Just days after the election last week, Merrill introduced a policy seeking to take discrimination disputes out of courts and before arbitration panels.
Calling the policy a "slap in the face," a pair of Merrill advisors are now suing the firm over alleged mistreatment that they say they would previously have tried to overcome without resorting to litigation. Linda Davila and Cathy Bender are seeking class action status for a civil complaint they brought on Friday in federal court in the southern district of New York alleging they suffered discriminatory treatment both from Merrill and its parent company, Bank of America. Both Davila, who lives in New York, and Bender, who is in Tennessee, are Black women.
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Their suit alleges they have been systematically excluded throughout their careers from becoming members of the productive advisory teams. Davila, for instance, was not invited to join a group with senior advisors, even though her white male colleagues were, according to the suit.
"Similarly, unlike their white male peers, neither Davila nor Bender were given leads or account distributions, even when distribution policies should have ensured they both should have received accounts," the suit says.
Of the 150 advisors in Davila's office on Park Avenue in New York, only three are Black. And Bender's office has the same number of Black advisors as it had when she started her career 36 years ago.
But an even bigger driver of the suit was a mandatory arbitration and class action waiver policy Merrill and Bank of America distributed to certain employees on Nov. 8. The policy, according to the suit, requires employees to waive the right to bring discrimination complaints before courts or juries.
Instead, it insists the place for such disputes is before arbitration panels such as those provided by the Financial Industry Regulatory Authority. The policy also insists discrimination claims can only be brought individually, precluding any class actions.
The suit says Merrill's policy was "a slap in the face to people like Davila and Bender who have worked tirelessly to reform Merrill Lynch from within instead of filing more litigation."
Davila got her start in the industry at Merrill in 1980. Bender began her career at Merrill in 1988, according to BrokerCheck. For the past decade, both women have served on a leadership council working to end the sort of discriminatory practices they allege in their lawsuit filed Friday.
A spokesperson for Merrill and Bank of America said, "We disagree with the allegations and will vigorously defend ourselves in this matter. We have a longstanding commitment to increase the diversity of our financial advisors and provide support to help each advisor succeed."
Linda Friedman, one of the lawyers representing Davila and Bender and a founding partner of the Chicago-based firm Stowell & Friedman, said women and minorities' ability to take discrimination claims to court has proved one of the most effective ways to bring about change in the notoriously white and male-dominated wealth management industry. Even if few lawsuits were actually filed, the mere knowledge that they could be was often enough to prod a firm in the direction of desired reforms, she said.
Friedman said the comparison she likes to make is to labor strikes and the bargaining power they give unions with employers.
"You don't see strikes every day," she said. "You usually see reconciliation and resolutions because a strike is in no one's interest." Similarly, Friedman said, "I feel the right to have access in court most often results in there being no need to use it. It's a balancer."
Friedman said the requirement that plaintiffs take complaints one by one before arbitration panels, rather than through class actions, will be particularly damaging. Discrimination cases often hinge on patterns of abuse that can be detected only by looking at how all the members of a particular group have been treated.
"Davila, Bender, and their colleagues can no longer count on good-faith negotiations to end the ongoing discrimination and instead must bring this suit now, before the door to the courthouse closes forever," according to the suit.
The Merrill and Bank of America spokesperson noted that most other wealth management firms already require that discrimination complaints go to arbitration.
"This policy aligns us with our peers in the financial services industry," the spokesperson said.
Large awards over discrimination claims are not unknown in arbitration decisions. On Nov. 1, for instance, a FINRA panel hit RBC Wealth Management
Merrill, though, has fought its big discrimination cases in court. In May,
That came more than a decade after Merrill
But the ability to bring cases to court had at least given members of those groups a way to make sure their concerns would be heard and taken seriously.
"It is a herculean task to transform a culture," Friedman said. "But where people act in good faith and work toward change, there is hope that it's at least possible."
