Kuba v. Disney Financial Services, LLC

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA ORLANDO DIVISION SANDRA KUBA, Plaintiff, Vv. Case No. 6:21-cev-312-JA-LRH DISNEY FINANCIAL SERVICES, LLC, Defendant. ORDER Disney Financial Services, LLC (DFS) moves under Federal Rule of Civi Procedure 12(b)(6) to dismiss all five claims that its former employee, Sandr: Kuba, brings in this suit. (Mot., Doc. 18). As set forth below, DFS’s motion i denied. 1 Background! > In March 1999 DFS, a subsidiary of the Walt Disney Company, □□□□□ Kuba, a Certified Public Accountant, as a Financial Analyst in its Revenue ans Currency Control Department in Lake Buena Vista, Florida. (Compl., Doc. 1 {4 7, 12, 18, & 19). DFS promoted Kuba to Senior Financial Analyst in Octobe 1 The Background section is derived from the allegations of the Complaint (Do 1), which are taken as true for the purpose of ruling on the Rule 12(b)(6) motion t 2013. (id. 98 & 21). Kuba held that position until DFS terminated he employment in September 2017. (id. 4 8, 21, & 35). While she was employed by DFS, Kuba reported concerns to DF‘ management about some of DFS’s accounting policies, practices, anc procedures. (id. { 22). Kuba “genuinely and reasonably believed” that thes. policies, practices, and procedures were “unethical, improper{,] or illegal.” (Id.) Between October 2016 and her September 2017 termination, Kuba mad several complaints to management about “false revenue recognition practices. (Id. | 23). Despite Kuba’s complaints, her supervisors did not make changes ti DFS’s systems. (Id. 25). After Kuba made a complaint to DFS’s Corporate Management Audi Department and its Employee Relations Department in June 2017 and did no receive a response, she emailed the then-President of Walt Disney World Resor about her concerns. (Id. J 27-28). According to Kuba, the next day the Employee Relations Department met with her “and threatened her not to report her concerns about the company’s practices elsewhere or [DFS] would conside: it ‘retaliation against the company.” (Id. § 29). Kuba was away from work on medical leave from July 29, 2017, tc September 12, 2017. (Id. { 33). Five days into that leave period, Kuba filed “whistleblower complaint”? with the Securities and Exchange Commissio1 (SEC). (Id. § 34). On September 21, 2017—less than ten days after Kuba ha returned from medical leave—DFS terminated her employment, effectiv immediately. (Id. { 35). DFS told Kuba that it was terminating her becaus her complaints were not valid or good faith complaints but instead wer inappropriate and a disruption to the business. (Id. § 36). Kuba, however maintains that she was wrongfully terminated for her internal and SEC complaints. (Id.). She also alleges that DFS paid her less than it paid similarly situated male employees. (Id. □□□ 69-79). Kuba filed this lawsuit on February 16, 2021. (Doc. 1). She brings five claims, alleging violations of: (1) the anti-retaliation provision of the □□□□□□□□□ Oxley Act of 2002,3 18 U.S.C. § 1514A; (2) the anti-retaliation provision of th: Dodd—Frank Wall Street Reform and Consumer Protection Act of 2010 (DoddFrank Act), 15 U.S.C. § 78u-6(h); (8) the California False Claims Act, Californi: Government Code § 12650 et seq.; (4) the Florida Private Sector Whistleblower’: Act, § 448.101 et seg., Florida Statutes; and (5) the Equal Pay Act of 1963, 25 U.S.C. § 206 (d). DFS now moves to dismiss all claims for failure to state a clain 2 The Complaint characterizes what Kuba filed with the SEC as ; “whistleblower complaint” but does not describe the contents of that complaint. (See Compl. § 34). 3 This Act is also known as the Public Company Accounting Reform and Investo: Protection Act of 2002. for which relief can be granted. II. Legal Standards In assessing a motion to dismiss brought under Federal Rule of Civi Procedure 12(b)(6), “the Court must accept the allegations in the complaint as true and construe them in the light most favorable to the plaintiff.” Henley v Payne, 945 F.3d 1320, 13826 (11th Cir. 2019). “A pleading that states a claim □□□ relief must contain ...a short and plain statement of the claim showing tha’ the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). “[D]letailed factua allegations” are not required, but “[a] pleading that offers ‘labels anc conclusions’ or ‘a formulaic recitation of the elements of a cause of action wil not do.