                                        PRECEDENTIAL


        UNITED STATES COURT OF APPEALS
             FOR THE THIRD CIRCUIT
                  _____________

                       No. 11-4257
                      _____________

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

                        Appellants

                             v.

THOMAS J. LYNCH, Chief Executive Officer and Director
  of Tyco Electronics Corporation; TERRENCE CURTIN,
Executive Vice President and Chief Financial Officer of Tyco
   Electronics Corporation; CHARLES POST, ESQUIRE,
     Senior Labor & Employment Counsel; CHARLES
    DOUGHERTY, President, Wireless Systems, A Tyco
 Business Unit; TYCO ELECTRONICS CORPORATION
                       ___________

      On Appeal from the United States District Court
         for the Eastern District of Pennsylvania
              (D.C. Civil No. 2-10-cv-03288)
       District Judge: Honorable Gene E.K. Pratter
                       ___________

                  Argued October 5, 2012
Before:   McKEE, Chief Judge, JORDAN and VANASKIE,
                    Circuit Judges

                 (Filed: March 19, 2013)

Richard C. Angino, Esq. (Argued)
Daryl E. Christopher, Esq.
Angino & Rovner, P.C.
4503 North Front Street
Harrisburg, PA 17110
       Counsel for Appellants

Stephen M. Kohn, Esq. (Argued)
Kohn, Kohn & Colapinto
3233 P. Street, N.W.
Washington, D.C. 20007
      Counsel for Amicus Curiae National Whistleblowers
      Center

Michael A. Finio, Esq. (Argued)
Amy C. Foerster, Esq.
Cory S. Winter, Esq.
Saul Ewing LLP
2 North 2nd Street
7th Floor
Harrisburg, PA 17101
       Counsel for Appellees

Eugene Scalia, Esq.
Gibson, Dunn & Crutcher LLP
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036




                             2
      Counsel for Amicus Curiae Chamber of Commerce of
      the United States of America
                        ___________

                OPINION OF THE COURT
                     ___________


VANASKIE, Circuit Judge.

       Appellant Jeffrey Wiest brought an action under the
whistleblower protection provisions set forth in Section 806
of the Sarbanes-Oxley Act (“SOX”), 18 U.S.C. § 1514A, and
under Pennsylvania law against Appellees Tyco Electronics
Corporation and several officers and directors of Tyco
Electronics (collectively, “Tyco”). The District Court granted
Tyco‟s Motion to Dismiss the federal whistleblower claims,
declined to exercise supplemental jurisdiction over the state
law claims, and denied Wiest‟s Motion for Reconsideration.
Concluding that the District Court erred in requiring that
Wiest allege that his communications to his supervisors
“definitively and specifically relate to” an existing violation
of a particular anti-fraud law, as opposed to expressing a
reasonable belief that corporate managers are taking actions
that could run afoul of a particular anti-fraud law, we will
reverse, in part, the dismissal of the federal whistleblower
claims and vacate the dismissal of the state law claim.

                              I.

                     A.     Background

      According to the Complaint, Wiest worked for
approximately thirty-one years in Tyco‟s accounting




                              3
department until his termination in April 2010. For Wiest‟s
last ten years of employment, his office was under “a high
level of audit scrutiny” due to the well-known corporate
scandal involving its former parent company, Tyco
International, and its CEO, Dennis Kozlowski. (App. 42, ¶
31.) Around 2007, Wiest “established a pattern of rejecting
and questioning expenses” that failed to satisfy accounting
standards or securities and tax laws. (Id. at 43, ¶ 33.)

               1.     The Atlantis Resort Event

        In mid-2008, Wiest refused to process a payment and
sent an email to his supervisor regarding an event that Tyco
intended to hold at the Atlantis Resort in the Bahamas, which
was similar to a corporate party under Kozlowski‟s
management that had drawn significant criticism. Expenses
for the $350,000 Atlantis event included “Mermaid Greeters”
and “Costumed Pirates/Wenches” at a cost of $3,000; a
“Tattoo Artist (includes tattoos)” and “Limbo” and “Fire” at a
cost of $2,350; chair decorations at a cost of $2,500; and hotel
room rentals ranging from $475 to $1,000 per night. (Id. at
45, ¶ 41.) In an email to his supervisor, Wiest expressed his
belief that the costs were inappropriately charged entirely as
advertising expenses. He asserted that the costs needed to be
detailed and charged as income to attending employees
because the employees were bringing guests, and the
expenses needed to “be reviewed for potential disallowance
by a taxing authority based on excessive/extravagant spend
[sic] levels.” (Id. at 84, Ex. E.) Following Wiest‟s email,
Tyco‟s management determined that the five-day event
included only a single one-and-one-half hour business
meeting. As a result, they determined that processing the
payment “would have resulted in a misstatement of




                               4
accounting records and a fraudulent tax deduction,” and that
Tyco needed to treat the event as income for attending
employees. (Id. at 43-44, ¶ 35.) Tyco decided to proceed
with the event and to compensate the attendees for the
additional tax liability by increasing (i.e., “grossing-up”) their
bonuses.

              2.      The Venetian Resort Event

       Also in mid-2008, Wiest received a request to process
a payment of $218,000 for a conference at the Venetian
Resort in Las Vegas, Nevada. The request lacked both
sufficient documentation for tax purposes and proper
approval pursuant to Tyco‟s “delegation of authority.”
Additionally, the request included inaccurate accounting and
tax treatment information. At Wiest‟s direction, one of his
subordinates sent an email to the Tyco employee who
submitted the request, explaining that the accounts payable
department could not process the request until it had received
an agenda and business purpose for the event, correct
accounting treatment for various expenses, and approval
pursuant to Tyco‟s delegation of authority.          The tax
department eventually concluded that the conference served a
business purpose, and the accounts payable department
subsequently allowed the payment.

             3.     The Wintergreen Resort Event

       In late 2008, Wiest was presented with a request for
approval of a conference at the Wintergreen Resort in
Virginia in the amount of $335,000. Like the Venetian
Resort request, the Wintergreen expense request lacked both
sufficient documentation and proper approval from Tyco‟s
CEO. Wiest emailed his supervisor, explaining that he




                                5
believed Tyco‟s internal policies required that the CEO be
notified about the transaction. To the best of Wiest‟s
knowledge, Tyco processed the payment without the CEO‟s
approval, in violation of Tyco‟s internal policies.

                       4.     Other Matters

        Wiest also alleges that he questioned other events
between 2007 and 2009. In particular, he questioned
expenses for a “relatively lavish „holiday party,‟” a $52,000
audit team meeting, and an employee baby shower. (Id. at 49,
¶ 55.) He also sent an email to management when he
received an expense request from an employee that included
duplicate entries, additional nights of hotel bills, and
undocumented expenses. He informed management that
processing that improper expense request would constitute
invalid or undocumented business expenses if Tyco was not
reimbursed or if the amount was not reported as income on
the employee‟s W-2 form.

             5.    Termination of Employment

       Wiest alleges that Tyco became frustrated with his
persistence in following proper accounting procedures. In
September 2009, two human resources employees met with
Wiest and informed him that he was under investigation for
incorrectly reporting the receipt of two basketball game
tickets in August 2009, for having a relationship with a co-
worker ten years earlier, and for allegedly making sexually-
oriented comments to co-workers. After Wiest learned of the
investigation, his health declined and he went on medical
leave. Seven months later, Tyco terminated his employment.

                  B.        Procedural History




                                 6
        On July 7, 2010, Wiest sued the Tyco Defendants,
asserting that his discharge was in retaliation for his reports of
improper expenditures, in violation of Section 806 of SOX.
That section prohibits certain employers from discriminating
against employees for reporting information that they
reasonably believe constitutes a violation of one of several
enumerated provisions relating to fraud and securities
regulations. See 18 U.S.C. § 1514A.1 Wiest also presented
state law claims, including intentional infliction of emotional
distress and wrongful termination, and his wife brought a
claim for loss of consortium. Tyco moved to dismiss under
Federal Rule of Civil Procedure 12(b)(6), asserting that Wiest
failed to state a prima facie claim under Section 806.

        As to the threshold question for a prima facie case in a
retaliation case under Section 806 – whether the Complaint
sufficiently alleges that the plaintiff had engaged in
“protected activity,” see 29 C.F.R. § 1980.104(e)(2)(i) – the
District Court determined that Wiest had to allege that his
communications (a) “definitively and specifically” related to
a statute or rule listed in Section 806; (b) expressed “„an
objectively reasonable belief that the company intentionally
misrepresented or omitted certain facts to investors, which
were material and which risked loss;‟” and (c) “reflect[ed] a
reasonable belief of an existing violation.” Wiest v. Lynch,
Civil Action No. 10-3288, 2011 WL 2923860, at *4 (E.D. Pa.
July 21, 2011) (citations omitted). In concluding that a

       1
         The enumerated provisions are mail fraud, wire
fraud, bank fraud, securities fraud, “any rule or regulation of
the Securities and Exchange Commission, or any provision of
Federal law relating to fraud against shareholders . . . .” 18
U.S.C. 1514A.




                                7
communication must “definitively and specifically” relate to a
violation of a statute or rule listed in Section 806, the District
Court relied upon the decision of the U.S. Department of
Labor Administrative Review Board (“ARB”) in Platone v.
FLYI, Inc., ARB 04-154, 2006 WL 3246910, at *8 (Dep‟t of
Labor Sept. 29, 2006), aff’d 548 F.3d 322 (4th Cir. 2008), and
court decisions that endorsed Platone‟s “definitive and
specific” standard. Finding that the allegations of the
Complaint failed to satisfy this standard, the District Court
did not reach the other elements of a prima facie Section 806
case, declined to exercise supplemental jurisdiction over the
state law claims, and dismissed the Complaint without
prejudice.

