Daly v. Citigroup Inc.

18‐665
Daly v. Citigroup Inc., et al.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
August Term, 2018
(Argued: March 29, 2019 Decided: September 19, 2019)
Docket No. 18‐665
ERIN DALY
Plaintiff‐Appellant,
v.
CITIGROUP INC., CITIGROUP GLOBAL MARKETS INC., CITIBANK, N.A.,
Defendants‐Appellees.
Before: SACK, HALL, AND DRONEY, Circuit Judges.
The plaintiff‐appellant, Erin Daly, is a former employee of Citigroup Inc.,
Citigroup Global Markets, Inc., and Citibank, N.A., the defendants‐appellees.
She brought suit against them in the United States District Court for the Southern
District of New York alleging gender discrimination and whistleblower
retaliation claims under several local, state, and federal statutes, including the
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Dodd‐Frank and Sarbanes‐Oxley Acts. In response, the defendants filed a
motion to compel arbitration and to dismiss the plaintiffʹs claims, arguing that
each of the plaintiffʹs claims, with the exception of her Sarbanes‐Oxley claim, was
subject to mandatory arbitration under her employment arbitration agreement,
and that her Sarbanes‐Oxley claim should be dismissed for lack of subject matter
jurisdiction. The district court (Richard J. Sullivan, Judge) issued an opinion and
order granting the defendantsʹ motion in its entirety. On appeal, the plaintiff
argues that the district court erred in dismissing her Sarbanes‐Oxley claim and
compelling arbitration of the remainder of her claims. We disagree. The district
court appropriately compelled arbitration of all but the plaintiffʹs Sarbanes‐Oxley
claim, including her Dodd‐Frank whistleblower retaliation claim, because her
claims fall within the scope of her employment arbitration agreement and
because she failed to establish that they are precluded by law from arbitration.
The plaintiffʹs Sarbanes‐Oxley claim was also properly dismissed because the
district court lacked subject matter jurisdiction over it inasmuch as the plaintiff
failed to exhaust her administrative remedies under the statute. Accordingly, the
district courtʹs order is:
AFFIRMED.
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MICHELLE N. DALY, Hopewell Junction,
NY, for Plaintiff‐Appellant.
LISA B. LUPION (Michael Delikat, on the
brief), Orrick, Herrington, & Sutcliffe LLP,
New York, NY, for Defendants‐Appellees.
SACK, Circuit Judge:
The plaintiff‐appellant Erin Daly was employed by the defendants‐
appellees, Citigroup Inc., Citigroup Global Markets, Inc., and Citibank, N.A. She
brought suit in the United States District Court for the Southern District of New
York alleging gender discrimination and whistleblower retaliation claims under
several local, state, and federal laws, including the Dodd‐Frank Act and the
Sarbanes‐Oxley Act. In response, the defendants filed a motion to compel
arbitration and to dismiss the plaintiffʹs claims. They argued that all of the
plaintiffʹs claims, with the exception of her Sarbanes‐Oxley claim, were subject to
mandatory arbitration under her employment arbitration agreement. The
defendants further contended that the plaintiffʹs Sarbanes‐Oxley claim, which is
nonarbitrable by statute, required dismissal for lack of subject matter jurisdiction
because the plaintiff had failed to exhaust her administrative remedies.
The district court (Richard J. Sullivan, Judge) issued an opinion and order
granting the defendantsʹ motion to compel arbitration and to dismiss in its
entirety. The court concluded that the plaintiffʹs claims fell within the scope of
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her employment arbitration agreement. It further concluded that the plaintiff
had failed to establish that her claims were precluded by law from arbitration,
with the exception of her Sarbanes‐Oxley claim, which is nonarbitrable by
statute. As relevant here, the court decided that because Congress had not
demonstrated its intent to preclude claims arising under Dodd‐Frankʹs
whistleblower retaliation provision from arbitration, the plaintiffʹs Dodd‐Frank
whistleblower claim was arbitrable.
The court further concluded that the plaintiffʹs Sarbanes‐Oxley claim
should be dismissed because she had failed to exhaust her administrative
remedies before filing her claim in federal court. While the district court noted
its uncertainty as to whether failure to exhaust under Sarbanes‐Oxley is a
jurisdictional prerequisite to suit evaluated under Federal Rule of Civil
Procedure 12(b)(1), or a claim‐processing requirement to be assessed under Rule
12(b)(6), it concluded that the defendantsʹ motion must in either event be
granted. The district court therefore dismissed the plaintiffʹs Sarbanes‐Oxley
claim and ordered arbitration of the remainder of her claims.
On appeal, the plaintiff maintains that the district court erred in
compelling arbitration of the majority of her claims because they involve the
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same whistleblower activity that is the subject of her nonarbitrable Sarbanes‐
Oxley claim. She also argues that the district court erred in dismissing her
Sarbanes‐Oxley claim because even if administrative exhaustion is a
jurisdictional prerequisite to suit, she has satisfied the statuteʹs requirements.
These arguments are meritless. The district court correctly compelled
arbitration of the plaintiffʹs claims, with the exception of her Sarbanes‐Oxley
claim, because they fall within the scope of her employment arbitration
agreement and because she failed to satisfy her burden of establishing that such
claims are precluded by statute from compelled arbitration. The plaintiffʹs
Sarbanes‐Oxley claim was also properly dismissed because the district court
lacked subject matter jurisdiction inasmuch as the plaintiff failed to exhaust her
administrative remedies under the statute, which constitutes a jurisdictional bar
to suit in federal court. The district court therefore properly dismissed the
plaintiffʹs Sarbanes‐Oxley claim and granted the defendantsʹ motion to compel
arbitration as to the remainder of her claims.
