O'Neil v. Putnam Retail Management, LLP

Opposition re MOTION to Dismiss

D. Mass.May 24, 2005

UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS ____________________________________ ) DAVID M. O’NEIL, ) ) Plaintiff, ) v. ) ) Civil Action No. 05-10469 PBS PUTNAM RETAIL MANAGEMENT ) LIMITED PARTNERSHIP, ) ) Defendant. ) ____________________________________) PLAINTIFF DAVID M. O’NEIL’S OPPOSITION TO DEFENDANT PUTNAM INVESTMENT’S MOTION TO DISMISS ALL COUNTS OF THE COMPLAINT Plaintiff David M. O’Neil (“Plaintiff” or “Mr. O’Neil”) hereby respectfully submits this Opposition to Defendant Putnam Retail Management Limited Partnership’s (“Defendant” or “Putnam”) Motion to Dismiss All Counts of the Complaint. As set forth below, all of Plaintiff’s claims are timely filed. With respect to his claims under the Uniformed Services Employment and Reemployment Rights Act (“USERRA”), 38 U.S.C. § 4311(a), (Counts I through III), the law is well-settled that the only timeliness defense available is the equitable defense of latches. The four-year general federal statute of limitations, set forth in 28 U.S.C. § 1658 and intended to avoid the inconsistent application of state limitations periods in federal claims, applies only in the absence of legal precedent providing otherwise, as clearly exists here. In addition, the federal limitations period does not apply under the Jones test because Mr. O’Neil’s claims are not “made possible” by USERRA, but rather existed under prior versions of the statute. With respect to Mr. O’Neil’s implied contract claim, it accrued within six years of filing when Mr. O’Neil first discovered that his licenses had not been transferred. Moreover, Mr. O’Neil has properly pled Case 1:05-cv-10469-PBS Document 8 Filed 05/24/2005 Page 1 of 17 -2- the elements of a claim for breach of implied contract by alleging that by hiring Mr. O’Neil as a registered securities representative and requiring him to sign a U4 to transfer his licenses, Putnam promised Mr. O’Neil that it would transfer his licenses. I. FACTUAL BACKGROUND Plaintiff David O’Neil is a reservist in the United States Navy who joined Defendant Putnam as a Retirement Specialist in 1997 with ten years of experience in the securities industry and holding Series 7, Series 24, and Series 63 securities licenses. (Compl. ¶¶ 8-9.) While employed at Putnam, Mr. O’Neil attended occasional weekend and two-week “drills” as part of his military reserve obligations. (Id. ¶¶ 11, 12, 19.) In February 1999, Mr. O’Neil’s boss said he had been “instructed” to tell him that he needed to decide between staying at Putnam and remaining a member of the United States Navy. (Id. ¶ 22.) In July 1999, shortly after Mr. O’Neil returned to Putnam after being away from work for one month in support of operations in Kosovo, Mr. O’Neil was terminated for pretexual reasons.1 (Id. ¶¶ 23-26.) On the day he was fired, Mr. O’Neil learned that Putnam had never transferred his securities licenses as required by rules promulgated by the National Association of Securities Dealers (“NASD”), despite the fact that on about his first day of work, he had competed and submitted a form U4, which authorized Putnam to transfer his securities licenses on his behalf. (Id. ¶ 8.) As a result of Putnam’s failure to transfer his licenses, they had lapsed and Mr. O’Neil was unable to find new employment in his field. (Id.) 1 Although its Motion to Dismiss is based entirely on statute of limitations grounds, Defendant devotes the first three pages of its Motion to Dismiss to maligning Plaintiff’s performance in an attempt to refute Plaintiff’s allegations that the performance reasons given for his termination were pretextual excuses for the real reason: Mr. O’Neil’s military obligations. Because the “facts” Putnam alleges about Mr. O’Neil’s performance are wholly irrelevant to the Motion to Dismiss, Plaintiff will not refute them in this opposition. Case 1:05-cv-10469-PBS Document 8 Filed 05/24/2005 Page 2 of 17 -3- Notwithstanding Defendant’s lengthy and contentious recitation of the facts, the only facts relevant to Defendant’s Motion to Dismiss Mr. O’Neil’s USERRA claims are the date on which Mr. O’Neil’s claims accrued and the date on which he filed his claim. Defendant concedes that the statute of limitations began to run on Mr. O’Neil’s USERRA claims on his July 1999 termination date. (Def.’s Mot. at 5.)2 Mr. O’Neil filed this civil action on March 11, 2005. II. LEGAL STANDARD In ruling on a motion to dismiss under Rule 12(b)(6), the district court must accept all well-pled factual averments as true and must draw all reasonable inferences in the plaintiff’s favor. See Carparts Distr. Ctr. v. Automotive Wholesalers’ Ass’n, 37 F.3d 12, 14 (1st Cir. 1994). If, under any theory, the allegations of the complaint are sufficient to state a cause of action, a motion to dismiss