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Federal Appeals Court Finds That Brokerage Case is Eligible for Class Action in McReynolds v. Merrill Lynch, Pierce, Fenner & Smith Inc.

 

When filing a class action law suit the plaintiffs must be able to prove that the case qualifies as a class action before it can move forward to trial. Class-action cases can result in higher recoveries and lower costs than when plaintiffs sue individually. In order to qualify, the plaintiffs must be able to prove that they incurred damages as part of a company policy rather than actions taken by individual managers.

Such is the case in McReynolds et al v. Merrill Lynch, Pierce, Fenner & Smith Inc. in which George McReynolds is suing the defendants on behalf of himself and approximately 700 current and former employees of Merrill Lynch (a branch of Bank of America) for discrimination which led to them getting paid less and having fewer opportunities for advancement than their white co-workers. The defendants allegedly steered African-American employees into clerical positions, assigning the larger accounts to white brokers and creating a hostile work environment.

In January of 2009, Bank of America bought Merrill Lynch and, as part of that acquisition, Bank of America and Merrill Lynch announced that they would pay retention and awards under an Advisor Transition Program (“ATP”) to Merrill Lynch’s Financial Advisors. In a company-wide broadcast to all Financial Advisors, Merrill Lynch’s executives allegedly explained that the retention awards would be based on “projections of Financial Advisors’ future contributions or ‘production,’ in essence, future commissions earned on client assets managed by the Financial Advisors.” Merrill Lynch used a formula to base the retention awards on “annualized production” through September 2008.

The plaintiffs allege that Merrill Lynch’s decision to design the retention awards based on annualized production credits are intentionally racist. The allegation is that African-Americans were grossly under-represented in the top quintiles and over-represented in the lowest quintiles of production credits. As a result, the plaintiffs allege that African-American Financial Advisors were disproportionately excluded from receiving retention awards and that the retention awards given to African-American Financial Advisors were lower than they would have been absent this racial discrimination.

The defendants have moved to dismiss the case for failure to state a claim. The plaintiffs countered that, while a court must rule on class certification early in the litigation, there is nothing to suggest that the merits of the case must be determined before class certification.

While recognizing that the individual actions of managers played a key role in discrimination, Judge Richard Posner also said that common issues made it more efficient to handle the brokers’ cases as a group. His decision to allow the suit to proceed as a class action over-turned the ruling of a lower court which had determined that the plaintiffs had not provided sufficient evidence to justify allowing the case to proceed as a class action. The case will now return to the federal district court in Chicago.


The attorneys at the Chicago Overtime Law Center have extensive experience working with class actions and litigating wage and hour cases including overtime, vacation pay, meal breaks, and tips. The Chicago Overtime Law Center has offices conveniently located in Oak Brook Terrace and Chicago, Illinois. If you live in Evanston, Oak Park or anywhere in Illinois and believe that you are not earning the wages you deserve due to unfair discrimination, contact an Urbana overtime attorney today at 312-869-4095 or by filling out our online form.