Rosenberg v. Merrill Lynch, Pierce, Fenner & Smith, 96-12267-NG.
| Decision Date | 23 April 1997 |
| Docket Number | No. 96-12267-NG.,96-12267-NG. |
| Citation | 965 F.Supp. 190 |
| Parties | Susan ROSENBERG, Plaintiff, v. MERRILL LYNCH, PIERCE, FENNER & SMITH, INC. and John Wyllys, Defendants. |
| Court | U.S. District Court — District of Massachusetts |
Steven T. Sager, Marc Redlich, Law Offices of Marc Redlich, Boston, MA, Richard P. Goodkin, Natick, MA, for plaintiff.
Barry Y. Weiner, Christopher P. Litterio, Shapiro, Israel & Weiner, P.C., Boston, MA, for defendants.
TABLE OF CONTENTS — MEMORANDUM AND ORDER
April 23, 1997
I. INTRODUCTION ......................................................... 191
II. BACKGROUND ........................................................... 192
III. DISCUSSION ........................................................... 193
A. The Case Law From Alexander v. Gardner-Denver To Gilmer ........... 193
1. Alexander v. Garner-Denver ..................................... 194
2. Mitsubishi Motors .............................................. 194
3. Gilmer And The Issues That Remain To Be Litigated .............. 195
B. The General Questions ............................................. 197
1. Does Title VII Preclude Mandatory Arbitration Of Gender
Discrimination Claims? ....................................... 197
a. The Text Of Title VII ....................................... 197
b. The Purposes Of Title VII ................................... 198
c. Inherent Conflict Between Arbitration And Statutory Rights
Under Title VII .......................................... 199
d. Legislative History ......................................... 199
2. Can The Plaintiff Demonstrate Systematic Arbitral Bias? ........ 201
3. Assuming The Appropriateness Of Waiving Access To Federal
Forum, Do The Circumstances Of Rosenberg's Waiver Meet
The Legal Standards For Waiver? ............................. 202
a. Legal Standards ............................................. 202
b. Assuming A "Knowing and Voluntary" Standard, Was The
Prospective Waiver Of Rosenberg's Right To Have Her
Claims Resolved In A Judicial Forum "Knowingly And
Voluntarily" Made? ........................................ 202
c. Was There Fraud, Or Unequal Bargaining Power, Or Some Other
"Contract Revocation" Ground Involved In Rosenberg's Alleged
Agreement To Arbitrate? ................................... 203
IV. CONCLUSION ........................................................... 203
Plaintiff Susan Rosenberg ("Rosenberg") brought suit against her former employer, Merrill Lynch, and her former supervisor, John Wyllys (collectively "defendants"), alleging age and gender discrimination, as well as sexual harassment.1 Defendants have moved to compel arbitration; they now seek a stay of the proceedings pending the outcome of that arbitration.
The defendants allege that when Rosenberg filled out what is known as a Form U-4, a prerequisite to becoming a securities broker, she agreed to arbitrate any and all claims against her employer. Rosenberg, they assert, has waived her statutory rights under Title VII2 to a judicial forum and a trial by jury, on the authority of Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991). Prior to Gilmer, the Supreme Court had held that an individual employee could never waive his or her rights to litigate civil rights claims in a federal forum; the Gilmer decision appeared to hold otherwise, at least with respect to claims under the Age Discrimination in Employment Act ("ADEA").3
The issue before me is the application of Gilmer to the facts at bar. Gilmer raises two questions, one more general, one more specific. The general question is: Whether Rosenberg may be obliged as a condition of her employment to prospectively waive the right to litigate the Title VII claim in a federal forum, before an Article III judge and jury. That question involves two others: (a) Do the conclusions of Gilmer with respect to the ADEA apply as well to Title VII, as amended by the Civil Rights Act of 1991? and, (b) Do the conclusions of Gilmer with respect to the adequacy of the arbitral fora — that the arbitrators in the securities industry are unbiased, competent and effective to enforce federal civil rights claims — apply to the instant case?
The more specific question is: Assuming Title VII permits a prospective waiver of the right to a federal forum, does Rosenberg's waiver meet the legal standards? This question also has several sub-parts: (a) What are the standards governing the waiver of this statutory and perhaps, constitutional right to a jury trial? (b) Whether the circumstances surrounding Rosenberg's waiver in fact complied with those standards, i.e., was it knowingly and voluntarily made; and, (c) Whether her agreement to arbitrate was revocable, due to the employer's unequal bargaining power or any other "adhesion" arguments.
