Supreme Court Lets Black Brokers’ Bias Case Against Merrill Proceed

By | October 2, 2012

The U.S. Supreme Court refused to consider an appeal by Bank of America Corp.’s Merrill Lynch unit of a ruling that allowed black brokers who accused it of bias to pursue their lawsuit as a class action.

Without comment, the court on Monday let stand a Feb. 24 decision by the 7th U.S. Circuit Court of Appeals in Chicago that Merrill claimed had misinterpreted a 2011 Supreme Court decision, Wal-Mart Stores Inc. v. Dukes, that made it significantly harder to pursue class-action cases.

The lawsuit accused Merrill of steering blacks into clerical positions and diverting lucrative accounts to white brokers, resulting in lower pay and fewer career growth opportunities.

Writing for the 7th Circuit, Circuit Judge Richard Posner said that while managers’ discretion played a big role in career development, a key reason the Wal-Mart class was struck down, common issues made it more efficient to handle the cases of roughly 700 current and former brokers as a group.

He said the brokers could challenge Merrill’s policies of teaming and distributing accounts to brokers, which are policies of the parent and not within the discretion of local managers.

“There is no indication that the corporate level of Merrill Lynch (or its parent, Bank of America) wants to discriminate against black brokers. Probably it just wants to maximize profits,” Posner wrote. “But in a disparate impact case the presence or absence of discriminatory intent is irrelevant.”

In the Wal-Mart decision, the Supreme Court decertified a class of as many as 1.5 million female workers claiming they were paid less and promoted less often than men. It found that the proposed class raised too many different claims, often based on decisions at the local store level.

The brokers are being led by George McReynolds, a longtime Merrill broker who first sued that company in 2005. They are also challenging Merrill’s allegedly paying them lower retention bonuses than white brokers to keep them from defecting after the company merged with Bank of America on Jan. 1, 2009.

On Sept. 11, the 7th Circuit said the brokers could try to prove losses over the bonuses as part of their overall damages.

The case is Merrill Lynch, Pierce, Fenner & Smith Inc. v. McReynolds et al, U.S. Supreme Court, No. 12-113.

Topics USA Agencies

Was this article valuable?

Here are more articles you may enjoy.