In Asadi v. G.E. Energy United States, L.L.C., 720 F.3d 620 (5th Cir. 2013), the Fifth Circuit Court of Appeals held that an employee who reported a suspected Foreign Corrupt Practices Act violation internally but not to the Securities and Exchange Commission did not qualify as a whistleblower under the whistleblower protection provisions of the Dodd-Frank Act, 15 U.S.C. § 78u-6(h).  In reaching this conclusion, the Court of Appeals declined to defer to the SEC’s rule, 17 C.F.R. § 240.21F-2(b)(1), that “redefines ‘whistleblower’ more broadly by providing that an individual qualifies as a whistleblower even though he never reports any information to the SEC, so long as he has undertaken the protected activity listed in 15 U.S.C. § 78u-6(h)(1)(A)”.  Id. at *629.

What about Chevron deference (See Will The Courts Stop Deferring To SEC Interpretations?)?  The Fifth Circuit paid no deference because it found that Congress had defined “whistleblower” unambiguously:

Because Congress has directly addressed the precise question at issue, we must reject the SEC’s expansive interpretation of the term “whistleblower” for purposes of the whistleblower-protection provision. Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842-44, 104 S. Ct. 2778, 81 L. Ed. 2d 694 (1984); id. at 842-43 (“If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.”); see also Khalid [v. Holder], 655 F.3d [363] at 371 [(5th Cir. 2011)] (“‘Congress has directly spoken to the precise question at issue,’ and thus there is no room for the agency to impose its own answer to the question.” (quoting Chevron, 467 U.S. at 842-44)).

Asadi, 720 F.3d at 630.

Now that an appellate has spoken on the topic, some might expect that the SEC’s rule is no longer valid.  The Fifth Circuit’s decision, however, isn’t binding on other Circuits.  It so happens that a similar claim was raised in the District Court in New Jersey, Safarian v. Am. DG Energy Inc., 2014 U.S. Dist. LEXIS 59684 (D.N.J. Apr. 29, 2014).  In a ruling issued in April, Judge Anne E. Thompson noted the issue but didn’t reach it because she found that the plaintiff failed to show that his disclosures fell under any of the four categories listed in the statute.

Safarian has been appealed and the SEC has filed an amicus brief in which it argues that its rule should be entitled to Chevron deference because the statute is ambiguous:

This examination of the relevant statutory language demonstrates, at a minimum, considerable tension and inconsistency with the text, thus revealing that Congress did not unambiguously express an intent to limit the employment anti-retaliation protections under Section 21F(h)(1) to only those individuals who report securities law violations to the Commission.

Thus, the issue of Chevron deference will likely be decided on whether the statute is ambiguous.  If it isn’t, courts should simply apply the unambiguous meaning.  If it is, then the courts should defer to reasonable agency interpretations.  Note that when a court, even a Court of Appeals [but perhaps not the Supreme Court], interprets an ambiguous statute, an agency is free to adopt a different interpretation and that interpretation will be entitled to judicial deference.  National Cable & Telecommunications Assn. v. Brand X Internet Services, 545 U.S, 967 (2005).  If you find this an odd case of judicial abnegation,  so did Justice Scalia:

It is indeed a wonderful new world that the Court creates, one full of promise for administrative-law professors in need of tenure articles and, of course, for litigators.  I would adhere to what has been the rule in the past: When a court interprets a statute without Chevron deference to agency views, its interpretation (whether or not asserted to rest upon an unambiguous text) is the law.

Id. at 1020 (J. Scalia dissenting) (footnote omitted).