Prout v. Vladeck et al

Filing 144

OPINION re: [140 ]ORDER denying 118 Motion for Summary Judgment: In sum, the Court concludes that Prout has created a triable issue as to each element of his malpractice claim. For these reasons, the Court, in its Order of March 26, 2019, denied VRC's motion for summary judgment in its entirety. (Signed by Judge Jed S. Rakoff on 4/12/2019) (jwh)

Case 1:18-cv-00260-JSR Document 144 Filed 04/15/19 Page 1 of 30

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
----------------------------------- x
ALEXANDER PROUT,

USDCSDNY

DOCUMENT
ELECTRONICALLY FILED
DOC #: _ _~<-+-:~+-h...,­
DATE FILED:-+-+--'--...__,,_.__.,_.

Plaintiff,
18 Civ. 260

(JSR)

-vOPINION
ANNE C. VLADECK and VLADECK,
RASKIN & CLARK, P.C.,

Defendants.

----------------------------------- x
JED S. RAKOFF, U.S.D.J.
Before the Court is the motion of defendants Anne C.
Vladeck and Vladeck, Raskin & Clark, P.C.

("VRC")

for summary

judgment on the legal malpractice claim of plaintiff Alexander
Prout. ECF No. 118. After receiving full briefing from each
side, the Court held oral argument on March 19, 2019.

In a

"bottom-line" Order issued on March 26, 2019, ECF No.

140, the

Court denied defendants' motion in its entirety. This Opinion
sets forth the reasons for the Court's ruling.
Factual Background

Except where otherwise noted, the following facts,

either

undisputed or, where disputed, taken most favorably to the nonmovant plaintiff, are taken from the parties' Rule 56.l
Statements and Counterstatements:

Case 1:18-cv-00260-JSR Document 144 Filed 04/15/19 Page 2 of 30

From 2003 to 2012, plaintiff Alexander Prout served as CEO
of Invesco Japan. Plaintiff's Response to Defendants' Local Rule
56.1 Statement of Material and Undisputed Facts

~

2 ("Prout 56.1

Counterstatement"), ECF No. 130. In September 2012, Prout was
succeeded by Alexander Sato, and from September 2012 to August
2013, Prout served as Chairman of Invesco Japan.

Id.

~~

3,

6.

Thereafter, Prout served as Managing Director and Regional Head
of Business for Invesco Asia-Pacific. Id.

~

9.

During his time at Invesco, Prout reported to Andrew Lo,
InV€sco's Senior Managing Director of Asia Pacific.

Id.

~

11. Lo

had a reputation for creating a hostile work environment, and
Prout testified that Lo once yelled at him on a telephone call
prior to the events described below.

Id.

~~

13-15. Lo also

conducted Prout's annual performance review, and in 2013, Lo
gave Prout a performance rating of "Needs Improvement I
Developing" in the "Overall Performance Category," as well as in
several other categories. See ECF No. 119, Ex. K, at 3-6, 8-10.
Lo also made positive comments, however,

including that Prout

"has strong competencies," "is a senior executive with
substantial regional & global experience," and "is a strong
business driver." Id. at 9.
In April 2014,

Prout heard a rumor that Sato had purchased

a $4,000 bottle of wine for a senior executive at a Japanese

2

Case 1:18-cv-00260-JSR Document 144 Filed 04/15/19 Page 3 of 30

Bank. Prout 56.1 Counterstatement

~

28. Concerned that Sato's

conduct may have violated various laws and internal rules, Prout
reported the rumor to Asha Balachandra, Head of Legal for
Invesco Asia Pacific. Id.

~~

29-31. Balachandra advised Prout to

report the rumor through Invesco's anonymous whistleblower
hotline because otherwise "Lo woulds[---] on [Prout's] head."
Prout Dep. 43:22-25, ECF No. 119, Ex. C. Prout did not use the
hotline but instead told Lo and warned Lo about the consequences
of Sato's gift. Prout 56.1 Counterstatement

~~

35-40. Prout

testified that Lo's response was, in substance, "so what." Prout
Dep. 46:11-13. On May 2, 2014, Balachandra followed up with
Prout, and Invesco initiated an internal investigation into
Sato. Prout 56.1 Counterstatement

~~

42, 45-46.

Soon after, on May 13, 2014, Prout introduced himself via
email to defendant Anne Vladeck. ECF No. 119, Ex. P, at 3. Prout
informed Vladeck that he was "currently considering career
options" and "would like to discuss my current circumstances I
situation and understand my options." Id. Vladeck responded on
May 15 that she "would be happy to talk to" Prout. Id. at 2.
Prout replied on May 26 that he was "in active consideration of
leaving Invesco" and had "had an ethical disagreement with my
boss and no longer feel comfortable working at the firm." Id.
Prout also said

h~

was "in discussions with another firm." Id.
3

Case 1:18-cv-00260-JSR Document 144 Filed 04/15/19 Page 4 of 30

Toward the end of May 2014, Prout's daughter Chessy was
sexually assaulted at the St. Paul's School in New Hampshire.
Prout 56.l Counterstatement

~

60. Prout stayed in the United

States through the end of June 2014 to take care of his family,
id.

~

61, and at the end of June, he traveled to Hong Kong at

Lo's request for an internal meeting,

~

id.

65. Once Prout

arrived in Hong Kong, however, Lo canceled the meeting,
ostensibly because the report that Prout had prepared for the
meeting contained formatting errors. Id.