        The District Court‟s Order dismissing the Complaint
granted Wiest leave to file an amended complaint. Rather
than filing an amended complaint, Wiest, on August 10, 2011,
presented a motion entitled “Motion for Reconsideration
Nunc Pro Tunc By the Eastern District Court En Banc of
Judge Pratter Memorandum Opinion of July 21, 2011, Or, In
the Alternative, Motion to Dismiss Plaintiffs‟ Complaint with
Prejudice and Enter a Final Appealable Order and Judgment”
(“Motion for Reconsideration”).          In his Motion for
Reconsideration, Wiest raised for the first time the argument
that the ARB overruled Platone‟s “definitive and specific”
standard in favor of a “reasonable belief” standard in
Sylvester v. Parexel Int’l LLC, ARB 07-123, 2011 WL
2165854, at *11 (Dep‟t of Labor May 25, 2011) (en banc).
Wiest argued that he was entitled to reconsideration because
Sylvester was an intervening change in controlling law, and
that the District Court‟s reliance on the ARB‟s prior Platone
decision was a clear error of law.




                                8
         The District Court disagreed, reasoning that Sylvester
was not an intervening decision because, although the ARB
issued Sylvester after the parties completed briefing on
Tyco‟s Motion to Dismiss, the opinion preceded the District
Court‟s ruling. Additionally, the District Court determined
that Sylvester was not controlling precedent, and that even if
it was binding, reconsideration was not warranted because (1)
its initial decision relied on cases other than Platone, and (2)
Sylvester‟s alteration of the standard for demonstrating
protected activity did not change its conclusion that Wiest
failed to establish that he communicated an objectively
reasonable belief that Tyco‟s conduct violated any statute or
rule listed in Section 806.

      Wiest filed a notice of appeal on November 23, 2011,
to appeal the District Court‟s Order denying his Motion for
Reconsideration. Wiest did not expressly indicate whether he
also was appealing the District Court‟s initial Order
dismissing the Complaint.

                              II.

      The District Court had jurisdiction under 28 U.S.C. §
1331 and we have appellate jurisdiction under 28 U.S.C. §
1291.

                   A.     Procedural Issues

       Before turning to the merits, we must address three
procedural issues. First, Tyco argues that, because Wiest
filed his Motion for Reconsideration twenty days after the
District Court entered its dismissal Order, the Motion was
untimely under E.D. Pa. L.R. 7.1(g), which establishes a




                               9
fourteen day period to file motions for reconsideration.2 As a
result, Tyco asserts that we lack jurisdiction over Wiest‟s
appeal from the District Court‟s denial of reconsideration.

        We see no jurisdictional bar due to Wiest‟s failure to
move for reconsideration within the time constraints
established by a local rule of court. We have recognized that,
in the context of a Federal Rule of Civil Procedure 59(e)
motion to alter or amend a judgment, the prescribed time
limits are claims-processing rules, rather than jurisdictional
rules. Lizardo v. United States, 619 F.3d 273, 276-77 (3d Cir.
2010). If the time limit contained within Rule 59(e) is not
jurisdictional, we cannot see how the time limit contained
within Local Rule 7.1(g) is jurisdictional. In any event, we
need not address the consequences of an untimely motion for
reconsideration under a local rule because we construe
Wiest‟s motion as one under Rule 59(e). See, e.g., Fed.
Kemper Ins. Co. v. Rauscher, 807 F.2d 345, 348 (3d Cir.
1986) (“For purposes of Rule 4(a) of the Federal Rules of
Appellate Procedure, we view a motion characterized only as
a motion for reconsideration as the functional equivalent of a
Rule 59(e) motion to alter or amend a judgment.”) (internal
quotation marks omitted)); see also Green v. Drug
Enforcement Admin., 606 F.3d 1296, 1299 (11th Cir. 2010)
(noting the prevalence of courts construing motions for
reconsideration as Rule 59(e) motions); Auto Servs. Co. v.
KPMG, LLP, 537 F.3d 853, 856 (8th Cir. 2008) (“A „motion
for reconsideration‟ is not described in the Federal Rules of
Civil Procedure, but such a motion is typically construed as

      2
         The District Court noted that the Motion for
Reconsideration was untimely under Local Rule 7.1(g), but
nonetheless decided the motion on the merits.




                             10
either a Rule 59(e) motion to alter or amend the judgment or
as a Rule 60(b) motion for relief from judgment.”). Because
Wiest filed his Motion for Reconsideration within Rule
59(e)‟s twenty-eight day time limit, we conclude that the
motion was timely.

        Tyco also argues that the scope of our review is
limited to the District Court‟s November 2011 Order denying
reconsideration because Wiest did not designate for appeal
the District Court‟s July 2011 Order granting Tyco‟s Motion
to Dismiss. When a party appeals only a specified judgment,
we acquire jurisdiction to review only that judgment or a
judgment “„fairly inferred‟” by the notice of appeal. Sulima
v. Tobyhanna Army Depot, 602 F.3d 177, 184 (3d Cir. 2010)
(quoting Elfman Motors, Inc. v. Chrysler Corp., 567 F.2d
1252, 1254 (3d Cir. 1977)). Yet, we have also held that we
“liberally construe[] notices of appeal.”         Id. (internal
quotations marks omitted). We may exercise appellate
jurisdiction over orders not specified in the notice of appeal
where: “(1) there is a connection between the specified and
unspecified orders; (2) the intention to appeal the unspecified
order is apparent; and (3) the opposing party is not prejudiced
and has a full opportunity to brief the issues.” Id. (internal
quotation marks omitted).

       Here, there is an adequate connection between the
District Court‟s Order denying reconsideration and its
underlying Order granting Tyco‟s Motion to Dismiss because
Wiest requested the District Court to reconsider the legal
standard it applied to his Section 806 claims in the original
dismissal Order. Second, because the two Orders of the
District Court were intertwined, we infer that Wiest intended
to appeal the underlying dismissal Order. Wiest‟s intention




                              11
was apparent in his principal brief, in which he argues that the
District Court erred in granting Tyco‟s Motion to Dismiss
because it relied on the Platone standard rather than Sylvester
and cites the District Court‟s dismissal Order throughout the
brief. Third, we find no prejudice to Tyco in reviewing the
underlying dismissal Order as Tyco has had a full opportunity
to brief the corresponding issues.3 As a result, we exercise
jurisdiction over both the District Court‟s November 2011
Order denying Wiest‟s Motion for Reconsideration and its
July 2011 Order granting Tyco‟s Motion to Dismiss.

        Finally, we also reject Tyco‟s third procedural
argument that Wiest waived any arguments based on
Sylvester because he failed to raise those arguments in his
brief in opposition to Tyco‟s Motion to Dismiss. Although
the District Court noted that Wiest first brought Sylvester to
its attention in his Motion for Reconsideration and that a
motion for reconsideration should not raise new arguments
that the party could have made previously, the District Court
proceeded to address Sylvester in its reconsideration ruling.
The District Court evidently did not deem Wiest to have
waived any arguments based on Sylvester, and neither do we.

                  B.     Standard of Review

      We have held that “a proper Rule 59(e) motion . . .
must rely on one of three grounds: (1) an intervening change
       3
        In addition, we have also held more plainly that “[a]
timely appeal from a denial of a Rule 59 motion to alter or
amend „brings up the underlying judgment for review.‟” Fed.
Kemper Ins. Co. v. Rauscher, 807 F.2d 345, 348 (3d Cir.
1986) (quoting Quality Prefabrication, Inc. v. Daniel J.
Keating Co., 675 F.2d 77, 78 (3d Cir. 1982)).




                              12
in controlling law; (2) the availability of new evidence; or (3)
the need to correct clear error of law or prevent manifest
injustice.” Lazaridis v. Wehmer, 591 F.3d 666, 669 (3d Cir.
2010) (citing N. River Ins. Co. v. CIGNA Reinsurance Co., 52
F.3d 1194, 1218 (3d Cir. 1995)). We generally review a
district court‟s denial of reconsideration for abuse of
discretion. Max’s Seafood Cafe v. Quinteros, 176 F.3d 669,
673 (3d Cir. 1999) (citing N. River Ins., 52 F.3d at 1203). An
“errant conclusion of law, an improper application of law to
fact, or a clearly erroneous finding of fact” may result in an
abuse of discretion. McDowell v. Phila. Housing Auth., 423
F.3d 233, 238 (3d Cir. 2005). More specifically, when a
district court predicates its denial of reconsideration on an
issue of law, our review is plenary, and when it bases its
denial on an issue of fact, we review for clear error. Id.

       In addition, we review a district court‟s dismissal
pursuant to Rule 12(b)(6) de novo. Phillips v. Cnty. of
Allegheny, 515 F.3d 224, 230 (3d Cir. 2008). In Long v.
Atlantic City Police Department, 670 F.3d 436 (3d Cir. 2012),
we concluded that the standards of review for an underlying
dismissal order and for the denial of a motion for
reconsideration of the dismissal order are functionally
equivalent, because we exercise plenary review of the
dismissal order as well as of the legal questions in the denial
of reconsideration. Id. at 446 & n.20, 447. Because the issue
here is whether the District Court applied the correct legal
standard to a claim under Section 806 of SOX, our review is
plenary regardless of whether we review the District Court‟s
application of the standard in its initial dismissal Order or its
subsequent Order denying reconsideration.

    C. Whistleblower Claims Under Section 806 of SOX




                               13
      SOX Section 806 prohibits publicly traded companies
and their employees from retaliating against an employee
who

             provide[s] information, cause[s]
             information to be provided, or
             otherwise     assist[s]     in   an
             investigation      regarding    any
             conduct which the employee
             reasonably believes constitutes a
             violation of section 1341[mail
             fraud], 1343 [wire, radio, or
             television fraud], 1344 [bank
             fraud], or 1348 [securities and
             commodities fraud], any rule or
             regulation of the Securities and
             Exchange Commission, or any
             provision of Federal law relating
             to fraud against shareholders,
             when the information is provided
             to or the investigation is
             conducted by . . . a person with
             supervisory authority over the
             employee (or such other person
             working for the employer who has
             the authority to investigate,
             discover,        or        terminate
             misconduct) . . . .



18 U.S.C. § 1514A. To establish a prima facie case for a
Section 806 claim, the employee must allege that he or she
(1) “engaged in a protected activity;” (2) “[t]he respondent




                             14
knew or suspected that the employee engaged in the protected
activity;” (3) “[t]he employee suffered an adverse action;”
and (4) “[t]he circumstances were sufficient to raise the
inference that the protected activity was a contributing factor
in the adverse action.” 29 C.F.R. § 1980.104(e)(2)(i)-(iv).

