Whistle-Blower Law Split Could Pique Supreme Court

Stay up-to-date with the latest developments in securities law through access to both news and all statutes and regulations. Find relevant corporate filings through a searchable EDGAR database. And...

By Rob Tricchinelli

Sept. 11 — A new rift in federal circuit courts' interpretation of whistle-blower protections under the Dodd-Frank Act is a prime candidate for Supreme Court review, even though the potential timing of any high court action is far from certain.

The U.S. Court of Appeals for the Second Circuit held Sept. 10 that a corporate whistle-blower qualifies for the robust anti-retaliation protections in Dodd-Frank even if he or she only reported suspicions internally, and not to the Securities and Exchange Commission.

The ruling clashes with the U.S. Court of Appeals for the Fifth Circuit, which ruled in July 2013 that the protections apply only to “individuals who provide information relating to a violation of the securities laws to the SEC”.

“The Second Circuit’s case now clearly sets up a split in authority with the Fifth Circuit, and it acknowledges doing so, both in majority and dissent,” Lloyd Chinn, a partner at Proskauer Rose LLP in New York, told Bloomberg BNA Sept. 10.

High Court Review

The Second Circuit's decision allows the whistle-blower claims brought by Daniel Berman to continue in district court. Berman says he was fired from Neo@Ogilvy LLC after internally reporting what he believed to be fraud that violated federal laws and accounting standards.

Neo@Ogilvy could ask the Supreme Court to review the legal standard, even without a final judgment in district court, by citing the circuit split.

Lawyers for Neo@Ogilvy didn't respond to multiple requests for comment.

“It wouldn’t surprise me if there’s a delay” before the issue reaches the Supreme Court, Jordan Thomas, the head of the whistle-blower representation practice at Labaton Sucharow LLP in New York, told Bloomberg BNA. “The Supreme Court’s a busy place and they can only take so many cases, and I don’t know if this is going to be one of them.”

“It’s a tough one to predict whether it’s going to make the cut,” he said, although adding that “the main ingredients for a Supreme Court case” are there.


If Neo@Ogilvy does petition for Supreme Court review, Berman could file to oppose the extra review.

The Second Circuit's decision sent Berman's anti-retaliation claims back to district court, and the case could be resolved there on other grounds. Accordingly, Berman could argue that his particular case doesn't merit the Supreme Court's time and attention.

That strategy would have some risks, though, Thomas said.

Opposing the petition would be smart if the case were a surefire win, he said, especially considering the “emotional component to litigation” and how litigants often want to put it behind them. Opposition, though, risks undermining the whistle-blower's credibility if the high court does take the case, Thomas said.

“If I were counsel for the whistle-blower, I would think very carefully about whether I thought I had legitimate grounds to justify” opposing the petition, he added.


Regardless of the strategy, the circuit split has caught the eye of employment and whistle-blower lawyers.

“This is the kind of thing that the Supreme Court will have to determine,” Ronald Dupree of Kennard Law PC in Houston told Bloomberg BNA. Dupree represented the whistle-blower in the Fifth Circuit case. In that case, the ruling knocked out the whistle-blower's anti-retaliation claims.

Only Neo@Ogilvy's attorneys know the next steps, and for now they aren't talking.

“It’s not clear that the split will be pursued right now,” Chinn said. “We’ll find out soon enough.”

To contact the reporter on this story: Rob Tricchinelli in Washington at rtricchinelli@bna.com

To contact the editor responsible for this story: Susan Jenkins at sjenkins@bna.com


Request Securities & Capital Markets on Bloomberg Law