Villanueva v. U.S. Dep't of Labor

• Decision Date: 12 February 2014
• Docket Number: No. 12–60122.,12–60122.
• Citation: 743 F.3d 103
• Parties: William VILLANUEVA, Petitioner v. UNITED STATES DEPARTMENT OF LABOR, Respondent.
• Court: U.S. Court of Appeals — Fifth Circuit

743 F.3d 103

William VILLANUEVA, Petitioner

v.UNITED STATES DEPARTMENT OF LABOR, Respondent.

No. 12–60122.

United States Court of Appeals, Fifth Circuit.

Feb. 12, 2014.

David N. Mair, Esq., Kaiser, Saurbom, & Mair, P.C., New York, NY, for Petitioner.

Sharon Swingle, Mark Bernard Stem, Esq. U.S. Department of Justice, Steven Jay Mandel, Mary Elizabeth McDonald, U.S. Department of Labor, Washington, DC, for Respondent.

Petition for Review of an Order of the United States Department of Labor.

Before JONES, DENNIS, and HIGGINSON, Circuit Judges.

DENNIS, Circuit Judge:

Section 806 of the Corporate and Criminal Fraud Accountability Act of 2002, Title VIII of the Sarbanes–Oxley Act (“SOX”), “creates a private cause of action for employees of publicly-traded companies who are retaliated against for engaging in certain protected activity.” Allen v. Admin. Review Bd., 514 F.3d 468, 475 (5th Cir.2008); see18 U.S.C. § 1514A(a). Generally speaking, § 806 bars any publicly traded company from retaliating against an employee who provides information to his or her employer regarding conduct that the employee reasonably believes violates federal mail-, wire-, bank-, or securities-fraud statutes; any rule or regulation of the Securities and Exchange Commission (“SEC”); or any other federal law related to fraud against shareholders. See18 U.S.C. § 1514A(a)(1)(C).¹

The petitioner in this case, William Villanueva (“Villanueva”), is a Colombian nationalwho, until recently, was employed in Colombia by Saybolt de Colombia Limitada (“Saybolt Colombia”), an indirect affiliate of Core Laboratories N.V. (“Core Labs”).² Core Labs is a Netherlands limited liability company, whose stock is publicly traded in the United States and therefore is an entity covered under § 806. See id. Core Labs provides services to petroleum-industry clients in more than fifty countries and has more than seventy offices. Villanueva alleged that starting in January 2008 he raised concerns to several Core Labs and Saybolt Colombia employees that Core Labs was orchestrating a transfer-pricing scheme by requiring Saybolt Colombia to use Core Laboratories Sales, N.V. (“Core Labs Sales”), domiciled in the Dutch Antilles, as the contracting party for inspection services that Saybolt Colombia performed for non-Colombian clients. Villanueva alleged that as part of the scheme, ten percent of the contract revenues were paid to Core Lab Sales even though it neither procured the contracts nor performed the services. Villanueva further claimed that, at the direction of Core Labs officials in Houston, Saybolt Colombia's accounting department wrongfully claimed value-added tax (“VAT”) exemptions on work transferred to Core Lab Sales and that, as a result, Saybolt Colombia was able to underreport its taxable revenue to Colombian authorities. Subsequently, Villanueva was passed over for a pay raise at Saybolt Colombia and eventually terminated.

Villanueva filed a complaint with the Occupational Safety and Health Administration (“OSHA”), asserting that Saybolt Colombia and Core Labs had violated § 806 by retaliating against him for blowing the whistle on the alleged scheme to violate Colombian tax law. OSHA, an Administrative Law Judge (“ALJ”), and the Administrative Review Board (“Board”) all rejected Villanueva's complaint. Villanueva now appeals to this court, see18 U.S.C. § 1514A(b)(2)(A); 49 U.S.C. § 42121(b)(4)(A), and the parties ask us to determine whether § 806 applies extraterritorially.

As previously noted, § 806 bars companies that are publicly traded in the United States from retaliating against a whistleblowing employee, but only if the employee seeking the statute's protection demonstrates that he provided information regarding conduct that he or she reasonably believed violated one of the six enumerated provisions of U.S. law. See18 U.S.C. § 1514A(a)(1)(C); Allen, 514 F.3d at 476. On review of the facts of the case—in particular, the allegations Villanueva made to Saybolt Colombia, to Core Labs, and in his complaint to OSHA—we conclude that Villanueva did not provide information regarding conduct that he reasonably believed violated one of the six provisions of U.S. law enumerated in § 806; rather, he provided information regarding conduct that he reasonably believed violated Colombian law. In other words, he failed to show that he engaged in protected activity under § 806. See Allen, 514 F.3d at 475–77. Because Villanueva's claim does not fall within the scope of § 806's protection, we AFFIRM.³

