PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

MARK LIVINGSTON, 

Plaintiff-Appellant,

v.

WYETH, INCORPORATED; BRUCE

KAYLOS, Wyeth Sanford Managing

Director; DAVID MCCUAIG, Wyeth  No. 06-1939 Sanford Human Resource Director,

Defendants-Appellees.

UNITED STATES CHAMBER OF

COMMERCE,

Amicus Supporting Appellees. 

Appeal from the United States District Court

for the Middle District of North Carolina, at Durham.

Paul Trevor Sharp, Magistrate Judge.

(1:03-cv-00919-PTS)

Argued: November 1, 2007

Decided: March 24, 2008

Before NIEMEYER and MICHAEL, Circuit Judges, and

Claude M. HILTON, Senior United States District Judge for the

Eastern District of Virginia, sitting by designation.

Affirmed by published opinion. Judge Niemeyer wrote the majority

opinion, in which Judge Hilton joined. Judge Michael wrote a dissenting opinion.
COUNSEL

ARGUED: Thad M. Guyer, T. M. GUYER & AYERS & FRIENDS,

P.C., Medford, Oregon, for Appellant. Michael Delikat, ORRICK,

HERRINGTON & SUTCLIFFE, L.L.P., New York, New York, for

Appellees. ON BRIEF: Joanne Royce, GOVERNMENT

ACCOUNTABILITY PROJECT, Washington, D.C., for Appellant.

James H. McQuade, ORRICK, HERRINGTON & SUTCLIFFE,

L.L.P., New York, New York; Terry A. Clark, CONSTANGY,

BROOKS & SMITH, L.L.C., Winston-Salem, North Carolina, for

Appellees. Virginia W. Hoptman, WOMBLE, CARLYLE, SANDRIDGE & RICE, Tysons Corner, Virginia; Charles A. Edwards,

Sheri Roberson, WOMBLE, CARLYLE, SANDRIDGE & RICE,

Raleigh, North Carolina; Robin S. Conrad, Shane Brennan,

NATIONAL CHAMBER LITIGATION CENTER, INC., Washington, D.C., for Amicus Supporting Appellees.

OPINION

NIEMEYER, Circuit Judge: 

Relying on the whistleblower protection provisions of the

Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1514A, Mark Livingston

commenced this action against his employer Wyeth, Inc., a pharmaceutical company, alleging that Wyeth unlawfully discharged him

because of his complaints to Wyeth’s management about Wyeth’s

inability to implement on schedule a training program at its Sanford,

North Carolina facility, supposing therefore that local employees

would likely misrepresent or cover up the deficiencies in progress to

internal compliance auditors and to the Food and Drug Administration. The training program was designed to train employees in good

manufacturing practices, and its implementation was required by regulations of the Food and Drug Administration. Livingston asserted

that in making his complaints, he reasonably believed that Wyeth’s

potential conduct in misrepresenting or covering up the deficiencies

in timely implementation of the program would constitute violations

of § 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5

promulgated under it, and therefore that his conduct was protected

under the Sarbanes-Oxley Act.

2 LIVINGSTON v. WYETH, INC.
The district court entered summary judgment against Livingston,

concluding that his complaints were not protected activity under the

Sarbanes-Oxley Act because Livingston could not reasonably have

believed that Wyeth was violating the securities laws. The court also

concluded that Wyeth had shown, by clear and convincing evidence,

that it had discharged Livingston for insubordination in threatening to

have the police remove Wyeth’s Director of Human Resources from

a company-sponsored holiday party and that Wyeth would have discharged Livingston regardless of whether he had complained about

the progress of the training program. 

Because we conclude that no objectively reasonable basis existed

for Livingston to have believed that Wyeth was violating the securities laws, we affirm. 

I

On Thursday, December 19, 2002, following a brief investigation,

Mark Livingston was discharged from his employment with Wyeth as

Associate Director of Training and Continuous Improvement at

Wyeth’s Sanford, North Carolina facility. The parties agree that the

precipitating events occurred on the previous Friday, December 13,

2002, when Livingston held a company-funded lunch party for members of the training staff. David McCuaig, the Director of Human

Resources at the Sanford facility, came to the party without an invitation from Livingston, allegedly to wish the group a happy holiday.

According to Livingston’s own testimony, Livingston approached

McCuaig as McCuaig came into the room and asked, "What are you

doing here? . . . You’re not invited. We have a gift exchange. You

have no gift. We have limited food." After some more discussion,

Livingston then stated, "I need you to leave. I’m asking you to leave.

If you do not leave, I’m going to ask the police escorting holiday traffic downstairs . . . to escort you out." Although there is a factual dispute about the manner in which Livingston told McCuaig to leave, it

is undisputed that he threatened to have the police remove him.

Wyeth suspended Livingston on the following Monday, December

16, 2002, pending investigation, and, following a three-day investigation, it terminated his employment. 

Wyeth contends that this incident was the culmination of a long

history of abusive and insubordinate conduct by Livingston, about

LIVINGSTON v. WYETH, INC. 3
which he had been warned numerous times previously. Livingston

contends, however, that he was fired in retaliation for complaining

about the insufficient progress in implementing a training program to

teach employees good manufacturing practices, as required by the

Food and Drug Administration ("FDA"), and about the potential that

Wyeth could misrepresent the progress of the program or cover up its

true status, in violation of the securities laws. 

Wyeth, Inc., formerly known as American Home Products Corporation, is a publicly traded company that develops pharmaceutical and

consumer health products worldwide. Its net revenue in 2001 was

approximately $14.1 billion. Its Sanford, North Carolina facility is

one of more than two dozen at which it develops and manufactures

products. 

From August 2000 to December 2002, Mark Livingston was

employed at the Sanford site, first as a manager of Training and Continuous Improvement, and then as Associate Director of Training and

Continuous Improvement. He reported to Bruce Kaylos, the managing

director of the Sanford site. During the period of his employment,

Livingston oversaw audits of training programs at the Sanford facility

to monitor their progress. The events which form the basis of Livingston’s complaint in this case occurred during July and August 2002.

Wyeth’s manufacturing operations are regulated by the Federal

Food, Drug, and Cosmetic Act, 21 U.S.C. § 301 et. seq., and the FDA

regulations promulgated thereunder. Pharmaceutical products, such as

the vaccine components produced at the Sanford facility, must be

made in accordance with "current good manufacturing practice." 21

C.F.R. § 211.1. In addition to specific mandates, such as requiring

workers to wear clean clothing during drug production, see id.

§ 211.28(a), the regulations for good manufacturing practices require

that "[e]ach person engaged in the manufacture . . . of a drug product

shall have education, training, and experience" sufficient to perform

the functions assigned to them. Id. § 211.25. The regulations do not

specify what training is required, how it should be accomplished, or

how it must be documented, but rather leave it to each regulated company to create and implement appropriate procedures, subject to FDA

inspection. If a pharmaceutical product is produced in a facility that

does not adhere to good manufacturing practices, including training

4 LIVINGSTON v. WYETH, INC.
for good manufacturing practices, the product is legally considered

adulterated and is subject to seizure by the FDA. See 21 U.S.C.

§§ 351(a), 334(a)(1). 

Precisely for this reason — a failure to follow good manufacturing

practices — the FDA seized allegedly adulterated products at

Wyeth’s Pearl River, New York and Marietta, Pennsylvania facilities,

leading to a Consent Decree in October 2000, directed at those facilities. While the decree did not apply to any other facility, it did require

Wyeth to retain an expert consultant to conduct a "division-wide"

assessment of its quality control programs at all sites, including the

Sanford site, and to respond to the expert’s report, providing the FDA

with a timetable for its responsive actions. As required, Wyeth did

retain a consultant and, in May 2001, advised the FDA that it would

revise its training guidance documents, setting September 30, 2002,

as the date by which it would implement training changes and verify

compliance with the new program. The FDA has never suggested that

Wyeth ever violated the October 2000 Consent Decree.

Wyeth’s training for good manufacturing practices at the Sanford

facility required each manufacturing employee to have a "curriculum"

of required training courses and a signed record to document the

training. Beginning in 2002, these records were to be loaded into an

electronic document control system known as ISOtrain. To transition

to the new system, managers needed to be trained on the new system,

curricula needed to be drafted, and forms and data for all employees

needed to be entered into ISOtrain. As part of his job responsibilities,

Livingston was designated to direct and oversee preparations for

training system audits at the Sanford site between January 2001 and

September 2002, which were to be conducted to monitor progress.

