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

No. 16-1276

IN THE

Supreme Court of the Uni

DIGITAL REALTY TRUST, INC.,

Petitioner,

v.

PAUL SOMERS,

Respondent.

On Wait or CertTiorari To THE U.S. Court

or APPEALS FOR THE NinTH Circuit

BRIEF OF THE CHAMBER OF COMMERCE

OF THE UNITED STATES OF AMERICA

AS AMICUS CURIAE IN SUPPORT

OF PETITIONER

Kate Comerrorp Topp STEVEN J. PEARLMAN

Sreve P. Lenorsxy Counsel of Record

JANET GALERIA Epwarp C. Younc

U.S. CHAMBER PROSKAUER Rose LLP

LITIGATION CENTER, INC. 70 W. Madison, Suite 3800

1615 H Street, N.W. Chicago, IL 60602

Washington, D.C. 20062 (312) 962-3550

(202) 463-5337 spearlman@proskauer.com

Counsel for Amicus Curiae

Lawary of Compe”

Law Liwery

August 31, 2017

ee

i

TABLE OF CONTENTS

Page

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INTEREST OF AMICUS CURIAE ..........600055 |

SUMMARY OF THE ARGUMENT................ 2

PEE SA din k's Cre tS ec Rw de tela Keedns te wees 4

[.. The Dodd-Frank Act Unambiguously

Requires That A Claimant Have

Reported ‘To The SEC To Qualify As A

“Whistleblower” Protected By Section

78u-6’s Anti-Retaliation Provision ............ 4

A. The Plain Language Of Section 78u-6

Extends Protection From Retaliation

Only To Individuals Who Report To

BEG aihene rds Va eek bee ous erode ts 4

B. The Legislative History Confirms The

Plain Meaning Of The Statute........... 10

©. TheCourtShould Reject The Arguments

Advanced By The Second Cireuit And

Bee Pe CE vad cc wavadhespeseeess 1]

1). The Court Should Not Defer To The

ES EN nt 1 re feat Sy Lore AEE e 15

ii

Table of Contents

Page

Il. Broadening Section 78u-6 Beyond Its

Statutorily Preseribed Limits Would

Undermine The Anti-Retaliation

Provisions Of The Sarbanes-Oxley Act....... 17

Ill. Respondent’s Assertion That The

Chamber Has Taken Inconsistent

yo, ee eer 21

CRISTEA Se deccaybecsascavuedeuenes i sesen 23

ill

TABLE OF AUTHORITIES

CASES

Almendarez-Torves v. United States,

G23 U.S. 224 (IBBE). cece ees eccvvnes

Arizona v. Thompson,

281 F.3d 248 (D.C. Cir. 2002) ...........

Asadi v. G.E. Energy (USA), LLC,

720 F.3d 620 (5th Cir. 2013). .......-....

Berman v. Neo@Ogilvy LLC,

801 F.3d 145 (2d Cir. 2015) .............

Berman v. Neo@Ogilvy LLC,

No. 14-ev-00528, 2014 WL 6865718

SARE, PEE CE Ie bbc ters cecnes

Bilski v. Kappos,

661 U.S. BBB (2010)... 2... eee eeeeoees

Burgess v. United States,

GES U.S. 1246 (OOS). wc crc esvccvcvvees

Chevron U.S.A., Lne. v.

Nat. Res. Def. Council, Inc.,

Be WA SE CU eve tvcknsvcsovecese

Dressler v. Lime Energy,

No. 14-cv-07060, 2015 WL 4773326

Se, OE PE cn cscowransecsess

Page

3, 9, 10, 14

... passim

iv

Table of Authorities

Page

Egan v. TradingScreen, Ince.,

No. 10-ev-8202, 2011 WL 4344067

Pe SE Oe NE ccs be wnkns ovens be bea en 14

FDA ». Brown & Williamson Tobacco Corp.,

Se ee I ek alan ck tetera d slaw ae eee 7

Gunther v. Deltek, Inc.,

ALJ No. 2010-SOX-00049, 2013 DOLSOX

LEXIS 35 (Dep’t of Labor June 5, 2013), aff,

ARB Nos. 13-068, 13-069, 2014 WL 7227263

(Dep’t of Labor Nov. 26, 2014), aff'd, Deltek, Inc.

v. Dep't of Labor, 649 Fed. App’x, 320

SE Coca Upcr aac ciaeG cence xs kbae 19-20

King v. Burwell,

I in Ck Ga ewabsadcamutn 13

Loughrin v. United States,

ee a oo eas ee REST ee 11

Maracich v. Spears,

ee ee a ny Loeackes vee enue ite 7

Maverick Transp., LLC v, Dep’t of Labor,

ope Pi ee | ree 19

Pavelic & LeF lore v. Marvel Entm't Grp.,

es CEG s So. chi vi ane cece cncunaeen 2

Vv

Table of Authorities

Page

Peter Pan Bus Lines, Inc. v.

hed. Motor Carrier Safety Admin.,

Potgow bs fos eh oR one 16

Stenberg v. Carhart,

EE oak da ie geal me oREME 8

TRW Inc. v. Andrews,

I ne Sk Pe eee 9

Verble v. Morgan Stanley Smith Barney, LIL,

148 F. Supp. 3d 644 (E.D. Tenn. 2015)............ 14

Wadler v. Bio-Rad Labs., inc.,

No. 15-ev-2356 (N.D. Cal. Feo. 6,2017)........... 19

Yates v. United States,

RRR AN HT ee pep ea MP ni 20

STATUTES

Dodd-Frank Wall Street Reform and Consumer

Protection Act of 2010

Pub. L. No. 111-208, § 922(¢)(1){A)(i),

ee es ccc ubisnaeweeden bene 18

Se EN, occ cucssucee ri veeveb ine 1]

