Bowen v. U.S. Bank N.A., Case No. 19-cv-2683 (SRN/LIB)

• Decision Date: 22 June 2020
• Docket Number: Case No. 19-cv-2683 (SRN/LIB)
• Parties: Matthew Bowen, Plaintiff, v. U.S. Bank National Association, Defendant.
• Court: U.S. District Court — District of Minnesota

Matthew Bowen, Plaintiff, v. U.S. Bank National Association, Defendant.

Case No. 19-cv-2683 (SRN/LIB)

UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA

June 22, 2020

ORDER

David H. Redden and Nicholas G.B May, Fabian May & Anderson, PLLP, 825 Nicollet Mall, Ste. 1625, Minneapolis, MN 55402, for Plaintiff.

Janet M. Olawsky, Jessica M. Marsh, Lee A. Lastovich, 150 South Fifth Street, Ste. 3500, Minneapolis, MN 55402, for Defendant.

SUSAN RICHARD NELSON, United States District Judge

I. INTRODUCTION

Before the Court is Defendant U.S. Bank National Association's ("U.S. Bank") Motion to Dismiss for Failure to State a Claim (("Motion to Dismiss") [Doc. No. 5]). Plaintiff Matthew Bowen opposes this motion, arguing that he has properly stated a claim against U.S. Bank for retaliatory discharge in violation of the Minnesota Whistleblower Act ("MWA"), Minn. Stat. § 181.932, subd. 1. By contrast, U.S. Bank contends that Mr. Bowen's claim is preempted by the National Bank Act ("NBA"), 12 U.S.C § 21, a statute that gives banks wide latitude in hiring and firing bank officers. See 12 U.S.C § 24 (Fifth).

Having carefully reviewed the record, the Court denies Defendant's motion for the reasons set forth below.

II. FACTUAL BACKGROUND

The facts pertinent to this matter are set forth in this Court's Order dated April 15, 2020 ("Supplemental Briefing Order" [Doc. No. 20] at 1-4) and are incorporated by reference here. Stated briefly, U.S. Bank is a national bank headquartered in Minnesota, with its main office located in Cincinnati, Ohio.¹ (("Compl.") [Doc. No. 1], ¶ 4.) Mr. Bowen worked for U.S. Bank first as a Risk Manager and then later as Vice President and Corporate Counsel. (Id. ¶¶ 5-7.)

In or around December 2016, U.S. Bank hired Jorge Rivera as its Associate General Counsel and leader of U.S. Bank's Legal Regulatory Group consumer banking regulatory attorneys. (Id. ¶¶ 8-9.) Hierarchically, Mr. Rivera was two supervisory positions above Mr. Bowen. (Id. ¶ 9.)

Before Mr. Rivera was hired, however, it is alleged that the Office of Comptroller of the Currency ("OCC") and Federal Reserve Board of Governors ("FRB") each issued consent orders (the "Consent Orders"), charging that U.S. Bank had "failed to devote to its foreclosure process adequate oversight, internal controls, policies, and procedures, compliance risk management, internal audit, third party management, and training; and failed to sufficiently oversee outside counsel and other third-party providers handling foreclosure-related services." (Id. ¶ 11.) The Consent Orders "required U.S. Bank to remedy these issues." (Id.)

In response, U.S. Bank compiled a set of materials that identified the foreclosure requirements for each of the 50 states and the District of Columbia ("the Foreclosure Reference Materials"). (Id. ¶ 12.) According to the Complaint, U.S. Bank personnel used these materials as their sole basis for certifying the bank's compliance with foreclosure laws to the Federal Housing Administration ("FHA") for purposes of securing federal insurance benefits. (Id. ¶¶ 17, 20, 39.) To allegedly ensure continued compliance with the "frequently-changing requirements in the various jurisdictions," U.S. Bank had outside counsel coordinate a quarterly review of the materials. (Id. ¶ 18.) This quarterly review ensured, among other things, that U.S. Bank was "observing current foreclosure law[s]" and ultimately played a "key role" in "convincing the OCC and FRB regulators to release U.S. Bank from the Consent Orders." (Id. ¶ 19) (stating that the "importance of these quarterly updates cannot be overstated."). As Vice President & Corporate Counsel, it is alleged that Mr. Bowen was responsible for shepherding the quarterly review by forwarding the Foreclosure Reference Materials to the law firm of Dorsey & Whitney. (Id. ¶ 18.)

After Mr. Rivera started working for U.S. Bank, in December 2016, it is alleged that Assistant General Counsel Alona Rindal and Senior Corporate Counsel Beth Northrop-Day advised Mr. Bowen and his manager, Wade Pyun, that "senior management" of the Mortgage Servicing business line had instructed that all legal work performed for the business was to be consolidated and transferred to the Alabama-based law firm Bradley Arant ("Bradley"). (Id. ¶ 21.) It is alleged that this direction deviated from U.S. Bank's "typical practice," which allowed the bank's Law Division to select outside law firms, evenif the business line was covering the expense. (Id.) Subsequently, it is alleged that Messrs. Bowen and Pyun were instructed that they were to "immediately pull the quarterly update project from Dorsey & Whitney" and assign it to the Bradley firm, for a cost "dramatically more" than Dorsey & Whitney charged for the same work. (Id. ¶ 22.) For instance, while Dorsey & Whitney charged $10,000 per quarter ($40,000 annually), Bradley would charge $90,000 per quarter ($360,000 annually). (Id.) Although the fees were allegedly negotiated down eventually, it remained "significantly more" than the fees Dorsey & Whitney charged for the same work. (Id. ¶ 24.)

