PRICE v. UBS FINANCIAL SERVICES INC.
OPINION. Signed by Judge William J. Martini on 11/27/17. (gh, )
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
CRAIG D. PRICE,
Civ. No. 2:17-01882
UBS FINANCIAL SERVICES, INC.,
WILLIAM J. MARTINI, U.S.D.J.:
Plaintiff Craig D. Price brings this action against UBS Financial Services, Inc.
(“Defendant”), alleging claims of whistleblowing retaliation under the Wall Street Reform
and Consumer Protection Act, 15 U.S.C. § 78u–6, and the Florida Whistleblower Act, Fla.
Stat. § 448.102. This matter comes before the Court on Defendant’s motion to dismiss
pursuant to Federal Rule of Civil Procedure 12(b)(6). There was no oral argument. Fed.
R. Civ. P. 78(b). For the reasons set forth below, Defendant’s motion to dismiss is
DENIED in part, and STAYED in part.
Plaintiff is a financial services professional with nearly 24 years of experience, 16
of which were spent under Defendant’s employ. See Compl. ¶¶ 1, 4, ECF No. 1. At the
time of his termination, Plaintiff held the title of Senior Vice President of Investments and
Private Wealth Advisor in Defendant’s Stuart, Florida office. See id. at ¶ 5. Defendant is
a Delaware corporation, with its principal place of business in Weehawken, New Jersey,
that provides, among other things, financial advisory services to high net worth individuals.
See id. at ¶ 7.
Plaintiff alleges that Defendant wrongfully terminated his employment in February
2016, in retaliation for his disclosure of a co-worker’s illegal activity to Plaintiff’s
supervisors and then to the Financial Industry Regulatory Authority, Inc. (“FINRA”). See
id. at ¶¶ 105–10. Plaintiff’s Complaint asserts two causes of action:
(1) Count 1: retaliation in violation of the Wall Street Reform and Consumer
Protection Act (the “Dodd-Frank Act”), 15 U.S.C. § 78u–6, id. at ¶¶ 104–16;
(2) Count 2: retaliation in violation of the Florida Whistleblower Act (“FWA”),
Fla. Stat. § 448.102, id. at ¶¶ 117–24.
Plaintiff specifically alleges that he first internally disclosed the co-worker’s fraudulent
mismanagement of a client account to his branch manager and Defendant’s “Complex
manager” in April 2013. See id. at ¶¶ 38–53. In July 2014, as part of its investigation into
the matter, FINRA deposed Plaintiff, at which time Plaintiff disclosed the same
information from his previous meetings with Defendant’s managers. See id. at ¶¶ 62–67.
Plaintiff submits that he maintained a light work schedule during the fourth quarter of 2014,
but that Defendant’s retaliation began in earnest upon his return to full-time work in 2015.
See id. at ¶¶ 72–73.
Plaintiff alleges a pattern of harassment, which included the questioning of expenses
and marketing events unlike anything he previously experienced. See id. at ¶¶ 73–77, 81–
85, 91–99. In August 2015, FINRA served Defendant with a complaint related to
Plaintiff’s trading in a penny stock named Cardero Resource Corp. (“Cardero”) on behalf
of his client. See id. at 78–80. Plaintiff contends that Defendant received three previous
complaints from that client, all of which were investigated and denied. See id. at ¶ 79. In
November 2015, Defendant questioned Plaintiff in person for six hours about his history
in recommending the Cardero stock. See id. at ¶¶ 87. Plaintiff previously submitted 13
Solicitation Approval Forms in connection with his Cardero trades and in compliance of
Defendant’s policies, all of which were approved. See id. at ¶ 90. On February 29, 2016,
Defendant fired Plaintiff for various policy violations in relation to his trading in the
Cardero stock. See id. at ¶¶ 100–02.
Defendant now moves to dismiss both counts of the Complaint. Defendant first
argues that Plaintiff does not meet the definition of “whistleblower” under the Dodd-Frank
Act because he never provided information to “the Commission”—i.e., the Securities and
Exchange Commission (“SEC”)—as required by statute. See Mem. of Law in Supp. of
Def.’s Mot. (“Def.’s Mem.”) 8–17, ECF No. 11-2. Defendant further argues that both the
Dodd-Frank and FWA claims must be dismissed because Plaintiff does not plead a
sufficient causal link between his disclosures and his termination. See id. at 17–24.
