Ninth Circuit Issues Its First Ruling Setting Forth The Elements For Sarbanes-Oxley Whistleblower Claims

The Sarbanes-Oxley Act of 2002,¹ ("Sarbanes-Oxley" or "SOX") protects employees of publicly traded companies from retaliation for providing information related to possible acts of fraud against shareholders. In Van Asdale v. International Game Technology, No. 07-16597 (9th Cir. 2009), the U.S. Court of Appeals for the Ninth Circuit, addressing for the first time the substantive elements of a SOX whistleblower claim, ruled that employees do not have to prove that actual shareholder fraud has occurred to maintain such a suit. Rather, plaintiffs need only establish that they had an actual and objectively reasonable belief that shareholder fraud occurred. In addition, the Ninth Circuit held that concerns about the potential disclosure of attorney-client privileged information would not bar in-house attorneys from asserting SOX whistleblower claims. While the ruling is ultimately a conservative one that closely tracks the existing case law and regulations, it is an