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Graves v. Deutsche Bank Securities

March 20, 2009


The opinion of the court was delivered by: Kevin Nathaniel Fox United States Magistrate Judge



Before the Court, in this action brought pursuant to the Age Discrimination in Employment Act of 1968, the Fair Labor Standards Act of 1938 and the New York City Human Rights Law, is the defendant's Fed. R. Civ. P. 11 sanctions motion. Also before the Court is a motion by the plaintiff, made pursuant to Fed. R. Civ. P. 15, for: (1) leave to amend and supplement his amended complaint; and (2) an order declaring that his reply to the defendant's opposition to his motion to amend was filed timely, or, alternatively, an order granting a "retroactive three-day extension" of the time for filing the reply. The motions are addressed below.


Plaintiff David Graves ("Graves"), alleges the defendant, Deutsche Bank Securities, Inc. ("DBSI"), terminated his employment unlawfully because of his age; Graves is over 40 years of age. Graves contends DBSI: (i) hired four "young" vice-presidents -- who are approximately 34 years old; (ii) promoted them to the position of "Director"; (iii) transferred some of Graves' clients to the younger Directors to prevent Graves from meeting his "revenue target"; and (iv) fired him, in 2004, because his "clients were 'needed for younger bankers.'" Graves maintains that, in response to an age discrimination and retaliation complaint he filed with the United States Equal Employment Opportunity Commission ("EEOC"), DBSI filed a "Position Statement"*fn1 with the EEOC, in which DBSI made false representations and provided "misleading extracts" from its "Franchise Revenue and Pipeline Reports"*fn2 ("the Reports"), in order to "cover-up" its discriminatory actions.

In July 2007, the defendant filed a motion to: (1) dismiss the plaintiff's complaint, pursuant to Fed. R. Civ. P. 12(b)(6); and (2) "strike prejudicial portions of the [c]omplaint under Fed. R. Civ. P. 12(f)." Specifically, DBSI sought to have allegations that it made misrepresentations to the EEOC, and the plaintiff's reference to 18 U.S.C. § 1001, which, inter alia, criminalizes knowingly and willfully concealing a material fact from, or making a materially false or fraudulent statement to, a government agency, removed from the complaint. That motion is still pending. In December 2007, the parties agreed that Graves could file an amended complaint ("the Amended Complaint"), which made minor changes to the original complaint.

In May 2008, DBSI filed the instant motion seeking sanctions against the plaintiff and his counsel, pursuant to Fed. R. Civ. P. 11(b)(3). According to DBSI, several of the allegations in Graves' amended complaint lacked evidentiary support and have harmed its reputation. Among the allegations made by the plaintiff that prompted DBSI to make the sanctions motion are that DBSI: (a) backdated a report, to "minimize Graves pipeline [revenue] for 2003"*fn3 ("Backdating Claim"); (b) inflated the "pipeline revenue" of other bankers in its EEOC Position Statement, thereby creating a false impression of their performance; and (c) provided "'made up' Pipeline Revenue figures [in its EEOC Position Statement] to devalue Graves' deals and overvalue those of younger bankers."

The defendant contends sanctions against the plaintiff are warranted because "over the past ten months" Graves has refused to withdraw the above-noted allegations from the Amended Complaint "even after DBSI produced clear evidence" demonstrating these allegations are unfounded. The defendant maintains that charts, valuation data and calculations relied upon by Graves do not support his assertions. To refute that data, DBSI has submitted to the Court its own financial charts, tables and reports -- all of which were disclosed to the plaintiff through pretrial discovery activities -- to establish Graves' awareness that his misrepresentation allegations lack factual support. Furthermore, DBSI provided letters, from June and July 2007, it sent to Graves explaining DBSI's formula for calculating the revenue it attributed to each banker assigned to work on a particular "deal," and its "procedures and systems for recording booked and pipeline revenue," to demonstrate to Graves that the pipeline revenue documentation DBSI submitted to the EEOC was neither fabricated nor misleading.

The parties have also shared with the Court, through the submissions made in connection with the Fed. R. Civ. P. 11 motion, correspondence they exchanged, after DBSI provided the plaintiff with a draft of its sanctions motion. In a 33-page letter Graves sent to DBSI, he rebutted the assertions made by DBSI in its draft motion and provided facts he contends support his misrepresentation claim. Thereafter, the plaintiff sent an e-mail message to the defendant in which he made reference to a telephone call from the defendant and advised that he: (a) would "withdraw the backdating allegations and cross-references to backdating" from the amended complaint; and (b) was continuing to assess matters and would "get back further to you." The following day, the plaintiff sent another e-mail message to the defendant memorializing the substance of a telephone conversation the parties had. The following points were included in that e-mail message:

First, [the plaintiff is] committing to review the allegations of the Complaint in light of the dropping of the backdating allegation, to determine whether further changes should be made in light of that change.

Second, we are committing to review all the allegations in light of the very small amount of discovery produced by defendant.

Third, I expect that there will be some changes, but cannot characterize today what those changes will be.

Finally, we expect to finish these reviews and file a motion for leave to file a revised Complaint next week.

Graves urged DBSI not to seek sanctions. He explained to DBSI, inter alia, that some of the information respecting the method DBSI employed when calculating revenue was revealed to him, for the first time, in DBSI's proposed Fed. R. Civ. P. 11 motion. The plaintiff explained further that a second amended complaint, he intended to file, would not contain the Backdating Claim, and would provide additional factual details that he believed supported the misrepresentation claim. Furthermore, according to Graves, the backdating allegation he proposes ...

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