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Murray v. Ubs Securities, LLC

United States District Court, Second Circuit

January 27, 2014




On August 2, 2012, Plaintiff Trevor Murray filed this action against Defendants UBS Securities, LLC ("UBS Securities"), and UBS AG ("UBS") (collectively, "Defendants") under 15 U.S.C. § 78u-6(h), the anti-retaliation provision (the "Anti-Retaliation Provision") of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, Pub. L. No. 111-203, 124 Stat. 1376 ("Dodd-Frank"). Specifically, Plaintiff alleged that Defendants violated the Anti-Retaliation Provision in terminating Plaintiff's employment after, and as a result of, Plaintiff making certain disclosures protected under Section 806 of the Sarbanes-Oxley Act of 2002, Pub. L. No. 107-204, 116 Stat. 745 ("Sarbanes-Oxley").

Defendants have moved pursuant to the Federal Arbitration Act (the "FAA"), 9 U.S.C. §§ 1-14, to compel Plaintiff to arbitrate the claim he raises in this action. For the reasons set forth in the remainder of this Opinion, Defendants' motion to compel is granted and the instant action is stayed.


A. Plaintiff's Employment With UBS Securities

According to his Complaint, Plaintiff was first employed by UBS Securities, a broker-dealer registered with the United States Securities and Exchange Commission (the "SEC"), from approximately May 2007 to September 2009, at which time Plaintiff was laid off. (Compl. ¶ 8).[2] Thereafter, in early 2011, UBS Securities solicited Plaintiff to return to work for the company. ( Id. at ¶ 10). In or around May 2011, Plaintiff rejoined UBS Securities as a Senior Commercial Mortgage-Backed Security ("CMBS") Strategist and Executive Director. ( Id. at ¶ 11). In that position, Plaintiff was "responsible for performing research and creating reports about CMBS products that were distributed to Defendants' current and potential clients, and in which UBS Securities held trading positions." ( Id. at ¶ 2).

B. Plaintiff's Agreements to Arbitrate with Defendants

1. Plaintiff's Employment Agreement

When Plaintiff rejoined UBS Securities, he received a formal offer letter dated April 26, 2011 (the "Employment Agreement"), signed by Katie Dresch, then a Director in UBS's Human Resources Department. (Compl. ¶ 11; Mara Decl., Exh. A). Plaintiff, by his signature, "[a]ccepted and agreed to" the Employment Agreement on May 2, 2011, and returned it to UBS. (Mara Decl. ¶ 5 and Exh. A).

The Employment Agreement "incorporates UBS's standard terms, conditions, and policies of employment as they existed on May 2, 2011, and which UBS, at that time, incorporated into all offer letters in the course of business." (Mara Decl. ¶ 4; see also Mara Decl., Exh. A (reciting that the Agreement "shall be governed, construed and enforced in accordance with the law of the State of Connecticut")). As relevant to the instant case, the Employment Agreement includes an agreement to arbitrate that provides:

[Plaintiff] and [UBS Securities] hereby knowingly and voluntarily agree that any dispute, controversy or claim (including but not limited to those arising out of or relating to this Agreement, the employment relationship between [Plaintiff] and [UBS Securities] or the termination thereof) will be settled by final and binding arbitration, unless prohibited by applicable law. The parties' agreement to arbitrate disputes includes, but is not limited to... any [] statutory or common law claims. Arbitration under this agreement will be conducted pursuant to [UBS Securities'] employment arbitration procedures in effect at the time of the filing of a claim. A copy of the employment arbitration procedures as currently in effect is attached hereto as Exhibit A.

(Mara Decl., Exh. A).

UBS's employment arbitration procedures (the "Arbitration Procedures") reiterated the parties' agreement to arbitrate "any employment-related disputes between [Plaintiff] and [UBS Securities]." (Mara Decl., Exh. A). The Arbitration Procedures provided, however, that "[c]laims arising under the Sarbanes-Oxley Act of 2002... are not covered by these procedures and will continue to be addressed in accordance with applicable law." ( Id. ). The Arbitration Procedures further required that the "arbitration... be conducted pursuant to the JAMS Employment Arbitration Rules & Procedures... then in effect." ( Id. ). The arbitration procedures in effect at the time Plaintiff filed the Complaint included these same provisions. (Mara Decl., Exh. B).

