New York Court Declines to Find Extraterritorial Reach of Dodd-Frank Whistleblower Protection

Liu v. Siemens A.G., No. 13-CV-317(WHP) (S.D.N.Y. Oct. 21, 2013) (Pauley, J.): Judge William H. Pauley III dismissed a retaliation claim under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank) brought by a former compliance officer, Meng-Lin Liu, who was employed by a Taiwanese subsidiary of Siemens A.G. Liu alleged that he was terminated for reporting suspected violations of the Foreign Corrupt Practices Act (FCPA) based on an alleged kickback scheme on medical equipment sold in China and North Korea. However, the court concluded that, absent evidence that Congress intended Dodd-Frank’s anti-retaliation provision to apply to acts committed outside U.S. borders, the court would not grant extraterritorial reach. Based on Supreme Court precedent, Judge Pauley held that, unless Congress clearly expressed its intent to provide extraterritorial effect to a U.S. statute, courts will presume “it is primarily concerned with domestic matters.” Such congressional intent was not indicated in Dodd-Frank, as some parts of the law specifically applied outside of the United States. Furthermore, the Dodd-Frank provision on which Liu relied to make his disclosure was not “required or protected under the Sarbanes-Oxley Act.” Finally, Judge Pauley determined that “whistleblower” status is a distinct issue from whether Dodd-Frank’s anti-retaliation provision extended to overseas whistleblowers. The decision therefore provides needed clarity regarding the reach and scope of Dodd-Frank’s well-publicized whistleblower bounty provision.