the claim must be denied. See Knight v. Mills, 836 F.2d 659, 664 (1st Cir. 1987). Dismissal for failure to state a claim is appropriate only if “it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Conley v. Gibson, 355 U.S. 41, 45-46 (1957); see also 5A Wright & Miller, FED. PRAC. & PROC. § 1357 (2d ed. 1990). The moving party has the burden of proving that no claim exists. See Rivera-Lebron v. Cellular One, 13 F. Supp. 2d 235, 238 (D.P.R. 1998); FED. PRAC. & PROC. § 1357 (1999 Supp.). III. ARGUMENT A. Plaintiff’s USERRA Claims Are Not Subject To the General Federal Statute of Limitations 1. The Legislative History of USERRA The background and history of statutory protections for veterans’ employment rights are integral to a comprehensive understanding of the legal issues surrounding the construction and 2 Defendant indicates that the date “would be earlier” for Counts II and III, but gives no further argument or Case 1:05-cv-10469-PBS Document 8 Filed 05/24/2005 Page 3 of 17 -4- interpretation of USERRA as it relates to Defendant’s Motion. As such, a brief summary will be set forth below.3 Beginning in 1940 with the Selective Training and Service Act, ch. 720, 54 Stat. 885 (“1940 Act”), Congress undertook the enactment of statutory protections for the jobs of persons serving in the military. The 1940 Act ensured that persons serving in the military had the right to re-employment upon their return to civilian life and created a private right of action for the enforcement of that right. In 1974, Congress made substantial and far-reaching amendments to the 1940 Act, when it passed the Veterans’ Readjustment Assistance Act of 1974, Pub. L. No. 93-508, 88 Stat. 1578 (“1974 Act”). Although the 1940 Act had been silent with respect to any applicable statute of limitations, the 1974 amendments expressly added a provision prohibiting federal courts from applying state statutes of limitations. See 38 U.S.C. § 2022. Section 404(a) of the 1974 Act prohibited discrimination against military reservists, making it unlawful for employers to deny reservists “retention in employment or any other promotion or other incident or advantage of employment because of any obligation as a member of a Reserve component” of the United States Armed Services. 38 U.S.C § 2021(b)(3). The anti-discriminations provisions in Section 404(a) were extended to all reservists and became known as the Veterans’ Reemployment Rights Act (“VRRA”), 38 U.S.C. §§ 2021–2027 (recodified at 38 U.S.C. §§ 4301–4307 (1992))(attached hereto as Ex. A.) In 1994, in order to “clarify, simplify, and, where necessary, strengthen the existing veterans’ employment and reemployment rights provisions,” H.R. Rep. No. 103-65(I), reprinted at 1994 U.S.C.C.A.N. 2449, 2451 (1993), Congress amended the VRRA with the Uniformed Services Employment and Reemployment Act (“USERRA”), 38 U.S.C. §§ 4301–4333 (attached guidance indicating why or what the “earlier” date would be. 3 For a complete history, see Lapine v. Town of Wellesley, 304 F.3d 90, 97-102 (1st Cir. 2002). Case 1:05-cv-10469-PBS Document 8 Filed 05/24/2005 Page 4 of 17 -5- hereto as Ex. B). The First Circuit has recognized that USERRA amends the VRRA, noting that there is “nothing in the legislative history to indicate that Congress . . . thought it was departing from the substance of the law as it had existed in the past. Indeed, the legislative history accompanying USERRA was careful to note changes to the law that represented a deviation from the VRRA.” Lapine, 304 F.3d at 100 (citing H.R. Rep. No. 103-65(I), 1994 U.S.C.C.A.N. at 2458-62 (discussing changes to length of service and notice requirements)). Finally, USERRA retained the VRRA’s prohibition on state statutes of limitation. See 38 U.S.C. § 4323(i); see also H. R. Rep. 103-65(I), 1994 U.S.C.C.A.N. at 2472 (reaffirming the VRRA’s amendment to prior incarnations of the act that no state statute of limitations should apply to claims brought under the provisions). 2. The General Federal Statute of Limitations Does Not Apply to USERRA Claims. Defendant’s argument that the four-year federal statute of limitations bars Mr. O’Neil’s USERRA claims fails on the face of the statute. Enacted in 1990, that statute states: “Except as otherwise provided by law, a civil action arising under an Act of Congress enacted after the date of the enactment of this section may not be commenced later than 4 years after the cause of action accrues.” 28 U.S.C § 1658 (emphasis added). With respect to USERRA, it is “otherwise provided by law” – indeed, by sixty years of legal precedent – that the only applicable timeliness challenge is the equitable doctrine of laches. a. Well-Established Law Provides That There Is No Statute of Limitations for USERRA claims. As described above and as Defendant concedes, USERRA explicitly states that “No state statute of limitations shall apply to any proceedings under this chapter.” 