Lira v. Edward Jones: An Ironic and Cynical Tale of Alleged Discrimination, Harassment, and Retaliation

February 9, 2023

Edward Jones made a big deal about employee Emilio Lira's allegedly untimely disclosure of a Summary Judgment. As the prevailing party in the lawsuit, however, Jones knew all about the judgment. Yeah, I know, there are in-house rules and FINRA rules. Things have to be timely disclosed. Of course, there's also common sense and the folks in human resources. Well, okay, maybe there isn't much common sense left on Wall Street these days. Notably, after much back-and-forth, Lira did submit the demanded report. Pointedly, it didn't matter.

2016: Let the Lawsuits Begin!

At first, in 2016, Edward Jones employee Emilio Lira sued his employer in federal district court citing discrimination and retaliation. In 2019, the district court dismissed his case; and, shortly thereafter, he was fired. All of which prompted Lira to sue Edward Jones in 2020 for retaliation. In 2022, the district court again dismissed Lira's case. For a bit more content and context, consider the following from

Emilio LIra, Plaintiff/Appellant, v. Edward Jones Investments, a/k/a Edward D. Jones & Company, L.P., Defendant/Appellee (Opinion, United States Court of Appeals for the Fifth Circuit ("5Cir"), No. 22-50141 / February 7, 2023)
https://brokeandbroker.com/PDF/LiraOpinion5Cir230207.pdf:

Plaintiff-Appellant Emilio Lira brings a Title VII retaliation claim against his former employer, Defendant-Appellee Edward Jones. The district court granted summary judgment for Edward Jones, holding that Lira failed to establish the causal link between his termination and his protected activities and thus had not established a prima facie case of retaliation. Lira appeals. We AFFIRM.

In 2016, Emilio Lira, who identifies as Hispanic/Latino, was employed as a financial advisor by Edward D. Jones & Co., L.P. (“Edward Jones”). That year, he brought a lawsuit against Edward Jones alleging discrimination and retaliation based on race and national origin. On March 12, 2019, the district court in that case granted summary judgment to Edward Jones and taxed Edward Jones’s costs against Lira.

Lira was required to timely report this 2019 judgment to Edward Jones pursuant to Edward Jones’s internal policies, which implemented Financial Industry Regulatory Authority (“FINRA”) reporting obligations. He did not. An Edward Jones employee from the reportable events team then gave Lira two deadlines to disclose the 2019 judgment. Lira did not comply with either deadline.

Lira reported the judgment on May 8, 2019 and also sent an email to the reportable events team employee accusing Edward Jones and its employees of “behav[ing] like a white supremacist or a colluder of white supremacist [sic].” Edward Jones terminated Lira’s employment on May 13, 2019 for unprofessional conduct and failure to provide timely responses to compliance inquiries. Lira subsequently filed a retaliation charge with the Equal Employment Opportunity Commission (“EEOC”). On October 18, 2019, the EEOC issued a notice of dismissal and a right-to-sue letter.

On January 6, 2020, Lira again sued Edward Jones for retaliation. Edward Jones moved to dismiss. On May 26, 2020, Lira filed the operative amended complaint alleging that his termination was retaliation in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-3(a). In this complaint, he proffered five protected activities: (1) complaining internally of discrimination at Edward Jones in 2014; (2) filing a charge of discrimination with the EEOC in 2016; (3) filing his 2016 employment discrimination lawsuit against Edward Jones; (4) giving a deposition in that lawsuit; and (5) opposing Edward Jones’s summary judgment motion in that lawsuit. Edward Jones moved for summary judgment.

In February 2022, the district court granted Edward Jones’s motion for summary judgment. It held that Lira failed to make a prima facie case of retaliation because he could not establish the causation requirement of a retaliation claim. Alternatively, the district court noted that even if Lira had established a prima facie case, “Edward Jones satisfied its burden by presenting evidence of legitimate, nonretaliatory reasons supporting Lira’s termination.” Lira timely appeals.

at Pages 1 - 3 of the 5Cir Opinion

Edward Jones Needed Disclosure About What????