For the period through June 2002, Livingston found no problem with

the program’s progress. He advised management on May 22, 2002,

that the Sanford facility remained "on track" for the September 30,

2002, implementation date. 

Wyeth’s Office of Compliance scheduled the final internal verification of the new training system for July 29, 2002, two months before

September 30, 2002, the date committed to the FDA. By July 9, 2002,

Livingston became convinced that Wyeth could not meet this internal

verification deadline, and he formally expressed his concerns in a July

LIVINGSTON v. WYETH, INC. 5
10, 2002 memorandum to Kaylos and various corporate directors and

managers. He stated in the memorandum that several departments of

the Sanford site 

require additional time to implement the initial components

of the Wyeth Site Employee Training System. As well, we

will need additional time to verify sustainable operation of

a compliant training system in these areas. To indicate otherwise provides false and misleading information to outside

auditors, including the FDA.

Kaylos did not receive the memorandum until approximately July 17,

2002, because he was on vacation. But he met with Livingston on

July 24 to discuss the memorandum. Livingston states that at the

meeting Kaylos threatened to fire him if he persisted in his criticism

of the company’s compliance status and that Kaylos implied that Livingston should hide or "cover up" noncompliance issues from the

Wyeth internal auditor. Livingston also acknowledges, however, that

"[a]t no time during this meeting, did I claim that Kaylos and Wyeth

were trying to mislead the FDA and those involved with the July 29

[internal] verification" audit. 

Wyeth proceeded with the July 29 internal verification audit, and

Marlene Raschiatore of the Wyeth Office of Compliance, who conducted the audit, found the system to be satisfactory, noting that gaps

in training documentation could be addressed in a "legacy plan." A

"legacy plan" is the means of closing compliance gaps after the target

date for compliance passes. Livingston, who had drafted legacy plans

in the past and was familiar with them, admits that he signed off on

Raschiatore’s verification, but states that he did so on limited terms

because, by then, he intended to file an ethics complaint based on the

July 24 meeting with Kaylos. 

On or around July 29, 2002, Livingston did file a formal complaint

with Wyeth’s Office of Compliance, in which he stated that he had

informed Kaylos of his belief that the Sanford site was not ready for

the planned July 29 internal verification of the training system. As

Livingston noted, "I expressed my concern that if we were to conduct

the audit and not fully disclose the status of training system implementation at the site, [Wyeth] would be in the unfortunate position of

6 LIVINGSTON v. WYETH, INC.
providing false and misleading information to compliance auditors,

including the FDA." He further stated that Kaylos had "mocked and

ridiculed" his analysis and that "[t]he underlying message from Mr.

Kaylos was clear — we are going to conceal facts, data, and information from the verification auditor that would shine negatively on system implementation or operation at Sanford." The complaint

concluded:

Federal law deems it a crime to make any false, fictitious,

or fraudulent statement to any government agency, or in

making such statement, to conceal any material fact. As I

read the Wyeth Code of Conduct, this policy is in place to

ensure that information provided to government agencies is

truthful, accurate, and complete. 

Wyeth’s Office of Compliance conducted an investigation into Livingston’s complaint, but it found no violations by Kaylos or other

Wyeth employees and closed its file on October 9, 2002.

The Sanford facility ultimately met the September 30, 2002 compliance target given to the FDA, and the Sanford site’s training system for good manufacturing practices received full verification by the

Wyeth Office of Compliance. Livingston does not dispute that he

signed the verification checklist certifying that the compliance deadline had been met. 

On or around October 16, 2002, well after verification of the new

training program was complete, the Human Resources director of the

Sanford site, David McCuaig, placed Livingston on a Personal

Improvement Plan ("PIP") containing ten expectations. These

included the specific requirements that Livingston stop making nonconstructive comments, such as saying that the use of "approved and

verified training practices is ‘defrauding’ the FDA," and that he

"[r]efrain from making negative and insulting comments regarding

the practices of other departments." The PIP stated that "[f]ailure to

show immediate, significant and sustained improvement within the

next 30 days will result in termination." Livingston refused to sign the

PIP. 

The October 16 PIP was not the first run-in Livingston had with

the Human Resources department. In 2001 and 2002, the Human

LIVINGSTON v. WYETH, INC. 7
Resources office had received numerous complaints from Wyeth

employees about Livingston’s use of abusive language and inappropriate behavior. In May 2002, Livingston was formally warned for the

use of "foul and abusive language and unprofessional behavior"

toward subordinates. Livingston does not dispute that a number of

employees asked for transfers or resigned as a result of his conduct.

Tension between Livingston and Kaylos and McCuaig continued to

grow after the October 16 PIP, with Livingston becoming increasingly suspicious that he was about to be terminated. Livingston states

that McCuaig "stalked" him at staff meetings and generally acted in

a way that led Livingston to believe that he would be fired in front

of his team members. 

The situation came to a head on Friday, December 13, 2002, at the

off-site Wyeth holiday party, when Livingston excluded McCuaig

from the room in front of company employees. Wyeth in turn suspended Livingston the following Monday, December 16, pending

investigation of the incident, and formally terminated him on December 19, 2002. 

Livingston filed a "whistleblower retaliation" complaint with the

Secretary of Labor on January 14, 2003. The Secretary issued preliminary findings against Livingston on June 27, 2003, but did not issue

a final decision within 180 days, thus permitting a district court to

obtain jurisdiction over the claim. Livingston commenced this action

on September 29, 2003, naming Wyeth, Kaylos, and McCuaig as

defendants. He alleged that the defendants (hereinafter collectively,

"Wyeth") violated 18 U.S.C. § 1514A, by taking adverse employment

action against him in retaliation for expressing concerns about training at the Sanford facility, and violated North Carolina common law

for wrongful discharge. 

After the parties conducted discovery, the district court granted

Wyeth’s motion for summary judgment, dismissing all counts of the

complaint. Livingston v. Wyeth, Inc., No. 1:03CV00919, 2006 WL

2129794 at *15 (M.D.N.C. July 28, 2006). The court concluded that

"[t]here [was] nothing in the record — or in Livingston’s allegations

— indicating that Wyeth made false or misleading statements, or

omitted relevant information, in any documents provided to its share8 LIVINGSTON v. WYETH, INC.
holders." Id. at *10. Nor was there "an objectively reasonable basis,

at the time of the allegedly protected activity, for Livingston to equate

the perceived training deficiencies with imminent wrongdoing. . . .

[T]he record is insufficient to support a finding that [Wyeth] appeared

to be ready to commit wrongdoing." Id. In addition, the court concluded that any wrongdoing hypothesized by Livingston would, in

any event, not have resulted in a "material" loss to Wyeth, requiring

the loss to be reported publicly. Id. Finally, the court found "as a matter of law that [Wyeth] [had] established by clear and convincing evidence that a non-discriminatory rationale independently caused

[Livingston’s] termination." Id. at *11. The court observed: 

Plaintiff, acting in front of subordinate employees, threatened to have a superior official removed from an office

party by police officers who were nearby. Such an act of

insubordination and insolence without question called for

and supported Plaintiff’s immediate termination, and Plaintiff was in fact suspended immediately and fired within six

days on the basis of his actions at the holiday party. 

Id. Consistent with these conclusions, the court also concluded that

essential elements of Livingston’s wrongful discharge claim under

North Carolina law were lacking. Id. at *12-15. 

Livingston appeals the district court’s judgment, dated July 28,

2006, challenging each of the reasons given by the district court for

granting Wyeth’s motion for summary judgment. 

II

We review the district court’s grant of summary judgment in favor

of Wyeth de novo. See Holland v. Washington Homes, Inc., 487 F.3d

208, 213 (4th Cir. 2007). 

To address Livingston’s claim, the factual essence of his claim

must first be articulated. 

Livingston rests his claim of retaliation on his complaints about

Wyeth’s training program at the Sanford facility, principally commuLIVINGSTON v. WYETH, INC. 9
nicated through two memoranda dated July 10 and July 29, 2002, but

also through related oral conversations. In the July 10 memorandum,

Livingston complained to management about "serious deficiencies" in

the implementation of the training program for good manufacturing

practices, observing that deadlines for completion of the training program were in jeopardy. He said, "We will need additional time to verify sustainable operation of a compliant training system in these areas.

To indicate otherwise provides false and misleading information to

outside auditors, including the FDA." In the July 29 memorandum,

which he submitted as a formal complaint in furtherance of his obligations as Associate Director of Training, he repeated that the Sanford facility "was not ready" for the planned July 29 internal audit to

verify the necessary progress of the training program and to ensure

that the September 30 deadline would be achieved. He warned that "if

we were to conduct the audit and not fully disclose the status of training system implementation at [Sanford], [Wyeth] would be in the

unfortunate position of providing false and misleading information to

compliance auditors, including the FDA." He added the admonition,

"Federal law deems it a crime to make any false, fictitious, or fraudulent statement to any government agency, or in making such statement, to conceal any material fact." 

