2013 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

3-19-2013

Jeffrey Wiest v. Thomas Lynch

Precedential or Non-Precedential: Precedential

Docket No. 11-4257

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PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_____________

No. 11-4257

_____________

JEFFREY A. WIEST; LAURA E. WIEST, HIS WIFE,

Appellants

v.

THOMAS J. LYNCH, Chief Executive Officer and Director 

of Tyco Electronics Corporation; TERRENCE CURTIN, 

Executive Vice President and Chief Financial Officer of Tyco 

Electronics Corporation; CHARLES POST, ESQUIRE, 

Senior Labor & Employment Counsel; CHARLES 

DOUGHERTY, President, Wireless Systems, A Tyco 

Business Unit; TYCO ELECTRONICS CORPORATION

___________

On Appeal from the United States District Court

for the Eastern District of Pennsylvania

(D.C. Civil No. 2-10-cv-03288)

District Judge: Honorable Gene E.K. Pratter

___________

Argued October 5, 2012
2

Before: McKEE, Chief Judge, JORDAN and VANASKIE, 

Circuit Judges

(Filed: March 19, 2013)

Richard C. Angino, Esq. (Argued)

Daryl E. Christopher, Esq.

Angino & Rovner, P.C.

4503 North Front Street

Harrisburg, PA 17110

Counsel for Appellants

Stephen M. Kohn, Esq. (Argued)

Kohn, Kohn & Colapinto

3233 P. Street, N.W.

Washington, D.C. 20007

Counsel for Amicus Curiae National Whistleblowers 

Center

Michael A. Finio, Esq. (Argued)

Amy C. Foerster, Esq.

Cory S. Winter, Esq.

Saul Ewing LLP

2 North 2nd Street

7th Floor

Harrisburg, PA 17101

Counsel for Appellees

Eugene Scalia, Esq.

Gibson, Dunn & Crutcher LLP

1050 Connecticut Avenue, N.W.

Washington, D.C. 20036
3

Counsel for Amicus Curiae Chamber of Commerce of 

the United States of America

___________

OPINION OF THE COURT

___________

VANASKIE, Circuit Judge.

Appellant Jeffrey Wiest brought an action under the 

whistleblower protection provisions set forth in Section 806 

of the Sarbanes-Oxley Act (“SOX”), 18 U.S.C. § 1514A, and 

under Pennsylvania law against Appellees Tyco Electronics 

Corporation and several officers and directors of Tyco 

Electronics (collectively, “Tyco”). The District Court granted

Tyco‟s Motion to Dismiss the federal whistleblower claims, 

declined to exercise supplemental jurisdiction over the state 

law claims, and denied Wiest‟s Motion for Reconsideration. 

Concluding that the District Court erred in requiring that 

Wiest allege that his communications to his supervisors 

“definitively and specifically relate to” an existing violation 

of a particular anti-fraud law, as opposed to expressing a 

reasonable belief that corporate managers are taking actions 

that could run afoul of a particular anti-fraud law, we will

reverse, in part, the dismissal of the federal whistleblower 

claims and vacate the dismissal of the state law claim.

I.

A. Background

According to the Complaint, Wiest worked for 

approximately thirty-one years in Tyco‟s accounting 
4

department until his termination in April 2010. For Wiest‟s 

last ten years of employment, his office was under “a high

level of audit scrutiny” due to the well-known corporate 

scandal involving its former parent company, Tyco 

International, and its CEO, Dennis Kozlowski. (App. 42, ¶ 

31.) Around 2007, Wiest “established a pattern of rejecting

and questioning expenses” that failed to satisfy accounting 

standards or securities and tax laws. (Id. at 43, ¶ 33.)

1. The Atlantis Resort Event

In mid-2008, Wiest refused to process a payment and 

sent an email to his supervisor regarding an event that Tyco 

intended to hold at the Atlantis Resort in the Bahamas, which 

was similar to a corporate party under Kozlowski‟s 

management that had drawn significant criticism. Expenses 

for the $350,000 Atlantis event included “Mermaid Greeters” 

and “Costumed Pirates/Wenches” at a cost of $3,000; a 

“Tattoo Artist (includes tattoos)” and “Limbo” and “Fire” at a 

cost of $2,350; chair decorations at a cost of $2,500; and hotel 

room rentals ranging from $475 to $1,000 per night. (Id. at

45, ¶ 41.) In an email to his supervisor, Wiest expressed his 

belief that the costs were inappropriately charged entirely as 

advertising expenses. He asserted that the costs needed to be 

detailed and charged as income to attending employees 

because the employees were bringing guests, and the 

expenses needed to “be reviewed for potential disallowance 

by a taxing authority based on excessive/extravagant spend 

[sic] levels.” (Id. at 84, Ex. E.) Following Wiest‟s email, 

Tyco‟s management determined that the five-day event 

included only a single one-and-one-half hour business 

meeting. As a result, they determined that processing the 

payment “would have resulted in a misstatement of 
5

accounting records and a fraudulent tax deduction,” and that 

Tyco needed to treat the event as income for attending 

employees. (Id. at 43-44, ¶ 35.) Tyco decided to proceed 

with the event and to compensate the attendees for the 

additional tax liability by increasing (i.e., “grossing-up”) their 

bonuses.

2. The Venetian Resort Event

Also in mid-2008, Wiest received a request to process 

a payment of $218,000 for a conference at the Venetian 

Resort in Las Vegas, Nevada. The request lacked both 

sufficient documentation for tax purposes and proper 

approval pursuant to Tyco‟s “delegation of authority.” 

Additionally, the request included inaccurate accounting and 

tax treatment information. At Wiest‟s direction, one of his 

subordinates sent an email to the Tyco employee who 

submitted the request, explaining that the accounts payable 

department could not process the request until it had received 

an agenda and business purpose for the event, correct 

accounting treatment for various expenses, and approval 

pursuant to Tyco‟s delegation of authority. The tax 

department eventually concluded that the conference served a 

business purpose, and the accounts payable department

subsequently allowed the payment.

3. The Wintergreen Resort Event

In late 2008, Wiest was presented with a request for 

approval of a conference at the Wintergreen Resort in 

Virginia in the amount of $335,000. Like the Venetian 

Resort request, the Wintergreen expense request lacked both 

sufficient documentation and proper approval from Tyco‟s 

CEO. Wiest emailed his supervisor, explaining that he 
6

believed Tyco‟s internal policies required that the CEO be 

notified about the transaction. To the best of Wiest‟s 

knowledge, Tyco processed the payment without the CEO‟s 

approval, in violation of Tyco‟s internal policies.

4. Other Matters

Wiest also alleges that he questioned other events 

between 2007 and 2009. In particular, he questioned 

expenses for a “relatively lavish „holiday party,‟” a $52,000 

audit team meeting, and an employee baby shower. (Id. at 49, 

¶ 55.) He also sent an email to management when he 

received an expense request from an employee that included 

duplicate entries, additional nights of hotel bills, and 

undocumented expenses. He informed management that 

processing that improper expense request would constitute 

invalid or undocumented business expenses if Tyco was not 

reimbursed or if the amount was not reported as income on 

the employee‟s W-2 form.

5. Termination of Employment

Wiest alleges that Tyco became frustrated with his

persistence in following proper accounting procedures. In 

September 2009, two human resources employees met with 

Wiest and informed him that he was under investigation for 

incorrectly reporting the receipt of two basketball game 

tickets in August 2009, for having a relationship with a coworker ten years earlier, and for allegedly making sexuallyoriented comments to co-workers. After Wiest learned of the 

investigation, his health declined and he went on medical 

leave. Seven months later, Tyco terminated his employment.

B. Procedural History
7

On July 7, 2010, Wiest sued the Tyco Defendants, 

asserting that his discharge was in retaliation for his reports of 

improper expenditures, in violation of Section 806 of SOX. 

That section prohibits certain employers from discriminating 

against employees for reporting information that they 

reasonably believe constitutes a violation of one of several 

enumerated provisions relating to fraud and securities 

regulations. See 18 U.S.C. § 1514A.1 Wiest also presented

state law claims, including intentional infliction of emotional 

distress and wrongful termination, and his wife brought a 

claim for loss of consortium. Tyco moved to dismiss under 

Federal Rule of Civil Procedure 12(b)(6), asserting that Wiest 

failed to state a prima facie claim under Section 806.

As to the threshold question for a prima facie case in a 

retaliation case under Section 806 – whether the Complaint 

sufficiently alleges that the plaintiff had engaged in 

“protected activity,” see 29 C.F.R. § 1980.104(e)(2)(i) – the 

District Court determined that Wiest had to allege that his 

communications (a) “definitively and specifically” related to 

a statute or rule listed in Section 806; (b) expressed “„an 

objectively reasonable belief that the company intentionally 

misrepresented or omitted certain facts to investors, which 

were material and which risked loss;‟” and (c) “reflect[ed] a 

reasonable belief of an existing violation.” Wiest v. Lynch, 

Civil Action No. 10-3288, 2011 WL 2923860, at *4 (E.D. Pa. 

July 21, 2011) (citations omitted). In concluding that a 

 

1

The enumerated provisions are mail fraud, wire 

fraud, bank fraud, securities fraud, “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.
8

communication must “definitively and specifically” relate to a 

violation of a statute or rule listed in Section 806, the District 

Court relied upon the decision of the U.S. Department of 

Labor Administrative Review Board (“ARB”) in Platone v. 

FLYI, Inc., ARB 04-154, 2006 WL 3246910, at *8 (Dep‟t of 

Labor Sept. 29, 2006), aff’d 548 F.3d 322 (4th Cir. 2008), and 

court decisions that endorsed Platone‟s “definitive and 

specific” standard. Finding that the allegations of the 

Complaint failed to satisfy this standard, the District Court 

did not reach the other elements of a prima facie Section 806 

case, declined to exercise supplemental jurisdiction over the 

state law claims, and dismissed the Complaint without 

prejudice.

The District Court‟s Order dismissing the Complaint 

granted Wiest leave to file an amended complaint. Rather 

than filing an amended complaint, Wiest, on August 10, 2011, 

presented a motion entitled “Motion for Reconsideration 

Nunc Pro Tunc By the Eastern District Court En Banc of 

Judge Pratter Memorandum Opinion of July 21, 2011, Or, In 

the Alternative, Motion to Dismiss Plaintiffs‟ Complaint with 

Prejudice and Enter a Final Appealable Order and Judgment” 

(“Motion for Reconsideration”). In his Motion for 

Reconsideration, Wiest raised for the first time the argument 

that the ARB overruled Platone‟s “definitive and specific” 

standard in favor of a “reasonable belief” standard in 

Sylvester v. Parexel Int’l LLC, ARB 07-123, 2011 WL 

2165854, at *11 (Dep‟t of Labor May 25, 2011) (en banc). 

