The US Supreme Court [official website] held [opinion, PDF] Wednesday in Digital Realty Trust v. Somers [SCOTUSblog materials] that the anti-retaliation provision of the securities law does not apply to an individual terminated before he reported acts of retaliation to the Securities and Exchange Commission (SEC) [official website].
The respondent, Somers, was terminated from petitioner Digital Realty Trust, Inc., shortly after he reported potential securities laws violations to senior management. Under the Dodd-Frank Act [text, PDF], whistleblowers are afforded protection from employer retaliation if they first report the potential violations to the SEC. Thus, the court was left to decide whether an individual subject to internal reporting requirements, such as Somers, who fails to report the violation to the SEC before termination, is a protected “whistleblower” under Dodd-Frank.
The court found that Somers was not a “whistleblower” under Dodd-Frank and therefore he was not afforded protection because he reported the potential violations only to senior management and not to the SEC before he was terminated.
In determining whether Somers was a “whistleblower” as defined in Dodd-Frank, the court relied heavily on the precedent that: “When a statute includes an explicit definition, we must follow that definition,’ even if it varies from a term’s ordinary meaning.” With this ruling, the court overturned the Ninth Circuit court’s holding that had found in favor of Somers.