Judge says Dodd-Frank arbitration ban applies retroactively

U.S. District Court Judge Douglas Woodlock issued an order yesterday that applies a ban on arbitration agreements retroactively. Congress enacted the ban as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Section 922 of the Dodd-Frank Act amends the Sarbanes-Oxley Act (SOX) to say that, “No predispute arbitration agreement shall be valid or enforceable, if the agreement requires arbitration of a dispute arising under this section.” 18 U.S.C. § 1514A(e)(2). Judge Woodlock considered Dodd-Frank’s remedial purpose, and the procedural nature of arbitration, to conclude that Congress intended that any present arbitration of SOX claims must be based on post-dispute agreements to arbitrate. If the employer required the arbitration agreement as a condition of employment, then that agreement cannot compel a whistleblower to use arbitration now, even though the agreement was legal when it was signed. The order has a nice analysis of arbitration agreements, statutory interpretation, and the purposes of SOX and Dodd-Frank.

To use this holding and pursue a SOX claim without being forced into arbitration, the whistleblower must still file the initial written complaint with OSHA on time (now 180 days of the first notice of any adverse action). If you have a SOX claim that arose within the last 180 days, I would urge you to consult a lawyer soon about how to meet this time limit. You can get a referral to a whistleblower lawyer from the Attorney Referral Service of the National Whistleblower Legal Defense and Education Fund.

Congratulations to Massachusetts attorney Alan Crede who successfully defeated a motion to compel arbitration. The case is Pezza v. Investors Capital Corp., Case No. 10-10113-DPW (D. Mass. 03/01/2011).

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