~

69. Prout testified

that Lo yelled at him and that when Prout updated Lo on his
family situation, Lo responded: "I certainly hope Chessy learns
better judgment in the future." Prout Dep. 114:18-20.
Shortly thereafter, Prout emailed Vladeck: "SOS from HK.
Need your advice.

. Pls also send retainer agreement." ECF

No. 119, Ex. Q, at 2. On July 3, 2014, Prout executed an
engagement letter with Vladeck "regarding an exit strategy with
Invesco." ECF No. 119, Ex. T. After Prout attempted
unsuccessfully to personally negotiate a severance package with
Invesco, Prout 56.l Counterstatement

~

83, Vladeck, on August 4,

2014, emailed individuals at Invesco to advise them that VRC
represented Prout regarding "his claims of, inter alia,
retaliation for raising concerns about potentially unlawful
conduct; retaliation for taking family leave; and claims

4

Case 1:18-cv-00260-JSR Document 144 Filed 04/15/19 Page 5 of 30

relating to the inappropriate conduct of his immediate
supervisor," id.

<JI

84.

In mid-August 2014, Prout requested Family and Medical
Leave Act

("FMLA")

leave to take care of his family, which

Invesco approved through October 31, 2014. Id.

<JI<JI

94-96. A few

weeks before Prout was scheduled to come back to work, he was
notified that he should report to Invesco's Atlanta headquarters
when he returned. Id.

<JI

99. When Prout reported on November 3,

2014, however, he was informed by Invesco that he had "two
options:

(1)

resign and receive approximately $1.13 million in

compensation, stock vesting, and dividends; or (2) be fired for
cause and receive approximately $71,000 in compensation." Id.
<JI<JI

100-01. After consulting with Vladeck, Prout chose to let

Invesco's offer expire, and he was terminated effective November
20, 2014. Id.

<JI<JI

107-08. Prout testified that Vladeck told him,

in substance: "Alex, don't settle.

I'll get you everything that

Invesco owes you and in addition Invesco will pay my legal
fees." Prout Dep. 167:4-6.
On December 2, 2014, Prout met with attorneys at VRC to
discuss potential claims against Invesco. Prout 56.1
Counterstatement

<JI

109. Vladeck's notes from the meeting contain

references to the Dodd-Frank Wall Street Reform and Consumer
Protection Act

("Dodd-Frank"), the Sarbanes-Oxley Act
5

("SOX"),

Case 1:18-cv-00260-JSR Document 144 Filed 04/15/19 Page 6 of 30

and the Foreign Corrupt Practices Act

("FCPA"), ECF No. 131,

Ex. 14, at 5, and VRC's billing records from that day indicate
that one of the firm's clerks "researched venue issues under
FCPA, Dodd Frank, and Sarbanes Oxley," ECF No. 119, Ex. EE, at
3. VRC did not file a SOX claim on behalf of Prout, and on May
2, 2015, 180 days after Prout's termination, any SOX claim that
Prout might have had expired. Plaintiff's Local Rule 56.l(b)
Statement of Additional Material Facts i

80 ("Prout 56.1

Statement"), ECF No. 129; 29 C.F.R. § 1980.103(d).
In the fall of 2015, Prout started a new job with Morgan
Stanley ("MS"). Prout 56.1 Counterstatement i

142. On October

24, 2016, Prout informed VRC that MS had initiated an
investigation into whether Prout had improperly retained
proprietary documents from Invesco.

Id. i

143. Prout conceded to

VRC that he had retained Invesco documents without authorization
after his employment there ended. Id. i

148. On October 26,

2016, Prout met with his superior and compliance investigators
at MS, and during the meeting he denied having hard copies of
the relevant documents at his office. Id. i i 154, 157. Although
Prout previously did have hard copies of the documents at his
office, he had removed them when he first learned of the
investigation, and he subsequently destroyed them at MS's
direction. Prout Dep. 237:15-238:19.
6

Case 1:18-cv-00260-JSR Document 144 Filed 04/15/19 Page 7 of 30

On October 30, 2016, Prout emailed VRC to summarize his
meeting at MS, and the next day, VRC responded that "[o]ur
timing has become more complicated because of these events."
Prout 56.1 Counterstatement

~~

155, 160. Specifically, although

Prout had a potential claim against Invesco for non-willful
violation of the FMLA, and the two-year statute of limitations
on that claim was set to expire the following week,

id.

~

164,

VRC warned Prout that if he filed his claim now, "there was a
substantial risk that Invesco would assert counterclaims against
Prout relating to his theft of the proprietary information and
documents," id.

~

165. VRC also warned Prout that such

counterclaims could reveal information that might cause MS to
terminate Prout,

id.

~

agreement with Invesco,
~~

166, and that if Prout sought a tolling
Invesco might pre-emptively sue him, id.

170-71. Based on VRC's advice, Prout chose not to pursue a

non-willful FMLA claim against Invesco. Id.

~

180.

On June 27, 2017, Prout terminated VRC as his counsel
and retained Sanford Heisler Sharp, LLP ("Sanford Heisler") also his counsel in the instant malpractice action - to
represent him in connection with his claims against Invesco.
~

Id.

186. On August 11, 2017, Sanford Heisler sent Invesco's

counsel a letter "set[ting] forth the basis for Prout's claims
of FMLA retaliation, whistleblower retaliation, and wrongful
7

Case 1:18-cv-00260-JSR Document 144 Filed 04/15/19 Page 8 of 30

termination." Id.

