Andaya v. Atlas Air, Inc.
| Decision Date | 30 April 2012 |
| Docket Number | 10 CV 7878 (VB) |
| Parties | TODD ANDAYA, Plaintiff, v. ATLAS AIR, INC., Defendant. |
| Court | U.S. District Court — Southern District of New York |
Plaintiff Todd Andaya commenced this action asserting he was terminated by defendant Atlas Air, Inc. ("Atlas"), in violation of Section 806 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1514A ("SOX"),1 and Section 296 of the New York Executive Law. Defendant has moved for summary judgment on each of plaintiff's claims. (Doc. #19). For the following reasons, defendant's motion is GRANTED as to plaintiff's SOX claim.2
This Court has jurisdiction pursuant to 28 U.S.C. § 1331 as to plaintiff's federal law claim and 28 U.S.C. § 1367 as to plaintiff's state law claim.
The parties have submitted briefs, statements of facts, and declarations with supportingexhibits which reflect the following factual background.3
From 2001 to 2009, plaintiff worked as an independent contractor for Atlas. In late 2008, Atlas's Chief Financial Officer, Jason Grant, and its Vice President of Information Technology, Richard Barnes, invited plaintiff to join Atlas as Director of a newly created Project Management Office. At the time he offered plaintiff the position, Barnes knew plaintiff was gay.
Two employees reported to plaintiff in his position as director. Plaintiff's relationship with one of them, Anne Bari, was strained from the outset. Plaintiff described his relationship with the second employee, Aime Schiavone, as "okay," but noted neither employee wanted him there. Beginning in spring 2009, plaintiff's subordinates and peers began to complain about his conduct and management style. Schiavone complained to Jim Barrecchia, Senior Director of Information Technology, that plaintiff had "berated her" for talking to him. Bari, Barrecchia, and Paul Neville, Director of Development, complained to Barnes about the way plaintiff interacted with and supervised staff. Plaintiff claims he was not aware of these complaints until he reviewed them during discovery.
In April 2009, Human Resources Director Joseph Kelly met with Barnes, Barrecchia, Bill Dowling, Neville, and plaintiff to discuss their differences. After the meeting, Barnes told Kelly the individuals would resolve their differences without further intervention.
Plaintiff testified at his deposition that he would often remind employees that Atlas was a publicly traded company and warned them not to discuss stock prices openly. Plaintiff believedsuch discussions violated SOX and SEC regulations. Plaintiff also complained to Barnes about employees working from home when they were not permitted to do so; employees not working their full shifts; issues related to internet reimbursement; and executive use of comp time. Plaintiff further complained about the IT department engaging a consultant which plaintiff believed was not necessary. In April or May 2009, plaintiff learned from Dowling and Schiavone of Barrecchia's practice of accepting fees for speaking engagements for vendors in his capacity as Senior Director of IT. Upon learning of this, plaintiff complained to Barnes who told him that Barrecchia's conduct was inappropriate. To plaintiff's knowledge, no corrective action was taken. Further, shortly before his termination, plaintiff objected when Barnes left an executive meeting to tell the directors, including plaintiff, that because the company was doing well, the stock price would likely increase. Plaintiff believed that because he was permitted to purchase stock in Atlas, he should not be privy to conversations concerning stock prices. Plaintiff believed each of these actions violated SOX and/or SEC regulations because they disclosed confidential information, potentially promoted insider trading, and wasted corporate assets. Plaintiff estimated millions of dollars were wasted.
On November 16, 2009, Barrecchia, Neville, Bari, Schiavone, and Dowling submitted a written complaint concerning plaintiff to Barnes. Grant, the company's Chief Financial Officer, interviewed four of the five complaining employees. On November 16, Grant advised Barnes to terminate plaintiff, and plaintiff was terminated that day.
The Court must grant a motion for summary judgment if the pleadings, discovery materials before the Court, and any affidavits show there is no genuine issue as to any material fact and it is clear that the moving party is entitled to judgment as a matter of law. Fed. R. Civ.P. 56(c); Celotex Corp v. Catrett, 477 U.S. 317, 322 (1986).
A dispute regarding a material fact is genuine if there is sufficient evidence upon which a reasonable jury could return a verdict for the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The Court "is not to resolve disputed issues of fact but to assess whether there are any factual issues to be tried." Wilson v. Nw. Mut. Ins. Co., 625 F.3d 54, 60 (2d Cir. 2010). It is the moving party's burden to establish the absence of any genuine issue of material fact. Zalaski v. City of Bridgeport Police Dep't, 613 F.3d 336, 340 (2d Cir. 2010).
