United States: Court Denies Extraterritorial Application Of The Dodd-Frank Act's Whistleblowing Provisions

Last Updated: September 15 2014
Article by Celia Joseph

On August 14, 2014, in Liu Meng-Lin v. Siemens AG, a three-judge panel of the United States Court of Appeals for the Second Circuit unanimously held that the whistleblowing provision of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act ("the Dodd-Frank Act"), does not protect a foreign worker employed abroad by a foreign corporation where all events related to the disclosures occurred abroad. (Liu Meng-Lin v. Siemens AG, 2d. Cir., Docket No. 13-4385, Decided August 14, 2014).

According to the Court's decision, the facts leading to this decision are as follows: Plaintiff-appellant Liu Meng-Lin ("Mr. Liu"), a citizen and resident of Taiwan, was employed as a compliance officer for the healthcare division of Siemens China, Ltd., a Chinese wholly-owned subsidiary of defendant-appellee Siemens AG ("Siemens"), a German corporation whose shares, at all relevant times, were listed on the New York Stock Exchange. Mr. Liu, according to his Complaint, discovered that Siemens employees were indirectly making improper payments to officials in North Korea and China in connection with the sale of medical equipment in those countries. Mr. Liu believed these payments violated both Siemens' policy and U.S. anti-corruption measures. He reported these allegations to his superiors through internal company procedures, including with a high-ranking Siemens executive in China. Mr. Liu claimed that as he sought to address these alleged violations, Siemens progressively restricted his authority as a compliance officer, demoted him and then ultimately fired him.

Two months after his discharge, Mr. Liu reported the alleged corrupt conduct to the U.S. Securities and Exchange Commission ("SEC"), claiming that Siemens had violated the U.S. Foreign Corrupt Practices Act ("FCPA"). Mr. Liu then sued Siemens in the United States District Court for the Southern District of New York, alleging that Siemens retaliated against him in response to his disclosures of alleged corrupt conduct, thereby violating the whistleblower antiretaliation provision of the Dodd-Frank Act. The Dodd-Frank Act includes a provision prohibiting employers from retaliating against whistleblower employees who make certain protected disclosures. The provision in question states, in relevant part:

[n]o employer may discharge . . . or in any other manner discriminate against, a whistleblower in the terms and conditions of employment because of any unlawful act done by the whistleblower . . . in making disclosures that are required or protected under the Sarbanes-Oxley Act of 2002 . . ., this chapter, . . . any other law, rule, or regulation subject to the jurisdiction of the [Securities and Exchange] Commission. (15 U.S.C. § 78u-6(h)(1)(A).

The District Court granted Siemens' motion to dismiss with prejudice, holding that the antiretaliation provision does not apply extraterritorially, and that, on the facts alleged by Mr. Liu, the Complaint sought an extraterritorial application of the statute.

In its August 14 decision, the Second Circuit stated that "to survive" Siemens' motion to dismiss, Mr. Liu had to demonstrate: 1) either that the facts alleged in his complaint stated a domestic application of the antiretaliation provision of the Dodd-Frank Act; or 2) the antiretaliation provision was is intended to apply extraterritorially. The Court first found that Mr. Liu, his employer and the other entities involved in the alleged wrongdoing were all "foreigners based abroad," and the whistleblowing, the alleged corrupt activity and retaliation also occurred abroad, and the Complaint revealed "essentially no contact with the United States regarding either the wrongdoing or the protected activity."

The Court rejected Mr. Liu's argument that Siemens' voluntary election to have a class of its securities publicly listed on the New York Stock Exchange meant that it had voluntarily subjected itself to United States securities laws. The Court stated that "where a plaintiff can point only to the fact that a defendant has listed securities on a U.S. exchange, and the complaint alleges no further meaningful relationship between the harm and those domestically listed securities, the listing of the securities alone" is the type of fleeting connection that cannot overcome the presumption against a statute's extraterritoriality (referring to Morrison v. National Australian Bank, Ltd, a 2010 United States Supreme Court case).

The Second Circuit also did not find the extraterritorial application of the statute, stating:

The support for the conclusion that the antiretaliation provision has no extraterritorial application is straightforward: there is absolutely nothing in the text of the provision . . . or in the legislative history of the Dodd-Frank Act, that suggests that Congress intended the antiretaliation provision to regulate the relationships between foreign employers and their foreign employees working outside the United States. Given the presumption against extraterritoriality, and the absence of any direct evidence of a congressional intent to apply the relevant provision extraterritorially, [Mr. Liu's] effort to cobble together indirect, circumstantial suggestions of extraterritorial application faces powerful headwinds.

The Court concluded that "[b]ecause 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 antiretaliation provision is intended to have extraterritorial reach," the provision did not apply extraterritorially. The Court further stated that because Mr. Liu's complaint alleged that he was a non-citizen employed abroad by a foreign company, and that all events allegedly giving rise to liability occurred outside of the United States, "applying the antiretaliation provision to these facts would constitute an extraterritorial application of that statute."

Of note is that the Second Circuit stated it need not determine: 1) whether the District Court correctly ruled that Section 806 of the Sarbanes-Oxley Act, a provision that protects employees of publicly-traded companies who provide evidence of fraud, does not require or protect disclosures of FCPA violations; or 2) whether Mr. Liu's internal reporting of the alleged misconduct, with or without his subsequent disclosures to the SEC, qualified him as a whistleblower under the Dodd-Frank Act, and stated they expressed no views on those issues. Instead the Court restricted its holding to the following: since the whistleblowing antiretaliation provision of the Dodd-Frank Act does not apply extraterritorially, and Mr. Liu has failed to plead facts constituting a domestic application of the antiretaliation provision, the District Court correctly granted Siemens' motion to dismiss.

This case is helpful in addressing a situation that is alleged to have occurred totally outside of the United States, where the connection to the United States was the listing of stocks on the New York Stock Exchange. It is likely that in the future courts will be required to decide cases with different fact patterns that might include other types and levels of connections to the United States, and will provide further guidance on what connections might cause the Dodd-Frank Act's antiretaliation provisions to govern otherwise extraterritorial activities.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.