality, are we "as funds, purposes Fidelity mutual sume[d], ment present purposes, for but without companies no em- public but have plaintiff deciding” that the was case a employers' ployees. contracts Their employee public Bos covered purposes. employment not for funds are those (BSC), Corporation though Scientific even ton opinions DOL ARB Some employed by foreign subsidiar he was BSC’s employee of have indicated that an DOL ALJs However, Id. at 6. we also stated ies. company may proceed non-public be able to party ... contested] [the “[n]either employer or her under 1514A against his plaintiff] employee BSC was covered non-public a con employer where such seeking purposes of relief un subcontractor, tractor, agent ato SOX; instead all of der” focused is, employment purposes company for —that arguments on extraterritorial reach sec non-public company retaliates where the 806. Id. The issue of whether tion public com own at the against its which are un covers Klopfenstein PCC Flow pany’s See behest. public companies was der contract Inc., WL Holdings, No. Techs. 3246904, presented to us in 31, Carnero. May (Dep't at *10 of Labor ARB 7835900, *14; 2006); but Zang, 2008 WL at only reported opin- other district court Techs., Inc., Bldg. v. No. see Johnson Siemens question argu- addressing rejected this the ion 1247202, (Dep’t WL *12 of 2011 at accepted here. ment the district court 31, 2011) Klop (stating Mar. Labor ARB (USA), Calyon F.Supp.2d Brady v. 406 Sec. stating read broader should be as the fenstein (S.D.N.Y.2005), the court concluded that 307 private company a can be proposition that officer, "any employee, con- the reference private § held liable under 1514A where such tractor, subcontractor, agent or of such com- public com company would be considered a 1514A(a) pany” "simply in the lists various prin pany's agent agency under common law potential prohibited who from actors are en- only private when is ciples, not the a gaging in behalf of cov- discrimination on company’s employment public agent the for employer.” (quoting Id. v. purposes). ered Minkina Af- 2005-SO-00019, plaintiff argues Again, Physician’s neither before us Grp., No. filiated 4889024, where a we are faced with a situation (Dep’t WL at *5 of Labor ALJ 2005 contractor, private company acts as subcon- a 22, 2005)) (internal quotation Feb. marks tractor, agent public company or of omitted). purposes against its employment and retaliates unreported court cases have Two district employee public at the of the own direction question. the See Ervin v. also addressed express company. opinion We on the no Ctr., 3:07-0832, & Peace 4449920, Justice No. Nashville 1514A(a)'s scope a situ- of (M.D.Tenn. 29, Sept. WL *7 2008 ation. 2008); Corp., Chrysler No. 06- Rao v. Daimler (E.D.Mich. WL 2007 at *3 Corp., v. Bos. 433 F.3d In Carnero Scientific 14, 2007). Cir.2006), (1st May we held did not 1514A arguments and those who are the these resolve the case. That public companies intent if companies’ of does become clearer one looks employees public those offi- beyond cers, contractors, phrases the immediate subsec employees, subcontrac- (a). tion circuit precedent Both and Su tors, or agents. preme precedent require that Court we readings may given be While different framework, statutory examine broader the “employee” empha- the term within including particularly nearby language, 1514A(a) of of sized the text 235, 250, Lundy, Comm’r v. 516 U.S. protected employ- itself as to whether the (1996); L.Ed.2d United ee refers of the employees Ozuna-Cabrera, States v. 663 F.3d statutory companies, principles interpre- (1st Cir.2011), and title and cap 1514A(a) us to interpret tation lead tion, Bhd. R.R. v. Trainmen Balt. & favor of such limitation. title of Co., Ohio R.R. 1514A(a) caption section 806 (1947); Berniger L.Ed. congressional are statements of intent Corp., Meadow 945 F.2d Green-Wildcat go against plaintiffs’ interpretation. (1st Cir.1991). provisions support Other also SOX We conclude that only more consistent with defendants’ public companies defined are covered reading with plain- and inconsistent by these provisions; reading. “employee” tiffs’ Our reading “officer, contractor, employee, clause sub- excluding as from coverage contractor, agent company” of such officers, employees, contractors, subcon- goes prohibited to who is from retaliating tractors, agents of public discriminating, not to who is a covered strongly also confirmed the pre-passage so does not violate the rule legislative history of this section and other against rendering superfluous any statuto- sections of SOX and the purpose 1514A(a) ry language. The text of first legislation. Further pro- confirmation is employers: identifies covered those with a vided of Congress the later actions registered class of securities under section rejecting a bill meant to amend SOX and 12 of Act the 1934 that file reports those in congressional acceptance of other 15(d) pursuant the SEC to section amendments. the 1934 Such public companies may Act. That immediate text within employ- retaliate10 their own may differently be read as to ees who engage protected activity. Sec- the scope protected “employees” tion then enumerates list of grammar a matter of little needs discus- representatives of such employers, includ- view, sion. In our the more natural read- ing are those who contractors or subcon- ing is the one the advanced defendants. tractors, are also barred from Each an argument side has had Con- retaliating against employees of the cov- gress words, just added few its intent public-company ered employer engage who clearer,9 would have been in protected activity. none of instance, Congress organized 9. For Company could have more the under Investment Act clearly interpretation enacted of defendants’ of 1514A(a) § by extending provision's the cov- erage only employee compa- "an 10. We term use the "retaliate” to cover "dis- of demote, ny." clearly threaten, harass, Or could have charge, enacted suspend, or plaintiffs’ interpretation by defining the "em- other manner ... in discriminate the ployee” explicitly adding coverage or of em- employment.” terms and conditions of 1514A(a). ployees of advisers to investment 1514A(a) that, guides itself argue explicit tion of and their amici plaintiffs 1514A(a) meaning retaliation limits on the of the textual forbids because contractor, 1514A(a). officer, subcon- employee, “any phrase within Section tractor, company, of agent” public Employ- it concerns “Protection for states retaliation must forbid provision Publicly Companies Who ees of Traded contractor, sub- of a employee an against of Provide Evidence Fraud.” From contractor, company. agent public to a 1514A(a) alone, it be odd to read would and, amici plaintiffs’ Lawson plaintiff But compa- covering employees private as of limiting prin- reject the district court’s also unlikely Congress It intended the nies. is reading. broad As a matter for their ciple protect against action to retali- term “Civil follow conclusion does not logic, of the heading cases” in of ation in fraud the lan- As a matter of premise. from its of § 1514A to be broader than the terms argument implica- its guage, ignores the “Protection” discussed in the title of the contractor, employee “any” if tion: an section 806. subcontractor, agent protected, is Con- Congress did not there. It re- rest must, by reasoning, the have same gress limitation peated pro- the “Whistleblower “any” protect employee intended tection for company. employee public officer or caption companies” in the first line both anomalies and argument

This creates (a) subpart This of the text of 1514A. provides very coverage. broad limitation strongly double works 1514A(a)’s repre- list of Section interpretation. plaintiffs’ serves, instead, ensure an sentatives covered public company of a is circuit, Court, Supreme as as well were provision if he or she under requires that we consider the title and law officers, employees, or harassed other caption section under which public or subcontractors to contractors appears. R.R. See Bhd. of reporting in that company for fraud Trainmen, 1387; 331 U.S. at company.11 Ozuna-Cabrera, 3; at 499 n. Ber F.3d certainly F.2d at 9. It true niger, 945 is cap and the 2. The title section 806 heading title of a that “the statute and tion of meaning cannot plain of a section limit the Trainmen, the text.” Bhd R.R. the title of SOX within Both section housed, cap- and the 1387. This is said, (such ax-wielding specialist our does not render with an 11. As superfluous listing gives George 'Up Clooney played clause but character Air').” 915; meaning. Id. at also Kalkunte v. see Servs., Inc., 2004-SOX-00056, DVI Fin. No. addition, has, our One of sister circuits July (Dep’t ALJ 2005 WL 4889006 of Labor particular hypothesized a fact situation. 18, 05-139, 05-140, 2005), aff'd, Nos. 2009 Labor, Dep’t v. U.S. 598 F.3d 912 Fleszar 27, (Dep’t Feb. WL 564738 of Labor ARB Cir.2010), denied, - U.S. -, (7th cert. 131 2009) (holding complaining that the 423, (2010), Judge S.Ct. 178 L.Ed.2d 324 bring a 1514A observed, of a could dicta, "[t]he that Easterbrook in against company’s private contractors, con action provision listing the idea behind” subcontractors, managed 1514A(a) where the the tractor contractor agents in operations public company’s and retaliated by place whom retaliation cannot take entities IBM, firm, complainant). merely note against the We can’t that a covered such as "is further. by have no need to comment contract- this and retaliate whistleblowers 70 “employees §of caption publicly companies” issue: the does traded