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BACKGROUND
Factual Background
From 2007 through 2014, the plaintiff‐appellant Erin Daly was employed
by the defendants‐appellees, Citigroup Inc., Citigroup Global Markets, Inc., and
Citibank, N.A. (collectively the ʺdefendantsʺ or ʺCitiʺ). On three separate
occasions while she was so employed, she entered into an arbitration agreement
with the defendants, in the form of an Employment Arbitration Policy (the
ʺPolicyʺ). The Policy required that all employment‐related disputes be
arbitrated.1
In 2010, Daly was promoted to Assistant Vice President of the Citi Private
Bank Division. The position carried with it the highly coveted authority to
allocate shares of stock for purchase among the defendantsʹ customers.2
Amended Complaint (ʺACʺ) ¶ 72; J. App. 103. On June 29, 2012, however, Daly
was stripped of her authority to make such allocations. Despite her complaints
to her supervisors, Citi did not restore her privileges. Other professional
1 These agreements were included in an appendix to Citiʹs employee handbook, and
the plaintiff electronically accepted each of their terms.
2 In her complaint, Daly describes the securities vaguely as ʺsubjective stock,ʺ AC ¶ 70,
J. App. 103, and ʺstock of certain ʹhotʹ IPOs,ʺ id. ¶ 72, J. App. 103, without alleging what
her or the defendantsʹ role was in its underwriting, sale, or distribution.
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responsibilities of hers were also diminished. The plaintiff asserts that these
actions on the part of her superiors were intended to make it clear that ʺ[t]he
boys were in charge.ʺ Id. ¶ 93; J. App. 106 (emphasis omitted).
The plaintiff further alleges that her supervisor, James Messina,
ʺconstantly demanded that [she] disclose material non‐public information of
which he knew she was in possessionʺ so that ʺhe could pass the information
along to his favored clients.ʺ Id. ¶¶ 121‐22; J. App. 110. On November 19, 2014,
Daly conveyed those accusations to Citi attorneys and human resources
employees.
On December 1, 2014, less than two weeks later, Daly was notified that she
was being terminated. The defendants later filed a Uniform Termination Notice
for Securities Industry Registration Form (ʺForm U‐5ʺ) with the Financial
Industry Regulatory Authority (ʺFINRAʺ), as required when a registered
representative of a firm departs therefrom for any reason.3 It contained
3 ʺThe National Association of Securities Dealers (ʹNASDʹ) require[d] its
members to file a termination form (ʹForm U‐5ʹ) whenever they terminate[d] a
registered employee. The form contain[ed] the employerʹs statement of the
reasons for the termination, and the NASD provide[d] the form to any member
firm upon request.ʺ Rosenberg v. MetLife, Inc., 493 F.3d 290, 290 (2d Cir. 2007) (per
curiam). In ʺ2007, the NASD merged with parts of the New York Stock
[E]xchange to form FINRA and the NASD code was replaced by the FINRA
Code.ʺ Metro. Life Ins. Co. v. Bucsek, 919 F.3d 184, 188 (2d Cir. 2019). The Form
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assertions that, among other things, the plaintiff had been late to work and had
mishandled confidential information. The plaintiff asserts that these statements
are ʺfalse, malicious, and defamatory.ʺ Id. ¶¶ 36‐38; J. App. 17‐18. Because the
plaintiffʹs Form U‐5 is available in the FINRA database, which allows FINRA
members to search for information about individual financial professionals, the
plaintiff alleges that the defendantsʹ statements continue to have an adverse
impact on her employment opportunities.
Procedural History
On November 28, 2016, Daly filed a complaint in the United States District
Court for the Southern District of New York. She alleged several gender
discrimination and whistleblower retaliation claims, including claims under Title
VII of the Civil Rights Act of 1964, 42 U.S.C. § 2002(e); the Equal Pay Act of 1963,
29 U.S.C. § 206(d); the Sarbanes‐Oxley Act (ʺSOXʺ), 15 U.S.C. § 1514A; the Dodd‐
U‐5 filing requirement continued under FINRA. See Financial Industry
Regulatory Authority, ʺTerminate an Individualʹs Registration,ʺ
https://www.finra.org/industry/terminate‐individuals‐registration (last visited
September 3, 2019).
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Frank Act (ʺDodd‐Frankʺ), 15 U.S.C. § 78u‐6; and the Human Rights Laws of
New York State and City.
On March 3, 2017, the defendants filed a motion to compel arbitration and
to dismiss the plaintiffʹs claims. They argued that, with the exception of her SOX
claim, the plaintiffʹs claims were employment‐related and therefore subject to her
employment arbitration agreement. They further contended that the plaintiffʹs
SOX claim should be dismissed for lack of subject matter jurisdiction because she
had failed to exhaust her administrative remedies.
On March 24, 2017, Daly responded, arguing that her claims were not
subject to arbitration because there was clear congressional intent to preclude
such claims from the waiver of judicial remedies. She also filed an amended
complaint, the operative pleading in this case. On October 6, 2017, the
defendants filed a letter supplementing their motion to dismiss, in light of the
amended complaint, to which the plaintiff responded on October 20, 2017.
On February 6, 2018, the district court issued an opinion and order
granting the defendantsʹ motion in its entirety.4 The district court found that the
4 The opinion and order is equivalent to a final judgment against Daly from which she
can and does appeal. See Fed. R. Civ. P. 54(a) (noting that ʺʹJudgmentʹ as used in these
rules includes a decree and any order from which an appeal liesʺ).
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plaintiff had entered into three successive employment arbitration agreements.
It concluded that the plaintiffʹs claims fell within the scope of her arbitration
agreements. The court further determined that the plaintiff had failed to
establish that her claims were nonetheless precluded from arbitration by law,
with the exception of her SOX claim, which is nonarbitrable by statute. By
contrast, because Congress had not demonstrated its intent to preclude Dodd‐
Frank whistleblower claims from arbitration, the plaintiffʹs Dodd‐Frank claim
was arbitrable. The court therefore concluded that each of the plaintiffʹs claims,
with the exception of her SOX claim, was subject to mandatory arbitration.
