13‐4385‐cv Liu v. Siemens AG
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
August Term, 2013
(Argued: June 16, 2014 Decided: August 14, 2014)
Docket No. 13‐4385‐cv
LIU MENG‐LIN,
Plaintiff ‐ Appellant,
— v. —
SIEMENS AG,
Defendant ‐ Appellee.
B e f o r e:
RAGGI, LYNCH, and LOHIER, Circuit Judges.
__________________
Plaintiff‐appellant Liu Meng‐Lin sued defendant‐appellee Siemens AG
(“Siemens”), his former employer, alleging that Siemens retaliated against him in
1 response to his disclosures of alleged corrupt conduct, and that Siemens thereby
violated the whistleblower antiretaliation provision of the Dodd‐Frank Act, 15
U.S.C. § 78u‐6(h)(1). The United States District Court for the Southern District of
New York (William H. Pauley, III, Judge) granted Siemens’s motion to dismiss
with prejudice, holding that the antiretaliation provision does not apply
extraterritorially, and that, on the facts alleged by Liu, the complaint sought an
extraterritorial application of the statute. 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 antiretaliation provision is intended to
have extraterritorial reach, we conclude that that provision does not apply
extraterritorially. 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 antiretaliation provision to these facts would constitute an
extraterritorial application of the statute.
AFFIRMED.
DAVID N. MAIR, Kaiser Saurborn & Mair, P.C., New York, N.Y., for Plaintiff‐Appellant Liu Meng‐Lin.
2 ERIC C. LIEBELER, Siemens Corporation, Washington, D.C. (Brant W. Bishop, P.C., Ragan Naresh, Eric S. Nguyen, Kirkland & Ellis LLP, Washington, D.C., on the brief), for Defendant‐Appellee Siemens AG.
Anne K. Small, Michael A. Conley, William K. Shirey, Stephen G. Yoder, Securities and Exchange Commission, Washington, D.C., for Amicus Curiae United States Securities and Exchange Commission.
GERARD E. LYNCH, Circuit Judge:
The Dodd‐Frank Wall Street Reform and Consumer Protection Act, Pub. L.
No. 111‐203, 124 Stat. 1376 (2010), includes a provision, 15 U.S.C. § 78u‐6(h), that
prohibits employers from retaliating against whistleblower employees who make
certain protected disclosures. The instant case requires us to determine whether
§ 78u‐6(h) protects a foreign worker employed abroad by a foreign corporation
where all events related to the disclosures occurred abroad. Because
(1) legislation is presumed to apply only domestically unless there is evidence
Congress intended otherwise; (2) there is no indication Congress intended the
whistleblower protection provision to have extraterritorial application; and (3)
the facts in the complaint unequivocally demonstrate that applying the statute in
3 this case would constitute an extraterritorial application, we conclude that the
district court properly dismissed the complaint.
BACKGROUND
Plaintiff‐appellant Liu Meng‐Lin, a citizen and resident of Taiwan, was
employed as a compliance officer for the healthcare division of Siemens China
Ltd., a Chinese corporation that is a 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. According to his
complaint, Liu 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. Liu believed that these payments
violated both company policy and U.S. anti‐corruption measures. He therefore
reported this conduct to his superiors through internal company procedures,
including in a meeting with a high‐ranking Siemens executive in Shanghai,
China. Liu claims that as he sought to address these alleged violations, Siemens
progressively restricted his authority as a compliance officer, demoted him, and
ultimately fired him. Liu does not plead that any of the events related to his
firing – the allegedly corrupt conduct, Liu’s discovery of that conduct, Liu’s
4 efforts to address the corrupt conduct through Siemens’s internal protocols, or
his subsequent mistreatment by Siemens – occurred within the territorial
jurisdiction of the United States.