our any way plain text, in contradict the not identified in caption.12 that subsection’s light meaning but sheds on the of the text. Plaintiffs’ fallback is to argument Supreme has been clear that The Court caption the title and the mean do not captions should be used “[f]or titles they say. what “publicly Just as the term ... interpretive purposes when shed companies” traded is a the shorthand for light ambiguous phrase.” on some word or two categories companies, of covered plain- 1387; at 67 see also Berni Id. S.Ct. argue tiffs caption that the title and are no (“It is ger, 945 F.2d at 9 well established more than a second shorthand meant in may a statute’s title aid construing include all in employees possibly covered statute.”). any ambiguities in a The title the text. not proper reading, That is the contain caption phrase, and the each the and is plain contradicted words of “employees publicly companies,” traded the title of caption section 806 and the supports reading that the use of which 1514A(a). caption The title and term underneath refers “employees” ambiguous their purpose being in “employees companies.” there was not to add to ambiguity Supreme has addressed a Court clarify. the text but to See Fla. Dep’t of similar question presenting case Inc., Piccadilly Cafeterias, Revenue v. one here. INS v. Nat’l Ctr. Immi- 2326, 2336, U.S. S.Ct. L.Ed.2d (NCIR), grants’ Rights, Inc. (2008) on (relying subchapter’s title— (1991). 112 S.Ct. 116 L.Ed.2d 546 At “Postconfirmation matters” —to undermine regulation was a entitled “Condition issue respondent’s argument that a with- statute employment,” against unauthorized in that subchapter preconfirma- covered of which to “[a] text referred condition transfers); tion Almendarez-Torres v. barring employment.” C.F.R. States, United U.S. 103.6(a)(2)(h) (1991). parties disa- (1998) (title 140 L.Ed.2d 350 greed “employment” whether the word amendment, legislative reinforced its employment text referred to generally history, meaning). clarified amendment’s more narrowly to unauthorized employ- We do not think there any ambiguity is NCIR, ment. were, left. But if there other rules of 551. The Court ruled text’s “[t]he statutory interpretation would lead us to generic ‘employment’ reference to should the same result. be read as a reference ‘unautho- employment’ para- rized in the identified provisions 3. Other textual SOXof graph’s title.” Id. follow the We same 1514A(a): reasoning by Congress The choice “generic provide as to limit- ed “employee” reference” to the text inad- was not vertent, be “should read as a reference to” the as shown its choices elsewhere Cabrera, reading entirely Our entirely is consistent with the the title was consistent principles applied construction the re rejection our defendant’s more defen- sult reached in United ra, States case, Ozuna-Cabre dant-friendly construction. In this (1st Cir.2011). 663 F.3d 496 There we support caption title and are even clearer in rejected argument an text "without Further, reading. of our the text we consid- 1028A(a)(1) authority" lawful provided ambiguity ered in no Ozuna-Cabrera equivalent per was to "without authorized which would have warranted resort to mission" and that the defendant’s construc lenity, rule of used in criminal supported tion was somehow the statute’s cases. "Aggravated identity title: theft.” In Ozuna- impris- under this or of as of the shall be fined title provisions in Other SOX SOX. than 10 both. years, our of oned not more enactment reinforce view time of 1514A(a) §of in several re- meaning § at (emphasis SOX 116 Stat. Congress limited spects. enacted added). language requires This neither 1514A(a). § in protection whistleblower nor an rela- public company, employment to broader whistle- it wished enact Where tionship, to nor a securities law violation elsewhere, explicitly it blower 1514A(a) § trigger coverage. scope of different, it chose more limit- did But so. is, by contrast, conspicuously narrow. See coverage provision for the of language ed Co., Inc., Sigmon Barnhart v. Coal than intended expand- when it 122 S.Ct. L.Ed.2d coverage. ed (2002) (“[W]hen ‘Congress includes particular language of a one section explicit also was

Congress elsewhere statute it in of but omits another section language in its choice of than Act, it generally presumed the same 1514A(a); regulate where intended to it Congress intentionally pur- acts and entities, language not use non-public it did posely disparate inclusion or exclu- 1514A(a). equivalent to the text It is ” States, (quoting sion.’ Russello v. United made Congress also clear choices 78 L.Ed.2d regulatory mechanisms for about different (1983))). entities, intended cover- different 1514A(a), private creates a

age of which Second, SOX, portions in other where action, not so broad to right of to be as separate provisions intended non-public compa- include the Act to apply private subjected example, For account- nies. entities, contrast, explicitly. By it said so lawyers regulatory to different ants title caption of section 806 and the mechanisms. explicitly refer to trad- publicly companies. ed SOX contains a number First, Congress intended to enact when below, provisions, directly described which SOX broader explicitly regulate the activities of en- 1514A, than itself in sections other it did compa- tities than other Carnero, clearly. so In we described sec Further, Congress up expressly nies. set tion 1107 of SOX other whistle- “[t]he schemes, regulatory different which varied provision [SOX].” blower found F.3d with the involved. For persons entities 10; Glynn Corp., see also v. EDO I of example, Title SOX establishes (describ (D.Md.2008) 595, 616 F.Supp.2d Oversight Company Accounting Public serving section 1107 as “deter[] Board, accounting regulates “public whistleblowers”). retaliation Sec firms audit for is- prepare reports Against tion 1107 is “Retaliation entitled suers, brokers, and dealers.” 15 U.S.C. this Informants” adds to 18 7211(c)(1); §§ see also id. 7211-7220. § 1513: independence Title II of out- ensures (e) with the knowingly, Whoever intent §§ side See id. 7231-7234. auditors. retaliate, any takes action harmful example, 307 of SOX any person, including another section interference governing to issue employment or livelihood directs the SEC rules the lawful professional attorneys— en- conduct of any person, providing a law any officer both in-house and outside counsel—who forcement truthful informa- appear it in the relating possi- representation to the commission before tion Moreover, offense, issuers. Title commission of Federal See id. ble 72

VI, Congress provide Resources and Authori- wished to “[w]hen “Commission remedy to ty,” authority purchase censure those who neither nor details the SEC’s to securities, doing sell it had little trouble in professionals or bar from outside securities Tambone, expressly”); F.3d so SEC v. 597 practice and defines conditions under (1st Cir.2010) (en banc) (court 436, 444-45 practic- can be person which a barred from honor draftsmanship must the differential broker, adviser, ing as a investment Congress). 78d-3, 78o, §§ dealer. 80b-3. See id. argue surely Plaintiffs Congress V,

Further, “Analyst Title Conflicts to cover all meant whistleblowers and then- Interest,” codes of conduct for defines reading required by Congress’s purpose. analysts requires outside and securities Not so. These distinctions and differenti- conflicts of See disclosures of interest. approaches problems ated to multi-faceted VII, id. 78o-6. And Title and “Studies by Congress, including coverage drawn Reports,” requires Comptroller Gen- §in limitation compa- perform eral and the SEC to various nies, are consistent with the problems studies, including on securities violations which led to the enactment SOX. Con- professionals, securities defined as gress’s primary in enacting concern SOX accountants, “public public accounting not the was activities advisers firms, bankers, investment ad- investment organized mutual funds under the Invest- visers, brokers, dealers, attorneys, and Act, Company Fidelity ment like the funds professionals practicing other securities Indeed, Congress here. knew that invest- before Commission.” SOX Fidelity ment like mutual § 703(a)(1), Stat. at 116 often do not employ- funds have own Congress been clear in has SOX when ees, Trustees, but Board and are intends regulate private and has entities managed by often advised and private en- contrast, explicit. By been the limited lan- tities, like the defendants. See v. Jones guage within the text of —L.P., -, Harris Assocs. caption the title Congress show that 1418, 1422, (2010) S.Ct. 176 L.Ed.2d 265 did beyond not intend to reach (“A separate entity called an investment public companies. The Su- fund, adviser creates mutual preme particu- Court has directed us to be own.”); may have no employees of its larly attentive to such choices Lasker, 471, 480-81, Burks v. 441 U.S. interpreting the securities See laws. Cent. (1979); S.Rep. S.Ct. L.Ed.2d Denver, Bank N.A. v. Interstate First (1969) No. at 4 (accompanying the Denver, N.A., 164, 176, Bank 511 U.S. Company Investment Amendments Act (1994) S.Ct. 128 L.Ed.2d 119 (“Mutual 1970) funds, with rare exception, (refusing impose aiding abetting operated are not employees. their own 10(b) liability under Act be- formed, sold, Most funds are and managed cause “Congress impose knew how to aid- by organizations, external [called ‘invest- liability and abetting when it chose to advisers,’] ment that are separately owned so”); do Chip Stamps Blue Drug Manor operated.”). And if have no em- Stores, ployees, they subject are not 1514A. (1975) L.Ed.2d (limiting Rule 10b-5 is not This anomalous. in the cause of action to actual purchasers and Company Investment Act deliberately cre- sellers of in part securities because this separation ated between investment Century Act and Reform for the 21st their See ment and advisers.13 companies 80a-1(b)(2) (AIR (declaring policy § as a 21), § a model 49 U.S.C. was U.S.C. Act Company the Investment for rationale of portions for at least the whistleblower of of interest be conflicts prevention 1514A, § protection of in- provision advisers). companies and investment tween procedures burden- corporates the and of shifting extend framework AIR 21. See to Had intended 1514A(b)(2)(A) coverage protec- (“An § whistleblower § 1514A action under U.S.C. employees private compa- (1)(A) tions shall under paragraph governed be provide invest- that have contracts to nies procedures in sec- the rules and set forth to funds under the organized advice ment 42121(b) of title tion United States Act, have Company it would Investment 1514A(b)(2)(C)(“An Code.”); action id. explicitly so done (1)(B) paragraph shall be brought under 1514A(a), in the title but also the text governed by legal proof set burdens the text is found. caption under which and 42121(b) forth in section of title United SOX, Congress specifi- did Elsewhere Code.”). States companies and address investment cally advisers, history also re- explicit legislative made it The of SOX investment and it did and when when it intended AIR 21. See No. S.Rep. fers to See, (exempt- e.g., (additional (2002) not. of Sen. at 30 views companies] registered un- “investment al.) Hatch, (stating that an amendment et Company 8 of Investment der” section containing the bill eventual 1514A id. provisions); from certain SOX Act provision with [AIR made “consistent 80b-3(e) (titled Advisers” “Investment provided we in which whistleblower 21] amending the Investment Advisers and protections non-govern- another class of Act). thought ... it best employees[;] ment we of- reading The broader protections closely to track those as plaintiffs imper- an by provide would fered possible”). tracking protec- The of these choice Congress’s end run around missible plaintiffs’ interpre- operates against tions in that limit whistleblower tation. catego- two subsection section AIR 21 is enti- pertinent caption call title and ries air employees providing “Protection tled companies.” “publicly

safety “[n]o information” and states H. 4. SOX’s to the Wendell or contractor air carrier or subcontractor reference Re- Ford Aviation Investment and may employ- an discharge of an air carrier Century Act the 21st form for an ee or otherwise discriminate respect compensation, employee provision conditions, terms, employ- privileges H. Ford Aviation Invest- of the Wendell ad- advisers violations of securities laws investment Investment SEC, laws, Study Report regulated by on Viola- the securities visers. See (2003), prosecuted may violations of these tions Securities Professionals be (making http://www.sec.gov/news/studies/ it un- available at laws. See 15 U.S.C. 80b-6 to, sox703report.pdi/ among (finding that in SEC actions for investment advisers oth- lawful 1, 1998, finality January prospective between things, defraud their that reached er clients fact, clients). ad- study December 264 investment the SEC’s of violations persons investment professionals associated with laws securities visers of securities found se- required by advisers had been to have violated SOX section 703 demonstrates laws). prosecuting SEC has been active in curities that the (or Second, any person of AIR 21 pose ment because the the text does not pursuant request to of the em- acting interpretative problems posed by the protected ployee)” engaged in whistleblow- plaintiffs’ proposed construction of 42121(a) activity. § ing (empha- 1514A(a): 49 U.S.C. § and the excessive breadth ex- added).14 sis coverage employees tension of to of em- ployees In employees and of officers. important are

