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1386RE: Oral Argument Held in Whistle-Blower Case

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  • Baker, John
    Nov 12, 2013
      The Supreme Court today held oral argument in Lawson v. FMR LLC, No. 12-3, which presents the question whether an employee of a privately held contractor or subcontractor of a public company is protected from retaliation for whistle-blowing by the Sarbanes-Oxley Act. For most mutual funds, the ruling will determine whether the anti-retaliation provision is applicable, since mutual funds are public companies but usually rely on the employees of their privately held investment adviser and other service providers. In the case at hand, the U.S. Court of Appeals for the First Circuit ruled below, in a 2 - 1 decision, that employees of the adviser to the Fidelity family of funds had no right of action. The Administrative Review Board of the Department of Labor subsequently rejected the First Circuit's reasoning.

      While the Justices questioned both sides intently, they seemed to be leaning toward allowing the right of action. Justice Alito said that the defendants' interpretation gave him pause, while Justice Scalia seemed to have a problem with the narrow statutory scope that the defendants' position would allow. If even these conservative Justices are unwilling to accept the defendants' position, then it would seem that they have little chance of success. However, it is dangerous to give too much weight to questioning at oral argument, which can be a highly misleading indicator of judges' views.

      A transcript of the oral argument is available online at

      http://www.supremecourt.gov/oral_arguments/argument_transcripts/12-3_9o6b.pdf

      For other filings in this case, see

      http://www.scotusblog.com/case-files/cases/lawson-v-fmr-llc/

      For my prior post on the case, see

      http://dir.groups.yahoo.com/neo/groups/FundLaw/conversations/topics/1372


      John M. Baker, Esquire
      Stradley Ronon Stevens & Young, LLP
      1250 Connecticut Avenue, N.W., Suite 500
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      p: 202.419.8413
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      FundLaw Listowner http://groups.yahoo.com/group/fundlaw