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Dodd-Frank Strategy for Avoiding Arbitration Rejected by Fourth Circuit Court

Monday, June, 16, 2014


In another battle between new federal arbitration laws and policies and those seeking to escape arbitration in favor of litigation, a plaintiff made an attempt to claim protection under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.  The specific provisions mentioned in Dodd-Frank invalidate agreements to arbitrate under specific circumstances, which the plaintiff in Santoro v. Accenture Federal Services, LLC claimed applied.

 

The Fourth Circuit Court disagreed, however, characterizing the Dodd-Frank language as a “specific carve-out” for the protection of people engaged in whistleblower activity and not a generally-applied exception to the Federal Arbitration Act.

 

The Santoro case involved an employee fired at the age of sixty-six and replaced with a younger employee.  Santoro filed age-discrimination charges against his employer and discovered that the broad arbitration clause in his employment contract applied to “any and all disputes arising out of, relating to or in connection with” his employment – without any exceptions.  Santoro’s claim of whistleblower protections despite not being a whistleblower under any interpretation of the term is the latest in many attempts to circumvent arbitration clauses in the aftermath of recent Supreme Court decisions regarding arbitrations.

 

The practical fallout from this decision is that the specific “any and all disputes” language will likely be seen in revised arbitration clauses around the country as employers seek to protect themselves from such end-runs around arbitration.  As possible challenges to the rising supremacy of arbitration clauses continue to shrink, it appears that binding arbitration contract language is here to stay.