Federal whistle blower protection against retaliation is not triggered unless the individual complies with the procedures set out in the controlling federal law, rule or regulation

Federal whistle blower protection against retaliation is not triggered unless the individual complies with the procedures set out in the controlling federal law, rule or regulation

Digital Realty Trust, Inc. v. Somers, USSC, No. 16-1276

Both the Sarbanes-Oxley Act of 2002, typically referred to as the Sarbanes-Oxley Act and the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, generally referred to as the Dodd-Frank Act, shield whistle blowers from retaliation by their employer for "whistle blowing" but they differ in important respects.

Sarbanes-Oxley applies to all "employees" who report misconduct to the Securities and Exchange Commission [SEC], any other federal agency, Congress, or an internal supervisor [see 18 U. S. C. §1514A(a)(1)].

In contrast, Dodd-Frank defines a "whistle blower" as any individual who provides . . . information relating to a violation of the securities laws to the SEC, in a manner established, by rule or regulation, by the SEC [see, generally, 15 U. S. C. §78u– 6(a)(6)].

Paul Somers alleged that his employer, Digital Realty Trust, Inc., [DRT] terminated him shortly after he reported suspected securities-law violations by the company to senior DRT management. Somers then initiated litigation against DRT, contending that he had been terminated in retaliation for his "whistle blowing" in violation of Dodd-Frank.

DRT asked the court to dismiss Somers lawsuit contending that Somers was not a whistle blower within the meaning of 15 USC §78u-6(h) because he failed to alert the Security and Exchange Commission of the suspected violations of Dodd-Frank prior to his termination.

The District Court denied the motion, and the Ninth Circuit affirmed. The Court of Appeals concluded that §78u-6(h) does not necessitate recourse to the SEC prior to gaining "whistle blower" status, and it accorded deference to the SEC's regulation, citing Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837.

The Supreme Court reversed, holding that the Dodd-Frank anti-retaliation provision does not extend to an individual who, like Somers, had not reported a violation of the securities laws to the SEC prior to his or her termination from his or her employment.

The court explained that "When a statute includes an explicit definition, [the court] must follow that definition ...."An individual who falls outside the protected category of “whistle blowers” as defined in the law, rule or regulation is ineligible to seek redress regardless of the conduct in which that individual has engaged. 

With respect to officers and employees of New York State as an employer and its political subdivisions, §75-b of the Civil Service Law provides as follows:

"2. (a) A public employer shall not dismiss or take other disciplinary or other adverse personnel action against a public employee regarding the employee's employment because the employee discloses to a governmental body information: (i) regarding a violation of a law, rule or regulation which violation creates and presents a substantial and specific danger to the public health or safety; or (ii) which the employee reasonably believes to be true and reasonably believes constitutes an improper governmental action. "Improper governmental action" shall mean any action by a public employer or employee, or an agent of such employer or employee, which is undertaken in the performance of such agent's official duties, whether or not such action is within the scope of his employment, and which is in violation of any federal, state or local law, rule or regulation" [emphasis supplied].

In Ringle v Onondaga County, 267 AD2d 1088, in determining Ringle’s and Sawyer’s rights under Section 75-b of the Civil Service Law, the Appellate Division noted that alleged violations of Section 75-b are typically challenged by the individual bringing an Article 78 action [Article 78, Civil Practice Law and Rules].* 

In filing such a petition, said Appellate Division, the individual seeks to vindicate a private rather than a public right. What private right? The right not to be dismissed or otherwise subjected to reprisals because of his or her disclosures to other governmental agencies of the media.

This conclusion meant that both Ringle and Sawyer had fallen into a procedural trap.

The Appellate Division said that because the “Civil Service Law Section 75-b causes of action Ringle and Sawyer brought sought to vindicate only their individual interests their claims were properly dismissed by the lower court because neither had filed a notice of claim as required by Section 50-a of the General Municipal Law Section and Section 52 of the County Law.**

In addition, the court pointed out that Section 75-b does not serve as a shield against disciplinary action being taken against an employee where there is a “separate and independent basis” for discipline the individual.

Finally, the Appellate Division observed that “by commencing actions pursuant to Civil Service Law Section 75-b, Ringle and Sawyer are barred from asserting any other State law cause of action related to the alleged retaliatory discharges.”

* In contrast, in DiGregorio v MTA Metro-N. R.R., 140 AD3d 530, the court ruled that where the collective bargaining agreement so provides, an allegation that the employer violated the “whistle-blower” statute is adjudicated in accordance with the terms of the agreement.

** This ruling implies that where an individual sues a school district or BOCES claiming he or she was dismissed or subjected to punitive action in violation of Section 75-b, he or she must file a notice of claim in accordance with Section 3813(1) of the Education Law. 

The decision is posted on the Internet at:

https://www.supremecourt.gov/opinions/17pdf/16-1276_b0nd.pdf