There several differences 1514A(a), § employ Congress chose to dif- of provision between whistleblower ferent from in language what it used SOX, operate AIR 21 and that of which 42121(a), § undercutting plaintiffs’ argu- plaintiffs’ against interpretation. text AIR purportedly ment because Further, clarity. of AIR 21 has greater contractors, employees covers of so should inherent, AIR 21 contains an textual limit- § 1514A. ing principle. broadly It not does extend subcontractor, any to contractor or instead Further, in AIR Congress did not § 42121 defines “contractor” to mean “a subject consider the matter of com- company that performs safety-sensitive plaints safety information —to be an —air functions contract for an air carrier.” adequate limitation on the creation of 42121(e). Id. This on the limitation liability whistleblower in air carrier term coverage “contractor” excludes from business, so it limited the definition of the employees of all sub- other contractors and Congress relevant contractors. did not in contractors. subject SOX consider the of matter contrast, By plaintiffs’ and un- broader complaints to the only limiting princi- be “employee” limited construction of in ple, nor to be sufficient itself to narrow 1514A(a) provide protection would range plaintiffs’ of contractors. The employees of contractor or subcon- reading is than Congress’s broader intend- It explicitly tractor. is true that AIR 21 reach.15 ed beyond airlines, employees went of but employees of a limited class of 5. Contrast with language other of contractors and subcontractors: those who protection whistleblower statutes perform “safety-sensitive That functions.” 1514A(a) expansion reading Our of on limited serves AIR stands purpose 21’s of protecting safety needed, of text SOX If itself. more were travelers focusing on we also support those contractors subcon- find the contrast with responsible safety. provisions tractors such whistleblower No in other statutes. limitation is built plain- into SOX or into contrast with expansive 1514A(a), tiffs’ reading. other, earlier, Defendants’ we note two fed- reading, by contrast, is protection self-limited. eral whistleblower statutes (1998) (stat- S.Rep. 14. See proposed limiting No. at 22 principle. court’s The dis that the whistleblower of AIR phrase "relating trict court that the stated airlines, provide employees 21 "would 1514A(a)(1) fraud shareholders” in employees of airline contractors and subcon- modifies the entire clause "a violation of sec tractors, statutory protec- 1348, any tion rule or tion"). regulation Exchange of the Securities and Commission, any provision of Federal we Because conclude that text of Lawson, F.Supp.2d law”. See at 159-60. 1514A(a) unambiguous limiting whis- proposed limiting principle That addresses tleblower scope protected activity, scope not court, companies and reverse the district we employee coverage. do not reach a conclusion on the district entities coverage explicit defining are which extend to em- explicitly regu- representatives to the which of those entities’ entities ployees of contractors Congress employers. That covered view the fact that by those statutes. We lated extending coverage employ- Congress similarly explicit in clear in was not ex- was in those con- tending statutes ees contractors con- understanding tractors, subcontractors, agents firms our so far. extending as evidence did intend to exist. not such Protection The Nuclear Whistleblower Energy Reorganization provision of the 6. Other canons construction of 5851(a)(1), Act, that states further reading Our of 1514A is con- may discharge any employ- employer “[n]o by firmed canons of construction mandated against any ee or otherwise discriminate by Supreme opinions regarding Court both his employee respect compensa- relationship and the securities laws be- conditions, tion, terms, privileges or of em- and their tween investment ad- (or employee any ployment because visers. request to a of the person acting pursuant engaged protected whistle- employee)” The Court has admonished the lower

blowing activity. provision defines give federal not to securities a courts laws as, “a li- “employer” among things, other scope greater than that allowed Regulatory] Com- censee the [Nuclear See, Partners, Stoneridge text. Inv. e.g., agreement mission or of an State under” Inc., Scientific-Atlanta, LLC v. 552 U.S. 1954, Act of Energy the Atomic id. 148, 128 S.Ct. 169 L.Ed.2d 627 5851(a)(2)(A), or “a contractor subcon- (“[T]he (2008) jurisdiction of the federal applicant” for tractor of a licensee or carefully guarded against courts is expan 5851(a)(2)(C), license, and “a con- id. by judicial interpretation.” (quoting sion of the tractor or subcontractor Commis- Finn, Am. Fire & Cas. Co. v. 341 U.S. 5851(a)(2)(E). sion,” §id. (1951))); 95 L.Ed. 702 Dahl, 622, 653, 108 protection Pinter v. whistleblower S.Ct. Similarly, the (1988) (“The 2063, 100 Pipeline Safety Improve- L.Ed.2d 658 ascer provision of the 60129(a)(1), congressional tainment of intent with re Act 49 U.S.C. ment may liability created discharge spect scope of employer states that “[n]o of the Securities Act any particular otherwise discriminate section employee or respect primarily must rest on the against any employee with to his section.”). terms, conditions, many of these While cases compensation, privi- or implied private are of the leges employment because context 10(b) (or acting right of action under person pursuant to a re- Act, the rule that we to “assume that quest employee)” engaged pro- activity. Congress meant what it said” when it en whistleblowing tected That stat- legislation throughout “employer” applies “a acts goes ute on to define as Pinter, Code, including fa- SOX. U.S. person owning operating pipeline 60129(a)(2)(A), 653, 108 “a S.Ct. 2063. cility,” contrac- id. person,” of such a id.

tor subcontractor incorrectly argue Plaintiffs since 60129(a)(2)(B). purposes, the statute has remedial some as provisions purposes plain- those must as broad be say, Congress assumed Energy Reorganization Act tiffs it must be of both the private of a broad Safety Improvement Act chose mechanism Pipeline and the “[a]ny mecha- right reapportionment liability rather than other in the action remedies. Plaintiffs light nisms to effectuate industry securities the close text essentially the actual must argue relationship between investment advisers reading to give way in of a broader favor and mutual funds is properly responsi- purposes. effectuate those broad remedial Id. bility Congress and the courts.” law. Court That is not the While the has at 2304. combating laws stated “securities Although relationship there a close technically construed ‘not fraud should be de- private between the investment adviser restrictively, flexibly but to effectuate funds, fendants their client mutual ” purposes,’ Herman remedial & [their] out pointed plaintiffs and the SEC Huddleston, MacLean v. curiae, sepa- as amicus the two entities are 74 L.Ed.2d 548 way. rate because wanted it that (1983) (quoting Capital v. Re- SEC Gains Congress sep- to ignore Had intended Inc., 180, Bureau, 195, search 375 U.S. 84 and private aration cover the of (1963)), 275, S.Ct. 11 L.Ed.2d 237 has investment advisers for whistleblower pro- also admonished broad remedi- “[t]he tections, it would done so explicitly have goals al of insufficient [a law] securities 1514A(a). However, it did not.

justification interpreting pro- for a specific broadly vision than ‘more its and Finally, lenity rule of no the has ” statutory reasonably permit.’ the scheme 1514A(a), place our of Pinter, 653, 486 at 2063 U.S. 108 S.Ct. Application for several the reasons. of (quoting Redington, Ross v. Touche & Co. lenity of interpre rule restricted to the 578, 2479, 560, 99 S.Ct. 61 of tation criminal v. statutes. Bifulco (1979)). Here, plaintiffs’ L.Ed.2d 82 read- States, 447 United U.S. 100 S.Ct. statutory is broader than the scheme (1980) (The 2247, 65 L.Ed.2d 205 rule Further, permits. later, as discussed lenity “applies ... interpretations to the plaintiffs’ interpretation goes beyond far ambit criminal prohibitions substantive problems Congress remedy. wished to ... to the penalties impose.”). [and] Section 1514A provision is not criminal Capital Group, Janus Inc. v. First — imposes penalties; and no criminal instead Traders, -, Derivative U.S. it provides compensatory civil dam 2296, (2011), S.Ct. 180 L.Ed.2d 166 1514A(c). ages. 18 U.S.C. In addition Court held that the fact that an investment inapplicability lenity to the rule of signifi- adviser to a mutual fund exercised non, it apply vel would not here in cant its pre- influence over client fund and simply event because there is the lack of pared prospectuses SEC on behalf of the “grievous ambiguity” considering left after subject fund did not make the adviser to text, structure, history, purpose and liability Rule under SEC 10b-5 for state- needed to invoke rule. ments As the Su prospectuses, despite made those preme recognized, Court has “uniquely adviser’s close” “the rule relationship if, lenity applies considering with the after fund. Court stated (an text, structure, history, purpose, mutual fund investment un- there 1940) der Company grievous ambiguity the Investment Act of remains or uncertain (an and the ty adviser investment adviser in the statute such that the Court must 1940) guess under the simply Investment Adviser Act as to what intende — “legally separate Thomas, U.S. -, were entities” and that d.” Barber v. Furthermore, interpretative principles ap- plied immigration to applica- have cases no 2499, 2508-09, Accountability Act makes clear that 177 L.Ed.2d Fraud 130 S.Ct. omitted) (citation (2010) the En- (quoting Congress’s primary Muscar concern was States, 125, 139, 118 debacle, ron which involved the stock of v. United ello (1998), and publicly company. 141 L.Ed.2d traded highly visible 2247) (2002) (dis- at 100 S.Ct. Bifulco, 447 U.S. No. S.Rep. See 2-5 omitted) (internal (quoted aftermath, quotation collapse, marks cussing Enron’s its Gerhard, reform). F.3d v. States United the need for (1st Cir.2010)). committee states that report The same provide 1514A what became “would history Legislative B. whistleblower statutory language Turning from publicly companies,” traded id. at statutory interpretation principles § 1514A intended to that eventual was reject us require plaintiffs’ alone to em- “provide also our under interpretation, we confirm ployees who by examining leg text standing of the report acts of fraud federal officials with Yousuf, See history. islative Samantar authority remedy wrongdoing - U.S. -, 2287 & n. individuals supervisors appropriate (2010) legislative (using L.Ed.2d 1047 within company,” at 18-19. id. a sense of history to confirm Court’s report These statements others in the meaning); Phillips v. Pem plain statute’s interpretation. Only with our em- accord Estate, 128, Inc. F.3d 143 broke Real 459 publicly companies of ployees traded Cir.2006). (1st n. 12 mentioned; employees compa- private of not. nies are history Contemporaneous legislative

