Prout v. Vladeck et al

Filing 44

OPINION AND ORDER re: 18 MOTION to Disqualify Counsel: In sum, the Court denies defendants' motion to dismiss with respect to Prout's FMLA-based and SOX-based legal malpractice claims, but grants the motion with respect to Prout 9;s breach of fiduciary duty claim. The Court also dismisses Prout's Title-VII based legal malpractice claim without prejudice. Finally, the Court denies defendants' motion to disqualify Sanford Heisler without prejudice to the possibility of its being re-raised at later stages of this litigation. The parties are directed to jointly call chambers by no later than Tuesday, June 12 to discuss the setting of deadlines in the case management plan. (Signed by Judge Jed S. Rakoff on 6/10/2018) (jwh)

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 1 of 52

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

------x

ALEXANDER PROUT,

18 Civ. 260 (JSR)
Plaintiff,
OPINION AND ORDER

-vANNE C. VLADECK & VLADECK, RASKIN,
& CLARK, P. C . ,

U~DCSDNY

DOCUMENT
El:'ECTR0~11CALLY FILED

ooc #: _ _ _ _ _ __

Defendants.

Y-

·~-~ ~rF_Y!1 FD: }_G_,~. . . . .
JED S. RAKOFF, U.S.D.J.

Before the Court are the motions of defendants to dismiss
the Second Amended Complaint and to disquali
Sharp, LLP ("Sanford Heis

Sanford Heisler

r") as counsel for plaintiff

Alexander Prout. ECF Nos. 15, 18, 23, 37. Prout brings claims
for legal malpractice and breach of fiduciary duty against
i

victual defendant Anne C. Vladeck and against Vladeck &

Vladeck, Raskin, Clark, P.C.

(the "Vladeck Firm"}. He alleges

that defendants agreed to represent him in a dispute with his
then-employer, Invesco, Ltd., advised him to reject a settlement
offer of over $1 million in favor of litigation, and then failed
to file any claims on Prout's behalf or otherwise preserve those
claims. Prout contends that, as a result, the statutes of
limitations applicable to his cla

under the Family and

Medical Leave Act and the Sarbanes-Oxley Act lapsed and he was

1

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 2 of 52

forced to settle for substantially less than he could have
received but for

fendants'

alleged misconduct. Prout also

alleges that defendants have refused to return the $5,000
retainer fee he paid and failed to produce their file relating
to his case.

BACKGROUND
Prout filed the instant action on January 11, 2018. ECF No.
1. Defendants filed motions to dismiss the complaint and to
disqualify Sanford Heisler as counsel on March 21, 2018. ECF
Nos. 15, 18. In response, Prout amended his compla
21. The Court accordingly grant

. ECF No.

defendants leave to file a

supplemental memorandum in support of their motion to dismiss
(now deemed to be a motion to dismiss

amended complaint),

which they did. ECF No. 23. At a hearing on defendants' motions
held on May 1, 2018, counsel for plaintiff informed the Court
that plaintiff was barred, under the terms of his settlement
agreement with Invesco, Ltd.

("Invesco"), from advancing certain

allegations supporting his claims absent a court order. See ECF
No. 34 at 21:19

3:5. The Court t

refore ordered Prout to file

a Second Amended Complaint by no later than May 8 that included
all allegations necessary to support his

aims, including those

allegations that he would otherwise be barred from disclosing
under the terms of his settlement agreement. See id. at 34:4-6;

2

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 3 of 52

ECF No. 31. Following Prout's filing of the Second Amended
Complaint, see ECF No. 32, both part

s submitted additional

briefing on defendants' motion to dismiss (now deemed to be
addressed to the Second Amended Complaint), see ECF Nos. 37, 40,
43.
The pertinent factual allegations, drawn from the Second
Amended Complaint and viewed in the light most favorable the
plaintiff, are as follows:

I.

Prout's Employment at Invesco, Ltd.

Plaintiff Alexander Prout worked for Invesco, a financial
services firm,

from 2003 to 2014. Second Amended Complaint

("Second Am. Compl.") at

<JI

11, ECF No. 32. Throughout his time

there, Prout received an annual compensation of approximately
$1.5 million, including an annual salary of $436,000 and a bonus
(in stock and cash) of approximately $1.1 million. Prout also
received benefits such as a life insurance policy, health
insurance, and a housing allowance (valued at approximately
$10,000 per month). Id. at
Prout first served as

<JI

76.
CEO of Invesco Japan, in which

capacity he reported to Andrew Lo, Invesco's Senior Managing
rector of Asia Pacific. Id. at

<JI<][

11, 14. During Prout's

tenure as CEO, Invesco Japan's Sourced Revenue increased more
than 600%; its Managed Revenue increased 300%; and its Assets
Under Management grew from $2.4 billion to $28 billion. Id. at

3

<JI

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 4 of 52

14. In addition, the office expanded from 55 to 160 employees.
Id.
In March 2011, an earthquake hit Japan. Id. at

~

15. After

learning that nuclear material had leaked and that his
daughters' school in Tokyo would not reopen for the remainder of
the school year, Prout moved his family to the United States.
Id. Prout himself remained in Japan to

~stabilize

the business"

until Invesco could hire a replacement for him. Id. Eighteen
months later,

Invesco hired Alex Sato as the CEO of Invesco

Japan. Id. at

~

16.

Prout agreed to remain at Invesco Japan, as Chairman, to
oversee the operation. Id. He served in this role from the fall
of 2012 until August 2013. Id. As Chairman, Prout worked on
Invesco's global business strategy and maintained offices at
Invesco's Atlanta headquarters, which were a relatively short
commute from his family, who were then based in Naples, Florida.
Id. However, since Prout continued to spend significant amounts
of time in Asia, he and his family decided that his wife and
youngest daughter would move to Hong Kong in the summer of 2013,
while his second daughter, Chessy, would attend the St. Paul's
School in New Hampshire, which Prout's oldest daughter already
was attending, beginning in the fall of 2013. Id. at

~~

16-17.

In the summer of 2013, Prout began his third, and final,
role at Invesco as the company's Managing Director and Regional

4

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 5 of 52

Head of Institutional Business. In this role, he again reported
to Andrew Lo. Id. at 1 17.
According to Prout, two incidents in 2014 helped put an end
to his career at Invesco. First, in April 2014, Prout learned
that Sato had purchased a $4,000 bottle of wine for a senior
executive of Japan Post Bank

a quasi-governmental institution

in Japan - during a dinner in New York City. Id. at 11 12, 18.
Prout also learned that Sato had bragged about having paid for
the wine from his personal account - "seemingly to throw off any
internal investigation." Id. at 1 18. Moreover, following Sato's
purchase, Invesco received additional sales from Japan Post
Bank. Id.
Concerned that this gift from an employee of Invesco (a
publicly traded company) to a foreign off

ial violated the

Foreign Corrupt Practices Act, Prout reported the incident to
Asha Balachandria, Head of Legal for Invesco Asia Pacific. Id.
at 1 19. After making the report, Prout asked Balachandria how
he should escalate his concern. In response, she laughed and
said, "You know that if you report to Andrew [Lo] he'll shit on
your head." Id. at 1 20. Prout nonetheless reported the
violation to Lo, whose response "was, effectively,

'So what?'"

Id. at 1 21. Lo thereafter became "increasingly hostile" toward
Prout. I

5

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 6 of 52

Second, in late May 2014, Prout flew from Hong Kong to New
Hampshire for his oldest daughter's graduation from St. Paul's.
Id. at

~

24. That weekend, a male student raped Prout's second

daughter, Chessy, who at that time was also a student at the
school. Id. Prout informed Mary Wang,

Invesco's Regional Head of

Human Resources based in Hong Kong, that he would need to remain
in the United States to care for his daughter who had been
sexually assaulted. Id. He used vacation and personal days to
take this leave, continuing to perform some work remotely and
remaining in regular contact with Lo and his colleagues. Id.
A few weeks later, Lo demanded that Prout return to Hong
Kong for a meeting to be held in late June. Id. at

~

25. Prout

did so. Id. Prior to the meeting, Lo became "irate" about
formatting issues in a report that they were planning to discuss
at the meeting. Id. Prout explained that the content was correct
and that the formatting could be corrected before the meeting.
Id. Nevertheless, Lo cancelled the meeting and stormed off. Id.
Approximately an hour later, Prout approached Lo and
explained the reason for his leave. Id. at

~

26. In response, Lo

said, "I certainly hope Chessy learns better judgment in the
future." Id. Prout raised these comments with Wong, who
apologized for Lo's behavior, stating that Lo is not a "family
man" and doesn't have daughters. Id. For the remainder of the
summer, Prout cared for his daughter in the United States while

6

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 7 of 52

working remotely and staying in regular contact with his team in
Hong Kong. Id.

II.