        Section 806 provides that an employee alleging
discrimination in violation of SOX may file a complaint with
the Secretary of Labor, who may issue a final order. 18
U.S.C. § 1514A(b)(1)(A), (2) (incorporating the Department
of Labor complaint procedures under 49 U.S.C. § 42121(b)).
If the Secretary fails to issue a final decision within 180 days
of the filing of the complaint, the complainant may also file a
civil action in federal district court. Id. § 1514A(b)(1)(B).
The Secretary of Labor has delegated the authority to review
appeals under Section 806 and issue final agency decisions to
the ARB. Delegation of Authority and Assignment of
Responsibility to the Administrative Review Board, 75 Fed.
Reg. 3924, 3924-25 (Jan. 25, 2010).

       Focusing on the “protected activity” prong in its
Memorandum accompanying its Order granting Tyco‟s
Motion to Dismiss, the District Court invoked the ARB‟s
opinion in Platone and concluded that “[f]or a
communication to be protected, it must „definitively and
specifically‟ relate to one of the statutes or rules listed in”
Section 806. Wiest, 2011 WL 2923860, at *4. The Court of
Appeals cases cited by the District Court in support of its
application of the “definitive and specific” standard either
relied upon or cited with approval Platone‟s standard. See
Van Asdale v. Int’l Game Tech., 577 F.3d 989, 996-97 (9th
Cir. 2009) (deferring to Platone‟s “definitive and specific”
standard as a reasonable interpretation of the statute); Day v.




                              15
Staples, Inc., 555 F.3d 42, 55 (1st Cir. 2009) (quoting the
Fourth Circuit‟s opinion affirming the ARB‟s decision in
Platone in which the court employed the “definitive and
specific” standard); Allen v. Admin. Review Bd., 514 F.3d
468, 476-77 (5th Cir. 2008) (“We agree with the ARB‟s legal
conclusion that an employee‟s complaint must „definitively
and specifically relate‟ to one of the six enumerated
categories found in” Section 806).

        In Sylvester, however, the ARB abandoned the
“definitive and specific” standard announced in Platone.
Sylvester, 2011 WL 2165854, at *15. The ARB noted that
the test adopted in Platone originated in cases under the
whistleblower provision in the Energy Reorganization Act, 42
U.S.C. § 5851 (“ERA”). Id. at *14. The ARB explained that,
in addition to enumerating specific activities for which
employers cannot retaliate against employees, the
whistleblower provision of the ERA contains a catch-all
provision to protect employees who “assist or participate in „a
proceeding ... or any other action [designed] to carry out the
purposes of this chapter or the Atomic Energy Act of 1954, as
amended.”      Id. (quoting 42 U.S.C. § 5851(a)(1)(F)).
According to the ARB, because the ERA does not define “any
other action to carry out the purposes of this chapter,” courts
interpreted that phrase to require that an employee‟s activity
definitively and specifically implicate safety because of the
ERA‟s purpose of protecting employee actions involving
nuclear safety. Id.

       As the ARB recognized in Sylvester, the SOX
whistleblower provision does not contain language similar to
the ERA‟s catch-all provision. Id. Instead, it expressly
enumerates the laws and rules to which it applies. Therefore,




                              16
the ARB concluded that the importation of the definitive and
specific standard is “inapposite to the question of what
constitutes protected activity under SOX‟s whistleblower
protection provision.” Id. Moreover, the ARB determined
that the definitive and specific standard potentially conflicts
with the statutory language of Section 806, which prohibits
retaliation against employees for reporting information that he
or she reasonably believes violates SOX. Id.4


       4
         In decisions issued subsequent to Sylvester, the ARB
has asserted that the definitely and specifically standard does
in fact conflict with the language of Section 806. See Zinn v.
Am. Commercial Lines, Inc., ARB No. 10-029, 2012 WL
1102507, at *4 n.33 (Dep‟t of Labor March 28, 2012) (“[T]he
„definitive and specific‟ standard employed in prior ARB
cases is inconsistent with the statutory language of Section
806.”); Prioleau v. Sikorski Aircraft Corp., ARB No. 10-060,
2011 WL 6122422, at *6 n.3 (Dep‟t of Labor Nov. 9, 2011)
(“In Sylvester, we made clear that the “definitive and
specific” standard that the ARB had employed in prior ARB
cases . . . was inconsistent with Section 806‟s statutory
language.”); Reamer v. Ford Motor Co., ARB No. 09-053,
2011 WL 3307575, at *3 n.3 (noting that the ARB “has
criticized the use of „definitively and specifically‟ as a
standard for an employee‟s reasonable belief of a violation of
the laws listed under Section 806.”); Inman v. Fannie Mae,
ARB No. 08-060, 2011 WL 2614298, at *6 (Dep‟t of Labor
June 28, 2011) (finding error in the ALJ‟s use of the
“definitive and specific” standard because it is inconsistent
with the statutory language of Section 806); Mara v. Sempra
Energy Trading, LLC, ARB No. 10-051, 2011 WL 2614345,
at *7 (Dep‟t of Labor June 28, 2011) (same).




                              17
        SOX does not define what constitutes a “reasonable
belief.” The ARB interprets the phrase to require that the
plaintiff have a subjective belief that the employer‟s conduct
violates a provision listed within Section 806 and that the
belief is objectively reasonable. Id. at *11-12. Indeed, as the
ARB noted in Sylvester, the legislative history of Section 806
provides that Congress intended this reasonable belief
standard to “impose the normal reasonable person standard
used and interpreted in a wide variety of legal contexts (See
generally, Passaic Valley Sewerage Commissioners v. U.S.
Department of Labor, 992 F.2d 474, 478 [3d Cir. 1993]).” Id.
at *11 (quoting S. Rep. No. 107-146, at 19 (2002)).

        The ARB opined that to meet the subjective element,
the plaintiff must actually have believed that the conduct in
question violated the laws enumerated in SOX. Id. The ARB
explained that “the legislative history of Sarbanes-Oxley
makes clear that its protections were „intended to include all
good faith and reasonable reporting of fraud, and there should
be no presumption that reporting is otherwise.‟”             Id.
(alteration omitted) (quoting Van Asdale v. Int’l Game Tech.,
577 F.3d 989, 1002 (9th Cir. 2009) (quoting 148 Cong. Rec.
S7418-01, (daily ed. July 26, 2002))). Regarding the
objective element, the ARB clarified that the plaintiff‟s belief
“is evaluated based on the knowledge available to a
reasonable person in the same factual circumstances with the
same training and experience as the aggrieved employee.” Id.
at *12 (quoting Harp v. Charter Commc’ns, Inc., 588 F.3d
722, 723 (7th Cir. 2009)).

       We conclude that the ARB‟s rejection of Platone‟s
“definitive and specific” standard is entitled to Chevron
deference. See Chevron, U.S.A., Inc. v. Natural Res. Def.




                              18
Council, 467 U.S. 837, 842-43 (1984) (“If . . . the court
determines Congress has not directly addressed the precise
question at issue . . . the question for the court is whether the
agency‟s answer is based on a permissible construction of the
statute.”). As previously discussed, Section 806 provides that
an employee seeking whistleblower protection under SOX
may file a complaint with the Secretary of Labor, who may
issue a final order. 18 U.S.C. § 1514A(b)(1)(A). The
Secretary of Labor has delegated the authority to review
appeals under Section 806 and issue final agency decisions to
the ARB. Delegation of Authority and Assignment of
Responsibility to the Administrative Review Board, 75 Fed.
Reg. 3924, 3924-25 (Jan. 25, 2010). In United States v. Mead
Corp., 533 U.S. 218 (2001), the Supreme Court recognized
that “express congressional authorizations to engage in the
process of . . . adjudication that produces . . . rulings for
which deference is claimed,” is “a very good indicator of
delegation meriting Chevron treatment . . . .” Id. at 229. The
Court further explained that “[i]t is fair to assume generally
that Congress contemplates administrative action with the
effect of law when it provides for a relatively formal
administrative procedure,” including formal adjudication. Id.
at 230 & n.12. Applying Mead, the Ninth Circuit held that
the ARB‟s interpretation of Section 806 warranted Chevron
deference based on this statutory and administrative
delegation. Welch v. Chao, 536 F.3d 269, 276 & n.2 (9th Cir.
2008). We agree and hold that the ARB‟s interpretation of
the “reasonable belief” standard is entitled to Chevron
deference.

       The fact that the ARB reconsidered and abandoned the
“definitive and specific” standard does not preclude our
deference to the reasonable belief standard it subsequently




                               19
announced in Sylvester.           In National Cable &
Telecommunications Ass’n v. Brand X Internet Services, 545
U.S. 967 (2005), the Court explained that “[a]gency
inconsistency is not a basis for declining to analyze the
agency‟s interpretation under the Chevron framework.” Id. at
981. The Court elaborated that “if the agency adequately
explains the reasons for a reversal of policy, change is not
invalidating, since the whole point of Chevron is to leave the
discretion provided by the ambiguities of a statute with the
implementing agency.”        Id. (internal quotation marks
omitted). Here, the ARB thoroughly explained why it
reversed the course it previously set in Platone. See
Sylvester, 2011 WL 2165854, at *14-15. Therefore, Chevron
deference applies.

       While agreeing that the definitive and specific standard
should be jettisoned, amicus curiae National Whistleblower
Center (“NWC”) contends that the objective belief standard
established in Sylvester is too stringent. NWC argues that
Section 806 protects an employee as long as he or she has a
good faith belief in the existence of a violation. For support,
NWC relies on our decision in Passaic Valley Sewerage
Commissioners v. U.S. Department of Labor, 992 F.2d 474
(3d Cir. 1993).

       In Passaic Valley, we interpreted the whistleblower
provision of the Clean Water Act, which protects employees
who have “filed, instituted, or caused to be filed or instituted
any proceeding under” the Clean Water Act. Id. at 478
(quoting 33 U.S.C. § 1367(a)). At issue was whether the term
“proceeding” included internal complaints. Id. at 475. We
noted that, if the whistleblower provision was to accomplish
the goals of the statute, then “employees must be free from




                              20
threats to their job security in retaliation for their good faith
assertions of corporate violations of the statute.” Id. at 478.
Affording Chevron deference to the Secretary‟s
interpretation, we upheld his construction that “all good faith
intracorporate allegations are fully protected from retaliation
under” the Clean Water Act‟s whistleblower provision. Id. at
480.

