Taft v. Agric. Bank of China Ltd.

• Decision Date: 06 January 2016
• Docket Number: 15 Civ. 5321 (PAE)
• Citation: 156 F.Supp.3d 407
• Parties: Natasha Taft, Plaintiff, v. Agricultural Bank of China Ltd., Defendant.
• Court: U.S. District Court — Southern District of New York

156 F.Supp.3d 407

Natasha Taft, Plaintiff,

v.Agricultural Bank of China Ltd., Defendant.

15 Civ. 5321 (PAE)

United States District Court, S.D. New York.

Signed January 6, 2016

Brian Adam Heller, Matthew Thomas Schatz, Davida S. Perry, Schwartz & Perry, New York, NY, for Plaintiff.

Glenn Kurtz, Kimberly Anne Haviv, Tal Marnin, White & Case LLP, New York, NY, for Defendant.

OPINION & ORDER

PAUL A. ENGELMAYER, District Judge

This case involves allegations of anti-whistleblower retaliation and gender-based discrimination. Plaintiff Natasha Taft alleges that she was employed by defendant Agricultural Bank of China Ltd. (“ABC”) as chief compliance officer in the New York office until she was constructively discharged after under a year of employment. She alleges that she was subjected to frequent sexually charged comments and gender-related mistreatment, and, further, that ABC retaliated against her after she brought certain issues to the attention of the Federal Reserve Bank of New York (“FRBNY”).

ABC has now moved to dismiss Taft's whistleblower claim. For the reasons that follow, the motion to dismiss is granted with leave to replead.

I. Background¹

A. Facts

Taft was employed by ABC between August 2014 and June 5, 2015, when, she alleges, she was constructively discharged. Am. Compl. ¶ 3. During this time, she was the chief compliance officer and head of legal and compliance at the New York branch. Id. ¶ 6. Taft had 18 years of experience in compliance and anti-money laundering. Id. ¶ 8. As chief compliance officer, she reported to Jason Zhang, the branch's deputy general manager; Ming Yu was the general manager. Id. ¶ 7. During this time, Taft was the only “C” level female (referring to corporate management) and the only non-Chinese female manager. Id. ¶ 9.

In her capacity as chief compliance officer, Taft alleges, she identified certain “areas of regulatory and compliance concerns,” which she shared with Yu and other senior managers. Id. ¶ 14. These persons “strongly resisted Taft's effort to address these concerns with the regulators” and told Taft “she was wrong and that there were no issues,” a brush-off that Taft claims was motivated by gender discrimination. Id. ¶ 15. However, Taft was eventually “permitted” on November 12, 2014 to submit a memorandum to the Supervisory Manager of Foreign Financial Institutions of the FRBNY conveying some of the concerns Taft had raised with her supervisors. Id. ¶ 16.²

In her cover email to the FRBNY, to which the memo was attached, Taft stated that she “had to go through some lengthy internal discussions before finalizing the memo.” Memo at 1.³ Taft added: “I included my concerns ... and the results of my due diligence for industry practices.” Id. Her cover email concluded: “I really appreciate your guidance and support so we can implement appropriate controls.” Id.

The memo begins by referring to a prior conversation between Taft and the FRBNY's Supervisory Manager. Id. at 3. The memo concerns the collection of customer information related to certain transactions. Specifically, it expresses “concerns” and seeks “guidance” about the Compliance Department's discovery of a “number of transactions related to clearing US Dollars for ABC's Trade related customers for Letters of Credit and Collection transactions,” with respect to which the customers “are not identified on [the] payment messages.” Id. at 3. The memo states: “Compliance believes this represents risk for adequate [Office of Foreign Assets Control] screening or [anti-money laundering] monitoring controls.” Id. at 4.

In seeking the FRBNY's guidance on this issue, the memo reports that “Compliance ... reached out to other banks, consulting firms and the regulators to better understand what the regulatory expectations are and what the industry practices are with respect to such transactions.” Id. The memo adds that “Compliance was not able to identify specific regulation with respect to such scenarios,” although it identified “various methods” in the industry for addressing the issue. Id. The memo concludes by stating that “Trade Finance is a new frontier for money laundering and the regulators are taking a very firm approach to ensure clearing banks have adequate policies and controls,” and, therefore, that “we seek your guidance to further address this issue.” Id. at 5.

Taft also alleges that she had “several conversations with the Supervisory Manager both before and after sending the memorandum” to the FRBNY, during which she “discussed her concerns about possible violations of law by ABC.” Am. Compl. ¶ 17.

In February 2015, Taft alleges, the FRBNY responded to the memo by letter, id. ¶ 18, “caus[ing] serious concerns for ABC that had to be addressed before the next examination by the regulators,” id. ¶ 19. ABC's management then “became furious at Taft for the Fed's response,” id. ¶ 20, and took various adverse actions against her. These included: (1) prohibiting her from communicating with regulators, outside attorneys, and ABC's general manager; (2) transferring her job responsibilities to a person with no compliance experience; (3) disparaging her and blaming her for the regulators' response; (4) requiring her to report to the chief financial officer, which allegedly harmed her independence and ability to do her job; (5) refusing to approve certain of her decisions; and (6) pressuring her to terminate other employees. Id. ¶ 22. Ultimately, ABC allegedly sought to punish Taft by terminating her most senior compliance officer, even after Taft had given the officer a strong performance evaluation. Id. ¶ 24.

These alleged adverse actions caused Taft “severe emotional and physical distress,” id. ¶ 23, requiring medical attention and ultimately causing Taft to apply for short-term disability leave on or about April 6, 2015, id. ¶ 25. Taft soon after filed a formal complaint of gender and whistleblower discrimination with ABC's human resources department, id. ¶ 26, and retained counsel, id. ¶ 28. ABC investigated Taft's complaint and ultimately rejected her allegations. Id. ¶ 29. With her disability leave set to expire on June 5, 2015, Taft decided not to “return to the same workplace where she had been subjected to discrimination.” Id. ¶ 31.

B. Procedural History

On July 9, 2015, Taft filed an initial Complaint. Dkt. 1 (“Compl.”). It brought three claims: (1) gender discrimination in violation of the New York City Human Rights Law, see id. ¶¶ 33–42; (2) whistleblower discrimination under the Bank Secrecy Act (“BSA”), 31 U.S.C. § 5328, see id. ¶¶ 43–49; and (3) whistleblower discrimination under the Financial Institutions Reform, Recovery, and Enforcement Act (“FIRREA”), 12 U.S.C. § 1831j, see id. ¶¶ 50–56.

On September 18, 2015, ABC moved to dismiss the second and third claims. Dkt. 16. On October 6, 2015, Taft filed an amended complaint, which dropped the FIRREA claim but retained the others. Taft seeks $8 million in compensatory and punitive damages.

On October 30, 2015, ABC again moved to dismiss the BSA whistleblower claim. Dkt. 27. ABC submitted a memorandum of law in support of its motion, Dkt. 34 (“ABC Br.”), and a declaration of Kimberly A. Haviv, Dkt. 33 (“Haviv Decl.”), and attached exhibits. On November 13, 2015, Taft submitted a memorandum of law in opposition, Dkt. 39 (“Taft Br.”), and a declaration of Brian Heller, Dkt. 36 (“Heller Decl.”), and attached exhibits. On November 20, 2015, ABC submitted a reply brief. Dkt. 43 (“ABC Reply”).⁴ On December 11, 2015, the Court held argument.

II. Legal Standards on a Motion to Dismiss

To survive a motion to dismiss under Rule 12(b)(6), a complaint must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A claim has “facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). A complaint is properly dismissed where, as a matter of law, “the allegations in a complaint, however true, could not raise a claim of entitlement to relief.” Twombly , 550 U.S. at 558, 127 S.Ct. 1955.

In considering a motion to dismiss, a district court must “accept [ ] all factual claims in the complaint as true, and draw[ ] all reasonable inferences in the plaintiff's favor.” Lotes Co. v. Hon Hai Precision Indus. Co. , 753 F.3d 395, 403 (2d Cir.2014) (quoting Famous Horse Inc. v. 5th Ave. Photo Inc. , 624 F.3d 106, 108 (2d Cir.2010) ) (internal quotation marks omitted). However, “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.” Iqbal , 556 U.S. at 678, 129 S.Ct. 1937. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id . “[R]ather, the complaint's factual allegations must be enough to raise a right to relief above the speculative level, i.e. , enough to make the claim plausible.” Arista Records, LLC v. Doe 3 , 604 F.3d 110, 120 (2d Cir.2010) (quoting Twombly , 550 U.S. at 555, 570, 127 S.Ct. 1955 ) (internal quotation marks omitted) (emphasis in Arista Records ).

III. Discussion

Taft's whistleblower protection claim arises under a provision of the BSA, codified at 31 U.S.C. § 5328(a), which provides:

No financial institution or nonfinancial trade or business may discharge or otherwise discriminate against any employee with respect to compensation, terms, conditions, or privileges of employment because the employee (or any person acting pursuant to the request of the employee) provided information to the Secretary of the Treasury, the Attorney General, or any Federal supervisory agency regarding a possible violation of any provision of this subchapter or section 1956, 1957, or 1960 of title 18, or any regulation under any such provision, by the financial

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