1. history contemporaneous legislative The Leahy provision stated that the Senator 6, 2002, May a commit- consists of Senate eventually as that would be codified be- report containing for bill what tee provide 1514A “would in the Con- came 1514A statements employees traded publicly of Leahy, a gressional Record Senator fraud,” report who 148 companies acts sponsor that bill. address each We 12, Cong. (daily Rec. S1787 ed. Mar. turn. 2002) statement), (pre-enactment and that many gov law “[a]lthough protects current and Criminal Fraud Ac- Corporate

The employees act in the 2002, S.2010, ernment who Act of 107th countability there is (2002), by reporting wrongdoing, interest Cong. incorporated was into SOX pub no similar provision as Title and contained the VIII licly traded who blow the whis report The that would become 1514A. investors,” Judiciary protect on fraud and id. at of the Senate accom- tle Committee S1788;17 Corporate Cong. see also 149 Rec. S1725 panying the and Criminal 289, (1966) (stating Cyr, INS v. U.S. the Court resolved tion here. St. 533 318 Cf. 2271, immigration 320, (2001) doubt in the of an 150 347 L.Ed.2d deporta- statute in favor alien "because (reciting longstanding principle of con "the at times the tion is a drastic measure and struing any lingering ambiguities deporta (quoting equivalent exile” of banishment or (quoting in favor of the alien" tion statutes 6, Phelan, 10, Fong v. 68 Haw Tan 333 U.S. Cardoza-Fonseca, U.S. INS v. 480 374, (1948))). 433 92 L.Ed. S.Ct. 1207, (inter (1987)) S.Ct. 94 L.Ed.2d 434 107 Errico, omitted)); quotation v. nal marks INS remarks, Leahy stated 17. In the same Senator 225, 214, 473, 87 17 L.Ed.2d 385 U.S. S.Ct. broadly to encour- "[o]ur more laws need 78 2003) (statement Board”); II, 29, Oversight

(daily Jan. SOX tit. Stat. ed. (§ (“Auditor Leahy) (post-enactment) 1514A Independence”). Sen. at 771-75 intentionally sweep broad- integ- “was written regarding committee’s concerns ly, protecting any publicly of a rity and independence accountants and took traded who such reasonable auditors are addressed SOX virtue try to protect action to investors by an provisions, expansive these and not market”). 1514A(a). “employee” §in definition of point report’s

Plaintiffs committee legislative activity Post-enactment supporting background discussion position. report decries retaliation enactment, After there SOX’s have Enron, at whistleblowers two attempts been relevant amend the company. Rep. S. 107-146 at See Act, successful, one the other not. theAs retalia- report 4-5. But also discusses in North Court said Haven Board Edu against employees tion at Arthur Ander- Bell, 1912, v. cation S.Ct. sen, entity both a private was (1982), “[although posten 72 L.Ed.2d 299 “independent” consultant Enron and its developments actment cannot be accorded report auditor. See id. at 3. The states weight legislative ‘the of contemporary his a variety corpo- of instances ... “[i]n tory, we would be if ignored remiss we rate at both Enron and Ander- expressions concerning these authoritative attempted sen report ‘blow the whis- ” scope purpose previous enact fraud, discouraged tle’ on but were (quoting ments. Id. at S.Ct. nearly every turn.” Id. at 4-5. The re- Chi., v. Cannon Univ. port cites also the fact an “Andersen (1979)); n. L.Ed.2d 560 partner apparently was removed from the Reno, also see Goncalves F.3d expressed Enron account when he reserva- (1st Cir.1998) (“[Subsequent legisla 133 practices tions about the financial firm’s developments, although tive never deter culture, an “example” sup- 2000” as of “a themselves, minative in ‘significant’ can be law, ported by employ- that discourage[d] clues to congressional (quoting intent.” reporting ees from fraudulent behavior.” Cardoza-Fonseca, 421, INS v. 480 U.S. Id. at 5. 430, 1207, 107 S.Ct. 94 L.Ed.2d 434 Congress’s about concern Arthur Ander- (1987))). special sen provisions was addressed I, to accountants. See SOX tit. 116 Stat. We turn to the effort failed to ex (“Public 1514A(a).18 at Company Accounting 750-71 pand “employee” the term protect age report acknowledge those who We legislative fraudulent that “failed proposals particularly 'a activity dangerous are damages publicly that investors in ground on which to rest an of companies.” Cong. traded 148 Rec. S1788 ” prior Craft, statute.' United States v. 12, 535 2002). (daily ed. Mar. contend Plaintiffs 274, 1414, 287, 122 S.Ct. 152 L.Ed.2d supports reading statement this broad (2002) (quoting Pension Guar. Benefit point of the statute: if the of 1514A is to 633, 650, Corp. Corp., v. LTV 496 U.S. protect compa- investors in (1990)). S.Ct. 110 L.Ed.2d 579 Howev- nies, then it statute makes sense er, attempts has Court used failed protect report would whistleblowers who statutory amend as aids to under- companies, fraud such even if a whistle- See, standing Congress's e.g., intent. FDA v. company's the employee blower is of such a Corp., Brown & Williamson Tobacco 529 U.S. agent. disagree contractor or We that Con- 120, 144, S.Ct. L.Ed.2d gress meant cast so broad a net. (2000) ("Congress rejected considered Affairs, reported never but was Urban Fitzgerald introduced Senator of that committee.19 Mutual Fund out entitled the bill the Senate (MFRA). S.2059, Act of 2004 Reform argue that MFRA is evi- Defendants 116(b) (2004). of Section .Cong. 108th did not believe dence 1514A(a) have amended MFRA would private covered of of investment cover explicitly did, companies; if it contractors to amended to mutual funds. As advisers would have then MFRA’s amendment MFRA, § have read: would cautious, are more superfluous. We been Employees Protection for there is no statement MFRA’s Whistleblower because Reg Publicly Companies and legislative history regarding sponsors’ Traded its 116(b) Companies or of understanding Investment of section istered —No 1514A(a).20 regis Shipbuilding of securities with a class Seatrain company Cf. Co., 12 of the Securities Corp. under section v. Shell Oil tered (1980) (con- (15 78l), 63 L.Ed.2d 36 Act of 1934 U.S.C. Exchange history discussing why sidering legislative under required reports to file or that is 15(d) provi- chose to amend a certain Exchange Congress of the Securities section another, (15 78o(d)), way sion in one but not and stat- or that Act of 1934 U.S.C. subsequent Con- adviser, ing “while the views un principal an investment cannot override the unmistakable gresses derwriter, provid service significant or one, such views are enacting intent of the (as under such terms er defined (citations significant weight” entitled 2(a) Company the Investment section omitted)). Supreme has stated Court 80a-2(a))) (15 an Act “[cjongressional persua- inaction lacks registered which is investment equally several significance sive because Investment Com section 8 under may be drawn from inferences tenable officer, employ Act pany inaction, the inference that including such subcontractor, contractor, agent ee, already incorporat- existing legislation demote, may discharge, company, Craft, 535 U.S. at change.” ed the offered threaten, harass, in any oth suspend, (alteration original) an em er manner discriminate Denver, N.A., 511 Bank (quoting Cent. conditions of in the terms and ployee 1439) (internal quo- 114 any of lawful act employment because omitted). most, At this is tation marks by employee— done clue, but far from conclusive. 116(b) S.2059, (emphasis § Cong. 108th 1514A(a). § Later, added). Congress did amend to the Sen- MFRA was referred Re- Dodd-Frank Wall Street Housing, and In 2010 the Banking, on ate Committee regarding only MFRA's granted juris 20. The statements the FDA” that would have bills tobacco.); regulate N. Haven Bd. amendment diction whistleblower of Bell, 512, 534, See, general. e.g., Educ. v. Congressional are Record (1982) ("Congress has 299 10, 2004) 72 L.Ed.2d (daily Cong. ed. Feb. Rec. S794 150 amended pass that would have refused to bills (“[MFRA] (statement Fitzgerald) puts Sen. of coverage employment of to limit its 901 by: ... institut- of investors first the interests "). discrimination. Sarbanes-Oxley-style provisions inde- accounting auditing, of pendent codes in the House in MFRAwas also introduced officers, ethics, compliance compliance chief to the Sub- as H.R. 4505 and referred certifications, protec- and whistleblower Markets, Capital Insurance on committee tions.”). Enterprises. was Sponsored It Government reported that subcommittee. never out of (Dodd- form Protection Act such a clarification was necessary and Consumer believed Frank) explicitly 1514A(a) by amended 1514A ex- of “[t]he [§ because ] tending employ- whistleblower may remedy read as providing only be companies’ ees of subsidiaries issuer, by for retaliation by and not employees rating organiza- statistical of an Id.21 subsidiaries issuer.” 1514A(a) by tions. Section as amended Furthermore, Cardin, Senator in re- Dodd-Frank reads: an introducing marks amendment company No with a class of securities 922(b) that section Dodd-Frank became under registered section Secu Act, explained that “Section 1514[A] (15 Exchange Act of rities U.S.C. companies by which are delineates covered 781), required reports or is to file prohibited. what actions are [SOX] 15(d) of the Ex under section Securities Cardin-Grassley The amendment expands (15 78o(d)) change Act U.S.C. provision include of the any including subsidiary or affiliate rating companies.” Cong. Rec. S3349 whose included is financial information 2010). (daily May ed. In the course of in the consolidated statements financial remarks, these Senator Cardin character- company, nationally recog by ized as enacted SOX as (as rating nized organization statistical 3(a) section the Securities extending] protections defined (15 78c)), Exchange Act U.S.C. of 1934 any company regis- is officer, contractor, any employee, under tered the SEC Act of 1934 or that subcontractor, or agent of such required to reports file under section nationally recognized statistical rat 15(d) of the same act. whistleblow- ing organization, may discharge, de provisions er Sarbanes-Oxley Act mote, harass, threaten, suspend, or in protect employees traded any other manner discriminate by from retaliation giving vic- an in the terms and conditions of such tims treatment a cause of action of employment because of lawful act can brought be Federal court. employee— done Notably, Id. Senator Cardin’s statement 1514A(a), as amended again confirms that the covered employees 929A, 922(b), §§ Pub.L. 111-203 No. those of publicly compa- (2010) Stat. (emphasis nies. added). Dodd-Frank’s successful amendments of report the Senate on Committee subject are not to the rule of Banking, Housing, and Urban Affairs ac- judicial legislative wariness about inaction. companying Dodd-Frank explains that Rather, these later section 929A of actions Act amended § to weight expres- make are entitled some as an “to clear that subsidiar- Congress’s ies and may understanding affiliates issuers not retali- sion 1514A(a)’s against § ate S.Rep. whistleblowers.” No. meaning, is consistent (2010). 111-176, at 114 interpretation. The committee with our later, 1514A(a), 21. As clarify § described the fact that DOL had cern was to and it said procedural DOL, issued what were non-substantive nothing regulation about a from much regulations says nothing congressional about purport less one did not and could not to SOX, years intent in enacted earlier. That provide a substantive fact also irrelevant is to the Dodd-Frank language SOX at issue. Congress amendments because its said con-

