In a March 8, 2017 ruling, the Ninth Circuit deepened a circuit split, holding that Dodd-Frank’s whistleblower protections extend to employees who raise concerns internally, and not merely to those who raise concerns to the U.S. Securities and Exchange Commission.
Dodd-Frank Act defines a whistleblower as “any individual who provides, or 2 or more individuals acting jointly who provide, information relating to a violation of the securities laws to the Commission, in a manner established, by rule or regulation, by the Commission,” the SEC has repeatedly argued that whistleblowers do not need to report to the SEC for the Dodd-Frank Act protections to apply.
The statutory provision of Dodd-Frank regarding anti-retaliation applies to “whistleblowers” who
(i) provide information to the SEC,
(ii) assist in a judicial or administrative action of the SEC, or
(iii) “in making disclosures required or protected under the Sarbanes-Oxley Act of 2002.”
This third prong includes internal disclosures, which are protected under Sarbanes-Oxley. Judge Mary Schroeder, writing for the majority, held “that anyone who does any of the things described in subdivisions (i), (ii), and (iii) of the anti-retaliation provision is entitled to protection, including those who make internal disclosures under Sarbanes-Oxley. They are all whistleblowers.” The majority concluded that a narrow ruling applying protections only to those reporting to the SEC “would make little practical sense and undercut congressional intent” to protect whistleblowers from retaliation.
In a short dissent, Judge John Owens sided with the original Fifth Circuit case. The dissent criticizes the majority for relying, in part, on the Affordable Care Act case King v. Burwell, to argue that “whistleblower” could mean something other than its defined term. He goes on to state that “King and its potentially dangerous shapeshifting nature” disrupt the law.
The Ninth Circuit’s ruling is consistent with a prior ruling from the Second Circuit, but is in conflict with a ruling from the Fifth Circuit. The opinion in the case, Somers v. Digital Realty Trust, can be found