Court Opinion

ID: 2911953
Source: CourtListenerOpinion
Date Created: 2015-09-10 14:00:28.322029+00
Date Added: 2024-06-11T11:57:50.498698
License: Public Domain

14-4626
Berman v. Neo@Ogilvy LLC

                           UNITED STATES COURT OF APPEALS

                                FOR THE SECOND CIRCUIT

                                    August Term 2014

            Argued: June 17, 2015                   Decided: September 10, 2015

                                     Docket No. 14-4626

  - - - - - - - - - - - - - - - - - - - - - -
  DANIEL BERMAN,
       Plaintiff-Appellant,

                           v.
  NEO@OGILVY LLC, WPP GROUP USA, INC.,
       Defendants-Appellees.
  - - - - - - - - - - - - - - - - - - - - - -

  Before: NEWMAN, JACOBS, and CALABRESI, Circuit Judges.

          Appeal from the December 8, 2014, judgment of the

  United States District Court for the Southern District of

  New York (Gregory H. Woods, District Judge), dismissing, for

  failure to state a claim on which relief can be granted, an

  employee’s suit claiming that his discharge violated the

  whistleblower protection provisions of the Dodd-Frank Wall

  Street Reform and Consumer Protection Act.                         The District

  Court ruled that these provisions protect only employees

  discharged for reporting violations to the Securities and

  Exchange Commission and not those reporting violations only

                                             1
internally. See Berman v. Neo@Ogilvy LLC, No. 1:14-cv-523-

GHW-SN, 2014 WL 6860583 (S.D.N.Y. Dec. 5, 2014).

    Reversed and remanded.   Judge Jacobs dissents with a

separate opinion.

                         Alissa Pyrich, Jardim, Meisner &
                           Susser, P.C., Florham Park, NJ
                           (Bennet   Susser,  Richard   S.
                           Meisner,   Jardim,  Meisner   &
                           Susser, P.C., Florham Park, NJ,
                           on the brief), for Appellant.

                         Howard J. Rubin, Davis & Gilbert
                           LLP, New York, NY (Jennifer
                           Tafet   Klausner,   David   J.
                           Fisher, Davis & Gilbert LLP,
                           New York, NY, on the brief),
                           for Appellees.

                         (William K. Shirey, Asst. Gen.
                           Counsel, Washington, DC (Anne
                           K. Small, Gen. Counsel, Michael
                           A. Conley, Deputy Gen. Counsel,
                           Stephen   G.    Yoder,   Senior
                           Counsel, Washington, DC), for
                           amicus curiae Securities and
                           Exchange Commission, in support
                           of Appellant.)

                         (Kate   Comerford    Todd,    U.S.
                           Chamber   Litigation     Center,
                           Inc., Washington, DC, Eugene
                           Scalia, Gibson, Dunn & Crutcher
                           LLP, Washington, DC (Rachel E.
                           Mondel, Gabrielle Levine on the
                           brief) for amicus curiae The
                           Chamber of Commerce of the
                           United States of America, in
                           support of the Appellees.)

                             2
JON O. NEWMAN, Circuit Judge.

      This appeal presents the recurring issue of statutory

interpretation     that   arises       when   express   terms    in    one

provision of a statute are arguably in tension with language

in another provision of the same statute. The Supreme Court

recently encountered a similar issue when it interpreted a

provision in the Patient Protection and Affordable Care Act

in Burwell v. King, 135 S. Ct. 2480 (2015).             In the pending

case, the tension occurs within the whistleblower protection

provisions of the Dodd-Frank Wall Street Reform and Consumer

Protection Act (“Dodd-Frank”). Pub. L. No. 111-203, Title

IX, § 922(a), 124 Stat. 1376, 1841 (2010), which added

section 21F to the Exchange Act of 1934, codified at 15

U.S.C. § 78u-6.      The relevant administrative agency, the

Securities and Exchange Commission (“SEC” or “Commission”),

has   issued   a   regulation   endeavoring        to   harmonize      the

provisions that are in tension.

      Plaintiff-Appellant    Daniel       Berman   appeals      from   the

December 8, 2014, judgment of the District Court for the

Southern District of New York (Gregory H. Woods, District

Judge), dismissing on motion for summary judgment his suit

against Defendants-Appellees Neo@Ogilvie LLC and WPP Group

USA, Inc. See Berman v. Neo@Ogilvy LLC, No. 1:14-cv-523-GHW-

                                   3
SN, 2014 WL 6860583 (S.D.N.Y. Dec. 5, 2014).             We conclude

that    the   pertinent    provisions    of   Dodd-Frank      create   a

sufficient ambiguity to warrant our deference to the SEC’s

interpretive rule, which supports Berman’s view of the

statute.       We therefore reverse and remand for further

proceedings.

                             Background

       The statutory and regulatory provisions.         Section 21F,

added to the Exchange Act by Dodd-Frank, is captioned

“Securities Whistleblower Incentives and Protection.” 15

U.S.C. § 78u-6.        Subsection 21F(b) provides the incentives

by directing the SEC to pay awards to individuals whose

reports to the Commission about violations of the securities

laws result in successful Commission enforcement actions.

See 15 U.S.C. § 78u-6(b).          Subsection 21F(h) provides the

protection by prohibiting employers from retaliation against

employees for reporting violations.           Id. § 78u-6(h).

       This   appeal    concerns   the   relationship    between     the

definition     of   “whistleblower”      in   section   21F    and   one

subdivision of the provision prohibiting retaliation, which

was added by a conference committee just before final

passage.      Subsection 21F(a), the definitions subsection of

section 21F, contains subsection 21F(a)(6), which defines

                                   4
“whistleblower” to mean “any individual who provides . . .

information relating to a violation of the securities laws

to the Commission . . . .” Id. 78u-6(a)(6) (emphasis added).

Subsection 21F(h), the retaliation protection provision,

contains subsection 21F(h)(1)(A), which provides:

    (A) In General

    No employer may discharge, demote, suspend,
    threaten, harass, directly or indirectly, or in
    any   other   manner  discriminate   against,  a
    whistleblower in the terms and conditions of
    employment because of any lawful act done by the
    whistleblower—

          (i) in providing information to the Commission
          in accordance with this section;

          (ii) in initiating, testifying in, or
          assisting in any investigation or judicial or
          administrative action of the Commission based
          upon or related to such information; or

          (iii) in making disclosures that are required
          or protected under the Sarbanes-Oxley Act of
          2002 (15 U.S.C. 7201 et seq.), this chapter
          [i.e., the Exchange Act], including section
          78j-1(m) of this title [i.e., Section 10A(m)
          of the Exchange Act], section 1513(e) of Title
          18, and any other law, rule, or regulation
          subject to the jurisdiction of the Commission.

Id. 78u-6(h)(1)(A).

