Deluca v. Bear Stearns & Co.
| Decision Date | 16 November 2001 |
| Docket Number | No. 00-12100-PBS.,00-12100-PBS. |
| Citation | 175 F.Supp.2d 102 |
| Court | U.S. District Court — District of Massachusetts |
| Parties | Karen M. DELUCA, Plaintiff, v. BEAR STEARNS & CO., INC., Mark E. Murphy, Brian C. Jerome, Robert P. Lyons, Bruce Lisman, and Kathy Cavallo, Defendants. |
Lawrence J. Casey, Nancy S. Shiplepsky, Barbara A. Robb, Sara Rapport, Perkins, Smith & Cohen, Boston, MA, for Karen M. DeLuca.
Barry Y. Weiner, Christopher P. Litterio, Shapiro, Israel & Weiner, P.C., Boston, MA, for Bear Stearns & Co., Inc., Mark E. Murphy, Brian C. Jerome, Robert P. Lyons, Bruce Lisman, Kathy Cavallo.
A. David Mazzone, Boston, MA, pro se.
Robert J. Gregory, Washington, DC, for U.S. Equal Employment Opportunity Com'n.
Karen DeLuca brings this action against her employer Bear Stearns & Co., Inc. ("Bear Stearns"), and Bear Stearns employees Mark E. Murphy, Brian C. Jerome, Robert P. Lyons, Bruce Lisman, and Kathy Cavallo (collectively "defendants"), alleging gender discrimination, sexual harassment, and retaliation for testimony she gave in the age discrimination lawsuit of a former co-worker.1
The defendants move to dismiss or, in the alternative, compel arbitration and stay the court proceedings pending arbitration, on the grounds that the plaintiff has entered an arbitration agreement that requires DeLuca to submit her claims to an arbitrator. DeLuca contends the agreement to arbitrate is unenforceable.
The U.S. Equal Employment Opportunity Commission ("amicus") has moved for leave to file a brief amicus curiae in support of the plaintiff's position. That motion is ALLOWED.
After a hearing and the filing of supplemental briefs, the defendants' motion to compel arbitration is ALLOWED.
Karen DeLuca began working for Bear Stearns in 1985 as a retail sales assistant in its Boston office. On March 6, 1986 DeLuca completed and signed the "Uniform Application for Securities Industry Registration or Transfer" form, a standard securities industry registration form commonly referred to in the industry as a "U-4" form. The U-4 form registered DeLuca as an "associated person" with the New York Stock Exchange ("NYSE") and the National Association of Securities Dealers ("NASD"). By signing the U-4 form, DeLuca agreed to arbitrate any dispute that arose between DeLuca and Bear Stearns that the rules of the NYSE and NASD required to be arbitrated. No specific mention was made of employment disputes in the U-4 document. As of 1996, the NASD's Code of Arbitration Procedure required the arbitration of "[a]ny dispute, claim, or controversy ... in connection with the activities of such associated person(s) or arising out of the employment or termination of employment of such associated person(s) ...." NASD Manual — Code of Arbitration Procedure, § 10201 (July 1996). Following a rules change by the NASD, effective January 1, 1999, DeLuca and Bear Stearns were no longer required to arbitrate statutory employment discrimination claims unless they agreed to arbitrate such claims by separate agreement.
On June 12, 1997, Bear Stearns presented its Boston office employees with an employee handbook. The handbook contained several documents, including an arbitration agreement, that the employees were required to sign and return. DeLuca received her copy of the employee handbook on June 17, 1997. The arbitration document provided that:
In consideration of my employment or continued employment with Bear Stearns ... I hereby agree to forego litigation and action in court and to submit to final and binding arbitration any and all claims, controversies of any nature and disputes of any nature whatsoever arising out of or in any way related to hiring, terms and conditions of employment, and cessation of employment, Claims for breach of expressed or implied contract or covenant, tort Claims, Claims for discrimination including, but not limited to Claims brought under Title VII, the federal Age Discrimination in Employment Act (ADEA) ..., Claims under any other applicable federal, state or local laws, rules and regulations, including, by way of example but not limitation, those covering sexual harassment, and all city and state laws and ordinances and decisional law ... excluded from arbitration are any claims that I may have for workers' compensation or unemployment compensation benefits, and claims Bear Stearns may have for injunctive relief or damages for unfair competition or the unauthorized use or disclosure of trade secrets or confidential information (as to which Bear Stearns may seek and obtain immediate relief in the courts) ....
