In Liu v. Siemens, the U.S. Court of Appeals for the Second Circuit held that the provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act that prohibits employers from retaliating against whistleblower employees who make certain disclosures (15 U.S.C. §78u-6(h)(1) (the “Anti-retaliation Provision”) does not apply extraterritorially. The appeal arose out of a case brought by Liu Meng-Lin (“Liu”), a citizen and resident of Taiwan who was employed as a compliance officer by Siemens China Ltd., a Chinese corporation and wholly owned subsidiary of the defendant, Siemens AG (“Siemens”), a German corporation whose shares are traded on the New York Stock Exchange. According to Liu, Siemens employees were indirectly making improper payments to North Korean and Chinese officials in connection with the sale of medical equipment in those countries, which he believed violated company policy and U.S. anticorruption laws. Liu alleged that Siemens restricted his authority as a compliance officer, demoted him, and eventually terminated his employment as a result of his reporting of this conduct according to Siemens’s internal protocols. After his termination, Liu reported the conduct to the SEC, alleging that Siemens had violated the U.S. Foreign Corrupt Practices Act (“FCPA”).
Liu filed a complaint in federal district court, asserting that Siemens unlawfully retaliated against him in violation of the Anti-retaliation Provision, which prohibits retaliation against whistleblowers who: (i) provide information to the SEC in accordance with the whistleblower provisions of the statute; (ii) initiate, testify in, or assist in an investigation or judicial or administrative action of the SEC based upon or related to that information; or (iii) make disclosures that are required or protected under the Sarbanes-Oxley Act of 2002 and any law, rule or regulation subject to the jurisdiction of the SEC. Because Liu was terminated prior to providing any information to the SEC, Liu claimed that Siemens had violated the third of these prohibitions. Liu did not assert that any of the events relating to his firing or the allegedly corrupt conduct occurred within the territorial jurisdiction of the United States.
The district court dismissed the complaint on the grounds that the Anti-retaliation Provision does not apply extraterritorially and that none of Liu’s disclosures were “required or protected” by any of the statutes specifically enumerated in the Anti-retaliation Provision. The Second Circuit affirmed the district court’s dismissal on the grounds that the Anti-retaliation Provision does not apply extraterritorially, without deciding the other questions that were raised at the district court level regarding whether disclosures of FCPA violations are covered by the Anti-retaliation Provision or whether internal reporting of FCPA violations would qualify someone for protection under the Anti-retaliation Provision.