Sharkey v. J.P. Morgan Chase & Co. et al

Filing 340

OPINION AND ORDER.....The defendants renewed Rule 50 motion for judgment as a matter of law is granted as to back pay only as of April 1, 2010, and denied in all other respects. A conditional new trial is granted as to back pay damages for the perio d after April 1, 2010. The defendants alternative Rule 59 motion for a new trial as to Lassiter and J.P. Morgan is granted. Sharkeys request to be reinstated at J.P. Morgan in the event she ultimately prevails in this matter is denied. (Signed by Judge Denise L. Cote on 3/5/2018) (gr)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-------------------------------------- X
:
JENNIFER SHARKEY,
:
:
Plaintiff,
:
:
-v:
:
J.P. MORGAN CHASE & CO., JOE KENNEY,
:
ADAM GREEN, and LESLIE LASSITER, in
:
their official and individual
:
capacities,
:
Defendants.
:
:
-------------------------------------- X

10cv3824 (DLC)
OPINION AND ORDER

For the plaintiff:
Douglas H. Wigdor
Michael J. Willemin
Wigdor LLP
85 Fifth Avenue
5th Floor
New York, New York 10003
For the defendants:
Michael D. Schissel
Kathleen Reilly
Arnold & Porter Kaye Scholer LLP
250 West 55th Street
New York, New York 10019
DENISE COTE, District Judge:
This Sarbanes-Oxley retaliation case has been pending for
nearly nine years.

After multiple dismissals and appeals, the

case was tried to verdict before a jury in November 2017.

At

the conclusion of the five-day trial, the jury awarded plaintiff
Jennifer Sharkey (“Sharkey”) $563,000 in back pay damages, and
an identical amount for her emotional distress.
can be supported by the trial record.

Neither amount

With reluctance, the

Court concludes that awards of damages of this magnitude reflect
a verdict infected by passion and prejudice.
moved for post-verdict relief.

Defendants have

For the reasons given below,

judgment as a matter of law is entered in the defendants’ favor
on a portion of the damages claim, a new trial is conditionally
ordered on that portion of the damages, and a new trial is
ordered on liability and the remainder of the plaintiff’s
request for damages.
PROCEDURAL BACKGROUND
Following her discharge in August 2009 by J.P. Morgan Chase
& Co. (“J.P. Morgan”), on October 22, 2009, Sharkey filed a
complaint with the Occupational Safety and Health Administration
(“OSHA”) alleging violations of Sarbanes-Oxley Act of 2002, 18
U.S.C. § 1514A (“SOX”).

On or about April 12, 2010, OSHA issued

an order dismissing her complaint.
Sharkey then brought this action by filing a complaint on
May 10, 2010, alleging the same SOX claims.
assigned to the Honorable Robert W. Sweet.

The case was
Defendants moved to

dismiss the complaint, and on January 14, 2011, the motion was
granted with leave to replead.

Sharkey v. J.P. Morgan Chase,

2011 WL 135026 (S.D.N.Y. Jan. 14, 2011).

A subsequent motion to

dismiss the amended complaint was denied on August 19, 2011.
Sharkey v. J.P. Morgan Chase, 805 F. Supp. 2d 45 (S.D.N.Y.
2

2011).
On December 12, 2013, Judge Sweet granted the defendants’
motion for summary judgment.

Sharkey v. J.P. Morgan Chase, 2013

WL 10796833 (S.D.N.Y. Dec. 12, 2013).

The Second Circuit

vacated and remanded that decision on October 9, 2014 for
reconsideration in light of Nielsen v. AECOM Tech. Corp., 762
F.3d 214, 221-22 (2d Cir. 2014) and Bechtel v. Admin. Review
Bd., 710 F.3d 443, 451 (2d Cir. 2013).

Sharkey v. J.P. Morgan

Chase, 580 F. App’x 28 (2d Cir. 2014).
The defendants again moved for summary judgment, and on
October 9, 2015, the motion was granted on the basis that
Sharkey had failed to make a prima facie showing that any
protected activity under SOX was a contributing factor in her
firing.

Sharkey v. J.P. Morgan Chase, 2015 WL 5920019 (S.D.N.Y.

Oct. 9, 2015).

The Second Circuit then vacated and remanded

that finding, holding that the temporal proximity between the
protected activity and her discharge was sufficient to establish
a prima facie case.
(2d Cir. 2016).

Sharkey v. JP Morgan Chase, 660 F. App’x 65

The Second Circuit also declined to affirm on

the basis of the defendants’ alternative ground, that Sharkey
lacked a reasonable belief for her reports of fraud, holding
that the issue gave rise to disputes of fact, and did not compel
the conclusion that Sharkey lacked a reasonable belief of fraud.
3

Id.
After further proceedings before Judge Sweet, including
rulings on motions in limine on January 26, 2017, the case was
reassigned to this Court on April 20, 2017.

This Court then

held conferences on May 5 and July 31, 2017, to determine if any
of Judge Sweet’s rulings merited reconsideration.

At the July

31 conference, the Court declined to change any of Judge Sweet’s
rulings on the motions in limine.

The case was tried over five

days between October 30 and November 6, 2017.
At the end of the plaintiff’s testimony, defendants made an
oral motion for a directed verdict as a matter of law on all
issues of liability.

The Court reserved decision.

After the

conclusion of the evidence, on November 4, 2017, the defendants
again made a motion for judgment as a matter of law.

Both the

defendants and the plaintiff submitted briefs on the motion.

