Livingston v. Wyeth, Inc.

PUBLISHED

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

MARK LIVINGSTON, 
Plaintiff-Appellant,
v.
WYETH, INCORPORATED; BRUCE
KAYLOS, Wyeth Sanford Managing
Director; DAVID MCCUAIG, Wyeth
Sanford Human Resource Director,  No. 06-1939
Defendants-Appellees.

UNITED STATES CHAMBER OF
COMMERCE,
Amicus Supporting Appellees.

Appeal from the United States District Court
for the Middle District of North Carolina, at Durham.
Paul Trevor Sharp, Magistrate Judge.
(1:03-cv-00919-PTS)

Argued: November 1, 2007

Decided: March 24, 2008

Before NIEMEYER and MICHAEL, Circuit Judges, and
Claude M. HILTON, Senior United States District Judge for the
Eastern District of Virginia, sitting by designation.

Affirmed by published opinion. Judge Niemeyer wrote the majority
opinion, in which Judge Hilton joined. Judge Michael wrote a dissent-
ing opinion.
2 LIVINGSTON v. WYETH, INC.
COUNSEL

ARGUED: Thad M. Guyer, T. M. GUYER & AYERS & FRIENDS,
P.C., Medford, Oregon, for Appellant. Michael Delikat, ORRICK,
HERRINGTON & SUTCLIFFE, L.L.P., New York, New York, for
Appellees. ON BRIEF: Joanne Royce, GOVERNMENT
ACCOUNTABILITY PROJECT, Washington, D.C., for Appellant.
James H. McQuade, ORRICK, HERRINGTON & SUTCLIFFE,
L.L.P., New York, New York; Terry A. Clark, CONSTANGY,
BROOKS & SMITH, L.L.C., Winston-Salem, North Carolina, for
Appellees. Virginia W. Hoptman, WOMBLE, CARLYLE, SAN-
DRIDGE & RICE, Tysons Corner, Virginia; Charles A. Edwards,
Sheri Roberson, WOMBLE, CARLYLE, SANDRIDGE & RICE,
Raleigh, North Carolina; Robin S. Conrad, Shane Brennan,
NATIONAL CHAMBER LITIGATION CENTER, INC., Washing-
ton, D.C., for Amicus Supporting Appellees.

OPINION

NIEMEYER, Circuit Judge:

Relying on the whistleblower protection provisions of the
Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1514A, Mark Livingston
commenced this action against his employer Wyeth, Inc., a pharma-
ceutical company, alleging that Wyeth unlawfully discharged him
because of his complaints to Wyeth’s management about Wyeth’s
inability to implement on schedule a training program at its Sanford,
North Carolina facility, supposing therefore that local employees
would likely misrepresent or cover up the deficiencies in progress to
internal compliance auditors and to the Food and Drug Administra-
tion. The training program was designed to train employees in good
manufacturing practices, and its implementation was required by reg-
ulations of the Food and Drug Administration. Livingston asserted
that in making his complaints, he reasonably believed that Wyeth’s
potential conduct in misrepresenting or covering up the deficiencies
in timely implementation of the program would constitute violations
of § 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5
promulgated under it, and therefore that his conduct was protected
under the Sarbanes-Oxley Act.
 LIVINGSTON v. WYETH, INC. 3
The district court entered summary judgment against Livingston,
concluding that his complaints were not protected activity under the
Sarbanes-Oxley Act because Livingston could not reasonably have
believed that Wyeth was violating the securities laws. The court also
concluded that Wyeth had shown, by clear and convincing evidence,
that it had discharged Livingston for insubordination in threatening to
have the police remove Wyeth’s Director of Human Resources from
a company-sponsored holiday party and that Wyeth would have dis-
charged Livingston regardless of whether he had complained about
the progress of the training program.

Because we conclude that no objectively reasonable basis existed
for Livingston to have believed that Wyeth was violating the securi-
ties laws, we affirm.

I

On Thursday, December 19, 2002, following a brief investigation,
Mark Livingston was discharged from his employment with Wyeth as
Associate Director of Training and Continuous Improvement at
Wyeth’s Sanford, North Carolina facility. The parties agree that the
precipitating events occurred on the previous Friday, December 13,
2002, when Livingston held a company-funded lunch party for mem-
bers of the training staff. David McCuaig, the Director of Human
Resources at the Sanford facility, came to the party without an invita-
tion from Livingston, allegedly to wish the group a happy holiday.
According to Livingston’s own testimony, Livingston approached
McCuaig as McCuaig came into the room and asked, "What are you
doing here? . . . You’re not invited. We have a gift exchange. You
have no gift. We have limited food." After some more discussion,
Livingston then stated, "I need you to leave. I’m asking you to leave.
If you do not leave, I’m going to ask the police escorting holiday traf-
fic downstairs . . . to escort you out." Although there is a factual dis-
pute about the manner in which Livingston told McCuaig to leave, it
is undisputed that he threatened to have the police remove him.
Wyeth suspended Livingston on the following Monday, December
16, 2002, pending investigation, and, following a three-day investiga-
tion, it terminated his employment.

Wyeth contends that this incident was the culmination of a long
history of abusive and insubordinate conduct by Livingston, about
4 LIVINGSTON v. WYETH, INC.
which he had been warned numerous times previously. Livingston
contends, however, that he was fired in retaliation for complaining
about the insufficient progress in implementing a training program to
teach employees good manufacturing practices, as required by the
Food and Drug Administration ("FDA"), and about the potential that
Wyeth could misrepresent the progress of the program or cover up its
true status, in violation of the securities laws.

Wyeth, Inc., formerly known as American Home Products Corpo-
ration, is a publicly traded company that develops pharmaceutical and
consumer health products worldwide. Its net revenue in 2001 was
approximately $14.1 billion. Its Sanford, North Carolina facility is
one of more than two dozen at which it develops and manufactures
products.

From August 2000 to December 2002, Mark Livingston was
employed at the Sanford site, first as a manager of Training and Con-
tinuous Improvement, and then as Associate Director of Training and
Continuous Improvement. He reported to Bruce Kaylos, the managing
director of the Sanford site. During the period of his employment,
Livingston oversaw audits of training programs at the Sanford facility
to monitor their progress. The events which form the basis of Living-
ston’s complaint in this case occurred during July and August 2002.

Wyeth’s manufacturing operations are regulated by the Federal
Food, Drug, and Cosmetic Act, 21 U.S.C. § 301 et. seq., and the FDA
regulations promulgated thereunder. Pharmaceutical products, such as
the vaccine components produced at the Sanford facility, must be
made in accordance with "current good manufacturing practice." 21
C.F.R. § 211.1. In addition to specific mandates, such as requiring
workers to wear clean clothing during drug production, see id.
§ 211.28(a), the regulations for good manufacturing practices require
that "[e]ach person engaged in the manufacture . . . of a drug product
shall have education, training, and experience" sufficient to perform
the functions assigned to them. Id. § 211.25. The regulations do not
specify what training is required, how it should be accomplished, or
how it must be documented, but rather leave it to each regulated com-
pany to create and implement appropriate procedures, subject to FDA
inspection. If a pharmaceutical product is produced in a facility that
does not adhere to good manufacturing practices, including training
 LIVINGSTON v. WYETH, INC. 5
for good manufacturing practices, the product is legally considered
adulterated and is subject to seizure by the FDA. See 21 U.S.C.
§§ 351(a), 334(a)(1).

Precisely for this reason — a failure to follow good manufacturing
practices — the FDA seized allegedly adulterated products at
Wyeth’s Pearl River, New York and Marietta, Pennsylvania facilities,
leading to a Consent Decree in October 2000, directed at those facili-
ties. While the decree did not apply to any other facility, it did require
Wyeth to retain an expert consultant to conduct a "division-wide"
assessment of its quality control programs at all sites, including the
Sanford site, and to respond to the expert’s report, providing the FDA
with a timetable for its responsive actions. As required, Wyeth did
retain a consultant and, in May 2001, advised the FDA that it would
revise its training guidance documents, setting September 30, 2002,
as the date by which it would implement training changes and verify
compliance with the new program. The FDA has never suggested that
Wyeth ever violated the October 2000 Consent Decree.

Wyeth’s training for good manufacturing practices at the Sanford
facility required each manufacturing employee to have a "curriculum"
of required training courses and a signed record to document the
training. Beginning in 2002, these records were to be loaded into an
electronic document control system known as ISOtrain. To transition
to the new system, managers needed to be trained on the new system,
curricula needed to be drafted, and forms and data for all employees
needed to be entered into ISOtrain. As part of his job responsibilities,
Livingston was designated to direct and oversee preparations for
training system audits at the Sanford site between January 2001 and
September 2002, which were to be conducted to monitor progress.
For the period through June 2002, Livingston found no problem with
the program’s progress. He advised management on May 22, 2002,
that the Sanford facility remained "on track" for the September 30,
2002, implementation date.

