Anthony v. The Northwestern Mutual Life Insurance Company et al
Filing
21
MEMORANDUM-DECISION and ORDERED, that Defendants Northwestern Mutual Investment Services, LLC, Northwestern Mutual Wealth Management Company, and Northwestern Mutual Life Insurance Companys Motion (Dkt. No. 5) to dismiss is GRANTED with respect to Pl aintiffs retaliation claim under 18 U.S.C. § 1514A; and it is further ORDERED, that Defendants Tronco Financial Group and Alexander J. Troncos Motion (Dkt. No. 6) to dismiss is GRANTED with respect to Plaintiffs retaliation claim under 18 U.S.C. § 1514A; and it is further ORDERED, that Plaintiffs Motion (Dkt. No. 15) to amend her Complaint is DENIED as moot; and it is further ORDERED, that Plaintiffs state law breach of contract claim is DISMISSED without prejudice pursuant to 28 U.S.C. § 1367(c)(3); and it is further ORDERED, that Plaintiffs Complaint (Dkt. No. 1) is DISMISSED. Signed by Senior Judge Lawrence E. Kahn on September 08, 2015. (sas)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
MARY ANTHONY,
Plaintiff,
-against-
1:14-cv-1416 (LEK/CFH)
NORTHWESTERN MUTUAL LIFE
INSURANCE CO., et al.,
Defendants.
MEMORANDUM-DECISION and ORDER
I.
INTRODUCTION
Plaintiff Mary Anthony (“Plaintiff”) commenced this action on November 21, 2014,
asserting claims for retaliation, pursuant to Section 806 of the Sarbanes-Oxley Act of 2002
(“Sarbanes-Oxley”), 18 U.S.C. § 1514A, and breach of contract, relating to the termination of her
employment by Defendants. Dkt. No. 1 (“Complaint”). Presently before the Court are Motions to
dismiss filed by Defendants Northwestern Mutual Life Insurance Company, Northwestern Mutual
Investment Services, LLC, Northwestern Mutual Wealth Management Company (together, the
“Northwestern Defendants”) and by Defendants Alexander J. Tronco (“Tronco”) and the Tronco
Financial Group (“Tronco Financial”) (together, the “Tronco Defendants”) (collectively,
“Defendants”). Dkt. Nos. 5 (“Northwestern Motion”); 5-1 (“Northwestern Memorandum”); 6
(“Tronco Motion”); 6-2 (“Tronco Memorandum”). For the following reasons, Defendants’ Motions
to dismiss are granted.
II.
BACKGROUND1
Plaintiff was an employee of Tronco Financial for a period of twenty-five years. Compl.
¶ 26. Tronco Financial’s principal place of business is in Albany County, New York; the office
Plaintiff worked at is located in Latham, New York. Id. ¶¶ 11, 30. Defendant Tronco was the
managing partner of the Latham office. Id. ¶ 30. Tronco Financial acted as a contractor for the
Northwestern Defendants.2 Id. ¶ 24. The Northwestern Defendants “provide investment advisory
services and the marketing, offer and sale of publically traded securities and mutual funds.” Id.
¶ 20. The Northwestern Defendants market and sell at least twenty-seven different publicly traded
mutual funds (the “Northwestern Mutual Funds”). Id. ¶ 21. The Northwestern Mutual Funds are
required to file reports under § 15(d) of the Securities and Exchange Act of 1934 (the “Exchange
Act”), 15 U.S.C. § 78o(d). Id. ¶ 22. The Northwestern Mutual Funds are sold and marketed
through various agents and contractors, including Tronco Financial. Id. ¶¶ 23-24.