On

November 6, the case was submitted to the jury, and on November
7, the jury returned a verdict.
The jury found that Sharkey had not proven her case as to
two of the defendants, Joe Kenney and Adam Green.1

As to

defendants Leslie Lassiter and J.P. Morgan, the jury found that
Sharkey had proven her claim of retaliation, and that Lassiter
At trial, Sharkey presented virtually no evidence that Green or
Kenney were aware of any protected activity by Sharkey, much
less that any protected activity was the cause of any decision
they made to terminate her employment.
4
1

and J.P. Morgan had failed to prove their affirmative defense.
As to damages, the jury found that the defendants had not shown
that Sharkey failed to mitigate her damages and that she was
entitled to $563,000 in back pay.

The jury also found that

Sharkey was entitled to emotional distress damages, and awarded
her the identical amount of damages for her emotional distress,
$563,000.
The defendants then renewed their motions as to J.P. Morgan
and Lassiter, and added a request in the alternative for a new
trial.

The Court also made post-verdict comments on the record

generally indicating the Court’s inclination as to the postverdict motions.

The motions became fully submitted on December

20, 2017.
TRIAL EVIDENCE
The undisputed and/or overwhelming weight of the trial
evidence established the following.

Sharkey had worked in the

banking industry for approximate 12 years before joining J.P.
Morgan in November 2006 as a private banker.

In 2008, J.P.

Morgan restructured certain of its services for its high-networth clients.

The restructuring placed one person in charge of

each client relationship, a person which J.P. Morgan called a
“Private Wealth Manager.”

The wealth manager effectively served

as the face of the bank, and was the primary point of contact
5

for the client for all issues related to the banking
relationship.

The position therefore required that individual

to be familiar with each aspect of the bank’s offerings to
effectively serve their clients.

As part of the restructuring,

J.P. Morgan brought in Leslie Lassiter to run its New-York-Citybased operations.
When Lassiter arrived in New York City, she had to staff
the new wealth manager positions.

Lassiter had never worked

with Sharkey and did not know her, but she did interview Sharkey
and, based on Sharkey’s background and previous work, gave her
an opportunity to become a private wealth manager.

This was a

promotion for Sharkey, and required Sharkey to become familiar
with banking services Sharkey had never handled before.

Sharkey

began her work as a private wealth manager in August or
September of 2008.
Sharkey had some difficulties learning and performing her
new job.

She failed the Series 7 securities examination twice.2

She was consistently tardy in conducting the due diligence
associated with the bank’s Know Your Client (“KYC”) obligations.
In conversations with Sharkey regarding her performance in April
and May 2009, Lassiter highlighted the deficiencies in Sharkey’s

Sharkey excused one of her failures, claiming that she had to
leave the exam early to respond to a call from Lassiter.
2

6

performance, including poor performance with investments and
failure to complete KYCs in a timely manner.

After a J.P.

Morgan biannual regional talent review meeting in June 2009, and
a national talent review in mid-July 2009, Sharkey’s employment
would have been near-termination but for Lassiter’s strong
support of Sharkey.

Then, on July 21, Lassiter learned from

Sharkey’s largest client -- who was referred to at trial as
Client H -- that Sharkey had lied to Lassiter about returning
the client’s calls.3
a “phantom.”

The client’s representative called Sharkey

That day, Lassiter told Green about the incident.

Green then wrote to Kenney to inform him that there was an
incident, and that the incident was viewed as a dischargeable
offense.

After consulting with her superiors and human

resources, Lassiter terminated Sharkey’s employment.
employment ended on August 5, 2009.

Sharkey’s

In her exit interview with

Steve Grande of the Human Resources department, Sharkey made no
reference whatsoever to a claim of retaliation.

By contrast,

Grande informed her, as Sharkey admitted she was so informed by
both Lassiter and Grande, that she was discharged because of a
significant lapse in judgment regarding Client H.
In the Fall of 2009, Lassiter learned that Sharkey had lied to
her about contacting yet another client. The bank sought to
admit this after-acquired evidence to establish that Sharkey
would have in any event been fired by the Fall of 2009. The
evidence was excluded for the defendants’ failure to give timely
notice of this defense.
7
3

Against the powerful documentary and testimonial evidence
which showed that Sharkey was not performing her job adequately
and that her employment was terminated because she lied to the
very supervisor who had recently promoted and defended her,
Sharkey offered a counter-narrative.

Sharkey contended that her

employment was terminated because of retaliation when she
expressed concerns about a bank client known at trial as Client
A.4
At trial, there was absolutely no evidence that Client A
was engaged in any illegal activity and insufficient evidence to
permit anyone to form a reasonable belief that he was.

Instead,

the primary issue was whether Client A was appropriately
responsive to requests made of him in the course of the KYC
inquiry.

The bank’s risk compliance department had, in March

2009, compiled a list of items that needed to be gathered from
Client A as part of the bank’s KYC protocol.
Because of the nature of the concerns raised regarding Client
A, and because his testimony would have been largely irrelevant
to the issues in the case, his testimony was excluded and he was
referred to pseudonymously. The trial of this action confirmed
that anything Client A would have testified to would be largely
irrelevant, and certainly outweighed by the prejudice, burden
and distraction of requiring him to testify. During the course
of the trial, Client A’s name was inadvertently mentioned in
open court, and the name of his business was reported in the
press. Because Client A has already been effectively identified
to the public, the parties and Client A will be given an
opportunity to be heard on whether the redaction of his name
should continue at the re-trial of this action.
4

8

Client A was assigned to Sharkey in early April 2009.
Sharkey and others at the bank called Client A shortly
thereafter to obtain the items identified by the risk
department.

The memorandum from this call recorded that Client

A had good explanations for nearly all of the concerns raised in
the risk department’s memorandum.

The next day, Sharkey sent an

e-mail to Client A, telling him that the information he provided
on the call was very helpful, and formally requesting the
documentation they discussed.

