On December 8, 2014, in Khazin v. TD Ameritrade Holding Corp., the US Court of Appeals for the Third Circuit held that whistleblower retaliation claims under 15 U.S.C. § 78u-6(h) are not statutorily exempt from pre-dispute arbitration agreements under the Dodd-Frank Act (773 F.3d 488 (3d Cir. 2014)).

Plaintiff Boris Khazin alleged that he was fired from TD Ameritrade (TD) for reporting securities violations to his supervisor. Khazin filed suit in state court asserting whistleblower retaliation claims in violation of state laws and the Dodd-Frank Act. The state court dismissed the case for lack of subject matter jurisdiction, and Khazin reasserted his Dodd-Frank claim in the U.S. District Court for the District of New Jersey.

TD moved to compel arbitration, relying on an arbitration agreement in Khazin's employment contract. Khazin opposed TD's motion to compel, arguing that the Dodd-Frank Act's Anti-Arbitration Provision nullified the parties' pre-dispute arbitration agreement. The district court granted TD's motion, reasoning that the Anti-Arbitration Provision did not prohibit arbitration agreements that were executed before the Dodd-Frank was enacted. Khazin appealed.

The Third Circuit affirmed, but on different grounds. The court rejected Khazin's contention that the Dodd-Frank Anti-Arbitration Provision applies to Dodd-Frank whistleblower suits brought under 15 U.S.C. § 78u-6(h). Although the Dodd-Frank Act created a separate private cause of action for whistleblowers, its Anti-Arbitration Provision is expressly limited to whistleblower retaliation claims brought under the Sarbanes-Oxley Act. The law also added analogous anti-arbitration provisions into the whistleblower protections of the Commodity Exchange Act and the Consumer Financial Protection Act, but the law contains no such provision with respect to Dodd-Frank whistleblower retaliation claims under 15 U.S.C. § 78u-6(h). Khazin argued that Congress did not intend to leave this gap, because the Dodd-Frank law is large and complicated and generally prohibits arbitration. The court reasoned that this omission was deliberate, however, given that Congress added such provisions in other contexts but did not do so in 15 U.S.C. § 78u-6(h).

In enforcing the parties' pre-dispute arbitration agreement, the Third Circuit distinguished the Fourth Circuit's recent decision in Santoro v. Accenture Federal Services, LLC, 748 F.3d 217 (4th Cir. 2014). Although that decision contained broad language suggesting that Dodd-Frank whistleblower claims are not subject to pre-dispute arbitration, the Fourth Circuit addressed an entirely different issue, and did not even mention the Dodd-Frank whistleblower provision at issue in this case.

The Third Circuit's decision underscores one of many key differences among the various whistleblower retaliation claims available under federal law. Counsel should carefully analyze these differences before choosing which cause of action to pursue.