3:09-cv-00268
D. Conn.Mar 25, 2016Background
- Richard Trusz was head of UBS Realty’s valuation unit from 1989 until his termination in 2008 after he raised concerns about understaffing, valuation errors (~$27M across accounts), and allegedly unethical "side letters."
- In 2007–08 Realty considered outsourcing valuation-review work; Trusz led a benchmarking study and repeatedly warned management about staffing and errors; he also took medical leave in early 2008.
- Trusz sent resignation-threat emails in January 2008, met with senior management in February identifying specific valuation errors, and retained counsel on February 1, 2008. Shortly thereafter he filed complaints with OSHA, the EEOC, and the CT CHRO.
- Internal and external investigations (including UBS compliance and KPMG) found valuation discrepancies but concluded they were not material enough to require disclosure.
- In August 2008 Trusz’s position was eliminated retroactive to June 30; two junior staff kept working until outsourcing; Trusz has not worked since. He sued in 2009 alleging Sarbanes-Oxley, CT §33-1336, CT §31-51m whistleblower claims and a CT free-speech claim under §31-51q (ADA claim abandoned).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether UBS Realty was covered by Sarbanes-Oxley §1514A for pre-Dodd-Frank conduct | Dodd-Frank’s amendment merely clarified §1514A to cover subsidiaries; the clarification applies retroactively so Realty is covered | Amendment changed law; pre-2010 Realty was not a covered employer | Court held Dodd-Frank clarified existing law and applied retroactively; UBS Realty is subject to §1514A |
| Whether Trusz engaged in §1514A protected activity (reasonable belief of securities/SEC-related violations) | Trusz reasonably believed valuation errors and failure to disclose/return fees implicated SEC rules and the Investment Advisers Act | Defendants argue complaints were not specifically about shareholder fraud and were not objectively reasonable | Court found triable issues on both subjective belief and objective reasonableness; summary judgment inappropriate |
| Causation and clear-and-convincing rebuttal under §1514A (did protected activity contribute to termination and would defendants have fired him anyway?) | Filing with OSHA/EEOC/CHRO and internal complaints contributed to removal; O’Shea admitted he didn’t want Trusz to work on accounts while suits pending | Defendants say termination resulted from legitimate business decision to outsource valuation review and would have occurred regardless | Court found genuine disputes of fact; defendants offered evidence of outsourcing rationale but a jury must decide whether protected activity was a contributing factor and if clear-and-convincing proof of inevitable firing exists |
| CT constitutional free-speech claim under §31-51q (was speech protected under Trusz v. UBS standard?) | Speech about valuation errors, side letters, and staffing implicated official dishonesty/serious wrongdoing and served public interest | Defendants argue the speech did not allege serious wrongdoing and/or interfered with job performance | Court applied CT Supreme Court’s Trusz standard (modified Connick/Pickering); factual disputes exist on whether speech implicated official dishonesty/serious wrongdoing and on motive/impact, so summary judgment denied |
Key Cases Cited
- Tolan v. Cotton, 134 S. Ct. 1861 (2014) (summary-judgment standard requires viewing evidence in light most favorable to nonmovant)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) (court’s role at summary judgment is not to weigh evidence but to determine existence of genuine issues)
- Nielsen v. AECOM Tech. Corp., 762 F.3d 214 (2d Cir. 2014) (adopts ARB reasonable-belief standard for Sarbanes-Oxley protected activity)
- Garcetti v. Ceballos, 547 U.S. 410 (2006) (public-employee speech precedent and companion discussion of Connick/Pickering balancing)
- Trusz v. UBS Realty Investors, LLC, 319 Conn. 175 (2015) (Connecticut Supreme Court: modified Connick/Pickering test for §31-51q; speech protected only when it concerns official dishonesty, deliberate unconstitutional action, other serious wrongdoing, or threats to health and safety)
- Pope v. Shalala, 998 F.2d 473 (7th Cir. 1993) (clarifying statutory amendment may be applied retroactively when it restates prior law)
- Lawson v. FMR LLC, 670 F.3d 61 (1st Cir. 2012) (discusses limits of §1514A coverage issues)