Supreme Court cites 'Enron debacle' in defense of contractor ruling

"It is common ground that Congress installed whistle-blower protection in the Sarbanes-Oxley Act as one means to ward off another Enron (Corp.) debacle,” Supreme Court Justice Ruth Bader Ginsburg wrote for the majority in the U.S. Supreme Court's ruling in Jackie Hosang Lawson et al. v. FMR L.L.C. et al.

“Also clear from the legislative record is Congress' understanding that outside professionals bear significant responsibility for reporting fraud by the public companies with whom they contract, and that fear of retaliation was the primary deterrent to such reporting by the employees of Enron's contractors,” the court ruled.

“In short, we cannot countenance the position advanced by FMR (Corp.) and the dissent ... that Congress intended to leave these professionals vulnerable to discharge or other retaliatory action for complying with the law,” the court ruled in remanding two cases to the lower court.

The majority also described as “unwarranted” the fear in Justice Sonia Sotomayor's dissent that household employees and others would pursue retaliation claims in response to the ruling, and that the Occupational Safety and Health Administration would find the claims to have merit.

“If we are wrong, however, Congress can easily fix the problem” by amending Sarbanes-Oxley to explicitly remove such employees “from the provisions' reach,” Justice Ginsburg wrote.