Administrative Review Board

Administrative Review Board

200 Constitution Avenue, N.W.

Washington, D.C. 20210

U.S. Department of Labor

In the Matter of:

ANTONIO JOSE JIMENEZ

PEREZ,

ARB CASE NO. 2017-0031

ALJ CASE NO. 2015-SOX-00014

COMPLAINANT,

DATE:

v.

SEP 3 0 2019

CITIGROUP, INC.,

RESPONDENT.

Appearances:

For the Complainant:

Kathleen M. Kundar, Esq.; Amit Shertzer, Esq.; Fox Horan &

Camerini LLP; New York, New York

For the Respondent:

A. Michael Weber, Esq.; Meredith Kaufman, Esq.; Littler Mendelson,

P.C.; New York, New York

Before: William T. Barto, Chief Administrative Appeals Judge; James A.

Haynes and Thomas H. Burrell, Administrative Appeals Judges.

FINAL DECISION AND ORDER

PER CURIAM. This case arises under the whistle blower provision of the

Sarbanes-Oxley Act of 2002 (Section 806 or SOX), 18 U.S.C. § 1514A (2010), as

amended, and its implementing regulations at 29 C.F.R. Part 1980 (2019). At the

time in question, Antonio Perez was an employee of Servicios Ejectivos, a foreign

subsidiary of Citigroup, Inc., a publicly traded U.S. company. Perez filed a

complaint alleging that his employer began taking adverse actions against him in

violation of the whistleblower provisions of Section 806 because he made SOX-

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protected repmts. Citigroup, Inc., filed a motion for summary decision in which it

argued that the complaint should be dismissed because it presents an impermissible

extraterritorial application of Section 806. 1 The Administrative Law Judge (ALJ)

granted the motion, concluding that the complaint required an extraterritorial

application of Section 806 of the SOX such that it had to be dismissed. We affirm.

BACKGROUND 2

Complainant was an employee of Servicios Ejectivos, which is a subsidiary of

Respondent and a company incorporated in Mexico. D. & 0. at 32. Respondent is a

Delaware corporation headquartered in New York City, and is registered under

Section 12 of the Securities and Exchange Act of 1934, 15 U.S.C. 78/.

It is undisputed that Complainant worked entirely in Mexico. Id. at 44.

Complainant asserts that although he worked for and was paid by Servicios

Ejectivos, he reported SOX-protected activities in May to July 2014, including a

report concerning large amounts of money going through a "concentration account"

that Banamex USA, a Servicios Ejectivos parent company (and also a subsidiary of

Respondent), maintained in the U.S. and managed in U.S. dollars. Id. at 33. He also

asserts that Respondent's U.S. shareholders were affected by the activity he

reported. Id. at 31.

On August 6, 2014, Complainant met with his supervisor in Mexico City to

discuss the outstanding balance on Complainant's corporate credit card. Id. at 35.

In exchange for severance, Complainant resigned from his position. Id. He signed a

settlement agreement dated August 6, 2014. Id.

Complainant filed a SOX complaint with the Occupational Safety and Health

Administration (OSHA) on or about January 20, 2015. OSHA dismissed the case on

March 9, 2015, because there was no protected activity as the adverse action took

place in Mexico and there was no indication that a U.S. parent company was

Respondent also argued in its summary decision motion that it was not a proper

respondent because it was not Complainant's employer and took no adverse action against

him and that Complainant was unable to establish a prima facie case. D. & 0. at 22.

We restate facts taken from the ALJ's Decision and Order. We make no independent

findings of fact on appeal.

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involved. Complainant filed objections on or about April 15, 2015, with the Office of

Administrative Law Judges.

Before the assigned ALJ, Respondent filed a motion for summary decision

asserting that SOX does not apply to employees working outside of the U.S., citing

Morrison v. Nat'l Australia Bank, Ltd., 561 U.S. 247 (2010). Complainant filed an

opposition, Respondent filed a reply, and Complainant filed a surreply brief.

On March 8, 2017, the ALJ granted Respondent's motion for summary

decision. The ALJ noted that the uncontroverted evidence of record was that

Complainant was a Mexico-based employee of a Mexican subsidiary of Respondent,

and worked entirely in Mexico. Complainant was interviewed, hired, and effectively

terminated in Mexico, and his job included no business travel to the United States.

D. & 0. at 47, 48. Further, the pl'Otected activity and adverse action all occurred in

Mexico. The ALJ reasoned that although the alleged fraudulent misconduct

Complainant reported involved an account located in the U.S., this fact did not

confer jurisdiction or authorize application of Section 806 of SOX to Complainant's

case. Id. at 49. Thus, the ALJ dismissed the complaint. Complainant appealed the

ALJ's decision to the Administrative Review Board (ARB or Board).