At no time did Livingston complain that Wyeth had in fact made

a false statement to any government agency or to stockholders. And,

as it turned out, Livingston’s fears went unrealized. He signed off on

the internal verification audit that took place from July 29 to August

1, and on the implementation of the whole training program, which

was completed by September 30, as committed, albeit with an agenda

under a "legacy plan" to fill gaps. Nonetheless, in this action Livingston claims that his complaints to management were a contributing

factor to his firing on December 19, 2002, and accordingly that

Wyeth violated the whistleblowing provisions of the Sarbanes-Oxley

Act insofar as it protects employees who make complaints about violations of § 10(b) of the Securities Exchange Act of 1934, 15 U.S.C.

§ 78j, and Rule 10b-5 promulgated under it, 17 C.F.R. § 240.10b-5.

Section 806 of the Sarbanes-Oxley Act of 2002, Pub. L. No. 107-

204, 116 Stat. 745, 802-04 (2002), added § 1514A to Title 18 of the

United States Code, providing "whistleblower" protection for employees of publicly-traded companies by prohibiting their employers from

10 LIVINGSTON v. WYETH, INC.
retaliating against them for providing information or cooperating in

investigations related to violations of specified laws, including 18

U.S.C. § 1348 (prohibiting securities fraud) and Rule 10b-5 of the

SEC (prohibiting the same), as well as any other provision of federal

law relating to a company’s fraud against shareholders. Section

1514A provides, as relevant:

No [publicly-traded company], or any officer [or] employee

. . . of such company, may discharge . . . or in any other

manner discriminate against an employee in the terms and

conditions of employment because of any lawful act done

by the employee — 

(1) to provide information . . . regarding any conduct which

the employee reasonably believes constitutes a violation 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 Federal law relating to fraud against shareholders, when

the information or assistance is provided to . . . 

* * *

(C) a person with supervisory authority over the employee

(or such other person working for the employer who has the

authority to investigate, discover, or terminate misconduct).

18 U.S.C. § 1514A(a) (emphasis added). The burdens of proof for

establishing a claim under § 1514A(a) are incorporated from the

Whistleblower Protection Program of the Wendell H. Ford Aviation

Investment and Reform Act for the 21st Century, Pub. L. No. 106-

181, § 519(a), 114 Stat. 61, 145-49 (2000) (codified at 49 U.S.C.

§ 42121). See 18 U.S.C. § 1514A(b)(2)(C) (providing that the retaliation claim under Sarbanes-Oxley "shall be governed by the legal burdens of proof set forth in [49 U.S.C. § 42121(b)]"). Section 42121(b),

in turn, provides with respect to the burdens of proof that the plaintiff

bears the burden of showing by a preponderance of the evidence that

protected activity "was a contributing factor in the unfavorable personnel action alleged in the complaint." 49 U.S.C. § 42121(b)(2)(B).

If the plaintiff carries his burden, the employer may nonetheless

LIVINGSTON v. WYETH, INC. 11
defeat the plaintiff’s claim for relief by showing "by clear and convincing evidence that the employer would have taken the same unfavorable personnel action in the absence of [the protected activity]."

Id.

Thus, for Livingston to establish a cause of action under 18 U.S.C.

§ 1514A, he must show, in the context of this case, by a preponderance of the evidence that (1) he provided information or a complaint

to a Wyeth supervisor or to one authorized to investigate and correct

misconduct; (2) the information or complaint regarded conduct that

he reasonably believed constituted a violation of an enumerated statute or any regulation promulgated by the Securities and Exchange

Commission relating to fraud;1 (3) his employer discharged him or

took other unfavorable personnel action against him; and (4) his providing the information or making the complaint was a contributing

factor to his discharge or other adverse employment action taken by

Wyeth. 

1

In § 1514A, the language defining the employee’s belief of a violation

includes a violation of (1) 18 U.S.C. § 1341 (mail fraud); (2) 18 U.S.C.

§ 1343 (wire fraud); (3) 18 U.S.C. § 1344 (bank fraud); (4) 18 U.S.C.

§ 1348 (securities fraud); (5) "any rule or regulation of the Securities and

Exchange Commission"; or (6) "any provision of Federal law relating to

fraud against shareholders." All except the violations described under (5)

refer explicitly to a company’s fraud. We conclude that number (5) also

refers to regulations prohibiting fraud. To conclude otherwise would

absurdly allow a retaliation suit for an employee’s complaints about

administrative missteps or inadvertent omissions from filing statements.

Moreover, the ambiguity is fully clarified by the context of the whistleblower provision in the Sarbanes-Oxley Act and by the legislative history

that indicates that whistleblowing is protected by § 1514A when it relates

to "fraud." See, e.g., S. Rep. No. 107-146, at 19 (2002) ("Although current law protects many government employees who act in the public

interest by reporting wrongdoing, there is no similar protection for

employees of publicly traded companies who blow the whistle on fraud

and protect investors") (emphasis added); id. (noting that whistleblower

provision protects employees who report conduct "which they reasonably

believe to be fraudulent") (emphasis added). In this case, Livingston

relies on violations of § 10(b) of the Securities Exchange Act of 1934

and Rule 10b-5 under it, both of which prohibit securities fraud. 

12 LIVINGSTON v. WYETH, INC.
To "reasonably believe" that company conduct "constitutes a violation" of law, as those terms are used in § 1514A(a)(1), Livingston

must show not only that he believed that the conduct constituted a

violation, but also that a reasonable person in his position would have

believed that the conduct constituted a violation. It would make no

sense to allow Livingston to proceed if he himself did not hold the

belief required by the statute, and the language of the statute itself

requires that the belief be a "reasonable" one. 18 U.S.C.

§ 1514A(a)(1). Thus, § 1514A requires both a subjective belief and an

objectively reasonable belief that the company’s conduct constitutes

a violation of the relevant law. 

Moreover, the statute requires Livingston to have held a reasonable

belief about an existing violation, inasmuch as the violation requirement is stated in the present tense: a plaintiff’s complaint must be "regarding any conduct which [he] reasonably believes constitutes a

violation of [the relevant laws]." 18 U.S.C. § 1514A(a)(1) (emphasis

added). In an analogous context, we have construed the reasonable

belief of a violation to allow for a reasonable belief that the violation

not only (1) "has happened" but also (2) "is in progress." Jordan v.

Alternative Resources Corp., 458 F.3d 332, 340-41 (4th Cir. 2006)

(construing the retaliation provision in Title VII, 42 U.S.C. § 2000e3(a)), cert. denied, 127 S. Ct. 2036 (2007). As we amplified in Jordan, "the employee must have an objectively reasonable belief that a

violation is actually occurring based on circumstances that the

employee observes and reasonably believes." Id. at 341. We rejected

the claim, however, that a reasonable belief that a violation has

occurred or is in progress can include a belief that a violation is about

to happen upon some future contingency. See id. at 340-41.2

Once Livingston establishes his cause of action, Wyeth can nonetheless defeat his claim for relief if it shows, by clear and convincing

evidence, that it would have taken the adverse employment action

against him even in the absence of his providing the information or

making the complaint. See 49 U.S.C. § 42121(b)(2)(B)(iv). 

2As we noted in Jordan, because this analysis for determining whether

an employee reasonably believes a law is being violated is an objective

one, we resolve the question as a matter of law. Jordan, 458 F.3d at 339.

LIVINGSTON v. WYETH, INC. 13
In this case, the district court concluded that Livingston failed to

establish element (2) of his cause of action — that his complaint

regarded company conduct that he reasonably believed constituted a

violation of § 10(b) of the Securities Exchange Act and Rule 10b-5

under it — and that Wyeth would have discharged Livingston even

in the absence of Livingston’s having provided the information or

made a complaint. 

Addressing Livingston’s failure to establish element (2), we conclude that Livingston failed at several of the suppositional levels

assumed by him to satisfy that element in the circumstances of this

case. Livingston himself recognizes the speculative multi-step reasoning on which he must rely. As he asserts in his brief on appeal:

All that Livingston needs to show in order for his complaints and disclosure to enjoy protected activity status

under Sarbanes-Oxley is a reasonable belief that Wyeth was

violating "any rule or regulation" of the SEC, or "any provision of Federal law relating to fraud against shareholders."

