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Dig. Realty Trust, Inc. v. Somers

Supreme Court of the United States

November 28, 2017, Argued; February 21, 2018, Decided

No. 16-1276.

Opinion

Justice Ginsburg delivered the opinion of the Court.

Endeavoring to root out corporate fraud, Congress passed the Sarbanes-Oxley Act of 2002, 116 Stat. 745  [**23]  (Sarbanes-Oxley), and the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, 124 Stat. 1376 (Dodd-Frank). ] Both Acts shield whistleblowers from retaliation, but they differ in important respects. Most notably, Sarbanes-Oxley applies to all “employees” who report misconduct to the Securities and Exchange Commission (SEC or Commission), any other federal agency, Congress, or an internal supervisor. 18 U. S. C. §1514A(a)(1). Dodd-Frank delineates a more circumscribed class; it defines “whistleblower” to mean a person who provides “information relating to a violation of the securities laws to the Commission.” 15 U. S. C. §78u-6(a)(6). A whistleblower so defined is eligible for an award if original information he or she provides to the SEC leads to [***8]  a successful enforcement action. §78u-6(b)-(g). And, most relevant here, a whistleblower is protected from retaliation for, inter alia, “making disclosures that are required or protected under” Sarbanes-Oxley, the Securities Exchange Act of 1934, the criminal anti-retaliation proscription at 18 U. S. C. §1513(e), or any other law subject to the SEC’s jurisdiction. 15 U. S. C. §78u-6(h)(1)(A)(iii).

The question presented: Does the anti-retaliation provision of Dodd-Frank extend to an individual who has not reported a violation of the securities laws to the SEC and therefore falls outside the Act’s definition of “whistleblower”? Pet. for Cert. (I). We answer that question “No”: ] To sue under Dodd-Frank’s anti-retaliation provision, a person must first “provid[e] . . . information relating to a  [*773]  violation of the securities laws to the Commission.” §78u-6(a)(6).

“To safeguard investors in public companies and restore trust in the financial markets following the collapse of Enron Corporation,” Congress enacted Sarbanes-Oxley in 2002. Lawson v. FMR LLC, 571 U. S. 429, ___, 571 U.S. 429, 134 S. Ct. 1158, 188 L. Ed. 2d 158, 170 (2014). Most pertinent here, ] Sarbanes-Oxley created new protections for employees at risk of retaliation for reporting corporate misconduct. See 18 U. S. C. §1514A. Section 1514A prohibits certain companies from discharging or otherwise “discriminat[ing] against an employee in the terms and conditions [***9]  of employment because” the employee “provid[es] information . . . or otherwise assist[s] in an investigation regarding any conduct which the employee reasonably believes constitutes a violation” of certain criminal fraud statutes, any SEC rule or regulation, or “any provision of Federal law relating to fraud against shareholders.” §1514A(a)(1). An employee qualifies for protection when he or she provides information or assistance either to a federal regulatory or law enforcement agency, Congress, or any “person with supervisory authority over the employee.” §1514A(a)(1)(A)-(C). 1

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138 S. Ct. 767 *; 200 L. Ed. 2d 15 **; 2018 U.S. LEXIS 1377 ***; 86 U.S.L.W. 4048; 102 Empl. Prac. Dec. (CCH) P45,981; Fed. Sec. L. Rep. (CCH) P100,021; 42 I.E.R. Cas. (BNA) 697; 27 Fla. L. Weekly Fed. S 54; 2018 WL 987345

DIGITAL REALTY TRUST, INC., Petitioner v. PAUL SOMERS

Notice: The LEXIS pagination of this document is subject to change pending release of the final published version.

Subsequent History: Motion denied by, Sanctions allowed by, in part, Sanctions disallowed by, in part Somers v. Digital Realty Trust, Inc., 2018 U.S. Dist. LEXIS 78557 (N.D. Cal., May 9, 2018)

Summary judgment granted by, Motion denied by, Without prejudice, As moot, Judgment entered by Somers v. Dig. Realty Trust Inc., 2018 U.S. Dist. LEXIS 132068 (N.D. Cal., Aug. 6, 2018)

Prior History:  [***1] ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Somers v. Digital Realty Trust, Inc., 850 F.3d 1045, 2017 U.S. App. LEXIS 4079 (9th Cir. Cal., Mar. 8, 2017)

Disposition: 850 F.3d 1045, reversed and remanded.

CORE TERMS

whistleblower, retaliation, anti-retaliation, securities law, provide information, disclosures, employees, reporting, quotation, marks, protections, statutory definition, violations, qualify, purposes, reliable, shields, legislative history, regulation, join

Labor & Employment Law, Discrimination, Retaliation, Statutory Application, Remedies, Damages, Backpay & Frontpay, Reinstatement, Elements, Protected Activities, Damages, Remedies, Governments, Legislation, Interpretation, Administrative Law, Judicial Review, Standards of Review, Deference to Agency Statutory Interpretation