Somers v. Digital Realty Trust, No. 15-17352 (9th Cir. 2017)Annotate this Case
This appeal relates to a last-minute addition to the anti-retaliation protections of the Dodd-Frank Act (DFA), Pub. L. No. 111-203, 124 Stat. 1376, to extend protection to those who make disclosures under the Sarbanes-Oxley Act and other laws, rules, and regulations. 15 U.S.C. 78u-6(h)(1)(A)(iii). At issue was whether, in using the term "whistleblower," Congress intended to limit protections to those who come within DFA's formal definition, which would include only those who disclose information to the SEC. If so, it would exclude those, like plaintiff here, who were fired after making internal disclosures of alleged unlawful activity. The Second Circuit, viewing the statute itself as ambiguous, applied Chevron deference to the SEC's regulation. The court agreed with the district court, and followed the Second Circuit's approach, that the regulation was consistent with Congress's overall purpose to protect those who report violations internally as well as those who report to the government. The court explained that this intent was reflected in the language of the specific statutory subdivision in question, which explicitly references internal reporting provisions of Sarbanes-Oxley and the Securities Exchange Act of 1934, 15 U.S.C. 78a et seq. Therefore, the court concluded that the SEC regulation correctly reflected congressional intent to provide protection for those who make internal disclosures as well as to those who make disclosures to the SEC. Accordingly, the court affirmed the judgment.
Court Description: Dodd-Frank Act. 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. SOMERS V. DIGITAL REALTY TRUST 3
The court issued a subsequent related opinion or order on April 11, 2018.
- Somers v. Digital Realty Trust Inc et al, No. 4:2014cv05180 (N.D. Cal. Jul. 22, 2015)
- Digital Realty Trust, Inc. v. Somers, No. 16-1276 (U.S. Feb. 21, 2018)