PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

STACY PLATONE, 

Petitioner,

v.

UNITED STATES DEPARTMENT OF

LABOR,

Respondent.  No. 07-1635

EQUAL EMPLOYMENT ADVISORY

COUNCIL; CHAMBER OF COMMERCE

OF THE UNITED STATES OF AMERICA,

Amici Supporting Respondent. 

On Petition for Review of an Order of

the United States Department of Labor.

(04-154; 2003-SOX-27)

Argued: September 22, 2008

Decided: December 3, 2008

Before WILLIAMS, Chief Judge, and TRAXLER and

GREGORY, Circuit Judges.

Affirmed by published opinion. Judge Gregory wrote the

opinion, in which Chief Judge Williams and Judge Traxler

joined.
COUNSEL

ARGUED: Michael MacKager York, WEHNER & YORK,

Reston, Virginia, for Petitioner. Theresa Schneider Fromm,

UNITED STATES DEPARTMENT OF LABOR, Office of

the Solicitor, Washington, D.C., for Respondent. ON BRIEF:

Jonathan L. Snare, Acting Solicitor of Labor, Steven J. Mandel, Associate Solicitor, Ellen R. Edmond, Counsel for

Whistleblower Programs, UNITED STATES DEPARTMENT OF LABOR, Office of the Solicitor, Washington,

D.C., for Respondent. Robin S. Conrad, Shane Brennan,

NATIONAL CHAMBER LITIGATION CENTER, Washington, D.C., for Amicus Curiae Chamber of Commerce of the

United States of America; Rae T. Vann, Paulos Iyob, NORRIS, TYSSE, LAMPLEY & LAKIS, L.L.P., Washington,

D.C., for Amicus Curiae Equal Employment Advisory Council.

OPINION

GREGORY, Circuit Judge:

This case challenges a ruling of the Department of Labor’s

Administrative Review Board ("ARB") denying Stacy Platone

whistleblower protection under the Sarbanes-Oxley Act, 18

U.S.C. § 1514A (2006). For the reasons stated herein, the

ARB’s decision is affirmed.

I.

Stacy Platone, Appellant, worked for the Airline Pilots

Association ("ALPA") as a pilot communications specialist.

In the summer of 2002, Atlantic Coast Airlines ("ACA"), a

wholly owned subsidiary of Atlantic Coast Airline Holdings,

Inc., solicited applications for the position of manager of

labor relations. Upon the recommendation of Captain John

2 PLATONE v. U. S. DEPARTMENT OF LABOR
Swigart, a pilot at ACA and chair of ALPA’s local Master

Executive Council, ACA hired Platone to fill the position.

Swigart and Platone were in a relationship at the time; however, it is disputed whether Jeffrey Rodgers, ACA’s Senior

Director of Labor Relations and Planning—and Platone’s

immediate supervisor—knew of the relationship at the time of

hiring.

After she started working at ACA, Platone began to notice

discrepancies regarding the airline’s flight-loss process—the

procedure by which the union reimbursed the airline when its

pilots had to miss flights in order to attend union meetings.

Tiffany de Ris, ACA’s Manager of Crew Resources, informed

Platone that ALPA had not been billed for several months of

flight loss.

Platone obtained the flight-loss records in February 2003

and discovered that pilots were also intentionally scheduling

flights for days on which they were originally not scheduled

to fly and for times at which they knew they would be

required to attend union meetings. In essence, the pilots were

getting paid for days on which they were originally not even

supposed to fly and, in fact, did not fly. ALPA’s policy was

not to pay for missed time on originally scheduled days off.

When Platone alerted Rodgers to the issue, he told her that

ACA would not pay the pilots for the days off if ALPA would

not reimburse ACA. Platone had also informed Captain Chris

Thomas, an ACA pilot and Swigart’s successor at ALPA, of

the discrepancy, and Thomas contacted Rodgers and assured

him that the union would reimburse ACA for the flight loss.

Platone was not satisfied with the union’s response, and on

March 6, 2003, she sent Rodgers a draft letter, addressed to

Thomas, demanding that ALPA uphold its flight-loss obligations. The letter also informed Thomas that if ALPA wanted

ACA to continue to pay pilots who attended ALPA business

on days for which they were not originally scheduled to fly,

but which were subsequently voluntarily scheduled, he would

PLATONE v. U. S. DEPARTMENT OF LABOR 3
need to inform ACA in writing to do so and indicate that

ALPA would reimburse ACA. The following day, Rodgers emailed Platone to inform her that he did not intend to send the

letter that she drafted.

