Verble v. Morgan Stanley Smith Barney, LLC

148 F. Supp. 3d 644, 2015 U.S. Dist. LEXIS 164495, 2015 WL 8328561
CourtDistrict Court, E.D. Tennessee
DecidedDecember 8, 2015
DocketNo.: 3:15-CV-74-TAV-CCS
StatusPublished
Cited by11 cases

This text of 148 F. Supp. 3d 644 (Verble v. Morgan Stanley Smith Barney, LLC) is published on Counsel Stack Legal Research, covering District Court, E.D. Tennessee primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Verble v. Morgan Stanley Smith Barney, LLC, 148 F. Supp. 3d 644, 2015 U.S. Dist. LEXIS 164495, 2015 WL 8328561 (E.D. Tenn. 2015).

Opinion

MEMORANDUM OPINION

Thomas A. Varlan, CHIEF UNITED STATES DISTRICT JUDGE

This civil matter is before the Court on the motion to dismiss filed by defendants Morgan Stanley Smith Barney, LLC (“MSSB”) and Morgan Stanley & Co., Inc. (“MSC”) [Doc. 10].1 Plaintiff filed a response [Doc. 17], and defendants replied [Doc. 19], The United States Securities and Exchange Commission ,(“SEC”) filed an Amicus Curiae brief on behalf of plaintiff [Doc. 22], and defendants responded [Doc. 23]. The SEC also filed four notices of supplemental authority [Docs. 24, 26, 28, 30], and defendants responded to each notice [Docs; 25, 27, 29, 31]. After careful consideration of the complaint and the relevant law, the Court will grant defendants’ motion to dismiss plaintiffs complaint and will dismiss this ease.

I. Background2

Plaintiff began working for defendant, MSSB, as a financial advisor in November 2006 [Doc. 1 ¶ 9], Plaintiff alleges that between November 2006 and March 2010, he became aware of numerous criminal activities on the part of both MSSB and some of MSSB’s clients [Id. ¶ 11], These activities included fraud upon the government, fraud and wrongdoing in the securities industry, as well as fraud and wrongdoing in publically traded companies [Id. ¶ 12].

Plaintiff alleges that he was a confidential source to the Federal Bureau of Investigation (“FBI”) during its investigation into Pilot Flying J [Id. ¶20]. Plaintiff claims that his collaboration with the FBI resulted in ten former employees of Pilot Flying J pleading guilty to fraud-related charges involving a fuel rebate scheme [Id. ¶ 20].

During the course of the investigation, plaintiff alleges that he wore a wire and uncovered insider trading activities at MSSB, all in violation of the Sarbanes-Oxley Act [Id. ¶ 28]. Plaintiff alleges that he also worked with the Securities and Exchange Commission (“SEC”) to uncover insider trading and Sarbanes-Oxley Act violations [Id. ¶ 29]. In particular, plaintiff claims to have uncovered insider trading among members of MSSB’s Knoxville office and their clients with regard to Miller Energy stock [Id. ¶ 30]. On September 20, 2013, plaintiff brought these concerns to the SEC [Id. ¶48].

In November 2012 and again in March 2013, plaintiff’s colleague at MSSB, Brian Massengill, observed plaintiff getting into a black sedan with tinted windows accompanied by what appeared to be federal agents [Id. ¶ 13]. Massengill asked plaintiff in November 2012 whether he was working with the FBI and plaintiff stated that he was working with the staff of Congressman John Duncan [Id.].

On May 7, 2013, executives at MSSB called plaintiff into a conference room where four other MSSB employees were present, including a lawyer, Daniel Dere-chin [Id. ¶ 14]. Derechin asked plaintiff a series of questions concerning whether plaintiff ■ was cooperating ' with the FBI [Id.]. Plaintiff did not discuss any details of his involvement in any investigation or [648]*648prosecution, but he alleges that his evasive answers signaled to defendants that he was working with federal and/or state authorities [Id. ¶ 16]. During this meeting, the branch manager at MSSB, David Elias, told plaintiff “I am going to take you outside and whip your ass!” [Id. ¶ 17]. Plaintiff then got up and left the room [Id. ¶ 18], He called the Knoxville FBI office and related the incident and the physical threat to the FBI [Id. ¶ 19].

The next day, Elias told plaintiff he was being placed on temporary leave with pay and that he was not to come into the office or to contact clients [Id. ¶ 21]. Plaintiff remained in that status until he was terminated in June 2013 [Id.]. Before plaintiffs termination, he brought to defendants’ attention the fact that executive employees of defendants’ Knoxville branch were violating both SEC regulations and the Sar-banes-Oxley Act [Id. ¶ 47].

After Elias placed plaintiff on administrative leave, he advised other financial advisors to inform plaintiffs clients that “Dr. John is in trouble” [Id. ¶ 33]. Plaintiff alleges that MSSB slandered plaintiff in his trade to his former clients and others, thus impeding plaintiffs ability to earn a living [Id. ¶ 34].

Plaintiff alleges that he was terminated as a result of his involvement in assisting the FBI’s investigation [Id, ¶22]. Per a letter from Elias to plaintiff, referenced in the complaint, defendants assert that plaintiffs cooperation with the FBI was not the cause of plaintiffs discharge [Id. ¶ 44]. Rather, according to plaintiff, defendants claim that plaintiff was terminated because of a “gift” plaintiffs daughter received five years earlier [Id. ¶ 44].3 Plaintiff proclaims that defendants’ proffered reason is pretextual [Id. ¶ 45].

Plaintiff asserts-that defendants are currently holding $242,471 of his money [Id. ¶27]. He also alleges that as a result of defendants’ actions, he has suffered acute emotional distress, which has caused substantial physical injuries, including acute gastrointestinal' distress, chronic headaches, and episodic impairment of his vision [Id. ¶ 56],

Plaintiff claims he was terminated because he assisted federal authorities with regard to (1) fraud perpetrated upon the government of the United States; (2) wrongdoing in the securities industry; (3) fraud and other wrongs committed by persons with regard to a publically traded company [Id. ¶ 53],

Plaintiff filéd a complaint to commence this action against MSSB and MSC [Id. at 1]. Plaintiff alleges the following claims: (1) a Sarbanes-Oxley retaliation claim, (2) a Dodd-Frank Act retaliation claim; (3) a False Claims Act retaliation claim; (4) and various state-law claims [Id. ¶¶1-2]. Defendants filed a motion to dismiss all of plaintiffs claims [Doc, 10].

[649]*649II. Standard of Review

Federal Rule of Civil Procedure 8(a)(2) sets out a liberal pleading standard, Smith v. City of Salem, 378 F.3d 566, 576 n. 1 (6th Cir.2004), requiring only “ ‘a short and plain statement of the claim showing that the pleader is entitled to relief,’ in order to ‘give the [opposing party] fair notice of what the ... claim is and the grounds upon which it rests,’ ” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). Detailed factual allegations are not required, but a party’s “obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief requires more than labels and conclusions.” Twombly, 550 U.S. at 555, 127 S.Ct. 1955. “[A] formulaic recitation of the elements of a cause of action will not do,” neither will “.‘naked assertion[s]’ devoid of ‘further factual enhancement,]’” nor “an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal,

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Bluebook (online)
148 F. Supp. 3d 644, 2015 U.S. Dist. LEXIS 164495, 2015 WL 8328561, Counsel Stack Legal Research, https://law.counselstack.com/opinion/verble-v-morgan-stanley-smith-barney-llc-tned-2015.