Halliburton, Incorporated v. LABR , 771 F.3d 254 ( 2014 )

Case: 13-60323 Document: 00512833838 Page: 1 Date Filed: 11/12/2014
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 13-60323 United States Court of Appeals
Fifth Circuit
FILED
HALLIBURTON, INCORPORATED, November 12, 2014
Lyle W. Cayce
Petitioner, Clerk
v.
ADMINISTRATIVE REVIEW BOARD, UNITED STATES DEPARTMENT
OF LABOR,
Respondent.
Petition for Review of the Final Decision and Order of the
United States Department of Labor Administrative Review Board
Before STEWART, Chief Judge, DENNIS, Circuit Judge, and GILSTRAP,
District Judge.*
PER CURIAM:
Anthony Menendez, an employee of Halliburton, used the company’s
internal procedures to submit a complaint to management about what he
thought were “questionable” accounting practices. Menendez also lodged a
complaint about the company’s accounting practices with the Securities and
Exchange Commission (“SEC”), which led the SEC to contact Halliburton and
instruct it to retain certain documents during the pendency of the SEC’s
investigation. When Halliburton received the SEC’s notice of the
* District Judge of the Eastern District of Texas, sitting by designation.
Case: 13-60323 Document: 00512833838 Page: 2 Date Filed: 11/12/2014
No. 13-60323
investigation, the company inferred from Menendez’s internal reports that
Menendez must have reported his concerns to the SEC too. Halliburton sent
an email to Menendez’s colleagues that instructed them to start retaining
certain documents because “the SEC has opened an inquiry into the allegations
of Mr. Menendez.” Once his identity as the whistleblower was disclosed,
Menendez’s colleagues, whom he had essentially accused of fraud, began
treating him differently, generally refusing to work and associate with him.
The Administrative Review Board of the Department of Labor determined that
the company’s disclosure to Menendez’s colleagues of his identity as the SEC
whistleblower who had caused an official investigation, thus resulting in
Menendez’s workplace ostracism, constituted illegal retaliation under § 806 of
the Sarbanes-Oxley Act (“SOX”). See 18 U.S.C. § 1514A(a). For the reasons
that follow, we affirm.
I. BACKGROUND
A. Facts
Menendez was hired by Halliburton, a global energy products and
services company, in March 2005 as Director of Technical Accounting Research
and Training in the Finance and Accounting department of the company’s
Houston office. In that position, Menendez monitored accounting issues and
gave advice and training to field accountants. He reported directly to Mark
McCollum, Chief Accounting Officer.
In July 2005, Menendez raised concerns that some of Halliburton’s
accounting practices involving revenue recognition did not conform with
generally accepted accounting principles. Menendez circulated a
memorandum on the revenue recognition issue to colleagues within his
department, including his direct supervisor, McCollum. McCollum met with
Menendez and suggested that, although the memorandum was good,
2
Case: 13-60323 Document: 00512833838 Page: 3 Date Filed: 11/12/2014
No. 13-60323
Menendez was not a “team player” and needed to work more closely with
colleagues to resolve any concerns over accounting practices. Halliburton
ordered a new study of the revenue recognition issue, and, in October 2005, the
study concluded that the company’s practices were proper. That same month,
Menendez sought another meeting with McCollum regarding the revenue
recognition practices, but McCollum declined to meet with Menendez again.
On November 5, 2005, Menendez filed a confidential complaint with the
SEC alleging that Halliburton was engaged in “questionable” accounting
practices with respect to revenue recognition. After submitting the SEC
complaint, Menendez continued to try to engage the company on the issue. In
late 2005, he contacted Charles Muchmore, the Vice President of Financial
Controls, who, after following up on Menendez’s concerns and deciding that
they lacked merit, suggested to Menendez that he go to the Audit Committee
of the Board of Directors if he felt strongly enough about the issues. As
required by SOX, the Audit Committee had “establish[ed] procedures for” “the
confidential, anonymous submission by employees of the [company] of concerns
regarding questionable accounting or auditing matters.” See 15 U.S.C. § 78j-
1(m)(4)(B). According to the Audit Committee’s policy, “[employees] can report
[their] concerns anonymously or confidentiality” and “[their] confidentiality
shall be maintained,” subject to certain exceptions not relevant here. 1 To
report such concerns, the Audit Committee instructed employees to call a listed
number or to write or email the Board of Directors.
1“[C]onfidentiality shall be maintained unless disclosure is: [1] Required or advisable
in connection with any governmental investigation or report; [2] In the interests of the
Company, consistent with the goals of the Company’s Code of Business Conduct; [3] Required
or advisable in the Company’s legal defense of the matter.”
3
Case: 13-60323 Document: 00512833838 Page: 4 Date Filed: 11/12/2014
No. 13-60323
On February 4, 2006, Menendez emailed Halliburton’s Board of
Directors to make the same complaint as he had made to the SEC. Menendez’s
internal complaint, which was sent from his company email address and
included his name, was forwarded to Bert Cornelison, Halliburton’s General
Counsel. A few days later, on February 8, the SEC contacted Cornelison to
notify Halliburton that it was investigating the company’s allegedly improper
accounting practices and that the company was directed to retain certain
documents relating to the investigation. The SEC did not specify who had
reported Halliburton’s accounting practices, but Cornelison, having seen
Menendez’s internal complaint, surmised that Menendez must have been the
source of the SEC complaint as well. Cornelison sent an email to Menendez’s
boss, McCollum, and others, instructing them to preserve documents relevant
to the SEC’s investigation, as directed, because “the SEC has opened an
inquiry into the allegations of Mr. Menendez.” That same day, McCollum
forwarded the email identifying Menendez as the whistleblower to fifteen
members of Menendez’s work group, including Menendez himself, thus
alerting them to the SEC’s investigation and to the fact that Menendez had
complained to the SEC about the propriety of their accounting practices.
