Murray v. UBS Sec., LLC

• Decision Date: 16 December 2020
• Docket Number: 14 Civ. 927 (KPF)
• Parties: TREVOR MURRAY, Plaintiff, v. UBS SECURITIES, LLC and UBS AG, Defendants.
• Court: U.S. District Court — Southern District of New York

TREVOR MURRAY, Plaintiff, v. UBS SECURITIES, LLC and UBS AG, Defendants.

14 Civ. 927 (KPF)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

December 16, 2020

OPINION AND ORDER

KATHERINE POLK FAILLA, District Judge:

Plaintiff Trevor Murray brought two lawsuits in this District against his former employer, UBS Securities, LLC, and its parent company, UBS AG (collectively, "Defendants" or "UBS"), alleging that UBS's decision to terminate his employment was motivated, at least in part, by his whistleblowing activities. Plaintiff pursued one of these suits to a jury trial at which he was awarded compensatory damages, and his attorneys now seek recovery of fees and costs expended in pursuing the lawsuits. For the reasons set forth in the remainder of this Opinion, Plaintiff's attorneys are awarded attorneys' fees in the aggregate amount of $1,639,923.57 and litigation costs in the aggregate amount of $129,463.95.

PROCEDURAL HISTORY

A. Overview of Plaintiff's Litigation History

The history of Plaintiff's litigation against UBS is both lengthy and complex, spawning five published decisions and several oral opinions. The decisions include: Murray v. UBS Sec., LLC, No. 12 Civ. 5914 (JMF), 2013 WL 2190084 (S.D.N.Y. May 21, 2013) ("Murray I") (denying motion to dismiss); Murray v. UBS Sec., LLC, No. 12 Civ. 5914 (KPF), 2014 WL 285093 (S.D.N.Y. Jan. 27, 2014) ("Murray II") (granting motion to compel arbitration); Murray v. UBS Sec., LLC, No. 12 Civ. 5914 (KPF), 2014 WL 1316472 (S.D.N.Y. Apr. 1, 2014) ("Murray III") (denying motion for amendment and certification for interlocutory appeal); Murray v. UBS Sec., LLC, No. 14 Civ. 927 (KPF), 2015 WL 769586, at *1 (S.D.N.Y. Feb. 24, 2015) ("Murray IV") (granting in part and denying in part motion to dismiss second litigation); Murray v. UBS Sec., LLC, No. 14 Civ. 927 (KPF), 2017 WL 1498051, at *1 (S.D.N.Y. Apr. 25, 2017) ("Murray V") (denying motion for summary judgment); see also Dkt. #155 (transcript of oral opinion resolving motion to reconsider in part decision on summary judgment motion); Dkt. #346 (transcript of oral opinion resolving various post-trial motions). The Court incorporates all of these opinions by reference.¹

Though pursued under different legal theories, Plaintiff's claims stemmed from largely the same factual allegations, which the Court summarized in itsopinion denying UBS's motion for summary judgment, and which is reprinted here for convenience:

Plaintiff had two periods of employment with UBS. The first lasted from in or about May 2007 to September 2009. During this period, Plaintiff was employed as a Strategist within UBS's Mortgage Strategy Group, where he focused on commercial mortgage-backed securities ("CMBS"). According to Defendants, Plaintiff was let go when his group and position were eliminated as part of a reduction in force prompted by the 2008 financial crisis.

By early 2011 business had improved, and UBS looked to rebuild its Mortgage Strategy Group, which was located within the Global Interest Rates Strategy Group headed by Michael Schumacher. The Global Interest Rates Strategy Group, in turn, was a part of Macro Strategy, a division within UBS's Investment Bank (sometimes referred to as the "Bank"). Schumacher reported to Lawrence Hatheway, UBS's Chief Economist, Chief Strategist, and Head of Macro Strategy.

As part of its rebuilding effort, UBS engaged in a series of new hires, including Kenneth Cohen in May 2011 to run the U.S. Real Estate Finance Group, which included the non-research, business side of CMBS dedicated to, inter alia, origination, trading, and sales (collectively, the "CMBS Business"). The U.S. Real Estate Finance Group, and thus the CMBS Business, was housed within the Fixed Income, Currency, and Commodities ("FICC") division, also within UBS's Investment Bank; Hatheway oversaw headcount (i.e., the number of UBS personnel) at FICC.

UBS also hired several strategists and analysts, including Plaintiff. Thus, Plaintiff began his second stint with UBS on May 31, 2011, working as a CMBS Strategist within the Mortgage Strategy Group, where he reported directly to Schumacher, and where his responsibilities included writing research articles about the CMBS market and interfacing with clients. Plaintiff was the only such Strategist reporting to Schumacher during this period, and his role in this regard includedsupporting the CMBS Business, his "internal client" at the Bank. Plaintiff did not have responsibilities over any non-CMBS securitized products, such as residential-mortgage-backed securities ("RMBS") or Asset-Backed Securities ("ABS").

***

About nine months into Plaintiff's second stint at UBS, on February 6, 2012, UBS terminated his employment. Defendants maintain that Plaintiff was let go as part of another reduction in force. Plaintiff argues that he was fired for whistleblowing to his supervisors about illegal efforts by CMBS Business personnel to sway his independent research analysis.