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SR Oe I oon a ck ces aeacnews cases 5

Ep es FPN Fs nv ces cceranceonsoeee me

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Table of Authorities

Page

Sy Ges OF GD 5 dco au od wed ende 0eks saad 5

ee Oe ED the hs onnkek walcues oohasded 5

So oss wack seeker tease 2, 5, 8, 16

i Oe a orn 5 6 6 ob none ov ace o'eRecen 6

Be Sh ere cacncesddaneseus 5, 6

OS SAS. STEED occ rec cecteveevcsae 5

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Ee at Oe EE a v's wc che ceed vanee 5

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De es EE 6 odo haves des eeeksaan werent 5

Se Ge 0 ED vn checccnateusesane caren

eRe IE os wecevecndhage sede atv 5

Oe Rare IE hieics hc teeevcenvesusndocenst 5

ED RTA S PIED os gv occ cneacentseceese cis 5

SP Rha OIE. cons vareaviancescnadéunt 5

RE oe | eee 5

en ec ches see seabeneneeenad 6, 8

Se RL, OP PIS, 6 c.0's cence b's ven ceuicbe waned 2

AD ThA. © TO cee ccenvencevese’s es Bt

SE Cn 0 PEI Sonn cc covcedacccnnetd 19

16 ULB.C. § TORS ov cect cc ccccececce 19

RE UL ADy © TO I 8 Fin ove hans cn dadan 19

vii

Table of Authorities

Page

BG UA © TROD oo ccc ccevcevcsavesienes 5

he ee | PE PET TTT TEE T TTT eee.

eee I i dads panencean baecdiu utes 5

Sarbanes-Oxley Act of 2002

a. chew sara cenean ee 10, 17

ee Sd hha ks 605 oe dceee ret ewnss 17

og FM BT ee eee errr er 18

OS UG. 8 RRO 6 sc vec cienevessecs 17, 18

RE ee pt eer re 18, 19

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BB UBC. © URC 3 ccc cc ccccccccns 18, 19

gt eG ey rer 18

Ee SID, Sib s eek ee as ache eecane’s 18

OTHER AUTHORITIES

ee PED voces ces nseucensuuees 15

hee Bt errr rere ere rr 17

Be Sec OTE ns ov kcdcncctsmeeesssdauss 13

cd OM a ere er re ree erie ee 15

By a ee SS Ie hh aS Kei wescee ee Qie sand eds 15

Fe Siete FG IS wire Rca cc tnt cn deed oases 15

viii

Table of Authorities

Paye

Ge ne RE a he os aids do awe ve wens eae Se 17

ee Pe LE bos nh nce edns oho capt eodmed 17

Ee ee Si dae wink cheers ceererek in 18

Rs Ne IE, ihn bd awd aed ben eelerservnne 18

as NG NE ea coke in bod sepeiews bexens 18

as 2 er eee rrr oe 18

76 Fed. Reg. 34,300 (June 13, 2011)...............4. 16

A. Sealia & B. Garner, Reading Law: The

Interpretation of Legal Texts (2012). ........0045. 7

Comment Letter from Chamber et al. to Secretary

Se SEL DREN s ccc chntunessecoconéecss 22

Ethies Resource Center, Jnside the Mind of a

Whistleblower: A Supplemental Report of the

2011 National Business Ethics Survey (2012). .12, 22

Occupational Safety and Health Administration,

CPL 02-03-007, Whistleblower Investigations

IIR Tg Shuvrp's aks cach da Cauckuebaneeses 20

Restoring American financial Stability Act of

2010, H.R. 4173, 111th Cong. § 922(a)(h)(1)(A)

(2nd Sess., as passed by Senate, May 20, 2010)... .10

ix

Table of Authorities

Page

© en, Pe. 118-200 D.Sc cin ee. 5

CE a riod Wace Rae Wak nile ha he ened ban l

ee I es ah oa heen eae ee eee l

U.S. Securities and Exchange Commission,

2016 Annual Report to Congress on the

Dodd-Frank Whistleblower Program (2016). ..... 13

Wall Street Reform and Consumer Protection Act

of 2009, H.R. 4178, 111th Cong. § 7203(a)(g)(1)(A)

(Ist Sess., as passed by House, Dec. 11, 2009)..... 10

]

INTEREST OF AMICUS CURIAE'

The Chamber of Commerce of the United States

of America is the world’s largest business federation.

It represents 300,000 direct members and indirectly

represents the interests of more than three million

companies and professional organizations of every size, in

every industry sector, from every region of the country.

An important function of the Chamber is to represent

the interests of its members in matters before Congress,

the Executive Branch, and the courts. To that end, the

Chamber regularly files amicus curiae briefs in cases that

raise issues of concern to the Nation’s business community.

The Chamber’s members have a strong interest in the

application of the “whistleblower” provisions of the Dodd-

Frank Wall Street Reform and Consumer Protection Act

of 2010 (the “Dodd-Frank Act” or “Act”) in aecordance

with the terms of the statute and the purposes of the Act,

and in the speedy dismissal of whistleblower retaliation

claims that fall outside the Act’s scope. Meritless claims

and expanding litigation costs have a direct impact on the

viability, growth, and survival of businesses nationwide.

