Sharkey v. J.P. Morgan Chase & Co.
| Decision Date | 05 March 2018 |
| Docket Number | 10cv3824 (DLC) |
| Parties | JENNIFER SHARKEY, Plaintiff, v. J.P. MORGAN CHASE & CO., JOE KENNEY, ADAM GREEN, and LESLIE LASSITER, in their official and individual capacities, Defendants. |
| Court | U.S. District Court — Southern District of New York |
For the plaintiff:
Douglas H. Wigdor
Michael J. Willemin
Wigdor LLP
85 Fifth Avenue
5th Floor
New York, New York 10003
For the defendants:
Michael D. Schissel
Kathleen Reilly
Arnold & Porter Kaye Scholer LLP
250 West 55th Street
New York, New York 10019
This Sarbanes-Oxley retaliation case has been pending for nearly nine years. After multiple dismissals and appeals, the case was tried to verdict before a jury in November 2017. At the conclusion of the five-day trial, the jury awarded plaintiff Jennifer Sharkey ("Sharkey") $563,000 in back pay damages, and an identical amount for her emotional distress. Neither amount can be supported by the trial record. With reluctance, the Court concludes that awards of damages of this magnitude reflect a verdict infected by passion and prejudice. Defendants have moved for post-verdict relief. For the reasons given below, judgment as a matter of law is entered in the defendants' favor on a portion of the damages claim, a new trial is conditionally ordered on that portion of the damages, and a new trial is ordered on liability and the remainder of the plaintiff's request for damages.
Following her discharge in August 2009 by J.P. Morgan Chase & Co. ("J.P. Morgan"), on October 22, 2009, Sharkey filed a complaint with the Occupational Safety and Health Administration ("OSHA") alleging violations of Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1514A ("SOX"). On or about April 12, 2010, OSHA issued an order dismissing her complaint.
Sharkey then brought this action by filing a complaint on May 10, 2010, alleging the same SOX claims. The case was assigned to the Honorable Robert W. Sweet. Defendants moved to dismiss the complaint, and on January 14, 2011, the motion was granted with leave to replead. Sharkey v. J.P. Morgan Chase, 2011 WL 135026 (S.D.N.Y. Jan. 14, 2011). A subsequent motion to dismiss the amended complaint was denied on August 19, 2011. Sharkey v. J.P. Morgan Chase, 805 F. Supp. 2d 45 (S.D.N.Y.2011).
On December 12, 2013, Judge Sweet granted the defendants' motion for summary judgment. Sharkey v. J.P. Morgan Chase, 2013 WL 10796833 (S.D.N.Y. Dec. 12, 2013). The Second Circuit vacated and remanded that decision on October 9, 2014 for reconsideration in light of Nielsen v. AECOM Tech. Corp., 762 F.3d 214, 221-22 (2d Cir. 2014) and Bechtel v. Admin. Review Bd., 710 F.3d 443, 451 (2d Cir. 2013). Sharkey v. J.P. Morgan Chase, 580 F. App'x 28 (2d Cir. 2014).
The defendants again moved for summary judgment, and on October 9, 2015, the motion was granted on the basis that Sharkey had failed to make a prima facie showing that any protected activity under SOX was a contributing factor in her firing. Sharkey v. J.P. Morgan Chase, 2015 WL 5920019 (S.D.N.Y. Oct. 9, 2015). The Second Circuit then vacated and remanded that finding, holding that the temporal proximity between the protected activity and her discharge was sufficient to establish a prima facie case. Sharkey v. JP Morgan Chase, 660 F. App'x 65 (2d Cir. 2016). The Second Circuit also declined to affirm on the basis of the defendants' alternative ground, that Sharkey lacked a reasonable belief for her reports of fraud, holding that the issue gave rise to disputes of fact, and did not compel the conclusion that Sharkey lacked a reasonable belief of fraud.Id.
After further proceedings before Judge Sweet, including rulings on motions in limine on January 26, 2017, the case was reassigned to this Court on April 20, 2017. This Court then held conferences on May 5 and July 31, 2017, to determine if any of Judge Sweet's rulings merited reconsideration. At the July 31 conference, the Court declined to change any of Judge Sweet's rulings on the motions in limine. The case was tried over five days between October 30 and November 6, 2017.
At the end of the plaintiff's testimony, defendants made an oral motion for a directed verdict as a matter of law on all issues of liability. The Court reserved decision. After the conclusion of the evidence, on November 4, 2017, the defendants again made a motion for judgment as a matter of law. Both the defendants and the plaintiff submitted briefs on the motion. On November 6, the case was submitted to the jury, and on November 7, the jury returned a verdict.