Lemme see if I got the gist of this. In 2016, Lira sued Edward Jones alleging racial/national origin discrimination/harassment; and, in 2019, the United States District Court for the Western District of Texas ("WDTX") granted summary judgment in favor of Edward Jones. Okay, so far so good; but now comes this bit of dubiousness: Edward Jones' "Reportable Events Team" gave Lira two deadlines to disclose the 2019 summary judgment. Ummm, what?

Edward Jones was the Defendant in the WDTX lawsuit.
Edward Jones filed a Motion for Summary Judgment in the WDTX lawsuit.
Edward Jones prevailed on its Motion.

And despite all of that, Edward Jones gave Lira deadlines for him to "timely report this 2019 judgment to Edward Jones"? I mean, for godsakes, talk about pouring salt into a wound and fuel on a fire! When WDTX granted Jones' Motion for Summary Judgment on March 12, 2019, didn't the firm have notice of the very event that it then demanded that Lira report to the firm itself?

Lira Reports the WDTX Judgment

In any event, On May 8, 2019, Lira reported the WDTX Summary Judgment to Edward Jones and then got in a few shots via an email referencing white supremacist conduct. I'm guessing that Edward Jones was just looking for a reason to terminate Lira at this point, and on May 13, 2019, the firm did just that citing "unprofessional conduct and failure to provide timely responses to compliance inquiries."

Here We Go Again

Viewing his termination as retaliation, Lira filed a complaint with EEOC, which, on October 18, 2019, dismissed his complaint but issued a right-to-sue letter. Not surprisingly, On January 6, 2020, Lira again sued Jones for retaliation and, not surprisingly, Jones filed a Motion to Dismiss followed by a Motion for Summary Judgment, which WDTX granted. And not surprisingly, Lira again refused to take "no" for an answer and appealed to 5Cir.

5Cir's "Causation" -- as in no proof that anyone knew anything

At the heart of 5Cir's rationale for finding that Lira failed to meet his burden of proof concerning "causation" in relationship to his cited protected activities, the appellate court offers this rationale in part:

First, Lira has presented no evidence that the Edward Jones employee responsible for his termination decision was aware of Lira’s filing this opposing motion at the time of Lira’s termination. Lira’s only citations to the record indicate that the employee in question was aware only of Lira’s first EEOC complaint, the first lawsuit, and the first lawsuit’s dismissal. The cited testimony does not show that the employee knew of the specific protected activity Lira proffers: the filing of the opposition to summary judgment. Without awareness of the specific protected activity at the time of termination, Lira cannot draw the causal link between this protected activity and his termination. . . .

at Page 6 of the 5Cir Opinion

5Cir's Missing Link

Deeming that LIra failed to show the requisite causal link, 5Cir then considers his arguments about his purportedly critical emails sent to Jones after the first lawsuit:

Even taking Lira at face value and treating these emails as evidence of causation, he does not make any cognizable argument as to how they show a causal link between his termination and his filing an opposition to Edward Jones’s summary judgment motion in the first lawsuit. Instead, he makes conclusory arguments that the district court “failed to consider other evidence of retaliation in deciding whether there was a causal connection between Appellant’s lawsuit and his termination.” He does not explain how these emails constitute such evidence, and we do not credit this argument. . . .

at Page 8 of the 5Cir Opinion

5Cir Cites Missing Citation to Legal Authority

5Cir gets in a final punch at Lira while he's on the canvas:

Finally, Lira’s other miscellaneous arguments are without merit. First, he argues that “[Edward Jones’s] reaction to the email wherein the phrase ‘white supremacists’ was used” constitutes evidence of retaliation. In doing so, Lira suggests, without a single citation to legal authority, that Edward Jones had already admitted that racism existed within its organization, that his description of Edward Jones as being composed of white supremacists was accurate, and that he was fired “to deflect this fact.” We do not credit this argument because nothing in this line of argumentation provides any additional evidence to suggest a causal link between any of Lira’s protected activities and his termination. Second, Lira argues that “there was no evidence presented by [Edward Jones] that [Lira] was performing poorly in his job.” But Lira bears the burden of proving a causal link between his protected activities and his termination; accordingly, identifying a way in which the other party has not proven an alternative reason for his termination is insufficient for him to meet his burden of proving the causal connection in the first instance.⁶

