- Whistle While You Work? The Lack of Consensus Regarding Who Is a Whistleblower Is No Fairy Tale
- September 30, 2014
- Law Firm: Marshall Dennehey Warner Coleman & Goggin, P.C. - Fort Lauderdale Office
- The courts are torn over who is a whistleblower under the Dodd-Frank Wall Street Reform and Consumer Protection Act.
- A decision by the United States Supreme Court may be necessary to resolve this issue.
- Recent Florida decision holds that in order to be a “whistleblower,” you must have provided information to the Securities Exchange Commission.
Under the Dodd-Frank Reform Act, Pub.L. No. 111-203, 124 Stat. 1367 (codified as amended in scattered sections of U.S.C. titles 7, 12, 15 and 31), employees who blow the whistle on possible securities law violations are protected. The Dodd-Frank Act extends such protection to those employees who provide “information relating to a violation of the securities’ laws to the SEC.” Englehart v. Career Education Corp., 2014 U.S. Dist. LEXIS 64994. At *8 (M.D. Fla. May 12, 2014) (citing Asadi v. G.E. Energy (USA), L.L.C., 720 F.3d 620, 623 (5th Cir. 2013)).
In Englehart, the plaintiff alleged that she was terminated because she internally reported that the company’s proposed budgets and forecasts misrepresented student enrollment numbers in violation of the Dodd-Frank Reform Act. She claimed that she was retaliated against and terminated from her employment for opposing the company’s unlawful practices. The company was a publicly owned and listed stock corporation. However, the plaintiff did not provide information to the SEC, rather, she provided the information internally and, therefore, was not considered a “whistleblower” and, as a result, did not receive any protections.
The defendant employer argued that there was only a “whistleblower” cause of action for individuals who provided information relating to a violation of the securities laws to the SEC. The plaintiff argued that the whistleblower protection provision should be interpreted to protect individuals who take actions that fall within the act, even if they do not provide information to the SEC. The Florida court found that allowing individuals, such as Ms. Englehart, to bring a claim under federal law, 15 U.S.C. §78u-6(h), would be inappropriate and directly contradict the section’s title “Protection of Whistleblowers.” The court held that, under Dodd-Frank, there is a clear and unambiguous single definition of whistleblower.
A similar case from Nebraska, Bussing v. COR Clearing, LLC, 2014 U.S. Dist. LEXIS 69461 (D. Neb. May 21, 2014), reached the opposite conclusion. In Bussing, the plaintiff employee alleged that she was terminated from her job after issuing an internal report that stated that her employer had violated the Bank Secrecy Act and anti-money laundering laws, and detailed deficits in her employer’s internal recordkeeping. She did not provide any information to the SEC. However, in Bussing, the district court decided that the plaintiff’s allegations stated a claim for whistleblowing, despite the lack of any reporting to the SEC. The Nebraska court opined that if “whistleblower” in the Dodd-Frank Act were found to mean only what the narrow definition states, then it would serve no significant purpose and its goal of broadly protecting whistleblowers would be stifled.
An answer to the question of who is a whistleblower under Dodd-Frank remains pending. We will be watching what courts across the country decide.