Tag: arbitration

THIRD CIRCUIT HOLDS THAT EX-TD AMERITRADE EMPLOYEE REQUIRED TO ARBITRATE WHISTLEBLOWER CLAIMS

Earlier this week, the Third Circuit Court of Appeals ruled that former TD Ameritrade employee, Boris Khazin, must arbitrate his whistleblower claims instead of suing in court. Khazin, who worked in the firm’s compliance group, sued TD Ameritrade for retaliating against him as a whistleblower when he complained about alleged securities law violations.

The issue before the court was whether Dodd-Frank’s ban on mandatory, pre-dispute arbitration agreements could be applied retroactively. Dodd-Frank was passed by Congress in 2010 in the wake of the financial crisis. In Khazin’s case, he signed an agreement in 2006, which stated that he was required to arbitrate employment-related claims through FINRA. The lower court compelled arbitration between TD Ameritrade, and Khazin subsequently appealed to the Third Circuit.

The Third Circuit refused to expand Dodd-Frank’s whistleblower protections beyond its technical reading, and thus, affirmed the lower court’s decision.

This issue was a matter of first impression in the U.S Court of Appeals for the Third Circuit. Other circuits have been split on this question.

THIRD CIRCUIT RULES AUTHORIZATION OF CLASS ARBITRATION SHOULD BE DECIDED BY COURTS

The Third Circuit ruled that courts, not arbitrators, should determine whether an arbitration agreement entered into by two parties allows for classwide arbitration.  The Third Circuit’s decision reversed the lower court’s ruling that the availability of class arbitration was a matter for the arbitrators to decide.

  In overturning the district court’s decision, the Third Circuit explained that “[b]ecause of the fundamental differences between classwide and individual arbitration, and the consequences of proceeding with one rather than the other…the availability of classwide arbitration is a ‘substantive question of arbitrability’ to be decided by a court[,]” unless the parties unmistakably provide otherwise.

This decision changes the field of class arbitration in the Third Circuit as now, the issue may be solely decided by the courts, except when the parties have clearly agreed that the issue is to be determined by the arbitrator.  The Third Circuit shares the same view as Sixth Circuit on this subject.