Lohn v. Morgan Stanley Dw, Inc.

• Decision Date: 26 August 2009
• Docket Number: Civil Action No. H-06-3690.
• Parties: Audray LOHN, Plaintiff, v. MORGAN STANLEY DW, INC., Defendant.
• Court: U.S. District Court — Southern District of Texas

652 F.Supp.2d 812

Audray LOHN, Plaintiff, v. MORGAN STANLEY DW, INC., Defendant.

Civil Action No. H-06-3690.

United States District Court, S.D. Texas, Houston Division.

August 26, 2009.

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Howard L. Steele, Jr., Steele Sturm PLLC, Thomas H. Padgett, Jr., Raker & Patterson LLP, Houston, TX, for Plaintiff.

Kenneth Turnbull, Meghan Cherner-Ranft, Morgan Lewis et al., New York, NY, Nancy Lynne Patterson, Alfred John Harper, III, Morgan Lewis Bockius LLP, Houston, TX, Ross Friedman, Morgan Lewis et al., Chicago, IL, for Defendant.

OPINION AND ORDER

MELINDA HARMON, District Judge.

Presently before the Court is Defendant Morgan Stanley DW, Inc.'s (Morgan Stanley) motion for summary judgment (Doc. 52). Upon review and consideration of the motion, the response, reply, and surreply thereto, and the relevant legal authority the Court finds that the motion should be granted-in-part and denied-in-part.

I. Background and Relevant Facts

Plaintiff Audray Lohn (Lohn) initiated suit against Defendant Morgan Stanley in the 269th District Court of Harris County, Texas (Cause No. 2006-68364) asserting gender discrimination and retaliation claims under the Texas Commission on Human Rights Act (TCHRA). Defendant subsequently removed the case to this Court on diversity jurisdiction grounds (Doc. 1).

Morgan Stanley hired Lohn as a Financial Advisor in 1993. (Lohn Dep., Doc. 69 Ex. B at 24-25). Through its Financial Advisors at each branch, Morgan Stanley provides clients with "comprehensive financial planning services, customized to meet individual investment goals and risk profiles." (Kabot Aff., Doc. 52 Ex. 1 at ¶ 4). Lohn attended training in New York for a month and was then assigned to the Greenway Plaza Branch in Houston, Texas, where she remained until her termination in 2005. (Id. at 25-27). Lohn had four Branch Managers over the course of her twelve years at Morgan Stanley. They are as follows: (1) Don Harris (Harris), 1993 to 1996; (2) Matt Kabot (Kabot), 1996 to 2000; (3) Mark Benson (Benson), 2000 to 2002; and (4) Pete Sigal (Sigal), 2002 to 2005. (Lohn Aff., Doc. 69 Ex. A at ¶ 3).

The treatment and conduct about which Plaintiff complains may be divided into three distinct categories. They are as follows: (1) the discriminatory distribution of client accounts, (2) the sexual harassment that female employees, including Lohn, endured which, in turn, led to a hostile work environment, and (3) the August 2005 reduction-in-force. The Court will summarize the relevant facts pertaining to each of these categories below.

A. Discriminatory Distribution of Client Accounts

When a Financial Advisor leaves Morgan Stanley or leaves his position for a nonproducing management or administrative position, that Financial Advisor's client accounts are "typically divided and reassigned to the remaining [Financial Advisors] in the branch." (Kabot Aff., Doc. 52 Ex. 1 at ¶ 11). The Financial Advisors who receive these accounts then contact the account holders in an effort to encourage them to remain with Morgan Stanley. (Id.).

Prior to November 12, 2002, it appears that there was no formal procedure or policy in place with respect to the distribution of accounts. It was not until this date that Morgan Stanley implemented a Power Ranking System "to standardize the process by which accounts of Financial Advisors who leave the firm are reassigned to other [Financial Advisors]." (Doc. 69 Ex. G at 1). The Financial Advisor Power Ranking spreadsheet employs a fixed set of weighted criteria to generate a Financial Advisor ranking for each branch, and the Business Intelligence System Client Retention report ranks each Financial Advisor's client households by total assets. (Id.). The Financial Advisor Power Ranking methodology incorporates these factors: (1) asset growth, (2) asset-based revenues as a percentage of trailing 12 month production, (3) trailing 12 month production, (4) total assets, (5) trailing 12 month new accounts, (6) length of service as a Financial Advisor with Morgan Stanley, and (7) industry professional designations. (Id. at 2). After ranking the Financial Advisors and the client households, the Branch Manager either matches the top-ranked Financial Advisor with the topranked account and proceeds accordingly or invites each Financial Advisor by rank to select an account from the Client Retention Report ranking. (Id. at 3). The Branch Manager may, in the exercise of his or her management discretion, distribute an account outside of this process. (Id.). Permissible exceptions include: the client requested the Financial Advisor or has a prior existing relationship with the Financial Advisor, the client requested the Financial Advisor's particular skill set or expertise, the Financial Advisor possesses the license or registration requirement to service the account, and the Financial Advisor to which the account was originally assigned in the distribution process failed to contact the client. (Id.). Any such distributions must be documented in an Exceptions Report. (Id.). The November 12, 2002, memorandum also describes the procedures for documenting and maintaining records on all account distributions (Id.)¹

