Gupta v. Saxena

Background

Rishi K. Gupta brought a retaliation claim under the Dodd-Frank Wall Street Reform and Consumer Protection Act against New Silk Route Advisors, L.P., New Silk Route Partners, LTD., Parag Saxena, and related entities, collectively called NSR in the opinion. Gupta alleged that he reported suspected misconduct to the Securities and Exchange Commission and that NSR terminated him on January 5, 2017, in retaliation for whistleblowing.

Gupta later became Chief Financial Officer of TradingScreen Inc. (TSI) in May 2018. He alleged that he found substantial financial mismanagement at TSI, expressed concerns to TSI executives, and was terminated in September 2018. NSR asserted an affirmative defense that, if Gupta suffered damages, he failed to make reasonable and diligent efforts to reduce them. This is commonly called a mitigation-of-damages defense.

Motion to Strike the Affirmative Defense

Gupta moved under Federal Rule of Civil Procedure 12(f) to strike NSR’s ninth affirmative defense. He argued that Dodd-Frank retaliation plaintiffs have no duty to mitigate damages and that his employment with TSI itself showed effective mitigation.

The court explained that motions to strike affirmative defenses are generally disfavored and should not be granted unless the defense cannot succeed under any possible facts and its inclusion would prejudice the plaintiff. The court declined to decide whether a Dodd-Frank plaintiff seeking damages has a duty to mitigate. It reasoned that Gupta might not ultimately prevail on his retaliation claim, making an early ruling on mitigation potentially advisory and based on hypothetical facts.

The court therefore denied Gupta’s motion to strike NSR’s ninth affirmative defense.

Motion to Compel Discovery from TSI

Gupta also sought documents from TSI to support his position that he had reasonably attempted to maintain his employment there and was terminated because he raised concerns about TSI’s practices, rather than because he was ineffective or difficult to work with.

Gupta initially sought broad financial information concerning TSI’s reporting and accounting practices and its dealings with banks and regulators. After TSI raised burden and scope objections, Gupta narrowed his requests to documents and communications reflecting his expressions of concern to TSI executives about those matters.

The court held that the narrowed requests were relevant to NSR’s mitigation defense, were not overly burdensome, and could be obtained under the confidentiality agreement Gupta represented he had reached with TSI. The court granted the motion to compel as to revised requests 9, 10, 11, 14, and 17. The ruling included relevant portions of board-meeting minutes, but TSI did not have to produce documents and communications concerning its financial, accounting, or hiring information and practices more generally.

Disposition

The court denied Gupta’s motion to strike NSR’s ninth affirmative defense and granted Gupta’s motion to compel discovery from third-party TSI. The Clerk was directed to terminate the motions.