= = =

Footnote 6: Because we hold that Lira has not met his burden of showing a prima facie case,we need not and do not reach the issue of whether Edward Jones has met its burden of proving legitimate, nonretaliatory reasons for Lira’s termination. See McCoy v. City of Shreveport, 492 F.3d 551, 557 (5th Cir. 2007) (“If the plaintiff makes a prima facie showing, the burden then shifts to the employer to articulate a legitimate, nondiscriminatory or nonretaliatory reason for its employment action.”).

at Page 9 of the 5Cir Opinion

Bill Singer's Comment

I'm in a lather over this Edward Jones case because I just don't like the peevishness of the firm over Lira's alleged nondisclosure of the WDTX Summary Judgment. Clearly, Edward Jones knew exactly what had happened with the first lawsuit -- and I'm not sure that the firm needed to resort to a full-court-press on Lira. Yeah, I know, there are in-house rules and FINRA rules. Of course, there's also common sense and the folks in human resources. Notably, after much back-and-forth, Lira did submit the demanded report.

It may well be that Lira was a difficult employee and everyone was happy that he was discharged; on the other hand, it may be that Lira was discriminated and harassed and his lawsuit was justified despite WDTX's ruling to the contrary. In the end, the 5Cir's Opinion found that Lira failed to prove his claims. Case dismissed. Case closed.

Unfortunately for Edward Jones, I love irony. I believe that the Universe loves to balance things out. I often note that Karma can be a bitch (although I likely need to use a less sexist word in the future). At the heart of Edward Jones' termination of Lira seems to be the employer's position that the employee was justly discharged for "unprofessional conduct and failure to provide timely responses to compliance inquiries."

In the spirit of re-balancing the Universe, I would call your attention to this October 31, 2022, FINRA News Release "Firms Elect Edward Jones’ Penny Pennington to FINRA Board of Governors / Pennington Elected to One of Three Large-Firm Seats on FINRA Board"
https://www.finra.org/media-center/newsreleases/2022/firms-elect-edward-jones-penny-pennington-finra-board-governors

How comforting it is to know that FINRA, the industry's self-regulatory-organization, now has a sitting Governor from member firm Edward Jones, which is such a staunch defender of the FINRA faith that it fired an employee for failing to provide timely responses to compliance inquiries -- and, pointedly, as to a matter involving the disclosure of a lawsuit to which Edward Jones was a party and in which Edward Jones prevailed. I expect that FINRA Governor Pennington immediately infused the FINRA Board with her employer's zeal for timely responses to all compliance inquiries, and, by extension, to all regulatory inquiries. We will all sleep much better from here on out knowing that at least one FINRA Governor's employer is so zealous about timely responses!

Also, while we're rebalancing the scales, why don't I just repost the article below and let's see if some hypocrisy helps level things off:

Edward D. Jones Fails To Timely Or Fully Produce
Phone Records To FINRA
(BrokeAndBroker.com Blog / December 14, 2022)
https://www.brokeandbroker.com/6796/edward-jones-finra/

Whether realistic or merely imagined, the mere perception of bias or favoritism within any regulatory sphere is corrosive. In a recent regulatory settlement, FINRA, Wall Street's most important self-regulatory-organization, responds to the alleged misconduct of one its largest member firms, Edward D. Jones & Co., with tepid sanctions, among which is the laughable imposition of a Censure, which has virtually no impact and amounts to whipping someone with a wet noodle. Yes, FINRA also imposed a $1.1 million fine on the firm; except, that's about the cost of a day's worth of toilet paper for Edward Jones. In the end, this comes off less as effective regulation and more as a folded $10 bill in someone's palm that is then pressed, somewhat surreptitiously, into the receiving palm of someone else. All of which renders FINRA's approach to regulation as an act akin to tipping someone who gets you a better table at a busy restaurant.

