Badgerow v. REJ Properties, Inc. et alREPLY to Response to MotionE.D. La.March 18, 20191 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA DENISE A. BADGEROW, on behalf of herself and a class of those similarly situated, Plaintiffs, v. REJ PROPERTIES, INC. D/B/A WALTERS, MEYER TROSCLAIR & ASSOCIATES, AND AMERIPRISE FINANCIAL SERVICES, INC. **************************************** * * * * * * * * * * * * * Case No.: 2:17-cv-09492 JUDGE: JAY C. ZAINEY MAGISTRATE: JOSEPH C. WILKINSON, JR. ********************************* PLAINTIFFS’ SUPPLEMENTAL MEMORANDUM IN RESPONSE TO SUPPLEMENTAL BRIEF OF REJ PROPERTIES, INC. D/B/A WALTERS, MEYER, TROSCLAIR & ASSOCIATES IN OPPOSITION TO PLAINTIFF’S MOTION FOR LEAVE TO FIRST [SIC] FIRST SUPPLEMENTAL AND AMENDED COMPLAINT MAY IT PLEASE THE COURT, through the undersigned counsel, comes Plaintiffs, Denise Badgerow and a class of similarly situated current and former female AFAs employed by REJ in the United States, who respectfully file this Supplemental Memorandum in Opposition to Supplemental Brief of REJ Properties, Inc. d/b/a Walters, Meyer, Trosclair & Associates in Opposition to Plaintiff’s Motion for Leave to First [sic] First Supplemental and Amended Complaint, pursuant to this Court’s Minute Entry dated February 13, 2019 (R. Doc. 98). Plaintiffs have revised their First Amended and Supplemental Complaint and attach it hereto as Exhibit B (hereinafter “March 18, 2019 Amended Complaint”). The March 18, 2019 Amended Complaint should be substituted for the First Supplemental and Amended Complaint that Plaintiff filed as Exhibit A to Motion for Leave to File Plaintiffs’ First Amended and Supplemental Complaint (R. Doc. 68). The March 18, 2019 Amended Complaint contains changes Case 2:17-cv-09492-JCZ-JCW Document 111 Filed 03/18/19 Page 1 of 7 2 that render a decision on the disputed issues in Plaintiff’s original motion moot.1 If this Court grants the Motion for Leave to File Plaintiffs’ First Amended and Supplemental Complaint (R. Doc. 68), it is the March 18, 2019 Amended Complaint that should form the basis for the Court’s decision. Plaintiffs changes do not require further briefing or oral argument because Plaintiffs are withdrawing certain claims that were contained in the prior version of the Amended Complaint. The withdrawn claims are as follows: 1) Plaintiff Badgerow’s Eighth Cause of Action against all defendants for violations of La. Rev. Stat. Ann. § 23:967 (the “Louisiana Whistleblower Statute”) is withdrawn from the Amended Complaint; 2) Plaintiff Badgerow’s Ninth Cause of Action against all defendants for violations of La. Rev. Stat Ann § 51:1401, et. seq (the “Louisiana Unfair Trade Practices Act”) is withdrawn from the Amended Complaint; 3) Plaintiff Badgerow’s amendment to the Eleventh Cause of Action for breach of contract is withdrawn from the Amended Complaint and has reverted back to the earlier breach of contract cause of action that was contained in Plaintiff’s Badgerow’s original complaint. Defendants had argued that these claims were barred as to the individual defendants on the basis of the doctrines of res judicata and collateral estoppel, but incorrectly cited to Federal law and not Louisiana law in discussing making their arguments. As this Court observed in oral argument, the standards are different. In their Supplemental Brief of REJ Properties, Inc. d/b/a 1 On March 12, 2019, Plaintiff’s counsel contacted defense counsel to inform counsel that Plaintiffs intend to “revise our amended complaint to drop the LUTPA and whistleblower claims.” See Exhibit C. On March 13, 2019, defense counsel responded: [W]e do not consent to the filing of any "revised" proposed Amended Complaint. Rather, the best course would be to notify the Court in writing that Plaintiff desires to withdraw those two claims from the proposed Amended Complaint. This can be accomplished through Plaintiff's Supplemental Memorandum due for filing next Monday, March 18, 2019. Id. Thus, instead of seeking to enter an agreed order regarding the issues, Plaintiffs are filing this Supplemental Memorandum. Case 2:17-cv-09492-JCZ-JCW Document 111 Filed 03/18/19 Page 2 of 7 3 Walters, Meyer, Trosclair & Associates in Opposition to Plaintiff’s Motion for Leave to First [sic] First Supplemental and Amended Complaint (R. Doc. 98), Defendants failed to correct this error in legal authority. Defendants have likewise failed even to explain why arguments invoking these doctrines are even ripe for consideration.2 Nevertheless, Plaintiffs’ March 18, 2019 Amended