Menendez was horrified when he saw the email disclosing his identity as
the SEC complainant, and he described that day as one of the worst in his life.
Colleagues began to treat him differently, generally avoiding him. Menendez
missed work frequently after the revelation, showing up at the office only
sporadically and, in early March, requested paid administrative leave “given
the current environment and circumstances involving the SEC investigation.”
The company granted the request.
On September 19, 2006, the SEC concluded that no enforcement action
against Halliburton was recommended. On October 17, 2006, Menendez
4
Case: 13-60323 Document: 00512833838 Page: 5 Date Filed: 11/12/2014
No. 13-60323
resigned from Halliburton, stating in his resignation letter that he could not
“professionally and ethically” return to the company while it persisted in
accounting practices that, he continued to maintain, were improper. He had
accepted a consultant position at a law firm during his leave of absence.
B. Procedural History
On May 8, 2006, Menendez filed a complaint with the Occupational
Safety and Health Administration of the Department of Labor pursuant to
§ 806 of SOX, the antiretaliation provision, alleging that Halliburton retaliated
against him because of his complaints about the company’s accounting
procedures by disclosing his identity as the whistleblower to his colleagues.
The Assistant Secretary for Occupational Safety and Health dismissed the
complaint, and Menendez requested a hearing before an Administrative Law
Judge. Following a hearing that included several days of testimony, the
Administrative Judge issued a decision and order dismissing the complaint.
The Administrative Judge concluded, among other things, that, although
Menendez’s reports to the SEC and the company were protected conduct, the
disclosure of his identity was not an “adverse action” (a required element of an
antiretaliation claim under SOX) because none of the workplace harm
Menendez suffered as a result of being identified as the whistleblower rose to
the level of being “materially adverse.” Menendez appealed.
On appeal, the Administrative Review Board affirmed the
Administrative Judge’s conclusion that Menendez engaged in protected
conduct but found that the Administrative Judge had erred in determining
that the disclosure was not an “adverse action.” Contrarily, the Review Board
held, under the facts of this case, the disclosure rose to the level of “material
adversity.” The Review Board remanded to the Administrative Judge for
findings on whether Menendez’s protected activity was a “contributing factor”
5
Case: 13-60323 Document: 00512833838 Page: 6 Date Filed: 11/12/2014
No. 13-60323
in Halliburton’s disclosure of his identity and whether Halliburton had
satisfied its burden of establishing, as an affirmative defense to the retaliation
claim, that “legitimate business reasons” mandated the disclosure of
Menendez’s identity.
On remand, the Administrative Judge held that Halliburton had shown
a legitimate business reason for disclosing Menendez’s identity as the
whistleblower. Specifically, the Administrative Judge found that Halliburton
did not intend negative consequences for Menendez and rather believed that,
by indicating that the company knew he was the whistleblower, it would show
him that the company was seeking to address his concerns. However,
recognizing that the Review Board may determine that he had erred, the
Administrative Judge held in the alternative that, if he is reversed on liability,
$1,000 in damages would be appropriate. The Administrative Judge explained
that, although Menendez suffered emotional distress and, to a limited extent,
certain reputational injury, the harms were not significant. The
Administrative Judge further held in the alternative that, if the Review Board
finds his damages award to be inadequate, $30,000 in damages would be
appropriate instead. Menendez again appealed.
In the decision that is now under review, the Review Board reversed the
Administrative Judge on the affirmative defense, thus holding Halliburton
liable for retaliation. As for damages, the Review Board affirmed the
Administrative Judge’s alternative award of $30,000 in compensatory
damages for emotional distress and reputational harm. Halliburton petitioned
this court for review.
II. STANDARD OF REVIEW
“[O]ur review is governed by the standard established in the
Administrative Procedure Act.” Allen v. Admin. Review Bd., 514 F.3d 468, 476
6
Case: 13-60323 Document: 00512833838 Page: 7 Date Filed: 11/12/2014
No. 13-60323
(5th Cir. 2008) (citing 5 U.S.C. § 706). The Review Board’s decision “will be
upheld unless it is ‘arbitrary, capricious, an abuse of discretion, or otherwise
contrary to law.’” Id. (quoting 5 U.S.C. § 706(2)(A)). “Factual findings are
subject to substantial evidence review.” Id. “[C]onclusions of law are reviewed
de novo.” Id.
III. DISCUSSION
Menendez’s antiretaliation claim arises under § 806 of SOX, codified at
18 U.S.C. § 1514A, which “creates a private cause of action for employees of
publicly-traded companies who are retaliated against for engaging in certain
protected activity.” Id. at 475. The statute states, in relevant part:
No [public company] 2 may discharge, demote,
suspend, threaten, harass, or in any other manner
discriminate against an employee in the terms and
conditions of employment because of [certain protected
whistleblowing activity]. 3
2 We use “public company” as shorthand for a “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 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),
or any officer, employee, contractor, subcontractor, or agent of such company or nationally
recognized statistical rating organization.” 18 U.S.C. § 1514A(a). There is no dispute in this
appeal that Halliburton constitutes such a public company.