    The   Sarbanes-Oxley   Act       of   2002   (“Sarbanes-Oxley”),

Public L. No. 107-204, 116 Stat. 475 (2002), which is cross-

referenced by subdivision (iii) of subsection 21F(h)(1)(A)

of Dodd-Frank, includes several provisions concerning the

                                 5
internal reporting of securities law violations or improper

practices.

      For example, section 307 of Sarbanes-Oxley requires the

SEC   to   issue   rules   requiring         an   attorney   to   report

securities law violations to the chief legal counsel or

chief executive officer      of the company. See 15 U.S.C.

§ 7245(1).     Section 301 of Sarbanes-Oxley added to the

Exchange Act section 10A(m)(4), requires the SEC by rule to

direct national securities exchanges and national securities

associations to require audit committees of listed companies

to establish internal company procedures allowing employees

to submit complaints regarding auditing matters.                    This

section is not codified.      Section 806(a) of Sarbanes-Oxley

prohibits a publicly traded company from retaliating against

an employee who provides information concerning securities

law violations to, among other, a federal regulatory or law

enforcement agency, a member of Congress, or “a person with

supervisory    authority    over       the    employee.”     18   U.S.C.

§ 1514A(a)(1).

      This appeal concerns the arguable tension between the

definitional subsection, subsection 21F(a)(6), which defines

“whistleblower” to mean an individual who reports violations

to the Commission, and subdivision (iii) of subsection

                                   6
21F(h)(1)(A), which, unlike subdivisions (i) and (ii), does

not within its own terms limit its protection to those who

report wrongdoing to the SEC.       On the contrary, subdivision

(iii) expands the protections of Dodd-Frank to include the

whistleblower protection provisions of Sarbanes-Oxley, and

those provisions, which contemplate an employee reporting

violations internally, do not require reporting violations

to the Commission.

    In statutory terms, the issue presented is whether the

“whistleblower” definition in subsection 21F(a)(6) of Dodd-

Frank   applies     to   subdivision      (iii)   of    subsection

21F(h)(1)(A). In operational terms, the issue is whether an

employee   who    suffers   retaliation     because    he   reports

wrongdoing internally, but not to the SEC, can obtain the

retaliation remedies provided by Dodd-Frank.

    The SEC believes he can.        In 2011, using its authority

to issue rules implementing section 21F, see 15 U.S.C.

§ 78u-6(j), the SEC promulgated Exchange Act Rule 21F-2, 17

C.F.R. § 240.21F-2, which provides:

    (a) Definition of a whistleblower.

    (1) You are a whistleblower if, alone or jointly
    with others, you provide the Commission with
    information pursuant to the procedures set forth
    in § 240.21F–9(a) of this chapter, and the

                                7
    information relates to a possible violation of the
    Federal securities laws (including any rules or
    regulations thereunder) that has occurred, is
    ongoing, or is about to occur. A whistleblower
    must be an individual. A company or another entity
    is not eligible to be a whistleblower.

    (2) To be eligible for an award, you must submit
    original   information  to   the  Commission  in
    accordance with the procedures and conditions
    described   in   §§  240.21F–4,  240.21F–8,  and
    240.21F–9 of this chapter.

    (b) Prohibition against retaliation.

    (1) For purposes of the anti-retaliation protections
    afforded by Section 21F(h)(1) of the Exchange Act (15
    U.S.C. 78u–6(h)(1)), you are a whistleblower if:

    (i) You possess a reasonable belief that the
    information you are providing relates to a possible
    securities law violation (or, where applicable, to a
    possible violation of the provisions set forth in 18
    U.S.C. 1514A(a)) that has occurred, is ongoing, or is
    about to occur, and;

    (ii) You provide that information in a manner described
    in Section 21F(h)(1)(A) of the Exchange Act (15 U.S.C.
    78u–6(h)(1)(A)).

    (iii) The anti-retaliation protections apply whether or
    not you satisfy the requirements, procedures and
    conditions to qualify for an award.1

    1
      Just recently, on August 4, 2015, the SEC issued a
release “to clarify that, for purposes of the employment
retaliation protections provided by Section 21F of the
Securities Exchange Act of 1934 (“Exchange Act”), an
individuals’s status as a whistleblower does not depend on
adherence to the reporting procedures specified in Exchange

                             8
    Echoing section 21F(a)(6) of Dodd-Frank, subsection

21F-2(a)(1)         of    Exchange      Act        Rule    21F-2     defines     a

whistleblower as a person who “provide[s] the Commission”

with specific information. 17 C.F.R. § 240.21F-2(a)(1).

However, subsection 21F-2(b) of the Rule, headed “Protection

against retaliation,” provides, in subdivision 21F-2(b)(ii)

that, for purposes of the retaliation protections of Dodd-

Frank,     a     person    is     a    whistleblower           if   the     person

“provide[s]” specified information “in a manner described

in” the retaliation protection provisions of Dodd-Frank,

which includes the cross-reference in subdivision (iii) to

the reporting provisions of Sarbanes-Oxley. Id. § 240.21F-

2(b)(ii).       Those provisions, as explained above, protect an

employee who reports internally without reporting to the

Commission.

    As     the      SEC   explained         in    its   release     accompanying

issuance       of   Exchange    Rule        21F–2,      “the   statutory     anti-

retaliation         protections       [of       Dodd-Frank]    apply   to   three

Act Rule 21F-9(a) [specifying procedures to be followed to
qualify for a whistleblower award], but is determined solely
by   the   terms   of   Exchange   Act   Rule   21F2(b)(1).”
Interpretation of the SEC’s Whistleblower Rules Under
Section 21F of the Securities Exchange Act of 1934, SEC
Release No. 34-75592, 2015 WL 4624264 (F.R.) (Aug. 4, 2015).

                                            9
different    categories     of    whistleblowers,       and     the    third

category    [described    in     subdivision    (iii)      of   subsection

21F(h)(1)(A)] includes individuals who report to persons or

governmental     authorities       other     than    the    Commission.”

Securities Whistleblower Incentives and Protections, Release

No. 34-64545, 76 Fed. Reg. 34300-01, at *34304, 2011 WL
2293084 (F.R.) (June 13, 2011) (emphasis added).

    So the more precise issue in the pending appeal is

whether    the   arguable      tension     between   the    definitional

section of subsection 21F(a)(6) and subdivision (iii) of

subsection 21(F)(h)(1)(A) creates sufficient ambiguity as to

the coverage of subdivision (iii) to oblige us to give

Chevron deference to the SEC’s rule. See Chevron U.S.A.,

Inc. v. Natural Resources Defense Council, Inc., 467 U.S.
837 (1984).