In addition to marketing and selling the Northwestern Mutual Funds, Tronco Financial
“provided compliance services to ensure that the marketing and sale of the [Northwestern Mutual
Funds] complied with all State and Federal Securities law, and the rules and regulations of the
Securities and Exchange Commission.” Id. ¶ 25. In particular, Plaintiff’s responsibilities—her last
position with Tronco Financial was “Director of Network Office Supervision,” id. ¶ 26—required
1
Because this matter is before the Court on a motion to dismiss, the allegations of the
Complaint are accepted as true and form the basis of this section. See Jaghory v. N.Y. State Dep’t
of Educ., 131 F.3d 326, 329 (2d Cir. 1997) (noting that, in addressing a motion to dismiss pursuant
to 12(b)(6), “[a] court must accept all factual allegations in the complaint as true and draw
inferences from those allegations in the light most favorable to the plaintiff”).
2
Defendants Northwestern Mutual Investment Services, LLC and Northwestern Mutual
Wealth Management Company are wholly owned subsidiaries of Defendant Northwestern Mutual
Life Insurance Company. Compl. ¶¶ 7-9.
2
her “to ensure that all financial representatives, associates and staff maintained compliance with
ethical business practices; and the rules, regulations, policies, and procedures of the Defendants’
regulatory bodies and governmental agencies, including the Securities and Exchange Commission
[(“SEC”)] and FINRA, and State and Federal Securities Laws.” Id. ¶ 27.
Beginning in the summer of 2012, Plaintiff brought numerous compliance issues regarding
the conduct of Tronco Financial representatives to the attention of Tronco. Id. ¶¶ 33, 35. Plaintiff
believed these issues represented violations of SEC rules and regulations. Id. ¶ 35. Conduct
reported by Plaintiff included representatives accepting trades and soliciting sales without being
properly registered or qualified, representatives maintaining pre-completed paperwork, a
representative making trades on a client account without speaking to the client, an assistant
accepting trades on behalf of a representative, and use of unapproved marketing materials and
advertising. Id.
Plaintiff had “ongoing and continuous communications” with Tronco concerning noncompliant practices by Tronco Financial representatives, but no action was taken. Id. ¶ 36. Plaintiff
also reported these practices to the Northwestern Defendants. Id. Tronco expressed frustration with
Plaintiff reporting these practices. Id. ¶ 37. On February 6, 2013, Plaintiff was verbally terminated
by Tronco, who allegedly admitted that the termination was due to Plaintiff’s persistence in
reporting non-compliant practices. Id. ¶ 38. Plaintiff had an employment contract with Tronco
Financial, which provided that, without cause, the contract could be terminated only upon thirty
days’ written notice. See id. ¶¶ 52-56; Dkt. No. 1-1 (“Exhibits”) at 2. Plaintiff was not provided
with thirty days’ written notice of her termination. Compl. ¶ 39-40.
3
Plaintiff commenced the present action on November 21, 2014.3 See id. Plaintiff asserts
two causes of action. First, Plaintiff alleges that her termination was retaliatory under 18 U.S.C.
§ 1514A for reporting violations of SEC rules and regulations, and federal and state securities law.
Id. ¶ 50. Second, Plaintiff alleges that her termination was in breach of her employment contract.
Id. ¶ 57. Plaintiff seeks damages. Id. ¶ 59.
III.
LEGAL STANDARD
To survive a motion to dismiss pursuant to Rule 12(b)(6), a “complaint must contain
sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”
Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)); see also FED. R. CIV. P. 12(b)(6). A court must accept as true the factual allegations
contained in a complaint and draw all inferences in the plaintiff’s favor. See Allaire Corp. v.
Okumus, 433 F.3d 248, 249-50 (2d Cir. 2006). A complaint may be dismissed pursuant to Rule
12(b)(6) only where it appears that there are not “enough facts to state a claim to relief that is
plausible on its face.” Twombly, 550 U.S. at 570. Plausibility requires “enough fact[s] to raise a
reasonable expectation that discovery will reveal evidence of [the alleged misconduct].” Id. at 556.
The plausibility standard “asks for more than a sheer possibility that a defendant has acted
unlawfully.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556).
IV.
DISCUSSION
Defendants move to dismiss Plaintiff’s § 1514A claim because she has not pled that any of
the Defendants are publicly traded companies covered by the provision. Northwestern Mem. at 1-2;
3
On July 12, 2013, Plaintiff filed a complaint regarding her termination with the
Occupational Safety and Health Administration (“OSHA”). Compl. ¶ 17. OSHA did not issue a
final decision on Plaintiff’s complaint within 180 days of its filing. Id. ¶ 18.