Pointing to the July 10 and July 29, 2002 memoranda, he states that

"the core" of his complaints about violations of law was that:

Wyeth was intentionally concealing the same type of FDA

[good manufacturing practices] violations that resulted in

the consent decree [of October 3, 2000, covering two sites

in Pennsylvania and New York] and . . . this noncompliance would violate the consent decree and [good

manufacturing practices] violations. Concealing consent

decree and [good manufacturing practices] compliance violations, after having told the SEC and shareholders in its

2001 and 2002 [annual reports] and 10-Q filings that Wyeth

was compliant with [good manufacturing practices] and

consent decree requirements constituted a violation or

apparent violation of Section 10(b) of the Exchange Act and

Rule 10b-5. 

In reaching this conclusion, however, Livingston has failed to detail

numerous critical steps that he must, but cannot satisfy. 

14 LIVINGSTON v. WYETH, INC.
First, as of the date of the July 29, 2002 memorandum, and indeed

as of anytime, Livingston failed to show that Wyeth misrepresented

or concealed anything, and the July 29 memorandum did not complain of any misrepresentation or concealment. It expressed a "concern that if we were to conduct the audit and not fully disclose the

status of training system implementation at [Sanford], [Wyeth] would

be in the unfortunate position of providing false and misleading information to compliance auditors, including the FDA." (Emphasis

added). Livingston’s July 29 memorandum did draw the conclusion

that he perceived Kaylos’ implicit message in their July 24 meeting

to be that facts and data would be "covered up" from the Wyeth internal auditor and the FDA. Yet, the record is devoid of evidence that

any Wyeth employee thereafter manifested even an intent to misrepresent facts or conceal any wrongdoing concerning training documentation. To the contrary, Livingston stated under oath that "[a]t no time

during this [July 24] meeting, did I claim that Kaylos and Wyeth were

trying to mislead the FDA and those involved with the July 29 verification." Furthermore, he informed the Wyeth investigators who

responded to his July 29 ethics complaint that he did not believe that

anyone at the site would intentionally provide false statements, and

a copy of the results of this investigation was actually provided to the

Wyeth internal auditor who conducted the July 29 inspection of the

Sanford facility, negating any possibility that Livingston’s concerns

could be "covered up" from the auditor. In addition, in order to anticipate a misrepresentation to the FDA, he would have to assume that

the new training documentation system would not actually be implemented by the September 30 commitment date; that Wyeth would fail

to develop an acceptable legacy plan to afford it additional time to

close any remaining compliance gaps; and that Wyeth would then

misrepresent or conceal the true status of the program. This chain of

speculation is simply too long to support a claim that Wyeth in fact

covered up anything and made misrepresentations to the FDA or was

in the process of doing so, as is required to support a violation of the

securities laws. 

Second, just as the hypothetical misrepresentations of the program’s progress never occurred, so also no violation of the 2000 Consent Decree occurred. That decree, issued with respect to two plants

in Pennsylvania and New York, was site-specific and did not cover

the Sanford facility. The only way in which activities of the Sanford

LIVINGSTON v. WYETH, INC. 15
site could be implicated by the decree was the decree’s requirement

that Wyeth "retain an expert consultant to undertake a division-wide

assessment" of Wyeth’s quality control programs and to submit proposed responsive actions to the FDA, along with a timetable for completing those actions. But Wyeth concededly did those things. It

retained an expert, and in response to the expert’s evaluation of the

Sanford facility’s procedures, it committed to implementing a new

training program for good manufacturing practices at the Sanford site

by September 30, 2002. Thus, during the summer of 2002, when the

training system implementation was in progress, there was no objectively reasonable basis from which to conclude that the 2000 Consent

Decree had been or was being violated.

Third, there is no suggestion in either the July 10 or July 29 memorandum that Wyeth or its employees had or even intended to mislead

shareholders, as necessary to support a reasonable belief that the

securities laws had been or were being violated. The annual reports

for 2001 and 2002, indicating that Wyeth was compliant with good

manufacturing practices, was never shown to be false or misleading

when made, and there is no indication in the record that Wyeth

intended to make false or misleading statements about its manufacturing practices in the annual report that would come out in the spring

of 2003. In addition, to convert a hypothesized cover-up and misrepresentation with respect to the progress of the training program at the

Sanford site into a securities fraud violation would require even larger

leaps of speculation than Livingston took in supposing misrepresentations to internal auditors and the FDA. In order to justify his belief

that Wyeth committed securities fraud, Livingston would have to

have reasonably believed that Wyeth (1) made a material misrepresentation (or omission) (2) with scienter (3) in connection with the

purchase or sale of a security (4) on which the seller or purchaser reasonably relied, (5) causing economic loss. See Dura Pharm., Inc. v.

Broudo, 544 U.S. 336, 341-42 (2005); Miller v. Asensio & Co., Inc.,

364 F.3d 223, 227 (4th Cir. 2004). While Wyeth did state in its public

reports for 2001 and 2002 that it was compliant with the 2000 Consent Decree (covering its Pennsylvania and New York sites and not

its Sanford, North Carolina site), there is no evidence that that statement was false or misleading. And there was no statement, false or

otherwise, about Wyeth’s training program implementation at the

Sanford site. Indeed, Livingston’s own observations indicate that no

16 LIVINGSTON v. WYETH, INC.
finding that Wyeth made a false or misleading statement would be

possible, inasmuch as Livingston acknowledged that he never complained that Kaylos and Wyeth were "trying to mislead the FDA and

those involved with the July 29 verification" and that he did not

believe that anyone at the Sanford site would intentionally provide

false statements. Nor was there any actual deficiency in implementing

the training program that could be misrepresented or concealed. None

of the fears expressed by Livingston in his July 10 and July 29 memoranda about false or misleading statements ever materialized. Thus,

even though his claim requires that he have complained about what

he believed as a past violation or one in progress, he cannot even

point to evidence indicating that Wyeth intended to make false or

misleading statements in any statement or report to shareholders. The

chain of speculation, in light of a record totally devoid of any Wyeth

wrongdoing at the Sanford site, is simply too weak on which to hang

even a postulated violation of the securities laws. Livingston, therefore, could not have reasonably believed that Wyeth had violated or

was violating the securities laws.

Fourth, even if Wyeth had made the false statements to compliance

auditors and the FDA that Livingston supposed could be made, none

would amount to a material statement as necessary to violate § 10(b)

of the Securities Exchange Act and Rule 10b-5. For a statement or

omission to be actionable under § 10(b) of the Securities Exchange

Act and Rule 10b-5, it must concern a material fact. The Supreme

Court has noted that to fulfill the materiality requirement, "there must

be 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) (internal quotation

marks omitted). Thus, for deficiencies in the training program schedule to have had a material impact on Wyeth’s finances, there must

have been some realistic possibility that the FDA would take regulatory action against Wyeth having material financial consequences to

a reasonable investor. It is undisputed, however, that the FDA never

issued any warning or made any observation regarding Wyeth’s training schedule deficiencies at the Sanford site during the period when

Livingston made his complaint. 

Furthermore, at the time of Livingston’s alleged protected activity,

Wyeth was developing pharmaceuticals at over two dozen facilities

LIVINGSTON v. WYETH, INC. 17
worldwide and had revenues of over $14 billion. The Sanford site

alone had 27 different "quality elements" defined by its good manufacturing practices manual, of which the training about which Livingston complained was only one element. Livingston has not

demonstrated why Wyeth would be obligated to report to investors as

"material" any deficiencies in the training documentation procedures

at a single site — or why he could "reasonably believe" that they must

do so — particularly when the FDA was aware that Wyeth was taking

steps to improve that procedure and before the FDA had in any way

indicated it would take action, or even threatened such action. See

Acito v. IMCERA Group, Inc., 47 F.3d 47, 52-53 (2d Cir. 1995) (noting that failure to disclose negative results of FDA inspections of two

plants was not material where defendant operated over 30 plants, the

FDA had taken no materially adverse action, and the defendant had

committed to correct plant deficiencies). 

In sum, not one link in Livingston’s imaginary chain of horribles

was real or was in the process of becoming real. The only fact about

which Livingston ever complained was the fact that the training system for good manufacturing practices was off schedule. And based on

this one fact, he made a judgment that the program would not likely

be ready for verification by internal compliance auditors on July 29

and would not be completed by September 30, 2002. Even this predictive judgment, however, proved to be wrong.

