Employment law is an ever-changing area. To keep you abreast of recent developments in the legal landscape, we have collected a number of cases that may be of special interest to you in the financial services industry. Each case discussed below features a party or an issue that relates to the financial services arena.
Reszetylo v. Morgan Stanley Dean Witter & Co.
Female broker allowed to proceed with her gender discrimination and retaliation claims
The Ninth Circuit recently reversed summary judgment for the employer and allowed a female broker to proceed with her gender discrimination and retaliation claims in Reszetylo v. Morgan Stanley Dean Witter & Co., No. CV-00-11865-JFW, 2003 WL 22977462 (9th Cir. Dec. 17, 2003) (unpublished).
Female broker complained about gender discrimination after several accounts were transferred to a male co-worker. The plaintiff followed up her complaint with a written memorandum in which she threatened to make a report to Human Resources or the Equal Employment Opportunity Commission. Four months later she was discharged for poor attendance and "over-concentrating" on certain accounts. The plaintiff sued, claiming her discharge was in retaliation for complaining about gender discrimination. The district court granted Morgan Stanley's summary judgment motion and the plaintiff appealed.
The Ninth Circuit found the timing of the plaintiff's discharge (four months after her complaint) satisfied the causation element required for a retaliation claim. Second, the judges noted the plaintiff had shown evidence of pretext. Specifically, the plaintiff's manager testified that he noticed plaintiff's poor attendance soon after he assumed his branch manager position in June of 1998; however, he did not discuss the issue with her until December 1998, after she had complained of discrimination. The plaintiff also introduced evidence that Morgan Stanley trained its brokers to focus on large accounts and to expect to earn 80% of their business from 20% of their clients. This caused the court to question why the plaintiff was terminated for "concentrating" on certain accounts. The Ninth Circuit concluded that the branch manager, frustrated with plaintiff's complaints, had "discovered concerns about over-concentration" and "created unnecessary attendance requirements to manufacture a pretextual justification for her termination." Accordingly, the Ninth Circuit reversed the grant of summary judgment.
Noto v. Regions Bank
Female bank employee's sexual harassment claim based on the actions of her "effusive" supervisor dismissed.
The Fifth Circuit affirmed summary judgement for the bank because the supervisor's "effusiveness" was directed at both men and women and therefore failed to satisfy the "because of sex" requirement. Noto v. Regions Bank, No. 03-30665, (5th Cir. Dec. 17, 2003) (unpublished).
Plaintiff, a loan assistant, brought suit against Regions Bank, claiming that she had been sexually harassed by her female supervisor, a loan officer. The plaintiff alleged that her supervisor hugged her, occasionally kissed her on the cheek, and would sometimes end conversations by saying "I love you." In affidavits, male and female employees stated that the supervisor had hugged them and kissed them on the cheek from time to time, and that she told them "you're the greatest" or "I love you" when they assisted her with job-related tasks. The supervisor testified that she is "naturally effusive" and that her hugs, kisses, and "love ya's" were not meant to be sexual.
The Fifth Circuit Court of Appeals observed that the plaintiff must "prove that the conduct at issue was not merely tinged with offensive sexual connotations, but actually constituted discrimination because of sex." The court also noted that the supervisor's behavior "may have been overly effusive, but Title VII prohibits discrimination, not overly effusive behavior."
Finding no evidence that the supervisor's conduct towards her subordinates, including plaintiff, was in any way sexually motivated, the court affirmed summary judgment.
Brickey v. Employers Reassurance Corp.
Female municipal bond portfolio manager may have Equal Pay Act claim.
A female municipal bond portfolio manager who alleges she was paid significantly less than a male co-worker will be allowed to continue with her Equal Pay Act claim. Brickey v. Employers Reassurance Corp., No. 02-2557-GTV (D. Kan. Nov. 24, 2003).
In support of its motion for summary judgement, the employer argued that plaintiff's bond portfolio manager position was not "substantially equal" to that of a male bond portfolio manager. Specifically, the employer claimed that the male bond portfolio manager managed larger portfolios that generated significantly larger revenues than those managed by the plaintiff. However, the employer could not unequivocally show that larger revenue meant greater responsibility; and two of the plaintiff's witnesses (former co-workers who had also been bond portfolio managers) testified to the contrary. One former portfolio bond manager testified that management of a larger portfolio did not require additional skills, and that it was actually easier to trade in larger blocks of bonds because it was easier to find a broker. Further, a second former bond portfolio manager testified that the consequences of mismanaging a small portfolio were equal to those of mismanaging a large one. Consequently, the court found conflicting evidence over whether there was any greater responsibility involved in managing a larger portfolio such that it merited greater compensation.
The employer also asserted an affirmative defense that the pay difference was based on "factors other than sex." It claimed that the following factors justified the higher wage for the male employee:
- his prior salary at a former employer;
- the need to recruit him;
- his Wall Street reputation; and
- his acceptance of additional supervisory responsibilities.
The plaintiff countered this by showing
- that his starting salary was more than he ever requested during the recruitment process, and
- that he was earning a much higher salary than the plaintiff before he acquired any supervisory duties.
