B. The District Court's Decision

The district court held that there is no inherent conflict between using the arbitral forum for SOX whistleblower claims and the purposes of the Act.  Rejecting Guyden's public policy arguments against compulsory arbitration, the court recognized that federal courts have routinely upheld bargains to arbitrate statutory claims despite the plaintiff's role as a private attorney-general.  J.A. 114-16.

The court also held that the procedural restrictions under Guyden and Aetna's arbitration agreement did not invalidate Guyden's bargain to arbitrate.  Specifically, the court rejected Guyden's contention that the requirement that the arbitrator's decision remain confidential conflicted with SOX's goal of eliminating the "corporate code of silence."  J.A. 114.^[6]  The court concluded that even though the confidentiality provision may favor the employer, which will have access to any prior decisions of similar claims, it does not render the arbitration agreement invalid.  The court noted that plaintiffs' lawyers and arbitration agencies "can scrutinize arbitration awards and accumulate a body of knowledge on a particular company," and that there are methods other than publication of arbitration decisions by which employees, shareholders, and investors can become aware of corporate misconduct.  Thus, the court concluded that the confidentiality requirement was not so offensive as to render Guyden's arbitration agreement void.  J.A. 117-18.

Finally, the district court concluded that limits placed on discovery in the arbitration agreement do not overcome the presumption of arbitrability, noting that the limits were identical for each party and the arbitrator had the discretion to allow further discovery.  J.A. 115.  With regard to the arbitrator's lack of subpoena power to compel nonparty witnesses to be deposed, the court stated that the arbitration agreement conferred sufficient powers upon an arbitrator to protect Guyden's rights, including permitting an arbitrator to compel the appearance of witnesses and the production of documents at a pre-merits hearing pursuant to section 7 of the Federal Arbitration Act.  J.A. 115-16.

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SUMMARY OF THE ARGUMENT

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ARGUMENT

THE MANDATORY ARBITRATION OF A WHISTLEBLOWER COMPLAINT UNDER SECTION 806 OF SOX DOES NOT CONFLICT WITH THE ACT'S UNDERLYING PURPOSES

     SOX, which was enacted in the wake of the Enron and WorldCom scandals to restore investor confidence in the nation's financial markets by ensuring corporate responsibility, enhancing public disclosure, and improving the quality and transparency of financial reporting and auditing, provides whistleblower protection to employees of publicly traded companies who report corporate misconduct.  See 148 Cong. Rec. S7420 (daily ed. July 26, 2002) (statement of Sen. Leahy) ("U.S. laws need to encourage and protect those who report fraudulent activity that can damage innocent investors in publicly traded companies.").  Section 806 specifically prohibits publicly traded companies from discriminating against an employee in the terms and conditions of employment because of his or her whistleblowing activity.  See 18 U.S.C. 1514A(a).  Activities protected under the Act include providing to a federal regulatory or law enforcement agency, Congress, or "a person with supervisory authority over the employee" information that an employee reasonably believes constitutes a violation of federal mail, wire, bank, or securities fraud (18 U.S.C. 1341, 1343, 1344, and 1348), or a violation of any securities rule or other provision of federal law relating to fraud against shareholders.  See 18 U.S.C. 1514A(a)(1), (a)(2).

An employee who believes that he or she has been subject to retaliation for protected activity may file a complaint with OSHA.  See 18 U.S.C. 1514A(b)(1)(A); 29 C.F.R. 1980.103.  If OSHA determines that there is reasonable cause to believe that a complaint has merit, it will issue findings and a preliminary order of relief.  See 49 U.S.C. 42121(b)(1), (b)(2)(A); 29 C.F.R. 1980.103-.105.^[7]  An employee prevailing in a section 806 action is entitled to "make-whole" relief, including reinstatement, back pay, and compensation for any special damages sustained as a result of the retaliation, including reasonable attorneys fees.  See 18 U.S.C. 1514A(c).

