UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT

________________ _________________ TIMOTHY C. DIETZ, an individual, Plaintiff - Appellee/Cross Appellant,

v. CYPRESS SEMICONDUCTOR CORPORATION, a California corporation, Defendant - Appellant/Cross Appellee.

––––––––––––––––––– –––––––––––––––– CYPRESS SEMICONDUCTOR CORPORATION, Petitioner,

v. ADMINISTRATIVE REVIEW BOARD, UNITED STATES DEPARTMENT OF LABOR, Respondent.

------------------------------ TIMOTHY C. DIETZ,
Intervenor.

––––––––––––––––––– –––––––––––––––– Nos. 16-1209 & 16-1249 (D.C. No. 1:16- CV-00832-LTB) (D. Colo.)

Nos. 16-9523 & 16-9534 (LABR No. 15-017) (Department of Labor (except OSHA)) FILED United States Court of Appeals Tenth Circuit 

### October 17, 2017

Elisabeth A. Shumaker Clerk of Court2 CYPRESS SEMICONDUCTOR CORPORATION, Petitioner,

v. ADMINISTRATIVE REVIEW BOARD, U.S. DEPARTMENT OF LABOR, Respondent.

------------------------------ TIMOTHY C. DIETZ,
Intervenor. No. 16-9529 (LABR No. 15-047) (Department of Labor (except OSHA))

________________ _________________ ORDER AND JUDGMENT *

________________ _________________ Before HARTZ and EBEL , Circuit Judges. 1

________________ ________________ Section 806 of the Sarbanes-Oxley Ac t of 2002 (Sarbanes-Oxley) protects whistleblowers from retaliation when they inform their company about conduct which they reasonably believe violates any one of certain enumerated federal laws,

* This order and judgment is not binding precedent, except under the doctrines of law of the case, res judica ta, and collateral estoppel. It may be cited, however, for its persuasive value consiste nt with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.

1 The Honorable Neil Gorsuch participated in the oral argument but not in the decision in this case. The pr actice of this Court permits th e remaining two panel judges, if in agreement, to act as a quorum in reso lving the appeal. See 28 U.S.C. § 46(d); see also United States v. Wiles, 106 F.3d 1516, 1516, n.* (10th Cir. 1997) (noting that this Court allows remaining panel judges to act as a quorum to resolve an appeal). In this case, the two remaining panel members are in agreement.3 including mail fraud and wire fraud. 18 U.S.C. § 1514A. In this case, Timothy Dietz complained to his employer Cypress Semico nductor Corporation (Cypress) that it concealed a peculiar co mpensation scheme from new empl oyees when they joined the company, which Dietz believed amounted to federal mail fraud a nd wire fraud. He then allegedly suffered retalia tion in the form of disciplin ary action and constructive discharge. The question pr esented is whether Dietz’s whistleblower complaint constituted protected activity under Sarban es-Oxley. We hold that it did not.