Thus, Livingston has failed to produce evidence that he provided

information or made a complaint to Wyeth about conduct which a

reasonable employee in his position could have believed at the time

constituted a violation of the securities laws. And because we affirm

the district court with respect to this element, we need not reach the

other conclusions of the district court challenged by Livingston. 

III

Livingston also contends that the district court erred in concluding

that he had not established a claim for wrongful discharge under

North Carolina common law. On appeal, however, Livingston’s entire

argument is contained in a single sentence in his opening brief: "Because the district court’s findings of fact leading to dismissal of the

18 LIVINGSTON v. WYETH, INC.
federal claim are also the factual basis for dismissing the wrongful

discharge claim, the latter dismissal was also in error." 

We agree with the district court that Livingston’s state law claim

is unsupported in the record. He has presented no evidence that he

was discharged on December 19, 2002, for refusing to violate the law

or that he was fired for reporting the violation of a law expressing the

public policy of North Carolina. 

The judgment of the district court is accordingly 

AFFIRMED.

MICHAEL, Circuit Judge, dissenting: 

I respectfully dissent from the majority’s holding that Mark Livingston can show no set of facts to entitle him to protection under the

whistleblower provision of the Sarbanes-Oxley Act of 2002, 18

U.S.C. § 1514A. 

The whistleblower protections in § 1514A respond to

a culture, supported by law, that discourage[s] employees

from reporting fraudulent behavior not only to the proper

authorities . . . but even internally. This "corporate code of

silence" not only hampers investigations, but also creates a

climate where ongoing wrongdoing can occur with virtual

impunity. The consequences of this corporate code of

silence for investors in publicly traded companies, in particular, and for the stock market, in general, are serious and

adverse, and they must be remedied. 

S. Rep. No. 107-146, at 10 (2002). Section 1514A was enacted to provide such a remedy. In short, § 1514A serves to "encourage and protect [employees] who report fraudulent activity that can damage

innocent investors in publicly traded companies." Id. at 19. 

To gain the protection of § 1514A, an employee only has to show

that he alerted his publicly traded employer to activity that he reasonLIVINGSTON v. WYETH, INC. 19
ably believed constituted a violation of an enumerated law, such as

the violation of a provision relating to fraud against shareholders. 18

U.S.C. § 1514A. Livingston meets this standard when the facts are

read in his favor, as is required at the summary judgment stage. While

working at Wyeth, Inc. (Wyeth), a pharmaceutical manufacturer, Livingston formed a reasonable belief that Wyeth was intentionally failing to comply with a consent decree that arose out of regulatory

action against Wyeth by the U.S. Food and Drug Administration

(FDA). The consent decree compelled compliance with FDA regulations requiring good manufacturing practices aimed at ensuring product safety. When Livingston stated his concerns to his superiors, he

was told that he would be fired unless he retracted his statements and

stopped all reports of non-compliance at the facility where he worked.

He then made an internal complaint to the company’s offices that deal

with ethics and regulatory compliance, stating that he was concerned

about the effect Wyeth’s cover-up would have on shareholders.

Wyeth then fired him. Because these facts are sufficient to require a

trial on Livingston’s § 1514A claim, I would reverse the grant of

summary judgment to Wyeth. Because the majority affirms the summary judgment by construing the facts in favor of Wyeth (the nonmovant), I respectfully dissent. 

I.

In reviewing the award of summary judgment to Wyeth, the majority has failed to state the facts in the light most favorable to Livingston. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986)

(stating that "[t]he evidence of the non-movant is to be believed" in

summary judgment proceedings). The facts, stated in that light, are as

follows. 

On October 3, 2000, Wyeth became subject to a consent decree

arising out of the FDA’s seizure of allegedly adulterated products

from two Wyeth facilities. The consent decree was entered in a forfeiture action in which the FDA asserted that the seized products were

adulterated under the Food, Drug, and Cosmetic Act, 21 U.S.C.

§ 351(a)(2)(B), because certain Wyeth facilities had failed to comply

with federally mandated good manufacturing practices (GMPs).

According to FDA regulations, GMPs require proper training of all

persons engaged in manufacturing drugs. 21 C.F.R. § 211.25. The

20 LIVINGSTON v. WYETH, INC.
regulations specify that each employee must be trained in the pertinent GMPs and in the employee’s particular job functions. Id.

§ 211.25(a). Training must be "conducted by qualified individuals on

a continuing basis." Id. This training is essential "to provide assurance

that [every] drug product has the safety, identity, strength, quality,

and purity that it purports or is represented to possess." Id.

§ 211.25(b). 

The consent decree imposed binding requirements on all Wyeth

facilities in its drug manufacturing division, including the facility in

Sanford, North Carolina. The consent decree ordered Wyeth to hire

an independent auditor to conduct a division-wide assessment of the

company’s quality control and compliance with GMPs. Thereafter,

Wyeth was required to submit a plan with a timetable for the correction of deficiencies to the FDA, obtain FDA approval of the plan, and

comply with the timetable. The timetable adopted under the consent

decree could not be altered without written authorization by the FDA.

In keeping with industry practice of reporting GMP compliance to

shareholders, Wyeth represented in its 2001 and 2002 annual reports

that it was complying with the consent decree. The 2001 annual report

also stated that the company was making an investment of "$300 million to support our number one operating objective — to make sure

that our manufacturing and operations maintain high quality standards." J.A. 323. The statement about this investment also mentioned

the consent decree and noted that Wyeth was independently "strengthening sustainable compliance." Id.

When the consent decree was entered in October 2000, Livingston

was the Manager for Training and Continuous Improvement at the

Sanford site. He was responsible for GMP compliance and implementation of the GMP training system. In April 2001 Wyeth (apparently

pleased with his work) promoted Livingston to the position of Associate Director of Training and Continuous Improvement. He continued to be responsible for GMP compliance. 

In November 2000 the independent auditor (retained pursuant to

the consent decree) reported that Sanford was not complying with

legally mandated GMP requirements. The auditor listed thirty-five

specific deficiencies related to training, including the following: (1)

LIVINGSTON v. WYETH, INC. 21
many employees were manufacturing drugs with no training whatsoever, (2) managers were not trained, (3) the individuals conducting

training were not properly trained themselves, and (4) training was

not assessed for its effectiveness. In response to the audit report,

Wyeth proposed September 30, 2002, to the FDA as the date by

which the company would finish implementation and verification of

GMP training compliance. The FDA apparently approved this deadline, and there is no evidence that Wyeth ever sought or was granted

an extension. 

Over the course of the two years leading up to the consent decree

deadline for GMP training compliance, Wyeth’s Sanford site made

little headway on the subject. Wyeth set several internal deadlines

(November 2001 was the first) to achieve compliance before the consent decree date, but internal audits showed that the company dismally failed to meet each deadline. Sanford management pushed the

November 2001 deadline first to February 2002, then to April, then

to July, and finally to the actual September 2002 consent decree date

— a date that Wyeth also failed to meet at Sanford. While some of

these deadlines were revised, others were "met" through the use of

"legacy plans." A "legacy plan" is a term used at Sanford to describe

an internal document that provides a time line for remedying noncompliance after a planned compliance date is missed. 

Livingston faced stiff resistance from department directors as he

attempted to remedy the serious non-compliance with training GMPs

identified by the independent auditor and periodic internal audits.

This resistance persisted despite Livingston’s ongoing (and increasingly urgent) reports of compliance failures.1

 For example, in Novem1The majority states that "Livingston found no problem with the [training] program’s progress" toward compliance through June 2002. Ante at

5. This statement is incorrect. Livingston did prepare slides about compliance for possible use by the Sanford site director during a May 22,

2002, visit by a high-ranking Wyeth executive. While these slides stated

that Sanford was "on track" for compliance by September 30, 2002, J.A.

569, Livingston explained that the slides were "optimistically written,"

J.A. 102. He continued to express his ongoing concerns about the lack

of progress in several meetings with site management both before and

after the preparation of the slides. 

22 LIVINGSTON v. WYETH, INC.
ber 2001 a vaccine development director informed him that she

refused to implement the compliance requirements for training in her

department. In December 2001, in response to Livingston’s report of

compliance gaps at a meeting of the Site Quality Council (the group

responsible for internally monitoring compliance at Sanford), two

members of the council "verbally assaulted" Livingston and refused

support for the training plan. J.A. 85. In early March 2002 Livingston

reported at a staff meeting that attendance at training for Sanford

directors had been abysmal. The directors nevertheless continued to

avoid their training obligations. Livingston made similar reports in

April and early May 2002, and he was informed by Sanford management that no information regarding Sanford’s compliance failures

would be shared outside the Sanford site. 