Either the employee or the employer may object to OSHA's findings by requesting a de novo hearing before an administrative law judge ("ALJ").  See 29 C.F.R. 1980.107.  ALJ decisions are subject to discretionary review by the Department's Administrative Review Board ("ARB").^[8]  SOX also provides that an employee may file a de novo complaint in district court if the Department has not issued a final decision within 180 days of the filing of the initial complaint and there is no showing that the delay is due to the bad faith of the employee.  See 18 U.S.C. 1514A(b)(1)(B); 29 C.F.R. 1980.114(a).

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The district court properly concluded that there is no conflict between arbitrating a section 806 claim under the terms of an individual arbitration agreement and the purposes of SOX.^[9]  In the Federal Arbitration Act ("FAA"), 9 U.S.C. 1 et seq., Congress codified a strong national policy in favor of arbitration that the courts have applied broadly.  See Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983) ("any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration"); McMahan Sec. Co. L.P. v. Forum Capital Mkts. L.P., 35 F.3d 82, 88 (2d Cir. 1994) (arbitration applies unless the arbitration clause does not cover the asserted dispute); S.A. Mineracao da Tridade-Samitri v. Utah Int'l, Inc., 745 F.2d 190, 194 (2d Cir. 1984) (courts should "construe arbitration clauses as broadly as possible").  As a result, statutory claims are presumed to be arbitrable unless it can be demonstrated that Congress precluded waiver of judicial remedies for the statutory rights in question.  See Gilmer, 500 U.S. at 26; Shearson/American Express, Inc. v. McMahon, 482 U.S. 220, 226 (1987); Oldroyd v. Elmira Sav. Bank, FSB, 134 F.3d 72, 78 (2d Cir. 1998).  "'[S]o long as the prospective litigant effectively may vindicate [his or her] statutory cause of action in the arbitral forum, the statute will continue to serve both its remedial and deterrent function.'"  Gilmer, 500 U.S. at 28 (alterations in original) (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 637 (1985)).  The party opposing arbitration bears the burden of demonstrating Congress's intent to preclude it.  See McMahon, 482 U.S. at 227; Oldroyd, 134 F.3d at 78.

There is no demonstrable congressional intent to preclude arbitration of section 806 claims.  Such congressional intent may be manifest in the statute, its legislative history, or an "inherent conflict" between arbitration and the statutory purpose.  See Gilmer, 500 U.S. at 26.  Nothing in SOX or its legislative history precludes the mandatory arbitration of whistleblower claims.  To the contrary, the history of SOX's enactment reveals that Congress rejected a provision that would have barred the mandatory arbitration of SOX whistleblower claims.  See S. 2010, 107th Cong. § 7 (2002); S. Rep. No. 107-146, at 22; see also Boss v. Salomon Smith Barney, Inc., 263 F. Supp. 2d 684, 685 (S.D.N.Y. 2003) (SOX whistleblower complaint is subject to mandatory arbitration).

Moreover, there is no inherent conflict between the purposes of SOX and the arbitration, pursuant to an individual arbitration agreement, of section 806 claims.  By enacting SOX, Congress intended "to improve the quality of and transparency in financial reporting and auditing of public companies."  Carnero v. Boston Scientific Corp., 433 F.3d 1, 9 (1st Cir.), cert. denied, 126 S. Ct. 2973 (2006).  To this end, Congress sought to protect whistleblowers from retaliation, entitling them to civil remedies, such as reinstatement and backpay, because "often, in complex fraud prosecutions, . . . insiders are the only firsthand witnesses to the fraud."  S. Rep. No. 107-146, at 10; see also Bechtel v. Competitive Techs., Inc., 448 F.3d 469, 484 (2d Cir. 2006) (Straub, J., dissenting in the result).  Because all the civil remedies that Congress established to encourage and protect SOX whistleblowers can be provided through arbitration, the remedial and deterrent purposes of the statute will not be undermined by compulsory arbitration.  See Mitsubishi, 473 U.S. at 637; see also Gilmer, 500 U.S. at 32 (arbitration procedures can adequately provide for broad equitable relief).

