Dodd-Frank Whistleblower Protections Headed to Supreme Court

July 7, 2017

This October, the U.S. Supreme Court plans to review whistleblower protections under the Dodd-Frank Act. Announced on June 26, the decision to hear the case of Somers v. Digital Realty Trust will resolve who is protected from possible retaliation under the reform law.

The case revolves around former Vice President Paul Somers of Digital Realty Trust Inc., who was fired after reporting to management potential securities law violations. Somers sued Digital Realty Trust Inc. for allegedly violating Dodd-Frank’s whistleblower rules, but the dispute centers on where he initially reported the transgression. Digital Realty’s lawyers contended that since Somers’ concerns were reported internally instead of the Securities and Exchange Commission, he was not protected by anti-retaliation laws.

In March, The Ninth Circuit Court of Appeals in March failed to agree with the lawyers’ argument, but the case was not tossed out of court. A District Court judge in California believed the statue was ambiguous enough to give way to the Securities and Exchange Commission’s (“SEC”) whistleblower rules under Release No. 34-64545, Implementation of the Whistleblower Provisions of Section 21F of the Securities Exchange Act of 1934. The rule protects employees who report violations to management or the government. Further, the SEC has supported an extensive interpretation of the protections under the Dodd-Frank Act, which would include Somers.