3The whistleblowing activity protected under the statute includes any lawful act done
by the employee—
(1) to provide information, cause information to be provided,
or otherwise assist in an investigation regarding any
conduct which the employee reasonably believes
constitutes a violation of section 1341, 1343, 1344, or
1348, any rule or regulation of the Securities and
Exchange Commission, or any provision of Federal law
relating to fraud against shareholders, when the
information or assistance is provided to or the
investigation is conducted by—
7
Case: 13-60323 Document: 00512833838 Page: 8 Date Filed: 11/12/2014
No. 13-60323
18 U.S.C. § 1514A(a). To prevail on an antiretaliation claim under that
provision, the employee must prove, by a preponderance of the evidence, that
(1) he engaged in protected whistleblowing activity, (2) the employer knew that
he engaged in the protected activity, (3) he suffered an “adverse action,” 4 and
(4) the protected activity was a “contributing factor” in the “adverse action.”
Allen, 514 F.3d at 475-76.
In this appeal, Halliburton does not challenge the Review Board’s
conclusions that (1) Menendez engaged in protected activity when he reported
his concerns about Halliburton’s accounting practices to the SEC and the
Board of Directors, and (2) Halliburton knew that Menendez engaged in such
reporting. Halliburton does, however, challenge the conclusions that (3)
Menendez suffered an “adverse action” when the company disclosed his
identity as the whistleblower to his colleagues, and (4) Menendez’s protected
(A) a Federal regulatory or law enforcement
agency;
(B) any Member of Congress or any committee
of Congress; or
(C) a person with supervisory authority over
the employee (or such other person
working for the employer who has the
authority to investigate, discover, or
terminate misconduct); or
(2) to file, cause to be filed, testify, participate in, or
otherwise assist in a proceeding filed or about to be filed
(with any knowledge of the employer) relating to an
alleged violation of section 1341, 1343, 1344, or 1348, any
rule or regulation of the Securities and Exchange
Commission, or any provision of Federal law relating to
fraud against shareholders.
18 U.S.C. § 1514A(a).
4 What we, like the parties to this appeal, here refer to as an “adverse action” is
sometimes alternatively called an “unfavorable personnel action.” See, e.g., Allen, 514 F.3d
at 476. The difference is semantic, not substantive.
8
Case: 13-60323 Document: 00512833838 Page: 9 Date Filed: 11/12/2014
No. 13-60323
activity was a “contributing factor” in the disclosure, as that element should be
understood. We address the “adverse action” arguments first.
A. Adverse Action
Halliburton challenges the Review Board’s conclusion that Menendez
suffered an “adverse action” when the company disclosed his identity as the
whistleblower to his colleagues. To put the argument in context, we start with
background legal principles.
In Burlington Northern & Santa Fe Railway Co. v. White, 548 U.S. 53
(2006), the Supreme Court addressed the antiretaliation provision in Title VII
of the 1964 Civil Rights Act, which generally prohibits employers from
retaliating against employees who report employment discrimination based on
“race, color, religion, sex, or national origin.” See 42 U.S.C. §§ 2000e-2, 2000e-
3. An antiretaliation claim under Title VII, like an antiretaliation claim under
SOX, requires a showing of an “adverse action” the employer imposed on the
employee. In Burlington, the Court addressed, among other things, “how
harmful [the adverse] action must be to constitute retaliation.” 548 U.S. at 60.
The Court answered that, “the [adverse] action [must be] materially adverse,
which in this context means it well might have dissuaded a reasonable worker
from making or supporting a charge of discrimination.” Id. at 67-68 (internal
quotation marks and citation omitted). “We speak of material adversity
because we believe it is important to separate significant from trivial harms.”
Id. at 68. “We refer to reactions of a reasonable employee because we believe
that the provision’s standard for judging harm must be objective.” Id.
Subsequently, in this court’s decision in Allen v. Administrative Review
Board, we concluded that the Burlington material-adversity standard applied
to SOX’s antiretaliation provision as well as Title VII’s. 514 F.3d at 476 n.2.
Thus, under Allen, a SOX antiretaliation claim requires an “adverse action”
9
Case: 13-60323 Document: 00512833838 Page: 10 Date Filed: 11/12/2014
No. 13-60323
that meets Burlington’s definition of material adversity, i.e., an action harmful
enough that it well might have dissuaded a reasonable worker from engaging
in statutorily protected whistleblowing. Here, the Review Board found that
Halliburton’s disclosure to Menendez’s colleagues of his identity as the
whistleblower who had reported them to the authorities, thus invoking an
official investigation, constituted such an “adverse action.” 5
Halliburton contends that the Administrative Judge, who ruled in the
company’s favor, correctly applied the Burlington standard to hold that
Halliburton’s disclosure of Menendez’s identity was not “materially adverse,”
and, in reaching the opposite conclusion, the Review Board “disregarded” the
5 As an initial matter, Halliburton contends that the Review Board should be reversed
because its “perplexing and contradictory” opinion does not apply the proper standard, that
is, Burlington’s material-adversity standard, but rather applies a lesser standard of some
sort, which would be clear error in light of Allen, 514 F.3d at 476 n.2. Certain language in
the Review Board’s opinion suggests that Halliburton is correct. For example, parts of the
opinion suggest that the Burlington standard does not “control” because it is not “broad”
enough, but it is “compelling” and a “helpful guide.” We agree with Halliburton that this
language is troubling, but we conclude that it is dicta. After those parts of the opinion that
Halliburton points to as problematic, the opinion concludes that Halliburton’s disclosure of
Menendez’s identity as the whistleblower “constituted adverse action,” and, importantly, in
so holding, the opinion cites Burlington in a footnote. It proceeds to state:
Menendez need only demonstrate that [Halliburton’s conduct]
would deter a reasonable person from engaging in protected
activity. Clearly, a reasonable employee in Menendez’s position
would be deterred from filing a confidential disclosure regarding
misconduct if there existed the prospect that his identity would
be revealed to the very people implicated in the alleged
misconduct.
