Monthly Archives: March 2014

By John F. Fullerton III and Jason Kaufman

Almost four years after it was enacted in 2010, the full impact of the Dodd Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) on the enforceability of predispute arbitration agreements is not completely clear.  Some whistleblower retaliation claims are still subject to mandatory arbitration agreements, while others plainly are not, depending upon when the arbitration agreement was executed, the statute under which the claim is brought, and the jurisdiction in which the employer and employee find themselves.

First, prior to the passage of Dodd-Frank, courts had held that whistleblower retaliation claims filed under Section 806 of the Sarbanes-Oxley Act (“SOX”) could be compelled to arbitrate under mandatory arbitration agreements between an employer and employee.  Dodd-Frank amended Section 806 to include an explicit ban on agreements to arbitrate SOX claims: “No predispute arbitration agreement shall be valid or enforceable, if the agreement requires arbitration of a dispute arising under this section.”  There is a split in authority, however, regarding whether this provision applies retroactively to invalidate arbitration agreements executed before Dodd-Frank was enacted.  Federal courts in Massachusetts and New York [pdf] have reasoned that retroactive application is appropriate because congressional intent as to the temporal scope of the statute is unclear, and because the right to arbitrate is jurisdictional – i.e., relates only to the forum in which claims can be heard – rather than substantive.  Courts in New Jersey (most recently) [pdf], Nevada, Colorado, South Carolina, and the District of Columbia, on the other hand, have rejected this rationale based on the well-settled presumption against statutory retroactivity, and their determination that the right to arbitrate is not merely a question of jurisdiction, but a vested contractual right that cannot be withdrawn retroactively absent clear congressional intent.  Thus, in the latter jurisdictions, some SOX claims remain arbitrable if the arbitration agreement pre-dates Dodd-Frank.