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Struthers v. UBS Financial Services

May 7, 2009


The opinion of the court was delivered by: Marilyn L. Huff, District Judge United States District Court


Plaintiff's complaint alleges several causes of action stemming from her employment with Defendant UBS Financial Services, Inc. and the termination of that employment. (Doc. No. 1.) On September 8, 2008, Defendant UBS Financial Services, Inc. filed its motion to compel arbitration (Doc. No. 9.) based on two separate arbitration agreements signed by Plaintiff. After due consideration of briefing from both parties, the Court granted Defendant's motion to compel arbitration and dismissed the case without prejudice. (Doc. No. 28.)

On December 1, 2008, Plaintiff filed an amended motion to alter judgment. (Doc. No. 42.) Defendant filed an opposition to Plaintiff's motion to amend judgment on January 20, 2009. (Doc. No. 49.) For the following reasons, the Court denies Plaintiff's motion to alter or amend the Court's judgment.


Before 2006, Plaintiff Gail Struthers worked as an Assistant Vice President, Financial Advisor for Morgan Stanley. (Struthers Decl. in Opp. to Mot. to Compel Arb. ["Struthers Decl."], ¶ 2.) Plaintiff's compensation exceeded $300,000 per year. (Id.) During Ms. Struther's employment at Morgan Stanley, she became close associates with another financial advisor, Tony Ferner. (Id. ¶ 4.) When Mr. Ferner accepted a position as a branch manager at UBS Financial Services, Inc. ("UBS"), he contacted Ms. Struthers and offered her a position as a financial advisor at UBS. (Id. ¶ 6.) Ms. Struthers decided to accept the offer.

On February 7, 2006, Ms. Struthers signed a "Letter of Understanding" ("LOU") confirming the elements of the compensation package she would receive in her new position at UBS. (Struthers Decl., Ex. A.) That Letter of Understanding provided for Ms. Struthers to receive an Employee Forgivable Loan ("EFL") in the amount of approximately $396,000 forgivable over 6 years. (Id. ¶ 2.) The LOU further provided that the loan would be "subject to all the provisions of the Employee Forgivable Loan Agreement" and stated that a copy of that agreement was enclosed, incorporated by reference and made a part of the LOU. (Id.) On March 13, 2006, after Ms. Struthers had resigned from Morgan Stanley and started working at UBS, she signed the Employee Forgivable Loan Agreement (labeled "Promissory Note"). (Howard Decl. ISO Mot. to Compel Arb. ["Howard Decl."], Ex. 1.) The Promissory Note contains an acceleration clause providing that repayment of the loan would be immediately due upon termination of employment for any reason besides disability or death. (Id. at 2.) The Promissory Note also contained an arbitration clause providing that:

[A]ny disputes between Employee and UBS Financial Services including claims concerning compensation, benefits or other terms or conditions of employment and termination of employment, or any claims for discrimination, retaliation or harassment, or any other claims whether they arise by statute or otherwise . . . will be determined by arbitration as authorized and governed by the arbitration law of the state of New York. (Id. at 5.)

Ms. Struthers also executed a "Form U-4 Uniform Application for Securities Industry Registration or Transfer" (the "U-4") in order to register with the NASD. (Howard Decl., Ex. 2.) This registration is required under a 1993 Securities and Exchange Commission ("SEC") regulation that requires all broker-dealers to be registered with a securities organization such as the NASD. 17 C.F.R. § 240.15b7-1. The U-4 form contains an arbitration clause that covers Ms. Struther's claims. (Id. at 12, ¶ 5.)

On May 15, 2007, UBS terminated Ms. Struthers's employment. (Struthers Decl. ¶ 17.) Plaintiff argues that she should not have to pay back her Employee Forgivable Loan because her termination was due to disability. She further asserts several causes of action stemming from her employment with UBS, including (1) intentional misrepresentation; (2) negligent misrepresentation; (3) violation of plaintiff's rights under the California Fair Employment and Housing Law; (4) invasion of privacy; (5) intentional infliction of emotional distress; (6) breach of implied covenant of good faith and fair dealing; (7) partial rescission; and (8) unlawfully preventing employment by misrepresentation.


I. Motion to Alter Judgment -- Legal Standard

Under Rule 59 of the Federal Rules of Civil Procedure, a party may file a motion to alter or amend a judgment no later than 10 days after the entry of the judgment. Fed. R. Civ. P. 59(e). Amendments to judgments under Rule 59(e) are appropriate "if the district court (1) is presented with newly discovered evidence, (2) committed clear error or the initial decision was manifestly unjust, or (3) if there is an intervening change in controlling law." Dixon v. Wallowa County, 336 F.3d 1013, 1022 (9th Cir. 2003) (quoting Sch. Dist. No. 1J, Multonomah County, Or. v. AcandS, Inc., 5 F.3d 1255, 1263 (9th Cir. 1993)).

Here, Plaintiff's motion raises no argument that there has been an intervening change in controlling law. Similarly, while Plaintiff presents additional information regarding the state action issue, Plaintiff does not explain why this information could not have been discovered earlier through due diligence, as required for a Rule 59 motion based on new evidence. Zimmerman v. City of Oakland, 255 F.3d 734, 740 (9th Cir. 2001) ("a party that fails to introduce facts in a motion or opposition cannot introduce them later in a motion to amend by claiming that they constitute 'newly discovered evidence' unless they were previously unavailable"). Therefore, Plaintiff's motion to amend the Court's judgment depends on Plaintiff's argument that the Court committed clear error or the ...

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