Platone met with Michelle Bauman, ACA’s Director of

Employment Services, on March 12, 2003. Bauman testified

that Platone mentioned the flight-loss problem during the

meeting, and handwritten notes from Bauman’s assistant verified that there was a discussion of the issue, though there was

no indication that Platone made allegations of fraud. The following day, Platone met with senior airline officials, who suspended her with pay due to an unspecified conflict of interest.

On March 19, 2003, Platone was officially fired, ostensibly

because of her relationship with Captain Swigart.

Platone filed a Sarbanes-Oxley whistleblower action with

the Occupational Safety and Health Administration ("OSHA")

on April 3, 2003, setting forth the above facts, and for the first

time, making an allegation of fraud. OSHA denied Platone’s

complaint, finding that she failed to establish that she had

engaged in protected activity. On August 14, 2003, Platone

requested a hearing before the Office of Administrative Law

Judges.

The administrative law judge ("ALJ") found that Platone’s

suspicions of fraud set forth in her OSHA complaint were reasonable, and that by alerting Rodgers and Bauman to the discrepancies, she had engaged in protected activity under the

Sarbanes-Oxley Act. The ALJ concluded that a fraudulent

scheme to compensate pilots in the hopes of gaining union

contract concessions would necessarily involve the use of the

mail and wires, and would therefore fall under the protection

of the Sarbanes-Oxley Act. The ALJ imputed knowledge of

Platone’s complaints to the managers at ACA responsible for

employment decisions, whether or not they were directly

involved in the dealings. The ALJ further concluded that Platone’s complaints were a contributing factor to her dismissal.

4 PLATONE v. U. S. DEPARTMENT OF LABOR
Given that Platone’s job involved direct dealings with

ALPA, the ALJ found that ACA had a legitimate, nonpretextual reason for firing Platone. Nevertheless, the ALJ

concluded that it was impossible to separate the legitimate

and improper reasons for firing Platone, and therefore that

ACA failed to meet its burden to show by clear and convincing evidence that it would have fired Platone even if she had

not come forward with her complaints.

ACA filed an appeal with the Administrative Review Board

of the Department of Labor ("ARB"), which reversed the

ALJ’s findings. First, the ARB held that allegations of mail

or wire fraud under Sarbanes-Oxley must involve conduct that

is at least "adverse to investors’ interests." Platone v. FLYi,

Inc., ARB Case No. 04-154, 2006 DOLSOX LEXIS 105 at

*29 (ARB Sept. 29, 2006). Second, the ARB held that Platone’s allegations must relate definitively and specifically to

the categories of fraud or securities violations listed in 18

U.S.C. § 1514A(a)(1) (2006). Id. at *33.

The ARB concluded that Platone’s e-mails to Rodgers and

meeting with Bauman did not communicate information specifically enough to indicate possible fraud against shareholders. Indeed, the ARB concluded that "the real victim of any

alleged impropriety was ALPA" since Platone and Rodgers

had been reassured that ALPA would reimburse ACA for the

flight pay loss. Id. at *42-43. Having reached this conclusion,

the ARB held that Platone failed to provide ACA with specific information relating to protected activity under

§ 1514A(a)(1), and it therefore declined to address the

remaining issues raised on appeal. Id. at *45-46.

II.

The whistleblower provision of the Sarbanes-Oxley Act is

codified at 18 U.S.C. § 1514A(a) (2006).1 The Act incorpo1

(a) Whistleblower Protection for Employees of Publicly Traded Companies.— No company with a class of securities registered under section

PLATONE v. U. S. DEPARTMENT OF LABOR 5
rates the rules and procedures set forth in 49 U.S.C.

§ 42121(b) (2000). Because the allegations at issue occurred

in Virginia, jurisdiction is conferred on this Court by 49

U.S.C. § 42121(b)(4).2

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)), or any officer, employee, contractor, subcontractor, or agent of such company, may discharge, demote, suspend,

threaten, harass, or in any other manner discriminate against an employee

in the terms and conditions of employment because of 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— 

(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. 

2

"Any person adversely affected or aggrieved by [a final order of the

Secretary of Labor] may obtain review of the order in the United States

Court of Appeals for the circuit in which the violation, with respect to

which the order was issued, allegedly occurred or the circuit in which the

complainant resided on the date of such violation." 