~

188

(internal quotations and citations

omitted). In October 2017,
mediation,

id.

~

Prout and Invesco agreed to submit to

192, and on November 7, 2017, Prout settled all

outstanding claims against Invesco for $1.75 million, id.

~

204.

Procedural Background

On January 11, 2018, Prout filed the instant malpractice
action against VRC. ECF No. 1. In his Second Amended Complaint
("SAC"), Prout brought a legal malpractice claim based on VRC's
failure to file Prout's SOX and non-willful FMLA claims within
the statutes of limitations. ECF No. 32, at

~

brought a claim for breach of fiduciary duty.

124. Prout also
Id.

~~

127-30.

VRC moved to dismiss the SAC, ECF Nos. 15, 23, 37, and to
disqualify Sanford Heisler as Prout's counsel, ECF No. 18. In an
Opinion and Order filed on June 11, 2018, the Court granted
VRC's motion to dismiss Prout's breach of fiduciary duty claim,
but it denied VRC's motion to dismiss Prout's FMLA- and SOXbased malpractice claims, and it also denied VRC's motion to
disqualify Sanford Heisler. ECF No. 44, at 52.
In holding that Prout had plausibly alleged malpractice,
the Court concluded, first,

that the SAC ·"adequately support[ed]

the claim that defendants were negligent in their representation
of Prout because they let the statutes of limitations pass on
his claim for non-willful retaliation under the FMLA and for
8

Case 1:18-cv-00260-JSR Document 144 Filed 04/15/19 Page 9 of 30

retaliation under SOX." Id. at 21. Next, the Court held that the
SAC adequately pled proximate causation because,

inter alia, the

SAC plausibly alleged that Prout would have had viable nonwil l ful FMLA and SOX claims had'it not been for VRC's
negligence. See id. at 26-29, 32-38. Finally, the Court held
that the SAC adequately pled damages because Prout alleged that
VRC initially told him his claims were worth $3 million, and
this value was reduced by the lapsed statute of limitations. Id.
at 40-42.
VRC moved for reconsideration, arguing that the Court had
not properly analyzed Prout's allegations of proximate causation
because, VRC argued, a party that settles can recover for legal
malpractice only where the settlement was "effectively compelled
by the mistakes of counsel." ECF No. 47, at 5. VRC argued that
the Court incorrectly applied the law by requiring only that
Prout show that he could have settled his entire case for more
in the absence of VRC's negligence.

Id. at 6. The Court denied

VRC's motion, and it clarified that the relevant question was
whether VRC's "negligence caused Prout to suffer a loss relating
to his non-willful FMLA and SOX claims." ECF No.

67, at 7

(emphasis added). Given that the claims were time barred, the
Court held, Prout was "effectively compelled" to settle them on
any interpretation. Id. at 6-7.

9

Case 1:18-cv-00260-JSR Document 144 Filed 04/15/19 Page 10 of 30

On July 9, VRC brought a third-party action for
contribution against Sanford Heisler, which negotiated Prout's
settlement with Invesco, and Steven J. Kelly, who represented
Prout in a lawsuit arising out of his daughter's sexual assault.
ECF No.
Nos. 70,

48. The third-party defendants moved to dismiss, ECF
74, and the Court granted the motions, ECF No.

96.

1

Finally, on August 17, VRC filed an Amended Answer2 to the
SAC with counterclaims for breach of contract, quantum meruit,
and a charging lien. ECF No.

80. Prout moved to dismiss the

charging lien counterclaim to the extent that it exceeded the
amount that VRC claimed in quantum meruit, ECF No.
Court granted the motion, ECF. No.

88, and the

100. On September 5, Prout

filed an answer to VRC's counterclaims. ECF No.

91.

Now before the Court is VRC's motion for summary judgment.
ECF No. 118. VRC argues that:

(1)

Prout cannot establish that

1

The Court initially dismissed VRC's claims against both thirdparty defendants with prejudice. ECF No 96, at 34. However, VRC
moved for reconsideration on the grounds that the Court had
found that it lacked personal jurisdiction over Kelly, and that
the dismissal as to Kelly therefore should have been without
prejudice. ECF No. 101. The Court granted VRC's mqtion, and
VRC's claim against Kelly accordingly was dismissed without
prejudice. ECF No. 108.
VRC's initial Answer was filed on June 25, 2018. ECF No. 45.
However, Prout filed a motion to strike portions of the Answer,
ECF No. 55, which the Court granted in part and denied in part,
ECF No. 79.
2

10

Case 1:18-cv-00260-JSR Document 144 Filed 04/15/19 Page 11 of 30

VRC was negligent in letting the statute of limitations lapse on
his SOX and non-willful FMLA claims, see Memorandum of Law
Submitted in Support of Defendants' Motion for Summary Judgment,
Dismissing Plaintiff's Second Amended Complaint 3-10 ("VRC SJ
Mem."), ECF No. 121;

(2)

Prout cannot demonstrate that he would

have prevailed on either of his time-barred claims, see id. at
11-20; and (3)

Prout cannot prove actual and ascertainable

damages, see id. at 20-25. Prout opposes. Plaintiff's Memorandum
of Law in Opposition to Defendants' Motion for Summary Judgment
("Prout SJ Opp."), ECF No. 128.
As noted above, this Court held oral argument on March 19,
2019, and it issued a "bottom-line" Order on March 26, 2019, in
which it denied defendants' motion in its entirety. ECF No. 140.
This Opinion sets forth the reasons for the Court's ruling.
Analysis
I.

