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HARTFORD — Did Richard Trusz risk his career to stand up for UBS investors such as public pension funds, as commercial real estate prices hit the peak and then started to fall in 2008?
Trusz, 58, lost his managing director job at UBS in Hartford in the summer of 2008 after months protesting overvaluation of commercial real estate in UBS funds, court filings show. He sued UBS in federal court in February 2009, claiming retaliation in part for his internal and external whistle-blowing — a case that has still not been decided. He asked to be reinstated, for back pay with interest, attorney’s fees and monetary damages.
Trusz, who lives in Glastonbury, has not found another job in the last 6 1/2 years and, through his attorney, said the litigation has taken a heavy toll on him and his family.
UBS argues in its legal filings that Trusz’s dismissal was a business decision to outsource appraisal oversight and had nothing to do with Trusz’s conduct.
The Connecticut Supreme Court will hear arguments Tuesday on one narrow issue in the case: Are employers free to discipline or fire employees for complaints inside the workplace, even if employees’ concerns are on a matter of public interest?
The U.S. Supreme Court, in a 2006 decision, rejected the argument that public employees deserve whistle-blower protection for internal protests, but Trusz’s lawyers are arguing that judges interpreting the Connecticut Constitution are not bound by that precedent.
The Connecticut ACLU has weighed in on Trusz’ side. It says previous U.S. Supreme Court precedents are adequate to balance employers’ needs for respecting workplace hierarchies and employees’ desires to express their viewpoint on how business should be conducted. The ACLU’s brief says Connecticut’s Supreme Court has a tradition of rejecting U.S. Supreme Court precedents that narrow protections.
If the Connecticut Supreme Court sides with Trusz, lawyers who represent employers say it will create more lawsuits or, at the very least, make it more likely that businesses will settle cases before they go to trial.
No matter how the state Supreme Court rules, whether UBS was legally justified in eliminating Trusz’s job will still have to be decided in federal court, because this argument is just one of many planks of Trusz’s case.
For years before Trusz’s job was eliminated, he received top-notch evaluations, court documents from both parties show.
“In 2007, [his supervisor Thomas] O’Shea wrote that ‘Rich continues to be a leader among senior management in the Company. He is well respected throughout all levels of the organization. He is quite dedicated and hard-working and leads his team by example. … Rich’s unit is well respected throughout the company and the industry. This is, in no small part, due to Rich’s leadership.'”
In late 2006 and throughout 2007, Trusz, who led an appraisal unit at UBS Realty, complained that the department was overworked, having put time in on nights and weekends to keep up with their duties, and asked for more staff, the documents say.
Trusz’ case asserts that he started warning in 2007 that being stretched so thin could result in valuation errors, and then started to identify individual office buildings or shopping malls that had been valued too high.
In January 2008, he found more mistakes in valuations, the court filings say.
An affidavit from Thomas O’Shea says that in January, Trusz told him that because of his heart disease, he would be forced to resign at the end of March unless there was meaningful change. O’Shea says that he and other executives identified three other senior-level jobs he could transfer to, but Trusz rejected all of them.
O’Shea says in the affidavit that in February, Trusz said: “he ‘worked himself into the ground’ and he was ‘scared to death of having another heart attack.'” O’Shea says Trusz told him he had hired a lawyer and intended to sue for discrimination on the basis of his heart disease. “Plaintiffs comments and complaints struck me as a calculated attempt by him to execute his game plan of leaving UBS Realty with severance pay,” O’Shea said.
Karina Byrne, a spokeswoman from UBS, said last week that the company had no comment on whether O’Shea’s opinion is the company’s position on Trusz’s motivation.
UBS reviewed the valuations that Trusz said were mistaken and concluded that the errors were not material to the funds’ performance and did not warrant disclosures to clients. They offered to give him a copy of the internal review but insisted he sign a confidentiality agreement because they did not want him to share it with fund investors or his lawyers, court documents show. He refused to sign.
Later, UBS asked its funds auditor, KPMG, to conduct a review on whether fund values needed to be restated. UBS, in its filing, said the outside audit from KPMG confirmed their judgment.
Trusz finally went to the federal government in April, filing a whistle-blower case under the Sarbanes-Oxley law.
UBS says in its counter-claim that Trusz sued in federal court before federal regulators could reject his Sarbanes-Oxley whistle-blower claim and that those regulators had already drawn that conclusion and were just waiting for a supervisor’s signature.
When asked how UBS knew that, Byrne had no response.
There should be similar protection for raising alarms internally and for external whistle-blowing, advocates say. The state’s Commission on Human Rights and Opportunities argues in a brief supporting Trusz that if the state Supreme Court makes a pro-business ruling, fewer whistle-blowers will come forward.
In court papers, Trusz says a human resources representative insisted in February that he leave and not come back until he had a doctor’s clearance. UBS denies it, saying he chose to take a few weeks off.
In May, O’Shea told Trusz that since Trusz insisted he should tell clients about the valuation issues, he didn’t want him attending a client meeting, according to O’Shea’s affidavit. He also said that Trusz replied that was “blatant retaliation.”
On the advice of his attorney, Trusz declined an interview for this story.
In June 2008, mediation between UBS and Trusz began, both parties say, but on June 30, before negotiations concluded, UBS asked him to leave the premises.
In August, the company decided to outsource valuation work and laid off Trusz retroactively to June 30. It also laid off two people he supervised.
Byrne said: “UBS believes that Mr. Trusz’s claims are wholly without merit, and the firm did not improperly act against him. We will continue to defend ourselves vigorously in this matter.”
Michael LaVelle, a labor attorney who represents employers for Pullman and Comley in Bridgeport, said, “People get fired all the time, laid off all the time,” and even though Trusz already had complained to federal regulators and warned he would sue for disability discrimination, the company can argue this was a business decision unrelated to the conflict.
Pullman and Comley is not involved in the suit. “If the company is believed, they win the [federal] case,” he said.
Murtha Cullina Partner Michael Harrington, another attorney not involved in the case, said because companies rarely leave a smoking gun lying around in discrimination cases, juries will evaluate the timing of the conflict and the layoff.
“Now it seems like in the case at hand, the facts and the timing were pretty tight,” he said. “The fact that other people were impacted certainly helps UBS’s argument.”