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Supreme Court Decision Places Limitations on the Protections for Corporate Whistleblowers

A February U.S. Supreme Court decision significantly limited the protections available for corporate whistleblowers. The court ruled in the case of Digital Realty Trust v. Somers that corporate whistleblowers are not protected from termination unless they reported possible instances of fraud to the Securities and Exchange Commission (SEC).

The case is a big blow for corporate whistleblowers across the nation — even the justices of the Supreme Court admitted their ruling could significantly roll back whistleblower protections that were put in place after the economy collapsed in 2008. However, the ruling was a unanimous one — they said the Dodd-Frank Act of 2010 clearly defined protected whistleblowers as being people who reported potential fraud “to the commission,” meaning the SEC.

According to Justice Ruth Bader Ginsberg, the intent of Congress might have been to offer broader protections to corporate whistleblowers. However, as written, the law clearly indicates a particular class of people protected from retaliation. It would, therefore, take an amendment to the law to expand the protections previously thought to have been afforded under the law.

Case could have an impact on whistleblowers’ strategies

The decision dismisses most of a lawsuit filed by an executive in San Francisco who claims he was fired as a vice president of a real estate investment firm after complaining to executives about hidden cost overruns at a branch office in Asia. However, he did not make the same complaints with the SEC and was fired.

While the court decision poses an immediate victory for employers, it might not last long. Now, employees who discover wrongdoing in the workplace will be more likely to avoid reporting internally and will instead take their concerns straight to the SEC.

To learn more about how the Supreme Court’s ruling could affect whistleblower retaliation cases in the future, contact a knowledgeable Dallas lawyer at Kardell Law Group.


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