Source: http://de.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20180221_0001404.SCT.htm/qx
Timestamp: 2019-04-21 04:47:39+00:00

Document:
Endeavoring to root out corporate fraud, Congress passed the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley) and the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). Both Acts shield whistleblowers from retaliation, but they differ in important respects. Sarbanes-Oxley applies to all "employees" who report misconduct to the Securities and Exchange Commission (SEC or Commission), any other federal agency, Congress, or an internal supervisor. 18 U.S.C. §1514A(a)(1). Dodd-Frank defines a "whistle-blower" as "any individual who provides . . . information relating to a violation of the securities laws to the Commission, in a manner established, by rule or regulation, by the Commission." 15 U.S.C. §78u- 6(a)(6). A whistleblower so defined is eligible for an award if original information provided to the SEC leads to a successful enforcement action. §78u-6(b)-(g). And he or she is protected from retaliation in three situations, see §78u-6(h)(1)(A)(i)-(iii), including for "making disclosures that are required or protected under" Sarbanes-Oxley or other specified laws, §78u-6(h)(1)(A)(iii). Sarbanes-Oxley's anti-retaliation provision contains an administrative-exhaustion requirement and a 180-day administrative complaint-filing deadline, see 18 U.S.C. §1514A(b)(1)(A), (2)(D), whereas Dodd-Frank permits a whistleblower to sue an employer directly in federal district court, with a default six-year limitation period, see §78u-6(h)(1)(B)(i), (iii)(I)(aa).
The SEC's regulations implementing the Dodd-Frank provision contain two discrete whistleblower definitions. For purposes of the award program, Rule 2IF-2 requires a whistleblower to "provide the Commission with information" relating to possible securities-law violations. 17 CFR §240.21F-2(a)(1). For purposes of the anti-retaliation protections, however, the Rule does not require SEC reporting. See §240.21F-2(b)(1)(i)-(ii).
Respondent Paul Somers alleges that petitioner Digital Realty Trust, Inc. (Digital Realty) terminated his employment shortly after he reported to senior management suspected securities-law violations by the company. Somers filed suit, alleging, inter alia, a claim of whistleblower retaliation under Dodd-Frank. Digital Realty moved to dismiss that claim on the ground that Somers was not a whistle-blower under §78u-6(h) because he did not alert the SEC prior to his termination. The District Court denied the motion, and the Ninth Circuit affirmed. The Court of Appeals concluded that §78u-6(h) does not necessitate recourse to the SEC prior to gaining "whistle-blower" status, and it accorded deference to the SEC's regulation under Chevron U.S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837.
Held: Dodd-Frank's anti-retaliation provision does not extend to an individual, like Somers, who has not reported a violation of the securities laws to the SEC. Pp. 9-19.
(a)A statute's explicit definition must be followed, even if it varies from a term's ordinary meaning. Burgess v. United States, 553 U.S. 124, 130. Section 78u-6(a) instructs that the statute's definition of "whistleblower" "shall apply" "[i]n this section, " that is, throughout §78u-6. The Court must therefore interpret the term "whistleblower" in §78u-6(h), the anti-retaliation provision, in accordance with that definition.
The whistleblower definition operates in conjunction with the three clauses of §78u-6(h)(1)(A) to spell out the provision's scope. The definition first describes who is eligible for protection-namely, a "whistleblower" who provides pertinent information "to the Commission." §78u-6(a)(6). The three clauses then describe what conduct, when engaged in by a "whistleblower, " is shielded from employment discrimination. An individual who meets both measures may invoke Dodd-Frank's protections. But an individual who falls outside the protected category of "whistleblowers" is ineligible to seek redress under the statute, regardless of the conduct in which that individual engages. This reading is reinforced by another whistleblower-protection provision in Dodd-Frank, see 12 U.S.C. §5567(b), which imposes no requirement that information be conveyed to a government agency. Pp. 9-11.
(b)The Court's understanding is corroborated by Dodd-Frank's purpose and design. The core objective of Dodd-Frank's whistleblower program is to aid the Commission's enforcement efforts by "motivat[ing] people who know of securities law violations to tell the SEC." S. Rep. No. 111-176, p. 38 (emphasis added). To that end, Congress provided monetary awards to whistleblowers who furnish actionable information to the Commission. Congress also complemented the financial incentives for SEC reporting by heightening protection against retaliation. Pp. 11-12.
(c) Somers and the Solicitor General contend that Dodd-Frank's "whistleblower" definition applies only to the statute's award program and not, as the definition plainly states, to its anti-retaliation provision. Their concerns do not support a departure from the statutory text. Pp. 12-18.