The argument that arbitration of federal remedial rights would frustrate a plaintiff's function as a private attorney-general has been consistently rejected by the Supreme Court, which has repeatedly upheld arbitration agreements under various statutes despite objections that arbitration would undermine the public interest.  See, e.g., McMahon, 482 U.S. at 222, 241-42 (notwithstanding congressional intent "to provide vigorous incentives for plaintiffs to pursue RICO claims that would advance society's fight against organized crime . . . [t]he private attorney general role for the typical RICO plaintiff

 . . . does not support a finding that there is an irreconcilable conflict between arbitration and enforcement of the RICO statute"); Mitsubishi, 473 U.S. at 635-37 (notwithstanding the antitrust plaintiff's role as "a private attorney-general who protects the public's interest," nothing in the nature of the federal antitrust laws prohibited parties from arbitrating the relevant antitrust claims).  Specifically, claims under employment statutes (see, e.g., Gilmer) and the securities laws (see, e.g., McMahon) have been held subject to compulsory arbitration.

While Guyden expresses a general distrust of the arbitral forum (Brief at 14-17), she does not provide any plausible support for her conclusion that whistleblowers will be dissuaded from asserting claims, and that the deterrent features of SOX will be compromised, simply because an employee pursuing a whistleblower claim must pursue her remedies in arbitration.   Notably, this Court has rejected arguments that whistleblower claims are to be treated differently than other statutory claims for purposes of arbitration.  See Oldroyd, 134 F.3d at 78-79 (compelling arbitration of a whistleblower claim under the Financial Institutions Reform, Recovery, and Enforcement Act); see also McMahon, 482 U.S. at 239-40 (so long as the plaintiff can obtain compensatory remedies in the arbitral forum, the federal statutes would continue to serve any "incidental policing" and "deterrent" functions) (citing Mitsubishi, 473 U.S. at 635, 637).  Accordingly, the district court correctly concluded that arbitration of an employee's whistleblower claim under section 806 does not conflict with Congress's intent in passing SOX.

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C.   The Confidentiality Provision in Guyden's Arbitration Agreement Does Not Invalidate Her Agreement to Arbitrate Her Employment Dispute Under SOX

The district court also correctly concluded that Guyden's arbitration agreement was valid despite its confidentiality clause, which provides that "[a]ll proceedings, including the arbitration hearing and decision, are private and confidential, unless otherwise required by law" and that "[a]rbitration decisions may not be published or publicized without the consent of both the [Employee] and the Company."  J.A. 59.^[10]  The circuit courts that have considered the issue have overwhelmingly held that a confidentiality provision does not render an arbitration agreement unenforceable.  See Iberia, 379 F.3d at 175 (attack on confidentiality provision is "attack on the character of arbitration itself"); Parilla v. IAP Worldwide Servs. VI, Inc., 368 F.3d 269, 280, 281 n.13 (3d Cir. 2004) ("the confidentiality of the proceedings will not impede or burden in any way Parilla's ability to obtain any relief to which she may be entitled" acting in accordance with the court of appeals for the District of Columbia in a similar case) (citing Cole v. Burns Int'l Sec. Servs., 105 F.3d 1465, 1477 (D.C. Cir. 1997).^[11]  As the Third Circuit noted, the court in Cole rejected as a "generalized attack[] on arbitration" the argument that the lack of public disclosure of arbitral decisions prevented potential plaintiffs from locating information necessary to build their cases.  See Parilla, 368 F.3d at 281 n.13.  But cf. Ting v. AT&T, 319 F.3d 1126, 1152 (9th Cir. 2003) (confidentiality requirement contained in AT&T's customer services arbitration agreement was unconscionable under California law because it affected millions of Californians and prevented potential plaintiffs from obtaining the necessary information with which to present their claims).

