Southern District of New York Limits Dodd-Frank Whistleblower Protections to the United States
The US District Court for the Southern District of New York limited the scope of the Dodd-Frank Wall Street Reform and Consumer Protection Act anti-retaliation provisions for whistleblowers to the United States, dismissing a complaint by an overseas former employee against Siemens A.G., the German multinational corporation. Plaintiff Meng-Lin Liu, a resident of Taiwan and former compliance officer for Siemens China, alleged that Siemens China used kickbacks to boost medical sales in North Korea and China. He filed suit against Siemens A.G. in the United States when he suffered negative employment actions, including poor reviews and early termination of his employment contract, after raising concerns about alleged violations of the Foreign Corrupt Practices Act (FCPA). Liu reported his FCPA allegations to the Securities and Exchange Commission following termination of his employment. Liu argued that his termination was illegal under the Anti-Retaliation Provision of the Dodd-Frank Act, claiming that he should be protected as a “whistleblower” under the statute. However, the District Court determined that the protections for whistleblowers under the Dodd-Frank Act did not extend to this case, agreeing with the one other court to have previously addressed the issue (the Southern District of Texas in a June 2013 decision.)
In analyzing the Anti-Retaliation Provision’s applicability to overseas acts, the District Court, relying on the Supreme Court’s ruling in Morrison v. National Australia Bank, noted that, where a statute gives no clear indication of extraterritorial application, there is a presumption that it is primarily concerned with domestic activity. The fact that the Dodd-Frank Act specifies some extraterritorial application under other provisions, but not the Anti-Retaliation Provision, indicated to the District Court that Congress intended to limit the retaliation protections to domestic activity. Further, the District Court rejected Liu’s argument that the fact that Siemens listed American Depository Receipts on the New York Stock Exchange brought Liu into the purview of the Anti-Retaliation Provision, finding that applying US securities law to foreign companies merely because they list securities in the United States is contrary to Morrison. The District Court explained that this case was “brought by a Taiwanese resident against a German corporation concerning its Chinese subsidiary relating to alleged corruption in China and North Korea.” Allowing overseas application of the whistleblower protections of the statute would be “an intrusion into the employment law of a foreign nation [that] could disrupt the ‘delicate field of international relations.’” Consequentially, the District Court dismissed the lawsuit.
Meng-Lin Liu v. Siemens A.G., No. 1:13-cv-00317 (S.D.N.Y. October 21, 2013).