4
Tronco Mem. at 3-4. The Northwestern Defendants further argue that Plaintiff has not pled that she
engaged in protected conduct under § 1514A. Northwestern Mem. at 13-15.4 Defendants also argue
that the Court should dismiss Plaintiff’s breach of contract claim. Northwestern Mem. at 15-17;
Tronco Mem. at 9-11.
A. Section 1514A
Section 1514A of Sarbanes-Oxley creates whistleblower protection for employees of
publicly traded companies, as follows:
[n]o company with a class of securities registered under section 12 of the Securities
Exchange Act of 1934 (15 U.S.C. 78l), or that is required to file reports under section
15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(d)) including . . . any
officer, employee, contractor, subcontractor, or agent of such company or nationally
recognized statistical rating organization, may discharge, demote, suspend, threaten,
harass, or in any other manner discriminate against an employee in the terms and
conditions of employment because of any lawful act done by the employee . . . to
provide information, cause information to be provided or otherwise assist in an
investigation regarding any conduct which the employee reasonably believes
constitutes a violation of . . . any rule or regulation of the Securities and Exchange
Commission . . .
18 U.S.C. 1514A(a). Thus, a company is covered by § 1514A where it: (1) has issued securities that
are registered under section 12 of the Exchange Act; or (2) is required to file reports under section
15(d) of the Exchange Act. 18 U.S.C. § 1514A(a). In the present case, Plaintiff does not allege that
any of the Defendants are publicly traded entities within the meaning of § 1514A. See Compl. ¶¶ 79, 11-12. The Complaint refers to Defendants as “broker-dealer[s]” subject to SEC rules and
regulations. Id. ¶ 29. The Complaint does not allege that Defendants have issued publicly traded
securities registered under section 12 of the Exchange Act or that Defendants are required to file
4
Plaintiff argues that she did plead that she engaged in protected activity, Dkt. No. 14
(“Opposition”) at 13-17, but in the event the Court finds otherwise, requests that she be granted
leave to amend her Complaint, id. at 18-19; see also Dkt. No. 15.
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reports under section 15(d) of the Exchange Act.
However, § 1514A also prohibits retaliation by “any . . . contractor, subcontractor, or agent”
of a company registered under section 12 or required to file reports under section 15(d) of the
Exchange Act. 18 U.S.C. § 1514A(a). The Supreme Court, in Lawson v. FMR LLC, 134 S. Ct.
1158 (2014), held that this language means that § 1514A “shelters employees of private contractors
and subcontractors, just as it shelters employees of the public company served by the contractors
and subcontractors.” Id. at 1161.
In the present case, Plaintiff alleges that the Northwestern Mutual Funds are required to file
reports under § 15(d) of the Exchange Act, Compl. ¶ 22, and that Defendants are contractors or
subcontractors of the Northwestern Mutual Funds, id. ¶ 44. Plaintiff accordingly argues that she
was employed by a contractor that provided services to entities that are within the scope of § 1514A,
and, as such, is subject to the provision’s protections under Lawson. Opp’n at 7-10. Defendants
argue that Plaintiff’s allegations do not place her among the contractor employees that Lawson
recognized as protected under § 1514A. Northwestern Mem. at 7-13; Tronco Mem. at 7-9. Section
1514A’s coverage of employees of private contractors under Lawson is an apparent issue of first
impression in the Second Circuit.