Within 8 days, Client A provided

the documents that responded to all but three of the requests.
Client A had explained in the telephone call and his responses
that one of those three items was actually in the possession of
Client A’s law firm, and the two remaining items were an ID card
and a document related to one of Client A’s entities.

There is

no document or email reflecting that Sharkey or anyone working
with Sharkey ever followed up with either Client A or his
attorneys regarding the three items.

While Sharkey testified

that she and a colleague attempted to call the law firm multiple
times, she never testified that they tried to reach Client A to
obtain the two missing items in his possession.

After Sharkey

was fired, her successor obtained the outstanding items with
little trouble.
At various points throughout the summer, Sharkey orally
9

recommended to Lassiter that Client A no longer be treated as a
private wealth management client.

Lassiter pressed Sharkey to

explain why she was making this recommendation, and to put it in
writing.

Sharkey finally put her recommendation in writing in a

July 24, 2009 e-mail.

The key paragraphs in the e-mail read as

follows:
As you are aware, all of the information that
we have accumulated during the KYC remediation
process feels uncomfortable regarding the
[A/Client A] family relationship and the nature
of its businesses as well as its related entities
. . . . After many conversations with the
client(s) and attempts to acquire the proper
documentation, we still have not received all
documentation and Identification [sic] needed to
satisfy our standard Know Your Client
requirements.
Since this is a complicated and long-term
relationship that we inherited, I recommend that
we discuss a simple way to detach the
relationship from the PWM metro business. I want
to be mindful of the fact that other LOB’s5 within
the firm have relationships with this client
and/or its related entities and may wish to
retain some or all of their business.
(Emphasis supplied.)
Notably, in this document, Sharkey expressed discomfort
primarily because she had been unable to complete all the
outstanding KYC issues with Client A.

Sharkey does not accuse

Client A of engaging in illegality or recommend that the bank as
a whole cease doing business with Client A.
5

“LOB’s” is an acronym for “Lines of Business.”
10

Nonetheless, after receiving this memorandum, Lassiter
began the process of terminating the entirety of the bank’s
relationship with Client A.

Lassiter believed that if, as

Sharkey represented, Client A was not being forthcoming in the
KYC process, Client A should not be a customer of the bank, in
any capacity.

It was only later, after Sharkey’s employment had

been terminated, when the bank obtained the missing three items,
and met with Client A in-person, that the bank reversed course
and retained the relationship.
Sharkey’s retaliation claim rested on her testimony that
she believed and orally expressed to Lassiter that Client A may
be engaged in illegal activity.

But Sharkey’s testimony was

filled with contradictions and far from credible on this issue.
For instance, at one point she testified that she expressed her
concerns to Lassiter that Client A was engaged in violations of
each of the enumerated statutes of SOX by actually naming each
of those statutes in her conversation with Lassiter.

That

testimony was effectively undermined by defense counsel’s
examination of Sharkey.
In addition, Sharkey did not identify new concerns about
Client A that she uncovered as a result of the KYC process.

The

concerns she listed to the jury were essentially the items that
other bankers at J.P. Morgan had identified for Sharkey to
11

investigate as part of the KYC process.
In sum, not one document and no credible evidence linked
Sharkey’s firing to any report she voiced about Client A.
Instead, the documents and credible testimony showed that (1)
Sharkey was fired for her performance, capped by her lies
regarding Client H, (2) Sharkey never told Lassiter that she
believed that Client A was engaged in fraud or that the bank
should terminate its relationship with him, and (3) it was
Lassiter who decided to exit the Client A relationship and that
Lassiter’s recommendation was accepted by Lassiter’s superiors.
Once a full investigation of the relationship was conducted,
J.P. Morgan concluded that Client A was not committing any
wrongdoing and kept the relationship.
The overwhelming evidence is also against the award of back
pay in an amount of $563,000.

At most, any award of back pay

would reflect a payment through March 2010, which was roughly
eight months after Sharkey’s employment was terminated.

Such a

payment would have been a fraction of the amount awarded by the
jury.

The evidence at trial established that Sharkey stopped

looking for new employment in March 2010.

Indeed, the evidence

strongly suggests that Sharkey never engaged in a serious job
search after J.P. Morgan fired her.

Since late 2009, Sharkey

had worked without salary for, and held herself out as the
12

President of, Mint Cars on Demand, a business run by her thenfiancée, now husband.

Then, after a family tragedy in early

2010, she also began assisting her father in his business
without compensation.

It was undisputed at trial that Sharkey

left the work force altogether in 2012.
While Sharkey kept a notebook recording her attempts to
find other employment, the last entry in that notebook was from
March 2010.

The only documentary evidence touching on any job

search after that time consists of an abbreviated e-mail chain
from October 2010, in which a recruiter concludes that Sharkey
is not interested in talking to him.6
Sharkey testified that she went about looking for work by
“[c]ontacting my friends in the industry and old employers and
recruiters and constantly asking was there anything that I could
do knowing that the lawsuit is out there and everybody has read
about it, because it was in the press.”7

But she did not testify

to an active job search, such as applying for jobs, making
appointments with recruiters, or other similar activities after
March 2010.
Understandably, plaintiff’s counsel made no mention of this
document in his summation.
6

The testimony regarding the presence of the lawsuit was
initially admitted under a limiting instruction preventing it
from being used for the truth of the statement. Later in the
trial, the ruling was reconsidered, and this portion of the
testimony was stricken in its entirety.
13
7

Similarly, the jury award of an equal amount of $563,000 in
emotional distress damages is without any basis in the record.
Sharkey’s evidence on her damages for her emotional distress
consisted of approximately two transcript pages of her own
testimony.

