Merrill Lynch & Co. won an appeal upholding a federal judge’s dismissal of the second of two race- bias lawsuits filed against it by black financial advisers.
The U.S. Court of Appeals in Chicago today affirmed U.S. District Judge Robert Gettleman’s decision last year to throw out the complaint filed against Merrill Lynch and Bank of America Corp. The Charlotte, North Carolina-based lender acquired the securities firm for $33 billion in 2009.
The lead plaintiff in both cases, Nashville, Tennessee, stock broker George McReynolds, alleged the bank and firm devised a discriminatory retention bonus plan when the acquisition was made public in 2008. McReynolds first accused Merrill Lynch of discriminating against its African-American financial advisers in a 2005 federal court lawsuit that is pending in Chicago.
“It is not enough to allege, as the complaint does, that the bonuses incorporated the past discriminatory effects of Merrill Lynch’s underlying employment practices,” U.S. Circuit Judge Diane Sykes wrote for the the unanimous three-judge panel.
“The disparate impact of those employment practices is the subject of the first lawsuit, and if proven, will be remedied there,” Sykes said.
In the 2005 case, McReynolds claimed Merrill Lynch’s past practices and procedures favored white financial advisers over their black counterparts, impairing their ability to earn comparable incomes.
Gettleman in 2010 denied a motion by McReynolds and 16 other advisers for certification of the case as a class action, or group lawsuit. That decision was reversed in February by a different panel of judges at the same U.S. appeals court that issued today’s decision.
Allowing class treatment would prevent courts from having to decide in individual trials whether the firm’s practices were unlawful, U.S. Circuit Judge Richard A. Posner wrote for that unanimous three-judge panel.
The bank is seeking U.S. Supreme Court review of that decision, said Bill Halldin, a Merrill Lynch spokesman. In a phone interview, he said the firm was pleased with today’s ruling.
In a July 13 order, Gettleman certified a class of “all African-Americans employed by Merrill Lynch at any time since July 10, 2004, as financial advisers or financial adviser trainees” in the U.S. retail brokerage unit of the firm’s Global Private Client division.
No trial date has been set for that case, plaintiffs’ lawyer Suzanne Bish said today in a phone interview.
Today’s decision came on an appeal filed after Gettleman had denied the class certification request in the first McReynolds case and before the appellate reversal, she said. That later ruling lessened the significance of the second suit’s dismissal.
“We’re thrilled that our plaintiffs will have the opportunity to recover those same retention bonuses,” said Bish, an attorney at the Chicago law firm Stowell & Friedman Ltd.
The cases are McReynolds v. Merrill Lynch, 11-01957, U.S. Court of Appeals for the Seventh Circuit (Chicago), and McReynolds v. Merrill Lynch Pierce Fenner & Smith Inc., 05- cv-06583, U.S. District Court, Northern District of Illinois (Chicago).
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