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

• Decision Date: 22 March 2021
• Docket Number: No. 20-2604,20-2604
• Citation: 991 F.3d 823
• Parties: Apostolos XANTHOPOULOS, Petitioner, v. UNITED STATES DEPARTMENT OF LABOR, Administrative Review Board, Respondent, and Marsh & McLennan Companies, Inc., doing business as Mercer Investment Consulting LLC, Intervening Respondent.
• Court: U.S. Court of Appeals — Seventh Circuit

991 F.3d 823

Apostolos XANTHOPOULOS, Petitioner,

v.UNITED STATES DEPARTMENT OF LABOR, Administrative Review Board, Respondent,andMarsh & McLennan Companies, Inc., doing business as Mercer Investment Consulting LLC, Intervening Respondent.

No. 20-2604

United States Court of Appeals, Seventh Circuit.

Submitted February 17, 2021^*

Decided March 22, 2021

George S. Bellas, Attorney, Bellas & Wachowski, Park Ridge, IL, for Petitioner.

Anne Bonfiglio, Attorney, Department of Labor, Office of the Solicitor, Washington, DC, for Respondent

Edward T. Ellis, Attorney, Alexa Laborda Nelson, Littler Mendelson, Philadelphia, PA, Lavanga V. Wijekoon, Attorney, Littler Mendelson P.C., Chicago, IL, for Intervening Respondent.

Before Sykes, Chief Judge, and Flaum and Rovner, Circuit Judges.

Flaum, Circuit Judge.

Petitioner Apostolos Xanthopoulos, Ph.D., detected securities fraud by his former employer, intervening respondent Marsh & McLennan Companies, Inc., doing business as Mercer Investment Consulting ("Mercer"). When he blew the whistle by reporting his suspicions to the United States Securities and Exchange Commission ("SEC"), Xanthopoulos also indicated his fear that his reports to the SEC might jeopardize his job.

When, by his account, Xanthopoulos's fears of reprisal came true, he filed a Sarbanes-Oxley complaint with the United States Department of Labor's Occupational Safety and Health Administration ("OSHA"). That complaint exceeded the 180-day statute of limitations for filing that type of complaint, so the Department of Labor dismissed it. Now, Xanthopoulos petitions this Court to review whether any of his reports to the SEC tolled the 180-day period for his Sarbanes-Oxley complaint. Xanthopoulos has not articulated a sufficient ground to equitably toll his untimely complaint, so we deny his petition for review.

I. Background

A. Federal Whistleblower Legal Landscape

Two statutes lie at the heart of this case: the Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley") and the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank"). Given the centrality of these two laws to the single dispute in this petition, we begin by describing the statutory backdrop before turning to the facts of the petition.

1. Sarbanes-Oxley

At issue in this case is an alleged violation of Sarbanes-Oxley, which Congress enacted in 2002 "[t]o safeguard investors in public companies and restore trust in the financial markets following the collapse of Enron Corporation." Digit. Realty Tr., Inc. v. Somers , ––– U.S. ––––, 138 S. Ct. 767, 773, 200 L.Ed.2d 15 (2018) (quoting Lawson v. FMR LLC , 571 U.S. 429, 432, 134 S.Ct. 1158, 188 L.Ed.2d 158 (2014) ). Sarbanes-Oxley shields "employees at risk of retaliation for reporting corporate misconduct." Id. (citing 18 U.S.C. § 1514A ). More specifically, § 1514A(a)(1) prohibits certain companies from discharging and discriminating "in the terms and conditions of employment" against an employee who (among other things) "provide[s] information ... or otherwise assist[s] in an investigation regarding any conduct which the employee reasonably believes constitutes a violation of" certain securities laws.

To recover for a Sarbanes-Oxley violation, a person must file a complaint with OSHA.¹ See 18 U.S.C. § 1514A(b)(1)(A) ; Delegation of Authority and Assignment of Responsibility to the Assistant Secretary for Occupational Safety and Health, 77 Fed. Reg. 3912 (Jan. 25, 2012) ("delegat[ing] authority and assign[ing] responsibility" to OSHA for enforcement of Sarbanes-Oxley). He or she must file that complaint within 180 days of the violation.² See 18 U.S.C. § 1514A(b)(2)(D). Under Sarbanes-Oxley, "[a]n employee who prevails in a proceeding under § 1514A is ‘entitled to all relief necessary to make the employee whole.’ " Digit. Realty , 138 S. Ct. at 773 (quoting 18 U.S.C. § 1514A(c) ). Such relief includes "reinstatement, backpay with interest, and any ‘special damages sustained as a result of the discrimination,’ " id. , which includes "litigation costs, expert witness fees, and reasonable attorney fees," 18 U.S.C. § 1514A(c). Nevertheless, this "remedial scheme [is] limited to actual damages." Digit. Realty , 138 S. Ct. at 778. Finally, to initiate OSHA's investigation of a Sarbanes-Oxley complaint, a person may submit an online form, which is available on OSHA's website (the "OSHA Form").³ See 29 C.F.R. § 1980.103(b) – (d) (2015) (allowing complaints in writing including through electronic transmittal).

2. Dodd-Frank Act and the SEC

Separately, in 2010 and on the heels of the 2008 financial crisis, Congress enacted Dodd-Frank, which aims to "promote the financial stability of the United States by improving accountability and transparency in the financial system," Digit. Realty , 138 S. Ct. at 773 (quoting 124 Stat. 1376), and which "responded to numerous perceived shortcomings in financial regulation," id.