(1) They claim that the Court's reading would vitiate the protections of clause (iii) for whistleblowers who make disclosures to persons and entities other than the SEC. See §78u-6(h)(1)(A)(iii). But the plain-text reading of the statute leaves the third clause with substantial meaning by protecting a whistleblower who reports misconduct both to the SEC and to another entity, but suffers retaliation because of the latter, non-SEC, disclosure. Pp. 13-15.
(2) Nor would the Court's reading jettison protections for auditors, attorneys, and other employees who are required to report information within the company before making external disclosures. Such employees would be shielded as soon as they also provide relevant information to the Commission. And Congress may well have considered adequate the safeguards already afforded to such employees by Sarbanes-Oxley. Pp. 15-16.
(3) Applying the "whistleblower" definition as written, Somers and the Solicitor General further protest, will allow "identical misconduct" to "go punished or not based on the happenstance of a separate report" to the SEC. Brief for Respondent 37-38. But it is understandable that the statute's retaliation protections, like its financial rewards, would be reserved for employees who have done what Dodd-Frank seeks to achieve by reporting information about unlawful activity to the SEC. P. 16.
(4) The Solicitor General observes that the statute contains no apparent requirement of a "temporal or topical connection between the violation reported to the Commission and the internal disclosure for which the employee suffers retaliation." Brief for United States as Amicus Curiae 25. The Court need not dwell on related hypotheticals, which veer far from the case at hand. Pp. 16-18.
(5) Finally, the interpretation adopted here would not undermine clause (ii) of §78u-6(h)(1)(A), which prohibits retaliation against a whistleblower for "initiating, testifying in, or assisting in any investigation or . . . action of the Commission based upon" information conveyed to the SEC by a whistleblower in accordance with the statute. The statute delegates authority to the Commission to establish the "manner" in which a whistleblower may provide information to the SEC. §78u-6(a)(6). Nothing prevents the Commission from enumerating additional means of SEC reporting, including through testimony protected by clause (ii). P. 18.
(d) Because "Congress has directly spoken to the precise question at issue, " Chevron, 467 U.S., at 842, deference is not accorded to the contrary view advanced by the SEC in Rule 21F-2. Pp. 18-19.
850 F.3d 1045, reversed and remanded.
GINSBURG, J., delivered the opinion of the Court, in which ROBERTS, C. J., and Kennedy, Breyer, Sotomayor, and Kagan, JJ., joined. So-TOMAYOR, J., filed a concurring opinion, in which BREYER, J., joined. THOMAS, J., filed an opinion concurring in part and concurring in the judgment, in which ALITO and GORSUCH, JJ., joined.
Endeavoring to root out corporate fraud, Congress passed the Sarbanes-Oxley Act of 2002, 116 Stat. 745 (Sarbanes-Oxley), and the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, 124 Stat. 1376 (Dodd-Frank). Both Acts shield whistleblowers from retaliation, but they differ in important respects. Most notably, Sarbanes-Oxley applies to all "employees" who report misconduct to the Securities and Exchange Commission (SEC or Commission), any other federal agency, Congress, or an internal supervisor. 18 U.S.C. §1514A(a)(1). Dodd-Frank delineates a more circumscribed class; it defines "whistleblower" to mean a person who provides "information relating to a violation of the securities laws to the Commission." 15 U.S.C. §78u-6(a)(6). A whistleblower so defined is eligible for an award if original information he or she provides to the SEC leads to a successful enforcement action. §78u-6(b)-(g). And, most relevant here, a whistleblower is protected from retaliation for, inter alia, "making disclosures that are required or protected under" Sarbanes-Oxley, the Securities Exchange Act of 1934, the criminal anti-retaliation proscription at 18 U.S.C. §1513(e), or any other law subject to the SEC's jurisdiction. 15 U.S.C. §78u-6(h)(1)(A)(iii).
The question presented: Does the anti-retaliation provision of Dodd-Frank extend to an individual who has not reported a violation of the securities laws to the SEC and therefore falls outside the Act's definition of "whistleblow-er"? Pet. for Cert. (I). We answer that question "No": To sue under Dodd-Frank's anti-retaliation provision, a person must first "provid[e] . . . information relating to a violation of the securities laws to the Commission." §78u-6(a)(6).
