On December 21, 2018, the U.S. District Court for the Northern District of California stayed a plaintiff's whistleblower retaliation claim under SOX (which was not subject to mandatory arbitration) while granting a motion compelling arbitration of the plaintiff's remaining employment discrimination and retaliation claims. Anderson v. Salesforce.com, Inc., No. 18-cv-06712-PJH.
Background
Plaintiff alleged that he was terminated after he raised concerns about his employer's accounting practices. He subsequently filed suit in the Northern District of California asserting ten causes of action under the FMLA and California law for various forms of employment discrimination and retaliation, and an eleventh cause of action under SOX for whistleblower retaliation. While employed, the plaintiff had signed an arbitration agreement in which he agreed to "resolve by arbitration all claims or controversies, past, present, and future" that he may have against Defendant. However, as Dodd-Frank invalidated pre-dispute arbitration agreements regarding whistleblower claims under SOX, 18 U.S.C. §1514A(e)(2), the employer moved to compel arbitration only of the first ten causes of action, and to stay the SOX claim pending resolution of the arbitration.
Ruling
The court granted the motion to compel arbitration and stayed the SOX claim pending resolution of the arbitration. In granting the motion to compel arbitration, the Court found that a valid and enforceable agreement to arbitrate existed between the parties and that the claims at issue fell squarely within the scope of the agreement. The Court also granted the employer's motion to stay the non-arbitrable SOX claim, because that claim arose from the same conduct as Plaintiff's arbitrable claims. The Court reasoned that allowing the arbitration to run its course would simplify issues of law or questions of fact relating to the SOX claim in future proceedings.
Implications
This is a win for the employer, as it was able both to enforce its arbitration clause and avoid litigating essentially the same set of facts in two places at once. Moreover, to the extent the employer establishes meritorious defenses to the other claims in arbitration, those defenses may have res judicata and/or collateral estoppel effects on the stayed SOX claim.
California Federal Court Stays SOX Claim Pending Arbitration Of Related Claims
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