    The pending lawsuit. Plaintiff-Appellant Daniel Berman

was the finance director of Defendant-Appellee Neo@Ogilvy

LLC (“Neo”) from October 2010 to April 2013.                          He was

responsible for Neo’s financial reporting and its compliance

with Generally Accepted Accounting Principles (“GAAP”), as

well as internal accounting procedures of Neo and its

parent, Defendant-Appellee WPP Group USA, Inc. (“WPP”). Neo

                                    10
is a media agency that provides a range of digital and

direct media services.

     In January 2014, Berman sued Neo and WPP, alleging that

he   was    discharged      in     violation    of     the    whistleblower

protection provisions of section 21F of Dodd-Frank and in

breach     of   his   employment        contract.      According    to   the

allegation of the complaint, while employed at Neo, he

discovered various practices that he alleged amounted to

accounting fraud.           He also alleged that these practices

violated GAAP, Sarbanes-Oxley, and Dodd-Frank, and that he

had reported these violations internally.                  A senior officer

at Neo became angry with him, and he was terminated as a

result of his whistleblower activities in April 2013.                     In

August 2013 he reported his allegations to the WPP Audit

Committee.

     While employed at Neo and for about six months after he

was fired, Berman did not report any allegedly unlawful

activities      to    the   SEC.        In   October    2013,    after   the

limitations period on one of his Sarbanes-Oxley claims had

ended, he provided information to the Commission.

     Defendants’       motion      to    dismiss     the     complaint   was

referred to Magistrate Judge Sarah Netburn.                     She filed a

                                        11
Report & Recommendation (“R&R”) recommending that Berman was

entitled to be considered a whistleblower under Dodd-Frank

because of the retaliation protection of subdivision (iii)

of subsection 21F(h)(A)(1), unrestricted by the definition

of “whistleblower” in subsection 21F(a)(6).                      However, the

R&R   also    recommended        that        the   retaliation     claims    be

dismissed for legal insufficiency, without prejudice to

amendment, and that the contracts claims be dismissed with

prejudice.

      The District Court, disagreeing with the Magistrate

Judge,   relied      on   the    definition          of   “whistleblower”   in

subsection 21F(a)(6) and ruled that subsection 21F(h)(1)(A),

including     subdivision         (iii),           provided    whistleblower

protection only to those discharged for reporting alleged

violations to the Commission.                The District Court dismissed

the Dodd-Frank claims because Berman had been terminated

long before he reported alleged violations to the SEC.                      The

District     Court    also      rejected       the    contract    claims    and

dismissed the entire complaint. See Berman, 2014 WL 6860583,

at *6. Berman’s appeal challenges only the dismissal of his

Dodd-Frank claim.

                                        12
                        Discussion

    The statutory interpretation issue posed by this case

is not as stark, and hence not as easily resolved, as that

encountered in somewhat similar cases.2    In Scialabba v.

Cuellar de Osorio, 134 S. Ct. 2191 (2014), for example, the

express language of one clause of a subsection of a statute

was contradicted by express language in another clause of

    2
       We start by posing the issue as one of statutory
construction because Berman sued for violation of Dodd-
Frank. If we find the statute ambiguous, we will consider
whether the SEC’s regulation is a reasonable interpretation
of the statute warranting Chevron deference. The SEC begins
its argument by asserting that “‘[t]he interpretation of a
statute   by   a   regulatory  agency   charged   with   its
administration is entitled to deference if it is a
permissible construction of the statute.’” Brief for SEC at
17 (citing Haekal v. Refco, Inc., 198 F.3d 37, 41 (2d Cir.
1999)).   Then the SEC points out that consideration of
whether an agency interpretation is permissible requires two
steps: first, considering whether there is an “unambiguously
expressed intent of Congress,” Chevron, 467 U.S. at 843, on
“the precise issue in question,” id. at 842, and, second, if
the statute is silent or ambiguous, considering whether the
agency’s interpretation is “based on a permissible
construction of the statute, id. at 843.

     Although our approach and the SEC’s both require
initial interpretation of the statute, the reasons for that
inquiry differ. We start with the statute because that is
the basis for Berman’s claim.      His complaint does not
mention the SEC’s rule. The SEC starts with the statute to
determine whether its regulation is entitled to Chevron
deference.   Chevron, in which the two-step analysis was
outlined, was a suit challenging the validity of an agency
regulation.

                             13
the same subsection. See id. at 2207 (“[T]he two halves of

[8 U.S.C.] § 1153(h)(3) face in different directions.”). In

Church of the Holy Trinity v. United States, 143 U.S. 457

(1892), application of the express terms of a statute to the

facts of a case yielded a result so unlikely to have been

intended by Congress that the Supreme Court did not apply

those terms.3 See id. at 472         (declining to apply to a

church’s contract with a British pastor a prohibition on

contracting to import an alien to perform labor of any

kind).

     Closer to our case is the issue the Supreme Court

recently confronted in Burwell v. King.        There, four words

of   one   provision   expressly    provided   that   income   tax

subsidies were available to those who purchased health

insurance on exchanges “established by a state,” and the

argument made to the Court was that the operation of the

entire statute would be undermined if tax subsidies were not

also available to those who purchased health insurance on

     3
      See also Yates v. United States, 135 S. Ct. 1074, 1079
(2015) (declining to apply literal meaning of “tangible
object” as used in Sarbanes-Oxley” to a fish); Bond v.
United States, 134 S. Ct. 2077, 2091 (2014) (declining to
apply express terms of definition of “chemical weapon” to
toxic chemicals spread by a jilted wife on property of her
husband’s lover).

                               14
exchanges established by the federal government.                 A closely

divided Court accepted that argument and interpreted the

Affordable    Care   Act   as    a    whole    to   provide     income   tax

subsidies to those who purchased health insurance on federal

exchanges.

     The interpretation issue facing the Supreme Court in

King was far more problematic than the issue we face here.

In   King    the   issue   was       whether    the    statutory    phrase

“established by the State” should be understood to mean

“established by the State or by the Federal Government.” In

our case, the statutory provision relied on by the Appellees

and our dissenting colleague contains the phrase “provide

. . . to the Commission,” but the issue is not whether that

phrase means something other than what it literally says.4

Instead,    the    issue   is    whether      the   statutory    provision

applies to another provision of the statute, or, more

precisely,     whether     the       answer    to     that    question   is

sufficiently unclear to warrant Chevron deference to the

Commission’s regulation.