6 PLATONE v. U. S. DEPARTMENT OF LABOR
The Administrative Procedure Act, 5 U.S.C. § 706(2)

(2006), sets forth the standard of review for this action, as referenced in 49 U.S.C. § 42121(b)(4)(A). The ARB’s findings

of law are reviewed de novo, with due deference accorded by

this Court to the ARB’s interpretation of § 1514A, and the

findings should be set aside if they are "arbitrary, capricious,

an abuse of discretion, or otherwise not in accordance with

law." 5 U.S.C. § 706(2)(A) (2000). See also Chevron U.S.A.,

Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984);

Welch v. Chao, 536 F.3d 269, 275-76 (4th Cir. 2008).

The Administrative Procedure Act compels this Court to

uphold the ARB’s findings of fact if they are supported by

substantial evidence. In doing so, however, we also accord a

degree of deference to the factual findings of the ALJ. The

ARB’s standard for reviewing the factual findings of the ALJ

is substantial evidence. 5 U.S.C. § 706(2)(E). Substantial evidence is that which is "such relevant evidence as a reasonable

mind might accept as adequate to support a conclusion." Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938).

III.

The ARB ruled below that allegations to management

under the whistleblowing provision of the Sarbanes-Oxley

Act must be definitively and specifically related to one of the

areas accorded protection in § 1514A(a)(1). The Court upheld

this conclusion in Welch, 536 F.3d 269, 276 n.2, where it

accorded Chevron deference to the ARB’s interpretation of

§ 1514A.3

Factually, the ALJ found that at least Rodgers, Bauman,

3The ARB went further to interpret § 1514A to require the complainant,

when alleging mail or wire fraud, to demonstrate that the fraud would be

adverse to the interests of shareholders or investors. The Welch decision

did not reach this portion of the ARB’s opinion, and because we decide

this case on alternate grounds, neither does our decision today. 

PLATONE v. U. S. DEPARTMENT OF LABOR 7
and Davis were made aware of the flight-loss issue by Platone, and it imputed knowledge to Moore, the final decisionmaker. Moreover, the ALJ concluded that the scheme alleged

in the OSHA complaint inherently involved the use of mail

and wires—an area protected by the statute. As noted above,

however, the ARB refined the requirements for § 1514A and

determined that Platone failed to provide her superiors with

definitive and specific information regarding the alleged fraud

that was taking place. The ARB reached its conclusion by

reading Platone’s actions as little more than alerting ACA

management to an internal billing issue. We agree with the

ARB and find that Platone failed to make a proper allegation

of fraud.

As the ALJ noted, ACA was engaged in important contract

negotiations with ALPA at the time of Platone’s complaints.

Platone alleged in her OSHA complaint that by avoiding the

flight-loss issue, ACA was trying to channel money to the

ALPA officials who would be involved in these negotiations

in the hope that ACA would obtain favorable concessions.

Thus, the ALJ concluded that Platone had a reasonable basis

to suspect that ACA officials were engaging in fraud against

the shareholders.

But the ALJ did not find that Platone clearly articulated her

belief of mail or wire fraud to ACA, and the ARB found that

she clearly did not. It is true that she alerted ACA management to a billing discrepancy. Yet, a billing discrepancy, without more, does not equal fraud, and Platone failed to identify

to ACA why she believed the actions related to the discrepancies would violate securities laws and constitute a fraud. The

first time Platone made an actual allegation of fraud was in

her OSHA complaint. Therefore, Platone did not sufficiently

articulate her fraud theory to ACA, and Sarbanes-Oxley does

not afford her whistleblower protection.

Our holding today does not heighten the requirements for

a complainant’s prima facie showing or otherwise change the

8 PLATONE v. U. S. DEPARTMENT OF LABOR
burden-shifting regime for Sarbanes-Oxley whistleblower

actions. See 49 U.S.C. § 42121(b)(2)(B) (2000). We hold only

that a complainant must alert management to more than the

fact that the company’s near-term profits were affected by

billing discrepancies in order to meet the standard of definitively and specifically alleging mail or wire fraud.

IV.

As a result of our conclusion that Platone failed to establish

a prima facie case for Sarbanes-Oxley whistleblower protection, we need not address the remaining issue of whether

ACA presented a legitimate, non-pretextual reason for firing

Platone.

The decision of the ARB is hereby affirmed.

AFFIRMED

PLATONE v. U. S. DEPARTMENT OF LABOR 9