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Martensen v. Chicago Stock Exchange

United States District Court, N.D. Illinois, Eastern Division

June 7, 2017

JEFFREY MARTENSEN, Plaintiff,
v.
CHICAGO STOCK EXCHANGE, Defendant.

          MEMORANDUM OPINION AND ORDER

          Milton I. Shadur Senior United States District Judge

         In response to a complaint brought against it by professed "whistleblower" Jeffrey Martensen ("Martensen") under the claimed auspices of the anti-retaliation provisions of the Dodd-Frank Act ("Act"), [1] defendant Chicago Stock Exchange ("Exchange") has filed a Fed.R.Civ.P. ("Rule") 12(b)(6) motion to dismiss because of Martensen's asserted failure to state a claim under the provisions of the Act, which apply solely to action taken by a "whistleblower" as expressly defined in Act § 6(a)(6) (emphasis added):

The term "whistleblower" means any individual who provides, or 2 or more individuals acting jointly who provide, information relating to a violation of the securities laws to the Commission, in a manner established, by rule or regulation, by the Commission.

         This sua sponte memorandum opinion and order addresses that motion because it relies on that express definition -- reliance that cannot be countered by any legally impermissible reading of Congress' unambiguous language out of the Act.

         Exchange's motion is unique in Rule 12(b)(6) jurisprudence in that there is no need to await Martensen's response before this Court rules on the matter. That oddity obviously calls for an explanation at the outset.

         What is at issue in this case is the purely legal question as to whether Martensen is or is not a "whistleblower" within the Act's above-quoted definition of that term, a subject on which our own Court of Appeals has had no occasion to rule, [2] while three other Courts of Appeals have treated the subject in depth and have reached conflicting conclusions. In that respect Act § 6(h)(1)(A) provides a right of action to a "whistleblower" in the following language relevant to this case (emphasis again added):

No employer may discharge, demote, suspend, threaten, harass, directly or indirectly, or in any other manner discriminate against, a whistleblower in the terms and conditions of employment because of any lawful act done by the whistleblower --
(i) in providing information to the Commission in accordance with this section . . . .

         Here is the story as to those three precedential Court of Appeals opinions:

1. Asadi has concluded that an employee in circumstances identical to those presented by Martensen, having complained up the employer's food chain (in Martensen's case, a requirement of the employer's internal regulations) but not to the SEC, as the Dodd-Frank statute requires for "whistleblower" status, is not a "whistleblower" subject to actions under Section 6(h)(1)(A).
2. Both Berman v. Neo@Ogilvy LLC, 801 F.3d 145 (2d Cir. 2015) and Somers v. Digital Realty Trust, Inc., 850 F.3d 1045 (9th Cir. 2017) have held that the unambiguous statutory definition in Section 6(a)(6) is somehow overridden by other considerations, including statements emanating from the SEC itself, so that "whistleblower" is transmuted from a term of art specifically defined by Congress to a generic noun of broader scope.

         This Court of course intends no disrespect to the four judges who have reached that last-described result.[3] But for more than three decades this Court has consistently adhered to the principle that it stated in these terms in State of Ill. by the Ill. Dep't of Pub. Aid v. Heckler, 616 F.Supp. 620, 624 (N.D. Ill. 1985), aff'd 808 F.2d 571 (7th Cir. 1986), addressing the meaning of a statutorily defined term (in that instance part of the Social Security Act):

Any analysis must of course begin with -- and focus on -- the language of [the statute] itself.

         As Heckler, id. at 624 n.8 went on to say, in language that could well have been written in this case to explain why analysis calls for the express statutory definition to prevail over the ...


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