Carl Genberg was an executive for the Ceregenix Corporation who suspected misconduct by the Board of Directors. When he suspected misconduct including insider training, he reported this to the Board. As a result of his actions, Genberg was fired. Yet when he brought a whistleblower suit before a federal district court, the judge dismissed his case upon a summary judgment motion by Ceregenix.
In reaching its decision, the District Court claimed that whistleblower reports needed to be “definitive and specific.” Yet this was the wrong standard. A quarter-century ago the Third Circuit ruled in in Passaic Valley Sewerage Commissioners v. Department of Labor that whistleblowers only need to have a reasonable belief that their claims amount to a violation of the law. In 2002, the Sarbanes-Oxley law (SOX) was passed in wake of the Enron and Worldcom scandals, and the Senate Judiciary Committee stated in its final legislative report that the Passaic Valley standard protecting any “non-frivolous” report should control in a Sarbanes-Oxley whistleblower case.
Alas, big corporate interest groups like the Chamber of Commerce did not concede defeat. Instead, courts around the country pushed for the “definitive and specific” standard, which makes it much harder for whistleblowers to get their cases to the trial stage. A surprising and disturbing number of decisions ignored the reasonableness language and adopted the “definitive and specific” standard.
The National Whistleblower Center counterpunched in a case before the Administrative Review Board and won an important victory, firmly establishing the Department of Labor standard, namely whether a whistleblower “reasonably believes” a violation of law has been committed. Moreover, DOL specifically rejected the “definitive and specific” language.
But some discredited ideas just don’t die, and the District Court in Colorado revived “definitive and specific” again. Genberg appealed the decision, and NWC again responded with an amicus brief explaining why the Tenth Circuit must use the “reasonably believes” standard.
The Tenth Circuit agreed. It explained the “statement of the burden [put forth by the District Court] was incorrect, for the Administrative Review Board of the Department of Labor has explicitly disavowed the definitive and specific evidentiary standard” (internal quotations omitted).
Stephen M. Kohn, the National Whistleblower Center’s executive director who submitted the amicus brief in Genberg v. Porter stated, “corporations must stop retaliating and start listening to their whistleblowers. The Tenth Circuit reaffirmed basic rules of law governing SOX. These rules were drafted to help whistleblowers report wrongdoing, not to help the corporation’s cover-up fraud. The culture of shooting the messenger must end. We are proud to have supported Mr. Genberg in this very important case.”
For more information: