In Kramer v. Trans-Lux Corp., the United States District Court for the District of Connecticut broadly interpreted the meaning of “whistleblower” as used in the federal Dodd-Frank Act, allowing an otherwise questionable retaliation claim to survive a motion to dismiss. This broad interpretation (the first of its kind we are aware of) could encourage an increase in retaliation claims under Dodd-Frank.
In Trans Lux, the employee was fired after telling his company’s board of directors and the SEC that his supervisors were violating the company pension plan. The employee filed suit alleging, in part, retaliation under the Dodd-Frank Act. The employer argued that the employee was not a “whistleblower” under Dodd-Frank and, therefore, could not bring a claim under this law.
Dodd-Frank defines a “whistleblower” as one who reports securities law violations to the SEC. 15 U.S.C. § 78u-6(a)(6). However, a portion of the anti-retaliation provision of this federal law also lists a number of protected activities: providing information to the SEC; assisting in the investigation or judicial/administrative action related to said information; or making disclosures required or protected under Sarbanes-Oxley, the Securities Exchange Act, or any other law/rule/regulation subject to the jurisdiction of the SEC. 15 U.S.C. § 78u-6(h)(1)(A).
The employer in Trans Lux unsuccessfully argued that in order to bring a retaliation claim under Dodd-Frank, the individual must have both engaged in one of the activities listed above and fit the definition of a “whistleblower.” The Court held that, given the ambiguous language of the statute, and its purpose (to protect and incentivize whistleblowers), individuals can assert a Dodd-Frank retaliation claim on the basis of either their classification as a whistleblower or their engagement in a protected activity under the Act.
Accordingly, although this is an evolving area of law, this broad interpretation could result in an increased number of retaliation claims under Dodd-Frank.
The opinions expressed in this bulletin are intended for general guidance only. They are not intended as recommendations for specific situations. As always, readers should consult a qualified attorney for specific legal guidance. Should you need assistance from a Miller & Martin attorney, please call 1-800-275-7303.