Reply Brief — Digital Realty Trust, Inc. v. Somers, 138 S. Ct. 43 (2017) (No. 16-1276)

No. 16-1276

Jn the Supreme Court of the Anited aan

DIGITAL REALTY TRUST, INC., PETITIONER

Vv.

PAUL SOMERS

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

REPLY BRIEF FOR THE PETITIONER

BRIAN T. ASHE KANNON K. SHANMUGAM

KIRAN A. SELDON Counsel of Record

SHIREEN Y. WETMORE AMY MASON SAHARIA

SEYFARTH SHAW LLP A. JOSHUA PODOLL

560 Mission Street, MENG JIA YANG

$1at Floor WILLIAMS & CONNOLLY LLP

San Francisco, CA 94105 725 Twelfth Street, N.W.

Washington, DC 20005

KYLE A. PETERSEN (202) 434-5000

SEYFARTH SHAW LLP kshanmugam@we.com

131 South Dearborn Street,

Suite 2400

Chicago, IL 60608

TABLE OF CONTENTS

Page

A. The Dodd-Frank Act unambiguously requires

reporting a securities-law violation to the SEC................... 3

1. A court must apply an unambiguous statutory

definition, like any other unambiguous statutory

provision, unless doing so would produce absurd

ee iececesieitdhaheteiichhrni deceit Olina ta 3

2. The plain-text interpretation of the anti-retaliation

provision does not produce absurd results .................

3. The legislative history does not support

respondent’s interpretation ..................c0:ccsseceseecsereneees

B. The SEC’s contrary interpretation is not entitled

8 AIEEE SE Ee SO ES te

TABLE OF AUTHORITIES

Cases:

Ali v. Federal Bureau of Prisons,

a ks Se I crcientrcinceministinianisieinisiaiberiiebeiteiniiagitnasiabininein

Chevron U.S.A. Inc. v. Natural Resources Defense

Council, Inc., 467 U.S. 837 (1984).........ccccccccceseceseeeeeeees

Department of Revenue v. ACF Industries, Inc.,

ETE ETA CE ORC ae ae 10

Duncan v. Walker, 533 U.S. 167 (2001) .......ccccccccccccccceeeceecees i)

Encino Motorcars, LLC v. Navarro,

136 S. Ct. 2117 (2016) ... aiidainebnisideniaheninnerdge AEE

Fox v. Standard Oil Co. of New Jevecy,

RE SE 4

Lamie v. United States Trustee,

RE Re 7, 8,9

Lawson v. FMR LLC, 134 S. Ct. 1158 (2014)................. 9,10

Lawson v. Suwannee Fruit & Steamship Co.,

ERLE SER ELE SS ee 4

Lebron v. National Railroad Passenger Corp.,

RR ah, Ge UE ccditcsicbiicasiibcinnbcinisinsebatnastiiniisipnilebineneninntiods

(TY

It

Page

Cases—continued:

Lexecon, Inc. v. Milberg Weiss Bershad Hynes

Pic Levent, GHB UB. BB (RGGI once ccececcosessscseceseveecccccesncccczceee 6

ong Island Care at Home, Ltd. v. Coke,

"551 U.S. 158 (2007)... <insenicibhaienna

Massachusetts v. EPA, 549 U. S. 497 (2007)... Sia ecnaal ll 5, 6

Meese v. Keene, 481 U.S. 465 (1987) ........ccccccceceeseceeeeeesvees 4,6

Morrison v. National Australia Bank Ltd.,

LE i)

Pavelic & LeFlore v. Marvel Entertainment Group,

a sotepeesisunsbsoeipareniammiseniidiia )

Perez v. Mortgage Bankers Association,

I ke, Se viaccicstnsiiernctiebecinstiertieviniomsitiimiaaiaetiaptibeanaenin 22

Philko Aviation, Inc. v. Shacket, 462 U.S. 406 (1983) ........ 5

Stenberg v. Carhart, 530 U.S. 914 (2000) ..........cccccensercnereres 4

Utility Air Regulatory Group v. EPA,

a cesttineeiennnenls 5, 6

Vance v. Terrazas, 444 U.S. 252 (1980) .0........cccccececcceeeeeeee 19

Statutes and regulations:

Administrative Procedure Act,

Pub. L. No. 79-404, 60 Stat. 237 (1946) ..............00 19, 20

Dodd-Frank Wall Street Reform and Consumer

Protection Act, Pub. L. No. 111-203,

De ne ai ieetneeenemeteinneaininitia passim

Be ee I tiscepeseretencinnnnsitantasonsnnnnsimmnnaniesti passim

oo ois deamiannilglensanniaalie 12

en I eneneneieieieneinaaniinndes 3

Be ccrnsscniieccncteenrinesvienannennnernnsai 3,8

15 U.S.C. T8u-G(n)CI A) (iI)... eeeceeeeseeeeeeneneneeeneee passim

es I ns ctenseaunsniisirarteninnmipasadeanatne i2

Federal Aviation Act,

Pub. L. No. 85-726, 72 Stat. 731 (1958) ...........cccceeecceeeees 5

Longshoremen’s and Harbor Workers’

Compensation Act, ch. 509, 44 Stat. 1424 (1927) ............ 4

Sarbanes-Oxley Act of 2002,

Pub. L. No. 107-204, 116 Stat. 746.......ccscccsssssseee passim

Til

Page

Statutes and regulations—continued:

ers I ste ncieresnintsicinciaerrceqneriseewsiinniarsecnsionnsin 10

Whistleblower Protection Act of 1989,

Pub. L. No. 101-12, 108 Stat. 16. ...........0..cccsccsecssscseeseess 13

Be I tiriainerecesecnscpenewninetsigeceminaninianiiniicnsupsavinisosrevinntinnmeniniaiie’ 14

FF I sipteiicnseiikscsasinins cnpitinensinenianiemnetiniininnsesnioniiaiininaines 13