Wiest argued that he was entitled to reconsideration because 

Sylvester was an intervening change in controlling law, and 

that the District Court‟s reliance on the ARB‟s prior Platone

decision was a clear error of law.
9

The District Court disagreed, reasoning that Sylvester

was not an intervening decision because, although the ARB 

issued Sylvester after the parties completed briefing on 

Tyco‟s Motion to Dismiss, the opinion preceded the District 

Court‟s ruling. Additionally, the District Court determined

that Sylvester was not controlling precedent, and that even if 

it was binding, reconsideration was not warranted because (1) 

its initial decision relied on cases other than Platone, and (2) 

Sylvester‟s alteration of the standard for demonstrating 

protected activity did not change its conclusion that Wiest 

failed to establish that he communicated an objectively 

reasonable belief that Tyco‟s conduct violated any statute or 

rule listed in Section 806.

Wiest filed a notice of appeal on November 23, 2011, 

to appeal the District Court‟s Order denying his Motion for 

Reconsideration. Wiest did not expressly indicate whether he

also was appealing the District Court‟s initial Order 

dismissing the Complaint.

II.

The District Court had jurisdiction under 28 U.S.C. § 

1331 and we have appellate jurisdiction under 28 U.S.C. § 

1291.

A. Procedural Issues

Before turning to the merits, we must address three 

procedural issues. First, Tyco argues that, because Wiest

filed his Motion for Reconsideration twenty days after the 

District Court entered its dismissal Order, the Motion was 

untimely under E.D. Pa. L.R. 7.1(g), which establishes a
10

fourteen day period to file motions for reconsideration.2 As a 

result, Tyco asserts that we lack jurisdiction over Wiest‟s 

appeal from the District Court‟s denial of reconsideration. 

We see no jurisdictional bar due to Wiest‟s failure to 

move for reconsideration within the time constraints 

established by a local rule of court. We have recognized that, 

in the context of a Federal Rule of Civil Procedure 59(e) 

motion to alter or amend a judgment, the prescribed time 

limits are claims-processing rules, rather than jurisdictional 

rules. Lizardo v. United States, 619 F.3d 273, 276-77 (3d Cir. 

2010). If the time limit contained within Rule 59(e) is not 

jurisdictional, we cannot see how the time limit contained 

within Local Rule 7.1(g) is jurisdictional. In any event, we 

need not address the consequences of an untimely motion for 

reconsideration under a local rule because we construe 

Wiest‟s motion as one under Rule 59(e). See, e.g., Fed. 

Kemper Ins. Co. v. Rauscher, 807 F.2d 345, 348 (3d Cir. 

1986) (“For purposes of Rule 4(a) of the Federal Rules of 

Appellate Procedure, we view a motion characterized only as 

a motion for reconsideration as the functional equivalent of a 

Rule 59(e) motion to alter or amend a judgment.”) (internal 

quotation marks omitted)); see also Green v. Drug 

Enforcement Admin., 606 F.3d 1296, 1299 (11th Cir. 2010)

(noting the prevalence of courts construing motions for

reconsideration as Rule 59(e) motions); Auto Servs. Co. v. 

KPMG, LLP, 537 F.3d 853, 856 (8th Cir. 2008) (“A „motion 

for reconsideration‟ is not described in the Federal Rules of 

Civil Procedure, but such a motion is typically construed as 

 

2

The District Court noted that the Motion for 

Reconsideration was untimely under Local Rule 7.1(g), but 

nonetheless decided the motion on the merits.
11

either a Rule 59(e) motion to alter or amend the judgment or 

as a Rule 60(b) motion for relief from judgment.”). Because 

Wiest filed his Motion for Reconsideration within Rule 

59(e)‟s twenty-eight day time limit, we conclude that the 

motion was timely.

Tyco also argues that the scope of our review is

limited to the District Court‟s November 2011 Order denying 

reconsideration because Wiest did not designate for appeal 

the District Court‟s July 2011 Order granting Tyco‟s Motion 

to Dismiss. When a party appeals only a specified judgment, 

we acquire jurisdiction to review only that judgment or a 

judgment “„fairly inferred‟” by the notice of appeal. Sulima 

v. Tobyhanna Army Depot, 602 F.3d 177, 184 (3d Cir. 2010) 

(quoting Elfman Motors, Inc. v. Chrysler Corp., 567 F.2d 

1252, 1254 (3d Cir. 1977)). Yet, we have also held that we 

“liberally construe[] notices of appeal.” Id. (internal 

quotations marks omitted). We may exercise appellate 

jurisdiction over orders not specified in the notice of appeal 

where: “(1) there is a connection between the specified and 

unspecified orders; (2) the intention to appeal the unspecified 

order is apparent; and (3) the opposing party is not prejudiced 

and has a full opportunity to brief the issues.” Id. (internal 

quotation marks omitted).

Here, there is an adequate connection between the 

District Court‟s Order denying reconsideration and its 

underlying Order granting Tyco‟s Motion to Dismiss because

Wiest requested the District Court to reconsider the legal 

standard it applied to his Section 806 claims in the original 

dismissal Order. Second, because the two Orders of the 

District Court were intertwined, we infer that Wiest intended 

to appeal the underlying dismissal Order. Wiest‟s intention 
12

was apparent in his principal brief, in which he argues that the 

District Court erred in granting Tyco‟s Motion to Dismiss 

because it relied on the Platone standard rather than Sylvester

and cites the District Court‟s dismissal Order throughout the 

brief. Third, we find no prejudice to Tyco in reviewing the 

underlying dismissal Order as Tyco has had a full opportunity 

to brief the corresponding issues.

3

 As a result, we exercise 

jurisdiction over both the District Court‟s November 2011 

Order denying Wiest‟s Motion for Reconsideration and its

July 2011 Order granting Tyco‟s Motion to Dismiss.

Finally, we also reject Tyco‟s third procedural 

argument that Wiest waived any arguments based on 

Sylvester because he failed to raise those arguments in his

brief in opposition to Tyco‟s Motion to Dismiss. Although 

the District Court noted that Wiest first brought Sylvester to 

its attention in his Motion for Reconsideration and that a 

motion for reconsideration should not raise new arguments 

that the party could have made previously, the District Court 

proceeded to address Sylvester in its reconsideration ruling. 

The District Court evidently did not deem Wiest to have 

waived any arguments based on Sylvester, and neither do we.

B. Standard of Review

We have held that “a proper Rule 59(e) motion . . . 

must rely on one of three grounds: (1) an intervening change 

 

3

In addition, we have also held more plainly that “[a] 

timely appeal from a denial of a Rule 59 motion to alter or 

amend „brings up the underlying judgment for review.‟” Fed. 

Kemper Ins. Co. v. Rauscher, 807 F.2d 345, 348 (3d Cir. 

1986) (quoting Quality Prefabrication, Inc. v. Daniel J. 

Keating Co., 675 F.2d 77, 78 (3d Cir. 1982)).
13

in controlling law; (2) the availability of new evidence; or (3) 

the need to correct clear error of law or prevent manifest 

injustice.” Lazaridis v. Wehmer, 591 F.3d 666, 669 (3d Cir. 

2010) (citing N. River Ins. Co. v. CIGNA Reinsurance Co., 52 

F.3d 1194, 1218 (3d Cir. 1995)). We generally review a 

district court‟s denial of reconsideration for abuse of 

discretion. Max’s Seafood Cafe v. Quinteros, 176 F.3d 669, 

673 (3d Cir. 1999) (citing N. River Ins., 52 F.3d at 1203). An 

“errant conclusion of law, an improper application of law to 

fact, or a clearly erroneous finding of fact” may result in an 

abuse of discretion. McDowell v. Phila. Housing Auth., 423 

F.3d 233, 238 (3d Cir. 2005). More specifically, when a 

district court predicates its denial of reconsideration on an 

issue of law, our review is plenary, and when it bases its 

denial on an issue of fact, we review for clear error. Id. 

In addition, we review a district court‟s dismissal 

pursuant to Rule 12(b)(6) de novo. Phillips v. Cnty. of 

Allegheny, 515 F.3d 224, 230 (3d Cir. 2008). In Long v. 

Atlantic City Police Department, 670 F.3d 436 (3d Cir. 2012), 

we concluded that the standards of review for an underlying 

dismissal order and for the denial of a motion for 

reconsideration of the dismissal order are functionally 

equivalent, because we exercise plenary review of the 

dismissal order as well as of the legal questions in the denial 

of reconsideration. Id. at 446 & n.20, 447. Because the issue 

here is whether the District Court applied the correct legal 

standard to a claim under Section 806 of SOX, our review is 

plenary regardless of whether we review the District Court‟s 

application of the standard in its initial dismissal Order or its 

subsequent Order denying reconsideration. 

C. Whistleblower Claims Under Section 806 of SOX
14

SOX Section 806 prohibits publicly traded companies 

and their employees from retaliating against an employee 

who

provide[s] information, cause[s] 

information to be provided, or 

otherwise assist[s] in an 

investigation regarding any 

conduct which the employee 

reasonably believes constitutes a 

violation of section 1341[mail 

fraud], 1343 [wire, radio, or 

television fraud], 1344 [bank 

fraud], or 1348 [securities and 

commodities fraud], any rule or 

regulation of the Securities and 

Exchange Commission, or any 

provision of Federal law relating 

to fraud against shareholders,

when the information is provided 

to or the investigation is 

conducted by . . . 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) . . . .

18 U.S.C. § 1514A. To establish a prima facie case for a 

Section 806 claim, the employee must allege that he or she 

(1) “engaged in a protected activity;” (2) “[t]he respondent 
15

knew or suspected that the employee engaged in the protected 

activity;” (3) “[t]he employee suffered an adverse action;” 

and (4) “[t]he circumstances were sufficient to raise the 

inference that the protected activity was a contributing factor 

in the adverse action.” 29 C.F.R. § 1980.104(e)(2)(i)-(iv).

Section 806 provides that an employee alleging 

discrimination in violation of SOX may file a complaint with 

the Secretary of Labor, who may issue a final order. 18 

U.S.C. § 1514A(b)(1)(A), (2) (incorporating the Department 

of Labor complaint procedures under 49 U.S.C. § 42121(b)). 

