April 15, 2018

Not All Whistleblower Acts Are Created Equal; Digital Realty Trust, Inc. v. Somers

Category: Indiana Law Review | Author: | Share:

Many people think of whistleblowing as a good thing that is worthy of protection. So many different types of statutes protecting whistleblowers have been enacted. But not all whistleblower protection statutes are written the same, and whistleblowers should get some legal advice lest they unnecessarily jeopardize their futures.

Congress has passed two different whistleblowing statutes in the last two decades directed at corporate fraud: the Sarbanes-Oxley Act of 2002 and the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. But while both of these statutes protect whistleblowers, those protections differ. This case explored how those differences affect whistleblowers.

Digital Realty is a real estate investment trust that owns, acquires, and develops data centers. Digital Realty employed Somers from 2010 to 2014. During his employment, Somers reported suspected securities-law violations to senior management and was terminated shortly thereafter. Somers did not alert the SEC to his concerns prior to his termination. He also did not file an administrative complaint within 180 days of termination, rendering him ineligible for relief under Sarbanes-Oxley.

Somers brought a whistleblower claim against Digital Realty under Dodd-Frank. Digital Realty moved to dismiss, arguing that Somers was not a whistleblower under that law because he did not report any violations to the SEC. The district court denied the motion, the Ninth Circuit affirmed, and the Supreme Court granted certiorari.

The case turned on the question of what “whistleblower” meant. Sarbanes-Oxley applies to all “employees” who report misconduct to the SEC, any other federal agency, Congress, or an internal supervisor. In contrast, Dodd-Frank defines a “whistleblower” as person who provides “information relating to a violation of the securities laws to the” SEC. The Court found that this definition was “unequivocal,” and that it “left no doubt” that someone who does not fall within this definition fell outside the scope of Dodd-Frank’s protections.

This is not the result that either Somers or the Solicitor General wanted—they wanted this definition to apply to the statute’s award program, not to its anti-retaliation provision. But while the Court found that a “plain-text reading of the statute undoubtedly shields fewer individuals from retaliation than the alternative,” this did not render the protections meaningless. And the Court held that its job was “to give the statute the effect its language suggests, however modest that may be.”

While the Court’s opinion was unanimous, two concurring opinions highlighted an important issue for the future. Justice Thomas, joined by Justices Alito and Gorsuch, took issue with the majority’s reliance on “a single Senate Report.”

Even assuming a majority of Congress read the Senate Report, agreed with it, and voted for Dodd-Frank with the same intent, “we are a government of laws, not of men, and are governed by what Congress enacted rather than by what it intended.” And “it would be a strange canon of statutory construction that would require Congress to state in committee reports … that which is obvious on the face of a statute.”

Justice Sotomayor pushed back, in a concurring opinion joined by Justice Breyer.

Legislative history is of course not the law, but that does not mean it cannot aid us in our understanding of a law. Just as courts are capable of assessing the reliability and utility of evidence generally, they are capable of assessing the reliability and utility of legislative-history materials.

She would find that committee reports “are a particularly reliable source to which we can look to ensure our fidelity to Congress’ intended meaning.”

Legislative history can be particularly helpful when a statute is ambiguous or deals with especially complex matters. But even when, as here, a statute’s meaning can clearly be discerned from its text, consulting reliable legislative history can still be useful, as it enables us to corroborate and fortify our understanding of the text. … For these reasons, I do not think it wise for judges to close their eyes to reliable legislative history—and the realities of how Members of Congress create and enact laws—when it is available.

Lessons:

  1. Whistleblowers must report their concerns to the SEC to enjoy the whistleblower protections of the Dodd-Frank Act.

2 There is an active dispute on the Supreme Court over whether it is legitimate to look to legislative committee notes when interpreting a statute.