Defendants' Representation of Prout
On May 13, 2014 - after his report of Sato's gift but a few

weeks before his daughter Chessy's assault at St. Paul's - Prout
contacted Vladeck, seeking representation in his dispute with
Invesco. Id. at

~

22. He told Vladeck that he was seeking advice

regarding separation options and communicated to her what had
transpired with Lo and Balachandria. Id. at

~

22. Vladeck and

the Vladeck Firm agreed to assist him and they entered into an
attorney-client relationship. Id. At that time, Vladeck
indicated to Prout that he had whistleblower retaliation claims
that could form the basis for a negotiated settlement. Id.
On July 2, 2014, Vladeck, on behalf of herself and the
Vladeck Firm, sent Prout an engagement letter outlining the
terms of Prout's agreement with the Vladeck Firm, including the
Vladeck Firm's agreement to "advise [Prout] regarding an exit
strategy" from his employer. Id. at

~

27. Defendant Vladeck

stated that she would be "primarily responsible for the work"
related to Prout's case. Id. Prout signed and returned the
letter, along with a $5,000 retainer, the following day. Id.
On July 21, 2014, Prout contacted Invesco's General
Counsel, Kevin Carome, stating that he worried that "certain
issues will expose the firm to potential liabilities and risk."

7

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 8 of 52

Id. at

~

28. Carome responded that "it actually would be better

for each of us if you and I do not engage directly at this
time." Id. at

~

29. Carome directed Prout to speak to Robert

Rigsby, the Managing Director of Legal, and Washington Dender,
the Global Head of Human Resources. Id.
Prout followed up, reiterating that he wanted to speak to
Carome, and the two spoke on July 25. Id. at

~

30. Carome sought

to characterize Prout's complaints as a "human resources" issue.
He also suggested that Sato's gift had been investigated and
resolved as "mere overspend." Id. Next, on July 29, Prout spoke
with Dender, who characterized Lo's offensive comments as "mere
personality conflict." Id. at

~

31. Dender further told Prout

that he had two options: take a job with Invesco in the United
States or leave the company. Id. However, Dender also suggested
that there might not be any jobs available for Prout in the
United States. Id.
On August 4, Vladeck wrote to Invesco stating that she and
the Vladeck

rm represented Prout in "his claims of, inter

alia, retaliation for raising concerns about potentially
unlawful conduct; retaliation for taking family leave; and
claims relating to the inappropriate conduct of his immediate
supervisor." Id. at

~

33. That same day, Dender communicated to

Prout that if he continued to call in sick, his absence would be

8

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 9 of 52

considered "job abandonment" and therefore grounds for
termination. Id. at

34.

'ii.

Vladeck spoke with Rigsby, who was handling the matter for
Invesco, the next day.

Id. at· 'il.'il. 34-35. According to Rigsby' s

notes on the conversation, Vladeck requested FMLA leave on
behalf of Prout. Rigsby wrote that he would "relate the same to
HR who will determine if such request will be with our [sic]
without pay." Id. at

'ii.

35. Dender then told Prout that he could

commence family leave - and also that Prout would be fired if he
did not take family leave. Id. at

'ii.

36. If Prout were fired, he

would be paid for four months of garden leave (approximately
$145,000) and be given vesting of some stock (approximately
$123,000) but would be required to repay approximately $748,000
in expenses. Prout wrote back that Invesco had "given [him] no
choice" but to take leave without pay to care for his daughter.
Id. at 'ii. 36.
On August 8, Dender followed up to say that the expenses
Prout would be required to repay would be only $383,922. Id. at
'ii.

37. Dender also stated that Prout's last performance appraisal

concluded that Prout "Needs Improvement" and that this rating
would "have to weigh into any agreement." Id. Dender then
encouraged that Prout take "Invesco leave," which was not jobprotected, rather than FMLA leave because FMLA leave would
require substantial paperwork. Id.

9

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 10 of 52

On August 10, 2014, Prout contacted Lesa Tucker, who worked
in Invesco benefits, to ask some questions about leave policy
options. Id. at

~

38. Prout learned from Tucker that he had been

placed on "Personal leave." Id. Prout spoke with Tucker by phone
on August 19, during which call Tucker explained the dif
between FMLA leave and personal leave, "i

uding .

rence

. that

personal leave would not guarantee Prout's job." Id.
On August 20, 2014, Prout applied

r FMLA leave, attaching

notes from his daughter's medical provider to his application.
Id.

at~

39. Prout's application was approved on September 9,

2014. Id. at

~

40. Invesco granted Prout FMLA leave through

October 31, 2014, anticipating that he would return to work on
November 3, 2014. Id.

at~

41. However, during Prout's leave, Lo

actively searched for someone to replace Prout and told Prout's
colleagues that Prout would not be returning to work. Id. at
42. Sato told Prout's colleagues that he was not retu

~

ng to

work because of performance issues. Id.
In mid-October 2014, Dender

d Prout that when he

returned from leave, he should report to Invesco's Atlanta
headquarters

tead of his off ice in Hong Kong. Id. at

November 3, 2014, when Prout arr
headquarters, Dender present
and receive $1,133,479

~

43. On

at Invesco's Atlanta

Prout with two options: resign

compensation and stock vesting plus

10

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 11 of 52

dividends or be fired for cause and receive $71,271.80 in
compensation. Id. at

~

44.

Prout asked what the cause for termination would be and
Dender responded that it would be Prout's 2013 performance
evaluation, in which Lo had stated that Prout's performance
needed improvement. Id. Dender provided no explanation for why
Invesco waited until after Prout's return from FMLA leave to
terminate him for conduct that had allegedly taken place more
than eleven months earlier and had been documented in a review
delivered more than six months earlier. Id. at

~

45. Moreover,

Prout believed that this 2013 review was "inaccurate." When
Prout received it, he did not sign it and instead notified
Invesco's Human Resources department in Hong Kong that the
report was incorrect.

Id.

Vladeck advised Prout to reject Invesco's settlement
proposal. Id. at

~

50. She stated that Prout should not "settle

for pennies on the dollar" and that he could get more if he
led a lawsuit. Vladeck told Prout that she believed she could
get him a settlement equal to the value of his unvested stock in
Invesco - roughly $3 million - in addition to payment of all of
r attorney's fees. Id.

at~

51.

Relying on Vladeck's advice, Prout let the of

r expire and

he was terminated effective November 20, 2014. Id. at
was paid through early December 2014. Id. at

11

~

~

52. He

76. In addition,

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 12 of 52

because Invesco deemed his termination a "voluntary
resignation,n it denied him vesting of 53,294 shares of Invesco
stock. Id. at

~

77. On December 5, 2014, this stock was valued

at $41.15 per share. I . During the period between December 2014
and October 2017, Prout earned approximately $2 million from
other employment. Id. at

~

78.

Vladeck and the Vladeck Firm did not thereafter prosecute
Prout's claims. Id. at

~

79. Nor did they ever request that

Invesco agree to a tolling agreement. Id. at

~

96. They did not

advise Prout of the applicable statutes of limitations,
including the 180-day deadline to fi

a charge with the

Department of Labor in order to preserve a claim of
whistleblower retaliation under the Sarbanes-Oxley Act. Id. at

~

80. As a result, Prout never filed a claim with the Department
of Labor. Id. Prout was himself aware of the two-year statute of
limitations that applied to his FMLA claims and so repeatedly
attempted to contact Vladeck about the status of his case and to
prepare to file a lawsuit within the two-year statute of
limitations. Id. at

~~

81, 83-92. For example, on September 27,

2016, Prout texted Vladeck that he "would like to fix plan for
Invesco as SOL is approaching.n Id. at
respond to these messages. Id. at

~

~

89. Defendants did not

92. Defendants failed to

take any action to preserve or otherwise prosecute Prout's
claims. Id. at

~

82.

12

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 13 of 52

According to Prout, Vladeck did not even attempt to contact
Invesco between late 2014, when Prout rejected Invesco's
separation offer, and October 20, 2016, the eve of the
expiration of the FMLA's two-year statute

limitations. Id. at

1 82. Nor did Vladeck produce a complaint for defendant to
review. Id. On October 20, 2016, Vladeck spo
did not reach a resolution. Id. at

~

with Rigsby but

93. Vladeck assured Prout

that the three-year deadline for willful violations of the FMLA
would apply to his case. Id. at 1 94.
Throughout defendants' three-year attorney client
relationship with Prout, they never produced an invoice to
inform Prout of hours worked. Id. at

~

98. However, defendants

did "demand[]" that Prout pay them for the work

legedly done

on his behalf. Id.
III.

Prout's Retention of New Counsel
In June 2017, Prout contacted Sanford Heisler seeking new

counsel in his claims against Invesco. Id. at

~

99. On June 27,

2017, Prout emailed Vladeck, asking her to send any files that
she had regarding his case to Sanford Heisler. He reiterated his
request on July 1, 2017. Defendants did not respond. Id. at 1
100.
On July 17, 2017, Sanford Heisler and defendants spoke by
phone. Id. at 1 101. On this call, Sanford Heisler repeated
Prout's request for his case files. Vladeck responded that Prout

13

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 14 of 52

should email her to confirm that she could speak with Sanford
Heisler. Prout accordingly emailed Vladeck so stating.
Defendants still did not produce Prout's case file.

Id. at ]

101.
On August 2, 2017, Vladeck emailed Sanford Heisler a
summary of defendants'

representation of Prout. Id. at

~

102.