This explanation of what Menendez “need demonstrate”—that the company’s conduct
“would deter a reasonable person from engaging in protected activity”—represents a
restatement of the Burlington material-adversity standard. See Burlington, 548 U.S. at 67-
68. Therefore, we read the Review Board to have applied the proper standard, as required
by Allen, and we understand language in the opinion that appears otherwise to be
unfortunate dicta. See Nat’l Ass’n of Home Builders v. Defenders of Wildlife, 551 U.S. 644,
659 (2007) (“We are not persuaded that this statement constitutes the type of error that
requires a remand. . . . The Federal Register statement . . . was dictum, and it had no bearing
on the final agency action that respondents challenge.”).
10
Case: 13-60323 Document: 00512833838 Page: 11 Date Filed: 11/12/2014
No. 13-60323
Administrative Judge’s factual findings. “In the end,” the company says, the
difference “was a factual one.” Citing Stone & Webster Construction., Inc. v.
Department of Labor, 684 F.3d 1127, 1132 (11th Cir. 2012), Halliburton
contends that, because the Review Board substituted its own view of the facts
for the Administrative Judge’s factual findings, this court should vacate the
Review Board’s decision and reinstate the Administrative Judge’s.
Halliburton’s argument is flawed in that it rests on a false premise. The
company’s assumption that an “adverse action” determination under
Burlington is a purely factual determination is incorrect. It is not. The pure
facts are the “who,” “what,” “when,” “where,” and “how” of the circumstances
underlying Menendez’s claim of retaliation. See Thompson v. Keohane, 516
U.S. 99, 109-10 (1995) (in the context of habeas corpus law, describing “issues
of fact” to mean issues of “basic, primary, or historical facts: facts in the sense
of a recital of external events and the credibility of their narrators”) (citing
Townsend v. Sain, 372 U.S. 293, 309 n.6 (1963)); Black’s Law Dictionary (9th
ed. 2009) (defining “fact” as “[a]n actual or alleged event or circumstance, as
distinguished from its legal effect, consequence, or interpretation”). For
example, it is a pure fact here that Cornelison’s email to McCollum, which was
forwarded to Menendez’s colleagues, identified Menendez as the
whistleblower. The Burlington standard asks whether a company’s actions
were such that they “well might have dissuaded a reasonable worker from
[engaging in protected conduct].” 548 U.S. at 67-68 (internal quotation marks
and citation omitted). Whether in its context a company’s conduct well might
dissuade a “reasonable” worker from engaging in protected conduct is a legal
question. Stewart v. Miss. Transp. Comm’n, 586 F.3d 321, 332 (5th Cir. 2009)
(deciding “material adversity” “as a matter of law”); Aryain v. Wal-Mart Stores
Tx. LP, 534 F.3d 473, 485 (5th Cir. 2008) (same); Morales-Vallellanes v. Potter,
11
Case: 13-60323 Document: 00512833838 Page: 12 Date Filed: 11/12/2014
No. 13-60323
605 F.3d 27, 33 (1st Cir. 2010) (same); see also Burlington, 548 U.S. at 68 (“We
refer to reactions of a reasonable employee because we believe that the
provision’s standard for judging harm must be objective. An objective standard
is judicially administrable.”). Therefore, the ultimate “adverse action”
question—viz., whether the factual circumstances are such that Halliburton’s
actions well might dissuade an objectively reasonable employee in Menendez’s
shoes from engaging in protected conduct—involves the application of a legal
standard, Burlington “material adversity,” to the facts of the case. “[T]he
historical facts are admitted or established, the rule of law is undisputed, and
the issue is whether the facts satisfy the statutory standard, or to put it
another way, whether the rule of law as applied to the established facts is or is
not violated.” See Pullman-Standard v. Swint, 456 U.S. 273, 290 n.19 (1982). 6
Here, contrary to Halliburton’s suggestion, nowhere do we see in the
opinion under review any indication that the Review Board rejected the
Administrative Judge’s factual findings. The Review Board stated that, “we
do not so much reject the [Administrative Judge’s] findings as view them from
a different perspective.” We take this to mean that the Review Board adopted
the Administrative Judge’s factual findings but came to a different conclusion
as to the legal import of those facts, that is, whether Halliburton’s disclosure
of Menendez’s identity in the surrounding circumstances amounted to a
“materially adverse” action under Burlington. And it is obvious that the
Review Board did not exceed its authority merely because it came to a different
6 Cf., e.g., Ornelas v. United States, 517 U.S. 690, 696-97 (1996) (whether a police
officer’s suspicion of criminal activity is “objectively reasonable” under the Fourth
Amendment “is a mixed question of law and fact”); Strickland v. Washington, 466 U.S. 668,
698 (1984) (whether a criminal defense attorney’s representation falls below an “objective
standard of reasonableness” under the Sixth Amendment is a “mixed question[] of law and
fact”).
12
Case: 13-60323 Document: 00512833838 Page: 13 Date Filed: 11/12/2014
No. 13-60323
legal conclusion than did the Administrative Judge. See Roadway Exp., Inc. v.
Dole, 929 F.2d 1060, 1066 (5th Cir. 1991). We reject Halliburton’s argument
that the Review Board exceeded its authority by impermissibly overriding the
Administrative Judge’s factual findings.
