The universal refrain from leading commentators in the wake of a ruling in September by the U.S. Court of Appeals for the Second Circuit is that it will dramatically increase the number of whistleblower retaliation claims filed in federal court under Dodd-Frank. By holding in Berman v. Neo@Ogilvy that retaliation protection is triggered under Dodd-Frank solely through an internal complaint, the court undoubtedly expanded the scope of potential claims. The big unanswered question, however, is whether companies facing costly and protracted litigation may actually be better off, from a litigation standpoint, defending themselves against whistleblower retaliation claims in federal court under Dodd-Frank than responding to similar whistleblower retaliation claims brought under the Sarbanes-Oxley Act (SOX).
An analysis of the evolution of claims under SOX over the past 10 years and an examination of the statutory language of Dodd-Frank strongly suggests that demonstrating “protected activity” and causation—two necessary elements of a whistleblower retaliation claim—will be more difficult under Dodd-Frank.
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