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Supreme Court to Decide Whistleblower Protection Case

Supreme Court to Decide Whistleblower Protection Case

The case is based on whistleblower protection rules in the Dodd-Frank Wall Street reform law.

Supreme Court to Decide Whistleblower Protection Case

This summer, the United States Supreme Court decided to take on a major case in the employment law field that may have major implications for anyone working in the corporate or financial services sector. The Court has agreed to hear the Digital Realty Trust Inc. case, which involves a question of whether employees are protected from retaliation if they report employer misconduct internally — but not to the Securities and Exchange Commission (SEC).

In this case, employee Paul Somers, an executive at Digital Realty Trust, was fired by his San Francisco-based employer after he filed an internal complaint about alleged misconduct by his supervisor. Mr. Somers never reported this misconduct to the SEC. After Mr. Somers reported this wrongdoing, he was fired by the company, and later filed a lawsuit against his employer for wrongful termination.

Under the 2010 Dodd-Frank Wall Street reforms, which were adopted by the SEC in 2011, corporate employers are barred from retaliating in any way against whistleblowers who attempt to report or who actually report allegations of securities law violations. These rules also empower the SEC to provide monetary awards to whistleblowers whose reports lead to successful prosecutions of individuals and corporations who break securities laws.

In the underlying lawsuit, Digital Realty Trust claimed that these rules don’t apply to employees who only report their concerns about misconduct or potential securities law violations internally. The employer argued that the law defines “whistleblowers” narrowly to only include people who report potential securities violations to the SEC — not through an internal company process.

If the Supreme Court agrees with this interpretation of the SEC rules, then whistleblowers will only be protected from retaliation if they report alleged securities violations to the SEC. Otherwise, they could be fired if they simply report potential wrongdoing within the company. For example, if an employee believes his supervisor is breaking federal securities law, he would face a choice between reporting it internally and potentially being fired, or going to the SEC and making a report that could result in a major enforcement action against his employer. This would potentially be bad news for both employees and employers, because it would mean that instead of employers being able to handle rogue employees or bad policies internally, all possible misconduct would be reported to the SEC — and could lead to enforcement actions. It could also deter employees from reporting misconduct.

Whistleblower and retaliation cases can be complex, and require the assistance of a seasoned employment law attorney. At PLBSMH, our team of skilled lawyers have more than 40 years of experience. We are adept at handling all types of employment law cases, including those involving whistleblowing, retaliation and wrongful termination. We offer free initial consultations, and offer contingency fee arrangements for some cases. Contact us today at (800) 435-7542 or info@plbsmh.com to learn more about how we can help you.

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