ITED ciiiciniinsataniteanccbitninistiinniianineinniinatenniatiinianiiti 7

ee inienteistssetinsctineccsenectaisnnintninsentanninierneminnscennnesli 13

i alicincisnnennntesemetnenireniinnieaniiuinantennannntinn 5

ee ED irtisinieeitceveinnaniccnnrmmincisnininiinaisianniionninian 13

ee IE Prsiinectcntiinnnvessssicinntineinnecnirenianseenenti 21

hk eS |, ene ae 12

Miscellaneous:

156 Cong. Rec. (2010):

i, IEEE ccenesesenerescoeenvecensnncsienvenssounenesecqcseunustunenteowienet 16

I TE eensccsnnisnssietetsiteicnaindeninainsanitinaiteinenetenseeeyeiinamnmrtincennanicith 17

75 Fed. Reg. (Nov. 17, 2010)

ii, TINIE iesssccdnesconsesismenenveduveenssseteneonsnesemanessatnennmepneienwnien 18

0 Fi cnnsatnsnscensnnsendinseninvapresescnstusreaytinenievcnnnsctipeasnenestaanitl 18

cacti diitssiinnsenmesecieneinenenpesvinneteniinitsiasinnisitiams 18

76 Fed. Reg. (June 13, 2011)

i, Stn i cneeisevicicatcisniovacevennciennrachesneumninnnmtentiowueieniniennninensomuini 18

pp. 34,3801-34,304 iqjestanthietebnnesennbaninin 18, 21

Ii, EI savsicscnoansnevesovavensntecnssuecesmensnresesenumnnceveetenseasaconasnessat 21

ie iiasenicenpiciintiicinninicednccaviatieranewtetnnanninenmesteanmetitninns 18

80 Fed. Reg. (Aug. 10, 2015)

1 GE ccvcaressocsencesennsnscnounsceqnenensssecnsnenencsevessassnensessevecossanees 22

Public Policy Isswes Raised by the Report of the

Lehman Bankruptcy Examiner: Hearing Before

the House Committee on Financial Services,

Ee Cee cere eceistenterccernstittinmnnnmasenemernmnnnnes 16

Restoring American Financial Stability Act of 2010,

S. $817, 111th Cong, (2010) ...cecsscecocscscessessccssscscecsesscesscers 17

Antonin Scalia & Bryan A. Garner, Reading Law:

The Interpretation of Legal Texts (2012) .........c00:000+ 4,7

Page

Miscellaneous—continued:

S. Rep. No. 176, 111th Cong., 2d Sess. (2010) .......cccceeeee 15

Stephen Shapiro et al., Supreme Court Practice

Se Se tauciSichesinteadagnesiniensanidicuniiiinberstbidtdesmepasnmnieaese 19

In the Supreme Court of the Anited States

No. 16-1276

DIGITAL REALTY TRUST, INC., PETITIONER

Vv.

PAUL SOMERS

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

REPLY BRIEF FOR THE PETITIONER

Section 922(a) of the Dodd-Frank Act defines “whis-

tleblower,” for purposes of “this section,” as an “individual

who provides * * * information relating to a violation

of the securities laws to the [Securities and Exchange]

Commission.” Ignoring that plain language, respondent

contends that “whistleblower” has two definitions in Sec-

tion 922(a): the actual statutory definition, which applies

only for purposes of the section’s award provision, and a

second “ordinary sense” definition, which applies for pur-

poses of the section’s anti-retaliation provision. Accord-

ing to respondent, the first requires reporting to the SEC,

and the second does not.

(1)

Respondent makes no serious effort to defend the

court of appeals’ conclusion that his is the correct textual

interpretation of Section 922(a). Instead, from the very

first sentence of his summary, he contends that “[t |his is

a Chevron case.” Br. 17. But an agency is not entitled to

deference when its interpretation is contrary to the unam-

biguous language of the underlying statute.

This may be a Chevron case, then, but it is a Chevron

step-one case. And at step one, the question is not close.

Section 922(a) does two things: it creates a reward pro-

gram to encourage individuals to report securities-law vi-

olations to the SEC, and it protects those same individuals

from retaliation. The statutory definition of “whistle-

blower” unambiguously applies throughout “this section”

to achieve Congress’s goal of promoting reporting to the

SEC.

There is nothing absurd about giving effect to the stat-

utory text. Respondent contends that the SEC’s contrary

interpretation better “advances Congress’s objectives,”

Br. 17, and comports with the sobering “realities of law-

making,” Br. 20. But that is insufficient to justify defer-

ence in the face of such plain text even under the most

steroidal understanding of Chevron—especially given the

existing protections under the Sarbanes-Oxley Act for

employees who report internally.

For its part, the government, perhaps recognizing the

defects in the SEC’s rule, devotes almost its entire brief

to arguing that this is not a Chevron case, on the theory

that its interpretation is compelled by the text of the stat-

ute. See U.S. Br. 14-32. In the government’s view, when

Congress said that the definition of “whistleblower” “shall

apply” “lijn this section,” 15 U.S.C. 78u-6(a), it unambigu-

ously meant that the definition shall apply in some subsec-

tions of “this section,” but not the one at issue in this case.

That is a preposterous interpretation of which Humpty

Dumpty would be proud. And it rests on a misleading ren-

dition of the legislative history.

All the Court need do in this case is to reaffirm the fa-

miliar principle that, where the ‘anguage of a statute is

plain and does not produce absurd results, the plain lan-

guage should be given effect. Because the Ninth Circuit

deviated from that principle, its judgment should be re-

versed.