If the Secretary fails to issue a final decision within 180 days 

of the filing of the complaint, the complainant may also file a 

civil action in federal district court. Id. § 1514A(b)(1)(B). 

The Secretary of Labor has delegated the authority to review 

appeals under Section 806 and issue final agency decisions to 

the ARB. Delegation of Authority and Assignment of 

Responsibility to the Administrative Review Board, 75 Fed. 

Reg. 3924, 3924-25 (Jan. 25, 2010).

Focusing on the “protected activity” prong in its 

Memorandum accompanying its Order granting Tyco‟s 

Motion to Dismiss, the District Court invoked the ARB‟s 

opinion in Platone and concluded that “[f]or a 

communication to be protected, it must „definitively and 

specifically‟ relate to one of the statutes or rules listed in”

Section 806. Wiest, 2011 WL 2923860, at *4. The Court of 

Appeals cases cited by the District Court in support of its 

application of the “definitive and specific” standard either 

relied upon or cited with approval Platone‟s standard. See 

Van Asdale v. Int’l Game Tech., 577 F.3d 989, 996-97 (9th 

Cir. 2009) (deferring to Platone‟s “definitive and specific”

standard as a reasonable interpretation of the statute); Day v. 
16

Staples, Inc., 555 F.3d 42, 55 (1st Cir. 2009) (quoting the 

Fourth Circuit‟s opinion affirming the ARB‟s decision in 

Platone in which the court employed the “definitive and 

specific” standard); Allen v. Admin. Review Bd., 514 F.3d 

468, 476-77 (5th Cir. 2008) (“We agree with the ARB‟s legal 

conclusion that an employee‟s complaint must „definitively 

and specifically relate‟ to one of the six enumerated 

categories found in” Section 806).

In Sylvester, however, the ARB abandoned the 

“definitive and specific” standard announced in Platone. 

Sylvester, 2011 WL 2165854, at *15. The ARB noted that 

the test adopted in Platone originated in cases under the 

whistleblower provision in the Energy Reorganization Act, 42 

U.S.C. § 5851 (“ERA”). Id. at *14. The ARB explained that,

in addition to enumerating specific activities for which 

employers cannot retaliate against employees, the 

whistleblower provision of the ERA contains a catch-all 

provision to protect employees who “assist or participate in „a 

proceeding ... or any other action [designed] to carry out the 

purposes of this chapter or the Atomic Energy Act of 1954, as 

amended.” Id. (quoting 42 U.S.C. § 5851(a)(1)(F)). 

According to the ARB, because the ERA does not define “any 

other action to carry out the purposes of this chapter,” courts 

interpreted that phrase to require that an employee‟s activity

definitively and specifically implicate safety because of the 

ERA‟s purpose of protecting employee actions involving

nuclear safety. Id.

As the ARB recognized in Sylvester, the SOX 

whistleblower provision does not contain language similar to 

the ERA‟s catch-all provision. Id. Instead, it expressly 

enumerates the laws and rules to which it applies. Therefore, 
17

the ARB concluded that the importation of the definitive and 

specific standard is “inapposite to the question of what 

constitutes protected activity under SOX‟s whistleblower 

protection provision.” Id. Moreover, the ARB determined 

that the definitive and specific standard potentially conflicts 

with the statutory language of Section 806, which prohibits 

retaliation against employees for reporting information that he 

or she reasonably believes violates SOX. Id.4

 

4

In decisions issued subsequent to Sylvester, the ARB 

has asserted that the definitely and specifically standard does 

in fact conflict with the language of Section 806. See Zinn v. 

Am. Commercial Lines, Inc., ARB No. 10-029, 2012 WL 

1102507, at *4 n.33 (Dep‟t of Labor March 28, 2012) (“[T]he 

„definitive and specific‟ standard employed in prior ARB 

cases is inconsistent with the statutory language of Section 

806.”); Prioleau v. Sikorski Aircraft Corp., ARB No. 10-060, 

2011 WL 6122422, at *6 n.3 (Dep‟t of Labor Nov. 9, 2011) 

(“In Sylvester, we made clear that the “definitive and 

specific” standard that the ARB had employed in prior ARB 

cases . . . was inconsistent with Section 806‟s statutory 

language.”); Reamer v. Ford Motor Co., ARB No. 09-053, 

2011 WL 3307575, at *3 n.3 (noting that the ARB “has 

criticized the use of „definitively and specifically‟ as a 

standard for an employee‟s reasonable belief of a violation of 

the laws listed under Section 806.”); Inman v. Fannie Mae, 

ARB No. 08-060, 2011 WL 2614298, at *6 (Dep‟t of Labor 

June 28, 2011) (finding error in the ALJ‟s use of the 

“definitive and specific” standard because it is inconsistent 

with the statutory language of Section 806); Mara v. Sempra 

Energy Trading, LLC, ARB No. 10-051, 2011 WL 2614345, 

at *7 (Dep‟t of Labor June 28, 2011) (same).
18

SOX does not define what constitutes a “reasonable 

belief.” The ARB interprets the phrase to require that the 

plaintiff have a subjective belief that the employer‟s conduct 

violates a provision listed within Section 806 and that the 

belief is objectively reasonable. Id. at *11-12. Indeed, as the 

ARB noted in Sylvester, the legislative history of Section 806 

provides that Congress intended this reasonable belief 

standard to “impose the normal reasonable person standard 

used and interpreted in a wide variety of legal contexts (See 

generally, Passaic Valley Sewerage Commissioners v. U.S. 

Department of Labor, 992 F.2d 474, 478 [3d Cir. 1993]).” Id.

at *11 (quoting S. Rep. No. 107-146, at 19 (2002)).

The ARB opined that to meet the subjective element, 

the plaintiff must actually have believed that the conduct in 

question violated the laws enumerated in SOX. Id. The ARB 

explained that “the legislative history of Sarbanes-Oxley 

makes clear that its protections were „intended to include all 

good faith and reasonable reporting of fraud, and there should 

be no presumption that reporting is otherwise.‟” Id.

(alteration omitted) (quoting Van Asdale v. Int’l Game Tech., 

577 F.3d 989, 1002 (9th Cir. 2009) (quoting 148 Cong. Rec. 

S7418-01, (daily ed. July 26, 2002))). Regarding the 

objective element, the ARB clarified that the plaintiff‟s belief 

“is evaluated based on the knowledge available to a 

reasonable person in the same factual circumstances with the 

same training and experience as the aggrieved employee.” Id.

at *12 (quoting Harp v. Charter Commc’ns, Inc., 588 F.3d 

722, 723 (7th Cir. 2009)).

We conclude that the ARB‟s rejection of Platone‟s 

“definitive and specific” standard is entitled to Chevron

deference. See Chevron, U.S.A., Inc. v. Natural Res. Def. 
19

Council, 467 U.S. 837, 842-43 (1984) (“If . . . the court 

determines Congress has not directly addressed the precise 

question at issue . . . the question for the court is whether the 

agency‟s answer is based on a permissible construction of the 

statute.”). As previously discussed, Section 806 provides that 

an employee seeking whistleblower protection under SOX 

may file a complaint with the Secretary of Labor, who may 

issue a final order. 18 U.S.C. § 1514A(b)(1)(A). The 

Secretary of Labor has delegated the authority to review 

appeals under Section 806 and issue final agency decisions to 

the ARB. Delegation of Authority and Assignment of 

Responsibility to the Administrative Review Board, 75 Fed. 

Reg. 3924, 3924-25 (Jan. 25, 2010). In United States v. Mead 

Corp., 533 U.S. 218 (2001), the Supreme Court recognized 

that “express congressional authorizations to engage in the 

process of . . . adjudication that produces . . . rulings for 

which deference is claimed,” is “a very good indicator of 

delegation meriting Chevron treatment . . . .” Id. at 229. The 

Court further explained that “[i]t is fair to assume generally 

that Congress contemplates administrative action with the 

effect of law when it provides for a relatively formal 

administrative procedure,” including formal adjudication. Id.

at 230 & n.12. Applying Mead, the Ninth Circuit held that 

the ARB‟s interpretation of Section 806 warranted Chevron 

deference based on this statutory and administrative 

delegation. Welch v. Chao, 536 F.3d 269, 276 & n.2 (9th Cir. 

2008). We agree and hold that the ARB‟s interpretation of 

the “reasonable belief” standard is entitled to Chevron

deference.

The fact that the ARB reconsidered and abandoned the 

“definitive and specific” standard does not preclude our 

deference to the reasonable belief standard it subsequently 
20

announced in Sylvester. In National Cable & 

Telecommunications Ass’n v. Brand X Internet Services, 545 

U.S. 967 (2005), the Court explained that “[a]gency 

inconsistency is not a basis for declining to analyze the 

agency‟s interpretation under the Chevron framework.” Id. at 

981. The Court elaborated that “if the agency adequately 

explains the reasons for a reversal of policy, change is not 

invalidating, since the whole point of Chevron is to leave the 

discretion provided by the ambiguities of a statute with the 

implementing agency.” Id. (internal quotation marks 

omitted). Here, the ARB thoroughly explained why it 

reversed the course it previously set in Platone. See 

Sylvester, 2011 WL 2165854, at *14-15. Therefore, Chevron 

deference applies.

While agreeing that the definitive and specific standard 

should be jettisoned, amicus curiae National Whistleblower 

Center (“NWC”) contends that the objective belief standard 

established in Sylvester is too stringent. NWC argues that 

Section 806 protects an employee as long as he or she has a 

good faith belief in the existence of a violation. For support, 

NWC relies on our decision in Passaic Valley Sewerage 

Commissioners v. U.S. Department of Labor, 992 F.2d 474

(3d Cir. 1993).

In Passaic Valley, we interpreted the whistleblower 

provision of the Clean Water Act, which protects employees 

who have “filed, instituted, or caused to be filed or instituted 

any proceeding under” the Clean Water Act. Id. at 478 

(quoting 33 U.S.C. § 1367(a)). At issue was whether the term 

“proceeding” included internal complaints. Id. at 475. We 

noted that, if the whistleblower provision was to accomplish 

the goals of the statute, then “employees must be free from 
21

threats to their job security in retaliation for their good faith 

assertions of corporate violations of the statute.” Id. at 478. 

Affording Chevron deference to the Secretary‟s 

interpretation, we upheld his construction that “all good faith 

intracorporate allegations are fully protected from retaliation 

under” the Clean Water Act‟s whistleblower provision. Id. at 

480.