Complaint and withdrawal of these claims from consideration renders these arguments moot. Contrary to the concession contained in Plaintiffs Sur Reply (R. Doc. 82), Plaintiffs have not amended to withdraw Ray Trosclair as a defendant to this case. Plaintiffs had indicated that they intended not to add Ray Trosclair, based on in-court representations by defense counsel regarding Ray Trosclair’s ownership status, even though the representations were the opposite of what REJ had stated in response to discovery requests. Plaintiffs propounded Interrogatory No. 1 to defendant REJ, in which REJ was asked to “Identify all persons with knowledge or information relating to the allegations in the Complaint or the Defenses raised in the Defendant's Answer.”3 In its July 5, 2019 response, REJ, which referred to itself as “REJ Properties, Inc. d/b/a Walters, Meyer, Trosclair & Associates (‘WMT’),” identified Trosclair as someone with knowledge of the matters identified in Interrogatory No. 1: Ray Trosclair: Owner of WMT; may be contacted through undersigned counsel. Knowledge may include, but is not limited to: WMT compensation practices and policies, including but not limited to those relative to salaries, commissions and bonuses; compensation and licensing requirements for Ameriprise associate financial advisors and Ameriprise financial advisors; WMT employment practices and policies; FINRA requirements for payment of commissions to associate financial advisors and financial advisors; lack of harassment or discriminatory or retaliatory conduct; lack of disparate treatment or disparate pay; and any other matters relative to Plaintiff's Complaint;4 2 See R. Doc. 109, Order Denying Motion to Confirm Arbitration Award, at 2 n.3 (denying REJ’s request for confirmation, since it was not a party to the arbitration and noting that if the principals of WMT (Meyer, Trosclair, and Walters) “seek a final judgment in their favor for purposes of res judicata, then they must petition a court for that relief or intervene in this matter for that purpose”). 3 Exhibit E at 2. 4 Exhibit D at 4. Not only did REJ explicitly identify Trosclair as an “Owner” but REJ has failed to explain how REJ could do business as “Walters, Meyer, Trosclair & Associates” without Trosclair being an owner of REJ. Case 2:17-cv-09492-JCZ-JCW Document 111 Filed 03/18/19 Page 3 of 7 4 On March 12, 2019, Plaintiff’s counsel contacted defense counsel and requested a discovery response that conformed with defense counsel’s unverified statements: We intend to drop Trosclair from the Amended Complaint, so long as we receive a revised discovery response by Friday, March 15, 2019 that confirms that Trosclair had no ownership role in REJ during the relevant time period. Absent verification, we'll need to keep him as a defendant.5 Exhibit C. Defense counsel have refused to submit a corrected and verified discovery response.6 Given that the extant discovery states that Trosclair is an “owner” of REJ and also that Walters, Meyer, Trosclair & Associates is a separate party to the present action, Plaintiffs will continue to pursue their claims against Trosclair individually. Finally, Plaintiffs have revised certain allegations regarding the claims remaining in the March 18, 2019 Amended Complaint. These revisions are minor, and are all shown in Exhibit F, which is a redline comparison of the changes Plaintiffs have made to the of the First Amended and Supplemental Complaint that was attached to Plaintiff’s Motion to Amend (R. Doc. 68).7 These revisions to the allegations do not alter the rationale for Plaintiffs’ Motion to Amend nor do they form a basis for denying Plaintiff’s Motion to Amend. Instead, they merely clarify wording or provide additional context to the allegations. The following are examples of such changes: The partners, Walters, Meyer and Trosclair contributed only enough capital to REJ Properties, Inc. to pay for the expenses of WMT, leaving the remaining income in their individual bank accounts. *** Badgerow has been unable to regain the majority of the clients she had in her book of business while working at REJ, causing immeasurable damage to her career. *** Badgerow was the only Associate Financial Advisor that was paid on the basis of an annual salary draw. A similarly Similarly situated male employee employees were paid 5 REJ has failed to explain how it was able to do business as WMT without Trosclair having any ownership interest in REJ. 6 See Exhibit D. 7 See Exhibit F. Case 2:17-cv-09492-JCZ-JCW Document 111 Filed 03/18/19 Page 