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Somers v. Digital Realty Trust Inc.

United States Court of Appeals, Ninth Circuit

March 8, 2017

Paul Somers, Plaintiff-Appellee,
v.
Digital Realty Trust Inc., a Maryland corporation; Ellen Jacobs, Defendants-Appellants.

          Argued and Submitted November 16, 2016 San Francisco, California

         Appeal from the United States District Court for the Northern District of California Edward M. Chen, District Judge, Presiding D.C. No. 3:14-cv-05180-EMC

          Brian T. Ashe (argued) and Tamara H. Fisher, Seyfarth Shaw LLP, San Francisco, California; Kyle A. Petersen, Seyfarth Shaw LLP, Chicago, Illinois; for Defendants-Appellants.

          Stephen F. Henry, Esq. (argued), Berkeley, California, for Plaintiff-Appellee.

          Stephen G. Yoder (argued), Senior Litigation Counsel; Anne K. Small, General Counsel; Sanket J. Bulsara, Deputy General Counsel; Michael A. Conley, Solicitor; Thomas J. Karr, Assistant General Counsel; Security and Exchange Commission, Washington D. C.; as and for Amicus Curiae.

          Before: Mary M. Schroeder, Kim McLane Wardlaw, and John B. Owens, Circuit Judges.

         SUMMARY [*]

         Dodd-Frank Act

         The panel affirmed the district court's denial of the defendant's motion to dismiss a whistleblower claim brought under the Dodd-Frank Act's anti-retaliation provision.

         Following the approach of the Second Circuit, rather than the Fifth Circuit, the panel held that, in using the term "whistleblower, " Congress did not intend to limit protections to those who disclose information to the Securities and Exchange Commission. Rather, the anti-retaliation provision also protects those who were fired after making internal disclosures of alleged unlawful activity under the Sarbanes-Oxley Act and other laws, rules, and regulations. The panel agreed with the Second Circuit that, even if the use of the word "whistleblower" in a last-minute addition to the anti-retaliation provision created uncertainty, an SEC regulation resolved any ambiguity, and was entitled to deference.

         Dissenting, Judge Owens agreed with the Fifth Circuit. He wrote that King v. Burwell, 135 S.Ct. 2480 (2015) (holding that terms can have different operative consequences in different contexts), on which the majority and the Second Circuit relied in part, should be quarantined to the specific facts of that case.

          OPINION

          SCHROEDER, Circuit Judge:

         INTRODUCTION

         This appeal presents an issue of securities law that has divided the federal district and circuit courts. It results from a last-minute addition to the anti-retaliation protections of the Dodd-Frank Act ("DFA") to extend protection to those who make disclosures under the Sarbanes-Oxley Act and other laws, rules, and regulations. 15 U.S.C. § 78u-6(h)(1)(A)(iii). The underlying issue is whether, in using the term "whistleblower, " Congress intended to limit protections to those who come within DFA's formal definition, which would include only those who disclose information to the Securities and Exchange Commission ("SEC"). See 15 U.S.C. ยง ...


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