When Lohn received accounts as a result of a distribution, the accounts were typically small, low revenue, or problematic. (Lohn Aff., Doc. 69 Ex. A at ¶ 6). In the twelve years that she worked for Morgan Stanley, she never received an entire book of business. (Id.). When Kabot served as Branch Manager, Lohn was supposed to receive a portion of Bill Stern's (Stern) book but never did. (Id. at ¶ 10). Additionally, when Jill Harris left in August 2002, she requested that "her accounts" be given to Lohn. (Id. at ¶ 13). Lohn, however, only received "a few small accounts" from this distribution. (Id). Furthermore, Lohn did not receive any accounts from the following individuals who departed between 2002 and 2005: Bill Alkek, David Beverly (Beverly), Christopher Carroll, Clifton Facey, Jay Fain, Brandon Fox, Jeff Green, Stacy Jata, Herbert Lyman, and Stephen Vance. (Id. at ¶ 14). Moreover, she never received any accounts from any of the trainees who left during those three years. (Id.)

Additionally, Plaintiff cites to two occasions where an entire book of business was distributed to a male Financial Advisor without the Branch Manager applying the Power Ranking System. Karla Robinson (Robinson) departed Morgan Stanley in 2003, and her entire book of business was distributed to Tom Chretien. (Greer Aff., Doc. 75 Ex. U at ¶ 13-15; Doc. 75 Ex. 7). Beverly left Morgan Stanley's employ in November 2004, and all of his accounts were distributed to David Aigner. (Greer Aff., Doc. 75 Ex. U at ¶ 10-12; Doc. 75 Ex. U-6). There is no documentation that Morgan Stanley made these distributions pursuant to the Power Ranking System.

B. Sexual Harassment and Hostile Work Environment

Over the course of her twelve years of employment with Morgan Stanley, Lohn alleges that she was subjected to humiliating and harassing treatment because she was a woman. (Lohn Aff., Doc. 69 Ex. A at ¶ 17). She claims that this treatment was ongoing over the course of her tenure regardless of who her Branch Manager was or whether the Branch Manager joined in with her fellow coworkers. (Id.).

Early in Lohn's career at Morgan Stanley, her Branch Managers and male coworkers referred to her as the TFB, which stands for "Token Female Broker," and had an office betting pool on how long she would last. (Id. at ¶ 18). When Lohn returned from her initial one-month training in New York in 1993, she was assigned an office directly facing the lobby, and anyone who came into the branch office had a direct view of her. (Id. at ¶ 19). Lohn complained to Harris, her Branch Manager at the time, that this location was disruptive to her work. (Id.). In response, he informed her that she was the FOP, which stands for "Front Office Personality," implying that she was merely a pretty face and not a respected broker. (Id.).

When Kabot served as Branch Manager from 1996 to 2000, the humiliating and harassing conduct continued. (Id. at ¶ 21). Kabot would constantly stare at Lohn's breasts and do whatever he could to brush up against her. (Id.). For example, he would walk into her in the hallway or rub up against her back when she stopped walking. (Id.). Moreover, when Kabot asked Lohn how she was doing and she responded "fine," he would reply "I know you are fine" in a sexually provocative manner. (Id.). During Kabot's tenure as Branch Manager, Lohn asked him if she could participate in an IPO investment, but he refused. (Id. at ¶ 22). When asked why, Kabot said, "[b]ecause you should just go home and have babies."² (Id.). Around the same time, one of Lohn's male coworkers, Doug Hall, said, "Do you know what you need? You need a 200-pound broker between your legs." (Id. at ¶ 23).

Although Lohn does not cite to specific instances of humiliating or harassing conduct by Benson, the Branch Manager from 2000 to 2002, she does complain about Don Whitehead (Whitehead), who transferred into the office in 2002. Other than these allegations about Whitehead and Lohn's statements that "the harassing and derogatory comments occurred often" and that she "consistently received sexually inappropriate messages," there is no evidence of inappropriate conduct during Benson's tenure. (Id. at ¶¶ 24, 28, & 29). Whitehead constantly referred to his penis in front of Lohn, as well as others. (Id.). In 2003, Whitehead circulated around the office a sexually provocative picture of a female intern that he had taken at his home. (Id. at ¶ 25). During a meeting in 2004, Whitehead said that he had set up video cameras in his bedroom in order to record his sexual activity. (Id. at ¶ 26). Both Whitehead and Chris Geston (Geston), another male broker, would frequently comment about strip clubs and...