933 F.3d 246 (3rd Cir. 2019), 16-3577, Jaludi v. Citigroup
|Citation:||933 F.3d 246|
|Opinion Judge:||SMITH, Chief Judge.|
|Party Name:||Abdul A. JALUDI, Appellant v. CITIGROUP and company or one or more of its direct or indirect subsidiaries|
|Attorney:||Adam Bluestein [ARGUED], Richard H. Frankel, Sydney Melillo [ARGUED], Drexel University, Thomas R. Kline School of Law, Counsel for Appellant Christen L. Casale, Morgan Lewis & Bockius, Thomas A. Linthorst [ARGUED], Morgan Lewis & Bockius, Counsel for Appellee Karla Gilbride, Public Justice, Coun...|
|Judge Panel:||Before: SMITH, Chief Judge, JORDAN, and MATEY, Circuit Judges|
|Case Date:||August 06, 2019|
|Court:||United States Courts of Appeals, Court of Appeals for the Third Circuit|
Argued June 4, 2019
On Appeal from the United States District Court for the Middle District of Pennsylvania, District Court No. 3-15-cv-02076, District Judge: The Honorable Malachy E. Mannion.
Adam Bluestein [ARGUED], Richard H. Frankel, Sydney Melillo [ARGUED], Drexel University, Thomas R. Kline School of Law, Counsel for Appellant
Christen L. Casale, Morgan Lewis & Bockius, Thomas A. Linthorst [ARGUED], Morgan Lewis & Bockius, Counsel for Appellee
Karla Gilbride, Public Justice, Counsel for Amici Appellants
Before: SMITH, Chief Judge, JORDAN, and MATEY, Circuit Judges
SMITH, Chief Judge.
Abdul A. Jaludi, a longtime Citigroup employee, was laid off and terminated in 2013 after reporting certain improprieties in Citigroups internal complaint monitoring system. Jaludi, believing Citigroup had fired him in retaliation for his reporting, sued Citigroup under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962 ("RICO"), and the Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1514A. Citigroup moved to compel arbitration, relying on two Employee Handbooks that contained arbitration agreements. The first of those Handbooks, the 2009 Employee Handbook, contained an arbitration agreement requiring arbitration of all claims arising out of employment— including Sarbanes-Oxley claims.
In July 2010, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, which amended Sarbanes-Oxley to prohibit pre-dispute agreements to arbitrate whistleblower claims. Pub. L. No. 111-203, § 922, 124 Stat. 1376, 1848 (2010) (codified at 18 U.S.C. § 1514A(e)). In 2011, Citigroup and Jaludi agreed to the 2011 Employee Handbook; the arbitration agreement appended to that Handbook excluded "disputes which by statute are not arbitrable" and deleted Sarbanes-Oxley from the list of arbitrable claims. Suppl. App. 140. Nonetheless, the District Court held that arbitration was required for all of Jaludis claims.
We disagree. Although Jaludis RICO claim falls within the scope of either Handbooks arbitration provision, the operative 2011 arbitration agreement supersedes the 2009 arbitration agreement and prohibits the arbitration of Sarbanes-Oxley claims. We will therefore affirm in part, reverse in part, and remand for further proceedings.
Jaludi began working for Citigroup Technology, Inc. in 1985.2 Throughout his more than two decades with Citigroup, Jaludi rose steadily through the ranks. Starting as an entry-level tape operator, he eventually became a senior vice president who managed a global team. Jaludis responsibilities included troubleshooting complaint monitoring systems, merging command centers, and streamlining an application for customer statements.
As part of Jaludis role, he was responsible for ensuring that problem tickets were created for system- and application-related problems that could affect customers. Jaludi made sure problems were tracked in the complaint management system, resolved, and prevented from recurring. Citigroup was obligated to report severity level one problem tickets to the Office of the Comptroller of the Currency.3 In early 2010, Jaludi discovered that problem tickets were being mishandled. Jaludi observed that Citigroup was not reporting hundreds of level one tickets; instead, Citigroup was deleting these tickets or reclassifying them
to a lower level to avoid reporting obligations. To make matters worse, Citigroups help desks refused to even open a level one ticket "unless they absolutely had to." Compl. ¶ 12.