The interpretation of the Dodd-k rank Act espoused

by the Ninth Circuit in this case would greatly expand the

number of employees authorized to pursue the enhanced

1. Pursuant to Rule 37.3(a), all partics have consented to

the filing of this brief. Pursuant to Rule 37.6, Amicus Curiae

affirms that no party or party’s counsel authored this brief in

whole or in part. And no party, party’s counsel, or other person

other than Amicus Curiae, its counsel, and its members made a

monetary contribution intended to fund this bricf’s preparation

or submission,

>

~

remedies of the Act, and the period of time in which they

may sue for alleged retaliation, without yielding the law-

enforcement benefits Congress intended when it enacted

a “bounty” and heightened protections for persons who

complain to the SEC. The carefully crafted procedures

established in 2002 in the Sarbanes-Oxley Act of 2002

(the “Sarbanes-Oxley Act”) would become largely moot

and obsolete under the Ninth Circuit’s interpretation,

depriving Chamber members of the limitations and

protections established by that earlicr law.

SUMMARY OF THE ARGUMENT

The question presented in this case is whether

an individual who does not meet the definition of

“whistleblower” in the Dodd-Frank Act can bring a cause

of action under the Act’s anti-retaliation provisions. The

language of the Act is clear that only a “whistleblower”

defined in the statute as an individual who provides

information “to the Commission”—is protected by

the anti-retaliation provisions of the Act. 15 U.S.C.

§ 78u-6(a)(6), (h)(1). Yet, Respondent is asking the Court

to expand the meaning of “whistleblower” as used in the

anti-retaliation provisions by striking the phrase “to

the Commission” from the statutory definition. That is

impermissible. See Pavelic & LeF lore v. Marvel Enim’t

Grp., 493 U.S. 120, 126 (1989) (“Our task is to apply the

text, not to improve upon it.”).

There are two fundamental reasons why this Court

should apply the Act’s plain text. First, the definition of

“whistleblower” and the subsection of the anti-retaliation

provision protecting internal complainants are not in

conflict: when read together, the anti-retaliation provision

5

protects individuals who report information both to the

SEC and to their employer and are retaliated against for

making the internal report. Respondent, however, trics

to flip this structure by using the conduct protected in

the anti-retaliation provisions to define who is a protected

whistleblower rather than using the unambiguous

definition of “whistleblower” to identify who is protected.

Also, Respondent argues that a plain-text reading

of the Dodd-F rank Act would leave auditors and lawyers

without a remedy, as the Sarbanes-Oxley Act requires

them to report securities violations internally before

reporting to the SEC. But the assumption that auditors

and lawyers would lack a remedy under the Act because

retaliation would occur before they have an opportunity

to report to the SEC is unfounded. Indeed, the allegations

in Berman v. Neo@Ogilvy LLC, 801 F.3d 145 (2nd Cir.

2015), Asadi v. G.B. Energy (USA), LLC, 720 F.3d 620

(5th Cir. 2013) and other district court cases show that

there often is an appreciable lag in time between an initial

internal report and any retaliation. Moreover, auditors and

lawyers are already protected from retaliation stemming

from internal reports under the Sarbanes-Oxley Act. The

Court should not seize on those small classes of claimants

to justify the broad, counter-textual reading advocated

by Respondent.

Second, Respondent’s proposed interpretation

undermines the Sarbanes-Oxley Act’s administrative

scheme, giving claimants who never reported to the SEC

discretion and incentives to bypass Sarbanes-Oxley’s

procedures. The Sarbanes-Oxley Act requires claims

to be filed with the U.S. Department of Labor (“DOL”)

before they may be brought before a district court, but

the Dodd-F rank Act enables a plaintiff to file a complaint

4

directly in district court. Compounding the problem,

plaintiffs are apt to forego the Sarbanes-Oxley Act and

proceed under the Dodd-F rank Act under Respondent’s

interpretation because the Dodd-Frank Act provides for

twice the amount of backpay as the Sarbanes-Oxley Act

and offers a dramatically longer statute of limitations (up

to 10 years) than the Sarbanes-Oxley Act (180 days). That

plainly is not what Congress intended when it narrowly

defined “whistleblower” in the Dodd-Frank Act and

simultaneously amended several features of the more

capacious Sarbanes-Oxley Act’s regime. It would make no

sense for Congress to retain a confined limitations period

for Sarbanes-Oxley Act claims while simultaneously

giving those same claimants—-on the same facts—as many

as 10 years to sue for the more generous relief available

under Section 78u-6.

For these reasons, as discussed in greater detail

below, the Chamber respectfully submits that the Court

should apply the plain text of the Act.

ARGUMENT

{. ‘The Dodd-Frank Act Unambiguously Requires That

A Claimant Have Reported To The SEC To Qualify

As A“Whistleblower” Protected By Section 78u-6’s

Anti-Retaliation Provision

A. The Plain Language Of Section 78u-6

Extends Prutection From Retaliation Only

To Individuals Who Report To The SEC

The Definition Of Whistleblower In Section 78u-6.

The Dodd-Frank Act amended the Securities Exchange

”

Act of 1934 by adding 15 U.S.C. § 78u-6, which seeks to

further enforcement of the securities laws by “motivatling]|

those with inside knowledge to come forward and assist the

Government to identify and prosecute persons who have

violated securities laws and recover money for victims of

financia) fraud,’ 5. Rep. No. 111-176, at 110 (2010).

Section 7Xu-6, titled “Securities whistleblower

incentives and protection,” begins by stating that “/i/n

this section the following definitions shal/ apply.” 15 U.S.C.

§ 78u-6(a) (emphasis added). Section 78u-6(a) then defines

“whistleblower” and uses that defined term throughout

Section 78u-6, including the anti-retaliation provision.’

