The Third Circuit recently held that the trial court should not have dismissed an ex-Vanguard Group, Inc. in-house attorney’s wrongful termination lawsuit. In his lawsuit, the ex-employee, David Danon, claimed that he was terminated after attempting to blow the whistle on the company’s alleged violations of corporate and tax laws, in violation of the Dodd-Frank Act, the False Claims Act, the Sarbanes-Oxley Act, and Pennsylvania’s whistleblower protection law. However, in May of 2016, the trial court dismissed Danon’s lawsuit on the basis that Danon was barred from re-litigating claims that he previously filed in a similar New York False Claims Act lawsuit.

Danon appealed that decision to the Third Circuit, arguing that his Dodd-Frank Act claim should be permitted to proceed based on recent precedent holding that the Dodd-Frank Act’s anti-retaliation protections extend beyond allegations that a whistleblower makes directly to the United States Securities and Exchange Commission (SEC). Danon further argued that his lawsuit was not barred because the state court had not fully ruled on the matter. The SEC provided support to Danon’s arguments on appeal, arguing in separate amicus briefs that individuals are entitled to anti-retaliation protections if they make any of the disclosures identified in Section 21F of the Securities Exchange Act (covering parts of the SEC’s whistleblower program), regardless of whether they separately report to the SEC.

Ultimately, the Third Circuit agreed that Danon’s Dodd-Frank Act-based claim should be permitted to proceed at the trial court level. The Third Circuit based its decision on the fact that the issue of whether Danon adequately pleaded a violation had not been fully ruled upon in the previous state court action, so Danon was not prevented from bringing a new lawsuit on that basis. The Third Circuit, however, agreed that the remainder of Danon’s claims were properly dismissed.

The case is David Danon v. Vanguard Group, Inc., case number 16-2881, 2017 U.S. App. LEXIS 6260 (3d Cir. April 12, 2017).