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v Twombly, 550 U.S. 544, 555 (2007)). “To survive a [Rule 12(b)(6)] motion to dismiss, a complaint must contair sufficient factual matter, accepted as true, to ‘state a claim to relief that 1: plausible on its face.” Id. (quoting Twombly, 550 U.S. at 570 ). In considering ¢ motion to dismiss brought under Rule 12(b)(6), a court limits its “consideratior to the well-pleaded factual allegations, documents central to or referenced in the complaint, and matters judicially noticed.” La Grasta v. First Union Sec., Inc. 358 F.3d 840, 845 (11th Cir. 2004). III. Discussion A. Count I—Sarbanes-—Oxley Act Kuba’s first claim is under the Sarbanes—Oxley Act, which was enacte: “[t]o safeguard investors in public companies and restore trust in the financia markets following the collapse of Enron Corporation.” Lawson v. FMR LLC, 57 U.S. 429 , 432 (2014). She brings her claim under 18 U.S.C. § 15144 , whic provides “Whistleblower Protection” by stating that companies within th coverage of the Sarbanes—Oxley Act may not “discharge, demote, suspend threaten, harass, or in any other manner discriminate against an employee i the terms and conditions of employment” because the employee has engaged i activity protected by the statute. 18 U.S.C. § 1514A(a). DFS seeks dismissal of this claim on two grounds: first, that Kuba did no exhaust her administrative remedies; and second, that Kuba does not alleg facts showing that she had an objectively reasonable belief that DFS wa violating laws covered by the Sarbanes—Oxley Act. Neither of these argument has merit. 1, Exhaustion of Administrative Remedies “To recover under §1514A, an aggrieved employee must exhaus administrative remedies by ‘filing a complaint with-the Secretary of Labor.’ Digit. Realty Tr., Inc. v. Somers, 138 S. Ct. 767, 773 (2018) (quoting 18 U.S.C § 1514A(b)(1)(A)). And “if the Secretary has not issued a final decision withi1 180 days of the filing of the complaint and there is no showing that such delay is due to the bad faith of the claimant,” the claimant may “bring[] an action at law or equity for de novo review in the appropriate district court of the Unitec States.” 18 U.S.C. § 1514A(b)(1)(B); accord 29 C.F.R. § 1980.114 (a) (regulatior titled “District court jurisdiction over retaliation complaints”). The Complaint alleges that Kuba complied with the administrative prerequisites to bringing this lawsuit. (Doc. 1 { 14-16). It states that or October 25, 2017, Kuba filed a complaint with the Department of Labor and that no final decision was made within 180 days. (1d. 14-15). DFS nevertheless maintains that Kuba did not her exhaust administrative remedies because she voluntarily withdrew her complaint on July 28, 2018. This argument fails. Here, Kuba alleges that she filed a complaint with the Secretary and that before she filed suit, more than 180 days elapsed without the Secretary issuing a decision. Although DFS relies on Kuba’s withdrawal of her complaint in July 2018—nine months after she filed it—none of the cases cited by DFS involved situation where a complainant voluntarily withdrew her complaint after the 180-day period had elapsed. Kuba has sufficiently alleged that she compliec with the administrative prerequisites, and once the 180 days passed □□□□□□□ decision, the statute and related regulations allowed her to file suit in a federa district court. DFS’s failure-to-exhaust argument fails. 2. Reasonable Belief The whistleblower provision of the Sarbanes-Oxley Act protects employees who “provide information, cause information to be provided, □□ otherwise assist in an investigation regarding any conduct which the employee reasonably believes constitutes a violation of section 1341, 1348, 1344, or □□□□ [of Title 18 of the United States Code], any rule or regulation of the Securities and Exchange Commission, or any provision of Federal law relating to frauc against shareholders.” 