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Fraser v. Fiduciary Trust Company International

August 25, 2009


The opinion of the court was delivered by: Honorable Paul A. Crotty, United States District Judge


Plaintiff Gregory A. Fraser ("Fraser") sues Defendants Fiduciary Trust Company International ("Fiduciary"), Franklin Resources Inc. ("Franklin"), and seven individual employees of Fiduciary and Franklin (the "Individual Defendants")*fn1 on a variety of claims arising out of his termination from Fiduciary in 2003. Fraser's claims have been the subject of two previous decisions, by Judge Richard M. Berman and this Court, which granted several of Defendants' motions to dismiss. See Fraser v. Fiduciary Trust Co. Int'l et al., No. 04 Civ. 6958 (RMB) (GWG), 2005 WL 6328596 (S.D.N.Y. June 23, 2005) (Berman, J.) ("Fraser I"); Fraser v. Fiduciary Trust Co. Int'l et al., 417 F. Supp. 2d 310 (S.D.N.Y. 2006) (Crotty, J.) ("Fraser II"). Fraser now has four causes of action remaining: (1) whistleblower claims pursuant to Section 806 of the Sarbanes-Oxley Act of 2002 ("SOX"), 18 U.S.C. § 1514A; (2) a discriminatory discharge claim pursuant to Section 510 of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1140; (3) racial discrimination claims under Title VII of the Civil Rights Act of 1964 ("Title VII"), 42 U.S.C. §§ 2000e et seq., New York State Human Rights Law ("NYSHRL"), N.Y. Exec. L. §§ 290 et seq., and New York City Human Rights Law ("NYCHRL"), N.Y.C. Admin. Code §§ 8-101 et seq.; and (4) a common law breach of contract claim for violation of Fiduciary's employee policy manual.

Defendants move for summary judgment on Fraser's remaining claims. They also move to strike the entire declaration submitted by Fraser and the exhibits attached to the declaration submitted by Fraser's counsel in opposition to the motion for summary judgment. The response is prolix, rambling, relies on irrelevant facts, makes unsupported arguments, and asserts bald legal conclusions. It does not raise a genuine issue of material fact necessitating a trial. Accordingly, Defendants' motion for summary judgment is GRANTED and Fraser's Second Amended Complaint is DISMISSED. Consequently, Defendants' motion to strike is DENIED as moot.*fn2


I. Facts

The Court assumes familiarity with the facts of this matter as presented in the previous decisions by Judge Berman and this Court. See Fraser I, 2005 WL 6328596, at *1-*3; Fraser II, 417 F. Supp. 2d at 315-17. What follows is a brief statement of facts relevant to the present motions.*fn3

Plaintiff Fraser, an African-American, was employed as a Vice President of Defendant Fiduciary from October 2, 2000 until his termination approximately two-and-a-half years later, on March 7, 2003. Fiduciary is a New York-based investment management company and a wholly-owned subsidiary of Defendant Franklin. Individual Defendant William Y. Yun served as Fiduciary's President. Individual Defendant Michael Materasso was the Head of Domestic Fixed Income Asset Management and was Fraser's direct supervisor.

Upon being hired, Fraser received a copy of Fiduciary's policy manual (the "Policy Manual"). The Policy Manual's "Introduction" section expressly stated that the Policy Manual was not a contract and that Fiduciary employees were terminable at will. (Deposition Transcript of Gregory A. Fraser ("Fraser Dep.") Ex. Q at iv.)*fn4 In sections entitled "Reporting Illegal Activity" and "Suspicious Activity Reporting," the Policy Manual encouraged employees to report potentially illegal conduct, and assured them that employees who reported such conduct would not be subjected to retaliation. (Id. at 5-6.) The Policy Manual also explained Fiduciary's anti-harassment policy and set forth a procedure for employees to report discriminatory or harassing conduct. (Id. at 27-28.) Fraser received and signed an updated version of the Policy Manual during each year of his employment at Fiduciary.

Fraser alleges that on two instances during his employment he "blew the whistle" on potentially illegal activities at Fiduciary.*fn5 First, in February 2002, Fiduciary's New York office decided to sell off the WorldCom bonds it held in its ERISA trust accounts. On February 6, 2002, Fraser drafted an e-mail intended for Fiduciary's other offices explaining the New York office's decision. A New York-based portfolio manager, however, instructed him not to send the e-mail. Fiduciary's Los Angeles office retained its WorldCom holdings and, according to Fraser, suffered substantial losses to its accounts when WorldCom defaulted on its debt and filed for bankruptcy. (See Second Amended Complaint ("Second Am. Compl.") ¶ 68.) Three months later, on May 16, 2002, Fraser forwarded a copy of his WorldCom e-mail to Yun. (See Fraser Dep. Ex. K.) He informed Yun that he had drafted the e-mail in February and was prepared to disseminate it to other offices but had been instructed not to do so. (Id.) At no point in his draft e-mail of February 6, 2002 or during any subsequent communications with Yun did Fraser allege that any of Fiduciary's actions with respect to its WorldCom holdings constituted a violation of the law. Nonetheless, Fraser claims that following the May 16, 2002 WorldCom bond e-mail, he was the victim of three retaliatory acts: (1) in May 2002, his desk was moved closer to Materasso's; (2) in June 2002, he was relieved of his responsibility for drafting the Fixed Income Department's client newsletter; and (3) Materasso stopped inviting Fraser to attend Global Investment Committee ("GIC") meetings.

