Former Morgan Stanley Brokers Seek to Revive Class-Action Discrimination Claims
A group of former Morgan Stanley employees who lost their attempt to be certified as a class in a case alleging racial discrimination are seeking to renew their case by filing an amended complaint with new evidence, according to court filings.
Kathy Frazier and the six other plaintiffs have asked Judge Richard Sullivan in the Southern District of New York to reconsider their case, which argues among other claims that Morgan Stanley discriminated in its account distribution and teaming policies.
They want to present new evidence and allegations from advisors in 14 states to address the judge’s ruling that their complaint offered “insufficient and anecdotal instances of discrimination,” according to a court document filed the day after Christmas by their lawyer, Linda Friedman of Stowell & Friedman in Chicago.
The case, which was first filed in February 2016, has drawn attention because of the contentious allegations and because it touches on employees’ rights to bring their claims in court at a time when Morgan Stanley and other firms have argued successfully in other cases that they are bound to arbitrate disputes.
After filing three amended complaints with substantial updates, including new plaintiffs to support the case’s class claim, a further revision would be improper and a waste of resources, Morgan Stanley responded on January 4.
“Plaintiffs’ proposed amendments are futile and an improper attempt to seek reconsideration,” Mark S. Dichter, a lawyer at Morgan, Lewis & Bockius wrote the court on behalf of Morgan Stanley. “Plaintiffs repeat many of the same legal arguments they made in their opposition to defendants’ motion and that this court already rejected.”
Friedman, who has argued that Morgan Stanley never employed more than 125 African American “tenured FAs” among its 16,000 brokers, said in her letter to the court that she would present new evidence of discriminatory practices. “Every day white FAs — who are disproportionately on teams — are awarded higher compensation, and African American FAs — who are intentionally and disproportionately excluded from teams — have their individual compensation rates artificially capped,” she wrote.
Dichter responded that her claims are outdated, referencing prior litigations and expert opinions that are more than ten years old and that predated two discrimination settlements and a consent decree that has led to policy changes.
“Similarly, the alleged ‘statistics’ about the African American representation rate in Defendants’ workforce provide no support for the claims that the teaming or account distribution policies intentionally discriminate or result in a disparate impact,” he wrote.
He also dismissed Friedman’s citing of the Obama-era Ledbetter Fair Pay Act as irrelevant since it protects plaintiffs with pay discrimination claims and does “not extend to claims regarding policies like defendant’s teaming and pooling policies.”
The lead plaintiff, Frazier, worked in Morgan Stanley’s Honolulu, Hawaii, office from 2007 until she resigned in November 2013. She alleged that ”lucrative accounts were routinely ‘steered’ to male, non-African American FA” and said her complaints of discrimination led to hostility, poaching of her clients and continued exclusion, according to the ruling.
Judge Sullivan ruled in November that the facts presented “do not support an inference of a pattern or practice of discriminatory treatment” and “fall short of support for the inference that intentional discrimination was…standard operating procedure’” for Morgan Stanley.