The jury found that Sharkey had not proven her case as to two of the defendants, Joe Kenney and Adam Green.1 As to defendants Leslie Lassiter and J.P. Morgan, the jury found that Sharkey had proven her claim of retaliation, and that Lassiterand J.P. Morgan had failed to prove their affirmative defense. As to damages, the jury found that the defendants had not shown that Sharkey failed to mitigate her damages and that she was entitled to $563,000 in back pay. The jury also found that Sharkey was entitled to emotional distress damages, and awarded her the identical amount of damages for her emotional distress, $563,000.
The defendants then renewed their motions as to J.P. Morgan and Lassiter, and added a request in the alternative for a new trial. The Court also made post-verdict comments on the record generally indicating the Court's inclination as to the post-verdict motions. The motions became fully submitted on December 20, 2017.
The undisputed and/or overwhelming weight of the trial evidence established the following. Sharkey had worked in the banking industry for approximate 12 years before joining J.P. Morgan in November 2006 as a private banker. In 2008, J.P. Morgan restructured certain of its services for its high-net-worth clients. The restructuring placed one person in charge of each client relationship, a person which J.P. Morgan called a "Private Wealth Manager." The wealth manager effectively served as the face of the bank, and was the primary point of contactfor the client for all issues related to the banking relationship. The position therefore required that individual to be familiar with each aspect of the bank's offerings to effectively serve their clients. As part of the restructuring, J.P. Morgan brought in Leslie Lassiter to run its New-York-City-based operations.
When Lassiter arrived in New York City, she had to staff the new wealth manager positions. Lassiter had never worked with Sharkey and did not know her, but she did interview Sharkey and, based on Sharkey's background and previous work, gave her an opportunity to become a private wealth manager. This was a promotion for Sharkey, and required Sharkey to become familiar with banking services Sharkey had never handled before. Sharkey began her work as a private wealth manager in August or September of 2008.
Sharkey had some difficulties learning and performing her new job. She failed the Series 7 securities examination twice.2 She was consistently tardy in conducting the due diligence associated with the bank's Know Your Client ("KYC") obligations. In conversations with Sharkey regarding her performance in April and May 2009, Lassiter highlighted the deficiencies in Sharkey'sperformance, including poor performance with investments and failure to complete KYCs in a timely manner. After a J.P. Morgan biannual regional talent review meeting in June 2009, and a national talent review in mid-July 2009, Sharkey's employment would have been near-termination but for Lassiter's strong support of Sharkey. Then, on July 21, Lassiter learned from Sharkey's largest client -- who was referred to at trial as Client H -- that Sharkey had lied to Lassiter about returning the client's calls.3 The client's representative called Sharkey a "phantom." That day, Lassiter told Green about the incident. Green then wrote to Kenney to inform him that there was an incident, and that the incident was viewed as a dischargeable offense. After consulting with her superiors and human resources, Lassiter terminated Sharkey's employment. Sharkey's employment ended on August 5, 2009. In her exit interview with Steve Grande of the Human Resources department, Sharkey made no reference whatsoever to a claim of retaliation. By contrast, Grande informed her, as Sharkey admitted she was so informed by both Lassiter and Grande, that she was discharged because of a significant lapse in judgment regarding Client H.
Against the powerful documentary and testimonial evidence which showed that Sharkey was not performing her job adequately and that her employment was terminated because she lied to the very supervisor who had recently promoted and defended her, Sharkey offered a counter-narrative. Sharkey contended that her employment was terminated because of retaliation when she expressed concerns about a bank client known at trial as Client A.4
At trial, there was absolutely no evidence that Client A was engaged in any illegal activity and insufficient evidence to permit anyone to form a reasonable belief that he was. Instead, the primary issue was whether Client A was appropriately responsive to requests made of him in the course of the KYC inquiry. The bank's risk compliance department had, in March 2009, compiled a list of items that needed to be gathered from Client A as part of the bank's KYC protocol.
Client A was assigned to Sharkey in early April 2009. Sharkey and others at the bank called Client A shortly thereafter to obtain the items identified by the risk department. The memorandum from this call recorded that Client A had good explanations for nearly all of the concerns raised in the risk department's memorandum. The next day, Sharkey sent an e-mail to Client A, telling him that the information he provided on the call was very helpful, and formally requesting the documentation they discussed. Within 8 days, Client A provided the documents that responded to all but three of the requests....
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