With respect to documents, Vladeck stated that "[Prout] also has
in his possession all of our correspondence and related
documents." Id. at ] 102. On October 31, 2017, Sanford Heisler
emailed Vladeck to confirm that she had no case f i

for Prout.

Id. at ] 103. On November 7, 2017, Vladeck emailed Sanford
Heisler and stated that she had previously provided defendants'
position regarding documents in her prior correspondence of
August 2. Id. at

~

104. Vladeck also asked whether Prout was

planning to pay defendants. Id.
Defendants have still not produced Prout's client file to
Prout or to Sanford Heisler. Nor have they produced any billing
invoices or any documents evidencing any billable work performed
on Prout's case. Id. a t ] 107.
On July 3, 2017, Sanford Heisler sent Invesco a letter
informing the company of its representation and inviting
settlement negotiations. Id. at ] 109. On July 17, 2017, John
Cambria of Alston & Bird, LLP called Sanford Heisler Chairman
David Sanford to inform Sanford that he and his firm would be

14

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 15 of 52

representing Invesco in the dispute relating to Prout. Id. at 1
110. Cambria further stated that Invesco felt badly about how
Prout and his family had been treated but that Invesco believed
that "Prout had blown the statute of limitations on any claims
that he might have had," such that the value of his claims for
purposes of any settlement was substantially reduced. Id.
Nonetheless, Cambria expressed that Invesco would likely agree
to mediation with Prout. Id.
On August 11, 2017, Sanford Heisler sent Cambria a second
letter detailing the factual and legal bases of Prout's claims.
Id. at 1 111. The letter asserted claims for willful violations
of the FMLA and violations of the anti-retaliation provisions of
the Dodd-Frank Wall Street Reform Act

("Dodd-Frank"). Id. On

August 25, 2017, Prout and Invesco agreed to a tolling agreement
preserving all claims as they then existed. Id. at 1 112.
In a letter response dated September 7, 2017, Cambria
acknowledged that Prout was asserting claims under Dodd-Frank
and the FMLA. Cambria also noted that the two-year statute of
limitations for any non-willful FMLA claim had passed, writing:
[I]n November
2014,
consistent with his
request, Invesco presented Mr. Prout with a
very generous severance package.
However,
other than repeated requests to extend his
deadline for accepting it, Mr. Prout did not
engage in discussions with Invesco about the
substance
of
the
package
or
make
a
counteroffer. It was only after Invesco's
numerous attempts to obtain a response were

15

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 16 of 52

ignored that Mr.
Prout's employment
Invesco
was
terminated.
Thus,
far
engaging in "willful" misconduct, Invesco
above and beyond any legal obligations it
to Mr. Prout.
Id. at

~

with
from
went
owed

114. Invesco further expressed its view that Dodd-Frank

is inapplicable to Prout and that Prout had failed to file a
charge with the Department of Labor, as was necessary to exhaust
his claims under the anti-retaliation provision of the SarbanesOxley Act. Id. at

~~

115-16.

In October 2017, Invesco and Prout agreed to mediate their
dispute. Id. at

~

118. Following mediation, on November 7, 2017,

Prout executed a legally binding Memorandum of Understanding
with Invesco. Id. at

~

119. Under the terms of the memorandum,

Invesco agreed to pay Prout and his attorneys $1.75 million
exchange for a general release of claims. On December 15, 2017,
Prout and Invesco executed a long-form settlement agreement on
December 15, 2017. Id.

ANALYSIS
Defendants move to dismiss the Second Amended Complaint
under Federal Rule of Civil Procedure 12(b) (6) for failure to
state a claim. 1 Defendants also move to disqualify Sanford

Defendants also move to dismiss for failure to join necessary
parties under Federal Rules of Civil Procedure 12(b) (7) and
19(a) (1). If a court determines that the particular party is
necessary, then it will order that party joined if it is
1

16

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 17 of 52

Heisler on the grounds that Sanford Heisler's representation of
Prout would violate the New York Rules of Professional Conduct,
which bar a lawyer from representing a client in a matter in
which that lawyer is a necessary witness and also bar a lawyer
from representing a client in a matter in which the lawyer and
the client have a conflict of interest.
I .

Motion to Dismiss
To survive a motion to dismiss for failure to state a claim

under Rule 12 (b) (6), "a complaint must contain sufficient
factual matter, accepted as true, to 'state a claim to relief
that is plausible on its face.'" Ashcroft v. I
662, 678

(2009)

1, 556 U.S.

(quoting Bell Atl. Corp. v. Twombly, 550 U.S.

544, 570 (2007)). Mere conclusory statements in a complaint and
"formulaic recitation[s] of the elements of a cause of action"
are not sufficient. Twombly, 550 U.S. at 555.
A. Legal Malpractice
To properly plead an action against an attorney for legal
malpractice under New York State law, in addition to privity
between the parties, a plaintiff must allege facts that tend to

feasible. See
102 F.3d 677, 682 (2d Cir. 1996). Only if the Court determines
that a particular party is necessary and cannot be joined will
the Court considers several factors to determine whether to
dismiss the case. Id. at 681. Defendants do not contend that
Sanford Heisler could not be joined. Therefore, even assuming
arguendo that Sanford Heisler is a necessary party, dismissal is
not warranted on this ground.
17

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 18 of 52

show:

(1) that the attorney acted negligently;

(2) that the

attorney's negligence was the proximate cause of a loss
sustained; and (3) actual and ascertainable damages. Baker v.
Dorfman, 239 F.3d 415, 420 (2d Cir. 2000).
Prout's legal malpractice claim is premised on defendants'
allowing the statutes of limitations to pass on claims under the
Sarbanes-Oxley Act ("SOX") the Family and Medical Leave Act
("FMLA"). This

ilure allegedly forced Prout to settle his

claims for less than he could otherwise have recovered (either
through settlement or litigation)