38 U.S.C. § 4323(i). This provision, re-enacted from the 1974 Act, has long been interpreted by federal Case 1:05-cv-10469-PBS Document 8 Filed 05/24/2005 Page 5 of 17 -6- courts to mean that the only time-bar to claims under USERRA and its predecessor Acts is the equitable doctrine of laches. See, e.g., Miller v. City of Indianapolis, 281 F.3d 648, 653 (7th Cir. 2002); Garner v. Yellow Freight Sys., Inc., 19 Fed. Appx. 834, 2001 WL 1173258 (10th Cir. 2001); Stevens v. Tennessee Valley Auth., 712 F.2d 1047, 1054 (6th Cir. 1983); Goodman v. McDonnell Douglas Corp., 606 F.2d 800, 805 (8th Cir. 1979); Novak v. Mackintosh, 937 F. Supp. 873, 879-80 (D.S.D. 1996); Petry v. Delmarva Power & Light Co., 631 F. Supp. 1532, 1534 (D. Del. 1986); Leston v. Liberty Mut. Ins. Co., 523 F. Supp. 1221, 1225 (N.D. Ga. 1981). By reenacting the 1974 Act’s bar on the application of state statutes of limitations and expressly acknowledging that the extensive body of case law that has evolved under the predecessor statutes remains in full force and effect,4 Congress clearly intended that the only time-bar that would prohibit claims under USERRA was the equitable doctrine of laches.5 In light of this ample precedent, the absence of an explicit statutory provision does not mean that statute of limitations for USERRA has not been “otherwise provided by law.” See, e.g., Douglass v. General Motors Corp., 2005 WL 1039148 (D. Kan. Mar. 31, 2005). In Douglass, the Court addressed whether section 1658’s four-year statute of limitations applied to a plaintiff’s “hybrid” breach of contract/breach of duty of fair representation claim under the Labor Management Relations Act (“LMRA”), 29 U.S.C. §§ 160(b), 185. See id. at *10. The Court concluded that although the LMRA itself did not set forth a statute of limitations, existing case law supported the application of a six-month statute of limitations for such “hybrid” claims under the Act. See id. Thus, because the statute of limitations was otherwise provided by law, 4 USERRA’s legislative history indicates “that the extensive body of case law that has evolved . . . to the extent that it is consistent with the provisions of this Act, remains in full force and effect in interpreting these provisions.” H.R. Rep. 103-65(I), 1994 U.S.C.C.A.N. at 2452. The Committee expressly reaffirmed the VRRA’s amendment to prior incarnations of the act that no state statute of limitations should apply to claims brought under the provisions. Id. at 2472. 5 Defendant has not argued that Mr. O’Neil’s claims are barred by the doctrine of laches. Case 1:05-cv-10469-PBS Document 8 Filed 05/24/2005 Page 6 of 17 -7- the Court held that section 1658’s four-year statute of limitations was not applicable and applied the six-month statute supplied by case law. See id. Likewise, here, because the inapplicability of a statute of limitations to USERRA claims is “otherwise provided by law,” section 1658 does not apply.6 Finally, Congress’s stated purpose in enacting section 1658 was to prevent the uncertainty and inefficiency created by federal courts applying different state statutes of limitation to federal causes of action. See, e.g., H. R. Rep. No. 101-734, reprinted in 1990 U.S.C.C.A.N. 6860, 6870 (1990)(noting “a number of practical problems” created by the practice of borrowing statutes of limitations, including: the need to determine the most analogous state law claim; imposition of uncertainty on litigants; reliance on varying state laws results; and undesirable variance among the federal courts). This rationale for the application of a federal statute of limitations is entirely absent in the context of USERRA, which explicitly prevents the confusion by prohibiting the application of any state statute of limitations. See 38 U.S.C. § 4323(i). In addition, the need for a uniform standard is obviated by the existence of sixty years of consistent case law holding that the only time-related bar to USERRA claims is the doctrine of laches. 6 Similarly, the Department of Labor has taken the position that no statute of limitations applies to USERRA, because the issue is “otherwise provided by law.” See Veterans’ Employment and Training Service, U.S. Department of Labor, Regulations Under the Uniformed Services Employment and Reemployment Rights Act of 1994, 69 Fed. Reg. 56,266 (Sept. 20, 2004). The proposed regulations state: The Department has long taken the position that no Federal statute of limitations applied to actions under USERRA. USERRA’s provision that State statutes of limitations are inapplicable, together with USERRA’s legislative history, show that the Congress intended that the only time- related defense that may be asserted in defending against a USERRA claim is the equitable doctrine of laches. 