Am I protected as a U.S. Citizen for reporting U.S. employer’s engagement in activity that violates law in another country?

WhistleblowerWhistleblowers — people who expose wrongdoing within an organization — have enjoyed special protection under the law since the earliest days of the United States and of the State of Florida.

QUESTION PRESENTED:  Whether, a U.S. citizen is protected under U.S. “whistleblower”  laws if he reports his U.S. employer’s engagement in activity which violates foreign law.

FACTS

Employee is a U.S. citizen employed by a U.S. employer and works at a physical location oversees.  Employee’s employer is engaged in activity which violates Saudi Arabian laws.  Employee wishes to report such illegal activity.

SHORT ANSWER

Probably not. Both Florida and Federal law seem to interpret Florida and Federal whistleblower statutes as pertaining only to disclosures of violations of state and federal laws rather than violations of foreign laws.

DISCUSSION

1. Florida Law – Florida Whistleblower Act

Florida’s private whistleblower law makes it unlawful for an employer to retaliate against an employee for objecting to, or refusing to participate in any activity, policy, or practice of the employer which is “in violation of a law, rule, or regulation.” Kearns v. Farmer Acquisition Co., 157 So. 3d 458 (Fla. 2nd DCA. 2015) (citing 448.102(3)). Although the statute is worded very broadly, (i.e. by stating “a” law rather than qualifying the type of law), the statute specifically defines the phrase “law, rule, or regulation” narrowly to only include “any statute or ordinance or any rule or regulation adopted pursuant to any federal, state, or local statute or ordinance applicable to the employer and pertaining to the business.” § 448.101(4).

Florida courts have interpreted the definition of “law, rule, or regulation” extremely narrowly.  See Snow v. Ruden, McClosky, Smith, Schuster & Russell, P.A., 896 So.2d 787, 791 (Fla. 2nd DCA 2005) (stating that the Rules Regulating the Florida Bar do not fall within the meaning of a “rule” under the FWA);  New World Communications of Tampa, Inc. v. Akre, 866 So.2d 1231, 1233 (Fla. 2nd DCA 2003),  (determining that an FCC policy did not qualify as a “law, rule or regulation” under the FWA); and Tyson v. Viacom, Inc., 760 So.2d 276, 277 (Fla. 4th DCA 2000).(stating that the violation of an injunction is not a violation of law under the FWA).  Kearns v. Farmer Acquisition Co., 157 So. 3d 458 (Fla. 2nd DCA. 2015) (The law, rule or regulation under the FWA “must be a legislatively enacted”.)

Thus, unless there is a U.S. state, federal, or local legislatively enacted law, rule or regulation forbidding the employer in this case from engaging in the specific activity which the employee wishes to report , it is very unlikely that such reporting will be deemed protected under Florida’s Whistleblower Act.

2. FEDERAL LAW

Federal whistleblower laws seem to be more specific in defining the scope of the employer’s illegal activity that would allow an employee protection, if reported.  For private-sector employees, Congress has adopted whistleblower provisions in at least 18 federal statutes.  The most common provisions include those within the Sarbanes-Oxley Act, FDA Food Safety Modernization Act, and the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).  Several federal courts have discussed the applicability of federal whistleblower statutes to employees who report their employers’ violation of foreign laws or their employer’s violations of U.S. laws in foreign countries.

3. Extraterritorial Reach of Federal Whistleblower Laws

In Morrison v. National Australia Bank Ltd., 130 S. Ct. 2869, 561 U.S. 247, 177 L. Ed. 2d 535 (2010), the U.S. Supreme Court declined to extend Section 10(b) of the Securities and Exchange Act to apply to misconduct regarding trading on foreign exchanges.  The Court reasoned that “unless there is the affirmative intention of the Congress clearly expressed” to give a statute extraterritorial effect, we must presume it is primarily concerned with domestic conditions.” Morrison at 2877.  A Texas District court similarly used this rationale to conclude that the Dodd-Frank Anti-Retaliation Provision “does not govern conduct outside the United States.” ASADI v. GE ENERGY (USA), LLC, Civil Action No. 4: 12-345 (S.D. Tex. June 28, 2012).

The First Circuit, in Carnero v. Boston Scientific Corp., 433 F.3d 1 (1st Cir.2006), held that a foreign employee who complained of misconduct abroad by overseas subsidiaries could not bring a claim against a U.S. Company under § 1514A of the Sarbanes-Oxley Act since that section of the statute “does not reflect the necessary clear expression of congressional intent to extend its reach beyond the nation’s borders.” The court pointed out that the provision’s silence as to its extra-territorial application and the legislative history of the provision indicated that Congress gave no consideration to the possibility of its application outside the United States.  The court further expressed concern with empowering United States courts and agencies to “delve into the employment relationship between foreign employers and their foreign employees.” Id. at 15.