That testimony, in its entirety, reads as follows:

Q. Ms. Sharkey, have you suffered emotionally as
a result of your termination?
MR. SCHISSEL: Objection.
THE COURT: Overruled.
A. Definitely.
Q. Can you describe to the jury how that is.
A. I think anyone could understand. You're losing
your job, being terminated for something you
thought you were doing well. I had been in the
field for 15 years. I had never had a situation
at work with any supervisor. It's just very
distressing, upsetting. You feel like your whole
life is taken away from you.
It was a career. It wasn't just a job for me. I
had worked my way up from being an administrative
assistant in the bank to being a VP at City [sic]
and then moving on to two other organizations.
Just feeling that it was all taken away from me
just like that.
Q. Did you have any physical symptoms that you
believe were attributed to the termination?
MR. SCHISSEL: Objection.
THE COURT: Overruled.
A. I had extreme anxiety and I was not sleeping
whatsoever.
14

Q. At any point in time did you take any
medication to help cope with that?
A. Yes.
Q. What was that and when?
A. What medications?
Q. Yes.
A. Xanax and sleeping medications.
Q. In what period of time?
A. In '09 probably through 2010. Through 2010.
No corroborative evidence, medical testimony, or other documents
were presented.

There was testimony, however, that Sharkey

suffered a family tragedy in early February 2010 that could have
independently caused or exacerbated these reported symptoms from
that day forward.
DISCUSSION
The standard for granting judgment as a matter of law under
Rule 50, Fed. R. Civ. P. is well-established.

“Judgment as a

matter of law may not properly be granted under Rule 50 unless
the evidence, viewed in the light most favorable to the opposing
party, is insufficient to permit a reasonable juror to find in
h[er] favor.”

Stevens v. Rite Aid Corp., 851 F.3d 224, 228 (2d

Cir. 2017) (citation omitted).

This standard “mirrors the

standard for” summary judgment under Rule 56, Fed. R. Civ. P,
except based on the trial record rather than the summary
15

judgment record.

Anderson v. Liberty Lobby, Inc., 477 U.S. 242,

250 (1986); see Piesco v. Koch, 12 F.3d 332, 341 (2d Cir. 1993).
The standard for granting Rule 59 relief, Fed. R. Civ. P.,
by contrast, grants far more discretion to the trial judge.

“It

is the judge’s right, and indeed duty, to order a new trial if
it is deemed in the interest of justice to do so.”

Charles Alan

Wright and Arthur R. Miller, Fed. Prac. & Proc. § 2803 (3d ed.
2017).

Among the grounds on which a new trial may be granted is

if the verdict is against the weight of the evidence.

“A

decision is against the weight of the evidence if and only if
the verdict is (1) seriously erroneous or (2) a miscarriage of
justice.”

Raedle v. Credit Agricole Indosuez, 670 F.3d 411,

417-18 (2d Cir. 2012) (citation omitted); see also DLC Mgmt.
Corp. v. Town of Hyde Park, 163 F.3d 124, 134 (2d Cir. 1998) (“A
court considering a Rule 59 motion for a new trial . . . should
only grant such a motion when the jury’s verdict is egregious.”
(citation omitted)).
In evaluating a Rule 59 motion, “the trial judge may weigh
the evidence and the credibility of witnesses and need not view
the evidence in the light most favorable to the verdict winner.”
Raedle, 670 F.3d at 418.

“Where the resolution of the issues

depended on assessment of the credibility of the witnesses, it
is proper for the court to refrain from setting aside the
16

verdict.”

Metromedia Co. v. Fugazy, 983 F.2d 350, 363 (2d Cir.

1992).
A special case of the general power to order relief under
Rule 59 arises in the context of excessive verdicts.

A trial

judge has “‘discretion to grant a new trial if the verdict
appears to the judge to be against the weight of the evidence .
. . includ[ing] overturning verdicts for excessiveness and
ordering a new trial without qualification, or conditioned on
the verdict winner’s refusal to agree to a reduction
(remittitur).’”

Kirsch v. Fleet Street, Ltd., 148 F.3d 149, 165

(2d Cir. 1998) (quoting Gasperini v. Center for Humanities,
Inc., 518 U.S. 415, 433 (1996)).

The “calculation of damages is

the province of the jury,” and a court may “not vacate or reduce
a jury award merely because [it] would have granted a lesser
amount of damages.”

Turley v. ISG Lackawanna, Inc., 774 F.3d

140, 162 (2d Cir. 2014) (citation omitted).

Review of a jury’s

verdict consists of determining “whether the award is so high as
to shock the judicial conscience and constitute a denial of
justice.”

DiSorbo v. Hoy, 343 F.3d 172, 183 (2d Cir. 2003)

(citation omitted).
But, when juries grant large compensatory awards
for intangible and unquantifiable injuries, such
as emotional distress, pain, and suffering, we
are required to subject the trial court’s
discretion to substantial constraints. Awards
for mental and emotional distress are inherently
17

speculative. There is no objective way to assign
any particular dollar value to distress.
Nonetheless, as we explained in discussing a
claim of excessive punitive damages . . . a legal
system has an obligation to ensure that such
awards for intangibles be fair, reasonable,
predictable, and proportionate.
We must ensure proportionality, to control for
the inherent randomness of jury decisions
concerning appropriate compensation for
intangible harm, and to reduce the burdensome
costs on society of over-extensive damages
awards. Stampf v. Long Island R.R. Co., 761 F.3d
192, 205 (2d Cir. 2014) (noting that, if
appellate courts regularly affirm large damages
awards in the name of deference to the jury, the
“baseline of reasonableness will be constantly
forced upward”).
Turley, 774 F.3d at 162 (citation omitted).