81 justifica- is no gap for to fill—and there III. resorting agency interpretation tion for to Agency Positions Owed to No Deference ambiguity”); an Succar v. Ash- to address authority give chose not Congress (1st Cir.2005) (de- 8, croft, F.3d 22-24 term interpret or the DOL the SEC clining agency’s interpretation to defer to 1514A(a). there is no §in So “employee” clear). text is of statute where statute’s Chevron, See deference. for Chevron basis Here, no deference is independently, S.A., Natural Res. Inc. v. Def. U. owed for the other reasons we discuss. 843, Council, Inc., 837, 104 S.Ct. U.S. DOL, SEC, supported by makes a (1984). Because the 81 L.Ed.2d argument plaintiffs’ in favor of threefold is not am “employee” term First, interpretation. particular as to the defer to an adminis we would not biguous, regulations regarding coverage un- determination, OSHA contrary agency’s trative 1514A(a), Secretary of Labor der delegated authority to had even regulations these are entitled to no admits Nat’l Ass’n Home agency. See deference, agree, and the defendants for Wildlife, 551 v. U.S. Builders Defenders we state below.22 OSHA has 168 L.Ed.2d 467 reasons 127 S.Ct. (“[D]eference (2007) regulations regarding appropriate promulgated is capacity body in its as the with directly has not ad 1514A ‘Congress where authority its delegated provi- at issue’ to enforce precise question dressed text.”) “im- (quoting regulations purport sions.23 These statutory through Chevron, 2778); plement] procedures under section 806” at 1980.100(a) (1st Gillen, SOX, (2009), 590 F.3d C.F.R. Saysana v. 1514A(a)’s Cir.2009) (because be construe statutory favor, provisions plaintiffs’ there is see id. unambiguous, court “is fore the agency interpret 1980.101-.102.24 nothing for the —no adjudication. Day Staples, through accepted in dicta in formal See 22. We Cir.2009), Inc., (1st 1514A(b)(1) (“A F.3d 54 & n. 7 person alleges who dis regulations with certain DOL concerned charge by any person or other discrimination two-part test for what constituted “reason- (a) may in violation of subsection seek relief to Chev- belief” under SOX were entitled able (c) by filing complaint under subsection ... contained ron deference. That test was also Labor....”). Secretary The Sec with the Day in the relevant case law. did not concern delegated responsibility retary enforcement here, regulation relied on the issue nor the Secretary of Oc 1514A to the Assistant Day neces- here. That statement in was not Safety, Fed.Reg. cupational Health and see 67 sary holding was rather to the in that case but 65,008, and review of decisions ALJs to at dicta, holding in the con- nor was the case ARB, 64,272-73. Fed.Reg. the DOL's see 67 precise regulations at issue cerned with Day easily distinguishable, and here. pertinent regulations 24. The in effect at the Day binding panel. dicta in is not on this times in this case state that Island, v. Rhode 331 F.3d Kosereis (1st Cir.2003). representative company "[n]o that, Beyond Secretary of Labor has demote, threaten, suspend, may discharge, regula- deference for the disclaimed Chevron harass or in other manner discriminate addition, the notice of final tions at issue. any employee respect rulemaking promulgating them states that the terms, employee's compensation, condi- procedural regulations “not intended to are tions, privileges employment or because provide statutory interpretations.” 69 Fed. person acting pursu- employee, any or the 52104, 24, 2004). (Aug. Reg. 52105 engaged employee’s request, has ant to the para- any specified in in of the activities Secretary delegates to the 23. Section 1514A (b)(1) (2) graphs authority the of this section.” of Labor the to enforce statute 82 Skidmore, id., at original) (quoting

These are not entitled to 323 U.S. regulations, 161). 140, Moreover, deference, Secretary Su- Chevron as the ad 65 S.Ct. as the Chevron, stated, 467 at stat- preme agency’s mits. See U.S. Court has an addition, in promulgat utory 104 S.Ct. 2778. In is re- “interpretation ‘entitled to rules, DOL made it clear the ing spect’ only extent it ‘power to the has the ” Act. interpretations rules were not persuade.’ Oregon, to v. 546 Gonzales rulemaking promul 243, 256, the notice of final 126 S.Ct. U.S. 163 L.Ed.2d gating regulations, repeatedly (2006) Skidmore, these OSHA (quoting at procedural 161). states that rules are “[t]hese The notice final provide nature and intended to are not reasoning to rulemaking here contains no interpretations Fed.Reg. the Act.” 69 support OSHA’s construction of the cover- 2004). 52,104, 52,105 In this (Aug. 1514A(a), age provisions saying case, explicitly the DOL has stated that that regulations] “OSHA believes that [its Department of Labor does not have “[t]he accurately statutory language.” reflect rulemaking authority substantive with re 52,105-06. Fed.Reg. at OSHA’s read- spect to section 1514A” and thus the Sec in- ing, statutory which it states is not a retary of not seek Labor does Chevron terpretation, per- “power lacks the to regulations.” deference “for procedural her note that suade.” We also the DOL’s not argue amicus brief does these partic We also conclude these particular regulations ac- OSHA should be ular not regulations OSHA entitled to deference, corded Skidmore nor does reasons, Skidmore for several deference SEC. including that text of the statute does Second, permit not on-point even that level of deference. if there were an hold- Co., ARB, might See Skidmore v. & be entitled Swift any 124 some ambiguity L.Ed. deference as in the (1944). Congress has made the choice statute. The is two point irrelevant for Further, given First, a agency role. reasons. find no so ambiguity, we Chao, “the Skidmore standard entails ... a no slid deference is owed. Welch Cf. (4th (ac- ing-scale Cir.2008) approach under which the n. 2 de F.3d gree of agency cording deference accorded to an to a deference decision of the ARB interpretation hinges variety on a interpreting of fac 1514A because the statute tors, thoroughness expressly such as ‘the delegated Secretary evident consideration, agency’s] [the validity authority by Labor enforce the statute reasoning, consistency adjudication its formal Secretary [and the] and the del- [of ARB). interpretation] Second, its egated with earlier and power later ” Leavitt, pronouncements.’ Doe v. there no ARB on event decision (1st Cir.2009) (alterations case, F.3d point,25 Zang and the ALJ 1980.102(a) (2009). regula- employment 29 C.F.R. whose could be affected company representative,” company “company representative” or id. tions define officer, contractor, "any employee, mean sub- Building In Johnson v. Siemens Technolo- contractor, agent company,” or id. Inc., complainant gies, brought a claim of 1980.101, “employee” to mean “an in- retaliation under 1514A em- her formerly presently working dividual for a subsidiary ployer, of a traded com- company representative, company an indi- pany. disposed The ARB of the case applying vidual to work for a holding SOX as enacted company representative, or an individual covered of subsidiaries of companies. In dicta to which no deference just ARB, analysis panel employed a conclu- this same reached the level below ago, pains paying any take to avoid Zang, 2008 weeks with ours. See sion consistent agency heed to considered views to which WL deference, compels precedent circuit arguments have considered the We poten- class of significant as a result bar SEC, of the DOL and in amicus briefs tial securities-fraud whistleblowers from positions to the no deference but we owe I any legal protection, dissent. rulemaking has no there. The SEC stated 1514A, Accepting allegations in the com- § authority as to so or enforcement true, plaint plaintiffs Zang as Lawson and any provision, its ex-employees private companies are any form, no deference would be owed manage pub- that contract to advise or Compounds, Plastic event. See Hoffman 137, 143-44, licly Fidelity-brand held mutual NLRB, funds. Inc. v. U.S. (2002); The mutual themselves have no em- FLRA funds L.Ed.2d 271 plaintiffs Both the whistle ployees. blew Navy, 941 F.2d Dep’t funds, Cir.1991). by (1st putative on fraud the mutual advanced arguments (actually constructively) both were fired or DOL, authority to by the which does have by employers. 1514A, § see 18 U.S.C. enforce 1514A(b)(2)(A); 1514A(b)(1), §§ 49 U.S.C. Sarbanes-Oxley purports Act 42121(b), arguments mirror the textual protect securities-fraud whistleblowers. on the plaintiffs of the and are based Specifically, provides 806 of the Act “specialized experience.” Skid DOL’s company with a “[n]o class securities more, 65 S.Ct. 161. In registered under section 12 of the Securi- 1514A(a) addition, view the text of we (15 Exchange ties Act of 1934 clear. 781), required reports or that is to file 15(d) under section of the Securities Ex-

IV. (15 78o(d)), change Act of 1934 U.S.C. Conclusion officer, contractor, any employee, subcon- tractor, agent company, may of such If intended wrong we are demote, threaten, discharge, suspend, ha- “employee” the term to have rass, any other manner discriminate meaning a broader than the one we have employee an the terms and con- at, arrived it can amend the statute. We employment ditions of because of law- Congress has written. are bound what employee” report ful act done and remanded with instruc- Reversed activity reasonably suspects tions to dismiss actions. No costs to be fraud. securities 18 U.S.C. awarded. (prior to amendment Dodd-Frank Wall Street Reform and Con- THOMPSON, Judge, dissenting. Circuit 2010). sumer Protection Act of my colleagues impose an un- Because intentionally present purposes, undisputed warranted restriction on the For Sarbanes-Oxley Fidelity mutual fall under broad funds Act, employ statutory plaintiffs’ employers a method of con- that the con- funds, diametrically opposed Fidelity tracted with the mutual struction owed, pub- protections than could be the ARB stated that SOX’s for more licly companies." WL “legislative history demonstrates that Con- gress intended to enact robust whistleblower at *12. plaintiffs’ employers discharged the the expense of the text itself.” Id. at 499 (internal plaintiffs employees. removed). the In other n. quotation marks —their words, in each a “contractor ... case of We also noted that it was no means ... discharged] ... an em- clear that the word “theft” in the title was ployee.” might Id. One think our inquiry intended to limit the effective here: Sarbanes-Oxley’s would end whistle- the statute. (citing Id. United States blower-protection provision by its terms Godin, (1st Cir.2008)). 534 F.3d applies. According majority, to the how- finally, Fourth and we looked at legislative ever, one would be incorrect. history and noted that implicitly restrictive references to “theft” could not limit majority engage faulty in a the statuto- exercise, scope of ry-interpretation statutory language. broad one whose Id. wrongness 500. More perhaps highlighted specifically, nothing best leg- the through contrast with our recent islative history explicitly decision suggested “that Ozuna-Cabrera, in United States v. Congress intended to so narrowly restrict (1st Cir.2011). F.3d 496 In Ozunctr-Cabre- Instead, the statute’s reach.” Id. leg- the ra, application we held that “Aggra- history islative that Con- “demonstratefd] Identity vated Theft” statute is not re- gress intended [the statute] to address a stricted to situations involving traditional array wide of’ conduct. Id. Applying this theft. Id. at 501. This analysis is how our analysis same present produces case went: very different result than the one the majority reach.

