Broker-Dealer Litigation - Greenberg Traurig LLP

give arbitrators the authority to issue such a prohibition. The district court found that, although
arbitral immunity extends only to those acts taken by arbitrators that are within the scope of their
duties and within their jurisdiction, the arbitrators in this case were acting within their
jurisdiction. The Ninth Circuit agreed, adding that “the fact that courts or other agencies ‘may’
resolve such an issue does not preclude the arbitral panel from doing so.”
Pezza v. Investors Capital Corp., 767 F. Supp. 2d 225 (D. Mass. 2011).
The district court addressed whether Section 922 of the Dodd-Frank Act, which amends
the whistleblower protection set forth in the Sarbanes-Oxley Corporate and Criminal Fraud
Accountability Act of 2002, should be applied retroactively. Specifically, the court addressed
the question of whether the ban on pre-dispute arbitration agreements imposed by the Dodd-
Frank Act applies retroactively. In conducting its analysis, the court first found that nothing in
Section 922 displays an express congressional intent regarding retroactivity. Next, the court
again found that the statute was unclear regarding retroactivity, and as a result of this
uncertainty, moved to the second step in the analysis of addressing the consequence of
retroactivity. Accordingly, the court held that, in the absence of clear legislative intent to limit
the temporal reach of Section 922 of the Act, and because of the procedural character of that
provision, the court and not a FINRA arbitration panel had subject matter jurisdiction over the
whistleblower claim.
The Ayco Company, L.P v. Becker, 2011 U.S. Dist. LEXIS 92380 (N.D.N.Y. Aug. 18, 2011).
Plaintiff filed this breach of employment contract action against its former employee
alleging that the employee breached the Trade Secrets and Confidentiality Agreement (the
“Agreement”) he signed upon beginning his employment. Plaintiff contended that Defendant
violated that agreement when he: (1) used its confidential client and business information
without the company’s permission; (2) removed from Plaintiff’s premises records of names and
addresses of the firm’s clients; and (3) solicited or performed services for Plaintiff’s clients
during the two year period following his departure from Plaintiff. Additionally, under the
Agreement, Defendant agreed that the Northern District of New York would have jurisdiction
over any disputes arising between the parties. Defendant offered various arguments in support of
his motion to stay the federal court action and compel arbitration of the dispute. First, Defendant
contended that FINRA Rule 13200(a) should apply, notwithstanding the fact that Plaintiff’s
affiliate, and not Plaintiff, signed Defendant’s Form U-4 Agreement. According to Defendant,
Plaintiff was the true party of interest with regard to the arbitration clause found in the Form U-4,
and therefore should be estopped from avoiding arbitration. The court explained that, absent an
express agreement to arbitrate, the Second Circuit has recognized only five theories upon which
it is willing to enforce an arbitration agreement against a non-signatory: 1) incorporation by
reference; 2) assumption; 3) agency; 4) veil-piercing/alter ego; and 5) estoppel. Regarding
estoppel, Defendant argued that Plaintiff should be bound by the arbitration agreement under a
“direct benefits” theory. The court, however, disagreed, finding that it was unclear whether
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