Standard of Review

Under Rule S6(a) of the Federal Rules of Civil Procedure, a
"court shall grant summary judgment if the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law." "The movant
bears the burden of demonstrating the absence of a genuine
dispute of fact, and, to award summary judgment, the court must
be able to find after drawing all reasonable inferences in favor
11

Case 1:18-cv-00260-JSR Document 144 Filed 04/15/19 Page 12 of 30

of a non-movant that no reasonable trier of fact could find in
favor of that party." Palmer/Kane LLC v. Rosen Book Works LLC,
204 F. Supp. 3d 565, 568

(S.D.N.Y. 2016).3

"A legal malpractice claim under New York law contains
three elements:

(1)

the negligence of the attorney;

(2)

proximate cause; and (3) damages. To establish the elements of
proximate cause and damages, a plaintiff must show that but for
the defendant's negligence, he or she would have prevailed in
the underlying action or would not have sustained any damages.
For defendants in a legal malpractice action to succeed on a
motion for summary judgment, evidence must be presented
establishing that the plaintiff is unable to prove at least one
of these essential elements of a malpractice cause of action."
Allianz Ins. Co. v. Lerner, 416 F.3d 109, 118
II.

(2d Cir. 2005).

Whether VRC Was Negligent

"In order to establish negligence in a legal malpractice
case, a plaintiff must allege that the attorney's conduct fell
below the ordinary and reasonable skill and knowledge commonly
possessed by a

~ember

Supp. 2d 586, 592

of the profession." Kirk v. Heppt, 532 F.

(S.D.N.Y. 2008). "Generally, an attorney may

3 Unless otherwise indicated, in quoting cases all internal
quotation marks, alterations, emphases, footnotes, and citations
are omitted.
12

Case 1:18-cv-00260-JSR Document 144 Filed 04/15/19 Page 13 of 30

only be held liable for ignorance of the rules of practice,
failure to comply with conditions precedent to suit, or for his
neglect to prosecute or defend an action." Achtman v. Kirby,
Mclnerney & Squire, LLP,

464 F.3d 328,

337

(2d Cir. 2006). The

"selection of one among several reasonable courses of action
does not constitute malpractice." Rosner v.
553, 554

(N.Y.

Paley, 481 N.E.2d

1985).

A. Prout' s SOX Claim

VRC argues that Prout cannot establish negligence based on
VRC's failure to bring Prout's SOX claim within the statute of
limitations. See VRC SJ Mem.

4-6. First, VRC argues that "Prout

never wanted to be perceived as a whistleblower," and that
"Prout's comments to Vladeck during the early stages of

[VRC's]

representation left Vladeck with the distinct impression that
Prout viewed filing a whistle blower claim as a

'nonstarter.'"

Id. at 4. Second, VRC argues that it always believed "that
Prout's

'whistleblower'

retaliation claim, to the extent he even

had one and ever wanted to sue, could be pursued to equal if not
greater effect via

[Dodd-Frank], which had a six-year statute of

limitations." Id. at 5. Although the Supreme Court ultimately
held in Digital Realty Trust,

Inc. v. Somers that Dodd-Frank

does not cover internal whistleblowers like Prout,
767, 772-73

138 S. Ct.

(2018), VRC argues that "numerous district courts
13

Case 1:18-cv-00260-JSR Document 144 Filed 04/15/19 Page 14 of 30

within the Second Circuit and elsewhere had" come to the
opposite conclusion at the time VRC chose not to prosecute
Prout's SOX claim, VRC SJ Mem. 5. As such, VRC argues,
reasonable to pursue only the Dodd-Frank claim.

it was

Id. at 6.

Beginning with VRC's argument that Prout never wanted to be
perceived as a whistleblower,

the Court finds that there is

ample evidence to the contrary. For example, shortly before the
statute of limitations expired-on his SOX claim, Prout sent an
email to VRC in
I

whic~

he wrote: "Someone recently asked me 'how

liked throwing away my career for a bottle of wine'

I

would do it again in a heartbeat." ECF No. 131, Ex. 13.
Furthermore, when asked at his deposition whether he had told
"Vladeck that

[he] did not want to assert a whistle blower

claim," Prout responded "absolutely not," and that he "wouldn't
hesitate at all to pursue this." Prout Dep.

101:14-19, 102:19-

20. Prout's willingness to be perceived as a whistleblower is
further supported by an August 4, 2014 email that Vladeck sent
to Invesco, in which she stated that VRC represented Prout
regarding "his claims of,

inter alia,

retaliation for raising

concerns about potentially unlawful conduct." ECF No. 119,
Ex. X.