"To safeguard investors in public companies and restore trust in the financial markets following the collapse of Enron Corporation, " Congress enacted Sarbanes-Oxley in 2002. Lawson v. FMR LLC, 571 U.S. 429, ___(2014) (slip op., at 1). Most pertinent here, Sarbanes-Oxley created new protections for employees at risk of retaliation for reporting corporate misconduct. See 18 U.S.C. §1514A. Section 1514A prohibits certain companies from discharging or otherwise "discriminat[ing] against an employee in the terms and conditions of employment because" the employee "provid[es] information ... or otherwise assist[s] in an investigation regarding any conduct which the employee reasonably believes constitutes a violation" of certain criminal fraud statutes, any SEC rule or regulation, or "any provision of Federal law relating to fraud against shareholders." §1514A(a)(1). An employee qualifies for protection when he or she provides information or assistance either to a federal regulatory or law enforcement agency, Congress, or any "person with supervisory authority over the employee." §1514A(a)(1)(A)-(C).
To recover under §1514A, an aggrieved employee must exhaust administrative remedies by "filing a complaint with the Secretary of Labor." §1514A(b)(1)(A); see Law-son, 571 U.S., at ___-___ (slip op., at 5-6). Congress prescribed a 180-day limitation period for filing such a complaint. §1514A(b)(2)(D). If the agency "does not issue a final decision within 180 days of the filing of [a] complaint, and the [agency's] delay is not due to bad faith on the claimant's part, the claimant may proceed to federal district court for de novo review." Id., at ___ (slip op., at 6) (citing §1514A(b)). An employee who prevails in a proceeding under §1514A is "entitled to all relief necessary to make the employee whole, " including reinstatement, backpay with interest, and any "special damages sustained as a result of the discrimination, " among such damages, litigation costs. §1514A(c).
At issue in this case is the Dodd-Frank anti-retaliation provision enacted in 2010, eight years after the enactment of Sarbanes-Oxley. Passed in the wake of the 2008 financial crisis, Dodd-Frank aimed to "promote the financial stability of the United States by improving accountability and transparency in the financial system." 124 Stat. 1376.
Dodd-Frank responded to numerous perceived shortcomings in financial regulation. Among them was the SEC's need for additional "power, assistance and money at its disposal" to regulate securities markets. S. Rep. No. 111-176, pp. 36, 37 (2010). To assist the Commission "in identifying securities law violations, " the Act established "a new, robust whistleblower program designed to motivate people who know of securities law violations to tell the SEC." Id., at 38. And recognizing that "whistleblow-ers often face the difficult choice between telling the truth and . . . committing 'career suicide, '" Congress sought to protect whistleblowers from employment discrimination. Id., at 111, 112.
Dodd-Frank implemented these goals by adding a new provision to the Securities Exchange Act of 1934: 15 U.S.C. §78u-6. Section 78u-6 begins by defining a "whistleblower" as "any individual who provides ... information relating to a violation of the securities laws to the Commission, in a manner established, by rule or regulation, by the Commission." §78u-6(a)(6) (emphasis added). That definition, the statute directs, "shall apply" "[i]n this section"-i.e., throughout §78u-6. §78u-6(a).
Section 78u-6 affords covered whistleblowers both incentives and protection. First, the section creates an award program for "whistleblowers who voluntarily provid[e] original information to the Commission that le[ads] to the successful enforcement of [a] covered judicial or administrative action." §78u-6(b)(1). A qualifying whistleblower is entitled to a cash award of 10 to 30 percent of the monetary sanctions collected in the enforcement action. See §78u-6(b)(1)(A)-(B).
Second, §78u-6(h) prohibits an employer from discharging, harassing, or otherwise discriminating against a "whistleblower" "because of any lawful act done by the whistleblower" in three situations: first, "in providing information to the Commission in accordance with [§78u-6], " §78u-6(h)(1)(A)(i); second, "in initiating, testifying in, or assisting in any investigation or . . . action of the Commission based upon" information provided to the SEC in accordance with §78u-6, §78u-6(h)(1)(A)(ii); and third, "in making disclosures that are required or protected under" either Sarbanes-Oxley, the Securities Exchange Act of 1934, the criminal anti-retaliation prohibition at 18 U.S.C. §1513(e),  or "any other law, rule, or regulation subject to the jurisdiction of the Commission, " §78u-6(h)(1)(A)(iii). Clause (iii), by cross-referencing Sarbanes-Oxley and other laws, protects disclosures made to a variety of individuals and entities in addition to the SEC. For example, the clause shields an employee's reports of wrongdoing to an internal supervisor if the reports are independently safeguarded from retaliation under Sarbanes-Oxley. See supra, at 2-3.

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