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New York District Court Dismisses SOX and Dodd-Frank Whistleblower Claims For Lack Of Protected Activity

On June 22, 2016, Judge Daniels of the Southern District of New York dismissed SOX and Dodd-Frank whistleblower claims, ruling that Plaintiff’s alleged internal complaints did not constitute protected activity, as they did not implicate securities laws, mail fraud, or wire fraud.  Diaz v. Transatlantic Reinsurance Co., No. 16-cv-1355.

Plaintiff allegedly complained that the Executive Vice President of her department was violating the Company’s conflict of interest policies by giving favorable treatment to family members working under Plaintiff’s management and by approving legal bills for the Company that were paid to her husband’s law firm for legal representation.  She claimed that she was subjected to unwarranted criticisms and transferred to a less desirable department after complaining.

The Company filed a Rule 12(b)(6) motion to dismiss, arguing that the conduct Plaintiff reported did not implicate federal securities law or mail or wire fraud.  The Court agreed and dismissed the SOX claim.  The court also dismissed the Dodd-Frank claim because it was premised upon alleged non-compliance with the Company’s internal conflict of interest policy which, is not covered by Dodd-Frank.  The Court also rejected Plaintiff’s assertions that the alleged conflict of interest could have affected shareholders because the supporting allegations in the complaint were conclusory and insufficient to support a SOX or Dodd-Frank whistleblower claim.

Employers can be expected to rely on this decision when confronted with claims based on alleged violations of internal policies or questionable business practices that do not implicate the laws referenced in SOX or Dodd-Frank.

© 2020 Proskauer Rose LLP. National Law Review, Volume VI, Number 182


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....


Christopher Bouriat is an associate in the Labor & Employment Law Department and a member of the Employment Litigation & Arbitration Group. His practice concentrates on defending employers in litigation in a variety of employment related matters, including claims involving discrimination and harassment, breach of contract, whistleblowing and retaliation, and restrictive covenants.

Chris has experience in managing all aspects of litigation, including taking and defending depositions, motion practice, oral arguments, and trials.