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ARB Affirms Dismissal of SOX Whistleblower Claim Against Non-Public Companies

The ARB recently affirmed the dismissal of a whistleblower retaliation claim under Section 806 of SOX, holding an employer is not a “contractor” covered by SOX simply because it was a party to a contract with a publicly traded company.  Griffo v. Book Dog Books, LLC, Robert William Holdings, LLC & Robert William Mgmt., LLC, ARB Case No. 2018-0029 (May 2, 2019).


Respondents are private companies in the business of selling and renting text books.  They entered into contracts to sell and rent books through a publicly traded retailer.  They also entered into contracts to maintain accounts and a line of credit with a publicly traded financial institution.  Complainant was the CFO of Respondent Book Dogs Books.  He allegedly complained about financial and inventory inconsistencies at Book Dog Books and, shortly thereafter, his employment was terminated.  He filed a complaint with OSHA claiming his discharge constituted retaliation in violation of SOX’s whistleblower protection provision.  After OSHA dismissed his complaint, an ALJ granted Respondents’ motion for summary judgment, holding they were not covered employers under SOX because they were not publicly traded and Complainant did not provide any services to a public company.  Complainant appealed to the ARB.


The ARB affirmed the ALJ’s decision, finding Respondents’ relationships with the two public companies were insufficient to render them covered “contractors” under SOX.  The ARB explained that, following the U.S. Supreme Court’s decision in Lawson v. FMR (2014) (discussed here)—which extended SOX’s whistleblower protection to employees of a publicly traded company’s contractors and subcontractors—courts considering the meaning of “contractor” under SOX have held that an employer is not a covered “contractor” simply because it has entered into a contract with a publicly traded company.  The ARB ruled that “at a minimum, a ‘contractor’ under [SOX’s whistleblower provision] must actually perform a service for a publicly traded company.”  The ARB concluded that since Respondents were only customers of the public companies, and did not provide any services to them, they were not covered by SOX.


This decision reflects the ARB’s recognition of basic and necessary limitations on the U.S. Supreme Court’s decision in Lawson.

© 2020 Proskauer Rose LLP.


About this Author

Steven J Pearlman, Labor Employment Law Firm, Proskauer Law firm

Steven Pearlman is a partner in the Labor & Employment Law Department and co-head of the firm's Whistleblowing & Retaliation Group, resident in the Chicago office. Steven’s practice focuses on defending complex employment litigation involving claims of discrimination and harassment, wage-and-hour laws and breaches of restrictive covenants (e.g., non-competition agreements). He has successfully tried cases to verdict before judges and juries in Illinois, Florida and California, and defended what is reported to be the largest Illinois-only class action in the history of the U.S....

Allison Lynn Martin, Proskauer Rose Law Firm, Labor Employment Attorney

Allison Martin is an Associate in the Labor & Employment Department, resident in the Newark office.