Introduction
On March 8, 2017, in Somers v. Digital Realty Trust Inc., No.15-cv-17352 (9th Cir., March 8, 2017), the Ninth Circuit Court of Appeals affirmed the district court’s denial of the defendant’s motion to dismiss a whistleblower claim brought under the Dodd-Frank Act’s (“DFA”)’s anti-retaliation provision.
In a 2-1 decision, the majority endorsed the approach of the Second Circuit, and not that of the Fifth Circuit, in holding that Congress did not intend to limit DFA whistleblower protections to only those who disclose information to the Securities and Exchange Commission (“SEC”). Rather, the court held that the DFA anti-retaliation provision also protects those who are fired after making internal disclosures of allegedly unlawful activity under the Sarbanes-Oxley Act (“SOX”) and other securities laws, rules, and regulations.
The majority also agreed with the Second Circuit that, to the extent there was any ambiguity in the statute, an SEC regulation, 17 C.F.R. § 240.21F-2 (Rule 21F-2) interpreting the DFA to protect those who made only internal disclosures resolved any such ambiguity and was entitled to Chevron deference.