Since 2015, the SEC has brought nearly two dozen enforcement actions for violations of the whistleblower protection rules under Rule 21F-17(a) against employers for actions taken to impede reporting to the SEC. The bulk of these actions have focused on language in employee-facing agreements that allegedly discouraged such reporting. The
whistleblower
EU Agrees to Set the Floor for Whistleblower Protection Across All Member States
According to a press release issued by the European Commission today, the European Parliament and the Member States have agreed to adopt new rules that set the standard for protecting individuals who blow the whistle on breaches of EU law from dismissal, demotion, and other forms of retaliation. This reform,…
N.D. Illinois Refuses To Expand Reach of Commodity Exchange Act Whistleblower Provisions
On October 22, 2018, the U.S. District Court for the Northern District of Illinois granted a Rule 12(b)(6) motion to dismiss a first-impression whistleblower retaliation claim under the Commodity Exchange Act (“CEA”). Johnson v. Oystacher, No. 15-cv-02263.
Background
Plaintiff and Defendant went into business together in January 2011, with…
SEC Votes in Favor of Proposal to Amend Whistleblower Rules to Comport with U.S. Supreme Court’s Holding in Digital Realty Trust
By Lloyd B. Chinn & Bassam Gergi on
On June 28, 2018, the U.S. Securities and Exchange Commission (“SEC” or “Commission”) voted in an open meeting on several final rules and rule proposals that will have a material impact on the Commission’s whistleblower program. Most notably, the SEC approved a rule proposal that would modify its Rule 21F, which defines who is a whistleblower and establishes anti-retaliation protection, to comport with the U.S. Supreme Court’s holding in Digital Realty Tr., Inc. v. Somers, 138 S. Ct. 767 (2018).
As detailed on our blog, in February, the U.S. Supreme Court unanimously held that the anti-retaliation provision of the Dodd-Frank Act only applies to individuals who have provided information regarding a violation of the securities laws to the SEC. In so holding, the Court ruled that the SEC’s Rule 21F-2, which enabled an individual to gain anti-retaliation protection from complaints not made directly to the SEC (such as internal company complaints), was in clear contravention of Congress’s instruction that a “whistleblower” is a person who provides “information relating to a violation of the securities laws to the Commission.”
The SEC’s proposed rule will comport with the Court’s holding by requiring, inter alia, that an individual seeking anti-retaliation protection report, in writing, information about possible securities laws violations to the SEC itself. The proposed rule would apply uniformly: to the SEC’s whistleblower award program, the heightened confidentiality program, as well as for employment anti-retaliation protection.
Chicago Federal Court Rejects Retaliatory Discharge Claim Due To Existence Of SOX Whistleblower Claim
By Steven J. Pearlman & Alex Weinstein on
On April 23, 2018, the U.S. District Court for the Northern District of Illinois ruled that a plaintiff’s SOX claim precluded his claim for common law retaliatory discharge. Cohen v. Power Solutions International, Inc., No. 17-cv-4385.
Plaintiff, a COO, claimed that in early 2016, he became suspicious of the…
Tenth Circuit Reverses Grant of Summary Judgment on SOX Whistleblower Claim
By Steven J. Pearlman & Bassam Gergi on
On February 22, 2018, the Tenth Circuit Court of Appeals reversed a district court’s grant of summary judgment against Plaintiff who claimed that his employment was terminated in violation of the SOX whistleblower protection provision. The court concluded that genuine issues of material fact existed as to whether Plaintiff actually…
Mississippi Federal Court Denies Summary Judgment on SOX Whistleblower Claim
By Steven J. Pearlman & Brett Schwab on
On February 12, 2018, the United States District Court for the Northern District of Mississippi recently denied a motion for summary judgment in a SOX whistleblower claim where the defendant company alleged that it terminated the plaintiff pursuant to a reduction-in-force (RIF). Hendrick v. ITT Engineered Valves, LLC, No.…
U.S. Supreme Court Holds That Anti-Retaliation Provisions of Dodd-Frank Apply Only to Whistleblowers Who Report to the SEC
By Lloyd B. Chinn & Meika Freeman on
On February 21, 2018, the U.S. Supreme Court unanimously ruled that an individual is not covered by the anti-retaliation provision of the Dodd-Frank Act unless they have provided information regarding a violation of law to the U.S. Securities and Exchange Commission. Digital Realty Trust, Inc. v. Somers, No. 10-1276…
S.D.N.Y Dismisses Dodd-Frank Whistleblower Action
By Steven J. Pearlman & Annabel Pollioni on
On February 5, 2018, U.S. District Court for the Southern District of New York granted Defendant Khan Funds Management America, Inc.’s Rule 12(b)(6) motion to dismiss a whistleblower retaliation claim under Dodd-Frank on the grounds that Plaintiff failed to state a claim upon which relief could be granted. Polite v.
Court Precludes Parallel Cause of Action Where CEPA Violations Are Plead
By Steven J. Pearlman & Annabel Pollioni on
On January 30, 2018, the U.S. District Court for the District of New Jersey granted Defendant Public Service Electric & Gas Co.’s motion to dismiss a New Jersey common law wrongful termination claim in a whistleblower retaliation suit after finding that once discovery closes, a plaintiff may not continue pursuing…