2013] PRE-DISPUTE ARBITRATION AGREEMENTS 2143
Congress passed the Dodd–Frank Wall Street Reform and Consumer
Protection Act (“Dodd–Frank”) in response to the global financial crisis that
began in 2008. The overall purpose of Dodd–Frank, as stated in the opening
passage of the Act, is to “promote the financial stability of the United States
by improving accountability and transparency in the financial system, to end
‘too big to fail’, to protect the American taxpayer by ending bailouts, to
protect consumers from abusive financial services practices, and for other
purposes.”1 In the wake of the Bernie Madoff scandal,2 in debates pertaining
to Dodd–Frank Congress spoke of the need for increased whistleblower
protections and rewards to increase the likelihood that a person will come
forward with important information about a potential fraud before it is too
late.3 One such protection is found in section 922 of Dodd–Frank, which
nullifies pre-dispute arbitration agreements entered into between an
employer and employee relating to whistleblower claims. This provision has
created a disagreement between courts over whether section 922 should be
applied retroactively to cases that were pending when Dodd–Frank was
Two separate courts have reached opposite conclusions. In Pezza v.
Investors Capital Corp., the District of Massachusetts applied the Supreme
Court’s framework for analyzing statutory retroactivity from Landgraf v. USI
Film Products4 and determined that section 922 of Dodd–Frank should be
applied retroactively.5 The District of Nevada applied Landgraf in Henderson
v. Masco Framing Corp. and found that section 922 should not be applied
retroactively.6 The main difference between Pezza and Henderson revolves
around the classification of arbitration as either substantive or procedural.
This Note discusses this important divergence (along with other aspects
central to reaching a complete and proper legal conclusion). After
completing that analysis, this Note concludes, based on Supreme Court
precedent, that section 922’s prohibition on pre-dispute arbitration
1. Dodd–Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203,
124 Stat. 1376, 1376 (2010) (codified as amended in scattered sections of 7, 12, 15, 18, 22, 31,
and 42 U.S.C.).
2. See Diana B. H enriques, Madoff Is Sentenced to 150 Years for Ponzi Scheme, N.Y. TIMES (June
29, 2009), http://www.nytimes.com/2009/06/30/business/30 madoff.html?ref=bernardlmadoff
(discussing the former Wall Street trader wh o pled guilty in 2009 to running a Ponzi scheme).
3. Additional Reforms to the Secur ities Investor Protection Act: Hearing on H.R. 3817 and H.R.
4173 Before H. Subcomm. on Capital Mkts., Ins., & Gov’t Sponsored Enters. of the H. Comm. on Fin.
Servs., 111th Cong. 2 (2009) [hereinafter Reform Hearing] (statement of Rep. Kanjorski,
Chairman, H. Subcomm. on Capital Mkts., Ins., & Gov’t Sponsored Enters.).
4. Landgraf v. USI Film Prods., 511 U.S. 244 (1994).
5. Pezza v. Investors Capital Corp., 767 F. Supp. 2d. 225, 228–34 (D. Mass. 2011).
6. Henderson v. Masco Framing Corp., No. 3:11-CV-00088-LRH, 2011 WL 3022535, at
*4 (D. Nev. July 22, 2011).