Though Dodd-Frank shares Sarbanes-Oxley's purpose of "root[ing] out corporate fraud" and likewise "shield[s] whistleblowers from retaliation," Dodd-Frank "differ[s] in important respects." See id. at 772. The shield takes a different shape: For example, Dodd-Frank's anti-retaliation provision covers only a "circumscribed," id. , class of whistleblowers who report suspected violations to the SEC, see id. at 777 (holding employee did not qualify as "whistleblower" under 15 U.S.C. § 78u-6(h) because he did not report alleged violation to the SEC). However, "the Sarbanes-Oxley anti-retaliation provision covers employees who report fraud not only to the SEC, but also to any other federal agency, Congress, or an internal supervisor." See id. at 778 (citing 18 U.S.C. § 1514A(a)(1) ).

Moreover, Dodd-Frank charts a different path to recovery for whistleblowers than Sarbanes-Oxley. A person who seeks to remedy retaliation under Dodd-Frank may file a lawsuit against his or her employer directly in federal court, without first initiating that complaint with a federal agency. See id. at 774–75 (citing 15 U.S.C. § 78u-6(h)(1)(B)(i) ). Neither OSHA nor the SEC even have authority to adjudicate a Dodd-Frank retaliation claim. See generally 15 U.S.C. § 78u-6. Dodd-Frank also provides a generous statute of limitations—six years from the violation—rather than 180 days under Sarbanes-Oxley. See Digit. Realty , 138 S. Ct. at 774–75 (citing first 18 U.S.C. § 1514A(b)(2)(D) ; and then § 78u-6(h)(1)(B)(iii)(I)(aa) ).

The remedies for a Dodd-Frank retaliation claim also differ from those available under Sarbanes-Oxley. Like Sarbanes-Oxley, Dodd-Frank "authorizes reinstatement and compensation for litigation costs, expert witness fees, and reasonable attorneys’ fees." Id. at 775 (citing first § 78u-6(h)(1)(C)(i), (iii) ; and then 18 U.S.C. § 1514A(c)(2)(A), (C) ). However, "Dodd-Frank instructs a court to award to a prevailing plaintiff double backpay with interest," as contrasted with Sarbanes-Oxley's actual damages limit. Id. (citing first § 78u-6(h)(1)(C)(ii) ; and then 18 U.S.C. § 1514A(c)(2)(B) ).

Finally, apart from the "anti-retaliation" provision described above, Dodd-Frank authorizes incentives not available under Sarbanes-Oxley. Dodd-Frank permits the SEC to provide a monetary award to "whistleblowers who voluntarily provided original information to the [SEC] that led to the successful enforcement of the covered judicial or administrative action." 15 U.S.C. § 78u-6(b)(1). The person must seek the award from the SEC. See 15 U.S.C. § 78u-6(c)(1)(A) ; see also id. § 78u-6(f) (granting SEC discretion to issue award subject to federal appellate review). Sarbanes-Oxley authorizes no such award, and OSHA does not participate in the administration of Dodd-Frank whistleblower awards. In sum and as relevant to this petition, Dodd-Frank differs from Sarbanes-Oxley in scope, procedure, and remedies.

Before turning to the facts, we note yet one final and distinct feature of this securities fraud landscape. The SEC invites the public to submit "tips, complaints, and referrals" regarding suspected securities fraud through an electronic form (the "TCR Form") on the SEC's website. See, e.g. , Report Suspected Securities Fraud or Wrongdoing , SEC, https://www.sec.gov/tcr (last modified Mar. 5, 2021).⁴

The SEC's TCR Form, however, serves a different function than the Sarbanes-Oxley OSHA Form. While the OSHA Form may be used to notify OSHA of a Sarbanes-Oxley complaint, the SEC's TCR Form does not affirmatively indicate that submission of the form will initiate a formal lawsuit under the federal securities law. However, it appears the TCR Form may pave the way for seeking a whistleblower award.

B. Factual Background

Turning to the facts of this case, petitioner Xanthopoulos was a Senior Consultant for Mercer from 2013 through 2017. Mercer is a self-described "human resources consulting firm and institutional investment advisor." Xanthopoulos's relationship with Mercer soured quickly when he detected securities fraud. In his view, Mercer was manipulating investment portfolio ratings and knowingly disseminating those ratings to clients. Xanthopoulos alleges that he raised these concerns with Mercer to no avail.

When Xanthopoulos's internal complaints fell on deaf ears, he turned to regulators. Though we describe several pathways for whistleblowers in Part A, at this juncture, Xanthopoulos chose just one path: the SEC's "tips, complaints, and referrals" website and the electronic TCR Form. On March 3, 2014, Xanthopoulos filled out the first in a series of TCR Forms that detailed his concerns about Mercer's misconduct. The parties dispute the total and timing, but Xanthopoulos alleges he submitted seven separate TCR Forms from March 14, 2014, through June 26, 2018. He prepared all TCR Forms himself and was not represented by counsel at any point during the four-year period.

All seven TCR Forms focused on Mercer's misconduct but varied in content. The majority of Xanthopoulos's TCR Forms focused on Mercer's ratings manipulation. The following is an...