.2

2

Prout originally alleged that defendants were also negligent in
letting the statute of limitations lapse on an otherwise-viable
claim under Title VII. See Complaint at ~ 49, ECF No. 1; First
Amended Complaint at ~ 50, ECF No. 21; Plaintiff's Memorandum of
Law in Opposition to Defendants' Motion to Dismiss Plaintiff's
Complaint ("Pl. Mem.") at 15-16, ECF No. 24. Prout is no longer
pursuing that claim. Defendants ask the Court to dismiss the
claim with prejudice. Under Federal Rule of Civil Procedure
4l(b), "[i]f the plaintiff fails to prosecute . . . , a defendant
may move to dismiss the action or claim against it. Unless the
dismissal order states otherwise, a dismissal under this
subdivision . . . operates as an adjudication on the merits."
Fed. R. Civ. P. 41(b). "[D]ismissal for failure to prosecute is
a harsh remedy to be utilized only in extreme situations."
I
375 F.3d 248,
254 (2d Cir. 2004) (internal quotation omitted). The Second
Circuit has directed that courts should consider the following
factors in determining whether to dismiss a claim or action or
ilure to prosecute: "(1) the plaintiff's failure to prosecute
caused a delay of significant duration; (2) plaintiff was given
notice that further delay would result in dismissal; (3)
defendant was likely to be prejudiced by further delay; (4) the
need to alleviate court calendar congestion . . . [as] balanced
against plaintiff's right to an opportunity for a day in court;
and (5) . . . the efficacy of lesser sanctions." Id. Here, these
factors weigh against dismissing the claim with prejudice for
~~~~~~~~~~~~~~~~~~~~~~~~~~~

18

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 19 of 52

1. Negligence

"In order to establish negligence in a legal malpractice
case, a plaintiff must allege that the attorney's conduct

11

below the ordinary and reasonable skill and knowledge commonly
possessed by a member of the profession." Kirk v.
Supp. 2d 586, 592 (S.D.N.Y. 2008)

328, 337

I

532 F.

(internal quotations omitted);

(2d Cir. 2006). "Generally, an attorney may 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, 464 F.3d at 337
(quoting Bernstein v. Oppenheim & Co., 160 A.D.2d 428, 430 (N.Y.
App. Div. 1990)). "[A) complaint that essentially alleges either
an error in judgment or a selection of one among several
reasonable courses of action fails to state a claim for
malpractice." Kirk, 532 F. Supp. at 592 (internal quotations
omitted); see also Achtman, 464 F.3d at 337

(an attorney's

advice or "selection of one among several reasonable courses of
action does not constitute malpractice").

failure to prosecute. However, the Court deems the claim
dismissed without prejudice.
. Fed. R. Civ. P. 41(a) (1) (A) (i)
("[T]he plaintiff may dismiss an action without a court order by
filing . . . a notice of dismissal before the opposing party
serves either an answer or a motion for summary judgment.");
Fed. R. Civ. P. 41 (a) (1) (B) ("Unless the notice or stipulation
states otherwise, the dismissal is without prejudice.").
19

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 20 of 52

As noted, Prout alleges that defendants were negligent
because they failed to prosecute his action and let lapse the
statutes of limitations on Plaintiff's claims under SOX and the
FMLA. In their response, defendants state that their decision
not to file an action against Invesco was a reasonable strategic
decision. In support of this defense, however, defendants cite
sources outside the pleadings. Specifically, defendants point to
evidence that they learned in October 2016, ten days before the
non-willful FMLA claim statute of limitations was set to expire,
that Prout (i) had taken proprietary information and documents
from his employer upon the end of his employment; and (ii) had
not been completely truthful with his subsequent employer during
its investigation concerning his taking of the proprietary
information and documents. See Memorandum of Law Submitted on
Behalf of Defendants in Support of Their Motion To Dismiss
Plaintiff's Complaint ("Def. Mem.") at 13-14, ECF No. 17;
Declaration in Support of Defendants' Motion to Dismiss
Plaintiff's Complaint

("Proscia Deel.") at Ex. D, ECF No. 16.

In assessing the motion to dismiss, the Court may not
consider these materials. As defendants surely know,

facts and

allegations considered in the context of a motion to dismiss
under Rule 12(b) (6) are limited to (1) the factual allegtions
set forth in the pleadings;

(2) documents attached to the

complaint as exhibits or incorporated by reference therein;

20

(3)

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 21 of 52

matters of which judicial notice may be taken; and {4) documents
upon which the complaint "relies heavily" and which are, thus,
rendered "integral" to the Complaint. Chambers v. Time Wa
Inc., 282 F.3d 147, 152-53 (2d Cir. 2002). The aforementioned
documents and allegations relied upon by defendants do not fall
within any of these categories.
Considering, then, only the facts pled in the complaint,
these allegations, viewed in the light most favorable to
plaintiff, adequately support 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 retaliation under SOX. An
attorney's negligence in allowing a statute of limitations to
run constitutes malpractice under New York law. See
Harley, 169 A.D.2d 683, 684
limit damages in "

(N.Y. App. Div. 1991)

(refusing to

l malpractice action alleg[ing] that

defendants negligently allowed the statute of limitations to
run.") .
2. Proximate Causation

In general, to establish proximate, or "but for," causation
in an action for attorney malpractice, a plaintiff must
plausibly allege that, but for the malpractice, the plaintiff
would have received a more advantageous result, would have
prevailed in the underlying action, or would not have sustained

21

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 22 of 52

some actual and ascertainable damage. See Schwartz v. Olshan
Grundman Frome & Rosenzweig, 302 A.D.2d 193, 198 (N.Y. App. Div.
2003) . "The 'but for' prong requires the trier of fact in effect
to decide a lawsuit within a lawsuit, because it demands a
hypothetical re-examination of the events at issue absent the
alleged malpractice." Even Street Prods., Ltd. v. Shkat Arrow
Hafer & Weber, LLP, 643 F. Supp. 2d 317, 322 (S.D.N.Y. 2008)
(internal quotation and alteration omitted); see also Rubens v.
Mason, 527 F.3d 252, 255 (2d Cir. 2008)

(citing Weil, Gotshal &

Manges, LLP v. Fashion Boutique of Short Hills,
267

Inc., 10 A.D.3d

(N.Y. App. Div. 2004)); Judd Burstein, P.C. v. Long, No. 15-

cv-5295, 2017 WL 3535004, at *6 (S.D.N.Y. Aug. 16, 2017)
plaintiff must prove proximate cause through a

("A

'case within a

case' such that 'a reasonable fact-finder in the present case
could conclude that a reasonable fact-finder in the underlying
suit would have arrived at a different result but for the
attorney's negligence.'" (quoting Riker v. Premier Capital, LLC,
No. 15-cv-8293, 2016 WL 5334980, at *8 (S.D.N.Y. Sept. 22,
2016))).
Plaintiff bears a relatively difficult burden here since he
settled, rather than testing his claims in court. "Where
termination is by settlement rather than by a dismissal or
adverse judgment, malpractice by the attorney is more difficult
to prove." Titsworth v. Mondo, 407 N.Y.S.2d 793, 796 (Sup. Ct.

22

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 23 of 52

1978). However, there is

~no

automatic waiver of a plaintiff's

right to sue for malpractice merely because plaintiff had
volunta

ly agreed to enter into a stipulation of settlement."

Becker v. Julien, Blitz & Schlesinger, 406 N.Y.S.2d 412, 414

(N.Y. App. Div. 1978); see al o Barry v. Liddle, O'Connor,
Finkelstein & Robinson, 98 F.3d 36, 40 (2d Cir. 1996)

(finding

plaintiff's allegations and evidence that he could have obtained
a higher settlement but for his attorney's negligence sufficient
to survive summary judgment).
underlying action

~A

settlement and release in an

do not preclude a subsequent action for

legal malpractice where the settlement was compelled because of
the mistakes of former counsel." Lattimore v. Bergman, 637
N.Y.S.2d 777, 777 (App. Div. 1996). That is, so long as the
plaintiff can

~demonstrate

that if not for the alleged acts of

malpractice, he would have been able to recover or proceed in a
manner other than that which actually eventuated," he has stated
a claim. Becker, 406 N.Y.S.2d at 414. 3

Law LLC v. Iannucci, 102 A.D.3d 563 (N.Y. App. Div.
2013), on which defendants rely, does not hold otherwise. In a
two-paragraph opinion, that court found not only that the client
had options other than settling the case, but also that the
record failed to demonstrate either that the law firm was
negligent or that the client had suffered any damages. Id. at
563.

3

23

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 24 of 52

Defendants argue that Prout would not have obtained a more
favorable result but for their negligence because Prout did not
have viable claims under the FMLA and SOX to begin with.4
Alternatively, defendants argue that Prout would not have
obtained a more favorable result but for their negligence even
if he did have viable claims under the FMLA and SOX. Defendants
assert that Prout could still have pursued (through his new
counsel) equally viable claims against Invesco for a willful
violation of the FMLA and for retaliation under the Dodd-Frank
Act, the statutes of limitations on which had not passed by the
time Sanford Heisler began representing him.
a. FMLA Claim

"The FMLA provides generally that a covered employer is
required to grant an eligible employee up to a total of 12 weeks
leave during any 12-month period for personal or family needs
indicated in the act."

4 Defendants ask the Court to treat allegations in a complaint
Prout filed against St. Paul's, in the district of New
Hampshire, as judicial admissions. See Hausler v. JPMorgan Chase
Bank, N.A., 127 F. Supp. 3d 17, 37 (S.D.N.Y. 2015). In that
action, Prout asserted that he "had to leave his overseas job to
support his family through the criminal trial, resulting in
disastrous financial losses for the family." Proscia Deel. Ex. B
at 1 132. Defendants argue that these allegations preclude Prout
from now claiming that his employer terminated him for
retaliatory reasons. Even assuming arguendo that these
allegations are properly deemed judicial admissions, the Court
agrees with Prout that this statement is consistent with Prout's
claims here. Prout's pleading that he "had to leave his job"
does not entail that Prout chose to leave his job.

24

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 25 of 52

F.3d 102, 108 (2d Cir. 2017)

(citing 29 U.S.C. § 2612(a)).

"There are four principal facets to the scope of the Act:
the employers to which it applies,
eligible for FMLA leave,

(1)

(2) the employees who are

(3) the personal or family relationship

in question, and (4) the qualifying reasons for requested
leave." Id.
To ensure the availability of its rights, the FMLA makes it
illegal

r employers to:

( 1) "interfere with, restrain, or deny

the exercise of or the attempt to exercise, any right" provided
under the FMLA; or (2) "discharge or in any other manner
discriminate against any individual for opposing any practice
made unlawful" by the FMLA. 29 U.S.C. § 2615(a). "The FMLA
'creates a private right of action to seek both equitable relief
and money damages against any employer

. in any Federal or

State court of competent jurisdiction' should that employer
'interfere with, restrain, or deny the exercise of' FMLA
rights." Sista v. CDC Ixis N. Am., Inc., 445 F.3d 161, 174 (2d
Cir. 2006)

(quoting Nevada Dep't of Human Res. v. Hibbs, 538

U.S. 721, 724-25 (2003)). The Second Circuit has recognized two
types of FMLA claims - "interference" claims and "retaliation"
claims.
2004). FMLA claims can be non-willful or willful. See Porter v.
York Univ. Sch. of Law,

392 F.3d 530, 531 (2d Cir. 2004).

25

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 26 of 52

Prout's FMLA claim was based on Invesco's terminating him
immediately following his return from FMLA leave.
Whether Prout Had a Viable Non-Willful FMLA Claim. Prout
has plausibly alleged that that he had a

able non-willful FMLA

claim for retaliation. 5 To state an FMLA retaliation claim, an
employee must show that
activity,

~(1)

he engaged in statutorily protected

(2) he suffered an adverse employment decision, and

(3) the decision was causally related to the protected
activity." Martin v. Brevard
(11th Cir. 2008)

. , 543 F. 3d 1261, 1268

.6

First, with respect to whether Prout was entitled to FMLA
leave, such that he engaged in "statutorily protected activity,"
Prout has plausibly alleged that Invesco would have been

5

Prout argues that he also had an interference claim, but this
argument elides the distinction between an interference and a
retaliation claim. According to Prout, he had a valid claim for
interference because, upon his return from FMLA leave, he was
entitled to "'be restored by the employer to the position of
employment held by the employee when the leave commenced' or to
an equivalent position," id. (quoting 29 U.S.C. § 2614 (a) (1),
and instead was fired. This is a retaliation claim, not an
interference claim. See
za v. C
of New York 365 F.3d
165, 168 (2d Cir. 2004) (observing that plaint ff's FMLA claim,