If the nonmoving party has failed to make a sufficient showing on an essential element of his case with respect to which he has the burden of proof, then summary judgment is appropriate. Celotex Corp. v. Catrett, 477 U.S. at 323. If the nonmoving party submits evidence which is "merely colorable," summary judgment may be granted. Anderson v. Liberty Lobby, 477 U.S. at 249-50. The mere existence of a scintilla of evidence in support of the nonmoving party's position is likewise insufficient; there must be evidence on which the jury could reasonably find for him. Dawson v. Cnty. of Westchester, 373 F.3d 265, 272 (2d Cir. 2004).
On summary judgment, the Court resolves all ambiguities and draws all permissible factual inferences in favor of the nonmoving party. Nagle v. Marron, 663 F.3d 100, 105 (2d Cir. 2011). If there is any evidence from which a reasonable inference could be drawn in favor of the opposing party on the issue on which summary judgment is sought, summary judgment is improper. See Roe v. City of Waterbury, 542 F.3d 31, 36 (2d Cir. 2008).
To sustain a claim for retaliation in violation of SOX, plaintiff must show (1) he engaged in a protected activity or conduct; (2) the employer knew or suspected, actually or constructively, he engaged in the protected activity; (3) he suffered an unfavorable personnel action; and (4) "[t]he circumstances were sufficient to raise the inference that the protectedactivity was a contributing factor in the unfavorable action." Gattegno v. Admin. Review Bd., 353 Fed. Appx. 498, 500 (2d Cir. 2009) (quoting 29 C.F.R. § 1980.104(b)(1)).
Defendant first argues that as a non-publicly traded company, it is not bound by Section 806 of SOX. See Brady v. Calyon Sec. (USA) Inc., 406 F. Supp. 2d 307, 318 (S.D.N.Y. 2005) ( ). In July 2010, the Dodd-Frank Act amended Section 806 to make it applicable to "any subsidiary or affiliate whose financial information is included in the consolidated financial statements of such [publicly traded] company." 18 U.S.C. § 1514A(a); see also Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, § 929A, 124 Stat. 1376 (2010). Because this amendment is a "clarifying" amendment, meant to correct a misinterpretation rather than effect a substantive change in the law, it applies retroactively to conduct predating the 2010 amendment, such as the conduct here. Johnson v. Siemens Building Techs., Inc., ARB Case No. 08-032 at 8-9, ALJ Case No. 2005-SOX-015, 2011 DOLSOX LEXIS 16 (Dept. of Labor ARB Mar. 31, 2011); see also Gladitsch v. Neo@ogilvy, Ogilvy, Mather, WPP Group USA, Inc., 2012 U.S. Dist. LEXIS 41904, at *11 (S.D.N.Y. Mar. 21, 2012).4 Defendant does not dispute that it is a subsidiary of a publicly traded corporation whose financial statements are included in its parent company'sreport. Therefore, defendant is subject to SOX.
Defendant next contends that plaintiff did not engage in any activity which is protected by SOX. Section 1514A defines protected activity to include the provision of information regarding conduct the employee "reasonably believes constitutes" a violation of: (1) 18 U.S.C. §§ 1341, 1343, 1344, or 1348; (2) "any rule or regulation of the [SEC]," or (3) "any provision of Federal law relating to fraud against shareholders." Vodopia v. Koninklijke Philips Elecs, N.V., 398 Fed. Appx. 659, 662 (2d Cir. 2010); 18 U.S.C. § 1514A(a)(1); see also Fraser v. Fiduciary Trust Co. Int'l, 2009 U.S. Dist. LEXIS 75565, at *14 (S.D.N.Y. Aug. 25, 2009); Allen v. Admin. Rev. Bd., 514 F.3d 468, 476-77 (5th Cir. 2008). The list is exhaustive, and for an action to qualify as a protected activity, the "employee's communications must definitively and specifically relate to one of the listed categories of fraud or securities violations in 18 U.S.C. § 1514A(a)(1)." Vodopia, 398 Fed. Appx. at 663; see also Van Asdale v. Int'l Game Tech., 577 F.3d 989, 996-97 (9th Cir. 2009). As several courts have observed, the employee's allegations of wrongdoing must resemble the allegations of shareholder fraud. See Day v. Staples, Inc., 555 F.3d 42, 55 (1st Cir. 2009); Van Asdale, 577 F.3d at 1001 (9th Cir. 2009); but see O'Mahony v. Accenture Ltd., 537 F. Supp. 2d 506, 517 (S.D.N.Y. 2008) ().
In addition, "the complaining employee's belief that his employer's conduct violated one of the enumerated categories must be both objectively...
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