Section 78u-6(a) defines “whistleblower” as follows:

{A)ny individual who provides, or 2 or more

individuals acting jointly who provide,

information relating to a violation of the

securities laws to the Commission, in a manner

established, by rule or regulation, by the

Commission.

/d. § T8u-6(a)(6) (emphasis added).

The foregoing plain language requires the Court

to apply this statutory definition of “whistleblower”

throughout Section 78u-6.

2. See 15 1.8.C, §§ 78u-6(a)(3)(A)-(C), (a)(6), (bD, (CCB)

(i)(1)-CITD), (@)(2)(A)-(D), (A), (d)(2)(A)-(B), Ce), (RIC2KA), (2S)

(A) & (E), (h)(2)(A), (h)(3), & (i).

6

The Bounty Program In Section 78u-6(6). Within

Section 78u-6, the Dodd-Frank Act first creates a

bounty award program through which “whistleblowers

who voluntarily provided original information to the

Commission” can receive between 10 pereent and 30

percent of the sanctions recovered by the SEC based on

the whistleblower’s tip. Jd. § 78u-6(b). More specifically,

Section 78u-6(b) provides:

In any covered judicial or administrative action,

or related action, the Commission, under

regulations prescribed by the Commission and

subject to subsection (c), shall pay an award

or awards to 1 or more whistleblowers who

voluntarily provided original information

to the Commission that led to the successful

enforcement of the covered judicial or

administrative action, or related action|.|

Id. § 78u-6(b)(1) (emphasis added).

The Anti-Retaliation Protections In Section

78u-6(h). Then, Section 78u-6(h), titled “Protection of

whistleblowers,” creates protections against retaliation

for “whistleblowers,” stating:

No employer may discharge, demote, suspend,

threaten, harass, directly or indirectly, or

in any other manner discriminate against, a

whistleblower in the terms and conditions of

employment because of any lawful act done by

the whistleblower -

(i) in providing information to the Commission

in accordance with |Section 78u-6];

7

(ii) [for participating} in any investigation

or judicial or administrative action of

the Commission [that is related to such

information]; or

(iii)in making disclosures that are required

or protected under the Sarbanes-Oxley

Act of 2002 (15 U.S.C. § 7201, et segq.), this

chapter, including section 78j-1(m) of this

title, section 1513(e) of title 18, and any

other law, rule, or regulation subject to the

jurisdiction of the Commission.

Td. § 78u-6(h)(1)(A) (emphasis added).

The definition of “whistleblower” and the anti-

retaliation provision should be read together in harmony.

See FDA v. Brown & Williamson Tobacco Corp., 529

U.S. 120, 133 (2000) (“A court must .. . interpret the

statute as a symmetrical and coherent regulatory

scheme, and fit, if possible, al] parts into an harmonious

whole.”) (internal citations omitted); Maruacich v.

Spears, 133 S. Ct. 2191, 2205 (2013) (“The provisions of

a text should be interpreted in a way that

renders them compatible, not contradictory ....['T here can

be no justification for needlessly rendering provisions in

conflict if they can be interpreted harmoniously.”)

(alteration and omission in original) (citing A. Sealia &

B. Garner, Reading Law: The Interpretation of Legal

Texts 180 (2012)).

Together, these provisions recognize that employees

who report to the Commission may engage in other,

related actions for which they wil] also be protected: an

8

employee who has made a report to the Commission may

be called to testify or assist an investigation related to that

information, or may raise the samc issue with her employer

or exercise other related rights or responsibilities. That

employee is protected from retaliation for all these

activities, not merely in connection with her initial report.

That employee, however, must be a Dodd-Frank

Act “whistleblower.” The statute includes an explicit

definition” of “whistleblower”—an individual who provides

information “to the Commission”—and this Court “must

follow that definition.” Stenberg v. Carhart, 530 U.S. 914,

942 .2000); see also Burgess v. United States, 543 U.S. 124,

129 (2008) (“Statutory definitions contro] the meaning of

statutory words”).

The surrounding context confirms that the statutory

definition of “whistleblower” applies to Section 78u-6(h).

It is well established that “the title of a statute and the

heading of a section’ are ‘tools available for the resolution

of a doubt’ about the meaning of a statute.” Almendarez-

Torres v. United States, 523 U.S. 224, 234 (1998) (citing

Bhd. of R.R. Trainmen v. Balt. & Ohio R.R. Co., 331 U.S.

519, 528-29 (1947)). The section here is tithed “Securities

whistleblower incentives and protection,” and the relevant

subsection is titled, “Protection of whistleblowers.”

Congress used the term “whistleblower” throughout

Section 78u-6, and the Court must give that language

effect.

Although this natural and straightforward reading

of the Act shows that the “whistleblower” definition in

Section 78u-6(a)(6) establishes who is protected and

the anti-retaliation provision in Section 78u-6(h)(1)(A)

9

specifies what actzons taken by that covered person are

protected, Respondent tries to flip this structure, using

the conduct that is protected to create new definitions of

who is protected. But that approach renders the definition

of “whistleblower” that Congress created meaningless.

As the Fifth Cireuit explained:

Under Dodd-Frank’s plain language and

structure, there is only one category of

whistleblowers: individuals who provide

information relating to a securities law violation

to the SEC. The three categories listed in

subparagraph § 78u-6(h)(1)(A) represent the

protected activity in 4 whistlcblower-protection

claim. They do not, however, define which

individuals qualify as whistleblowers.

Asadi, 720 F.3d at 625.