     4
      We do not doubt that “provide . . . to the Commission”
means “provide . . . to the Commission.”

                                      15
    In our case there is no absolute conflict between the

Commission notification requirement in the definition of

“whistleblower” and the absence of such a requirement in

both subdivision (iii) of subsection 21F(h)(1)(A) of Dodd-

Frank and the Sarbanes-Oxley provisions incorporated by

subdivision (iii).     An employee who suffers retaliation

after reporting wrongdoing simultaneously to his employer

and to the SEC is eligible for Dodd-Frank remedies and those

provided by Sarbanes-Oxley.       Subdivision (iii) assures him

the latter remedies, and his simultaneous report to the SEC

assures him that he will not have excluded himself from

Dodd-Frank remedies.    Indeed, it was the possibility of

simultaneous   complaints   to    both   the   employer   and   the

Commission that persuaded the Fifth Circuit to insist that

the Commission notification requirement be observed by all

employees who seek Dodd-Frank remedies for whistleblower

retaliation. See Asadi v. G.E. Energy (USA), L.L.C., 720
F.3d 620, 627-28 (5th Cir. 2013).5

    5
      By using the Fifth Circuit’s example of “simultaneous”
reporting to an employer and to the Commission, we recognize
that   a  literal    application   of  the   definition   of
“whistleblower” to subdivision (iii) would also benefit
those who reported to the Commission very soon after
reporting to an employer, soon enough to do so before the
employer retaliated by discharging the employee for the
internal reporting (assuming the employer terminated because
of both acts of reporting).

                                 16
     Although the simultaneous employer/Commission reporting

example    avoids     an    absolute         contradiction          between      the

Commission reporting requirement of the “whistleblower”

definition     and    subdivision            (iii)'s          incorporation       of

Sarbanes-Oxley       remedies,     a        significant         tension     within

subsection     21F    nevertheless            remains.             Applying      the

Commission     reporting      requirement              to    employees     seeking

Sarbanes-Oxley remedies pursuant to subdivision (iii) would

leave that subdivision with an extremely limited scope for

several reasons.

     First,     although       there         may        be     some      potential

whistleblowers who will report wrongdoing simultaneously to

their employer and the Commission, they are likely to be few

in number.     Some will surely feel that reporting only to

their employer offers the prospect of having the wrongdoing

ended, with little chance of retaliation, whereas reporting

to   a   government    agency      creates         a    substantial       risk    of

retaliation.

     Second, and more significant, there are categories of

whistleblowers       who     cannot         report          wrongdoing    to     the

Commission until after they have reported the wrongdoing to

their    employer.         Chief   among       these         are   auditors      and

attorneys.

                                       17
    Auditors       are    subject      to    subsection     78j-1    of     the

Exchange Act, 15 U.S.C. § 78j-1, which is one of the

provisions of Sarbanes-Oxley, expressly cross-referenced by

subdivision (iii).            Subsection 78j-1(b)(1)(B) requires an

auditor of a public company, under certain circumstances, to

“inform the appropriate level of the management” of illegal

acts, unless they are inconsequential. See 15 U.S.C. § 78j-

1(b)(1)(B).       Subsection 78j-1(b)(2) requires an auditor to

report to the board of directors if the company does not

take reasonable remedial action after the auditor’s report

to management. See id. § 78j-1(b)(2).               Significantly to our

case, subsection 78j-1(b)(3)(B) permits an auditor to report

illegal    acts    to    the    Commission     only   if    the     board   or

management fails to take appropriate remedial action. See

id. § 78j-1(b)(3)(B).           Thus, if subdivision (iii) requires

reporting to the Commission, its express cross-reference to

the provisions of Sarbanes-Oxley would afford an auditor

almost no Dodd-Frank protection for retaliation because the

auditor must await a company response to internal reporting

before reporting to the Commission, and any retaliation

would almost always precede Commission reporting.

    Attorneys are subject to both section 307 of Sarbanes-

Oxley,    15   U.S.C.     §    7245,   and    the   SEC’s    Standards      of

                                       18
Professional   Conduct6   (“Attorney    Standards”),   17   C.F.R.

§ 205.1-7, and subdivision (iii) cross-references “any other

law, rule, or regulation subject to the jurisdiction of the

Commission.”    Subsection    7245(1)    requires   attorneys   to

report material violations of the securities laws to the

chief legal counsel or chief executive officer (“CEO”) of a

public company, and subsection 7245(2) requires attorneys to

report such violations to the audit or other appropriate

committee of the board of directors if the counsel or CEO

“does not appropriately respond to the attorney’s internal

reporting. 15 U.S.C. §§ 7245(1), (2).       Again significantly

to our case, the SEC’s Rule 3 of its Attorney Standards

contemplates an attorney reporting to the Commission only

after internal reporting, see 17 C.F.R. § 205.3(d)(2),

explicitly recognizing that by reporting internally first an

attorney “does not reveal client confidences or secrets or

privileged or otherwise protected information related to the

attorney’s representation of the issuer,” id. § 205.3(b)(1).

Like auditors, attorneys would gain little, if any, Dodd-

Frank   protection   if   subdivision   (iii),   despite    cross-

referencing Sarbanes-Oxley provisions protecting lawyers,

    6
      The full title is “Standards of Professional Conduct
for Attorneys Appearing and Practicing Before the Commission
in the Representation of an Issuer.” 17 C.F.R. § 205.1.

                               19
protected only against retaliation for reporting to the

Commission.

      Thus, apart from the rare example of simultaneous (or

nearly simultaneous)7 reporting of wrongdoing to an employer

and to the Commission, there would be virtually no situation

where an SEC reporting requirement would leave subdivision

(iii) with any scope.

      In light of these realities as to the sharply limiting

effect     of   a   Commission    reporting    requirement     on   all

whistleblowers seeking the Sarbanes-Oxley remedies promised

by Dodd-Frank for those who report wrongdoing internally,

the   question      becomes   whether    Congress   intended   to   add

subdivision (iii) to subsection 21F(h)(1)(A) only to achieve

such a limited result.           To answer that question we would

normally look to the legislative history of subdivision

(iii) to learn what Congress, or the relevant committee, had

sought to accomplish by adding subdivision (iii). See, e.g.,

Vincent v. The Money Store, 736 F.3d 88, 101 n.10 (2d Cir.

2013).

      Unfortunately that inquiry yields nothing. What became

subdivision (iii) of subsection 20F(h)(1)(A) was not in

      7
          See footnote 5, supra.

                                    20
either version of Dodd-Frank that was passed by the House

and the Senate prior to a conference.8               After these versions

went       to   conference,    the   House     Conferees       prepared   a

“conference base text” to serve as the basis for resolution

of differences by the Conference Committee.

