Federal Appeals Court Says Dodd-Frank Does Not Protect Overseas Whistleblowers


The U.S. Court of Appeals for the Second Circuit has ruled that the Dodd-Frank Act does not protect whistleblowers outside the United States.

In Liu Meng Lin v. Siemens AG, Case No. 13-4385-cv (2nd Cir. August 14, 2014), the court affirmed a trial court's dismissal of a Dodd-Frank whistleblower lawsuit filed by a former Siemens compliance officer, Meng-Lin Liu, in China.  Liu claimed that Siemens violated the whistleblower anti-retaliation provisions of Dodd-Frank by terminating his employment because he made internal reports of alleged corrupt sales practices.  Dodd-Frank generally prohibits retaliation against employees who provide information relating to a violation of U.S. securities laws to the Securities and Exchange Commission ("SEC").

The U.S. District Court dismissed the complaint and ruled that the anti-retaliation provisions of Dodd-Frank do not apply to acts outside the United States.  The court also noted that Liu was not entitled to federal whistleblower protection because he did not report anything to the Securities and Exchange Commission until after he was fired.

On August 14, 2014, the U.S. Court of Appeals for the Second Circuit affirmed the trial court's dismissal of the complaint. The court upheld the ruling that Dodd-Frank does not protect whistleblowers outside the United States.  Specifically, the court stated:

Because a statute is presumed, in the absence of clear congressional intent to the contrary, to apply only domestically, and because there is no evidence that the anti-retaliation provision is intended to have extraterritorial reach, we conclude that that provision does not apply extraterritorially. We furthermore conclude that because Liu's complaint alleges that he was a non-citizen employed abroad by a foreign company, and that all events allegedly giving rise to liability occurred outside the United States, applying the anti-retaliation provision to these facts would constitute an extraterritorial application of the statute.

The court's decision may prompt Congress to explicitly extend Dodd-Frank anti-retaliation protections to whistleblowers who act outside the United States.  But until Congress extends Dodd-Frank, whistleblowers outside the United States will not be afforded protection.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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