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<xTITLE>Fifth Circuit Holds Federal Whistleblower Statute Does Not Exempt Former Employee’s Claims from Arbitration</xTITLE>

Fifth Circuit Holds Federal Whistleblower Statute Does Not Exempt Former Employee’s Claims from Arbitration

by Beth Graham
November 2020 Beth Graham

This article first appeared on the Disputing Blog, here.

Last month, the United States Court of Appeals for the Fifth Circuit held a federal whistleblower statute did not render an arbitration agreement between a man and his former employer unenforceable.  In Robertson v. Intratek Computer, Inc., No. 19-50792 (5th Cir., October 2, 2020), a worker, Robertson, signed an employment contract that included an arbitration agreement as a condition of employment with a company, Intratek. After Robertson was terminated, he filed a whistleblower complaint alleging Intratek’s CEO, Fahami, bribed a Veterans Administration official, Rininger, in order to secure certain federal contracts.  Roberston then filed a lawsuit in the Western District of Texas against Intratek, Fahami, and Rininger claiming they violated the whistleblower protections enumerated in 41 U.S.C. § 4712.

In response to Robertson’s complaint, Intratek filed a motion to compel the dispute to arbitration. Robertson opposed the motion by arguing his federal whistleblower protection claims were not subject to arbitration.  Following referral to a magistrate judge, the Western District of Texas disagreed with Robertson and granted Intratek’s motion with regard to all of the defendants.  Robertson then filed an appeal with the United States Court of Appeals for the Fifth Circuit.

Although the issue was one of first impression in the Fifth Circuit, the appellate court summed up the main question before it quite succinctly by stating:

The principal question on appeal is one of first impression in our Circuit: whether Robertson can use 41 U.S.C. § 4712 to escape the arbitration agreement he signed. Statutory text says no. So does Supreme Court precedent. And the legislative history is irrelevant.

The Court of Appeals next examined the parties’ legal arguments and applied the law to the facts of the case at hand.  Interestingly, the Court of Appeals dismissed Robertson’s claim that the text of 41 U.S.C. § 4712 provided him with a right to a trial by jury:

Robertson confuses the rights and remedies created by § 4712 with the means it provides to secure them. Section 4712 creates whistleblower rights: “An employee of a contractor, subcontractor, grantee, or subgrantee or personal services contractor may not be discharged, demoted, or otherwise discriminated against as a reprisal for” blowing the whistle on certain government-contracting abuses. Id. §4712(a)(1). And § 4712 creates an administrative apparatus to review whistleblowers’ complaints and to afford them administrative remedies. Id. § 4712(b). Section 4712 further specifies that “[a]n action under this paragraph may not be brought more than two years after the date on which remedies”—that is, administrative remedies— “are deemed to have been exhausted.” Id. § 4712(c)(2) (emphasis added). Thus, the text and structure of § 4712 make clear that a jury trial is one way to vindicate a whistleblower’s statutory rights after the whistleblower exhausts administrative remedies; the jury trial is not itself a “right” or “remedy” created by § 4712.

The appellate court then held Robertson’s claims against both Intratek and Fahami were subject to arbitration, but stated those filed against Rininger were not:

The same is not true of Robertson’s claims against Rininger. Rininger is a VA official. He therefore (obviously) never signed any employment contract with Intratek, much less an employment-related arbitration agreement. And although nonsignatories can be compelled to arbitrate under certain conditions, see Bridas S.A.P.I.C. v. Gov’t of Turkmenistan, 345 F.3d 347, 355–56 (5th Cir. 2003), Robertson never moved to arbitrate his claims against Rininger. Nor did the district court explain any basis (lawful or otherwise) for compelling arbitration of Robertson’s claims against Rininger. It’s with good reason, then, that neither Rininger nor Intratek even attempt to explain how claims against Rininger could be arbitrable. The district court’s decision to compel arbitration of these claims was erroneous.

Finally, the Fifth Circuit Court of Appeals affirmed the lower court’s order compelling Robertson’s dispute with Intratek and Fahami to arbitration, reversed the Western District’s order compelling arbitration with Rininger, and remanded the case.

 

Biography


Beth Graham received a J.D. from the University of Nebraska College of Law in 2004 and a M.A. in Information Science and Learning Technologies from the University of Missouri in 2006. She also holds a B.S. in Public Administration from the University of Nebraska-Omaha. She is licensed to practice law in Texas and the District of Columbia.



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