Today the U.S. Supreme Court decided to review the issue of whether the Dodd-Frank Act prohibits retaliation against whistleblowers who report possible securities law violations internally to their company but who have not filed with the U.S. Securities and Exchange Commission. In Digital Realty Trust, Inc. v. Paul Somers, a real estate investment trust company fired Paul Somers, its former vice president of portfolio management, after he complained internally that his supervisor improperly eliminated internal controls and hid major cost overruns on a project in Hong Kong. After his termination, he sued the company in November 2014 for retaliation as a whistleblower under the Dodd-Frank whistleblower law. The company tried unsuccessfully to dismiss his claim at the district court and on appeal before the Ninth U.S. Circuit Court of Appeals, which held that individuals who report misconduct internally are whistleblowers who merit protection from retaliation under the law. The Ninth Circuit opinion, along with a similar holding from the Second Circuit, is at odds with the Fifth Circuit, which previously held that whistleblowers must report to the SEC in order to receive protective status.
Whistleblowers are protected under many federal statutes. The Second and Ninth Circuit allow for a broader range of employees to invoke the extended protections under Dodd-Frank, as was intended by Congress in passing the law and is consistent with SEC regulations.
The Court also announced that it will hear a suit brought by a baker who refused to bake a wedding cake for a same-sex couple, reviewing whether Colorado’s anti-discrimination public accommodations law violates the free speech or free exercise clauses of the First Amendment when applied to business owners who allege a sincerely held religious belief. In Masterpiece Cakeshop v. Colorado Civil Rights Commission, the owner of a bakery refused to sell a wedding cake to a same-sex couple, which the Colorado Civil Rights Commission found violated Colorado’s anti-discrimination law. When the bakery was held accountable for its actions, it argued that the state’s public accommodations law violates the First Amendment by requiring him to express himself in a way that violates his sincerely held religious beliefs – here, by making custom wedding cakes to celebrate same-sex weddings.
The issue of whether religious liberty is a license to discriminate came before the Court in 1968, when the owner of a barbecue restaurant claimed that he should be exempt from the federal ban on whites-only lunch counters because such a ban, in his opinion, “contravenes the will of God.” A unanimous Supreme Court labeled this argument “patently frivolous.”
Lawyers for Colorado have already warned that finding for Masterpiece Cakeshop would create a “gaping hole” in civil rights laws if business owners could cite their religious beliefs as a valid basis for denying service to certain customers. The case will address the extent to which religion can be used as a defense to discrimination, which could affect the civil rights laws that prohibit discrimination against LGBTQ individuals at work and in schools.