The district court also dismissed the plaintiffʹs SOX whistleblower claim,
concluding that the plaintiff had failed to file an administrative complaint within
180 days of the alleged violation, and, thus, had not exhausted her administrative
remedies under the statute. See 18 U.S.C. § 1514A(b)(2)(D). The court noted its
uncertainty as to whether failure to exhaust under SOX is a jurisdictional bar to
suit, evaluated on a motion to dismiss under Federal Rule of Civil Procedure
12(b)(1) for lack of subject matter jurisdiction, or a claim‐processing requirement
to be assessed under Rule 12(b)(6) for failure to state a claim. But it determined
that the plaintiffʹs claim was in either event dismissible: If exhaustion is
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jurisdictional, the plaintiffʹs claim fails for lack of subject matter jurisdiction
because she did not timely file her administrative complaint; and if it is an
element of a claim, the plaintiff fails to assert equitable defenses that would
excuse her belated filing. The court therefore dismissed the plaintiffʹs SOX claim
and referred each of her other claims to arbitration.
DISCUSSION
On appeal, the plaintiff argues that the district court erred in dismissing
her SOX claim for lack of subject matter jurisdiction and compelling arbitration
of her other claims. She insists that her Title VII, EPA, and Dodd‐Frank claims
involve the same whistleblower activity that is the subject of her nonarbitrable
SOX claim and should therefore, like her SOX claim, be precluded from
arbitration. 5 She further maintains that the district court erred in dismissing her
SOX claim for failure to exhaust her administrative remedies because she
continues to suffer an ongoing violation on the part of her former employer, thus
rendering her administrative filing timely.
5 On appeal, the plaintiff does not separately address her claims under the Equal Pay
Act or Title VII. She does, however, speak generally about the claims asserted under
federal law. See, e.g., Pl. Br. 25 (ʺThe claims asserted here are exactly the federal
statutory claims . . . [which] . . . Congress intended . . . to be non arbitrable.ʺ (internal
quotation marks omitted)). We therefore understand the plaintiff to be contesting the
arbitrability of each of her federal claims, including those under the EPA and Title VII.
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I. Motion to Compel Arbitration
We review a district courtʹs decision to compel arbitration de novo. See
Motorola Credit Corp. v. Uzan, 388 F.3d 39, 49 (2d Cir. 2004).
The Federal Arbitration Act (ʺFAAʺ), 9 U.S.C. § 1 et seq., ʺreflects a
legislative recognition of ʹthe desirability of arbitration as an alternative to the
complications of litigation.ʹʺ Genesco, Inc. v. T. Kakiuchi & Co., 815 F.2d 840, 844
(2d Cir. 1987) (quoting Wilko v. Swan, 346 U.S. 427, 431 (1953)). The FAA,
ʺreversing centuries of judicial hostility to arbitration agreements, was designed
to allow parties to avoid the costliness and delays of litigation, and to place
arbitration agreements upon the same footing as other contracts.ʺ Id.(internal
quotation marks omitted). To achieve these goals, it provides that arbitration
clauses in commercial contracts ʺshall be valid, irrevocable, and enforceable, save
upon such grounds as exist at law or in equity for the revocation of any contract.ʺ
9 U.S.C. § 2. Therefore, ʺ[b]y its terms, the [FAA] leaves no place for the exercise
of discretion by a district court, but instead mandates that district courts shall
direct the parties to proceed to arbitration on issues as to which an arbitration
agreement has been signed.ʺ Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218
(1985) (emphasis in original).
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In reviewing a motion to compel arbitration, we must therefore determine:
(1) ʺwhether the parties agreed to arbitrateʺ; (2) ʺthe scope of that agreementʺ;
and, (3) ʺif federal statutory claims are asserted, . . . whether Congress intended
those claims to be nonarbitrable.ʺ Genesco, 815 F.2d at 844. In accordance with
the ʺstrong federal policy favoring arbitration as an alternative means of dispute
resolution,ʺ we resolve any doubts concerning the scope of arbitrable issues ʺin
favor of arbitrability.ʺ State of N.Y. v. Oneida Indian Nation of N.Y., 90 F.3d 58, 61
(2d Cir. 1996). In so doing, we ʺwill compel arbitration unless it may be said with
positive assurance that the arbitration clause is not susceptible of an
interpretation that covers the asserted dispute.ʺ Id. (internal quotation marks
omitted).
The plaintiff does not dispute that she entered into three valid arbitration
agreements with the defendants during the course of her employment, in the
form of an Employment Arbitration Policy. They provide:
This Policy applies to both you and to Citi, and makes
arbitration the required and exclusive forum for the
resolution of all employment‐related disputes (other
than disputes which by statute are not subject to
arbitration) which are based on legally protected rights
(i.e., statutory, regulatory, contractual, or common‐law
rights) and arise between you and Citi . . . . These
disputes include, without limitation, claims, demands, or
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actions under Title VII of the Civil Rights Act of 1964, . . .
the Equal Pay Act of 1963, . . . and any other federal,
state, or local statute, regulation, or common‐law
doctrine regarding employment, employment
discrimination, the terms and conditions of employment,
termination of employment, compensation, breach of
contract, defamation, or retaliation, whistle‐blowing, or
any claims arising under the Citigroup Separation Pay
Plan.
J. App. 75. The plain terms of the plaintiffʹs arbitration agreements thus
establish that the parties agreed to arbitrate ʺall employment‐related disputes.ʺ
Id. And, as the district court correctly concluded, each of the plaintiffʹs claims fall
within that broad category. The only question that remains then is whether
Congress intended for any of the plaintiffʹs federal statutory claims to be
nonarbitrable as a matter of law.
