ABDUL A. JALUDI, Appellant
CITIGROUP and company or one or more of its direct or indirect subsidiaries
June 4, 2019
Appeal from the United States District Court for the Middle
District of Pennsylvania District Court No. 3-15-cv-02076
District Judge: The Honorable Malachy E. Mannion
Bluestein, Richard H. Frankel Sydney Melillo Drexel
University Thomas R. Kline School of Law Counsel for
Christen L. Casale Morgan Lewis & Bockius, Thomas A.
Linthorst Morgan Lewis & Bockius Counsel for Appellee
Gilbride Public Justice Counsel for Amici Appellants
Before: SMITH, Chief Judge, JORDAN, and MATEY, Circuit Judges
A. Jaludi, a longtime Citigroup employee, was laid off and
terminated in 2013 after reporting certain improprieties in
Citigroup's internal complaint monitoring system. Jaludi,
believing Citigroup had fired him in retaliation for his
reporting, sued Citigroup under the Racketeer Influenced and
Corrupt Organizations Act, 18 U.S.C. § 1962
("RICO"), and the Sarbanes-Oxley Act of 2002, 18
U.S.C. § 1514A. Citigroup moved to compel arbitration,
relying on two Employee Handbooks that contained arbitration
agreements. The first of those Handbooks, the 2009 Employee
Handbook, contained an arbitration agreement requiring
arbitration of all claims arising out of employment-including
2010, Congress passed the Dodd-Frank Wall Street Reform and
Consumer Protection Act, which amended Sarbanes-Oxley to
prohibit pre-dispute agreements to arbitrate whistleblower
claims. Pub. L. No. 111-203, § 922, 124 Stat. 1376, 1848
(2010) (codified at 18 U.S.C. § 1514A(e)). In 2011,
Citigroup and Jaludi agreed to the 2011 Employee Handbook;
the arbitration agreement appended to that Handbook excluded
"disputes which by statute are not arbitrable" and
deleted Sarbanes-Oxley from the list of arbitrable claims.
Suppl. App. 140. Nonetheless, the District Court held that
arbitration was required for all of Jaludi's claims.
disagree. Although Jaludi's RICO claim falls within the
scope of either Handbook's arbitration provision, the
operative 2011 arbitration agreement supersedes the 2009
arbitration agreement and prohibits the arbitration of
Sarbanes-Oxley claims. We will therefore affirm in part,
reverse in part, and remand for further proceedings.
began working for Citigroup Technology, Inc. in
1985. Throughout his more than two decades with
Citigroup, Jaludi rose steadily through the ranks. Starting
as an entry-level tape operator, he eventually became a
senior vice president who managed a global team. Jaludi's
responsibilities included troubleshooting complaint
monitoring systems, merging command centers, and streamlining
an application for customer statements.
of Jaludi's role, he was responsible for ensuring that
problem tickets were created for system- and
application-related problems that could affect customers.
Jaludi made sure problems were tracked in the complaint
management system, resolved, and prevented from recurring.
Citigroup was obligated to report severity level one problem
tickets to the Office of the Comptroller of the
Currency. In early 2010, Jaludi discovered that
problem tickets were being mishandled. Jaludi observed that
Citigroup was not reporting hundreds of level one tickets;
instead, Citigroup was deleting these tickets or
reclassifying them to a lower level to avoid reporting
obligations. To make matters worse, Citigroup's help
desks refused to even open a level one ticket "unless
they absolutely had to." Compl. ¶ 12.
repeatedly reported these issues to management, escalating
his complaints up the chain of command. In early 2010, Jaludi
emailed Citigroup's then-CEO, Vikram Pandit, to complain.