4 of 7 5 either a full base salary or were paid on the basis of a pay period salary draw, as opposed to an annual salary draw.8 Defendants have not raised any objection to the submission in the Amended and Supplemented Complaint of the remaining claims against the individual defendants, and those claims remain in the March 18, 2019 Amended Complaint.9 Thus, Plaintiffs’ Motion to Amend as to those claims should be granted. Plaintiffs had good cause to bring those claims against the individual defendants, and did so in a timely fashion. The remaining claims and allegations against the individual defendants based on the alter ego doctrine are properly before this Court. “For the purposes of [Title] VII, ‘employer’ may include not only corporate entities who are named as the plaintiff’s employer, but also individuals or entities who are, in reality, the alter ego of the named employer.” Biggs v. Boyd, No. 12-CV- 3037 at 3 (D. Neb. January 2, 2013) (citations omitted) (defendant’s motion to strike allegations seeking to pierce the corporate veil to reach the assets of individual defendant denied; efficiencies existed in simultaneously litigating same claims against named employer and owner of named employer). Plaintiffs had good cause, under Fed. R. Civ. P. 16(b), for first adding the claims against the individual defendants on January 8, 2019. The claims against the individual defendants in the March 18, 2019 Amended Complaint are not claims that could have been pursued in the Arbitration. The arbitration panel only issued its Arbitration Award on December 28, 2018. Moreover, Plaintiffs could not have filed an amended complaint within the time prescribed by the 8 Exhibit F at ¶¶ 24, 86, 105. 9 See First, Second, Third, Fourth, Fifth, Sixth, and Seventh Causes of Action to March 18, 2019 Amended Complaint. Case 2:17-cv-09492-JCZ-JCW Document 111 Filed 03/18/19 Page 5 of 7 6 original scheduling order. See R. Doc. 24 (“[a]mendments to pleadings . . . shall be filed no later than December 29, 2017, in accordance with the Federal Rules of Civil Procedure and Local Rule 7.6”). The parties sought a stay of this case on August 29, 2018 (R. Doc. 61), and the stay was granted on August 31, 2018 (R. Doc. 62). Defendants assert in their responses that, insofar as the claims that are now being withdrawn, Plaintiffs lacked good cause for filing on January 8, 2019 but Defendants then make an admission that undermines the “good cause” argument. Defendants assert that Plaintiffs “had sufficient knowledge to bring these claims at the very latest, in August 2018 when she took depositions of REJ’s owners and participated in a two-day arbitration proceeding before the Financial Industry Regulatory Authority (“FINRA”), involving two of the exact same claims she now seeks to add through the Amended Complaint (LWPA and LUTPA).” (R. Doc. 101 at 3) Thus, even with regard to the disputed and now withdrawn claims, Defendants admit that the claims against the individual defendants became known to Plaintiffs at the same time as the stay became effective in this case. Plaintiffs clearly had just cause to file the Motion to Amend on January 8, 2019, after the deadline for filing amended pleadings. Once Plaintiffs have demonstrated that they had good cause to file their amended complaint after the deadline set in the scheduling order, "[t]he court should freely give leave [to amend] when justice so requires," Fed. R. Civ. P. 15(a)(2). Defendants have not attempted to demonstrate and cannot demonstrate "undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party, and futility of amendment." Wimm v. Jack Eckerd Corp., 3 F.3d 137, 139 (5th Cir. 1993). For these reasons, Plaintiffs’ Motion to Amend should be granted and the March 18, 2019 First Amended and Supplemented Complaint should be filed into the record. Case 2:17-cv-09492-JCZ-JCW Document 111 Filed 03/18/19 Page 6 of 7 7 Respectfully Submitted: BUSINESS LAW GROUP, LLC By: s/Amanda Butler Amanda Butler (LSBA #31644) Stephanie Dovalina LSBA # 31137 abutler@lawgroup.biz Business Law Group 700 Camp St., Ste. 405 New Orleans, LA 70130 Telephone: (504) 528- 9500 Facsimile: (504) 754-7776 Attorneys for Plaintiffs CERTIFICATE OF SERVICE I hereby certify that on March 18, 2019, a copy of the above and foregoing has been served upon counsel for all parties by electronic means and filed electronically with the Clerk of Court using the CM/ECF system. /s/ Amanda Butler Amanda Butler, Esq. 4844-9785-8188, v. 1 Case 2:17-cv-09492-JCZ-JCW Document 111 Filed 03/18/19 Page 7 of 7