       Subdivision (iii) first saw the light of day in that

conference       base   text    when      it   was     added   to   follow

subdivisions (i) and (ii) of subsection 20F(h)(1)(A), both

of which had been in the Senate version.                  Unfortunately,

there is no mention of the addition of subdivision (iii),

       8
      As originally submitted by the Administration on July
22, 2009, the “Financial Services Oversight Council Act of
2009" proposed adding section 21F to the Exchange Act. The
Administration’s proposal included subsection 21F(g)(1)(A),
which entitled an employee to be made whole if discharged
“for providing information ” as provided elsewhere in the
bill. As passed by the House of Representative on Dec. 11,
2009, the “Wall Street Reform and Consumer Protection Act of
2009" also proposed adding section 21F to the Exchange Act.
The House version of section 21F included subsection
21F(g)(1)(A), which prohibited retaliation against an
employee for “providing information to the Commission” as
provided elsewhere in the bill, and subsection 21F(g)(4),
which defined “whistleblower” as one or more individuals
“who submit information to the Commission” as provided in
section 21F. See H.R. 4173, 111th Cong., 1st Sess. (2009).
As passed by the Senate on May 20, 2010, the “Restoring
American Financial Stability Act of 2010" also proposed
adding section 21F to the Exchange Act. The Senate version
of section 21F included subsection 21F(a)(7), which copied
the definition of “whistleblower” from H.R. 4173, and
included in subsection 21F(h)(1)(A) the language that would
become subdivisions (i) and (ii) of subsection 21F(h)(1)(A)
of Dodd-Frank. See H.R. 4173, 111th Cong., 2d Sess. (2010).

                                     21
much    less     its     meaning       or     intended      purpose,      in    any

legislative materials – not in the conference report nor the

final passage debates on Dodd-Frank in either the House or

the    Senate.         The    “Joint    Explanatory         Statement      of   the

Committee of Conference” explains only that “[t]he subtitle

[Subtitle B of Title IX] further enhances incentives and

protections for whistleblowers providing information leading

to successful SEC enforcement actions.” H. Rep. No. 111-517,

at 870 (2009-10) (Conf. Rep.).                 Subdivision (iii) is, like

Judge Friendly’s felicitous characterization of the Alien

Tort Act, “a kind of legal Lohengrin; . . . no one seems to

know whence it came.” ITT v. Vencap, Ltd., 519 F.2d 1001,

1015 (2d Cir. 1975), abrogated on other grounds by Morrison

v. National Australia Bank, 561 U.S. 247 (2010) .

       Other   courts        confronting       the   issue    of    whether     the

arguable       tension        between         subsection      21F(a)(6)         and

subdivision      (iii)        of     subsection      21F(h)(1)(A)         warrants

Chevron    deference         to     Exchange    Rule   21F-2       have    reached

conflicting results.               The Fifth Circuit in Asadi, 720 F.3d

at 620, and the District Court decision that Asadi affirmed,

Asadi v. G.E. Energy (USA), LLC, Civ. Action No. 4:12-345,

2012 WL 2522599 (S.D. Tex. Jun. 28, 2012), both ruled the

subsection       21F(a)(6)           definition        of     “whistleblower”

                                         22
controlling.   Three other district courts have followed

Asadi. See Verfuerth v. Orion Energy Systems, Inc., 65 F.

Supp. 640, 643-46 (E.D. Wis. 2014); Banko v. Apple Inc., 20
F. Supp. 3d 749, 756-57 (N.D. Cal. 2013); Wagner v. Bank of

America Corp., No. 12-cv-00381-RBJ, 2013 WL 3786643, at *4-

*6 (D. Colo. July 19, 2013).

    On the other hand, a far larger number of district

courts have deemed the statute ambiguous and deferred to the

SEC’s Rule. See Somers v. Digital Realty Trust, Inc., No. C-

14-5180 EMC, 2015 WL 2354807, at *4-*12 (N.D. Cal. May 15,

2015); Yang v. Navigators Group, Inc., 18 F. Supp. 3d 519,

533-34 (S.D.N.Y. 2014); Khazin v. TD Ameritrade Holding

Corp. No. 13-4149 (SDWQ)(MCA), 2014 WL 940703, at *3-*6

(D.N.J. Mar. 11, 2014); Azim v. Tortoise Capital Advisors,

LLC, No. 13-2267-KHV, 2014 WL 707235, at *2-3 (D. Kan. Feb.

24, 2014); Ahmad v. Morgan Stanley & Co., 2 F. Supp. 3d 491,

495-97 n.5 (S.D.N.Y 2014); Rosenblum v. Thomson Reuters

(Mkts.) LLC, 984 F. Supp. 2d 141, 146-49 (S.D.N.Y. 2013);

Murray v. UBS Securities, LLC, No. 12-5914, 2013 WL 2190084,

at *4 (S.D.N.Y. May 21, 2013); Ellington v. Giacoumakis, 977
F. Supp. 2d 42, 44-46 (D. Mass. 2013); Genberg v. Porter,

935 F. Supp. 2d 1094, 1106-07 (D. Colo. 2013); Nollner v.

Southern Baptist Convention, Inc., 852 F. Supp. 2d 986, 995

                               23
(M.D. Tenn. 2012); Kramer v. Trans-Lux Corp., No. 3:11CV1424

SRU, 2012 WL 4444820, at *4 (D. Conn. Sept. 25, 2012); Egan

v. Tradingscreen, Inc., No. 10 Civ. 8202, 2011 WL 1672066,

at *4-7 (S.D.N.Y. May 4, 2011). Thus, although our decision

creates a circuit split, it does so against a landscape of

existing disagreement among a large number of district

courts.

     Like all these courts, we confront both the definition

of “whistleblower” in subsection 21F(a)(6), which extends

whistleblower      protection   only   to     employees    who      report

violations    to    the    Commission,       and   the    language      of

subdivision (iii), which purports to protect employees9 from

retaliation for making reports required or protected by

Sarbanes-Oxley, reports that are made internally, without

notification to the Commission. We recognize that the terms

of   a   definitional     subsection   are    usually     to   be    taken

literally, see Antonin Scalia and Bryan A. Garner, “Reading

     9
       The dissent chides us for stating that subdivision
(iii) protects “employees” from retaliation for reporting
violations, pointing out correctly that this subdivision
does not use the word “employees.” Dissenting op. [5-6].
However, subsection 21F(h)(1)(A), of which subdivision (iii)
is a component, prohibits an “employer” from taking adverse
action or discriminating against a whistleblower “in the
terms or conditions of employment.” Who but “employees”
could be discriminated against by an “employer” in the terms
and conditions of “employment?”

                                 24
Law,” 227 (2012) (“Ordinarily, judges apply text-specific

definitions with rigor.”), and, pertinent to this case,

usually applied to all subdivisions literally covered by the

definition, but we have also recognized that “mechanical use

of a statutory definition” is not always warranted. See In

re Air Cargo Shipping Services Antitrust Litigation, 697
F.3d 154, 163 (2d Cir. 2012).                   Scalia and Garner too have

stated, “Definitions are, after all, just one indication of

meaning    –    a     very    strong      indication,        to    be     sure,       but

nonetheless          one     that   can        be    contradicted         by        other

indications.” Scalia and Garner 228.                             The issue here,

however,       is     not    whether      to        read   the     words       of    the

definitional section literally, but the different issue of

whether    the       definition      should          apply   to     a     late-added

subdivision of a subsection that uses the defined term.