The second alleged instance of whistleblowing occurred in February 2003, when Fraser came across an internal document entitled "Top Ten Relationships By Revenue," which listed United Nations ("UN") pension fund accounts managed by Fiduciary and identified the UN as one of Fiduciary's ten largest relationships by revenue. (Fraser Dep. Ex. M.) The document had not been shown to clients. Fraser believed that the UN pension fund accounts should not have been included in the document because they were not "managed accounts" and the document therefore overstated Fiduciary's Assets Under Management ("AUM"). He told Materasso that Fiduciary should not show the document to clients because it overstated Fiduciary's AUM. Materasso told Fraser that that was how Fiduciary had "always done it," and moved on to other business.

Fraser further alleges that he was subjected to racial discrimination during his employment at Fiduciary. He claims to have been unfairly passed over for a portfolio manager position. During his employment at Fiduciary, although the New York Fixed Income Department did not hire or promote any portfolio managers, the London office promoted a white European, Atanas Christev, to a portfolio manager position in July 2002. In addition, Fraser contends that his colleagues in the New York office made insensitive racial remarks both to him and to other minority employees. Fraser claims that in one instance, Materasso directed a highly offensive racial epithet at him.

In November 2002, Fraser sought, but did not receive, Fiduciary's approval to create and manage a hedge fund. On February 23, 2003, still acting without Fiduciary's approval, Fraser held what attendees later described as a "pitch" for the proposed hedge fund. (See Deposition Transcript of Edward G. Eisert ("Eisert Dep.") at 218:14-19.)*fn6 On February 28 and March 3, Fraser sent follow-up e-mails about the proposed hedge fund to Fiduciary's portfolio managers, in which he suggested that they promote the fund to Fiduciary's clients. Fiduciary's management became concerned about these activities because they had not approved Fraser's proposed hedge fund, and they opened an investigation into the matter. (Fraser Dep. Exs. I, N.) The investigation was conducted by Edward G. Eisert ("Eisert"), a Fiduciary employee who otherwise had no connection to Fraser's day-to-day employment. Eisert determined that Fraser was promoting an unauthorized hedge fund; he presented his findings to Yun, who concluded that Fraser's conduct warranted dismissal. Fiduciary terminated Fraser's employment on March 7, 2003.

II. Procedural History

Fraser filed his original Complaint on August 27, 2004. On December 6, 2004, he filed an Amended Complaint pleading eight causes of action based upon a variety of federal, state, and local statutes. Defendants moved to dismiss the Amended Complaint on January 28, 2005. By Decision and Order dated June 23, 2005, Judge Berman dismissed without prejudice Fraser's claims arising under Section 10(b) of the Securities Exchange Act and Rule 10b-5 promulgated thereunder; Rule 20(a) of the Securities Exchange Act; California state securities law; ERISA § 510's whistleblower provision; and ERISA § 404. Fraser I, 2005 WL 6328596, at *14. Judge Berman also dismissed without prejudice Fraser's common law breach of contract claim and his SOX § 806 whistleblower claims based upon three of his four alleged instances of whistleblowing activity, including the May 16, 2002 WorldCom bond e-mail. Id. In addition, Judge Berman dismissed with prejudice claims arising under Section 15 of the Securities Exchange Act and SOX sections 1102 and 1107. Id. Judge Berman allowed Fraser to proceed with his discriminatory discharge claim under ERISA § 510; SOX § 806 whistleblower claim based upon the UN AUM document; and racial discrimination claims under Title VII, the NYSHRL, and the NYCHRL. Id.

Fraser filed a Second Amended Complaint on August 12, 2005, which Defendants moved to dismiss on October 4, 2005. On February 15, 2006, this Court granted the motion in part and denied it in part. The Court held that Fraser's Second Amended Complaint failed to cure the defects in his claims arising under Section 10(b) of the Securities Exchange Act and Rule 10b-5 promulgated thereunder; Rule 20(a) of the Securities Exchange Act; California state securities law; ERISA § 510's whistleblower provision; and ERISA § 404. Consequently, it dismissed those claims with prejudice. Fraser II, 417 F. Supp. 2d at 317-21. The Court also held, however, that Fraser's Second Amended Complaint stated a claim for common law breach of contract and for whistleblower ...

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