Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_09-cv-04129/USCOURTS-cand-4_09-cv-04129-2/pdf.json

Nature of Suit Code: 442
Nature of Suit: Civil Rights Employment
Cause of Action: 28:1332 Diversity-Employment Discrimination

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

FREDERICK CASISSA,

Plaintiff,

 v.

FIRST REPUBLIC BANK, a division of,

MERRILL LYNCH BANK & TRUST COMPANY,

FSB,

Defendant. /

ELIZABETH RIGGINS,

Plaintiff,

 v.

FIRST REPUBLIC BANK, a division of,

MERRILL LYNCH BANK & TRUST COMPANY,

FSB,

Defendant. /

No. C 09-04129 CW

ORDER DENYING

DEFENDANT’S MOTION

TO DISMISS

(Docket No. 32)

(consolidated with

09-4129)

Plaintiffs Frederick Casissa and Elizabeth Riggins bring

claims against Defendant First Republic Bank concerning the

termination of their employment. Defendant moves to dismiss

Plaintiffs’ Second Amended Complaint (2AC). Plaintiffs oppose the

motion. The motion was heard on July 1, 2010. Having considered

oral argument and all the papers submitted by the parties, the

Court DENIES Defendant’s Motion.

Case 4:09-cv-04129-CW Document 41 Filed 07/19/10 Page 1 of 8
United States District Court

For the Northern District of California

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BACKGROUND

Plaintiffs are California residents who were employees of

Defendant. During the relevant period, Defendant appears to have

been a division of Merrill Lynch Bank and Trust, FSB. The

following allegations are contained in Plaintiffs’ complaint. 

Defendant employed Casissa as “the Bank Secrecy Act/Anti-Money

Laundering . . . compliance officer” and Riggins as a “Bank AntiMoney Laundering Analyst.” 2AC ¶¶ 7 and 10. Plaintiffs maintain

they were under legal duties to, among other things, report

evidence of suspicious activity to the Financial Crimes Enforcement

Network (FCEN), a bureau of the U.S. Department of the Treasury. 

On or about October 31, 2007, Riggins learned through a news

article that two of Defendant’s customers were “suspected of

operating an unlawful ‘Ponzi’ scheme” and that their assets had

been seized by law enforcement authorities. 2AC ¶ 17. The article

indicated that Defendant held “$40 million in defaulted loans” by

the two customers. 2AC ¶ 17. Riggins informed Casissa of the

report. In turn, Casissa contacted Edward Dobranski, his immediate

supervisor and vice president and general counsel for Defendant. 

Casissa informed Dobranski that Defendant was required to file a

Suspicious Activity Report (SAR) regarding the two customers. 

Dobranski instructed Plaintiffs “to take no actions” concerning the

report. 2AC ¶ 20. Plaintiffs then told Dobranski that they

“refused to participate in any conduct contrary to law and

regulations governing their duties and responsibilities at the

Bank, including specifically not filing a SAR regarding” these two

customers. 2AC ¶ 21. Thereafter, Plaintiffs investigated the

customers’ accounts, at the behest of Merrill Lynch executives. 

Case 4:09-cv-04129-CW Document 41 Filed 07/19/10 Page 2 of 8
United States District Court

For the Northern District of California

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Plaintiffs complain that their investigation was impeded by the

deliberate withholding of documents. 

On or about March 11, 2008, Riggins learned that, in August,

2007, Defendant had been served with a subpoena for the banking

records of another customer. This subpoena “had been deliberately

withheld from” Plaintiffs by Dobranski and other employees. 2AC

¶ 25. When Casissa asked Dobranski about the subpoena, Dobranski

acknowledged its existence and instructed Plaintiffs “not to worry

and to take no action.” 2AC ¶ 28. Plaintiffs believed that the

subpoena required the filing of a SAR and again stated to Dobranski

that they refused to participate in any conduct contrary to law. 

On March 14, 2008, Casissa informed Robert Werner at Merrill

Lynch about his concerns regarding the subpoena. Werner stated

that he had no prior knowledge of the subpoena. Plaintiffs again

reiterated that they refused to participate in any conduct contrary

to law. 

