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Cruz v. HSBC Bank, USA, N.A.

United States District Court, E.D. New York

March 10, 2014

JOHN CRUZ, Plaintiff,
HSBC BANK, USA, N.A., Defendant

Page 254

For Plaintiff: Andrew Grosso, Esq., ANDREW GROSSO & ASSOCIATES, Georgetown Place, Washington, D.C.

For Plaintiff: Nicholas J. Damadeo, NICHOLAS J. DAMADEO, P.C., Huntington, NY.

For Defendant: Allan S. Bloom, Esq., Stephen P. Sonnenberg, Esq., Kelsey G. Van Wart, Esq., PAUL HASTINGS LLP, New York, NY.


Page 255



Plaintiff brings this complaint based on diversity jurisdiction alleging that his employer terminated him in retaliation for reporting illegal conduct on behalf of the employer. He brings claims for breach of contract, breach of an implied duty of good faith and fair dealing, retaliatory discharge, coercion and intentional infliction of emotional distress. Defendants move to dismiss under Federal Rules of Civil Procedure (" Fed.R.Civ.P." ), Rule 12(b)(6), claiming that there is no basis for these claims under New York law. For the reasons that follow, Defendants' motion to dismiss is granted.


1. Factual Background

The following facts are alleged in Plaintiff's first amended complaint: Plaintiff John Cruz (" Cruz" or " Plaintiff'), currently domiciled in Colorado, was hired by defendant HSBC Bank, U.S.A., N.A. (" HSBC," " Defendant" or " Bank" ) in January 14, 2008, as a Vice President and Senior Business Relationships Manager for HSBC on Long Island. See First Amended Complaint (" Cmplt." ), ¶ 1,2,3,6,9. HSBC has operational headquarters in New York, principal headquarters in Virginia, and various branch offices in the Eastern District of New York. Cmplt., ¶ 2. Cruz worked on various accounts involving business loans, deposit accounts and investments accounts in numerous HSBC offices throughout Long Island and the New York Metro region. Cmplt., ¶ 6, 10. While his home office was in Melville, he primarily worked " on the road." Cmplt., ¶ 11. Cruz' first performance evaluation was " satisfactory" in January 2009.

Plaintiff alleges that before he started working for HSBC, it was aware that some of its branches and employees were involved in illegal laundering of money that was proceeds of criminal activity. This knowledge was described in a Staff Report of the Permanent Subcommittee on Investigations of the United States Senate. Cmplt., ¶ 13. Starting in January 2009, Cruz was assigned an account in the Northport branch, worth over $850,000,000.00. Cmplt., ¶ 16. Cruz tried to determine the identity of the corporations affiliated with the account and identify where money was being deposited from and withdrawn to, without success. Cmplt., ¶ 17-19. He notified his supervisor that the account should be investigated and reported to the government, but no action was taken. Cmplt., ¶ 20. Further examination of the social security number affiliated with the account linked it to 5,449 other accounts, some of which were clearly fraudulent. Cmplt., ¶ 21. Cruz again reported his findings to his superiors and nothing was done. Cmplt., ¶ 21-23.

Cruz then investigated other accounts and identified fifty other potentially fraudulent or phony accounts. Cmplt., ¶ 24-31. In July 2009, Cruz sought to formally report his findings, first to one his superiors he had approached earlier, Michael Jenkins (" Jenkins" ), and received no response. Another superior suggested he meet with George Matranga (" Matranga" ) of HSBC Security, which he did. Cmplt., ¶ 32. Matranga informed Cruz that there was an ongoing investigation, and offered a meeting with another Senior Vice President in lieu of his requests to Jenkins. Cmplt., ¶ 34. At about that time, Jenkins formally criticized Cruz for poor job performance. Cmplt., ¶ 35.

Cruz requested another meeting with Matranga, but was told by Matranga that he was not allowed to speak with Cruz, and that Cruz would be terminated for what he knew. Cmplt., ¶ 36-37.

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Thereafter, Cruz retained an attorney, who advised that Cruz notify his superiors that he was going to bring the information he had to regulatory and law enforcement agencies, which Cruz did by email dated October 2, 2009. Cmplt., ¶ 38, Ex. B. A representative of Human Resources responded, summarizing Cruz' complaint, outlining the investigation that was done, and requesting that Cruz provide specifics when making such allegations. Cmplt., ¶ 40. Cruz alleges this response was unknowingly false since HSBC knew Cruz had already reported his concerns unsuccessfully, and that HSBC had the same access to details that Cruz did. Cmplt., ¶ 40.

Cruz continued to document unlawful and suspicious accounts, which he communicated to Matranga. Cmplt., ΒΆ 41-42. In January 2010, Cruz received an email requesting information about two accounts. Six months prior, he had reported the accounts as suspicious and fraudulent, and was told to stay away from them. Following the email, his superior Jenkins filed a Corrective Action complaint against him for not ...

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