Plaintiff counters by arguing that he meets the definition of whistleblower as
adopted by the SEC in its rulemaking authority over the Dodd-Frank Act. See Pl.’s Resp.
in Opp’n to Def.’s Mot. (“Pl.’s Opp’n”) 12–21, ECF No. 17. Plaintiff further argues that
he reported information to the SEC by reporting to FINRA, which resides under the SEC’s
jurisdiction. See id. at 21–23. Finally, he argues that he pleaded sufficient facts to
demonstrate a causal link between his disclosures and his termination because he alleged a
pattern of harassing behavior that began soon after his FINRA deposition and continued
until his termination. See id. at 23–34. Defendant filed a reply, which largely reiterated
its original arguments. See Reply in Supp. of Def.’s Mot., ECF No. 18.
Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of a complaint,
in whole or in part, if the plaintiff fails to state a claim upon which relief can be granted.
The moving party bears the burden of showing that no claim has been stated. Hedges v.
United States, 404 F.3d 744, 750 (3d Cir. 2005). In deciding a motion to dismiss under
Rule 12(b)(6), a court must take all allegations in the complaint as true and view them in
the light most favorable to the plaintiff. See Warth v. Seldin, 422 U.S. 490, 501 (1975);
Trump Hotels & Casino Resorts, Inc. v. Mirage Resorts Inc., 140 F.3d 478, 483 (3d Cir.
Although a complaint need not contain detailed factual allegations, “a plaintiff’s
obligation to provide the ‘grounds’ of his ‘entitlement to relief’ requires more than labels
and conclusions, and a formulaic recitation of the elements of a cause of action will not
do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, the factual allegations
must be sufficient to raise a plaintiff’s right to relief above a speculative level, such that it
is “plausible on its face.” See id. at 570; see also Umland v. PLANCO Fin. Serv., Inc., 542
F.3d 59, 64 (3d Cir. 2008). A claim has “facial plausibility when the plaintiff pleads factual
content that allows the court to draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly,
550 U.S. at 556). While “[t]he plausibility standard is not akin to a ‘probability
requirement’ . . . it asks for more than a sheer possibility.” Id.
Defendant presents a threshold question concerning who may pursue a private cause
of action under the Dodd-Frank Act. The answer to this question, however, does not affect
Plaintiff’s FWA claim, which Florida courts construe broadly. See Pinder v. Bahamasair
Holdings Ltd., Inc., 661 F. Supp. 2d 1348, 1351 (S.D. Fla. 2009) (The FWA “is to be
construed liberally in favor of granting access to the remedy.” (internal quotation and
citations omitted)). The Court, therefore, will first address the causal link alleged by
Plaintiff before turning to the Dodd-Frank Act.
Plaintiff Sufficiently Pleads a Causal Link Between His Disclosures and
“[A] valid claim for retaliation under Dodd-Frank and the FWA must allege that (1)
plaintiff engaged in a protected activity, (2) plaintiff suffered a materially adverse
employment action, and (3) the adverse action was causally connected to the protected
activity.” Hall v. Teva Pharm. USA, Inc., 214 F. Supp. 3d 1281, 1289 (S.D. Fla. 2016)
(citing Securities Whistleblower Incentives & Protections, 76 Fed. Reg. 34300, 34304
(June 13, 2011)). “‘[I]f the plaintiff succeeds in proving the prima facie case, the burden
shifts to the defendant to articulate some legitimate . . . reason for the [adverse action].’”
See id. (quoting Tex. Dep’t of Cmty. Affairs v. Burdine, 450 U.S. 248, 252–53 (1981)).
“‘[S]hould the defendant carry this burden, the plaintiff must then have an opportunity to
prove by the preponderance of the evidence that the legitimate reasons offered by the
defendant were not its true reasons, but were a pretext for retaliation.’” Id. (quoting same).
Defendant does not challenge that Plaintiff engaged in a protected activity or that
he suffered a materially adverse employment action. Defendant only argues that Plaintiff
has not pleaded a causal link between the protected activity and the adverse action. The
main thrust of Defendant’s argument is that multiple years passed between Plaintiff’s
disclosures and his termination. See Def.’s Mem. at 18–21. Defendant also argues that
Plaintiff cannot plausibly establish, under any circumstance, that his termination was the
result of unlawful retaliation because Defendant demonstrated a legitimate reason for his
termination—i.e., the violations of Defendant’s policies in relation to the trading of
Cardero stock. See id. at 22–24.