Wyeth’s Office of Compliance scheduled the final internal verifica-
tion of the new training system for July 29, 2002, two months before
September 30, 2002, the date committed to the FDA. By July 9, 2002,
Livingston became convinced that Wyeth could not meet this internal
verification deadline, and he formally expressed his concerns in a July
6 LIVINGSTON v. WYETH, INC.
10, 2002 memorandum to Kaylos and various corporate directors and
managers. He stated in the memorandum that several departments of
the Sanford site

require additional time to implement the initial components
of the Wyeth Site Employee Training System. As well, we
will need additional time to verify sustainable operation of
a compliant training system in these areas. To indicate oth-
erwise provides false and misleading information to outside
auditors, including the FDA.

Kaylos did not receive the memorandum until approximately July 17,
2002, because he was on vacation. But he met with Livingston on
July 24 to discuss the memorandum. Livingston states that at the
meeting Kaylos threatened to fire him if he persisted in his criticism
of the company’s compliance status and that Kaylos implied that Liv-
ingston should hide or "cover up" noncompliance issues from the
Wyeth internal auditor. Livingston also acknowledges, however, that
"[a]t no time during this meeting, did I claim that Kaylos and Wyeth
were trying to mislead the FDA and those involved with the July 29
[internal] verification" audit.

Wyeth proceeded with the July 29 internal verification audit, and
Marlene Raschiatore of the Wyeth Office of Compliance, who con-
ducted the audit, found the system to be satisfactory, noting that gaps
in training documentation could be addressed in a "legacy plan." A
"legacy plan" is the means of closing compliance gaps after the target
date for compliance passes. Livingston, who had drafted legacy plans
in the past and was familiar with them, admits that he signed off on
Raschiatore’s verification, but states that he did so on limited terms
because, by then, he intended to file an ethics complaint based on the
July 24 meeting with Kaylos.

On or around July 29, 2002, Livingston did file a formal complaint
with Wyeth’s Office of Compliance, in which he stated that he had
informed Kaylos of his belief that the Sanford site was not ready for
the planned July 29 internal verification of the training system. As
Livingston noted, "I expressed my concern that if we were to conduct
the audit and not fully disclose the status of training system imple-
mentation at the site, [Wyeth] would be in the unfortunate position of
 LIVINGSTON v. WYETH, INC. 7
providing false and misleading information to compliance auditors,
including the FDA." He further stated that Kaylos had "mocked and
ridiculed" his analysis and that "[t]he underlying message from Mr.
Kaylos was clear — we are going to conceal facts, data, and informa-
tion from the verification auditor that would shine negatively on sys-
tem implementation or operation at Sanford." The complaint
concluded:

Federal law deems it a crime to make any false, fictitious,
or fraudulent statement to any government agency, or in
making such statement, to conceal any material fact. As I
read the Wyeth Code of Conduct, this policy is in place to
ensure that information provided to government agencies is
truthful, accurate, and complete.

Wyeth’s Office of Compliance conducted an investigation into Liv-
ingston’s complaint, but it found no violations by Kaylos or other
Wyeth employees and closed its file on October 9, 2002.

The Sanford facility ultimately met the September 30, 2002 com-
pliance target given to the FDA, and the Sanford site’s training sys-
tem for good manufacturing practices received full verification by the
Wyeth Office of Compliance. Livingston does not dispute that he
signed the verification checklist certifying that the compliance dead-
line had been met.

On or around October 16, 2002, well after verification of the new
training program was complete, the Human Resources director of the
Sanford site, David McCuaig, placed Livingston on a Personal
Improvement Plan ("PIP") containing ten expectations. These
included the specific requirements that Livingston stop making non-
constructive comments, such as saying that the use of "approved and
verified training practices is ‘defrauding’ the FDA," and that he
"[r]efrain from making negative and insulting comments regarding
the practices of other departments." The PIP stated that "[f]ailure to
show immediate, significant and sustained improvement within the
next 30 days will result in termination." Livingston refused to sign the
PIP.

The October 16 PIP was not the first run-in Livingston had with
the Human Resources department. In 2001 and 2002, the Human
8 LIVINGSTON v. WYETH, INC.
Resources office had received numerous complaints from Wyeth
employees about Livingston’s use of abusive language and inappro-
priate behavior. In May 2002, Livingston was formally warned for the
use of "foul and abusive language and unprofessional behavior"
toward subordinates. Livingston does not dispute that a number of
employees asked for transfers or resigned as a result of his conduct.

Tension between Livingston and Kaylos and McCuaig continued to
grow after the October 16 PIP, with Livingston becoming increas-
ingly suspicious that he was about to be terminated. Livingston states
that McCuaig "stalked" him at staff meetings and generally acted in
a way that led Livingston to believe that he would be fired in front
of his team members.

The situation came to a head on Friday, December 13, 2002, at the
off-site Wyeth holiday party, when Livingston excluded McCuaig
from the room in front of company employees. Wyeth in turn sus-
pended Livingston the following Monday, December 16, pending
investigation of the incident, and formally terminated him on Decem-
ber 19, 2002.

Livingston filed a "whistleblower retaliation" complaint with the
Secretary of Labor on January 14, 2003. The Secretary issued prelimi-
nary findings against Livingston on June 27, 2003, but did not issue
a final decision within 180 days, thus permitting a district court to
obtain jurisdiction over the claim. Livingston commenced this action
on September 29, 2003, naming Wyeth, Kaylos, and McCuaig as
defendants. He alleged that the defendants (hereinafter collectively,
"Wyeth") violated 18 U.S.C. § 1514A, by taking adverse employment
action against him in retaliation for expressing concerns about train-
ing at the Sanford facility, and violated North Carolina common law
for wrongful discharge.

After the parties conducted discovery, the district court granted
Wyeth’s motion for summary judgment, dismissing all counts of the
complaint. Livingston v. Wyeth, Inc., No. 1:03CV00919, 2006 WL
2129794 at *15 (M.D.N.C. July 28, 2006). The court concluded that
"[t]here [was] nothing in the record — or in Livingston’s allegations
— indicating that Wyeth made false or misleading statements, or
omitted relevant information, in any documents provided to its share-
 LIVINGSTON v. WYETH, INC. 9
holders." Id. at *10. Nor was there "an objectively reasonable basis,
at the time of the allegedly protected activity, for Livingston to equate
the perceived training deficiencies with imminent wrongdoing. . . .
[T]he record is insufficient to support a finding that [Wyeth] appeared
to be ready to commit wrongdoing." Id. In addition, the court con-
cluded that any wrongdoing hypothesized by Livingston would, in
any event, not have resulted in a "material" loss to Wyeth, requiring
the loss to be reported publicly. Id. Finally, the court found "as a mat-
ter of law that [Wyeth] [had] established by clear and convincing evi-
dence that a non-discriminatory rationale independently caused
[Livingston’s] termination." Id. at *11. The court observed:

Plaintiff, acting in front of subordinate employees, threat-
ened to have a superior official removed from an office
party by police officers who were nearby. Such an act of
insubordination and insolence without question called for
and supported Plaintiff’s immediate termination, and Plain-
tiff was in fact suspended immediately and fired within six
days on the basis of his actions at the holiday party.

Id. Consistent with these conclusions, the court also concluded that
essential elements of Livingston’s wrongful discharge claim under
North Carolina law were lacking. Id. at *12-15.

Livingston appeals the district court’s judgment, dated July 28,
2006, challenging each of the reasons given by the district court for
granting Wyeth’s motion for summary judgment.

II

We review the district court’s grant of summary judgment in favor
of Wyeth de novo. See Holland v. Washington Homes, Inc., 487 F.3d
208, 213 (4th Cir. 2007).

To address Livingston’s claim, the factual essence of his claim
must first be articulated.

Livingston rests his claim of retaliation on his complaints about
Wyeth’s training program at the Sanford facility, principally commu-
10 LIVINGSTON v. WYETH, INC.
nicated through two memoranda dated July 10 and July 29, 2002, but
also through related oral conversations. In the July 10 memorandum,
Livingston complained to management about "serious deficiencies" in
the implementation of the training program for good manufacturing
practices, observing that deadlines for completion of the training pro-
gram were in jeopardy. He said, "We will need additional time to ver-
ify sustainable operation of a compliant training system in these areas.
To indicate otherwise provides false and misleading information to
outside auditors, including the FDA." In the July 29 memorandum,
which he submitted as a formal complaint in furtherance of his obli-
gations as Associate Director of Training, he repeated that the San-
ford facility "was not ready" for the planned July 29 internal audit to
verify the necessary progress of the training program and to ensure
that the September 30 deadline would be achieved. He warned that "if
we were to conduct the audit and not fully disclose the status of train-
ing system implementation at [Sanford], [Wyeth] would be in the
unfortunate position of providing false and misleading information to
compliance auditors, including the FDA." He added the admonition,
"Federal law deems it a crime to make any false, fictitious, or fraudu-
lent statement to any government agency, or in making such state-
ment, to conceal any material fact."