As the official FDA compliance date of September 30, 2002,

approached, Livingston’s reports became more urgent. The district

court explained: "the state of documented training at the Sanford

facility in the summer of 2002 was so abysmal that it mirrored the

conditions in Pearl River, New York and in Marietta, Pennsylvania

that prompted entry of the Consent Decree." J.A. 42-43. Convinced

that Sanford would be unable to meet the compliance deadline, Livingston requested a meeting with the Site Quality Council. On July

9, 2002, Bruce Kaylos, the Sanford site director, angrily informed him

that he would not be allowed to discuss the compliance issue with the

council. 

After being blocked from meeting with the Site Quality Council

about the imminent compliance failure, Livingston shared his evaluation with Kaylos and the council in a memo dated July 10, 2002. He

concluded, "I do not support the request for [Sustainable Compliance

Initiative] verification or attest to our state of compliance to corporate, site, and regulatory [ ]GMP training requirements." J.A. 709.

The following day, July 11, 2002, Kaylos met with human resources

to discuss putting Livingston on a "personal improvement plan" (PIP),

a Wyeth personnel action threatening termination. Kaylos then left a

telephone message for Livingston at his home on July 12 and had his

assistant telephone Livingston at work on July 16. Livingston

attempted to respond to these messages, but he was not able to speak

with Kaylos. Livingston understood the telephone messages of July

LIVINGSTON v. WYETH, INC. 23
12 and 16 to indicate that Kaylos had received the July 10 memo.2

 On

July 24, 2002, Kaylos met with Livingston to discuss the memo.

According to Kaylos’s notes of this meeting, Livingston told him that

"the site and I [Kaylos] were trying to mislead FDA and corporate

audit groups into believing that training was compliant."3 J.A. 446. As

he had done previously, Kaylos instructed Livingston not to report

non-compliance to Wyeth corporate headquarters. Kaylos also threatened to fire or demote Livingston if he continued to report Sanford’s

failure to comply with training GMPs. That same day, in response to

his meeting with Livingston, Kaylos again contacted human resources

to discuss the creation of a PIP threatening Livingston’s termination.

The final internal audit prior to the FDA compliance date revealed

that Sanford continued to violate GMP requirements, and it noted that

Wyeth would have to adopt yet another legacy plan to address these

problems. Despite the majority’s assertion to the contrary, there is no

evidence that the auditor verified compliance at this time or that Livingston "signed off on [any] verification." Ante at 6. 

Around July 29 Livingston submitted a complaint to Wyeth’s

Office of Ethics and Business Conduct and its Office of Sustainable

Compliance (compliance office). Livingston explained that Kaylos

had attempted to intimidate him in an effort to prevent his accurate

reporting of Sanford’s compliance gaps. Livingston concluded,

Federal law deems it a crime to make any false, fictitious,

or fraudulent statement to any government agency, or in

making such statement, to conceal any material fact. . . . If

we succumb to the pressure of the moment, if we avoid our

compliance obligations, if we are unwilling to do the right

2The majority writes that "Kaylos did not receive the memorandum

until approximately July 17, 2002, because he was on vacation." Ante at

6. While this is Kaylos’s claim, we are required to view the evidence in

the light most favorable to Livingston. As I have described, Livingston

has produced evidence that permits the inference that Kaylos received

Livingston’s memo on July 10 and immediately undertook retaliatory

action. 

3The majority states that there were no allegations of fraud at this

meeting. Ante at 6. Kaylos’s own notes contradict this assertion. 

24 LIVINGSTON v. WYETH, INC.
thing, or if we purposefully prevent the inner from matching

the outer, we fail the ethics test and our Code of Conduct

becomes another empty promise for employees, patients,

health care providers, regulatory bodies, shareholders, and

ourselves. 

J.A. 745. 

In response to these allegations, Wyeth’s compliance office opened

an investigation and recommended that the PIP proposed by Kaylos

be delayed. An investigator met with Livingston, who explained his

concerns about gaps in training documentation and the impending

release of adulterated vaccine. The investigator’s report found Livingston’s training compliance concerns to be "substantiate[d]." J.A. 358.

In particular, the investigator found that Sanford supervisors were

systematically reporting employees as trained to complete tasks for

which they, in fact, lacked training, thus allowing them to manufacture adulterated drugs in violation of 21 C.F.R. § 211.25. 

On September 30, 2002, the FDA compliance date, Livingston

signed two documents: a verification checklist indicating that certain

aspects of the training were complete and yet another legacy plan to

address continued training compliance gaps. There is no evidence that

Wyeth sought, or that the FDA approved, any extension of the deadline. On October 9 Wyeth’s compliance office closed the file on Livingston’s complaint without taking any remedial action. Within a

week Kaylos and David McCuaig, the human resources director,

placed Livingston on a ninety-day PIP. The PIP required, among

other things, that Livingston "[i]mmediately end non-constructive

comments to internal and external staff and contacts that the establishment and utilization of certain corporately approved and verified

training practices is ‘defrauding’ the FDA." J.A. 814. If Livingston

failed to "show immediate, significant and sustained improvement

within 30 days," he would be terminated. J.A. 815. 

From October through December 2002 Livingston became increasingly concerned that he was about to be terminated, based on repeated

actions and comments from McCuaig, his placement on a PIP with little explanation, and a decision by Kaylos to limit his job responsibilities. Livingston and McCuaig both reported to Kaylos and were

LIVINGSTON v. WYETH, INC. 25
equals in the Sanford hierarchy. On December 13, 2002, McCuaig

appeared at Livingston’s offsite holiday party for his team.

McCuaig’s appearance was an unusual occurrence because each team

had its own holiday party, so McCuaig would have been expected

only to attend the human resources party. In fact, McCuaig did not

attend any team holiday party other than the one held by Livingston.

Using brusque terms, Livingston asked McCuaig to leave, and Livingston was fired five days later. 

II.

Livingston claims that Wyeth terminated him in violation of 18

U.S.C. § 1514A. The statute protects employees of publicly traded

companies from retaliation for 

provid[ing] information, caus[ing] information to be provided, or otherwise assist[ing] in an investigation regarding

any conduct which the employee reasonably believes constitutes a violation 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 Federal law relating to fraud

against shareholders. 

18 U.S.C. § 1514A(a)(1). I would refine certain aspects of the majority’s interpretation of the statute. 

The majority states that a plaintiff’s reasonable belief in a violation

may not be based on "a belief that a violation is about to happen upon

some future contingency." Ante at 13 (citing Jordan v. Alternative

Res. Corp., 458 F.3d 332, 340-41 (4th Cir. 2006)). While I agree with

this statement, it requires some elaboration. The reasonableness standard in § 1514A "is intended to impose the normal reasonable person

standard used and interpreted in a wide variety of legal contexts." S.

Rep. No. 107-146, at 19 (citing Passaic Valley Sewerage Comm’rs v.

U.S. Dep’t of Labor, 992 F.2d 474, 478 (3d Cir. 1993)). As the majority recognizes, a similar standard is used in Title VII retaliation cases.

See ante at 13; see also Allen v. Admin. Review Bd., ___ F.3d ___,

2008 WL 171588, at *7 (5th Cir. Jan. 22, 2008). Under Title VII a

plaintiff complaining of retaliatory discharge does not have to prove

26 LIVINGSTON v. WYETH, INC.
that he believed a violation had already occurred or was complete. See

Jordan, 458 F.3d at 340-41 (citing EEOC v. Navy Fed. Credit Union,

424 F.3d 397 (4th Cir. 2005)). Instead, he has a claim if he was retaliated against for reporting his reasonable belief that a violation "was

taking shape," that "a plan was in motion" to violate the law, or that

a violation was "likely to occur." Id. at 340-41. In other words, an

employee’s belief is unreasonable (and unprotected) if it is based

entirely on unsupported conjecture about hypothetical future events;

his belief must relate to activity that a reasonable person could conclude is or is about to become a violation. Id. at 341. 

Further, in applying the standard requiring the complainant to have

an objectively reasonable belief that his employer is engaged in a violation, the majority consistently focuses on whether the violation did,

in fact, occur. An actual violation is not required, however. An

employee’s reasonable belief about a violation is protected even if the

belief is mistaken and an actual violation never occurs. Allen, 2008

WL 171588, at *6. 

Finally, the majority states that "because th[e] analysis for determining whether an employee reasonably believes a law is being violated is an objective one, we resolve the question as a matter of law."

