Dodd-Frank Whistleblower Provisions Do Not Override FAA Arbitration Mandate for Non-whistleblower Claims: Fourth Circuit

Practical Law Legal Update 0-567-7005 (Approx. 5 pages)

Dodd-Frank Whistleblower Provisions Do Not Override FAA Arbitration Mandate for Non-whistleblower Claims: Fourth Circuit

by Practical Law Labor & Employment

Background

Santoro was an employee of Accenture since 1997. In 2005, he entered into an employment contract with Accenture that included the following arbitration clause:

Any and all disputes arising out of, relating to or in connection with this Agreement or your employment by Accenture, including, but not limited to, disputes relating to the validity, negotiation, execution, interpretation, performance or non-performance of the Agreement ... shall be finally settled by arbitration.... Arbitrable disputes include without limitation employment and employment termination claims and claims by you for employment discrimination, harassment, retaliation, wrongful termination, or violations under Title VII ... the Age Discrimination in Employment Act.

In September 2011, Santoro was terminated from Accenture as part of a cost-cutting measure and was replaced by a younger male employee. In response to his termination, Santoro filed a complaint against Accenture in the Superior Court for DC, alleging claims for age discrimination under the DC Human Rights Act. Accenture moved to compel arbitration. Santoro opposed Accenture's motion, contending that the arbitration clause was void under three Dodd-Frank whistleblower provisions:

The Superior Court:

Rejected Santoro's argument and granted Accenture's motion.
Stayed the case pending arbitration.

During the time that the case was pending with the Superior Court, Santoro received a right-to-sue letter from the EEOC, and filed an action in the Eastern District of Virginia alleging claims under the ADEA, FMLA and ERISA. Accenture moved to compel arbitration of these federal claims as well. The district court:

Granted the motion.
Concluded that Dodd-Frank only applies to certain situations:
- when whistleblowers are involved; and
- that are set out by the statute.
Held that because Santoro did not bring a Dodd-Frank whistleblower claim, he could not use Dodd-Frank to invalidate an otherwise valid arbitration agreement.

Santoro appealed to the Fourth Circuit, contending that:

The district court erred in compelling arbitration.
Dodd-Frank invalidates all arbitration agreements by publicly-traded companies that lack a carve-out for Dodd-Frank whistleblower claims, even if the plaintiff is not a whistleblower.
Dodd-Frank represents a "contrary congressional command" that overrides the otherwise valid arbitration clause in his employment contract.

Accenture contended that Dodd-Frank's scope is limited to plaintiffs bringing whistleblower claims.

Outcome

The Fourth Circuit affirmed the district court's judgment, holding that:

Dodd-Frank does not invalidate the arbitration agreement between Accenture and Santoro.
Where a plaintiff is not pursuing Dodd-Frank whistleblower claims, neither 7 U.S.C. § 26(n)(2) nor 18 U.S.C. § 1514A(e)(2) override the FAA's mandate that arbitration agreements are enforceable.
Since Santoro is not pursuing a whistleblower dispute under Dodd-Frank, Dodd-Frank does not bar arbitration of Santoro's federal claims.

The Fourth Circuit found that:

Dodd-Frank prohibits pre-dispute agreements to arbitrate whistleblower claims. Therefore, an agreement to arbitrate whistleblower claims is not "valid or enforceable" (CompuCredit Corp. v. Greenwood, 132 S.Ct. 665 (2012)).
It does not follow that Dodd-Frank prohibits the arbitration of non-whistleblower claims simply because an arbitration agreement does not carve-out Dodd-Frank whistleblower claims. Instead the language, context and enactment of the statute led to the opposite conclusion.
The statutory language of Dodd-Frank does not support Santoro's reading. Subsections (1) and (2) of Section 1514A(e) both focus on the rights and remedies pertaining to whistleblower claims, and prohibit any provision that waives or limits judicial resolution of those claims, not of the many varieties of claims that may arise in an employment relationship.
Accenture is not requiring Santoro to arbitrate a whistleblower section arising under Dodd-Frank. Rather it is requiring him to arbitrate claims arising under other federal statutes under an otherwise valid arbitration agreement.
Under Dodd-Frank, Congress has protected the right to bring a whistleblower cause of action in a judicial forum and nothing more.
Santoro's argument to apply subsection (2) as a broad, free-standing right for non-whistleblowing employees overlooks both:
- the limiting language within subsection (2); and
- the broader context of the statute.
Nothing in Dodd-Frank suggests that Congress sought to bar arbitration of every claim if the arbitration agreement in question did not exempt Dodd-Frank claims. In fact, nothing in Dodd-Frank even refers to arbitration apart from the limited reference in subsections (1) and (2) that are otherwise solely concerned with establishing a cause of action for whistleblowing employees.
Given the statute's language and context, Santoro cannot meet his burden of showing that Dodd-Frank represents a contrary congressional command overriding the validity of arbitration clauses as to non-whistleblower claims.
This conclusion is further reinforced by the context surrounding the enactment of Dodd-Frank.

Practical Implications

Employers should be encouraged as this decision shows that an employee who is bringing non-whistleblowing federal claims arising out of the employment relationship cannot rely on Dodd-Frank to override the validity of arbitration clauses.

Dodd-Frank Whistleblower Provisions Do Not Override FAA Arbitration Mandate for Non-whistleblower Claims: Fourth Circuit | Practical Law