Two months after Siemens fired him, Liu reported the allegedly corrupt
conduct to the Securities and Exchange Commission (“SEC”), charging that
Siemens had violated the Foreign Corrupt Practices Act (“FCPA”).1 Liu then
brought this action in the United States District Court for the Southern District of
New York (William H. Pauley III, Judge), alleging that by firing him Siemens had
violated the antiretaliation provision of the Dodd‐Frank Act, 15 U.S.C. § 78u‐
6(h)(1)(A). Siemens moved to dismiss the suit for failure to state a claim, Fed. R.
Civ. P. 12(b)(6), asserting two separate defects in the complaint: that the
antiretaliation provision does not apply extraterritorially, and that none of Liu’s
1 We note in passing that Liu does not claim that Siemens retaliated against him for his disclosures to the SEC; he had already been fired by the time he made those disclosures. Rather, Liu claims that he was fired in retaliation for his purely internal reporting of alleged misconduct, and argues that the protection of the Dodd‐Frank antiretaliation provision extends to internal whistleblowing. Because we find that Liu’s complaint was properly dismissed for other reasons, we need not address Siemens’s argument that such internal reporting is insufficient to evoke the protection of the antiretaliation provision. We thus assume without deciding that internal reporting is sufficient to qualify for the statute’s protection.
5 disclosures were “required or protected” by a relevant statute as the
antiretaliation provision requires. The district court granted Siemens’s motion to
dismiss with prejudice on both grounds, holding (1) that on the facts pled, the
complaint sought an extraterritorial application of the antiretaliation provision,
which does not have extraterritorial reach, and (2) that Liu’s complaint failed to
establish that he had made a disclosure to the SEC that was “required or
protected” by any of the specific statutes enumerated in § 78u‐6(h)(1)(A)(iii).
Liu timely appealed, and upon de novo review of the district court’s grant
of the motion to dismiss, Lundy v. Catholic Health Sys. of Long Island, Inc., 711
F.3d 106, 113 (2d Cir. 2013), we affirm on the ground that Liu seeks an
extraterritorial application of the antiretaliation provision, and that that provision
does not apply extraterritorially.
DISCUSSION
We review a motion to dismiss de novo, “accepting all factual allegations
in the complaint as true, and drawing all reasonable inferences in the plaintiff’s
favor.” Lundy, 711 F.3d at 113. “To survive a motion to dismiss, a complaint
must contain sufficient factual matter, accepted as true, to state a claim to relief
that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal
6 quotation marks omitted). The “factual content” of the complaint must “allow[]
the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Id.
“[I]t is a longstanding principle of American law that legislation of
Congress, unless a contrary intent appears, is meant to apply only within the
territorial jurisdiction of the United States.” Morrison v. Nat’l Austl. Bank Ltd.,
561 U.S. 247, 255 (2010), quoting EEOC v. Arabian Am. Oil Co. (“Aramco”), 499
U.S. 244, 248 (1991). “This principle represents a canon of construction, or a
presumption about a statute’s meaning, rather than a limit upon Congress’s
power to legislate. It rests on the perception that Congress ordinarily legislates
with respect to domestic, not foreign matters.” Id. (internal citations omitted).
The presumption that “[w]hen a statute gives no clear indication of an
extraterritorial application, it has none,” Kiobel v. Royal Dutch Petroleum Co.,
133 S. Ct. 1659, 1664 (2013), quoting Morrison, 561 U.S. at 255 (alteration omitted),
is rebutted only when the statute’s “text, history, and purposes . . . evince a ‘clear
indication of extraterritoriality.’” Id. at 1665, quoting Morrison, 561 U.S. at 265.
Moreover, it is “well established that generic terms like ‘any’ or ‘every’ do not
rebut the presumption against extraterritoriality,” id., nor do “fleeting
7 reference[s]” to possible international ramifications of an otherwise domestic
statute, Morrison, 561 U.S. at 263.
We have read Morrison to “wholeheartedly embrace[] application of the
presumption against extraterritoriality, finding that ‘unless there is the
affirmative intention of the Congress clearly expressed to give a statute
extraterritorial effect, we must presume it is primarily concerned with domestic
conditions.’” Norex Petroleum Ltd. v. Access Indus., Inc., 631 F.3d 29, 32 (2d Cir.