Indeed, VRC's 30(b) (6) witness, Valdi Licul, more or less

conceded that this language referred to whistleblower activity.
VRC Dep. 104:14-16, 20-24, ECF No. 119, Ex. D.
14

Case 1:18-cv-00260-JSR Document 144 Filed 04/15/19 Page 15 of 30

Moving to VRC's contention that it reasonably chose to
pursue a Dodd-Frank claim rather than a SOX claim, the Court
finds that VRC has not demonstrated the absence of a triable
issue. Even if some courts had held as of May 2015 that DoddFrank covered internal whistleblowers like Prout, it was
nevertheless the case that "Prout's Dodd-Frank claim rested on
shaky grounds" because of inter-Circuit disagreement. Prout v.
Vladeck, 316 F. Supp. 3d 784, 805 (S.D.N.Y. 2018). Moreover,
Prout's expert, Edward Mazurek, opined in his report that VRC's
strategy was unreasonable and that, "[p]articularly where the
state of the law with respect to some claims is unsettled,

it is

important to preserve those claims that are on the strongest
legal footing." Mazurek Rep. 7-8, ECF No. 131, Ex. 11. These are
genuine disputes to resolve at trial, and they preclude the
Court from granting summary judgment for VRC on the issue of
whether its handling of Prout's SOX claim was negligent.
B. Prout's Non-Willful FMLA Claim

VRC also argues that Prout cannot establish negligence
based on VRC's failure to bring Prout's non-willful FMLA claim
within the statute of limitations. See VRC SJ Mem. 6-10. VRC
contends that it was "preparing to file an action against
Invesco within the two-year statute of limitations for nonwillful FMLA claims," but that it learned on the eve of the
15

Case 1:18-cv-00260-JSR Document 144 Filed 04/15/19 Page 16 of 30

filing deadline that "Prout's then-employer, Morgan Stanley, had
launched an investigation into whether he had improperly
retained proprietary information and documents from Invesco
following his termination." Id. at 7. During this investigation,
VRC argues,

Prout admitted to retaining proprietary information,

and he "provided answers that were deceitful,

if not outright

false." Id.
VRC argues that it immediately convened a phone call with
Prout when it learned this information, and that it "explained
all the possible 'pros

a~d

cons' of commencing an action against

Invesco or seeking a tolling agreement from Invesco before the
non-willful FMLA limitations period expired." Id. at 8. VRC
"recommended against commencing suit or seeking a tolling
agreement, citing the substantial risk that Invesco would
counterclaim (in the event of a lawsuit) or sue Prout first

(if

presented with a tolling agreement)." Id. VRC also cautioned
that MS might fire Prout if it learned that he had not been
truthful during their investigation. Id.
VRC states that it advised Prout that he would retain a
viable willful FMLA claim even if he did not pursue his nonwill ful FMLA claim, and it "made clear to Prout that [VRC]

[was]

ready to request a tolling agreement from Invesco or commence a
lawsuit against Invesco before the two-year statute of
16

Case 1:18-cv-00260-JSR Document 144 Filed 04/15/19 Page 17 of 30

limitations expired,

if Prout chose either of those options."

Id. at 9. However, VRC argues, Prout chose to defer litigation
against Invesco because he was worried about the risk of losing
his job at MS.

Id. at 10. Given the risks that Prout faced if he

pursued his non-willful FMLA claim, VRC concludes, it was
reasonable to let the statute of limitations expire.

Id.

The Court agrees that if this were the whole story, VRC
would be entitled to summary judgment on the issue of whether it
negligently handled Prout's non-willful FMLA claim.

Prout argues

that the costs of adverse action by Invesco did not outweigh the
benefits of filing his non-willful FMLA claim or seeking a
tolling agreement,

see Prout SJ Opp. 11, but this is a classic

question of strategy, and the "selection of Dne among several
reasonable courses of action does not constitute malpractice."
Rosner,

481 N.E.2d at 554. Prout also argues that VRC was

unprepared to file a complaint against Invesco, and that VRC was
negligent for failing to review the documents at issue in the MS
investigation,

Prout SJ Opp. 11, but he does not offer enough

evidence to create a triable issue on either of these points.
The Court must deny VRC summary judgment, however, because
its recounting above is not the whole story. As Prout explains,
after VRC's initial settlement negotiations with Invesco failed
in November 2014, VRC waited to reengage Invesco until October
17

Case 1:18-cv-00260-JSR Document 144 Filed 04/15/19 Page 18 of 30

20, 2016, two weeks before the statute of limitations expired on
Prout's non-willful FMLA claim. Prout SJ Opp. 6. Furthermore,
Prout lists nearly thirty occasions between January 4, 2015 and
October 18, 2016 on which he "prodded Defendants to reengage
Invesco," to no avail.

Id. at 6-7. On September 19, 2016, for

example, Prout told VRC: "I am concerned about SOL for our case
and how to proceed to reach conclusion with Invesco." ECF
No. 131, Ex.

64, at 3. And on October 6, he wrote: "Checking in

to see if you were able to connect with Invesco. Pls let me know
what the plan is to avoid the SOL issue should Invesco respond
negatively. Are you ready and have capacity to keep this on
track or should [I] prepare back up plan?" ECF No. 131, Ex.

68.

When VRC finally contacted Invesco, it was unable to resolve
Prout's claims, and shortly thereafter, Prout informed VRC that
MS had opened its investigation. Prout 56.l

Statement~~

122,

125. It was only at this juncture, days before the statute of
limitations was set to expire on Prout's non-willful FMLA claim,
that VRC advised Prout to let the claim lapse.
With the history fleshed out to include the above evidence
of unresponsiveness and delay, the Court finds that there is a
genuine dispute as to whether VRC's conduct fell within the
range of "reasonable courses of action" that would immunize it
from malpractice liability. Rosner,
18

481 N.E.2d at 554. A

Case 1:18-cv-00260-JSR Document 144 Filed 04/15/19 Page 19 of 30

reasonable jury could agree with Prout's expert's opinion that
"it was unreasonable for Defendants to wait until the fall of
2016 to take the first steps towards re-engaging with Invesco
and possibly initiating a lawsuit based on Mr. Prout's FMLA
claims." Mazurek Rep.
592, 594

9; see Bonilla v. Abbott,

(2d Dep't 1985)

493 N.Y.S.2d

(concluding that a reasonably jury

could find legal malpractice defendants were negligent in
handling of wrongful death action because defendants "fail [ed]
to proceed promptly,

for no apparent reason, thereby risking and

ultimately forfeiting the rights and interests of" decedent's
beneficiaries) .
For these reasons, the Court denied summary judgment for
VRC on the issue of whether it negligently handled Prout's nonwillful FMLA claim.
III.