which alleged he had been terminated for taking FMLA leave,
"involve[d] retaliation rather than interference"); - - - - - Di Gi
v. Beth Israel Med. Ctr., 651 F. Supp. 2d 193, 203 (S.D.N.Y.
2003) (descr
ion-based interference claim as
"really no more than an effort to dress [plaintiff]'s
retaliation claim in (barely) different clothing").
Eleventh Circuit case law is relevant to Prout's legal
malpractice claims because Invesco is headquartered in Atlanta.
6

26

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 27 of 52

equitably estopped from denying Prout's entitlement. Where an
employer grants FMLA leave and the employee detrimentally relies
on that grant, the employer may not later assert that
employee was not entitled to FMLA leave. See Kosakow v. New
Rochel

Radiol

2001) (" [A]n employer who remains silent when its employee
announces that she plans to take medical leave is effectively
misleading that employee into believing that she is protected by
the FMLA."); see also Cooper v. New York State Nurses Ass'n, 847
F. Supp. 2d 437, 448

(E.D.N.Y. 2012)

("'[A]n employer who makes

an affirmative representation that an employee reasonably and
detrimentally believed was a grant of FMLA leave can be estopped
form later arguing that the employee was not in fact entitled to
that leave because she did not suffer a serious health
condition.'" (quoting Murphy v. FedEx Nat' 1 LTL,
893, 899-900

Inc., 618 F.3d

(8th Cir. 2010)). 7

Second, Prout has plausibly alleged that he was fired for
taking FMLA leave given the temporal proximity between his leave
and his termination. According to the Second Amended Complaint,
Invesco "fired [Prout]

immediately when he returned to t

Company's Atlanta Headquarters, in November 2014." Second Am.

7

The Court accordingly does not need to reach defendants'
argument that Prout was not in fact entitl
to FMLA leave
because he worked abroad.
27

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 28 of 52

Compl. at

<JI

13. "The Second Circuit has made clear that '[p]roof

of causal connection can be established indirectly by showing
that the protected activity was followed closely by
discriminatory treatment.'" Cooper, 847 F. Supp. 2d at 448
(quoting DeCintio v. Westchester County Med. Ctr., 821 F.2d 111,
115 (2d Cir. 1987)); see also Gordon v. Health & Hosps. Corp.,
No. 06-cv-1517, 2008 WL 924756, at *11 (E.D.N.Y. Mar. 31, 2008)
("[T]he temporal proximity of plaintiff's engagement in a
protected activity .

with defendants' decision to fire her

can be sufficient in and of itself to establish a causal
connection."); Martin, 543 F.3d at 1268

(finding that "close

temporal proximity" is "more than sufficient to create a genuine
issue of material fact of causal connection") .
However, the inference of causation from timing can be
undercut by "gradual adverse job actions

[that] began well

before the plaintiff had ever engaged in [the] protected
activity." Slattery v. Swiss Reinsurance Am. Corp., 248 F.3d 87,
95 (2d Cir. 2001). Here,

Invesco threatened to terminate Prout

for job abandonment shortly before it approved his FMLA leave. 8
Although these allegations give rise to an inference that
Invesco had other (even if potentially invalid)

reasons for

s Prout does not allege that the time he took off prior to his
FMLA leave is itself protected under the FMLA.

28

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 29 of 52

firing Prout, it is not the sort of "extensive period of
progressive discipline" sufficient to undercut - as a matter of
plausible pleading - the inference that Prout was fired for
taking FMLA leave. Slattery, 248 F.3d at 95.9 The Court
accordingly finds that Prout has plausibly (though narrowly)
alleged that he had a viable FMLA claim.

Whether Prout Had a Similarly Viable Willful FMLA Claim.
Defendants argue that if Prout would have prevailed on a nonwillful FMLA claim, then he also would have prevailed on a
willful FMLA claim, which has a three year statute of
limitations that had not yet run when Sanford Heisler began
representing Prout. See 29 U.S.C.

§

2617(c) (2).

Prout's counsel admitted that a willful FMLA claim
"remained" at the time Sanford Heisler undertook Prout's
representation. See ECF No. 34 at 24:23-25:11. However, Prout
contends, it would have been difficult to prove. An employer's
misconduct is willful only if the employer "knew or showed
reckless disregard for the matter of whether its conduct was

9 Defendants argue that Prout had already begun suffering adverse
job actions before he went on approved FMLA leave, citing
disputes that Prout himself raised with his attorney. See
Supplemental Memorandum of Law in Support of Defendants' Motion
to Dismiss ("Supp. Def. Mem.") at 2-3, ECF No. 23 (citing First
Amended Complaint ~~ 13, 16, ECF No. 21). These do not suffice
to establish an "extensive period of progressive discipline
sufficient to undercut the inference that Prout was fired for
taking FMLA leave.
248 F.3d at 95.
11

29

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 30 of 52

prohibited" by the FMLA. Porter, 392 F.3d at 531

(stating that

the Second Circuit uses the Supreme Court 1 s definition of
"willful" as the term is used in the context of the Fair Labor
Standards Act)

(citing McLaughlin v. Richland Shoe Co., 486 U.S.

128, 133 (1998)). "Neither an employer's 'good-faith but
incorrect assumption' regarding its [statutory] obligations, nor
an employer 1 s lack of a reasonable basis for believing that it
was complying with the [the statute], is by itself sufficient to
demonstrate an employer's willfulness." Saunders v. City of New
York, 594 F. Supp. 2d 346, 358 (S.D.N.Y. 2008)

(articulating the

FLSA standard); see also Trimmer v. Barnes & Noble, Inc., 31 F.
Supp. 3d 618, 627

(S.D.N.Y. 2014)

("Reckless disregard . . .

involves actual knowledge of a legal requirement, and deliberate
disregard of the risk that one is in violation." (internal
quotation omitted)).
It is true that the Second Circuit has stated in an
unpublished summary order that "retaliating against an employee
for exercising FMLA rights is almost by definition a 'willful 1
violation." Offor v. Mercy Med. Ctr., 676 Fed. App'x 51, 54 n.2
(2d Cir. 2017). But aside from the fact that the summary order
in Offor expressly recites that it is non-precedential, the
brief discussion in

ffor involved a very different factual

context than is presented in the instant motion.

30

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 31 of 52

The issue here is whether Prout's legal position, and
therefore his bargaining power at settlement, would plausibly
have been made materially stronger if defendants had not allowed
his non-willful FMLA claim to lapse. The very fact that the
standard for willfulness is a high one, and that it involves
inquiries into subjective states of mind that are inherently
more difficult to prove than the objective facts that establish
negligence, illustrates that, as a practical matter,
preservation of a claim of a negligent violation of the FMLA is
plausibly a material "bargaining chip" that Prout here lost by
defendants' allowing the relevant statute of limitations to
expire. Although it might be unusual for the kind of violation
of the FMLA here alleged not to be willful

(though Congress

clearly contemplated that the two could be different and hence
provided different statutes of limitations), it ignores the
realities of hard bargaining for defendants to assert that Prout
would not have been in a materially better bargaining position
as to his settlement negotiations if he had still been able to
argue that he was not required to prove a willful violation of
the FMLA because he had preserved the non-willful claim.
Nor is this point a matter of speculation. On the contrary,
as alleged in the Second Amended Complaint, Invesco, in
correspondence concerning the parties' dispute, expressly argued

31

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 32 of 52

that it had not engaged in any "willful" conduct. Second Am.
Compl.

<JI

114.

Accordingly, Prout has plausibly alleged that defendants'
failure to preserve his non-willful FMLA claim was materially
detrimental to his bargaining power. Nor can this be viewed in
isolation of his SOX claim. The combination of bargaining
detriments he suffered from the loss of his non-willful FMLA
claim and the loss of his SOX claim, discussed below,
effectively compelled him to settle his claims, and to settle
for

ss than he would have settled but for defendants'

malpractice.

b. Sarbanes-Oxley Claim
Whether Prout Had a Viable SOX Claim. Section 806 of SOX
provides whistleblower protection for employees of publicly
traded information. To succeed in making a prima facie case
under this provision, "'an employee must prove by a
preponderance of the evidence that
activity;

(2)

(1)

she engaged in protected

the employer knew that she engaged in the .

protected activity;
action; and (4)

(3) she suffered an unfavorable personnel

the protected activity was a contributing factor

in the unfavorable action.'" Bechtel v. Admin. Review Bd.,
United States Dep't of Labor, 710 F.3d 443,
(quoting Ha

v. Charter Commcn's

447

(2d Cir. 2013)

Inc., 558 F.3d 722, 723

(7th

Cir. 2009)); see also Nielsen v. AECOM Tech. Corp., 762 F.3d

32

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 33 of 52

214, 219

(2d Cir. 2014). Here, Prout alleges that his report of

a potential FCPA violation contributed to his termination.
Defendants argue that Prout has failed to allege that he ever
had a viable SOX claim against Invesco for several reasons.
rst, defendants argue that the reporting of putative FCPA
violations does not constitute "protected activity" under SOX,
especially where there is no allegation that the violator
intended to defraud the shareholders of a publicly traded
company. This appears to be an open question. SOX makes it
unlawful for a publicly traded company to "discharge, demote,
suspend,
employee

. or in any other manner discriminate against an
because of any lawful act done by the employee to

provide information, cause information to be provided, or
otherwise assist in an investigation regarding any conduct which
the employee reasonably believes constitutes a violation of 1)
section 1341, 1343, 1344, or 1348, 2) any rule or regulation of
the Securities and Exchange Commission, or 3) any provision of
Federal law relating to fraud against shareholders." 18 U.S.C. §
1514A(a) (1).
The parties have identified one case holding that reporting
an FCPA violation is never protected under SOX, one holding that
it sometimes is protected, and a third holding that it is always

33

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 34 of 52

protected. 10 In Asadi v. G.E. Energy (USA), LLC, the court found
that SOX does not protect reporting FCPA violations because the
FCPA does not "protect" or "require" internal reporting of
alleged bribery. No. 4:12-345, 2012 WL 2522599, at *6 (S.D. Tex.
June 28, 2012). In

Liu v. Siemens A.G., a court in this

District suggested that reporting FCPA violations "could only
conceivably fall within 'fraud against shareholders,'" and,
further,

that such reporting could fall within that category

only if the whistleblower alleged an "intent to defraud
shareholders." 978 F. Supp. 2d 325, 330 (S.D.N.Y. 2013).
Finally, in Wadler v. Bio-Rad

Inc., the court held

broadly that "disclosure of alleged FCPA violations (both its
anti-bribery provisions and its books-and-records requirements)
is . . . protected activity under the Sarbanes-Oxley Act." No.
15-cv-2356, 2017 WL 1910057, at *5 (N.D. Cal. May 10, 2017),
appeal docketed, No. 17-16193 (9th Cir. June 8, 2017). There,
defendants had conceded that "there is a rule or regulation of
the SEC regarding the books and records provisions of the FCPA,
and so reporting a books and records violation could support a
Sarbanes-Oxley claim." Id. The court also noted that the FCPA is
an amendment to the Securities and Exchange Act of 1934 and is
codified within it. Id.

10 The Court itself did not identify any additional cases
directly addressing the question.

34

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 35 of 52

Based on this survey of case law, the Court concludes that
Prout has plausibly alleged that his report of Sato's potential
FCPA violation was protected under SOX. This is especially true
because Prout alleges that Sato sought to skirt SOX reporting
requirements, and thereby defraud shareholders, by paying

~for

the wine from his personal account - seemingly to throw off any
internal investigation.n Second Am. Compl.

~

18.

Second, defendants assert that applying SOX to Prout's
claim would be an improper extraterritorial application of the

4977562, at *7

(S.D.N.Y. Mar. 31, 2014), aff'd No. 17-1060-cv,

2018 WL 357539 (2d Cir. Jan. 11, 2018)

(finding that the anti-

retaliation provision of SOX does not apply extraterritorially);
cf. Liu Meng-Lin v. Siemens AG, 763 F.3d 175, 183 (2d Cir. 2014)
(Dodd-Frank's whistleblower protection does not apply
extraterritorially). "[I]t is a rare case .

that lacks all

contact with the territory of the United States [and] the
presumption against extraterritorial application would be a
craven watchdog indeed if it retreated to its kennel whenever
some domestic activity is involved in the case.n Morrison v.
Bank Lt ., 561 U.S. 247, 266 (2010). Prout's