18 U.S.C. § 1514A(a)(1).4 DFS contends that Kuba has not alleged facts supporting the “reasonably believes” component of this provision, but the Complaint is sufficient in this regard. Courts have interpreted the “reasonably believes” language of § 1514A(a)(1) to “encompass|[] both a subjective and an objective component.” Gale v. U.S. Dep’t of Labor, 384 F. App’x 926, 929 (11th Cir. 2010).5 DFS argues that Kuba has not alleged an objectively reasonable belief of a violation of one of the laws listed in § 1514A and that the conduct about which she complained 4 The protection applies when the employee provides information to a “Federa] regulatory or law enforcement agency,” “any Member of Congress or any committee of Congress,” or “a person with supervisory authority over the employee (or such other person working for the employer who has the authority to investigate, discover, or terminate misconduct).” 18 U.S.C. § 1514A(a)(1)(A)—(C). 5 Although Gale is an unpublished opinion, it is persuasive authority, see 11th Cir. R. 36-2, and apparently is the only case from the Eleventh Circuit on this issue. That court noted in Gale that it had “not had occasion to define” “reasonably believes” but found persuasive the reasoning of all the other circuits that have addressed it. See 384 F. App’x at 929 . “falls short of the type of serious misconduct” that could be a violation of lav and instead amounts only to “trivial internal processes.” (Doc. 18 at 9, 11) However, the Court finds that the Complaint sufficiently alleges both the subjective and objective components of the “reasonably believes” portion o: § 1514A. Especially considering Kuba’s experience as an accountant and □□□ described role at DFS, her allegations of systemic accounting regularities anc false revenue recognition practices state a plausible claim of violations of the laws listed in the Sarbanes-Oxley Act. This claim survives the motion tc dismiss. B. Count II—Dodd-Frank Act Kuba’s second claim is under the Dodd—Frank Act, which was enacted eight years after the Sarbanes—Oxley Act, “in the wake of the 2008 financial crisis.” Somers, 1388. Ct. at 773. Its aim was “to ‘promote the financial stability of the United States by improving accountability and transparency in the financial system.” Id. (quoting 124 Stat. 1376 ). As stated in a Senate Report, the Dodd—Frank Act “established ‘a new, robust whistleblower program designed to motivate people who know of securities law violations to tell the SEC.” Id. (quoting S. Rep. No. 111-176 at 38). The Act defines a “whistleblower” as “any individual who provides . . . information relating to a violation of the securities laws to the [Securities and Exchange] Commission.” 15 U.S.C. § 78u-6(a)(6). DFS argues that Kuba’s Dodd—Frank Act claim fails to state a claim f which relief can be granted because Kuba does not allege facts showing sl engaged in activity protected by the Dodd—Frank Act. DFS does not dispu Kuba’s allegation that she complained to the SEC, but DFS contends that Kul has not alleged that the conduct she reported to the SEC related to a violatic of federal securities laws. DFS also faults Kuba for not attaching her SE complaint to the Complaint (Doc. 1) that she filed in this Court. (See Doc. 18 | 12). Kuba has sufficiently pleaded her Dodd—Frank claim. DFS cites 1 authority for a requirement that a Dodd—Frank claimant submit a copy of h: SEC complaint to the Court at this stage of the case. Kuba alleges that sl made a complaint to the SEC. She does not describe the content of the SE complaint, but in light of the nature of the internal complaints she made to DF and the fact that she indeed complained to the SEC—the agency charged wit enforcing the securities laws—the Court concludes that Kuba has plausib alleged that she “provide[d] information relating to a violation of the □□□□□□□□ laws” to the SEC. 15 U.S.C. § 78u-6(a)(6). This is all that is required at th stage of the case.