Dodd-Frank Whistle-Blower Can't Use Law's Anti-Arbitration Provision, 3rd Cir. Decides

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By Jay-Anne Casuga

Dec. 8 — A former TD Ameritrade Inc. employee must arbitrate his Dodd–Frank Wall Street Reform and Consumer Protection Act whistle-blower retaliation claim against the company because the law's anti-arbitration provision doesn't apply to his specific cause of action, the U.S. Court of Appeals for the Third Circuit ruled Dec. 8 in an issue of first impression.

Affirming a lower court's order dismissing Boris Khazin's complaint and compelling arbitration of his claim under 15 U.S.C. § 78u-6(h), the Third Circuit found that the plain text and structure of the Dodd-Frank Act limits the provision barring the enforcement of predispute arbitration agreements to whistle-blower claims brought under the Sarbanes-Oxley Act, the Commodity Exchange Act and the Consumer Financial Protection Act. The Dodd-Frank Act includes no similar arbitration prohibition for Section 78u-6(h) claims, the court said.

“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,” the court said.

Judge Julio M. Fuentes wrote the opinion, joined by Judges Morton I. Greenberg and Robert Cowen.

Worker Allegedly Reported Securities Violation

When Khazin joined TD, he signed an agreement in which he and the company agreed to arbitrate all employment disputes, the court said.

Khazin, whose duties included “performing due diligence on financial products offered to TD customers,” reported to his supervisor that the pricing for one such product didn't comply with securities regulations. Company officials allegedly didn't accept his recommendation to change the price for compliance purposes because doing so would have negative “revenue impact.”

TD ultimately fired Khazin because he purportedly was involved in a “billing irregularity.” Khazin brought a Dodd-Frank Act whistle-blower lawsuit against TD under Section 78u-6(h), alleging that he was fired for reporting securities violations.

The U.S. District Court for the District of New Jersey granted TD's motion to dismiss the complaint and compel arbitration, finding that Khazin and TD executed their arbitration agreement prior to the enactment of the Dodd-Frank Act, which didn't apply retroactively.

Anti-Arbitration Provision Applies to Certain Claims

The Third Circuit affirmed on different grounds, namely that the Dodd-Frank Act's anti-arbitration provision at 18 U.S.C. § 1514A(e)(2) doesn't apply to Khazin's cause of action.

The court said the provision was appended to the section dealing with whistle-blower retaliation claims under the SOX Act and states that “[n]o predispute arbitration agreement shall be valid or enforceable, if the agreement requires arbitration of a dispute arising under this section.”

Meanwhile, it said, Dodd-Frank whistle-blower causes of action aren't “located in the same title of the United States Code, let alone the same section.”

“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,” Judge Fuentes wrote.

Furthermore, similar anti-arbitration language was included in Dodd-Frank sections pertaining to the whistle-blower protections of the CEA and the CFPA, but not for Section 78u-6(h) claims, the court said.

“The text and structure of Dodd-Frank compel the conclusion that whistle-blower retaliation claims brought pursuant to 15 U.S.C. § 78u-6(h) are not exempt from predispute arbitration agreements,” the court said. “As this is the only type of claim that Khazin asserts, nothing prevents TD from seeking to enforce their arbitration agreement.”

The Third Circuit said federal district courts in New York and California have reached the same conclusion.

Biebelberg & Martin represented Khazin. Baritz & Colman represented TD.

To contact the reporter on this story: Jay-Anne B. Casuga in Washington at

To contact the editor responsible for this story: Susan J. McGolrick at

Text of the opinion is available at