Whistling Loud and Clear: Applying Chevron to Subsection 21F of Dodd-Frank

On June 26th, 2017 the Supreme Court granted certiorari in Digital Realty Trust, Inc. v. Somers. This is not a freedom of religion case, nor is it an equal protection problem, nor is it any other high profile issue one would expect to see covered by major media outlets. This case is about securities law. Specifically, it is about whether Dodd-Frank’s anti retaliation protections for whistleblowers extend to those who do not fall within the statutory definition of “whistleblower.” Dodd–Frank defines a “whistleblower” as a person or persons who report alleged violations of the securities laws to the SEC. A subsection of Dodd-Frank’s anti retaliation provisions prohibits an employer from taking retaliatory action against a whistleblower for making reports which are required or protected under Sarbanes-Oxley. The problem arises from the fact that, under Sarbanes-Oxley, employees receive anti retaliation protections for reporting misconduct to a variety of entities, and not just to the SEC. The SEC has promulgated an interpretive rule stating that, despite Dodd-Frank’s express definition of “whistleblower,” the statute’s whistleblower protections extend to those who only make Sarbanes-Oxley protected reports in addition to those who fall under the statutory definition. One would rightfully presume that this is a classic setup for the Chevron doctrine to determine whether the SEC’s interpretive rule warrants deference. However, not all of the Circuit Courts of Appeals actually applied Chevron. The Fifth, Second, and Ninth Circuits have all addressed the issue, and with widely varying results. The Fifth Circuit applied Chevron, found no ambiguity in the statute, and rejected the SEC’s interpretive rule. The Second Circuit’s Chevron analysis reached a different result, affording deference to the SEC and creating the circuit split. However, the Second Circuit’s analysis utilized the Supreme Court’s interpretive method from King v. Burwell. The Ninth Circuit’s analysis did not use Chevron at all, and expressly relied entirely on King to conclude that, despite Dodd-Frank’s express statutory definition, the term “whistleblower” unambiguously has a different meaning in Dodd-Frank’s anti retaliation context. On February 21, 2018, the Court issued its decision in the Somers case, concluding that the SEC's interpretive rule should receive no Chevron deference, and that the plain statutory definition of "whistleblower" should apply. The Court did not, however, address the Second or Ninth Circuits' use of King v. Burwell, and the jurisprudential implications of such an approach. This Note reveals these courts' reliance on King, and discusses the potential implications of leaving this interpretive approach unaddressed.