December 14, 2016
Yet another BrokeAndBroker.com Blog installment about the need for more quality control at FINRA when it comes to its Arbitration Decisions. In today's rant by our publisher Bill Singer, Esq., we are confronted with claims of civil rights violations by a former Edward Jones & Co. employee. She seems to have won her case . . . sort of. Exactly what constituted the alleged discrimination isn't clearly explained in the arbitrators' award. Then there's that whole issue about whether "disparate treatment" is the best way to describe sexual discrimination.
Case In Point
In
a Financial Industry Regulatory Authority ("FINRA") Arbitration
Statement of Claim filed in March 2015, and as amended thereafter, former
Edward Jones & Co. employee Claimant asserted in
connection with the circumstances of her employment termination the violation
of the:- Elliot-Larsen
Civil Rights Act ("ELCRA"),
- Persons with Disabilities
Civil Rights Act ("PWDCRA")
- Americans with
Disabilities Act ("ADA"), and
- Family Medical Leave
Act ("FMLA").
At the hearing, Claimant requested the
expungement of her Central Registration Depository records ("CRD"), which Respondent
did not contest. Subsequently, in her Arbitration Hearing Brief, Claimant Foote
requested $3,326,383.00 in compensatory damages; $300,000 in punitive damages;
attorneys' fees, and costs. In the Matter of the FINRA Arbitration Between
Stacy L. Foote,
Claimant, vs. Edward Jones & Co.,
L.P.,
Respondent (FINRA Arbitration
15-00682, December 7, 2016). SIDE BAR:
Consider the following characterizations of the Acts cited by
Claimant:The
preamble to the Michigan ELCRA states that it
is:AN ACT to define civil rights; to prohibit
discriminatory practices, policies, and customs in the exercise of those rights
based upon religion, race, color, national origin, age, sex, height, weight,
familial status, or marital status; to preserve the confidentiality of records
regarding arrest, detention, or other disposition in which a conviction does
not result; to prescribe the powers and duties of the civil rights commission
and the department of civil rights; to provide remedies and penalties; to provide
for fees; and to repeal certain acts and parts of
acts.
The
preamble to the
Michigan PWDCRA states that it
is:
AN ACT to
define the civil rights of persons with disabilities; to prohibit
discriminatory practices, policies, and customs in the exercise of those
rights; to prescribe penalties and to provide remedies; and to provide for the
promulgation of rules
According to the
United States
Department of Justice / Civil Rights Division's ADA.gov
website:The Americans with Disabilities
Act (ADA) was signed into law on July 26, 1990, by President George H.W. Bush.
The ADA is one of America's most comprehensive pieces of civil rights legislation
that prohibits discrimination and guarantees that people with disabilities have
the same opportunities as everyone else to participate in the mainstream of
American life -- to enjoy employment opportunities, to purchase goods and
services, and to participate in State and local government programs and
services. Modeled after the Civil Rights Act of 1964, which prohibits
discrimination on the basis of race, color, religion, sex, or national origin -
and Section 504 of the Rehabilitation Act of 1973 -- the ADA is an "equal
opportunity" law for people with
disabilities.
To be
protected by the ADA, one must have a disability, which is defined by the ADA
as a physical or mental impairment that substantially limits one or more major
life activities, a person who has a history or record of such an impairment, or
a person who is perceived by others as having such an impairment. The ADA does
not specifically name all of the impairments that are
covered.
According to the United States Department of
Labor/ Wage and Hour Division's website:
The FMLA entitles
eligible employees of covered employers to take unpaid, job-protected leave for
specified family and medical reasons with continuation of group health
insurance coverage under the same terms and conditions as if the employee had
not taken leave. Eligible employees are entitled
to:
- Twelve workweeks of leave
in a 12-month period for:
- the birth of a child
and to care for the newborn child within one year of
birth;
- the placement with the employee of a child for
adoption or foster care and to care for the newly placed child within one year
of placement;
- to care for the employee's spouse, child, or
parent who has a serious health condition;
- a serious health
condition that makes the employee unable to perform the essential functions of
his or her job;
- any qualifying exigency arising out of the
fact that the employee's spouse, son, daughter, or parent is a covered military
member on "covered active duty;" or
- Twenty-six
workweeks of leave during a single 12-month period to care for a covered
servicemember with a serious injury or illness if the eligible employee is the
servicemember's spouse, son, daughter, parent, or next of kin (military
caregiver leave).
