Rhinehimer v. U.S. Bancorp Invs., Inc.

• Decision Date: 28 May 2015
• Docket Number: No. 13–6641.,13–6641.
• Citation: 787 F.3d 797
• Parties: Michael RHINEHIMER, Plaintiff–Appellee, v. U.S. BANCORP INVESTMENTS, INC., Defendant–Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

787 F.3d 797

Michael RHINEHIMER, Plaintiff–Appellee

v.U.S. BANCORP INVESTMENTS, INC., Defendant–Appellant.

No. 13–6641.

United States Court of Appeals, Sixth Circuit.

Argued: Nov. 21, 2014.

Decided and Filed: May 28, 2015.

Rehearing En Banc Denied July 7, 2015.

ARGUED:Gregory Parker Rogers, Taft, Stettinius & Hollister LLP, Cincinnati, Ohio, for Appellant. Lynn D. Pundzak, Cincinnati, Ohio, for Appellee. ON BRIEF:Gregory Parker Rogers, Aisha H. Monem, Taft, Stettinius & Hollister LLP, Cincinnati, Ohio, for Appellant. Lynn D. Pundzak, Cincinnati, Ohio, for Appellee.

Before: DAUGHTREY, MOORE, and CLAY, Circuit Judges.

OPINION

CLAY, Circuit Judge.

Defendant U.S. Bancorp Investments, Inc. (“Defendant” or “USBII”) appeals from judgment following a jury trial on Plaintiff Michael Rhinehimer's claim that he was disciplined and fired in retaliation for his complaint about fraud perpetrated on USBII customer Norbert Purcell, in violation of the Sarbanes–Oxley Act, 18 U.S.C. § 1514A. The only issue on appeal is whether Plaintiff established that he engaged in activity protected by § 1514A(a)(1). For the reasons set forth below, we AFFIRM the judgment of the district court.

BACKGROUND

Plaintiff filed his complaint in the instant action in 2011, alleging a single count of retaliation in violation of the Sarbanes–Oxley Act. The case was tried to a jury over five days in 2013. At trial, Plaintiff presented evidence that he was disciplined and fired in retaliation for an email he sent alerting one of his superiors to unsuitable trades made by a co-worker, Patrick Harrigan, to the detriment of Plaintiff's elderly client, Norbert Purcell. The trades, which are undisputed, occurred while Plaintiff was on disability leave. Plaintiff learned of the trades from his personal assistant shortly after they were made. He called his immediate supervisor twice to express concern about the trades, and finally wrote an email to his supervising principal, criticizing the trades for “destroy[ing]” Purcell's estate plan and asserting that the trades should never have been placed or approved. Upon returning, Plaintiff was specifically reprimanded for his email. His superiors also threatened his job, placed him on an aggressive “performance improvement plan,” and fired him when he ultimately failed to meet the plan goals.

The jury returned a verdict for Plaintiff and awarded damages for economic loss and emotional damages. Via special verdict form, the jury specifically found (1) that Plaintiff “proved by a preponderance of the evidence that, at the time of the complaint, he had an objectively reasonable belief that Mr. Harrigan had committed unsuitability fraud;” (2) that Plaintiff “further proved, by a preponderance of the evidence, that [Plaintiff's] email was a contributing factor in his termination;” and (3) that Defendant did not prove “by clear and convincing evidence that it would have discharged [Plaintiff] even if he had not sent the email.” (R. 114, Special Verdict Form, PGID 3850–51.)

A. Plaintiff's Employment at U.S. Bancorp Investments and His Knowledge Regarding Norbert Purcell

Plaintiff is a certified financial planner. He testified at trial that he had about twenty years of experience in financial consulting. Plaintiff testified that certification as a financial planner requires approximately three to five years of professional experience and three years of study on topics like insurance, investment, taxes, and estate planning, followed by a rigorous exam. Following the initial certification, a financial planner must adhere to certain ethical standards and engage in continuing education. Plaintiff was certified as a financial planner in 1999, and in 2005 he earned a charter financial consultant designation.

Plaintiff worked at USBII and a predecessor bank for eleven years as a financial advisor. In that capacity, he was assigned a territory covering four offices in Kentucky. Through his work at USBII, Plaintiff became acquainted with an elderly gentleman named Norbert Purcell. Plaintiff met Purcell early in his time with USBII through his work as a financial advisor for Purcell's brother. Plaintiff testified at trial that he and Purcell became friends over time. All of Purcell's assets were in a trust at the bank. Plaintiff described Purcell as a conservative investor who favored cash-like instruments.

