UBS wins stay of retaliation case based on arbitration clause

by Ben Vernia | January 29th, 2014

In a January 27 decision in Murray v. UBS Securities, LLC, the Southern District of New York agreed to stay civil proceedings in a retaliation case brought under the anti-retaliation provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act so that the alleged whistleblower’s case could be heard by an arbitration panel. UBS moved for the stay even after moving to dismiss and filing an answer. The plaintiff, who claimed that UBS employed him as a “Senior Commercial Mortgage-Backed Security (“CMBS”) Strategist and Executive Director,” argued that his case was exempt from arbitration because it arose under the Sarbanes-Oxley Act (for which the clause provided an exception), but the Court agreed with UBS that the claims should be submitted to arbitration under the liberal policy in favor of arbitration under the Federal Arbitration Act. Although the parties disagreed about the arbitrability of the dispute, the Court concluded that this, too, was a question for the arbitrator to decide.

Comment: Whether a retaliation claim under the False Claims Act can be forced into arbitration has also been the subject of litigation. Courts tend to view these cases as employment disputes, rather than matters affecting the public policy of encouraging whistleblowers. Plaintiffs in these cases may find themselves subject to more business-friendly factfinders, and constrained by confidentiality restrictions from disclosing defendants’ wrongdoing. Courts would better fulfill the purpose of federal antiretaliation law by recognizing the significant public interest in these cases, and exercising jurisdiction over them on equitable grounds.

Leave a Reply

Recent Posts

Recent Comments