Morgan Stanley is fighting to stop a race-discrimination suit from going to trial by using a controversial tactic that keeps employee complaints secret
- Morgan Stanley is fighting to keep a race-discrimination complaint from a former wealth manager out of the courts and force it into arbitration.
- Plaintiff John Lockette and his lawyer, Linda Friedman, who are trying to stay in court, say Morgan Stanley is using mandatory arbitration to mask ongoing race discrimination at the bank.
- Morgan Stanley denies it discriminated against Lockette.
- Mandatory arbitration clauses bar workers from filing lawsuits against their employers for a variety of civil-rights and labor complaints. Instead, employees must have their complaint heard in a private and secret forum. The clauses are increasingly being used across corporate America.
- Business Insider spoke with lawyers, arbitrators, and judges about the expansion of mandatory arbitration in the US and its effects on civil and labor rights.
John Lockette, a 64-year old former Morgan Stanley wealth manager who is suing the brokerage over race discrimination, is fighting for his day in court.
Lockette, who claimed in a complaint filed in February that he was fired in retaliation for raising concerns about race discrimination at the bank, is in an ongoing legal battle for the right to have his suit heard in a US federal court rather than through a process called mandatory arbitration, whereby complaints are heard in a private forum.
Lockette told Business Insider that despite bringing the region under his control from 12th place out of 12 to No.1 on training performance, he was given negative work reviews, denied raises and bonuses, nicknamed “Johnny” because he was black, and fired in August 2016 after raising concerns over race discrimination.
Lockette said a superior told him: “Well, it’s a cultural thing. Blacks aren’t exposed to finance at this level, so they don’t do well in this environment.”
Lockette said, “It just became very dark at the time.”
But Lockette might not have the right to have the complaint heard in court, thanks to a 2015 email.
Morgan Stanley updated its employee arbitration contracts to ban racial-discrimination claims and class actions that year by sending out blanket emails to over 20,000 employees, including Lockette, records show. Employees who didn’t opt-out of the new terms and conditions in the email, or just didn’t read it, were automatically enrolled in the new arbitration agreement.
The strategy is being used to strip employees of their rights by “stealth” in companies across the US, said Linda Friedman, Lockette’s lawyer at Chicago civil-rights firm Stowell & Friedman, who is challenging the legality of the move in a separate case.
Morgan Stanley has become like “a lawless institution, without fear of being held accountable for their prejudice.” Friedman said, adding, “They do believe … that money is white. It’s not green.”
A Morgan Stanley spokeswoman denied the allegations in the complaint, saying in a statement, “The Firm is strongly committed to nondiscrimination, and looks forward to addressing this former employee’s claims on the merits.”
The case highlights that even amid heightened awareness for racial and sexual discrimination in the #MeToo era, it remains difficult for employees to seek legal justice in the court system.
Where Wall Street leads, corporate America follows
Mandatory arbitration bars workers from filing lawsuits against their employers for a variety of civil-rights and labor complaints, and is written into an increasing number of employee contracts across corporate America. It is a legally binding agreement that says that disputes that fall under certain categories will not be heard in court but put in front of private arbitrators in cases that are kept confidential.
Wall Street has been a leader in the implementation of mandatory arbitration contracts, which are now spreading into the wider economy.
Proponents of arbitration say it’s cheaper, faster, and quieter than the courts, benefiting all parties; critics of the practice say it favors companies over workers, restricts access to open justice, and conceals employer abuses because resolution takes place in isolation behind closed doors.
In all, 60 million American employees are now barred from using the courts for an array of claims against their employers, including race discrimination, short pay, workplace safety, and class-action litigation.
Source: Business Insider
https://www.businessinsider.com/lockette-lawsuit-morgan-stanley-mandatory-arbitration-2018-9
