Toscano v. Regions Financial Corporation et al

RESPONSE in Opposition re MOTION to Bifurcate

N.D. Ala.March 1, 2019

PLAINTIFF’S RESPONSE IN OPPOSITION TO DEFENDANT’S MOTION TO BIFURCATE COMES NOW the Plaintiff August Toscano and files this Response in Opposition to Defendant Regions Financial Corporation’s Motion to Bifurcate, and as grounds therefore say as follows: I. BIFURCATION OF PLAINTIFF’S CLAIMS IN DISCOVERY IS NOT APPROPRIATE By Order dated March 28, 2018, the Court granted, in part, and denied, in part, Regions’ Motion to Dismiss, finding that Plaintiff’s retaliation claim under the False Claims Act (Count III), retaliation in UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ALABAMA SOUTHERN DIVISION AUGUST TOSCANO, an individual, Plaintiff, v. REGIONS FINANCIAL CORPORATION, et al. ) ) ) ) ) ) ) ) ) ) ) Case No. 2:16-CV-01284-MHH FILED 2019 Mar-01 AM 10:04 U.S. DISTRICT COURT N.D. OF ALABAMA Case 2:16-cv-01284-MHH Document 88 Filed 03/01/19 Page 1 of 13 violation of Florida’s Civil Rights Act (Count V), and certain claims for breach of contract under a Severance Protection Agreement (“SPA”) asserted plausible claims for relief.1 The Court further stated that the release executed by Plaintiff would not apply if Regions materially breached the SPA or the release. Following the Court’s Order on its motion to dismiss, Defendant has moved to bifurcate discovery and trial proceedings in an effort to segregate Plaintiff’s breach of contract claims from his retaliation and disparate treatment claims. While Defendant seeks to treat this case as a simple breach of contract action, Plaintiff has alleged that Defendant engaged in a series of acts designed to retaliate against Plaintiff for his knowledge and reporting of certain misconduct by members of Regions’ upper management, which resulted in Plaintiff suffering adverse employment consequences including a reduction in job responsibilities, termination without cause, and deprivation of material benefits to which he was entitled under a Severance Protection Agreement. Plaintiff alleges that Regions’ failure to honor the terms of the SPA are part and parcel of its overall retaliatory treatment of Plaintiff. Regions’ request for bifurcated discovery represents an effort to deprive 1 The Court subsequently dismissed Plaintiff’s claim under the Dodd‐Frank Act in light of the Supreme Court’s recent clarification of the Act. Case 2:16-cv-01284-MHH Document 88 Filed 03/01/19 Page 2 of 13 Plaintiff of necessary information and/or testimony regarding the motivation behind Regions’ unlawful conduct, which included a refusal to honor the Plaintiff’s contractual rights under the SPA, in favor of limiting all discovery to Plaintiffs’ breach of contract claim. The fatal flaw in Regions’ Motion is threefold: (1) Defendant’s retaliatory conduct underpins Plaintiff’s retaliation and contract claims; (2) certain of Plaintiff’s contract claims (i.e., management bonus) require information relating to Regions’ “pattern” of providing bonus compensation under the SPA, which necessitates broader discovery than contemplated by Regions’ bifurcation motion, including Regions’ treatment of other departing executives; and (3) Plaintiff has evidence demonstrating Regions’ material breach of the SPA before any discovery occurs. Defendant’s Motion to restrict the scope of discovery will deprive Plaintiff of crucial pattern and practice discovery concerning management bonuses paid to other departing Regions’ executives, as well as information regarding Regions’ common retaliatory scheme against those who have voiced criticism of unlawful activity at Regions. Moreover, following its proposed bifurcation of discovery, Regions intends to file another dispositive motion before Plaintiff obtains any discovery regarding Defendant’s Case 2:16-cv-01284-MHH Document 88 Filed 03/01/19 Page 3 of 13 retaliation against him, which was the motivating factor and impetus leading to Regions’ breach of the SPA. A. Regions Bears the Burden of Showing that Bifurcation Would be Beneficial in this Case Rule 42(b) vests this court with the