The question for us becomes whether the Review Board’s ultimate
conclusion that Halliburton’s disclosure of Menendez’s identity as the
whistleblower amounts to a “materially adverse” action constitutes reversible
legal error. We conclude that it does not. The undesirable consequences, from
a whistleblower’s perspective, of the whistleblower’s supervisor telling the
whistleblower’s colleagues that he reported them to authorities for what are
allegedly fraudulent practices, thus resulting in an official investigation, are
obvious. It is inevitable that such a disclosure would result in ostracism, and,
unsurprisingly, that is exactly what happened to Menendez following the
disclosure. Furthermore, when it is the boss that identifies one of his
employees as the whistleblower who has brought an official investigation upon
the department, as happened here, the boss could be read as sending a
warning, granting his implied imprimatur on differential treatment of the
employee, or otherwise expressing a sort of discontent from on high. Moreover,
in Menendez’s workplace, collaboration with colleagues was valued.
Menendez’s supervisor scolded him for not collaborating with his colleagues
enough and told him to be more of a “team player.” In an environment where
insufficient collaboration constitutes deficient performance, the employer’s
disclosure of the whistleblower’s identity and thus targeted creation of an
environment in which the whistleblower is ostracized is not merely a matter of
social concern, but is, in effect, a potential deprivation of opportunities for
future advancement.
13
Case: 13-60323 Document: 00512833838 Page: 14 Date Filed: 11/12/2014
No. 13-60323
We, like other courts that have addressed similar circumstances, agree
with the Review Board’s conclusion that, in a workplace environment such as
Menendez’s where collaboration is an important part of the job, the employer’s
targeted disclosure to the whistleblower’s colleagues that the whistleblower
had reported them to the authorities for alleged wrongdoing and has caused
them to become the subject of an official investigation, thus creating an
environment of ostracism, well might dissuade a reasonable employee from
whistleblowing. See Mogenhan v. Napolitano, 613 F.3d 1162, 1166 (D.C. Cir.
2010) (supervisor’s posting of employee’s equal employment opportunity
complaint to the office intranet, which the employee’s colleagues could and did
access, could “chill a reasonable employee from further protected activity”);
Franklin v. Local 2 of the Sheet Metal Workers Int’l Ass’n, 565 F.3d 508, 520
(8th Cir. 2009) (union’s public posting of legal bills associated with employees’
lawsuit could dissuade a reasonable employee from making a charge of
discrimination); Booth v. Pasco Cnty., 829 F. Supp. 2d 1180, 1201-02 (M.D. Fla.
2011) (union’s public posting of announcement that named employees had sued
it could dissuade a reasonable worker from making a charge of discrimination
because “no one volunteers for the role of social pariah”).
B. Contributing Factor
To maintain an antiretaliation claim under SOX, the employee must
prove that his protected conduct was a “contributing factor” in the employer’s
adverse action. Allen, 514 F.3d at 476. The Review Board found here that
Menendez’s whistleblowing was indeed a “contributing factor” in Halliburton’s
disclosure of his identity as the whistleblower. (Given the facts of this case, it
is difficult to see how a different outcome could have been possible.)
Halliburton contends that, as a matter of law, it is not enough that the
protected conduct be a “contributing factor” in the employer’s adverse action.
14
Case: 13-60323 Document: 00512833838 Page: 15 Date Filed: 11/12/2014
No. 13-60323
Rather, according to Halliburton, an employee must prove a “wrongfully-
motivated causal connection.” (Emphasis added.) The principal problem with
Halliburton’s argument is that it conflicts with our statement in Allen that a
“contributing factor” is “any factor, which alone or in combination with other
factors, tends to affect in any way the outcome of the decision.” Id. at 476 n.3
(citation omitted, emphasis added). Furthermore, the argument entirely lacks
support in the case law. 7 We are unaware of any court that has held that, in
addition to proving that the employee’s protected conduct was a “contributing
factor” in the employer’s adverse action, the employee must prove that the
employer had a “wrongful motive” too. On the contrary, the Federal Circuit
has explained that “a whistleblower need not demonstrate the existence of a
retaliatory motive on the part of the [employer] in order to establish that his
[protected conduct] was a contributing factor to the personnel action.” Marano
v. Dep’t of Justice, 2 F.3d 1137, 1141 (Fed. Cir. 1993). 8 “Regardless of the
official’s motives, personnel actions against employees should quite simply not
be based on protected activities such as whistleblowing.” Id. (citation and
alteration omitted). We reject Halliburton’s argument that the Review Board
7 Halliburton cites Lockheed Martin Corp. v. Administrative Review Board, 717 F.3d
1121, 1136 (10th Cir. 2013), and Harp v. Charter Communications, Inc., 558 F.3d 722, 727
(7th Cir. 2009), in support of its proposed “wrongful motive” rule. Neither case, however,
applied such a rule nor suggested in any way that such a rule ought to be applied. In fact,
the Tenth Circuit in Lockheed Martin Corp. described the “contributing factor” test as “broad
and forgiving” and cited our Allen decision for the standard: “any factor, which alone or in
combination with other factors, tends to affect in any way the outcome of the decision.” 717
F.3d at 1136 (citing Allen, 514 F.3d at 476 n.3).
8 In Marano, the statute at issue was not the SOX antiretaliation provision but rather
the Whistleblower Protection Act of 1989, Pub. L. No. 101-12, 103 Stat. 16. That statute,
however, contains the same “contributing factor” test as SOX, i.e., “any factor, which alone
or in combination with other factors, tends to affect in any way the outcome of the decision.”
