United States District Court, S.D. New York
[Copyrighted Material Omitted]
For Phillip Leshinsky, Plaintiff: Alice Keeney Jump, LEAD ATTORNEY, Reavis Parent Lehrer LLP (Madison Ave.), New York, NY.
For Telvent Git, S.A., Telvent Farradyne, Inc., Telvent Caseta, Inc., Defendants: Meghan Elizabeth Mcgin Hill, Squire Sanders & Dempsey L.L.P., Columbus, OH; Meghan Elizabeth McGinnis Hill, PRO HAC VICE, Squire, Sanders (U.S.) L.L.P. (Columbus), Columbus, OH; Susan Carol Hastings, PRO HAC VICE, Squire, Sanders & Dempsey, Cleveland, OH; Victor Genecin, Squire, Sanders (U.S.) L.L.P. (NYC), New York, NY.
For Glenn Deitiker, Defendant: Dov Kesselman, LEAD ATTORNEY, Seyfarth Shaw L.L.P., New York, NY.
For Alfred Escriba, Defendant: Meghan Elizabeth McGinnis Hill, PRO HAC VICE, Squire, Sanders (U.S.) L.L.P. (Columbus), Columbus, OH; Susan Carol Hastings, PRO HAC VICE, Squire, Sanders & Dempsey, Cleveland, OH; Victor Genecin, Squire, Sanders (U.S.) L.L.P. (NYC), New York, NY.
MEMORANDUM AND ORDER
J. PAUL OETKEN, United States District Judge.
Plaintiff Phillip Leshinsky brought this action against Defendants Telvent GIT,
S.A. (Telvent GIT" ), Telvent Farradyne, Inc. (" Farradyne" ), Telvent Caseta, Inc. (" Caseta" ), Glenn Deitiker, and Alfredo Escribá (collectively, " Defendants" ), alleging whistleblower claims under Section 806 of the Sarbanes-Oxley Act of 2002 (" Sarbanes-Oxley" ), codified at 18 U.S.C. § 1514A(a) (" Section 806" or " Section 1514A" ), as amended by Section 929A of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, Pub. L. No. 111-203, 124 Stat. 1376, 1852 (2010) (" Dodd-Frank" ). Plaintiff alleges that Defendants wrongfully terminated his employment in violation of the whistleblower provisions of Sarbanes-Oxley.
Before this Court at present is Defendants' Motion for Summary Judgment, the resolution of which requires the Court to the address several questions of first impression concerning the scope of the Sarbanes-Oxley retaliation provision. For the reasons that follow, Defendants' Motion for Summary Judgment is granted in part and denied in part.
A. Factual Background
The following facts are drawn from Defendants' Local Rule 56.1 Statement (Dkt. No. 53 (" Defs.' 56.1" )), Plaintiff's Opposition to Defendants' Local Rule 56.1 Statement (Dkt. No. 59 (" Pl.'s 56.1 in Opp'n" )), Plaintiff's Local Rule 56.1 Statement (Dkt. No. 61 (" Pl.'s 56.1" )), Defendant's Opposition to Plaintiff's Local Rule 56.1 Statement (Dkt. No. 63 (" Defs.' 56.1 in Opp'n), and the underlying evidence cited therein. The facts are construed in the light most favorable to Plaintiff, the non-movant.
Telvent GIT is an international information technology company headquartered in Spain.
In July 2006, Telvent GIT announced that it was acquiring PB Farradyne, Inc. (" PB Farradyne" ). (Defs.' 56.1 at ¶ 11.) After the merger, PB Farradyne became Farradyne. The president of PB Farradyne, Lawrence Yermack, became president of Farradyne. Plaintiff was employed by Farradyne as Vice President, Toll Systems. ( Id. at ¶ 12.)
Defendant Alfredo Escribá was, for a period of time relevant to this case, the general manager of Farradyne. ( Id. at ¶ 22). He reported to Yermack. Escribá 's predecessor was José Ramón Aragón; Aragón had been considered by Plaintiff and others to be an abusive manager, and Plaintiff reported his problems with Aragón to Yermack. Farradyne's switch in general managers was a result of this misbehavior. ( Id. at ¶ 15-22.)
In or about April 2007, Telvent GIT acquired Caseta Technologies, Inc., an Austin, Texas company, which developed and maintained software used in automated toll collection. The merger was effected through the same holding company, TTNA, that had acquired PB Farradyne. The acquisition of Caseta Technologies, Inc. brought Farradyne (and Telvent) into the business of selling tolling systems in the United States. Caseta Technologies, Inc. was renamed Telvent Caseta. ( Id. at 23-25; Pl.'s 56.1 at ¶ 6.)
Defendant Glenn Deitiker was the founder of Caseta Technologies, Inc., and subsequently became president of Caseta. (Defs.' 56.1 at ¶ 25.)
Plaintiff joined PB Farradyne as a Technical Manager on December 1, 1997. ( Id. at ¶ 8.) At this point, Plaintiff already had a close friendship with Yermack, going back nearly fifteen years. ( Id. at ¶ 3.) Yermack and Plaintiff knew each other from their days working for the Triborough Bridge and Tunnel Authority, a division
of the Metropolitan Transportation Authority (" MTA" ); indeed, Yermack hired Plaintiff into his first position at MTA in 1987 or 1988. ( Id. at ¶ ¶ 1-2.)