Jaludi repeatedly reported these issues to management, escalating his complaints up the chain of command. In early 2010, Jaludi emailed Citigroups then-CEO, Vikram Pandit, to complain. Shortly thereafter, Jaludi was summoned to meet with Tony Disanto, the head of the North America Data Center. Disanto expressed his displeasure with Jaludis repeated complaints. Citigroup management warned Jaludi to "keep his mouth shut." Id. ¶ 17. One of Jaludis former managers told him that Disanto "hated [Jaludis] guts for refusing to keep his mouth shut and wanted him fired." Id.
In the second quarter of 2010, Jaludi was demoted. Jaludis then-supervisor told him that he was more qualified than the person who would be supervising him "but that her hands were tied." Id. ¶ 18. Jaludi complained about his demotion. Thereafter, in the third quarter of 2010, Jaludis teams were taken away from him. For a period of two months "Jaludi had no staff reporting to him nor was he given any work to do." Id. ¶ 21.
Late in the fourth quarter of 2010, Jaludi was transferred from the division where he had worked for twenty-two years. Jaludis new supervisor had been "told to take Jaludi and did not know what to do with him." Id. Two months later, a new manager was added to work between Jaludi and his supervisor. In May 2011, Jaludi was further demoted to an entry-level position.
In the third quarter of 2011, Citigroup held the Citigroup Challenge contest to find the best idea for the future of banking. Jaludis idea, Family Banking, was selected as the co-winner out of 2,500 ideas from 65,000 participants. Jaludi, along with others, presented the winning idea to the CEO in New York. Shortly afterwards, Jaludi was given an unsatisfactory performance review for failing to meet the companys expectations.
In 2012, one of the judges from the Citigroup Challenge sought Jaludis assistance in reducing customer problems at one of the banks command centers. Jaludi reviewed the command centers incident management process and discovered that employees were improperly opening and categorizing trouble tickets. Despite Jaludis suggestions, the leaders of the command center were not amenable to change. One manager told Jaludi that the command center would not alter its policy because doing so would make metrics look bad and require reporting to federal regulators. In the fourth quarter of 2012, Jaludi told a supervisor about the problem and made suggestions for resolving it. The supervisor ultimately refused to discuss the issue with Jaludi, telling him in December 2012 that he was wasting everyones time.
On February 20, 2013, Citigroup told Jaludi that he was being laid off "due to deteriorating business conditions and budget constraints." Id. ¶ 39. Jaludi complained that his layoff was retaliatory. On April 21, 2013, Jaludi was terminated.4
Congress enacted Sarbanes-Oxley "[t]o safeguard investors in public companies and restore trust in the financial markets following the collapse of Enron Corporation." Dig. Realty Tr., Inc. v. Somers, __ U.S. __, 138 S.Ct. 767, 773, 200 L.Ed.2d 15 (2018). Sarbanes-Oxley protects whistleblowers of publicly traded companies. See 18 U.S.C. § 1514A(a). Under the Act, companies cannot "discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment" in retaliation for an employees protected conduct. Id. Protected conduct includes providing information to a supervisor "regarding any conduct which the employee reasonably believes constitutes a violation" of certain criminal fraud statutes, U.S. Securities and Exchange Commission rules and regulations, or statutes prohibiting fraud against shareholders. Id. § 1514A(a)(1). Prior to Dodd-Frank, employers and employees could agree to arbitrate any future Sarbanes-Oxley claims.
Throughout Jaludis time at Citigroup, he received many iterations of the companys Employee Handbook, which enumerates its policies and guidelines. In late 2008, Citigroup issued the 2009 Employee Handbook, which Jaludi acknowledged receiving in December 2008. The 2009 Handbook contained an arbitration agreement, which was set forth in an appendix. The 2009 arbitration agreement expressly identifies Sarbanes-Oxley claims as arbitrable disputes and requires their referral to arbitration.
On July 21, 2010, Congress enacted Dodd-Frank. "Passed in the wake of the 2008 financial crisis, Dodd-Frank aimed to promote the financial stability of the United States by improving accountability and transparency in the financial system." Dig. Realty Tr., Inc., 138 S.Ct. at 773 (internal quotation marks omitted). Dodd-Frank...
To continue readingFREE SIGN UP