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Raw v. Bank of New York Mellon Corp.

October 21, 2010

DAVID RAW, PLAINTIFF,
v.
BANK OF NEW YORK MELLON CORPORATION AND PERSHING, LLC, DEFENDANTS.



The opinion of the court was delivered by: Hurley, Senior District Judge

MEMORANDUM & ORDER

Plaintiff David Raw ("Plaintiff") filed this action against his former employer Pershing, LLC ("Pershing"), a subsidiary of defendant Bank of New York Mellon Corporation ("Defendant-Bank") (collectively "Defendants") for retaliation and wrongful discharge under the Sarbanes-Oxley Act ("SOX"), 18 U.S.C. § 1514A, and the New Jersey Conscientious Employee Protection Act ("CEPA"), N.J.S.A. § 34:19-1 et seq. Presently before the Court is Defendants' motion made pursuant to Federal Rule of Civil Procedure 12(b)(1) and the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq., to compel arbitration and dismiss Plaintiff's complaint, or in the alternative to compel arbitration and stay this lawsuit pursuant to Section 3 of the FAA. For the reasons stated below, Defendants' motion is granted and Plaintiff's complaint is dismissed.

Factual and Procedural Background

From May 2007 to January 2009, Plaintiff was employed by Pershing as a Vice President of Operational Risk and Control.*fn1 Plaintiff signed a written Employee Agreement*fn2 with Pershing on May 8, 2007, which contained, inter alia, a mandatory arbitration provision which is the subject of this dispute. It provides in relevant part:

ANY DISPUTES ARISING BETWEEN THE EMPLOYEE AND THE EMPLOYER INCLUDING THOSE CONCERNING COMPENSATION, BENEFITS, OR OTHER TERMS OR CONDITIONS OF EMPLOYMENT (INCLUDING ALLEGED DISCRIMINATION OR HARASSMENT) WILL BE DETERMINED BY ARBITRATION... (Ex. A to Defs.' Aff., Dkt. No. 9 ¶ 5) (capital letters in original).) The Employee Agreement contained another paragraph immediately following Paragraph 5, also at issue, which provides that:

EXCEPT OF DISHONEST OR FRAUDULENT ACTS COMMITTED BY THE EMPLOYEE, NEITHER EMPLOYER NOR EMPLOYEE WILL COMMENCE ANY ACTION, SUIT, OR PROCEEDING AGAINST THE OTHER ARISING FROM, RELATED TO OR OTHERWISE CONNECTED WITH ACTS WHICH WERE TAKEN OR WHICH ALLEGEDLY SHOULD HAVE BEEN TAKEN DURING THE EMPLOYEES [sic] EMPLOYMENT BY OR WITH THE EMPLOYER (INCLUDING, BUT NOT LIMITED TO, THOSE CONCERNING COMPENSATION, BENEFITS, TERMS OR CONDITIONS OF EMPLOYMENT, OR ALLEGED DISCRIMINATION OR HARASSMENT OR THE TERMINATION OF SUCH EMPLOYMENT) MORE THAN ONE YEAR AFTER THE OCCURRENCE OF THE ACT OR FAILURE TO ACT GIVING RISE TO THE CLAIM AND IN NO EVENT MORE THAN SIX MONTHS AFTER TERMINATION OF THE EMPLOYEE'S EMPLOYMENT WITH THE EMPLOYER. (Id. ¶ 6.) (capital letters in original).

Plaintiff alleges that a series of events took place beginning in 2008 during which he became aware of a potential glitch or security breach in Pershing's internet application, NETXPro.*fn3 In short, the NETX-Pro application could be accessed remotely by Pershing employees, which may have allowed for the dissemination to third parties of clients' personal information such as social security numbers and bank records, among others. Plaintiff then began to investigate the potential breach and conducted empirical studies to assess its severity. (Compl., Dkt. No. 1 at 4-8.) In late August 2008, Plaintiff first informed his direct supervisor, Jane Longendyck ("Longendyck") of the potential breach. (Id. at 7.) Longendyck refused to discuss the matter with Plaintiff and ordered Plaintiff out of her office. (Id.)

In early October 2008, Longendyck submitted a "written action plan" to Plaintiff which targeted certain performance goals, which Plaintiff believed were already part of his regular work assignments and was otherwise unwarranted. (Id. at 8-9.) Plaintiff then began searching for another position within Pershing. (Id. at 9.) On November 17, 2008, Plaintiff was advised by Pershing's human resource department that he could no longer apply for positions within Pershing because Plaintiff was on "written warning" status. (Id.) Plaintiff was unaware that the written action plan from Longendyck constituted "written warning" status and filed an employee complaint pursuant to Defendant-Bank's internal policies. The following day, Plaintiff was given a verbal warning for allegedly acting belligerently the previous day upon being informed that he could no longer apply for positions within Pershing, and was informed that he was belligerent on "other unidentified and undocumented occasions." (Id. at 10.) From approximately August 2008 to November 2008, Plaintiff attempted on several occasions to inform his superiors of the potential breach. (Id. at 7-11.)

On November 21, 2008, Plaintiff was placed on administrative leave, absent any accompanying explanation, until December 4, 2008. (Id. at 11.) On January 30, 2009, Plaintiff was informed by Pershing that he was terminated for violations of company policy, which violations were not immediately disclosed to Plaintiff. (Id. at 13-14.)

On February 10, 2009, Plaintiff filed an administrative complaint*fn4 against Defendants alleging unlawful retaliation.*fn5 Defendants timely answered the administrative complaint on March 31, 2009. Plaintiff then gave notice 180 days later of his intent to file the present action, and the administrative complaint was dismissed. On October 9, 2009, Plaintiff commenced the current action, and on June 18, 2010, Defendants filed the instant motion.

The Parties' Contentions

The Complaint asserts two causes of action based on wrongful discharge and retaliation under SOX and CEPA. Plaintiff contends that his claims are not subject to the arbitration provision found in Paragraph 5 of the Employee Agreement because "the parties agreed to arbitrate only the terms and conditions of employment and not matters of termination and wrongful discharge." (Pl.'s Aff., Dkt. No. 11 at 2.) Plaintiff asserts that the arbitration provision of Paragraph 5 fails to specifically mention termination or wrongful discharge and as a result those claims cannot be encompassed by that paragraph. (Id.) Defendants, however, maintain that the current dispute is arbitrable because Plaintiff's claims of wrongful discharge and retaliation under SOX and CEPA are "disputes" within the meaning of Paragraph 5 of the Employee Agreement. For the reasons that follow, the Court find that Plaintiff's claims do fall within the scope of Paragraph 5. Accordingly, Defendants' motion to compel arbitration is granted.

Discussion

I. Legal ...


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