        Because the legislative history of Section 806
references Passaic Valley in stating Congress‟s intention “to
impose the normal reasonable person standard used and
interpreted in a wide variety of legal contexts,” S. Rep. No.
107-146, at 19 (2002), NWC contends that Congress intended
to adopt Passaic Valley‟s good faith belief test as the only
standard to meet in bringing a claim under Section 806. We
disagree. First, at issue in Passaic Valley was the meaning of
the term “proceeding,” Passaic Valley, 992 F.2d at 478, not
the phrase “reasonably believes.” As a result, its standard
does not control the issue at hand. Second, a good faith belief
goes to the employee‟s subjective belief that a violation
occurred, which is only one element of the reasonable belief
standard applicable to Section 806. Therefore, whatever
guidance Passaic Valley provides, it relates only to the
subjective element of a reasonable belief test. As explained
in Sylvester, the reasonable belief standard also includes an
objective element. Sylvester, 2011 WL 2165854, at *11. As
we did in Passaic Valley, and as explained above, we defer to
the administering agency‟s reasonable interpretation of the
statute. As a result, an employee must establish not only a
subjective, good faith belief that his or her employer violated
a provision listed in SOX, but also that his or her belief was
objectively reasonable. Id. at *11. A belief is objectively
reasonable when a reasonable person with the same training




                               21
and experience as the employee would believe that the
conduct implicated in the employee‟s communication could
rise to the level of a violation of one of the enumerated
provisions in Section 806. Id. at *11-12.

        The Dissent contends that we have adopted an
internally inconsistent test by recognizing that an employee
must have an objectively reasonable belief of a violation of
one of the listed federal laws but not a reasonable belief that
each element of a listed anti-fraud law is satisfied. We
perceive no inconsistency because we do not think Congress
intended such a formalistic approach to the question of
whether an employee has engaged in “protected activity.” As
so aptly stated by our dissenting colleague, the purpose of
“[w]histleblower statutes like SOX § 806 [is] to protect
people who have the courage to stand against institutional
pressures and say plainly, „what you are doing here is wrong‟
. . . in the particular way identified in the statue at issue.”
(Dissenting Op. Typescript at 1.) By identifying conduct that
falls within the ample bounds of the anti-fraud laws, an
employee has done just that. That employee should not be
unprotected from reprisal because she did not have access to
information sufficient to form an objectively reasonable
belief that there was an intent to defraud or the information
communicated to her supervisor was material to a
shareholder‟s investment decision. “Congress chose statutory
language which ensures that „an employee‟s reasonable but
mistaken belief that an employer engaged in conduct that
constitutes a violation of one of the six enumerated categories
[set forth in § 806] is protected.‟” Van Asdale, 577 F.3d at
1001 (quoting Allen, 514 F.3d at 477). An employee‟s lack
of knowledge of certain facts that pertain to an element of one
of the anti-fraud laws would be relevant to, but not dispositive




                              22
of, whether the employee did have an objectively reasonable
belief that a listed anti-fraud law had been violated. Indeed,
whether an employee has an objectively reasonable belief
may not always be decided as a matter of law. See Allen, 514
F.3d at 477-78. Indeed, this issue would generally not be
amenable to adjudication on the basis of the averments of a
complaint that concerns a communication that relates in an
understandable way to one of the anti-fraud provisions listed
in § 806.

       In addition to rejecting the definitive and specific
standard that the District Court relied upon in granting Tyco‟s
Motion to Dismiss, Sylvester conflicts with two additional
legal conclusions reached by the District Court relating to
protected activity under Section 806. First, in dismissing
Wiest‟s Complaint, the District Court concluded that an
“employee‟s communication must convey that his concern
with any alleged misconduct is linked to „an objectively
reasonable belief that the company intentionally
misrepresented or omitted certain facts to investors, which
were material and which risked loss.‟” Wiest, 2011 WL
2923860, at *4 (quoting Day v. Staples, Inc., 555 F.3d 42, 56
(1st Cir. 2009)). Sylvester expressly rejected such an
interpretation.     Observing that “[s]ome courts have
misinterpreted [Platone‟s] analysis as a requirement that SOX
complainants must allege elements of a securities fraud claim
for protection,”     the ARB reasoned that “requiring a
complainant to prove or approximate the specific elements of
a securities law violation contradicts the statute‟s requirement
that an employee have a reasonable belief of a violation of the
enumerated statues.” Sylvester, 2011 WL 2165854, at *18.
The ARB further explained, “a complainant can engage in
protected activity under Section 806 even if he or she fails to




                              23
allege or prove materiality, scienter, reliance, economic loss,
or loss causation.” Id. We find this interpretation to be
reasonable because there is nothing in the statutory text that
suggests that a complainant‟s communications must assert the
elements of fraud in order to express a reasonable belief that
his or her employer is violating a provision listed in Section
806. Therefore, the District Court erred by requiring that an
employee‟s communication reveal the elements of securities
fraud, including intentional misrepresentation and materiality.

        Second, the District Court concluded that to constitute
protected activity, the information contained within an
employee‟s communication must implicate “a reasonable
belief of an existing violation.” Wiest, 2011 WL 2923860, at
*4 (emphasis added) (citing Livingston v. Wyeth, 520 F.3d
344, 352 (4th Cir. 2008)). Sylvester rejected this requirement
as well. The ARB held that Section 806 protects an
employee‟s communication about a violation that has not yet
occurred “as long as the employee reasonably believes that
the violation is likely to happen.” Sylvester, 2011 WL
2165854, at *13.        We find this interpretation of the
“reasonably believes” statutory phrase, 18 U.S.C. §
1514A(a)(1), to be reasonable given the statute‟s purpose to
combat corporate wrongdoing. See S. Rep. No. 107-146, at 5
(2002) (“Th[e] „corporate code of silence‟ not only hampers
investigations, but also creates a climate where ongoing
wrongdoing can occur with virtual impunity.”). It would
frustrate that purpose to require an employee, who knows that
a violation is imminent, to wait for the actual violation to
occur when an earlier report possibly could have prevented it.

       Contrary to our dissenting colleague‟s assertion, we
are not “ignor[ing] the need for a whistleblower‟s employer to




                              24
actually perceive that a whistle has been blown.” (Dissenting
Op. Typescript at 4.) We agree with the Dissent that, in order
for an employer to “know or suspect that the whistleblower-
plaintiff is engaged in protected conduct . . . the plaintiff‟s
intra-corporate communications [must] relate in an
understandable way to one of the stated provisions of federal
law [in § 806].”           (Id.)    But the whistleblower‟s
communication need not ring the bell on each element of one
of the stated provisions of federal law to support an inference
that the employer knew or suspected that the plaintiff was
blowing the whistle on conduct that may fall within the ample
reach of the anti-fraud laws listed in § 806. To hold that an
employer could not have suspected that the plaintiff was
engaged in protected activity because the communication did
not recite facts showing an objectively reasonable belief in
the satisfaction of each element of one of the listed anti-fraud
provisions would eviscerate § 806. An employee may not
have access to information necessary to form a judgment on
certain elements of a generic fraud claim, such as scienter or
materiality, and yet have knowledge of facts sufficient to alert
the employer to fraudulent conduct. When an employee
communicates these facts to a supervisor, the employer has a
sufficient basis to suspect that the employee is protected
against reprisal for communicating that information.

       Moreover, whether an employee‟s communication is
indeed “protected activity” under § 806 is distinct from
whether the employer had reason to suspect that the
communication was protected.            To show that the
communication is protected, the employee must have both a
subjective and an objective belief that the conduct that is the
subject of the communication relates to an existing or
prospective violation of one of the federal laws referenced in




                              25
§ 806. The communication itself need not reveal all the facts
that would cause a reasonable person with the
whistleblower‟s training and background to conclude that a
referenced federal law has been or will be violated. That
determination should be based upon all the attendant
circumstances, and not be limited to the facts conveyed by a
whistleblower to the employer. If the communication itself
had to convey facts sufficient to support an objectively
reasonable belief of a violation of one of the referenced laws,
Congress would not have imposed liability upon an employer
who merely “suspected” that the communication is protected
from reprisal.

        In this case, the District Court did not decide this
matter on the ground that Wiest‟s pleadings failed to support
a plausible inference that Tyco knew or suspected that Wiest
had engaged in protected activity. Instead, the District Court
decided that Wiest‟s Complaint was inadequate because the
communications did not “definitively and specifically” relate
to a statute or rule listed in § 806 and failed to articulate facts
that supported a reasonable belief of actionable fraudulent
conduct directed at investors. Consistent with according
Chevron deference to the ARB‟s holding in Sylvester, we
have found that the standards used by the District Court were
too stringent. We now turn to Wiest‟s Complaint to ascertain
whether it states a § 806 claim for relief under the standard
announced in Sylvester.

D.     Application of Sylvester‟s Reasonable Belief Standard

       Although we hold that the District Court applied the
wrong legal standard in analyzing Wiest‟s claims under
Section 806, dismissal is still appropriate if Wiest
nevertheless failed to plead sufficient facts to state a claim.




                                26
See Tourscher v. McCullough, 184 F.3d 236, 240 (3d Cir.
1999) (“We may affirm the district court on any ground
supported by the record.”). “To survive a motion to dismiss,
a complaint must contain sufficient factual matter, accepted
as true, to state a claim to relief that is plausible on its face.”
McTernan v. City of York, Pa., 577 F.3d 521, 530 (3d Cir.
2009) (alteration omitted) (quoting Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (internal quotation marks omitted).

               1.      The Atlantis Resort Event

       The Complaint alleges that Wiest refused to process a
payment for and questioned the legitimacy of an extravagant
event to be held at the Atlantis Resort. In particular, in a June
3, 2008 email to his supervisor, Wiest explained, among other
concerns, that “[a]s submitted, the costs are charged entirely
to advertising expense which seems inappropriate and does
not address the issue of breaking out the meals and
entertainment portions which we feel would fall into the 50%
deductibility classification for tax purposes.” (App. 84, Ex.
E.) The Complaint also alleges that Wiest, like many others,
was aware of a similar event held during Kozlowski‟s tenure.
Wiest‟s email to his supervisor expressed his concerns about
Tyco treating the costs of the event as business expenses and
his belief that certain costs should be treated as income for the
guests. Because of his communication, a review of the
expenses revealed that if Tyco had processed the transaction
as originally submitted, it “would have resulted in a
misstatement of accounting records and a fraudulent tax
deduction . . . .” (App. 43, ¶ 35.)