A. The Dodd-Frank Act Unambiguously Requires Re-

porting A Securities-Law Violation To The SEC

Section 922(a) of the Dodd-F rank Act defines a “whis-

tleblower” as “any individual who provides * * * infor-

mation relating to a violation of the securities laws to the

[Securities and Exchange] Commission.” 15 U.S.C. 78u-

6(a)(6). That definition, Congress instructed, “shall ap-

ply” “[iJn this section.” 15 U.S.C. 78u-6(a) (emphasis

added). “(TJhis section” indisputably includes the Act’s

anti-retaliation provision, which prohibits retaliation

against “whistleblower|s].” 15 U.S.C. 78u-6(h)(1)(A). The

plain text of the Dodd-F rank Act thus extends anti-retal-

iation protection only to a particular category of defined

individuals: “whistleblowers.”

Respondent acknowledges that the Court ordinarily

must apply definitional provisions according to their

terms. See Br. 25. He nevertheless contends that this is

one of the “admittedly rare” cases where the Court should

deviate from an unambiguous statutory definition. /bid.

That contention lacks merit.

I. A Court Must Apply An Unambiguous Statutory

Definition, Like Any Other Unambiguous Statu-

tory Provision, Unless Doing So Would Produce Ab-

surd Results

a. A court construing a statute “must follow” an ex-

plicit statutory definition, “even if it varies from thfe]

term’s ordinary meaning.” Stenberg v. Carhart, 530 U.S.

914, 942 (2000); see Fox v. Standard Oil Co. of New Jer-

sey, 294 U.S. 87, 95-96 (1935). It is “axiomatic,” moreover,

that “the statutory definition of [a] term excludes un-

stated meanings.” Meese v. Keene, 481 U.S. 465, 484

(1987). To be sure, a court may depart from that “virtually

conclusive” axiom in “very rare” circumstances. Antonin

Scalia & Bryan A. Garner, Reading Law: The Interpreta-

tion of Legal Texts 228 (2012) (Scalia & Garner). As with

other unambiguous statutory language, however, a court

may refuse to apply an unambiguous statutory definition

only where its application would produce absurd results.

b. The cases respondent cites prove the point. For

example, in Lawson v. Suwannee Fruit & Steamship Co.,

336 U.S. 198 (1949), the Court considered whether the def-

inition of “disability” in the Longshoremen’s and Harbor

Workers’ Compensation Act should apply to a provision

stating that, “[i]f an employee receives an injury which of

itself would only cause permanent partial disability but

which, combined with a previous disability, does in fact

cause permanent total disability, the employer shall pro-

vide compensation only for the disability caused by the

subsequent injury.” /d. at 200 (citation and footnote omit-

ted). The Act defined “disability” as “incapacity because

of injury,” and it defined “injury” as “accidental injury or

death arising out of and in the course of employment.”

/bid. (emphasis added; citation omitted). Applying that

definition would have led to an “obvious incongruitly]”:

the employer would have been liable for the entire dis-

ability if the previous disability had occurred while the

employee was not on the job, thus defeating the Act’s goal

of preventing employers from discriminating against indi-

viduals with existing disabilities. /d. at 201.

Philko Aviation, Inc. v. Shacket, 462 U.S. 406 (1983),

is of a piece. There, the Court considered whether to ap-

ply the statutory definition of “conveyance” in the Federal

Aviation Act. See id. at 411-412. By its terms, that defi-

nition was “expressly not applicable ‘if the context other-

wise require|d].’” /bid. (citation omitted). Another pro-

vision of the Act stated that “[njo conveyance or instru-

ment” would be valid “against any person * * * until

such conveyance or other instrument is filed for re-

cordation in the office of the Secretary of Transportation.”

Id. at 409 (citation omitted). The Court observed that, if

it applied the statutory definition of “conveyance” liter-

ally, the Act “would not require every transfer to be doc-

umented and recorded; it would only invalidate unre-

corded title instruments, rather than unrecorded title

transfers.” Ibid. That would be absurd, given Congress’s

expressly stated intent to require “the recordation of

every transfer * * * of any interest in a civil aircraft.”

Id. at 410 (internal quotation marks and citation omitted).

So too in Utility Air Regulatory Group v. EPA, 134

S. Ct. 2427 (2014). There, the Court construed the Clean

Air Act, which required major emitters of “air pollutants”

to acquire certain permits. /d. at 2439. The Act defined

“air pollutant” as “any air pollution agent or combination

of such agents, including any * * * substance or matter

which is emitted into or otherwise enters the ambient air.”

42 U.S.C. 7602(g). In Massachusetts v. HPA, 549 U.S. 497

(2007), the Court had construed the definition of “air pol-

lutant” to “embrace[] all airborne compounds of whatever

stripe.” Jd. at 529. Based on that broad definition, the

Environmental Protection Agency argued in Utility Air

that major emitters of greenhouse gases had to obtain the

permits required for major emitters of air pollutants. See

1348. Ct. at 2439.

This Court rejected that argument. It explained that

applying the Massachusetts construction of “air pollu-

tant” throughout the statute was “obviously untenable.”

134 S. Ct. at 2439. EPA had applied narrower definitions

of “air pollutant” in various specific contexts since the

1970s, and “Massachusetts did not invalidate all these

longstanding constructions.” /d. at 2439-2441. For exam-

ple, EPA’s interpretation of the statute would have re-

quired “an elaborate, burdensome permitting process for

major emitters of steam, oxygen, or other harmless air-

borne substances.” /d. at 2440. Avoiding such absurdity,

the Court explained that the Act-wide definition of “air

pollutant” was “not a command to regulate, but a descrip-

tion of the universe of substances EPA may consider reg-

ulating under the Act’s operative provisions.” /d. at 2441.

These cases illustrate the problem with respondent’s

approach here. The rule that a court must apply a statu-

tory definition according to its terms is more than a thumb

on the scale; it is a binding “axiom|],” except in the un-

usual situation in which applying the plain text would be

absurd. See Keene, 481 U.S. at 484. That is particularly

true where (as here) not just the definition, but also the

reach of that definition, is unambiguous: the definitional

provision commands that its definitions “shall apply” “[i}n

this section.” 15 U.S.C. 78u-6(a) (emphasis added). Such

mandatory language is “normally * * * impervious to

judicial discretion.” Lexecon, Inc. v. Milberg Weiss Ber-

shad Hynes & Lerach, 528 U.S. 26, 35 (1998).

