posted on Friday, May 16, 2008 4:50 PM
by
Lou Michels
Overseas Whistleblowing?
A recent case out of the Southern District of New York has serious implications for multi-national corporations with U.S. subsidiaries or anyone with employees working overseas. In O’Mahony v. Accenture, No. 07-7906 (S.D.N.Y., Feb. 5, 2008), the plaintiff was a partner at Accenture, LLP, a U.S. subsidiary of Accenture Ltd., a Bermuda-based company. O’Mahony was an Irish national working in the United States. Accenture moved her to France in 1992. Foreign employees in France are required to contribute to French social security and O’Mahony told her supervisors that Accenture needed to make those contributions. At some point, senior Accenture management, located in New York, told her that the U.S. tax partner for the company decided not to make the social security contributions and would effectuate the plan by concealing the length of O’Mahony's assignment in France. When O’Mahony objected to what she perceived to be tax fraud, an Accenture senior manager, also located in New York, supposedly decided to reduce her level of responsibility, along with her compensation.
O’Mahony filed a complaint under the Sarbanes-Oxley Act, claiming that Accenture retaliated against her because of her objections to the tax fraud scheme.
Now it gets interesting. The Department of Labor initially dismissed O’Mahony's complaint on the grounds that each of the elements of her complaint occurred in France and that the DOL lacked jurisdiction over the claim because the whistleblowing provisions of Sarbanes-Oxley do not apply extraterritorially. The DOL administrative law judge upheld the dismissal on appeal and O’Mahony filed a petition for review with the DOL Administrative Review Board.
Probably figuring that the ARB wasn't going to upset the DOL apple cart by reversing its own administrative law judge, O’Mahony pulled the case out of DOL's administrative process and put it into federal court. This was an option because the ARB couldn't make the six-month deadline for processing claims under the Act.
Surprisingly, the federal court reversed the DOL dismissal, finding that although the statute does not apply to elements occurring overseas, in this case the alleged adverse decisions were all made in the United States. In other words, the actual work site or nationality of the employee doesn't matter; it's where the decisions to engage in fraud/Sarbanes-Oxley violations occur that drives the jurisdiction issue.
This decision could have some real fall-out for multi-national corporations, especially those with operating headquarters in the United States. There are plenty of places in the world (just about all of the former Soviet Union, for example) where companies must operate in ways that are not exactly compliant with every single local and national ordinance. An expatriate employee who raises this non-compliance can establish a Sarbanes-Oxley claim simply by alleging that he suffered an adverse employment action resulting from a decision made in the United States. In other words, moving these kinds of issues up the food chain to higher headquarters, when those higher headquarters are located in the U.S., might not be the best plan of attack for dealing with a complaint that might trigger Sarbanes-Oxley liability.