• Two District Courts Grant Defendants’ Motions to Arbitrate Whistleblower Employment Disputes
  • April 2, 2014 | Authors: Bryan B. House; Pamela L. Johnston; Courtney Worcester
  • Law Firms: Foley & Lardner LLP - Milwaukee Office ; Foley & Lardner LLP - Los Angeles Office ; Foley & Lardner LLP - Boston Office
  • In Khazin v. TD Ameritrade, Civ. No. 13-4149 (D.N.J. March 11, 2014), the district court faced two questions. First, was the plaintiff a whistleblower under the Dodd-Frank Act, even though he had not reported wrongdoing to the SEC at the time he was terminated? Second, was the plaintiff required to arbitrate his employment termination claims?

    On the first point, the court disagreed with the Fifth Circuit’s ruling in Asadi v. G.E. Energy (U.S.A.), L.L.C., 720 F.3d 620 (5th Cir. 2013), and sided with the many district courts that have concluded that the Dodd-Frank anti-retaliation protections extend to whistleblowers protected under the Sarbanes-Oxley Act regardless of whether any disclosures were made to the SEC. Because the Dodd-Frank Act is ambiguous on the issue, the court concluded that it should look to the SEC’s construction of the statute for guidance.

    On the second issue, the court again faced conflicting caselaw, this time regarding whether the Dodd-Frank Act’s bar of pre-dispute arbitration provisions for whistleblower claims brought pursuant to the Sarbanes-Oxley Act can be applied retroactively. Assuming that the bar applied to claims made under the Dodd-Frank Act, the court sided with those courts that have held that the pre-dispute arbitration bar does not apply retroactively.

    Several weeks earlier, in Murray v. UBS Securities, LLC, Case 2:12-cv-05914 (S.D.N.Y. January 27, 2014), the court addressed head-on whether retaliation claims brought under the Dodd-Frank Act were subject to a pre-dispute arbitration bar. The court ruled that they were not because the Dodd-Frank Act amended the Sarbanes-Oxley Act to provide such a bar, but the Dodd-Frank Act itself contains no such bar. The court rejected the plaintiff’s attempt to recast his claim as arising under the Sarbanes-Oxley Act, even though his Dodd-Frank Act claim was premised on making disclosures that were protected under Sarbanes-Oxley.