Determination of

what is fair, reasonable, predictable, and proportionate can
rely upon a survey of damages awards in comparable cases.
Stampf, 761 F.3d at 207.
If a damages verdict is deemed excessive, the Court must
determine whether the excessive amount is subject to remittitur,
or whether a new trial must be granted without remittitur.

“A

remittitur should be granted only where the trial has been free
of prejudicial error.”

Ramirez v. New York City Off-Track

Betting Corp., 112 F.3d 38, 40 (2d Cir. 1997).

“[T]he size of a

jury’s verdict may be so excessive as to be ‘inherently
indicative of passion or prejudice’ and to require a new trial,”
without remittitur.

Id. (citing Auster Oil & Gas, Inc. v.
18

Stream, 835 F.2d 597, 603 (5th Cir. 1988)).

“Influences such as

caprice, passion, bias, and prejudice are antithetical to the
rule of law.

If there is a fixture of due process, it is that a

verdict based on such influences cannot stand.”

TXO Production

Corp. v. Alliance Resources Corp., 509 U.S. 443, 475-76 (1993)
(O’Connor, J., dissenting) (collecting cases).

Prejudice may be

found to exist where the appropriate amount of the remittitur
“is totally out of proportion to the damages” awarded by the
jury.

Ramirez, 112 F.3d at 41.

Calculation of the appropriate amount of a remittitur
requires a judicial determination of the maximum amount of
damages that the record can support.

Earl v. Bouchard Transp.

Co., 917 F.2d 1320, 1330 (2d Cir. 1990).

Such amounts are

frequently determined with reference to other verdicts and the
experience of the Court.

If, with the damages amount remitted,

the verdict can be sustained, then a new trial motion may be
denied conditioned on the plaintiff’s acceptance of the
remittitur.
Once a court makes a decision requiring a new trial on at
least some issue in the case, the court must then determine
whether a partial new trial is appropriate, or whether the whole
case must be re-tried.

In the event the jury’s verdict was the

result of passion or prejudice, the whole matter must be re19

tried, as the prejudice that infected one aspect of the verdict
may have affected the remainder of the verdict as well.

See

generally Wagenmann v. Adams, 829 F.2d 196, 216-17 (1st Cir.
1987).

If the jury’s verdict, although unsupportable in some

aspects, was not incurably biased, the issue becomes whether the
issues to be retried are separable.
Miller § 2814.

See generally Wright &

For example, sometimes the amount of damages can

be determined independently from the presentation of the
evidence giving rise to liability.

See Mertens v. Flying Tiger

Line, Inc., 341 F.2d 851, 857-58 (2d Cir. 1965).
case, a retrial limited to damages is appropriate.

In such a
But, when

the issues are inextricably intertwined, such that a proper
determination of the amount of damages requires an evaluation of
the same evidence that gave rise to liability, any retrial must
be on all issues.

See Caskey v. Village of Wayland, 375 F.2d

1004, 1009-1010 (2d Cir. 1967) (“Partial new trials should not
be resorted to ‘unless it clearly appears that the issue to be
retried is so distinct and separable from the others that a
trial of it alone may be had without injustice.’” (quoting
Gasoline Products Co. v. Champlin Refining Co., 283 U.S. 494,
500 (1931)).
Sharkey’s claim arises under 18 U.S.C. § 1514A, a portion
of the much broader SOX statute.
20

Section 1514A was passed in

2002, in the wake of financial crises, to help protect
whistleblowers working at covered financial institutions from
retaliation.

“To accomplish this goal, § 1514A protects

employees when they take lawful acts to disclose information or
otherwise assist in detecting and stopping actions which they
reasonably believe to be fraudulent.”

Bechtel, 710 F.3d at 446

(citation omitted).
“To prevail under § 1514A, an employee must prove
by a preponderance of the evidence that (1) she
engaged in protected activity, (2) the employer
knew that she engaged in the protected activity,
(3) she suffered an unfavorable personnel action,
and (4) the protected activity was a contributing
factor in the unfavorable action.”
Id. at 447 (citation omitted).

Protected activity

occurs when an employee:
provides information, causes information to be
provided, or otherwise assists in an
investigation regarding any conduct with the
employee reasonably believes constitutes a
violation of section 1341 [mail fraud], 1343
[wire fraud], 1344 [bank fraud], or 1348
[securities fraud], any rule or regulation of the
Securities and Exchange Commission, or any
provision of Federal law relating to fraud
against shareholders.
Nielsen, 762 F.3d at 219 (2d Cir. 2014) (alterations in
original) (citation omitted).

“A reasonable belief contains

both subjective and objective components.”

Id. at 221.

[T]he plaintiff must have a subjective belief
that the challenged conduct violates a provision
listed in § 1514A, and . . . this belief must be
21

objectively reasonable. . . . The objective
component of the reasonable belief standard
should be evaluated based on the knowledge
available to a reasonable person in the same
factual circumstances with the same training and
experience as the aggrieved employee.
Id.

(citation omitted).

Put another way, “[t]he objective

prong of the reasonable belief test focuses on the ‘basis of
knowledge available to a reasonable person in the circumstances
with the employee’s training and experience.’”

Id. (quoting

Sharkey v. J.P. Morgan Chase & Co., 805 F. Supp. 2d 45, 55
(S.D.N.Y. 2011)); cf. Federal Housing Finance Agency v. Nomura
Holding Am., Inc., 873 F.3d 85, 119 (2d Cir. 2017) (“A plaintiff
is charged with knowledge of any fact that ‘a reasonably
diligent plaintiff would have discovered.’” (quoting Merck &
Co., Inc. v. Reynolds, 559 U.S. 633, 653 (2010))).