DefensesRespondent Edward Jones
generally denied the allegations and asserted various affirmative
defenses. AwardThe FINRA Arbitration Panel
found in favor of Claimant Foote on her claim of ELCRA gender discrimination
and, accordingly, found Respondent Edward Jones liable to and ordered it to pay
to Claimant Foote $200,000, said amount includes attorneys' fees and
compensatory, wage-loss, and emotional-distress damages. Further Respondent was
ordered to reimburse Claimant $200 in non-refundable filing fees. The Panel
pointedly denied Claimant's ADA and PWDCRA claims.
ExpungementAs to the issue of unopposed
request for expungement, the Panel recommended the expungement of the Form U5
"Termination Explanation" and offered the following, in pertinent
part:
[T]he Termination Explanation shall be deleted and
replaced with the following language: "Inappropriate conduct, not securities or
client related. Claimant received disparate treatment in her discipline
resulting in her discharge." The Reason for Termination shall remain the
same.
Bill Singer's
Comment
According to online
FINRA BrokerCheck records as of December 14, 2016, Claimant
Foote was first registered in January 2009 with Ameriprise Financial Services,
Inc. and was registered with FINRA member firm Edward Jones from November 2009
to August 2013.
Missing Damages Calculation
Claimant Foote sued
for some $3.6 million in damages but was awarded only $200,000. I take no
exception to the amount of awarded damages. I take exception to the lack of
explanation as to how the Panel calculated the awarded
damages.
Missing PWDCRA Finding
Claimant Foote
alleged violations of two State of Michigan Acts: ELCRA and PWDCRA and two
federal Acts: ADA and FMLA. The Panel rendered an award of damages for the
ELCRA cause of action and specifically denied the ADA and FMLA claims. Ummm . .
. what happened to the PWDCRA claim? Why did the Panel find liability for one
of the state civil rights acts but denied liability for both of the federal
acts?
Missing Explanations
We are never informed as to the
nature of the alleged statutory violations, and, admittedly, there may well be compelling
reasons to preserve some confidentiality as to the specifics out of
consideration for Claimant Foote. That being said, how about that being said
in the
Decision by way of explanation for the omission? A delicate balancing act is often appropriate when weighing
allegations of discrimination against disclosing facts of those allegations, which may prove
embarrassing to the victim. Similarly, I appreciate that if an individual
has been defamed that it may not be appropriate to
re-state that defamation in the Decision. Notwithstanding
those reservations, a FINRA Arbitration Decision should at
least inform us that the arbitrators have taken such concerns into
consideration and have made a conscious decision not to disclose
same.
Euphemism
Finally, I'm not exactly sure as
to how we are to respond to this proposed Form U5
revision:
Inappropriate
conduct, not securities or client related. Claimant received disparate
treatment in her discipline resulting in her
discharge.
A logical and reasonable
inference to be drawn from the above is that the arbitrators believed that Claimant Foote had
somehow precipitated her firing by having engaged in "inapproprate
conduct." Notably, that conduct was deemed to not have involved securities
or a client. Unfortunately, since the
Decision never states what constituted said inappropriate conduct, our
imaginations are unleashed and that's not a particularly positive result for
Foote or for other similarly situated industry employees. Again, there may be legitimate reasons to not disclose the particulars;
however, that is all the more reason for any Decision to at
least address the elephant in the room and acknowledge that such a concern came
into play.
Finally, I take issue with the Decision's characterization
that Respondent Edward Jones' violation of Claimant Foote's civil rights was
"disparate treatment," which strikes me as a grossly
inappropriate euphemism. Additionally,
the Panel's proposed revised language muddies the waters by conflating whatever
"discipline" was unfairly meted out to Foote with the ultimate
penalty of her "discharge." Frankly, I'm not quite sure whether the
arbitrators found that Edward Jones had discriminated against Foote only during
its internal discipline of her; or, if the arbitrators found that Edward Jones had
discriminated against Foote only when the firm discharged her.