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DOL Decision Confirms Extraterritorial Limits of SOX Whistleblower Provision

As we previously reported, the Department of Labor’s (DOL) Administrative Review Board has twice held that Sarbanes Oxley’s anti-retaliation provision does not apply extraterritorially.  See Hu v. PTC, Inc., ARB Case No. 2017-0068 (Sept. 18, 2019); Perez v. Citigroup, Inc., ARB Case No. 2017-0031 (Sept. 30, 2019).  An Administrative Law Judge (ALJ) of the DOL recently applied this precedent and dismissed a former in-house attorney’s whistleblower claims because he worked entirely outside of the United States.  Garvey v. Morgan Stanley, No. 2017-SOX-00030 (ALJ Feb. 13, 2020).

Background

Complainant Christopher Garvey worked entirely in Hong Kong for a foreign subsidiary of a U.S. company.  Garvey claimed that he was constructively discharged after he objected to certain conduct that he believed was in violation of the U.S. Foreign Corrupt Practices Act and other U.S. securities laws.  Garvey filed suit under SOX’s anti-retaliation provision (Section 806), and the company moved to dismiss the action on the grounds that the ARB’s recent decisions in Hu and Perez precluded extraterritorial claims under Section 806.

Ruling

The ALJ determined that Garvey’s claims were extraterritorial in nature and therefore were subject to dismissal under Hu and Perez.  Comparing the facts before him to those in Hu, the ALJ determined that Garvey was similarly situated to the Hu complainant – both were foreign-based employees of foreign subsidiaries of U.S. companies.  The ALJ explained that “the location of the employee’s permanent or principal worksite is the key factor to consider when deciding whether a claim is a domestic or extraterritorial application of Section 806,” and other factors “such as the employee’s U.S. citizenship” are “less critical, if not irrelevant” to determining whether Section 806 applies.  Because Garvey’s permanent or principal worksite was in Hong Kong, the ALJ determined that Section 806 could not apply to his claims.

Implications

In the wake of Hu and Perez, the Garvey decision confirms that SOX’s anti-retaliation provision does not apply extraterritorially.

© 2020 Proskauer Rose LLP.

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About this Author

Harris M Mufson, Class/Collective Action Attorney, Proskauer
Senior Counsel

Harris Mufson is a senior associate in the Labor & Employment Law Department and a member of the Employment Litigation & Arbitration and Whistleblowing & Retaliation Groups.

Adept at counseling clients at every turn of the litigation process, Harris represents employers in a variety of industries, including financial services, health care, entertainment, sports and legal, with respect to a wide range of labor and employment law matters. These include compensation disputes, employment discrimination and retaliation, whistleblowing,...

212-969-3794
Pinny Goldberg Labor and Employment Lawyer Proskauer Rose Law Firm
Associate

Pinny Goldberg is an associate in the Labor & Employment Law Department. Pinny represents employers in a broad array of matters before federal and state courts, FINRA and other arbitration panels, and administrative agencies, including the EEOC and its state equivalents, and in pre-litigation negotiations. Matters he works on include discrimination and harassment, wage and hour, wrongful discharge, whistleblowing and retaliation, covenants not to compete, breaches of fiduciary duty, unjust enrichment, and tort and contract claims. 

In addition to handling litigation and dispute resolution, Pinny regularly advises clients on a wide variety of employment issues, including drafting, reviewing and revising handbooks and workplace policies. He also addresses questions and concerns related to hiring, wage and hour issues, employee leave, performance problems, terminations of employment, and separation agreements and releases.

Prior to joining Proskauer, Pinny was a Labor and Employment associate at Seyfarth Shaw LLP. While in law school, he served as an editor for the Cardozo Law Review.

212.969.3074
Associate

Dominique Kilmartin is an associate in the Labor & Employment Law Department and a member of the Employment Litigation & Arbitration Group.

Dominique graduated cum laude from Seton Hall University School of Law, where she was an editor of the Seton Hall Law Review. Dominique also worked as a student attorney at the Civil Litigation & Practice Clinic and as an intern for the Honorable Judge John Michael Vazquez of the United States District Court for the District of New Jersey. Upon graduation from law school, Dominique received the ABA/BNA Award for Excellence...

212.969.3834