Moreover, Respondent’s approach reads the words

“to the Commission” in the definition of “whistleblower”

out of the statute, thus violating the canon of statutory

interpretation that no words in a statute shall be treated

as superfluous. See TRW Inc. v. Andrews, 534 U.S. 19, 31

(2001) (“It is ‘a cardinal principle of statutory construction’

that ‘a statute ought, upon the whole, to be so construed

that, if it can be prevented, no clause, sentence, or word

shall be superfluous, void, or insignificant.’” (citing

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

10

B. The Legislative History Confirms The Plain

Meaning Of The Statute

The Dodd-Frank Act’s legislative history confirms

that Section 78u-6 extends protection from retaliation

only to individuals who report to the SEC. The House

bill initially prohibited retaliation against an “employee,

contractor, or agent,” but this later was replaced

with the narrower prohibition on retaliation against a

“whistleblower” that now appears in the Act. Compare

Wall Street Reform and Consumer Protection Act of 2009,

H.R. 4178, 111th Cong. § 7203(a)(z)(1)(A) (Ist Sess., as

passed by House, Dec. 11, 2009), with Restoring American

Financial Stability Act of 2010, H.R. 4173, 111th Cong.

§ 922(a)(h)(1)(A) (2nd Sess., as passed by Senate, May 20,

2010). Had Congress selected the terms “individual” or

“employee,” then the construction Respondent advances

would follow more naturally because the use of such

broader terms would indicate that Congress intended

any individual or employee—not just those who qualify

as a “whistleblower”—to be protected from retaliatory

actions by their employers. See Asadi, 720 F.3d at 626-27.

But Congress used the term “whistleblower” throughout

Section 78u-6 and that purposeful language should be

given effect. /d.°

3. Itis useful to compare the Dodd-F rank Act’s whistleblower

provision to the Sarbanes-Oxley Act’s whist!cblower provision. The

Sarbanes-Oxley Act prohibits an employer from “dischargling),

demotling], suspend{ing], threaten[ing], harass{ing], or in any

other manner discriminatling] against an employee in the

terms and conditions of employment” because of the employee's

involvement in certain enumerated protected activities. 18 U.S.C.

§ 1514A(a) (emphasis added). It is telling indeed that Congress

used the term “employee” in the Sarbanes-Oxley Act, while using

the limited definition of “whistleblower” in the Dodd-Frank Act.

11

Further, Congress’s use of express language

protecting employees who report only to their employer

in other sections of the Dodd-Frank Act cautions against

interpreting Section 78u-6 to protect such individuals.

Title X of the Act, which creates the Consumer Financial

Protection Bureau, prohibits an employer from terminating

or discriminating against a “covered employee” who has

“provided ... information to the employer, the bureau, or

any other State, local, or Federal, government authority

or law enforcement agency relating to any violation of

... any rule, order, standard, or prohibition prescribed

by the Bureau.” 12 U.S.C. § 5567(a)(1) (emphasis added).

The fact that Congress used express language protecting

employees who report only to their employer in Title

X shows that Congress knows how to protect those

individuals when it so desires. See Loughrin v. United

States, 134 S. Ct. 2384, 2390 (2014) (“[W]hen ‘Congress

includes particular language in one section of a statute

but omits it in another],]’... this Court ‘presume[s]’ that

Congress intended a difference in meaning.”) (quoting

Russello v. United States, 464 U.S. 16, 23 (1983)).

C. The Court Should Reject The Arguments

Advanced By The Second Circuit And The

Ninth Circuit

The Second Cireuit and the Ninth Circuit advanced

a number of justifications for not following the plain text.

None of those arguments is persuasive.

First, the lower courts believed that applying the

statute’s plain terms would leave paragraph (iii) of

Section 78u-6(h){1)(A) with an extremely limited scope,

undermining Congress's goal of fostering interna]

12

complaints. This concern is misplaced. Under the statute's

plain terms, a whistleblower is protected under paragraph

(iii) when he: (1) reports to the SEC, then reports internally

and is fired for the internal reporting; (2) simultaneously

reports both to the SEC and internally and is fired for

either disclosure; or (3) reports internally, then reports

to the SEC, then is fired for the internal reporting.

The coverage provided by the Act's plain language

in these circumstances cannot be dispelled by the

Second Circuit’s and Ninth Circuit’s speculation that

“Le}mployees are not likely to report in both ways, but

are far more likely to choose reporting either to the SEC

or reporting internally.” See Somers v. Digital Realty

Trust inc., 850 F.3d 1045, 1049-50 (9th Cir. 2017); see also

Berman, 801 F.3d at 152 (“[A]part from the rare example

of simultaneous (or nearly simultaneous) reporting of

wrongdoing to an employer and to the Commission, there

would be virtually no situation where an SEC reporting

requirement would leave subdivision (iii) with any seope.”).

In facet, highly reliable empirical evidence shows that

employees often advance complaints through multiple

avenues. Data from the Ethics Resource Center National

Business Ethics Survey of the U.S. Workforce indicates

that approximately 84 percent of whistleblowers who

report a complaint outside of the company cdo so after

reporting internally first. Ethics Resource Center, /uside

the Mind of a Whistleblower: A Supplemental Report of

the 2011 National Business Ethics Survey 2 (2012). in

these and similar circumstances, paragraph (ili) spares

courts the trouble of divining whether it was the report

to the SEC or the internal complaint that prompted

any retaliatory action—if the employec is a statutory

13

“whistleblower,” he is protected regardless which specific

complaint prompted the action.‘

Second, the lower courts relied on King v. Burwell,

135 S.Ct. 2480 (2015), for the proposition that “|t/he use

of a term in one part of a statute ‘muy mean [a] different

thing|]’ in a different part, depending on context.” See

Somers, 850 F.3d at 1049 (quoting King, 1358. Ct, at 2493

n.3); Berman, 801 F.3d at 150. But the question presented

in this case is not whether one “part” of a statute means the

same thing “in a different part” or a “later... provision.”

