The Law Is What It Says
The spirit of Antonin Scalia infused the Supreme Court’s oral arguments in Digital Realty Trust, Inc. v. Somers on Tuesday as Justices battered the government’s lawyer with questions about the Securities and Exchange Commission’s reinterpretation of Dodd-Frank.
Real-estate portfolio manager Paul Somers sued his former employer Digital Realty Trust for allegedly firing him in retaliation for filing an internal complaint about a securities violation. The 2002 Sarbanes-Oxley law protects internal “whistleblowers” like Mr. Somers from retaliation if they file complaints with the Labor Department within 180 days.
But Mr. Somers ignored Sarbanes and sued in federal court under Dodd-Frank, which lets whistleblowers who are retaliated against sue and receive double back pay. One problem: Dodd-Frank defines a whistleblower as “any individual who provides, or 2 or more individuals acting jointly who provide, information relating to a violation of the securities laws to the [Securities and Exchange] Commission.” In other words, the law doesn’t shield Mr. Somers.
The SEC reinterpreted the law to protect employees who file internal complaints, but Digital Realty contends that Dodd-Frank unambiguously protects only whistleblowers who report misconduct to the SEC.
The government, which intervened in the case, argued that executive agencies can ignore the text of laws if their provisions produce an outcome anomalous or contrary to Congress’s putative purpose. But as Justice Neil Gorsuch noted, “we don’t follow what [lawmakers are] trying to do. We follow what they do do, right?”
Justice Elena Kagan chimed in that “you have this definitional provision, and it says what it says. And it says that it applies to this section. . . . It’s odd; it’s peculiar; it’s probably not what Congress meant. But what makes it the kind of thing where we can just say we’re going to ignore it?”
Such a ruling would give executive agencies free rein to rewrite laws based on what they claim is Congressional intent. Even liberal Justices can understand that this poses a threat to democracy and the separation of powers.
Appeared in the November 30, 2017, print edition.