While I have addressed some of these issues in a decision issued April 21, 1997, LaChance v. Northeast Publishing Inc., 965 F.Supp. 177 (1997) (), I conclude that the record in the instant case is presently inadequate on a number of levels for current resolution. Contrary to the position of the defendants, Gilmer is not dispositive; a number of issues were left open by the Gilmer Court, or were not presented at all. These issues need to be clarified before the matter before me can be resolved.
Accordingly, I ORDER additional briefing and discovery on certain legal issues — the application of Gilmer to the particular statutory schemes at issue here, gender discrimination and sexual harassment under Title VII, age discrimination under the Age Discrimination in Employment Act ("ADEA"), the adequacy of the arbitral scheme in the securities industry to enforce gender and age discrimination claims, the legal standards for waiver of the right to an Article III judge and representative jury, and finally, the particular circumstances of waiver in this case. (The briefing and discovery schedule are set forth in a separate order attached hereto.) I also request amicus participation on these issues, and invite counsel for both sides to solicit interested organizations to submit materials.
Accordingly, defendants' motion to compel arbitration is DEFERRED pending the additional discovery and briefing described above. With the exception of this discovery and briefing, the defendant's motion to stay the proceedings is ALLOWED.
Rosenberg was forty-five years old when she was hired by Merrill Lynch on January 6, 1992 for employment in its Wellesley, Massachusetts office. She began in a training program for financial consultants known as the Professional Development Program; this program normally lasts 29 months. On January 10, 1992, Rosenberg filled out a U-4 Form, which is the Uniform Application For Securities Industry Registration Or Transfer. People seeking to become securities brokers must file a U-4 form. The U-4 form required her to:
... agree to arbitrate any dispute, claim or controversy that may arise between me and my firm, or a customer, or any other person, that is required to be arbitrated under the rules, constitutions, or by-laws of the organizations indicated in item 10 as may be amended from time to time and that any arbitration award rendered against me may be entered as a judgment in any court of competent jurisdiction. (emphasis added.)
Rosenberg claims she did not personally check any of the boxes in item 10, nor did she authorize anyone to check the boxes for her. Item 10 lists the various organizations, such as the New York Stock Exchange ("NYSE") and National Association of Securities Dealers, Inc. ("NASD"), as well as the fifty states, in which one can become licensed to trade securities. A mark in the boxes on the U-4 form express the person's intent to join the various organizations indicated, and to be licensed to trade as a member of these organizations. Five of the boxes in item 10 on Rosenberg's U-4 form, however, are marked: The boxes labeled ASE, CBOE, NASD, NYSE, and Massachusetts have all been marked with an X and circled.4
The record concerning Rosenberg's knowledge of the U-4 form and the arbitration clause is murky. First, Rosenberg claims she does not remember seeing these boxes checked when she signed the U-4. Second, she claims that she was never given a copy of the rules from the Securities Exchange Commission ("SEC"), NASD or NYSE, or any other organization, indicating that any and all employment disputes must be submitted to arbitration. Third, she claims she was never given any copies of, or otherwise made aware of, any amendments to the rules of these organizations. Finally, Rosenberg states that, to the best of her recollection, the Merrill Lynch Employee Handbook did not mention arbitration or indicate that by filling out a U-4 form, that she was agreeing to arbitrate any and all employment disputes.
Rosenberg finished the training program and became a financial consultant for Merrill Lynch on May 5, 1992. On March 9, 1994, Rosenberg claims that she was harassed by her supervisor John Wyllys ("Wyllys"), who handed her a phallus-shaped vibrator when she came into his office looking for a document. She claims she did not speak to him again until April 25, 1994, when she met with him to discuss her performance as a financial consultant. He raised his concern that her performance was not up to the expected levels and suggested she resign. The next day, Rosenberg called Wyllys to invite him to meet her for dinner and drinks to discuss his...
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...judge and representative jury, and finally, the particular circumstances of waiver in this case." Rosenberg v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 965 F.Supp. 190, 192 (D.Mass.1997). Later, the district court denied the motion to compel. See Rosenberg, 995 F.Supp. at 212. The court......
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