38 U.S.C. 4323(i); see S. Rep. No. 103-158, at 70 (1993); H.R. Rep. No. 103- 65, at 39. 69 Fed. Reg. 52,266, 56,281. The comment period has closed and the final regulations are expected this year. Case 1:05-cv-10469-PBS Document 8 Filed 05/24/2005 Page 7 of 17 -8- b. Section 1658 Does Not Apply to Claims Brought Under Post-1990 Amendments to Existing Statutes Unless the Claim was “Made Possible” by the Post-1990 Amendment In addition to the statute of limitations being “otherwise provided by law,” Plaintiff does not bring his claims pursuant to “a civil action arising under an Act of Congress enacted after the date of the enactment of [section 1658].” 28 U.S.C § 1658. The Supreme Court recently addressed a split in the circuits7 regarding when a cause of action pursuant to an amendment to a pre-existing statute “arises under an Act of Congress enacted” after December 1, 1990, and is therefore governed by the federal four-year statute of limitations. See Jones v. R.R. Donnelly & Sons Co., 531 U.S. 369, 124 S.Ct. 1836 (2004). The Court determined that section 1658 applies to federal causes of action that were “made possible by a post-1990 enactment.” Id. at 1845. In doing so, the Court held that even when Congress designates an act as an amendment, “[w]hat matters is the substantive effect of an enactment – the creation of new rights of action and corresponding liabilities.” Id. at 1844-45. In Jones, the plaintiffs were African American employees who brought hostile work environment, termination, and failure to transfer claims pursuant to 42 U.S.C. § 1981. The Court determined that the plaintiff’s claims were “made possible” by a 1991 amendment, which overturned prior case law holding that racial harassment relating to the conditions of employment was not actionable under section 1981. Jones, 124 S.Ct. at 1845-46 (discussing Patterson v. McLean Credit Union, 491 U.S. 164, 171 (1989))(emphasis added). 7 Compare Akhdary v. City of Chattanooga, 2002 WL 32060140, *6 (E.D. Tenn. 2002)(holding that section 1658 does not apply to claims brought under USERRA, which amended the pre-existing law of the VRRA) with Rogers v. City of San Antonio, 2003 WL 1566502, * 7-8 (W.D. Tex. Mar. 4, 2003)(holding that the four-year statute of limitations created by 28 U.S.C. § 1658 should apply to USERRA which is “essentially a new act.”). The Akhdary decision is in line with the First Circuit’s holding that there is “nothing in the legislative history [of USERRA] to indicate that Congress . . . thought it was departing from the substance of the law as it had existed in the past.” Lapine, 304 F.3d at 100 (citing H.R. Rep. 103-65(I), reprinted in 1994 U.S.C.C.A.N. at 2452). Case 1:05-cv-10469-PBS Document 8 Filed 05/24/2005 Page 8 of 17 -9- Unlike the conduct in Jones, however, discriminatory employment practices based on reserve status was actionable prior to the enactment of section 1658, and Mr. O’Neil’s claims were not “made possible” by a post-1990 enactment.8 The VRRA prohibited the very conduct that forms the basis of Mr. O’Neil’s claims: employment discrimination based on his membership in the reserves. The VRRA provided, “Any person who holds a position… shall not be denied retention in employment or any promotion or other incident or advantage of employment because of any obligation as a member of a reserve component of the armed forces.” 38 U.S.C. § 2021(b)(3). In Monroe v. Standard Oil Co., the Supreme Court held that section 2021(b)(3) protected reservists against certain types of discharges or demotions that might “rob” their reemployment of its substance. 452 U.S. 549, 556–57 (1981). The Court explicitly noted that Congress intended to create non-discrimination protections for reservists when it enacted the VRRA. Id; H.R. Rep. No. 1303 (1966)(“It should be noted that the only substantive changes in existing law relate to . . . prohibiting against employer discrimination against reservists who participate in the Reserve or National Guard programs.”); S. Rep. No. 90- 1477 (1968)(the VRRA was enacted “to address employment practices that discriminate against employees with Reserve obligations.”). See also Lapine, 304 F.3d at 100 (“in the VRRA, Congress had extended to reservists – without more or less – the same rights as it had provided to other serving in the Armed Forces”). Finally, section 2024 of the VRRA extends to reservists “all of the reemployment rights and benefits provided for by this chapter.” 38 U.S.C. § 2024(b). Thus, well before 1990, the VRRA was enacted and interpreted to provide reservists with the 8 The Department of Labor also takes the position that Jones “is not dispositive because USERRA “otherwise provides by law” that no statute of limitations applies, and because, with respect to some USERRA claims, the cause of action previously existed under the VRRA and consequently predates the effective date of 28 U.S.C. 1658.” 