For Allen’s recitation of the “contributing factor” test under SOX, we cited to Marano. See
Allen, 514 F.3d at 476 n.3 (citing Marano, 2 F.3d at 1140).
15
Case: 13-60323 Document: 00512833838 Page: 16 Date Filed: 11/12/2014
No. 13-60323
committed legal error by failing to require proof that the company had a
“wrongful motive.”
C. Damages
The Review Board affirmed a damages award of $30,000 to Menendez
for emotional distress and reputational harm. Halliburton now contends that
such “noneconomic compensatory damages” (i.e., emotional distress and
reputational harm) are not available under SOX. The statute provides:
(1) In general.—An employee prevailing in [an
antiretaliation action] shall be entitled to all relief
necessary to make the employee whole.
(2) Compensatory damages.—Relief for any action under
paragraph (1) shall include—
(A) reinstatement with the same seniority status
that the employee would have had, but for the
discrimination;
(B) the amount of back pay, with interest; and
(C) compensation for any special damages sustained
as a result of the discrimination, including
litigation costs, expert witness fees, and
reasonable attorney fees.
18 U.S.C. § 1514A(c).
As an initial matter, we read the word “include” in §1514A(c)(2) (“Relief
for any action under paragraph (1) shall include . . .”) to indicate that the three
forms of relief listed as included (reinstatement, back pay, and certain “special
damages”) are non-exhaustive. Put another way, we read the entitlement to
“all relief necessary to make the employee whole” in §1514A(c)(1) to have a
broader scope than the three enumerated forms of relief in §1514A(c)(2). See
United States v. Canada, 110 F.3d 260, 263 (5th Cir. 1997) (construing the
word “includes” in another statute to “unambiguously indicate” a scope that is
“inclusive” of the items listed but not “exclusive” of all others); Project
16
Case: 13-60323 Document: 00512833838 Page: 17 Date Filed: 11/12/2014
No. 13-60323
Vote/Voting for Am. v. Long, 682 F.3d 331, 337 (4th Cir. 2013) (“Courts have
repeatedly indicated that ‘shall include’ is not equivalent to ‘limited to.’”). If
we were to hold otherwise, that is, to hold that SOX affords nothing beyond the
three forms of relief enumerated in §1514A(c)(2), we would in effect be reading
§1514A(c)(1) out of the statute, and we decline to do so. See In re McBryde, 120
F.3d 519, 525 (5th Cir. 1997) (“It is axiomatic that we must construe statutes
so as to give meaning to all terms,” and “we cannot accept” a construction that
renders statutory text “mere surplusage.”). In short, SOX affords “all relief
necessary to make the employee whole” (§1514A(c)(1)), and such relief “shall
include,” but is not limited to, reinstatement, back pay, and certain “special
damages” (§1514A(c)(2)). See Lockheed Martin Corp. v. Admin. Review Bd.,
717 F.3d 1121, 1138 (10th Cir. 2013) (concluding the same). The question then
is whether noneconomic compensatory damages, i.e., emotional distress and
reputational harm, are included too.
Thus far, only one circuit court, the Tenth Circuit, has addressed
whether SOX affords noneconomic compensatory damages, and that circuit
answered in the affirmative. See Lockheed Martin Corp., 717 F.3d at 1138.
That opinion offers scarce reasoning though, so its conclusion is of limited
persuasive value to us, but we are nevertheless hesitant to create a circuit split
absent a persuasive justification.
Halliburton’s argument that SOX does not allow noneconomic
compensatory damages relies primarily on the analysis in Murray v. TXU
Corp., No. 3:03-CV-888, 2005 WL 1356444 (N.D. Tex. June 7, 2005). In
Murray, the court compared the relevant SOX statutory language (that is,
§1514A) to prior statutory language of Title VII. Before amendment in 1991
(see Civil Rights Act of 1991, Pub. L. No. 102-166, 105 Stat. 1071), Title VII
provided the following relief:
17
Case: 13-60323 Document: 00512833838 Page: 18 Date Filed: 11/12/2014
No. 13-60323
[T]he court may enjoin the respondent from engaging
in [an] unlawful employment practice, and order such
affirmative action as may be appropriate, which may
include, but is not limited to, reinstatement or hiring
of employees, with or without back pay . . . or any other
equitable relief as the court deems appropriate.
See Murray, 2005 WL 1356444, at *3 (quoting 42 U.S.C. § 2000e-5(g) (1991)).
The courts construed such language to preclude noneconomic compensatory
damages, including emotional distress and reputational harm. See id. (citing
United States v. Burke, 504 U.S. 229, 238-39 (1992)); see also Bennett v.
Corroon & Black Corp., 845 F.2d 104, 106 (5th Cir. 1988). The court in Murray
concluded that, because SOX’s language is similar to Title VII’s pre-
amendment language, the latter of which was construed to preclude
noneconomic compensatory damages, it follows that this court should construe
SOX to do the same. Halliburton urges us to adopt Murray’s reasoning.
We are not persuaded by Halliburton’s argument because, contrary to
Murray’s suggestion, the text of SOX plainly evinces a broader remedial scope
than the text of pre-amendment Title VII. Under SOX, the employee “shall be
entitled to all relief necessary to make the employee whole.” 18 U.S.C.
