Monday, March 13, 2017

Somers v. Digital Realty Trust


 The panel affirmed the district court’s denial of the defendant’s motion to dismiss a whistleblower claim brought under the Dodd-Frank Act’s anti-retaliation provision.



Following the approach of the Second Circuit, rather than the Fifth Circuit, the panel held that, in using the term “whistleblower,” Congress did not intend to limit protections to those who disclose information to the Securities and Exchange Commission. Rather, the anti-retaliation provision also protects those who were fired after making internal disclosures of alleged unlawful activity under the Sarbanes-Oxley Act and other laws, rules, and regulations. The panel agreed with the Second Circuit that, even if the use of the word “whistleblower” in a last-minute addition to the anti-retaliation provision created uncertainty, an SEC regulation resolved any ambiguity, and was entitled to deference.



Dissenting, Judge Owens agreed with the Fifth Circuit. He wrote that King v. Burwell, 135 S. Ct. 2480 (2015) (holding that terms can have different operative consequences in different contexts), on which the majority and the Second Circuit relied in part, should be quarantined to the specific facts of that case.

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