2. The Plain-Text Interpretation Does Not Produce

Absurd Results

Respondent cannot show that applying the statutory

definition of “whistleblower” to the anti-retaliation provi-

sion would lead to absurdity. To the contrary, only peti-

tioner’s interpretation is faithful to the structure and his-

tory of the Dodd-F rank Act.

a. Asa preliminary matter, respondent does not con-

tend that applying the statutory definition of “whistle-

blower” would “contradict another provision” of the

Dodd-Frank Act, thus requiring the Court to harmonize

those provisions. Scalia & Garner 228. At most, respond-

ent cites the supposed “tension” between the “whistle-

blower” definition and the third clause of the anti-retalia-

tion provision. The former, he observes, requires the re-

porting of a securities-law violation to the SEC; the latter

prohibits retaliation because of “disclosures that are re-

quired or protected” under the Sarbanes-Oxley Act and

other laws, without requiring reporting to the SEC. 15

U.S.C. 78u-6(h)(1)(A)(iii). According to respondent, the

differences between those two provisions produce “ten-

sion” that gives rise to statutory ambiguity. See Br. 28-

30.

This Court’s decision in Lamie v. United States Trus-

tee, 540 U.S. 526 (2004), which petitioner discussed at

length in its opening brief, gives the lie to that argument.

There, the Court construed a provision of the Bankruptcy

Code that gave enumerated persons—‘“a trustee, an ex-

aminer, [or] a professional person employed under section

327 or 1103”—the right to “reasonable compensation for

actual, necessary services rendered by the trustee, exam-

iner, professional person, or attorney and by any

paraprofessional person employed by any such person.”

Id. at 530 (quoting 11 U.S.C. 330(a)(1)).

The petitioner in Lamie, like respondent here, argued

that the statute was ambiguous because of a tension be-

tween the individuals the statute covered and the right the

statute afforded. See 540 U.S. at 535. But the Court dis-

agreed, noting that the first provision at issue “author-

ize|d] an award of compensation to one of three types of

persons” and the second “define]d| what type of compen-

sation may be awarded.” /d. at 534. The type of compen-

sation awarded, the Court explained, was “irrelevant” to

the threshold question of which individuals were covered.

See zbid.

That logic applies equally here. The anti-retaliation

provision identifies a particular type of individual entitled

to protection, a “whistleblower.” See 15 U.S.C. 78u-

6(h)(1)(A). It then protects a whistleblower from retalia-

tion that occurs because of certain types of conduct by the

whistleblower. See ibid. But unless an individual falls

within the protected class in the first place—namely,

“whistleblower|s|”-—the type of protection afforded is “ir-

relevant.” See Lamie, 540 U.S. at 534.

Remarkably, respondent ignores Lamie altogether.

The government does little better, attempting to distin-

guish Lamie in a footnote on the formalistic ground that

it did not involve an explicit statutory definition. See U.S.

Br. 27 n.13. But that is a distinction without a difference:

Lamie is on point because it illustrates how the Court

should analyze a provision structured like the anti-retali-

ation provision. On that point, neither respondent nor the

government has anything to say.

b. Respondent fails to identify any substantial anom-

alies that would result from the plain-text interpretation

of the anti-retaliation provision.

i. Tracking the court of appeals, respondent first

contends that applying the statutory definition of “whis-

tleblower” to the anti-retaliation provision would render

the third clause of the provision absurdly narrow, because

it would apply only when an individual reported both to

the SEC and internally (or to another entity). See Br. 35-

37. Even if respondent is correct and the provision has

only “modest” “effect|s |” under that interpretation, how-

ever, it hardly renders the interpretation absurd. Morri-

son Vv. National Australia Bank Ltd., 561 U.S. 247, 270

(2010). An interpretation is absurd only if it results in

statutory language having “no operative effect.” Duncan

v. Walker, 533 U.S. 167, 174 (2001) (emphasis added).

For its part, the government hypothesizes that cases

in which an individual reports both to the SEC and inter-

nally (or to another entity) “are likely to be few in num-

ber.” U.S. Br. 23 (internal quotation marks and citation

omitted). But even if that hypothesis were true (and the

government offers no empirical support for it), a statute

that protects even a “few” individuals still has “operative

effect.” Duncan, 533 U.S. at 174. This Court’s role is to

“apply the text,” not to “improve upon it.” Pavelic &

LeFlore v. Marvel Entertainment Group, 493 U.S. 120,

126 (1989).

ii. In a related vein, respondent asserts that peti-

tioner’s interpretation is absurd because it “would en-

tirely cut out protections for lawyers and auditors,” who,

he contends, must typically report internally before re-

porting to the SEC. Br. 35. But there is no evidence in

the text or history of the Dodd-Frank Act that Congress

had lawyers and auditors in mind when it enacted the anti-

retaliation provision. See Pet. Br. 34. By contrast, the

Congress that enacted the Sarbanes-Oxley Act was fo-

cused specifically on lawyers, auditors, and other employ-

ees of outside companies, as this Court has recognized.

See Lawson v. FMR LLC, 134 8. Ct. 1158, 1169-1170

(2014).

Respondent thus overreaches when he asserts that the

Dodd-Frank Act “strip|s| away” whistleblower protec-

tions for lawyers and auditors. Br. 36. As respondent con-

cedes in a footnote, “lawyers and accountants * * *

would still be able to take advantage of Sarbanes-Oxley’s

10

remedies under Section 1514A.” /d. at 36 n.10. Respond-

ent asserts, again without empirical support, that “those

remedies have proven ineffective.” /bid. But fewer than

two pages later, in an effort to explain why his interpreta-

tion does not render the Sarbanes-Oxley Act’s anti-retali-

ation protection effectively obsolete, he argues that the

Sarbanes-Oxley Act’s remedies “may be more attractive”

than those available under the Dodd-F rank Act. /d. at 38-

39 (citation omitted).

