Sylvester v.Parexel Int’l LLC, ARB Case No. 07-123, 2011 WL 2165854 (Dep’t of Labor May 25, 2011). Even though the First Circuit already had adopted the “definitively and specifically” standard, see Day v. Staples, Inc., 555 F.3d 42, 56 (1st Cir. 2009), the Doral court ruled that the ARB’s more recent “reasonable belief” standard controlled and that plaintiff’s pleading was sufficient, 2014 U.S. Dist. LEXIS 22441, at *19–24. Both the Lawson and Doral rulings dramatically broaden the scope of whistleblower liability for public companies and private companies that contract for public companies.

One justice dissented, arguing that Parexel was wrongly decided by the ARB, and was not entitled to deference. That justice’s position is in line with pre-Parexel cases from other circuit courts that adopted the “definitive and specific” standard, such as Day v. Staples, 555 F.3d 42 (1st Cir. 2009) and Welch v. Chao, 536 F.3d 269 (4th Cir. 2008), cert. denied, 129 S. Ct. 1985 (2009).

The Wiest decision runs counter to pre-Sylvester decisions issued in other circuits, which have generally ruled that the objections to improper business practices or accounting irregularities do not on their own constitute protected activity under the SOX whistleblower provision. For instance, in Day v. Staples, Inc., 555 F.3d 42 (1st Cir. 2009), the court stated that "to have an objectively reasonable belief there has been shareholder fraud, the complaining employee’s theory of such fraud must at least approximate the basic elements of a claim of securities fraud." Id.

at 843.7 Day v. Staples, 555 F.3d 42 (1st Cir. 2009); Welch v. Chao, 536 F.3d 269 (4th Cir. 2008), cert. denied, 129 S. Ct. 1985 (2009).

The dissent, however, stressed that the standard enunciated in “Sylvester provides no guidance as to what, if anything, a §806 claimant is required to allege . . . and the ARB has provided little more than a recitation of what is not required for an employee to allege protected conduct.”Implications This decision is at odds with decisions out of the First, Fifth, Sixth and Ninth Circuits—namely: Day v. Staples, Inc., 555 F.3d 42, 55 (1st Cir. 2009); Allen v. Admin. Review Bd., 514 F.3d 468, 476-77 (5th Cir. 2008); Van Asdale v. Int’l Game Tech., 577 F.3d 989, 996-97 (9th Cir. 2009); Riddle v. First Tenn. Bank, N.A., No. 11-cv-6277, 2012 U.S. App. LEXIS 18684 (6th Cir. Aug. 31, 2012) (unpublished))—as to the viability of a “definitive and specific” standard, and employers are rightfully concerned that, at least within the Third Circuit, it may open the floodgates to claims that bear a highly attenuated relationship to the categories fraud and rules exhaustively listed in Section 806. Likewise, this decision is at odds with the Fourth Circuit’s decision in Livingston v. Wyeth, 520 F.3d 344, 352 (4th Cir. 2008), with respect to whether an employee can engage in protected activity under SOX by complaining of future misconduct.

In a decision of first impression in the Circuit, but resembling those of other courts, the United States Court of Appeals for the First Circuit has found a plaintiff’s allegations of shareholder fraud were not “objectively reasonable” under the whistleblower protection provision of the Sarbanes-Oxley Act (“SOX” or “Act”), and so has affirmed summary judgment for the employer. Day v. Staples, Inc., No. 08-1689 (1st Cir., Feb. 9, 2009). The standard by which a plaintiff’s reasonable belief of fraudulent activity is measured under SOX had not previously been addressed by the First Circuit.