Whether Prout Lost Meritorious Claims
"In order to demonstrate proximate cause,

[a] plaintiff

must establish that but for the attorney's negligence,

[the]

plaintiff would have prevailed in the matter in question or
would not have sustained any ascertainable damages." Schwartz v.
Olshan Grundman Frome & Rosenzweig, 753 N.Y.S.2d 482,

486 (1st

Dep't 2003). "A plaintiff claiming legal malpractice must meet a
case within a case requirement, and must demonstrate that a
reasonable fact-finder

[in this case] could conclude that a
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Case 1:18-cv-00260-JSR Document 144 Filed 04/15/19 Page 20 of 30

reasonable fact-finder in the underlying suit would have arrived
at a different result but for the attorney's negligence." Schutz
v. Kagan Lubic Lepper Finkelstein & Gold, LLP, No.

12 Civ.

9459

(PAE) , 2013 WL 3 3 5 7 9 21 , at * 6 ( S . D. N . Y. July 2, 2013) , a ff' d,
552 F. App'x 79

(2d Cir. 2014).

A. Prout' s SOX Cl.aim

"Section 806 of SOX provides whistleblower protection for
employees of publicly traded [companies]. To succeed in making a
prima facie case under this provision, an employee must prove by
a preponderance of the evidence that
protected activity;

(2)

the protected activity;

(1) she engaged in

the employer knew that she engaged in
( 3) she suf f erect an unfavorable

personnel action; and (4)

the protected activity was a

contributing factor in the unfavorable action." Prout, 316 F.
Supp. 3d at 803.
VRC argues that Prout would not have prevailed on a SOX
claim "because (1)

Prout's admissions during his deposition show

that he did not engage in protected activity; and (2)

even if he

did, there is no evidence to demonstrate that the alleged
protected activity was a contributing factor in Invesco's
subsequent termination of Prout's employment." VRC SJ Mem. 11.
With respect to protected activity, VRC argues that SOX
protects only those who report what they reasonably believe to
20

Case 1:18-cv-00260-JSR Document 144 Filed 04/15/19 Page 21 of 30

be violations of federal law.

Id. at 12. In the SAC, Prout

alleges that he believed Sato's gift of a $4,000 bottle of wine
constituted an FCPA violation. SAC '

69. But, VRC argues, Prout

testified in his deposition that "he believed Sato's alleged
conduct may have violated Invesco's own rules and internal
guidelines, as well

[as] the rules and regulations of Japan when

it comes to client entertainment." VRC SJ Mem. 12

(internal

quotations and citation omitted). Because Prout sought only to
report violations of foreign law, VRC argues, his activity was
not protected under SOX. Id. at 13.
On the issue of causation, VRC argues that Prout cannot
establish that Invesco retaliated against him for reporting
Sato's gift.

Id. at 14. VRC claims that Balachandra's alleged

comment that Lo would "s[---] on [Prout's] head" - in addition
to being hearsay - is only "a stray remark," and VRC contends
that "Prout has failed to produce any evidence that Balachandra
played any role in the decision to terminate Prout's
employment." Id. at 14-15 (internal quotations and citation
omitted) .
Furthermore, VRC argues, despite his allegation that "Lo
grew increasingly hostile towards Prout almost immediately after
he reported" Sato's gift, SAC i

73, "Prout admitted during his

deposition that his relationship with Lo had been strained for
21

Case 1:18-cv-00260-JSR Document 144 Filed 04/15/19 Page 22 of 30

at least several months prior to the conversation during which
Prout allegedly made his complaint to Lo." VRC SJ Mem. 15
(emphasis omitted). VRC argues that Lo had previously demoted
Prout and given Prout a poor performance review, and it argues
that

notwithstanding Prout's confrontation with Lo in June

2014 - Prout acknowledged that Lo had a reputation for temper
tantrums.

Id. at 16. Finally, VRC argues that there is no

evidence that Invesco had a negative reaction to Prout's reports
given that Invesco quickly commenced and completed its own
internal investigation of the matter.

Id. at 17. "Without

evidence of retaliatory animus," VRC concludes, "Prout is left
to rely on temporal proximity alone," and Prout was terminated
nearly seven months after reporting to Balachandra and Lo.

Id.

at 18.
Beginning with VRC's argument that Prout did not engage in
protected activity, there is ample evidence in the record that
Prout believed he was reporting an FPCA violation. Before he
even retained VRC,

Prout emailed Vladeck: "Potential FCPA and

local Japan regs violations are swept under the rug and I am
placed to the sidelines." ECF No. 119, Ex. Q, at 2. Furthermore,
Vladeck's notes from a July 14, 2014 meeting with Prout
reference "an FCPA issue." ECF No.