I. BACKGROUND A. Cypress and the Bonus Plan Dietz was working for Ramtron Intern ational Corporation (Ramtron) when Cypress acquired Ramtron in November 201 2. Cypress extended offers to some former Ramtron employees, including Dietz, i nviting them to join the new company. The offer letters outlined the basic term s and conditions of employment, including expected salary and that the employment with Cypress would be at-will. Cypress also stated it would honor the Ramtron se verance package if th e employee chose to leave Cypress within one year. In othe r words, working for Cypress and quitting within one year would entitle the employee to the same bene fits as if he turned down employment with Cypress in the first instan ce. Dietz accepted the offer to become a program manager at Cypress. The Cypress offer letters, however, omi tted one important term of employment which is the focus of this lawsuit. Cypres s did not reference or explain that some of4 the former Ramtron employees would be subject to a unique compensation scheme called the Design Bonus Plan (Bonus Plan) created by one of Cypress’s cofounders. This Bonus Plan involved a mandatory wage deduction under which certain employees working on certain projects would forfeit ten pe rcent of their salary until six weeks after the close of each quarter, at which tim e they would receive a bonus based on a review of their projects’ perfo rmance. If a qualifying project was behind schedule, then every eligible employee on the team would receive a bonus that was less than the initial deduction, resulting in a ne t loss in salary for th at quarter; but if a project was ahead of schedule, the bon us would normally exceed the initial deduction—sometimes by a substantial marg in—resulting in a net gain for the employees on the team. On average, bonus-eligible empl oyees received a net salary that was twenty-seven per cent higher than their pre-bo nus salaries, although some employees ultimately lost money in certain quarters due to their projects’ underperformance. Further, the potential bonus was subj ect to forfeiture if an employee left before a quarterly payout. This scheme was not described in the offer letters given to Ramtron employees. A Cypress executive justified the omission on the ground that there was “no way of knowing which empl oyees would be” subject to the Bonus Plan at the time Cypress acquired Ramtron. AR 1215. The Bonus Pl an only applied to certain employees, normally design engineers , associated with certain launch projects. And because of what Cypress pe rceived as a lack of “man agement rigor” at Ramtron, Cypress was unable to clearly define at the time of acqui sition which existing5 projects at Ramtron would even tually be eligible for the Bonus Plan. Id. For this reason, it did not include the Bonus Plan details in the Ramtron offer letters. Nevertheless, Cypress did not star t making deductions from the former Ramtron employees’ paychecks until August 2013—approximately nine months after the Ramtron employees came on board. That is because the first Bonus Plan-eligible project on which they would work did not launch until late March 2013, and Cypress’s policy was to pay the employees ’ first 18 weeks’ c ontributions before beginning deductions from th eir paychecks. Before Cypress began making these comp ulsory deductions, it attempted to apprise Ramtron employees of the Bonus Pl an’s details. In December 2012, a Design Center Manager named David Still met with them and explained the Bonus Plan. Then, in April 2013, the Design Bonus Admi nistrator, Ryan Wellsman, conducted a training session for the Ramtron employees rega rding the Bonus Plan. Further, at all relevant times Cypress described the Bonus Plan in detail on the company’s intranet, which was accessible by all employees. Cypress also required that any employ ee participating in a launched project acknowledge they have read a document know n internally as the Design Governing Spec, which includes a discussion of th e Bonus Plan. Then, as a condition of participating in a Bonus-Plan eligible pr oject, each qualifying employee was required to write a memo acknowledging the aspects of the Bonus Plan that were relevant to the project team. All of this was done w ith respect to the Ramtron employees’ first6 eligible project, the TR-20005, before Cypress started deductin g anything from their paychecks around August 2013.

B. Dietz’s Whistleb lower Complaint On April 12, 2013, after one of the Bonus Plan training sessions, Dietz emailed his supervisor, James Nulty, expres sing concern about the legality of the Bonus Plan under California and Colorado wa ge laws. On April 22, 2013, Dietz had a follow-up phone conversation with Cypress’ s General Counsel, Vi ctoria Valenzuela during which he made the same assertion—that the Bonus Plan violated state wage laws. In addition to his st ate-law complaint, Dietz told Valenzuela that the Bonus Plan took the Ramtron employees by surprise. He said that the Ramtron offer letters conveyed to employees “what their salary [was] going to be and then you change the

game. ” AR 1307 (emphasis added). Valenz uela assured Dietz that there was no legal problem with the Bonus Plan itsel f and that Ramtron employees had been properly apprised of the scheme.

C. Cypress’s Alleged Retaliation Shortly after his conversation with Va lenzuela, Dietz be gan having trouble with his supervisor Nulty. In late May 2013, Nulty arranged a phone meeting with Dietz and others to go over some recent co ncerns about Dietz’s performance. In particular, Nulty was troubled by thr ee observations: (1) Dietz had updated his project schedule to show a three-week de lay for an important milestone that was7 fourteen weeks away, (2) Dietz did not imme diately notify a superv isor when another manager pulled one of Dietz’s employees off of Dietz’s project, and (3) Dietz neglected to update the project-managemen t computer system for too long a period. On June 4, 2013, after the teleconference, Nulty memorialized these concerns in a written memo to be placed indefinitely in Dietz’s personnel file. The memo instructed Dietz to prepare a memo explaining what he did wrong and stating that “[a]ny future infractions will result in further disciplinar y action, up to and including termination.” AR 1401. The ALJ characte rized this memo as “career ending.” AR
2230. On June 5, 2013, Dietz responded with a letter disputing the disciplinary allegations. He claimed that Nulty’s memo was “unlawfu l retaliation” for Dietz’s complaint regarding the Bo nus Plan. AR 1412-13. Then, instead of admitting wrongdoing as Nulty’s letter instructed, Dietz countered: I will do no such thing, be cause I have done nothing wrong, and this requirement is nothing more than bullying with legal implications. Therefore, my response is that I am terminating my employment at Cypress. I will agree to stay onboard through July 1 as a professional courtesy to my fellow Cypress employees in Colorado Springs, and to keep the TR20005 project stable while executing an orderly turnover, unless Cypress chooses to terminate my employment sooner. AR 1413 (emphasis in original). This response “stunned” Cypr ess managers. AR 1067. But according to Dietz, he was not intending to resign at all—rather, he was triggering a specific employ ee-retention policy at Cypr ess called the “Turnaround Process.” AR 1249. Under th at policy, Cypress would react quickly to a valued8 employee’s notice of resignation and attempt to persuade that employee to remain at Cypress. Cypress’s response, howeve r, was not immediate. Th e next day, June 6, 2013, Nulty responded with an invitation for Di etz to attend a meeting for the following day—an invitation with no attached age nda, which Dietz believed was unusual at Cypress. Dietz called Nulty about the upc oming meeting but coul d not reach him. Because Nulty had waited a full day to resp ond to the resignation notice, because the invitation had no agenda, and because he could not get in touch with Nulty, Dietz concluded that Cypress was not adhering to its turnarou nd process and was planning to terminate him. Dietz believed the writing was on the wall and the axe was about to fall. Thus, on June 7, 201 3, before the scheduled mee ting he notified Cypress that his resignation was effective immediately. That was his last day at Cypress.

