Source: https://www.rubinfortunato.com/article/blowing-whistle-whistleblower-protection-supreme-court-review-scope-whistleblower-protection-dodd-frank-act/
Timestamp: 2019-04-18 20:20:22+00:00

Document:
On November 28, the United States Supreme Court will hear oral argument to determine whether federal law protects whistleblowers who report securities violations internally to their employers without making a report directly to the United States Securities and Exchange Commission (“SEC”).
In response to the 2008 economic crisis, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act (“DFA”) to ensure the stability of the financial industry and to provide increased consumer protection. Part of the DFA provides incentives and protections for employees who report their employers to the SEC for potential securities violations.
Of particular importance is the DFA’s anti-retaliation provision, which prohibits employers from taking adverse employment action against employees who make reports to the SEC. The DFA is silent on whether this protection extends to employees who opt to report violations internally without also going to the SEC. The DFA defines “whistleblowers” only as persons who provide information “to the Commission.” This apparent restriction has divided the United States Circuit Courts of Appeal, but will now be addressed by the Supreme Court in Digital Realty Trust, Inc. v. Somers, (No. 16-1276).
The District Court for the Northern District of California ruled in favor of Somers, deferring to an SEC rule interpreting the DFA’s anti-retaliation provision to include protections for whistleblowers who report only internally. The SEC rule and its corresponding commentary, promulgated in 2011, provide clarity on “whistleblower” qualification under the DFA by analyzing the interplay between the DFA and SOX. The rule’s commentary states that an individual qualifies as a whistleblower for the purpose of the DFA’s anti-retaliation protection, regardless of how the DFA itself defines “whistleblower,” if the individual makes a report in accordance with the DFA’s anti-retaliation provision. Because the provision explicitly affords protection to individuals who report violations of SOX, and SOX provides protection to employees who make reports only internally, the DFA must also provide whistleblower protection for internal whistleblowers. As such, the District Court ruled that Somers had standing to bring a wrongful termination claim under the DFA.
The Supreme Court granted certiorari to Digital Realty and will hear the case in a few weeks, though the scale tips heavily in Somers’s favor. The District Court’s deference to the SEC’s interpretation of the DFA was based on a framework established in a landmark Supreme Court case, Chevron U.S.A., Inc. v. NRDC, 467 U.S. 837 (1984). In that case, the Supreme Court created an administrative law principle that requires courts to defer to an agency’s interpretation of an ambiguous statutory provision, as long as the interpretation is reasonable, meaning the interpretation is not “arbitrary, capricious, or manifestly contrary to the statute.” The interpretation need not be the only or best interpretation, just reasonable.
The Supreme Court’s decision will have a meaningful impact one way or another and is a must-watch for employers and employees in the financial industry. Employees should be aware of the current incentives and protections afforded to them under the DFA, and how Digital Realty may change those benefits, while employers should be cognizant of how Digital Realty could impact their internal compliance practices.
 See 15 U.S.C. § 78u-6, which was added as Section 21F to the Securities Exchange Act of 1934.
 See 15 U.S.C. § 78u-6(h)(1)(A).
 See, e.g., Asadi v. G.E. Energy (USA), L.L.C., 720 F.3d 620 (5th Cir. 2013) (rejecting SEC interpretation that DFA was meant to protect whistleblowers who make disclosures internally or to the SEC); Berman v. Neo@Ogilvy LLC, 801 F.3d 145 (2d Cir. 2015) (adopting SEC’s interpretation that whistleblowers who make disclosures internally are protected under DFA).
 Stephen Kohn, Digital Realty Trust v. Somers May Kill Corporate Compliance, Law360 (Sep. 21, 2017, 1:14 PM), https://www.law360.com/articles/964208/digital-realty-trust-v-somers-may-kill-corporate-compliance.

References: v. 
 v. 
 § 78
 § 78
 v. 
 v. 
 v.