BACKGROUND

A. Statutory and Regulatory Framework

A person alleging retaliation under § 806 may seek relief by filing a complaint with the Secretary of Labor. 18 U.S.C. § 1514A(b)(1)(A). The Secretary has delegated responsibility for receiving and investigating SOX whistleblower complaints to OSHA. See77 Fed.Reg. 3912;see also29 C.F.R. § 1980.104(a). Following an investigation, OSHA must, within 60 days, issue a determination either dismissing the complaint or finding reasonable cause to believe that retaliation has occurred and ordering appropriate relief. See18 U.S.C. § 1514A(b)(2)(A); 49 U.S.C. § 42121(b)(2)(A); 29 C.F.R. § 1980.105. Either the complainant or the respondent may file objections to OSHA's determination with an ALJ. See18 U.S.C. § 1514A(b)(2)(A); 49 U.S.C. § 42121(b)(2)(A); 29 C.F.R. § 1980.106. The ALJ's decision is subject to discretionary review by the Board, which issues the final order of the Secretary. See29 C.F.R. § 1980.110. “Any person adversely affected or aggrieved by” a final order of the Secretary “may obtain review of the order in the United States Court of Appeals for the circuit in which the violation[ ] ... allegedly occurred or the circuit in which the complainant resided on the date of such violation.” 49 U.S.C. § 42121(b)(4)(A); see18 U.S.C. § 1514A(b)(2)(A).

B. Facts and Procedural Posture

Villanueva lived in Bogota, Colombia and worked for Saybolt Colombia for more than twenty-four years. For the last sixteen of those twenty-four years, Villanueva served as the company's general manager. Villanueva is not a U.S. citizen and he has never worked in the United States for Saybolt Colombia.

Saybolt Colombia is a Colombian limited liability company that is headquartered in Bogota and is an indirect affiliate of Core Labs. Core Labs is a Netherlands limited liability company with headquarters in Amsterdam and a U.S. office in Houston, Texas. Core Labs's securities are registered under § 12 of the Securities and Exchange Act of 1934 (“Exchange Act”) and are publicly traded on the New York Stock Exchange. Saybolt Colombia does not register securities under § 12 or file reports under § 15(d) of the Exchange Act. Consequently, Core Labs is a publicly traded company under SOX, but Saybolt Colombia is not. See18 U.S.C. § 1514A. Additionally, Villanueva submitted evidence that, he claims, shows that Core Labs directly controlled all aspects of Saybolt Colombia's business, finances, and operations.

Starting in January 2008, Villanueva raised concerns to employees at both Core Labs and Saybolt Colombia regarding what he believed to be Saybolt Colombia's fraudulent underreporting of taxable revenue to the Colombian government. Villanueva informed these individuals that Core Labs had required Saybolt Colombia to use Core Labs Sales as the contracting party for inspection services that Saybolt Colombia performed for non-Colombian clients and that this policy required that ten percent of any contract revenue be paid to Core Labs Sales even though it did not procure the contracts or perform the services. Villanueva further alleged that, at the direction of Core Labs officials in Houston, Saybolt Colombia had wrongfully claimed VAT exemptions on work transferred to Core Labs Sales pursuant to this claimed policy.

Among the people to whom Villanueva raised his concerns were Fernando Padilla (“Padilla”), Saybolt Colombia's Controller, and Osiris Goenaga (“Goenaga”), Core Labs's accounting assistant for Colombia. Additionally, Villanueva copied C. Brig Miller, Core Labs's Chief Accounting Officer based in Houston, on his emails to Padilla and Goenaga. Villanueva requested that Padilla correct the tax exemptions before closing the books for Saybolt Colombia on March 31, 2008.

Villanueva alleged that between January and April 2008, Core Labs directed two Colombian law firms to provide Villanueva with opinion letters. Both firms concluded that there was no impropriety in the transactions between Saybolt Colombia and Core Labs Sales or with respect to the claimed VAT exemptions. Villanueva, who has a Colombian law degree, was dissatisfied with the firms' legal conclusions. Relying on his own analysis under Colombian tax law, Villanueva refused to sign Saybolt Colombia's tax returns, which were due to the Colombian tax authorities by April 17, 2008.

On April 3, 2008, Villanueva was passed over for a pay raise while other Saybolt Colombia employees received raises. Villanueva alleged that the decision to deny him a pay raise was made by Ivan Piedrahita (“Piedrahita”), the Regional Manager for Saybolt Latin America B.V., and Jan Heinsbroek (“Heinsbroeck”), the President of Saybolt Latin America B.V. and a director of Saybolt International B.V. On April 29, 2008—after Villanueva had refused to certify and file Saybolt Colombia's tax returns—Villanueva's employment was terminated. On that same day, a letter, signed by Heinsbroeck and personally delivered to Villanueva in Bogota by Piedrahita, informed Villanueva of his discharge.

On July 28, 2008, Villanueva filed a complaint with OSHA alleging that Saybolt Colombia and Core Labs violated § 806 by retaliating against him for blowing the whistle on the alleged scheme to violate Colombian tax law. Specifically, Villanueva alleged that he “was abruptly fired ... as a result of his complaints about, and investigation of, income-tax and value-added-tax fraud that was being perpetrated by Saybolt Colombia...