Respondent cannot have it both ways. Whatever the

relative merits of the Sarbanes-Oxley Act’s remedy, the

continuing availability of that remedy underscores that in-

terpreting the Dodd-Frank Act’s anti-retaliation provi-

sion not to reach certain lawyers and auditors would not

be “so bizarre that Congress could not have intended it.”

Department of Revenue v. ACF Industries, Inc., 510 U.S.

332, 347 (1994) (internal quotation marks and citation

omitted).

iii. Respondent next contends that, under the plain-

text interpretation, whether an individual has a remedy

under the anti-retaliation provision will depend on when

the individual suffers retaliation, and that employers com-

mitting retaliatory acts will not necessarily know that em-

ployees have a cause of action under the anti-retaliation

provision. See Br. 37-38. The government similarly con-

tends that two individuals who make the same internal

disclosure will have different remedies if one reports to

the SEC but the other does not. See U.S. Br. 24.

Those observations are correct—and that is precisely

what Congress intended. As this Court has explained, the

purpose of the Dodd-Frank Act was to incentivize “re-

porting to federal authorities.” Lawson, 134 S. Ct. at

1175. Given the substantial evidence that Congress in-

tended to protect employees who report their employers’

11

misconduct to the SEC, see Pet. Br. 24-26, there is noth-

ing out of the ordinary, much less absurd, about condition-

ing the availability of the anti-retaliation remedy on such

reporting—regardless of whether an employer is aware of

the reporting at the time of the retaliatory act.

In a related vein, respondent and the government con-

tend that the plain-text interpretation would lead to odd

outcomes because the whistleblower provisions do not

specify a substantive or temporal connection between the

report to the SEC that qualifies an individual as a “whis-

tleblower” and the disclosure that triggers the retaliation

underlying the individual’s claim. Specifically, the disclo-

sure protected under the third clause of the anti-retalia-

tion provision need not relate to the securities laws, as

long as the whistleblower has made a separate report of a

securities-law violation to the SEC. See Br. 38 n.13; U.S.

Br. 25-26.

Again, those contentions are valid—but there is no re-

sulting absurdity that would justify ignoring Congress’s

unambiguous command to apply the “whistleblower” def-

inition “[i}n this section.” Congress could reasonably have

made the policy judgment that individuals who report se-

curities-law violations to the SEC should receive broad

protection over time against retaliation for a variety of

disclosures. That would be consistent with the Act’s

broader goal of promoting reporting to the SEC.

In any event, respondent’s alternative interpretation

leads to a far more substantial oddity. Under that inter-

pretation, an individual can have a cause of action under

the anti-retaliation provision solely for making a disclo-

sure that bears no relation to the securities laws. Con-

sider, for instance, petitioner’s hypotheticals involving

employees fired for reporting drug dealing to the Federal

Bureau of Investigation or mail fraud to a supervisor. See

Pet. Br. 38. Other than calling those hypotheticals “far-

12

fetched,” Br. 40 n.15, respondent offers no answer to

them. Nor does respondent offer any reason to believe

that Congress thought it was enacting a whistleblower

provision for conduct unrelated to the securities laws

when it enacted the Dodd-Frank Act.

Indeed, the SEC’s rule underscores the absurdity of

respondent’s interpretation. In an evident effort to elim-

inate that absurdity, the SEC retained a remnant of the

requirement from the “whistleblower” definition that the

reported misconduct relate to a “violation of the securities

laws” at the same time that it (impermissibly) dispensed

with the remainder of the statutory definition. See 17

C.F.R. 240.21F-2(b)(1)(i). The plain-text interpretation is

superior to respondent’s because it requires at least some

nexus to a securities-law violation without any of the ju-

jutsu of the SEC’s rule.

ce. Respondent’s and the government’s remaining

textual criticisms of the plain-text interpretation lack

merit and certainly do not give rise to absurdity.

The government contends that, because the other de-

fined terms in Section 78u-6(a) do not appear in the anti-

retaliation provision, the definition of “whistleblower”

should not be applied to that provision either. See U.S.

Br. 19-20. But that is an extremely dubious inference. It

is directly contrary to Congress’s command that the

“whistleblower” definition “shall apply” “[i}n this section.”

15 U.S.C. 78u-6(a). And it overlooks the fact that Con-

gress expressly cross-referenced the anti-retaliation re-

gime in the definitions provision. See 15 U.S.C. 78u-

6(a)(5) (citing 15 U.S.C. 78u-6(h)(2)(D)(i)). The govern-

ment provides no affirmative reason to believe that Con-

gress intended the “whistleblower” definition to apply

only in subsections (b), (c), (d), (e), (g), and (i), but not in

subsection (h).

13

The government’s argument that “numerous federal

statutes use ‘whistleblower’ in its ordinary sense,” U.S.

Br. 16 n.6, is simply misleading. The only support the gov-

ernment musters for that proposition is a series of cita-

tions to the Whistleblower Protection Act of 1989, Pub. L.

No. 101-12, 103 Stat. 16. But that Act defines “whistle-

blowers” as “individuals who make disclosures described”

in another provision, id. § 2(a)(3), and it does not even use

the term “whistleblower” in its operative provisions.’ In

fact, statutory definitions of “whistleblower” appear to be

the rule, not the exception. See, e.g., 7 U.S.C. 26(a)(7); 38

U.S.C. 323(g)(2)-(3); 49 U.S.C. 30172(a)(6).

