• Southern District of New York Rejects Extraterritorial Application of Dodd-Frank’s Whistleblower Anti-Retaliation Provision
  • October 25, 2013
  • Law Firm: Sutherland Asbill Brennan LLP - Washington Office
  • Over the past three years, federal courts have confronted a number of unsettled questions raised by the whistleblower provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The latest development on this front stems from the U.S. District Court for the Southern District of New York’s dismissal of a self-described whistleblower’s retaliation claim, on the ground that Dodd-Frank’s anti-retaliation provision has no extraterritorial effect.

    In Liu v. Siemens A.G., [1] a Taiwanese resident sued his German employer (whose securities were traded on the New York Stock Exchange) for firing him after he complained about a Chinese subsidiary’s allegedly corrupt business practices in Asia. The bases for the plaintiff’s claim were his disclosures to the U.S. Securities and Exchange Commission and Dodd-Frank’s prohibition on discriminating against a “whistleblower” for “making disclosures that are required or protected under the Sarbanes-Oxley Act of 2002.” [2]

    The employer responded by arguing that Dodd-Frank’s anti-retaliation provision should not be applied to “wholly foreign conduct between foreign persons” [3] — and the court agreed. After reasoning that Dodd-Frank’s silence on the extraterritoriality question “invokes a strong presumption against extraterritoriality,” the court held that the anti-retaliation provision “does not apply overseas.” [4]

    The court found further support for its holding in the fact that other provisions of Dodd-Frank have express extraterritorial application: “‘[W]hen a statute provides for some extraterritorial application, the presumption against extraterritoriality operates to limit that provision to its terms.’” [5] In addition, the court noted that the only other court to have considered the issue, the U.S. District Court for the Southern District of Texas, has also held that Dodd-Frank’s anti-retaliation provision does not apply extraterritorially. [6]

    After examining the extraterritoriality issue under Dodd-Frank, the court also expressed two alternative grounds for dismissing the plaintiff’s claim. First, the court concluded that because the Sarbanes-Oxley Act does not have extraterritorial application either, that statute could not have “required or protected” the disclosures on which the plaintiff based his claim under Dodd-Frank. [7] Second, the court concluded that the plaintiff’s disclosures, which related to alleged violations of the Foreign Corrupt Practices Act, were “‘not within the scope’” of the protections afforded by the Sarbanes-Oxley Act in the first place. [8]

    Although Liu is only the second case addressing the extraterritoriality question under Dodd-Frank’s whistleblower anti-retaliation provision, the decision suggests the beginning of a consensus in favor of limiting Dodd-Frank’s anti-retaliation protections to whistleblowers working in the United States.

    [1] No. 1:13-CV-317-WHP, 2013 WL 5692504 (S.D.N.Y. Oct. 21, 2013).


    [2] 15 U.S.C. § 78u-6(h)(1)(A).

    [3] Mem. Law Supp. Siemens AG’s Mot. Dismiss, Liu v. Siemens A.G, No. 1:13-CV-317-WHP, 2013 WL 5692504 (S.D.N.Y. Oct. 21, 2013), ECF No. 15.

    [4] Liu, 2013 WL 5692504, at *4.

    [5] Id. at *3 (quoting Morrison v. Nat’l Austl. Bank Ltd., 130 S. Ct. 2869, 2883 (2010)).

    [6] Id. at *2 (citing Asadi v. G.E. Energy (USA), LLC, No. 4:12-345, 2012 WL 2522599 (S.D. Tex. June 28, 2012), aff’d on other grounds, 720 F.3d 620 (5th Cir. 2013)). For details, please see the following Sutherland Legal Alert: Federal Court Bars Extraterritorial Application of Dodd-Frank’s Anti-Retaliation Provision to Whistleblowers Employed Abroad (Oct. 23, 2012), http://www.sutherland.com/NewsCommentary/Legal-Alerts/83173/Legal-Alert-Federal-Courts-Bars-Extraterritorial-Application-of-Dodd-Franks-Anti-Retaliation-Provision-to-Whistleblowers-Employed-Abroad.

    [7] Liu, 2013 WL 5692504, at *4 (citing 15 U.S.C. § 78u-6(h)(1)(A); Carnero v. Bos. Scientific Corp., 433 F.3d 1, 6-19 (1st Cir. 2006)).

    [8] Id. at *5 (quoting In re Gupta, 2010 SOX-54, 2011 WL 121916, at *5 (Dep’t of Labor Jan 7, 2011)).