2010), quoting Morrison, 561 U.S. at 255. We will “thus look for a ‘clear’ and
‘affirmative indication’ that a statute applies to conduct occurring outside the
territorial jurisdiction of the United States before concluding that the
presumption has been overcome.” United States v. Weingarten, 632 F.3d 60, 65
(2d Cir. 2011), quoting Morrison, 561 U.S. at 265 (citations and internal quotation
marks omitted).
This case involves the reach of the antiretaliation provision of the Dodd‐
Frank Act, which directs, in relevant part, that
[n]o employer may discharge . . . 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 . . . in making disclosures that are required or protected under the Sarbanes‐Oxley
8 Act of 2002 . . ., this chapter, . . . and 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). To survive Siemens’s motion to dismiss, Liu must
demonstrate either (1) that the facts alleged in his complaint state a domestic
application of the antiretaliation provision of the Dodd‐Frank Act, or (2) that the
antiretaliation provision is intended to apply extraterritorially.
The first alternative need not detain us long. We have no occasion here to
define the precise boundary between domestic and extraterritorial application of
this relevant provision, or to delineate the types of contacts within the United
States that would render an application of the statute domestic rather than
extraterritorial because this case is extraterritorial by any reasonable definition.
Liu is a resident of Taiwan employed by the Chinese subsidiary of a German
company; he reported to superiors in China and Germany regarding allegedly
corrupt activities that took place in China, North Korea, and Hong Kong; and his
employers decided, apparently in China and/or Germany, to terminate his
employment. In short, the whistleblower, his employer, and the other entities
involved in the alleged wrongdoing are all foreigners based abroad, and the
whistleblowing, the alleged corrupt activity, and the retaliation all occurred
9 abroad. The facts alleged in the complaint reveal essentially no contact with the
United States regarding either the wrongdoing or the protected activity.
Liu attempts to avoid this conclusion by pointing to one slim connection to
the United States. He argues that “Siemens voluntarily elected to have a class of
its securities publicly listed on the New York Stock Exchange and thereby
voluntarily subjected itself to – and undertook to comply with – United States
securities laws,” including the antiretaliation provision. Appellant’s Br. at 10.
Liu argues that because Siemens has securities listed on an American exchange,
his case is “fundamentally distinguishable” from Morrison, id. at 14.
This argument is unavailing. Morrison addressed whether Australian
purchasers of shares listed on an Australian stock exchange could rely on § 10(b)
of the Securities Exchange Act of 1934 to sue the Australian bank that issued the
shares. The Supreme Court concluded that § 10(b) did not have extraterritorial
reach, but rather applied “only [to] transactions in securities listed on domestic
exchanges, and domestic transactions in other securities.” Morrison, 561 U.S. at
267. The Court reached this conclusion despite the fact that “[t]here [were] listed
on the New York Stock Exchange . . . the [defendant bank’s] American
Depositary Receipts (ADRs), which represent the right to receive a specified
10 number of” the Australian shares. Id. at 251.2 Morrison thus decisively refutes
Liu’s contention that the United States securities laws apply extraterritorially to
the actions abroad of any company that has issued United States‐listed securities.
Far from helping Liu, Morrison establishes 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 securities alone is the sort of
“fleeting” connection that “cannot overcome the presumption against
extraterritoriality.” 561 U.S. at 263. See also In re Royal Bank of Scotland Grp.
