Dodd-Frank Arbitration

Recently, a federal appeals court ruled that a prohibition on mandatory arbitration does not apply to new causes of action that the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 created to protect whistle-blowers. Congress banned mandatory arbitration in corporate and financial whistle-blower litigation by enacting the Dodd-Frank. With that, employees could no longer be compelled to arbitrate their retaliation claims under the Sarbanes-Oxley Act, the Commodity Exchange Act or the new Consumer Financial Protection Act. Though there is some overlap between Sarbanes-Oxley and newer Dodd-Frank claims, an employee may have no judicial remedy if they are subject to mandatory arbitration and also fail to exhaust the administrative remedies necessary to bring a Sarbanes-Oxley claim. The U.S. Court of Appeals for the Third Circuit, in Khazin v. TD Ameritrade Holding Corp., ruled last month that TD Ameritrade could compel arbitration of a former employee’s Dodd-Frank whistle-blower claim, because he had a written employment contract that required him to arbitrate all employment-related disputes and that was enforceable under the act. The district court had ruled he must arbitrate his claims, but for different reasons. The lower court reasoned that the employment contract predated the passage of Dodd-Frank, but the Third Circuit found on appeal that the Dodd-Frank legislation’s anti-arbitration section expressly amended Sarbanes-Oxley, but did not contain any reference to Dodd-Frank’s own anti-retaliation cause of action. Distinctions between Sarbanes-Oxley and Dodd-Frank could generate further splits of authority in the federal courts if this approach is rejected. See full story here-- http://bit.ly/1z646rA and a copy of the opinion here-- http://www2.ca3.uscourts.gov/opinarch/141689p.pdf