Turnbull v. JPMorgan Chase & Co.

Background

Donald Turnbull sued JPMorgan Chase & Co. under the Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1514A(a)(2), alleging that the company retaliated against him for cooperating with a Department of Justice investigation. Turnbull had worked on JPMorgan’s precious metals trading desk and became its managing director in 2018. The Department of Justice and other regulators were investigating suspected “spoofing,” described in the opinion as placing trade orders with the intent to cancel them before execution in order to create a false appearance of supply or demand and influence prices.

Turnbull alleged that he met with Department of Justice investigators three times between March and August 2019 and answered their questions truthfully. He said he raised concerns about trading by several colleagues and about JPMorgan’s training, monitoring, compliance, and discipline practices. During a JPMorgan interview on October 7, 2019, Turnbull allegedly provided substantially similar information for the first time directly to the company. He was placed on leave on October 31 and later terminated. According to the complaint, JPMorgan said it terminated him because 14 trading sequences could be perceived as spoofing, while Turnbull alleged that the company actually feared the information he had provided to the government and wanted to discredit him.

Motion to dismiss

JPMorgan moved to dismiss the Second Amended Complaint under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint states a legally sufficient claim. On such a motion, the court accepts factual allegations as true, draws reasonable inferences for the plaintiff, and does not decide which side’s evidence is more credible.

The parties did not dispute that JPMorgan was covered by the statute, that Turnbull engaged in protected activity, that JPMorgan knew he engaged in protected activity, or that his termination was an unfavorable employment action. JPMorgan disputed whether Turnbull plausibly alleged that his protected activity contributed to the termination.

Court’s analysis

The court concluded that Turnbull plausibly alleged the required connection. His termination occurred 24 days after the October 7 interview, when he alleged JPMorgan first learned the substance of his disclosures. The court determined that this timing strongly supported an inference that the protected activity contributed to the termination. It rejected JPMorgan’s argument that the relevant period should run from Turnbull’s first Department of Justice interview in March 2019, because Turnbull’s theory focused on what JPMorgan allegedly learned during the October 7 interview.

The court also found that Turnbull plausibly alleged pretext, meaning that JPMorgan’s stated reason for the termination was not the real reason. Turnbull alleged that other traders who faced more serious spoofing-related allegations, including indictments or guilty pleas, remained employed longer or received favorable departures, while he was terminated based on 14 sequences identified as potentially appearing to involve spoofing. The court stated that these allegations supported an inference that JPMorgan applied a different standard to Turnbull.

The court considered JPMorgan’s reliance on an indictment and a deferred prosecution agreement as support for its position that Turnbull had engaged in wrongdoing. The court explained that those materials might make another interpretation of events plausible, but they did not defeat Turnbull’s claim at the pleading stage. A plaintiff need only state a claim that is plausible, not prove that the plaintiff’s account is the only or most likely explanation.

Disposition

Judge John G. Koeltl denied JPMorgan’s motion to dismiss. The court did not determine whether Turnbull was actually terminated in retaliation or whether JPMorgan’s stated reason was true; it ruled only that the Second Amended Complaint plausibly stated a Sarbanes-Oxley retaliation claim.