§ 1514A(c)(1). By contrast, under the text of pre-amendment Title VII, the
employee was not “entitled” to any relief, let alone “all relief necessary to make
the employee whole.” Compare id. (the employee “shall be entitled to all relief
necessary to make the employee whole”), with 42 U.S.C. § 2000e-5(g) (1991)
(the court “may enjoin the respondent” and order certain other relief “as may
be appropriate”). And, while SOX plainly affords at least some damages, that
is, legal relief, in addition to equitable remedies, pre-amendment Title VII
afforded only equitable relief. Compare 18 U.S.C. §§ 1514A(b)(1)(B), (c)(2)(C)
(stating that antiretaliation claims may be asserted in “an action at law or
18
Case: 13-60323 Document: 00512833838 Page: 19 Date Filed: 11/12/2014
No. 13-60323
equity” and that the employee’s relief “shall include” “special damages”), with
42 U.S.C. § 2000e-5(g) (1991) (the court may “enjoin the respondent” and order
certain “affirmative action” and other “appropriate” “equitable relief”). 9
The Secretary of Labor argues, and we agree, that SOX’s language is
more comparable to language in the False Claims Act’s antiretaliation
provision. The relevant language in the False Claims Act provides:
(1) In general.—Any employee, contractor, or agent
shall be entitled to all relief necessary to make that
employee, contractor, or agent whole, if that employee,
contractor, or agent is [retaliated against].
(2) Relief.—Relief under paragraph (1) shall include
reinstatement with the same seniority status that
employee, contractor, or agent would have had but for
the discrimination, 2 times the amount of back pay,
interest on the back pay, and compensation for any
special damages sustained as a result of the
discrimination, including litigation costs and
reasonable attorneys’ fees.
31 U.S.C. § 3730(h). Both SOX’s and the False Claims Act’s antiretaliation
remedial provisions state that employees “shall be entitled to all relief
necessary to make [them] whole.” Both statutes then provide that the relief
available “shall include” reinstatement, back pay, and certain “special
damages.” The relevant statutory language is almost identical. Compare 18
U.S.C. § 1514A(c)(1), with 31 U.S.C. § 3730(h). And, as is relevant here, the
circuit courts that have addressed the question have concluded that the False
Claims Act affords noneconomic compensatory damages. See Neal v.
Honeywell, Inc., 191 F.3d 827, 832 (7th Cir. 1999); Brandon v. Anesthesia &
9 See generally Dan B. Dobbs, Law of Remedies § 1.2 (2d ed. 1993) (“The damages
remedy was historically a legal remedy. The injunction and most other coercive remedies
were equitable. . . . Although the courts of law and equity are merged almost everywhere,
this dichotomy remains in the remedial language today.”).
19
Case: 13-60323 Document: 00512833838 Page: 20 Date Filed: 11/12/2014
No. 13-60323
Pain Mgmt. Associates, Ltd., 277 F.3d 936, 944 (7th Cir. 2002); Hammond v.
Northland Counseling Ctr., Inc., 218 F.3d 886, 893 (8th Cir. 2000). This would
suggest that SOX does too. 10
The Secretary of Labor also argues persuasively that, because the text of
SOX’s antiretaliation provision proscribes certain employer conduct, namely
“threat[s] and “harass[ment],” see 18 U.S.C. § 1514A(a), that in the usual case
will cause only noneconomic harm such as emotional distress, rather than
economic harm, it would be anomalous to construe the statute to fail to afford
a corresponding remedy for such. We agree. It would be an odd result, to say
the least, to construe a statute that prohibits certain “threat[s]” and
“harass[ment]” against employees and purports to afford “all relief necessary
to make the employee[s] whole” to not offer a remedy for the most usual and
predictable result of threats and harassment, emotional distress. See Dan B.
Dobbs, Law of Remedies § 1.7 (2d ed. 1993) (stating that, because “remedies
are means of carrying into effect the substantive right,” “the remedy should
reflect the right or the policy behind that right as precisely as possible”).
Additionally, we take note of the common-law background to SOX’s
antiretaliation claim. At common law, many jurisdictions recognize torts for
wrongful discharge of employment, which, in many cases, is essentially an
antiretaliation claim analogous to the cause of action at issue here, and the
courts in such jurisdictions allow recovery of noneconomic compensatory
damages, emotional distress damages specifically, for such claims. See, e.g.,
Smith v. Atlas Off-Shore Boat Svc., Inc., 653 F.2d 1057 (5th Cir. 1981);
10See also Rutherford v. Jones Lang LaSalle Am., Inc., No. 12-CV-14422, 2013 WL
4431269, at *3-4 (E.D. Mich. Jan. 29, 2013) (rejecting the analogy between SOX and pre-
amendment Title VII, reasoning that SOX is more comparable to the False Claims Act).
20
Case: 13-60323 Document: 00512833838 Page: 21 Date Filed: 11/12/2014
No. 13-60323
Merchant v. Am. S.S. Co., 860 F.2d 204 (6th Cir. 1988); Hentzel v. Singer Co.,
188 Cal. Rptr. 159 (Cal. Ct. App. 1982); Perry v. Hartz Mountain Corp., 537 F.
Supp. 1387 (S.D. Ind. 1982); Niblo v. Parr Mfg., Inc., 445 N.W.2d 351 (Iowa
1989); Chavez v. Manville Prods. Corp., 777 P.2d 371 (N.M. 1989); Nees v.
Hocks, 536 P.2d 512 (Or. 1975); Cagle v. Burns and Roe, Inc., 726 P.2d 434
(Wash. 1986); Harless v. First Nat’l Bank in Fairmont, 289 S.E.2d 692 (W. Va.