Case in Point

For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Edward D. Jones & Co., L.P., submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Edward D. Jones & Co., L.P., Respondent (FINRA AWC 2020066649301)
https://www.finra.org/sites/default/files/fda_documents/2020066649301
%20Edward%20D.%20Jones%20%26%20Co.%2C%20L.P.%20
CRD%20No.%20250%20AWC%20gg.pdf

The AWC asserts that Edward D. Jones & Co., L.P., has been a FINRA member firm since 1939 with about 22,000 registered persons at 15,000 offices. In accordance with the terms of the AWC, FINRA alleged that that the firm violated FINRA Rules 8210 and 2010; and imposed upon Edward Jones a Censure, $1.1 million fine, and an undertaking to certify the compliance of its policies, procedures, processes, and internal controls as cited.

Four Years. Ten Investigations. Crickets

The AWC asserts in part that:

Edward Jones failed to timely, completely, and accurately respond to certain FINRA requests for call detail records.

In February 2017, the firm implemented a policy of purging (i.e., deleting) call detail records older than 18 months from the internal network drive where such records were stored (Location A). The call detail records were logs showing phone calls made to a branch landline, including the number originating or receiving the call, the time and date of the call, and the duration of the call.² Location A was where the firm typically searched for call detail records responsive to regulatory, litigation and arbitration requests.

At the time the firm implemented the purge protocol, the firm was aware that call detail records were also stored in a separate location for use with an analytics tool for business planning, not retention or production, purposes (Location B). Although the firm decided that it would not apply the purge protocol to the call detail records contained in Location B, it did not search, or implement a procedure to search, Location B when responding to document requests for call detail records that went back in time more than 18 months.

From May 2017 to March 2021, Edward Jones received or had pending document requests from FINRA seeking call detail records going back in time more than 18 months in ten separate investigations. Five of the investigations requested the documents pursuant to FINRA Rule 8210, and five of the investigations made requests without citing Rule 8210. The investigations involved allegations of potential misconduct, including unauthorized trading, discretionary trading, and excessive trading. In responding to these requests, the firm failed to search Location B, which contained call detail records older than 18 months and thus housed responsive documents. In addition, in eight of the investigations, the firm inaccurately represented in the text of its responses or in a legend attached to its productions, that records older than 18 months were not available.

In July 2019, members of the firm’s group responsible for responding to regulatory requests learned of Location B, realized that Edward Jones should be searching Location B when responding to certain requests for call detail records, and understood that it was likely that some of Edward Jones’s past responses to requests from regulators and others were incomplete. Notwithstanding the firm’s awareness of this issue in July 2019, the firm failed to fulfill its obligations, as follows:

First, in two of the FINRA investigations, one in 2019 and one in 2020, the firm failed to search Location B for call detail records despite receiving new requests calling for such records after July 2019 that extended back more than 18 months. In both instances, responsive documents that should have been produced were in Location B. In addition, in both instances, the firm continued to include a legend attached to its productions of call detail records stating that only 18 months of phone records were available.

Second, the firm failed to promptly advise FINRA of its production failures, doing so only in March 2020, eight months after learning of the issue, and after FINRA Enforcement staff raised questions about what appeared to be an incomplete production of phone records in another matter it was then investigating.

Third, the firm failed to identify all affected investigations where its responses were likely incomplete until more than a year after discovery of the issue and failed to contact most affected parties until more than two years after discovery of the issue. Notably, five of the FINRA investigations that had called for call detail records greater than 18 months old were still pending in July 2019. Although the firm had an obligation under Rule 8210 to supplement its prior responses once it learned that such responses were incomplete, it failed promptly to do so.

Edward Jones failed to preserve certain responsive call detail records from Location A during the pendency of regulatory requests.

After February 2017, in seven FINRA investigations, the firm also failed to make a complete production of call detail records from Location A, which was the firm’s source for production of such records during that time. In these investigations, although the firm received a request for call detail records going back 18 months or more, it did not take action to prevent responsive records from being deleted pursuant to the firm’s purge protocol. As a result, call detail records continued to be purged between the time the firm received the request and the time that members of the firm’s response team pulled the records from Location A, which resulted in responsive records being deleted and not included in the firm’s response.³ Depending on the delays involved, the amount of missing call detail records ranged from several days to several weeks.