The

reasonable belief inquiry is context-dependent: for example, a
low-level employee of a covered institution may have no
authority to investigate potentially fraudulent activity, and
therefore a report of potentially fraudulent activity may be
reasonable for such an employee even if it would not be for an
employee with more ability and/or the duty to investigate.

Cf.

id. at 130 (citing In re WorldCom Sec. Litig., 346 F. Supp. 2d
628, 663 (S.D.N.Y. 2004)) (noting context-dependent nature of
inquiry).
Under SOX, an employer may assert as an affirmative defense
22

that it would have taken the same unfavorable personnel action
in the absence of the protected activity.
446.

Bechtel, 710 F.3d at

The employer has the burden of proving this affirmative

defense by clear and convincing evidence.

Id.

If an employee succeeds in proving their case, and the
affirmative defense is not proven, the employee is entitled to
“all relief necessary to make the employee whole.”
§ 1514A(c)(1).

18 U.S.C.

Such relief “shall include” reinstatement, the

amount of back pay, with interest, and compensation for any
special damages, such as litigation costs, expert witness fees,
and reasonable attorneys’ fees.

Id. at § 1514A(c)(2).

Know Your Customer (“KYC”) procedures are procedures
employed by banks to ensure that their clients are not engaging
in illegal or otherwise problematic activities through their
banking relationships.

KYC procedures are intended to comply

with various federal laws, such as the Bank Secrecy Act and the
USA Patriot Act, and guidelines associated with those laws.
Thus, 31 U.S.C. § 5318 provides that,
[i]n order to guard against money laundering
through financial institutions, each financial
institution shall establish anti-money laundering
programs, including, at a minimum-(A) the development of internal policies,
procedures, and controls;
(B) the designation of a compliance officer;
(C) an ongoing employee training program; and
(D) an independent audit function to test
programs.
23

31 U.S.C. § 5318(h)(1).
Where the customer is not a United States person, the
Patriot Act requires that
[e]ach financial institution that establishes,
maintains, administers, or manages a private
banking account . . . in the United States for a
non-United States person . . . shall establish
appropriate, specific, and where necessary,
enhanced due diligence policies, procedures, and
controls that are reasonably designed to detect
and report instances of money laundering through
those accounts.
31 U.S.C. § 5318(i)(1) (emphasis supplied).

These procedures

must
ascertain the identity of the nominal and
beneficial owners of, and the source of funds
deposited into, such account as needed to guard
against money laundering and report any
suspicious transactions . . . and conduct
enhanced scrutiny of any such account that is
requested or maintained by, or on behalf of, a
senior foreign political figure, or any immediate
family member or close associate of a senior
foreign political figure, that is reasonably
designed to detect and report transactions that
may involve the proceeds of foreign corruption.
31 U.S.C. § 5318(i)(3).
Other provisions of the Bank Secrecy Act and its
implementing regulations also require banks to have procedures
in place to identify potentially suspicious transactions.
generally 31 U.S.C. § 5318(g)(1); 31 C.F.R. §§ 1020.210,
1010.610, 1010.620.

The specific implementations of these
24

See

statutes and regulations, however, are left up to each
individual bank, subject to audit and oversight by the bank’s
regulator, such as the Office of the Comptroller of the
Currency.
I.

Liability

Defendants have moved for judgment as a matter of law on
liability under Rule 50, Fed. R. Civ. P., on the grounds that
Sharkey did not engage in protected activity, that her belief
that Client A was committing any sort of fraud was neither
objectively nor subjectively reasonable, that there was no
evidence that defendants knew about Sharkey’s protected
activity, and that there was no evidence from which a reasonable
jury could conclude that any protected activity contributed to
her termination.
The questions raised by defendants are close ones.

Many of

the defendants’ criticisms of the jury’s verdict have merit, as
already indicated.

It was Sharkey’s duty to perform the KYC

process for Client A.

Merely regurgitating questions -–

identified by others in the bank -- that required investigation
falls short of protected activity.

The single document authored

by Sharkey to express her concerns -- the July 24 e-mail -seriously undermines her claim.

It neither mentions fraud nor

other criminal activity, and does not recommend that J.P. Morgan
25

terminate its banking relationship with the client.
Moreover, Sharkey’s testimony that she voiced her concerns
about fraud, even if credited, must still be compared against
the “basis of knowledge available to a reasonable person” in her
circumstances.

Nielsen, 762 F.3d at 211.

Had Sharkey done the

KYC investigation she was charged with performing, as the bank
later did, she would have developed information that dispelled
any reasonable concerns that Client A was engaged in fraudulent
or criminal activity.

Because an objectively reasonable

investigation would have developed this information, the strong
weight of the evidence is against a finding that Sharkey had an
objectively reasonable belief that Client A was committing
fraud.
Defendants also presented powerful evidence to show that
the bank had decided to fire Sharkey three days before she wrote
the July 24 e-mail.

Lassiter’s superiors considered Manager T’s

complaint that Sharkey was a “phantom” and Sharkey’s lies to
Lassiter about her responsiveness to Manager T a firing offense.
Nonetheless, taken in the light most favorable to Sharkey,
the evidence is sufficient, albeit barely so, to support the
jury’s verdict as to liability.

Although belied by the

documentary record, Sharkey testified that she in fact did
report to Lassiter that she believed that Client A was engaged
26

in activity that would violate the statutes enumerated in
Sarbanes-Oxley.

Lassiter was subject to a lengthy examination

by plaintiff’s counsel focusing repeatedly and in exquisite
detail on inaccuracies or inconsistencies in Lassiter’s prior
statements.

