In Digital Realty Trust, Inc. v. Somers, 138 S.Ct. 767 (2018), a unanimous Supreme Court recently held that in order to be a whistleblower entitled to the anti-retaliation protections under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, an employee must have provided pertinent information to the SEC. Accordingly, the Court held that internal complaints to corporate management are insufficient to invoke Dodd-Frank’s Whistleblower anti-retaliation protections. The import of this decision has been somewhat dramatically characterized by various news outlets (see, “The Supreme Court Limits Whistleblower Protections Under Dodd-Frank,” and “Supreme Court declines to broaden whistleblower protections”), and while this decision may indeed have practical implications in the securities industry, it is important not to conflate this limitation on Dodd-Frank’s Whistleblower protections with the broader ambit of anti-retaliation protections afforded to employees under that 2010 law. Internal complaints remain an integral and expressly authorized form of protected activity under another prong of Dodd-Frank, and the Digital Realty Trust decision reaffirms that those protections continue to exist for covered employees.
Much of the potential confusion surrounding the import of the Digital Realty Trust decision arises in the terminology used by Dodd-Frank’s statutory text. While whistleblower is an expressly defined term in the Act, it is given a more narrow definition than common usage would typically apply. Moreover, Dodd-Frank affords far more substantial whistleblower protections to a group of covered employees that are not defined as whistleblowers, but would clearly fall within a common usage definition of that term. The Digital Realty Trust decision relied upon the Act’s definition of whistleblower, which encompasses, “any individual who provides, or 2 or more individuals acting jointly who provide, information relating to a violation of the securities laws to the Commission, in a manner established, by rule or regulation, by the Commission.” 15 U.S.C. § 78u-6(a)(6) (emphasis added). Thus, the Court found that in order to be a whistleblower, as that term is defined, an individual must have made some form of communication to the SEC in relation to a violation of securities laws.
However, Dodd-Frank’s additional whistleblower protections extend far beyond the Act’s narrow definition of that term and apply outside of the context of federal securities laws. In particular, Title X of the Act established the Consumer Financial Protection Bureau (“CFPB”) and placed a broad swath of consumer financial protection laws under its jurisdiction. An employee is covered under Title X if she “performs tasks related to the offering or provision of a consumer financial product or service.” 12 U.S.C. § 5567(b). Covered employees are protected from retaliation if, inter alia, they “provided . . . information to the employer . . . relating to any violation of, or any act or omission that the employee reasonably believes to be a violation of any provision . . . of law that is subject to the jurisdiction of the Bureau.” 12 U.S.C. § 5567(a)(1) (emphasis added). Justice Ginsburg, writing for the Court in the Digital Realty Trust decision, emphasized that the protections afforded to whistleblowers under this provision “impose[ ] no requirement that information be conveyed to a government agency.” Digital Realty Trust, 138 S.Ct. at 771.
In conclusion, the Digital Realty Trust eliminated the legal protections of internal complaints as it relates to individuals who complained internally to management about violations of the federal securities laws based upon the definition of whistleblower found in the Act. However, internal complaints are still afforded legal protection against retaliation under Dodd-Frank in the context of the consumer financial protection laws under the CFPB’s jurisdiction. These protections enable employees to feel empowered to speak out against violations of law in their place of work and provides redress against companies who insist upon violating the same.
https://ncbarblog.com/wp-content/uploads/2018/06/Blog-Header-1-1030x530.png00NCBARBLOGhttps://ncbarblog.com/wp-content/uploads/2018/06/Blog-Header-1-1030x530.pngNCBARBLOG2018-04-16 12:21:342018-04-16 12:21:34No Internal Complaints Under Dodd-Frank? Not So Fast.