Ramona Rocheleau v. Microsemi Corp.

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS FEB 21 2017
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
RAMONA LUM ROCHELEAU, No. 15-56029
Plaintiff-Appellant, D.C. No. 8:13-cv-01774-CJC-JPR
v.
MICROSEMI CORPORATION, INC., MEMORANDUM*
Defendant - Appellee.
Appeal from the United States District Court
for the Central District of California
Cormac J. Carney, District Judge, Presiding
Argued and Submitted February 13, 2017
Pasadena, California
Before: M. SMITH and OWENS, Circuit Judges, and KORMAN,** District Judge.
Plaintiff-Appellant Ramona Lum Rocheleau alleges that her former employer,
Defendant-Appellee Microsemi Corporation, Inc. (Microsemi), retaliated against
her in violation of the whistleblower protection provision of the Sarbanes-Oxley Act
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The Honorable Edward R. Korman, United States District Judge for the
Eastern District of New York, sitting by designation.
1
(SOX), 18 U.S.C. § 1514A, as amended by the 2010 Dodd-Frank Wall Street
Reform and Consumer Protection Act (Dodd-Frank). The district court granted
summary judgment for Microsemi on the basis that Rocheleau failed to make out a
prima facie case of whistleblower retaliation because she had not shown that she
engaged in protected activity under either SOX or Dodd-Frank. Specifically,
Rocheleau failed to establish that she had an objectively reasonable belief that
Microsemi violated one of the provisions enumerated in § 1514A. For the reasons
stated in this memorandum, we affirm.
Section 806 of SOX, codified at 18 U.S.C. § 1514A(a), prohibits retaliation
against any employee who provides information to a federal agency “regarding any
conduct which the employee reasonably believes constitutes a violation of section
1341 [mail fraud], 1343 [wire fraud], 1344 [bank fraud], or 1348 [securities fraud],
any rule or regulation of the Securities and Exchange Commission, or any provision
of Federal law relating to fraud against shareholders.” 18 U.S.C. § 1514A(a)(1).
Similarly, § 922 of Dodd-Frank protects whistleblowers who provide information to
the Securities Exchange Commission (SEC) from retaliation, defining a
“whistleblower” as “any individual who provides . . . information relating to a
violation of the securities laws to the Commission, in a manner established, by rule
or regulation, by the Commission.” 15 U.S.C. § 78u-6(a)(6).
2
Under SEC regulations, a whistleblower must “possess a reasonable belief
that the information [they] are providing relates to a possible securities law violation
(or, where applicable, to a possible violation of the provisions set forth in 18 U.S.C.
1514(a)) that has occurred, is ongoing, or is about to occur.” 17 C.F.R. § 240.21F-
2(b)(1)(i). We apply a burden-shifting framework to claims brought under
§ 1514A, first asking whether the plaintiff has established a prima facie case of
retaliatory discrimination. Tides v. The Boeing Co., 644 F.3d 809, 813–14 (9th Cir.
2011). In order to make out a prima facie case, a plaintiff must demonstrate that
(1) [She] engaged in protected activity or conduct; (2) [her] employer
knew or suspected . . . that [she] engaged in the protected activity;
(3) [she] suffered an unfavorable personnel action; and (4) the
circumstances were sufficient to raise an inference that the protected
activity was a contributing factor in the unfavorable action.
Id. at 814; see also 29 C.F.R. § 1980.104(e)(1)–(2). In order for a plaintiff’s
reporting to constitute “protected activity,” the plaintiff must have “(1) a subjective
belief that the conduct being reported violated a listed law, and (2) this belief must
be objectively reasonable.” Van Asdale v. Int’l Game Tech., 577 F.3d 989, 1000
(9th Cir. 2009). Finally, “to have an objectively reasonable belief there has been
shareholder fraud, the complaining employee’s theory of such fraud must at least
approximate the basic elements of a claim of securities fraud.” Id. at 1001 (internal
quotation marks and alteration omitted).
