Pezza v. Investors Capital Corp.
767 F. Supp. 2d 225
D. Mass.2011Background
- Pezza alleges retaliation under Sarbanes-Oxley Act whistleblower protections after raising concerns about defendants' securities transactions.
- Defendants contend Pezza's employment agreements require arbitration of disputes, including the SOX claim.
- Dodd-Frank Act § 922 bars predispute arbitration agreements for SOX whistleblower claims, enacted after Pezza filed suit.
- The question is whether § 922 retroactively bars arbitration for claims arising before its enactment.
- Proceedings involved a motion to compel arbitration; the court must decide retroactivity and jurisdictional effects.
- Court ultimately denies the motion to compel arbitration, finding § 922 retroactively applicable and subject-matter jurisdiction lies in court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| retroactivity of §922 | Pezza argues §922 applies retroactively to pre-enactment conduct. | Defendants contend no retroactive effect or clear temporal reach of §922. | Court finds no clear congressional intent against retroactivity; §922 applies to pre-enactment conduct. |
| jurisdiction and forum for claims | Court should hear the whistleblower claim; arbitration not required due to retroactive bar. | Arbitration should govern under the pre-existing agreement unless retroactivity overrides it. | Court concludes §922 overrides arbitration and retains subject-matter jurisdiction; denies motion to compel arbitration. |
Key Cases Cited
- Landgraf v. USI Film Prod., 511 U.S. 244 (1994) (framework for determining retroactivity)
- Fernandez-Vargas v. Gonzales, 548 U.S. 30 (2006) (presumption against retroactivity in statutory application)
- Preston v. Ferrer, 552 U.S. 346 (2008) (national policy favoring arbitration; limits retroactivity when not explicit)
- Lindh v. Murphy, 521 U.S. 320 (1997) (normal rules of construction for temporal reach of statutes)
- INS v. St. Cyr, 533 U.S. 289 (2001) (implicit indications of retroactivity and statutory application)
- Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991) (arbitration does not undermine substantive rights under statutes)