Lawson v. FMR LLC (Fidelity Investments)

Whistleblowers Jackie Lawson and Jonathan Zang uncovered the truth about rule violations carried out FMR LLC, a subcontractor of Fidelity Investments. Lawson and Zang informed the Occupational Health and Safety Administration (OSHA) that FMR had breached several rules and regulations set out by the Security and Exchange Commission (SEC). Subsequent to filing these complaints, Zang was fired for what FMR claimed was unsatisfactory performance. Lawson proceeded to file several retaliation claims against FMR before resigning on the basis of constructive discharge. Both whistleblowers were out of a job. Zang and Lawson filed separate district court cases against FMR, both on the grounds of Sarbanes-Oxley Act (“SOX”) violations by means of retaliation. Yet the First Circuit Court neglected the principles of the SOX by denying whistleblower protections to employees of contractors of publicly-traded companies.

This case raises the question of whether the employee of a privately held contractor or subcontractor of a public company is protected from retaliation under the whistleblowers protection provision of the Sarbanes-Oxley Act.

On July 30th 2012, the National Whistleblower Center (“NWC”) filed an amicus brief urging the U.S. Supreme Court to reverse the 1st Circuit Court’s decision. The brief draws attention to the non-retaliatory principle of the SOX and identifies the loophole created by the 1st Circuit Court’s decision. It notes that employee protection is a “crucial” component necessary to protect the economy from fraudulent actions. Moreover, the brief highlights how lower courts have wrongfully abandoned the practice of allowing whistleblower protections to function under a broad scope and explains how continuing to do so will severely damage the functionality of whistleblowing as a useful tool.

The Supreme Court ruled in favor of whistleblowers by electing to reverse the 1st Circuit Court’s decision and remanding the case. Stephen M. Kohn, former Executive Director of the NWC, noted, “This is a big win for corporate whistleblowers… By ruling that contractors and subcontractors of publicly traded companies are fully protected under the corporate whistleblower provisions, the Court has put an end to the popular shell game which large companies use try to silence whistleblowers.”

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