The United States District Court for the Western District of Tennessee recently emphasized the limited scope of what constitutes protected activity under the Dodd-Frank Act’s (the Act) whistleblower protection provision, noting that the Act protects only “certain kinds of whistleblowers who report certain kinds of violations.”  Boyle v. Evolve Bank & Trust et al, No. 16-02171, 2017 U.S. Dist. LEXIS 111964 (W.D. Tenn. July 19, 2017).

Plaintiff Jayme Boyle asserted a claim under the Act’s whistleblower-protection provision, alleging that he internally reported violations of numerous banking and lending-related statutes, rules and regulations to Defendants.  Plaintiff alleged that he was entitled to protection against retaliation under the Act because one of the defendants sold loans to institutional customers regulated by the SEC.  On a Rule 12(b)(6) motion to dismiss, Defendants argued that Plaintiff failed to identify a law, rule or regulation within the SEC’s jurisdiction under which his alleged complaints were made and that the disclosures of which he complained were not required or protected by any such law or regulation.  One of the defendants also argued that it is not required to make SEC filings (because it is a bank), and thus is not subject to the SEC’s jurisdiction.

The district court granted Defendants’ motion to dismiss. It agreed that Plaintiff did not allege that he reported violations of a law, rule or regulations subject to the jurisdiction of the SEC and that he did not allege that any disclosure he made was required or protected by a law, rule, or regulation within the SEC’s jurisdiction.  Although Plaintiff focused on whether defendants or their customers were “generally” regulated by the SEC, the Court noted that the Act’s whistleblower protection provision is not a “general-purpose anti-retaliation provision” and § 78u-6(h)(1)(A) identifies only three categories of whistleblowers entitled to protection – none of which included Plaintiff.

This is a useful decision for employers, particularly those not regulated by the SEC.  Indeed, such employers should carefully consider whether they may have success in moving to dismiss a whistleblower claim under the Act pursuant to Rule 12(b)(6) if the plaintiff fails to sufficiently allege that he/she engaged in protected activity.

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