    In deciding whether sufficient ambiguity exists in

Dodd-Frank to warrant deference to the SEC’s Rule, we note,

but are not persuaded by, the arguments that any reading

would   render        some    language         of    Dodd-Frank         superfluous.

Berman contends that if subdivision (iii) is subject to the

Commission reporting requirement by virtue of subsection

21F(a)(6),          then    most    of    subdivision            (iii)     would       be

superfluous          because        the        Sarbanes-Oxley            protections

                                          25
purportedly incorporated would have no effect.               The SEC

argues that if the definition of “whistleblower” applies to

all three subdivisions of subsection 21F(h)(1)(A), then the

Commission     reporting    requirement,     expressly   stated    in

subdivisions (i) and (ii),             would be superfluous.      Neo

contends that if subdivision (iii) does not require an

employee to report violations to the Commission, then the

SEC reporting requirement in subsection 21F(a)(6) would be

superfluous.

    All     these     arguments   ignore   the   realities   of   the

legislative process.       When conferees are hastily trying to

reconcile House and Senate bills, each of which number

hundreds of pages, and someone succeeds in inserting a new

provision      like     subdivision      (iii)   into    subsection

21F(h)(1)(A), it is not at all surprising that no one

noticed that the new subdivision and the definition of

“whistleblower” do not fit together neatly.10 The definition

speaks of reporting to the Commission, but subdivision (iii)

incorporates Sarbanes-Oxley provisions, which contemplate

internal reporting, without reporting to the Commission.

Subdivisions (i) and (ii), which were included in the Senate

    10
        “True ambiguity is almost always the result               of
carelessness or inattention.” Scalia and Garner 33.

                                  26
version     of   Dodd-Frank   before       the   conferees     met,   fit

precisely with the “whistleblower” definition. Subdivision

(i) explicitly requires reporting “to the Commission,” and

subdivision      (ii)   concerns        assisting    action    “of    the

Commission,” whereas the terms of subdivision (iii) do

neither.11

     When    the   conferees,   at      the   last   minute,    inserted

subdivision (iii) within subsection 21F(h)(1)(A), did they

expect subdivision (iii) to be limited by the statutory

definition of “whistleblower” in subsection 21F(a)(6), or

did they expect employees to be protected by subdivision

(iii) whenever they report violations internally, without

reporting to the Commission?12           The texts leave the matter

unclear, and no legislative history even hints at an answer.

     11
       Subdivision (iii) mentions the Commission only to
provide that the protection of (iii) extends to Sarbanes-
Oxley disclosures required by any “law, rule, or regulation
subject to the jurisdiction of the Commission.” 15 U.S.C.
§ 78u-6(h)(1)(A)(iii).
     12
       Or, to put the matter another way, did the conferees
deliberately decide to insert subdivision (iii) in
subsection 21F(h)(1)(A), knowing it would arguably be
subject   to  the   subsection   21F(a)(6)  definition   of
“whistleblower,” rather than add the text of subdivision
(iii) elsewhere so that it would not even arguably be
subject to that definition?

                                   27
    Ultimately, we think it doubtful that the conferees who

accepted the last-minute insertion of subdivision (iii)

would have expected it to have the extremely limited scope

it would have if it were restricted by the Commission

reporting requirement in the “whistleblower” definition in

subsection 21F(a)(6).   If we had to choose between reading

the statute literally or broadly to carry out its apparent

purpose, we might well favor the latter course. However, we

need not definitively construe the statute, because, at a

minimum, the tension between the definition in subsection

21F(a)(6) and the limited protection provided by subdivision

(iii) of subsection 21F(h)(1)(A) if it is subject to that

definition renders section 21F as a whole sufficiently

ambiguous to oblige us to give Chevron deference to the

reasonable   interpretation   of   the   agency   charged   with

administering the statute. Unlike the situation confronting

the Supreme Court in King, where the agency administering

the disputed provision, the Internal Revenue Service, was

deemed to lack relevant expertise, King, 135 S. Ct. at 2489,

obliging the Court itself to resolve the ambiguity, see id.,

the SEC is clearly the agency to resolve the ambiguity we

face.   Therefore, also unlike King, we need not resolve the

                              28
ambiguity   ourselves,     but   will   defer    to   the    reasonable

interpretive rule adopted by the appropriate agency.

    Under    SEC    Rule   21F-2(b)(1),   Berman      is    entitled   to

pursue Dodd-Frank remedies for alleged retaliation after his

report of wrongdoing to his employer, despite not having

reported to the Commission before his termination.                     We

therefore reverse and remand for further proceedings.                  On

remand, the District Court will have an opportunity to

consider    the    R&R’s   recommendation   to     dismiss,     without

prejudice to amendment, for lack of a sufficient allegation

of a termination entitled to Dodd-Frank protection, and any

other arguments made by the Defendants in support of their

motion to dismiss.

    Reversed and remanded.

                                  29
DENNIS JACOBS, Circuit Judge, dissenting:

      The majority and the Securities and Exchange Commission (“SEC”) have

altered a federal statute by deleting three words (“to the Commission”) from the

definition of “whistleblower” in the Dodd‐Frank Act.  No doubt, my colleagues

in the majority, assisted by the SEC or not, could improve many federal statutes

by tightening them or loosening them, or recasting or rewriting them.  I could try

my hand at it.  But our obligation is to apply congressional statutes as written.  In

this instance, the alteration creates a circuit split, and places us firmly on the

wrong side of it.  See Asadi v. G.E. Energy (USA), LLC, 720 F.3d 620 (5th Cir.

2013).  I respectfully dissent.

                                           I

      Persons who report certain violations of the securities laws are protected

from retaliation under (at least) two federal statutes.  Sarbanes‐Oxley protects

employees who blow a whistle to management or to regulatory agencies; Dodd‐

Frank protects “whistleblowers,” defined as persons who report violations “to

the Commission.”  15 U.S.C. § 78u‐6(a)(6).  Dodd‐Frank has a longer statute of

limitations, doubles the collectible back‐pay, and requires no administrative

                                           1
exhaustion.  The plaintiff in this case reported the violation to his employer, and

did not report it “to the [Securities and Exchange] Commission,” id., and he is

therefore protected from retaliation under Sarbanes‐Oxley only.  But the SEC and

the majority perceive a hole in coverage, or an insufficiency of remedy, and are

patching.

      The statutory provisions relevant to this case are few.  The Dodd‐Frank Act

defines the word “whistleblower” in one sentence, and provides that this

definition “shall apply” anywhere else “[i]n this section”:

      (a) Definitions

      In this section the following definitions shall apply:

      [...]

              (6) Whistleblower

              The term “whistleblower” means any individual who provides, or 2
              or more individuals acting jointly who provide, information relating
              to a violation of the securities laws to the [Securities and Exchange]
              Commission, in a manner established, by rule or regulation, by the
              Commission.

