Digital Realty Trust, Inc. v. Somers Oral Argument Recap
As we have previously noted here, in Digital Realty Trust, Inc. v. Somers, the United States Supreme Court will decide how to interpret the term “whistleblower” under the Dodd-Frank Act, and how to apply the term to the Act’s anti-retaliation provisions. Specifically, the Court will consider whether the anti-retaliation provisions protect an individual who only reports wrongdoing internally to his or her employer, rather than externally, to the Securities and Exchange Commission (“SEC”). Oral argument was held on November 28, 2017, and the Justices’ questioning on certain key issues, as we review below, provides insight into their thinking on the case.
One issue at oral argument was whether the defined statutory term “whistleblower” is ambiguous when used in the anti-retaliation provisions. Digital Realty Trust (“DRT”) emphasized the plain meaning of the definition, which seems to clearly require reporting to the SEC in order for a “whistleblower” to be entitled to the anti-retaliation protections. Justice Neil Gorsuch likewise focused on the plain language of the statute, asking Daniel Geyser, Somers’ counsel, pointedly, “how much clearer could Congress have been[?]” and, “What else would you have had Congress do if it had wanted to achieve that which your opponent says it achieved?” This line of questioning suggests that, for Justice Gorsuch at least, the plain meaning of the definition controls, and therefore that a “whistleblower” must report to the SEC in order to get anti-retaliation protection under the Act.
Geyser, however, maintained that applying the plain meaning of the term would create anomalies, leading other Justices to wonder how much of an anomaly would be necessary to overcome the clarity of the plain meaning of the “whistleblower” definition. Specifically, Geyser maintained that the meaning of the term must take into account “the context, the structure, the purpose, the history of this provision,” and argued that applying the definition as written would create a serious anomaly.
But Justice Elena Kagan, in later questioning of Christopher Michel, representing the Solicitor General, who was appearing as amicus curiae in support of Somers, suggested that a mere anomaly might not be sufficient: “you have this definitional provision, and it says what it says. And it says that it applies to this section. And you have to have a really, really severe anomaly to get over that.” Michel, in turn, relied upon an anomaly that Justice Kagan herself had identified in earlier questioning of counsel to DRT: under DRT’s reading of the statute, an employee who happened to make a report to the SEC years earlier on an unrelated topic would be deemed to have reported to the SEC, and therefore protected from retaliation under the statute, while an employee who much more recently had made an internal report shortly before going to the SEC would not be similarly protected.
Justice Samuel Alito similarly questioned what degree of seriousness an anomaly would need to reach to overcome the plain meaning, and asked Michel if he was urging the Court to adopt a standard merely that “the definition in the statute doesn’t apply if it produces an anomaly. Is that the standard? That’s all you need to get out of the definitional provision?” Justice Ruth Bader Ginsburg, for her part, expressed the view that “if the statute gives a definition, you follow the definition in the statute unless it would lead not merely to an anomaly, but to an absurd result.” Justice Gorsuch followed up, saying to the government’s counsel that “you agree you don't have an absurdity here.” Chief Justice John Roberts, similarly, appeared to share the view that “[t]he cases where you’re allowed to move beyond the defined term are when if you stick to it, it really makes a mess of the whole thing.” Michel acknowledged that the government was not acknowledging that the defined term created an absurdity, but that DRT’s reading “would eviscerate the incentive for internal reporting.”
Another issue that generated lively discussion was Chevron deference. Under Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984), courts must defer to administrative agencies’ interpretations of federal law where the statutory text is ambiguous and the agency’s interpretation of the ambiguity is reasonable. For its part, relying upon a rule it promulgated in 2011, the SEC maintains that internal reporting is sufficient to entitle whistleblowers to protection. Somers argued that the Dodd-Frank Act’s definition of “whistleblower” is ambiguous, as applied to the anti-retaliation provisions, and therefore that the SEC’s interpretation is entitled to deference. DRT’s counter-argument was that the SEC’s interpretation is not entitled to deference when the statute’s plain meaning is clear and, alternatively, that the SEC’s final rule changed the meaning of the term “whistleblower” without providing adequate notice to interested parties to comment on the rule.
Justice Gorsuch took up a lengthy critique of Somers’ argument, calling the SEC’s rule “an ipse dixit unreasoned opinion.” He evinced skepticism – in the manner we anticipated in our prior post [see here], that “[t]he agency acts without the benefit of the notice and comment and is unable to issue a reasoned decision-making and then we’re supposed to defer to that to resolve this ambiguity? Help me out with that scheme. That just doesn’t quite hold together for me.”
Check back here for our review of the Court’s decision, anticipated later in the term.