1. Since Asadi had to concede that he was not covered under the statutory language, what was his theory of the case as to why he should be protected as a whistle-blower under Dodd-Frank?

2. Why did the court reject the SEC’s interpretation as expressed in its regulation? Was Asadi reason-able in relying on the regulation?

3. Is statutory protection for whistle-blowers good public policy? Does it encourage managers to be more vigilant about compliance with legal and ethical codes? Why or why not? The whistle-blower anti-retaliation pro-vision in Dodd-Frank allows a remedy of double back pay in the event of a wrongful termination. SOX only provides for one year. What specific incentives result from those provisions for the employer and employee? Are these incentives consistent with good public policy?

In 2006, Asadi accepted GE Energy’s offer to serve as its Iraq Country Executive and relocated to Amman, Jordan. At a meeting in 2010, while serving in this capacity, Iraqi officials informed Asadi of their concern that GE Energy hired a woman closely associated with a senior Iraqi official to curry favor with that official in negotiating a lucrative joint venture agreement. Asadi, concerned this alleged conduct violated the Foreign Corrupt Practices Act, reported the issue to his supervisor and to the GE Energy ombudsperson for the region. Shortly following these internal reports, Asadi received a “sur-prisingly negative” performance review. GE Energy pressured him to step down from his role as Iraq Country Executive and accept a reduced role in the region with minimal responsibility. Asadi did not comply and, approximately one year after he made the internal reports, GE Energy fired him.

Asadi filed a lawsuit alleging that GE Energy violated Dodd-Frank’s whistle-blower protection provision by terminating him following his internal reports of the possible violation of federal law. GE Energy filed a motion for summary judgment on the basis that Asadi’s whistle-blower report did not fit the definition of a whistle-blower under Dodd-Frank because the statute requires the wrongdoing to be reported to the SEC in order to be eligible for anti-retaliation protections. The trial court ruled in favor of GE Energy and dismissed Asadi’s lawsuit. On appeal, Asadi argued that the SEC’s published regulations interpreted the definition of a Dodd-Frank whistle-blower broadly enough to cover Asadi.

The Court of Appeals for the Fifth Circuit upheld the trial court’s ruling in favor of GE Energy. The court engaged in an extensive statutory interpretation analysis and concluded that the plain meaning of the statute requires that whistle-blowers must have reported the unlawful activity to the SEC in order to be protected under the Dodd-Frank whistle-blower retaliation provision. Since Asadi’s whistle-blowing was confined to GE Energy’s internal management, he was not eligible for Dodd-Frank whistle-blower protection. Although the court acknowledged that subsequent SEC regulations permitted a more expansive scope when defining whistle-blowers, the court cited long-standing precedent in rejecting the SEC’s interpretation. The court ruled that since Congress had directly spoken to the precise question at issue, there was no room for the SEC to impose its own answer to the question.

“This construction of the whistleblower protection provision follows directly from the plain language of [Dodd-Frank’s Whistleblower Section]: ‘No employer may discharge  .  .  .  or in any other manner discriminate against, a whistle-blower  .  .  .  because of any lawful act done by the whistleblower’ in taking any of the three categories of protected actions. This statutory language clearly answers two questions: (1) who is protected; and (2) what actions by protected individuals constitute protected activity.”

“Congress defined ‘whistle-blower’ in [the statute], and did so unambiguously. Congress specified that a ‘whistleblower,’ not merely any individual, is protected from employer retaliation on the basis of the whistleblower’s protected activities. The statute, therefore, clearly expresses Congress’s intention to require individuals to report information to the SEC to qualify as a whistleblower under Dodd-Frank. Because Congress has directly addressed the precise question at issue, we must reject the SEC’s expansive interpretation of the term ‘whistleblower’ for purposes of the whistleblower-protection provision.”