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

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0745%3A15

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2017

## Text

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
pe BA gs oy SP er er eee rere i
iy, PAS ip yy re rere iii
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]

i fe” Pe eee eee errr Te passim

SR Oe I oon a ck ces aeacnews cases 5

Ep es FPN Fs nv ces cceranceonsoeee me

vi

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
Eis Soe eT ee
Gis Tee ye = fs (|) eae eer 5
es Fee fp OS 0 Ul Ea errr rere rey 5
Ee at Oe EE a v's wc che ceed vanee 5
PRS Ee Ree a
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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
as ED 6 6-6 nhc Kas ot ssuews aun 17
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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0745%3A15. Public record. Not legal advice.