To arbitrate or not to arbitrate – that was the question the Fourth Circuit faced in Santoro v. Accenture Federal Services, LLC, a recent employment discrimination case involving statutory interpretation of the Dodd-Frank Act. No. 12-2561 (4th Cir. May 5, 2014). Because the plaintiff did not bring a whistleblower claim, the Court concluded, “to arbitrate” carried the day.
The facts underlying Dr. Armond Santoro’s claims are relatively straightforward. After entering into an employment contract with Accenture as a program manager in 2005, Santoro was fired just over six years later in what the court called “a cost-cutting measure.” At the time of his termination, Santoro was 66 years old, and his replacement was a younger male employee. Santoro sued his former employer under the ADEA, FMLA, and ERISA. He did not, however, allege any whistleblower retaliation under the Dodd-Frank or Sarbanes-Oxley Acts.
Importantly, Santoro’s employment contract included a broad arbitration clause, which stated that “[a]ny and all disputes” related to his employment “shall be finally settled by arbitration,” including Title VII and ADEA claims. Because the contract clearly provided for arbitration, the only issue for the court to determine was whether this language was enforceable.
The Federal Arbitration Act (FAA) provides that arbitration agreements are enforceable except for “such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. In other words, there is a presumption that employee disputes may go to arbitration unless there is a clear indication by Congress to “override” the FAA’s mandate.
Santoro argued that the Dodd-Frank Act—specifically, sections 7 U.S.C. § 26(n) and 18 U.S.C. § 1514A(e))—was intended to override the FAA and to bar arbitration of his claims. (The Dodd-Frank Act contains a third whistleblower provision at 12 U.S.C. § 5567(d), but Santoro did not raise this provision as part of his appeal.) Those statutory sections each state that “[t]he rights and remedies provided for in this section may not be waived by any agreement, . . . including by a predispute arbitration agreement.” The laws also explain that “[n]o predispute arbitration agreement shall be valid or enforceable, if the agreement requires arbitration of a dispute arising under this section.”
“Initially,” the Fourth Circuit noted, “it is clear that Dodd-Frank prohibits predispute agreements to arbitrate whistleblower claims.” Nevertheless, the court explained, Santoro’s employment contract did not fall within this protected category. The Santoro Court examined the plain language of the Dodd-Frank Act, noting that the Act prohibits only those predispute arbitration agreements affecting disputes “in this section,” and “under this section,” i.e., claims of whistleblower retaliation under the Dodd-Frank Act itself. Because Mr. Santoro’s claims were raised under other federal anti-discrimination statutes, the court reasoned, these exceptions to the FAA were not applicable.
The Dodd-Frank Act remains, in its relative infancy, a complicated legislative labyrinth that courts are now wading through, often in cases of first impression. What the Santoro decision makes clear is that employers may continue to include arbitration clauses in their employment agreements. Employers should recognize, however, that those clauses will not be enforceable in cases where the (former) employee brings claims specifically under the Dodd-Frank Act.