¢ 6 Of course, if the facts developed during this lawsuit do not show that Kuk indeed “provide[d] information relating to a violation of the securities laws to tl Commission,” Kuba will not be able to succeed on her Dodd—Frank Act claim. But th; is a question for another day. At this point, she has plausibly alleged that she did sc C. Count IlI—California False Claims Act In her third claim, Kuba alleges that DFS violated the California False Claims Act, which provides for relief to an employee who is “discharged. demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of his or her employment because of lawful acts done by the employee... in furtherance of an action □□□□ this section or other efforts to stop one or more violations of [the CFCA].” Cal. Gov't Code § 12653 (a). DFS moves to dismiss this claim on two grounds: that extraterritorial application of the CFCA is improper in this case and that Kuba has not alleged facts supporting her allegation that she engaged in activity protected under that statute. The Court cannot conclude at this stage of the case that the CFCA does not apply here; the Complaint alleges that DFS’s principal place of business is in California and that DFS engaged in misconduct related to California financial laws. (See Compl. {12 & 60). And Kuba has sufficiently pleaded that she engaged in protected activity under the CFCA. Kuba points out that a violation of the CFCA occurs when, among other enumerated acts, someone “[k]nowingly makes, uses, or causes to be made or used a false record or statement material to an obligation to pay or transmit money or property to the state or to any political subdivision, or knowingly conceals or knowingly and improperly avoids, or decreases an obligation to pay or transmit money or property to the state or [10] to any political subdivision.” Cal. Gov't Code § 12651 (a)(7). The □□□□□□□□ alleges that Kuba engaged in protected activity “when she objected to □□□□ reported underreporting and errors in [DFS]’s revenue recognition and sales ta reporting and payments to the State of California ... and for violations of tk State’s Sales and Use Tax Law.” (Compl. § 60). The Complaint sufficient! describes complaints by Kuba of activity within § 12651(a)(7). Thus, Kuba claim of CFCA retaliation survives the motion to dismiss. D. Count IV—Florida Private Sector Whistleblower’s Act Kuba brings her fourth claim under Florida’s Private Sect« Whistleblower’s Act (FWA), which provides: An employer may not take any retaliatory personnel action against an employee because the employee has: (1) Disclosed, or threatened to disclose, to any appropriate governmental agency, under oath, in writing, any activity. policy, or practice of the employer that is in violation of a law, rule, or regulation.... (2) Provided information to, or testified before, any appropriate governmental agency, person, or entity conducting an investigation, hearing, or inquiry into an alleged violation of a law, rule, or regulation by the employer. [or] (3) Objected to, or refused to participate in, any activity, policy, or practice of the employer which is in violation of a law, rule, or regulation. § 448.102, Fla. Stat. Kuba alleges that she reasonably believed that DFS we [11] violating “the Tax Code, GAAP, WPP Compliance and Accounting Policies,’ [tl Sarbanes—Oxley Act], [the] Dodd—Frank [Act], U.S. Securities Laws, includin. but not limited to, the Securities and Exchange Act, in addition to Californ: and Florida Sales and Use Tax Laws.” (Compl. { 65). And she alleges that he protected activity under the Florida statute “was the motivating factor behin [DFS’s] decision to terminate [her] employment.” (Id. § 68). In seeking dismissal of this count, DFS argues (1) that Kuba has ni alleged facts showing that the conduct to which she objected was an actu: violation of law as required under the FWA and (2) that Kuba does not alleg that her protected activity was the “but for” cause of her termination. But th: claim is sufficiently pleaded. 