69 Fed. Reg. 52,266, 56281 (emphasis added). Case 1:05-cv-10469-PBS Document 8 Filed 05/24/2005 Page 9 of 17 -10- very rights at issue here: protections against job discrimination – including discharge, denial of promotion, and denial of benefits – based on their military status. USERRA was subsequently enacted “to streamline the laws protecting veterans that had become increasingly complex and cumbersome over the years.” Lapine, 304 F.3d at 100; see also H.R. Rep. No. 103-65(I), 1994 U.S.C.C.A.N. at 2451. USERRA revised the VRRA and compiled its existing prohibitions on discrimination based on military status into one anti- discrimination clause – “Discrimination Against Persons Who Serve In the Uniformed Services and Acts of Reprisal,” 38 U.S.C. § 4311 – under which Mr. O’Neil brings his claims. Section 4311’s prohibition on employment discrimination practices based on reserve status existed in the VRRA, and pre-dated the enactment of section 1658. Therefore, Mr. O’Neil’s claims were not “made possible” by a post-1990 enactment and the four-year statute of limitations does not apply. Unable to state how Mr. O’Neil’s claims are “made possible” by USERRA, Defendant points to the fact that USERRA changed the burden of proof for a plaintiff bringing a discrimination claim. Instead of being the sole cause, as required under the VRRA, see Monroe, 452 U.S. at 559, a plaintiff bringing a claim under USERRA must show that his or her military status was a motivating factor for the discrimination. See, e.g., Gagnon v. Sprint Corp., 284 F.3d 839, 852 (8th Cir. 2002)(emphasis added). The argument that a change in the burden of proof somehow creates a new cause of action is simply a red herring. Courts and legislatures routinely revise and change standards of proof, particularly with respect to employment discrimination claims, without creating new causes of action. See, e.g., Desert Palace, Inc. v. Costa, 539 U.S. 90 (2003)(holding that the lesser causation standard in 1991 amendments to Title VII that added Section 703(m) establishing liability upon proof that bias was “a motivating Case 1:05-cv-10469-PBS Document 8 Filed 05/24/2005 Page 10 of 17 -11- factor” in the employment decision is available in all Title VII cases without the requirement of direct evidence).9 Defendant cites (and attaches) two district court opinions decided since Jones, holding that section 1658 applied to a plaintiff’s USERRA claims. See Quick v. Deluxe Corp., No. 4:04- CV-396 (CEJ)(E.D. Mo. Mar. 18, 2003); Copeland v. Novartis Pharm. Corp., Novartis Nutrition Corp., No. CV-04-J-1159-S (N.D. Ala. Sept. 22, 2004). Neither case applies to the issue of whether Mr. O’Neil’s claims were “made possible” by USERRA; the court in Quick inexplicably ignored that dispositive standard and the court in Copeland, while applying the correct standard, reached an incorrect result. In Quick, which involved a claim that the defendant employer violated USERRA by not recognizing active military service as qualifying employment for purposes of pension benefits, the plaintiff did not argue whether claims were “made possible” by USERRA, but instead argued only that section 1658 was limited to “entirely new federal causes of action,” not amendments. Quick, No. 4:04-CV-396 at 6. The court rejected that argument as “irrelevant,” citing language in Jones that stated that § 1658 was not limited to entirely new laws. Without further explanation, however, the court also failed to analyze whether the plaintiff’s claims were “made possible” by USERRA. Instead, the case turned on the simplistic – and wrong – proposition that “[b]ecause USERRA was enacted in 1994, all claims based on that statute must be brought within four years pursuant to § 1658.” Id. at 7. 9 Legal scholars were quick to point out that the Supreme Court’s interpretation of Title VII’s 1991 amendments significantly altered the burden of proof in discrimination cases, eliminating the more rigorous “because of” causation requirement and quietly killing the thirty years of jurisprudence applying the McDonnell Douglas model of proof. See, e.g., William R. Corbett, McDonnell Douglas, 1973-2003: May You Rest in Peace? 