3
The only issue on appeal is whether Rocheleau possessed an objectively
reasonable belief that Microsemi engaged in violations of one of the enumerated
provisions under § 1514A(a).1 She did not.2
To hold a reasonable belief that the actions she reported constituted
shareholder fraud, Rocheleau needed to believe that they approximated the elements
of securities fraud: “material misrepresentation or omission, scienter, a connection
with the purchase or sale of a security, reliance, economic loss, and loss causation.”
Id. Material representations or omissions are those which a “reasonable
1
Rocheleau briefly gestures at a meritless due process claim premised on the
district court’s grant of permission to Microsemi to file a third motion for summary
judgment, and the district court’s purported denial of the opportunity for
Rocheleau to similarly move. The district court acted well within its discretion by
permitting Microsemi’s third motion. See Polar Bear Prods., Inc. v. Timex Corp.,
384 F.3d 700, 719 (9th Cir. 2004); Fed. R. Civ. P. 16(b)(4). Rocheleau then filed a
brief in opposition, and did not request leave to file any additional motion of her
own.
2
We have held, based on a decision by the Department of Labor’s
Administrative Review Board (ARB), that a whistleblower’s “communications
must definitively and specifically relate to one of the listed categories of fraud or
securities violations under [§ 1514A].” Van Asdale, 577 F.3d at 996–97 (quoting
Platone v. Flyi, Inc., ARB 04-154, 2006 WL 3246910, at *8 (Dep’t of Labor Sept.
29, 2006)) (internal quotation marks and alteration omitted). The ARB has since
rejected the “definitively and specifically” standard and held that the issue is
whether the employee “provided information . . . that [she] reasonably believed
related to one of the violations listed in [§ 1514A], and not whether that
information ‘definitively and specifically’ described one or more of those
violations.” Sylvester v. Parexel Int’l LLC, ARB 07-123, 2011 WL 2165854, at
*15 (Dep’t of Labor May 25, 2011) (en banc). We decline to address the issue of
whether we defer to this new interpretation, because Rocheleau’s claims fail under
either standard.
4
shareholder” would consider important. See Basic Inc. v. Levinson, 485 U.S. 224,
231 (1988). The conduct that Rocheleau reported did not satisfy this standard.
Rocheleau reported that Microsemi (1) engaged in certain technical violations
of the affirmative action requirements imposed by the Office of Federal Contract
Compliance Programs (OFCCP), (2) misclassified Rocheleau and two other
employees as independent contractors, and (3) asked Rocheleau to retroactively
change hiring and recruiting data in violation of OFCCP regulations. Reports of
violations of OFCCP regulations are not themselves protected under SOX or Dodd-
Frank, and no objectively reasonable basis existed to believe that any such violations
would cause Microsemi and its shareholders to suffer significant losses, as required
to establish a prima facie case of reasonable belief in shareholder fraud. Similarly,
Rocheleau’s belief in misclassification of employees was reasonable only in regard
to herself, and the misclassification of a single employee as an independent
contractor falls far short of the materiality standard for shareholder fraud. Finally,
Rocheleau’s claim of shareholder fraud stemming from Microsemi’s failure to
disclose OFCCP’s investigation into Microsemi fails because the 10-K Form in
which Microsemi would disclose any such information was not due to be filed until
after Rocheleau made her report. Any omissions in that form therefore could not
form the basis of protected activity on her part.
5
Rocheleau additionally lacked a reasonable belief that the conduct she
reported constituted violations of any of the remaining provisions enumerated under
§ 1514A. Rocheleau argues that her supervisors directed her to “scrub”—or, as she
believed, to falsify—data that was then sent “to the U.S. Government via both the
Internet and the United States mail,” and that sending the data “constituted both mail
and wire fraud.” But Rocheleau clearly stated in her deposition that she did not alter
the data that she prepared and sent, and the record contains no evidence that false
data was ever transmitted. Additionally, the only argument she presented to the
district court in opposition to Microsemi’s summary judgment motion or in support
of her cross-motion rested on her asserted reasonable belief of shareholder fraud, not
mail or wire fraud. In re Mercury Interactive Corp. Sec. Litig., 618 F.3d 988, 992
(9th Cir. 2010) (“We apply a general rule against entertaining arguments on appeal
that were not presented or developed before the district court.” (internal quotation
marks omitted)).
AFFIRMED.
6