We conclude that the plaintiffʹs claims arising under Title VII and the
Equal Pay Act (ʺEPAʺ) are arbitrable. We have previously decided that there is
insufficient evidence ʺthat with respect to claims under Title VII, Congress
intended to preclude the waiver of judicial remedies.ʺ Desiderio v. Natʹl Assʹn of
Sec. Dealers, Inc., 191 F.3d 198, 206 (2d Cir. 1999); see also Gold v. Deutsche
Aktiengesellschaft, 365 F.3d 144, 148 (2d Cir. 2004) (noting that we have
ʺconclude[d], along with the majority of other circuits, that Title VII claims could
be subject to compulsory arbitrationʺ). Similarly, the plaintiff has failed to
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present any ʺevidence that Congress intended claims arising under the EPA to be
nonarbitrable.ʺ Crawley v. Macyʹs Retail Holdings, Inc., No. 15 Civ. 2228 (KPF),
2017 WL 2297018, at *5, 2017 U.S. Dist. LEXIS 80541, at *13 (S.D.N.Y. May 25,
2017) (internal quotation marks omitted). The plaintiff has therefore failed to
meet her burden of showing with respect to either her Title VII or EPA claim that
Congress intended to preclude her claims from arbitration. See Oldroyd v. Elmira
Sav. Bank, FSB, 134 F.3d 72, 78 (2d Cir. 1998) (ʺCongress . . . may override the
presumption in favor of arbitration by manifesting its intention to do so[, which]
will be discoverable in the text of the [statute], its legislative history, or an
inherent conflict between arbitration and the [statuteʹs] underlying purposes.ʺ
(internal quotation marks omitted)), abrogated on other grounds by Katz v. Cellco
Pʹship, 794 F.3d 341 (2d Cir. 2015). The parties also expressly agreed that the
scope of their arbitration agreements covers ʺclaims . . . under Title VII . . .
[and] . . . the Equal Pay Act of 1963.ʺ J. App. 75. The district court therefore
correctly compelled arbitration of both claims.
Whether the plaintiffʹs Dodd‐Frank claim is arbitrable, however, is less
certain. To determine whether it is, we must first look to its statutory
framework.
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In 2002, Congress passed the Sarbanes‐Oxley Act, Pub. L. No. 107‐204, 116
Stat. 745 (2002), which established a private right of action for employees of
certain companies who are discharged for, among other things, ʺprovid[ing]
information . . . regarding any conduct which the employee reasonably believes
constitutes a violation of [specified securities laws] . . . to . . . a person with
supervisory authority over the employee.ʺ 18 U.S.C. § 1514A(a)(1)(C). Following
the financial crisis of 2007‐08, Congress passed the Dodd‐Frank Wall Street
Reform and Consumer Protection Act of 2010, Pub. L. No. 111‐203, 124 Stat. 1376
(2010), which, inter alia, amended a variety of federal statutory provisions that
had been designed to regulate the financial industry. As relevant here, Dodd‐
Frank amended the Securities Exchange Act of 1934 to create a private right of
action against an employer who retaliates against a whistleblower for engaging
in one or more of three categories of protected activity including ʺmaking
disclosures that are required or protected under [SOX].ʺ 15 U.S.C. § 78u‐
6(h)(1)(A)(iii). Separately, Dodd‐Frank amended the SOX whistleblower
retaliation provision, 18 U.S.C. § 1514A, to include an anti‐arbitration provision,
which reads:
(1) Waiver of rights and remedies.‐‐The rights and
remedies provided for in this section may not be waived
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by any agreement, policy form, or condition of
employment, including by a predispute arbitration
agreement.
(2) Predispute arbitration agreements.‐‐No predispute
arbitration agreement shall be valid or enforceable, if the
agreement requires arbitration of a dispute arising under
this section.
18 U.S.C. § 1514A(e)(1)‐(2). Importantly for present purposes, Dodd‐Frank did
not include a comparable anti‐arbitration provision in its own whistleblower
provision, § 78u‐6(h).
The parties agree that Congressʹs amendment to SOXʹs
whistleblower‐retaliation provision to include an anti‐arbitration clause
evidences clear congressional intent that claims arising under that provision are
to be precluded from arbitration. We have yet to determine, however, whether
claims arising under Dodd‐Frankʹs whistleblower provision are also precluded
from arbitration.6 The Third Circuit, the only federal circuit to have ruled on this
6 District courts in this Circuit have diverged on the issue. Compare Murray v. UBS
Securities, LLC, No. 12 Civ. 5914 (KPF), 2014 WL 285093, at *8‐11, 2014 U.S. Dist. LEXIS
9696, at *22‐33 (S.D.N.Y Jan. 27, 2014) (Dodd‐Frank claims are arbitrable), with Wiggins
v. ING U.S., Inc., No. 14 Civ. 1089 (JCH), 2015 WL 3771646, at *7, 2015 U.S. Dist. LEXIS
78129, at *19 (D. Conn. June 17, 2015) (Dodd‐Frank claims are nonarbitrable).
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issue, has found such claims to be arbitrable.7 See Khazin v. TD Ameritrade
Holding Corp., 773 F.3d 488, 492‐95 (3rd Cir. 2014). For the reasons that follow, we
now join the Third Circuit in concluding that Congress did not intend to
preclude arbitration of Dodd‐Frank whistleblower claims:
First, nothing in Dodd‐Frankʹs 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, § 78u‐6(h). As discussed above, Dodd‐Frank amended
SOXʹs whistleblower provision to include an anti‐arbitration provision. See 18
U.S.C. § 1514A(e)(2). It also inserted an identical anti‐arbitration provision into
the whistleblower protections of the Commodity Exchange Act, see 7 U.S.C.