D. Procedural History In August 2013, Dietz filed this laws uit for unlawful reta liation with the Occupational Safety and Health Administ ration (OSHA), which investigates and adjudicates complaints on behalf of the De partment of Labor (DOL). The Regional Administrator of OSHA denied Dietz’s clai m for relief. Diet z appealed to an administrative law judge (A LJ) who found in his favor . The ALJ awarded Dietz $654,906.00 in front pay, $22 0,105.85 in back pay, $3 1,199.08 in back benefits, immediate vesting of 3,512 shares of Cypress stock a nd 2,041 shares of Cypress stock options, interest, cost s, and attorneys’ fees.9 Cypress then appealed to the Administ rative Review Board (the Board), which affirmed the ALJ’s decision and awarded re lief to Dietz in March 2016. Cypress now petitions this Court for review of the Board’s merits decision. Appeal No. 16- 9523. Subsequently the Board affirmed the ALJ’s decision awarding Dietz attorney fees and costs incurred before the ALJ, and then awarded attorney fees and costs for litigation before the Board. Cypress petitions this Court for review of those orders as well. Appeal Nos. 16-9529, 16-9534. Having won his case before the Board, Di etz filed a civil acti on in the district court to enforce the Board’s orders against Cypress. In May 2016, the district court entered judgment for Dietz, and Cypress timely appealed to this Court. Appeal No. 16-1209. When Cypress app ealed the case, it posted a supersedeas bond, which the district court treated as an automatic stay under Fed. R. Ci v. P. 62. Dietz then crossappealed on that issue, arguing that the district court lack ed jurisdiction to stay the judgment against Cypress. Appeal No. 16-1249. In December 2016, we consolidated the petitions for review, Nos. 16-9523 (merits), 16-9529 (fees and costs before th e ALJ), 16-9534 (fees and costs before the Board), with the appeals from the district court, Nos. 16-1209 (appeal), 16-1249 (cross-appeal).

II. STANDARD OF REVIEW “The Board’s factual determinations may be set aside only if they are ‘unsupported by substantial evidence.’” Loc kheed Martin Corp. v. Admin. Rev. Bd.,10 717 F.3d 1121, 1129 (10th Cir. 2013) (quoting 5 U.S.C. § 706(2)(E)). This standard “requires more than a scintil la but less than a prepondera nce of the ev idence” for the Board’s decision to be upheld. Id. As fo r legal determinations, this Court affords administrative deference to the Board’s st atutory interpretations , as expressed in formal adjudications, under Chevron, U.S. A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 844 (1984). See Lockheed Martin Corp., 717 F.3d at
1131.

