Today, the Supreme Court announced they will decide a case that determines whether a whistleblower who reports securities laws violations internally and is fired is entitled to anti-retaliation protections under Dodd-Frank. The case is Digital Realty Trust, Inc. v. Paul Somers.
The company in this case argues that a whistleblower needs to report wrongdoing to the SEC first in order to be protected from retaliation under Dodd-Frank. The whistleblower contends that internally reporting wrongdoing is sufficient to trigger protection.
So far, the federal appeals courts have split on this issue — the 9th Circuit has come down on the side of whistleblowers, while the 5th Circuit has sided with companies. The Supreme Court will presumably resolve this split and establish the law for the entire country.
This case will have far reaching consequences for company whistleblowers. If the Court sides with the companies, internal whistleblowers will be forced to report to the SEC in order to enjoy anti-retaliation protection. That would set a dangerous standard. It would leave employees who try to address suspicious conduct internally vulnerable to retaliation. Unintentionally, it could incentivize employees to avoid internal reporting all together and go straight to an SEC submission.
The justices will hear this case in October 2017. Given the stakes, we will be following this one closely.