Murray V, 2017 WL 1498051, at *2-3 (record citations omitted).

B. The DFA Action

Plaintiff brought his first complaint against UBS in August 2012, pursuant to the Securities Whistleblower Incentives and Protection provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, 15 U.S.C. § 78u-6(h) (the "DFA"). (5914 Dkt. #1). He was represented in that case by attorneys at the firm of Broach & Stulberg, LLP ("B&S"), now known as Stulberg & Walsh LLP. (5914 Dkt. #1, 9). The case was initially assigned to the Honorable Jesse M. Furman. (5914 Dkt. #6).

UBS moved to dismiss the DFA Action, claiming that Plaintiff did not qualify as a whistleblower under the DFA because he had not alleged that he made a report of the putative misconduct to the Securities and Exchange Commission (the "SEC"). (See 5914 Dkt. #14). In Murray I, Judge Furman denied UBS's motion to dismiss, citing the decisions of other district courts to have considered the issue and an SEC rule defining who qualified as awhistleblower under the DFA. Murray I, 2013 WL 2190084, at *3-4. (5914 Dkt. #22).² Shortly after the decision was issued, on June 14, 2013, the case was reassigned to this Court. (5914 Dkt. #25).

Coincidentally, on the same day as the reassignment, UBS filed both an answer and a motion to compel arbitration of the DFA claim. (5914 Dkt. #26-29). Relatedly, UBS requested that if the motion to compel arbitration were granted, the Court dismiss, rather than stay, the DFA Action. (5914 Dkt. #31). On January 27, 2014, this Court granted the motion to compel, see Murray II, 2014 WL 285093, but stayed the case pending completion of the arbitration, see id. at *14. (5914 Dkt. #36).³ In relevant part, the Court found that: (i) UBS had not waived its right to arbitration by filing a motion to dismiss; (ii) Plaintiff's claim as pleaded arose under the DFA, and not the Sarbanes-Oxley Act of 2002, Pub. L. No. 107-204, 116 Stat. 745 ("SOX"), and accordingly was not foreclosed from arbitration; and (iii) it was up to the arbitrator, and notthe Court, to determine whether Plaintiff's claims were arbitrable. Murray II, 2014 WL 285093, at *4-14.

Clearly dispreferring arbitration of his claims, Plaintiff responded to the Court's decision with a motion to amend Murray II to include language that would permit him to petition the Second Circuit for an immediate interlocutory appeal of the Court's conclusions that: (i) "Plaintiff's claim arose under the Anti-Retaliation Provision [of the DFA], which did not include a prohibition against pre-dispute arbitration agreements"; and (ii) "Plaintiff's claim was not within the exceptions in the parties' arbitration agreements (i.e., the Employment Agreement and Form U-4)." Murray III, 2014 WL 1316472, at *1. The Court denied Plaintiff's motion, finding in relevant part that its prior decision did not involve a controlling question of law; that there was not conflicting authority on the issue; and, most importantly, that resolution of the appeal would not materially advance the ultimate termination of the litigation. Id. at *3-7.

The Court's decision denying amendment for interlocutory appeal was issued on April 1, 2014. (5914 Dkt. #44). The case has remained stayed since then. (5914 Dkt. #45). The Court understands from the parties' briefing that, after trial in the SOX Action, Plaintiff commenced, but ultimately withdrew, an arbitration demand in light of the Supreme Court's decision in Digital Realty Trust, Inc. v. Somers, 138 S. Ct. 767, 772-72 (2018). (Dkt. #357 at 3).

C. The SOX Action

1. The Motion to Dismiss

Further telegraphing his desire not to arbitrate his claims, Plaintiff commenced a second lawsuit in this District, alleging violations of 18 U.S.C. § 1514A(a), SOX's anti-retaliation provision, as well as 12 U.S.C. § 5567(a), the anti-retaliation provision of the DFA, commonly known as the Consumer Financial Protection Act (or "CFPA"). The SOX Action was filed on February 13, 2014 (Dkt. #1), one day prior to Plaintiff's motion for amendment to permit interlocutory appeal (5914 Dkt. #37-38). Again, Plaintiff was represented by lawyers from the B&S firm. (See, e.g., Dkt. #4, 5). Plaintiff then filed an amended complaint on April 21, 2014, three weeks after the Court's decision in Murray III. (Dkt. #25). In his amended complaint, Plaintiff sought relief in the form of, inter alia, reinstatement to his position at UBS, back pay, fees and costs incurred in bringing the action, and other compensatory damages. (Id.).

UBS moved to dismiss Plaintiff's SOX complaint, arguing in particular that the second lawsuit amounted to impermissible claim-splitting; in the alternative, it sought a stay of the SOX Action in favor of the prior DFA Action. (Dkt. #32-34). In an Opinion issued on February 24, 2015, the Court granted in part and denied in part the motion to dismiss and denied the motion to stay. Murray IV, 2015 WL 769586. (Dkt. #42). While the Court agreed with UBS that the two lawsuits shared a common nucleus of...