III. DISCUSSION A. Applicable Law Congress enacted Sarbanes-Oxley “[t] o safeguard investors in public companies and restore trust in the financial markets follo wing the collapse of Enron Corporation[.]” Lawson v. FMR LLC, 134 S. Ct. 1158, 1161 (2014) (citation omitted). To do this, Section 806 enc ourages employees of publicly traded companies to report corporate fraud and s ecurities violations by sheltering those employees from retaliation. 18 U.S.C. § 1514A. It provides: No [publicly traded ] company . . . may discharge, demote, suspend, threaten, harass , or in any other manner discriminate against an employee in the terms and conditions of employment becaus e of any lawful act done by the employee . . . to provide information, cause information to be provided, or otherwise assist in an investigation regarding any conduct which the employee reasonably believes constitutes a violati on of section 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 Federal11 law relating to fraud agains t shareholders, when the information or assistance is provided to . . . a person with supervisory authority over the employee . . . . 2

Id. § 1514A(a)-(a)(1) (emphasis added). Under its plain terms, Sarbanes-Oxley protects whistleblower activ ity only when the employee reasonably believes the company has engaged in certain enumerated federal offenses. See Id. § 1514A(a). This reasonable-belief standard “incl ude[s] both a subjective and an objective component; an employee must actually belie ve in the unlawfulness of the employer’s actions and that belief must be objectively reasonable.” Lockheed Martin Corp., 717 F.3d at 1132. At issue in th is case is whether it was r easonable for Dietz to believe that Cypress committed mail fraud or wire fraud when it did not disclose the Bonus Plan to the Ramtron employees in their initial offer letters. The federal mail fraud and wire fraud statut es require: “(1) a scheme or artifice to defraud or obtain propert y by means of false or fraudulent pretenses, representations, or promises, (2) an intent to defraud, a nd (3) use of the mails [or wires] to execute the scheme .” United States v. Welc h, 327 F.3d 1081, 1104 (10th Cir. 2003) (citing 18 U.S.C. §§ 1341, 1343). For the commis sion of either offense, a person must actually harbor th e intent to deprive a victim of property or honest

2 We use the term “public ly traded” company as shorthand for the statute’s reference to companies that either have “a class of se curities registered under section 12 of the Securities Exchange Act of 1934,” or that are “‘require d to file reports under section 15(d)” of that Act. § 1514 A(a); see also Lawson, 134 S. Ct. at 1164.12 services. 3 Id. at 1105 (“[T]he intent to defraud under §§ 1341 and 1343 is akin to the intent to deceive in order to deprive one of property . . . .” (emphasis added)); see also Cleveland v. United St ates, 531 U.S. 12, 26 (2000) (“We conclude that § 1341 requires the object of the fraud to be ‘property’ in the victim’s hands . . . .”); Pasquantino v. United Stat es, 544 U.S. 349, 355 n.2 (2 005) (suggesting that Cleveland’s construction of the § 1341 (ma il fraud) applies equally to § 1343 (wire fraud)). In other words, it is not enough merely to fraudulently induce a victim to take some action—there must be a conscious objective to deprive the victim of property. 4 Turning to the case befo re us, the question is whether Dietz reasonably believed that Cypress intende d to deprive Ramtron employees of their property when it did not disclose the Bonus Plan in their offer letters. 5 If Dietz could not have

3 Honest-services fraud is not at issue in this case because it is limited to bribery or kickback schemes. See Skill ing v. United States , 561 U.S. 358, 408-09 (2010). With that understanding, for conven ience this order refe rs only to property deprivation as the requisite intent of the fraud. 4 We stress that this intent-to-deprive re quirement is not a feature of Sarbanes Oxley itself, but rather is an element of the mail fraud and wire fraud statutes, which are referenced as enumerated offenses in Sarbanes Oxley.

5 In Sylvester v. Parexel International LLC, No. 07-123, 20 11 WL 2165854, at *17-19 (Admin. Rev. Bd. May 25, 2011), the Board indica ted that a whistleblower claimant under Sarbanes-Oxley—at least in th e context of a securities-fraud complaint to his employer—need not prove or allege the sp ecific elements of the crime he believes that his employer committed. We interpret th is to mean that the whistleblower need not show the elements of the crime were actually satisfied; but that does not absolve the claimant from showing that he made his whistleblower co mplaint with the reasonable belief that an enumerated offe nse occurred or was occurring. If the facts known to the claimant could not even reasona bly be squared with the elemen ts of a crime referenced in13 formed such a reasonable belie f, then his whistleblower complaint was not protected by Sarbanes-Oxley.

