The Second Circuit Court of Appeals this week affirmed the dismissal of a legal challenge filed by a whistleblower against Siemens, holding that the anti-retaliation provisions of the Dodd-Frank Act do not extend to employees outside the United States, marking a second victory in the case for companies that face such claims.
As Compliance Week previously reported, Meng-Lin Liu, former group chief compliance officer for the healthcare division of a Chinese subsidiary of Siemens, filed the case in January 2013 alleging he was wrongfully terminated in 2010 after he raised concerns about potential violations of the company’s anti-graft internal controls.
Liu further raised concerns about a deal in North Korea that he believed also circumvented internal compliance procedures put into place after Siemen’s 2008 guilty plea with the Department of Justice over violations of the Foreign Corrupt Practices Act. Liu alleged that his termination was in violation of the anti-retaliation provisions under the Dodd-Frank Act.
In its defense, Siemens argued in its motion to dismiss that the anti-retaliation provisions under Dodd-Frank don’t extend to employees abroad. Liu also wasn't entitled to protection under Dodd-Frank, they argued, because he initially reported his concerns internally, rather than first to the Securities and Exchange Commission; it wasn't until 2011 that Liu reported any potential wrongdoing to the SEC.
In an opinion issued in October 2013, Judge William Pauley of the U.S. District Court for the Southern District of New York, granted Siemens motion to dismiss. “There's simply no indication that Congress intended the anti-retaliation provision to apply extra-territorially,” Pauley wrote in his opinion.
On Aug. 14, 2014, the Second Circuit affirmed Pauley’s dismissal of Liu’s complaint. “Because a statute is presumed, in the absence of clear congressional intent to the contrary, to apply only domestically, and because there is no evidence that the anti-retaliation provision is intended to have extraterritorial reach, we conclude that that provision does not apply extra-territorially,” the opinion stated.
“We furthermore conclude that because Liu’s complaint alleges that he was a non-citizen employed abroad by a foreign company, and that all events allegedly giving rise to liability occurred outside the United States, applying the anti-retaliation provision to these facts would constitute an extraterritorial application of the statute,” the opinion stated.