1. Lawson v. FMR LLC
The Lawson plaintiffs were two former employees of private companies that provided
advisory and management services to Fidelity mutual funds. 134 S. Ct. at 1164. The Fidelity funds
had no employees themselves, but instead contracted with private investment advisors to handle all
of their operations, including making investment decisions, preparing reports for shareholders, and
filing reports with the SEC. Id. This is a common structure in the mutual fund industry. Id. Both
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plaintiffs suffered adverse employment actions when they raised concerns regarding compliance
issues with the funds. Id. One employee reported that certain accounting methodologies overstated
expenses for operating the funds; the other reported concerns regarding inaccuracies in an SEC draft
registration statement. Id. The plaintiffs commenced suit under § 1514A. Id. The defendant
companies argued that § 1514A only protected employees of public companies, and therefore had
no application to them, as privately held companies. Id. The Supreme Court held, “based on the
text of § 1514A, the mischief to which Congress was responding, and earlier legislation Congress
drew upon, that the provision shelters employees of private contractors and subcontractors, just as it
shelters employees of the public company served by the contractors and subcontractors.” Id. at
1161.
The Supreme Court stated the relevant text of § 1514A as follows: “no . . . contractor . . .
may discharge . . . an employee.” Id. at 1165. In that context, the Court found that “[t]he ordinary
meaning of ‘an employee’ . . . is the contractor’s own employee.” Id. The Court rejected the
defendant companies’ proposed interpretation that “an employee” only refers to employees of the
public company because the statutory structure suggested that the prohibited retaliatory measures
“are commonly actions an employer takes against its own employees.” Id. at 1166. Furthermore,
“[c]ontractors are not ordinarily positioned to take adverse actions against employees of the public
company with whom they contract.” Id. Thus, the Court concluded that the most logical reading of
§ 1514A prohibited contractors from taking retaliatory measures against their own employees.
The Court next noted that extending § 1514A’s protections to employees of contractors was
consistent with the purposes of Sarbanes-Oxley. Id. at 1169. The Court observed that “[i]t is
common ground that Congress installed whistleblower protection in the Sarbanes-Oxley Act as one
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means to ward off another Enron debacle.” Id. (citing S. Rep. No. 107-146 at 2-11 (2002)). There
was “abundant evidence that Enron succeeded in perpetuating its massive shareholder fraud in large
part due to a ‘corporate code of silence.’” Id. at 1162. Employees who “attempted to report
corporate misconduct . . . faced retaliation, including discharge.” Id. “The lack of whistleblower
protection [was] ‘a significant deficiency’ in the law, for in complex securities fraud investigations,
employees ‘are [often] the only firsthand witnesses to the fraud.’” Id. at 1162-63 (quoting S. Rep.
No. 107-146 at 10).
Significantly, “contractors and subcontractors, including the accounting firm Arthur
Andersen, participated in Enron’s fraud and its coverup.” Id. at 1162. The legislative history
demonstrated to the Court that “Congress was as focused on the role of Enron’s outside contractors
in facilitating the fraud as it was on the actions of Enron’s own officers.” Id. at 1169. Congress
understood “that outside professionals bear significant responsibility for reporting fraud by the
public companies with whom they contract, and that the fear of retaliation was the primary deterrent
to such reporting by the employees of Enron’s contractors.” Id. at 1170. The Court therefore could
“safely conclude that Congress enacted § 1514A aiming to encourage whistleblowing by contractor
employees who suspect fraud involving the public companies with whom they work.” Id.
The Court further noted that its reading of § 1514A was essential to avoid a “huge hole” in
the coverage of § 1514A; otherwise contractors’ employees “would be vulnerable to retaliation by
their employers for blowing the whistle on a scheme to defraud the public company’s investors,
even a scheme engineered entirely by the contractor.” Id. at 1168. This gap in coverage was
particularly significant for the mutual fund industry which is structured so that “[v]irtually all
mutual funds . . . have no employees of their own . . . [and] are managed, instead by independent
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investment advisers.” Id. at 1171.
A plurality of the Court responded to concerns that its reading would extend whistleblower
protection to all employees of private contractors, including those who had “no exposure to
investor-related activities and thus could not possibly assist in detecting investor fraud.” Id. at 1172.
