SW Legal studies in Business

Whistleblower Claims under Federal Law May Be Subject to Arbitration

Appeals court held that a claim by an employee that she was fired due to herconcern about SOX compliance by the employer would be subject to confidential arbitration, as provided by her employment contract. The fact that she claims whistleblower status does not affect the binding nature of arbitration.

Topic Alternate Dispute Resolution
Key Words

Employee, Whistleblower Provision, Sarbanes-Oxley

C A S E   S U M M A R Y

Guyden began work for Aetna as Director of Internal Audit. Soon after starting, she decided that the office was ineffective and without independence or objectivity. She believed the situation was in danger of violating Aetna’s duty under Sarbanes-Oxley, which requires effective internal controls. Guyden argued with Aetna’s CFO about the matter. She raised concerns with the company’s CEO, President, and General Counsel. She was then given a negative performance review despite having received a positive review a month earlier. Problems continued and she was fired after about 11 months at Aetna. She contended she was fired to prevent her from bringing attention to deficiencies in Aetna’s internal controls. She filed a complaint with the Secretary of Labor alleging that Aetna violated the Sarbanes-Oxley (SOX) whistleblower protection provision. As provided under SOX, since the Secretary of Labor did nothing, Guyden proceeded to file suit in federal court. The district court dismissed the suit, holding that Guyden had to take the matter to arbitration as provided in her employment agreement. She appealed.


Affirmed. Guyden’s suit was precluded. Under the Federal Arbitration Act, since an arbitration agreement with Aetna stated that any employment dispute would go to arbitration. Guyden is invoking a statutory claim under SOX that can be reviewed in arbitration. Unless Congress clearly intends to waive arbitration, it is presumed to be within the bounds of an employment arbitration agreement. Similarly, Guyden cannot contest the confidentiality provision of the arbitration agreement. It is a normal clause in such agreements and does not affect the possible validity of her claim under the whistleblower provision of SOX.


Guyden v. Aetna, 544 F.3d 376 (2nd Cir., 2008)

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