Garvey v. Administrative Review Board, United States Department of Labor
| Decision Date | 23 December 2022 |
| Docket Number | 21-1182 |
| Parties | Christopher GARVEY, Petitioner v. ADMINISTRATIVE REVIEW BOARD, UNITED STATES DEPARTMENT OF LABOR, Respondent Morgan Stanley, Intervenor |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Christopher Garvey, pro se, argued the cause and filed the briefs for petitioner.
Reynaldo Fuentes, Attorney, U.S. Department of Labor, argued the cause for respondent. With him on the brief was Megan E. Guenther, Counsel for Whistleblower Programs.
Michael E. Kenneally argued the cause for intervenor in support of respondent. With him on the brief were Sarah E. Bouchard and A. Klair Fitzpatrick.
Before: Pillard, Circuit Judge, and Edwards and Rogers, Senior Circuit Judges.
Section 806 of the Corporate and Criminal Fraud Accountability Act of 2002, Title VIII of the Sarbanes–Oxley Act ("SOX"), aims to encourage disclosure of corporate fraud by protecting employees of publicly traded companies who report illegal activities. 18 U.S.C. § 1514A ; 29 C.F.R. § 1980.102(b). To achieve this end, the statute authorizes these employees to file complaints with the Secretary of Labor ("Secretary") or pursue suits in federal district court if they are discharged or otherwise discriminated against for engaging in protected whistleblower activity. There are two principal issues in this case: (1) whether Section 806 has an extraterritorial reach covering persons who are employed overseas by a foreign subsidiary of a U.S.-based corporation; and (2) whether such persons may allege a domestic application of Section 806 if they work exclusively overseas under an employment contract governed by the laws of a foreign nation.
This case was initiated by Petitioner Christopher Garvey. Between 2006 and 2016, Garvey was employed by foreign subsidiaries of Morgan Stanley, a U.S. corporation. In 2006, he was hired by the Morgan Stanley Japan Group in Tokyo. In 2011, he relocated to Morgan Stanley Asia Limited in Hong Kong. When he moved to Hong Kong, Garvey consented to "the exclusive jurisdiction of [Hong Kong's] courts and [ ] Labour Tribunal," under a contract of employment that was "governed by the laws of Hong Kong." Joint Appendix ("J.A.") 357.
Garvey alleges that, between late 2014 and early 2016, he raised a number of concerns with his superiors in New York regarding potential U.S. securities law violations committed by Morgan Stanley employees. According to Garvey, these alleged legal transgressions included various forms of corporate corruption, occurring predominantly overseas but affecting U.S. markets. See J.A. 3-5. Garvey contends that his whistleblowing claims were met with antagonism by his superiors at Morgan Stanley. He says that "[i]n January 2016 [he] received a pay cut and a blunt recommendation to find a job elsewhere"[;] so "[i]n the face of ongoing pressure, hostility and clear and present risk," he "resigned his position in February 2016." Petitioner's Br. 17. Garvey retained counsel to represent his interests after he left Morgan Stanley Asia Limited. However, he contends that he lost the services of his attorney after Morgan Stanley threatened to pursue disciplinary actions against counsel for breach of professional obligations.
In August 2016, Garvey filed a pro se complaint with the Occupational Safety and Health Administration ("OSHA") at the Department of Labor ("DOL") against Morgan Stanley for alleged retaliation in violation of Section 806. His complaint was dismissed for failure to allege an adverse employment action. Garvey then sought review by an Administrative Law Judge ("ALJ"), whose adverse decision was then reviewed by the DOL Administrative Review Board ("Board"). The Board rejected his complaint on the grounds that, by its terms, Section 806 does not have extraterritorial application and the facts of the case did not give rise to a domestic application of SOX. J.A. 377-81. Garvey timely petitioned for review in this court.
"It is a longstanding principle of American law that legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States." Morrison v. Nat'l Austl. Bank Ltd ., 561 U.S. 247, 255, 130 S.Ct. 2869, 177 L.Ed.2d 535 (2010) (citations omitted) (internal quotation marks omitted). While "an express statement of extraterritoriality is not essential," the text, context, and legislative history of Section 806 do not contain a "a clear, affirmative indication that [the statute] applies extraterritorially." RJR Nabisco , Inc. v. European Cmty. , 579 U.S. 325, 337, 340, 136 S.Ct. 2090, 195 L.Ed.2d 476 (2016). Therefore, Garvey has no cause of action under Section 806 unless this "case involves a domestic application of the statute." Id .
Garvey argues that his complaint states a viable cause of action because the primary focus of Section 806 is the prevention of corporate fraud and his allegations of fraud affecting U.S. securities markets establish a domestic application of Section 806. We disagree. There is no cause of action under Section 806 for securities fraud. Rather, Section 806 protects employees from retaliation by making it unlawful for a company to "discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment because of [the employee's protected activity]." 18 U.S.C. § 1514A(a).
Finally, we hold that Garvey's claim that Morgan Stanley threatened his attorney does not support a domestic application of Section 806. Even if the allegation is true, it would not fall within the compass of the statute because the events giving rise to the claim took place after Garvey's employment was terminated. And Garvey does not contend that Morgan Stanley attempted to undermine his employment prospects after he left the company.
For the reasons given in this opinion, we deny the petition for review.
In 2002, "[t]o safeguard investors in public companies and restore trust in the financial markets following the collapse of Enron Corporation," Congress enacted the Sarbanes-Oxley Act. Lawson v. FMR LLC , 571 U.S. 429, 432, 134 S.Ct. 1158, 188 L.Ed.2d 158 (2014) (citing S. REP. NO. 107-146, at 2-11 (2002)). Key among SOX's provisions is Section 806, which "sets a national floor for employee protections" against retaliation for covered employees reporting instances of corporate fraud. See S. REP. NO. 107-146, at 20. Section 806 provides in relevant part:
18 U.S.C. § 1514A. Nothing in Section 806, nor in any coordinate statute, see 18 U.S.C. § 1514A(a)(1) (citing §§ 1341, 1343, 1344, 1348), indicates that the specified protections for employees against retaliation in fraud cases are meant to apply extraterritorially.
When Congress enacted Section 806, it also amended Section 1107, 18 U.S.C. § 1513, another whistleblower provision in the Sarbanes-Oxley Act. This legislative action added subsection (e) to 18 U.S.C. § 1513, providing for criminal sanctions for retaliation against anyone giving truthful information to law enforcement officers relating to the commission of any federal offense. What is noteworthy is that there is express language providing for the statute's extraterritorial jurisdiction, under 18 U.S.C. § 1513(d). "That Congress provided for extraterritorial reach as to Section 1107 but did not do so as to Section 806 () conveys the implication that Congress did not mean Section 806 to have extraterritorial effect." Carnero v. Bos. Sci. Corp ., 433 F.3d 1, 10 (1st Cir. 2006).
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