discretion to bifurcate claims for discovery and trial where such division would: (1) “be conducive to expedition and economy,” (2) “further [] the convenience” of the court and/or the parties, or (3) “avoid[] prejudice.” Fed.R.Civ.P. 42(b). But “[j]ust as bifurcation may save judicial resources, it could cause a waste of judicial resources[,]” as it would here. Devito v. Barrant, No. 03cv1927, 2005 WL 2033722, at *11 (E.D.N.Y. Aug. 23, 2005) (internal citations omitted) “Any decision ordering or denying bifurcation is dependent on the facts and circumstances of each case.” Estate of Owensby v. City of Cincinnati, 385 F.Supp. 2d 626, 665 (S.D. Ohio 2004), aff’d, 414 F.3d 596 (6th Cir. 2005); see also CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE & PROCEDURE § 2388 (3RD ED.)(“The major consideration, of course, must be which procedure is more likely to result in a just and expeditious final disposition of the litigation.”) Case 2:16-cv-01284-MHH Document 88 Filed 03/01/19 Page 4 of 13 The ordinary presumption is that discovery will proceed with respect to all claims at the same time. It is the moving party who bears the burden to justify bifurcation, so as to overcome the general principle that full discovery tends to lessen the delay, expense and inconvenience to all the parties. As shown below, the Defendant has not come close to satisfying its burden. B. The Particular Facts and Claims in this Case Make Bifurcation of Discovery Inappropriate The Defendant’s Motion to Bifurcate is premised upon the erroneous notion that Plaintiff’s breach of contract claims are separate and distinct from the Plaintiff’s other remaining claims, and that discovery and/or an adjudication related to such contract claims do not overlap with Plaintiff’s claims of disparate treatment and retaliation under the False Claims Act and/or Florida’s Civil Rights Act. Further, Regions suggests that if the Court finds that no material breach of the SPA occurred, all of Plaintiff’s claims will fail as they will be barred by the release. While such a statement in the abstract may be true, Plaintiff submits that he has evidence of Regions’ material breach of the SPA. Specifically, it is undisputed that Regions has refused to reimburse Plaintiff for more than $70,000 in attorneys’ fees incurred and attributable to the parties’ SPA dispute. Further, Plaintiff submits that Regions refused to pay Plaintiffs’ long term incentive Case 2:16-cv-01284-MHH Document 88 Filed 03/01/19 Page 5 of 13 benefits of more than $100,000. Similarly, Plaintiff claims that he is entitled to a management bonus under the SPA, which he alleges Regions has routinely paid to departing executives, and which Regions has disputed. Defendant’s Motion seeks to recast Plaintiff’s case as involving separate and distinct incidents of misconduct, which ignores the theories of liability actually asserted. Plaintiff alleges a pattern and practice of disparate treatment and retaliation which began as a reduction of his job responsibilities, and thereafter included a termination of his employment, and finally a refusal to honor the terms of Plaintiff’s SPA. Plaintiff alleges that such disparate treatment occurred, in part, as a result of his knowledge and reporting of unlawful activity by members of Regions’ executive management. Because Plaintiff has alleged that Regions’ retaliation gave rise to Plaintiff’s breach of his contract (SPA) claims, such retaliatory efforts and evidence are part and parcel of his claim that Regions engaged in a concerted effort to retaliate against him for his reporting of unlawful activities, including a refusal to honor the terms of his SPA. As such, segregating Plaintiff’s breach of contract claims from his retaliation claims and conducting an isolated review of Plaintiff’s contract claims without regard to the Defendant’s motive, will unduly prejudice Plaintiff and his ability to support such claims. Specifically, Plaintiff intends to depose Case 2:16-cv-01284-MHH Document 88 Filed 03/01/19 Page 6 of 13 former executive employees who may possess material information regarding common retaliatory measures taken by Regions against those voicing criticism of any unlawful activities, and who have signed confidentiality agreements prohibiting the voluntary disclosure of such information. 