On June 22, 2006, female financial advisors working for Morgan Stanley, a retail financial services firm, filed this lawsuit in the U.S. District Court for the District of Northern California against their employer.
The plaintiffs, represented by private counsel, were female and minority financial advisors employed by the defendant. They claimed that the defendants' substantially male branch managers had near unfettered discretion over compensation and distributing business to the advisors. Financial advisors earned a commission and obtained clients by referral. The complaint alleged branch managers gave more business, assistance, and opportunities to male advisors; this was a systemic, continuing pattern and practice at Morgan Stanley. The lead plaintiff also alleged she was terminated for being female and over the age of 40. The complaint sought to certify a class of all female advisors employed by the defendant from January 5, 2005 to the present and a subclass of advisors who had worked in California.
The first complaint contained the following claims: (1) intentional discrimination in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq.
; (2) disparate impact discrimination under the same statute; (3) gender discrimination in violation of the California Fair Employment and Housing Act, Cal. Gov't. Code § 12940 et seq; (4) on behalf of the named plaintiff only, age discrimination in violation of the Age Discrimination in Employment Act of 1967, 29 U.S.C. § 621 et seq.
; (5) on behalf of the named plaintiff only, age discrimination under the California Fair Employment and Housing Act, Cal. Gov't. Code §12940 et seq.
The complaint sought: a declaratory judgment; preliminary and permanent injunctions ordering the defendant to cease discrimination; an order restoring class members to previous positions or, in lieu thereof, front pay; back pay and benefits; damages for emotional distress and punitive damages; and attorneys' fees and costs.
The first amended complaint, filed on October 12, 2006, added another named plaintiff, who was a black Michigan resident. It also added a claim of gender discrimination under Michigan's Elliot-Larsen Civil Rights Act, M.C.L.A. §§ 37.2101 et seq.
and claims of race discrimination under: Title VII; 42 U.S.C. § 1981; and the Elliot-Larsen Civil Rights Act, M.C.L.A. §§ 37.2101 et seq.
A final amended complaint, filed on August 17, 2007, added a third plaintiff, a black California resident. This complaint added claims for race and color discrimination under Title VII and 42 U.S.C. § 1981 on behalf of black and Latino subclasses.Related Case & Gender Discrimination Claims
The Defendant sought a stay of this action pending the outcome of settlement negotiations in a similar class action filed in the U.S. District Court for the District of Columbia. In Augst-Johnson v. Morgan Stanley DW, Inc.,
the plaintiffs also alleged gender discrimination. That case can be found at EE-DC-0033
in this Clearinghouse. On January 19, 2007, the district court ordered a stay of the gender discrimination claims, which were eventually resolved by the settlement in Augst-Johnson
. 2007 WL 163196 (S.D.N.Y. Mar. 15 2007). Thus, the Jaffe
settlement dealt only with race discrimination claims.Settlement Agreement
On February 11, 2008, the parties filed a copy of the proposed settlement agreement. The district court granted final class certification, approval of the proposed settlement agreement, and entered final judgment on October 22, 2008. 2008 WL 4667090 (S.D.N.Y. Oct. 22, 2008). The parties reached the agreement with the assistance of mediator Hunter Hughes, Esq., who had also mediated the Augst-Johnson
case. The settlements term was five years. The settlement class was defined as "All African Americans and Latinos who were employed as Financial Advisors or Registered Financial Advisor Trainees in the Global Wealth Management Group of Morgan Stanley & Co. Incorporated or its predecessor(s) at any time between October 12, 2002 and the date of preliminary approval."
The settlement agreement required the defendant to: distribute its anti-harassment policy to all employees; retain an employee dedicated to increasing African American and Latino presence in the defendant's work force; work only with recruiters who would provide a diverse slate of potential employees; post all job openings on an internal job website; provide diversity training; create a more transparent and objective career path; change a "power ranking' system that rated financial advisors' performance; and implement a revised complaint process. The parties also agreed to jointly appoint a diversity monitor, Fred W. Alvarez, Esq., and industrial psychologists Dr. Kathleen Lundquist and Dr. Irwin Goldstein to assist with implementation of the changes. Monitoring included semi-annual reports to class counsel.
The defendant agreed to pay $16,000,000 to a settlement trust. A trust administrator would allocate the money to class members according to a formula based on their seniority, business generated, and other factors. The District Court also awarded $25,000 to an individual plaintiff for her efforts representing the class and $950,000 in attorneys' fees and costs for litigation; $150,000 of which was to monitor and enforce the settlement. The last entry on the District Court docket, on May 24, 2010, records the objecting class members' notice of appeal. Objecting Class Members
On December 10, 2007, several putative class members filed a notice of objection and a motion for discovery regarding a proposed class certification and settlement agreement. Nonetheless, on February 7, 2008, in an unpublished order, the District Court denied the objectors' motion. Jaffe v. Morgan Stanley DW, Inc.,
No. 06-3903, 2008 WL 346417 (S.D.N.Y. Feb. 7 2008). The objectors continued to argue against the settlement, asserting that the plaintiffs could not adequately represent Latino class members and that the provisions for monitoring and implementation were not strong enough. However, the Court disagreed and felt the settlement adequately protected the class. On July 16, 2008., the District Court allowed one of the named plaintiffs to transfer her individual claims to the U.S. District Court for he Eastern District of Michigan. Jaffe v. Morgan Stanley DW, Inc.,
No. 06-3903, 2008 WL 2782713 (S.D.N.Y. Jul. 16 2008). Furthermore, several dozen plaintiffs opted out of the settlement. The objecting class members filed an appeal in the U.S. Court of Appeals for the Ninth Circuit. The case appeared on the docket as Jaffe v. Glover,
No. 08-17599. The case is still pending; the most recent filing was a reply brief of the appellants filed on March 4, 2010.
In July 2010, appellees filed motions to dismiss for failure to prosecute and failure to provide a timely brief, which the Ninth Circuit granted. On September 7, 2011, following the merger of Morgan Stanley's Global Wealth Management Group and Citigroup's Smith Barney, the District Court approved a joint motion to modify the settlement start date to October 1, 2010 and granted several more specific modifications in light of the merger. Litigation over settlement fund distribution followed. Right before the settlement was due to expire, the parties filed a motion for extension of the settlement by two years on September 29, 2015, which the Court granted. The order also granted several modifications to the settlement, including the appointment of a Diversity Monitor and the continuation of settlement programs related to increasing participation of female, African American, and Latino Financial Advisors in teams and partnerships for an additional year past the settlement's expiration.
As of November 6, 2016, there have been no further updates. Monitoring of the settlement agreement is presumably ongoing.Eric Weiler - 07/03/2010
Virginia Weeks - 11/06/2016