While finding these concerns exaggerated, the plurality cited with approval “various limiting
principles,” identified by the United States as amicus curiae, that might resolve overbreadth
problems. Id. at 1172-73.5 First, “contractor” is limited to business relationships where
“performance of a contract will take place over a significant period of time.” Id. at 1173. Second,
§ 1514A “protects contractor employees only to the extent that their whistleblowing relates to ‘the
contractor . . . fulfilling its role as a contractor for the public company, not the contractor in some
other capacity.’” Id.; see also id. (“[I]t has to be a person who is in a position to detect and report
the types of fraud and securities violations that are included in the statute.”). However, the plurality
did not determine the bounds of those principles because the plaintiffs were only seeking a
“mainstream application” of § 1514A, where the “alleged fraud directly implicate[d] the funds’
shareholders.” Id.
2. Analysis
Plaintiff’s allegations require the Court to determine the boundaries of the Supreme Court’s
holding in Lawson. Plaintiff argues that she “alleged that she worked for a contractor that provided
5
Justice Ginsburg delivered the majority opinion, joined by Chief Justice Roberts, and
Justices Breyer and Kagan, and joined in principal part by Justices Scalia and Thomas. Justice
Scalia filed an opinion concurring in principal part and concurring in the judgment, joined by Justice
Thomas. Justice Scalia did not agree that § 1514A’s coverage of contractor employees was subject
to limiting principles. 134 S. Ct. at 1177. Justice Scalia stated that although the Government’s
limiting principles may have been good policy, they had “no basis whatsoever in the statute’s text.”
Id. Justice Sotomayor filed a dissent, joined by Justices Kennedy and Alito.
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compliance services on behalf of the [Northwestern Mutual Funds],” and is accordingly within the
scope of § 1514A. Opp’n at 7. Defendants argue that Plaintiff is not covered by § 1514A, as
interpreted by Lawson, because she does not allege that she provided services to the Northwestern
Mutual Funds, or that she reported wrongdoing committed either by the Funds or on their behalf.
For the following reasons, the Court agrees with Defendants.
In order to determine the scope of § 1514A’s coverage of contractor employees, the Court
begins with the examples discussed in Lawson. The Lawson Court found significant evidence for
its interpretation of § 1514A in the Enron scandal and the role of accounting and law firms in
facilitating it. See Lawson, 134 S. Ct. at 1169. Because accounting and law firms were integral in
the scandal, and Congress found that “fear of retaliation” deterred their employees from reporting
fraudulent practices, the Lawson Court concluded that Congress intended § 1514A to cover
accountants, lawyers, and other outside professionals who are involved in a company’s business
operations and thus positioned to be firsthand witnesses to corporate fraud. Id. at 1170. The
Lawson plaintiffs similarly alleged a “mainstream” case of § 1514A. Id. at 1173. The investment
advisory firms that employed the plaintiffs handled all day-to-day operations of the Fidelity mutual
funds and therefore, the employees of those firms were positioned to be firsthand witnesses to
shareholder fraud. Id. at 1164. Each of the plaintiffs alleged retaliation for reporting practices that
directly implicated the mutual funds’ shareholders. Id. at 1173.
Conversely, in Gibney v. Evolution Mktg. Research, LLC, 25 F. Supp. 3d 741 (E.D. Pa.
2014), the court, in considering a § 1514A action, found that a contractor employee was not within
the scope of the provision. In Gibney, the plaintiff was terminated from his employment with a
private contractor when he reported that the contractor was overbilling a publicly-traded company.
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25 F. Supp. 3d at 742. The plaintiff brought an action under § 1514A, asserting that “as an
employee of a contractor to a publicly-traded company . . . his activities were protected under
§ 1514A.” Id. at 744. The Gibney court found it a “close question” whether the allegations fell
within the scope of § 1514A, because if a contractor defrauds a public company, it necessarily
defrauds the public company’s shareholders. Id. at 747. The plaintiff’s action then touched the
central purpose of Sarbanes-Oxley, protecting shareholders. Id. Nonetheless, the court found that it
would be “impermissibly broad,” id., to interpret § 1514A to encompass every action “that has some
attenuated, negative effect on the revenue of a publicly-traded company,” id. at 748. SarbanesOxley was specifically intended to prevent shareholder fraud “either by the public company itself or
through its contractors,” whereas the plaintiff alleged fraud committed against a public company.
