Burns v. The Upstate National Bank (agency decision, February 26, 2019)

Plain-English summary

Rene Burns alleged that Upstate National Bank fired her for protected activity under Sarbanes-Oxley. Section 806 covers companies with securities registered under Securities Exchange Act Section 12 or companies required to file periodic reports under Section 15(d), along with specified subsidiaries and affiliates. Burns supplied no registration statement, report, or other document showing that Upstate met either condition. Her reliance on a third-party website for the general claim that Sarbanes-Oxley can affect private companies did not establish coverage. The Board affirmed dismissal.

Decision snapshot

• Cited authorities: 18 U.S.C. § 1514A; 15 U.S.C. §§ 78l and 78o(d); 29 C.F.R. § 18.70(a)
• Outcome: Dismissal affirmed because the employer was not shown to be covered by SOX.
• Key point: A complainant must provide evidence tying the employer to Section 12 registration or Section 15(d) reporting obligations, not rely on general statements about private-company coverage.

Full text (DOL official public release)

U.S. Department of Labor Administrative Review Board
200 Constitution Avenue, N.W.
Washington, D.C. 20210

  In the Matter of:

  RENE A. BURNS,                                        ARB CASE NO. 2017-0041

                  COMPLAINANT,                          ALJ CASE NO.    2017-SOX-00010

         v.                                             DATE: February 26, 2019

  THE UPSTATE NATIONAL BANK,

                  RESPONDENT.


  BEFORE:         THE ADMINISTRATIVE REVIEW BOARD

  Appearances:

  For the Complainant:
         Rene A. Burns; pro se; Hilton, New York

  For the Respondent:
         Raymond W. Steinmetz, Jr.; Upstate National Bank; Rochester, New York

  Before: William T. Barto, Chief Administrative Appeals Judge; James A. Haynes and
  Daniel T. Gresh, Administrative Appeals Judges.

  PER CURIAM


                                FINAL DECISION AND ORDER

          This case arises under the whistleblower provision of the Sarbanes-Oxley Act of 2002
  (SOX), 18 U.S.C. § 1514A (2010) and its implementing regulations at 29 C.F.R. Part 1980
  (2018).





           Rene Burns filed a complaint on November 22, 2016, with the Occupational Safety and
  Health Administration (OSHA) claiming that The Upstate National Bank (Upstate) retaliated
  against her in violation of the SOX when it terminated her employment for engaging in protected
  activities.

          OSHA dismissed Burn’s complaint as Burns was not an employee of a company covered
  by the SOX. Burns objected, and the case was assigned to a Department of Labor
  Administrative Law Judge (ALJ) for hearing. The ALJ issued an order to show cause directing
  Burns to explain why her complaint should not be dismissed for lack of jurisdiction. Both
  parties responded. Thereafter, the ALJ dismissed Burns’ complaint for lack of subject matter
  jurisdiction on April 12, 2017. 1 Burns appealed to the Administrative Review Board (ARB or
  Board). We summarily affirm the ALJ’s decision.

                                JURISDICTION AND STANDARD OF REVIEW

         The ARB has jurisdiction to review the ALJ’s SOX decision pursuant to Secretary’s
  Order No. 02-2012 (Delegation of Authority and Assignment of Responsibility to the
  Administrative Review Board), 77 Fed. Reg. 69,379 (Nov. 16, 2012); 29 C.F.R. Part 1980. The
  ARB reviews the ALJ’s conclusions of law de novo. 2

                                                 DISCUSSION

         The sole issue on appeal is whether Upstate is a covered company under the SOX’s
  whistleblower provision, which is predicated on the employer meeting the following conditions:

           (1) having a class of securities registered under Section 12 of the Securities and
               Exchange Act of 1934 [hereinafter the Act], 15 U.S.C. § 78l (2017); or,

           (2) being required to file periodic reports under Section 15(d) of the Act, 15 U.S.C.
               78o(d) (2017). 3

  1
          See 29 C.F.R. § 18.70(a) (“If the judge determines at any time that subject matter jurisdiction is
  lacking, the judge must dismiss the matter”).
  2
         Blanchard v. Exelis Sys. Corp., ARB No. 15-031, ALJ No. 2014-SOX-020, slip op. at 4 (ARB
  Aug. 29, 2017).
  3
          The SOX’s whistleblower provision provides in relevant part:
                  (a) Whistleblower Protection for Employees of Publicly Traded
                      Companies.—No company with a class of securities registered under
                      section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 78l), or
                      that is required to file reports under section 15(d) of the Securities
                      Exchange Act of 1934 (15 U.S.C. 78o(d)) including any subsidiary



  Coverage under the SOX’s whistleblower provision is therefore limited to companies registered
  under Section 12 and those required to file reports under Section 15(d) of the Act. 4 Section 12 of
  the Act provides that a company register its securities before trading on a national exchange. 15
  U.S.C. § 78l(a) (it is unlawful for “any member, broker, or dealer to effect any transaction in any
  security (other than an exempted security) on a national securities exchange unless a registration
  is effective as to such security for such exchange”). Section 15(d) of the Act requires that issuers
  registered prior to 1964 or registered under the Securities Act of 1933 file supplementary
  reports. 5

          We agree with the ALJ that Burns has failed to identify any evidence in the record that
  could support a factual finding that Upstate is covered under the SOX whistleblower provision. 6
  Burns did not offer registration statements, reports, or documentation showing that Upstate is
  registered under Section 12 or required to file reports under Section 15(d). On appeal, Burns
  reiterates her case but fails to identify any error the ALJ made in finding that her employer is not
  covered under the SOX. Citing a third-party website discussing the SOX and other financial
  laws, Burns incorrectly claims that SOX affects private companies as well as public companies.

           In conclusion, Burns has failed to provide evidence to support her complaint or to show
  that the dismissal should be reversed. Accordingly, we AFFIRM the ALJ’s Order Dismissing
  Complaint.

         SO ORDERED.




                     or affiliate whose financial information is included in the
                     consolidated financial statements of such company, or nationally
                     recognized statistical rating organization (as defined in section 3(a)
                     of the Securities Exchange Act of 1934 (15 U.S.C. 78c), . . . may
                     discharge, demote suspend, threaten, harass, or in any other manner
                     discriminate against an employee. . . .
  18 U.S.C. § 1514A(a).
  4
          Nortell v. North Central Coll., ARB No. 16-071, ALJ No. 2016-SOX-013, slip op. at 2-3 (ARB
  Feb. 12, 2018); Fleszar v. Am. Med. Ass’n, ARB Nos. 07-091, 08-061; ALJ Nos. 2007-SOX-030, 2008-
  SOX-016; slip op. at 4 (ARB Mar. 31, 2009).
  5
         15 U.S.C. § 78o(d)(1).
  6
         Order Dismissing Complaint at 2.