~~~~~~~~~~~~~~

claim has the following domestic features: the conduct that he
reported took place in the United States, Prout worked for the
foreign subsidiary of an American company at the time he

35

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 36 of 52

reported the conduct, Prout is a United States citizen, and
Prout was fired in the United States.
The Court finds that these domestic features

and in

particular the fact that the conduct reported took place in the
United States - are sufficient to render the application
domestic. Cf. Ulrich, 2014 WL 4977562 at *8 (finding that
plaintiff's claims originated outside the United States where
the alleged wrongdoing, the protected activity, and the
retaliation plaintiff allegedly experienced all occurred in Hong
Kong).
Defendants lastly argue that Prout has failed to adequately
plead that he ever had a viable SOX claim because the
allegations in the Second Amended Complaint do not establish a
causal connection between the protected activity and any adverse
employment action. In the context of a retaliation claim, a
plaintiff can plead a causal connection "directly, by alleging
facts of retaliatory animus against him, or indirectly, either
by showing a temporal relationship in which the protected
activity was followed closely in time by discriminatory
treatment, or by other circumstantial evidence."
Palsimano, 157 F. Supp. 3d 306, 327 (S.D.N.Y. 2016)
quotation omitted).

36

(internal

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 37 of 52

Prout has plausibly alleged that he suffered "retaliatory
animus." 11 In the Title VII context, "[n]egative reactions by an
employer to a plaintiff's complaints of discrimination have been
deemed indicative of retaliatory animus." White v. Dep't of
Correctional Servs., 814 F. Supp. 2d 374, 390 (S.D.N.Y. 2011).
Here,

Prout alleges that when he reported the FCPA violation to

the Head of Legal for Invesco Asia Pacific, she told him that if
he reported it to Andrew Lo he would "shit on (his] head."
Second Am. Compl. !! 19

0. When Prout persisted and reported

the violation to Lo, La's response was "effectively,

'So What?'"

Prout alleges that Lo "became increasingly hostile towards [him]
almost immediately after he" reported the bottle of wine.
~

Id. at

73. In addition, in June 2014, Lo "became irate" that a report

Prout prepared "had minor formatting issues." Id. ! 25. These
allegations of Invesco's negative reaction to Prout's reporting
of the FCPA violation give rise to a plausible inference that
Prout was retaliated against for the report. This conclusion is

11

The Court therefore need not reach whether Prout has
sufficiently alleged a temporal relationship in which the
protected activity was closely followed by discriminatory
treatment. In order for temporal proximity to establish
causality, the intervening period between the protected activity
and the adverse employment action must be "very close." Dawson
v. City of New York, 2013 U.S. Dist. LEXIS 117744, at *47-48
(S.D.N.Y. Aug. 19, 2013). Here, there was almost a seven-month
gap between Prout's original report to Lo in April 2014 and his
termination on November 3, 2014.

37

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 38 of 52

bolstered by the fact that Vladeck told Prout that he had "had
whistleblower retaliation claims that could form the basis for a
negotiated settlement." Second Am. Compl. at 91 22.
Accordingly, the Court finds that Prout has plausibly
alleged that he would have had a viable retaliation claim under
SOX if not for defendants' negligence.
Whether Prout Had a Similarly Viable Dodd-Frank Claim.
Defendants argue that even if Prout did have a viable SOX claim
but for the lapsed statute of limitations, defendants' alleged
negligence was not a "but for" cause of any harm because Prout
recovered for the same alleged injury by settling a claim for
retaliation under Dodd-Frank. Dodd-Frank, like SOX, "shield[s]
whistleblowers from retaliation." Digital Realty Trust, Inc. v.
Somers, 138 S. Ct. 767, 772

(2018). Prout concedes that he did,

in fact, settle his Dodd-Frank claim with Invesco. However, he
has plausibly alleged that he was effectively left with no other
recourse but to settle this remaining claim.
Prout's Dodd-Frank claim rested on shaky grounds. As noted
by Invesco during settlement negotiations, courts in the
Eleventh Circuit, where Invesco is headquartered, had held that
an individual must report misconduct to the Securities and
Exchange Commission ("SEC") in order to qualify as a
whistleblower and bring a claim under Dodd-Frank's antiretaliation provisions. Second Am. Compl. at

38

~

115. And Invesco

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 39 of 52

knew during settlement negotiations that the Supreme Court might
soon invalidate Prout's Dodd-Frank claim by agreeing with those
courts and holding that to qualify as a whistleblower under
Dodd-Frank, an employee must have reported the alleged
misconduct to the SEC and devalued that claim accordingly. See
id. The Supreme Court ultimately did so hold, on February 21,
2018. See

ital Realt

Trust

138 S. Ct. 767.

Defendants contend that 1 even taking into account Invesco's
"substantial leveragen during settlement negotiations with
respect to Prout 1 s Dodd-Frank claim, Prout still has not
plausibly alleged that he suffered any damages since Dodd-Frank
entitles a plaintiff to recover greater damages than in a SOX
claim, including double backpay. SOX, by contrast, limits
recovery to actual backpay with interest. See Digital Realty
Trust,

Inc., 138 S. Ct. at 774-75. 12 But which statute would have

ultimately afforded Prout greater relief is unclear. Unlike
Dodd-Frank, SOX "explicitly entitles a prevailing employee to
'all relief necessary to make the employee whole,'

including

'compensation for any special damages sustained as a result of

12 Both SOX and Dodd-Frank authorize reinstatement and
compensation for litigation costs, expert witness fees, and
reasonable attorneys' fees. Digital Realty Trust, Inc., 138 S.
Ct. at 775.