Ante at 13 n.2 (citing Jordan, 458 F.3d at 339). The majority overstates our warrant at the summary judgment stage. Jordan simply

states that "the issue [of objective reasonableness] may be resolved as

a matter of law." Jordan, 458 F.3d at 339 (emphasis added). The issue

of objective reasonableness should be decided as a matter of law only

when "[n]o reasonable person could have believed" that the facts

amounted to a violation. Clark County Sch. Dist. v. Breeden, 532 U.S.

268, 271 (2001) (per curiam). However, if reasonable minds could

disagree about whether the employee’s belief was objectively reasonable, the issue cannot be decided as a matter of law. Allen, 2008 WL

171588, at *7 (citing Lipphardt v. Durango Steakhouse of Brandon,

Inc., 267 F.3d 1183, 1188 (11th Cir. 2001); Fine v. Ryan Int’l Airlines, 305 F.3d 746, 752-53 (7th Cir. 2002)). 

III.

Livingston contends that he believed Wyeth was intentionally misleading shareholders about its noncompliance with federal GMP reguLIVINGSTON v. WYETH, INC. 27
lations and the consent decree, in violation of § 10(b) of the Securities

Exchange Act of 1934, 15 U.S.C. § 78j(b), and Securities and

Exchange Commission Rule 10b-5, 17 C.F.R. § 240.10b-5. To avoid

summary judgment on his whistleblower claim asserted under 18

U.S.C. § 1514A, Livingston must proffer evidence that (1) his

whistleblower complaints implicated shareholder fraud by Wyeth; (2)

he subjectively believed that Wyeth was violating § 10(b) and Rule

10b-5, that a plan was in motion to violate these laws, or that a violation was likely; and (3) his belief was objectively reasonable. See ante

at 13. For his belief in a § 10(b) and Rule 10b-5 violation to be objectively reasonable, he must show that a person in his position would

have believed that Wyeth (1) made "a material misrepresentation (or

omission)," (2) with "a wrongful state of mind," (3) in "connection

with the purchase or sale of a security," and that (4) a seller or purchaser would have reasonably relied on the representation or omission, (5) with resulting economic loss. Dura Pharms., Inc. v. Broudo,

544 U.S. 336, 341-42 (2005) (citations omitted). The majority holds

that Livingston has not offered evidence that would create a genuine

issue of fact about the elements of his claim. To reach its result, the

majority places an improperly high burden on Livingston and fails to

recognize fully the strength and breadth of the factual case he has

offered. 

First, Livingston’s whistleblower complaints implicated a violation

of § 10(b) and Rule 10b-5. He was not required to specifically cite

these provisions. He simply had to "provide information . . . regarding any conduct" that he believed constituted a violation. 18 U.S.C.

§ 1514A. Livingston satisfied this burden by repeatedly reporting to

Wyeth his concern that FDA regulations were certain to be violated,

that violations were being covered up, and that, as a result, shareholders were being impacted adversely. As Kaylos’s notes of his July 24,

2002, meeting with Livingston reveal, and the October PIP confirms,

Livingston informed Kaylos in person that he believed that the Sanford site and Kaylos were involved in fraud on the FDA. Then, in his

July 29 complaint to Wyeth’s compliance office, Livingston again

reported that Sanford was failing to comply with federal GMP

requirements and that Kaylos had instructed him to misrepresent the

state of Sanford’s compliance. Specifically, Livingston reported that

Kaylos "attempt[ed] to shame me to retract the analysis and position,"

imparted the message that "we are going to conceal facts, data, and

28 LIVINGSTON v. WYETH, INC.
information from the verification auditor," and threatened to fire Livingston if he "persisted in raising the awareness level of this issue up

the chain-of-command." J.A. 744-45. Livingston was convinced that

Kaylos’s behavior in the July 24 meeting "violate[d] Wyeth’s Code

of Conduct," J.A. 744, and explained why in his complaint to the

compliance office: 

Federal law deems it a crime to make any false, fictitious,

or fraudulent statement to any government agency, or in

making such statement, to conceal any material fact. As I

read the Wyeth Code of Conduct, this policy is in place to

ensure that information provided to government agencies is

truthful, accurate, and complete. 

J.A. 745. Wyeth’s Code of Conduct explicitly instructed employees

to avoid false reporting to government agencies and to "accurate[ly]

and complete[ly] and fairly present" information in its disclosures to

shareholders. J.A. 244. Livingston concluded his complaint by asserting that "avoid[ing] our compliance obligations," as Kaylos had suggested, would "fail the ethics test and our Code of Conduct," which

would then amount to "another empty promise" for, among others,

"shareholders." J.A. 745. In short, Livingston asserted that Wyeth

was covering up its noncompliance with GMP requirements and the

consent decree, thus failing to keep its commitment to shareholders.

The majority argues that Livingston "did not complain of any misrepresentation or concealment," ante at 15, and presumably therefore

did not communicate information regarding shareholder fraud. In support of this conclusion, the majority reads the facts in the light most

favorable to Wyeth, not Livingston as is required. The majority first

cites Livingston’s use of conditional language in a background paragraph in his July 29 complaint. The conditional language, however,

referred to Livingston’s earlier July 10 memo to Kaylos, the Site

Quality Council, and others, urging full disclosure of problems in the

upcoming internal audit of training compliance. See J.A. 743 (Livingston stating in his July 29 complaint that in his July 10 memo he "expressed [his] concern that if we were to conduct the audit and not

fully disclose the status of training implementation at [Sanford],

[Wyeth] would be in the unfortunate position of providing false and

misleading information to compliance auditors, including the FDA.").

LIVINGSTON v. WYETH, INC. 29
There is nothing conditional, however, in Livingston’s report in his

July 29 complaint detailing Kaylos’s response to the July 10 memo.

Livingston provides an unequivocal report that Kaylos, the site director, threatened retaliation if Livingston refused to join in the plan to

cover-up Wyeth’s failure to comply with federal law. The majority

next concludes that Livingston told investigators that "he did not

believe that anyone at the site would intentionally provide false statements." Ante at 15. This quote is taken from the investigator’s letter,

not Livingston. Livingston, in fact, definitively stated under oath that

"I did not tell [Ed] Babiaz [the investigator] that ‘I did not believe

anyone would intentionally provide false or misleading statements.’"

J.A. 124 (emphasis added). Livingston’s affidavit thus directly contradicts the majority’s conclusion. The majority also notes that Livingston says in his affidavit that he did not mention fraud in his July 24

meeting with Kaylos. Ante at 15. Nevertheless, it is uncontested that

Livingston’s July 29 complaint informed Wyeth that he had been

instructed to misrepresent facts about compliance. In addition, both

Kaylos’s notes from the July 24 meeting and the October PIP confirm

that Livingston was alleging fraud. 

Livingston thus meets the first requirement for whistleblower protection because the clear text of his July 29 complaint communicates

a concern about fraud on shareholders. Livingston’s assertions also

provide evidence to satisfy the second and third requirements for protection: he believed Wyeth was committing securities fraud and this

belief was objectively reasonable. 

In particular, Livingston has provided sufficient evidence to establish that he had a reasonable belief that Wyeth was violating Rule

10b-5. First, Livingston reasonably believed that Wyeth was making

(and would continue to make) material misrepresentations or omit

material facts in reports to shareholders. Wyeth stated in its 2001 and

2002 annual reports that it was complying with the 2000 consent

decree and that GMP compliance was its "highest priorit[y]." J.A.

323. At the time of these representations, Wyeth was not planning to

comply with the consent decree, nor was it capable of achieving compliance. Every audit of Sanford’s compliance with training GMPs, up

to the very last internal audit prior to the FDA compliance date,

revealed Sanford’s serious failure to comply with federal requirements. Just months prior to the September 30, 2002, deadline, these

30 LIVINGSTON v. WYETH, INC.
failures were "so abysmal that [they] mirrored conditions . . . that

prompted the entry of the Consent Decree." J.A. 42-43. At this time,

many of Sanford’s department directors and staff were receiving no

training at all, almost half of the site had not even developed training

curricula, and most of the training that occurred was deficient. Since

2000 Livingston had watched as Sanford made little effort to correct

its deficiencies; he had every reason to believe that it would not —

and in fact could not — come into compliance by September 30,

2002. Indeed, Livingston’s fears were realized as Sanford failed to

reach compliance by this date. Based on his experience at Wyeth,

Livingston also believed that Wyeth would misinform shareholders

about the company’s intention not to comply with the consent decree

and GMPs generally. Livingston was correct about this as well: the

shareholder reports indicated that Wyeth was complying with GMPs

and the consent decree when it was not, and, indeed, had no intention

of doing so. 