1. Bifurcation Would Harm Plaintiff, Lengthen the Litigation, Duplicate Efforts, and Generally Hinder Efficiency in the Case As stated above, there already exists ample evidence demonstrating that Regions breached the terms of the SPA as follows: Defendant failed and refused to pay Plaintiff any bonus as provided under the SPA, as well as failed to provide Plaintiff with long term incentive plan (LTIP) benefits in accordance with the SPA. Further, Regions has refused to reimburse Plaintiff for attorneys’ fees of $71,626.84 incurred and attributable to the parties’ dispute with respect to the SPA. Additionally, despite Plaintiff’s request and completion of paperwork, Regions failed to honor Plaintiff’s written request and paperwork seeking to transfer his 401(k) account transferred to a provider/servicer of his choice (i.e., MetLife).2 Plaintiff 2 While the Court concluded that Plaintiffs’ claims with respect to the 401(k) and COBRA benefits are preempted by ERISA, Plaintiff references such facts to provide context regarding the Defendant’s retaliatory efforts against Plaintiff. Case 2:16-cv-01284-MHH Document 88 Filed 03/01/19 Page 7 of 13 submits that the monetary value of such SPA benefits of which Plaintiff was deprived exceeds $500,000 which is “material” by any definition. Although Regions contends that Plaintiff was not entitled to any “bonus” under its management plan, and also attempts to mischaracterize its own SPA to suggest that the Agreement does require the payment of Plaintiff’s attorneys’ fees until and unless Plaintiff has prevailed in this action, the remaining breaches have nonetheless deprived Plaintiff of benefits exceeding $200,000. Because there exists ample evidence reflecting Regions’ material breach of the SPA, Regions’ request to limit Plaintiff’s initial discovery solely to his breach of contract claims will unnecessarily protract the litigation, result in duplicated efforts, and otherwise hinder the efficient prosecution of such claims. 2. Bifurcation at this Stage Would Jeopardize Plaintiff’s Ability to Properly Investigate and Prove His Claims As noted above, Plaintiff’s retaliation claims are inter-related and overlap with his breach of contract claims insofar as Plaintiff’s Complaint alleges that after he engaged in protected activities, Regions’ retaliated against him. Such retaliation occurred through various forms, including ostracizing and isolating him at work, reducing his job responsibilities, and Case 2:16-cv-01284-MHH Document 88 Filed 03/01/19 Page 8 of 13 thereafter progressed to suspending and terminating his employment without cause, and ultimately refusing to honor material terms of his SPA. One of the material benefits of the SPA to which Plaintiff alleges he was deprived was a management “bonus.” Plaintiff alleges that Regions customarily paid management bonuses to executives but that his bonus was withheld as a form of retaliation. Without discovery concerning Regions’ pattern and practice of honoring SPA benefits with respect to other executives who were terminated without cause, Plaintiff will be deprived of conducting and obtaining crucial discovery which establishes such disparate treatment, which also constitutes a violation of the SPA. Further, as noted above, Plaintiff also intends to depose former employees who have information regarding Regions’ retaliation against those who voiced criticism of any unlawful activities. 