June 25, 2018

June 25, 2018

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E.D. Virginia Tosses Dodd-Frank Whistleblower Claim for Lack of SEC Complaint

The U.S. District Court for the Eastern District of Virginia recently granted a Rule 12(b)(6) motion to dismiss a Dodd-Frank whistleblower retaliation claim brought by an ex-project manager, finding that Plaintiff failed to allege that her protected activity involved any disclosures to the SEC.  Smith v. Raytheon Co., No. 17-cv-00438 (E.D. Va. Aug. 11, 2017).

Background.  Plaintiff was a former project manager at the Company, a defense contractor.  She was asked to prepare a status report on a project for Alaska and Hawaii, and her report estimated that the Company would take a $300,000 loss.  Later, after concluding that cost overruns would actually triple the initial $300,000 loss estimate, Plaintiff reported the new figures and was subsequently removed from the project.  A month later, the Company terminated her employment.

Ruling.  Plaintiff filed suit in the U.S. District Court for the Eastern District of Virginia, claiming that she was retaliated against for protected activity under the Dodd-Frank whistleblower protection provision.  The Company moved to dismiss pursuant to Rule 12(b)(6), arguing that Plaintiff did not qualify as a Dodd-Frank whistleblower because she never complained to the SEC.  The court agreed, stating that “the express language of the Dodd-Frank Act’s definition for whistleblower is limited to individuals who provide information to the SEC.”

Implications.  This decision deepens the split in decisions in jurisdictions around the country as to whether one must complain to the SEC to qualify as a Dodd-Frank whistleblower.  This issue will soon be resolved by the U.S. Supreme Court, as we discussed here.

© 2018 Proskauer Rose LLP.


About this Author

Steven J Pearlman, Labor Employment Law Firm, Proskauer Law firm

Steven Pearlman is a partner in the Labor & Employment Law Department and co-head of the firm's Whistleblowing & Retaliation Group, resident in the Chicago office. Steven’s practice focuses on defending complex employment litigation involving claims of discrimination and harassment, wage-and-hour laws and breaches of restrictive covenants (e.g., non-competition agreements). He has successfully tried cases to verdict before judges and juries in Illinois, Florida and California, and defended what is reported to be the largest Illinois-only class action in the history of the U.S....

Law Clerk

Brett Schwab is a law clerk in the Labor & Employment Law Department.

While attending the University of Pennsylvania Law School, Brett served as the Co-President of the Entertainment & Sports Law Society. Brett was also a Senior Editor for the Journal of Business Law and a Senior Advocate for the Employment Advocacy Project.

Brett’s professional experience includes placements with the Philadelphia 76ers, Wells Fargo Bank, and Comcast-Spectacor. His ideas on NBA Draft Lottery reform have been published on the popular analytics website FiveThirtyEight.