§ 26(n)(2), and a nearly identical provision into the whistleblower protections of
the Consumer Financial Protection Act, see 12 U.S.C. § 5567(d)(2) (ʺ[subject to one
limited exception,] no predispute arbitration agreement shall be valid or
7 This also appears to be the consensus position of district courts outside this Circuit.
See, e.g., Sayre v. JP Morgan Chase & Co., No. 17‐cv‐449 (JLS) (MDD), 2018 WL 1109032, at
*6, 2018 U.S. Dist. LEXIS 30776, at *14‐15 (S.D. Cal. Feb. 26, 2018); Wussow v. Bruker
Corp., No. 16‐cv‐444 (WMC), 2017 WL 2805016, at *6‐7, 2017 U.S. Dist. LEXIS 99904, at
*15‐18 (W.D. Wis. June 28, 2017); Ruhe v. Masimo Corp., No. SACV 11–00734 (CJC), 2011
WL 4442790, at *4‐5, 2011 U.S. Dist. LEXIS 104811, at *11‐14 (C.D. Cal. Sept. 16, 2011).
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enforceable to the extent that it requires arbitration of a dispute arising under
this section.ʺ).
Congressʹs failure to attach an anti‐arbitration provision to the Dodd‐Frank
whistleblower provision, § 78u‐6(h), 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.8 See Gross v. FBL
Fin. Servs., Inc., 557 U.S. 167, 174 (2009) (ʺWhen Congress amends one statutory
provision but not another, it is presumed to have acted intentionally [in doing
so].ʺ); see also Khazin, 773 F.3d at 493 (ʺThe fact that Congress did not append an
anti‐arbitration provision to the Dodd‐Frank cause of action while
contemporaneously adding such provisions elsewhere suggests . . . that the
omission was deliberate.ʺ).
8 The statuteʹs legislative history also supports our understanding that this omission
was not accidental. See, e.g., Ruhe, 2011 WL 4442790, at *4, 2011 U.S. Dist. LEXIS 104811,
at *13‐14 (concluding based on review of relevant legislative history that omission of
anti‐arbitration provision in Dodd‐Frankʹs whistleblower provision was not a ʺdrafting
errorʺ); Wussow, 2017 WL 2805016, at *7, 2017 U.S. Dist. LEXIS 99904, at *17‐18 (noting
that ʺCongressʹs apparent inconsistent treatment with the whistleblower provisions
under SOX and Dodd‐Frank has been the subject of substantial discussion and a fair
amount of criticism. Yet Congress has done nothing to expressly expand the SOX
[a]nti‐[a]rbitration [p]rovision to Dodd‐Frank whistleblower claimsʺ (internal citations
omitted)).
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Second, the language of the SOX anti‐arbitration provision restricts its
applicability to its own statutory scheme. As discussed above, the SOX anti‐
arbitration provision states that ʺ[n]o predispute arbitration agreement shall be
valid or enforceable, if the agreement requires arbitration of a dispute arising
under this section.ʺ 18 U.S.C. § 1514A(e)(2) (emphasis added). The ʺsectionʺ
referred to is the SOX whistleblower provision. The SOX anti‐arbitration
provision thus applies only to agreements requiring arbitration of SOX
whistleblower claims. The Dodd‐Frank cause of action, by contrast, is not
located in the same section, or even the same title, of the federal code. See 15
U.S.C. § 78u‐6(h).9 The language of the SOX anti‐arbitration provision thus
further reflects congressional intent to limit its terms to the claims arising under
its particular statutory scheme.
9 Nor could the phrase ʺthis sectionʺ refer to the location of these two provisions in
Dodd‐Frank itself. While both the SOX anti‐arbitration provision and the Dodd‐Frank
whistleblower provision appear in the same section of Dodd‐Frank, ʺSec. 922.
Whistleblower Protection,ʺ see 124 Stat. 1376, 1841‐49 (2010), the text of the statute
clearly indicates that each provision is to be incorporated at other points in the federal
code. Compare § 922(c)(2), 124 Stat. at 1848 (amending the whistleblower provision of
SOX ʺby adding [that anti‐arbitration provision] at the endʺ), with § 922(a), 124 Stat. at
1841 (Dodd‐Frank whistleblower provision to be inserted into ʺ[t]he Securities
Exchange Act of 1934 (15 U.S.C. 78[a et seq.])).ʺ
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Moreover, even if the SOX anti‐arbitration provision were ambiguous, we
still could not infer that Congress intended to extend its application to Dodd
Frank. Despite some surface similarities,10 the whistleblower retaliation
10 The SOX whistleblower provision, 18 U.S.C. § 1514A(a), states, in
relevant part, as follows:
No company [covered under relevant provisions of the
Securities Exchange Act] . . . may discharge, demote, suspend,
threaten, harass, or in any other manner discriminate against
an employee in the terms and conditions of employment
because of any lawful act done by the employee—
(1) to provide information . . . regarding any conduct which
the employee reasonably believes constitutes a violation of . . .
any rule or regulation of the Securities and Exchange
Commission, or any provision of Federal law relating to fraud
against shareholders . . . ; or
(2) to file . . . or otherwise assist in a proceeding filed . . .
relating to an alleged violation of . . . any rule or regulation of
the Securities and Exchange Commission, or any provision of
Federal law relating to fraud against shareholders.