Because the legislative history of Section 806 

references Passaic Valley in stating Congress‟s intention “to 

impose the normal reasonable person standard used and 

interpreted in a wide variety of legal contexts,” S. Rep. No. 

107-146, at 19 (2002), NWC contends that Congress intended 

to adopt Passaic Valley‟s good faith belief test as the only 

standard to meet in bringing a claim under Section 806. We 

disagree. First, at issue in Passaic Valley was the meaning of

the term “proceeding,” Passaic Valley, 992 F.2d at 478, not 

the phrase “reasonably believes.” As a result, its standard 

does not control the issue at hand. Second, a good faith belief 

goes to the employee‟s subjective belief that a violation 

occurred, which is only one element of the reasonable belief

standard applicable to Section 806. Therefore, whatever 

guidance Passaic Valley provides, it relates only to the 

subjective element of a reasonable belief test. As explained

in Sylvester, the reasonable belief standard also includes an 

objective element. Sylvester, 2011 WL 2165854, at *11. As 

we did in Passaic Valley, and as explained above, we defer to 

the administering agency‟s reasonable interpretation of the 

statute. As a result, an employee must establish not only a 

subjective, good faith belief that his or her employer violated 

a provision listed in SOX, but also that his or her belief was 

objectively reasonable. Id. at *11. A belief is objectively 

reasonable when a reasonable person with the same training 
22

and experience as the employee would believe that the 

conduct implicated in the employee‟s communication could 

rise to the level of a violation of one of the enumerated 

provisions in Section 806. Id. at *11-12.

The Dissent contends that we have adopted an 

internally inconsistent test by recognizing that an employee 

must have an objectively reasonable belief of a violation of 

one of the listed federal laws but not a reasonable belief that 

each element of a listed anti-fraud law is satisfied. We 

perceive no inconsistency because we do not think Congress 

intended such a formalistic approach to the question of 

whether an employee has engaged in “protected activity.” As 

so aptly stated by our dissenting colleague, the purpose of 

“[w]histleblower statutes like SOX § 806 [is] to protect 

people who have the courage to stand against institutional 

pressures and say plainly, „what you are doing here is wrong‟ 

. . . in the particular way identified in the statue at issue.” 

(Dissenting Op. Typescript at 1.) By identifying conduct that 

falls within the ample bounds of the anti-fraud laws, an 

employee has done just that. That employee should not be 

unprotected from reprisal because she did not have access to 

information sufficient to form an objectively reasonable 

belief that there was an intent to defraud or the information 

communicated to her supervisor was material to a 

shareholder‟s investment decision. “Congress chose statutory 

language which ensures that „an employee‟s reasonable but 

mistaken belief that an employer engaged in conduct that 

constitutes a violation of one of the six enumerated categories 

[set forth in § 806] is protected.‟” Van Asdale, 577 F.3d at 

1001 (quoting Allen, 514 F.3d at 477). An employee‟s lack 

of knowledge of certain facts that pertain to an element of one 

of the anti-fraud laws would be relevant to, but not dispositive 
23

of, whether the employee did have an objectively reasonable 

belief that a listed anti-fraud law had been violated. Indeed, 

whether an employee has an objectively reasonable belief 

may not always be decided as a matter of law. See Allen, 514 

F.3d at 477-78. Indeed, this issue would generally not be 

amenable to adjudication on the basis of the averments of a 

complaint that concerns a communication that relates in an 

understandable way to one of the anti-fraud provisions listed 

in § 806.

In addition to rejecting the definitive and specific

standard that the District Court relied upon in granting Tyco‟s 

Motion to Dismiss, Sylvester conflicts with two additional 

legal conclusions reached by the District Court relating to 

protected activity under Section 806. First, in dismissing 

Wiest‟s Complaint, the District Court concluded that an 

“employee‟s communication must convey that his concern 

with any alleged misconduct is linked to „an objectively 

reasonable belief that the company intentionally 

misrepresented or omitted certain facts to investors, which 

were material and which risked loss.‟” Wiest, 2011 WL 

2923860, at *4 (quoting Day v. Staples, Inc., 555 F.3d 42, 56 

(1st Cir. 2009)). Sylvester expressly rejected such an 

interpretation. Observing that “[s]ome courts have 

misinterpreted [Platone‟s] analysis as a requirement that SOX 

complainants must allege elements of a securities fraud claim 

for protection,” the ARB reasoned that “requiring a 

complainant to prove or approximate the specific elements of 

a securities law violation contradicts the statute‟s requirement 

that an employee have a reasonable belief of a violation of the 

enumerated statues.” Sylvester, 2011 WL 2165854, at *18. 

The ARB further explained, “a complainant can engage in 

protected activity under Section 806 even if he or she fails to 
24

allege or prove materiality, scienter, reliance, economic loss, 

or loss causation.” Id. We find this interpretation to be 

reasonable because there is nothing in the statutory text that 

suggests that a complainant‟s communications must assert the 

elements of fraud in order to express a reasonable belief that 

his or her employer is violating a provision listed in Section 

806. Therefore, the District Court erred by requiring that an 

employee‟s communication reveal the elements of securities 

fraud, including intentional misrepresentation and materiality.

Second, the District Court concluded that to constitute 

protected activity, the information contained within an 

employee‟s communication must implicate “a reasonable 

belief of an existing violation.” Wiest, 2011 WL 2923860, at 

*4 (emphasis added) (citing Livingston v. Wyeth, 520 F.3d 

344, 352 (4th Cir. 2008)). Sylvester rejected this requirement

as well. The ARB held that Section 806 protects an 

employee‟s communication about a violation that has not yet 

occurred “as long as the employee reasonably believes that

the violation is likely to happen.” Sylvester, 2011 WL 

2165854, at *13. We find this interpretation of the 

“reasonably believes” statutory phrase, 18 U.S.C. § 

1514A(a)(1), to be reasonable given the statute‟s purpose to 

combat corporate wrongdoing. See S. Rep. No. 107-146, at 5 

(2002) (“Th[e] „corporate code of silence‟ not only hampers 

investigations, but also creates a climate where ongoing 

wrongdoing can occur with virtual impunity.”). It would 

frustrate that purpose to require an employee, who knows that 

a violation is imminent, to wait for the actual violation to 

occur when an earlier report possibly could have prevented it.

Contrary to our dissenting colleague‟s assertion, we 

are not “ignor[ing] the need for a whistleblower‟s employer to 
25

actually perceive that a whistle has been blown.” (Dissenting 

Op. Typescript at 4.) We agree with the Dissent that, in order 

for an employer to “know or suspect that the whistleblowerplaintiff is engaged in protected conduct . . . the plaintiff‟s 

intra-corporate communications [must] relate in an 

understandable way to one of the stated provisions of federal 

law [in § 806].” (Id.) But the whistleblower‟s 

communication need not ring the bell on each element of one 

of the stated provisions of federal law to support an inference 

that the employer knew or suspected that the plaintiff was 

blowing the whistle on conduct that may fall within the ample 

reach of the anti-fraud laws listed in § 806. To hold that an 

employer could not have suspected that the plaintiff was

engaged in protected activity because the communication did 

not recite facts showing an objectively reasonable belief in 

the satisfaction of each element of one of the listed anti-fraud 

provisions would eviscerate § 806. An employee may not 

have access to information necessary to form a judgment on 

certain elements of a generic fraud claim, such as scienter or 

materiality, and yet have knowledge of facts sufficient to alert 

the employer to fraudulent conduct. When an employee 

communicates these facts to a supervisor, the employer has a 

sufficient basis to suspect that the employee is protected 

against reprisal for communicating that information.

Moreover, whether an employee‟s communication is 

indeed “protected activity” under § 806 is distinct from 

whether the employer had reason to suspect that the 

communication was protected. To show that the 

communication is protected, the employee must have both a 

subjective and an objective belief that the conduct that is the 

subject of the communication relates to an existing or 

prospective violation of one of the federal laws referenced in 
26

§ 806. The communication itself need not reveal all the facts 

that would cause a reasonable person with the 

whistleblower‟s training and background to conclude that a 

referenced federal law has been or will be violated. That 

determination should be based upon all the attendant 

circumstances, and not be limited to the facts conveyed by a 

whistleblower to the employer. If the communication itself 

had to convey facts sufficient to support an objectively 

reasonable belief of a violation of one of the referenced laws, 

Congress would not have imposed liability upon an employer 

who merely “suspected” that the communication is protected 

from reprisal. 

In this case, the District Court did not decide this 

matter on the ground that Wiest‟s pleadings failed to support 

a plausible inference that Tyco knew or suspected that Wiest 

had engaged in protected activity. Instead, the District Court 

decided that Wiest‟s Complaint was inadequate because the 

communications did not “definitively and specifically” relate 

to a statute or rule listed in § 806 and failed to articulate facts 

that supported a reasonable belief of actionable fraudulent 

conduct directed at investors. Consistent with according 

Chevron deference to the ARB‟s holding in Sylvester, we 

have found that the standards used by the District Court were 

too stringent. We now turn to Wiest‟s Complaint to ascertain 

whether it states a § 806 claim for relief under the standard 

announced in Sylvester. 

D. Application of Sylvester‟s Reasonable Belief Standard

Although we hold that the District Court applied the 

wrong legal standard in analyzing Wiest‟s claims under 

Section 806, dismissal is still appropriate if Wiest 

nevertheless failed to plead sufficient facts to state a claim. 
27

See Tourscher v. McCullough, 184 F.3d 236, 240 (3d Cir. 

1999) (“We may affirm the district court on any ground 

supported by the record.”). “To survive a motion to dismiss, 

a complaint must contain sufficient factual matter, accepted 

as true, to state a claim to relief that is plausible on its face.” 

McTernan v. City of York, Pa., 577 F.3d 521, 530 (3d Cir. 

2009) (alteration omitted) (quoting Ashcroft v. Iqbal, 556 

U.S. 662, 678 (2009) (internal quotation marks omitted).

1. The Atlantis Resort Event

The Complaint alleges that Wiest refused to process a 

payment for and questioned the legitimacy of an extravagant 

event to be held at the Atlantis Resort. In particular, in a June 

3, 2008 email to his supervisor, Wiest explained, among other 

concerns, that “[a]s submitted, the costs are charged entirely 

to advertising expense which seems inappropriate and does 

not address the issue of breaking out the meals and 

entertainment portions which we feel would fall into the 50% 

deductibility classification for tax purposes.” (App. 84, Ex. 

E.) The Complaint also alleges that Wiest, like many others,

was aware of a similar event held during Kozlowski‟s tenure. 