6 U. Pa. J. Lab. & Emp. L. 199 (Fall 2003), and Jeffrey A. Van Detta, Le Roi Est Mort: Vive Le Roi!: An Essay on the Quiet Demise of McDonnell Douglas and the Transformation of Every Title VII Case After Desert Palace, Inc. v. Costa into a “Mixed-Motives” Case, 52 Drake L. Rev. 427 (Spring 2004). Case 1:05-cv-10469-PBS Document 8 Filed 05/24/2005 Page 11 of 17 -12- In Copeland, which involved a claim that the employer violated USERRA by denying the plaintiff promotions due to his military commitments, the court correctly recognized that, “in light of Jones, the applicability of § 1658 to plaintiff’s claims against [defendant employer] depends upon whether the claims arise under a new cause of action created by USERRA.” Copeland, No. CV-04-J-1159-S at 6. But in applying the proper standard, the Copeland court incorrectly determined that the VRRA had not prohibited employers from denying employees with military obligations “promotion, or any benefit or employment by an employer on the basis of” the employee’s military obligations,” as is prohibited under section 4311. Id. at 6. The Copeland court cited 38 U.S.C. § 2024(d)10 to “show” that under the VRRA, employers were only required to grant leaves of absences to fulfill training obligations and to restore comparable jobs to reservists, whereas USERRA’s section 4311 created new rights. See id. The Court’s reliance on the cited section, which is not comprehensive of the rights conferred on reservists by the VRRA, is myopic and incorrect. Indeed, as noted above, the VRRA also provided, “Any person who holds a position… shall not be denied retention in employment or any promotion or other incident or advantage of employment because of any obligation as a member of a reserve component of the armed forces.” 38 U.S.C. § 2021(b)(3). The Supreme Court interpreted the provision to mean that employers were prohibited by the VRRA from discriminating against reservists. See Monroe, 452 U.S. at 556–57. Finally, the VRRA also provided that: “Any person who . . . enters upon active duty . . . shall be entitled to all of the reemployment rights and benefits provided by this chapter in the case of persons inducted.” 38 U.S.C. § 2024(b)(emphasis added). The Copeland court’s incorrect conclusion stems from its incomplete reading of the VRRA. This is precisely 10 Cited by Defendant in its brief as recodified at 38 U.S.C. § 4304(d)(1992). (See Def.’s Mem. at 6.) Case 1:05-cv-10469-PBS Document 8 Filed 05/24/2005 Page 12 of 17 -13- the narrow and confused interpretation of the anti-discrimination protections for reservists that USERRA was enacted to prevent. 3. Application of the General Federal Limitations Period Is Inconsistent With the Mandate That USERRA Is To Be Liberally Construed for the Benefit of Members of the Military. USERRA and the VRRA are to be “liberally construed.” Fishgold v. Sullivan Drydock and Repair Corp., 328 U.S. 275, 285 (1946). See also H.R. Rep. 103-65(I), 1994 U.S.C.C.A.N. at 2452. To impose a four-year statute of limitations on claims brought under USERRA would weaken, rather than strengthen, the protections afforded to members of the military for the last sixty years. This would fly in the face of directives by both Congress and the Court that USERRA should be liberally construed and was enacted to expand protections for members of the military. B. Plaintiff’s Breach Of Implied Contract Claim Is Timely Under The Discovery Rule And States A Valid Claim Putnam seeks to avoid Mr. O’Neil’s breach of implied contract claim (Count IV) for its failure to transfer his securities licenses by arguing that the claim is untimely and that Plaintiff fails to allege its essential elements. Both arguments are without merit. Defendant’s statute of limitations defense is premised on the argument that the six-year statute of limitations set forth in Mass. Gen. L. ch. 260, § 2, began to run at the time of the breach, which Defendant asserts occurred when Putnam failed to transfer Mr. O’Neil’s security licenses in October 1997 at the time he was hired. However, under the discovery rule applicable to contract claims, the cause of action arose only when Mr. O’Neil knew or should have known of the breach, which was when he discovered that his securities licenses had lapsed after Putnam fired him in July 1999. See Whitcomb v. Pension Devel. Co., Inc., 808 F.2d 167, 169 (1st Cir. 1986)(under Massachusetts law, when a cause of action in contract is based on an inherently Case 1:05-cv-10469-PBS Document 8 Filed 05/24/2005 Page 13 of 17 -14- unknowable wrong, the cause of action accrues when the injured party knows or in the exercise of reasonable diligence should know the facts giving rise to the cause of action); Anthony’s Pier Four, Inc. v. Crandall Dry Dock Engineers, Inc., 396 Mass. 818, 825-26 (1986)(applying discovery rule to claims for breach of express warranty, which did not accrue until the plaintiff knew or reasonably should have known of the breach). Mr. O’Neil had no way of knowing that Putnam did not properly transfer his securities licenses when it hired him to transact in securities as a Retirement Plans Specialist. In fact, Putnam’s actions and its securities law obligations led Mr. O’Neil to reasonably believe that it did transfer his licenses. As part of his orientation and training, Putnam required Mr. O’Neil to fill out a form “U4,” which is a “Uniform Application for Securities Industry Registration or Transfer.” As the name implies, the U4 is completed by new employees and submitted to Putnam (or any employing securities firm) for the very purpose of transferring the employee’s securities licenses from the employee’s prior place of employment to Putnam. Moreover, under NASD rules, Putnam was required to transfer Mr. O’Neil’s licenses for him to be lawfully employed at Putnam in the capacity for which he was hired. First, NASD Rule 1031 (attached hereto as Ex. C) requires that all persons engaged in the securities business of a member firm who are to function as representatives to be registered with the NASD. Further, NASD Rule 1000-3 (attached hereto as Ex. D) states: “The failure of any member to register an employee, who should be so registered, as a Registered Representative may be deemed to be conduct inconsistent with just and equitable principles of trade and when discovered may be sufficient cause for appropriate disciplinary action.” Finally, NASD Information for Brokers indicates, Case 1:05-cv-10469-PBS Document 8 Filed 05/24/2005 Page 14 of 17 -15- “Your firm registers you by filing a Uniform Application for Securities Industry Registration or Transfer, Form U-4, with NASD.” See NASD Obligations to Your Firm.11, 12 Mr. O’Neil did not learn about Putnam’s failure to transfer his licenses until the day he was terminated in July 1999. His breach of contract claim, filed on March 11, 2005, was filed within the six-year statutory period prescribed by Mass. Gen. L. ch. 260, § 2, and is not time- barred. Equally unavailing is Defendant’s argument that Plaintiff has failed to state a claim for breach of contract by not alleging a promise by Putnam to transfer his licenses when it hired him as a securities representative. Defendant relies on an inapplicable line of cases involving employment contracts implied from employee manuals. (See Def.’s Mem. at 10-11.) Plaintiff, however, does not claim an implied employment contract that changed the nature of his relationship with Putnam from anything other than “at-will.” Rather, Plaintiff’s claim is that by employing him in the capacity of a securities representative Putnam was required by law to transfer his licenses, and by requiring him to submit a U4 to effect the transfer of his securities licenses, Putnam made an implied promise to do so. Mr. O’Neil brings his breach of contract claim based on the theory of reliance. Under Massachusetts law, “When a promise is enforceable in whole or in part by virtue of reliance, it is a ‘contract,’ and it is enforceable pursuant to a ‘traditional contract theory.’” Loranger Const. 11 Available at: http://www.nasd.com/web/idcplg?IdcService=SS_GET_PAGE&nodeId=1057&ssSource NodeId=1056 and attached hereto at Ex. E. 12 The Securities Exchange Act of 1934 makes it unlawful for any “broker or dealer” who uses interstate commerce to “effect any transactions in, or to induce or attempt to induce the purchase or sale of, any security” unless registered as a broker/dealer. 15 U.S.C. § 78o(a)(1); see S.E.C. v. Kenton Capital, Ltd., 69 F.Supp.2d 1, 13 (D.D.C. 1998); Herbruck, Alder & Co., SEC No-Action Letter (June 4, 2002). Section 3(a)(4)(A) of the Act defines a “broker” as “any person engaged in the business of effecting transactions in securities for the account of others.” 15 U.S.C. § 78c(4)(A). Case 1:05-cv-10469-PBS Document 8 Filed 05/24/2005 Page 15 of 17 -16- Corp. v. E. F. Hauserman Co., 376 Mass. 757, 761 (1978)(“We do not use the expression ‘promissory estoppel,’ since it tends to confusion rather than clarity.”) Therefore, in order to plead his claim for breach of contract, Mr. O’Neil must allege that: (1) he and Putnam had a binding agreement; (2) Putnam breached the terms of the agreement; and (3) Mr. O’Neil suffered damages as a result of the breach. See Michelson v. Digital Financial Services, 167 F.3d 715, 720 (1st Cir. 1999). Mr. O’Neil has so alleged. (See Compl. ¶¶ 48-52.) Mr. O’Neil relied on Putnam’s promise by accepting employment and working at Putnam as a broker for nearly two years. Mr. O’Neil suffered damages from Putnam’s breach – its failure to transfer his licenses as promised – because without his licenses, which expired, he was unable to attain employment as a securities representative. (See Compl. ¶¶ 28-35.)13 As such, Mr. O’Neil has stated a claim upon which relief can be granted and Putnam’s motion to dismiss count IV should be denied. 