15 U.S.C. § 78u‐6(a)(6).  “This definition, standing alone, expressly and

unambiguously requires that an individual provide information to the SEC to

qualify as a ‘whistleblower’ for purposes of § 78u‐6.”  Asadi, 720 F.3d at 623.  A

                                          2
definition is one of the “prominent manner[s]” for limiting the meaning of

statutory text.  King v. Burwell, 135 S. Ct. 2480, 2495 (2015); see also United States

v. DiCristina, 726 F.3d 92, 99 (2d Cir. 2013) (quoting Groman v. IRS, 302 U.S. 82,

86 (1937) (“When an exclusive definition is intended the words ‘means’ is

employed.”)).

      Later, within the same statutory section, in a provision titled “Protection of

whistleblowers,” Dodd‐Frank creates a private cause of action for

“whistleblowers”:

      (h) Protection of whistleblowers

             (1) Prohibition against retaliation

             (A) In general

             No employer may discharge, demote, suspend, threaten, harass,
             directly or indirectly, or in any other manner discriminate against, a
             whistleblower in the terms and conditions of employment because of
             any lawful act done by the whistleblower‐‐

                    (i) in providing information to the Commission in accordance
                    with this section;

                    (ii) in initiating, testifying in, or assisting in any investigation
                    or judicial or administrative action of the Commission based
                    upon or related to such information; or

                                           3
                    (iii) in making disclosures that are required or protected under
                    the Sarbanes‐Oxley Act of 2002 (15 U.S.C. 7201 et seq.), this
                    chapter, including section 78j‐1(m) of this title, section 1513(e)
                    of Title 18, and any other law, rule, or regulation subject to the
                    jurisdiction of the Commission.

15 U.S.C. § 78u‐6(h)(1)(A)(emphases added).

      Reading the definition and the substantive provision together “clearly

answers two questions: (1) who is protected; and (2) what actions by protected

individuals constitute protected activity.”  Asadi, 720 F.3d at 625.  As the Fifth

Circuit put it, “the answer to the first question is ‘a whistleblower.’”  Id. (quoting

15 U.S.C. § 78u‐6(h)(1)(A) (“No employer may discharge . . . a whistleblower . . . .”

(emphasis added))).  And, just as easy, “the answer to the latter question is ‘any

lawful act done by the whistleblower’ that falls within one of the three categories

of action described in the statute.”  Id. (quoting 15 U.S.C. § 78u‐6(h)(1)(A)).

      Berman alleges that he made “disclosures that are required or protected

under the Sarbanes‐Oxley Act of 2002,” 15 U.S.C. § 78u‐6(h)(1)(A)‐‐in particular,

he alleges that he reported a securities law violation to his employer.  But he does

not allege facts that make him a “whistleblower” as that term is defined in Dodd‐

Frank.  Nor could he‐‐he concedes that before his termination, he never reported

anything “to the [Securities and Exchange] Commission.”  15 U.S.C. § 78u‐6(a)(6).

                                          4
                                           II

      The majority hardly disputes that my reading (and the reading given in

Asadi) is the more natural reading of the statute.  But the majority extends

deference to an SEC regulation that alters the unambiguous definition of

“whistleblower” to include anyone who reports a securities law violation “in a

manner described in . . . 15 U.S.C. 78u‐6(h)(1)(A),” 17 C.F.R. § 240.21F‐2(b)(1),

including those who report a securities violation to their employer only. 

According to the majority, there is “arguable tension,” Maj. Op. at 7, between the

definition and the substantive whistleblower‐protection provisions, and that is

deemed enough for the SEC’s interpretation to survive under Chevron.  I would

apply the unambiguous statutory text. 

      A.  The majority assumes its own conclusion, claiming that “subdivision

(iii) [of 15 U.S.C. § 78u‐6(h)(1)(A)] . . . purports to protect employees from

retaliation for making reports required or protected by Sarbanes‐Oxley”.  Maj.

Op. at 25 (emphasis added).  That is a bad misreading, tantamount to a

misquotation.  Dodd‐Frank’s whistleblower‐protection provisions do not

mention this (generic) employee.  Instead, the statute lists three ways that “a

whistleblower” may take protected activity (in one case, by making disclosures

                                           5
protected under Sarbanes‐Oxley, see 15 U.S.C. § 78u‐6(h)(1)(A)(iii)).  And

“whistleblower” is a defined term.  So subdivision (iii) only protects someone

who (1) makes a protected disclosure under Sarbanes‐Oxley, and (2) also satisfies

Dodd‐Frank’s definition of “whistleblower.”  If the statute used the word

“employee[],” Maj. Op. at 25, Berman might have a claim.  He does not because

the phrasing is a coinage of the majority.

      The majority asks: “Who but ‘employees’ could be discriminated against

by an ‘employer’ in the terms and conditions of ‘employment?’”  Maj. Op. at 25

n.9.  My answer?  A whistleblower.  (Congress apparently agrees.  See 15 U.S.C.

§ 78u‐6(h)(1)(A) (“No employer may . . . discriminate against[] a whistleblower in

the terms and conditions of employment . . . .”).)

      The (generic) “employee” is nevertheless protected: in the Sarbanes‐Oxley

whistleblower‐protection provision.  See 18 U.S.C. § 1514A(a) (a publicly‐traded

company may not “discriminate against an employee” because of lawful

whistleblowing activity) (emphasis added).  The majority ignores the distinction

Congress drew in the two statutes.

      B.  The majority claims repeatedly that “the issue presented is whether the

‘whistleblower’ definition in subsection 21F(a)(6) of Dodd‐Frank applies to

                                         6
subdivision (iii) of subsection 21F(h)(1)(A).”  Maj. Op. at 7; see also id. at 15‐16. 

To answer that question, the majority looks here, there and everywhere‐‐except

to the statutory text.  But the definitions section is unambiguous: “In this section

the following definitions shall apply.”  15 U.S.C. § 78u‐6(a) (emphasis added). 

And all of the relevant statutory provisions in this case appear “[i]n this

section”‐‐that is, section 78u‐6 of title 15 of the U.S. Code.  Accordingly, when

Congress used the word “whistleblower” in 15 U.S.C. 78u‐6(h)(1)(A), it “mean[t]

any individual who provides . . . information relating to a violation of the

securities laws to the Commission.”  15 U.S.C. § 78u‐6(a)(6).

      The thing about a definition is that it is, well, definitional.

      C.  What appears to animate the majority’s finding of “arguable tension” is

that the natural reading of the statutory text would leave 15 U.S.C.