The Court disagrees with both arguments. First, close temporal proximity between
the protected activity and the adverse action is merely one way in which a plaintiff may
establish an inference of retaliatory motive; it is not the only way. “[W]here there is a lack
of temporal proximity, circumstantial evidence of a ‘pattern of antagonism’ following the
protected conduct can also give rise to the inference.” See Kachmar v. SunGard Data Sys.,
Inc., 109 F.3d 173, 177 (3d Cir. 1997) (citation omitted); see also Teva Pharm., 214 F.
Supp. 3d at 1293–94 (“The court must, in considering all the evidence, ascertain whether
the plaintiff has cast doubt on the defendant’s proffered [non-retaliatory] reasons . . . .”
(internal quotation and citation omitted)). Plaintiff pleads precisely this: a pattern of
antagonism. See Pl.’s Opp’n at 30 (summarizing pattern pleaded).
Second, Plaintiff pleads sufficient facts that, if true, would establish a pretext for
Defendant’s adverse action, which might lead a fact-finder to an inference of retaliation.
Plaintiff alleges that Defendant’s behavior changed markedly after he testified before
FINRA, particularly as related to his expenses and marketing events. See Compl. at ¶¶ 73–
77, 81–85, 91–99. Plaintiff also pleads that Defendant did not once question him about
three prior complaints related to his trading in the Cardero stock. It was only after he
testified that Defendant decided he violated some corporate policies that led to his
termination. If true, Plaintiff’s pleadings could establish a pretext for his termination.
Taking Plaintiff’s pleadings as true, which the Court must at the motion to dismiss stage,
Plaintiff has sufficiently pleaded a causal link between his disclosures and his termination.
Accordingly, the motion to dismiss with respect to Count 2 is DENIED.
The Supreme Court Will Shortly Decide Whether a Person Who Did Not
Directly Report Information to the SEC Still Qualifies as a
“Whistleblower” Under Dodd-Frank
Defendant argues that Plaintiff does not have a cause of action under Dodd-Frank
because he does not meet the statutory definition of “whistleblower.” The Dodd-Frank Act
defines whistleblower as “any individual who provides, or 2 or more individuals acting
jointly who provide, information relating to a violation of the securities laws to the
Commission, in a manner established, by rule or regulation, by the Commission.” See 15
U.S.C. § 78u–6(a)(6) (emphasis added). Defendant argues that the phrase “to the
Commission” necessarily excludes Plaintiff from Dodd-Frank’s private cause of action
because he did not report any information directly to the SEC.
Defendant’s argument is not novel. In fact, a circuit split currently exists as to
precisely this point. The Fifth Circuit ruled that a plaintiff must report directly to the SEC
to be eligible under Dodd-Frank. See Asadi v. G.E. Energy (USA), LLC, 720 F.3d 620 (5th
Cir. 2013). The Second and Ninth Circuits ruled that a plaintiff making disclosures
otherwise protected by the Sarbanes-Oxley Act and other similar disclosures also qualifies
as a whistleblower under the Dodd-Frank Act. See Somers v. Digital Realty Trust Inc., 850
F.3d 1045 (9th Cir. 2017), cert. granted 137 S. Ct. 2300 (2017); Berman v. Neo@Ogilvy
LLC, 801 F.3d 145 (2d Cir. 2015). The Supreme Court granted a writ of certiorari in June
2017 of the Ninth Circuit case and oral argument is scheduled for November 28, 2017.
The Supreme Court’s decision will definitively answer the question put to this Court
by Defendant. “A United States district court has broad power to stay proceedings.”
Bechtel Corp. v. Local 215, Laborers’ Int’l Union of N.A., AFL-CIO, 544 F.2d 1207, 1215
(3d Cir. 1976). “In the exercise of its sound discretion, a court may hold one lawsuit in
abeyance to abide the outcome of another which may substantially affect it or be dispositive
of the issues.” Id. The Court exercises its discretion here and stays Defendant’s motion
with respect to Count 1, pending the Supreme Court’s decision in Digital Realty Trust Inc.
v. Somers. The Court finds, however, that Plaintiff’s FWA claim is unaffected by the
outcome in Somers because the FWA does not contain the language at issue in that case
and is otherwise construed broadly. The Court, therefore, determines that discovery shall
begin on Plaintiff’s FWA claim at the issuance of this opinion and subsequent order.
For the reasons stated above, Defendants’ motion to dismiss is DENIED in part,
and STAYED in part. The motion to dismiss is denied with respect to Count 2. The Court
stays Defendant’s motion with respect to Count 1, pending the Supreme Court’s decision
in Digital Realty Trust, Inc. v. Somers. An appropriate order follows.
/s/ William J. Martini
WILLIAM J. MARTINI, U.S.D.J.
Date: November 27th, 2016
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