First, we plain looked to the language of the statute and noted that it contained no First, looking plain language of limiting restriction application statute’s statute, only one can conclude that involving situations theft. Id. at 498-99. there is no limiting restriction the statute’s Instead, the statute contained application publicly held phrase broad “without lawful authority.” companies.26 As I already pointed have Second, Id. we looked to statutory out, boiling the statute down its relevant framework, noting phrase that the “with- syntactic elements, provides it ... “no out authority” lawful was used in the stat- may contractor ... discharge ... an em- criminalizing utes identity both fraud and 1514A(a). ployee.” 18 U.S.C. The stat- aggravated identity theft. Id. at 499. Be- ute does not limit its to “an em- cause identical language appeared both, ployee of a company” just held statutes, related only one of which refer- broadly refers to “an employee.” (albeit title), enced theft at all in the we fact, majority’s deemed it of- unlikely that Congress intended fends a phrase longstanding import statutory rule of in- the elements of com- Third, terpretation, footnote, violating mon-law theft. Id. statutory lan- we statutory (which, guage by looked to the rendering title again, word “contractor” theft) referenced See, and noted superfluous. that “we do the statute e.g., Unit- rely on the statutory Ven-Fuel, Inc., titles of enact- ed States v. 758 F.2d plumbing (1st Cir.1985) ments in meaning ... at 751-52 (providing that “no In addition to our own recent decision in coverage,” ers from ... the reasonable con- Ozuna-Cabrera, days-old Supreme Court de- clusion is "that did not limit just cision impropriety has reaffirmed the scope coverage.” Oper- [the statute]'s Pac. - imposing Valladolid, extra-textual Offshore, limitations on statutes: ators LLP v. -, 680, 689-90, where “[t]here is no indication in the text ... 181 L.Ed.2d 675 [particular] the [statute] excludes work- (2012). Maj. adopted reading Op. of the Act. 70-71 should be construction Cf. statutory phrases words or render would (noting Congress explicitly “enact[ed] superfluous”). meaningless, redundant protection broader whistleblower else suggest that the word “con majority ... ... it explicit where was where intend only intended to refer to might tractor” be regulate non-public ed to entities ... [and] “ax-wielding specialists” that so-called choices about regulatory made different lay in companies bring off em entities”). mechanisms for different 11; Maj. Op. 69 n. see also Fles ployees. Labor, F.3d Dept. zar v. U.S. 598 An example Congress’s enactment of (7th Cir.2010) (employing the term 915 protection appears narrower whistleblower “ax-wielding specialist” providing § in Sarbanes-Oxley which bars “a George Clooney example of “the character persons employed by broker or dealer and ”). ‘Up in in the Air’ If that is played retaliating a broker or dealer” from case, mystery why it is a Con indeed against “any analyst employed securities But gress say specifically. did not so by that broker or or its dealer affiliates.” importantly present purposes, more 78o-6(a)(1)(C). § Congress 15 U.S.C. actually ax-wielding specialists when fire similarly could have narrowed the defini they public-company employees acting § tion in “employee” but it chose (rather contractors) agents than mere not to do so. We should honor that § public company. specifi And States, choice.28 Limone v. United entities, just cally agents lists as covered (1st Cir.2009); F.3d see also Pac. “contractor,” like contractors. The word Operators, (“Congress’ at 686-88 therefore, something doing must be else. detail, end, then, specify, scrupulous decision to only majority In do the § limitations on impose extratextual exactly where the other subsections of effectively but also evict the word § apply, but to include no similar “contractor” from the statute.27 This is 1333(b), restriction ... convinces us Ven-Fuel, at simply wrong. See 758 F.2d did not intend” to so limit 751-52. 1333(b).). Second, looking statutory frame- example Congress’s specific An refer- work, Congress explicitly one sees that companies appears ence to held enacted narrower whistleblower specifically itself. Section 806 in- Sarbanes-Oxley, elsewhere Con- vokes “with a class of securities gress explicit was where it intended to registered under section of the Securi- regulate public only, entities and that Con- (15 Exchange Act ties of 1934 U.S.C. gress’s choices about different mechanisms 781)” support “required reports entities to file plaintiffs’ for different under majority correctly Sarbanes-Oxley wrong. 27. state that their in- where in is Not (§ 1107, terpretation superfluous provision does not render the referenced enacted is “officer, contractor, 1513) phrase employee, actually subcon- than at 18 U.S.C. narrower tractor, agent company” respects example, of such 806 in some it cov- —but —for my point. Maj. Op. My point, is not 68. whistleblowing only police, ers not to work unrebutted, that their inter- which remains nothing pro- supervisors does also —but pretation superfluous essence, renders the word "con- nothing tect whistleblowers. it is tractor.” obstruction-of-justice more than a criminal targeted wrongdoers, statute at not whistle- Moreover, blower-protection targeted at majority's contrary example statute wronged. of broader whistleblower else- 15(d) Ozuna-Cabrera, Exchange section the Securities itself.” 663 F.3d 499 n. (15 78o(d)).” already Act of 1934 The 3. I have explained nothing how goes section on to list number of other either the text or the context of entities, including covered contractors. It actually supports conjured the limitation companies” the modifier “of such also uses majority. A few words a title to, contractors, point e.g., at one to refer change are not sufficient to that rock-solid notably employees. but not to refer to insufficiency fact. That especially glar- fact, the section does not limit the word where, here, the title does pur- not “employees” any way. Again, we should port apply any to explicit (e.g., limitations Congress’s honor employ choice to broad protection employees “whistleblower Limone, language. 579 F.3d at 105. public companies only”) merely but de- specific scribes a application common majority’s And the examples own generally of a more applicable statute.30 Congress’s electing to apply different Ozuna-Cabrera, 663 F.3d at 500 (“ag- mechanisms to different highlight entities Cf. gravated identity may commonly theft” ap- reading correctness of a broad ply actually to “criminals who steal other § majority 806. The note that “[else- identities,” people’s but this is one SOX, where in Congress specifically did statute). application of a broad Under address investment and invest- Ozuna-Cabrera prece- and other circuit Maj. ment advisers.” Op. 73. The first see, dent, e.g., Mass. Ass’n Health example they provision look to is a Ruthardt, Orgs. Maint. 194 F.3d exempts investment mu- (including entities (1st Cir.1999), advisers) gets majori- the title tual funds and mutual fund from ty certain, nowhere. specific requirements of the Act. § See 15 U.S.C. 7263. No such exemption Fourth, nothing legislative history appears in and the absence of an Sarbanes-Oxley congressional indicates exemption surely suggests Congress intent to limit whistleblower protect intended to of mutu- Instead, companies. al fund advisers.29 majority’s second legislative history positively all refers example 80b-3—deals with —15 extending “Registration of investment advisers” encourage order to the reporting of securi- says nothing Maj. of whistleblowers. ties fraud. Op. 73. The existence of a section tailored to investment hardly advisers exempts According Sarbanes-Oxley’s Senate Sarbanes-Oxley’s entities from (Section I, report conference titled “PUR- all, provisions'

broader 806. After —like POSE”) key purpose chapter Congress exempt’investment knew how to protect includes 806 is “to whistleblow- entities when it wanted to do so. See 15 report ers who fraud retaliation U.S.C. 7263. employers.” S.Rep. No.

