Digital Realty Trust, Inc. v. Somers (16-1276)

argument 16-1276

Digital Realty Trust, Inc. v. Somers

Supreme Court of the United States 55 min 6 speakers 8 chapters transcribed 5 days ago official recording ↗

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What is the central question about the whistleblower definition in the Dodd‑Frank Act?

John G. Roberts 0:00

We'll hear argument next in case sixteen twelve seventy six, Digital Realty Trust versus Somers. Mr. Shamnagam?

Aarti Shah 0:07

Thank you, Mr Chief Justice, and may it please the court. The Dodd Frank Act provides incentives to and protections for whistleblowers, that is, individuals who have reported securities law violations to the SEC. The question presented in this case is whether the statutory definition of whistleblower applies to the subsection of the statute that protects whistleblowers from retaliation for engaging in certain types of conduct. The answer to that question is yes. By its plain terms, the statutory definition applies to the entirety of the section, including the anti retaliation provision. Far from being absurd, that plain text interpretation is entirely consistent with the history and the structure of the whistleblower provisions and with Congress's overarching objective of promoting reporting to the SEC.

Aarti Shah 0:56

It also preserves the balance between the Dodd Frank Act and the Sarbanes Oxley Act, which already provides broad protections to whistleblowers who report internally. And even if the statute were somehow ambiguous, the SEC's interpretation is not entitled to deference, because its rulemaking was procedurally defective. This court should reject the interpretation of the Ninth Circuit, and it should reverse the judgment of the Ninth Circuit in this case. By its terms, the Dodd Frank Act's anti retaliation provision prohibits retaliation only against a particular category of persons, namely whistleblowers. And the statutory definition of whistleblower, again by its terms, applies in this section. That section, of course, indisputably includes the anti retaliation provision as well as the award provisions.

Aarti Shah 1:47

Therefore, the anti retaliation provision only applies to individuals who meet the statutory definition of whistleblower, again individuals who have reported securities law violations to the SEC. As I said at the outset, we believe that that is consistent with the history, structure and objectives of the whistleblower provisions. As to the history, perhaps the most telling fact is the fact that an earlier version of the anti retaliation provision reached all employees. Congress then amended the provision to apply to a narrower set of individuals, whistleblowers. As to the structure of these provisions, in our view the anti retaliation provision protects the very class of persons to whom the award provisions provide incentives.

Aarti Shah 2:29

And therefore the anti retaliation provision, in a very real sense, works hand in glove with the anti retali uh with the award provisions.

Unknown 2:37

What about employees? who must uh report internally before they can report to the SEC.

Aarti Shah 2:46

So Justice Ginsburg, where an employee reports internally and then suffers an adverse action in the immediate aftermath of doing so, the Sarbanes Oxley Act will provide protection. In our view, the Dodd-Frank Act's anti retaliation provision only applies to individuals who report to the SEC, and to be sure, it applies to those individuals really without regard to the reason for retaliation. So just to make clear what our affirmative interpretation of the anti retaliation provision and in particular the third clause is, the third clause, which was the last of the clauses to be added. reaches a situation in which an employee in fact reports to the SEC, but is retaliated against because of an internal report or perhaps a report to another governmental entity.

Aarti Shah 3:39

And precisely because a report to the SEC will often be confidential, there may very well be cases in which the reason for the retaliation is not the report to the SEC, which is covered by the first clause, but is instead some other report, such as an internal report. Now the primary argument on the other side as to why our interpretation is somehow absurd or as to why this is one of those exceptional circumstances where the court should not pay heed to the unambiguous language is that there are relatively few cases that would be covered by the third clause.