Preston v. Fid. Brokerage Servs., Civil No. 16-1799

THOMAS E. PRESTON, Plaintiff, v. FIDELITY BROKERAGE SERVICES, Defendant.

Civil No. 16-1799

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA

February 18, 2020

OPINION

Plaintiff, Thomas E. Preston, brings claims of age discrimination under the Age Discrimination in Employment Act, 29 U.S.C. § 621, et seq. ("ADEA"), age discrimination under the Pennsylvania Human Relations Act, 43 Pa. Cons. Stat. § 951, et seq. ("PHRA"); and Defamation. His claims arise from allegations that Defendant, Fidelity Brokerage Services ("Fidelity"), engaged in a scheme to unlawfully terminate him because of his age by falsely accusing him of professional wrongdoing, and then publishing on a required industry form false defamatory statements as to why he was terminated.

Pending before the Court are Mr. Preston's Motion for Partial Summary Judgment as to Fidelity's ability to assert an absolute privilege defense to the Defamation claim, ECF No. 88,¹ and Fidelity's Motion for Summary Judgment as to all claims. ECF No. 93. As more fully explained below, Mr. Preston's Partial Motion for Summary Judgment will be denied, and Fidelity's Motion for Summary Judgment will be granted on all claims.

I. BACKGROUND²

Fidelity hired Mr. Preston in October 2011 as a Financial Consultant and he worked at the Pittsburgh, Pennsylvania investor center. Mr. Preston reported to Matthew Knight, Vice President Branch Office Manager. Mr. Knight reported to David Regelbrugge, Vice President Branch Office Manager and the territory supervisor of Fidelity's Pittsburgh branches. As a Financial Consultant, Mr. Preston was subject to Fidelity's Temporary Lockout Policy, as set forth in Fidelity's "PI Investor Center, 2016 Rules of Engagement Rules of Relationship Policy Document" ("TLO Policy"). Mr. Preston was fired on April 14, 2016, for allegedly violating the TLO Policy.

The TLO Policy permits a Financial Consultant to "lock out" a customer, and receive exclusive financial remuneration for that customer, under certain defined circumstances. The duration of a TLO is 180 days. Id. at 2. Fidelity's TLO Policy describes "Temporary Lockouts," as follows:

The Temporary Lockout is designed to compensate registered representatives for providing professional services and appropriate investment solutions to both existing customers and prospects. By submitting a Temporary Lockout representatives acknowledge that they have addressed the needs of Fidelity's customers and/or prospects in a professional manner consistent with firm policy and industry standards. The Temporary Lockout process helps to insure (sic) that customers and/or prospects are properly educated about appropriate investments that are consistent with their financial needs.

For these types of interactions, representatives are required to provide supporting notes in the Siebel system, to clarify or add commentary beyond that which thedrop down box's in Siebel provide. By logging Temporary Lockouts into Siebel, representatives are creating a database of customer information, which can enhance a customer's future interactions with branch and/or phone representatives.

Id. The Seibel computer-based system for tracking notes is a part of Fidelity's books and records. Pursuant to the TLO Policy, a Financial Consultant is required to provide supporting notation in the Seibel system; specifically, the Policy states that "Seibel notes must be present and include documentation of a value add[ed] conversation." Id.

The TLO further describes Temporary Lockouts as "investment related conversations between Fidelity representatives and customers and prospects." Id. Such "discussions" are defined as one of the following four categories:

A. Value Added Conversation - Value added conversation consists of five clearly defined stages within the discussion between the Representative and the customer. They include, understanding the investor goal, knowing the opportunity, discussing a potential solution, outlining the next steps, and documenting additional customer specific information as may be required by the nature of the conversation.

B. Full Guidance - Those conversations involving portfolio planning through the use of a recognized Fidelity guidance interaction; tool based or dialogue based such as 'fundamental guidance'. The conversation can be done in person or over the phone. The following tool based suite includes: Retirement Quick Check, Portfolio Review, Retirement Income Planner, PAS IPQ, FILI IPQ, Fundamental Guidance, PRQP and the Annuity Calculator.

C. Completion of a New Account or Transfer Form - Representative directly assists customer in completing a new account or asset transfer form including letters of instruction (DTC, Corporate Rollover Paperwork, etc...). This can be done in person or over the phone.

