14‐990‐cv Cruz v. HSBC
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007 IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURTʹS LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION ʺSUMMARY ORDERʺ). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 26th day of September, two thousand fourteen.
PRESENT: PIERRE N. LEVAL, DENNY CHIN, SUSAN L. CARNEY, Circuit Judges.
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JOHN CRUZ, Plaintiff‐Appellant,
v. 14‐990‐cv
HSBC BANK USA, N.A., Defendant‐Appellee.
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FOR PLAINTIFF‐APPELLANT: ANDREW GROSSO, Andrew Grosso & Associates, Washington, DC, and Nicholas J. Damadeo, Nicholas J. Damadeo, P.C., Huntington, NY, on the brief.
FOR DEFENDANT‐APPELLEE: ALLAN S. BLOOM, Proskauer Rose LLP, New York, NY.
Appeal from the United States District Court for the Eastern District of
New York (Wexler, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the judgment of the district court is AFFIRMED.
Plaintiff‐appellant John Cruz appeals from the judgment of the district
court entered March 13, 2014, dismissing his claims against defendant‐appellee HSBC
Bank USA, N.A. (ʺHSBCʺ). By memorandum and order entered March 10, 2014, the
district court granted HSBCʹs motion to dismiss pursuant to Federal Rule of Civil
Procedure 12(b)(6). We assume the partiesʹ familiarity with the facts, procedural
history, and issues for review, which we summarize briefly below.
In December 2012, Cruz commenced this diversity case asserting claims
for breach of contract, breach of the covenant of good faith and fair dealing, retaliatory
discharge, unlawful coercive conduct, and intentional infliction of emotional distress
(ʺIIEDʺ) related to the termination of his employment as a bank officer with HSBC. The
district court dismissed Cruzʹs first amended complaint for failure to state a claim. On
appeal, Cruz argues that (1) the district court erred in dismissing the breach of the
‐ 2 ‐
covenant of good faith and fair dealing claim, (2) this Court should certify to the New
York State Court of Appeals the question whether the breach of the covenant of good
faith and fair dealing that he alleges presents the basis for a claim that is cognizable in
New York, and (3) the district court erred in dismissing the IIED claim.
We review the district courtʹs dismissal of Cruzʹs first amended complaint
pursuant to Federal Rule of Civil Procedure 12(b)(6) de novo. Chambers v. Time Warner,
Inc., 282 F.3d 147, 152 (2d Cir. 2002). To survive a Rule 12(b)(6) motion to dismiss, a
complaint must plead ʺenough facts to state a claim to relief that is plausible on its face.ʺ
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Although we accept factual
allegations as true and construe all reasonable inferences in favor of Cruz, these tenets
do not apply to ʺ[t]hreadbare recitals of the elements of a cause of action, supported by
mere conclusory statements.ʺ Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
Under New York law, ʺwhere an employment is for an indefinite term it is
presumed to be a hiring at will which may be freely terminated by either party at any
time for any reason or even for no reason.ʺ Murphy v. Am. Home Prods. Corp., 58 N.Y.2d
293, 300 (1983). New York courts have consistently rejected causes of action arising
from the allegedly wrongful discharge of an at‐will employee ʺabsent violation of a
constitutional requirement, statute or contract.ʺ Sullivan v. Harnisch, 19 N.Y.3d 259, 262‐
63 (2012). The New York Court of Appeals, however, has articulated a narrow
‐ 3 ‐
exception to the long standing at‐will doctrine unique to certain employment
relationships.
In Wieder v. Skala, 80 N.Y.2d 628 (1992), the Court of Appeals sustained a
wrongful discharge claim brought by an attorney who was allegedly discharged for his
insistence that a fellow attorneyʹs unethical conduct be reported as required by the
Code of Professional Responsibility. Id. at 632, 635. Wieder explained that because an
attorneyʹs core purpose of employment as an associate of a law firm and responsibilities
as a member of the bar are ʺso closely linked as to be incapable of separation,ʺ adhering
to the professionʹs ethical standards is an implied term of an attorneyʹs employment
agreement and one that courts are well‐placed to monitor. Id. at 635‐36 (noting that the
ʺprofessional conduct implicated here . . . is critical to the unique function of self‐
regulation belonging to the legal professionʺ).
New York courts have interpreted the Wieder exception narrowly, and
subsequent attempts to broaden its scope have failed. See, e.g., Sullivan, 19 N.Y.3d at
264‐65 (declining to extend Wieder to hedge fund executive/compliance officer who was
discharged after objecting to misconduct); Horn v. N.Y. Times, 100 N.Y.2d 85, 95‐96
(2003) (declining to extend Wieder to physician who was discharged after refusing ‐‐
consistent with state law, federal regulations, and Code of Ethical Conduct ‐‐ to provide
confidential medical records requested by corporate employer). Cases analyzing Wieder
have focused on the purpose of the employment and whether reporting misconduct is
‐ 4 ‐
ʺcentralʺ to an employeeʹs role on behalf of its employer. See Horn, 100 N.Y.2d at 95‐96.
