Berman v. Neo@Ogilvy LLC
72 F. Supp. 3d 404
S.D.N.Y.2014Background
- Plaintiff Daniel Berman alleges he reported internally to his employer suspected securities/GAAP/SOX/Dodd-Frank violations and was fired in retaliation.
- Berman did not report any of those concerns to the SEC before the alleged retaliatory acts.
- He sued under Dodd-Frank’s anti-retaliation provision (15 U.S.C. § 78u-6(h)) and alleged breach of express and implied employment contracts.
- Defendants moved to dismiss under Fed. R. Civ. P. 12(b)(6), arguing Berman is not a Dodd-Frank “whistleblower” because he never reported to the SEC.
- Magistrate Judge Netburn recommended dismissal of some claims but concluded Berman could qualify as a Dodd-Frank “whistleblower”; the report recommended leave to amend the retaliation claim.
- The district court (Woods, J.) reviewed defendants’ objections de novo and held the statutory definition of “whistleblower” unambiguously requires reporting to the SEC, dismissing the Dodd-Frank retaliation claim; contract claims dismissal was adopted from the Report.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a person who only reported internally (not to the SEC) is a Dodd-Frank “whistleblower” entitled to §78u-6(h) protection | Berman: §78u-6(h)(1)(A)(iii) protects internal disclosures, so the statutory definition of “whistleblower” should not be read to require prior SEC reporting; any ambiguity warrants Chevron deference to the SEC regulation treating internal reporters as whistleblowers | Defendants: §78u-6(a) unambiguously defines “whistleblower” as someone who provides information to the SEC; no private claim under Dodd-Frank for pure internal reporters | Court: Adopts Fifth Circuit’s Asadi reasoning — the statutory definition requires reporting to the SEC; subsection (h) describes protected actions by a whistleblower, not additional ways to become one; dismissal of Dodd-Frank retaliation claim affirmed |
Key Cases Cited
- Asadi v. G.E. Energy (USA), L.L.C., 720 F.3d 620 (5th Cir. 2013) (holds Dodd-Frank retaliation protection applies only to individuals who provided information to the SEC)
- Duncan v. Walker, 533 U.S. 167 (U.S. 2001) (canon that statutes should be construed so no clause is superfluous)
- FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120 (U.S. 2000) (interpret statutes to render provisions compatible, not contradictory)
- United States v. Porres-Garcia, 171 F.3d 142 (2d Cir. 1999) (same-term-in-act canon of construction)
- Bellikoff v. Eaton Vance Corp., 481 F.3d 110 (2d Cir. 2007) (courts should be reluctant to extend private rights of action absent clear congressional intent)