More on the Whistleblower Improvement Act, and Another Anti-Arbitration Bill is Introduced
Posted on Categories Arbitration Agreements, Business & Employment, Class Action/Collective Waivers, LegislationTags , , ,

By George H. Friedman, SAA Editor-in-Chief

We briefly mentioned in SAA 2019-37 (Sep. 25) that the bipartisan Whistleblower Programs Improvement Act had been introduced in the Senate. As promised, here is more expansive coverage, along with an analysis of yet another anti-arbitration bill that has since been introduced.

The Whistleblower Programs Improvement Act (“WPIA”) (S. 2529) was introduced September 23 by Senate Finance Committee Chairman Charles Grassley (R-IA), and Senators Tammy Baldwin (D-WI), Richard Durbin (D-IL), and Joni Ernst (R-IA). The bipartisan legislation aims to expand Dodd-Frank’s whistleblower protections – including the anti-mandatory predispute arbitration agreement (“PDAA”) feature – to employees of “an entity registered with, or required to be registered with, the Commission, a self-regulatory organization, or a State securities commission or office performing like functions…”

Protection for Dodd-Frank Whistleblowers

A small part of the wide-ranging bill immediately drew our attention. While Dodd-Frank section 922 bars mandatory PDAAs covering Sarbanes-Oxley (“SOX”) whistleblower retaliation claims, it does not cover whistleblower claims brought under Dodd-Frank, and courts have consistently declined to so extend whistleblower protection. For example, we covered in #37 Daly v. Citigroup, No. 18‐665 (2d Cir. Sep. 19, 2019), where the Court followed the Third Circuit’s holding in Khazin v. TD Ameritrade Holding Corp., 773 F.3d 488 (3d Cir. 2014), and held that Dodd-Frank does not bar arbitration of whistleblower claims asserted under that statute. The WPIA would extend Dodd-Frank’s anti-arbitration protection to cover expressly Dodd-Frank whistleblowers. The text provides: “(1) WAIVER OF RIGHTS AND REMEDIES. The rights and remedies provided in this section may not be waived by any agreement, policy form, or condition of employment, including by a predispute arbitration agreement. (2) PREDISPUTE ARBITRATION AGREEMENT. No predispute arbitration agreement shall be valid or enforceable if the agreement requires the arbitration of a dispute arising under this section.” There is currently no stated effective date.

Yet Another Bill to Curb PDAAs…

On September 27, Rep. Madeleine Dean (D-PA) introduced the Ensuring Fair Legal Recourse for Private Student Loan Borrowers Act (H.R. 4544), which would amend the Truth in Lending Act “to prohibit predispute arbitration agreements that force arbitration of disputes arising from private education loans, and for other purposes.” Similar to almost all the anti-arbitration bills that have been introduced this year, the statute would be retroactive. This appears to be a companion bill to the Justice for Student Borrowers Act (H.R. 3764), which would amend the Federal Arbitration Act to ban PDAAs and class action waivers in private higher ed loan agreements.

A New Strategy?

As SAA Editor-in-Chief George Friedman observed in his SAC feature article, Surprise! Some of the Anti-Arbitration Bills Introduced in Congress this Year May Actually Become Law (One Already Has), these two bills target specific federal statutes. This is a sound tactic, given very clear and well-established SCOTUS jurisprudence holding that the FAA will prevail over another federal statute unless the latter expressly bars PDAAs (see Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018)).

(ed: *Public Citizen wrote on September 23 praising the WPIA’s introduction and urging that it be passed. **Although the nonpartisan www.GovTrack.us Website rates the WPIA’s chances of enactment as only 3%, we think the odds are much higher. This bill already has bipartisan support that will only grow, and if passed by Congress, will we suspect get consideration by the President (although, on second thought, whistleblowers may not be his favorite group right now…).) (SAC Ref. No. 2019-38-01)

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