The majority makes several arguments against this aspect of Livingston’s claim. Initially, the majority argues that Livingston’s concerns about FDA noncompliance were objectively unreasonable

because Sanford could not violate the consent decree. According to

the majority, the consent decree "did not cover the Sanford facility."

Ante at 15. This conclusion is directly contradicted by the record. The

express terms of the consent decree covered Wyeth’s entire drug manufacturing division, of which Sanford was a part. The consent decree

ordered Wyeth to (1) hire an independent auditor to conduct "a

division-wide assessment" of quality control and GMP compliance,

(2) submit a plan (with a timetable) for compliance to FDA, and (3)

adhere to the timetable. J.A. 1253. In a company document explaining

the decree, Wyeth stated that the decree mandated that "[e]xpert consultants will examine our [quality assurance and compliance] systems

at every facility making product for the U.S. market; we then must

take appropriate actions to address any issues they identify in these

areas." J.A. 976 (emphasis added). A member of the task force Wyeth

created to respond to the consent decree further explained, "Sanford

training . . . needed to implement [the GMP] conformance standards"

by the September 30, 2002, deadline established in the consent decree

timetable. J.A. 965. Thus, Wyeth understood that the consent decree

applied to Sanford and mandated that facility’s compliance with the

September 30, 2002, deadline. 

LIVINGSTON v. WYETH, INC. 31
The majority further argues that Wyeth could not violate the consent decree because it could always adopt a legacy plan to correct any

compliance gaps still existing on the September 30 deadline. Ante at

15. However, as noted above, a legacy plan was an internal Wyeth

procedure. There was no reason for Livingston to believe that the

FDA would accept such a plan, allowing the facility to grant itself

extensions to continue to violate federal law. In fact, under the binding terms of the consent decree, Livingston had every reason to

believe that the FDA would not accept a legacy plan. The consent

decree expressly stated that Wyeth could not alter any schedule

approved by the FDA without written approval, granted at the discretion of the FDA. Wyeth’s internal decision to grant itself an extension

through a legacy plan would be an obvious violation of this provision.

In fact, despite the majority’s contention to the contrary, ante at 16,

Livingston’s evidence shows that Wyeth did violate the consent

decree; it is undisputed that Sanford adopted a legacy plan to address

its failure to comply with GMPs on the FDA compliance date of September 30, 2002. Wyeth did not petition the FDA for an extension,

and the FDA did not give it written approval to extend the deadline

for compliance. Thus, the consent decree’s terms assist in confirming

that Livingston’s concerns were objectively reasonable because the

terms clarify (1) that Wyeth’s failure to meet the FDA deadline would

be an actual violation of the consent decree (as well as federal law)

and (2) that a legacy plan was not a proper means to avoid the company’s regulatory obligations. 

The majority finally argues that, "[w]hile Wyeth did state in its

public reports for 2001 and 2002 that it was compliant with the 2000

Consent Decree (covering its Pennsylvania and New York sites and

not its Sanford, North Carolina site), there is no evidence that that

statement was false or misleading." Ante at 16. Because the majority

is mistaken about the reach of the consent decree, this conclusion is

unsupported. Any statement by Wyeth that it was complying with the

consent decree was false, or at the least misleading, because the company was aware that it would miss the September 30, 2002, deadline

for Sanford compliance. Livingston’s beliefs that Wyeth was making

material misrepresentations or omitting material facts in reports to

shareholders were well founded. 

Second, Livingston’s belief that Wyeth had a "wrongful state of

mind" was objectively reasonable for a person in his position. Living32 LIVINGSTON v. WYETH, INC.
ston had ample evidence that Sanford was engaged in a cover-up.

From the inception of his efforts to bring Sanford into compliance, he

was met with hostility and refusals to cooperate from his supervisors

and site department directors; as the FDA compliance date

approached, this resistance escalated into demands that he mislead

corporate management and outside auditors. The department directors

never once claimed that Livingston’s reports were unfounded; after

all, he was backed by the clear results of the audits. But the directors’

resistance to training, refusal to report training failures, and refusal to

implement GMPs in their own departments were clear indications that

they never planned to comply with the consent decree deadline. This

resistence and refusal culminated in Livingston’s July 24 meeting

with Kaylos, the Sanford site director, in which Kaylos threatened to

fire Livingston if he persisted in reporting regulatory failures and

failed to retract his statements. This threat was eventually formalized

in the October PIP. Not only was Livingston subjected to demands

that he misrepresent Sanford compliance to authorities, there is independent, direct evidence that an intentional cover-up was underway

at the Sanford facility. The investigation of Livingston’s internal complaint revealed that Sanford department directors were intentionally

documenting untrained employees as having received the necessary

training, so that they could continue working in violation of federal

regulations. The threats, refusal to cooperate, and actual misrepresentation of the woeful state of training compliance by Sanford department directors is sufficient evidence to support Livingston’s belief the

Sanford facility was engaging in a fraudulent cover-up of its ongoing

violations of federal law. It was objectively reasonable for Livingston,

who knew that Wyeth was making intentional misrepresentations to

the FDA, to believe that Wyeth was intentionally misleading its

shareholders about its compliance with FDA regulations and the consent decree, as evidenced by the actual misrepresentations in the

annual reports. 

Third, Livingston reasonably believed that Wyeth’s misrepresentations in its annual shareholder reports would be material to shareholders and would cause economic loss. Under the consent decree Wyeth

was subject to careful, regular reviews by the FDA beyond those conducted in the normal course of business. As a result, the FDA was far

more likely to detect and punish any violations by Wyeth, especially

violations of the consent decree. Wyeth had explained to its employLIVINGSTON v. WYETH, INC. 33
ees that any failure to meet the consent decree’s timetable would cost

the company a $15,000 fine for each day of tardiness, up to a total

$5 million dollars. Wyeth paid the government $30 million to settle

the FDA enforcement action that prompted the consent decree. And

the Sanford violations disclosed by Livingston were similar to those

underlying the consent decree. Huge settlement costs and fines paid

by a company are material to shareholders, and a reasonable shareholder would want to know whether a company is engaged in activity

that could trigger such settlements and fines. See No. 84 EmployerTeamster Joint Council Pension Trust Fund v. Am. West Holding

Corp., 320 F.3d 920, 935 (9th Cir. 2003) (airline company’s failure

to comply with Federal Aviation Administration regulations, which

would likely result in a sanction, was material to shareholders). Thus,

Wyeth’s failure to comply with the consent decree and its ongoing

obligations under FDA regulations was material to shareholders. 

The majority argues that any false statement made in the annual

reports could not have been viewed as material because "the FDA

never issued any warning or made any observation regarding Wyeth’s

training schedule deficiencies at the Sanford site during the period

when Livingston made his complaint." Ante at 17. The majority erroneously magnifies Livingston’s burden. In order to prevail on a

§ 1514A whistleblower claim, Livingston does not have to prove that

Wyeth did, in fact, violate Rule 10b-5. Nor does he have to show a

working knowledge of the securities laws. He only has to provide sufficient evidence to show that a person in his position — a manager

in charge of complying with federal drug regulations and a binding

consent decree — could reasonably believe that Wyeth’s reports of

compliance constituted a material misrepresentation to shareholders

under Rule 10b-5. Livingston had watched as the FDA seized allegedly adulterated products and extracted a massive sum in settlement

from Wyeth as a result of the same compliance failures at other facilities as those that he saw at his own; as the manager responsible for

compliance, he understood the huge financial impact of the consent

decree, was aware of its binding nature, and understood the consequences of failure to meet its deadlines. 

In sum, Livingston has produced evidence that his reports implicated shareholder fraud; that Wyeth both planned to violate and actually violated federal laws and regulations; that Wyeth management

34 LIVINGSTON v. WYETH, INC.
falsely reported compliance (internally and to shareholders) with

these same laws; that his direct supervisor threatened him and that he

was formally instructed to stop reporting non-compliance; and that

Wyeth (and its shareholders) risked substantial financial loss if this

cover-up was discovered in the enforcement of the consent decree.

Wyeth instructed Livingston to stop his complaints, and after he

refused to do so, it fired him. This evidence is sufficient to present an

issue of material fact about whether Livingston’s complaints were

protected under § 1514A. In addition, Wyeth has failed to present

clear and convincing evidence that it would have placed Livingston

on a PIP and ultimately fired him if he had not made his complaints.

As a result, I would conclude that Livingston has presented sufficient

evidence to survive summary judgment on his § 1514A claim, and I

would remand the case for trial.

LIVINGSTON v. WYETH, INC. 35