Beginning in or about March, 2008, Defendant engaged in acts

of retaliation against Plaintiffs that prevented them from

performing their job duties, including withholding information,

imposing “unnecessary and punitive administrative duties and

responsibilities,” hiring “an inexperienced and unqualified

individual as ‘Chief Risk Officer,’” and excluding them from

meetings. 2AC ¶ 32. This alleged chain of events culminated in

the termination of Plaintiffs’ employment on May 29, 2009. 

Defendant indicated to Plaintiffs that the terminations were the

result of restructuring and reorganization. However, Plaintiffs

contend that their positions were “posted on the Internet.” 2AC

¶ 34. Casissa’s position was subsequently filled. 

Case 4:09-cv-04129-CW Document 41 Filed 07/19/10 Page 3 of 8
United States District Court

For the Northern District of California

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Plaintiffs bring claims under California law, asserting that

Defendant violated California Labor Code section 1102.5(c) and

terminated their employment in violation of public policy.

On April 16, 2010, the Court dismissed Plaintiffs’ First

Amended Complaint, but granted them leave to amend to plead factual

allegations in support of their claims. Plaintiffs filed their

current complaint on April 30, 2010. 

LEGAL STANDARD

A complaint must contain a “short and plain statement of the

claim showing that the pleader is entitled to relief.” Fed. R.

Civ. P. 8(a). Dismissal under Rule 12(b)(6) for failure to state a

claim is appropriate only when the complaint does not give the

defendant fair notice of a legally cognizable claim and the grounds

on which it rests. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555

(2007). In considering whether the complaint is sufficient to

state a claim, the court will take all material allegations as true

and construe them in the light most favorable to the plaintiff. NL

Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986). 

However, this principle is inapplicable to legal conclusions;

“threadbare recitals of the elements of a cause of action,

supported by mere conclusory statements,” are not taken as true. 

Ashcroft v. Iqbal, ___ U.S. ___, 129 S. Ct. 1937, 1949-50 (2009)

(citing Twombly, 550 U.S. at 555).

DISCUSSION

I. Claims under California Labor Code Section 1102.5

California Labor Code section 1102.5(c) forbids an employer

from taking retaliatory action against an employee for “refusing to

participate in an activity that would result in a violation of

Case 4:09-cv-04129-CW Document 41 Filed 07/19/10 Page 4 of 8
United States District Court

For the Northern District of California

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state or federal statute, or a violation or noncompliance with a

state or federal rule or regulation.” The California Legislature

intended “to protect employees who refuse to act at the direction

of their employer or refuse to participate in activities of an

employer that would result in a violation of law.” Act of Sep. 22,

2003, ch. 484, § 1, 2003 Cal. Legis. Serv. 484. 

To plead a prima facie case under section 1102.5, Plaintiffs

must allege that (1) they engaged in a protected activity,

(2) Defendant subjected them to adverse employment actions and

(3) there is a causal link between the two. Mokler v. County of

Orange, 157 Cal. App. 4th 121, 138 (2007). Defendant contends that

Plaintiffs fail to plead that they engaged in protected activity

and retaliatory causation. 

Although Plaintiffs failed to plead protected activity in

their first amended complaint, they do so here. Under 31 C.F.R.

§ 103.18(a)(1), every bank is required to file “a report of any

suspicious transaction relevant to a possible violation of law or

regulation.” See also 12 C.F.R. § 353.3(a)(2) (requiring a report

whenever “the bank detects any known or suspected federal criminal

violation, or pattern of criminal violations . . . involving a

transaction or transactions conducted through the bank, and

involving or aggregating $5,000 or more in funds or other assets,

where the bank believes it was . . . used to facilitate a criminal

transaction, and the bank has a substantial basis for identifying a

possible suspect or group of suspects”). Plaintiffs cite a news

article, which suggested that two of Defendant’s customers were

involved in an unlawful “Ponzi” scheme that may have implicated

funds obtained through a loan held by Defendant. This article

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United States District Court

For the Northern District of California

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1 At the hearing on the motion, Plaintiffs’ counsel

represented that Plaintiffs’ Second Amended Complaint contains

several allegations, to which he referred. For instance, he

asserted that the complaint avers that the purported subpoena “sat

on the desk of a bank employee whose name is Sunshine Smith for

months.” He also suggested that Plaintiffs filed a SAR, in

contravention of Dobranski’s instructions. No such allegations

appear in the complaint. Plaintiffs’ counsel is reminded of his

obligation under California Rule of Professional Conduct 5-200(C),

which requires that attorneys “shall not seek to mislead the judge,

judicial officer, or jury by an artifice or false statement of fact

or law.”

