* Dodd-Frank whistleblower rule does not apply
* China, N. Korea officials said to get kickbacks
By Jonathan Stempel
NEW YORK, Oct 21 A U.S. judge has thrown out a
lawsuit accusing Germany's Siemens AG of funneling
kickbacks to Chinese and North Korean hospital officials,
narrowing the ability of plaintiffs to use U.S. courts to sue
over conduct outside the country.
U.S. District Judge William Pauley in Manhattan on Monday
said the anti-retaliation provision of the 2010 Dodd-Frank
financial reform law, which shields whistleblowers from
discipline for reporting alleged violations by their employers,
did not apply to conduct outside the United States.
The decision is the latest arising from the U.S. Supreme
Court's 2010 ruling in Morrison v. National Australia Bank,
which created a presumption that U.S. civil statutes do not
apply to non-U.S. conduct unless Congress suggests otherwise.
Meng-Lin Liu, a former compliance officer at Siemens China's
healthcare unit, accused Siemens of routinely making inflated
bids for medical imaging equipment sales to public hospitals,
and then selling the equipment at lower prices to intermediaries
who gave kickbacks to hospital officials.
Liu, a Taiwan resident, said this violated the Foreign
Corrupt Practices Act (FCPA), which bars companies with
U.S.-listed securities from bribing foreign officials, and
violated terms of Siemens' compliance obligations under its $1.6
billion settlement in 2008 with U.S. and German regulators of
Liu said he first raised his concerns in October 2009, only
to be later stripped of his responsibilities, and fired in March
2011. He said the firing was illegal under Dodd-Frank, and
sought twice his back pay plus other damages.
But Pauley concluded that while Dodd-Frank covers some
non-U.S. activity, including in cases brought by the U.S.
Securities and Exchange Commission, its whistleblower
protections did not.
"There is simply no indication that Congress intended the
anti-retaliation provision to apply extraterritorially," the
Pauley also rejected Liu's request for protection under the
Sarbanes-Oxley Act of 2002, saying the relevant provision of
that governance law did not apply outside the United States and
did not "require or protect" disclosures of FCPA violations.
David Mair, a partner at Kaiser Saurborn & Mair representing
Liu, did not immediately respond to requests for comment.
Brant Bishop, a partner at Kirkland & Ellis representing
Siemens, declined to comment.
Lower courts have used the Supreme Court's Morrison decision
to keep a wide range of lawsuits, many involving securities law,
out of U.S. courts.
In June 2012, a federal judge in Houston dismissed a similar
whistleblower claim against a General Electric unit over
its hiring of a woman closely associated with an Iraqi official
with whom it hoped to negotiate a joint venture agreement.
Meanwhile, this April the Supreme Court cited a presumption
that U.S. law "governs domestically, but does not rule the
world" in limiting the sweep of a 1789 law that had been used to
bring cases in U.S. courts alleging human rights abuses outside
Siemens has U.S.-listed American depositary receipts.
The case is Liu v. Siemens AG, U.S. District Court, Southern
District of New York, No. 13-00317.