Just yesterday, the Ninth Circuit Court of Appeals ruled that an employee’s statements to the media are not protected from the whistleblower protections of the Sarbanes-Oxley Act (“SOX”).  SOX is a federal law that – among other things – provides whisteblower protection for employees of publicly traded companies who lawfully disclose certain types of information to (a) a federal regulatory or law enforcement agency, (b) a Member of Congress or any committee of Congress, or (c) a person with supervisory authority over the employee.  SOX also provides regulations regarding a company’s audit procedures and other internal operational matters.

In Tides v. The Boeing Company (9th Circuit, May 3, 2011), the court addressed a situation where  two employees from Boeing made statements about Boeing’s compliance (or noncompliance) with SOX’s regulatory requirements to a media publication in Seattle, Washington.  The media publication then printed an article reporting that Boeing failed in both internal and external audits, and also failed to establish that it could properly protect its computer systems against manipulation, theft and fraud.  The article also detailed a “threatening company culture perceived by employees involved in SOX compliance” and a record of poor internal audit results.

At some point prior to the release of the article, Boeing discovered that some employees were releasing company information to the media.  Boeing then conducted an investigation and learned that two specific employees were responsible for communicating with the media.  The two employees were first suspended indefinitely, and were later terminated following a vote by Boeing’s Board of Directors.

The two employees then filed a lawsuit for whistleblower violation under SOX.

The district court dismissed the lawsuit via summary judgment, and the employees filed an appeal.  In addressing this case, the Ninth Circuit Court of Appeals first noted that the issue in the lawsuit came down to whether the employees’ disclosures to the media were protected under SOX.  The court then noted that SOX applies to disclosures under three limited situations only (as discussed above), and that statements made to the media were not covered by those three situations.  The employees argued that statements to the media should be protected because the media may eventually “cause information to be provided” to members of Congress or a federal law enforcement agency.  The court, however, declined “to adopt such a boundless interpretation of the statute.”  The court then upheld the dismissal of the employees’ lawsuit.

You can read a copy of the Tides decision here.