The Dodd‐Frank whistleblower provision, 15 U.S.C. § 78u‐6(h)(1)(A), states, in relevant
part, as follows:
No employer may discharge, demote, suspend, threaten,
harass, directly or indirectly, or in any other manner
discriminate against, a whistleblower in the terms and
conditions of employment because of any lawful act done by
the whistleblower—
(i) in providing information to the [Securities and Exchange]
Commission in accordance with this section;
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provisions of Sarbanes‐Oxley and Dodd‐Frank diverge significantly in their
ʺprohibited conduct, statute of limitations, and remedies.ʺ Ahmad v. Morgan
Stanley & Co., 2 F. Supp. 3d 491, 497 (S.D.N.Y. 2014). For example, a
whistleblower seeking to assert a claim under SOX must first file an
administrative complaint with the Secretary of Labor through the Occupational
Safety and Health Administration (ʺOSHAʺ), see 18 U.S.C. § 1514A(b)(1)(A), 29
C.F.R. § 1980.103(c), while that same whistleblower asserting a claim under the
Dodd‐Frank whistleblower provision may bring suit directly in federal district
court, see 15 U.S.C. § 78u‐6(h)(1)(B)(i). And a whistleblower asserting a claim
under SOX may obtain ʺback pay, with interest,ʺ 18 U.S.C. § 1514A(c)(2)(B), while
under Dodd‐Frank he or she is entitled to double that amount, 15 U.S.C. § 78u‐
6(h)(1)(C)(ii). These differences in the statutesʹ whistleblower provisions support
our conclusion that Congress did not intend for SOXʹs anti‐arbitration provision
to extend to whistleblower claims arising under Dodd‐Frank.
(ii) in initiating, testifying in, or assisting in any investigation
or judicial or administrative action of the Commission based
upon or related to such information; or
(iii) in making disclosures that are required or protected
under [SOX}, this chapter . . . , and any other law, rule, or
regulation subject to the jurisdiction of the Commission.
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Daly v. Citigroup Inc., et al.
Notwithstanding the absence of evidence that Congress intended to
preclude from arbitration the Title VII, EPA, and Dodd‐Frank claims, the plaintiff
asserts that we cannot separate these claims from her SOX claims for purposes of
determining their arbitrability because they arise out of the same act of
whistleblowing. Pl. Br. 23. She therefore argues that each of her federal claims,
like her SOX claim, should be precluded from arbitration. We disagree. We
cannot simply lump all of the plaintiffʹs claims together for purposes of
determining their arbitrability, even if they pertain to the same conduct. We are
instead charged with ʺexamin[ing] with care the complaints seeking to invoke
[our] jurisdiction in order to separate arbitrable from nonarbitrable claims.ʺ
KPMG LLP v. Cocchi, 565 U.S. 18, 19 (2011) (per curiam). Here, for the reasons
discussed, we conclude that Congress did not intend for claims arising under
Dodd‐Frankʹs whistleblower provision to be precluded from arbitration. The
plaintiffʹs SOX whistleblower claim cannot save her otherwise arbitrable claims
from their fate. The district court therefore correctly compelled arbitration of all
of the plaintiffʹs claims, with the exception of her SOX claim, which it properly
determined to be nonarbitrable.
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Daly v. Citigroup Inc., et al.
II. Motion to Dismiss
ʺWe review de novo a district courtʹs grant of a motion to dismiss, including
legal conclusions concerning the courtʹs interpretation and application of a
statute of limitations.ʺ Castagna v. Luceno, 744 F.3d 254, 256 (2d Cir. 2014)
(internal quotation marks omitted). ʺA case is properly dismissed for lack of
subject matter jurisdiction under Rule 12(b)(1) when the district court lacks the
statutory or constitutional power to adjudicate it.ʺ Makarova v. United States, 201
F.3d 110, 113 (2d Cir. 2000). ʺThe burden of proving jurisdiction is on the party
asserting it.ʺ Robinson v. Overseas Military Sales Corp., 21 F.3d 502, 507 (2d Cir.
1994).
The district court dismissed the plaintiffʹs SOX whistleblower claim on the
ground that she failed to exhaust the statuteʹs administrative exhaustion
requirements, which require a claimant who wishes to raise a claim of
whistleblower retaliation to first file a complaint with OSHA within 180 days of
the date of the alleged violation, or when the claimant first became aware of it.11
11 As of July 22, 2010, the statute allows 180 days for the filing of a complaint, rather
than the previously mandated statutory period of 90‐days. 18 U.S.C. § 1514A(b)(2)(D)
(2010). Since the plaintiff filed her claim with OSHA no earlier than 2016, the 180‐day
filing period applies to her claim.
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Daly v. Citigroup Inc., et al.
The plaintiff in this case did not file her complaint with OSHA until at least two
years after she became aware of the alleged violation. The district court
concluded that Dalyʹs claim required dismissal because she had failed to exhaust
her administrative remedies, even though it was not certain whether the proper
vehicle for that dismissal was for lack of jurisdiction, under Rule 12(b)(1), or for
failure to state a claim, under Rule 12(b)(6).
In evaluating whether the plaintiffʹs SOX claim was correctly dismissed by
the district court, we first assess whether the statuteʹs administrative exhaustion
requirements are a jurisdictional prerequisite to suit. We consider the Rule
12(b)(1) challenge first since ʺif [we] must dismiss the complaint for lack of
subject matter jurisdiction, the [dendantsʹ] defenses and objections become moot
and do not need to be determined.ʺ Rhulen Agency, Inc. v. Alabama Ins. Guar.
Assʹn, 896 F.2d 674, 678 (2d Cir. 1990) (internal quotation marks omitted).