Wiest‟s email to his supervisor expressed his concerns about 

Tyco treating the costs of the event as business expenses and 

his belief that certain costs should be treated as income for the 

guests. Because of his communication, a review of the 

expenses revealed that if Tyco had processed the transaction 

as originally submitted, it “would have resulted in a 

misstatement of accounting records and a fraudulent tax 

deduction . . . .” (App. 43, ¶ 35.)

These facts are sufficient to support a plausible 

inference that Wiest reasonably believed that Tyco‟s conduct 

would violate one of the provisions in Section 806 because he 
28

foresaw a potentially fraudulent tax deduction and 

misstatement of accounting records if he did not bring that 

information to the attention of his supervisors. Furthermore, 

Tyco‟s decision to “gross-up” its employees‟ income by 

compensating them for extra tax liabilities due to the Atlantis

trip not being considered a business expense also plausibly 

created a reasonable belief in Wiest that a SOX violation 

would occur, given Wiest‟s familiarity with Kozlowski 

having used the “grossing-up” method during the Tyco 

scandal.

We find that the alleged facts show not only that Wiest 

subjectively believed that Tyco‟s conduct may have violated 

a provision listed in Section 806, but also support an 

inference that his belief was objectively reasonable. A 

reasonable person in Wiest‟s position who had seen the 

expense request for the extravagant Atlantis event could have 

believed that treating the Atlantis event as a business expense 

violated a provision of Section 806, especially given the 

scrutiny Tyco received during the Tyco International scandal 

under Kozlowski. We find, therefore, that Wiest pled 

sufficient facts to establish that his communication relating to 

the Atlantis event was protected activity under Section 806. 

As a result, we reverse the District Court‟s dismissal Order 

with respect to Wiest‟s communication relating to the Atlantis 

event.5

 

5

The Dissent asserts that the accounting treatment of 

the Atlantis event does not suggest fraudulent conduct, 

characterizing the manner in which the event‟s expenses were 

originally to be treated as an “error” or “mistake.” 

(Dissenting Op. Typescript at 16 n.12.) That characterization 
29

2. The Venetian Resort Event

Wiest also alleges that he directed an expense request 

for an event at the Venetian Resort to be held while the tax 

department evaluated the business purpose of the event and 

until his department received proper documentation and 

accounting treatment. After receiving a revised agenda, the 

tax department eventually approved the event as a business 

expense. In an email chain attached to the Complaint relating 

to the Venetian event, the only reference to Wiest indicates 

that he asked his subordinate to forward a colleague 

additional information that Wiest‟s department had received

about the event. That particular email also reveals that 

although the accounts payable department requested 

additional review of the expenses, the department “believe[d] 

the information provided substantiates this [event] as a 

business expense . . . .” (App. 114, Ex. M.)

 

ignores the fact that we are dealing solely with the allegations 

of a complaint, which must be viewed in the light most 

favorable to Wiest. See Phillips, 515 F.3d at 233 (holding 

that, in the wake of Bell Atlantic Corp. v. Twombly, 550 U.S. 

544 (2007), courts are still correct to “construe the complaint 

in the light most favorable to the plaintiff, and [to] determine 

whether, under any reasonable reading of the complaint, the 

plaintiff may be entitled to relief” (internal quotation marks 

omitted)). In any event, the issue is not whether the 

contemplated accounting treatment was or was not part of a 

scheme to defraud. The issue is whether such accounting 

treatment could reasonably be believed by Wiest to be 

fraudulent. Given the Kozlowski scandal, a jury could find 

that Wiest reasonably believed that the sins of Kozlowski 

were being repeated.
30

Even if the facts in the Complaint established that 

Wiest subjectively believed the expense request for the 

Venetian event could have violated a provision in Section 

806, we conclude that, objectively, a reasonable person in 

Wiest‟s position would not have believed that the expense 

request that initially lacked a detailed agenda and breakdown 

of expenses would constitute a violation of one of the 

provisions listed in Section 806. Therefore, we affirm the 

District‟s dismissal Order with respect to Wiest‟s 

communications relating to the Venetian event.

3. The Wintergreen Resort Event

Regarding the $355,000 event that took place at the 

Wintergreen Resort, Wiest alleges that the initial invoice 

lacked sufficient documentation and accounting breakdowns. 

In addition, Wiest alleges that a planned attendee of the event 

had approved the request instead of Defendant Thomas 

Lynch, the CEO, as required by Tyco‟s delegation of 

authority. Emails relating to the event show that Wiest twice 

indicated to management that Lynch needed to approve the 

request. In the first email, Wiest requested clarification from 

the CFO, Defendant Terrence Curtin, that he was approving 

the entire cost of the event and asked that Curtin copy Lynch

on his response to communicate his approval. After Curtin 

apparently responded by giving his approval without copying 

Lynch, Wiest then emailed his supervisor reiterating that he 

still believed that Lynch should be informed about the matter

because Curtin could only approve up to $100,000 for events.

Curtin failed to copy Lynch.

The averments of the Complaint support an inference 

that Wiest subjectively believed that the lack of the CEO‟s

approval, which contravened internal control procedures,
31

would violate one of the provisions enumerated in Section

806. Furthermore, it is plausible that a reasonable person in 

Wiest‟s position could have believed that the event‟s approval 

by an attendee of the event, who would therefore directly 

benefit from that approval, instead of by the CEO as required 

by internal control procedures, may have violated one of the 

provisions contained in Section 806.

6

 Therefore, we reverse 

the District Court‟s dismissal Order with respect to Wiest‟s 

communications relating to the Wintergreen event.

4. Other Matters

Wiest emailed management in 2007 about an 

employee who submitted improper expenses to inform

management that if it wished to claim the expenses as 

business expenses then either Tyco would have to be 

reimbursed or the charges would have to be reported as 

income for the employee. The allegation and corresponding 

 

6

The Dissent questions whether unauthorized 

expenditures for the Wintergreen Resort event could support 

a claim under one of the anti-fraud laws listed in § 806. 

Approval authorities exist to ensure that large expenditures 

are undertaken for appropriate business purposes. 

Expenditures for which required approvals have not been 

obtained raise the specter that they are not undertaken for an 

appropriate business purpose. Once again, such expenditures 

could plunder corporate assets for the benefit of those 

attending lavish events, masking personal income. We 

believe that the Complaint alleges sufficient facts to plausibly 

support an inference that Wiest had an objectively reasonable 

belief that the absence of the CEO‟s authorization for the 

Wintergreen Resort Event was part of a fraudulent scheme.
32

email show only that Wiest explained to management the 

potential tax consequences relating to the expenses. Without 

more, the Complaint lacks sufficient facts to establish that 

Wiest reasonably believed that Tyco‟s handling of the matter 

constituted a violation of a law listed in Section 806.

In addition, Wiest alleges that he “raised questions” 

about proper accounting treatment of other events that 

occurred between late 2007 and September 2009, including a 

“lavish” holiday party, a team meeting that did not break out 

entertainment and meal expenses, and a baby shower for an 

employee. Aside from stating that it took several attempts to 

confirm that the baby shower would be treated as a business 

expense, Wiest fails to allege any facts suggesting that he 

reasonably believed these events violated an enumerated 

provision in Section 806. The Complaint does not specify 

anything about the nature or content of his communications. 

By itself, the allegation that Wiest “raised questions” does not 

create a plausible inference that he or any reasonable person 

in his position would believe that expenditures on the events 

rose to the level of a violation of a provision in Section 806. 

As a result, we affirm the District Court‟s dismissal Order 

with respect to Wiest‟s communications relating to the

improper business expense claims of an individual employee

as well as the holiday party, team meeting, and baby shower 

events.

III.

In sum, we hold that the reasonable belief test is the 

appropriate standard with which to analyze the 

communications that Wiest contends constitute “protected 

activity.” As explained in Sylvester, that standard requires 

that an employee‟s communication reflect a subjective and 
33

objectively reasonable belief that his employer‟s conduct 

constitutes a violation of an enumerated provision in Section 

806. The District Court erred in dismissing Wiest‟s 

Complaint by employing the “definitive and specific” 

standard, by interpreting Section 806 to require that an 

employee‟s alleged “protected activity” reveal the elements of 

securities fraud, and by requiring that his or her

communication reference an existing violation. We find that 

Wiest has pled adequate facts to show that his 

communications relating to the Atlantis and Wintergreen 

events were protected activity under Section 806. We agree 

with the District Court, however, that Wiest cannot establish

that his communications relating to the other alleged matters 

constituted protected activity.

For the foregoing reasons, we reverse the District 

Court‟s Order denying Wiest‟s Motion for Reconsideration. 

See McDowell v. Phila. Housing Auth., 423 F.3d 233, 238 (3d 

Cir. 2005) (explaining that an errant conclusion of law may 

result in an abuse of discretion). We also reverse the District 

Court‟s Order granting Tyco‟s Motion to Dismiss as to 

Wiest‟s communications relating to the Atlantis and 

Wintergreen events and affirm the dismissal as to Wiest‟s 

communications relating to the other events.7 We remand

this matter to the District Court for further proceedings 

consistent with this opinion.

 

7

In light of the reinstatement of the SOX Section 806 

claims, the District Court‟s decision to decline to exercise 

supplemental jurisdiction will be vacated. 
1

Wiest, et al. v. Lynch, et al., No. 11-4257 

JORDAN, Circuit Judge, Dissenting

Because I believe the District Court properly 

determined that the Wiests failed to establish that Mr. Wiest 

held or communicated an objectively reasonable belief that 

the actions of Tyco officials constituted a violation of one or 

more of the laws referenced in § 806 of the Sarbanes-Oxley

Act of 2002 (“SOX”), Pub. L. No. 107-204, 116 Stat. 745 

(codified at 18 U.S.C. § 1514A), I respectfully dissent.

Whistleblower statutes like SOX § 806 seek to protect 

people who have the courage to stand against institutional 

pressures and say plainly, “what you are doing here is wrong”

– not wrong in some abstract or philosophical way, but wrong 

in the particular way indentified in the statute at issue. See 

Day v. Staples, Inc., 555 F.3d 42, 55 (1st Cir. 2009) 

(requiring that an employee‟s Section 806 complaint “be 

measured against the basic elements of the laws specified in 

the statute”). The protection of § 806 depends upon the 

whistleblower identifying wrongdoing made illegal by federal 

laws targeting fraud, especially fraud against the holders of 

publicly traded securities. To qualify as a whistleblower

under § 806, the employee must have provided information 

regarding conduct “which the employee reasonably believes 

constitutes a violation of [18 U.S.C. §§] 1341 [mail fraud], 

1343 [wire fraud], 1344 [bank fraud], or 1348 [securities 

fraud], 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)(1). Section 

806 thus defines protected conduct not by reference to the 
2

statute in which it is contained,

1

but by reference to four

federal fraud statutes, SEC rules and regulations, and other

federal law that is circumscribed as “relating to fraud against 

shareholders.” 

