In a much-anticipated decision, the Second Circuit Court of Appeals recently held in Berman v. Neo@Ogilvy LLC1 that internal reporting of alleged wrongdoing to an employer is sufficient to trigger protection under Dodd-Frank’s anti-retaliation provision. The plaintiff did not need to report externally to the U.S. Securities and Exchange Commission (“SEC”) in order to be protected by the statute. This holding has created a circuit split with the Fifth Circuit, whose 2013 decision in Asadi v. G.E. Energy (USA), LLC2 held that, under the plain language of the statute, the anti-retaliation provision covers only those who blow the whistle externally by providing information to the SEC. With this circuit split, it seems likely that the question will ultimately be addressed by the U.S. Supreme Court.
The Seventh Circuit Court of Appeals has yet to be given an opportunity to determine its position on the protections of Dodd Frank. From a policy perspective, although Illinois employers are likely to advocate for the position of the Fifth Circuit, employees who feel unprotected by reporting SEC concerns internally first will simply circumvent internal procedures and report directly to external sources. Thus, it would be mutually beneficial to the employment relationship for employers to develop appropriate internal safeguards for employees coming forward with concerns about securities violations. Given the murky interpretations of Dodd Frank and the developing splits amongst the Circuits, we anticipate that the anti-retaliation provision will be a continually growing area of litigation.