This Court has yet to address whether SOXʹs administrative exhaustion
requirements are a jurisdictional prerequisite to suit, nor have we found clear
guidance among our sister circuits. The Fourth Circuit assumed without
deciding that a claimantʹs failure to exhaust the statuteʹs administrative remedies
would deprive a district court of jurisdiction, citing as support several district
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Daly v. Citigroup Inc., et al.
court cases and an administrative decision of the Department of Labor. See
Feldman v. Law Enfʹt Assocs. Corp., 752 F.3d 339, 345 n.7 (4th Cir. 2014). And the
Fifth Circuit similarly implied that the SOX exhaustion requirements are a
jurisdictional prerequisite to suit. See Heaney v. Prudential Real Estate Affiliates,
Inc., 328 F. Appʹx 314, 314 n.1 (5th Cir. 2009) (per curiam) (noting that the court
was ʺsatisfied that the plaintiff exhausted his administrative remedies under the
Sarbanes Oxley Act and thus that the district court had jurisdiction over the
matterʺ).12 However, the First Circuit appears to have departed from this
position. See Newman v. Lehman Bros. Holdings Inc., 901 F.3d 19, 25 (1st Cir. 2018)
(dismissing the plaintiffʹs SOX whistleblower claim for failure to exhaust under
12(b)(6) after noting that ʺadministrative exhaustion requirements in similar
statutes . . . are mandatory, though not jurisdictional, and akin to a statute of
limitationsʺ(internal quotation marks omitted)).
12 Most district courts to have considered the issue have similarly concluded that a
claimantʹs satisfying the statuteʹs administrative exhaustion requirements is a
jurisdictional prerequisite to suit. See, e.g., Verble v. Morgan Stanley Smith Barney, LLC,
148 F. Supp. 3d 644, 649‐50 (E.D. Tenn. 2015) (collecting cases), affʹd on other grounds, 676
F. Appʹx 421 (6th Cir. 2017); Mart v. Forest River, Inc., 854 F. Supp. 2d 577, 599 (N.D. Ind.
2012) (same); Trusz v. UBS Realty Invʹrs, No. 9 Civ. 268 (JBA), 2010 WL 1287148, at *4 n.2,
2010 U.S. Dist. LEXIS 30374, *11‐13 n.2 (D. Conn. Mar. 30, 2010); Nieman v. Nationwide
Mut. Ins. Co., 706 F. Supp. 2d 897, 907 (C.D. Ill. 2010); JDS Uniphase Corp. v. Jennings, 473
F. Supp. 2d 705, 710 (E.D. Va. 2007); Willis v. Vie Fin. Grp., Inc., No. CIV.A. 04‐435, 2004
WL 1774575, at *2 n.3, 2004 U.S. Dist. LEXIS 15753, *5 (E.D. Pa. Aug. 6, 2004).
26
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Daly v. Citigroup Inc., et al.
To determine whether the administrative exhaustion requirements of SOX
are jurisdictional or not, we look to the text of the statute to assess the
congressional intent behind it. See Patsy v. Bd. of Regents of State of Fla., 457 U.S.
496, 501 (1982) (ʺ[T]he initial question whether exhaustion is required should be
answered by reference to congressional intent.ʺ); Ace Prop. & Cas. Ins. Co. v. Fed.
Crop Ins. Corp., 440 F.3d 992, 996 (8th Cir. 2006) (ʺThe Supreme Court has
indicated that a statute requiring plaintiffs to exhaust administrative remedies
before coming into federal court may be either jurisdictional in nature or non
jurisdictional, depending on the intent of Congress as evinced by the language
used.ʺ(citing Weinberger v. Salfi, 422 U.S. 749 (1975))).
We conclude that 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 statuteʹs exhaustion requirements are included in the
same provision—indeed, in the same sentence—as its jurisdictional provision.
And that provision expressly grants federal jurisdiction only when specific
administrative remedies have been exhausted:
(1) In general.‐‐A person who alleges discharge or other
discrimination by any person in violation of [the
whistleblower protection provision] may seek relief
under [this section], by‐‐
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Daly v. Citigroup Inc., et al.
(A) filing a complaint with the Secretary of Labor; or
(B) if the Secretary has not issued a final decision within
180 days of the filing of the complaint and there is no
showing that such delay is due to the bad faith of the
claimant, bringing an action at law or equity for de novo
review in the appropriate district court of the United
States, which shall have jurisdiction over such an action
without regard to the amount in controversy.
18 U.S.C. § 1514A(b)(1)(A)‐(B).
The statute goes on to state that an employee asserting a SOX
whistleblower claim must file her complaint with the Secretary of Labor ʺnot
later than 180 days after the date on which the violation occurs, or after the date
on which the employee became aware of the violation.ʺ 18 U.S.C.
§ 1514A(b)(2)(D). And the Secretary of Labor has, in turn, delegated the
responsibility for adjudicating such a claim to OSHA. See 29 C.F.R. § 1980.103(b)‐
(d).
By the terms of the statute and its attendant regulations, then, a party may
seek review of a SOX whistleblower claim in federal court under two
circumstances:
First, when OSHA fails to issue a final decision within 180 days of the
filing of an administrative complaint, and ʺthere is no showing that such delay is
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Daly v. Citigroup Inc., et al.
due to the bad faith of the claimant,ʺ 18 U.S.C. § 1514A(b)(1)(B),13 a party may
seek relief by ʺbringing an action at law or equity for de novo review in the
appropriate district court of the United States.ʺ Id. Second, review in federal
court is possible if the party seeks review of a final order from OSHA within 60
days in ʺthe United States Court of Appeals for the circuit in which the violation
allegedly occurred or the circuit in which the complainant resided on the date of
the violation,ʺ in which case the federal courtʹs review on appeal is limited to the
administrative record. See Bechtel v. Admin. Review Bd., U.S. Depʹt of Labor, 710
F.3d 443, 450 (2d Cir. 2013) (explaining on review of agency order dismissing
SOX whistleblower claim that our review is limited to the administrative record).
In either instance, however, for the federal court to have jurisdiction over
the claim, the claimant must first commence an action with an adjudicating
administrative agency.14 And the nature of a federal courtʹs subsequent review,
13A final order in an OSHA administrative proceeding is issued by an Administrative
Law Judge, unless a petition for review is filed and accepted by the Administrative
Review Board, who would then issue the final order. See 29 C.F.R. §§ 1980.109‐110.