As the Majority notes, the elements of a § 806

retaliation claim are that (1) the employee “engaged in a 

protected activity,” (2) the employer “knew or suspected that 

the employee engaged in the protected activity,” (3) the 

employee “suffered an adverse action,” and (4) the 

circumstances were “sufficient to raise the inference that the 

 

1

In contrast to § 806, other whistleblower statutes 

often identify the targeted wrongdoing within the same 

statutory scheme. See, e.g., 42 U.S.C. § 7622(a)(1) (defining 

protected conduct pursuant to the Clean Air Act as having 

“commenced, caused to be commenced, or [to be] about to 

commence ... a proceeding” under the Act or testifying or 

assisting in such a proceeding); 42 U.S.C. § 5851(a)(1)

(defining protected conduct pursuant to the Energy 

Reorganization Act as having notified an employer of a 

violation of the Act, refusing to engage in practices prohibited 

by the Act, or commencing or testifying in a proceeding 

regarding violations of the Act); 30 U.S.C. § 815(c)(1) 

(defining protected conduct pursuant to the Federal Mine 

Safety and Health Act as having “filed or made a complaint 

under or related to” the Act); 29 U.S.C. § 158(a)(4) (defining 

protected conduct pursuant to the National Labor Relations 

Act as having “filed charges or given testimony” under the 

Act); 31 U.S.C. § 3730(h)(1) (defining protected conduct 

under the False Claims Act as “lawful acts done by the 

employee[] ... in furtherance of an action under [the Act] or 

other efforts to stop 1 or more violations of [the Act]”).
3

protected activity was a contributing factor in the adverse 

action.” 29 C.F.R. § 1980.104(e)(2); see also Day, 555 F.3d 

at 53 (noting that the “requirements for a prima facie [§ 806] 

case are articulated in the DOL regulations” (citing 29 C.F.R. 

§ 1980.104)). For purposes of the first, second, and fourth 

elements, the term “protected activity” means “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” one 

of the laws referenced in § 806. 11 U.S.C. § 1514A(a)(1).

To establish a reasonable belief that such a violation has 

taken place, “an employee must show that he had both a 

subjective belief and an objectively reasonable belief that the 

conduct he complained of constituted a violation of relevant 

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

(internal quotation marks omitted). Thus, general allegations 

of misconduct by corporate officers, even if that misconduct 

relates to financial matters, are not sufficient to state a § 806 

claim. See Day, 555 F.3d at 56-57 (noting that “violations of 

„general accounting principles‟” do not constitute 

“shareholder fraud” that gives rise to SOX-protected activity). 

The second element of a SOX retaliation claim 

confirms that conclusion. It is difficult to see how a 

defendant, such as a whistleblower‟s supervisor, can know or 

suspect that the whistleblower-plaintiff is engaged in 

protected conduct if the plaintiff‟s intra-corporate

communications do not relate in an understandable way to 

one of the stated provisions of federal law. What matters is 

not what is locked inside the plaintiff‟s mind or how the 

plaintiff may later describe his actions; it is what is 

communicated to the employer that counts. See Welch, 536 

F.3d at 277 (“[T]he relevant inquiry is what an employee 
4

actually communicated to [his] employer prior to the ... 

termination; it is not what [is] alleged in [the employee‟s] 

OSHA complaint.” (alterations in original) (internal 

quotation marks omitted)). Both the Department of Labor‟s 

Administrative Review Board (“ARB”) and the Majority 

effectively bypass that element of a SOX retaliation claim and 

concentrate their focus on the complainant‟s frame of mind

and after-the-fact spin. In doing so, they ignore the need for a 

whistleblower‟s employer to actually perceive that a whistle 

has been blown.

2

The imperative that the whistleblower sound off with 

clarity was the subject of the ARB‟s opinion in Platone v. 

FLYi, Inc., 25 IER Cases 278 (Sept. 29, 2006). That opinion,

the reasoning of which was adopted by several courts of 

appeals,3required that “the [complaining] employee‟s 

 

2

The Majority contends that “whether an employee‟s 

communication is indeed „protected activity‟ under § 806 is 

distinct from whether the employer had reason to suspect that 

the communication was protected.” (Majority Op. at 25.) 

That, however, is contradicted by what the Majority 

acknowledges is the second element of a § 806 claim, namely 

that the employer “knew or suspected that the employee 

engaged in the protected activity.” (Id. at 15 (internal 

quotation marks omitted).) The communication of a 

suspected fraud is the protected activity. 

3

See, e.g., Van Asdale v. Int’l Game Tech., 577 F.3d 

989, 996-97 (9th Cir. 2009) (deferring to the ARB‟s 

determination that an “employee‟s communications must 

„definitively and specifically‟ relate to [one] of the listed 

categories of fraud or securities violations under [§ 1514A]”);

Day v. Staples, Inc., 555 F.3d 42, 55 (1st Cir. 2009) (“The 
5

communications must „definitively and specifically‟ relate to 

any of the listed categories of fraud or securities violations 

under [§ 806].” 25 IER Cases at 287. In essence, the ARB 

established something like a pleading standard for intracorporate communications. But Platone has been supplanted 

by the ARB‟s recent opinion in Sylvester v. Parexel 

International LLC, 32 IER Cases 497, 505 (U.S. Dep‟t of

Labor May. 25, 2011) (en banc), which jettisons the

requirement that SOX whistleblowers definitively and 

specifically tie with their disclosures to the kinds of fraud

listed in § 806. 

The ARB evidently viewed that standard as too 

stringent. When confronted in Sylvester with complainants 

who alleged that their intra-corporate communications

concerning compliance with FDA testing protocols were 

actually allegations of securities fraud,

4

the ARB in effect 

said “good enough.” More precisely, it said:

 

employee must show that his communications to the 

employer specifically related to one of the laws listed in 

§ 1514A.”); Welch v. Chao, 536 F.3d 269, 275 (4th Cir. 2008)

(“[A]n employee must show that his communications to his 

employer definitively and specifically relate[d] to one of the 

laws listed in § 1514A.” (internal alteration and quotation 

marks omitted)); Allen v. Admin. Review Bd., 514 F.3d 468, 

476 (5th Cir. 2008) (“We agree with the ARB‟s legal 

conclusion that an employee‟s complaint must definitively 

and specifically relate to one of the six enumerated categories 

found in § 1514A.” (internal quotation marks omitted)).

4

The rather tenuous connection between the 

company‟s conduct and “fraud against shareholders” that the 

Sylvester employees asserted was that, “by covering up 
6

[b]ecause a complainant need not prove a 

violation of the substantive laws, ... a [SOX] 

complainant can have an objectively 

reasonable belief of a violation of the laws in 

Section 806 ... even if the complainant fails 

to allege, prove, or approximate specific 

elements of fraud, which would be required

under a fraud claim against the defrauder 

directly. In other words, a complainant can 

engage in protected activity under Section 

806 even if he or she fails to allege or prove 

materiality, scienter, reliance, economic loss, 

or loss causation.

Sylvester, 32 IER Cases at 512 (emphasis added). Ponder 

that: without “alleg[ing]” or “prov[ing]” or even 

“approximat[ing]” a charge of fraud, the complaints of a socalled whistleblower are, in the ARB‟s view, supposed to put 

a company on notice that a fraud has been identified. The 

rationale the ARB offered for that conclusion was the ipse 

dixit that “the purposes of the whistleblower protection 

provision will be thwarted,” id. at 512, if a § 806 complainant 

proceeding on a theory of underlying shareholder fraud must 

actually say something pointing out such fraud. 

 

clinical research fraud ... Parexel engaged in fraud against its 

shareholders, financial institutions, and others” because 

disclosure of the compliance failures would have been “at the 

expense of the long-term financial performance of the 

company ... [and] would have significantly reduced Parexel‟s 

revenue and reputation.” Sylvester v. Parexel Int’l LLC, 32 

IER Cases 497, 501 (U.S. Dep‟t of Labor May. 25, 2011) (en 

banc).
7

To discredit the “definitive and specific” requirement, 

the ARB said that the requirement had been erroneously

drawn from a different statute. The whistleblowing provision 

in the Energy Reorganization Act (“ERA”), 42 U.S.C. 

§ 5851, protects an employee who participates in any 

“proceeding or in any other action to carry out the purposes” 

of that statute. 42 U.S.C. § 5851(a)(1)(F). The ARB 

reasoned that the “importation” of a pleading standard 

derived from the ERA‟s catch-all provision “is inapposite to 

the question of what constitutes protected activity under 

SOX‟s whistleblower protection provision” because “the 

SOX whistleblower protection provision contains no similar 

language, and instead expressly identifies the several laws to 

which it applies.” 32 IER Cases at 509.

My colleagues in the Majority conclude that “the 

ARB‟s rejection of Platone‟s „definitive and specific‟ 

standard is entitled to Chevron deference” (Majority Op. at 

18) because “the ARB thoroughly explained why it reversed 

the course it previously set in Platone” (id. at 20). With all 

due respect, I cannot agree with that generous 

characterization of the ARB‟s work product. Sylvester’s

rejection of Platone is hardly explained and far from 

persuasive.

5

 It is strange, for example, to hear the ARB claim 

 

5 Chevron deference extends only to reasonable agency 

interpretations of ambiguous statutory language. See

Chevron U.S.A., Inc. v. Natural Res. Def. Counsel, 467 U.S. 

837, 843 (1984) (“[I]f the statute is silent or ambiguous ..., 

the question for the court is whether the agency‟s answer is 

based on a permissible construction of the statute.”). For 

several reasons, including those discussed herein, I question 

whether the ARB‟s interpretation of the requirements of a 
8

that the greater specificity of § 806 makes the “definitive and 

specific” standard inappropriate but then hear it say in the 

next breath that one need not bother with alleging, proving, or 

even approximating a statement showing that the specifics of 

§ 806 have been satisfied.

