Reed Smith Client Alerts

On February 21, 2018, the United States Supreme Court’s decision in Digital Realty Trust, Inc. v. Somers, 583 U.S.___(2018) resolved a split between the Second, Ninth and Fifth Circuits concerning whether the anti-retaliation provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank) covers only persons who have reported alleged securities violations to the SEC or whether it also includes persons who have made internal complaints without making a complaint to the SEC. The Second and Ninth Circuits held that the anti-retaliation provision applied to both categories of persons while the Fifth Circuit restricted the provision’s coverage to persons who filed complaints with the SEC.

Authors: Stephanie Wilson Sherri A. Affrunti Jennifer L. Achilles Raagini R. Shah

The decisions from these three circuits turned primarily on their determinations of whether the statutory definition of “whistleblower” in Dodd-Frank’s anti-retaliation provision was ambiguous. The Second and Ninth Circuits found the term ambiguous, thereafter relying on the Supreme Court’s decision in Chevron USA Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984) to afford deference to the SEC’s interpretative regulations that extended anti-retaliation protection to whistleblowers who reported violations only internally as well as to whistleblowers who reported violations to the SEC. In contrast, the Fifth Circuit found the statutory term unambiguous and, as a result, concluded that Chevron deference to the SEC’s interpretative regulations should not be afforded because the statutory definition was clear.