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Dodd-Frank Whistleblower Protections Upheld

A broad interpretation of Dodd-Frank whistleblower protections was upheld this month by the Ninth Circuit Court of Appeals (“Ninth Circuit”). Earlier this month, the Ninth Circuit ruled that whistleblowers who report illegal behavior through their employer instead of the Securities and Exchange Commission (“SEC”) fall under the anti-retaliation protections.

The decision was based on the case of Somers v. Digital Realty Trust, which involved the termination of Digital Realty’s former vice president being fired after reporting possible securities law violations. Paul Somers sued Digital Realty, claiming that his termination violated whistleblower protections under the Dodd-Frank Act. Digital Realty maintained that the company could fire him because Somers failed to notify the SEC before going to management.

In its ruling, the Ninth Circuit cited Sarbanes-Oxley laws requiring certain employees to first disclose violations through a company’s internal channels. Judge Mary Schroeder said that adopting the restricted description of a whistleblower would be impractical and weaken congressional intent.

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