On Aug. 14, the U.S. Court of Appeals for the Second Circuit issued a decision that helps clarify the territorial reach of the anti-retaliation provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act, 15 USC Section 78u-6(h). In Liu Meng-Lin v. Siemens AG, No. 13-4385 (2d. Cir. Aug. 14, 2014), the court held that Congress did not intend the provision to apply extraterritorially to claims by a foreign whistleblower employed abroad by a foreign corporation where all events related to the whistleblower’s disclosures occurred outside the United States. After affirming the district court’s dismissal of Liu Meng-Lin’s retaliation claim against Siemens AG on this ground, the court declined to address the additional argument advanced by Siemens that the Dodd-Frank anti-retaliation provision does not protect whistleblowers, like Liu, who fail to report potential securities violations to the U.S. Securities and Exchange Commission (SEC) before the alleged retaliation.
Background
Liu is a citizen and resident of Taiwan who had been employed as a compliance officer for Siemens China Ltd., a Chinese subsidiary of Siemens, a German corporation with American depositary receipts listed on the New York Stock Exchange (NYSE) at that time. Liu brought a federal action against Siemens in the Southern District of New York alleging that Siemens demoted and ultimately fired him because he reported to a high-level executive in China that Siemens employees allegedly had engaged in indirect bribery of certain Chinese and North Korean foreign officials. He further claimed that, by firing him, Siemens violated Dodd-Frank’s anti-retaliation provision. Significant to the Second Circuit’s ultimate decision, “Liu [did] not plead that any of the events related to his firing—the allegedly corrupt conduct, Liu’s discovery of that conduct, Liu’s efforts to address the corrupt conduct through Siemens’ internal protocols, or his subsequent mistreatment by Siemens—occurred within the territorial jurisdiction of the United States.”
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