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Reyher v. Grant Thornton, LLP

United States District Court, E.D. Pennsylvania

July 6, 2017

ANN MARIE REYHER, Plaintiff,
v.
GRANT THORNTON, LLP, Defendant.

          MEMORANDUM

          ANITA B. BRODY, J.

         Defendant Grant Thornton, LLP (“Grant Thornton”) moves to dismiss Plaintiff Ann Marie Reyher's Second Amended Complaint. Although the Parties raise myriad arguments, resolution of the motion to dismiss ultimately depends upon the answer to a single question: Does Reyher qualify as a whistleblower under the Dodd-Frank Wall Street Reform and Consumer Protection Act? The answer to this question is no, and I will therefore dismiss Reyher's Dodd-Frank whistleblower claim with prejudice. Because the Dodd-Frank claim provides the sole basis for original federal jurisdiction, the prevailing law strongly suggests that I must, unfortunately, decline to continue exercising supplemental jurisdiction over Reyher's Pennsylvania state law claims. I will therefore dismiss Reyher's remaining claims, without prejudice to Reyher to refile in a court of competent jurisdiction.

         I. FACTUAL BACKGROUND[1]

         A. Reyher Joins Grant Thornton

         Reyher is a Certified Public Accountant with over twenty years of experience. Prior to January 25, 2016, Reyher was employed as a Senior Manager by the professional services firm Ernst & Young, where she led a group responsible for individual and trust tax services. In her position at Ernst & Young, Reyher retained a number of sought-after clients. Reyher was first contacted about the possibility of joining Grant Thornton in November 2015. A recruiting process ensued, that led to Reyher joining Grant Thornton on January 25, 2016, as a Managing Director in the Philadelphia office. Throughout the recruiting process, Reyher requested and received numerous assurances that her responsibilities at Grant Thornton would be limited to her area of expertise, “handling individual and fiduciary tax returns for the Private Wealth Services Team.” Sec. Am. Compl. 5, ECF No. 96. Reyher was further assured that she would be assigned to a particular group that “exclusively handled individuals and trusts.” Id.

         Upon beginning work at Grant Thornton, Reyher quickly discovered that all was not as had been represented. On her second day of work, Reyher received a list of assigned clients that included only corporate clients, rather than individuals and trusts. Reyher repeatedly expressed her distress about this to managers at Grant Thornton, including Partner 1 and Partner 2, [2] but to no avail.

         B. Reyher Discovers Accounting Irregularities

         Despite Grant Thornton's misrepresentations, Reyher nevertheless began performing work for her assigned corporate clients. She began to discover accounting irregularities within the statements and filings of her new clients. Reyher alleges that Grant Thornton employees, including Partner 1, knowingly included inaccurate information in client tax documents. She further alleges that she complained to administrators at Grant Thornton about these irregularities and inaccuracies, stating that she believed they “amounted to bank fraud, mail fraud, wire fraud, and/or fraud against shareholders.” Id. at 12. Reyher repeatedly conveyed to Grant Thornton partners that she refused to engage in any illegal activity. Reyher's Second Amended Complaint alleges irregularities or improprieties related to four specific clients.

         i. Client A

         Reyher identifies Client A as consisting of “approximately thirty (30) partnerships and three (3) S Corporations, ” with “approximately $700 million in revenue.” Sec. Am. Compl. 9, ECF No. 96. Reyher alleges that she noticed “questionable practices” relating to Client A, “including problematic deductions and inaccurately recorded intercompany transactions.” Id. Specifically, she alleges that, during a meeting in February 2016, employees of Client A's family office indicated that the leader of Client A frequently drove expensive automobiles for personal use, while classifying the costs of these automobiles as being related to a foundation. The employees also discussed other intercompany transactions that raised Reyher's suspicions. When Reyher expressed her concerns to partner Partner 1, she was rebuffed. Reyher later became aware of “additional errors and inaccuracies relating to Client A's intercompany transactions, including transactions in excess of $1 million which were not properly reported or not reported at all.” Id. at 10. When she raised these concerns with Partner 1, she was again rebuffed and told to “stop asking questions.” Id.

         ii. Client B

         Reyher identifies Client B as a “large corporation” with a family office. Id. Reyher alleges that, during a meeting with a family office employee of Client B, the employee revealed to Reyher that Client B performed extensive work in Philadelphia but did not file Philadelphia tax returns. Reyher presented this issue to Partner 1 and was told that she should not address the issue with the client.

         iii. Client C

         Reyher alleges that Client C “intended to claim only $83, 000 worth of alimony payments despite records showing that he paid approximately $500, 000 in alimony.” Id. at 11. Reyher also alleges that her review of Client C's documents revealed that “despite projected income of $8, 000, 000, income was being calculated at just $2, 000, 000 for extension purposes.” Id. Reyher alleges that when she raised these issues with Partner 1, Partner 1 again told her to stop asking questions.

         iv. Client D

         Reyher learned that Client D had gifted a large house to an employee. When Reyher approached Partner 1 to discuss whether the employee had incorrectly failed to pay a gift tax, Partner 1 responded “that is none of your business.” Id. After subsequently questioning the employee, Reyher was told by Partner 1 that she was no longer permitted to work with Client D. Reyher also alleges that the files and work papers of Client D were stored on a hard drive referred to by Grant Thornton employees as the “Super Secret Drive.” Only a handful of Grant Thornton employees were aware of or had access to this secret drive.

         v. Corporate Status of Clients A, B, C, and D

         Reyher's Second Amended Complaint does not include any allegations that Clients A, B, C, or D are publicly traded companies, nor does it include any information that would identify them as such. As noted above, Client A is identified as consisting of “approximately thirty (30) partnerships and three (3) S Corporations, ” and Client B is identified as a “large corporation” with a family office. Id. at 9-10. The Second Amended Complaint does not explicitly identify Client C, but the Complaint includes information-such as statements about Client C making alimony payments-that implies that Client C is an individual. The Second Amended Complaint does not identify the status of Client D.

         C. Grant ...


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