At no time did Livingston complain that Wyeth had in fact made
a false statement to any government agency or to stockholders. And,
as it turned out, Livingston’s fears went unrealized. He signed off on
the internal verification audit that took place from July 29 to August
1, and on the implementation of the whole training program, which
was completed by September 30, as committed, albeit with an agenda
under a "legacy plan" to fill gaps. Nonetheless, in this action Living-
ston claims that his complaints to management were a contributing
factor to his firing on December 19, 2002, and accordingly that
Wyeth violated the whistleblowing provisions of the Sarbanes-Oxley
Act insofar as it protects employees who make complaints about vio-
lations of § 10(b) of the Securities Exchange Act of 1934, 15 U.S.C.
§ 78j, and Rule 10b-5 promulgated under it, 17 C.F.R. § 240.10b-5.

Section 806 of the Sarbanes-Oxley Act of 2002, Pub. L. No. 107-
204, 116 Stat. 745, 802-04 (2002), added § 1514A to Title 18 of the
United States Code, providing "whistleblower" protection for employ-
ees of publicly-traded companies by prohibiting their employers from
 LIVINGSTON v. WYETH, INC. 11
retaliating against them for providing information or cooperating in
investigations related to violations of specified laws, including 18
U.S.C. § 1348 (prohibiting securities fraud) and Rule 10b-5 of the
SEC (prohibiting the same), as well as any other provision of federal
law relating to a company’s fraud against shareholders. Section
1514A provides, as relevant:

No [publicly-traded company], or any officer [or] employee
. . . of such company, may discharge . . . or in any other
manner discriminate against an employee in the terms and
conditions of employment because of any lawful act done
by the employee —

(1) to provide information . . . 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, when
the information or assistance is provided to . . .

***

(C) a person with supervisory authority over the employee
(or such other person working for the employer who has the
authority to investigate, discover, or terminate misconduct).

18 U.S.C. § 1514A(a) (emphasis added). The burdens of proof for
establishing a claim under § 1514A(a) are incorporated from the
Whistleblower Protection Program of the Wendell H. Ford Aviation
Investment and Reform Act for the 21st Century, Pub. L. No. 106-
181, § 519(a), 114 Stat. 61, 145-49 (2000) (codified at 49 U.S.C.
§ 42121). See 18 U.S.C. § 1514A(b)(2)(C) (providing that the retalia-
tion claim under Sarbanes-Oxley "shall be governed by the legal bur-
dens of proof set forth in [49 U.S.C. § 42121(b)]"). Section 42121(b),
in turn, provides with respect to the burdens of proof that the plaintiff
bears the burden of showing by a preponderance of the evidence that
protected activity "was a contributing factor in the unfavorable per-
sonnel action alleged in the complaint." 49 U.S.C. § 42121(b)(2)(B).
If the plaintiff carries his burden, the employer may nonetheless
12 LIVINGSTON v. WYETH, INC.
defeat the plaintiff’s claim for relief by showing "by clear and con-
vincing evidence that the employer would have taken the same unfa-
vorable personnel action in the absence of [the protected activity]."
Id.

Thus, for Livingston to establish a cause of action under 18 U.S.C.
§ 1514A, he must show, in the context of this case, by a preponder-
ance of the evidence that (1) he provided information or a complaint
to a Wyeth supervisor or to one authorized to investigate and correct
misconduct; (2) the information or complaint regarded conduct that
he reasonably believed constituted a violation of an enumerated stat-
ute or any regulation promulgated by the Securities and Exchange
Commission relating to fraud;1 (3) his employer discharged him or
took other unfavorable personnel action against him; and (4) his pro-
viding the information or making the complaint was a contributing
factor to his discharge or other adverse employment action taken by
Wyeth.
1
In § 1514A, the language defining the employee’s belief of a violation
includes a violation of (1) 18 U.S.C. § 1341 (mail fraud); (2) 18 U.S.C.
§ 1343 (wire fraud); (3) 18 U.S.C. § 1344 (bank fraud); (4) 18 U.S.C.
§ 1348 (securities fraud); (5) "any rule or regulation of the Securities and
Exchange Commission"; or (6) "any provision of Federal law relating to
fraud against shareholders." All except the violations described under (5)
refer explicitly to a company’s fraud. We conclude that number (5) also
refers to regulations prohibiting fraud. To conclude otherwise would
absurdly allow a retaliation suit for an employee’s complaints about
administrative missteps or inadvertent omissions from filing statements.
Moreover, the ambiguity is fully clarified by the context of the whistle-
blower provision in the Sarbanes-Oxley Act and by the legislative history
that indicates that whistleblowing is protected by § 1514A when it relates
to "fraud." See, e.g., S. Rep. No. 107-146, at 19 (2002) ("Although cur-
rent law protects many government employees who act in the public
interest by reporting wrongdoing, there is no similar protection for
employees of publicly traded companies who blow the whistle on fraud
and protect investors") (emphasis added); id. (noting that whistleblower
provision protects employees who report conduct "which they reasonably
believe to be fraudulent") (emphasis added). In this case, Livingston
relies on violations of § 10(b) of the Securities Exchange Act of 1934
and Rule 10b-5 under it, both of which prohibit securities fraud.
 LIVINGSTON v. WYETH, INC. 13
To "reasonably believe" that company conduct "constitutes a viola-
tion" of law, as those terms are used in § 1514A(a)(1), Livingston
must show not only that he believed that the conduct constituted a
violation, but also that a reasonable person in his position would have
believed that the conduct constituted a violation. It would make no
sense to allow Livingston to proceed if he himself did not hold the
belief required by the statute, and the language of the statute itself
requires that the belief be a "reasonable" one. 18 U.S.C.
§ 1514A(a)(1). Thus, § 1514A requires both a subjective belief and an
objectively reasonable belief that the company’s conduct constitutes
a violation of the relevant law.

Moreover, the statute requires Livingston to have held a reasonable
belief about an existing violation, inasmuch as the violation require-
ment is stated in the present tense: a plaintiff’s complaint must be "re-
garding any conduct which [he] reasonably believes constitutes a
violation of [the relevant laws]." 18 U.S.C. § 1514A(a)(1) (emphasis
added). In an analogous context, we have construed the reasonable
belief of a violation to allow for a reasonable belief that the violation
not only (1) "has happened" but also (2) "is in progress." Jordan v.
Alternative Resources Corp., 458 F.3d 332, 340-41 (4th Cir. 2006)
(construing the retaliation provision in Title VII, 42 U.S.C. § 2000e-
3(a)), cert. denied, 127 S. Ct. 2036 (2007). As we amplified in Jor-
dan, "the employee must have an objectively reasonable belief that a
violation is actually occurring based on circumstances that the
employee observes and reasonably believes." Id. at 341. We rejected
the claim, however, that a reasonable belief that a violation has
occurred or is in progress can include a belief that a violation is about
to happen upon some future contingency. See id. at 340-41.2

Once Livingston establishes his cause of action, Wyeth can none-
theless defeat his claim for relief if it shows, by clear and convincing
evidence, that it would have taken the adverse employment action
against him even in the absence of his providing the information or
making the complaint. See 49 U.S.C. § 42121(b)(2)(B)(iv).
2
As we noted in Jordan, because this analysis for determining whether
an employee reasonably believes a law is being violated is an objective
one, we resolve the question as a matter of law. Jordan, 458 F.3d at 339.
14 LIVINGSTON v. WYETH, INC.
In this case, the district court concluded that Livingston failed to
establish element (2) of his cause of action — that his complaint
regarded company conduct that he reasonably believed constituted a
violation of § 10(b) of the Securities Exchange Act and Rule 10b-5
under it — and that Wyeth would have discharged Livingston even
in the absence of Livingston’s having provided the information or
made a complaint.

Addressing Livingston’s failure to establish element (2), we con-
clude that Livingston failed at several of the suppositional levels
assumed by him to satisfy that element in the circumstances of this
case. Livingston himself recognizes the speculative multi-step reason-
ing on which he must rely. As he asserts in his brief on appeal:

All that Livingston needs to show in order for his com-
plaints and disclosure to enjoy protected activity status
under Sarbanes-Oxley is a reasonable belief that Wyeth was
violating "any rule or regulation" of the SEC, or "any provi-
sion of Federal law relating to fraud against shareholders."