1982). This court, for example, in Smith v. Atlas Off-Shore Boat Service, Inc.,
recognized a maritime-law wrongful-discharge claim where an employee was
terminated in retaliation for filing a personal-injury case against the employer,
and we held that the employee was “entitled to recover compensatory damages
for mental anguish that he may suffer as a result of the wrongful discharge.”
653 F.2d at 1064. This common-law backdrop would tend to suggest that, when
Congress created SOX’s statutory antiretaliation right and specified that
recovery thereunder includes “all relief necessary to make the employee whole”
(emphasis added), it intended to encompass within the statute’s broad ambit
such damages as are often available at common law for analogous claims.
In light of SOX’s plain text and the foregoing considerations, we find that
the statute affords noneconomic compensatory damages, including emotional
distress and reputational harm. SOX affords “all relief necessary to make the
employee whole” (emphasis added), and we think Congress meant what it said.
“All means all.” See Kennedy v. Lynd, 306 F.2d 222, 230 (5th Cir. 1962). If an
employee suffers emotional distress from actionable retaliation, then
emotional damages are “necessary to make the employee whole.” See
Hammond, 218 F.3d at 892-93 (“Providing compensation for [emotional
distress] comports with the statute’s requirement that a whistleblowing
employee ‘be entitled to all relief necessary to make the employee whole.’”);
Sheely v. MRI Radiology Network, P.A., 505 F.3d 1173, 1199 (11th Cir. 2007)
21
Case: 13-60323 Document: 00512833838 Page: 22 Date Filed: 11/12/2014
No. 13-60323
(“[E]motional damages, like other forms of compensatory damages, are
designed to make the plaintiff whole.”); Dobbs-Weinstein v. Vanderbilt Univ.,
185 F.3d 542, 547 (6th Cir. 1999) (“This court has recognized that in making a
plaintiff whole it often will be appropriate to award . . . damages for emotional
harm.”); accord Tembenis v. Sec’y of Health & Human Servs., 733 F.3d 1190,
1193 (Fed. Cir. 2013). The same is true for reputational harm and damages
for such. See Dobbs-Weinstein, 185 F.3d at 547; Hanna v. WCI Communities,
Inc., 348 F. Supp. 2d 1332, 1334 (S.D. Fla. 2004); Mahony v. KeySpan Corp.,
No. 04-CV-554, 2007 WL 805813, at *7 (E.D.N.Y. Mar. 12, 2007). Thus, under
the statute’s text, such noneconomic compensatory damages are available.
In sum, we agree with the Tenth Circuit that the plain language of SOX’s
text relating to remedies for retaliation affords noneconomic compensatory
damages. See Lockheed Martin Corp., 717 F.3d at 1138. This conclusion
comports with the decisions of the Seventh and Eighth Circuits respecting
essentially identical statutory text in the False Claims Act. See Neal, 191
F.3d at 832; Brandon, 277 F.3d at 944; Hammond, 218 F.3d at 893.
Halliburton has offered us no persuasive reason to differ from these decisions
of three of our sister circuits, and we are unable to find any indication that
Congress intended to exclude damages that SOX’s plain text appears to
allow. 11
11 Halliburton contends that, if noneconomic compensatory damages are available
under SOX, and we conclude that they are, the Review Board nevertheless exceeded its
authority here because it “failed to defer” to the Administrative Judge’s factual findings and
in fact disregarded them. We disagree. Nowhere in the Review Board’s opinion do we see
the disregard for the facts that Halliburton contends. We do note, however, that the
Administrative Judge and the Review Board followed an unusual procedure in this case in
that the Administrative Judge issued alternative damages awards and the Review Board
affirmed the one it found more appropriate. But Halliburton’s argument in this regard is so
22
Case: 13-60323 Document: 00512833838 Page: 23 Date Filed: 11/12/2014
No. 13-60323
IV. CONCLUSION
Halliburton has failed to show that the Review Board’s decision was
arbitrary, capricious, an abuse of discretion, or otherwise contrary to law.
However, nothing in our decision today should be read as implying our
agreement with all of the dicta in the Review Board’s opinion. 12
AFFIRMED.
terse, insubstantial, and lacking in citation to legal authority, we find that the issue has been
waived and decline to address it.
12 See supra, note 5. Additionally, Halliburton’s brief dedicates substantial space to
arguing that parts of the Review Board’s opinion suggest that, under SOX’s antiretaliation
provision, company conduct is actionable regardless of whether it is “employment-related” or
not. That, the company argues, is wrong because company conduct is actionable under SOX
only if it affects a “term [or] condition of employment.” See 18 U.S.C. § 1514A(a) (prohibiting
public companies from “discharg[ing], demot[ing], suspend[ing], threaten[ing], harass[ing],
or in any other manner discriminat[ing] against an employee in the terms and conditions of
employment because of [the employee’s protected whistleblowing]”) (emphasis added); cf.
Burlington, 548 U.S. at 61-67 (addressing whether Title VII’s antiretaliation provision
“extends beyond workplace-related or employment-related retaliatory acts and harm”). We
decline to address the argument because it is irrelevant to this case, in which everything that
occurred was employment-related. Halliburton offers no argument for why the company’s
disclosure of Menendez’s identity as the whistleblower and the resultant workplace ostracism
should be construed as not affecting the “condition[s] of [Menendez’s] employment.” See 18
U.S.C. § 1514A(a). In essence, Halliburton asks us to issue an advisory opinion on the scope
of SOX’s prohibitions without regard to whether such issues are involved in the instant case,
and we decline to do so.
23