Respondent notes that Congress used not just “whis-

tleblower,” but also “employee” and “individual,” in the

anti-retaliation provision. See Br. 26. But that does not

suggest that the terms are coterminovs it merely reflects

the reality that all whistleblowers are ©':o employees and

individuals. Congress’s use of other terms in the anti-re-

taliation provision does not override the express limita-

tion of anti-retaliation protection to “whistleblower|[s]”—

especially because that limitation replaced an earlier ver-

sion of the provision that reached all “employee|s].” See

Pet. Br. 25.

Respondent further contends that applying the statu-

tory definition of “whistleblower” to the anti-retaliation

provision would “arguably” render surplusage the refer-

ences to the SEC in the first and second clauses of that

provision. See Br. 31. As a preliminary matter, respond-

ent’s contention cannot easily be reconciled with the his-

tory of the anti-retaliation provision: Congress amended

an earlier version of the provision to include the defined

' Puzzlingly, the government cites two subsections of the Act, Sec-

tion 4(a) and Section 4(b), that do not even use the term “whistle-

blower.” See U.S. Br. 16 n.6.

14

term “whistleblower” at a time when the phrases “to the

Commission” and “of the Commission” already appeared

in what are now the first two clauses. See Pet. Br. 25.

More broadly, there is no surplusage sufficient to ren-

der the plain-text ‘nterpretation absurd. The references

to the SEC in the first and second clauses merely define

(and limit) the conduct protected by those clauses. They

do not duplicate the “whistleblower” definition, which es-

tablishes the category of individuals entitled to protection.

And language that clarifies or “remove|s] any doubt”

about an issue does not constitute impermissible surplus-

age. Ali v. Federal Bureau of Prisons, 552 U.S. 214, 226

(2008) (citation omitted).

Finally on this score, respondent simply invents a new

canon of statutory interpretation: the canon of the lower-

case letter. See Br. 25, 35. But there is no such canon.

While the contagion of Defined Terms has spread from

contracts into legal briefs, it has not yet infected the

United States Code: Congress does not usually capitalize

otherwise uncapitalized terms to signal that they bear a

statutorily defined meaning. See, e.g., 1 U.S.C. 1-8. Con-

gress’s failure to capitalize “whistleblower” is thus of no

import.

Respondent’s desperate efforts to find a foothold for

ambiguity in the statutory text are telling. Because there

is no valid reason to deviate from the plain text of the stat-

ute, respondent’s contrary interpretation should be re-

jected.

3. The Leaislative History Does Not Support Re-

spondent’s Interpretation

Not only is respondent’s interpretation of the anti-re-

taliation provision contrary to the text, but it also finds no

support in the legislative history.

15

a. As respondent seemingly concedes (Br. 42), the

purpose of Section 922(a) was to create a “new, robust

whistleblower program designed to motivate people who

know of securities law violations to tell the SEC.” S. Rep.

No. 176, 111th Cong., 2d Sess. 38 (2010). Because the stat-

ute was intended to channel information about securities-

law violations to the SEC, Congress limited both the re-

ward and the anti-retaliation provisions to whistleblowers

who reported such information in a manner satisfactory

to the SEC. The legislative history is thus consistent with

the plain text.

Respondent’s efforts to put a different spin on the leg-

islative history are unavailing. Respondent oddly begins

by devoting two pages to describing the purpose of the

Sarbanes-Oxley Act’s anti-retaliation provision, contend-

ing that the plain-text interpretation of the Dodd-F'rank

Act “frustrat{[es] Sarbanes-Oxley’s key framework.” Br.

33-34. This case, however, involves the Dodd-Frank Act,

not the Sarbanes-Oxley Act, which was enacted eight

years earlier. And limiting anti-retaliation protection un-

der the Dodd-Frank Act to “whistleblower(s!” in no way

interferes with the Sarbanes-Oxley Act’s regime. Rather,

it gives independent effect to that Act’s anti-retaliation

provision and leaves it to serve its intended purpose of

protecting whistleblowers who report fraudulent activity

more broadly. See Pet. Br. 26-30.

When it comes to the Dodd-Frank Act itself, respond-

ent flails. As discussed above, Congress initially defined

the persons protected by the anti-retaliation provision to

include all “employee[s}” and later limited the protected

persons to “whistleblower(s].” See p. 13. Respondent

contends that the change did “nothing to modify the scope

of the statute,” because the protected conduct focused on

providing information to the SEC both immediately be-

fore and immediately after the change. Br. 41-42. But

16

even if that is correct—and it is far from clear that it is—

it misses the point: Congress specifically abandoned

broader language in favor of narrower language in de-

scribing the protected category of individuals.

Respondent primarily focuses on the fact that the

third clause of the anti-retaliation provision was a last-mi-

nute addition, thereby suggesting that Congress failed to

notice that the third clause was incorporating the defini-

tion of “whistleblower.” See Br. 40-41. Like the govern-

ment, however, respondent seemingly takes the position

that the definition of “whistleblower” does not apply to the

entire anti-retaliation provision, including the first and

second clauses—-which long predated the third clause.

See Br. 24; U.S. Br. 14-17. Respondent thus cannot argue

that the incorporation of the definition in the anti-retalia-

tion provision was some sort of last-minute drafting error.

And applying the definition of “whistleblower” to the third

clause, like the first and second, is entirely consistent with

Congress’s broader goal of promoting reporting to the

SEC.

b. The government goes a step further than respond-

ent, suggesting that Congress added the third clause in

order to address shortcomings in the Sarbanes-Oxley

Act’s anti-retaliation regime. See U.S. Br. 2, 27-28. That

theory is based on three excerpts from the legislative his-

tory, all referencing whistleblowers at Lehman Brothers

who reported internally and then suffered retaliation.

