Daly v. Citigroup Inc.
| Decision Date | 19 September 2019 |
| Docket Number | Docket No. 18-665,August Term, 2018 |
| Citation | 939 F.3d 415 |
| Parties | Erin DALY Plaintiff-Appellant, v. CITIGROUP INC., Citigroup Global Markets Inc., Citibank, N.A., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Second Circuit |
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.
Before: Sack, Hall, and Droney, Circuit Judges.
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 plaintiff's claims. They argued that all of the plaintiff's 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 plaintiff's 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 defendants' motion to compel arbitration and to dismiss in its entirety. The court concluded that the plaintiff's claims fell within the scope of 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-Frank's whistleblower retaliation provision from arbitration, the plaintiff's Dodd-Frank whistleblower claim was arbitrable.
The court further concluded that the plaintiff's 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 defendants' motion must in either event be granted. The district court therefore dismissed the plaintiff's 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 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 statute's requirements.
These arguments are meritless. The district court correctly compelled arbitration of the plaintiff's 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 plaintiff's 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 plaintiff's Sarbanes-Oxley claim and granted the defendants' motion to compel arbitration as to the remainder of her claims.
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 "defendants" or "Citi"). 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 "Policy"). 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 defendants' customers.2 Amended Complaint ("AC") ¶ 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 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 "[t]he boys were in charge." Id . ¶ 93; J. App. 106 (emphasis omitted).
The plaintiff further alleges that her supervisor, James Messina, "constantly demanded that [she] disclose material non-public information of which he knew she was in possession" so that "he could pass the information along to his favored clients." 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 ("Form U-5") with the Financial Industry Regulatory Authority ("FINRA"), as required when a registered representative of a firm departs therefrom for any reason.3 It contained assertions that, among other things, the plaintiff had been late to work and had mishandled confidential information. The plaintiff asserts that these statements are "false, malicious, and defamatory." Id. ¶¶ 36-38; J. App. 17-18. Because the plaintiff's 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 defendants' statements continue to have an adverse impact on her employment opportunities.
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 ("SOX"), 15 U.S.C. § 1514A; the Dodd-Frank Act ("Dodd-Frank"), 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 plaintiff's claims. They argued that, with the exception of her SOX claim, the plaintiff's claims were employment-related and therefore subject to her employment arbitration agreement. They further contended that the plaintiff's 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 defendants' motion in its entirety.4 The district court found that the plaintiff had entered into three successive employment arbitration agreements. It concluded that the plaintiff's 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 plaintiff's Dodd-Frank claim was arbitrable. The court therefore concluded that each of the plaintiff's claims, with the exception of her SOX claim, was subject to mandatory arbitration.
The district court also dismissed the plaintiff's 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 plaintiff's claim was in either event dismissible: If exhaustion is jurisdictional, the plaintiff's 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 plaintiff's SOX claim and referred each of her other claims to arbitration.
On appeal, the plaintiff argues that the district court erred in dismissing her...
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