Pointing to the July 10 and July 29, 2002 memoranda, he states that
"the core" of his complaints about violations of law was that:

Wyeth was intentionally concealing the same type of FDA
[good manufacturing practices] violations that resulted in
the consent decree [of October 3, 2000, covering two sites
in Pennsylvania and New York] and . . . this non-
compliance would violate the consent decree and [good
manufacturing practices] violations. Concealing consent
decree and [good manufacturing practices] compliance vio-
lations, after having told the SEC and shareholders in its
2001 and 2002 [annual reports] and 10-Q filings that Wyeth
was compliant with [good manufacturing practices] and
consent decree requirements constituted a violation or
apparent violation of Section 10(b) of the Exchange Act and
Rule 10b-5.

In reaching this conclusion, however, Livingston has failed to detail
numerous critical steps that he must, but cannot satisfy.
 LIVINGSTON v. WYETH, INC. 15
First, as of the date of the July 29, 2002 memorandum, and indeed
as of anytime, Livingston failed to show that Wyeth misrepresented
or concealed anything, and the July 29 memorandum did not com-
plain of any misrepresentation or concealment. It expressed a "con-
cern that if we were to conduct the audit and not fully disclose the
status of training system implementation at [Sanford], [Wyeth] would
be in the unfortunate position of providing false and misleading infor-
mation to compliance auditors, including the FDA." (Emphasis
added). Livingston’s July 29 memorandum did draw the conclusion
that he perceived Kaylos’ implicit message in their July 24 meeting
to be that facts and data would be "covered up" from the Wyeth inter-
nal auditor and the FDA. Yet, the record is devoid of evidence that
any Wyeth employee thereafter manifested even an intent to misrep-
resent facts or conceal any wrongdoing concerning training documen-
tation. To the contrary, Livingston stated under oath that "[a]t no time
during this [July 24] meeting, did I claim that Kaylos and Wyeth were
trying to mislead the FDA and those involved with the July 29 verifi-
cation." Furthermore, he informed the Wyeth investigators who
responded to his July 29 ethics complaint that he did not believe that
anyone at the site would intentionally provide false statements, and
a copy of the results of this investigation was actually provided to the
Wyeth internal auditor who conducted the July 29 inspection of the
Sanford facility, negating any possibility that Livingston’s concerns
could be "covered up" from the auditor. In addition, in order to antici-
pate a misrepresentation to the FDA, he would have to assume that
the new training documentation system would not actually be imple-
mented by the September 30 commitment date; that Wyeth would fail
to develop an acceptable legacy plan to afford it additional time to
close any remaining compliance gaps; and that Wyeth would then
misrepresent or conceal the true status of the program. This chain of
speculation is simply too long to support a claim that Wyeth in fact
covered up anything and made misrepresentations to the FDA or was
in the process of doing so, as is required to support a violation of the
securities laws.

Second, just as the hypothetical misrepresentations of the pro-
gram’s progress never occurred, so also no violation of the 2000 Con-
sent Decree occurred. That decree, issued with respect to two plants
in Pennsylvania and New York, was site-specific and did not cover
the Sanford facility. The only way in which activities of the Sanford
16 LIVINGSTON v. WYETH, INC.
site could be implicated by the decree was the decree’s requirement
that Wyeth "retain an expert consultant to undertake a division-wide
assessment" of Wyeth’s quality control programs and to submit pro-
posed responsive actions to the FDA, along with a timetable for com-
pleting those actions. But Wyeth concededly did those things. It
retained an expert, and in response to the expert’s evaluation of the
Sanford facility’s procedures, it committed to implementing a new
training program for good manufacturing practices at the Sanford site
by September 30, 2002. Thus, during the summer of 2002, when the
training system implementation was in progress, there was no objec-
tively reasonable basis from which to conclude that the 2000 Consent
Decree had been or was being violated.

Third, there is no suggestion in either the July 10 or July 29 memo-
randum that Wyeth or its employees had or even intended to mislead
shareholders, as necessary to support a reasonable belief that the
securities laws had been or were being violated. The annual reports
for 2001 and 2002, indicating that Wyeth was compliant with good
manufacturing practices, was never shown to be false or misleading
when made, and there is no indication in the record that Wyeth
intended to make false or misleading statements about its manufactur-
ing practices in the annual report that would come out in the spring
of 2003. In addition, to convert a hypothesized cover-up and misrep-
resentation with respect to the progress of the training program at the
Sanford site into a securities fraud violation would require even larger
leaps of speculation than Livingston took in supposing misrepresenta-
tions to internal auditors and the FDA. In order to justify his belief
that Wyeth committed securities fraud, Livingston would have to
have reasonably believed that Wyeth (1) made a material misrepre-
sentation (or omission) (2) with scienter (3) in connection with the
purchase or sale of a security (4) on which the seller or purchaser rea-
sonably relied, (5) causing economic loss. See Dura Pharm., Inc. v.
Broudo, 544 U.S. 336, 341-42 (2005); Miller v. Asensio & Co., Inc.,
364 F.3d 223, 227 (4th Cir. 2004). While Wyeth did state in its public
reports for 2001 and 2002 that it was compliant with the 2000 Con-
sent Decree (covering its Pennsylvania and New York sites and not
its Sanford, North Carolina site), there is no evidence that that state-
ment was false or misleading. And there was no statement, false or
otherwise, about Wyeth’s training program implementation at the
Sanford site. Indeed, Livingston’s own observations indicate that no
 LIVINGSTON v. WYETH, INC. 17
finding that Wyeth made a false or misleading statement would be
possible, inasmuch as Livingston acknowledged that he never com-
plained that Kaylos and Wyeth were "trying to mislead the FDA and
those involved with the July 29 verification" and that he did not
believe that anyone at the Sanford site would intentionally provide
false statements. Nor was there any actual deficiency in implementing
the training program that could be misrepresented or concealed. None
of the fears expressed by Livingston in his July 10 and July 29 memo-
randa about false or misleading statements ever materialized. Thus,
even though his claim requires that he have complained about what
he believed as a past violation or one in progress, he cannot even
point to evidence indicating that Wyeth intended to make false or
misleading statements in any statement or report to shareholders. The
chain of speculation, in light of a record totally devoid of any Wyeth
wrongdoing at the Sanford site, is simply too weak on which to hang
even a postulated violation of the securities laws. Livingston, there-
fore, could not have reasonably believed that Wyeth had violated or
was violating the securities laws.

Fourth, even if Wyeth had made the false statements to compliance
auditors and the FDA that Livingston supposed could be made, none
would amount to a material statement as necessary to violate § 10(b)
of the Securities Exchange Act and Rule 10b-5. For a statement or
omission to be actionable under § 10(b) of the Securities Exchange
Act and Rule 10b-5, it must concern a material fact. The Supreme
Court has noted that to fulfill the materiality requirement, "there must
be a substantial likelihood that the disclosure of the omitted fact
would have been viewed by the reasonable investor as having signifi-
cantly altered the total mix of information made available." Basic,
Inc. v. Levinson, 485 U.S. 224, 231-32 (1988) (internal quotation
marks omitted). Thus, for deficiencies in the training program sched-
ule to have had a material impact on Wyeth’s finances, there must
have been some realistic possibility that the FDA would take regula-
tory action against Wyeth having material financial consequences to
a reasonable investor. It is undisputed, however, that the FDA never
issued any warning or made any observation regarding Wyeth’s train-
ing schedule deficiencies at the Sanford site during the period when
Livingston made his complaint.

Furthermore, at the time of Livingston’s alleged protected activity,
Wyeth was developing pharmaceuticals at over two dozen facilities
18 LIVINGSTON v. WYETH, INC.
worldwide and had revenues of over $14 billion. The Sanford site
alone had 27 different "quality elements" defined by its good manu-
facturing practices manual, of which the training about which Living-
ston complained was only one element. Livingston has not
demonstrated why Wyeth would be obligated to report to investors as
"material" any deficiencies in the training documentation procedures
at a single site — or why he could "reasonably believe" that they must
do so — particularly when the FDA was aware that Wyeth was taking
steps to improve that procedure and before the FDA had in any way
indicated it would take action, or even threatened such action. See
Acito v. IMCERA Group, Inc., 47 F.3d 47, 52-53 (2d Cir. 1995) (not-
ing that failure to disclose negative results of FDA inspections of two
plants was not material where defendant operated over 30 plants, the
FDA had taken no materially adverse action, and the defendant had
committed to correct plant deficiencies).

In sum, not one link in Livingston’s imaginary chain of horribles
was real or was in the process of becoming real. The only fact about
which Livingston ever complained was the fact that the training sys-
tem for good manufacturing practices was off schedule. And based on
this one fact, he made a judgment that the program would not likely
be ready for verification by internal compliance auditors on July 29
and would not be completed by September 30, 2002. Even this pre-
dictive judgment, however, proved to be wrong.