§ 78u‐6(h)(1)(A)(iii) with “extremely limited scope,” Maj. Op. at 17, affording

incremental protection only for individuals who suffer retaliation for reporting to

their employer after having already made a report to the SEC.  But the majority

simply assumes that this would be a “rare example,” Maj. Op. at 20, because the

two reports would have to be “simultaneous,” Maj. Op. at 16, or at least “nearly

simultaneous,” Maj. Op. at 20, and that, because simultaneity would be so rare,

                                           7
Congress could not have bothered its head over it.  The majority does not explain

why simultaneous reporting is required.  I cannot see why it would be. 

Moreover, someone might well fire off complaints of illegal activity more or less

at once to one or more of everyone and anyone who might listen: corporate

officers or directors, the SEC, the newspaper, a prosecutor, members of Congress,

and so on.

      In any event, the majority has no support for the proposition that when a

plain reading of a statutory provision gives it an “extremely limited” effect, the

statutory provision is impaired or ambiguous.  The U.S. Code is full of statutory

provisions with “extremely limited” effect; there is no canon that counsels

reinforcement of any sub‐sub‐sub‐subsection that lacks a paradigm‐shift.1  The

majority is thrown back on what it calls euphemistically “the realities of the

legislative process.”  Maj. Op. at 27.  By that, it is suggested that Congress is too

     1 The majority properly disclaims reliance on the absurdity canon, see Maj.
Op. at 14, presumably recognizing that there is nothing absurd about a plain
reading of the whistleblower definition in Dodd‐Frank.  Compare Church of the
Holy Trinity v. United States, 143 U.S. 457, 460 (1892) (“If a literal construction of
the words of a statute be absurd, the act must be so construed as to avoid the
absurdity.”).

                                           8
busy or confused to draft wording that achieves goals consistent with the intent

of the SEC.2

       D.  The majority observes that the statutory text as written gives “little, if

any” protection to lawyers who report violations to employers only, or do so

first‐‐and who may be required to do so.  Maj. Op. at 20.  As the majority

explains, lawyers and auditors are subject to a web of statutory, contractual, and

ethical obligations that impact the timing and manner in which they report

violations, whether to employers or to regulatory agencies or to prosecutors. 

Sometimes these obligations require disclosure; sometimes they require

confidentiality.  Congress may well have considered that additional incentives

should not be offered to get lawyers and auditors to fulfill existing professional

duties, for the same reason reward posters often specify that the police are

ineligible.

     2 The regulation at issue reflects the SEC’s territorial interests, not its own
reading.  Until only yesterday or so, a separate SEC regulation specified the
procedures by which a Dodd‐Frank whistleblower “must” report a violation‐‐
either by mail or fax “to the SEC Office of the Whistleblower” in Washington,
D.C., or online through the SEC’s website.  See 17 C.F.R. § 240.21F‐9(a).  After oral
argument, the SEC issued an “interpretive rule” amending its regulations to
conform to the error it has (successfully) argued here.  See SEC Release No.
34‐75592, 80 Fed. Reg. 47,829 (Aug. 10, 2015).

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                                         III

      The majority relies almost wholly on King v. Burwell, 135 S. Ct. 2480

(2015).  That case does not do the work the majority needs done.

      A.  King v. Burwell is not a wholesale revision of the Supreme Court’s

statutory interpretation jurisprudence, which for decades past has consistently

honored plain text over opportunistic inferences about legislative history and

purpose.  Had the Supreme Court intended an avulsive change, it would not

have done so sub silentio.  Just ten days before King v. Burwell came down, the

Court reinforced and applied the principle that a judge’s “job is to follow the text

even if doing so will supposedly undercut a basic objective of the statute.”  Baker

Botts LLP v. ASARCO LLC, 135 S. Ct. 2158, 2169 (2015) (internal quotation marks

omitted); see also id. (Sotomayor, J., concurring in part and concurring in the

judgment) (“Given the clarity of the statutory language, it would be improper to

allow policy considerations to undermine the American Rule in this case.”). 

Nothing in King v. Burwell suggests that, in the fortnight that intervened after

ASARCO, the Court repented of that holding‐‐let alone the scores of cases

preceding ASARCO that say the same thing.  See, e.g., Pavelic & LeFlore v.

                                         10
Marvel Entm’t Grp., 493 U.S. 120, 126 (1989) (“Our task is to apply the text, not to

improve upon it.”).

      B.  To the extent the Supreme Court departed from the plain statutory text

in King v. Burwell, it expressly relied on most unusual circumstances.  The Court

adapted wording to avoid what it considered the upending of a ramified, hugely

consequential enactment: “Congress passed the Affordable Care Act to improve

health insurance markets, not to destroy them.”  135 S. Ct. at 2496.  

      Here, the sole consequence of applying the statute as written is that those

who report securities violations only to their employer will receive statutory

protection that in the SEC’s view is sub‐optimal.  They will be protected under

Sarbanes‐Oxley, but not Dodd‐Frank‐‐that is, they will enjoy the same protection

every securities whistleblower had before the passage of Dodd‐Frank in 2010,

and more protection than any securities whistleblower had before the passage of

Sarbanes‐Oxley in 2002.  No markets collapse, no castles fall.  A shorter statute of

limitations may be inconvenient for some plaintiffs, but it does not threaten the

entire statutory scheme.  The only palpable danger lurking here is that

bureaucrats and federal judges assume and exercise power to redraft a statute to

give it a more respectable reach.  

                                         11
        King v. Burwell was not animated by a perceived need to afford greater

impact to a small phrase; to the contrary, the Court rejected the idea that

“Congress made the viability of the entire Affordable Care Act turn on the

ultimate ancillary provision: a sub‐sub‐sub section of the Tax Code.”  135 S. Ct. at

2495.  In rejecting that approach, the Court emphasized that categorical guidance

as to congressional intent should better be looked for in a more predictable

location‐‐like a definitions section: 

              Had Congress meant to limit tax credits to State Exchanges, it likely
              would have done so in the definition of ‘applicable taxpayer,’ or in
              some other prominent manner.  It would not have used such a
              winding path of connect‐the‐dots provisions about the amount of the
              credit.

Id.  

        For the purpose of the provision at issue here, Congress expressed its

meaning in a “prominent manner”‐‐in the definitions section.  That is exactly

where the Court said one should look, and where the Court said that Congress

should have inserted its limiting language about Affordable Care Act subsidies if it

wanted the language interpreted strictly.  In our case the majority follows the sort

of “winding path of connect‐the‐dots provisions” that the Supreme Court

ridiculed.

                                         12
                                       *  *  *

      I vote to affirm.  “If the statutory language is plain, we must enforce it

according to its terms.”  King v. Burwell, 135 S. Ct. at 2489.  The Court did not

mean in King v. Burwell to revisit the era when judges could cast aside plain

statutory text just because they harbor “doubt[s]” about what was going on in the

heads of individual “conferees” during the legislative process.  See Maj. Op. at

28.

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