Updated and expanded 1:57 pm; final update 3:41 pm

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The Supreme Court on Tuesday asked the U.S. Solicitor General to provide the government’s views on a case testing the workplace rights of employees of a contractor under the “whistleblower” protection provisions of the Sarbanes-Oxley Act.   The case is Lawson v. FMR LLC.  The Court will decide whether to hear the case after the Solicitor General replies.

The Act bars a contractor working for a publicly traded mutual fund from discriminating against employees in their job conditions.  In this case, the First Circuit Court ruled that if such a contractor is a privately held firm, it is not barred from retaliating against its own employees, since the retaliation bar only applies to workers on the payroll of the mutual fund or one of its affiliates for whom the contractor is performing services.

The Court did not grant review in any new cases Tuesday.  The Court had granted seven new cases last week.

In the “whistleblower” case sent to the Justice Department for its views, two former employees of a firm that had contracted for investment advisory services to the Fidelity family of mutual funds contended that they were fired or forced to quit because they had made complaints internally about financial statements or accounting practices.  They argued that the Sarbanes-Oxley Act protected them from retaliation for those actions.  The Securities and Exchange Commission supported their claim that the Act does reach the employees of private firms serving as contractors or agents for a mutual fund, and not just the employees of the publicly traded fund.  The Labor Department also has taken a position in favor of such protection.

The two individuals, Jackie Hosang Lawson and Jonathan M. Logan, had worked for FMR Co., Inc., a subsidiary of Fidelity Management & Research Co.  The Fidelity management companies had contracts to serve as investment advisers to the Fidelity funds — the nation’s largest mutual fund company.  The mutual fund itself has no employees, so it relies on advisers to make day-to-day investment decisions and other management and administrative services.  The advisers also prepare financial reports that go to fund investors and to the SEC.

After the two former employees had pursued their complaint with the federal Labor Department, they sued their employer, which asked that their case be dismissed on the theory that the Sarbanes-Oxley whistleblower protection only applied to the employees of a company directly regulated by the Act.   The protection, it contended, does not bar a contractor from retaliating against its own employees.  The First Circuit agreed, and ordered the former employees’ claims dismissed.  That is the outcome that the Solicitor General has been asked to consider, and then advise the Court on whether it should hear the former employees’ petition.

In another order Tuesday, the Justices continued their pattern of turning aside all challenges to the federal government’s widespread use of secret wiretapping to track potential terrorism suspects, a program that challengers contended had eavesdropped on the telephone calls, cables, and Internet exchanges of innocent Americans.   In an unexplained order, the Justices denied review of a challenge to the 2008 law in which Congress gave the attorney general the authority to shut down any lawsuit against telephone companies for their aid in the wiretapping program.  The power was used to scuttle this lawsuit.  Justice Samuel A. Alito, Jr., took no part in the order in the case of Hepting v. AT&T Corp. (11-1200).

A long list of individuals, businesses and civil liberties groups — all customers of telephone and other communications companies — had filed some thirty lawsuits against three major carriers over their participation in two secret wiretapping operations that began in the George W. Bush Administration, one of which appears to have continued.  The lawsuits made claims under the First and Fourth Amendments, the Foreign Intelligence Surveillance Act, federal wiretap law, and two federal communications laws, as well as claims under state wiretap laws.

The federal government intervened in the cases to support the communications companies, arguing that the state secrets privilege barred the cases from going forward because, it claimed, they risked disclosure of highly secret information.  A federal judge in San Francisco refused to dismiss the cases.  Then, in 2008, Congress passed a new law that gave the U.S. attorney general the power to go into court to ask that such cases be dismissed.  Then-Attorney General Michael Mukasey did so, and all of the cases were dismissed.  The Ninth Circuit Court upheld the dismissal.

It now appears that those who believe that their private communications were wiretapped or otherwise monitored by the federal government, using the facilities and records of the communications companies, are out of options against the communications companies.  However, there are still two lawsuits pending in lower courts against the government and officials over two global wiretapping programs.  The challengers now have a case pending in federal district court in San Francisco.  That case, Jewel v. National Security Agency, now in a briefing stage on summary judgment, targets the surveillance program under the former Bush Administration.  Another group of challengers has a case pending in federal court in New York City against surveillance that was done after 2008, and involves a test of the same law that was at issue in the Hepting case turned aside by the Justices Tuesday.   That New York case is also under review by the Supreme Court this Term.  On October 29, the Court will hear oral argument in Clapper v. Amnesty International (11-1025) on the question whether the challengers had a right to sue (“standing”) to file that lawsuit.

One other order among those issued Tuesday was a significant one.  Again without comment, the Court turned down a petition by Chevron Corporation (Chevron v. Naranjo, No. 11-1428), seeking to have a federal court in New York City throw out an $18.2 billion judgment against the company, issued by a court in Ecuador.  The company has contended that the legal claim against it was obtained by fraud and bribery.  The issue that Chevron had asked the Supreme Court to review was whether the Declaratory Judgment Act of 1934 allowed it to seek to block the court judgment against it — an issue on which the company said there is a split in federal courts.

Posted in Cases in the Pipeline, Featured

Recommended Citation: Lyle Denniston, SG views invited on workplace rights (UPDATED), SCOTUSblog (Oct. 9, 2012, 9:33 AM), http://www.scotusblog.com/2012/10/sg-views-invited-on-workplace-rights/