Two of the excerpts, however, come from the congres-

sional investigation into Lehman Brothers in the wake of

the financial crisis. See 156 Cong. Rec. 7083-7084 (2010);

Public Policy Issues Raised by the Report of the Lehman

Bankruptcy Examiner: Hearing Before the House Com-

mittee on Financial Services, 111th Cong. 68, 75-77, 128,

175-178 (2010), Nothing in the legislative history connects

17

those references to Congress’s consideration of the anti-

retaliation provision of the Dodd-F rank Act.

In fact, the third excerpt affirmatively refutes such a

connection. The government cites comments by Senator

Menendez concerning retaliation against Lehman Broth-

ers employees. See U.S. Br. 2. But Senator Menendez

offered those comments while proposing an amendment

to the anti-retaliation provision of the Sarbanes-Oxley

Act. See 156 Cong. Rec. 7236 (2010).

Senator Menendez’s proposed amendment, moreover,

bore no resemblance to what would eventually become the

anti-retaliation provision of the Dodd-Frank Act. It did

not suggest that whistleblowers covered by the Sarbanes-

Oxley Act should have a direct cause of action in federal

court, double backpay, or a six-year statute of limitations.

Instead, it sought to ensure that, inter alia, those whistle-

blowers had the right to a jury trial; 180 days, instead of

90, to file a claim; and protection from pre-dispute arbi-

tration agreements. See S. Amend. 3841 to S. Amend.

3739 to Restoring American Financial Stability Act of

2010, S. 3217, 111th Cong. S. 3268 (2010).

Congress ultimately adopted those improvements to

the Sarbanes-Oxley Act’s anti-retaliation regime in Sec-

tion 922(c) of the Dodd-Frank Act. Congress’s decision in

Section 922(c) to bolster the remedy provided to whistle-

blowers under the Sarbanes-Oxley Act negates any infer-

ence that Congress intended to extend the protections of

Section 922(a) to such persons when it added the third

clause to the Dodd-F rank Act’s anti-retaliation provision.

B. The SEC’s Contrary Interpretation Is Not Entitled To

Deference

Respondent and the government (in its fallback argu-

ment) contend that this Court should defer to the SEC’s

interpretation of the Dodd-Frank Act’s anti-retaliation

18

provision. See Br. 21-23, 42-54; U.S. Br. 32-35. That con-

tention lacks merit for two reasons.

1. Despite his best efforts, respondent has failed to

identify any relevant ambiguity in the Dodd-F rank Act’s

whistleblower provisions. The plain text compels the con-

clusion that the anti-retaliation provision applies only to a

“whistleblower,” as the statute defines the term. Where,

as here, Congress has “directly spoken to the precise

question at issue,” the Court should not proceed past the

first step of the Chevron inquiry. See Chevron U.S.A. Inc.

v. Natural Resources Defense Council, Inc., 467 U.S. 837,

842-843 (1984).

2. Even if the Court were to reach Chevron’s second

step, the SEC’s interpretation would warrant no defer-

ence because the SEC “fail[ed] to follow the correct pro-

cedures in issuing the regulation.” H’ncino Motorcars,

LLC v. Navarro, 136 S. Ct. 2117, 2125 (2016). The SEC

initially proposed a rule consistent with the statutory def-

inition of “whistleblower.” See 75 Fed. Reg. 70,488,

70,489, 70,519 (Nov. 17, 2010). In its final rule, however,

the SEC announced an alternative definition of “whistle-

blower” for purposes of the anti-retaliation provision that

abandoned the statutory requirement of reporting to the

SEC, See 76 Fed. Reg. 34,300, 34,301-34,304, 34,363 (June

13, 2011). As a result, the proposed rule failed to give fair

notice of the contents of the final rule, thereby violating a

basic requirement of notice-and-comment rulemaking.

See Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158,

174 (2007).

a. Neither respondent nor the government seriously

disputes that this about-face occurred. Instead, they try

to salvage the SEC’s interpretation by raising two thresh-

old objections. Neither withstands scrutiny.

19

i. Respondent and the government first contend that

petitioner’s argument that Chevron deference is not war-

ranted because the SEC’s rule was procedurally defective

was forfeited below and is not fairly included in the ques-

tion presented. See Br. 43-45; U.S. Br. 35. That conten-

tion lacks merit.

As to the lower courts: petitioner argued below, in re-

sponse to respondent’s argument, that the SEC’s inter-

pretation was not entitled to Chevron deference. See Pet.

C.A. Br. 21-27. The rule’s procedural defects are simply

an additional reason why deference is not warranted—or

a “new argument to support what has been [petitioner’s |

consistent claim,” which this Court has long permitted.

Lebron v. National Railroad Passenger Corp., 513 U.S.

374, 379 (1995); see generally Stephen Shapiro et al., Su-

preme Court Practice § 6.26(b), at 466 (10th ed. 2013).

As to this Court: petitioner’s petition presented the

question “[wlhether the anti-retaliation provision for

‘whistleblowers’ in the Dodd-F rank | Act] extends to indi-

viduals who have not reported alleged misconduct to the

[SEC] and thus fall outside the Act’s definition of a ‘whis-

tleblower.’” Pet. i. Respondent’s proposed answer to that

question primarily rests on the doctrine of Chevron defer-

ence. See, e.g., Br. 21-25. Having invoked (and relied so

heavily on) that doctrine, respondent cannot fairly argue

that petitioner is barred from offering a particular reason

why Chevron deference is not warranted—an issue that is

plainly bound up in the question presented. See, e.g.,

Vance v. Terrazas, 444 U.S. 252, 258-259 n.5 (1980).

