Supreme Court Rules Internal Whistleblowers Are Not Protected under Dodd-Frank
The Supreme Court narrowed the definition of the term "whistleblower" and excluded internal whistleblowers from the anti-retaliation protections provided under Dodd-Frank (see previous coverage). In Digital Realty Trust Inc. v. Paul Somers, the Supreme Court resolved a two-year split among Circuit Courts on whether whistleblowers who do not first provide information relating to a securities law violation to the SEC are protected by the anti-retaliation provisions in Dodd-Frank (a position adopted by the Ninth Circuit, Second Circuit and the SEC). The Supreme Court held they are not protected by those anti-retaliation provisions.
Mr. Somers was a former employee of Digital Realty Trust Inc. ("Digital Realty"). He was fired shortly after reporting suspected securities law violations by the company to senior management. He sued the company, alleging a claim of whistleblower retaliation. The company's chief argument was that Mr. Somers was not entitled to protection under Dodd-Frank. Specifically, the company argued that Mr. Somers was not a whistleblower within the meaning of Dodd-Frank's statutory language, which defines a whistleblower as an "individual who provides . . . information relating to a violation of the securities laws to the [Securities and Exchange] Commission" (15 USC 78u-6). Because Mr. Somers reported the alleged violations through internal channels only and did not make any reports to the SEC, the company claimed he was not entitled to protection under the statute.
The Supreme Court opinion, written by Justice Ruth Bader Ginsburg and joined by Justices Roberts, Kennedy, Breyer, Sotomayor and Kagan, relied on what it found to be clear statutory language, and held that the Dodd-Frank definition of whistleblower included only those who directly inform the SEC of potential securities law violations.
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