Rather, it is whether a statutory definition that Congress

said “shall apply” in Section 78u-6 applies to a provision

falling squarely in that section.

Moreover, applying King in the manner suggested

by the lower courts would yield a potentially chaotic

approach to statutory interpretation, as it would enable

courts to rewrite statutory definitions. The dissent in

Somers warned of this risk in vivid terms. See Somers,

850 F.3d at 1051 (Owens, J., dissenting) (“In my view, we

should quarantine King and its potentially dangerous

shapeshifting nature to the specific facts of that case to

avoid jurisprudentia! disruption on a cellular level.”),

4. SEC regulations prevent the Commissiwn from revealing

the identity of a whistleblower absent narrow extenuating

circumstances (17 C.F.R. Part 240.21F-7 (2011)), and nearly a

quarter of all award recipients reported to the SEC anonymously

through counsel, U.S. Securities and Exchange Commission, 20/6

Annual Report to Congress on the Dodd-Frank Whistleblower

Program 18 (2016), Accordingly, it will often be easier for

employees to show that an internal complaint pursuant Lo

paragraph (iii) prompted the allegedly retaliatory action.

14

Finally, the lower courts claimed that Petitioner's

interpretation would leave auditors and lawyers without a

remedy, as they are required by the Sarbanes-Oxley Act

to report securities violations internally before reporting

to the SEC. See Somers, 850 F.3d at 1049-50; Berman,

801 F.3d at. 151-52. This argument is unavailing for several

reasons.

As an initial matter, the assumption that auditors

and lawyers would lack a remedy under the Act because

retaliation would occur before they have an opportunity

to report to the SEC is unfounded. The allegations in

Berman and Asadi show that there often is an appreciable

lag in time between an initial report and the alleged

employment retaliation. In Berman, nearly eight months

elapsed between the plaintiff's internal complaint and

the termination of his employment. See Berman v. Neo@

Ogilvy LLC, No. 14-cv-00528, 2014 WL 6865718, at *2-3

(S.D.N.Y. Aug. 15, 2014). And in Asadi, approximately one

year passed between the plaintiff’s internal complaint

and the termination of his employment (although plaintiff

received a negative performance review in the interim

period). See Asadi, 720 F.3d at 621. District court eases

addressing this issue have involved similar delays. See,

e.g., Dressler v. Linve Energy, No. 14-cev-07060, 2015 WL

4773326, at “1-2 (D.N.J. Aug. 13, 2015) (plaintiff was not

terminated until well over a year after her initial report);

Egan v, TradingScreen, Inc., No. 10-cv-8202, 2011 WL

4344067, at “1 (S.D.N_Y. Sept. 12, 2011) (plaintiff was not

allegedly retaliated against until nearly eight months

after his initial report); Verble v. Morgan Stanley Smith

Barney, LLC, 148 F. Supp. 3d 644, 647-648 (E.D. Tenn.

2015) (plaintiff was not allegedly retaliated against until

nearly six months after the company began to suspect

that he was reporting externally),

15

Moreover, lawyers and auditors are not left without

protection for internal reporting because they are

protected by the Sarbanes-Oxley Act. As the dissent in

Berman observed, “Congress may well have considered

that additional incentives should not be offered to get

lawyers and auditors to fulfill existing professional duties,

for the same reason reward posters often specify that the

police are ineligible.” Herman, 801 F.3d at 159 (Jacobs,

J., dissenting). Lawyers and auditors account for a smal]

portion of Sarbanes-Oxley whistleblower cases; the Court

should not seize on those small classes of claimants to

justify the broad, counter-textual reading advocated by

Respondent.

D. ‘The Court Should Not Defer To The SEC’s Rule

In May 2011, the SEC issued regulations implementing

the Dodd-Frank Act’s whistleblower provision, which

provide that individuals are protected under the Act's anti-

retaliation provision even if they do not report to the SEC.

17 C.F.R. Parts 240.21K'-1-17 and 249,1800-1801. And in

August 2015 (while Bermc » vas pending before the Second

Circuit), the SEC issued interpretive guidance reiterating

its position that individuals who have not reported to the

SEC are covered by the Act’s anti-retaliation provision. 17

C.E.R. Part 241. Despite Section 78u-6’s straightforward

text, Respondent contends that under Chevron U.S.A.,

Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 887 (1984),

this Court should defer to the interpretation set forth in

the SEC’s rule. This argument fails for multiple reasons.

The SEC’s rule is due no deference because “Congress

has directly spoken to the precise question at issue,”

so this Court “must give effect to the unambiguously

16

expressed intent of Congress.” Chevron, 467 U.S. at

842-43 (“If the intent of Congress is clear, that is the

end of the matter; for the court, as well as the agency,

must give effect to the unambiguously expressed intent

of Congress.”). As explained above, the plain meaning of

the Act is that to be a “whistleblower” protected from

retaliation for the disclosures listed in paragraph (iii), an

individual] must report a violation “to the Commission.”

