Barker v. UBS AG: Motion for Summary Judgment Denied

In Barker v. UBS AG, Mary Barker brought a case alleging that UBS AG (UBS) ended her employment in violation of the whistleblower provision of the Sarbanes-Oxley Act (“SOX”) under 18 U.S.C. § 1514A.  3:09-CV-2084, (D. Conn. May 22, 2012).  UBS moved for summary judgment, and the court denied the motion. 

Traditionally, a firm must own a minimum number of “seats” to be able to trade on that exchange.  According to the complaint, UBS in 2006 began investing in additional seats on the exchanges.  Barker was assigned to reconcile these holdings on a uniform, consolidated basis.  In the course of doing so, Barker discovered reporting discrepancies regarding firm-wide holdings. 

Barker reported the discrepancies to her supervisor, Gerald Hees.  Hees allegedly discussed how to “spin” these discrepancies to senior management with other co-workers, forbade Barker from discussing these discrepancies with anyone outside the Equities department, and reprimanded her for informing Operational Risk about the project.  At the conclusion of the reconciliation project, management rewarded Barker for her work.  Barker, however, noticed that she was passed over for projects and removed from the promotion consideration list.  Subsequently, UBS conducted a large-scale employee reduction and terminated Barker. 

A motion for summary judgment may be granted only when there is no dispute regarding the material facts to be tried.  The court must draw all inferences in favor of the non-moving party.  If there is evidence that a reasonable jury would decide in the non-moving party's favor, then a dispute about a genuine issue of fact exists and the motion must be denied.  The plaintiff bears the initial burden of showing a violation of 18 U.S.C. § 1514A by setting forth a prima facie case.  The plaintiff must allege that: (1) a protected activity was engaged in; (2) “the employer knew of the protected activity”; (3) an unfavorable action was suffered; and (4) “circumstances exist to suggest that the protected activity was a contributing factor to the unfavorable action.”

To demonstrate a protected activity, the plaintiff must “provide factually specific information regarding the conduct she believes to be illegal” and plead that the protected activity she engaged in contributed to her termination.  The court defines a contributing factor as “any factor, which alone or in combination with other factors, tends to affect in any way the outcome of the decision.”

UBS argued that Barker could not establish a protected activity because management requested, supported, and concluded the project.  Additionally, UBS praised Barker and her team for their work.  Finally, UBS alleged that Barker did not know she was blowing the whistle on securities fraud and that senior management did not have knowledge of Barker’s protected activity when they made the decision to terminate her.

Barker asserted that senior management did not know about the project until months after she started.  She further asserted that she went beyond the scope of her job in completing the project and she was reprimanded for discussing the project with the Operational Risk department.  Barker argued that she met with a member of senior management to discuss her findings and, shortly thereafter, was removed from consideration for promotion. 

The court found that material issues of fact existed as to whether Barker participated in protected activities.  The court held that a reasonable jury could find that senior management knew of Barker’s protected activity when they chose to terminate her.  Furthermore, the court concluded that a reasonable jury could find that Barker’s expressed concerns regarding the inaccurate reporting created a reasonable belief that UBS violated federal law and that the close proximity of events leading to Barker’s termination satisfied the causation requirement.

Nor had UBS rebutted this prima facie case by showing that Barker had been terminated irrespective of the protected activity.  UBS had asserted that Barker had been terminated due to its financial hardships and her performance evaluations.  The performance evaluations discussed some performance issues, but they also complimented Barker.  Thus, the court found that UBS did not provide clear and convincing evidence that Barker would have been terminated regardless of any protected activity.

For all of these reasons, the court denied UBS’s motion for summary judgment.

The primary materials for this case may be found on the DU Corporate Governance website.

Sarah Emery