Third, (2002). caption statute’s title and do *1 There is no mention of compel reading limited of its lan- limitation on which employers are covered. instead, guage; majority’s strained The breadth of specific purpose this com- reading expense comes “at the ports the text purpose: the Act’s overall “to Indeed, note, 29. majority Congress as the repeat: 30. I "explicit the title contains no explicit "made when it intended guides Maj. Op. to the limits" on 69. Maj. and when it Op. (emphasis did not.” added). punish corporate majority’s indeed, and criminal none of prevent and no sources— fraud, fraud, protect the victims of such expresses any source at intent to re all— fraud, and preserve evidence of such hold narrowly.32 strict 806 so Ozuna- Cf. (“Without wrongdoers Cabrera, accountable for their actions.” ques 663 F.3d at 500 Indeed, very tion, Id. this court has endorsed Congress harbored concerns over understanding purpose, of the Act’s broad actually criminals who steal people’s other noting that 1514A whistleblower “[t]he nothing identities. There is to suggest, ‘encourage serves provision thus however, nar intended so [employees] report who fraudulent protect reach.”). rowly restrict the statute’s It is activity damage that can innocent inves strange that the same circumstance —lack ” companies’ tors in and of congressional intent to limit broad stat provide that also aimed ‘to federal “[i]t utory language cut differently so —could protection private corporate to whistle- two different cases. Inc., Day v. Staples, blowers.’” 555 F.3d majority’s And the reliance on subse- (1st Cir.2009) (alteration original) quent legislative history is entirely mis- (2002), (quoting S.Rep. No. at *17 placed. only Not does their reading of the Corp., v. Bos. Carnero Scientific provision’s whistleblower subsequent (1st Cir.2006)). Again, F.3d extend defy faulty amendment their own logic, but ing protection employees whistleblower ignore also the administrative back- specific of contractors fits both with the drop against which Sarbanes-Oxley was whistleblower-protection purpose of Sar amended Dodd-Frank. banes-Oxley and with its broader anti- purpose. fraud point, majority’s On the first read of Moreover, legislative history none of the Dodd-Frank defeats their overall conclu- majority rely actually any on evidences sion as a of simple grammar. matter On hand, congressional scope they say intent to limit the the one that phrase (from 1514A) protection. 806’s whistleblower All of [public 18 U.S.C. “No com- majority highlight the statements the pany], any de- ... ... contractor of such protect employees public- note intent to company, may discharge ... an employee” ly companies. Maj. traded Op. See 77-78. employees does not extend wholly hand, Such is a uncontroversial contractors. they say On other (from undisputed effect of phrase section, 806.31 The the same question is whether protection post-Dodd-Frank) is limited to [public company] “No employees only. entities And ... nationally recognized statistical rat- undisputed says 31. Also uncontroversial and provi- is the ment that "[t]he whistleblower majority's “Legislative discussion in its Sarbanes-Oxley protect Histo- sions of the Act em- ry” Congress's addressing section of ployees publicly "concern companies,” traded "special provi- about Arthur Andersen” with Cong. (daily May Rec. S3349 ed. Maj. Op. 2010); sions as to accountants.” In majority say this statement "con- being addition to uncontroversial and undis- employees that the firms covered are however, puted, Sarbanes-Oxley's special companies.” those Maj. provisions as to added). accountants are irrelevant Op. (emphasis point As I out here. above, "only” word would indeed indicate limiting appeared intent—if it in Senator Car- (or, matter, majority's 32. reference to din’s statement for that Senator Car- abso- example lutely any legislative din's statement is textbook of their relevant materials what- soever). not, imputing any an intent to limit where none is But it does so neither does Specifically, limiting evident. Senator Cardin's state- intent. enacting In Dodd-Frank may discharge company”). ... ... an organization then, of rat- a miles-wide employees had employee” apply does (noting Maj. Op. 79-80 in the ings companies. nip regulation Labor’s opening “explicitly extend[ed] Dodd-Frank if to do so. It did not. bud it had wished limited) to ... (very subsequent extent To the rating organizations”). here, of statistical history anything tells us legislative “rating or- “contractor” and phrases, these majority are incorrect. tells us syntactic equivalents ganization” if circuit has kind of precedent So effect. given equal be should therefore majority go methodological value then the employ- plainly protects both The statute in this things exactly about backwards rating ees of contractors and contrary pan To reiterate: to this case. companies. Ozuna-Cabrera, major analysis el’s majority’s the admin- ignoring As to the myopic take a ity ignore the text of let start with the backdrop, istrative us context, wrongly in view of section’s courts, proposition well-settled law, operative title into flate the section’s statute, that at construing when assume limiting legislative and attribute a intent enactment, the time of the statute’s Con- reality that a history supports broad gress agencies’ was aware of courts’ and majori reading Again, of the statute. interpretations existing law. Lorillard ty wrong.33 Pons, 55 v. 434 U.S. majority rely To the extent the on analo- (1978) (“Congress presumed 40 is L.Ed.2d statutes, they get wrong, that too. gous judicial to be aware of an administrative or that There is indeed evidence Sarbanes- interpretation adopt statute and Oxley H. part was based on the Wendell interpretation that when it re-enacts a Ford Aviation Investment and Reform Act change.”). At the time of statute without (“AIR”). Century Rep. for the 21st See S. Dodd-Frank, Department of Labor (2002). pro- at *26 The relevant (which statutorily tasked with adminis- vision of AIR is entitled “Discrimination § tratively adjudicating 806 whistleblower reads, against airline and 1514A(b)(l)) employees,” claims, § see 18 U.S.C. had air carrier or contractor or subcon- “[n]o regulations ex- issued notice-and-comment may discharge tractor of an air carrier an § plicitly providing applied that to em- employee otherwise discriminate ployees public companies. of contractors of (2009) against employee.” an § (defining 29 C.F.R. 1980.101 “em- 42121(a). § perfectly par- This structure ployee” presently as “an individual or for- company § allels ... or merly working company “[n]o for a 806’s: ... ... representative” “company representa- contractor subcontractor [or] as, e.g., “any may discharge tive” ... contractor ... of a ... or in company, I, one, majority’s 33. The to be can in a result seems driven for discern no "anomalies” “very coverage.” Maj. Op. protects 806’s broad determination that whistle- very precise goal against employ- But broad was blowers retaliation (consider- Maj. Op. majority §of 806. See 77-78 n. 17 ers. If the consider anomalous the of, ing legislative history supporting unlikely employee say, broad whis- scenario where an coverage, rejecting history superstore Staples manages spot tleblower then that office of, dixit). by ipse majority say, report also refer securities fraud in the course binding company's obliquely printing public that would fi- "anomalies” occur if give scope reports, why we were to 806 the broad Con- nancial I see no reason that intended; however, gress identify protected never should not be a whistle- policy. Maj. Op. what either law or those "anomalies” are. 79-80. blower as matter of (7th against Statutory manner discriminate an any other Construction 60:1 ed.2010); §in AIR employee.” Just as does accord Dudley v. Hannaford Co., (1st specify protects employees Cir.2003) whether it Bros. 333 F.3d protects of carriers or whether it (citing Tcherepnin Knight, contractors and subcontrac- (1967)). L.Ed.2d 564 majority tors as well. The conclude achingly It should be point clear this carriers, protects employees AIR con- nature; 806 is specifi- remedial tractors, subcontractors, but cally, remedy aims to of compa- evil protects only employees firing nies’ reporting puta- primarily companies, because—in the ma- tive securities fraud. statutory Where the view, jority’s notwithstanding the broad language supports a reading broad language passed legislative branch comports with that remedial purpose, and the considered precedent calls for implement courts to executive branch 806 would be exces- reading. that broad Dudley, See 333 F.3d Maj. sively Op. broad.34 73-74. This is majority at 307. The inexplicably fail to judicial overreaching of highest or- heed this call.

der.35 Second, at opposite end of the in principles statutory

Other basic inter- terpretative spectrum is the so-called rule pretation support a broad reading lenity, an “ancient statutory rule of con majority’s reasoning. and undermine the penal struction that statutes should be (1) principles broadly These are: that we strictly construed government (2) statutes; interpret remedial that we ... and in favor of persons on whom narrowly interpret immigra- criminal and penalties are sought imposed.” to be (3) statutes; tion presume and that we a Singer, Statutory Sutherland Construction right statute will not create a of action Ozuna-Cabrera, § 59:3. In a criminal implication. The princi- relevance of these case, we held that this had principle no ples immediately here is not apparent, so I place because the text did not support the explain. will proposed defendant’s limitations. See 663 First, Now, F.3d at generally courts adhere to 498-99. in a context the where principle supposed that statutes are we are to “[r]emedial lib default to breadth and erally narrowness, suppress reject construed to the evil majority the neverthe remedy.” advance the Sing impose analogous 3 Norman J. less extratextual limita er Singer, & J.D. Shambie Sutherland tions. This is precisely backwards. AIR, according majority,

34. Maj. Op. is not ex- (discussing tions. See Energy cessively Act, 5851(a)(1), broad Reorganization because it includes a subsec- 42 U.S.C. narrowly Act, tion that Pipeline Safety Improvement defines “contractor.” and the But 60129(a)). majority's reliance on AIR's narrower provision example proving as the 806’s apparently provision actually broader is Indeed, nar- during appeal’s pendency, this logical rower than AIR’s is a Escher stair- Supreme again Court has reaffirmed the im- way just as nonsensical as it sounds. propriety judges’ limiting scope of of a —it’s " limiting That AIR has a definition means AIR policy statute's reasons: '[I]f limiting is That narrow. 806 has no defini- Congress’ coverage decisions are mistaken as Logic gram- tion means 806 is broad. policy, Congress change of it matter is for to ” preclude any contrary mar conclusion. And legislate them. We should not for them.’ reasoning the same that the Operators, demonstrates ma- (quoting Pac. 132 S.Ct. at 690 jority properly rely analogous 414, cannot Welding, Gray, on whis- Herb's Inc. v. 470 U.S. 427, 1421, limiting (1985)). tleblower statutes that include defini- 105 S.Ct. 84 L.Ed.2d 406 Inc., 761, lanta, 148, 552 U.S. 128 S.Ct. reading of fact, rejecting broad