3. Judicial Economy Will Not be Promoted Through Bifurcation Regions’ main assertion in support of its motion to bifurcate is that permitting discovery only as to the Plaintiff’s breach of contract claim will streamline this litigation by preventing needless discovery on other claims and issues if the Court ultimately determines that Regions did not materially breach the SPA. However, as noted above, Plaintiff submits that the Case 2:16-cv-01284-MHH Document 88 Filed 03/01/19 Page 9 of 13 evidence already reflects that Regions has materially breached the SPA by depriving Plaintiff of significant benefits to which he was entitled. Moreover, bifurcation has the potential to further complicate this litigation and not serve the interests of judicial economy as Plaintiff’s breach of contract and retaliation claims are inextricably intertwined. Plaintiff alleges that Regions’ retaliation includes a failure to honor the terms of the SPA. Therefore, bifurcation would undoubtedly result in disputes regarding whether discovery relates to claims beyond Plaintiff’s breach of contract claims, thereby causing additional litigation regarding the distinction between the two. See Makeoff, 2014 WL 3490356, at *7 (discussing Plaintiffs’ belief that “the overlap between class and merits discovery in this case is such that bifurcation would lead to needless litigation over the distinction between the two, and inefficiencies in the discovery process.”); In re Rail Freight Surcharge Antitrust Litig., 258 F.R.D. 167, 174 (D.D.C. 2009) (“Bifurcated discovery fails to promote judicial economy when it requires ongoing supervision of discovery. If bifurcated, this Court would likely have to resolve various needless disputes that would arise concerning the classification of each document as ‘merits’ or ‘certification’ discovery.”) In the same vein, bifurcation herein would result in needless disputes over what information pertained to Plaintiff’s retaliation claims versus his breach Case 2:16-cv-01284-MHH Document 88 Filed 03/01/19 Page 10 of 13 of contract claims, which Plaintiff alleges was a form of retaliation perpetrated against him. Because the Court must weigh the possibility that discovery will demonstrate that Regions breached the terms of its SPA with Plaintiff, there is a significant chance that the record will demonstrate Regions’ failure to honor material terms of the SPA. As noted above, it is undisputed that Regions has failed to reimburse Plaintiff’s attorneys’ fees and costs as provided under the SPA, and refused to provide him with his long term incentive pay. Plaintiff also believes that the evidence will reflect Regions’ practice of paying executive bonuses provided that they were not terminated for cause. In that event, the parties and the Court would have needlessly engaged in limited discovery, resulting in a duplication of efforts, inefficiency and lack of judicial economy. CONCLUSION Defendant has failed to meet its burden of demonstrating that bifurcation is warranted herein. Plaintiff respectfully requests that the Court deny Regions’ Motion to Bifurcate as such a process will unduly protract this litigation and unduly prejudice Plaintiff’s ability to obtain necessary discovery in support of his claims. Case 2:16-cv-01284-MHH Document 88 Filed 03/01/19 Page 11 of 13 Respectfully submitted, /s/ Jeffrey P. Mauro Thomas E. Baddley, Jr. Jeffrey P. Mauro Baddley & Mauro, LLC 850 Shades Creek Parkway, Suite 310 Birmingham, AL 35209 205.939.0090 tbaddley@baddleymmauro.com jpmauro@baddleymauro.com John Parker Yates Campbell Guin LLC 505 N .20th Street, Suite 1600 Birmingham, AL 35203 205.224.0750 parker.yates@campbellguin.com Mitchell I. Feldman Feldman Law Group, P.A. Westshore Center 1715 N. Westshore Blvd., Suite 400 Tampa, FL 33607-3929 813.639.9366 Case 2:16-cv-01284-MHH Document 88 Filed 03/01/19 Page 12 of 13 CERTIFICATE OF SERVICE I hereby certify that on this 1st day of March 2019, I electronically filed the foregoing which will automatically serve the following counsel of record: Regions Financial Corporation Regions Bank Catherine H. Molloy Waller Lansden Dortch & Davis LLP 511 Union Street, Suite 2700 Nashville, TN 37219 615.244.6380 molloyk@gtlaw.com Jennifer Carin Burford Ogletree Deakins Nash Smoak & Stewart PC 420 N. 20th Street, Suite 1900 Birmingham, AL 35203 205.328.1900 Carin.burford@ogletree.com Peter W. Zinober Greenberg Traurig PA 101 E. Kennedy Blvd., Suite 1900 Tampa, FL 33602 813.318.5725 zinoberp@gtlaw.com /s/ Jeffrey P. Mauro Case 2:16-cv-01284-MHH Document 88 Filed 03/01/19 Page 13 of 13