Id. at 747-48.
Analyzing the facts of Lawson, Gibney, and the Enron scandal, the Court concludes that
there are two main limitations on the scope of § 1514A. First, the whistleblowing must relate to the
contractor’s provision of services to the public company. See Lawson, 134 S. Ct. at 1173. Thus,
§ 1514A only covers contractors insofar as they are firsthand witnesses to corporate fraud at a public
company—for example, the lawyers and accountants in the Enron scandal who facilitated and
contributed to the fraud. It does not cover contractor employees who experience retaliation that is
unrelated to the provision of services to a public company. The second limitation is that § 1514A is
concerned with public company fraud, whether committed by the public company itself or through
its contractors. Gibney, 25 F. Supp. 3d at 747; see also Lawson, 134 S. Ct. at 1173 (“[T]he
contractor . . . fulfilling its role as a contractor for the public company, not the contractor in some
other capacity.” (emphasis added)). A private company’s fraudulent practices do not become
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subject to § 1514A merely because that company incidentally has a contract with a public company.
See Fleszar v. U.S. Dep’t of Labor, 598 F.3d 912, 915 (7th Cir. 2010) (“Nothing in § 1514A implies
that, if [a privately held company] buys a box of rubber bands from Wal-Mart, a company with
traded securities, the [privately held company] becomes covered by § 1514A.”). The effect of these
limitations is to restrict § 1514A to situations where a contractor employee is functionally acting as
an employee of a public company, and in that capacity, is a witness to fraud by the public company.
Under these limiting principles, Plaintiff’s allegations fail to state a claim under § 1514A
because she has neither alleged that she was providing services to the Northwestern Mutual Funds,
nor that she reported any wrongdoing committed either by the Mutual Funds or on their behalf.
Plaintiff’s allegations appear superficially similar to the Lawson plaintiffs’ allegations
insofar as they also involve the unique structure of the mutual fund industry. However, unlike the
Lawson plaintiffs, who were providing advisory and management services directly to mutual funds,
Plaintiff nowhere alleges that she was providing services to the Northwestern Mutual Funds.
Plaintiff alleges that she was Director of Network Office Supervision, Compl. ¶ 26, and was
responsible for ensuring that Tronco Financial representatives and staff complied with applicable
rules and regulations, including federal securities law, id. ¶ 27. Plaintiff further alleges that she
“provided on behalf of [the Northwestern Defendants’] publically traded securities, compliance
services, ensuring that all marketing, offered and sales were in compliance with all Federal
Securities Laws and SEC rules and regulations.” Id. ¶ 45. Plaintiff’s allegations fall short because
they do not plausibly suggest that Plaintiff provided services to the Northwestern Mutual Funds.
While Plaintiff states that she provided compliance services “on behalf of” the Mutual Funds, id. ¶
45, the Complaint clearly pleads that she was responsible for ensuring that Tronco Financial
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representatives and associates complied with their legal obligations, id. ¶ 27. Plaintiff does not
plead that she ensured that the Mutual Funds complied with their legal obligations. Thus, Plaintiff
was not providing services to the Mutual Funds. Rather, Plaintiff and her employer, Tronco
Financial, provided services to clients—individuals and entities purchasing the mutual funds and
securities offered and sold by the Northwestern Defendants. Id. ¶ 25; see also Exs. at 5 (stating that
Plaintiff would assist Northwestern Defendants “in offering advisory services and products to
clients”).6 Plaintiff therefore was not in a position to be a firsthand witness to shareholder fraud by
the Northwestern Mutual Funds, as the investment advisors in Lawson were. The Court agrees with
the Northwestern Defendants that finding Plaintiff’s claims cognizable under § 1514A would be to
expand its coverage to “any situation where any private company sells products or services issued
by any publicly traded company.” Dkt. No. 17 (“Northwestern Reply”) at 8.