2. Plaintiff's Form U-4

As part of his employment with UBS Securities, Plaintiff also executed a Form U4 Uniform Application for Securities Industry Registration or Transfer ("Form U-4") on June 2, 2011, pursuant to which Plaintiff agreed

to arbitrate any dispute, claim or controversy that may arise between [Plaintiff] and [UBS Securities], or a customer, or any other person, that is required to be arbitrated under the rules, constitutions, or by-laws of the [self-regulatory organizations, or "SROs"] indicated in Section 4 (SRO Registration) as may be amended from time to time and that any arbitration award rendered against me may be entered as a judgment in any court of competent jurisdiction.

(Mara Decl. ¶ 8 and Exh. C). Plaintiff identified, among others, the Financial Industry Regulatory Authority ("FINRA") as an applicable SRO. ( Id. at Exh. C).

C. The Termination of Plaintiff's Employment

According to Plaintiff, during his second stint with UBS Securities, senior personnel involved in CMBS trading and commercial mortgage origination made a "concerted effort" to influence Plaintiff "to skew his published research in ways designed to support UBS Securities' ongoing CMBS trading and loan origination activities." (Compl. ¶¶ 2, 13). As examples, Plaintiff detailed a series of interactions with individuals responsible for CMBS trading, during which, among other things, those individuals instructed Plaintiff (i) "not to publish anything negative" about investments or areas in which UBS Securities had exposure and (ii) to "write what the business line wanted." ( Id. at ¶ ¶ 15-16, 20). Plaintiff further claimed that he was "pressured to produce ostensibly objective research reports about [UBS Securities'] securities products that were... false or misleading, and intended to favor UBS Securities' products and trading positions, in violation of federal laws." ( Id. at ¶ 19).

According to Plaintiff, he refused to publish any material that conflicted with his research, and "repeatedly told his superiors at UBS Securities" about these encounters. (Compl. ¶ 18). Specifically, in or around December 2011, Plaintiff told his manager about the negative response he had received to his research, including criticisms that Plaintiff's published articles were "too bearish" and "off message with the strategy of the trading desk and overall commercial mortgage group." ( Id. ). Plaintiff also alleged that in or around January 2012, he informed a Managing Director of UBS Securities that the head of CMBS trading and commercial mortgage originations had "only interacted with Plaintiff to criticize his research and attempt to manipulate his reports." ( Id. ).

On February 6, 2012, UBS Securities advised Plaintiff that he was terminated. (Compl. ¶ 22). In the Complaint, Plaintiff notes his "impeccable record, " and claims that his termination was motivated, at least in part, by Plaintiff informing his superiors about the attempts by others at UBS Securities to skew Plaintiff's published research. ( Id. at ¶¶ 22, 24). Proceeding from this premise, Plaintiff claims that his termination violated the Anti-Retaliation Provision because the disclosures that he made to his superiors were protected by Sarbanes-Oxley.

D. The Instant Litigation

Plaintiff filed the Complaint on August 2, 2012. (Dkt. #1). That same day, Plaintiff separately "submitted a Complaint to the United States Department of Labor, charging that Defendants' termination of Plaintiff also violated [Sarbanes-Oxley] and 12 U.S.C. § 5567, "[3] the latter of which was another Dodd-Frank provision. (Compl. ¶ 1, n.1).

On September 21, 2012, Defendants moved to dismiss Plaintiff's Complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. (Dkt. #13). On May 21, 2013, the Court denied Defendants' motion. See Murray v. UBS Sec., LLC, No. 12 Civ. 5914 (JMF), 2013 WL 2190084 (S.D.N.Y. May 21, 2013).

On June 14, 2013, Defendants answered Plaintiff's Complaint, asserting, as an affirmative defense, that "Plaintiff's claims may not be brought in this Court because they are subject to compulsory arbitration pursuant to the parties' employment agreement and... [the] Form U-4." (Dkt. #26). On that same day, Defendants filed the instant motion to compel arbitration. (Dkt. #27). Plaintiff filed his opposition on July 19, 2013 (Dkt. #34), and Defendants submitted their reply on August 2, 2013 (Dkt. #35). In light of the motion practice to ...

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