Consequently, ʺwhere an employee is merely peripherally responsible for informing his
or her employer . . . of violations of certain obligations, that person is unlikely to be
covered by the Wieder exception.ʺ Sullivan, 19 N.Y.3d at 268 (Lippman, J., dissenting).
We conclude that Cruzʹs employment with HSBC, as alleged in the first
amended complaint, does not fall within the Wieder exception. Cruz was hired by
HSBC as a Vice President and Senior Business Relationships Manager, and his core role
at HSBC was to manage accounts and supervise clients. Although Cruz was required to
report fraudulent or criminal activity pursuant to the terms of his employment and
federal law 18 U.S.C. § 4, this obligation does not implicate the Wieder exception.
Indeed, the New York Court of Appeals has affirmed the dismissal of a compliance
officerʹs claim that he was wrongfully discharged for reporting trading practices that
violated his hedge fundʹs code of ethics and securities laws because regulatory
compliance was not the core purpose of his employment. Sullivan, 19 N.Y.3d at 264.
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14‐990‐cv Cruz v. HSBC
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007 IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURTʹS LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION ʺSUMMARY ORDERʺ). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 26th day of September, two thousand fourteen.
PRESENT: PIERRE N. LEVAL, DENNY CHIN, SUSAN L. CARNEY, Circuit Judges.
‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐x
JOHN CRUZ, Plaintiff‐Appellant,
v. 14‐990‐cv
HSBC BANK USA, N.A., Defendant‐Appellee.
‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐x
FOR PLAINTIFF‐APPELLANT: ANDREW GROSSO, Andrew Grosso & Associates, Washington, DC, and Nicholas J. Damadeo, Nicholas J. Damadeo, P.C., Huntington, NY, on the brief.
FOR DEFENDANT‐APPELLEE: ALLAN S. BLOOM, Proskauer Rose LLP, New York, NY.
Appeal from the United States District Court for the Eastern District of
New York (Wexler, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the judgment of the district court is AFFIRMED.
Plaintiff‐appellant John Cruz appeals from the judgment of the district
court entered March 13, 2014, dismissing his claims against defendant‐appellee HSBC
Bank USA, N.A. (ʺHSBCʺ). By memorandum and order entered March 10, 2014, the
district court granted HSBCʹs motion to dismiss pursuant to Federal Rule of Civil
Procedure 12(b)(6). We assume the partiesʹ familiarity with the facts, procedural
history, and issues for review, which we summarize briefly below.
In December 2012, Cruz commenced this diversity case asserting claims
for breach of contract, breach of the covenant of good faith and fair dealing, retaliatory
discharge, unlawful coercive conduct, and intentional infliction of emotional distress
(ʺIIEDʺ) related to the termination of his employment as a bank officer with HSBC. The
district court dismissed Cruzʹs first amended complaint for failure to state a claim. On
appeal, Cruz argues that (1) the district court erred in dismissing the breach of the
‐ 2 ‐
covenant of good faith and fair dealing claim, (2) this Court should certify to the New
York State Court of Appeals the question whether the breach of the covenant of good
faith and fair dealing that he alleges presents the basis for a claim that is cognizable in
New York, and (3) the district court erred in dismissing the IIED claim.
We review the district courtʹs dismissal of Cruzʹs first amended complaint
pursuant to Federal Rule of Civil Procedure 12(b)(6) de novo. Chambers v. Time Warner,
Inc., 282 F.3d 147, 152 (2d Cir. 2002). To survive a Rule 12(b)(6) motion to dismiss, a
complaint must plead ʺenough facts to state a claim to relief that is plausible on its face.ʺ
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Although we accept factual
allegations as true and construe all reasonable inferences in favor of Cruz, these tenets
do not apply to ʺ[t]hreadbare recitals of the elements of a cause of action, supported by
mere conclusory statements.ʺ Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
Under New York law, ʺwhere an employment is for an indefinite term it is
presumed to be a hiring at will which may be freely terminated by either party at any
time for any reason or even for no reason.ʺ Murphy v. Am. Home Prods. Corp., 58 N.Y.2d
293, 300 (1983). New York courts have consistently rejected causes of action arising
from the allegedly wrongful discharge of an at‐will employee ʺabsent violation of a
constitutional requirement, statute or contract.ʺ Sullivan v. Harnisch, 19 N.Y.3d 259, 262‐
63 (2012). The New York Court of Appeals, however, has articulated a narrow
‐ 3 ‐
exception to the long standing at‐will doctrine unique to certain employment
relationships.