By reason of the foregoing, Edward Jones violated FINRA Rules 8210 and 2010.

= = =

Footnote 2: Call detail records are not required broker-dealer books and records pursuant to Rules 17a-3 and 17a-4 of the Securities Exchange Act of 1934.

Footnote 3: The documents separately existed in Location B.

Bill Singer's Comment

So . . . lemme see if I got this. From 2017 to 2021 (some four years), FINRA conducted 10 -- count 'em: 10 -- investigations of one of its largest, best known member firms; and, in response to the regulator's requests for documents, Edward Jones failed to timely/completely produce phone records. As to the nature of FINRA's underlying investigations, the AWC characterizes them as involving "allegations of potential misconduct, including unauthorized trading, discretionary trading, and excessive trading." Seems to me that those are serious allegations and involve potentially dangerous misconduct. Despite the prolonged period on non-response and the seriousness of the regulatory investigations, even after Edward Jones knew that it had failed to comply with the regulator's document requests, the firm failed to immediately alert FINRA to its failures.

Now, let's all imagine that instead of Edward Jones, this non-compliant behavior over four years and 10 investigations involved, say, a FINRA Small Member Firm. Y'know, one of the so-called mom-and-pops that FINRA seems to be socially engineering out of business. Y'all think that FINRA would have just censured and fined the small firm? Y'all believe that someone's head would not have rolled via a suspension or bar? And before you're too quick to answer, consider this:

FINRA Rule 9552. Failure to Provide Information or Keep Information Current

(a) Notice of Suspension of Member, Person Associated with a Member or Person Subject to FINRA's Jurisdiction if Corrective Action is Not Taken

If a member, person associated with a member or person subject to FINRA's jurisdiction fails to provide any information, report, material, data, or testimony requested or required to be filed pursuant to the FINRA By-Laws or FINRA rules, or fails to keep its membership application or supporting documents current, FINRA staff may provide written notice to such member or person specifying the nature of the failure and stating that the failure to take corrective action within 21 days after service of the notice will result in suspension of membership or of association of the person with any member. . . .

FINRA had the teeth to take a bite out of Edward Jones but the self-regulatory-organization just didn't have the desire to chomp down. NOWHERE in the Edward Jones AWC is any assertion by FINRA that it had invoked Rule 9552 against Edward Jones in response to the firm's failure to timely produce and in consideration that the firm had demonstrated a "failure to take corrective action within 21 days" of the service of a Rule 9552 Notice of Suspension of Membership.

Did FINRA have a basis for threatening a Rule 9552 suspension? Sure as hell seems so. I mean, c'mon, you tell me what to make of these allegations in the AWC:

When all is said and done, FINRA has had its say but it hasn't done much in terms of meaningful regulation.

Securities Industry Commentator: A legal, regulatory, and compliance feed curated by veteran Wall Street lawyer Bill Singer https://www.rrbdlaw.com/6876/securities-industry-commentator/

Lira v. Edward Jones: An Ironic and Cynical Tale of Alleged Discrimination, Harassment, and Retaliation (BrokeAndBroker.com Blog)

FINRA Arbitrators Award Customer $144,000 Against Charles Schwab Amid Allegation of Flawed Investment Recommendations (BrokeAndBroker.com Blog)

FINRA Arbitrator Denies Indemnification Citing Firm's Failure to Supervise (BrokeAndBroker.com Blog)

Calling All Unreasonable Wall Street Professionals by Bill Singer Esq

‘Phishing-as-a-service’ kits are driving an uptick in theft: What you can learn from one business owner’s story (CNBC by Dawn Giel)

Criminals use Telegram to recruit ‘walkers’ as America’s big banks see an 84% increase in check fraud (CNBC By Eamon Javers and Paige Tortorelli)

DOJ RELEASES

Financial Advisor Sentenced To 42 Months In Prison On Fraud And False Statement Charges (DOJ Release)

Russian National Charged with Bank Fraud Related to Hacking Campaign (DOJ Release)

CEO Of Security Company Sentenced To Five Years In Prison For International Boiler Room Fraud Scheme (DOJ Release)