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In Khazin v. TD Ameritrade, No. 14-1689,
2014 WL 6871393 (3rd Cir. Dec. 8, 2014), the Third
Circuit affirmed a lower court's decision compelling
arbitration of a Dodd-Frank whistleblower retaliation claim.
This is the first circuit court decision to address whether such
claims are arbitrable, and the decision is consistent with
two district court opinions that have previously addressed the
issue.
Khazin alleged that TD Ameritrade terminated his employment in
retaliation for reporting a potential securities regulation
violation to his supervisor. He filed a Dodd-Frank
whistleblower claim under the securities whistleblower provision
and TD Ameritrade moved to compel arbitration pursuant to the
arbitration clause in Khazin's employment agreement.
On appeal, Khazin argued that the arbitration clause was not
enforceable in light of an anti-arbitration provision found in
Dodd-Frank's amendments to the Sarbanes-Oxley Act
("SOX"), which states that "[n]o predispute
arbitration agreement shall be valid or enforceable, if the
agreement requires arbitration of a dispute arising under this
section." But applying a plain reading of the statutes,
the Third Circuit held that SOX's anti-arbitration provision
did not apply to the Dodd-Frank securities retaliation claim raised
by Khazin, because the latter is "not located within the same
title of the United States Code, let alone the same section"
as SOX's anti-arbitration provision. The court
rejected Khazin's contention that Congress unintentionally
omitted the anti-arbitration language from the Dodd-Frank
securities retaliation statute while including the language in the
commodities whistleblower provision, the consumer financial
protection whistleblower provision, and in SOX's whistleblower
provision, reasoning that the "fact that Congress did not
append an anti-arbitration provision to the Dodd-Frank cause of
action while contemporaneously adding such provisions elsewhere
suggests ... that the omission was deliberate."
Notably, the Third Circuit affirmed on a different ground than
that relied upon by the district court in compelling
arbitration. The District Court of New Jersey had compelled
arbitration on the ground that SOX's anti-arbitration provision
did not apply retroactively to invalidate the arbitration clause
within Khazin's employment agreement, which predated
it. In reaching its conclusion, the Third Circuit
"express[ed] no opinion on whether the District Court properly
concluded that the Anti-Arbitration Provision does not invalidate
preexisting agreements."
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