2nd Circuit Ruling that Dodd-Frank Whistleblower Retaliation Claims are Arbitrable under Employment Agreements filed for US Supreme Court Review

Date: December 31, 2019

On December 16, 2019 Petitioner Erin Daly filed a petition for writ of certiorari to have the United States Supreme Court review the 2nd Circuit ruling of Daly v. Citigroup Inc., 939 F.3d 415 (2nd Cir. 2019), which held that arbitration clauses were valid for whistleblower retaliation complaints under the Dodd-Frank Act.

The facts of the case pertain to the Plaintiff working in the Private Bank Division of Citigroup.  The Plaintiff allegedly complained to internal bank attorneys and human resources employees that her supervisor repeatedly demanded of her to disclose material non-public information to the supervisor’s favored clients, and was subsequently fired when she reported her complaint.  The Plaintiff then filed a complaint in the Southern District of New York alleging several claims under the whistleblower retaliation clauses of the Dodd-Frank and Sarbanes-Oxley Acts.  Citigroup responded by filing a motion to dismiss the Plaintiff’s Sarbane-Oxley Act claims and compel arbitration for the Dodd-Frank Act claims.  Citigroup argued the Plaintiff’s signed employment agreement contained an arbitration clause, and all of the claims, except the claims under the Sarbanes-Oxley Act were subject to mandatory arbitration.  In regard to the Sarbanes-Oxley Act claim, Citigroup argued for dismissal based on the fact the Plaintiff had not exhausted all of her administrative remedies.  The district court granted both of Citigroup’s motions.

On September 19, 2019, the 2nd Circuit affirmed the district court’s ruling and joined the 3rd Circuit in holding that Dodd-Frank whistleblower retaliation complaints are arbitrable (See Khazin v. TD Ameritrade Holding Corp., 773 F.3d 488 (3d Cir. 2014)).  The 2nd Circuit justified its decision in noting that unlike the Sarbanes-Oxley Act, which explicitly contains an anti-arbitration provision, the Dodd-Frank Act contains no language, signaling Congress’s intent to not preclude whistleblower retaliation complaints under the Dodd-Frank Act from being precluded.  Thus, the Plaintiff, in signing the employment agreement with the arbitration provision, was bound to arbitration for her Dodd-Frank Act whistleblower retaliation claims.

While there is no guarantee that the Supreme Court will grant certiorari and review the case, this is an important case to follow as the 2nd Circuit is now the second federal appellate court decision to conclude that mandatory arbitration clauses in employment agreements are enforceable with respect to whistleblower retaliation claims under the Dodd-Frank Act.

VW Contributor: Ryan Coufal
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