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.