Who Do Dodd-Frank's Anti-Retaliation Provisions Protect? For Now, It Depends On Where You Are.

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Julia M.  Jordan Tracy Richelle  High

By Julia M. Jordan and Tracy Richelle High

Julia M. Jordan is a partner in Sullivan & Cromwell LLP’s Litigation Group. Ms. Jordan has a broad litigation practice that includes whistleblower litigation and workplace investigations, labor and employment, complex civil litigation and regulatory enforcement matters.

Tracy Richelle High is Deputy Managing Partner of Sullivan & Cromwell LLP’s Litigation Group, and a member of both the Firm’s Labor and Employment Law Group and Criminal Defense and Investigations practice.

The disagreement among courts as to whether a purported whistleblower must report wrongdoing to the U.S. Securities and Exchange Commission (“SEC” or the “Commission”) in order to be entitled to protection under Dodd-Frank's anti-retaliation provision persists. To date, the Fifth Circuit and certain district courts have held that a whistleblower must report the alleged misconduct directly to the SEC to be entitled to protection under the provision, while the Second Circuit and a majority of district courts have held that Dodd-Frank's anti-retaliation provision can be invoked not just by individuals who report concerns to the SEC but also by individuals who complain to their employers internally. Currently, appeals are pending in both the Sixth and Ninth Circuits on this issue.

Dodd-Frank's Anti-Retaliation Provision

Section 21F(h)(1)(A) of Dodd-Frank prohibits retaliation against “whistleblowers” for, among other things, making “disclosures that are required or protected” under the Sarbanes-Oxley Act of 2002 (“SOX”), the Securities Exchange Act of 1934, 18 U.S.C. §1513(e), and “any other law, rule or regulation subject to the jurisdiction of the [SEC].” 15 U.S.C. §78u-6(h)(1)(A). Dodd- Frank otherwise defines “whistleblower” in part as “any individual who provides … information relating to a violation of the securities laws to the Commission.” Id. at §78u-6(a)(6).

SEC's Position

In August 2011, the SEC issued a Final Whistleblower Rule to “clarify” that the anti-retaliation provision applies not only to individuals who report wrongdoing to the SEC but also to employees who, among other things, report potential securities law violations internally to their employers. 17 C.F.R. §240.21F-2. In August 2015, the Commission issued interpretive guidance to “clarify” again that the Dodd-Frank anti-retaliation provision applies to individuals who report information of possible securities law violations irrespective of whether they report such information internally or to the Commission. 80 Fed. Reg. 47829 (Aug. 4, 2015). The SEC has filed numerous amicus curiae briefs in federal district courts and appellate courts setting forth that position.

Division in the Courts
Broad Interpretation

In Berman v. Neo@Ogilvy LLC & WPP Group USA, Inc., 810 F.3d 145 (2d Cir. 2015), the Second Circuit, in a 2-1 decision, held that an employee who suffers retaliation because he reports wrongdoing internally, but not to the SEC, can obtain the retaliation remedies provided by Dodd-Frank. In doing so, the court relied on subsection 21F(h)(1)(A)(iii) and noted that it does not, by its own terms, limit its protection to those who report wrongdoing to the SEC, but rather “expands the protections of Dodd-Frank to include the whistleblower protection provisions of Sarbanes-Oxley, and those provisions, which contemplate an employee reporting violations internally, do not require reporting violations to the Commission.” Id. at 147. The Second Circuit explained that this subsection was in tension with Dodd-Frank's definition of “whistleblower.” It therefore found Section 21F of Dodd-Frank as a whole sufficiently ambiguous to warrant the court's deference to the reasonable interpretation of the SEC.

To date, numerous other district courts outside the Second Circuit have similarly concluded. See, e. g., Lutzeier v. Citigroup, Inc., 2015 WL 7306443, at *2 (E.D. Mo. Dec. 8, 2015); Connolly v. Remkes, 2014 WL 5473144, at *4-6 (N.D. Cal. Oct. 28, 2014); Peters v. LifeLock Inc., 2014 WL 12544495, at *4-*6 (D. Ariz. Sept. 19, 2014); Khazin v. TD Ameritrade Holding Corp, 2014 WL 940703, at *3-6 (D.N.J. Mar. 11, 2014), aff'd on other grounds, 773 F.3d 488 (3d Cir. 2014); Ellington v. Giacoumakis, 977 F. Supp. 2d 42, 44-46 (D. Mass. 2013); Genberg v. Porter, 935 F. Supp. 2d 1094, 1106-07 (D. Colo. 2013), appeal dismissed in relevantpart, 566 Fed. App'x 719 (10th Cir. 2014); Nollner v. S. Baptist Convention, Inc., 852 F. Supp. 2d 986, 993-95 (M.D. Tenn. 2012).

Narrow Interpretation

In Asadi v. G.E. Energy (USA) LLC , the Fifth Circuit found that Dodd-Frank's definition of “whistleblower” “expressly and unambiguously requires that an individual provide information to the SEC to qualify as a ‘whistleblower.'” 720 F.3d 620, 623 (5th Cir. 2013). Several district courts outside the Fifth Circuit have agreed with that analysis. See, e.g., Lamb v. Rockwell Automation Inc., No. 15-CV-1415-JPS, 2016 WL 4273210 (E.D. Wis. Aug. 12, 2016); Verble v. Morgan Stanley Smith Barney, LLC, 2015 WL 8328561, at *10 (E.D. Tenn. Dec. 8, 2015) (appeal filed); Puffenbarger v. Engility Corp., 151 F. Supp. 3d. 651 (E.D. Va. 2015); Englehart v. Career Educ. Corp., 2014 WL 2619501, at *9 (M.D. Fla. May 12, 2014); Verfuerth v. Orion Energy Sys., 65 F. Supp. 3d 640, 646 (E.D. Wis. Nov. 4, 2014); Wagner v. Bank of Am. Corp., 2013 WL 3786643, at *4 (D. Colo. July 19, 2013); Banko v. Apple Inc., 20 F. Supp. 3d 749, 755-56 (N.D. Cal. 2013).


Whether internal reports (or reports to agencies other than the SEC) qualify for protection under Dodd-Frank is important because Dodd-Frank gives additional rights and remedies to whistleblowers than those available under SOX. Among other things, the statute of limitations on a Dodd-Frank retaliation claim is three years, while a SOX retaliation claim must be filed within 180 days of the violation (or the date that the employee became aware of the violation). Moreover, SOX imposes additional administrative burdens on a claimant, requiring a purported whistleblower to first raise the complaint with the Occupational Safety and Health Administration, while a Dodd-Frank claimant can go straight to federal court. In addition, Dodd-Frank provides a claimant with the remedy of double back pay, which is not available under SOX. As a result, acceptance of the broad interpretation of the Dodd-Frank anti-retaliation provision would render the SOX cause of action a dead letter to a significant extent, as the Dodd-Frank cause of action is far more enticing for individuals given its procedural and substantive advantages.

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