Mr. Bowen started becoming "suspicious of the motives for consolidating the work" to the Bradley firm, because in addition to agreeing to pay "significantly more" in fees for the quarterly reports, Mr. Bowen also allegedly observed Ms. Rindal and her direct reports assigning "unnecessary work" to the firm that was "already being reviewed in-house, again citing the business line management as requesting outside review." (Id. ¶ 25.) After the Bradley firm failed to meet its deadline for completing the quarterly review project in April 2017, Mr. Bowen allegedly relayed his suspicions on a conference call that included Mr. Rivera, Mr. Pyun, Ms. Rindal and Ms. Northrop-Day. (Id. ¶¶ 27-32.) "Immediately" following the conference call, it is alleged that Mr. Rivera berated Mr. Bowen "for reporting his concerns about the potentially unlawful conduct" concerning the appearance of an improper relationship between Ms. Rindal, Ms. Northrop-Day, and the Bradley firm. (Id. ¶ 33.)

Approximately one month after the conference call, in May 2017, a partner in Bradley's real estate and finance practice named "Chet Little" was allegedly indicted bythe FBI. (Id. ¶ 34.) The last name stood out to Mr. Bowen because it "happened to be the last name of the Executive Vice President of U.S. Bank's Mortgage Servicing business line—the business line whose senior management had allegedly demanded that all the legal work be consolidated at the Bradley firm." (Id.) Given the totality of the circumstances, Mr. Bowen believed the situation "could only be explained by a fraudulent relationship between a bank employee and an attorney with Bradley." (Id. ¶ 35.) Thus, it is alleged that Mr. Bowen reported the situation to Kyle Bakken, the U.S. Bank attorney "responsible for investigating internal fraud." (Id. ¶ 36.)

After this meeting, Mr. Bowen allegedly informed Mr. Rivera, in passing, that he had reported the Bradley matter to Mr. Bakken. (Id. ¶ 37.) Upon hearing this news, Mr. Rivera apparently seemed "shocked" and "unhappy." (Id.) Nonetheless, later that same day, Mr. Bowen continued to try and explain to Mr. Rivera the significance of the Foreclosure Reference Materials and the Bradley firm's failure to timely update them. (Id. ¶¶ 39-40.) Although Mr. Rivera purportedly acknowledged that the situation "appear[ed] to suggest an improper relationship" between Ms. Rindal, Ms. Northrop-Day and the Bradley law firm, he asserted that it was "not worth causing controversy over" because Mr. Rivera was "up for a promotion." (Id. ¶ 41.) Additionally, Mr. Rivera allegedly threatened Mr. Bowen's job if he escalated this matter to the Deputy General Counsel and General Counsel, claiming his future at U.S. Bank was in "great jeopardy." (Id.) Three days later, Mr. Rivera allegedly continued his beratement, claiming he could not trust Mr. Bowen's judgment and that he needed to work on his "emotional intelligence." (Id. ¶ 42.) Concerned about these comments, Mr. Bowen allegedly told Mr. Bakken that he "felt hewas being retaliated against, and that he feared he would lose his job." (Id. ¶ 43.) Mr. Bakken, however, allegedly assured him that if he were terminated, Mr. Bakken would "report to Human Resources that Mr. Bowen was a whistleblower and would explain the situation and everything he had relayed." (Id.)

A little more than a week later, on June 27, 2017, Mr. Bowen was terminated. (Id. ¶¶ 44-45.) Although the asserted reason for his termination was that he concealed that he had failed the Minnesota bar exam, Mr. Bowen claims that this explanation is a "mere pretext." (Id. ¶ 46.) He alleges that he was terminated by Mr. Rivera "for exposing suspected fraud and embezzlement involving certain employees of U.S. Bank and a law firm championed by those employees [i.e., Bradley], and for reporting U.S. Bank's likely violation of the False Claims Act by acting with reckless disregard as to its certifications of compliance with state home mortgage laws." (Pl.'s Mem. of Law in Opp. to Mot. to Dismiss Compl. Pursuant to Fed. R. Civ. P. 12(b)(6) ("Pl.'s Opp'n") [Doc. No. 13] at 2; see generally Compl.) In fact, he claims that taking the Minnesota bar exam was never a "condition of employment" and he had notified Mr. Pyun "the day he received his results," but was allegedly told "not to worry about it," and to "take [the exam] again" when he had sufficient time to prepare. (Compl. ¶ 46.)

III. DISCUSSION

U.S. Bank contends that Mr. Bowen's MWA claim is preempted by Section 24 of the National Bank Act. 12 U.S.C. § 24. The NBA empowers the bank, in relevant part:

[T]o appoint a president, vice president, cashier, and other officers, define their duties, . . . , dismiss such officers or anyof them at pleasure, and appoint others to fill their places.

12 U.S.C § 24 (Fifth) (emphasis added). Here, it is undisputed that U.S. Bank is an association covered by the NBA. (See Bidon Decl....