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Supreme Court Poised to Scale Down Whistleblower Protections

— December 3, 2017

Supreme Court justices seem ready to restrict the scope of whistleblower protections.

Citing the text of the Dodd-Frank Act as backing, the justices are poised to narrow the definition of what it means to be a whistleblower. Thousands of retaliation lawsuits could be thrown from courts as a consequence.

“How much clearer could Congress have been?” asked recently-appointed Justice Neil Gorsuch.

Gorsuch and his colleagues seem intent on interpreting the act literally, rather than vying to understand whatever Congress’ intent may have been in its drafting. As The New York Times reports, Dodd-Frank simply defines “whistle-blower” as “an individual who provides information relating to the violation of the securities laws” to the Securities and Exchange Commission.

That narrow definition precludes individuals who may have reported corporate misdeeds without first notifying the SEC.

Some justices say the glaring exception could have been an unintended fault of lawmakers.

Justice Neil M. Gorsuch was appointed by President Donald Trump shortly after his inauguration as ommander-in-chief. AP Images.

“It’s odd,” said Justice Elena Kegan, speaking of Dodd-Frank’s limited scope. “It’s peculiar. It’s probably not what Congress meant. But what makes it the kind of thing where we can just say we’re going to ignore it?”

The Supreme Court’s speculation stems from a case being fought between Digital Realty Trust and Paul Somers.

Somers, once an employee of Digital Reality, tried informing his superiors of perceived securities violations. But instead of garnering praise or heralding positive change, Somers was quickly dismissed from his position.

Progressing from the lower courts toward the highest in the land, the suit was passed upward after a divided 9th Circuit Court said interpreting the law literally “would make little practical sense and undercut congressional intent.”

One of Somers’ lawyers, Daniel L. Geyser, said reading Dodd-Frank literally could create bizarre exceptions for whistleblowers.

“If anyone reports to the SEC at any time, it could be half a decade or a decade earlier on a completely unrelated issue; they’re a whistleblower for life,” said Geyser. “So any report they make at a later time is protected, even if the information doesn’t get to the S.E.C.”

Justice Kegan concurred, noting that a direct reading of the law could lead to unexpected outcomes.

“There are two employees,” explains Kegan, “and they both internally report and they’re both fired. And one of them, tough luck, but the other one is going to get protection because he’s filed a report with the SEC about some different matter entirely years earlier.”

Not surprisingly, attorneys for the defendants argued in favor of taking Dodd-Frank at face.

But Christopher G. Michael, a government attorney working on behalf of Somers, said a literal interpretation of Dodd-Frank could harm corporations.

Michael explains that, because reports to the SEC are often confidential, many employers could be sued for retaliating against whistleblowers – even if they weren’t aware that an employee had notified the government of a possible violation.


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