Plaintiff testified that Purcell discussed estate planning with Plaintiff. The beneficiaries of Purcell's trust included his alma mater and his preferred charity. Purcell told Plaintiff that he wanted to leave some money for family members, and they discussed the need to set up an account solely in his name to fulfill those wishes. Plaintiff testified that they discussed this issue repeatedly over their ten year acquaintance. Plaintiff also testified that he observed Purcell's faculties decline over the decade he knew him:

He was elderly when we first met. I would imagine the mid 80s when I met him. And he was pretty sharp. But as time goes by, I would notice that he would ask me the same things at multiple meetings or we discussed at the last meeting.

You know, you could just tell that—he was in his mid 90s by this point, and he just, you know, was not nearly as sharp or cognizant of the things as he used to be. He was deteriorating.

(R. 126, Rhinehimer Tr. Test., PGID at 4050–51.)

Plaintiff testified that their discussions about Purcell's desire to leave money for his family “came to a head” in 2009, as Plaintiff was preparing to take disability leave. (Id. at 4051.) The two men discussed available options, and Plaintiff opened a brokerage account in Purcell's name so that he would have assets apart from the trust. Plaintiff linked the account in Purcell's name to the trust so that purchases in the brokerage account would be paid for by the trust, and any interest or sale proceeds from the brokerage account would return to the trust.

Plaintiff testified that he and Purcell decided to remove a “relatively small” portion of the trust assets, $465,000, and invest it through the brokerage account in Purcell's name. (Id. at 4052.) Plaintiff purchased a TransAmerica short term bond fund for Purcell. Due to the recession, the bond fund had lowered its “break point”—the point at which a buyer was not charged for purchasing shares—from one million dollars to $250,000. The shares he bought were “A shares,” which had a low operating expense at a quarter of one percent. The purchase was made on October 30, 2009.

B. Plaintiff's Disability Leave and Communications with Patrick Harrigan

Plaintiff went on disability leave the first week of November 2009 and remained on leave, with the exception of a brief two week period in March, until August 2010. While he was on leave, he stayed in touch with his personal assistant, his immediate supervisor and his supervising principal (Jeff Harper and Susan Gattermeyer, respectively), as well as some other colleagues.

One of the other colleagues that Plaintiff reportedly spoke with was Patrick Harrigan, another USBII financial advisor. According to Plaintiff, Harrigan contacted him to let him know that he was covering the Cold Springs branch in Plaintiff's absence and to ask if there was anything in particular Harrigan should know. Plaintiff testified:

I told him that my assistant, Becky Smith, was handling most of the day-to-day operations, stuff like that, but I did have one particular client, Norbert Purcell, who was very elderly, diminished capacity, had a lot of money in a trust in cash that the bank was wanting to have invested to produce revenue. And I informed Pat that his estate plans were long and thought out, I'd known him for over ten years; and I asked him not to do any transactions with Mr. Purcell, due to his advanced age and his declining facilities.

(R. 128, Rhinehimer Tr. Test., PGID. at 4106–07.)¹

C. Plaintiff's Knowledge of the Trades and Email to Susan Gattermeyer

Plaintiff's assistant, Becky Smith, called Plaintiff shortly after his conversation with Harrigan and informed him that there had been trades on Purcell's account. She informed him that Harrigan purchased $250,000 worth of a certain LDLAX fund for Purcell. The purchase was made on May 5, 2010. Plaintiff testified that this purchase was a short term bond fund similar to the TransAmerica fund he had purchased for Purcell, but that the trade was more costly for a number of reasons—because it was in a different family, because the shares purchased were C–Shares (which had a higher operating expense), and because it had a higher “break point.” The trade was also inconsistent with Purcell's estate plans, as Plaintiff understood them, because it took money out of the trust. Plaintiff also testified that the trade placed by Harrigan resulted in significantly more compensation to the firm and to the broker than the trade he had placed for Purcell the previous year.

After learning about the May 5, 2010 purchase from Becky Smith, Plaintiff called his direct supervisor, Jeff Harper and “let him know that [he] felt there was a situation that had developed or was developing between Mr. Harrigan and Mr. Purcell that [he] thought was unsuitable and could reflect poorly on everyone involved.” (Id. at 4111.) Jeff Harper told Plaintiff to stay out of it.

Soon after, Plaintiff again heard from Becky Smith about a second trade placed by Harrigan for Purcell. The trade withdrew $650,000 from the trust and invested it through the brokerage account in a TransAmerica fund that Plaintiff described as “another leg up on the risk scale.” (Id. at 4143.) Plaintiff explained why the trade caused him concern:

I did not agree with that purchase either, for the same reasons I just recounted. You're depriving one group of people and enriching another. Now you've went from being in a short-term conservative fund to something that has stocks in it. And this is all overlaying Mr. Purcell with 95 years old, and these are intricate math problems and estate problems, and I don't think he

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