39

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 40 of 52

the discrimination.'" Id. at 775 n.4
l 514A ( c) ( 1)

I

(

(quoting 18 U.S.C. §

2) {c) •

Given all this, Prout has plausibly alleged that
defendants' negligence in letting the statute of limitations
lapse on his SOX claim left him with little choice but to settle
and reduced his potential recovery from Invesco.13
3. Damages

Lastly, defendants argue that Prout has failed to plead any
actual and ascertainable damages because the settlement that
Prout ultimately entered into with Invesco was for a greater
amount than the settlement Invesco initially of

red and that

defendants advised him to reject. See Second Am. Compl.

~~

44,

119 (Invesco initially offered $1,133,479,00 "in compensation
and stock vesting plus dividends" and ultimately settled with
Prout for $1.75 million). Thus, defendants reason, "the absence
of an actual pecuniary inJury defeats any conceivable cause of

13

Defendants' argument that their alleged negligence cannot have
proximately caused any injury because Sanford Heisler had
sufficient time and opportunity to adequately protect Prout's
rights is without merit. Where a plaintiff, on his own or
through subsequent counsel, has "sufficient time and
opportunity" to adequately protect his rights, any alleged
negligence by the former counsel cannot proximately cause that
plaintiff's injury. See Hufst
v Fr
& Molinsek P.C.,
150 A.D.3d 1489, 1490 (N.Y. App. Div. 2017); Maks
ak v.
Schwartzapfel Novick Truhowsky Marcus, P.C., 82 A.D.3d 652, 652
(N.Y. App. Div. 2011). Here, there is no indication that Sanford
Heisler failed to adequately protect ?rout's remaining rights.
There is nothing Sanford Heisler could have done to revive
Prout's SOX and non-willful FMLA claims.
40

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 41 of 52

action for malpractice." Second Supplemental Memorandum of Law
in Support of Defendants' Motion to Dismiss at 3-4, ECF No. 37;
see Fusco v. Fauci, 299 A.D.2d 263 (N.Y. App. Div. 2002)
(affirming dismissal of malpractice claim based on erroneous
settlement advice where 'the amount of the settlement .
exceed[ed] the [amount] plaintiff previously stipulated to
accept in full satisfaction of [his] underlying claims, plus
interest").
However, Prout's allegations that defendants told him his
claims were worth at least $3 million and that Invesco told him
the value of his claims was substantially reduced by the lapsed
statutes of limitations, Second Am. Compl.

~~

51, 110, give rise

to a plausible inference that defendants' negligence resulted in
damages. 14 It is a question of

ct, inappropriate for resolution

at the motion to dismiss stage, whether the amount of Prout's
settlement was within the range of what the jury's verdict or
settlement would have been. Titsworth v. Mondo, 407 N.Y.S.2d
793, 799 (Sup. Ct. 1978)

,15

Unlike in Fusco v. Fauci, where plaintiff's lawyer was
allegedly negligent in failing to settle plaintiff's case for
$700,000 as directed and plaintiff later settled for $1,250,000,
Prout rejected Invesco's initial $1 million settlement offer.
749 N.Y.S.2d 715, 715 (App. Div. 2002); No. 109704/98, 2001 WL
36119232 (N.Y. Sup. Ct. June 15, 2001).

14

lo Defendants also argue that Prout is precluded from pursuing
recovery in this action because he has already recovered for his
alleged lost wages and opportunity in the action he brought

41

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 42 of 52

In sum, the Court finds that Prout has plausibly alleged a
legal malpractice claim based on defendants'

letting the statute

of limitations lapse on his SOX claim but not based on
defendants' letting the statute of limitations lapse on his FMLA
claim.
B. Breach of Fiduciary Duty

Prout alleges that defendants breached their fiduciary duty
by (i) withholding the $5,000 retainer fee he paid them; and
(ii)

failing to turn over any of the files relating to his case

to Sanford Heisler. Defendants move to dismiss Prout's breach of
fiduciary duty claims as duplicative of his legal malpractice
claim and for failure to state claim.
1. Whether the Breach of Fiduciary Duty Claims Are
Duplicative

"Under New York law, where a claim for breach of fiduciary
duty is 'premised on the same facts and seeking the identical
relief' as a claim for legal malpractice, the claim for
fiduciary duty 'is redundant and should be dismissed.'" Nordwind

against St. Paul's in New Hampshire. See Def. Mem. at 20. In
support of this argument, defendants state that Prout claimed
job-related damages in the New Hampshire case that exceeded $3
million, and that that case has now has settled. See id. (citing
Proscia Deel. Exs. K, L). Defendants then assert, without
citation, that "[p]laintiff's settlement within the New
Hampshire Action constitutes an implied waiver to any claim for
job-related damages he did not recover therein." Id. The Court
finds that it cannot resolve at the motion to dismiss stage what
effect, if any, Prout's settlement of the New Hampshire action
has on his right to recover in the instant action.
42

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 43 of 52

v. Rowland, 584 F.3d 420, 433-34
Gotshal &
10 A.D.3d 267

(2d Cir. 2009)

LLP v. Fashion

(quoting Weil,

of Short

(N.Y. App. Div. 2004)).

Prout's claim for breach of fiduciary duty is not
duplicative. "The fiduciary duty of an attorney

'extends

both to current clients and former clients and thus is broader
in scope than a cause of action for legal malpractice.'" Neuman
v. Frank, 82 A.D.3d 1642, 1643 (N.Y. App. Div. 2011)

(quoting

TVGA Eng'g, Surveying, P.C. v. Gallick, 45 A.D.3d 1252, 1256
(N.Y. App. Div. 2007)). "Thus, a cause of action for legal
malpractice based upon alleged misconduct occurring during the
attorney's representation of the plaintiff is not duplicative of
a cause of action for breach of fiduciary duty based upon
alleged misconduct occurring after the termination of the
representation." Id. Here, Prout's fiduciary duty claim is not
duplicative of his legal malpractice claim because it depends
not on defendants' letting the statute of limitations lapse
during the defendants' representation of him but rather on
defendants' failing to turn over their files relating to Prout's
case to his new counsel and failing to return his retainer fee
after the termination of the representation.
2. Whether Prout Has Failed To State a Breach of
Fiduciary Duty Claim

43

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 44 of 52

The elements of a breach of fiduciary duty claim are: "(1)
negligence by the attorney;

(2) that the negligence was the

proximate cause of the loss sustained; and (3) proof of actual
damages." Stevens & Lee

P.C. v.

, 2011 N.Y. Misc. LEXIS

5044, at *2 (N.Y. App. Div. 2011).
First, with respect to the retainer fee, defendants contend
that Prout still owes defendants for their legal services such
that defendants have properly asserted a lien on Prout's
retainer fee. "[A] lawyer breaches his fiduciary duty to his
client when the lawyer fails to return the unearned advance
payment retainer when the engagement ends." In re Dewey &
Leboeuf LLP, 493 B.R. 421, 433 (Bankr. S.D.N.Y. 2013}
added)

(emphasis

(citing Ruberto v. Defilippo, 913 N.Y.S.2d 889, 889 (N.Y.

Civ. Ct. 2010)). The allegations in the complaint do not give
rise to a plausible inference that the $5,000 retainer fee has
not been earned. Even if defendants have "not produced any
billing invoices or otherwise provided documents evidencing any
billable work performed on Prout's case," Second Am. Compl.

~

107, they clearly have done at least $5,000 of work, see id. at
~

33 (describing letter Vladeck sent to defendants),

~

35

(describing conversation between Vladeck and Invesco official
regarding Prout's requested FMLA leave). Therefore, Prout has
failed to state a claim for legal malpractice based on
defendants' failure to turn over his retainer fee.

44

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 45 of 52

Second, defendants argue that they also are under no
obligation to turn over Prout's files in light of Prout's
failure to compensate them for their services. A "common law
'retaining lien'

. allows withdrawing counsel to retain

pleadings and other documents in counsel's possession until
counsel is paid for his or her work." Star Funding, Inc. v.
Vault Minerals, LLC, No. 15-cv-3026, 2017 WL 7790610, at *2
(S.D.N.Y. Aug. 31, 2017)

.16

"[W]here a client requests that

papers in the possession of his former attorney be returned to
him, and the attorney asserts a claim for compensation for
services rendered, the attorney is ent

led to a determination

fixing the value of his services, and the amount so fixed must
be paid or otherwise secured to the attorney before any such
turnover may be enforced." Rosen v. Rosen,

97 A.D.2d 837, 837

(N.Y. App. Div. 1983). However, this lien is available only
"where an attorney's representation terminates and there has
been no misconduct, no discharge for just cause and no
unjustified abandonment by the attorney." Klein v. Eubank, 663

Defendants also assert that they are entitled a statutory
charging lien, which is authorized by "New York Judiciary Law §
475, which allows for liens 'upon his client's cause of action,
claim or counterclaim which attaches to a . . . judgment in his
or her client's favor, and the proceeds thereof .
. ."Star
Fund
2017 WL 7790610, at *2. Defendants fail to explain how
a charging lien is relevant to the issue of whether they
properly withheld Prout's files. The Court therefore only
addresses whether defendants are entitled to a common law lien.
16

45

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 46 of 52

N.E.2d 599, 601

(N.Y. Ct. App. 1996). Given that, as discussed

above, Prout has plausibly alleged that defendants committed
legal malpractice, defendants are not entitled to a common law
lien.
However, defendants further argue that even if they were
obligated to return Prout's files,

Prout still would have failed

to state a claim because he has not alleged that defendants'
withholding of the files proximately caused any actual damages.
Prout argues that he suffered damages as a result of defendants'
failure to turn over his case file because

~[h]e

was forced to

resolve his case for considerably less money than he would
otherwise have received, including less than the $3 million plus
attorney fees that Defendant Vladeck told

aintiff his case was

worth." Plaintiff's Memorandum of law in Opposition to
Defendants' Motion to Dismiss Plaintiff's Complaint at 17-18,
ECF No. 24. Prout does not actually explain how defendants'
failure to turn over the case files contributed to his resolving
his case for considerably less money than he would otherwise
have received. Since defendants' production of his case file, to
the extent one exists, see Second Am. Compl.

