Digital Realty Trust, Inc. v. Somers
583 U.S. 149
SCOTUS2018Background
- Dodd-Frank §78u-6 created a whistleblower award program and an anti-retaliation provision; it defines “whistleblower” as one who provides information relating to securities-law violations to the SEC (§78u-6(a)(6)).
- The SEC promulgated Rule 21F-2 with two definitions: one requiring SEC reporting for awards, and a broader one (for anti-retaliation) that does not require reporting to the SEC.
- Paul Somers alleged Digital Realty fired him after he made internal reports of suspected securities-law violations but he never reported to the SEC and did not pursue Sarbanes-Oxley administrative remedies.
- Somers sued under Dodd-Frank’s anti-retaliation clause; the district court and Ninth Circuit accepted the SEC’s broader regulatory definition and allowed the claim to proceed without prior SEC reporting.
- The Supreme Court granted review to decide whether Dodd-Frank’s statutory definition of “whistleblower” (requiring reporting to the SEC) applies to the anti-retaliation provision.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §78u-6(h)’s protection requires prior reporting to the SEC | Somers: “whistleblower” should be read in ordinary sense; prior SEC report not required, and clause (iii) must protect internal disclosures alone | Digital Realty: statutory definition applies throughout §78u-6; must report to SEC to be a whistleblower | Held: Must have provided information to the Commission; statutory definition controls |
| Whether the SEC’s Rule 21F-2 may broaden the statute by removing SEC-reporting requirement for anti-retaliation | Somers/SEC: Chevron deference supports the SEC rule filling statutory ambiguity | Digital Realty: statute is unambiguous; no Chevron deference where Congress spoke directly | Held: No deference; statute unambiguous — SEC rule cannot override definition |
| Whether applying the statutory definition nullifies §78u-6(h)(1)(A)(iii) (internal or other disclosures) | Somers: reading would render clause (iii) nearly meaningless because it would require dual reporting | Digital Realty: clause (iii) still protects dual reporters and has substantial meaning; Congress aimed to incentivize SEC reporting | Held: Clause (iii) retains meaning for those who reported to SEC and also made other disclosures; statutory text and purpose justify result |
| Whether application undermines protections for professionals required to report internally (e.g., auditors/attorneys) | Somers: such professionals would be vulnerable if they must also report to SEC before protection | Digital Realty: Sarbanes-Oxley already provides protections; Dodd-Frank’s aim was to encourage SEC reporting | Held: Professionals remain unprotected under Dodd-Frank until they report to SEC; this outcome is consistent with statutory design |
Key Cases Cited
- Burgess v. United States, 553 U.S. 124 (statutory definition controls ordinary meaning)
- Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (agency deference framework)
- Lawson v. FMR LLC, 571 U.S. 429 (discussion of Sarbanes-Oxley whistleblower scope)
- Asadi v. G.E. Energy (USA), L.L.C., 720 F.3d 620 (5th Cir. holding that SEC reporting required)
- Berman v. NEO@OGILVY LLC, 801 F.3d 145 (2d Cir. decision reaching opposite conclusion)
- Morrison v. National Australia Bank Ltd., 561 U.S. 247 (textual interpretation principle)
- Suwannee Fruit & S.S. Co. v. McGowan, 336 U.S. 198 (precedent referenced on incompatibility of definitions)