Moreover, the reasoning behind the “definitive and 

specific” standard applies with at least equal force to § 806

as it does to the pertinent provision of the ERA. I agree with 

the ARB at least to the extent that it observed that courts have

construed the ERA catch-all provision “in light of [that 

statute‟s] overarching purpose of protecting acts implicating 

nuclear safety,” and thus courts have required “that an 

employee‟s actions implicate safety „definitively and 

specifically‟” to constitute protected activity. Sylvester, 32 

IER Cases at 509. In the same way, the overarching purpose 

of SOX is to expose and therefore deter fraud against 

shareholders of companies whose shares are publicly traded,

see Cohen v. Viray, 622 F.3d 188, 195 (2d Cir. 2010) (noting 

that “[SOX] ... outlaws fraud and deception by managers in 

the auditing process” (quoting S. Rep. No. 107-205, at 23 

(2002) (internal quotation marks omitted)), and, just as the 

ERA cases call for a definitive and specific linkage to that 

statute‟s purpose, so a SOX whistleblower was, once upon a 

time, required to demonstrate “definitively and specifically” 

that the subject of his allegedly protected communication 

implicated the kind of unlawful activity targeted by SOX.

6

 

§ 806 claim, as expressed in Sylvester, represents a reasonable 

and thus permissible construction of the statute.

6 As the ARB sees it, the “plain language” of § 806 

somehow demands a different result from the one it 

previously insisted on in Platone. See Sylvester, 32 IER 
9

At the end of the day, though, the fate of the 

“definitive and specific” standard is not the main issue. That 

standard is just one way of practically addressing the 

requirement that a SOX whistleblower demonstrate a 

reasonable belief that the kinds of unlawful behavior 

identified in § 806 have occurred or are threatened. Of 

particular importance here is the “objective reasonableness” 

component of the reasonable belief requirement. The ARB 

reaffirmed that component in Sylvester, noting that “[t]he 

second element of the „reasonable belief‟ standard, the 

objective component, „is evaluated based on the knowledge 

available to a reasonable person in the same factual 

circumstances with the same training and experience as the 

aggrieved employee.‟” 32 IER Cases at 507 (quoting Harp v. 

Charter Commc’ns Inc., 558 F.3d 722, 723 (7th Cir. 2009)).7 

 

Cases at 508 (saying that “the ALJ failed to focus on the plain 

language of the SOX whistleblower protection provision”). 

Quoting not the statute, but its legislative history, the ARB 

says that § 806 protects “„all good faith and reasonable 

reporting of fraud.‟” See id. (quoting 148 Cong. Rec. S7418-

01, S7420 (daily ed. July 26, 2002)). That broad statement 

does not support the standardless liability imposed by 

Sylvester, but, more to the point, we are not trying to apply 

legislative history. Our job is to interpret and apply the 

statute itself. The plain language of § 806 protects only 

reporting of conduct that an employee “reasonably believes” 

constitutes a violation of one of four specific fraud provisions 

set forth in federal criminal law, or certain SEC rules and 

regulations, or, at the catch-all level, any other provision of 

federal law that targets “fraud against shareholders.” 18 

U.S.C. § 1514A(a)(1). 

7 Moreover, prior to Sylvester, our sister circuits treated 
10

Unfortunately, Sylvester provides no guidance as to what, if 

anything, a § 806 claimant is required to allege. In its efforts 

to lower the bar, the ARB has provided little more than a 

recitation of what is not required for an employee to allege 

protected conduct. See 32 IER Cases at 512 (“[A] 

complainant need not prove a violation of the substantive

laws ...”); id. (“[A] complainant can engage in protected 

activity under Section 806 even if he or she fails to allege or 

prove materiality, scienter, reliance, economic loss, or loss 

causation.”); id. ([A] complainant ... [need not] allege, prove, 

 

the “definitive and specific” requirement as separate from the 

statutory requirement of reasonable belief. See, e.g., Welch, 

536 F.3d at 275 (“To ... establish that he engaged in 

protected activity, an employee must show that he had both „a 

subjective belief and an objectively reasonable belief‟ that the 

conduct he complained of constituted a violation of relevant 

law. Additionally, an employee must show that his 

communications to his employer „definitively and specifically 

relate[d]‟ to one of the laws listed in § 1514A.”); Van Asdale 

v. Int’l Game Tech., 577 F.3d 989, 1000 (9th Cir. 2009) 

(noting, after determining that the plaintiffs satisfied the 

“definitively and specifically” standard from Platone, that 

they must also have a reasonable belief concerning a violation 

of a listed law in order “to trigger the protections of the Act”); 

Day, 555 F.3d at 54 (treating the “definitively and 

specifically” requirement and “reasonable belief” requirement 

separately); Allen, 514 F.3d at 477 (same). Consequently, 

although the ARB eliminated the “definitive and specific” 

standard as “an inappropriate test ... [that] is often applied too 

strictly,” 32 IER Cases at 509, the determination of the 

objective reasonableness of a SOX complainant‟s belief 

remains a necessity.
11

or approximate that the reported irregularity or misstatement 

satisfies securities law „materiality‟ standards, was done 

intentionally, was relied upon by shareholders, and that 

shareholders suffered a loss because of the irregularity.”).8

Trying to apply the impossibly vague “standard” of 

Sylvester, the Majority has adopted an internally inconsistent 

test. On one hand, my colleagues rightly reject the argument 

offered by our amicus, the National Whistleblower Center,

that no more than an employee‟s own subjective good faith

belief is required to allege a § 806 violation. (See Majority 

Op. at 21 (“As explained in Sylvester, the reasonable belief 

standard also includes an objective element.”).) On the other 

hand, they go on to conclude that the ARB “expressly 

rejected” the District Court‟s interpretation of § 806 as 

requiring that Wiest demonstrate “„an objectively reasonable 

belief that the company intentionally misrepresented or 

omitted certain facts to investors which were material and

which risked loss.‟” (Majority Op. at 23 (quoting Wiest v. 

Lynch, No. 10-3288, 2011 WL 2923860, at *4 (E.D. Pa. July 

21, 2011)).) Those two conclusions seem to me to be in 

tension, and one is left to wonder what the objective standard 

is for measuring whether a complainant‟s belief is reasonable

if it is not the existing rules of law expressly noted in § 806.

9

 

 

8

The Majority follows the ARB‟s approach, 

concluding that a “whistleblower‟s communication need not 

ring the bell on each element of one of the stated provisions 

of federal law in [§ 806]” (Majority Op. at 25), without 

specifying which, if any, bells must be rung. 

9

The Majority perceives no inconsistency because it 

“do[es] not think Congress intended such a formalistic 

approach to the question of whether an employee has engaged 
12

Pre-Sylvester case law from federal courts made it 

clear that “[t]he reasonableness of [a SOX complainant‟s]

belief for purposes of § [806] must be measured against the 

basic elements of the laws specified in the statute.” Day, 555 

F.3d at 55. Logically, that ought still to be the case. Section 

806 references identifiable pieces of positive law. They are 

not mere generalities and they do not open the door to 

whistleblower relief to anyone with vague feelings of unease 

or even specific discomfort with something other than that 

which is identified in § 806. Particularly pertinent here,

“„[f]raud‟ itself has defined legal meanings and is not, in the 

context of SOX, a colloquial term.” Id.10 Section 806 thus 

 

in „protected activity.‟” (Majority Op. at 22.) I do not agree 

that requiring that an allegedly protected communication 

clearly relate to one of the laws enumerated in § 806 is an 

exercise in formalism. But even if it were, Congress has 

expressed its intent in the text of the statute, which sets forth 

the particular laws that may give rise to a SOX whistleblower 

claim.

10 The Majority correctly points out that an employee‟s 

reasonable belief may not always be determined as a matter 

of law or on the basis of averments in a complaint. However, 

a SOX whistleblower‟s claim must be based on allegations of

mail, wire, and securities fraud, which are required to be pled 

with specificity pursuant to Federal Rule of Civil Procedure 

9(b) or are subject to the heightened pleading standards of the 

Private Securities Litigation Reform Act (PSLRA), Pub. L. 

No. 104-67, 109 Stat. 737 (1995). Rule 9(b) “gives 

defendants notice of the claims against them, provides an 

increased measure of protection for their reputations, and 

reduces the number of frivolous suits,” In re Burlington Coat 

Factory Sec. Litig., 114 F.3d 1410, 1418 (3d Cir. 1997), while 
13

requires a SOX whistleblower to demonstrate that he has 

done more than criticize undesirable corporate conduct. He is 

required to demonstrate that his protected communication 

concerned a “violation” of one of the listed statutes or of an 

SEC rule or regulation or other Federal law relating to fraud 

on shareholders. A violation can only be said to “relat[e] to

... fraud against shareholders” if it manifests at least some of 

the elements of fraud as defined in the securities context, such 

as falsity, scienter, and materiality. Cf. In re Cabletron Sys., 

Inc., 311 F.3d 11, 34 (1st Cir. 2002) (“Merely stating in 

conclusory fashion that a company‟s books are out of 

compliance with GAAP would not in itself demonstrate 

 

the PSLRA is intended to “curb frivolous lawyer-driven 

litigation, while preserving the [plaintiffs‟] ability to recover 

on meritorious claims,” Winer Family Trust v. Queen, 503 

F.3d 319, 326 (3d Cir. 2007). Notwithstanding the ARB‟s

conclusion that those sorts of heightened pleading 

requirements “should not be applied to SOX whistleblower 

claims,” Sylvester, 32 IER Cases at 505, the same concerns

that gave rise to those requirements suggest that 

communications that serve as the basis of a claim under § 806 

should contain something more than vague allegations 

concerning a possible fraud. I am not suggesting the 

importation of pleading standards to the review of a 

whistleblower‟s allegedly protected communications. I am 

suggesting that it is not too much to ask for some specificity, 

especially since SOX whistleblower protection has the effect 

of shielding an employee from any disciplinary action and 

should not be lightly granted.
14

liability under section 10(b) or Rule 10b–5.”); DSAM Global 

Value Fund v. Altris Software, Inc., 288 F.3d 385, 390 (9th 

Cir. 2002) (“[T]he mere publication of inaccurate accounting 

figures, or a failure to follow GAAP, without more, does not 

establish scienter” in a securities fraud action (internal 

quotation marks omitted)); Novak v. Kasaks, 216 F.3d 300, 

309 (2d Cir. 2000) (“[A]llegations of GAAP violations or 

accounting irregularities, standing alone, are insufficient to 

state a securities fraud claim. Only where such allegations 

are coupled with evidence of „corresponding fraudulent 

intent,‟ might they be sufficient.” (internal quotation marks

omitted)). The many cases to that effect cannot with 

propriety be swept away by the federal bureaucracy deciding 

it would like SOX to reach beyond the frauds specified in the 

statute.