In (2008) 772, (noting L.Ed.2d 627 one, a narrow imposing § 806 and scope implied limit courts should part on cases majority rely significant judicial creation of rights of action because here) (unlike interpretations narrow where contrary remedies “runs to the estab the rule absolutely appropriate under were jurisdiction of principle lished that ‘[t]he in I.N.S. v. Nat’l lenity. example, For against ex guarded the federal courts is (NCIR), Inc. Immigrants’ Rights, Ctr. for ” (quot pansion by judicial interpretation’ L.Ed.2d 112 S.Ct. 502 U.S. Chi, ing Cannon Univ. (1991), Supreme Court narrowed 1946, 60 L.Ed.2d 560 99 S.Ct. “employment” of the word scope (1979) (Powell, J., dissenting))); Cent. imposing restrictive bond used in a statute Denver, Bank N.A. v. First Interstate in removal conditions on aliens embroiled N.A., Denver, Bank U.S. words, by narrow- proceedings.36 other (1994) 114 S.Ct. 128 L.Ed.2d 119 immi- types employment (holding implied right of action out on grants could not undertake while under SEC Rule 10b-5 does not extend bond, them and the Court benefitted “Congress aiders and abetters because lenity. rule of thereby honored the NCIR abetting impose aiding knew how suggest that a by any does not means so”); liability when it chose to do Blue appropriate restrictive Stores, 421 Chip Stamps Drug v. Manor strip intentionally legal protections broad 1917, 44 L.Ed.2d from whistleblowers.37 (1975) (limiting availability presumption Third and last is the right of implied action under Rule 10b-5 rights of action. The ma implied securities, purchasers actual sellers jority repeatedly expressly ap cite cases in part because wished “[w]hen as if these cases plying principle this provide remedy to those who neither support limiting explicit somehow causes securities, little purchase nor sell had action, too. Here is a list of several Here, doing expressly”). trouble so we majority wrongly such cases on which the implied right are not faced with an rely: Grp., Inc. v. De Capital Janus First narrowly; action that should be applied — Traders, U.S. -, 131 S.Ct. rivative instead, a that dealing we are with statute (2011) (hold 2296, 2303, 180 L.Ed.2d 166 right a of action expressly creates broad ing that a mutual not may fund adviser be employee-whistleblowers who suffer a mutual fund’s violation of found liable for By at their employers’ retaliation hands. 10b-5, in of “the part breadth, SEC Rule because rejecting Congress’s intentional scope give that the [courts] narrow must majority legislative pro the undermine the action”); implied private right way Stoner that precisely cess the same the Partners, against time idge Supreme Inv. LLC v. Court has warned Scientific-At- immigrants perfectly my lenity applies point rule 37. Let me be clear: is that majority wrong proceedings rely well are sub- removal as as defendants on cases See, proceedings. e.g., ject lenity. despite v. to the rule And dis- criminal I.N.S. St. 289, 320, 2271, rule, majority Cyr, claiming any 533 U.S. 121 S.Ct. reliance on " (2001) (relying long- rely applies. L.Ed.2d 347 on 'the still on cases where the rule standing construing any lingering Maj. (providing principle Compare Op. that 69-70 majority reasoning” ambiguities deportation in favor of "follow the statutes same ” NCIR), Maj. Op. (providing (quoting that "the the alien’ I.N.S. Cardoza-Fonse- ca, 421, 449, lenity interpreta- place rule of has no in our 480 U.S. (1987))). 1514A(a)”). L.Ed.2d 434 tion of again implied § and time the context of 1980.101. On point, this Labor found the rights they of action. That do so re- statute as clear as I regulations do: the stricting proclaim broad statute rather than ex- they non-interpretative, are panding narrow statute is beside the Fed.Reg. (Aug. 2004), point: usurping are still Congress’s so Labor must have thought the statute lawmaking system role in our govern- simply says: means what it ... “[n]o con- ment. tractor ... of company! may ] dis- charge ... an employee” for reporting egregious, though, Even more is the ma- 1514A(a). fraud. 18 U.S.C. And we jority’s thirty-five conclusion—after pages have previously held that regulations construing statutory provision to which deference, entitled to Day, Chevron they say readings “different may giv- be at F.3d 54 & n. meaning that we en,” Maj. Op. 67 that the statute is “not should honor Labor’s read of the statute ambiguous” and even “clear” in imposing a it arbitrary unless capricious limitation on the word “employee” that contrary U.S.A., to law. Chevron Inc. v. appears nowhere in the statute’s text. Id. Council, Inc., Natural Res. Def. peculiar 83. This determination38 81 L.Ed.2d 694 appears to be nothing more than a mecha- (1984). rejecting nism for multiple the views of agencies39 federal daily come into Again, all this would seem to end our contact with the Sarbanes-Oxley inquiry. Act and Not does Sarbanes-Oxley provision, its whistleblower and for down- its protect employees terms playing this court’s earlier determination contractors of companies, but the that agency views are entitled to defer- agency that every § handles 806 whistle- fact, ence. thing clearest about the complaint blower has regula- issued formal breadth, statute is its Department as the tions recognizing straightforward in- regulations Labor’s confirm. terpretation, and this court has held that regulations But, are owed deference. above, As I’ve mentioned Depart somehow, authority of all three ment of Labor adjudicatory authority has branches of government does win the comp over Sarbanes-Oxley whistleblower day: majority disregard Congress’s 1514A(b)(1). 18 U.S.C. To ex laints.40 language, reject broad agency’s regula- ercise authority, the Department of hand, tions out of and do their best to promulgated Labor has regulations re neutralize this court’s Day by decision in garding Sarbanes-Oxley. 29 C.F.R. labeling distinguishable both and dicta. § 1980.100 seq. regulations et specifi Maj. Op. 81 n. 22. cally provide that Sarbanes-Oxley^ whis tleblower extends to Here is what said in Day: we “Both the of public companies. contractors Id. DOL regulations, which are entitled to 38. peculiar, part, The determination Although my is be- 39. dissent limits its discussion to principle cause of the basic that a court will Department regulations, the of Labor's the generally beyond only look a statute's text Commission, too, Exchange Securities and See, interpreting ambiguous when statutes. has filed an urging amicus brief in this case e.g., Corp. Darling’s, Gen. Motors 444 F.3d the same broad 806. 98, (1st Cir.2006) (noting that "we ... will plain language look behind the given has not Labor substantive legislative history if we find the statute rule-making authority, but this does not mat- (internal ambiguous” quotation marks omit- shortly. ter for reasons I will discuss ted)). 218, 237, deference, Corp., estab- Mead 533 U.S. and the caselaw

Chevron (2001)). ‘reasonable belief has 150 L.Ed.2d 292 Here we lish that the term objective component. subjective though a Even both have such case. Labor 555 F.3d at 54. We agree.” Day, statutory authority We lacks issue substan- why regula- explain on to then went regarding § and even tive rules deference, noting tions were due Chevron regulations labeled its though Labor has among things “Congress explic- that other under Skidmore we non-interpretative, Secretary of Labor itly delegated to just cannot throw its considered views still § 1514A formal authority to enforce out the window. adjudication.” at 54 n. 7. This is not Id. Nevertheless, majority conclude that merely did not the stuff of dicta. We First, they place Skidmore has no here. regulations certain DOL “accept ... and, say, unambiguous the statute is there- deference,” ... to Chevron were entitled fore, nothing can add to its con- Labor affirmatively Maj. Op. n. 22—we stated Maj. Op. struction. 80. On the heels of were, explained reasoning our on majority’s lengthy statutory-interpre- point, and relied on the conclusion analysis, tation this claim no holds water. And our broad state- reaching our result. susceptible multiple A statute that is may ment not have been “concerned with interpretations meaning and whose re- id., here,” regulations at issue precise thirty quires pages explain over is nei- purport precise but it did not to involve unambiguous by ther clear nor definition. instead, spoke sweepingly it regulations; See, e.g., Singer, Statutory 2A Sutherland regarding § regulations of Labor’s 1514A. (“Ambiguity 45:2 exists Construction it Day good If remains law then controls capable being when statute under- here and deference to Labor’s we owe reasonably persons stood well-informed regulations. senses.”). if two or more different And said, go That we need not so far as to not, fact, unambiguous, the statute is apply Chevron deference here. While play. then Skidmore deference is in suggest of Labor does Department judicial In guiding inquiry ap into the deference, degree of Day compels some propriate respect give level of we should regulations properly concedes that the views, requires Labor’s Skidmore consid something than due less Chevron defer- thoroughness eration of “the evident Naturally, ence. the Skidmore doctrine consideration, validity of its [Labor’s] comes to mind. reasoning, consistency its with earli [and] Co., In Skidmore v. & Swift Skidmore, pronouncements.” er and later (1944), 89 L.Ed. First, 323 U.S. at 65 S.Ct. 161. con Supreme Court held that considered trary majority’s determination that agency views—even informal ones—should Maj. provided reasoning,” Op. Labor “no provide guidance to the courts to the ex- spent paragraph explaining Labor “power per- tent those views have the literally, taken applied suade.” have the Skidmore We “ extends of con agencies’ rule to views in cases “where public companies. tractors of See 69 Fed. statutory circumstances indicate no [con- 52,105-06. majority Reg. at never gressional] delegate general intent to au- ” overcome convincingly agency’s simple thority to make rules with force of law.’ application grammar of basic to the statu Corp., Navarro v. F.3d Pfizer (1st Cir.2001) te,41 only can it (quoting pretend United States v. and so isn’t there. fact, majority validity grammatical implicitly edge 41. Labor's read- acknowl- Continuing with the other fac very reject Skidmore work hard to our own tors, agency’s reasoning precedent is valid be but also the views of the other plain language cause the statute’s does government, branches of say nothing of extend of contrac grammar logic. The simple answer to (as above). explained tors I have And as question certified from the district consistency, long regula for as as the court42 yes. reasons, For these I dis- consistently tions have existed have sent.

extended to employees of con public

tractors of companies. Compare 29 (2003),

C.F.R. 1980.101 with 29 C.F.R. (2011), 1980.101 amended 76 Fed. (Nov. 68,084 3, 2011).

Reg. majority consistency

cannot claim the same in this jurisprudence. Compare Day,

court’s n. 7 (noting

F.3d 54 & “prohibit[] aims employers from retal CO.; VALLEY FORGE INSURANCE iating against employees” and “to encour Casualty American Reading, age protect employees report who PA, Plaintiffs, Appellees, activity,” holding fraudulent that the regulations Labor “are entitled to Chevron v. (internal quotation deference” marks and omitted)), Maj. brackets Op. 81 n. 22. FIELD; Carol The Carson Center Because all three weigh Skidmore factors Services, Inc., for Human favor, in Labor’s we owe deference to the Defendants, Department of Labor’s regulations. And

that means 806 extends whistleblower Murphy, David as Guardian of the protection to employees of contractors of Estate, Defendant, Child’s public companies. Appellant. To sum the whole thing up, plain- Valley Forge Co.; Insurance American ly protects Casualty Reading, PA, public companies; contractors of digging Plaintiffs, Appellees, deeper into the section’s legis- context and history only lative confirms the breadth of protections; 806’s agency considered

views further support a broad Murphy, read of the David as Guardian of the statute; majority and the Estate, have had to Defendant, Child’s opinion, 1514A, they say earlier in their when apply to an of a merits "little discussion” the statute contractor or subcontractor of a com- "may differently scope be read as to the of the pany, employee reports when that activity protected 'employees' gram- aas matter of reasonably may he or she believes con- Maj. Op. mar.” paragraph 68. If Labor's §§ stitute a violation of 18 U.S.C. applying the basic rules of 1348; any regulation rule or of the reasoning," statute constitutes "no then one Commission; Exchange Securities and majority’s wonders how to characterize provision of Federal law and such a violation "little discussion.” would relate to fraud shareholders of public company?” "Does the whistleblower afford- 806(a) Act, by § ed Sarbanes-Oxley

Case Details

Case Name: Lawson v. Fmr Co., Inc.

Court Name: Court of Appeals for the First Circuit

Date Published: Feb 3, 2012

Citation: 670 F.3d 61

Docket Number: 10-2240

Court Abbreviation: 1st Cir.