2 Notably, however, the manual also states that a subpoena

“does not, by itself, require the filing of a SAR by the bank.” 

Id.

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could have triggered Defendant’s federal reporting obligation. As

a result, Dobranski’s direction to Plaintiffs to do nothing could

have prevented Defendant from fulfilling its reporting obligation. 

By pleading that they refused to accede to this instruction, which

could have led to the violation of federal law, Plaintiffs allege

protected activity.

In addition, Plaintiffs’ allegations concerning the grand jury

subpoena support their claims.1 They cite a manual, published by

the Federal Financial Institutions Examination Council, which

states that “the receipt of a grand jury subpoena should cause a

bank to review account activity for the relevant customer.” 

See Fed. Fin. Institutions Examination Council, Bank Secrecy

Act/Anti-Money Laundering Examination Manual 70 (2010), available

at http://www.ffiec.gov/bsa_aml_infobase/documents/BSA_AML_Man_2010.pdf.2

They also allege that, until they confronted him about it,

Dobranski withheld the subpoena from them and his superiors. 

Because the subpoena could have triggered Defendant’s reporting

obligation, Dobranski’s instruction to do nothing, along with the

alleged suppression of the subpoena, could have resulted in the

Case 4:09-cv-04129-CW Document 41 Filed 07/19/10 Page 6 of 8
United States District Court

For the Northern District of California

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violation of federal law. While the allegations concerning the

subpoena are somewhat sparse, they are sufficient to state

protected activity. 

With regard to adverse employment actions, Plaintiffs allege

that, around March 11, 2008, Defendant began to hamper their

ability to do their jobs. This included the withholding of

information and their exclusion from meetings. These acts could

suffice as adverse employment actions. See Yanowitz, 36 Cal. 4th

at 1054 (stating that adverse employment actions include those

“that are reasonably likely to adversely and materially affect an

employee's job performance”). Plaintiffs assert these acts

culminated in the termination of their employment in May, 2009. 

Based on these allegations, Plaintiffs adequately plead that

Defendant took adverse employment actions against them. 

Concerning causation, Plaintiffs do not allege facts that

support a direct link between their alleged protected activity and

Defendant’s alleged retaliatory conduct. Instead, they argue that

the temporal proximity of Defendant’s retaliation to their

rejection of Dobranski’s instruction supports an inference of

causation. See, e.g., Morgan v. Regents of Univ. of Cal., 88 Cal.

App. 4th 52, 69-70 (2000). Because the alleged retaliatory acts

began around the time Plaintiffs refused to comply with Dobranski’s

instruction concerning the subpoena, Plaintiffs sufficiently plead

a causal link. 

Accordingly, Plaintiffs state claims under section 1102.5(c)

based on their refusal to follow Dobranski’s instructions to take

no action concerning the news report and the subpoena. 

Case 4:09-cv-04129-CW Document 41 Filed 07/19/10 Page 7 of 8
United States District Court

For the Northern District of California

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II. Claims for Wrongful Termination in Violation of Public Policy

Under California law, an employee may maintain a tort cause of

action against his or her employer when the employer’s discharge of

the employee contravenes fundamental public policy. Foley v.

Interactive Data Corp., 47 Cal. 3d 654, 666 (1988). Such claims

are often referred to as Tameny claims, after the decision in

Tameny v. Atlantic Richfield Co., 27 Cal. 3d 167, 176-177 (1980). 

A claim for wrongful termination in violation of public policy must

be based on a fundamental policy established by a constitutional,

statutory or regulatory provision. Green v. Ralee Eng’g Co., 19

Cal. 4th 66, 76, 90 (1998). 

Plaintiffs’ Tameny causes of action rest in part on their

section 1102.5(c) claims. Thus, Plaintiffs’ Tameny claims may go

forward to the extent that they implicate the same conduct that

supports their claims under 1102.5(c). 

CONCLUSION

For the foregoing reasons, the Court DENIES Defendant’s Motion

to Dismiss. (Docket No. 32.) 

IT IS SO ORDERED.

Dated: July 19, 2010 

CLAUDIA WILKEN

United States District Judge

Case 4:09-cv-04129-CW Document 41 Filed 07/19/10 Page 8 of 8