Thus, Livingston has failed to produce evidence that he provided
information or made a complaint to Wyeth about conduct which a
reasonable employee in his position could have believed at the time
constituted a violation of the securities laws. And because we affirm
the district court with respect to this element, we need not reach the
other conclusions of the district court challenged by Livingston.

III

Livingston also contends that the district court erred in concluding
that he had not established a claim for wrongful discharge under
North Carolina common law. On appeal, however, Livingston’s entire
argument is contained in a single sentence in his opening brief: "Be-
cause the district court’s findings of fact leading to dismissal of the
 LIVINGSTON v. WYETH, INC. 19
federal claim are also the factual basis for dismissing the wrongful
discharge claim, the latter dismissal was also in error."

We agree with the district court that Livingston’s state law claim
is unsupported in the record. He has presented no evidence that he
was discharged on December 19, 2002, for refusing to violate the law
or that he was fired for reporting the violation of a law expressing the
public policy of North Carolina.

The judgment of the district court is accordingly

AFFIRMED.

MICHAEL, Circuit Judge, dissenting:

I respectfully dissent from the majority’s holding that Mark Living-
ston can show no set of facts to entitle him to protection under the
whistleblower provision of the Sarbanes-Oxley Act of 2002, 18
U.S.C. § 1514A.

The whistleblower protections in § 1514A respond to

a culture, supported by law, that discourage[s] employees
from reporting fraudulent behavior not only to the proper
authorities . . . but even internally. This "corporate code of
silence" not only hampers investigations, but also creates a
climate where ongoing wrongdoing can occur with virtual
impunity. The consequences of this corporate code of
silence for investors in publicly traded companies, in partic-
ular, and for the stock market, in general, are serious and
adverse, and they must be remedied.

S. Rep. No. 107-146, at 10 (2002). Section 1514A was enacted to pro-
vide such a remedy. In short, § 1514A serves to "encourage and pro-
tect [employees] who report fraudulent activity that can damage
innocent investors in publicly traded companies." Id. at 19.

To gain the protection of § 1514A, an employee only has to show
that he alerted his publicly traded employer to activity that he reason-
20 LIVINGSTON v. WYETH, INC.
ably believed constituted a violation of an enumerated law, such as
the violation of a provision relating to fraud against shareholders. 18
U.S.C. § 1514A. Livingston meets this standard when the facts are
read in his favor, as is required at the summary judgment stage. While
working at Wyeth, Inc. (Wyeth), a pharmaceutical manufacturer, Liv-
ingston formed a reasonable belief that Wyeth was intentionally fail-
ing to comply with a consent decree that arose out of regulatory
action against Wyeth by the U.S. Food and Drug Administration
(FDA). The consent decree compelled compliance with FDA regula-
tions requiring good manufacturing practices aimed at ensuring prod-
uct safety. When Livingston stated his concerns to his superiors, he
was told that he would be fired unless he retracted his statements and
stopped all reports of non-compliance at the facility where he worked.
He then made an internal complaint to the company’s offices that deal
with ethics and regulatory compliance, stating that he was concerned
about the effect Wyeth’s cover-up would have on shareholders.
Wyeth then fired him. Because these facts are sufficient to require a
trial on Livingston’s § 1514A claim, I would reverse the grant of
summary judgment to Wyeth. Because the majority affirms the sum-
mary judgment by construing the facts in favor of Wyeth (the non-
movant), I respectfully dissent.

I.

In reviewing the award of summary judgment to Wyeth, the major-
ity has failed to state the facts in the light most favorable to Living-
ston. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986)
(stating that "[t]he evidence of the non-movant is to be believed" in
summary judgment proceedings). The facts, stated in that light, are as
follows.

On October 3, 2000, Wyeth became subject to a consent decree
arising out of the FDA’s seizure of allegedly adulterated products
from two Wyeth facilities. The consent decree was entered in a forfei-
ture action in which the FDA asserted that the seized products were
adulterated under the Food, Drug, and Cosmetic Act, 21 U.S.C.
§ 351(a)(2)(B), because certain Wyeth facilities had failed to comply
with federally mandated good manufacturing practices (GMPs).
According to FDA regulations, GMPs require proper training of all
persons engaged in manufacturing drugs. 21 C.F.R. § 211.25. The
 LIVINGSTON v. WYETH, INC. 21
regulations specify that each employee must be trained in the perti-
nent GMPs and in the employee’s particular job functions. Id.
§ 211.25(a). Training must be "conducted by qualified individuals on
a continuing basis." Id. This training is essential "to provide assurance
that [every] drug product has the safety, identity, strength, quality,
and purity that it purports or is represented to possess." Id.
§ 211.25(b).

The consent decree imposed binding requirements on all Wyeth
facilities in its drug manufacturing division, including the facility in
Sanford, North Carolina. The consent decree ordered Wyeth to hire
an independent auditor to conduct a division-wide assessment of the
company’s quality control and compliance with GMPs. Thereafter,
Wyeth was required to submit a plan with a timetable for the correc-
tion of deficiencies to the FDA, obtain FDA approval of the plan, and
comply with the timetable. The timetable adopted under the consent
decree could not be altered without written authorization by the FDA.

In keeping with industry practice of reporting GMP compliance to
shareholders, Wyeth represented in its 2001 and 2002 annual reports
that it was complying with the consent decree. The 2001 annual report
also stated that the company was making an investment of "$300 mil-
lion to support our number one operating objective — to make sure
that our manufacturing and operations maintain high quality stan-
dards." J.A. 323. The statement about this investment also mentioned
the consent decree and noted that Wyeth was independently "strength-
ening sustainable compliance." Id.

When the consent decree was entered in October 2000, Livingston
was the Manager for Training and Continuous Improvement at the
Sanford site. He was responsible for GMP compliance and implemen-
tation of the GMP training system. In April 2001 Wyeth (apparently
pleased with his work) promoted Livingston to the position of Asso-
ciate Director of Training and Continuous Improvement. He contin-
ued to be responsible for GMP compliance.

In November 2000 the independent auditor (retained pursuant to
the consent decree) reported that Sanford was not complying with
legally mandated GMP requirements. The auditor listed thirty-five
specific deficiencies related to training, including the following: (1)
22 LIVINGSTON v. WYETH, INC.
many employees were manufacturing drugs with no training whatso-
ever, (2) managers were not trained, (3) the individuals conducting
training were not properly trained themselves, and (4) training was
not assessed for its effectiveness. In response to the audit report,
Wyeth proposed September 30, 2002, to the FDA as the date by
which the company would finish implementation and verification of
GMP training compliance. The FDA apparently approved this dead-
line, and there is no evidence that Wyeth ever sought or was granted
an extension.

Over the course of the two years leading up to the consent decree
deadline for GMP training compliance, Wyeth’s Sanford site made
little headway on the subject. Wyeth set several internal deadlines
(November 2001 was the first) to achieve compliance before the con-
sent decree date, but internal audits showed that the company dis-
mally failed to meet each deadline. Sanford management pushed the
November 2001 deadline first to February 2002, then to April, then
to July, and finally to the actual September 2002 consent decree date
— a date that Wyeth also failed to meet at Sanford. While some of
these deadlines were revised, others were "met" through the use of
"legacy plans." A "legacy plan" is a term used at Sanford to describe
an internal document that provides a time line for remedying noncom-
pliance after a planned compliance date is missed.

Livingston faced stiff resistance from department directors as he
attempted to remedy the serious non-compliance with training GMPs
identified by the independent auditor and periodic internal audits.
This resistance persisted despite Livingston’s ongoing (and increas-
ingly urgent) reports of compliance failures.1 For example, in Novem-
1
The majority states that "Livingston found no problem with the [train-
ing] program’s progress" toward compliance through June 2002. Ante at
5. This statement is incorrect. Livingston did prepare slides about com-
pliance for possible use by the Sanford site director during a May 22,
2002, visit by a high-ranking Wyeth executive. While these slides stated
that Sanford was "on track" for compliance by September 30, 2002, J.A.
569, Livingston explained that the slides were "optimistically written,"
J.A. 102. He continued to express his ongoing concerns about the lack
of progress in several meetings with site management both before and
after the preparation of the slides.
 LIVINGSTON v. WYETH, INC. 23
ber 2001 a vaccine development director informed him that she
refused to implement the compliance requirements for training in her
department. In December 2001, in response to Livingston’s report of
compliance gaps at a meeting of the Site Quality Council (the group
responsible for internally monitoring compliance at Sanford), two
members of the council "verbally assaulted" Livingston and refused
support for the training plan. J.A. 85. In early March 2002 Livingston
reported at a staff meeting that attendance at training for Sanford
directors had been abysmal. The directors nevertheless continued to
avoid their training obligations. Livingston made similar reports in
April and early May 2002, and he was informed by Sanford manage-
ment that no information regarding Sanford’s compliance failures
would be shared outside the Sanford site.

