Kell v. Iberville Bank

352 F. Supp. 3d 650
CourtDistrict Court, E.D. Louisiana
DecidedNovember 7, 2018
DocketCIVIL ACTION No. 17-1527
StatusPublished
Cited by9 cases

This text of 352 F. Supp. 3d 650 (Kell v. Iberville Bank) is published on Counsel Stack Legal Research, covering District Court, E.D. Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kell v. Iberville Bank, 352 F. Supp. 3d 650 (E.D. La. 2018).

Opinion

CARL J. BARBIER, UNITED STATES DISTRICT JUDGE

Before the Court are a Motion for Summary Judgment (Rec. Doc. 37) and a Motion for Partial Summary Judgment (Rec. Doc. 50) filed by Defendants, Iberville Bank, through its successor The First, A National Banking Association, and The First Bancshares, Inc. The Parties have briefed the former (Rec. Doc. 37) extensively; both Parties have been given leave to file supplemental memoranda. The motion for partial judgment (Rec. Doc. 50) is limited to causation of certain damages and is unopposed, so it will be GRANTED . Having considered the Motion and legal memoranda, the record, and the applicable law, the Court finds that Defendant's Motion for Summary Judgment (Rec. Doc. 37) should be GRANTED IN PART and DENIED IN PART .

FACTS AND PROCEDURAL BACKGROUND

This case involves the termination of a bank's regulatory compliance officer, allegedly motivated in part by a desire to retaliate against the officer for whistleblowing on a fraud committed by an employee at the bank. The bank, Iberville Bank, is now defunct; its successor is The First, A National Banking Association. From 1931 until 2017, Iberville bank was owned by A. Wilbert's Sons Lumber and Shingle Inc.1 ("Lumber and Shingle"). (Rec. Doc. 44 at 1).

Beginning around 2008, Iberville Bank began experiencing safety and soundness issues. According to the CEO and chairman of Lumber and Shingle, Klein Kirby, the bank owners did not receive a dividend from 2009 to 2011. (Rec. Doc. 44 at 2). On May 20 of 2010-amid these problems-Iberville Bank hired Plaintiff Jessica Kell as the bank's Compliance Officer and Bank Secrecy Act ("BSA") Compliance Officer (Rec. Doc. 44 at 3). As BSA Compliance Officer, Plaintiff was responsible for the *654supervision and administration of the bank's compliance with anti-money laundering laws, including the BSA. Among other things, the BSA requires financial institutions to report suspicious activities that might signify criminal conduct. See 31 U.S.C. §§ 5311 - 5330. Federal regulations clarify that banks are required to submit a suspicious activity report ("SAR") to the Treasury's Financial Crimes Enforcement Network ("FinCEN") if the bank detects insider abuse involving any amount within 30 days of discovering the conduct. 12 C.F.R. § 353.3.

The record indicates, and Defendants do not dispute, that between 2010 and 2014 Plaintiff received excellent ratings in her performance evaluations. In February of 2014, Plaintiff was promoted to Vice President and she received her first bonus at the end of 2015 for her performance. (Rec. Doc. 44 at 4-5). Robert Smith, the President and CEO of Iberville Bank, testified that "Jessica Kell is one of the brightest people I know" and noted that her job performance is "[a]lways good." (Rec. Doc. 44 at 5).

On September 15, 2015, Smith became aware of a loss in the insurance division of the bank-Iberville Insurance Agency, a wholly-owned subsidiary. (Rec. Doc. 44 at 5). The manager of the division, Robert Martin, was covering up that premiums on a policy insuring buses were uncollectible. The auditors who had discovered the loss found that receivables were being booked as negative payables. (Rec. Doc. 44 at 5). In total the bank lost $764,362.87. Plaintiff argues Martin was an insider of Iberville Bank. Thus, under the BSA, Iberville Bank was required to file an SAR within 30 days of discovering the loss. See 12 C.F.R. § 353.3(b).

However, Smith did not inform Plaintiff of the loss until October 19, 2015. (Rec. Doc. 44 at 6). Smith informed the Board of the loss the next day. Plaintiff testified that after the loss she found Smith to be less forthcoming with information and that she began to unexpectedly receive criticism from Smith regarding her performance, a first. (Rec. Doc. 44 at 6). She also testified in her deposition that Smith told her not to file a SAR with local law enforcement, despite a recommendation in the federal regulations that a bank do so in that circumstance. (Rec. Doc. 40-5 at 31-32). 12 C.F.R. § 353.3 ("A bank is encouraged to file a copy of the suspicious activity report with state and local law enforcement agencies where appropriate.").

On November 16, 2015, regulators began the FDIC Compliance and Community Reinvestment Act exam. The Safety and Soundness exam began on December 7, 2015. On January 20, 2016, Smith informed Plaintiff that she could no longer work from home and reminded her that she was "an at-will employee, meaning that the Bank or [Plaintiff] may terminate the employment relationship at any time." (Rec. Doc. 40-3 at 56). A week later, the bank rehired Jeannie Guillory with the intention she become the new BSA Officer. (Rec. Doc. 44 at 5). On February 5, 2016, regulators informed in bank in its exit interview for the Safety and Sound exam that the bank was not completing its obligations under the BSA in a satisfactory manner. (Rec. Doc. 44 at 8). A reason for this was that SARs were not being filed timely, which contributed to the evaluator's conclusion that "[t]he BSA Office is unable to devote sufficient time to BSA-related duties because of other significant duties at the bank." (Rec. Doc. 40-5 at 64).

On February 22, 2016, the bank placed Plaintiff on a 90-day probation, purportedly because of the bank's poor performance on the compliance and safety and soundness exams. (Rec. Doc. 44 at 9). That same day, Plaintiff called the FDIC ombudsman *655by dialing an 800 number. (Rec. Doc. 40-5 at 241-242). Plaintiff recalls that during her 26-minute phone call, she summarized the events described above and said that she believed the bank was attempting a cover-up of some type. (Rec. Doc. 44 at 9). On March 2, after a phone call with a special agent at the FDIC, Plaintiff e-mailed to that agent over 400 pages of documents concerning the loss in the insurance division. (Rec. Doc. 40-5 at 51). Plaintiff had stored these documents on the cloud.

On March 11, 2016, the bank's IT manager, Robin Pitre, discovered that Plaintiff had stored these documents on the cloud. (Rec. Doc. 44 at 10). Plaintiff knew that Pitre would have to report this as a security violation but asked whether Pitre would have to report the names of the files. (Rec. Doc. 40-5 at 24). The names on the files stored in the cloud revealed that they related to the insurance loss. Pitre took screen shots of the names of the documents.

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352 F. Supp. 3d 650, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kell-v-iberville-bank-laed-2018.