Guyden fails to demonstrate how the confidentiality provision prevents her from vindicating her individual rights under SOX.  See Parilla, 368 F.3d at 280.  Here, as in Parilla, under the arbitration agreement's confidentiality provision, "[e]ach side has the same rights and restraints . . . and there is nothing inherent in confidentiality itself that favors or burdens one party vis-à-vis the other in the dispute resolution process."  Id.

Nor has Guyden demonstrated how preserving the confidentiality of arbitration proceedings is any different from the confidential settlement of SOX whistleblower cases in district court, which also are not statutorily prohibited.  See Gilmer, 500 U.S. at 32 (noting that concerns about public knowledge of ADEA arbitrations "apply equally to settlements of ADEA claims, which . . . are clearly allowed"); Iberia, 379 F.3d at 176 (upholding confidentiality provision where nothing in underlying law prohibits confidential settlement of the claims at issue); Parilla, 368 F.3d at 281 (same).  Accordingly, the confidentiality clause in Guyden's arbitration agreement does not invalidate the arbitration of her SOX complaint. ^[12]

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D.   The Discovery Restrictions in Guyden's Arbitration Agreement Do Not Render Arbitration Inappropriate

The district court correctly concluded that complaints under section 806 of SOX can be effectively litigated even if discovery is limited and arbitrators do not have subpoena authority to compel discovery.  Courts have repeatedly held that discovery restrictions are not a bar to arbitration.  See Gilmer, 500 U.S. at 31 (discovery in arbitration, though less extensive than that available in district court, was sufficient to allow plaintiff fair opportunity to present ADEA claims); McMahon, 482 U.S. at 232 ("the streamlined procedures of arbitration do not entail any consequential restriction on substantive rights"); Morrison v. Circuit City Stores, Inc., 317 F.3d 646, 673 & n.16 (6th Cir. 2003) (plaintiff failed to show how arbitration's discovery restrictions prevented her from presenting employment discrimination claims); Sobol v. Kidder, Peabody & Co., 49 F. Supp. 2d 208, 223 (S.D.N.Y. 1999) (same). 

Although a minimal amount of discovery presumably is necessary for a plaintiff effectively to exercise her statutory rights, see Martin v. SCI Mgmt. L.P., 296 F. Supp. 2d 462, 468 (S.D.N.Y. 2003), the district court correctly concluded that the discovery provisions in this agreement are sufficient.  Importantly, the arbitration agreement allows the arbitrator to order additional discovery beyond the terms of the agreement "upon a showing that it is necessary for that party to have a fair opportunity to present a claim or defense."  J.A. 59.^[13]  As the district court stated, "absent provisions affording Aetna a favorable bias, the Court cannot indulge in the presumption that the arbitrator will act without equanimity to deny plaintiff's request."  J.A. 120 (citing Gilmer, 500 U.S. at 30).

It is noteworthy that Congress entrusted the administration and enforcement of section 806 claims in the first instance to the Secretary, see 18 U.S.C. 1514A(b)(2)(A), and intended that those complaints be handled expeditiously.  Specifically, investigations are to be conducted within 60 days and final decisions are to be issued within 120 days after the end of the ALJ hearing.  See 49 U.S.C. 42121(b)(2), (b)(3).  To accommodate Congress's intent that SOX complaints be adjudicated in a fair and expeditious manner, the Department's implementing regulations provide ALJs with broad discretion to limit discovery.  See 29 C.F.R. 1980.107(b) (the ALJ has "broad discretion to limit discovery in order to expedite the hearing").

