Court Rules Dodd-Frank Whistleblower Retaliation Claims Are Arbitrable

We have previously written about how Dodd-Frank retaliation cases are a mixed bag for employers and about the Supreme Court’s expansion of Sarbanes-Oxley (“SOX”) Whistleblower protections.  A new decision from the Wisconsin District Court is another mixed win for employers who want to enforce arbitration agreements in Dodd-Frank and SOX retaliation cases.  In a case of first impression in the Seventh Circuit, Wussow v. Bruker Corporation., No. 16-cv-444-wmc, 2017 WL 2805016 (W.D. Wis. June 25, 2017), the district court held that while arbitration of SOX whistleblower retaliation claims cannot be compelled, a similar cause of action for whistleblower retaliation under Dodd-Frank can be.

In Wussow, the plaintiff filed an employment discrimination and retaliation action under SOX and Dodd-Frank, claiming that his employer, Bruker Corporation, retaliated against him for engaging in whistleblowing activity.  In response, Bruker Corporation filed a motion to compel arbitration of the Dodd-Frank claim and to stay the court proceedings on the SOX claim pending the outcome of the arbitration.  Although the plaintiff had signed an arbitration agreement covering all employment related claims, Dodd-Frank expressly precludes mandatory arbitration of SOX whistleblower retaliation claims. Thus, the arbitration agreement was unenforceable as to the SOX claim.

However, the very similar Dodd-Frank retaliation statute includes no provision expressly barring mandatory arbitration. For this reason, the court granted the motion to compel arbitration of the Dodd-Frank retaliation claims. The court, however, denied the employer’s bid to stay the court proceedings of the SOX claim, noting that while it “normally would stay all proceedings in this court pending the outcome of that arbitration, doing so here would frustrate Congress’s express intent with respect to plaintiff’s” SOX claim. Id. at *1.  Therefore, the court referred the Dodd-Frank claim to arbitration and declined to stay proceedings on the SOX claim, indicating that it would enter an expedited schedule for the SOX claim if necessary.

While this case signals an important win for employers seeking to enforce arbitration agreements in Dodd-Frank retaliation cases, the possibility of defending against claims in two forums could lead to increased litigation costs and even inconsistent outcomes. Employers may have to decide whether it is really in their best interest to pursue enforcement of arbitration agreements in instances where both SOX and Dodd-Frank retaliation claims are brought by plaintiffs.