Protecting Workers’ Rights

Focusing on the Rights of Federal Employees

Dodd-Frank court case could redefine whistleblowing

The U.S. Supreme Court is mulling a case with major implications for would-be whistleblowers. At issue is fuzzy language in the whistleblower protections of the Dodd-Frank Act. At stake is the fate of people like Paul Somers, who was fired after he reported wrongdoing, and anyone who might blow the whistle in the future.

The decision could literally redefine who is a federal whistleblower. The wording in Dodd-Frank – under a strict interpretation – appears to protect only those who report illegal activity directly to the SEC. Had Somers done so, the law would protect him from retaliation. By reporting to his employer instead of the SEC, he may be out of luck.

Blowing the whistle or just whistling Dixie?

The case is Digital Realty Trust v. Somers. Paul Somers, an executive of a real estate investment trust, went up the chain of command with evidence of securities violations. After he was fired, Somers sued for retaliation under the whistleblower provisions of Dodd-Frank. The language in Dodd-Frank defines whistleblower as someone who “provides information relating to a violation of the securities laws” to the Securities and Exchange Commission. Does that mean workers are not protected when  employers take the slash-and-burn approach to prevent the wrongdoing from filtering up to the SEC?

Some justices felt the law is clear, or cannot be interpreted more broadly. Other justices doubted that Congress intended to punish whistleblowers who first went to their employers.

The Sarbanes-Oxley Act specifically protects employees who report wrongdoing internally, whether or not they report it to the SEC. The Court’s Dodd-Frank decision could essentially nullify the whistleblower protections of Sarbanes-Oxley. That would kick it back to a Congress that is unlikely to rewrite the law favorably for employees. The Trump administration has been friendly to whistleblowers who report government waste and fraud, but hostile to other forms of whistleblowing.

Could the Supreme Court kill whistleblowing?

If the Court sides with Digital Realty, it will undoubtedly have a chilling effect on potential whistleblowers. Even with anti-retaliation protection (and the possibility of a qui tam lawsuit), reporting fraud or abuses is a risky venture. If the Court removes the protections of Dodd-Frank, such heroes are on their own. Many will simply stay silent.

It could also be a Pyrrhic victory for companies accused of wrongdoing. If Dodd-Frank is interpreted narrowly, more whistleblowers will go straight to the SEC, allowing employers no opportunity to mitigate or do the right thing before the feds come down on them.

Source:  Justices Seem Ready to Limit Whistle-Blower Protections (New York Times

No Comments

Leave a comment
Comment Information

LOOKING FOR REPRESENTATION?

I’m a Federal Employee or D.C. Government Employee Or... I work in the Private Sector in D.C., Maryland or Virginia Or... I already have scheduled my Initial Consultation

SCHEDULE YOUR INITIAL CONSULTATION

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy