Wiest v. Lynch

• Decision Date: 15 November 2011
• Docket Number: No. 10-3288,10-3288
• Parties: JEFFREY A. WIEST, et al., Plaintiffs, v. THOMAS J. LYNCH, et al., Defendant.
• Court: U.S. District Court — Eastern District of Pennsylvania

JEFFREY A. WIEST, et al., Plaintiffs,

v.THOMAS J. LYNCH, et al., Defendant.

No. 10-3288

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

NOVEMBER 15, 2011

CIVIL ACTION

MEMORANDUM

GENE E.K. PRATTER

I. INTRODUCTION

Jeffrey Wiest was terminated from his position in Tyco's accounts payable department in April 2010, after spending seven months on medical leave prompted by a company investigation into certain of Mr. Wiest's activities.¹ Mr. Wiest and his wife, Laura Wiest (collectively "the Wiests"), contend that the investigation and the treatment he endured as a result of it, were initiated in retaliation against him for having engaged in protected activity under the Whistleblower Protection provisions of the Sarbanes-Oxley Act of 2002 . Specifically, the Wiests allege that he questioned the company's treatment of certain event expenditures that he felt were improper in the wake of the highly publicized corporate fraud scandal involving Tyco International's former CEO, Dennis Kozlowski.

The Wiests filed an administrative complaint with the Occupational Safety and Health Administration ("OSHA") on November 24, 2009, and filed suit in federal court on July 7, 2010 (Docket No. 1) after the Secretary of Labor made no final determination within 180 days.² The Wiests' Complaint alleges violations of Section 806 of the Sarbanes-Oxley Act of 2002 ("SOX 806") and state law. On September 17, 2010, the Defendants filed a Motion to Dismiss (Docket No. 5), and on July 21, 2011, the Court issued a Memorandum and Order dismissing the Wiests' Complaint in its entirety without prejudice. Wiest, 2011 WL 2923860, at *1.

In dismissing the Complaint, the Court held that the Wiests failed to properly plead that Mr. Wiest engaged in a protected activity, the first element of a prima facie case under SOX 806.³ Id. at *10. The Court explained that the activity Mr. Wiest allegedly engaged in -communicating his concerns about certain corporate expenses - was not a "protected activity" under SOX 806, because it did not relate to shareholder fraud or a law covered by SOX 806. Id. The Court set forth the standard for what constitutes a "protected activity" as follows:

SOX protects an employee who has "provided information" to a supervisor regarding conduct that the employee "reasonably believes" violates one of the specific provisions enumerated in § 1514A. For a communication to be protected, it must "definitively and specifically" relate to one of the statutes or rules listed in § 1514A. Platone v. FLYi, Inc., ARB No. 04-154, 2006 WL 3246910, at *8 (Dep't of Labor Sept. 29, 2006), aff'd 548 F.3d 322 (4th Cir. 2008); accord Van Asdale v. Int'l Game Tech., 577 F.3d 989, 996-97 (9th Cir. 2009); Day v. Staples, Inc., 555 F.3d 42, 55 (1st Cir. 2009); Allen v. Admin.Review Bd., 514 F.3d 468, 476 (5th Cir. 2008). Although the employee does not have to cite a specific code provision or prove that a violation actually occurred, the employee's communication must express "an objectively reasonable belief there has been shareholder fraud." Day, 555 F.3d at 55. This requires that the employee's communication do more than merely allege that wrongdoing has occurred. Instead, the employee's communication must convey that his concern with any alleged misconduct is linked to "an objectively reasonable belief that the company intentionally misrepresented or omitted certain facts to investors, which were material and which risked loss." Id..; seealso Novak v. Kasaks, 216 F.3d 300, 309 (2d Cir. 2000) (noting that "allegations of GAAP violations or accounting irregularities" need to be "coupled with evidence of 'corresponding fraudulent intent' " before stating a securities fraud claim).

Id. at *4. Throughout the Memorandum and Order, relying in part on the standard enunciated by the Administrative Review Board ("ARB") in Platone and by various circuit courts of appeals, the Court ruled that the e-mail communications between Mr. Wiest and his supervisors did not convey his reasonable belief that the complained-of conduct "definitively and specifically" related to the violation of one of the statutes or rules listed in § 1514A. Id. at *5-10. Although the Defendants contested the sufficiency of the Complaint on other grounds, including deficiencies in the Wiests' pleading of the other SOX 806 elements, the Court ended its analysis with and dismissed the Complaint based on the Wiests' failure to demonstrate Mr. Wiest engaged in a protected activity. See Wiest, 2011 WL 2923860 at *4 n.4, *10.

