January 11, 2018
from the United States District Court for the Northern
District of Illinois, Eastern Division. No. 17 C 1494 -
Milton I. Shadur, Judge.
EASTERBROOK and BARRETT, Circuit Judges, and Stadtmueller,
District Judge [*]
EASTERBROOK, CIRCUIT JUDGE.
Martensen used to be a supervisor in the Chicago Stock
Exchange's unit responsible for examining compliance with
trading regulations. He was fired in mid-2016 and contends in
this suit that his discharge violates 15 U.S.C.
§78u-6(h), a part of the Dodd-Frank Act that protects
complaint does not allege that he reported to the Securities
and Exchange Commission any fraud or other unlawful activity
at the Exchange. The district judge summarily dismissed the
suit, ruling that only a person who has reported "a
violation of the securities laws to the Commission"
(§78u-6(a)(6)) is covered by §78u-6(h). See 2017
U.S. Dist. LEXIS 87621 (N.D. Ill. June 7, 2017). The judge
recognized that some courts have held that a report to the
SEC is unnecessary but thought that view incompatible with
§78u-6(a)(6). Martensen proposed to file an amended
complaint alleging that he had indeed reported fraud to the
SEC, but the judge blocked that step, declaring that the
absence of detail made an amendment pointless.
plaintiff is entitled to file one amended complaint within 21
days of the original complaint, an answer, or a motion to
dismiss. Fed.R.Civ.P. 15(a)(1). Martensen was eligible under
that rule, no matter what the judge thought of the
amendment's merit. An amendment authorized by Rule
15(a)(1) must be accepted. But the question remains whether
the decision was prejudicial to Martensen. If the judge would
have dismissed the amended complaint immediately after its
filing, a remand would be pointless.
Supreme Court has under advisement a case posing the question
whether a whistleblower's protection depends on
complaining directly to the SEC. Digital Realty Trust,
Inc. v. Somers, No. 16-1276 (argued Nov. 28, 2017). And
on the day Martensen's appeal was argued, this court
issued its opinion in Verfuerth v. Orion Energy Systems,
Inc., 879 F.3d 789 (7th Cir. 2018). Verfuerth
holds that a Dodd-Frank whistleblower case need not wait for
the Court's decision in Digital Realty Trust
when the plaintiff's own filings show that he has not
reported "a violation of the securities laws"
(§78u-6(a)(6)) to anyone at all.
sides have filed post-argument memoranda discussing
Verfuerth. The Stock Exchange contends that it
requires affirmance. Martensen, by contrast, contends that it
supports him because he has reported fraud to the
SEC. He tells us that his amended complaint would allege that
on January 13, 2014, he reported securities fraud by filling
out a Form TCR on the Commission's website.
so good. But Martensen adds that this report was unrelated to
his discharge. His memorandum states: "It is ...
important to understand that ... Martensen does not
allege that he was terminated from the [Stock Exchange] due
to his SEC form TCR submission" (emphasis in original).
Martensen traces his discharge to an internal complaint filed
with the Stock Exchange itself on April 29, 2016, in which he
accused his superior of instructing Martensen's unit to
act in a way that he deems inconsistent with one of the
Exchange's internal rules.
other words, Martensen treats a report to the SEC as
conferring a status-like a whistleblower lapel pin-that
prevents employers from responding adversely to later reports
that do not concern fraud or any other violation of the
securities laws and never reach the SEC. As Martensen sees
things, the act that makes one a whistleblower need not
affect the eventual adverse action. That would make
§78u-6(h) unique in federal law. The retaliation
doctrine in employment-discrimination law covers only a
protected act that causes the adverse action. See, e.g., 42
U.S.C. §2000e-3(a); University of Texas Southwestern
Medical Center v. Nassar, 133 S.Ct. 2517 (2013). Other
anti-retaliation rules are treated similarly; causation is
built into the definition of the word "retaliate."
law uses causation in many senses, from "motivating
factor" (some role) to but-for causation (an essential
role) to proximate causation (an essential and closely
connected role). See, e.g., Paroline v. United
States, 134 S.Ct. 1710, 1722-26 (2014) (discussing these
many shadings of causation); Nassar (holding that
but-for causation is essential under §2000e-3(a)). As
far as we know, none of the many legal theories grouped under
the heading "retaliation" dispenses with
all causal relation between the act that justifies
the label "whistleblower" and the adverse
employment action. Subsection 78u-6(h) is captioned
"Protection of whistleblowers" and paragraph (1)
"Prohibition against retaliation". In context this
means "retaliation for being a whistleblower."
Martensen disclaims any contention that the Exchange
retaliated against him for the act that made him a
whistleblower, and unless §78u-6(h) is to stand alone in
the American legal canon, that is dispositive against him.
rests his claim on §78u-6(h)(1)(A)(iii). To provide
context, we reproduce all of subparagraph (A):
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 ...