Additionally, as the district court recognized, an arbitrator's lack of subpoena authority to compel discovery should not render discovery provisions deficient.  While the circuit courts are split concerning whether an arbitrator has authority to subpoena third-parties for pre-hearing discovery, no court has concluded that the absence of pre-hearing subpoena power invalidates an arbitration agreement.^[14]  In any event, To Whom It May Concern: the extent that Guyden can convince the arbitrator that certain documents or witnesses are necessary for her to present her case, section 7 of the FAA authorizes the arbitrator to compel production of those documents or the appearance of witnesses at a preliminary hearing.  See Stolt-Nielsen SA v. Celanese AG, 430 F.3d 567, 578-79 (2d Cir. 2005).

Significantly, section 806 of SOX does not provide the Department of Labor with subpoena authority and yet, as noted above, Congress entrusted the administration and enforcement of SOX whistleblower claims to the agency.^[15]  Thus, Congress clearly anticipated that an employee could obtain a fair adjudication of his or her SOX whistleblower claim, even if he or she lacks an ability to subpoena documents or testimony for pre-hearing discovery. 

A SOX retaliatory discharge claim is no more complex nor likely to require more evidence than other statutory claims that have been held subject to arbitration.  See Gilmer, 500 U.S. at 31 ("It is unlikely, however, that age discrimination claims require more extensive discovery than other claims that we have found to be arbitrable, such as RICO and antitrust claims.").    Moreover, it is undisputed that third-party testimony and document production can be compelled by an arbitrator at a hearing on the merits or during an evidentiary hearing before the final hearing on the merits, if Guyden demonstrates such a need.  9 U.S.C. 7.  The district court thus properly concluded that Guyden's complaint can be effectively litigated notwithstanding its discovery restrictions.

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CONCLUSION

     For the foregoing reasons, this Court should affirm the district court's decision.  

Respectfully submitted,

JONATHAN L. SNARE
Acting Solicitor of Labor

STEVEN J. MANDEL
Associate Solicitor

ELLEN R. EDMOND

Counsel for Whistleblower

  Programs

_____________________________

ROGER W. WILKINSON

Attorney

U.S. Department of Labor
200 Constitution Ave., N.W.
Room N-2716
Washington, D.C. 20210
(202) 693-5555

CERTIFICATE OF COMPLIANCE

PURSUANT TO FED. R. APP. P. 32(a)(7)(C) AND CIRCUIT RULE 32(a)(2)

FOR CASE NUMBER 06-4954

Type-Volume Limitations

     I certify that pursuant to Fed. R. App. P. 32(a)(7)(c) and the Second Circuit Rule 32(a)(2), the attached amicus brief was prepared using Microsoft Office Word 2003 and the monospaced typeface Courier New 12 points or more and contains 7,000 words or less.

Dated:  February 21, 2007                                     

                                             ROGER W. WILKINSON

                                             Attorney

COMPLIANCE

CERTIFICATE OF COMPLIANCE

PURSUANT TO CIRCUIT RULE 32(a)

FOR CASE NUMBER 06-4954 

Virus Scan and PDF Duplication

     I certify that the text of the brief transmitted to the Court as an e-mail attachment to http://briefs@ca2.uscourts.gov as a PDF file is identical to the text of the paper copies mailed to the Court and counsel of record.  In addition, I certify that the PDF file was scanned for viruses using VirusScan Enterprise 8.1i by McAfee Security.  The scan indicated there were no viruses present.

Dated:  February 21, 2007                                     

                                              ROGER W. WILKINSON

                                              Attorney

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SERVICE

     I hereby certify that on February 21, 2007, a PDF version was emailed and two paper copies of the foregoing Brief for the Secretary of Labor as amicus curiae were served using first-class mail, postage prepaid, upon the following counsel of record: 

Eric J. Grannis, Esq.

Law Offices of Eric J. Grannis

620 Fifth Avenue

New York, New York 10020

E-mail:   egrannis@grannislaw.com

Willis J. Goldsmith, Esq.

Wendy C. Butler, Esq.

Jones Day

222 East 41st Street

New York, New York 10017

E-mails:  wgoldsmith@jonesday.com

             wbutler@jonesday.com

                                  ROGER W. WILKINSON

                                  Attorney