The United States Supreme Court decided in Digital Realty Trust, Inc. v. Somers (Feb. 21, 2018) that the anti-retaliation provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) applies only to individuals who have reported a violation of the securities law to the Securities and Exchange Commission (SEC) and not to those who raise concerns only to their employers internally. The Court’s decision resolved an important conflict in the federal Courts of Appeals.
Justice Ruth Bader Ginsburg authored the opinion of the Court, which held that Dodd-Frank’s definition of “whistleblower” was “unequivocal” in requiring that the individual provide information to the SEC. The Court further held that Dodd-Frank’s core objective – to motivate people who know of securities violations to advise the SEC – also supported the Court’s reading.
While individuals who report concerns only internally may not bring retaliation claims under Dodd-Frank, they may bring claims under the Sarbanes-Oxley Act of 2002 (SOX), which provides a right of action to employees subjected to retaliation for having reported concerns internally. However, SOX whistleblowers are subject to a number of limitations not applicable to those who bring claims under Dodd-Frank. Unlike Dodd-Frank, which permits a whistleblower to sue a current or former employer directly in federal court, to recover under SOX’s anti-retaliation provision, an employee must exhaust administrative remedies by filing a complaint with the United States Department of Labor. Moreover, SOX whistleblowers are constrained by a 180-day administrative complaint deadline, while a claim under Dodd-Frank has a limitation period of at least six years. Finally, while both SOX and Dodd-Frank authorize reinstatement, backpay and interest, and attorneys’ fees, Dodd-Frank also provides prevailing plaintiffs with double back pay.
If you have any questions or concerns, please do not hesitate to call or email a member of Kramer Levin’s employment department.