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ZUBULAKE v. UBS WARBURG LLC

February 2, 2005.

LAURA ZUBULAKE, Plaintiff,
v.
UBS WARBURG LLC, UBS WARBURG, and UBS AG, Defendants.



The opinion of the court was delivered by: SHIRA SCHEINDLIN, District Judge

MEMORANDUM OPINION AND ORDER

This case was filed close to three years ago, discovery closed on October 2, 2004, defendants' motion for partial summary judgment was decided on January 7, 2005, and a trial is scheduled to begin on March 21, 2005. Nonetheless, defendants now move to amend their Answer to include an additional affirmative defense. Specifically, defendants seek to add an after-acquired evidence defense on the ground that plaintiff, in her employment application with UBS Warburg LLC ("UBS"), misrepresented the reasons why she was terminated by Credit Suisse First Boston ("CSFB") and Salomon Brothers ("Salomon").*fn1 Page 2 Defendants contend that had UBS learned of plaintiff's misrepresentations, it would have immediately terminated her employment. For the following reasons, defendants' motion is denied. Page 3

  I. BACKGROUND

  A. The Alleged Misrepresentations

  Defendants claim that plaintiff made the following misrepresentations on her employment application (dated July 14, 1999), which is signed and recites that she understands that the information provided is true and complete and that any false or misleading statements or omissions will be sufficient cause to justify refusal or termination of employment:
(1) her employment at CSFB ended in May 1999 (as opposed to August 1999)
(2) the reason for her departure from CSFB was "diff w/mgmt philosophy — nature of job changed"
(3) her termination from CSFB was "voluntary"
(4) the reason for her departure from Salomon was to pursue a "better opportunity"
(5) her termination from Salomon was "voluntary"
See UBS Group, Employment Application, Employment History, attached as Ex. B to the Plevan Decl.

  Plaintiff's personnel file produced by CSFB in March 2003 records Zubulake's last day of work as May 10, 1999, and a date of separation of August 16, 1999. The file also contains a document that describes a number of Page 4 performance deficiencies, namely, a May 5th 1999 Memorandum from Jay Plourde entitled "Performance Deficiencies." See Memorandum, Ex. C to the Plevan Decl. The Memorandum states that plaintiff was insubordinate toward her supervisors and that her job performance was substandard. The Memorandum explicitly warns plaintiff that "[f]ailure to comply with the terms of this memo immediately or other failure to perform satisfactorily will result in further disciplinary action up to and including your immediate termination from this firm." Id.

  Plaintiff's personnel file from Salomon could not be produced as it was destroyed during the attacks of September 11, 2001. Although hard copy records pertaining to plaintiff were not available, a computer print-out (produced in March 2003) indicates that she was terminated for "unsatisfactory perf." 2/20/03 Computer Print-Out, Ex. D to the Plevan Decl.

  B. Plaintiff's Termination Documents

  In opposing the motion, plaintiff has submitted her Form U-5, Uniform Termination Notice For Securities Industry Registration, from CSFB and Salomon. See Affirmation of James A. Batson ("Batson Aff."), plaintiff's attorney, Exs. C & D. Both forms contain the following boxes under the Reason For Termination section: voluntary, deceased, permitted to resign, discharged, Page 5 other. See id. Plaintiff's U-5 for CSFB has the "voluntary" box checkmarked as the reason for termination but does not provide an explanation. See id., Ex. C. Plaintiff's U-5 for Salomon has the "other" box checkmarked as the reason for termination and provides "resign mutual" as the explanation. See id., Ex. D.

  Defendants have submitted a Central Registration Depository Registration Summary obtained from the National Association of Securities Dealers which they obtained on January 4, 2005. This document contains plaintiff's registration information pertaining to her prior employers. As with the U-5, plaintiff's Registration Summary states "Voluntary" as the reason for termination from CSFB. See Plevan Decl., Ex. E at 3. Similarly, the Registration Summary indicates "Other" as the reason for plaintiff's termination from Salomon and contains "resign mutual" as the termination comment. See id. at 5.

  II. LEGAL STANDARD

  Leave of court to amend a pleading "shall be freely given when justice so requires." Fed.R.Civ.P. 15(a). However, whether to grant a motion to amend lies within the sound discretion of the trial court. See Foman v. Davis, 371 U.S. 178, 182 (1962). In Foman, the Supreme Court expressly reaffirmed the liberal mandate of Rule 15(a). Page 6

 
If the underlying facts or circumstances relied upon by a plaintiff may be a proper subject of relief, [s]he ought to be afforded an opportunity to test [her] claim on the merits. In the absence of any apparent or declared reason — such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc. — the leave sought should, as the rules require, be `freely given.' Of course, the grant or denial of an opportunity to amend is within the discretion of the District Court. . . .
Id. at 182.

  The Second Circuit has stated that "`considerations of undue delay, bad faith, and prejudice to the opposing party [are] touchstones of a district court's discretionary authority to deny leave to amend.'" Krumme v. Westpoint Stevens Inc., 143 F.3d 71, 88 (2d Cir. 1998) (quoting Barrows v. Forest Labs., 742 F.2d 54, 58 (2d Cir. 1984) (footnote omitted)). Factors relevant to a showing of prejudice include "whether the assertion of new claims would: (i) require the opponent to expend significant additional resources to conduct discovery and prepare for trial; (ii) significantly delay the resolution of the dispute; or (iii) prevent the plaintiff from bringing a timely action in another jurisdiction." Block v. First Blood Assocs., 988 F.2d 344, 350 (2d Cir. 1993). In fact, "`[o]ne of the most important considerations in determining whether amendment would be Page 7 prejudicial is the degree to which it would delay the final disposition of the action.'" Krumme, 143 F.3d at 88 (quoting H.L. Hayden Co. of New York, Inc. v. Siemens Med. Sys., Inc., ...


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