       These facts are sufficient to support a plausible
inference that Wiest reasonably believed that Tyco‟s conduct
would violate one of the provisions in Section 806 because he




                                27
foresaw a potentially fraudulent tax deduction and
misstatement of accounting records if he did not bring that
information to the attention of his supervisors. Furthermore,
Tyco‟s decision to “gross-up” its employees‟ income by
compensating them for extra tax liabilities due to the Atlantis
trip not being considered a business expense also plausibly
created a reasonable belief in Wiest that a SOX violation
would occur, given Wiest‟s familiarity with Kozlowski
having used the “grossing-up” method during the Tyco
scandal.

        We find that the alleged facts show not only that Wiest
subjectively believed that Tyco‟s conduct may have violated
a provision listed in Section 806, but also support an
inference that his belief was objectively reasonable. A
reasonable person in Wiest‟s position who had seen the
expense request for the extravagant Atlantis event could have
believed that treating the Atlantis event as a business expense
violated a provision of Section 806, especially given the
scrutiny Tyco received during the Tyco International scandal
under Kozlowski. We find, therefore, that Wiest pled
sufficient facts to establish that his communication relating to
the Atlantis event was protected activity under Section 806.
As a result, we reverse the District Court‟s dismissal Order
with respect to Wiest‟s communication relating to the Atlantis
event.5


       5
         The Dissent asserts that the accounting treatment of
the Atlantis event does not suggest fraudulent conduct,
characterizing the manner in which the event‟s expenses were
originally to be treated as an “error” or “mistake.”
(Dissenting Op. Typescript at 16 n.12.) That characterization




                              28
              2.     The Venetian Resort Event

       Wiest also alleges that he directed an expense request
for an event at the Venetian Resort to be held while the tax
department evaluated the business purpose of the event and
until his department received proper documentation and
accounting treatment. After receiving a revised agenda, the
tax department eventually approved the event as a business
expense. In an email chain attached to the Complaint relating
to the Venetian event, the only reference to Wiest indicates
that he asked his subordinate to forward a colleague
additional information that Wiest‟s department had received
about the event. That particular email also reveals that
although the accounts payable department requested
additional review of the expenses, the department “believe[d]
the information provided substantiates this [event] as a
business expense . . . .” (App. 114, Ex. M.)


ignores the fact that we are dealing solely with the allegations
of a complaint, which must be viewed in the light most
favorable to Wiest. See Phillips, 515 F.3d at 233 (holding
that, in the wake of Bell Atlantic Corp. v. Twombly, 550 U.S.
544 (2007), courts are still correct to “construe the complaint
in the light most favorable to the plaintiff, and [to] determine
whether, under any reasonable reading of the complaint, the
plaintiff may be entitled to relief” (internal quotation marks
omitted)). In any event, the issue is not whether the
contemplated accounting treatment was or was not part of a
scheme to defraud. The issue is whether such accounting
treatment could reasonably be believed by Wiest to be
fraudulent. Given the Kozlowski scandal, a jury could find
that Wiest reasonably believed that the sins of Kozlowski
were being repeated.




                              29
       Even if the facts in the Complaint established that
Wiest subjectively believed the expense request for the
Venetian event could have violated a provision in Section
806, we conclude that, objectively, a reasonable person in
Wiest‟s position would not have believed that the expense
request that initially lacked a detailed agenda and breakdown
of expenses would constitute a violation of one of the
provisions listed in Section 806. Therefore, we affirm the
District‟s dismissal Order with respect to Wiest‟s
communications relating to the Venetian event.

            3.     The Wintergreen Resort Event

        Regarding the $355,000 event that took place at the
Wintergreen Resort, Wiest alleges that the initial invoice
lacked sufficient documentation and accounting breakdowns.
In addition, Wiest alleges that a planned attendee of the event
had approved the request instead of Defendant Thomas
Lynch, the CEO, as required by Tyco‟s delegation of
authority. Emails relating to the event show that Wiest twice
indicated to management that Lynch needed to approve the
request. In the first email, Wiest requested clarification from
the CFO, Defendant Terrence Curtin, that he was approving
the entire cost of the event and asked that Curtin copy Lynch
on his response to communicate his approval. After Curtin
apparently responded by giving his approval without copying
Lynch, Wiest then emailed his supervisor reiterating that he
still believed that Lynch should be informed about the matter
because Curtin could only approve up to $100,000 for events.
Curtin failed to copy Lynch.

      The averments of the Complaint support an inference
that Wiest subjectively believed that the lack of the CEO‟s
approval, which contravened internal control procedures,




                              30
would violate one of the provisions enumerated in Section
806. Furthermore, it is plausible that a reasonable person in
Wiest‟s position could have believed that the event‟s approval
by an attendee of the event, who would therefore directly
benefit from that approval, instead of by the CEO as required
by internal control procedures, may have violated one of the
provisions contained in Section 806.6 Therefore, we reverse
the District Court‟s dismissal Order with respect to Wiest‟s
communications relating to the Wintergreen event.

                     4.     Other Matters

      Wiest emailed management in 2007 about an
employee who submitted improper expenses to inform
management that if it wished to claim the expenses as
business expenses then either Tyco would have to be
reimbursed or the charges would have to be reported as
income for the employee. The allegation and corresponding

       6
           The Dissent questions whether unauthorized
expenditures for the Wintergreen Resort event could support
a claim under one of the anti-fraud laws listed in § 806.
Approval authorities exist to ensure that large expenditures
are undertaken for appropriate business purposes.
Expenditures for which required approvals have not been
obtained raise the specter that they are not undertaken for an
appropriate business purpose. Once again, such expenditures
could plunder corporate assets for the benefit of those
attending lavish events, masking personal income. We
believe that the Complaint alleges sufficient facts to plausibly
support an inference that Wiest had an objectively reasonable
belief that the absence of the CEO‟s authorization for the
Wintergreen Resort Event was part of a fraudulent scheme.




                              31
email show only that Wiest explained to management the
potential tax consequences relating to the expenses. Without
more, the Complaint lacks sufficient facts to establish that
Wiest reasonably believed that Tyco‟s handling of the matter
constituted a violation of a law listed in Section 806.

       In addition, Wiest alleges that he “raised questions”
about proper accounting treatment of other events that
occurred between late 2007 and September 2009, including a
“lavish” holiday party, a team meeting that did not break out
entertainment and meal expenses, and a baby shower for an
employee. Aside from stating that it took several attempts to
confirm that the baby shower would be treated as a business
expense, Wiest fails to allege any facts suggesting that he
reasonably believed these events violated an enumerated
provision in Section 806. The Complaint does not specify
anything about the nature or content of his communications.
By itself, the allegation that Wiest “raised questions” does not
create a plausible inference that he or any reasonable person
in his position would believe that expenditures on the events
rose to the level of a violation of a provision in Section 806.
As a result, we affirm the District Court‟s dismissal Order
with respect to Wiest‟s communications relating to the
improper business expense claims of an individual employee
as well as the holiday party, team meeting, and baby shower
events.

                              III.

        In sum, we hold that the reasonable belief test is the
appropriate standard with which to analyze the
communications that Wiest contends constitute “protected
activity.” As explained in Sylvester, that standard requires
that an employee‟s communication reflect a subjective and




                              32
objectively reasonable belief that his employer‟s conduct
constitutes a violation of an enumerated provision in Section
806.     The District Court erred in dismissing Wiest‟s
Complaint by employing the “definitive and specific”
standard, by interpreting Section 806 to require that an
employee‟s alleged “protected activity” reveal the elements of
securities fraud, and by requiring that his or her
communication reference an existing violation. We find that
Wiest has pled adequate facts to show that his
communications relating to the Atlantis and Wintergreen
events were protected activity under Section 806. We agree
with the District Court, however, that Wiest cannot establish
that his communications relating to the other alleged matters
constituted protected activity.

        For the foregoing reasons, we reverse the District
Court‟s Order denying Wiest‟s Motion for Reconsideration.
See McDowell v. Phila. Housing Auth., 423 F.3d 233, 238 (3d
Cir. 2005) (explaining that an errant conclusion of law may
result in an abuse of discretion). We also reverse the District
Court‟s Order granting Tyco‟s Motion to Dismiss as to
Wiest‟s communications relating to the Atlantis and
Wintergreen events and affirm the dismissal as to Wiest‟s
communications relating to the other events.7 We remand
this matter to the District Court for further proceedings
consistent with this opinion.




      7
        In light of the reinstatement of the SOX Section 806
claims, the District Court‟s decision to decline to exercise
supplemental jurisdiction will be vacated.




                              33
Wiest, et al. v. Lynch, et al., No. 11-4257

JORDAN, Circuit Judge, Dissenting

        Because I believe the District Court properly
determined that the Wiests failed to establish that Mr. Wiest
held or communicated an objectively reasonable belief that
the actions of Tyco officials constituted a violation of one or
more of the laws referenced in § 806 of the Sarbanes-Oxley
Act of 2002 (“SOX”), Pub. L. No. 107-204, 116 Stat. 745
(codified at 18 U.S.C. § 1514A), I respectfully dissent.

       Whistleblower statutes like SOX § 806 seek to protect
people who have the courage to stand against institutional
pressures and say plainly, “what you are doing here is wrong”
– not wrong in some abstract or philosophical way, but wrong
in the particular way indentified in the statute at issue. See
Day v. Staples, Inc., 555 F.3d 42, 55 (1st Cir. 2009)
(requiring that an employee‟s Section 806 complaint “be
measured against the basic elements of the laws specified in
the statute”). The protection of § 806 depends upon the
whistleblower identifying wrongdoing made illegal by federal
laws targeting fraud, especially fraud against the holders of
publicly traded securities. To qualify as a whistleblower
under § 806, the employee must have provided information
regarding conduct “which the employee reasonably believes
constitutes a violation of [18 U.S.C. §§] 1341 [mail fraud],
1343 [wire fraud], 1344 [bank fraud], or 1348 [securities
fraud], any rule or regulation of the Securities and Exchange
Commission, or any provision of Federal law relating to fraud
against shareholders … .” 18 U.S.C. § 1514A(a)(1). Section
806 thus defines protected conduct not by reference to the




                                1
statute in which it is contained,1 but by reference to four
federal fraud statutes, SEC rules and regulations, and other
federal law that is circumscribed as “relating to fraud against
shareholders.”