14 In this regard, the administrative scheme of SOX differs significantly from that of
Title VII, which we have previously concluded does not create a jurisdictional
prerequisite to suit. Fowlkes v. Ironworkers Local 40, 790 F.3d 378, 384 (2d Cir. 2015).
While SOX is ʺjudicial in nature and is designed to resolve the controversy on its
merits,ʺ the procedures of Title VII are ʺgeared toward fostering settlement.ʺ Roganti v.
Metro. Life Ins. Co., No. 12 Civ. 161 (PAE), 2012 WL 2324476, at *6, 2012 U.S. Dist. LEXIS
29
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Daly v. Citigroup Inc., et al.
if any, is expressly set forth by statute and agency regulation, including the
standard of review (de novo) and the substantive content that may be reviewed
(the administrative record). This procedural structure reflects Congressʹs clear
intent for federal courts to exercise jurisdiction over a SOX claim only after the
claimant has first exhausted the statuteʹs administrative remedies. We therefore
conclude that the administrative exhaustion requirements under SOX are
jurisdictional and a prerequisite to suit in federal court.
We also conclude that the plaintiff has failed to exhaust her administrative
remedies, which, for the foregoing reasons, deprives federal courts of subject
matter jurisdiction over her claim. Daly contends that she filed an administrative
complaint on November 28, 2016, which is approximately two years after her
alleged wrongful termination, although she concedes that OSHA did not actually
receive her complaint until March 24, 2017. See Daly v. Citigroup Inc., No. 16‐cv‐
9183 (RJS), 2018 WL 741414, at *6 n.5, 2018 U.S. Dist. LEXIS 19413, *15 n.5
84939, at *18 (S.D.N.Y. June 18, 2012) (quoting Willis, 2004 WL 1774575 at *5, 2004 U.S.
Dist. LEXIS 15753, at *15). And while, as discussed, the federal jurisdictional provision
of SOX is coupled with its administrative exhaustion requirements, the jurisdictional
provision in Title VII, by contrast, is entirely separate from the ʺprovision specifying the
time for filing charges with the EEOCʺ and ʺdoes not limit jurisdiction to those cases in
which there has been a timely filing.ʺ Zipes v. Trans World Airlines, Inc., 455 U.S. 385,
393‐94 (1982).
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Daly v. Citigroup Inc., et al.
(S.D.N.Y. Feb. 6, 2018). In either event, though, her administrative complaint
was untimely: It was submitted long after the 180‐day statutory filing period
had run. See 18 U.S.C. § 1514A(b)(2)(D); 29 C.F.R. § 1980.103(d). Because the
plaintiff did not exhaust her administrative remedies, the district court correctly
dismissed her claim for lack of subject matter jurisdiction.
The plaintiff argues that even if filing a complaint with OSHA is a
jurisdictional prerequisite to suit, it is a requirement that she has satisfied under
the ʺcontinuing violationʺ doctrine. See Pl. Br. 13‐14, 18‐20. Under that doctrine,
a court may review a claim involving a mix of timely and time‐barred conduct as
part of one violative pattern of activity. Gonzalez v. Hasty, 802 F.3d 212, 220 (2d
Cir. 2015). The plaintiff argues that because the defendantsʹ filing of a false and
defamatory Form U‐5 about her on the FINRA database continues to prevent her
from obtaining employment in the financial sector, their violation is ongoing
and, therefore, her 180‐day filing deadline has not yet elapsed. See Pl. Br. 13‐14,
18‐20.
We disagree. The Supreme Court has rejected the continuing violation
doctrine in the employment discrimination context when the alleged violation
involves discrete acts, rather than an ongoing discriminatory policy. See Natʹl
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Daly v. Citigroup Inc., et al.
R.R. Passenger Corp. v. Morgan, 536 U.S. 101, 114‐15 (2002) (explaining that ʺacts
such as termination, failure to promote, denial of transfer, or refusal to hireʺ are
clearly discrete adverse actions); see also Lightfoot v. Union Carbide Corp., 110 F.3d
898, 907 (2d Cir. 1997) (ʺDiscrete incidents of discrimination . . . will not
ordinarily amount to a continuing violation, unless such incidents are specifically
related and are allowed to continue unremedied for so long as to amount to a
discriminatory policy or practice.ʺ (internal quotation marks omitted)). The
defendantsʹ misconduct, as alleged, consists of discrete, discriminatory acts,
including her exclusion from workplace meetings, ultimate termination, and the
filing of a disparaging Form U‐5. They do not amount to an overarching policy
of discrimination and are, therefore, insufficient to establish a continuing
violation for purposes of deferring her administrative filing deadline. See
Gonzalez, 802 F.3d at 220 (explaining that the continuing violation doctrine does
not apply ʺto discrete unlawful acts, even where those discrete acts are part of a
serial violationʺ (internal quotation marks and brackets omitted)). Indeed, ʺ[t]o
hold otherwise would render meaningless the time limitations imposed on
discrimination actions.ʺ Lightfoot, 110 F.3d at 907‐08.
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Daly v. Citigroup Inc., et al.
We conclude, then, that Congress intended for federal courts to be able to
assert jurisdiction over a SOX whistleblower claim only after the claimant has
first exhausted the statuteʹs administrative remedies. Here, Daly failed to satisfy
her administrative exhaustion requirements because she did not file a timely
complaint with OSHA. She is therefore precluded from filing her claim in
federal district court. Because the district court lacked subject matter jurisdiction
over her claim, the court properly dismissed it under Rule 12(b)(1).15
Conclusion
We have considered the plaintiffʹs remaining arguments on appeal and
conclude that they are without merit. For the foregoing reasons, we AFFIRM the
order of the district court.
15 Because we conclude that the plaintiffʹs failure to exhaust is a jurisdictional bar to
suit, we need not reach the plaintiffʹs SOX claim on the merits.
33