15 U.S.C, § 78u-6(a)(6).

Moreover, even if the statute were ambiguous,

the Court should not give Chevron deference to the

interpretation in the SEC’s rule. First, courts defer to

an agency's interpretive diseretion only “when an agency

recognizes that the Congress’s intent is not plain from

the statute’s face,” and therefore purports to exercise

interpretative discretion. See Peter Pan Bus Lines, Inc.

v. Fed. Motor Carrier Safety Admin., 471 F.3d 1350,

1354 (D.C. Cir. 2006); see also Arizona v. Thompson,

281 F.3d 248, 254 (D.C. Cir. 2002). But in promulgating

the rule here, the SEC never purported to exercise its

discretion to resulve a statutory ambiguity. Instead, it

justified its action by stating that the Dodd-F rank Act’s

anti-retaliation provision “expressly protec(ts|” internal

whistleblowing. 76 Fed. Reg. 34,300, 34,304 n.38 (June

13, 2011); see also id. at 34,304 (referring to “the fact

that. . . [paragraph (iii)] includes individuals who report

to persons or governmental authorities other than the

Commission.”) (emphasis in the original). The SEC cannot

claim deference to interpretative discretion that it never

exercised.

Second, an agency interpretation receives Chevron

deference only when it is “reasonable.” Chevron, 467 U.S.

17

at 845. Here, the SEC’s rule is unreasonable because the

SEC substituted Congress’s definition of “whistleblower”

with a different definition of its own design. “For purposes

of the anti-retaliation protections” of the Dodd-Frank Act,

the SEC’s rule states, “you are a whistleblower if .. .[yJou

provide .. . information in a manner described” in the anti-

retaliation provision itself. 17 C.F.R. Part 240.21 F-2(b)(1).

Congress has already defined “whistlicblower,” however,

and the SEC had no authority to give that statutory term

a different meaning.

ll. Broadening Section 78u-6 Beyond Its Statutorily

Prescribed Limits Would Undermine The Anti-

Retaliation Provisions Of The Sarbanes-Oxley Act

Less than ten years before enacting the Dodd-

Frank Act, Congress passed the Sarbanes-Oxley Act, a

comprehensive regime to protect internal whistleblowers.

In the Sarbanes-Oxley Act, Congress authorized

employees to file a complaint with the U.S. Department

of Labor (“DOL”) if they believe they have suffered

retaliation for reporting, internally or externally, mail

fraud, wire fraud, bank fraud, securities fraud, a violation

of any rule or regulation of the SEC, or any provision of

federal law relating to fraud against shareholders. 18

U.S.C. § 1514A(a)-(b). The complaint is investigated by the

Oceupational Safety and Health Administration (“OSHA”),

which renders findings and may order reinstatement of

an employee who has been improperly removed from his

or her position. 18 U.S.C. §§ 1514 A(b)}(2)(A), (e)(2 A); 29

C.F_R. Parts 1980.104-105.

Either party may appeal OSHA’s decision to an

Administrative Law Judge (“ALJ”), who will permit

1s

discovery, conduct a bench trial, and issue a decision that

may be appealed to the Administrative Review Board

(“ARB”). 29 C.F_R. Parts 1980.106, 107, 109, 110. An ARB

decision may be appealed to a federal court of appeals.

18 U.S.C. § 1514A(b)(2)(A); 49 U.S.C. § 42121(b)(4)(A).

if a final DOL decision does not issue within 180 days of

the employee’s initial complaint, the complainant has the

option of removing the case to a federal district court,

where he may proceed de novo. 18 U.S.C. § 1514A(b)1)(B).

The Sarbanes-Oxley Act’s regime imposes important

constraints. It provides for initia] investigation by the

DOL, which can lead to the prompt termination of baseless

claims. Resolution within the DOL is the preferred

outcome, although complainants may “kick-out” the

case to federal court in certain circumstances. 18 U.S.C.

§ 1514A(b)(1)(B). The Simitations period is short—the

Sarbanes-Oxley Act prescribed a 90-day limitations

period, which the Dodd-Frank Act extended to 180 days.

18 U.S.C. § 1514A(b)(2)(D); see Pub. L. No. 111-203,

§ 922(e)(1KAMi), 124 Stat. 13876, 1848 (2010). Monetary

relief is limited to compensatory damages, which may

inelude backpay, litigation costs, and reasonable attorneys’

fees, § 1514A(c)(2)(B)-(C).

If claimants may proceed under the odd-F rank Act’s

whistleblower provision even when they do not meet its

definition of “whistleblower,” there will be a proliferation

of whistleblower litigation under the Dodd-Frank Act,

and the strictly circumscribed scheme of the Sarbanes-

Oxley Act will be undermined. As a matter of practical

and economic reality, plaintiffs would be far more likely

to invoke the Dodd-Frank Act than the Sarbanes-Oxley

Act for three reasons.

19

First, whistleblowers who allegedly experience

rctaliation in violation of the Dodd-F rank Act may sue as

many as 10 years after the retaliatory action (15 U.S.C.

§ 78u-6(h)(1)(B)(i), (h)(1)(B) Gi), whereas the Sarbanes-

Oxley Act has a 180-day statute of limitations (18 U.S.C.

§ 1514 A(b)(2)(D)). Second, while the Sarbanes-Oxley Act.

provides for a single backpay award (id. at § 1514A(c)(2)

(B)), the Dodd-Frank Act provides for double backpay (15

U.S.C. § 78u-6(h)\(1)(C\iD). Third, under the Sarbanes-

Oxley Act, a complainant must proceed before OSHA,

an ALJ, and the ARB before heading to the court of

appeals—a more costly and time-consuming endeavor

than proceeding under the Dodd-Frank Act.

Although the Sarbanes-Oxley Act provides for

emotional distress damages, those awards are usually

much lower than backpay awards, and again, Dodd-F'rank

backpay awards are doubled. As a general matter, an

award of $75,000 is at the high-end of emotic nal distress

awards in a Sarbanes-Oxley Act whistleblower retaliation

case. See Maverick Transp., LLC v. Dep't of Labor, 739

F.3d 1149, 1157-58 (8th Cir. 2014). By contrast, backpay

damages in whistleblower retaliation actions are often

much higher. See, e.g., Final Verdict Form at 4, Wadler

v. Bio-Rad Labs., Inc., No. 15-ev-2356 (N.D. Cal. Feb.

