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Fato v. Vartan National Bank

January 6, 2009

FRANK FATO, PLAINTIFF
v.
VARTAN NATIONAL BANK, VARTAN FINANCIAL CORP., AND CENTRIC BANK DEFENDANTS



The opinion of the court was delivered by: Judge Conner

MEMORANDUM

Plaintiff Frank Fato ("Fato") brings this retaliatory discharge action pursuant to the whistleblower provision of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"), 12 U.S.C. § 1831j. Presently before the court is a motion to dismiss Fato's complaint (Doc. 20), filed by defendants Vartan National Bank, Vartan Financial Corporation, and Centric Bank (collectively "the defendants"). For the reasons that follow, the motion will be denied.

I. Statement of Facts*fn1

Fato was hired as president and chief executive officer of defendant Vartan National Bank ("VNB") on August 4, 2004. (Doc. 1 ¶ 9.) At the time, VNB was organized as an insured depository institution under the Federal Deposit Insurance Corporation Act, 12 U.S.C. §§ 1831a-1835a.*fn2 (Id. ¶ 36.) Defendant Vartan Financial Corporation ("VFC"), a bank holding company, owned VNB. (Id. ¶ 6.) On May 20, 2005, Fato renewed his contract, extending his term of employment with VNB to March 31, 2008. (Id. ¶¶ 11-12.)

In late June 2005, representatives from the Office of the Comptroller of the Currency ("OCC") met with several VNB board members in a private meeting. (Id. ¶ 27.) Fato was not present at this meeting. (Id.) Later in the day, however, Fato met with an OCC representative and expressed several concerns regarding VNB's corporate governance. (Id. ¶ 29.) Fato purportedly explained that Robert DeSousa ("DeSousa"), the executive vice president, secretary, and general counsel of the Vartan Group*fn3 ("VG"), was actively interfering with Fato's management of VNB and pressuring him to prioritize issues that Fato felt were not VNB priorities. (Id.) Fato allegedly disclosed: (1) DeSousa's demand that Fato reallocate bank assets so that VNB might acquire authority to exercise trust powers; (2) DeSousa's directive instructing Fato to remove a member of the VNB board without cause; (3) DeSousa's request that VNB absorb the cost of health benefits for employees working for VG subsidiaries; and (4) DeSousa's attempt to sell VNB to an outside party without informing Fato. (See id. ¶ 29.)

According to the complaint, Fato spoke with VNB board member Donnie Enders ("Enders") later that day, recounting his conversation with the OCC representative. (Id.; see also Doc. 21 at 7.) On July 18, 2005-approximately three weeks after his disclosures to the OCC-the VNB board of directors terminated Fato's employment. (Doc. 1 ¶ 32.) The board conveyed its decision to Fato via discharge letter, which ambiguously referenced "performance issues" as justification for the board's action. (Id. ¶ 33.) DeSousa signed the letter. (Id.)

Fato commenced the instant action on July 16, 2007. (Id.) He alleges that his termination constitutes an act of unlawful retaliation under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, 12 U.S.C. § 1831j.*fn4 (Id. ¶¶ 35-41.) On May 16, 2008, defendants moved to dismiss the complaint pursuant to Rule 12(b)(6) for failure to state a claim upon which relief can be granted. (See Doc. 20 ¶¶ 7-8.) The motion has been fully briefed and is ripe for disposition.

II. Standard of Review

Rule 12(b)(6) of the Federal Rules of Civil Procedure provides for the dismissal of complaints that fail to state a claim upon which relief can be granted. FED. R. CIV. P. 12(b)(6).

When ruling on a motion to dismiss under Rule 12(b)(6), the court must "accept as true all [factual] allegations in the complaint and all reasonable inferences that can be drawn therefrom, and view them in the light most favorable to the plaintiff." Kanter v. Barella, 489 F.3d 170, 177 (3d Cir. 2007) (quoting Evancho v. Fisher, 423 F.3d 347, 350 (3d Cir. 2005)). Although the court is generally limited in its review to the facts in the complaint, it "may also consider matters of public record, orders, exhibits attached to the complaint and items appearing in the record of the case." Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1384 n.2 (3d Cir. 1994); see also In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997).

Federal notice and pleading rules require the complaint to provide "the defendant notice of what the . . . claim is and the grounds upon which it rests." Phillips v. County of Allegheny, 515 F.3d 224, 232 (3d Cir. 2008) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1964 (2007)). The plaintiff must present facts that, if true, demonstrate a plausible right to relief. See FED. R. CIV. P. 8(a) (stating that the complaint should include "a short and plain statement of the claim showing that the pleader is entitled to relief"); Twombly, 550 U.S. at ---, 127 S.Ct. at 1965 (requiring plaintiffs to allege facts sufficient to "raise a right to relief above the speculative level"); Victaulic Co. v. Tieman, 499 F.3d 227, 234 (3d Cir. 2007). Thus, courts should not dismiss a complaint for failure to state a claim if it contains "enough factual matter (taken as true) to suggest the required element. This does not impose a probability requirement at the pleading stage, but instead simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of the necessary element." Phillips, 515 F.3d at 234 (quoting Twombly, 550 U.S. at ---, 127 S.Ct. at 1965). Under this liberal pleading standard, courts should generally grant plaintiffs leave to amend their claims before dismissing a complaint that is merely deficient. See Grayson v. Mayview State Hosp., 293 F.3d 103, 108 (3d Cir. 2002); Shane v. Fauver, 213 F.3d 113, 116-17 (3d Cir. 2000).

III. Discussion

Section 1831j of Title 12 of the United States Code offers a right of relief to employees of insured depository institutions when they provide certain information to federal banking agencies and thereafter suffer employment-related retaliation. The statute provides, in pertinent part, as follows:

No insured depository institution may discharge or otherwise discriminate against any employee with respect to compensation, terms, conditions, or privileges of employment because the employee . . . provided information to any ...


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