Plaintiff also fails to state a claim under § 1514A because she does not allege that she
reported any wrongdoing by the Northwestern Mutual Funds. Plaintiff pleads that she reported
violations by Tronco Financial representatives. Compl. ¶ 35. However, there is no allegation of
wrongdoing by the Mutual Funds for the reasons described supra: because neither Plaintiff nor
Tronco Financial were providing services to the Mutual Funds, there was no possibility for the
Mutual Funds to be acting either through Plaintiff or Tronco Financial. The compliance issues
raised by Plaintiff only implicated Tronco Financial, a private company. Although Plaintiff alleges
that she provided services “on behalf of” the Mutual Funds, id. ¶ 45, like Gibney, the case “does not
6
Plaintiff pleads that Northwestern Mutual Investment Services, LLC is a registered brokerdealer and investment advisor, Compl. ¶ 8, but does not plead that it provided management or
advisory services to any mutual funds. Moreover, neither Plaintiff nor Tronco Financial provided
management or advisory services to any mutual funds.
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implicate the peculiar structure of the mutual fund industry,” because Plaintiff was not providing
services to the Mutual Funds, 25 F. Supp. 3d at 747.
In summary, the Court finds that Plaintiff’s allegations do not state a claim under § 1514A.7
Plaintiff has not alleged that she provided services to the Mutual Funds, nor has she alleged any
wrongdoing either by the Mutual Funds themselves or committed through their contractors.
Accordingly, Plaintiff’s § 1514A claim against Defendants is dismissed.
B. Breach of Contract Claim
Having dismissed Plaintiff’s § 1514A claim, the Court no longer has subject-matter
jurisdiction over Plaintiff’s remaining breach of contract claim. A federal district court has
supplemental jurisdiction over all state-law claims “that are so related to claims in the action within
such original jurisdiction that they form part of the same case or controversy.” 28 U.S.C. § 1367(a).
A district court may decline to exercise supplemental jurisdiction where it “has dismissed all claims
over which it has original jurisdiction.” Id. § 1367(c)(3). “[I]n the usual case in which all federallaw claims are eliminated before trial, the balance of factors to be considered under the pendent
jurisdiction doctrine—judicial economy, convenience, fairness, and comity—will point toward
declining to exercise jurisdiction over the remaining state-law claims.” Carnegie-Mellon Univ. v.
Cohill, 484 U.S. 343, 350 n.7 (1988). Because Plaintiff’s federal claims have been dismissed at this
early stage of the action, the Court declines to exercise supplemental jurisdiction over Plaintiff’s
breach of contract claim and it is accordingly dismissed without prejudice pursuant to 28 U.S.C.
§ 1367(c)(3).
7
The Court need not address the Northwestern Defendants’ argument that Plaintiff failed to
plead a protected activity. Northwestern Mem. at 13-15. Plaintiff’s request to amend her Complaint
is accordingly denied as moot. Opp’n at 18-19; Dkt. No. 15.
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V.
CONCLUSION
Accordingly, it is hereby:
ORDERED, that Defendants Northwestern Mutual Investment Services, LLC, Northwestern
Mutual Wealth Management Company, and Northwestern Mutual Life Insurance Company’s
Motion (Dkt. No. 5) to dismiss is GRANTED with respect to Plaintiff’s retaliation claim under 18
U.S.C. § 1514A; and it is further
ORDERED, that Defendants Tronco Financial Group and Alexander J. Tronco’s Motion
(Dkt. No. 6) to dismiss is GRANTED with respect to Plaintiff’s retaliation claim under 18 U.S.C.
§ 1514A; and it is further
ORDERED, that Plaintiff’s Motion (Dkt. No. 15) to amend her Complaint is DENIED as
moot; and it is further
ORDERED, that Plaintiff’s state law breach of contract claim is DISMISSED without
prejudice pursuant to 28 U.S.C. § 1367(c)(3); and it is further
ORDERED, that Plaintiff’s Complaint (Dkt. No. 1) is DISMISSED; and it is further
ORDERED, that the Clerk of the Court serve a copy of this Memorandum-Decision and
Order on all parties in accordance with the Local Rules.
IT IS SO ORDERED.
DATED:
September 08, 2015
Albany, NY
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