6, 2017), ECF No. 223 (awarding millions in backpay

damages but zero dollars in emotional distress damages);

Gunther v. Deitek, inc., ALJ No. 2010-SOX-00049, 2013

DOLSOX LEXIS 35, at *78-81, 95-97 (Dep’t of Labor

June 5, 2013) (allowing the complainant to recover over

$500,000 in backpay, lost bonuses and other lost benefits,

but awarding only $10,000 for emotional distress), aff'd,

ARB Nos. 13-068, 13-069, 2014 WL 7227263 (Dep't of

Labor Nov. 26, 2014), affa, Dellek, Inc. v. Dep't of Labor,

20

649 Fed. App’x. 320 (4th Cir. 2016). As a result, plaintiffs

will be far more likely to pursue claims under the Dodd-

Frank Act than the Sarbanes-Oxley Act regardless of

whether they may obtain emotional! distress damages

under the latter.

That plainly is not what Congress intended when it

narrowly defined “whistleblower” in the Dodd-Frank Act

and simultaneously amended several features of the more

capacious Sarbanes-Oxley Act’s regime. It would make no

sense for Congress to retain a confined limitations period

for Sarbanes-Oxley Act claims, while simultaneously

giving those same claimants—on the same facts—as many

as 10 years to sue for the more generous relief available

under Section 78u-6. See Yates v. United States, 1358. Ct.

1074, 1085 (2015) (“We resist a reading of |a statute] that

would render superfluous an entire provision passed in

proximity as part of the same Act.”); Bilski v. Kappos, 561

U.S. 593, 607-08 (2010) (“|T |he canon against interpreting

any statutory provision in a manner that would render

another provision superfluous . .. applies to interpreting

any two provisions in the U.S. Code, even when Congress

enacted the provisions at different times.” (internal

citation omitted)).

Moreover, construing the Dodd-F rank Act to provide

a cause of action for a violation of the Sarbanes-Oxley

Act without an exhaustion of administrative remedies

requirement deprives employers of the considerable

benefits that the Sarbanes-Oxley Act’s administrative

scheme provides, as proceeding through the DOL fosters

early settlements and dismissals. See Occupational Safety

and Health Administration, CPI. 02-03-007, Whistleblower

fnvestigations Manual 6-12 to -13 (2016) (“Voluntary

21

resolution of disputes is often desirable, and investigators

are encouraged to actively assist the parties in reaching

an agreement, where appropriate. It is OSHA policy to

seek settlement of all cases determined to be meritorious

prior to referring the case for litigation. Furthermore,

at any point prior to the completion of the investigation,

OSHA will make every effort to accommodate an carly

resolution of complaints in which both parties seek it.”).

Ill. Respondent’s Assertion That The Chamber Has

Taken Inconsistent Positions Is Meriiless

Lastly, Respondent argues that the Chamber's

position in this case is inconsistent with the position it took

in a December 17, 2010 comment letter addressing the

SEC’s proposed rules for implementing the Dodd-Frank

Act’s whistleblower provision. (Resp’t’s Opp’n Cert. at p.

17, n.11). This claim is meritless.

The SEC’s proposed rules gave no notice that it

intended to expand the meaning of “whistleblower” as

used in the anti-retaliation provision, and the Chamber

therefore did not have an occasion in its comment letter to

address the question presented in this case. Instead, the

SEC requested comments on whether it should require

whistleblowers to use available internal reporting systems

as a condition of award eligibility under the Dodd-Frank

Act’s bounty program. The Chamber’s comments urged

the SEC to adopt such a rule. As the Chamber explained,

“lejonditioning an award on appropriate utilization of

internal reporting processes would provide a strong

ineentive for whistleblowers to report internally, which

would enable companies to continue to receive essential

information about potential misconduct necessary to

22

maintaining robust corporate compliance programs.” See,

e.g., Comment Letter from Chamber e# al. to Secretary

Murphy, at 4-5, 15 (Dec. 17, 2010), https://www.sec.

gov/comments/s7-33-10/s73310-189.pdf. The Chamber

advocated for internal reporting before an individual

reports to the SEC, not instead of reporting to the SEC,

Moreover, Petitioner’s position that Section 78u-6

extends protection from retaliation only to individuals who

report to the SEC will not discourage internal reporting.

As data from the Ethics Resource Center demonstrates,

the vast majority of employees will continue to report

internally. See Etks-s Resource Center, /nside the Mind

of a Whistleblower: A Supplemental Report of the 2011

National Business Ethies Survey 2 (2012) (84 percent

of whistleblowers who report a complaint outside of

the company do so after reporting internally first). The

only effect of ruling in favor of Petitioner would be to

discourage otherwise meritless retaliation claims.

23

CONCLUSION

For the foregoing reasons, the Chamber respectfully

requests that the Court reverse the decision of the Ninth

Cirenit Court of Appeals.

Respectfully submitted,

KATE ComMERFoRD Tupp STEVEN J. PEARLMAN

STEVE P. LEHOTSKY Counsel of Record

JANET GALERIA Epwarb C, Younc

U.S. CHAMBER PROSKAUER Rose LLP

LiriGaTion CENTER, INC. 70 W. Madison, Suite 3800

1615 H Street, N.W. Chicago, TL 60602

Washington, D.C. 20062 (312) 962-3550

(202) 463-5337 spearlman@proskauer.com

Counsel for Amicus Curiae

August 31, 2017