148 F. Supp. 3d 644
E.D. Tenn.2015Background
- Plaintiff was an MSSB financial advisor (hired 2006) who alleges he assisted the FBI and SEC in investigations (including wearing a wire and reporting insider trading) and was terminated in June 2013 after being placed on administrative leave.
- Plaintiff claims defendants threatened him, communicated disparaging statements to clients, and are withholding roughly $242,471; he alleges physical and emotional injuries from the retaliation.
- He filed federal claims for retaliation under Sarbanes‑Oxley, Dodd‑Frank, and the False Claims Act (FCA), plus state claims; defendants moved to dismiss.
- Court accepted complaint facts as true for the Rule 12(b)(6) analysis and evaluated statutory definitions and administrative‑exhaustion requirements.
- Court dismissed: (1) Sarbanes‑Oxley claim for failure to exhaust OSHA/administrative remedies; (2) Dodd‑Frank claim because plaintiff was not a §78u‑6(a)(6) "whistleblower" when terminated and the court declined Chevron deference to the SEC rule; (3) FCA retaliation claim for failure to plead specific protected FCA activity; and it declined supplemental jurisdiction over state claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Sarbanes‑Oxley (18 U.S.C. §1514A) — subject‑matter jurisdiction | Plaintiff alleges retaliation under SOX for assisting federal investigations. | Plaintiff failed to file an OSHA complaint or exhaust administrative remedies. | Dismissed for lack of jurisdiction; claim forfeited by failing to respond. |
| Dodd‑Frank anti‑retaliation (§78u‑6(h)(1)(A)) — who is a "whistleblower" | Plaintiff says clause (iii) protects employees who report to non‑SEC authorities (e.g., FBI); SEC rule expands definition and should apply. | Defendant says the statute unambiguously defines "whistleblower" as someone who provided information to the SEC; SEC rule is not entitled to Chevron deference. | Dismissed: court finds statute unambiguous that whistleblower means reported to the SEC; declines Chevron deference; plaintiff not protected. |
| False Claims Act retaliation (31 U.S.C. §3730(h)) — protected activity pleading | Plaintiff contends his assistance to federal authorities involved fraud on the government, warranting FCA protection. | Defendant contends allegations are conclusory and do not plead facts showing efforts to stop specific false claims against the government. | Dismissed for failure to plead specific protected FCA activity; leave to amend not sua sponte granted. |
| Supplemental state‑law claims (28 U.S.C. §1367) | Plaintiff seeks to keep state claims alongside federal claims. | Defendants seek dismissal of federal claims, implying dismissal of supplemental claims. | Court declines to exercise supplemental jurisdiction and dismisses state claims without prejudice. |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (establishes plausibility pleading standard)
- Ashcroft v. Iqbal, 556 U.S. 662 (applies plausibility standard and limits conclusory allegations)
- Chevron U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (framework for judicial deference to agency interpretations)
- Asadi v. G.E. Energy (USA) L.L.C., 720 F.3d 620 (Fifth Circuit holding Dodd‑Frank whistleblower definition requires reporting to SEC)
- Berman v. Neo@Ogilvy LLC, 801 F.3d 145 (Second Circuit applying SEC rule and finding ambiguity in Dodd‑Frank definition)
- King v. Burwell, 135 S.Ct. 2480 (Supreme Court on statutory interpretation and when to look beyond text)
- BedRoc Ltd. v. United States, 541 U.S. 176 (canon: enforce statutory text when unambiguous)
- McKenzie v. Bell‑South Telecomms., Inc., 219 F.3d 508 (discusses FCA whistleblower/retaliation elements)