Supreme Court to Address Ambiguity in Whistleblower Provisions of Dodd-Frank

arrowsWhen lawmakers and their staffs draft proposed legislation, they must consider any and all possible interpretations of the language they use. Even then, the legislative process may alter or amend a bill in ways that affect the potential meaning of certain words or phrases. Confusion over ambiguities in some statutes is inevitable. The U.S. Supreme Court recently granted certiorari in a case that involved a dispute over the meaning of the word “whistleblower” in the anti-retaliation provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, or “Dodd-Frank.” The lower-court decision from the Ninth Circuit deferred to the interpretation of the Securities and Exchange Commission (SEC), which applied a broad definition of the term. This conflicts with a Fifth Circuit decision finding that Dodd-Frank’s whistleblower protection is limited to a narrow definition provided within the statute. Thus, the status of New Jersey whistleblowers remains unclear pending the Supreme Court’s resolution of the issue.

Dodd-Frank creates incentives for “whistleblowers”—employees and other insiders—to report violations and protects them from retaliation. Employers may not terminate or otherwise retaliate against whistleblowers for reporting Dodd-Frank violations to the SEC, or for “making disclosures that are required or protected” by other statutes. 15 U.S.C. § 78u-6(h)(1). Reading this provision in isolation, one might think that it applies to people who report legal violations to the SEC, other government agencies, or company management. An earlier subsection, however, defines “whistleblower” specifically as someone who reports securities law violations to the SEC. Id. at § 78u-6(a)(6). The dispute before the Supreme Court concerns whether Dodd-Frank’s anti-retaliation provision only applies to this narrow definition of “whistleblower,” or whether it uses a broader definition.

The plaintiff worked for the defendant as a Vice President. He made several reports to his superiors “regarding possible securities law violations by the company,” and he was fired shortly afterwards. Somers v. Digital Realty Trust, Inc., 850 F.3d 1045, 1047 (9th Cir. 2017). He sued for retaliation under Dodd-Frank. The district court held that he was a “whistleblower” within the meaning of the statute, even though he did not make a report to the SEC. The Ninth Circuit affirmed this ruling on several grounds.

The Ninth Circuit cited King v. Burwell, 576 US ___ (2015), which addressed ambiguous language in the Affordable Care Act. That case held that “terms can have different operative consequences in different contexts.” Somers, 850 F.3d at 1049. Limiting “whistleblower” to the definition found in § 78u-6(a)(6), the Ninth Circuit held, “would make little practical sense and undercut congressional intent.” Id. The court also applied Chevron deference, meaning that it gave considerable weight to the SEC’s interpretation that Dodd-Frank’s whistleblower protections apply to “individuals who report to persons or governmental authorities other than the Commission.” 76 Fed. Reg. 34299, 34304 (Jun. 13, 2011). See also 17 C.F.R. § 240.12F-2; Chevron U.S.A., Inc. v. NRDC, 467 U.S. 837 (1984).

The ruling in Somers follows another circuit court’s ruling, Berman v. Neo@Ogilvy LLC, 801 F.3d 145 (2d Cir. 2015). It directly conflicts with a third ruling, however, which used “the plain language of § 78u-6” to conclude that a person who does not make a report to the SEC is not a “whistleblower” under Dodd-Frank. Asadi v. GE Energy (USA), LLC, 720 F.3d 620, 630 (5th Cir. 2013). The Supreme Court agreed to hear the appeal of Somers because of this conflict.

If you need to speak to a whistleblower lawyer about a matter in New Jersey or New York, contact the Resnick Law Group today online, at 973-781-1204, or at 646-867-7997.

More Blog Posts:

Plaintiff in New Jersey Whistleblower Lawsuit Alleges Retaliation, Wrongful Termination, The New Jersey Employment Law Firm Blog, October 13, 2017

New Jersey Court Allows Wrongful Termination Case Under FMLA and State Law to Proceed, The New Jersey Employment Law Firm Blog, September 28, 2017

Appellate Court Rules on Mixed-Motive Claim in FMLA Retaliation Case, The New Jersey Employment Law Firm Blog, September 22, 2017

Photo credit: ArtistIvanChew [CC BY 2.0], via Flickr.

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