JURISDICTION AND STANDARD OF REVIEW

The ARB has jurisdiction to review the ALJ's decision under Secretary's

Order No. 01-2019 (Delegation of Authority and Assignment of Responsibility to the

Administrative Review Board), 84 Fed. Reg. 13,072 (Apr. 3, 2019); 29 C.F.R. Part

1980. The ARB reviews an ALJ's grant of summary decision de novo. Siemaszko v.

First Energy Nuclear Operating Co., Inc., ARB No. 09-123, ALJ No. 2003-ERA-013,

slip op. at 3 (ARB Feb. 29, 2012). Under 29 C.F.R. § 18.72 (2019), an ALJ may enter

summary decision for either party if the pleadings, affidavits, material obtained by

discovery, or matters officially noticed show that there is no genuine issue as to any

material fact and that based on the law a party is entitled to summary decision.

To avoid summary decision, the non-moving party must rebut the motion and

evidence presented by the moving party with contrary evidence sufficient to create a

genuine issue of material fact. That rebuttal, or answer, "may not rest upon mere

allegation or denials of his pleading, but must set forth specific facts showing that

there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256

(1986) (citing Federal Rule of Civil Procedure 56(e)). In assessing this, or any,

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summary decision, both the ARB and the ALJ must view the evidence, along with

all reasonable inferences, in the light most favorable to the non-moving party.

DISCUSSION

Section 806's employee-protection provision generally prohibits covered

employers and individuals from retaliating against employees because they provide

information or assist in investigations related to the categories listed in the SOX

whistleblower statute.

To state a claim under Section 806, a complainant must allege that his

employer took an unfavorable action against him and that protected activity by the

Complainant was a contributing factor in the adverse action. See Prioleau v.

Sikorsky Aircraft Corp., ARB No. 10-060, ALJ No. 2010-SOX-003, slip op. at 5 (ARB

Nov. 9, 2011). Under 18 U.S.C. § 1514A(b)(2)(C), SOX complaints are decided using

the legal burdens of proof set forth in the employee-protection provision of the

Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (AIR

21), 49 U.S.C. § 42121.

It is undisputed that Complainant is a foreign citizen who worked for

Servicios Ejectivos during all relevant periods in Mexico. It is likewise undisputed

that Servicios Ejectivos is a foreign subsidiary of Respondent, a U.S. company

registered under Section 12 of the Securities Exchange Act of 1934. Complainant

alleges that he reported misconduct to his Mexican supervisors, and that the

wrongdoing he reported concerned a U.S. account and fraud against Respondent's

shareholders. Id. at 31, 42.

We have recently held that Section 806 is not extraterritorial in Hu v. PTC,

Inc., ARB No. 2017-0068, ALJ No. 2017-SOX-00019, slip op. at 7-9 (ARB Sept. 18,

2019). In Hu, we concluded that the primary focus of Section 806 was to deter and

punish retaliation against an employee's terms conditions and privileges of

employment. This interpretation is consonant with the actual language of Section

806, although we recognize that SOX, as an entire legislative enactment, has a

number of goals. It is clear that an attempt to apply the terms and remedies of

Section 806 outside the United States could lead to frequent conflict with the laws

of foreign nations and potentially inconsistent results for employees. Therefore, to

allow the adjudication of the complaint before us, it must be a domestic application

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of Section 806.-3 Id. at 10. When deciding the question, we have held that "the

location of the employee's permanent or principal worksite is the key factor to

consider." Id.

Applying this analytical framework to this Section 806 complaint, we

conclude that it does not represent a domestic application of Section 806. It is

undisputed that Complainant's only place of work was Mexico and never the United

States. The only domestic contacts in this matter arc that the fraud Complainant

allegedly reported concerned an account in the U.S. and that U.S. shareholders

were potentially affected by Complainant's allegations. These facts, without more,

do not create a domestic application of Section 806.

CONCLUSION

For the reasons explained above, we AFFIRM the ALJ's decision as correct.

Accordingly, the complaint is hereby DENIED.

SO ORDERED.

The two-step framework in Morrison requires analysis of (1) whether the statute at

issue extends extraterritorially and, if not, (2) whether the activity comprising the focus of

the statute occurred within the United States or outside of it. If the activity occurred within

the U.S., then there is a permissible domestic application of the statute. If the activity

occurred outside the U.S., then there is an impermissible extraterritorial application and

the complaint must be dismissed. Hu, ARB No. 2017-0068, slip op. at 6, 10; Morrison, 561

U.S. 266-70.

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