        As the Majority notes, the elements of a § 806
retaliation claim are that (1) the employee “engaged in a
protected activity,” (2) the employer “knew or suspected that
the employee engaged in the protected activity,” (3) the
employee “suffered an adverse action,” and (4) the
circumstances were “sufficient to raise the inference that the

       1
         In contrast to § 806, other whistleblower statutes
often identify the targeted wrongdoing within the same
statutory scheme. See, e.g., 42 U.S.C. § 7622(a)(1) (defining
protected conduct pursuant to the Clean Air Act as having
“commenced, caused to be commenced, or [to be] about to
commence ... a proceeding” under the Act or testifying or
assisting in such a proceeding); 42 U.S.C. § 5851(a)(1)
(defining protected conduct pursuant to the Energy
Reorganization Act as having notified an employer of a
violation of the Act, refusing to engage in practices prohibited
by the Act, or commencing or testifying in a proceeding
regarding violations of the Act); 30 U.S.C. § 815(c)(1)
(defining protected conduct pursuant to the Federal Mine
Safety and Health Act as having “filed or made a complaint
under or related to” the Act); 29 U.S.C. § 158(a)(4) (defining
protected conduct pursuant to the National Labor Relations
Act as having “filed charges or given testimony” under the
Act); 31 U.S.C. § 3730(h)(1) (defining protected conduct
under the False Claims Act as “lawful acts done by the
employee[] ... in furtherance of an action under [the Act] or
other efforts to stop 1 or more violations of [the Act]”).




                               2
protected activity was a contributing factor in the adverse
action.” 29 C.F.R. § 1980.104(e)(2); see also Day, 555 F.3d
at 53 (noting that the “requirements for a prima facie [§ 806]
case are articulated in the DOL regulations” (citing 29 C.F.R.
§ 1980.104)). For purposes of the first, second, and fourth
elements, the term “protected activity” means “to provide
information, cause information to be provided, or otherwise
assist in an investigation regarding any conduct which the
employee reasonably believes constitutes a violation of” one
of the laws referenced in § 806. 11 U.S.C. § 1514A(a)(1).
To establish a reasonable belief that such a violation has
taken place, “an employee must show that he had both a
subjective belief and an objectively reasonable belief that the
conduct he complained of constituted a violation of relevant
law.” Welch v. Chao, 536 F.3d 269, 275 (4th Cir. 2008)
(internal quotation marks omitted). Thus, general allegations
of misconduct by corporate officers, even if that misconduct
relates to financial matters, are not sufficient to state a § 806
claim. See Day, 555 F.3d at 56-57 (noting that “violations of
„general accounting principles‟” do not constitute
“shareholder fraud” that gives rise to SOX-protected activity).

        The second element of a SOX retaliation claim
confirms that conclusion. It is difficult to see how a
defendant, such as a whistleblower‟s supervisor, can know or
suspect that the whistleblower-plaintiff is engaged in
protected conduct if the plaintiff‟s intra-corporate
communications do not relate in an understandable way to
one of the stated provisions of federal law. What matters is
not what is locked inside the plaintiff‟s mind or how the
plaintiff may later describe his actions; it is what is
communicated to the employer that counts. See Welch, 536
F.3d at 277 (“[T]he relevant inquiry is what an employee




                               3
actually communicated to [his] employer prior to the ...
termination; it is not what [is] alleged in [the employee‟s]
OSHA complaint.”          (alterations in original) (internal
quotation marks omitted)). Both the Department of Labor‟s
Administrative Review Board (“ARB”) and the Majority
effectively bypass that element of a SOX retaliation claim and
concentrate their focus on the complainant‟s frame of mind
and after-the-fact spin. In doing so, they ignore the need for a
whistleblower‟s employer to actually perceive that a whistle
has been blown.2

        The imperative that the whistleblower sound off with
clarity was the subject of the ARB‟s opinion in Platone v.
FLYi, Inc., 25 IER Cases 278 (Sept. 29, 2006). That opinion,
the reasoning of which was adopted by several courts of
appeals,3 required that “the [complaining] employee‟s

       2
          The Majority contends that “whether an employee‟s
communication is indeed „protected activity‟ under § 806 is
distinct from whether the employer had reason to suspect that
the communication was protected.” (Majority Op. at 25.)
That, however, is contradicted by what the Majority
acknowledges is the second element of a § 806 claim, namely
that the employer “knew or suspected that the employee
engaged in the protected activity.” (Id. at 15 (internal
quotation marks omitted).)        The communication of a
suspected fraud is the protected activity.
       3
         See, e.g., Van Asdale v. Int’l Game Tech., 577 F.3d
989, 996-97 (9th Cir. 2009) (deferring to the ARB‟s
determination that an “employee‟s communications must
„definitively and specifically‟ relate to [one] of the listed
categories of fraud or securities violations under [§ 1514A]”);
Day v. Staples, Inc., 555 F.3d 42, 55 (1st Cir. 2009) (“The




                               4
communications must „definitively and specifically‟ relate to
any of the listed categories of fraud or securities violations
under [§ 806].” 25 IER Cases at 287. In essence, the ARB
established something like a pleading standard for intra-
corporate communications. But Platone has been supplanted
by the ARB‟s recent opinion in Sylvester v. Parexel
International LLC, 32 IER Cases 497, 505 (U.S. Dep‟t of
Labor May. 25, 2011) (en banc), which jettisons the
requirement that SOX whistleblowers definitively and
specifically tie with their disclosures to the kinds of fraud
listed in § 806.

       The ARB evidently viewed that standard as too
stringent. When confronted in Sylvester with complainants
who alleged that their intra-corporate communications
concerning compliance with FDA testing protocols were
actually allegations of securities fraud,4 the ARB in effect
said “good enough.” More precisely, it said:

employee must show that his communications to the
employer specifically related to one of the laws listed in
§ 1514A.”); Welch v. Chao, 536 F.3d 269, 275 (4th Cir. 2008)
(“[A]n employee must show that his communications to his
employer definitively and specifically relate[d] to one of the
laws listed in § 1514A.” (internal alteration and quotation
marks omitted)); Allen v. Admin. Review Bd., 514 F.3d 468,
476 (5th Cir. 2008) (“We agree with the ARB‟s legal
conclusion that an employee‟s complaint must definitively
and specifically relate to one of the six enumerated categories
found in § 1514A.” (internal quotation marks omitted)).
      4
          The rather tenuous connection between the
company‟s conduct and “fraud against shareholders” that the
Sylvester employees asserted was that, “by covering up




                              5
        [b]ecause a complainant need not prove a
        violation of the substantive laws, … a [SOX]
        complainant can have an objectively
        reasonable belief of a violation of the laws in
        Section 806 … even if the complainant fails
        to allege, prove, or approximate specific
        elements of fraud, which would be required
        under a fraud claim against the defrauder
        directly. In other words, a complainant can
        engage in protected activity under Section
        806 even if he or she fails to allege or prove
        materiality, scienter, reliance, economic loss,
        or loss causation.

Sylvester, 32 IER Cases at 512 (emphasis added). Ponder
that: without “alleg[ing]” or “prov[ing]” or even
“approximat[ing]” a charge of fraud, the complaints of a so-
called whistleblower are, in the ARB‟s view, supposed to put
a company on notice that a fraud has been identified. The
rationale the ARB offered for that conclusion was the ipse
dixit that “the purposes of the whistleblower protection
provision will be thwarted,” id. at 512, if a § 806 complainant
proceeding on a theory of underlying shareholder fraud must
actually say something pointing out such fraud.

clinical research fraud … Parexel engaged in fraud against its
shareholders, financial institutions, and others” because
disclosure of the compliance failures would have been “at the
expense of the long-term financial performance of the
company … [and] would have significantly reduced Parexel‟s
revenue and reputation.” Sylvester v. Parexel Int’l LLC, 32
IER Cases 497, 501 (U.S. Dep‟t of Labor May. 25, 2011) (en
banc).




                              6
       To discredit the “definitive and specific” requirement,
the ARB said that the requirement had been erroneously
drawn from a different statute. The whistleblowing provision
in the Energy Reorganization Act (“ERA”), 42 U.S.C.
§ 5851, protects an employee who participates in any
“proceeding or in any other action to carry out the purposes”
of that statute. 42 U.S.C. § 5851(a)(1)(F). The ARB
reasoned that the “importation” of a pleading standard
derived from the ERA‟s catch-all provision “is inapposite to
the question of what constitutes protected activity under
SOX‟s whistleblower protection provision” because “the
SOX whistleblower protection provision contains no similar
language, and instead expressly identifies the several laws to
which it applies.” 32 IER Cases at 509.

        My colleagues in the Majority conclude that “the
ARB‟s rejection of Platone‟s „definitive and specific‟
standard is entitled to Chevron deference” (Majority Op. at
18) because “the ARB thoroughly explained why it reversed
the course it previously set in Platone” (id. at 20). With all
due respect, I cannot agree with that generous
characterization of the ARB‟s work product. Sylvester’s
rejection of Platone is hardly explained and far from
persuasive.5 It is strange, for example, to hear the ARB claim

      5
         Chevron deference extends only to reasonable agency
interpretations of ambiguous statutory language.          See
Chevron U.S.A., Inc. v. Natural Res. Def. Counsel, 467 U.S.
837, 843 (1984) (“[I]f the statute is silent or ambiguous …,
the question for the court is whether the agency‟s answer is
based on a permissible construction of the statute.”). For
several reasons, including those discussed herein, I question
whether the ARB‟s interpretation of the requirements of a




                              7
that the greater specificity of § 806 makes the “definitive and
specific” standard inappropriate but then hear it say in the
next breath that one need not bother with alleging, proving, or
even approximating a statement showing that the specifics of
§ 806 have been satisfied.