PLC Sec. Litig., 765 F. Supp. 2d 327, 336 (S.D.N.Y. 2011) (“The idea that a foreign
company is subject to U.S. [s]ecurities laws everywhere it conducts foreign
transactions merely because it has ‘listed’ some securities in the United States is
simply contrary to the spirit of Morrison.”). In short, “simply alleging that some
2 No purchaser of the American‐listed ADRs remained party to the suit when the case reached the Supreme Court. In a curious twist of nomenclamenture, an American investor in the ADRs, Robert Morrison, had been an original plaintiff in the case, “but his claims were dismissed by the District Court because he failed to allege damages.” Morrison, 561 U.S. at 252 n.1. Morrison did not appeal that ruling, yet, as the Supreme Court noted, Morrison’s name “[i]nexplicably” remained attached to the case, id., and he was listed as a petitioner on the subsequent appeals, eventually giving his name to the Supreme Court’s decision.
11 domestic conduct occurred cannot support a claim of domestic application
[because] ‘[i]t is a rare case of prohibited extraterritorial application that lacks all
contact with the territory of the United States.’” Norex, 631 F.3d at 33, quoting
Morrison, 561 U.S. at 266 (emphasis in original).
Liu’s argument that the statute nevertheless applies to his case requires a
somewhat lengthier discussion, but is equally unavailing. 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, set forth
above, 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, Liu’s effort to cobble together indirect, circumstantial
suggestions of extraterritorial application faces powerful headwinds.
Liu offers several arguments that the statutory language or context of the
antiretaliation provision indirectly demonstrates that it is intended to have
extraterritorial reach. None provides the “clear and affirmative indication,”
12 Weingarten, 632 F.3d at 65, required to overcome the presumption against
extraterritoriality. First, Liu’s contention that the antiretaliation provision
“contains very broad language that includes all employees,” Appellant’s Br. at
11, is of no avail. The plain text of the statute contains no hint that the
antiretaliation provision is meant to apply extraterritorially, but rather simply
indicates that “[n]o employer” may retaliate against a whistleblower, 15 U.S.C.
§ 78u‐6(h)(1). That is precisely the sort of “generic” language that the Supreme
Court has expressly stated is insufficient to overcome the presumption against
extraterritorial application. See Kiobel, 133 S. Ct. at 1665.
Liu next points to other sections of the Dodd‐Frank Act that do have some
extraterritorial application to argue, in effect by association, that the
antiretaliation provision also should be read to have extraterritorial reach. He
points to § 929P(b) of the Dodd‐Frank Act, 124 Stat. at 1864‐65, which, inter alia,
grants district courts jurisdiction where a suit brought by the SEC or the United
States government
allege[s] a violation of the antifraud provisions of [the Securities Exchange Act of 1934] involving (1) conduct within the United States that constitutes significant steps in furtherance of the violation, even if the securities transaction occurs outside the United States
13 and involves only foreign investors; or (2) conduct occurring outside the United States that has a foreseeable substantial effect within the United States.
15 U.S.C. § 78aa(b). Liu argues that “by specifically providing for extraterritorial
jurisdiction in a related section of the statute, Congress clearly evidenced its
intention to protect SEC whistleblowers located abroad.” Appellant’s Br. at 16.
Liu’s argument inverts the ordinary canons of statutory interpretation.
“Where Congress includes particular language in one section of a statute but
omits it in another section of the same Act, it is generally presumed that Congress
acts intentionally and purposely in the disparate inclusion or exclusion.”
Russello v. United States, 464 U.S. 16, 23 (1983) (alteration omitted). There is no
exception to this general rule for language effecting extraterritorial application; to
the contrary, the Supreme Court has specifically cautioned against acceptance of
arguments such as Liu’s: “[W]hen a statute provides for some extraterritorial
application, the presumption against extraterritoriality operates to limit that
provision to its terms.” Morrison, 561 U.S. at 265. That limitation is founded in
“Congress’ awareness of the need to make a clear statement that a statute
applies” extraterritorially through “express[] legislat[ion]” that enables such
application. Aramco, 499 U.S. at 258. As Morrison observes, it would be
14 “superfluous” for a statute to note that a particular provision applies
extraterritorially if the entire statute had extraterritorial reach. See 561 U.S. at
265. Since § 929P(b) identifies a particular provision of Dodd‐Frank as having
such reach, the logical inference is that the antiretaliation provision, enjoying no
such explicit grant of extraterritorial application, has none, a conclusion which at
least one district court has also reached. See Asadi v. G.E. Energy (USA), LLC,
No. 4:12‐345, 2012 WL 2522599, at *4 (S.D. Tex. June 28, 2012).
