|
The Second Circuit Court of Appeals has held that claims based on the whistleblower provision in the Sarbanes-Oxley Act are fully arbitrable in the same manner as claims brought under other federal employment statutes.
In Guyden v. Aetna, Inc., No. 06-4954-CV, 2008 WL 4426478 (2d Cir. Oct. 2, 2008), Guyden was employed by Aetna as a compliance officer. As a condition of employment, Guyden entered into an arbitration agreement covering all employment-related claims. After allegedly pointing to potential violations of Sarbanes-Oxley, Guyden was terminated.
Guyden sued Aetna, alleging violations of Sarbanes-Oxley’s whistleblower protection provision. 18 U.S.C. § 1514A. Aetna moved to compel arbitration of the claim. The district court ruled that Guyden’s claims were fully arbitrable and that the provisions of the arbitration agreement were not unconscionable. However, the district court did opine that restricting discovery to the extent theoretically possible under the agreement might preclude Guyden from vindicating her statutory rights.
On appeal, the Court first affirmed that whistleblower claims under Sarbanes-Oxley are arbitrable. Although Guyden argued that there was an “inherent conflict” between the purpose of Sarbanes-Oxley and the enforcement of arbitration agreements, the Court observed that comparable statutory claims had been deemed arbitrable. See, e.g., Oldroyd v. Elmira Sav. Bank, 134 F.3d 72, 79 (2d Cir. 1998) (noting the arbitrable nature of federal FIRREA, ADEA, ERISA, and Sherman Act claims).
Instead, the Court found the legislative history of Sarbanes-Oxley evinced no intent to displace the strong federal presumption in favor of arbitration, with a primary purpose of “provid[ing] a private remedy for the aggrieved employee, not publiciz[ing] alleged corporate misconduct.” Furthermore, the Court noted that both the House and Senate had specifically rejected versions of Sarbanes-Oxley that would have prohibited arbitration of such claims.
The Court also affirmed the trial court’s determination that none of the agreement’s provisions were unconscionable. Neither the confidentiality clause nor the provision for only a brief summary of the award were unconscionable, and according to the Court, both provisions were “paradigmatic aspect[s] of arbitration.” While the Court shared the trial court’s concerns that the discovery provision might be unconscionable if fully enforced, it found the provision allowed the arbitrator to order additional discovery and noted that Guyden’s concerns regarding discovery were merely speculative at such an early stage.
Based on its holding, the Court affirmed the order compelling arbitration of Guyden’s claims.
Subscribe to a free weekly update on ADR case law and
legislation
|