Upon dismissing the Complaint, the Court explicitly granted the Wiests leave to file an Amended Complaint on or before August 20, 2011 (Docket No. 14). However, instead of filing an Amended Complaint, on August 10, 2011, the Wiests filed their self-styled, "Plaintiffs' Motion for Reconsideration Nunc Pro Tunc By the Eastern District Court En Banc of Judge Pratter Memorandum Opinion of July 21, 2011, Or, In the Alternative, Motion to DismissPlaintiffs' Complaint with Prejudice and Enter a Final Appealable Order and Judgment" ("Motion for Reconsideration") (Docket Nos. 15, 16) and allowed the deadline to file an Amended Complaint to lapse. In their Motion for Reconsideration, the Wiests bring to the Court's attention for the first time, Sylvester v. Parexel Int'l LLC, ARB No. 07-123, 2011 WL 2165854, at *14-15 (Dep't of Labor May 25, 2011), a May 25, 2011 ARB case overruling Platone.

For the reasons that follow, the Court will deny the Wiests' Motion for Reconsideration.⁴

II. LEGAL STANDARD

Motions for reconsideration are rarely granted due to the Court's "strong interest in the finality of judgments." Schafer v. Decision One Mortg. Corp., No. 08-5653, 2009 WL 1886071, at *3 (E.D. Pa. Jun. 30, 2009) (citing Continental Cas. Co. v. Diversified Indus., Inc., 884 F. Supp. 937, 943 (E.D. Pa. 1995)). To succeed on a motion for reconsideration, the moving party must demonstrate either (1) an intervening change in the controlling law; (2) the availability of new evidence which was not available when the court issued its order; or (3) the need to correct a manifest injustice stemming from a clear error of law or fact. Max's Seafood Cafe v. Quinteros, 176 F.3d 669, 677 (3d Cir. 1999); North River Ins. Co. v. Cigna Reins. Co., 52 F.3d 1194, 1218 (3d Cir. 1995).

A motion for reconsideration should not raise additional arguments that the movant "could have made but neglected to make prior to judgment." Holsworth v. Berg, No. 05-1116,2005 WL 1799409, at *3 (E.D. Pa. Jul. 26, 2005). Furthermore, reconsideration is not permitted simply to allow a "second bite at the apple." See Bhatnagar v. Surrendra Overseas Ltd., 52 F.3d 1220, 1231 (3d Cir. 1995).

III. DISCUSSION

The Wiests' Motion for Reconsideration hinges entirely on the ARB's May 25, 2011 decision in Sylvester, 2011 WL 2165854, which overturned Platone, a single ARB decision cited by this Court in its Memorandum and Order granting the Defendants' Motion to Dismiss. Wiest Mot. ¶¶9-12. In Sylvester the ARB held that the requirement announced in Platone that for a communication to be protected, it must "definitively and specifically" relate to shareholder fraud or one of the statutes or rules listed in § 1514A was not consistent with the purpose or language of § 1514A. See Sylvester, 2011 WL 2165854, at *14-15. Instead, the ARB noted, the complainant need only show that (1) he had a subjective belief that the complained-of conduct constitutes shareholder fraud or a violation of one of the statutes or rules listed in § 1514A , and (2) the belief was objectively reasonable. Id.

Without any discussion or analysis of the underlying cases, the Court's July 21, 2011 Memorandum and Order, or the standard for a motion for reconsideration,⁵ the Wiests contend that the Court should reconsider and reverse its ruling granting the Defendants' Motion to Dismiss. In light of the Wiests' failure to articulate which of the three potential rationales their motion relies upon for the Court to reconsider its prior ruling, the Court will analyze their motion on each of the grounds in turn. Therefore, the Court will address, first, whether the Sylvesterdecision constitutes an intervening change in the controlling law, and second, whether the court committed a clear error of law that would constitute a manifest injustice.⁶

A. No Intervening Change in the Controlling Law

At oral argument, counsel for the Wiests suggested that the Wiests' Motion for Reconsideration was based on an intervening change in the controlling law. See Tr. at 6. The Court, however, is not persuaded that the Sylvester decision constitutes an intervening change in controlling law because the ARB's decision is neither intervening nor controlling.

The Sylvester case is not an intervening change in the law because the ARB issued its opinion well before this Court ruled on the Defendants' Motion to Dismiss. The ARB issued the Sylvester decision on May 25, 2011. See Sylvester, 2011 WL 2165854. The Sylvester decision had been publicly available for almost two months before this Court issued its July 21, 2011 Memorandum and Order granting the Defendants' Motion to Dismiss. Nevertheless, the Wiests failed to bring the case to the Court's attention until August 20, 2011, a full month after it rendered its decision, and almost three months after the Sylvester case was decided. See, e.g., Marracco v. Kuder, No. 08-713, 2009 WL 235469, at *4 (D.N.J. Jan. 30, 2009) (holding that a case that the plaintiff failed to cite in her opposition to a motion to dismiss and that was decided prior to the Court's ruling on the motion to dismiss was not a "change in intervening law" for the purposes of her motion for reconsideration, and that "[i]f plaintiff believed this case supported her claim, she should have cited to it in her opposition brief."); see also Borough of Lansdale v. PP&L, Inc., 503 F. Supp. 2d 730, 743 (E.D. Pa. 2007) (denying a motion for reconsideration ofan April 5, 2006 opi...