Williams v. Rosenblatt Securities Inc.
136 F. Supp. 3d 593
S.D.N.Y.
2015

Background

  • Steven Williams, former RSI strategist (Jan–Oct 2012), published a report alleging market manipulation involving Credit Suisse and HFT firms; he sent the report to the SEC and the SEC opened an investigation.
  • RSI allegedly pressured Williams after the report, moved him off the trading floor, required psychiatric treatment with Dr. Henricks, and terminated him after he refused antipsychotic medication.
  • Post-termination, Williams alleges reputation-harming statements by Jane St. and Integral harmed his subsequent employment prospects; he also alleges RSI delayed and modified access to his work emails.
  • Williams filed a multi-count fourth amended complaint asserting (inter alia) Dodd‑Frank whistleblower retaliation, SCA, ADA and NYHRL claims, § 1985/1986 conspiracy claims, and a state-law medical malpractice claim against Dr. Henricks.
  • Defendants (RSI, Jane St., Integral, Dr. Henricks) moved to dismiss. The Court: dismissed claims against Jane St., Integral, and Dr. Henricks (with limited NYHRL and malpractice claims dismissed without prejudice); allowed Williams’ Dodd‑Frank, ADA (Title I), and NYHRL claims to proceed against RSI only; denied his preliminary injunction request.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Dodd‑Frank anti‑retaliation (§21F(h)) — was Williams a protected whistleblower? Williams contends he reasonably believed securities law violations occurred, provided the report to the SEC, and assisted the SEC investigation. RSI argued he did not report a securities violation and did not follow Commission reporting procedures (Form TCR/Rule 21F‑9). Court held Williams plausibly alleges a reasonable belief and that anti‑retaliation protection does not require filing Rule 21F‑9; Dodd‑Frank claim against RSI survives.
Stored Communications Act (18 U.S.C. §2701) — did RSI unlawfully access/alter Williams’ stored emails? Williams claims RSI tampered with and locked attachments after withholding his emails post‑termination. RSI argues it was authorized to access employer emails and that alleged alterations to previously downloaded emails are not covered by the SCA. Court dismissed SCA claim: work emails on RSI servers were employer property and accessible under FINRA/authority; allegations failed to show unlawful access/alteration under the SCA.
ADA (Title I) and NYHRL employment discrimination — did Williams exhaust administrative remedies and plead timely claims? Williams alleges he was perceived as mentally ill and discriminated/harassed, and points to an EEOC charge/right‑to‑sue (in later papers). RSI argues failure to exhaust administrative remedies and possible time‑bar. Jane St. and Integral argue they are not his employers (not covered entities). Court denied dismissal as to ADA and NYHRL claims against RSI (exhaustion is an affirmative defense not apparent on face of FAC) but noted timeliness concerns; ADA and NYHRL claims against Jane St. and Integral dismissed (not employers); NYHRL claims dismissed without prejudice for non‑federal defendants.
42 U.S.C. §§1985(3)/1986 conspiracy — did Williams plead a class‑based conspiracy to deprive constitutional rights? Williams alleges a conspiracy by RSI, Jane St., and Integral to disparage him because he was perceived as mentally ill. Defendants argue allegations are conclusory, motivated by commercial animus, and lack any protected‑class animus or deprivation of a constitutional right; no state action alleged. Court dismissed §§1985(3) and 1986 claims: plaintiff failed to plead class‑based animus or an object of depriving constitutional rights; commercial motive not covered; §1986 depends on §1985.

Key Cases Cited

  • McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184 (2d Cir. 2007) (Rule 12(b)(6) standard; pleadings construed in plaintiff's favor)
  • Goldman v. Belden, 754 F.2d 1059 (2d Cir. 1985) (court not to weigh evidence on motion to dismiss)
  • Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for complaints)
  • Ashcroft v. Iqbal, 556 U.S. 662 (2009) (legal conclusions not accepted as true on a motion to dismiss)
  • Livingston v. Wyeth, 520 F.3d 344 (4th Cir. 2008) (reasonable‑belief standard in whistleblower context)
  • ATSI Commc'ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87 (2d Cir. 2007) (manipulative acts actionable under §10(b))
  • United Bhd. of Carpenters & Joiners of Am. v. Scott, 463 U.S. 825 (1983) (§1985(3) requires class‑based animus; excludes purely commercial conspiracies)
  • Novotny v. Great Am. Fed. Sav. & Loan Ass'n, 442 U.S. 366 (1979) (§1985(3) requires object of denying constitutional rights)
  • Jolly v. Coughlin, 76 F.3d 468 (2d Cir. 1996) (heightened standard for mandatory preliminary injunction)
  • Moore v. Consol Edison Co. of N.Y., 409 F.3d 506 (2d Cir. 2005) (case‑by‑case approach for injunctions to prevent witness intimidation)
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