In O’Mahony v. Accenture Ltd., 537 F. Supp. 2d 506 (S.D.N.Y. 2008) however, a New York District court distinguished the ruling in Canero with circumstances where the SEC complaint is done by a U.S. citizen who worked overseas but is employed by a U.S. company.  In those circumstances, the court stated, the concerns expressed by the Canero Court are totally avoided.  O’Mahony, 537 F. Supp. 2d at (“The Carnero Court was concerned with the United States interfering with the employment relationship of a foreign employer and their foreign employees, and wanted to avoid opening ‘”the door for U.S. courts to examine and adjudicate relationships abroad that would normally be handled by a foreign country’s own courts and government agencies pursuant to its own laws.”’) The O’Mahony court also found it important that the employee complained in the U.S. and that the actions the employee complained of occurred in the U.S. Id.  (“Accenture UP, perpetrated the alleged fraud by deciding in the United States not to pay French social security contributions owed on O’Mahony’s behalf pursuant to the Social Security Agreement and then acting upon that decision in the United States by not making the payments in question.”).

After deciding that Canero provided limited guidance due to the differing factual circumstances, the court had to otherwise determine whether application of § 1514A raised an extra-territorial question under the facts of the case. The court stated, “when a court ‘”is confronted with transactions that on any view are predominantly foreign, it must seek to determine whether Congress would have wished the precious resources of United States courts and law enforcement agencies to be devoted to them rather than [to] leave the problem to foreign countries.”’ O’Mahony, 537 F. Supp. 2d at (citing Securities and Exchange Commission v. Berger, 322 F.3d 187, 192 (2d Cir.2003)) The court was still bound by the principal that “the presumption in such a case is against extending jurisdiction.” Id (citing In re National Australia Bank Securities Litigation, No. 03 Civ. 6537, 2006 WL 3844465, at *3 (S.D.N.Y. Oct. 25, 2006)). see also U.S. v. Gatlin, 216 F.3d 207, 211 (2d Cir.2000) (“In determining whether a statute applies extra-territorially, we are guided by a general presumption that Acts of Congress do not ordinarily apply outside our borders.”) (citations and internal quotation marks omitted). The presumption “serves to protect against unintended clashes between our laws and those of other nations which could result in international discord.” E.E.O.C. v. Arabian Am. Oil Co., 499 U.S. 244, 248, 111 S.Ct. 1227, 113 L.Ed.2d 274 (1991).

Thus in applying these principles, courts look at two factors: (1) whether the wrongful conduct occurred in the United States, and (2) whether the wrongful conduct had a substantial adverse effect in the United States or upon United States citizens.” O’Mahony, 537 F. Supp. 2d at 506 (citing Berger, 322 F.3d at 192). “In evaluating these two factors,” Second Circuit courts apply “what are known respectively as the `conduct test’ and the `effects test.'” Id. A plaintiff need only satisfy either the “conduct” or the “effects” test to support a finding of subject matter jurisdiction. O’Mahony, 537 F. Supp. 2d at (citing Psimenos v. E.F. Hutton & Co., 722 F.2d 1041, 1045 (2d Cir.1983)) (“courts need not ‘”reach the question whether the effects test provides an independent basis for jurisdiction” when there is subject matter jurisdiction under the conduct test).

Based on this analysis, the court found that it had subject matter jurisdiction over the case since the alleged wrongful conduct and other material acts occurred in the United States by persons located in the United States, and concluded the court’s exercise of jurisdiction “would not implicate extra-territorial application of American law.” Id.

4. Complaints Regarding Violations of Foreign Law

In Villanueva v. US Dept. of Labor, 743 F.3d 103 (5th Cir. 2014), the 5th Circuit reviewed and Administrative Law Judge’s decision to dismiss a Sarbanes-Oxley Act (SOX) whistleblower action.   The case involved a Columbian employee who worked for an Amsterdam company with offices in Columbia and the U.S.  The company’s securities were further registered under the SEC.  The employee was employed by the Columbian affiliate company and his complaint was based on a violation of Columbian law.

The Board decided that the issue presented was not one of subject matter jurisdiction, but was one of substance.  The Board decided that the SOX limits its protection to reported violations of one of six enumerated provisions of “U.S. law” and that the SOX thus did not apply extraterritorially to this case since “the alleged fraud and/or law violations involve Colombian laws with no stated violation or impact on U.S. securities or financial disclosure laws.” Villanueva, 743 F.3d at 108 (quoting Villanueva v. Core Labs. N.V., ARB Case No. 09-108, 2011 WL 7021145, at *1 (ARB Dec. 22, 2011).

The 5th Circuit agreed with the Board regarding the exclusion of Columbian law as a basis for whistleblower protection pursuant to the SOX.  Villanueva, 743 F.3d at 110 (“the conduct to which he objected was the supposed orchestration of violations of Colombia tax law, not the violation of U.S. mail or wire laws to effectuate those purported Colombian law violations. Consequently, Villanueva has not demonstrated that he engaged in any protected activity.”

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  • Attorney: Maurice Arcadier
  • Status: Answered