As the official FDA compliance date of September 30, 2002,
approached, Livingston’s reports became more urgent. The district
court explained: "the state of documented training at the Sanford
facility in the summer of 2002 was so abysmal that it mirrored the
conditions in Pearl River, New York and in Marietta, Pennsylvania
that prompted entry of the Consent Decree." J.A. 42-43. Convinced
that Sanford would be unable to meet the compliance deadline, Liv-
ingston requested a meeting with the Site Quality Council. On July
9, 2002, Bruce Kaylos, the Sanford site director, angrily informed him
that he would not be allowed to discuss the compliance issue with the
council.

After being blocked from meeting with the Site Quality Council
about the imminent compliance failure, Livingston shared his evalua-
tion with Kaylos and the council in a memo dated July 10, 2002. He
concluded, "I do not support the request for [Sustainable Compliance
Initiative] verification or attest to our state of compliance to corpo-
rate, site, and regulatory [ ]GMP training requirements." J.A. 709.
The following day, July 11, 2002, Kaylos met with human resources
to discuss putting Livingston on a "personal improvement plan" (PIP),
a Wyeth personnel action threatening termination. Kaylos then left a
telephone message for Livingston at his home on July 12 and had his
assistant telephone Livingston at work on July 16. Livingston
attempted to respond to these messages, but he was not able to speak
with Kaylos. Livingston understood the telephone messages of July
24 LIVINGSTON v. WYETH, INC.
12 and 16 to indicate that Kaylos had received the July 10 memo.2 On
July 24, 2002, Kaylos met with Livingston to discuss the memo.
According to Kaylos’s notes of this meeting, Livingston told him that
"the site and I [Kaylos] were trying to mislead FDA and corporate
audit groups into believing that training was compliant."3 J.A. 446. As
he had done previously, Kaylos instructed Livingston not to report
non-compliance to Wyeth corporate headquarters. Kaylos also threat-
ened to fire or demote Livingston if he continued to report Sanford’s
failure to comply with training GMPs. That same day, in response to
his meeting with Livingston, Kaylos again contacted human resources
to discuss the creation of a PIP threatening Livingston’s termination.

The final internal audit prior to the FDA compliance date revealed
that Sanford continued to violate GMP requirements, and it noted that
Wyeth would have to adopt yet another legacy plan to address these
problems. Despite the majority’s assertion to the contrary, there is no
evidence that the auditor verified compliance at this time or that Liv-
ingston "signed off on [any] verification." Ante at 6.

Around July 29 Livingston submitted a complaint to Wyeth’s
Office of Ethics and Business Conduct and its Office of Sustainable
Compliance (compliance office). Livingston explained that Kaylos
had attempted to intimidate him in an effort to prevent his accurate
reporting of Sanford’s compliance gaps. Livingston concluded,

Federal law deems it a crime to make any false, fictitious,
or fraudulent statement to any government agency, or in
making such statement, to conceal any material fact. . . . If
we succumb to the pressure of the moment, if we avoid our
compliance obligations, if we are unwilling to do the right
2
The majority writes that "Kaylos did not receive the memorandum
until approximately July 17, 2002, because he was on vacation." Ante at
6. While this is Kaylos’s claim, we are required to view the evidence in
the light most favorable to Livingston. As I have described, Livingston
has produced evidence that permits the inference that Kaylos received
Livingston’s memo on July 10 and immediately undertook retaliatory
action.
3
The majority states that there were no allegations of fraud at this
meeting. Ante at 6. Kaylos’s own notes contradict this assertion.
 LIVINGSTON v. WYETH, INC. 25
thing, or if we purposefully prevent the inner from matching
the outer, we fail the ethics test and our Code of Conduct
becomes another empty promise for employees, patients,
health care providers, regulatory bodies, shareholders, and
ourselves.

J.A. 745.

In response to these allegations, Wyeth’s compliance office opened
an investigation and recommended that the PIP proposed by Kaylos
be delayed. An investigator met with Livingston, who explained his
concerns about gaps in training documentation and the impending
release of adulterated vaccine. The investigator’s report found Living-
ston’s training compliance concerns to be "substantiate[d]." J.A. 358.
In particular, the investigator found that Sanford supervisors were
systematically reporting employees as trained to complete tasks for
which they, in fact, lacked training, thus allowing them to manufac-
ture adulterated drugs in violation of 21 C.F.R. § 211.25.

On September 30, 2002, the FDA compliance date, Livingston
signed two documents: a verification checklist indicating that certain
aspects of the training were complete and yet another legacy plan to
address continued training compliance gaps. There is no evidence that
Wyeth sought, or that the FDA approved, any extension of the dead-
line. On October 9 Wyeth’s compliance office closed the file on Liv-
ingston’s complaint without taking any remedial action. Within a
week Kaylos and David McCuaig, the human resources director,
placed Livingston on a ninety-day PIP. The PIP required, among
other things, that Livingston "[i]mmediately end non-constructive
comments to internal and external staff and contacts that the establish-
ment and utilization of certain corporately approved and verified
training practices is ‘defrauding’ the FDA." J.A. 814. If Livingston
failed to "show immediate, significant and sustained improvement
within 30 days," he would be terminated. J.A. 815.

From October through December 2002 Livingston became increas-
ingly concerned that he was about to be terminated, based on repeated
actions and comments from McCuaig, his placement on a PIP with lit-
tle explanation, and a decision by Kaylos to limit his job responsibili-
ties. Livingston and McCuaig both reported to Kaylos and were
26 LIVINGSTON v. WYETH, INC.
equals in the Sanford hierarchy. On December 13, 2002, McCuaig
appeared at Livingston’s offsite holiday party for his team.
McCuaig’s appearance was an unusual occurrence because each team
had its own holiday party, so McCuaig would have been expected
only to attend the human resources party. In fact, McCuaig did not
attend any team holiday party other than the one held by Livingston.
Using brusque terms, Livingston asked McCuaig to leave, and Liv-
ingston was fired five days later.

II.

Livingston claims that Wyeth terminated him in violation of 18
U.S.C. § 1514A. The statute protects employees of publicly traded
companies from retaliation for

provid[ing] information, caus[ing] information to be pro-
vided, or otherwise assist[ing] in an investigation regarding
any conduct which the employee reasonably believes consti-
tutes 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 Commis-
sion, or any provision of Federal law relating to fraud
against shareholders.

18 U.S.C. § 1514A(a)(1). I would refine certain aspects of the majori-
ty’s interpretation of the statute.

The majority states that a plaintiff’s reasonable belief in a violation
may not be based on "a belief that a violation is about to happen upon
some future contingency." Ante at 13 (citing Jordan v. Alternative
Res. Corp., 458 F.3d 332, 340-41 (4th Cir. 2006)). While I agree with
this statement, it requires some elaboration. The reasonableness stan-
dard in § 1514A "is intended to impose the normal reasonable person
standard used and interpreted in a wide variety of legal contexts." S.
Rep. No. 107-146, at 19 (citing Passaic Valley Sewerage Comm’rs v.
U.S. Dep’t of Labor, 992 F.2d 474, 478 (3d Cir. 1993)). As the major-
ity recognizes, a similar standard is used in Title VII retaliation cases.
See ante at 13; see also Allen v. Admin. Review Bd., ___ F.3d ___,
2008 WL 171588, at *7 (5th Cir. Jan. 22, 2008). Under Title VII a
plaintiff complaining of retaliatory discharge does not have to prove
 LIVINGSTON v. WYETH, INC. 27
that he believed a violation had already occurred or was complete. See
Jordan, 458 F.3d at 340-41 (citing EEOC v. Navy Fed. Credit Union,
424 F.3d 397 (4th Cir. 2005)). Instead, he has a claim if he was retali-
ated against for reporting his reasonable belief that a violation "was
taking shape," that "a plan was in motion" to violate the law, or that
a violation was "likely to occur." Id. at 340-41. In other words, an
employee’s belief is unreasonable (and unprotected) if it is based
entirely on unsupported conjecture about hypothetical future events;
his belief must relate to activity that a reasonable person could con-
clude is or is about to become a violation. Id. at 341.

Further, in applying the standard requiring the complainant to have
an objectively reasonable belief that his employer is engaged in a vio-
lation, the majority consistently focuses on whether the violation did,
in fact, occur. An actual violation is not required, however. An
employee’s reasonable belief about a violation is protected even if the
belief is mistaken and an actual violation never occurs. Allen, 2008
WL 171588, at *6.

