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Testy 9th Circuit Hears Whistleblower Case

SEATTLE (CN) - Two Boeing employees who were fired after providing a newspaper reporter information about alleged ethics violations asked the 9th Circuit to reconsider a federal judge's ruling that the Sarbanes-Oxley Act does not prohibit termination for disclosures to the media. No court has yet addressed whether employees can be fired under federal whistleblower laws for providing non-confidential information about potential fraud to the press.

Nicholas Tides and Matthew Neumann worked in Boeing's corporate audit department and made several complaints to supervisors about the company's violations of auditing requirements under Sarbanes-Oxley, according to their original federal complaint.

Congress enacted Sarbanes-Oxley after the Enron accounting scandal.

Tides and Neumann provided a reporter at the Seattle Post-Intelligencer with information and documents about the alleged fraud. They were fired after Boeing learned of the disclosures.

U.S. District Judge John Coughenour ruled that Sarbanes-Oxley "does not prohibit termination for disclosures to the media" and upheld the firings.

During oral arguments on Friday, attorney Stephen Kohn, whose National Whistleblowers Center filed a friend of the court brief, argued the case with the plaintiffs' attorney, John Tollefsen.

As soon as Kohn began his arguments, he was interrupted by a skeptical Judge Andrew Kleinfeld.

"This case concerns a per se rule prohibiting whistleblowers from contacting the press," Kohn said.

Judge Kleinfeld disagreed. "I have difficulty seeing it that way," Kleinfeld said. "It looks to me as though what it concerns is a statute that prohibits retaliation against whistleblowers provided that their disclosures are one of three classes of recipients of the information. I don't see where the statute says anything about the press."

Kohn replied that that was a "misreading" of Sarbanes-Oxley.

"Does the stature mention the press?" Judge Kleinfeld asked.

"It does not, your Honor," Kohn replied.

Kleinfeld then said that the law allowed whistleblowers to provide information to federal regulatory or law enforcement, congress and the employee's supervisors.

"That's all she wrote," the judge said.

But Kohn said that the wording "cause to be provided" in Sarbanes-Oxley could be read as going through the media, and that the language is "substantially similar" to other whistleblower protection laws, "all of which were interpreted as protecting contacts with the press."

Tollefsen said Sarbanes-Oxley does not place limits on how one contacts Congress, and that contacting the press is one of the most effective ways to get the attention of Congress.

"You would be the first court ever to interpret any of these statutes - and we cited four of the whistleblower statutes where you're allowed to use the media as a mode of communication," Tollefsen said.

Judge Kleinfeld countered, "You can use this for blackmail."

Tollefsen, raising his voice, said, "We're not talking about blackmail. We're talking about - that's the kind of thing that Enron's lawyers would have said."

Kleinfeld replied: "I must be a bad fellow because I asked you a question that you think Enron's lawyers might have raised."

Both Judge Kleinfeld and Judge Barry Silverman noted that whistleblower protection for federal employees placed no restrictions on whom the employees could contact, unlike Sarbanes-Oxley.

Tollefsen said that Congress intended for Sarbanes-Oxley to have the same protections as federal employees.

"Now, why they didn't use the exact language as the federal employee statute, I don't know," Tollefsen said.

"That's a major problem, isn't it, for you?" Judge Silverman asked.

In a short argument, Boeing's attorney Eric Wolff claimed that the case was "a very straightforward case of statutory interpretation."

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