13 Putnam’s assertion that Mr. O’Neil was not really harmed by Putnam’s allowing his licenses to lapse because he still could have worked in the investment industry in a clerical or non-securities related capacity, citing NASD Reg. 1060(a)(attached to Defendant’s motion at Ex C), is absurd. Mr. O’Neil came to Putnam with ten years experience as a securities representative and holding three securities licenses, including a Series 24 managerial license; he did not come to Putnam as a secretary or clerical worker. Putnam’s actions therefore denied him the ability to find new employment in his chosen field. Case 1:05-cv-10469-PBS Document 8 Filed 05/24/2005 Page 16 of 17 -17- IV. CONCLUSION For the foregoing reasons, Plaintiff requests that the Court deny Defendant’s Motion to Dismiss All Counts of the Complaint and order Defendant to file an Answer in this matter. Respectfully submitted, DAVID M. O’NEIL By his attorneys, /s/ Jessica P. Driscoll _________________________ Jody L. Newman (BBO # 542264) Jessica P. Driscoll (BBO # 655394) DWYER & COLLORA, LLP 600 Atlantic Avenue Boston, MA 02210 (617) 371-1000 (617) 371-1037 (fax) Dated: May 24, 2005 Case 1:05-cv-10469-PBS Document 8 Filed 05/24/2005 Page 17 of 17 Case 1:05-cv-10469-PBS Document 8-2 Filed 05/24/2005 Page 1 of 26 Case 1:05-cv-10469-PBS Document 8-2 Filed 05/24/2005 Page 2 of 26 Case 1:05-cv-10469-PBS Document 8-2 Filed 05/24/2005 Page 3 of 26 Case 1:05-cv-10469-PBS Document 8-2 Filed 05/24/2005 Page 4 of 26 Case 1:05-cv-10469-PBS Document 8-2 Filed 05/24/2005 Page 5 of 26 Case 1:05-cv-10469-PBS Document 8-2 Filed 05/24/2005 Page 6 of 26 Case 1:05-cv-10469-PBS Document 8-2 Filed 05/24/2005 Page 7 of 26 Case 1:05-cv-10469-PBS Document 8-2 Filed 05/24/2005 Page 8 of 26 Case 1:05-cv-10469-PBS Document 8-2 Filed 05/24/2005 Page 9 of 26 Case 1:05-cv-10469-PBS Document 8-2 Filed 05/24/2005 Page 10 of 26 Case 1:05-cv-10469-PBS Document 8-2 Filed 05/24/2005 Page 11 of 26 Case 1:05-cv-10469-PBS Document 8-2 Filed 05/24/2005 Page 12 of 26 Case 1:05-cv-10469-PBS Document 8-2 Filed 05/24/2005 Page 13 of 26 Case 1:05-cv-10469-PBS Document 8-2 Filed 05/24/2005 Page 14 of 26 Case 1:05-cv-10469-PBS Document 8-2 Filed 05/24/2005 Page 15 of 26 Case 1:05-cv-10469-PBS Document 8-2 Filed 05/24/2005 Page 16 of 26 Case 1:05-cv-10469-PBS Document 8-2 Filed 05/24/2005 Page 17 of 26 Case 1:05-cv-10469-PBS Document 8-2 Filed 05/24/2005 Page 18 of 26 Case 1:05-cv-10469-PBS Document 8-2 Filed 05/24/2005 Page 19 of 26 Case 1:05-cv-10469-PBS Document 8-2 Filed 05/24/2005 Page 20 of 26 Case 1:05-cv-10469-PBS Document 8-2 Filed 05/24/2005 Page 21 of 26 Case 1:05-cv-10469-PBS Document 8-2 Filed 05/24/2005 Page 22 of 26 Case 1:05-cv-10469-PBS Document 8-2 Filed 05/24/2005 Page 23 of 26 Case 1:05-cv-10469-PBS Document 8-2 Filed 05/24/2005 Page 24 of 26 Case 1:05-cv-10469-PBS Document 8-2 Filed 05/24/2005 Page 25 of 26 Case 1:05-cv-10469-PBS Document 8-2 Filed 05/24/2005 Page 26 of 26 Case 1:05-cv-10469-PBS Document 8-3 Filed 05/24/2005 Page 1 of 29 Case 1:05-cv-10469-PBS Document 8-3 Filed 05/24/2005 Page 2 of 29 Case 1:05-cv-10469-PBS Document 8-3 Filed 05/24/2005 Page 3 of 29 Case 1:05-cv-10469-PBS Document 8-3 Filed 05/24/2005 Page 4 of 29 Case 1:05-cv-10469-PBS Document 8-3 Filed 05/24/2005 Page 5 of 29 Case 1:05-cv-10469-PBS Document 8-3 Filed 05/24/2005 Page 6 of 29 Case 1:05-cv-10469-PBS Document 8-3 Filed 05/24/2005 Page 7 of 29 Case 1:05-cv-10469-PBS Document 8-3 Filed 05/24/2005 Page 8 of 29 Case 1:05-cv-10469-PBS Document 8-3 Filed 05/24/2005 Page 9 of 29 Case 1:05-cv-10469-PBS Document 8-3 Filed 05/24/2005 Page 10 of 29 Case 1:05-cv-10469-PBS Document 8-3 Filed 05/24/2005 Page 11 of 29 Case 1:05-cv-10469-PBS Document 8-3 Filed 05/24/2005 Page 12 of 29 Case 1:05-cv-10469-PBS Document 8-3 Filed 05/24/2005 Page 13 of 29 Case 1:05-cv-10469-PBS Document 8-3 Filed 05/24/2005 Page 14 of 29 Case 1:05-cv-10469-PBS Document 8-3 Filed 05/24/2005 Page 15 of 29 Case 1:05-cv-10469-PBS Document 8-3 Filed 05/24/2005 Page 16 of 29 Case 1:05-cv-10469-PBS Document 8-3 Filed 05/24/2005 Page 17 of 29 Case 1:05-cv-10469-PBS Document 8-3 Filed 05/24/2005 Page 18 of 29 Case 1:05-cv-10469-PBS Document 8-3 Filed 05/24/2005 Page 19 of 29 Case 1:05-cv-10469-PBS Document 8-3 Filed 05/24/2005 Page 20 of 29 Case 1:05-cv-10469-PBS Document 8-3 Filed 05/24/2005 Page 21 of 29 Case 1:05-cv-10469-PBS Document 8-3 Filed 05/24/2005 Page 22 of 29 Case 1:05-cv-10469-PBS Document 8-3 Filed 05/24/2005 Page 23 of 29 Case 1:05-cv-10469-PBS Document 8-3 Filed 05/24/2005 Page 24 of 29 Case 1:05-cv-10469-PBS Document 8-3 Filed 05/24/2005 Page 25 of 29 Case 1:05-cv-10469-PBS Document 8-3 Filed 05/24/2005 Page 26 of 29 Case 1:05-cv-10469-PBS Document 8-3 Filed 05/24/2005 Page 27 of 29 Case 1:05-cv-10469-PBS Document 8-3 Filed 05/24/2005 Page 28 of 29 Case 1:05-cv-10469-PBS Document 8-3 Filed 05/24/2005 Page 29 of 29 Case 1:05-cv-10469-PBS Document 8-4 Filed 05/24/2005 Page 1 of 2 Case 1:05-cv-10469-PBS Document 8-4 Filed 05/24/2005 Page 2 of 2 Case 1:05-cv-10469-PBS Document 8-5 Filed 05/24/2005 Page 1 of 2 Case 1:05-cv-10469-PBS Document 8-5 Filed 05/24/2005 Page 2 of 2 Case 1:05-cv-10469-PBS Document 8-6 Filed 05/24/2005 Page 1 of 4 Case 1:05-cv-10469-PBS Document 8-6 Filed 05/24/2005 Page 2 of 4 Case 1:05-cv-10469-PBS Document 8-6 Filed 05/24/2005 Page 3 of 4 Case 1:05-cv-10469-PBS Document 8-6 Filed 05/24/2005 Page 4 of 4