In Wieder v. Skala, 80 N.Y.2d 628 (1992), the Court of Appeals sustained a
wrongful discharge claim brought by an attorney who was allegedly discharged for his
insistence that a fellow attorneyʹs unethical conduct be reported as required by the
Code of Professional Responsibility. Id. at 632, 635. Wieder explained that because an
attorneyʹs core purpose of employment as an associate of a law firm and responsibilities
as a member of the bar are ʺso closely linked as to be incapable of separation,ʺ adhering
to the professionʹs ethical standards is an implied term of an attorneyʹs employment
agreement and one that courts are well‐placed to monitor. Id. at 635‐36 (noting that the
ʺprofessional conduct implicated here . . . is critical to the unique function of self‐
regulation belonging to the legal professionʺ).
New York courts have interpreted the Wieder exception narrowly, and
subsequent attempts to broaden its scope have failed. See, e.g., Sullivan, 19 N.Y.3d at
264‐65 (declining to extend Wieder to hedge fund executive/compliance officer who was
discharged after objecting to misconduct); Horn v. N.Y. Times, 100 N.Y.2d 85, 95‐96
(2003) (declining to extend Wieder to physician who was discharged after refusing ‐‐
consistent with state law, federal regulations, and Code of Ethical Conduct ‐‐ to provide
confidential medical records requested by corporate employer). Cases analyzing Wieder
have focused on the purpose of the employment and whether reporting misconduct is
‐ 4 ‐
ʺcentralʺ to an employeeʹs role on behalf of its employer. See Horn, 100 N.Y.2d at 95‐96.
Consequently, ʺwhere an employee is merely peripherally responsible for informing his
or her employer . . . of violations of certain obligations, that person is unlikely to be
covered by the Wieder exception.ʺ Sullivan, 19 N.Y.3d at 268 (Lippman, J., dissenting).
We conclude that Cruzʹs employment with HSBC, as alleged in the first
amended complaint, does not fall within the Wieder exception. Cruz was hired by
HSBC as a Vice President and Senior Business Relationships Manager, and his core role
at HSBC was to manage accounts and supervise clients. Although Cruz was required to
report fraudulent or criminal activity pursuant to the terms of his employment and
federal law 18 U.S.C. § 4, this obligation does not implicate the Wieder exception.
Indeed, the New York Court of Appeals has affirmed the dismissal of a compliance
officerʹs claim that he was wrongfully discharged for reporting trading practices that
violated his hedge fundʹs code of ethics and securities laws because regulatory
compliance was not the core purpose of his employment. Sullivan, 19 N.Y.3d at 264.
Cruzʹs duty to report misconduct is even further attenuated from a compliance officerʹs
duty. Because Cruz does not fall within the Wieder exception, his claim for breach of an
implied covenant of good faith and fair dealing was properly dismissed.
The New York Court of Appeals has provided sufficient controlling
precedent to permit us to determine Cruzʹs claim for breach of the covenant of good
faith and fair dealing. Hence, certification is not proper, and we deny Cruzʹs request for
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certification. Fischer & Mandell, LLP v. Citibank, N.A., 632 F.3d 793, 798 n.5 (2d Cir. 2011);
Highland Capital Mgmt. LP v. Schneider, 460 F.3d 308, 316 (2d Cir. 2006) (noting that
certification is used ʺsparinglyʺ); see N.Y. Comp. Codes R. & Regs. tit. 22, § 500.27.
Finally, we conclude that the district court properly dismissed Cruzʹs IIED
claim. The requirements of an IIED claim are ʺrigorous[] and difficult to satisfyʺ and
ʺ[l]iability has been found only where the conduct has been so outrageous in character,
and so extreme in degree, as to go beyond all possible bounds of decency, and to be
regarded as atrocious, and utterly intolerable in a civilized community.ʺ Howell v. N.Y.
Post Co., 81 N.Y.2d 115, 122 (1993) (internal quotation marks omitted). As a threshold
matter, it is for the court to determine whether alleged conduct may be regarded as so
extreme and outrageous as to permit recovery. See Stuto v. Fleishman, 164 F.3d 820, 827
(2d Cir. 1999); Howell, 81 N.Y.2d at 121. HSBCʹs conduct here, as alleged in the first
amended complaint, falls well short of extreme and outrageous. Accordingly, the IIED
claim was properly dismissed.
* * *
We have considered Cruzʹs remaining arguments and find them to be
without merit. Accordingly, we AFFIRM the judgment of the district court.
FOR THE COURT: Catherine OʹHagan Wolfe, Clerk
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