Plaintiff left PB Farrayne in February 2003, but returned in August 2005 as Technical Manager/Director of Toll Services. ( Id. at ¶ 9.) Plaintiff stayed on after PB Farradyne became Farradyne; he became Vice President, Toll Systems, and continued to report to Yermack. ( Id. at ¶ 12.)
Plaintiff, along with the two other Farradyne employees working in the tolling business, was assigned to Caseta after the acquisition. Plaintiff remained formally employed by Farradyne during this time, but he reported to Deitiker, in addition to continuing to report to Yermack. ( Id. at ¶ 27.)
3. The MTA Bid
On January 22, 2008, Caseta received a request for proposals (" RFP" ) from MTA for a fixed-priced toll-system maintenance contract, divided among cost, profit, and overhead costs, which are calculated by dividing direct labor costs by indirect expenses. ( Id. at ¶ ¶ 33-38.) In early 2008, Plaintiff was involved in a project for congestion pricing in New York City. ( Id. at ¶ 48.)
On February 6, 2008, a bid/no-bid meeting concerning MTA's RFP for its toll system maintenance contract was held at the Caseta offices in Austin, Texas; Detiker, Doering, Escribá, Shannon Swank, Darby Swank, Scott Hooton, Paul Muzzey, Ed Fuchs, Gonzolo Sá nchez Arias, and Plaintiff were present. ( Id. at ¶ ¶ 52-53.) During the meeting, the attendees discussed strategies for winning the bid by reducing overhead " as a matter of reducing the overall price." ( Id. at ¶ ¶ 58-59.) In his deposition, Plaintiff testified that:
Darby [Swank] raised the possibility, he said we had two audited overhead rates. Maybe if we, you know, we use one as our external rate and they use the other one back, you know, internally, that we can reduce, looked like we reduce our [profits] margin but we still can keep the margin the same. . . . That there were two overhead rates we can use, one as our external rate, you know, and everything, but we can use the, the lesser one as our internal audited rate and everything and that way we, we could actually still keep the profit the same which Alfredo [Escribá ] pretty much insisted on but we can reduce our pricing. . . . External we would always be using the higher [overhead rate]. But internal when we were calculating profit we would use the lesser one.
( Id. at ¶ 61.) Plaintiff believed that the higher rate no longer existed, and thus that using the higher rates would artificially inflate costs.
In his deposition, Plaintiff stated that he " would not say a final decision was made" in the meeting about whether or not to pursue the so-called " two overhead strategy." ( Id. at ¶ 76.)
4. Plaintiff's Objection
A few minutes after the end of the February 6, 2008 bid/no-bid meeting, Plaintiff went into Deitiker's office to lodge his objection to the two overhead strategy outlined at the meeting. Plaintiff was not sure if the strategy was illegal, but he believed it might be. ( Id. at ¶ 88; Pl.'s 56.1 in Opp'n. at ¶ 88.) After entering Deitker's office, he
told [Deitiker] that, number one, I thought . . . the two overhead strategy . . . was unethical, certainly immoral and may even be illegal but I wasn't sure since I'm not a lawyer. I said but even from a risk standpoint, it was much worse. Because if the agency ever found out we were doing it, not only wouldn't we get this contract, we would
be pretty much dead in the industry in general.
( Id. at ¶ 86.) Plaintiff does not recall if he " used the word 'fraud'" during their conversation. ( Id. at ¶ 87.)
After Plaintiff expressed his concerns, Deitiker replied that it " was an important contract" for the company and " for him . . . personal[y]," and when Plaintiff renewed his objection, Deitiker, becoming angry, accused Plaintiff of " not being a team player." ( Id. at ¶ ¶ 90-92.) When Deitiker asked Plaintiff to " reconsider [his] objections," Plaintiff decided that he did not " want it to become extremely confrontational, more than it was, so [he] just left." ( Id. at ¶ ¶ 94-95.) This was the only discussion Plaintiff had with anyone at Telvent companies about the two overhead strategy; he did not put the objection in writing. ( Id. at ¶ ¶ 96-97, 111-12.)
Caseta submitted its proposal to MTA on April 17, 2008. ( Id. at ¶ 122.) In July 2008, MTA awarded the toll-system maintenance contract to Caseta as prime contractor. ( Id. at ¶ 131.) It is undisputed that the bid submitted to MTA did not utilize the two overhead strategy.
5. Plaintiff's Marginalization
After Plaintiff's February 6, 2008 meeting with Deitiker, Plaintiff was cut off from any further involvement in the MTA bidding process. (Dkt. No. 58 (" Pl.'s Decl." ) at ¶ 31.) It also appears that certain projects previously assigned to Plaintiff were given to other employees. ( Id.) In the spring of 2008, Plaintiff complained to Yermack and Doering about his marginalization, although he did not tell either of them that he suspected that the change in his ...