1, Actual Violation DFS notes in its motion that there is a split among Florida appellat courts regarding whether an FWA plaintiff must allege that she objected to a actual violation of the law or whether alleging a reasonable belief that violation occurred is sufficient to state a cause of action for FWA □□□□□□□□□□□ (See Doc. 18 at 16 n.8). Specifically, Florida’s Second District Court of Appe¢ has endorsed the “actual violation” standard, Kearns v. Farmer Acquisition Co 157 So. 3d 458 (Fla. 2d DCA 2015), while the Fourth District Court of □□□□□ 7 As noted earlier, the Complaint does not define or explain “WPP Complianc and Accounting Policies.” [12] has held that a plaintiff need only allege a good faith, objectively reasonabl belief of a violation, Aery v. Wallace Lincoln-Mercury, LLC, 118 So. 3d 904 (Fl: 4th DCA 2013). The Supreme Court of Florida has not weighed in on this question, but a DFS points out in its motion the undersigned has previously taken the positio that the Supreme Court would agree with the Second District’s Kearns decisio: and adopt the “actual violation” standard. See Graddy v. Wal-Mart Stores East LP, 237 F. Supp. 3d 1223, 1227 (M.D. Fla. 2017) (Antoon, J.) (“This Court i persuaded that the Supreme Court of Florida would adopt Kearns rather tha: Aery.”). Thus, that standard will be applied in assessing the sufficiency Kuba’s pleading of her FWA claim. Kuba’s response to DFS’s motion to dismiss the FWA claim consists c only one sentence: “Plaintiff sufficiently pleads actual violations of laws, rules and regulations.” (Doc. 20 at 18 (referring to other sections of the □□□□□□□□□ Construing the reasonable inferences from the allegations of the Complaint i: Kuba’s favor, the Court agrees that Kuba has sufficiently pleaded actua violations of laws, rule, and regulations to survive the motion to dismiss th FWA count. 2. Causation The FWA prohibits employers from retaliating against an employe “because the employee has” engaged in protected activity. § 448.102, Fla. Stat [138] (emphasis added). DFS asserts in its motion that Kuba alleges only that □□ protected activity was “a ‘motivating factor” in her termination and that ‘ motivating factor” does not equate to “because of.” (See Doc. 18 at 17). DF argues that Kuba was required to allege “but for” causation. But what Kuba actually alleges in her FWA claim is that her protecte activity “was the motivating factor” in her termination, (Compl. § 68 (emphas: added)), not merely that it was “a” motivating factor as characterized by DF: Thus, even accepting DFS’s contention that Kuba must allege “but fo: causation to satisfy the “because” language of the FWA, Kuba has □□□□□□□□□ alleged “but for” causation here. EK. Count V—Equal Pay Act In her final claim, Kuba alleges that DFS violated the Equal Pay Act □ 1963, which provides that employers within its provisions shall mn “discriminate . . . between employees on the basis of sex by paying wages t employees...atarate less than the rate at which he pays wages to employee of the opposite sex . . . for equal work on jobs the performance of which require equal skill, effort, and responsibility, and which are performed under simila working conditions.” 29 U.S.C. § 206 (d)(1). Although DFS argues that Kub has too vaguely pleaded this claim, Kuba’s allegations are sufficient under Rul 8 to state a plausible claim for relief under the Equal Pay Act. [14] F. Motion for a More Statement In a footnote in its motion to dismiss, DFS requests in the alternative th: the Court construe the motion as a motion for a more definite statement unde Federal Rule of Civil Procedure 12(e). (See Doc. 18 at 1 n.1). That rule allow a party to “move for a more definite statement of a pleading to which responsive pleading is allowed but which is so vague or ambiguous that th party cannot reasonably prepare a response.” Fed. R. Civ. P. 12(e). A motio under this rule “must point out the defects complained of and the detail desired.” Id. Beyond its 12(b)(6) arguments—which the Court has rejected—DFS ha not “point[ed] out the defects complained of and the details desired” in suppor of its Rule 12(e) motion. (See Doc. 18 at 1 n.1). And in any event, the Complain is not “so vague or ambiguous” that DFS “cannot reasonably prepare □□ response.” Fed. R. Civ. P. 12(e). DFS’s alternative motion is without merit. IV. Conclusion Accordingly, it is ORDERED that Defendant’s Motion to Dismiss (Doc 18) is DENIED in all respects. DONE and ORDERED in Orlando, Flefida, op July 30, 2021 □□ nited States District Judge Copies furnished to: Counsel of Record