Finally, the majority states that "because th[e] analysis for deter-
mining whether an employee reasonably believes a law is being vio-
lated is an objective one, we resolve the question as a matter of law."
Ante at 13 n.2 (citing Jordan, 458 F.3d at 339). The majority over-
states our warrant at the summary judgment stage. Jordan simply
states that "the issue [of objective reasonableness] may be resolved as
a matter of law." Jordan, 458 F.3d at 339 (emphasis added). The issue
of objective reasonableness should be decided as a matter of law only
when "[n]o reasonable person could have believed" that the facts
amounted to a violation. Clark County Sch. Dist. v. Breeden, 532 U.S.
268, 271 (2001) (per curiam). However, if reasonable minds could
disagree about whether the employee’s belief was objectively reason-
able, the issue cannot be decided as a matter of law. Allen, 2008 WL
171588, at *7 (citing Lipphardt v. Durango Steakhouse of Brandon,
Inc., 267 F.3d 1183, 1188 (11th Cir. 2001); Fine v. Ryan Int’l Air-
lines, 305 F.3d 746, 752-53 (7th Cir. 2002)).

III.

Livingston contends that he believed Wyeth was intentionally mis-
leading shareholders about its noncompliance with federal GMP regu-
28 LIVINGSTON v. WYETH, INC.
lations and the consent decree, in violation of § 10(b) of the Securities
Exchange Act of 1934, 15 U.S.C. § 78j(b), and Securities and
Exchange Commission Rule 10b-5, 17 C.F.R. § 240.10b-5. To avoid
summary judgment on his whistleblower claim asserted under 18
U.S.C. § 1514A, Livingston must proffer evidence that (1) his
whistleblower complaints implicated shareholder fraud by Wyeth; (2)
he subjectively believed that Wyeth was violating § 10(b) and Rule
10b-5, that a plan was in motion to violate these laws, or that a viola-
tion was likely; and (3) his belief was objectively reasonable. See ante
at 13. For his belief in a § 10(b) and Rule 10b-5 violation to be objec-
tively reasonable, he must show that a person in his position would
have believed that Wyeth (1) made "a material misrepresentation (or
omission)," (2) with "a wrongful state of mind," (3) in "connection
with the purchase or sale of a security," and that (4) a seller or pur-
chaser would have reasonably relied on the representation or omis-
sion, (5) with resulting economic loss. Dura Pharms., Inc. v. Broudo,
544 U.S. 336, 341-42 (2005) (citations omitted). The majority holds
that Livingston has not offered evidence that would create a genuine
issue of fact about the elements of his claim. To reach its result, the
majority places an improperly high burden on Livingston and fails to
recognize fully the strength and breadth of the factual case he has
offered.

First, Livingston’s whistleblower complaints implicated a violation
of § 10(b) and Rule 10b-5. He was not required to specifically cite
these provisions. He simply had to "provide information . . . regard-
ing any conduct" that he believed constituted a violation. 18 U.S.C.
§ 1514A. Livingston satisfied this burden by repeatedly reporting to
Wyeth his concern that FDA regulations were certain to be violated,
that violations were being covered up, and that, as a result, sharehold-
ers were being impacted adversely. As Kaylos’s notes of his July 24,
2002, meeting with Livingston reveal, and the October PIP confirms,
Livingston informed Kaylos in person that he believed that the San-
ford site and Kaylos were involved in fraud on the FDA. Then, in his
July 29 complaint to Wyeth’s compliance office, Livingston again
reported that Sanford was failing to comply with federal GMP
requirements and that Kaylos had instructed him to misrepresent the
state of Sanford’s compliance. Specifically, Livingston reported that
Kaylos "attempt[ed] to shame me to retract the analysis and position,"
imparted the message that "we are going to conceal facts, data, and
 LIVINGSTON v. WYETH, INC. 29
information from the verification auditor," and threatened to fire Liv-
ingston if he "persisted in raising the awareness level of this issue up
the chain-of-command." J.A. 744-45. Livingston was convinced that
Kaylos’s behavior in the July 24 meeting "violate[d] Wyeth’s Code
of Conduct," J.A. 744, and explained why in his complaint to the
compliance office:

Federal law deems it a crime to make any false, fictitious,
or fraudulent statement to any government agency, or in
making such statement, to conceal any material fact. As I
read the Wyeth Code of Conduct, this policy is in place to
ensure that information provided to government agencies is
truthful, accurate, and complete.

J.A. 745. Wyeth’s Code of Conduct explicitly instructed employees
to avoid false reporting to government agencies and to "accurate[ly]
and complete[ly] and fairly present" information in its disclosures to
shareholders. J.A. 244. Livingston concluded his complaint by assert-
ing that "avoid[ing] our compliance obligations," as Kaylos had sug-
gested, would "fail the ethics test and our Code of Conduct," which
would then amount to "another empty promise" for, among others,
"shareholders." J.A. 745. In short, Livingston asserted that Wyeth
was covering up its noncompliance with GMP requirements and the
consent decree, thus failing to keep its commitment to shareholders.

The majority argues that Livingston "did not complain of any mis-
representation or concealment," ante at 15, and presumably therefore
did not communicate information regarding shareholder fraud. In sup-
port of this conclusion, the majority reads the facts in the light most
favorable to Wyeth, not Livingston as is required. The majority first
cites Livingston’s use of conditional language in a background para-
graph in his July 29 complaint. The conditional language, however,
referred to Livingston’s earlier July 10 memo to Kaylos, the Site
Quality Council, and others, urging full disclosure of problems in the
upcoming internal audit of training compliance. See J.A. 743 (Living-
ston stating in his July 29 complaint that in his July 10 memo he "ex-
pressed [his] concern that if we were to conduct the audit and not
fully disclose the status of training implementation at [Sanford],
[Wyeth] would be in the unfortunate position of providing false and
misleading information to compliance auditors, including the FDA.").
30 LIVINGSTON v. WYETH, INC.
There is nothing conditional, however, in Livingston’s report in his
July 29 complaint detailing Kaylos’s response to the July 10 memo.
Livingston provides an unequivocal report that Kaylos, the site direc-
tor, threatened retaliation if Livingston refused to join in the plan to
cover-up Wyeth’s failure to comply with federal law. The majority
next concludes that Livingston told investigators that "he did not
believe that anyone at the site would intentionally provide false state-
ments." Ante at 15. This quote is taken from the investigator’s letter,
not Livingston. Livingston, in fact, definitively stated under oath that
"I did not tell [Ed] Babiaz [the investigator] that ‘I did not believe
anyone would intentionally provide false or misleading statements.’"
J.A. 124 (emphasis added). Livingston’s affidavit thus directly contra-
dicts the majority’s conclusion. The majority also notes that Living-
ston says in his affidavit that he did not mention fraud in his July 24
meeting with Kaylos. Ante at 15. Nevertheless, it is uncontested that
Livingston’s July 29 complaint informed Wyeth that he had been
instructed to misrepresent facts about compliance. In addition, both
Kaylos’s notes from the July 24 meeting and the October PIP confirm
that Livingston was alleging fraud.

Livingston thus meets the first requirement for whistleblower pro-
tection because the clear text of his July 29 complaint communicates
a concern about fraud on shareholders. Livingston’s assertions also
provide evidence to satisfy the second and third requirements for pro-
tection: he believed Wyeth was committing securities fraud and this
belief was objectively reasonable.

In particular, Livingston has provided sufficient evidence to estab-
lish that he had a reasonable belief that Wyeth was violating Rule
10b-5. First, Livingston reasonably believed that Wyeth was making
(and would continue to make) material misrepresentations or omit
material facts in reports to shareholders. Wyeth stated in its 2001 and
2002 annual reports that it was complying with the 2000 consent
decree and that GMP compliance was its "highest priorit[y]." J.A.
323. At the time of these representations, Wyeth was not planning to
comply with the consent decree, nor was it capable of achieving com-
pliance. Every audit of Sanford’s compliance with training GMPs, up
to the very last internal audit prior to the FDA compliance date,
revealed Sanford’s serious failure to comply with federal require-
ments. Just months prior to the September 30, 2002, deadline, these
 LIVINGSTON v. WYETH, INC. 31
failures were "so abysmal that [they] mirrored conditions . . . that
prompted the entry of the Consent Decree." J.A. 42-43. At this time,
many of Sanford’s department directors and staff were receiving no
training at all, almost half of the site had not even developed training
curricula, and most of the training that occurred was deficient. Since
2000 Livingston had watched as Sanford made little effort to correct
its deficiencies; he had every reason to believe that it would not —
and in fact could not — come into compliance by September 30,
2002. Indeed, Livingston’s fears were realized as Sanford failed to
reach compliance by this date. Based on his experience at Wyeth,
Livingston also believed that Wyeth would misinform shareholders
about the company’s intention not to comply with the consent decree
and GMPs generally. Livingston was correct about this as well: the
shareholder reports indicated that Wyeth was complying with GMPs
and the consent decree when it was not, and, indeed, had no intention
of doing so.