~~

102-104, could

not un-do the lapse of Prout's statutes of limitations, the only
possible damage Prout could have suffered is having to pay
Sanford Heisler to do work already conducted by defendants. But
Prout does not allege that he suffered such damages. Therefore,

46

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 47 of 52

Prout has not plausibly alleged that he suffered any damages as
a result of defendants' alleged refusal to turn over his file
and the Court dismisses Prout's claim for breach of fiduciary
duty.

II.

Motion to Disqualify
Finally, defendants seek to disqualify Sanford Heisler.

"The power to disqualify an attorney is drawn from a court's
'inherent power to preserve the integrity of the adversary
process.'"
*l (S.D.N.Y. Mar. 29, 2013)

(quoting

Inc. Vill. Of Valley Stream, 409 F.3d 127, 132 (2d Cir. 2005)).
A motion to disqualify an attorney is committed to the
discretion of the Court. See Purgess v. Sharrock, 33 F.3d 134,
144 (2d Cir. 1994). "[N]ot e.very violation of a disciplinary
rule will necessarily lead to disqualification." Hempstead
Video, 409 F.3d at 132. In particular, "[d]isqualification is
only warranted in the rare circumstance where an attorney's
conduct 'poses a significant risk of trial taint.'" Decker v.
Nagel Rice, LLC, 716 F. Supp. 2d 228, 231

(S.D.N.Y. 2010)

(quoting Glueck v. Jonathan Logan, INc., 653 F.2d 746, 748

(2d

Cir. 1981)).
Rule 3.7 of the New York Rules of Professional Conduct
provides, with certain exceptions, that "[a] lawyer shall not
act as an advocate before a tribunal in a matter in which the

47

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 48 of 52

lawyer is likely to be a witness on a significant issue of
fact." N.Y. R. Prof'l Conduct 3.7(a). Accordingly, an attorney
may be disqualified from representing a client in an action when
such attorney is a necessary witness who has "knowledge of the
facts and [has] participate[d] in some of the events giving rise
to [the lawsuit]" and who, if allowed to participate as both an
advocate and a witness, "would jeopardize [the court's]

interest

in ensuring that the trial is conduct fairly and in conformity
with prevailing ethical rules." United States v. Napoli, No. 10CR-150, 2010 WL 1687669, at *4

(E.D.N.Y. 2010). In order to

disqualify an attorney based on the advocate-witness rule, "a
party must demonstrate that the testimony is both necessary and
substantially likely to be prejudicial." Decker, 716 F. Supp. 2d
at 232 (internal quotation omitted).
"Rule 3. 7 lends itself to opportunistic abuse.

'Because

courts must guard against the tactical use of motions to
disqualify counsel, they are subject to strict scrutiny,
particularly motions' under the witness advocate rule." Murray
v. Metropolitan Life Ins. Co., 583 F.3d 173, 178 (2d Cir. 2009)
(quoting

v. Dittmer

"The movant, therefore,

873 F.2d 522, 531 (2d Cir. 1989)).

'bears the burden of demonstrating

specifically how and as to what issues in the case the prejudice
may occur and that the likelihood of prejudice occurring [to the
witness-advocate' s client] is substantial." Id.

48

(quoting

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 49 of 52

Lamborn, 873 F.2d at 531). However, "any doubts are to be
resolved in favor of disqualification." Decker, 716 F. Supp. 2d
at 232. "'A finding of necessity takes into account such factors
as the significance of the matters, the weight of the testimony,
and the availability of other evidence.

1

"

Soberman v. Groff

Studios Corp., No. 99-CV-1005, 1999 WL 349989, at *7
June 1, 1999)
663, 667

(quoting Stratavest Ltd. v. Rogers,

(S.D.N.Y.

903 F. Supp.

(S.D.N.Y. 1995)). The "availability of other witnesses

is essentially fatal to the 'necessity' prong of the
disqualification inquiry." John Wiley & Sons, Inc. v. Book Dog
Books, LLC, 126 F. Supp. 3d 413, 423 (S.D.N.Y. 2015)

(collecting

cases); see also Acker v. Wilger, No. 12-cv-3620, 2013 WL
12 8 5 4 3 5, at * 3 ( S . D. N. Y. Mar. 2 9, 2013) .
In addition to arguing that its testimony would not be
necessary, Sanford Heisler argues that the motion for
disqualification is premature. The Court agrees. The "witness
advocate rule is concerned with preventing potential taint at
trial." Ross v. Blister, No. 09-cv-8666, 2009 WL 4907062, at *3
(S.D.N.Y. Dec. 21, 2009)

(emphasis in original). Thus, "where

there has been only limited discovery and it is not yet clear
the extent to which an attorney's testimony might be necessary
or prejudicial, numerous courts have found that motions to
disquali

counsel are premature." Id.

(collecting cases);

ee

also Gormin v. Hubregsen, No. 08-cv-7674, 2009 WL 508269, at *3

49

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 50 of 52

(S.D.N.Y. Feb. 27, 2009)

(prior to discovery, "it is impossible

to determine how significant [counsel] might be as a witness or
whether he is likely even to be called as a witness; whether his
testimony would likely hurt or help his client; or whether his
testimony would or would not be cumulative of other witnesses.
Based on such a record, courts in this District commonly deny
disqualification motions."). Here, where there is no record on
which to base a disqualification motion, the Court cannot
determine with sufficient certainty that defendants have borne
their "high burden" to show that Sanford Heisler's testimony
will be necessary at trial or that the content of that testimony
is likely to be prejudicial to Prout. See Ross, 2009 WL 4907062,
at *4.
Defendants also move to disqualify Sanford Heisler on the
ground that the firm has a conflict of interest resulting from
defendants' "intention" to imp lead it. Rule 1. 7 (a) of the New
York Rules of Professional Conduct provides,

in pertinent part:

[A] lawyer shall not represent a client if a
reasonable lawyer would conclude that either:
(1) the representation will involve the lawyer
in representing differing interests; or (2)
there is a significant risk that the lawyer's
professional judgment on behalf of a client
will be adversely affected by the lawyer's own
financial,
business,
property
or
other
personal interests.
N.Y. R. of Prof'l Conduct 1.7(a). Plaintiff argues that because
defendants' threatened impleader action has no basis in law or

50

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 51 of 52

fact, defendants have failed to meet their burden to show "a
significant risk that the conflict will affect the attorney's
ability to represent his or her client with vigor." Commercial
Union Ins. Co. v. Marco Int'l Co

75 F. Supp. 2d 108, 110

(S.D.N.Y. 1999). Specifically, "Sanford Heisler asserted all of
Plaintiff's viable claims that remained at the time Sanford
Heisler assumed representation; Sanford Heisler had no
opportunity to cure the lapsed statutes [of] limitations caused
by Defendants' conduct." Plaintiff's Memorandum of Law in
Opposition to Defendants' Motion to Disqualify Sanford Heisler
Sharp, LLP as Plaintiff's Counsel Herein at 15-16, ECF No. 26.
Defendants' motion to disqualify on the basis of Sanford
of interest therefore turns on

Heisler's anticipated confl

whether or not defendants will ultimately file and prevail on
their impleader action. The Court declines to evaluate the
viability of defendants'

impleader action before it has been

filed.
Accordingly, the Court denies defendants' motion to
disqualify Sanford Heisler without prejudice to renewing the
motion following either the close of discovery or a successful
impleader action by defendants.

CONCLUSION

51

Case 1:18-cv-00260-JSR Document 44 Filed 06/11/18 Page 52 of 52

In sum, the Court denies defendants' motion to dismiss with
respect to Prout's FMLA-based and SOX-based legal malpractice
claims, but grants the motion with respect to Prout's breach of
fiduciary duty claim. The Court also dismisses Prout's Title-VII
based legal malpractice claim without prejudice. Finally, the
Court denies defendants' motion to disqualify Sanford Heisler
without prejudice to the possibility of its being re-raised at
later stages of this litigation.
The parties are directed to jointly call chambers by no
later than Tuesday, June 12 to discuss the setting of deadlines
in the case management plan.
SO ORDERED.
Dated:

New York, NY
June

/d,

2018

52