119, Ex. U, at 3. And in an

August 2, 2017 email to Sanford Heisler that summarized VRC's
22

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representation of Prout, Vladeck wrote that Prout had initially
said that Sato "bragg[ed] about buying an expensive wine outside
the FCPA guidelines." ECF No. 131, Ex. 43, at 2. Even Invesco
stated, in a September 7, 2017 letter to Sanford Heisler, that
it understood Prout to be raising an FCPA violation. ECF
No. 119, Ex. ZZ, at 2. Given this evidence, the Court finds that
there is a triable issue as to whether Prout believed he was
reporting a violation of federal law.
Moving to causation, the Court need not wade into the
parties' debate over the relevance and admissibility of
Balachandra's graphic (albeit metaphoric) comment to Prout.
Instead, Prout's testimony regarding Lo's reaction to the report
of Sato's gift - along with the temporal proximity of Prout's
termination to the report - is sufficient to create a triable
issue as to retaliation. In his declaration in opposition to
summary judgment, Prout concedes that he and Lo did not always
get along, but he states that their prior disagreements "were
always professional and short-lived." Prout Deel.

~

16, ECF

No. 131, Ex. 6. After Prout reported Sato's gift, however, his
relationship with Lo "changed quickly and dramatically." Id. Lo
"became cold and stopped speaking to" Prout, and when Prout
"tried to initiate conversations about work or even engage in

23

Case 1:18-cv-00260-JSR Document 144 Filed 04/15/19 Page 24 of 30

small talk,

[Lo] would glare at [Prout] or respond in just one

or two words." Id.
Prout reported Sato's gift to Lo in May 2014, and Prout was
out of the office from late May to late June.

Prout SJ Opp. 18.

When Prout returned to Hong Kong at Lo's request for an internal
meeting, Prout testified that Lo's first interaction with him
was to yell that "the f[------]

format on this report is not

correct." Prout Dep. 112:16-17. Prout stated in his declaration
that "[t]his was the first time that [Lo] had ever cursed at
[him] or spoken to [him]

in such a tone," Prout Deel.

~

21, and

Prout also testified that when he subsequently updated Lo on his
family situation, Lo responded that he "hope[d] Chessy learns
better judgment in the future," Prout Dep. 114:18-20.
Based on the above evidence of Lo's sudden dissatisfaction
with Prout, a reasonable jury could find that Prout's report of
Sato's gift motivated the decision to terminate him. Moreover,
while it is true that Lo gave Prout a performance rating of
"Needs Improvement I Developing" in the "Overall Performance
Category," as well as in several other categories, see ECF
No. 119, Ex. K, at 3-6, 8-10,
positive comments,

it is also true that Lo made

including that Prout "has strong

competencies," "is a senior executive with substantial regional
& global experience," and "is a strong business driver," id. at
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9. Even if Prout's performance record was checkered, this does
not preclude him from showing retaliation under SOX. Instead,
Prout "need only establish that whistleblower retaliation was a
contributing factor to [his] termination," Feldman-Boland v.
Stanley, No. 15-cv-6698, 2016 WL 3826285, at *3 (S.D.N.Y. July
13, 2016), not that it was the sole factor.
The conclusion that Prout has created a triable issue as to
retaliation is bolstered by the temporal proximity of Prout's
termination and his reporting of the gift. Contrary to VRC's
calculation, Prout was terminated six months, not seven months,
after he reported the gift to Lo. See Prout 56.1 Statement
~~

12, 16, 19 (reported in early May 2014); id.

~

56 (was

notified of his termination on November 3, 2014). Furthermore,
Prout has put forth evidence that Lo intended to fire him months
earlier, see ECF No. 131, Ex. 21, at 3, and even the six-month
period does not account for the time that Prout was out of the
office between late May and late June, or the FMLA leave that he
took between August and October. Finally, as Prout notes, even
if six months were the relevant period, the Second Circuit has
found retaliation based on longer lapses. See Espinal v. Goord,
558 F.3d 119, 129 (2d Cir. 2009)

("the passage of only six

months between the dismissal of [the plaintiff's] lawsuit" which had been filed one year prior - "and an allegedly
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retaliatory beating by officers, one of whom .
defendant in the prior lawsuit,

. was a

is sufficient to support an

inference of a causal connection" between the beating and the
plaintiff's protected activity); Grant v. Bethlehem Steel Corp.,
622 F.2d 43, 45-46 (2d Cir. 1980)

(passage of eight months

between protected activity and disfavored treatment gave rise to
an inference of retaliation) .
For these reasons, the Court denied summary judgment to VRC
on the issue of whether Prout's SOX claim would have been
meritorious.
B. Prout's Non-Willful FMLA Claim