Moreover, Liu’s argument fails even on its own terms. Liu does not
explain his contention that § 929P(b)’s crisply delineated jurisdictional grant is
somehow “related” to the whistleblower antiretaliation provision. In § 929P(b),
Congress provided the district court with limited extraterritorial jurisdiction over
specific types of antifraud suits brought by governmental entities when the
conduct at issue has particular types of relationships to the United States. Liu is
not a governmental actor, he has not pled facts of the sort that would confer
jurisdiction under § 929P(b), and he cannot argue that the antiretaliation
provision qualifies as an antifraud provision of the Securities Exchange Act. In
sum, there is no colorable argument that the limited extraterritorial reach of
15 § 929P(b) supports extraterritorial application of the antiretaliation provision in
circumstances such as those alleged by Liu.
Liu next turns to the Dodd‐Frank’s whistleblower bounty provision, 15
U.S.C. § 78u‐6(b), to make a similar argument. The bounty provision allows the
SEC, in its discretion, to make award payments to “whistleblowers who
voluntarily provided original information to the Commission that led to [a]
successful enforcement” action. Id. § 78u‐6(b)(1). Liu asserts that the SEC
regulations which define the eligibility for a whistleblower bounty suggest that
the agency conceives of the bounty as having international reach. He cites a
regulation providing that “you are not eligible [for an award] if: . . . You are . . . a
member, officer, or employee of a foreign government, any political subdivision,
department, agency, or instrumentality of a foreign government, or any other
foreign financial regulatory authority.” 17 C.F.R. § 240.21F–8(c)(2). Liu further
asserts that aspects of the agency’s discussion of the bounty provision included in
the promulgation of the final rule, 76 Fed. Reg. 34300‐01 (June 13, 2011), offer
additional support for the idea that the bounty provision is meant to have
extraterritorial reach. In particular, he points to the agency’s discussion of the tax
filing procedures for an award payment to a foreign national, id. at 34348 n.370,
16 and the agency’s decision to avoid making a categorical determination as to
whether a whistleblower’s possible violation of foreign laws should affect the
eligibility for an award, id. at 34320.
Liu’s argument proceeds by a concatenation of strained assumptions.
First, it assumes that SEC regulations should be accorded weight in determining
congressional intent with respect to the extraterritorial application of a statute.
Courts generally defer to reasonable agency interpretations of statutes that are
confided to the agency’s administrative discretion. Chevron, U.S.A., Inc. v.
Natural Res. Def. Council, Inc., 467 U.S. 837 (1984). However, “Chevron[]
deference to [an agency’s] statutory interpretation is called for only when the
devices of judicial construction have been tried and found to yield no clear sense
of congressional intent.” Gen. Dynamics Land Sys., Inc. v. Cline, 540 U.S. 581,
600 (2004). Given the strong presumption that statutes are limited to domestic
application in the absence of clear expression of congressional intent to the
contrary, it is far from clear that an agency’s assertion that a statute has
extraterritorial effect, unmoored from any plausible statutory basis for rebutting
the presumption against extraterritoriality, should be given deference. Indeed,
Morrison itself describes the presumption against extraterritoriality as a “canon
17 of construction,” 561 U.S. at 255, precisely one of the “devices of judicial
construction,” Gen. Dynamics Land Sys., 540 U.S. at 600, that can resolve the
question of congressional intent without the need to resort to the interpretation of
agency regulations under Chevron. At least one district court has interpreted our
own precedent to mean that “no regulation could ‘supply, on Congress’s behalf,
the clear legislative intent required to overcome,’ . . . the presumption against
extraterritoriality.” Souryal v. Torres Advanced Enter. Solutions, LLC, 847 F.