Accordingly, the court was not persuaded that these factors indisputably explained the wage disparity. Finding that genuine issues of fact remained as to whether the positions were "substantially equal," the court denied the employer's motion for summary judgment.
Matter of J. Daniel Plants and J.P. Morgan Securities, Inc.
J.P. Morgan Securities, Inc. settles whistleblower case.
J.P. Morgan Securities, Inc., recently settled a complaint brought by a former managing director under the Sarbanes-Oxley Act's whistleblower provision. In the matter of J. Daniel Plants and J.P. Morgan Securities, DOL ALJ, No. 2003-SOX-19 (8/7/03).
Although no substantive order was issued, this is interesting simply because it highlights the fact that employees in the financial services arena are bringing claims under the Sarbanes-Oxley Act.
Tenkku v. Normandy Bank
"Neither job classifications nor titles" are dispositive when reviewing whether jobs are equal for purposes of the Equal Pay Act
A female bank vice president failed to establish her prima facie case under the Equal Pay Act such that the Eighth Circuit affirmed summary judgment for the employer in Tenkku v. Normandy Bank, 348 F.3d 737 (8th Cir. 2003). The plaintiff argued that her position was "substantially equal" to that of the male vice president whom had originally held her vice president position, and who had been paid a considerably larger salary. However, Normandy Bank demonstrated that the positions were not comparable. First, the male employee had responsibility for numerous additional functions that were spread out among other employees upon his departure from the bank. Second, the male employee had seven years more experience with the bank than plaintiff. Plaintiff also claimed that she was paid less than the other current male vice presidents at the bank; however, she submitted no evidence which compared the duties of her position with those of her male colleagues. The Eighth Circuit found that "neither job classifications nor titles" are dispositive when reviewing whether jobs are equal for purposes of the Equal Pay Act.
Trammel v. Simmons First Bank of Searcy
Senior Vice President was not terminated in violation of the ADEA.
In Trammel v. Simmons First Bank of Searcy, a bank senior vice president who accused the bank president of fraud was unsuccessful in arguing that he was later discharged in violation of the Age Discrimination in Employment Act (ADEA). 345 F.3d 611 (8th Cir. 2003). Though the plaintiff established a prima facie case, the Eighth Circuit (applying McDonnell-Douglas not Desert Palace) affirmed summary judgment for the employer. The court was persuaded that the bank's proffered nondiscriminatory reason for the termination - that plaintiff had accused the bank president of fraud - was not pretext. Further, the court observed that the plaintiff had failed to offer evidence that any similarly situated younger employees were treated more favorably than he. Although plaintiff had submitted evidence that younger employees had assumed his duties after his discharge, the court observed "this evidence alone is insufficient to allow his claim to survive the bank's summary judgment motion." The plaintiff's retaliation claim also failed based on his allegation that he received a negative performance evaluation two months after he filed an EEOC charge, and was terminated two months after that. The court determined these time intervals undercut his claim that a causal connection existed.
Batka v. Prime Charter, LTD.
Employee who was selected for a reduction in force while out on maternity leave allowed to proceed with her FMLA and Title VII claims.
A New York District Court recently denied summary judgment on a female employee's Title VII and FMLA claims arising out of a reduction-in-force which occurred while she was on maternity leave in Batka v. Prime Charter, LTD., 2004 WL 213001 (S.D.N.Y. Feb. 4, 2004). Prime Charter maintained that Batka was part of a reduction in force necessitated by the economic downturn in the financial sector, and that Batka was selected because of poor performance. Batka countered that Prime Charter's reliance on "poor performance" was pretext, as she was:
- promoted less than two years before her termination;
- given periodic pay increases; and
- never given a negative performance evaluation.
Prime Charter defended its selection of Batka by offering affidavits from Batka's supervisor and the vice president of human resources, stating that complaints had been received regarding Batka's work and that she had a problem with absenteeism. Prime Charter also argued that it did not issue performance evaluations to its employees, and that Batka's periodic raises were not performance-based, but part of firm-wide salary increases. The court applied McDonnell-Douglas, not Desert Palace, to determine whether Batka had met her burden of showing Prime Charter's proffered reasons for terminating her were pretextual. It concluded she had, noting that "all the evidence supporting Prime Charter's claim that Batka was not performing satisfactorily surfaced after this action was commenced." (emphasis added).
Welch v. Cardinal Bankshares Corp.
Judge orders bank to re-hire chief financial officer under Sarbanes-Oxley Act.
A small town bank's chief financial officer was fired in violation of the Sarbanes-Oxley Act, an administrative law judge recently ruled in Welch v. Cardinal Bankshares Corp., No. 2003-SOX-15 (ALJ Jan. 28, 2004). David Welch had been terminated after refusing to meet with the bank's audit committee investigators unless he could have a personal attorney present. After his termination, Welch filed a complaint with the Department of Labor alleging he had been fired in retaliation for raising concerns about the bank's financial activities-concerns that are protected pursuant to whistle-blower provisions under the Sarbanes-Oxley Act. Cardinal Bankshares was ordered to reinstate Welch, purge his personnel file of all references to discipline stemming from the protected activity, issue back pay, and reimburse Welch for all costs and expenses, including attorneys fees.
*article courtesy of Dorsey & Whitney LLP.