ii. Respondent (but not the government) next con-

tends that petitioner’s argument that Chevron deference

is not warranted because the SEC’s rule was procedurally

defective is time-barred under the Administrative Proce-

dure Act (APA). See Br. 45-46. But that misapprehends

the nature of petitioner’s argument. Petitioner is not

20)

bringing an affirmative claim under the APA to invalidate

the SEC’s rule or otherwise to take action against the

SEC. Instead, petitioner is merely arguing, as part of its

defense against a private lawsuit, that the rule’s proce-

dural deficiencies preclude deference. It would be passing

strange if the question whether an agency interpretation

is entitled to Chevron deference turned on the timing of

litigation implicating the interpretation—particularly be-

cause parties will often have no incentive affirmatively to

challenge a procedurally defective rule during the APA’s

limitations period.

b. Respondent and the government offer only the fee-

blest defense of the SEC’s facially deficient rulemaking

process.

i. Respondent plucks excerpts out of the SEC’s no-

tice of proposed rulemaking in an effort to show that the

SEC was concerned about internal reporting. See Br. 47-

48. But respondent fails to identify any indication in the

notice that the SEC was considering expanding the anti-

retaliation provision to cover those who only report inter-

nally. Respondent is left to fill in the gaps himself, postu-

lating that “one obvious difficulty with balancing [the

whistleblower program and internal reporting] is that an

employee might fear retaliation if she reports internally”

and that “{a]n obvious solution is to protect internal re-

porters from retaliation.” Br. 48. But the SEC did not

suggest that possibility in its notice.

Respondent fares no better when he addresses the

comments submitted in response to the notice. He cites

three out of the 240 submitted comments, but those com-

ments do little to show that interested parties were gen-

erally on notice of the potential expansion of the definition

21

of “whistleblower.” See Br. 48-49.° And the SEC did not

cite those comments in unexpectediy adopting its ex-

panded definition. See 76 Fed. Reg. at 34,301-34,304.

Not only did the SEC fail to provide fair notice, but it

also gave no “adequate reasons for its decision| |” to aban-

don the “whistleblower” definition for part of the rule.

Encino Motorcars, 136 S. Ct. at 2125. Respondent cites

one reference to internal reporting in the final rule, but

that reference occurred in the context of discussing eligi-

bility under the award provisions. See Br. 50 (citing 76

Fed. Reg. at 34,325); see also U.S. Br. 8 (citing similar ad-

ditional references). The reference does not explain the

SEC’s expansion of the definition of “whistleblower” for

purposes of the anti-retaliation provision. The SEC’s ex-

planation was as deficient as its notice, and the interpre-

tation in the final rule is invalid for that reason as well.

ii. As a last-ditch effort to defend the SEC’s rule, re-

spondent (but not the government) contends that the

SEC’s initial rule, and the SEC’s subsequent interpretive

guidance, were valid interpretive rules that did not re-

quire notice and comment and that warrant Chevron def-

erence. See Br. 51-54. That contention lacks merit.

As to the SEC’s initial rule: the SEC did not issue an

interpretive rule in the first instance. It chose to proceed

through notice-and-comment rulemaking, and the ques-

tion now is whether the interpretation in the resulting

* One of respondent’s amici suggests that members of the business

community previously supported internal reporting but have now

abandoned that position. See Sen. Grassley Br. 13-14. That is incor-

rect. The Chamber of Commerce, for example, supported making

award eligibility contingent on an employee's use of an internal re-

porting system where available—a position the SEC rejected in its

final rule. The Chamber never proposed providing anti-retaliation

protection to those who only report internally. See Chamber Br. 21-

22.

22

rule is entitled to Chevron deference. For the reasons al-

ready discussed, it is not. The mere possibility that the

agency could have proceeded with an interpretive rule

cannot excuse the actual rule’s procedural defects. Oth-

erwise, an agency could sidestep the requirements of no-

tice-and-comment rulemaking after the fact by repackag-

ing a defective rule as an interpretive rule. In any event,

it is doubtful that the SEC would have opted for an inter-

pretive rule in the first place, because such a rule would

have lacked the “force and effect of law.” Perez v. Mort-

gage Bankers Association, 135 S. Ct. 1199, 1204 (2015) (ci-

tation omitted).

As to the SEC’s interpretive guidance: that guidance

merely purported to “clarify the meaning and application”

of parts of the initial rule and attempted to provide the

explanation absent in the initial rule for the expansion of

the “whistleblower” definition. 80 Fed. Reg. 47,829 (Aug.

10, 2015). As petitioner has explained, however, a post hoc

interpretation of a procedurally defective rule cannot cure

its deficiencies. See Pet. Br. 44.

+ * * * *

The SEC’s rulemaking process was highly irregular.

But even if it were otherwise, respondent cannot resolve

the fundamental inconsistency between the statutory

text, which provides one definition of “whistleblower” for

purposes of the Dodd-Frank Act’s whistleblower provi-

sions, and the SEC’s rule, which provides two. Because

the statutory text is unambiguous, the Court need not

even consider the SEC’s rule.’ Instead, the Court need

* Should the Court somehow conclude both that the statutory text

is ambiguous and that the procedural defects in the SEC’s rulemak-

ing can be excused, it should order supplemental briefing to consider

whether Chevron should be overruled.

23

only hold, consistent with the plain text of the statute, that

an individual must report a securities-law violation to the

SEC in order to bring a claim under the Dodd-Frank Act’s

anti-retuliation provision. The Ninth Circuit’s contrary

interpretation of the statute is unsustainable, and its judg-

ment should therefore be reversed.

Respectfully submitted.

BRIAN T. ASHE KANNON K. SHANMUGAM

KIRAN A. SELDON AMY MASON SAHARIA

SHIREEN Y. WETMORE A. JOSHUA PODOLL

SEYFARTH SHAW LLP MENG JIA YANG

560 Mission Street, WILLIAMS & CONNOLLY LLP

31st Floor 725 Twelfth Street, N.W.

San Francisco, CA 94105 Washington, DC 20005

(202) 434-5000

KYLE A. PETERSEN kshanmugam@we.com

SEYFARTH SHAW LLP

131 South Dearborn Street,

Suite 2400

Chicago, IL 60603

NOVEMBER 2017