Supp. 2d 835, 843 (E.D. Va. 2012), quoting Desiano v. Warner‐Lambert & Co., 467
F.3d 85, 97 n.9 (2d Cir. 2006).
Moreover, even if we assume that the regulations clearly apply the bounty
program to whistleblowers located abroad and that some deference would be
due such an agency interpretation, it would not follow that Congress intended
the antiretaliation provision to apply similarly. As with our analysis of § 929P(b),
we must restrict an indication of extraterritorial application “to its terms,”
Morrison, 561 U.S. at 265; a regulation addressing the bounty provision cannot be
taken to support the proposition that the antiretaliation provision should apply
extraterritorially. 17 C.F.R. § 240.21F–8(c)(2) does not mention the antiretaliation
provision, and indeed, other SEC regulations suggest that the requirements of the
18 antiretaliation and bounty provisions are to be considered separately.3 Moreover,
extraterritorial application of the bounty and antiretaliation provisions have far
different international ramifications. Providing rewards to persons, foreign or
domestic, who supply information about lawbreaking is far less intrusive into
other countries’ sovereignty than seeking to regulate the employment practices of
foreign companies with respect to the foreign nationals they employ in foreign
countries. Applying the antiretaliation provision in circumstances such as Liu’s
would effect such an intrusion. Thus, whatever their merits, none of the
arguments that the bounty provision is meant to have extraterritorial reach
provide any support for Liu’s claim that the antiretaliation provision is meant to
have extraterritorial reach.
3 For example, 17 C.F.R. § 240.21F–2(b)(iii) states that “[t]he anti‐retaliation protections apply whether or not you satisfy the requirements, procedures and conditions to qualify for an award.” The most direct consequence of this provision is that the antiretaliation provisions protect even whistleblowers who, for various reasons enumerated in the statute, cannot collect a bounty. But it more broadly suggests a separation between the conditions triggering the antiretaliation provision and those triggering the bounty provision, and supports our conclusion that even if the bounty provision has certain extraterritorial applications, it does not follow that the antiretaliation provision must apply extraterritorially as well.
19 In sum, there is no explicit statutory evidence that Congress meant for the
antiretaliation provision to apply extraterritorially, and none of the tangential
indications of extraterritorial application elsewhere in Dodd‐Frank to which Liu
points are sufficiently germane or cogent to overcome the presumption against
extraterritoriality. Thus “we must presume [that the antiretaliation provision] is
primarily concerned with domestic conditions.” Norex, 631 F.3d at 32, quoting
Morrison, 561 U.S. at 255.
As the district court was correct in granting Siemens’s motion to dismiss
because the antiretaliation provision does not apply extraterritorially, we need
not reach the various other questions raised by Siemens to determine whether
Liu’s claim was otherwise adequately pled. In particular, we need not determine
whether the district court correctly ruled that § 806 of the Sarbanes‐Oxley Act,
Pub. L. No. 107‐204, 116 Stat. 745, 802, codified as amended at 18 U.S.C. § 1514A
(2010), “does not ‘require or protect’ disclosures of FCPA violations,” Meng‐Lin
Liu v. Siemens A.G., 978 F. Supp. 2d 325, 330 (S.D.N.Y. 2013), or whether Liu’s
internal reporting of alleged misconduct, with or without his subsequent
disclosures to the SEC, qualified him as a “whistleblower” under the Dodd‐
Frank Act, id. at 331‐332, and we express no views on those issues.
20 CONCLUSION
Because the whistleblower antiretaliation provision of the Dodd‐Frank Act,
15 U.S.C. § 78u‐6(h), does not apply extraterritorially, and Liu has failed to plead
facts constituting a domestic application of the antiretaliation provision, the
district court correctly granted Siemens’s motion to dismiss. The judgment of the
district court is therefore AFFIRMED.