        Moreover, the reasoning behind the “definitive and
specific” standard applies with at least equal force to § 806
as it does to the pertinent provision of the ERA. I agree with
the ARB at least to the extent that it observed that courts have
construed the ERA catch-all provision “in light of [that
statute‟s] overarching purpose of protecting acts implicating
nuclear safety,” and thus courts have required “that an
employee‟s actions implicate safety „definitively and
specifically‟” to constitute protected activity. Sylvester, 32
IER Cases at 509. In the same way, the overarching purpose
of SOX is to expose and therefore deter fraud against
shareholders of companies whose shares are publicly traded,
see Cohen v. Viray, 622 F.3d 188, 195 (2d Cir. 2010) (noting
that “[SOX] ... outlaws fraud and deception by managers in
the auditing process” (quoting S. Rep. No. 107-205, at 23
(2002) (internal quotation marks omitted)), and, just as the
ERA cases call for a definitive and specific linkage to that
statute‟s purpose, so a SOX whistleblower was, once upon a
time, required to demonstrate “definitively and specifically”
that the subject of his allegedly protected communication
implicated the kind of unlawful activity targeted by SOX.6

§ 806 claim, as expressed in Sylvester, represents a reasonable
and thus permissible construction of the statute.
       6
        As the ARB sees it, the “plain language” of § 806
somehow demands a different result from the one it
previously insisted on in Platone. See Sylvester, 32 IER




                               8
        At the end of the day, though, the fate of the
“definitive and specific” standard is not the main issue. That
standard is just one way of practically addressing the
requirement that a SOX whistleblower demonstrate a
reasonable belief that the kinds of unlawful behavior
identified in § 806 have occurred or are threatened. Of
particular importance here is the “objective reasonableness”
component of the reasonable belief requirement. The ARB
reaffirmed that component in Sylvester, noting that “[t]he
second element of the „reasonable belief‟ standard, the
objective component, „is evaluated based on the knowledge
available to a reasonable person in the same factual
circumstances with the same training and experience as the
aggrieved employee.‟” 32 IER Cases at 507 (quoting Harp v.
Charter Commc’ns Inc., 558 F.3d 722, 723 (7th Cir. 2009)).7

Cases at 508 (saying that “the ALJ failed to focus on the plain
language of the SOX whistleblower protection provision”).
Quoting not the statute, but its legislative history, the ARB
says that § 806 protects “„all good faith and reasonable
reporting of fraud.‟” See id. (quoting 148 Cong. Rec. S7418-
01, S7420 (daily ed. July 26, 2002)). That broad statement
does not support the standardless liability imposed by
Sylvester, but, more to the point, we are not trying to apply
legislative history. Our job is to interpret and apply the
statute itself. The plain language of § 806 protects only
reporting of conduct that an employee “reasonably believes”
constitutes a violation of one of four specific fraud provisions
set forth in federal criminal law, or certain SEC rules and
regulations, or, at the catch-all level, any other provision of
federal law that targets “fraud against shareholders.” 18
U.S.C. § 1514A(a)(1).
       7
           Moreover, prior to Sylvester, our sister circuits treated




                                  9
Unfortunately, Sylvester provides no guidance as to what, if
anything, a § 806 claimant is required to allege. In its efforts
to lower the bar, the ARB has provided little more than a
recitation of what is not required for an employee to allege
protected conduct.       See 32 IER Cases at 512 (“[A]
complainant need not prove a violation of the substantive
laws …”); id. (“[A] complainant can engage in protected
activity under Section 806 even if he or she fails to allege or
prove materiality, scienter, reliance, economic loss, or loss
causation.”); id. ([A] complainant ... [need not] allege, prove,

the “definitive and specific” requirement as separate from the
statutory requirement of reasonable belief. See, e.g., Welch,
536 F.3d at 275 (“To … establish that he engaged in
protected activity, an employee must show that he had both „a
subjective belief and an objectively reasonable belief‟ that the
conduct he complained of constituted a violation of relevant
law.      Additionally, an employee must show that his
communications to his employer „definitively and specifically
relate[d]‟ to one of the laws listed in § 1514A.”); Van Asdale
v. Int’l Game Tech., 577 F.3d 989, 1000 (9th Cir. 2009)
(noting, after determining that the plaintiffs satisfied the
“definitively and specifically” standard from Platone, that
they must also have a reasonable belief concerning a violation
of a listed law in order “to trigger the protections of the Act”);
Day, 555 F.3d at 54 (treating the “definitively and
specifically” requirement and “reasonable belief” requirement
separately); Allen, 514 F.3d at 477 (same). Consequently,
although the ARB eliminated the “definitive and specific”
standard as “an inappropriate test ... [that] is often applied too
strictly,” 32 IER Cases at 509, the determination of the
objective reasonableness of a SOX complainant‟s belief
remains a necessity.




                               10
or approximate that the reported irregularity or misstatement
satisfies securities law „materiality‟ standards, was done
intentionally, was relied upon by shareholders, and that
shareholders suffered a loss because of the irregularity.”).8

         Trying to apply the impossibly vague “standard” of
Sylvester, the Majority has adopted an internally inconsistent
test. On one hand, my colleagues rightly reject the argument
offered by our amicus, the National Whistleblower Center,
that no more than an employee‟s own subjective good faith
belief is required to allege a § 806 violation. (See Majority
Op. at 21 (“As explained in Sylvester, the reasonable belief
standard also includes an objective element.”).) On the other
hand, they go on to conclude that the ARB “expressly
rejected” the District Court‟s interpretation of § 806 as
requiring that Wiest demonstrate “„an objectively reasonable
belief that the company intentionally misrepresented or
omitted certain facts to investors which were material and
which risked loss.‟” (Majority Op. at 23 (quoting Wiest v.
Lynch, No. 10-3288, 2011 WL 2923860, at *4 (E.D. Pa. July
21, 2011)).) Those two conclusions seem to me to be in
tension, and one is left to wonder what the objective standard
is for measuring whether a complainant‟s belief is reasonable
if it is not the existing rules of law expressly noted in § 806.9

       8
          The Majority follows the ARB‟s approach,
concluding that a “whistleblower‟s communication need not
ring the bell on each element of one of the stated provisions
of federal law in [§ 806]” (Majority Op. at 25), without
specifying which, if any, bells must be rung.
       9
        The Majority perceives no inconsistency because it
“do[es] not think Congress intended such a formalistic
approach to the question of whether an employee has engaged




                               11
       Pre-Sylvester case law from federal courts made it
clear that “[t]he reasonableness of [a SOX complainant‟s]
belief for purposes of § [806] must be measured against the
basic elements of the laws specified in the statute.” Day, 555
F.3d at 55. Logically, that ought still to be the case. Section
806 references identifiable pieces of positive law. They are
not mere generalities and they do not open the door to
whistleblower relief to anyone with vague feelings of unease
or even specific discomfort with something other than that
which is identified in § 806. Particularly pertinent here,
“„[f]raud‟ itself has defined legal meanings and is not, in the
context of SOX, a colloquial term.” Id.10 Section 806 thus

in „protected activity.‟” (Majority Op. at 22.) I do not agree
that requiring that an allegedly protected communication
clearly relate to one of the laws enumerated in § 806 is an
exercise in formalism. But even if it were, Congress has
expressed its intent in the text of the statute, which sets forth
the particular laws that may give rise to a SOX whistleblower
claim.
       10
          The Majority correctly points out that an employee‟s
reasonable belief may not always be determined as a matter
of law or on the basis of averments in a complaint. However,
a SOX whistleblower‟s claim must be based on allegations of
mail, wire, and securities fraud, which are required to be pled
with specificity pursuant to Federal Rule of Civil Procedure
9(b) or are subject to the heightened pleading standards of the
Private Securities Litigation Reform Act (PSLRA), Pub. L.
No. 104-67, 109 Stat. 737 (1995). Rule 9(b) “gives
defendants notice of the claims against them, provides an
increased measure of protection for their reputations, and
reduces the number of frivolous suits,” In re Burlington Coat
Factory Sec. Litig., 114 F.3d 1410, 1418 (3d Cir. 1997), while




                               12
requires a SOX whistleblower to demonstrate that he has
done more than criticize undesirable corporate conduct. He is
required to demonstrate that his protected communication
concerned a “violation” of one of the listed statutes or of an
SEC rule or regulation or other Federal law relating to fraud
on shareholders. A violation can only be said to “relat[e] to
... fraud against shareholders” if it manifests at least some of
the elements of fraud as defined in the securities context, such
as falsity, scienter, and materiality. Cf. In re Cabletron Sys.,
Inc., 311 F.3d 11, 34 (1st Cir. 2002) (“Merely stating in
conclusory fashion that a company‟s books are out of
compliance with GAAP would not in itself demonstrate


the PSLRA is intended to “curb frivolous lawyer-driven
litigation, while preserving the [plaintiffs‟] ability to recover
on meritorious claims,” Winer Family Trust v. Queen, 503
F.3d 319, 326 (3d Cir. 2007). Notwithstanding the ARB‟s
conclusion that those sorts of heightened pleading
requirements “should not be applied to SOX whistleblower
claims,” Sylvester, 32 IER Cases at 505, the same concerns
that gave rise to those requirements suggest that
communications that serve as the basis of a claim under § 806
should contain something more than vague allegations
concerning a possible fraud. I am not suggesting the
importation of pleading standards to the review of a
whistleblower‟s allegedly protected communications. I am
suggesting that it is not too much to ask for some specificity,
especially since SOX whistleblower protection has the effect
of shielding an employee from any disciplinary action and
should not be lightly granted.




