In a win for employers, the Second Circuit Court of Appeals recently held that whistleblower claims under the Dodd-Frank Act are arbitrable.  Daly v. Citigroup Inc., 939 F.3d 415 (2d Cir. 2019).  The Second Circuit also held that a plaintiff’s failure to exhaust administrative remedies related to a Sarbanes-Oxley Act claim serves as a jurisdictional bar, warranting dismissal of the claim.


The plaintiff, a former employee, brought suit against the employer alleging, among other things, whistleblower retaliation claims under the Dodd-Frank Act (“Dodd-Frank”) and the Sarbanes-Oxley Act (“SOX”).  The employer (1) filed a motion to compel arbitration of certain claims, including the Dodd-Frank claim; and (2) sought dismissal of the SOX claim.

The district court concluded that although the plaintiff’s SOX claim was not arbitrable, the remainder of her claims (including Dodd-Frank) were arbitrable.  The district court dismissed the plaintiff’s SOX claim because she did not file a complaint with the Occupational Safety and Health Administration (“OSHA”) in a timely manner, thus failing to exhaust her administrative remedies.  The Second Circuit affirmed.

Arbitrability of Dodd-Frank Whistleblower Claims

In determining the arbitrability of the Dodd-Frank whistleblower claim, the Second Circuit examined the statutory text and framework.

The court noted that although SOX contains an anti-arbitration provision, Dodd-Frank does not.  This was significant:  “[N]othing in Dodd-Frank’s text suggests that claims arising thereunder are nonarbitrable.  Dodd-Frank amended several statutory provisions to include anti-arbitration provisions but did not do so with respect to its own whistleblower provision….Congress’s failure to attach an anti-arbitration provision to the Dodd-Frank whistleblower provision…while simultaneously amending similar statutory regimes to include the same, is a strong indication of its intent not to preclude Dodd-Frank whistleblower claims from arbitration.”

Further, the court underscored that the SOX anti-arbitration provision was limited to “this section,” i.e., SOX’s whistleblower provision.  The court observed, “The Dodd-Frank cause of action, by contrast, is not located in the same section, or even the same title, of the federal code.”  The court noted that even if ambiguity existed, it “still could not infer that Congress intended to extend” SOX’s anti-arbitration provision to Dodd-Frank given the differences between the two statutes.

Finally, the plaintiff argued that the court cannot separate her various claims (including Title VII, Equal Pay Act, and Dodd-Frank) from her SOX claims “because they arise out of the same act of whistleblowing.”  The court rejected this argument: “We cannot simply lump all of the plaintiff’s claims together for purposes of determining their arbitrability, even if they pertain to the same conduct….The plaintiff’s SOX whistleblower claim cannot save her otherwise arbitrable claims from their fate.”

SOX’s Administrative Exhaustion as a Jurisdictional Prerequisite to Federal Court Lawsuit

The Second Circuit affirmed dismissal of the plaintiff’s SOX claim because she filed her complaint with OSHA at least two years after-the-fact, and not within the 180-day deadline.  The Second Circuit addressed uncertainty regarding whether dismissal was proper under Rule 12(b)(1) (lack of jurisdiction) or Rule 12(b)(6) (failure to state a claim), and ultimately concluded “…the text of SOX makes clear that Congress intended for its administrative exhaustion requirements to be a jurisdictional prerequisite to suit in federal court.”

The plaintiff asserted a “continuing violation” argument, claiming that her alleged continued difficulty in securing employment essentially caused the deadline to be extended.  However, the court rejected the argument and affirmed dismissal of the SOX claim.