While those matters may have been considered

trivial, a jury was also entitled to find that were sufficiently
serious to undermine Lassiter’s credibility when she described
her interactions with Sharkey.

Nor have defendants sustained

their extremely heavy burden to prove that, as a matter of law,
a reasonable jury must have found, by clear and convincing
evidence, that they would have discharged Sharkey in the absence
of her protected activity.

The defendants’ renewed Rule 50

motion for judgment as a matter of law as to liability must be
denied.
II.

Damages
A. Back Pay

Defendants contend that as a matter of law, Sharkey’s
damages award for back pay is unsupportable because she failed
to mitigate her damages after March 2010.

The jury found that

Sharkey had never failed to mitigate her damages, and was
entitled to $563,000 in back pay damages.
Employees discharged in violation of Sarbanes-Oxley have a
duty to mitigate their damages.

Although this duty is not meant
27

to be “onerous,” it still requires the employee to act with a
“reasonable diligence” to obtain comparable employment.

Dailey

v. Societe Generale, 108 F.3d 451, 456 (2d Cir. 1998) (citation
omitted).

An employer who has acted wrongfully in discharging

an employee does not thereby become obligated to continue paying
that employee if that employee subsequently fails to take
reasonable efforts to secure alternate employment.

Broadnax v.

City of New Haven, 415 F.3d 265, 268-69 (2d Cir. 2005).

Two

alternative paths exist for employers to prove failure to
mitigate.

Under Dailey, an employer may prove that an employee

failed to mitigate by “establishing (1) that suitable work
existed, and (2) that the employee did not make reasonable
efforts to obtain it.”

108 F.3d at 456.

An exception to this

rule applies, however, when an employer can “prove that the
employee made no reasonable efforts to seek [suitable]
employment.”

Greenway v. Buffalo Hilton Hotel, 143 F.3d 47, 54

(2d Cir. 1998).
The burden of proving a defense of failure to mitigate
rests, on either theory, squarely on the defendant.
415 F.3d at 269.

Broadnax,

Accordingly, in the context of a motion for

judgment as a matter of law, an employer must show that no
reasonable juror could have failed to find in their favor on the
defense.
28

The defendants did not attempt to show that comparable work
was available to Sharkey, and relied entirely on their
contention that Sharkey failed to make any reasonable efforts to
seek suitable employment.

The testimony and documentary record

permitted a jury to find that Sharkey did make some effort to
seek alternative employment through March 2010.

Although the

evidence tended to show that these efforts were less than
fulsome -- one document and Sharkey’s own testimony showed that
in October 2009, Sharkey told a recruiter she had accepted
another offer when in fact she had not -- it cannot be said as a
matter of law that any reasonable juror had to have found that
Sharkey failed to make any reasonable effort to seek alternative
employment during this eight-month period.
After March 2010, however, the evidence compels the
conclusion as a matter of law that Sharkey ceased making any
reasonable efforts to seek alternative employment.

As Judge

Sweet ruled on defendants’ first motion in limine:
[Sharkey’s] claims for back pay will end at the
date at which the jury determines she stopped
actively applying for jobs and seeking
employment. Merely maintaining contact with
industry professionals will not suffice, and
hearsay evidence regarding her search for
employment offered for the truth of out of court
statements will not be permitted. At that date,
back pay will cease because Sharkey made no
reasonable efforts to seek such employment when
she was still capable of employment and failed to
mitigate her damages.
29

(citation omitted).

That ruling was entirely correct.

The

trial evidence confirmed that after March 2010, Sharkey ceased
applying for jobs, and her testimony showed that she “merely
maintain[ed] contact with industry professionals,” rather than
actively engaged in a real job search.

And her attempt to offer

hearsay out-of-court statements regarding the pending lawsuit to
justify her lack of effort cannot do so unless these statements
are credited for their truth, which they cannot be.8
The one document to which Sharkey points in opposition to
this motion to support the existence of a search for employment
after March 2010 does not in fact support her position.

That

document, Plaintiff’s Exhibit 226, does not show a reasonable
effort to connect with the recruiter; it shows precisely the
opposite, to wit, that plaintiff rebuffed the recruiter.
Plaintiff’s own testimony does not suffice, because the
content of that testimony merely establishes that she maintained
contact with professionals, rather than actually applying for a
job or otherwise making active efforts in a job search.

And in

2012, it is beyond dispute she left the work force altogether

In any event, because the reasonableness of efforts are
governed by an objective, and not a subjective standard, as a
matter of law, a reasonable person would not cease making
essentially any effort to find suitable employment in light of a
few statements made by others.
8

30

and was no longer assisting even her husband or father.
Accordingly, judgment will be entered for the defendants to the
extent of holding that Sharkey failed to mitigate her damages
after April 1, 2010.

As a matter of law, Sharkey is eligible to

receive back pay only through March 2010.

Pursuant to Rule

50(c)(1), Fed. R. Civ. P., the defendants’ motion for a new
trial is conditionally granted to the extent of requiring a new
trial on back pay damages for the period after April 1, 2010.
B. Emotional Distress
Defendants challenge the award of $563,000 in emotional
distress damages as unwarranted by the evidence, and request a
new trial, or in the alternative, remittitur.

Damages available

under 18 U.S.C. § 1514A include all relief necessary to make the
plaintiff whole.

If a plaintiff has suffered emotional distress

as a result of being retaliated against in violation of
Sarbanes-Oxley, damages for that emotional distress are
recoverable.
Nonetheless, emotional distress damages, because of their
inherent malleability, are substantially limited in amount
unless the plaintiff presents objective evidence.

