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The Birth of Dodd-Frank Whistleblower Actions

In what many are calling the first Dodd-Frank retaliation suit to survive a Rule 12(b)(6) motion to dismiss, the United States District Court for the District of Connecticut issued a ruling permitting a terminated Human Resources manager’s retaliation claim to proceed.  In Kramer v. Trans-Lux Corp. (to read the full opinion click here), the plaintiff’s Dodd-Frank retaliation claim is based on his termination allegedly caused by his written complaints – one to the company’s CEO, another to the Board’s audit committee and, finally, a complaint to the SEC –  that the company was violating its pension plan.

Much of the argument in the case hinged on whether Kramer’s method of reporting to the SEC – sending a letter to the SEC via regular mail – was sufficient to trigger Dodd-Frank’s anti-retaliation provisions.  Specifically, the defendant employer insisted that a “whistleblower” under Dodd-Frank’s statutory definitions must report violations to the SEC through the Commission’s website or by mailing or faxing a Form TCR (Tip, Complaint or Referral).  The court rejected this construction, finding that such an interpretation would defeat a key goal of the Dodd-Frank Act to “improve the accountability and transparency of the financial system” and create “new incentives and protections for whistleblowers.”  Like two other federal courts in Maryland and New York, the federal court in Connecticut specifically noted that the term “whistleblower” should be given broader construction in the retaliation provision of the statute than in other portions.

This decision opens the door for more whistleblower lawsuits under Dodd-Frank – an option that is appealing to many potential plaintiffs.  Notably, a Dodd-Frank retaliation claim offers different remedies than a Sarbanes-Oxley claim.  Further, Dodd-Frank offers a significantly longer statute of limitations.  Yet another bonus: Dodd-Frank claims can be brought directly in federal court whereas Sarbanes-Oxley claims must be brought through a U.S. Department of Labor administrative process.

For more background on Dodd-Frank retaliation claims click here to read “Dodd-Frank: Picking Up Where SOX Fell Short”, authored by Lynne Anne Anderson and Meredith R. Murphy in the New Jersey Labor and Employment Law Quarterly, Vol. 33, No. 4 – May 2012.

© 2023 Faegre Drinker Biddle & Reath LLP. All Rights Reserved.National Law Review, Volume II, Number 276
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