In addition, DeLuca's version of the arbitration agreement provided:
I further agree to submit any Claim I may have against Bear Stearns to arbitration within one hundred and eighty (180) calendar days of the Claim arising, and specifically waive any longer statute of limitations which might otherwise control. I further understand and agree that if, for any reason, I am allowed to pursue a Claim in court, (i) the court proceeding must be commenced within the one hundred and eighty (180) calendar days of any Claim arising or within one hundred and eighty (180) calendar days of the termination of my employment, whichever occurs sooner, and (ii) all rights to a jury trial are waived.
DeLuca was given an older version of the arbitration agreement. She contends that the arbitration agreements given to other Bear Stearns employees in the Boston office did not contain the statute of limitation or jury waiver provisions.
On or about June 20, 1997, DeLuca signed and returned the Bear Stearns arbitration agreement (the "Agreement"). DeLuca also signed an Acknowledgment that she was an at-will employee and that her employment was terminable "at any time for any reason." DeLuca, in reference to a clause in the Agreement that read "in consideration of my employment or continued employment with Bear Stearns & Co., Inc....," made a notation on the agreement stating, "I do not completely understand this statement but I signed it so that I wouldn't lose my job."
DeLuca alleges that Bear Stearns has afforded men higher positions and greater compensation, benefits, and employment opportunities than DeLuca, despite their comparable or lesser qualifications and experience. DeLuca also alleges that she has been subjected to a hostile work environment by those (predominately male) employees in the Boston office who make sexually explicit jokes, use misogynistic language, and discuss their personal sexual encounters loudly and publicly on a daily basis. DeLuca states that she suffered additional discriminatory and retaliatory acts after she testified against Bear Stearns in an age-discrimination case of a former co-worker in 1997. DeLuca states that from 1997 to the present the defendants have retaliated against her by failing to allocate new accounts on an equal basis, reassigning her current accounts to others, impeding her ability to travel and to attend certain business-related meetings and events, and subjecting her to a hostile and retaliatory work environment.
On July 11, 2000, DeLuca filed a Charge of Discrimination with the Massachusetts Commission Against Discrimination ("MCAD") alleging gender discrimination, sexual harassment, and retaliation. Defendant Kathy Cavallo, Managing Director of Human Resources, conducted an internal investigation into the MCAD charge and concluded that the allegations had no merit. On July 24, 2000, DeLuca, in order to protect her rights in the event arbitration is compelled, submitted her claims to the NASD for arbitration.
DeLuca filed this action on October 11, 2000. In her Amended Complaint, dated December 5, 2000, and again by motion on January 29, 2001, DeLuca requested a stay of the proceedings before the NASD. On December 18, 2000, the defendants filed a Motion to Dismiss or, in the Alternative, Compel Arbitration and Stay Proceedings Pending Arbitration. This Court held a hearing on the defendants' motion on January 29, 2001. At the hearing, the Court stayed this proceeding pending a ruling in the case of Circuit City Stores, Inc. v. Adams, 194 F.3d 1070 (9th Cir.1999), cert. granted, 529 U.S. 1129, 120 S.Ct. 2004, 146 L.Ed.2d 955 (NO. 99-1379), and allowed the parties to conduct additional discovery on the issues of consideration for the Agreement and the allegation of duress.
The Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1-16, governs the enforcement of most written arbitration agreements. The Supreme Court has recently affirmed that the FAA extends to arbitration agreements in the employment contracts of most workers engaged in interstate commerce. Id. § 2; accord Circuit City Stores, Inc. v. Adams, 532 U.S. 105, ___, 121 S.Ct. 1302, 1311, 149 L.Ed.2d 234 (2001) (). With the FAA, Congress has declared a liberal federal policy favoring arbitration agreements, notwithstanding any state substantive or procedural policies to the contrary. Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 941, 74 L.Ed.2d 765 (1983). This liberal policy must underlie the consideration of the enforceability of any arbitration agreement.
When an enforceable arbitration agreement exists between the parties, a court may enforce that agreement by staying existing litigation pending arbitration of the parties, 9 U.S.C. § 3, or compelling the parties to arbitrate, 9 U.S.C. § 4.2 In deciding motions to dismiss or stay pursuant to §§ 3 & 4, a federal court may only consider issues relating to the making and performance of the agreement to arbitrate, or the failure to comply with it. See Prima Paint Corp. v. Flood & Conklin...
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