In a significant win for companies with employees working in foreign countries, the U.S. Court of Appeals for the First Circuit decided on January 5, 2006 that the whistleblowing protections of the Sarbanes-Oxley Act ("SOX") do not extend to foreign citizens working outside the United States for foreign subsidiaries of companies covered by SOX. In its ruling, the first decision on this issue by a U.S. Court of Appeals, the Court dismissed the whistleblowing claim that Ruben Carnero ("Carnero") brought against Boston Scientific Corporation ("BSC"). BSC was represented in the case by Goodwin Procter labor and employment attorneys Jim Nagle and Leslie Blickenstaff.
Background
Carnero is an Argentine citizen who was employed by Boston Scientific Argentina and who also performed services for Boston Scientific Brazil until he was terminated in August 2002. In addition to seeking statutory severance benefits under the laws of Argentina and Brazil, Carnero brought a whistleblowing retaliation claim under SOX seeking additional damages, including the value of stock options. Carnero asserted that he was terminated for allegedly reporting certain accounting practices at the company’s Latin American subsidiaries that he claimed were improper. When the Department of Labor did not move forward with Carnero’s claim within 180-days of its filing, Carnero filed a complaint in the U.S. District Court for Massachusetts. The District Court granted BSC’s motion to dismiss that complaint and a related common law whistleblowing claim in 2004.
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