"To establish a prima facie case of FMLA retaliation, a
plaintiff must establish that 1) he exercised rights protected
under the FMLA; 2) he was qualified for his position; 3) he
suffered an adverse employment action; and 4)

the adverse

employment action occurred under circumstances giving rise to an
inference of retaliatory intent." Graziadio v. Culinary Inst. of
Am., 817 F.3d 415, 429 (2d Cir. 2016).
VRC argues that Prout would not have prevailed on a nonwillful FMLA claim because he cannot establish retaliatory
intent. VRC SJ Mem. 19. As noted above, VRC argues that, "[b]y
the time Prout went on FMLA leave in August 2014, his career
path at Invesco was on a decidedly downward trajectory." Id.
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Furthermore, VRC argues that "Prout had effectively stopped
coming to work before he went out on FMLA leave." Id. at 20. And
finally, VRC contends, "Prout cannot prove that the legitimate,
nondiscriminatory reason Invesco proffered for termination (poor
performance) was pretextual, or even that Prout's taking FMLA
leave was a factor ih Invesco's decision to terminate his
employment." Id.
As Prout explains, however, VRC's "own papers contradict
[its] argument that Prout has no viable FMLA claim." Prout SJ
Opp. 20. Specifically, VRC "admit[s] to advising Prout not only
that his FMLA claim was viable, but that it was so strong that
he should waive a non-willful claim and rely on a willful one."
Id. And VRC's moving papers concede that defendants "advised
Prout that it was their opinion that his FMLA retaliation claim
could remain viable for another year under the statute of
limitations for a willful claim." Id.

(quoting VRC SJ Mem.

9)

Furthermore, there is evidence in the record to support
each element of Prout's non-willful FMLA claim. As Prout notes,
there is no question that he engaged in protected activity by
taking approved FMLA leave. Id. at 21. And it is clear that he
suffered adverse employment action given that he was fired the
day he returned.

Id. Finally, even Vladeck acknowledged during

her deposition that Prout's firing was "retaliatory" and that
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Case 1:18-cv-00260-JSR Document 144 Filed 04/15/19 Page 28 of 30

the FMLA gave Prout "real recourse." Vladeck Dep. 166:14-22, ECF
No. 119, Ex.

F.

Based on this evidence, the Court has no trouble concluding
that Prout has created a triable issue as to retaliation, and
summary judgment on the viability of his non-willful FMLA claim
is accordingly unwarranted.

IV.

Whether Prout Suffered Actual and Ascertainable Damages

"A plaintiff who brings a legal malpractice claim must show
that he or she suffered actual and ascertainable damages."
Schutz, 2013 WL 3357921, at *7. "Mere speculation about a loss
resulting from an attorney's poor performance is insufficient to
sustain a prima facie case of legal malpractice." Antokol &
Coffin v. Myers,

819 N.Y.S.2d 303, 306 (3d Dep't 2006).

VRC argues that "Prout's theory of damages is based on the
allegation that the 'loss' of his SOX claim and non-willful FMLA
retaliation claim cost him 'substantial leverage'

in settlement

negotiations with Invesco and 'effectively compelled' him to
settle 'for considerably less money' than he otherwise would
have." VRC SJ Mem. 21

~~

(quoting SAC

.

120-21). VRC rejects this

.

theory and argues that "Prout admitted during his deposition
that, after he retained Sanford Heisler, he chose to settle with
Invesco because he was 'fatigued'
on.'" Id.

. and just wanted to 'move

(citation omitted). Furthermore, VRC contends, Prout
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Case 1:18-cv-00260-JSR Document 144 Filed 04/15/19 Page 29 of 30

"failed to pursue any discovery from Invesco during the course
of this litigation," and, as a result, "there is no evidence in
the record to support the allegation that Prout could have
extracted a larger settlement from Invesco if his non-willful
FMLA and/or SOX claim had remained viable." Id. at 22. Instead,
VRC argues, Invesco had myriad defenses to Prout's claims aside

.

from their being time barred. Id. at 23-24.
~-

Prout responds that he "was effectively compelled to settle
his lapsed FMLA and SOX claims because

these claims had no

value." Prout SJ Opp. 22. Prout argues that Vladeck told him she
would "get [him] everything that Invesco owe [d]

[him] and in

addition Invesco [would] pay [her] legal fee," and he argues
that he "understood, based on his discussions with Vladeck, that
this amount would equal $3 to 4 million - or $1.25 to $2.25
million [more] than he ultimately received." Id. at 23. While
VRC argues that Prout settled all his claims because of
"fatigue," Prout responds that he was effectively compelled to
settle only his non-willful FMLA and SOX claims.

Id. at 23-24.

Furthermore, Prout argues, although Invesco asserted other
defenses, "the fact that alternative explanations may exist for
Invesco's resistance to paying a larger sum does not undercut
that the expiration of the statute of limitations was one of
them, nor that a jury could infer that it was the dispositive
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one." Id. at 24. Finally, Prout cites Mazurek's opinion that "it
was critical to maintain as many viable claims as possible to
maximize

leverage." Id.

(quoting Mazurek Rep. 7).

The Court agrees that Prout has raised a triable issue as
to damages.

It is irrelevant whether Prout chose to settle his

remaining viable claims because he was "fatigued." Instead, his
damages are measured by the loss in value of his time-barred
claims. As this Court previously explained, "[f]or purposes of
alleging damages, the relevant question is .

whether Prout

would have been better off if he had pursued all four of his
claims, rather than pursuing only two." Prout v. Vladeck, 319 F.
Supp. 3d 741, 746 (S.D.N.Y. 2018). Mazurek's opinion, Prout's
testimony, and common sense all suggest that the answer is yes,
and this is enough for a reasonable Jury to find that Prout
suffered damages.
Conclusion

In sum, the Court concludes that Prout has created a
triable issue as to each element of his malpractice claim. For
these reasons, the Court, in its Order of March 26, 2019, denied
VRC's motion for summary judgment in its entirety.
SO ORDERED.
Dated:

~~U.S.D.J.

New York, NY
April /~ 2019
30