Annis v. Cty.

of Westchester, 136 F.3d 239, 249 (2d Cir. 1998).

In Annis,

addressing a claim for emotional distress damages under 42
U.S.C. § 1983, the Second Circuit held that damages for
31

emotional distress were unavailable absent physical
manifestations of that distress, or corroborating testimony or
independent medical evidence.

Id.

Reaffirming Annis, the

Second Circuit has stated that:
[a] plaintiff’s subjective testimony, standing
alone, is generally insufficient to sustain an
award of emotional distress damages. Rather, the
plaintiff’s testimony of emotional injury must be
substantiated by other evidence that such an
injury occurred, such as the testimony of
witnesses to the plaintiff’s distress, or the
objective circumstances of the violation itself.
Evidence that a plaintiff has sought medical
treatment for the emotional injury, while
helpful, is not required.
Patrolmen’s Benevolent Ass’n of City of New York v. City of New
York, 310 F.3d 43, 55 (2d Cir. 2002) (citation omitted).
If Sharkey is entitled to recover emotional distress
damages at all, she at most would be entitled to a gardenvariety award to reflect the emotional distress that typically
accompanies a wrongful firing.

The evidence of her emotional

distress was limited to her own testimony, which was brief and
largely conclusory.
After surveying other verdicts and taking into account the
objective circumstances of her termination and Sharkey’s
testimony, the Court concludes that a damages award in the range
of $20,000 to $50,000 would be the maximum award sustainable on
this record.

See generally Dotson v. City of Syracuse, 2011 WL
32

817499, at *16-21 (N.D.N.Y. Mar. 2, 2011) (collecting cases);
see also Legg v. Ulster Cty., 2017 WL 3668777, at *11-12
(N.D.N.Y. Aug. 24, 2017) (collecting cases).
The particular amount chosen for the emotional distress
damages award indicates that the jury did not follow its
instructions.

An award of $563,000 cannot be sustained because

it is far in excess of what a reasonable jury could have
awarded.

But, as significantly, the particular choice of amount

-- an amount equal to that it awarded back pay -- indicates that
the jury acted out of passion in favor of Sharkey, or prejudice
against J.P. Morgan, and not on the basis of the trial evidence
and the law provided in the jury charge.
C. Remittitur or New Trial
As just described, the jury’s verdict is vastly out of
proportion to the maximum supportable damages award.

The

excessiveness of these awards reflects a jury motivated by
passion or prejudice, or both.

As a consequence, there can be

no confidence in the integrity of the jury’s verdict on
liability.

Moreover, because the issue of emotional distress

damages must be re-tried in any event, there is no way to fairly
try the issue of the emotional harm that Sharkey suffered
divorced from the issue of whether she was wrongfully
discharged.

Emotional distress damages necessarily include
33

consideration of the objective circumstances of the legal
violation that created the emotional injury.
Benevolent Ass’n, 310 F.3d at 55.

See Patrolmen’s

Accordingly, the new trial as

to Lassiter and J.P. Morgan must be on all issues, and an offer
of remittitur is inappropriate.
III. Reinstatement
The final issue is whether Jennifer Sharkey is entitled to
reinstatement in her position.

SOX provides that relief for a

victorious employee “shall include . . . reinstatement with the
same seniority status that the employee would have had, but for
the discrimination.”

18 U.S.C. § 1514A (c)(2).

relief is available, it is not automatic.

While that

At trial, the Court

ruled that the issue would be decided by the Court, and not the
jury.
Jennifer Sharkey stopped making reasonable efforts to
secure employment in early 2010, and removed herself from the
workforce altogether in 2012.

That decision on her part ended

the defendants’ obligation to reinstate her.

For, even if she

is entitled to reinstatement at the same seniority and benefit
status she would have had but for the discrimination, when she
left the workforce she abandoned her claim for reinstatement.
Reinstatement must also be denied for an independent
reason.

Reinstatement, even when authorized as a remedy, is
34

inappropriate here as an equitable matter.

See Kirsch v. Fleet

Street, Ltd., 148 F.3d 149, 168-69 (2d Cir. 1998); Padilla v.
Metro-North Commuter R.R., 92 F.3d 117, 125-26 (2d Cir. 1996).
Sharkey struggled to perform her work as a private wealth
manager.

She lied to her superior about being in touch with the

clients the bank assigned to her.

Whether or not the jury was

allowed to hear the full extent of Sharkey’s malfeasance, that
malfeasance forfeited Sharkey’s right to reinstatement.
Finally, and again for an entirely independent reason,
reinstatement in this case is impractical if not impossible.
Through this hard fought litigation, Sharkey has impugned the
bank, and the bank has called her character for truthfulness and
reliability as an employee into serious question.

It would

simply place both Sharkey and J.P. Morgan into a completely
untenable position to order her reinstatement.
Normally, in the event that reinstatement is unavailable,
the alternative remedy is front pay.

As Judge Sweet held,

however, because Sharkey removed herself from the workforce,
front pay is also unavailable.

This Court had declined to

revisit that decision before the trial, and declines to do so
now.

Accordingly, reinstatement will not be awarded in this

case.

35

CONCLUSION
The defendants’ renewed Rule 50 motion for judgment as a
matter of law is granted as to back pay only as of April 1,
2010, and denied in all other respects.

A conditional new trial

is granted as to back pay damages for the period after April 1,
2010.

The defendants’ alternative Rule 59 motion for a new

trial as to Lassiter and J.P. Morgan is granted.

Sharkey’s

request to be reinstated at J.P. Morgan in the event she
ultimately prevails in this matter is denied.
SO ORDERED:
Dated:

New York, New York
March 5, 2018
__________________________________
DENISE COTE
United States District Judge

36