D. Active Trader Discussion - Discussion of Fidelity Active Trader Services with the following customer conditions present and documented in Siebel:

a. Customer trades at least 120 times a year (includes Fidelity and outside trading)

b. Has outside assets to bring to Fidelity to use for trading

c. Wants to discuss Fidelity's trading advantage and expects a call from an expert.

Id. at 2-3. Fidelity asserts that the above four categories are the only methods by which a Financial Consultant may claim a temporary lockout. Mr. Preston disputes Fidelity's assertion, claiming that the TLO Policy provides eight other ways in which a Financial Consultant may claim a TLO. Mr. Preston points to the TLO Policy's "Additional Guidelines for Temporary Lockouts," which provide that "Branch FCs may use Temporary lockout when:

• Client is eligible for the 1:1 relationship

• Client is an external referral with

• Client is better suited for ATS, AT VIP, a PAS FC, or Premium Service

• Clients >$500K PI assets must be offered a covered model: Book, ATS/AT VIP, PAS FC

• Clients not offer a 1:1 relationship position the model the client is best suited for: ATS, PAS FC, or Premium Services

• The client declines coverage

• Stand-alone Niche (non-proto, corporate accounts) with BOM approval; requires Market manager approval to renew; guidce for current AT VIP, ATS or SPS customer (BAU)

• A limit of one temp lockout per customer, unless granted a manager exception (must be documented in Siebel)

TLO Policy, at 3.

Mr. Preston was terminated following an investigation into alleged improper use of TLO's by Financial Consultants in Pittsburgh. In February 2016, an anonymous Fidelity employee reported a complaint to Cathy Morrisey, Director of Fidelity's Employee Relations. The complaint raised concerns that Financial Consultants in Pittsburgh were abusing the TLO system by locking out customers without having the requisite customer interaction. After receiving the complaint, Ms. Morrisey conferred with Fidelity's in-house counsel and another Fidelity employee, after which they agreed that the complaint needed to be investigated. Fidelity assigned Internal Investigators Matthew Pliskin and Eric Bronner to conduct the investigation.

The investigators reviewed TLO activity for all seven of Fidelity's Pittsburgh Financial Consultants. The investigators decided not to review TLO activity for Vice President Financial Consultants, since the complaint only referred to Financial Consultants. The investigation began by reviewing a sample of sixty-two out of a total of 135 TLO's processed by the seven Pittsburgh Financial Consultants during the prior four months. The investigators cross-referenced each TLO with the Financial Consultant's associated Seibel note. The investigators reviewed telephone logs associated with each TLO, which, in part, showed the length of the telephone call. The investigators also consulted usage reports to confirm when a Financial Consultant accessed each customer's account information.

The initial phase of the investigation revealed that Mr. Preston had thirty-five TLO's during the investigation time period. The investigation identified three suspect lockouts for Mr. Preston. The length of the customer telephone calls appeared to be too brief to qualify as "value added conversations." And, for one of the three TLO's, there was no telephone or other record that showed any communication with the customer. No other Financial Consultants' TLO's raised similar concerns. The investigators next reviewed Mr. Preston's overall TLO activity. During this phase of the investigation, seven of Mr. Preston's TLO's did not appear to be supported with documented appropriate customer interaction in accordance with Fidelity's TLO Policy.

Central to the instant action is a single, December 24, 2015, Preston TLO for a customer identified as Customer A. On December 21, 2015, the telephone log showed that Mr. Preston had a 54-second call to Customer A's telephone number. Mr. Preston entered a Seibel note associated with this call indicating that he had left a message with the customer. On December 22, 2015, the telephone log showed that Mr. Preston had a six-second call-to Customer A'stelephone number, after which he again noted in the Seibel system that he had left a message with the customer. On December 24, 2015, the telephone log indicates that Mr. Preston had another six- second call with Customer A. Mr. Preston initiated a TLO for Customer A on December 24, 2015, which was the last business day for the compensation year. Mr. Preston's Seibel note, associated with the December 24, 2015 six-second call, stated: "Called to introduce myself to him as local point of contact for him. Sending my contact information. Will use if needed. Confirmed that TOA is in progress towards completion, saw note that fee adjustment was made."

On April 14, 2016, the investigators interviewed Mr. Preston. Internal Investigations Investigative Summary, at 3 (Ex. I (under seal)). During the interview Mr. Preston indicated that he understood the requirement that a Financial Consultant must have a value-added conversation with a customer before applying a TLO. Id. The...