B. Dietz’s Complaint Was Not Pr otected By Sarbanes-Oxley Dietz could not have reas onably believed that Cypre ss was engaged in mail or wire fraud, so his complaint was not prot ected by Sarbanes-Oxley . There simply was not enough evidence to conclude reasonably that Cypress intended to deprive the Ramtron employees of their property by nondisclosure of the Bonus Plan in their offer letters. At the outset, Cypress o ffered at least a plau sible, non-nefarious explanation for the omission: because the Bonus Plan would only apply to certain employees on certain launche d projects, Cypress had “ no way of knowing which employees would be” subject to the Bo nus Plan at the tim e of the Ramtron acquisition. AR 1215. But even assumi ng that excuse is in sufficient—perhaps because Cypress could have included a disclaim er in the offer lette rs warning that the employees might be subject to the Bonus Plan—t he evidence is still woefully inadequate to support any belie f that Cypress committed a fraud in order to deprive the employees of their property. The Ramtron recruits were at-will empl oyees, meaning they could quit for any reason or no reason at all. Moreover, they could resign within one year of joining Cypress and likely receive the same benefi ts package they would have gotten had

Sarbanes-Oxley, then the whistleblower cannot be said to have formed a reasonable belief necessary to trigger protection under the statute.14 they declined to join Cypr ess in the first instance. And most importantly, Cypress did not start making compul sory deductions under the Bonus Plan until around nine months after they signed their offer letters. During that nine-month period, Cypress made sure they were aware of and understood the Bonus Plan. The company held two training sessions, explained the Bonus Plan on the corporate intranet, and required all qualifying employees to acknowledge the Design Governing Spec (whi ch included the Bonus Plan details) before launching a project governed by the Bo nus Plan. In other words, an employee who did not want to participate in the B onus Plan after learning about it would still have time to decide whether to continue working at Cypress knowing the Bonus Plan would eventually kick in, or to jump sh ip and get the same severance package it would have received from Ramtron. Putti ng all this together , Dietz could not reasonably believe that C ypress was engaged in a sc heme to cheat Ramtron employees out of their money. To be sure, there might be some evid ence to support the Board’s conclusion that Cypress concealed a mate rial fact in order to lure Ramtron employees to work under false pretenses. But as we have said, mail fraud and wire fraud require more than merely fraudulent inducement—ther e must be a scheme designed to deprive the victims of their property. The eviden ce here does not remotely support the conclusion that Cypress harbored that in tent. Therefore, lacking any reasonable belief that Cypress was enga ged in one of the enumerat ed offenses in 18 U.S.C. § 1514A(a)(1), Dietz’s whistleblower co mplaint was not protected by Sarbanes-15 Oxley. Thus any subsequent adverse employment action agai nst Dietz is not actionable under § 1514A. 6

IV. CONCLUSION Sarbanes-Oxley does not protect Dietz’ s whistleblower complaint because he did not reasonably believe that Cypress engaged in any of the enumerated offenses in 18 U.S.C. § 1514(a)(1). Accordingly, we GRANT Cypress’s petitions for review, Nos. 16-9523, 16-9529, 16-9534, and VACA TE the Board’s awards for Dietz on the merits and for attorney s’ fees and costs. As for the district court or der enforcing the Board’s meri ts award to Dietz, that order is VACATED as moot, as there is nothing now left to enforce. Thus, Appeal

6 This conclusion obviates the need to address the other diffi cult issues in the case, including whether Diet z reasonably believed the cr iminal fraud involved the mail or wires, whether Dietz adequately communicated his compla int to Cypress in terms that were specific e nough to alert the company th at he was alleging federal mail fraud or wire fraud, whether even such a specificity re quirement exists in Sarbanes-Oxley, whether Diet z’s resignation was a construc tive discharge or instead a voluntarily departure from the company, and whether Nulty’s June 4, 2013 disciplinary memo was an independent ad verse employment action. We rest our disposition solely on the gr ound that Dietz’s complain t was not protected by Sarbanes Oxley because it is logically anteceden t to these other issues—he could not reasonably believe that Cypr ess was engaged in mail fra ud or wire fraud so his whistleblower complaint was not protected by Sarbanes-Oxley at all. Nevertheless, although we do not reach the issue, we note our skepticism about Dietz’s constructive-discharge argument—the ev idence strongly suggests that Dietz voluntarily resigned from Cypress with no unlawful coercion or ultimatum by his supervisors.16 Nos. 16-1209 and 16- 1249 are DISMISSED. 7

Entered for the Court

David M. Ebel Circuit Judge

7 The Department of Labor’s Consent Mo tion to File Under Seal Documents Subject to Protective Or der is hereby GRANTED.