The majority makes several arguments against this aspect of Liv-
ingston’s claim. Initially, the majority argues that Livingston’s con-
cerns about FDA noncompliance were objectively unreasonable
because Sanford could not violate the consent decree. According to
the majority, the consent decree "did not cover the Sanford facility."
Ante at 15. This conclusion is directly contradicted by the record. The
express terms of the consent decree covered Wyeth’s entire drug man-
ufacturing division, of which Sanford was a part. The consent decree
ordered Wyeth to (1) hire an independent auditor to conduct "a
division-wide assessment" of quality control and GMP compliance,
(2) submit a plan (with a timetable) for compliance to FDA, and (3)
adhere to the timetable. J.A. 1253. In a company document explaining
the decree, Wyeth stated that the decree mandated that "[e]xpert con-
sultants will examine our [quality assurance and compliance] systems
at every facility making product for the U.S. market; we then must
take appropriate actions to address any issues they identify in these
areas." J.A. 976 (emphasis added). A member of the task force Wyeth
created to respond to the consent decree further explained, "Sanford
training . . . needed to implement [the GMP] conformance standards"
by the September 30, 2002, deadline established in the consent decree
timetable. J.A. 965. Thus, Wyeth understood that the consent decree
applied to Sanford and mandated that facility’s compliance with the
September 30, 2002, deadline.
32 LIVINGSTON v. WYETH, INC.
The majority further argues that Wyeth could not violate the con-
sent decree because it could always adopt a legacy plan to correct any
compliance gaps still existing on the September 30 deadline. Ante at
15. However, as noted above, a legacy plan was an internal Wyeth
procedure. There was no reason for Livingston to believe that the
FDA would accept such a plan, allowing the facility to grant itself
extensions to continue to violate federal law. In fact, under the bind-
ing terms of the consent decree, Livingston had every reason to
believe that the FDA would not accept a legacy plan. The consent
decree expressly stated that Wyeth could not alter any schedule
approved by the FDA without written approval, granted at the discre-
tion of the FDA. Wyeth’s internal decision to grant itself an extension
through a legacy plan would be an obvious violation of this provision.
In fact, despite the majority’s contention to the contrary, ante at 16,
Livingston’s evidence shows that Wyeth did violate the consent
decree; it is undisputed that Sanford adopted a legacy plan to address
its failure to comply with GMPs on the FDA compliance date of Sep-
tember 30, 2002. Wyeth did not petition the FDA for an extension,
and the FDA did not give it written approval to extend the deadline
for compliance. Thus, the consent decree’s terms assist in confirming
that Livingston’s concerns were objectively reasonable because the
terms clarify (1) that Wyeth’s failure to meet the FDA deadline would
be an actual violation of the consent decree (as well as federal law)
and (2) that a legacy plan was not a proper means to avoid the compa-
ny’s regulatory obligations.

The majority finally argues that, "[w]hile Wyeth did state in its
public reports for 2001 and 2002 that it was compliant with the 2000
Consent Decree (covering its Pennsylvania and New York sites and
not its Sanford, North Carolina site), there is no evidence that that
statement was false or misleading." Ante at 16. Because the majority
is mistaken about the reach of the consent decree, this conclusion is
unsupported. Any statement by Wyeth that it was complying with the
consent decree was false, or at the least misleading, because the com-
pany was aware that it would miss the September 30, 2002, deadline
for Sanford compliance. Livingston’s beliefs that Wyeth was making
material misrepresentations or omitting material facts in reports to
shareholders were well founded.

Second, Livingston’s belief that Wyeth had a "wrongful state of
mind" was objectively reasonable for a person in his position. Living-
 LIVINGSTON v. WYETH, INC. 33
ston had ample evidence that Sanford was engaged in a cover-up.
From the inception of his efforts to bring Sanford into compliance, he
was met with hostility and refusals to cooperate from his supervisors
and site department directors; as the FDA compliance date
approached, this resistance escalated into demands that he mislead
corporate management and outside auditors. The department directors
never once claimed that Livingston’s reports were unfounded; after
all, he was backed by the clear results of the audits. But the directors’
resistance to training, refusal to report training failures, and refusal to
implement GMPs in their own departments were clear indications that
they never planned to comply with the consent decree deadline. This
resistence and refusal culminated in Livingston’s July 24 meeting
with Kaylos, the Sanford site director, in which Kaylos threatened to
fire Livingston if he persisted in reporting regulatory failures and
failed to retract his statements. This threat was eventually formalized
in the October PIP. Not only was Livingston subjected to demands
that he misrepresent Sanford compliance to authorities, there is inde-
pendent, direct evidence that an intentional cover-up was underway
at the Sanford facility. The investigation of Livingston’s internal com-
plaint revealed that Sanford department directors were intentionally
documenting untrained employees as having received the necessary
training, so that they could continue working in violation of federal
regulations. The threats, refusal to cooperate, and actual misrepresen-
tation of the woeful state of training compliance by Sanford depart-
ment directors is sufficient evidence to support Livingston’s belief the
Sanford facility was engaging in a fraudulent cover-up of its ongoing
violations of federal law. It was objectively reasonable for Livingston,
who knew that Wyeth was making intentional misrepresentations to
the FDA, to believe that Wyeth was intentionally misleading its
shareholders about its compliance with FDA regulations and the con-
sent decree, as evidenced by the actual misrepresentations in the
annual reports.

Third, Livingston reasonably believed that Wyeth’s misrepresenta-
tions in its annual shareholder reports would be material to sharehold-
ers and would cause economic loss. Under the consent decree Wyeth
was subject to careful, regular reviews by the FDA beyond those con-
ducted in the normal course of business. As a result, the FDA was far
more likely to detect and punish any violations by Wyeth, especially
violations of the consent decree. Wyeth had explained to its employ-
34 LIVINGSTON v. WYETH, INC.
ees that any failure to meet the consent decree’s timetable would cost
the company a $15,000 fine for each day of tardiness, up to a total
$5 million dollars. Wyeth paid the government $30 million to settle
the FDA enforcement action that prompted the consent decree. And
the Sanford violations disclosed by Livingston were similar to those
underlying the consent decree. Huge settlement costs and fines paid
by a company are material to shareholders, and a reasonable share-
holder would want to know whether a company is engaged in activity
that could trigger such settlements and fines. See No. 84 Employer-
Teamster Joint Council Pension Trust Fund v. Am. West Holding
Corp., 320 F.3d 920, 935 (9th Cir. 2003) (airline company’s failure
to comply with Federal Aviation Administration regulations, which
would likely result in a sanction, was material to shareholders). Thus,
Wyeth’s failure to comply with the consent decree and its ongoing
obligations under FDA regulations was material to shareholders.

The majority argues that any false statement made in the annual
reports could not have been viewed as material because "the FDA
never issued any warning or made any observation regarding Wyeth’s
training schedule deficiencies at the Sanford site during the period
when Livingston made his complaint." Ante at 17. The majority erro-
neously magnifies Livingston’s burden. In order to prevail on a
§ 1514A whistleblower claim, Livingston does not have to prove that
Wyeth did, in fact, violate Rule 10b-5. Nor does he have to show a
working knowledge of the securities laws. He only has to provide suf-
ficient evidence to show that a person in his position — a manager
in charge of complying with federal drug regulations and a binding
consent decree — could reasonably believe that Wyeth’s reports of
compliance constituted a material misrepresentation to shareholders
under Rule 10b-5. Livingston had watched as the FDA seized alleg-
edly adulterated products and extracted a massive sum in settlement
from Wyeth as a result of the same compliance failures at other facili-
ties as those that he saw at his own; as the manager responsible for
compliance, he understood the huge financial impact of the consent
decree, was aware of its binding nature, and understood the conse-
quences of failure to meet its deadlines.

In sum, Livingston has produced evidence that his reports impli-
cated shareholder fraud; that Wyeth both planned to violate and actu-
ally violated federal laws and regulations; that Wyeth management
 LIVINGSTON v. WYETH, INC. 35
falsely reported compliance (internally and to shareholders) with
these same laws; that his direct supervisor threatened him and that he
was formally instructed to stop reporting non-compliance; and that
Wyeth (and its shareholders) risked substantial financial loss if this
cover-up was discovered in the enforcement of the consent decree.
Wyeth instructed Livingston to stop his complaints, and after he
refused to do so, it fired him. This evidence is sufficient to present an
issue of material fact about whether Livingston’s complaints were
protected under § 1514A. In addition, Wyeth has failed to present
clear and convincing evidence that it would have placed Livingston
on a PIP and ultimately fired him if he had not made his complaints.
As a result, I would conclude that Livingston has presented sufficient
evidence to survive summary judgment on his § 1514A claim, and I
would remand the case for trial.