11

 

11 We are not required to follow – and arguably are 

constitutionally compelled to reject – an agency‟s reversal of 

course that contradicts prior judicial interpretations of a 

statute. “Article III courts do not sit to render decisions that 

can be reversed or ignored by executive officers.” Nat’l 

Cable & Telecommc’ns Ass’n v. Brand X Internet Servs., 545 

U.S. 967, 1017 (2005) (Scalia, J., dissenting) (citing Chicago 

& S. Air Lines Inc. v. Waterman S.S. Corp., 333 U.S. 103 

(1948)). “Once [a court] ha[s] determined a statute‟s 

meaning, [it] adhere[s] to [its] ruling under the doctrine of 

stare decisis, and [it] assess[es] an agency‟s later 

interpretation of the statute against that settled law.” Neal v. 

United States, 516 U.S. 284, 295 (1996). In this case, 

numerous courts of appeals, see supra note 3, have construed 

SOX § 806 as requiring that a complainant‟s communications 

include the elements of one or more of the referenced laws. 

Under the Majority‟s approach, the ARB will be “able to 
15

In this case, the application of a test of objective 

reasonableness that looks to the elements of securities fraud

shows Wiest‟s allegedly protected communications for what 

they are: a bookkeeper‟s sensible inquiries about proper 

accounting for expenses, not allegations of fraud. Wiest‟s 

statements about the Atlantis Resort Event prove the point. 

The Majority concludes that “[a] reasonable person in Wiest‟s 

position who had seen the expense request for the extravagant 

Atlantis event could have believed that treating the Atlantis 

event as a business expense may have violated a provision of 

Section 806 ... .” (Majority Op. at 28.) A fair question is 

“which one?” Wiest does not claim that he reasonably 

believed that “extravagance” or the possible reporting of 

employee expenses as advertising expenses constituted mail 

fraud, wire fraud, or bank fraud. He alleges rather that, “if 

Tyco had processed the transaction as originally submitted, it 

„would have resulted in a misstatement of accounting records 

and a fraudulent tax deduction.‟” (Majority Op. at 27

(quoting App. at 43).) That would seem to point to a 

violation of 18 U.S.C. § 1348, which involves fraud in 

connection with a sale of securities, or of a “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)(1). However, Wiest‟s communication 

with Tyco about the Atlantis Event contains none of the 

elements of a securities fraud. In particular, it contains no 

 

disregard that construction and seek Chevron deference for its 

contrary construction the next time around.” Nat’l Cable & 

Telecommc’ns Ass’n, 545 U.S. at 1017 (Scalia, J., dissenting). 

Stare decisis is not a straitjacket, but it must mean something 

more than “this is the law until the executive branch 

unilaterally changes its mind.”
16

hint of falsity but rather suggests that an accounting judgment 

was faulty and needed to be corrected, which it was.

12

 

 

12 My colleagues in the Majority appear to have been 

persuaded by an allegation in Wiest‟s complaint that, but for 

his intervention, the Atlantis Event would have resulted in “a 

misstatement of accounting records and a fraudulent tax 

deduction.” (Majority Op. at 5 (quoting App. at 43-44) 

(internal quotation marks omitted).) Following the Majority‟s 

instruction that the determination of reasonable belief “should 

be based upon all of the attendant circumstances, and not be 

limited to the facts conveyed by a whistleblower to the 

employer” (id. at 26), Wiest‟s Atlantis Event allegation is 

belied by the record and is inconsistent with applicable tax 

law. Wiest‟s email regarding the Atlantis Event simply 

requested that “the relevant tax department resources” review 

the proposed costs to determine if some would not have been 

fully deductible as business expenses but rather would have to 

be treated as employee compensation and reported as income 

to employees attending. (See App. at 102 (suggesting that the 

“meal and entertainment portions” might “fall into the 50% 

deductibility classification for tax purposes” and that 

expenses associated with spouses and friends attending the 

event should be “recorded as income to the employees 

attending”).) As Wiest himself admits in his complaint, the 

result of that review was that Tyco determined that “[t]he trip 

did not qualify as a business expense per IRS guidelines and[] 

... would have to be treated as an award and as income to the 

attendees and reported on their W-2s.” (App. at 45.) 

Compensation to employees is treated as a business expense 

for federal tax purposes, see I.R.C. § 162(a)(1), so the cost 

would have been deductible for Tyco under either scenario. 

The classification of the cost of the Atlantis Event, while 
17

The supposed connection between Wiest‟s 

communications regarding the Wintergreen Resort Event and 

a violation of a statute or regulation referenced in § 806 is 

even more strained. The Majority concludes that “a 

reasonable person in Wiest‟s position could have believed 

that the event‟s approval by an attendee of the event[] ...

instead of by the CEO as required by internal control 

procedures, may have violated one of the provisions 

contained in Section 806.” (Majority Op. at 31.) Assuming 

the unspecified violation is again securities fraud, there is still 

the glaring question of how his communication with the 

company indicated any fraud. Unlike his allegations 

concerning the Atlantis Resort Event, Wiest does not claim

that expenses from that event were not recorded correctly, nor

does he allege that any public financial disclosure was at 

issue. As a result, it is impossible to identify a securities 

fraud. The Majority simply suggests that it was reasonable 

for Wiest to believe that there had been such a violation 

because “the event‟s approval [was] by an attendee of the 

event, who would therefore directly benefit from that 

approval ... .” (Id.) Leaving aside the fact that there is no 

explanation of what the “direct benefit” was, that allegation 

goes only to motivation and does nothing to establish a 

violation of any of the laws referenced in § 806.

Given the present record, two final observations 

should be made about the Majority‟s application of the

 

significant to employees for whom it represented taxable 

compensation, was irrelevant for purposes of Tyco‟s public 

financial statements, and, even if the error had gone 

uncorrected, it is a huge stretch to say that such a mistake 

would constitute shareholder fraud.
18

objective reasonableness standard. First, even Sylvester 

acknowledged that objective reasonableness “is evaluated 

based on the knowledge available to a reasonable person in 

the same factual circumstances with the same training and 

experience as the aggrieved employee.” 32 IER Cases at 507 

(quoting Harp, 558 F.3d at 723) (internal quotation marks 

omitted). When an employee is a licensed CPA, and thus 

able to distinguish between violations of accounting rules and 

violations of SEC rules or regulations, a failure to do so tends 

to show his asserted belief that a violation of the latter has 

occurred to be less than objectively reasonable. Cf. Allen, 

514 F.3d at 477 (finding that, although a violation of an SEC 

accounting bulletin could fall within the general “fraud 

against shareholder” category of § 1514A, the complainant 

CPA‟s belief as to the violation was not objectively 

reasonable). Wiest is a trained accountant who had more than 

thirty years experience in Tyco‟s accounting department, 

which, as the Majority points out, had been under “a high 

level of audit scrutiny” for the last decade. (Majority Op. at 

4. (quoting App. at 42) (internal quotation marks omitted).) 

The Majority itself observes that Wiest had knowledge of 

both “accounting standards ... and securities and tax laws.” 

(Id.) Therefore, Wiest should be held to a “higher [objective 

reasonableness] standard” than someone of “limited 

education.” Sylvester, 32 IER Cases at 507 (citing Parexel 

Int’l Corp. v. Feliciano, 28 IER Cases 820, 2008 WL 

5101642, at *3 & n.6 (E.D. Pa. 2008)). Since his allegedly 

protected communications do not meet even an objective 

standard geared to the general public, they certainly do not 

meet a heightened standard applicable to someone of his 

training and experience.
19

Second, as the ARB acknowledged in Sylvester, “many 

of the laws listed in § [806] of SOX contain materiality 

requirements,” and “[i]t may well be that a complainant‟s 

complaint concerns such a trivial matter that he or she did not 

engage in protected activity under Section 806.” 32 IER 

Cases at 512. For that grudging acknowledgement of a

materiality requirement to be consistent with existing law 

concerning fraud against shareholders, a SOX complainant 

must believe that there is “a substantial likelihood that the 

disclosure of the omitted fact would have been viewed by 

the reasonable investor as having significantly altered the 

„total mix‟ of information made available.” Basic, Inc. v. 

Levinson, 485 U.S. 224, 231-32 (1988) (quoting TSC Indus., 

Inc. v. Northway, Inc., 426 U.S. 438, 449 (1976) (internal 

quotation marks omitted)); see also TSC Indus., 426 U.S. at

448 (acknowledging that certain information concerning 

corporate developments is of “dubious significance”). 

Wiest‟s allegedly protected communications concerned 

transactions with no financial impact on Tyco, see supra note 

12, or internal control practices that are not financial in nature 

and are not reported to shareholders. The subjects of Wiest‟s 

communications were not material, and contrary to the 

Majority‟s conclusion, those communications do not 

demonstrate an objectively reasonable belief that a

shareholder fraud was being threatened.

The essence of Wiest‟s assertion that the conduct he 

found objectionable “relates to” fraud against shareholders for

purposes of § 806 is, as his attorney put it to the District 

Court, that “every time you improperly allocate money to 

something that is improper, you are affecting the value of the 

company, and the value of the company is determined by 

individuals who buy and sell stock.” (App. at 290-91.) That 
20

sweeping statement, which even the attorney attempted to 

walk back at oral argument before us, underscores the flaw in 

the Majority‟s approach to post-Sylvester objective 

reasonableness. If it is unnecessary to measure a SOX 

complainant‟s reasonable belief against at least some of the 

elements of securities fraud, like materiality, then virtually

any internal questioning of an accounting mistake or a 

judgment call turns the questioner into a SOX whistleblower, 

and that cannot be right. 

As the District Court correctly noted, Wiest “failed ... 

to plead facts reflecting [his] reasonable belief that his 

communications regarding the tax treatment of certain 

company expenses related – in any way, definitively and 

specifically, or otherwise – to shareholder fraud or a violation 

of one of the statutes or rules listed in § [806].” Wiest v. 

Lynch, No. 10-3288, 2011 WL 5572608, at *4 (E.D. Pa. Nov. 

16, 2011). The District Court recognized that the protection 

afforded SOX whistleblowers is limited to communications

that relate to violations of the law specified in § 806, and it 

assessed the reasonableness of Wiest‟s alleged belief 

consistent with the explicit scope of § 806. The thoughtful 

opinion of the District Court is entirely sound in that regard,

and I would therefore affirm the judgment against the 

Appellants.