Shortly thereafter, Jaludi was summoned to meet with Tony
DiSanto, the head of the North America Data Center. DiSanto
expressed his displeasure with Jaludi's repeated
complaints. Citigroup management warned Jaludi to "keep
his mouth shut." Id. ¶ 17. One of
Jaludi's former managers told him that DiSanto
"hated [Jaludi's] guts for refusing to keep his
mouth shut and wanted him fired." Id.
second quarter of 2010, Jaludi was demoted. Jaludi's
then-supervisor told him that he was more qualified than the
person who would be supervising him "but that her hands
were tied." Id. ¶ 18. Jaludi complained
about his demotion. Thereafter, in the third quarter of 2010,
Jaludi's teams were taken away from him. For a period of
two months "Jaludi had no staff reporting to him nor was
he given any work to do." Id. ¶ 21.
the fourth quarter of 2010, Jaludi was transferred from the
division where he had worked for twenty-two years.
Jaludi's new supervisor had been "told to take
Jaludi and did not know what to do with him."
Id. Two months later, a new manager was added to
work between Jaludi and his supervisor. In May 2011, Jaludi
was further demoted to an entry-level position.
third quarter of 2011, Citigroup held the Citigroup Challenge
contest to find the best idea for the future of banking.
Jaludi's idea, Family Banking, was selected as the
co-winner out of 2, 500 ideas from 65, 000 participants.
Jaludi, along with others, presented the winning idea to the
CEO in New York. Shortly afterwards, Jaludi was given an
unsatisfactory performance review for failing to meet the
2012, one of the judges from the Citigroup Challenge sought
Jaludi's assistance in reducing customer problems at one
of the bank's command centers. Jaludi reviewed the
command center's incident management process and
discovered that employees were improperly opening and
categorizing trouble tickets. Despite Jaludi's
suggestions, the leaders of the command center were not
amenable to change. One manager told Jaludi that the command
center would not alter its policy because doing so would make
metrics look bad and require reporting to federal regulators.
In the fourth quarter of 2012, Jaludi told a supervisor about
the problem and made suggestions for resolving it. The
supervisor ultimately refused to discuss the issue with
Jaludi, telling him in December 2012 that he was wasting
February 20, 2013, Citigroup told Jaludi that he was being
laid off "due to deteriorating business conditions and
budget constraints." Id. ¶ 39. Jaludi
complained that his layoff was retaliatory. On April 21,
2013, Jaludi was terminated.
enacted Sarbanes-Oxley "[t]o safeguard investors in
public companies and restore trust in the financial markets
following the collapse of Enron Corporation." Dig.
Realty Tr., Inc. v. Somers, 138 S.Ct. 767, 773 (2018).
Sarbanes-Oxley protects whistleblowers of publicly traded
companies. See 18 U.S.C. § 1514A(a). Under the
Act, companies cannot "discharge, demote, suspend,
threaten, harass, or in any other manner discriminate against
an employee in the terms and conditions of employment"
in retaliation for an employee's protected conduct.
Id. Protected conduct includes providing information
to a supervisor "regarding any conduct which the
employee reasonably believes constitutes a violation" of
certain criminal fraud statutes, U.S. Securities and Exchange
Commission rules and regulations, or statutes prohibiting
fraud against shareholders. Id. § 1514A(a)(1).
Prior to Dodd-Frank, employers and employees could agree to
arbitrate any future Sarbanes-Oxley claims.
Jaludi's time at Citigroup, he received many iterations
of the company's Employee Handbook, which enumerates its
policies and guidelines. In late 2008, Citigroup issued the
2009 Employee Handbook, which Jaludi acknowledged receiving
in December 2008. The 2009 Handbook contained an arbitration
agreement, which was set forth in an appendix. The 2009
arbitration agreement expressly identifies Sarbanes-Oxley
claims as arbitrable disputes and requires their referral to
21, 2010, Congress enacted Dodd-Frank. "Passed in the
wake of the 2008 financial crisis, Dodd-Frank aimed to
promote the financial stability of the United States by
improving accountability and transparency in the financial
system." Dig. Realty Tr., Inc., 138 S.Ct. at
773 (internal quotation marks omitted). Dodd-Frank amended
Sarbanes- Oxley's whistleblower provision to prohibit
pre-dispute arbitration agreements. See 18 U.S.C.
§ 1514A(e)(2) (providing that "[n]o predispute