Brief Fact Summary.
Plaintiff filed a lawsuit against Defendant for retaliation, in violation of the Sarbanes-Oxley Act. Defendant moved to dismiss the case.
On appeal, the Fifth Circuit found that SOX has an exhaustion requirement, and the District Court correctly concluded that Wallace's wire fraud-based protected activity was outside the scope of the OSHA complaint or any investigation it would reasonably prompt.View Full Point of Law
Kevin Wallace (Plaintiff), Vice President of Pricing and Commercial Analysis at Tesoro Corporation (Defendant), investigated his company for financial reporting violations. He was subsequently fired. Plaintiff filed a lawsuit against Defendant, alleging he was fired as retaliation for reporting his investigation, a protected activity under the Sarbanes-Oxley Act. Defendant moved to dismiss the case.
Did Plaintiff sufficiently plead a an objectively reasonable belief that he was investigating a violation under the Sarbanes-Oxley Act?
Yes, Plaintiff sufficiently plead an objectively reasonable belief that he was investigating a violation under the Sarbanes-Oxley Act, and the portion of the District Court’s opinion stating otherwise is reversed.
The Court concludes that the Plaintiff plead a plausible claim for relief under an objective standard that he reasonably believed he was engaging in protected activity. The Court also rejects the Defendant’s argument that the Plaintiff had to plead fraud with particularity under Rule 9(b) because the facts used to allege an individual’s reasonable belief they are investigating potential fraud are not the same as facts used to allege actual fraud.