ATTORNEY ADVERTISING

SEC Whistleblower Lawyer Blog

Circuit Court Split On Internal Whistleblower Protection Sets Stage For Supreme Court Showdown

A key component of the Dodd-Frank Act is headed to the Supreme Court for review. The court will decide if internal whistleblowers who have not yet reported potential violations to the SEC are protected under the anti-retaliation statutes of Dodd-Frank.

The Supreme Court review is necessary to resolve a split in the lower appellate courts stemming from a case brought by a former Digital Realty Trust Inc executive. In the case, Paul Somers a former employee of Digital Realty seeks to sue for alleged retaliation. Digital Realty had protested a decision by the Ninth Circuit that found that internal whistleblowers were protected under the Dodd-Frank Act’s anti-retaliation statutes, even if they had not yet reported potential violations to the SEC.

Somers’s lawyer, Daniel L. Geyser of Stris and Maher was not surprised by the Supreme Courts willingness to hear the case, although he strongly believed that the Ninth circuits interpretation of the law was in line with the scope of Dodd-Frank as written by Congress.

  “Digital’s reading, by contrast, would upset the proper operation of both Dodd-Frank and Sarbanes-Oxley. We look forward to litigating this important issue before the Court,” Geyser said. 

Somer sued Digital Realty in November of 2014, with allegations that he was discriminated against as an openly gay male while he worked at Digital Realty from July 2010 to April 2014. Somer’s alleges that he was terminated because of “vague, trivial and false allegations of misconduct”. His termination came about after he reported to Digital Realty senior management that a senior vice president had removed internal corporate controls in clear violation of the Sarbanes-Oxley Act.

In 2015, Digital Realty tried to have the case dismissed, however, U.S District Judge Edward M. Chen denied the motion for dismissal.

The statute in question, subdivision (iii) of Section 21F of Dodd-Frank expressly prohibits employers from discriminating or discharging an employee who makes whistleblower disclosures as required by the Sarbanes-Oxley Act.

Earlier this year the Ninth Circuit reaffirmed the Second Circuit’s 2015 ruling that whistleblower retaliation is ambiguous and the courts should refer to the Securities & Exchange Commission for guidance. In contrast, a 2013 ruling by the Fifth Circuit stated that only those have reported potential violations to the SEC can be classified as whistleblowers by the stature.  

In its petition for writ of certiorari to the Supreme Court, Digital Realty stated that the Ninth Circuit’s actions had tipped the balance of power between the Sarbanes-Oxley Act and the Dodd-Frank Act and had the potential to make Sarbanes-Oxley’s anti-retaliation provisions useless.

A number of organizations have filed amicus briefs in support of Digital Realty’s Supreme Court petition, among them are The new England Legal Foundation and the U.S Chamber of Commerce. They state that the Ninth Circuits interpretation of the statute would undoubtedly open the floodgates of lawsuits that Congress had never intended for Dodd-Frank to cover.

Scott L. Silver, the managing partner of the Silver Law Group, was an early proponent of the legislation and authored a primer on the SEC Whistleblower Program.  Our legal team includes David R. Chase, a former SEC prosecutor now working to protect whistleblowers.

Silver Law Group and The Law Firm of David R. Chase are committed to the protection of whistleblowers tthrough the SEC whistleblower claim process and can prosecute your whistleblower claims.  If you have questions about your legal rights as a whistleblower, please contact Scott Silver of the Silver Law Group for a free consultation at ssilver@silverlaw.com or toll-free at (800) 975-4345.

 

 

   

Contact Information