                               13
liability under section 10(b) or Rule 10b–5.”); DSAM Global
Value Fund v. Altris Software, Inc., 288 F.3d 385, 390 (9th
Cir. 2002) (“[T]he mere publication of inaccurate accounting
figures, or a failure to follow GAAP, without more, does not
establish scienter” in a securities fraud action (internal
quotation marks omitted)); Novak v. Kasaks, 216 F.3d 300,
309 (2d Cir. 2000) (“[A]llegations of GAAP violations or
accounting irregularities, standing alone, are insufficient to
state a securities fraud claim. Only where such allegations
are coupled with evidence of „corresponding fraudulent
intent,‟ might they be sufficient.” (internal quotation marks
omitted)). The many cases to that effect cannot with
propriety be swept away by the federal bureaucracy deciding
it would like SOX to reach beyond the frauds specified in the
statute.11

       11
          We are not required to follow – and arguably are
constitutionally compelled to reject – an agency‟s reversal of
course that contradicts prior judicial interpretations of a
statute. “Article III courts do not sit to render decisions that
can be reversed or ignored by executive officers.” Nat’l
Cable & Telecommc’ns Ass’n v. Brand X Internet Servs., 545
U.S. 967, 1017 (2005) (Scalia, J., dissenting) (citing Chicago
& S. Air Lines Inc. v. Waterman S.S. Corp., 333 U.S. 103
(1948)). “Once [a court] ha[s] determined a statute‟s
meaning, [it] adhere[s] to [its] ruling under the doctrine of
stare decisis, and [it] assess[es] an agency‟s later
interpretation of the statute against that settled law.” Neal v.
United States, 516 U.S. 284, 295 (1996). In this case,
numerous courts of appeals, see supra note 3, have construed
SOX § 806 as requiring that a complainant‟s communications
include the elements of one or more of the referenced laws.
Under the Majority‟s approach, the ARB will be “able to




                              14
       In this case, the application of a test of objective
reasonableness that looks to the elements of securities fraud
shows Wiest‟s allegedly protected communications for what
they are: a bookkeeper‟s sensible inquiries about proper
accounting for expenses, not allegations of fraud. Wiest‟s
statements about the Atlantis Resort Event prove the point.
The Majority concludes that “[a] reasonable person in Wiest‟s
position who had seen the expense request for the extravagant
Atlantis event could have believed that treating the Atlantis
event as a business expense may have violated a provision of
Section 806 … .” (Majority Op. at 28.) A fair question is
“which one?” Wiest does not claim that he reasonably
believed that “extravagance” or the possible reporting of
employee expenses as advertising expenses constituted mail
fraud, wire fraud, or bank fraud. He alleges rather that, “if
Tyco had processed the transaction as originally submitted, it
„would have resulted in a misstatement of accounting records
and a fraudulent tax deduction.‟” (Majority Op. at 27
(quoting App. at 43).) That would seem to point to a
violation of 18 U.S.C. § 1348, which involves fraud in
connection with a sale of securities, or of a “rule or regulation
of the Securities and Exchange Commission, or any provision
of Federal law relating to fraud against shareholders.” 18
U.S.C. § 1514A(a)(1). However, Wiest‟s communication
with Tyco about the Atlantis Event contains none of the
elements of a securities fraud. In particular, it contains no

disregard that construction and seek Chevron deference for its
contrary construction the next time around.” Nat’l Cable &
Telecommc’ns Ass’n, 545 U.S. at 1017 (Scalia, J., dissenting).
Stare decisis is not a straitjacket, but it must mean something
more than “this is the law until the executive branch
unilaterally changes its mind.”




                               15
hint of falsity but rather suggests that an accounting judgment
was faulty and needed to be corrected, which it was.12

       12
           My colleagues in the Majority appear to have been
persuaded by an allegation in Wiest‟s complaint that, but for
his intervention, the Atlantis Event would have resulted in “a
misstatement of accounting records and a fraudulent tax
deduction.” (Majority Op. at 5 (quoting App. at 43-44)
(internal quotation marks omitted).) Following the Majority‟s
instruction that the determination of reasonable belief “should
be based upon all of the attendant circumstances, and not be
limited to the facts conveyed by a whistleblower to the
employer” (id. at 26), Wiest‟s Atlantis Event allegation is
belied by the record and is inconsistent with applicable tax
law. Wiest‟s email regarding the Atlantis Event simply
requested that “the relevant tax department resources” review
the proposed costs to determine if some would not have been
fully deductible as business expenses but rather would have to
be treated as employee compensation and reported as income
to employees attending. (See App. at 102 (suggesting that the
“meal and entertainment portions” might “fall into the 50%
deductibility classification for tax purposes” and that
expenses associated with spouses and friends attending the
event should be “recorded as income to the employees
attending”).) As Wiest himself admits in his complaint, the
result of that review was that Tyco determined that “[t]he trip
did not qualify as a business expense per IRS guidelines and[]
... would have to be treated as an award and as income to the
attendees and reported on their W-2s.” (App. at 45.)
Compensation to employees is treated as a business expense
for federal tax purposes, see I.R.C. § 162(a)(1), so the cost
would have been deductible for Tyco under either scenario.
The classification of the cost of the Atlantis Event, while




                              16
       The     supposed      connection     between      Wiest‟s
communications regarding the Wintergreen Resort Event and
a violation of a statute or regulation referenced in § 806 is
even more strained.        The Majority concludes that “a
reasonable person in Wiest‟s position could have believed
that the event‟s approval by an attendee of the event[] …
instead of by the CEO as required by internal control
procedures, may have violated one of the provisions
contained in Section 806.” (Majority Op. at 31.) Assuming
the unspecified violation is again securities fraud, there is still
the glaring question of how his communication with the
company indicated any fraud.           Unlike his allegations
concerning the Atlantis Resort Event, Wiest does not claim
that expenses from that event were not recorded correctly, nor
does he allege that any public financial disclosure was at
issue. As a result, it is impossible to identify a securities
fraud. The Majority simply suggests that it was reasonable
for Wiest to believe that there had been such a violation
because “the event‟s approval [was] by an attendee of the
event, who would therefore directly benefit from that
approval … .” (Id.) Leaving aside the fact that there is no
explanation of what the “direct benefit” was, that allegation
goes only to motivation and does nothing to establish a
violation of any of the laws referenced in § 806.

      Given the present record, two final observations
should be made about the Majority‟s application of the

significant to employees for whom it represented taxable
compensation, was irrelevant for purposes of Tyco‟s public
financial statements, and, even if the error had gone
uncorrected, it is a huge stretch to say that such a mistake
would constitute shareholder fraud.




                                17
objective reasonableness standard. First, even Sylvester
acknowledged that objective reasonableness “is evaluated
based on the knowledge available to a reasonable person in
the same factual circumstances with the same training and
experience as the aggrieved employee.” 32 IER Cases at 507
(quoting Harp, 558 F.3d at 723) (internal quotation marks
omitted). When an employee is a licensed CPA, and thus
able to distinguish between violations of accounting rules and
violations of SEC rules or regulations, a failure to do so tends
to show his asserted belief that a violation of the latter has
occurred to be less than objectively reasonable. Cf. Allen,
514 F.3d at 477 (finding that, although a violation of an SEC
accounting bulletin could fall within the general “fraud
against shareholder” category of § 1514A, the complainant
CPA‟s belief as to the violation was not objectively
reasonable). Wiest is a trained accountant who had more than
thirty years experience in Tyco‟s accounting department,
which, as the Majority points out, had been under “a high
level of audit scrutiny” for the last decade. (Majority Op. at
4. (quoting App. at 42) (internal quotation marks omitted).)
The Majority itself observes that Wiest had knowledge of
both “accounting standards ... and securities and tax laws.”
(Id.) Therefore, Wiest should be held to a “higher [objective
reasonableness] standard” than someone of “limited
education.” Sylvester, 32 IER Cases at 507 (citing Parexel
Int’l Corp. v. Feliciano, 28 IER Cases 820, 2008 WL
5101642, at *3 & n.6 (E.D. Pa. 2008)). Since his allegedly
protected communications do not meet even an objective
standard geared to the general public, they certainly do not
meet a heightened standard applicable to someone of his
training and experience.




                              18
        Second, as the ARB acknowledged in Sylvester, “many
of the laws listed in § [806] of SOX contain materiality
requirements,” and “[i]t may well be that a complainant‟s
complaint concerns such a trivial matter that he or she did not
engage in protected activity under Section 806.” 32 IER
Cases at 512. For that grudging acknowledgement of a
materiality requirement to be consistent with existing law
concerning fraud against shareholders, a SOX complainant
must believe that there is “a substantial likelihood that the
disclosure of the omitted fact would have been viewed by
the reasonable investor as having significantly altered the
„total mix‟ of information made available.” Basic, Inc. v.
Levinson, 485 U.S. 224, 231-32 (1988) (quoting TSC Indus.,
Inc. v. Northway, Inc., 426 U.S. 438, 449 (1976) (internal
quotation marks omitted)); see also TSC Indus., 426 U.S. at
448 (acknowledging that certain information concerning
corporate developments is of “dubious significance”).
Wiest‟s allegedly protected communications concerned
transactions with no financial impact on Tyco, see supra note
12, or internal control practices that are not financial in nature
and are not reported to shareholders. The subjects of Wiest‟s
communications were not material, and contrary to the
Majority‟s conclusion, those communications do not
demonstrate an objectively reasonable belief that a
shareholder fraud was being threatened.

       The essence of Wiest‟s assertion that the conduct he
found objectionable “relates to” fraud against shareholders for
purposes of § 806 is, as his attorney put it to the District
Court, that “every time you improperly allocate money to
something that is improper, you are affecting the value of the
company, and the value of the company is determined by
individuals who buy and sell stock.” (App. at 290-91.) That




                               19
sweeping statement, which even the attorney attempted to
walk back at oral argument before us, underscores the flaw in
the Majority‟s approach to post-Sylvester objective
reasonableness. If it is unnecessary to measure a SOX
complainant‟s reasonable belief against at least some of the
elements of securities fraud, like materiality, then virtually
any internal questioning of an accounting mistake or a
judgment call turns the questioner into a SOX whistleblower,
and that cannot be right.

        As the District Court correctly noted, Wiest “failed …
to plead facts reflecting [his] reasonable belief that his
communications regarding the tax treatment of certain
company expenses related – in any way, definitively and
specifically, or otherwise – to shareholder fraud or a violation
of one of the statutes or rules listed in § [806].” Wiest v.
Lynch, No. 10-3288, 2011 WL 5572608, at *4 (E.D. Pa. Nov.
16, 2011). The District Court recognized that the protection
afforded SOX whistleblowers is limited to communications
that relate to violations of the law specified in § 806, and it
assessed the reasonableness of Wiest‟s alleged belief
consistent with the explicit scope of § 806. The thoughtful
opinion of the District Court is entirely sound in that regard,
and I would therefore affirm the judgment against the
Appellants.




                              20
