Rulings clash over triggers for whistleblower protectionsReprints
September's divided ruling by the 2nd U.S. Circuit Court of Appeals in Daniel Berman v. Neo@Ogilvy L.L.C. and WPP Group USA Inc. says whistleblowers can obtain protection from employer retaliation if they report wrongdoing only internally under the Dodd-Frank Wall Street Reform and Consumer Protection Act.
It conflicts with the July 2013 ruling by the 5th U.S. Circuit Court of Appeals in New Orleans in Khaled Asadi v. G.E. Energy (USA) L.L.C., which held whistleblowers must have first filed a complaint with the U.S. Securities and Exchange Commission before falling under Dodd-Frank's anti-retaliation provisions.
In the 2015 case, Mr. Berman, who was formerly finance director of New York-based Neo@Ogilvy L.L.C., alleged he was discharged in 2013 for reporting accounting fraud.
According to the 2nd Circuit's 2-1 ruling in the case, the Dodd-Frank Act defines whistleblower in one section to mean an individual who reports violations to the SEC. But another section of the statute does not limit its protection to those who have reported wrongdoing to the SEC.
The decision points to a 2011 SEC rule that provides that Dodd-Frank's retaliation protections extend to employees who report wrongdoing only internally.
The “pertinent provisions of Dodd-Frank create a sufficient ambiguity to warrant our deference to the SEC's interpretive rule,” says the 2nd Circuit's ruling.
The dissenting opinion in the case says “our obligation is to apply congressional statutes as written.”
In the 5th Circuit case, Mr. Asadi claimed he was fired by GE Energy, a now-defunct unit of Fairfield, Connecticut-based General Electric Corp., after he complained the company had violated the Foreign Corrupt Practices Act by hiring a woman who was closely associated with a senior Iraqi official in order to curry favor with that official in negotiating a lucrative joint venture agreement.
In the court's ruling, a unanimous three-judge panel said “the plain language of the Dodd-Frank whistleblower-protection provision creates a private cause of action for individuals who provide information” to the SEC.