On November 5, 2015, the District of Kansas dismissed a whistleblower retaliation claim under Dodd-Frank, ruling that the statute’s anti-retaliation provision only protects individuals who report securities violations.  Azim v. Tortoise Capital Advisors, LLC, Case No. 13-cv-2267.

Background

Plaintiff was as a vice president for business development for Tortoise Capital Advisors (Company), an investment management firm.  Plaintiff alleged that he reported harassment and discrimination based on his national origin and religion, and also reported securities-law violations to Human Resources on April 16, 2012.  In particular, he claimed to have reported that the Company made misrepresentations to become certified as a minority business enterprise, made fraudulent representations to gain potential investments and investors, and made false filings with the SEC.  After his employment was terminated on April 30, 2012, he filed suit under Dodd Frank claiming that he was retaliated against for protected whistleblowing activity.

Ruling

The court granted the Company summary judgment on Plaintiff’s Dodd-Frank claim.  As an initial matter, it noted the disagreement amongst courts regarding the scope of Dodd-Frank’s anti-retaliation provision, with some courts holding that the statute requires a complaint to the SEC, and a majority of courts holding that internal complaints are also covered.  The court, however, ultimately concluded that it need not reach that issue because the evidence established that Plaintiff had never made an internal report of securities law violations; the court noted that Plaintiff failed to identify a rule, law or regulation within the SEC’s jurisdiction under which his alleged complaints were made, required, or protected.  In addition, the court also found that summary judgment was warranted on causation grounds, as the undisputed evidence showed that the Company terminated Plaintiff’s employment for making negative remarks about the Company and making unreasonable demands on management.

Implications

Though numerous courts have taken an expansive view of the scope of the Dodd-Frank whistleblower provision, this decision narrowly requires a Dodd-Frank complaint to include allegations of a securities law violation—a welcome advancement for employers.