Posts tagged with "FINRA Rule 13201"

Employer May Not Compel FINRA Arbitration of Gender Discrimination and Retaliation Claims

Employer May Not Compel FINRA Arbitration of Gender Discrimination and Retaliation Claims

Joni D. Ffrench, v.PricewaterhouseCoopers Corporate Finance, LLC, et al., 2012 WL 1900930 (S.D. Tex. May 24, 2012)

In a recent case before the Southern District of Texas, PricewaterhouseCoopers Corporate Finance LLC (“PwCCF”) filed a motion to compel Joni Ffrench (“Ffrench”), a former employee, to arbitrate gender discrimination and retaliation claims pending before the federal court. PwCCF also filed a motion to stay federal court proceedings until arbitration by the Financial Industry Regulatory Authority (“FINRA”) was complete. The court denied both motions.

Ffrench was employed by PwCCF from 1999 until her termination in 2009. She alleged that she was terminated in retaliation for complaints about the substantial compensation disparities between her and her male counterparts. In accordance with FINRA rules, PwCCF filed a Uniform Termination Notice for Securities Industry Registration (“Form U-5”) stating the basis for her termination. Ffrench alleged that the U-5 filed by PwCCF in October 2009 contained improper disparaging remarks and filed a claim with FINRA for “Libel and Slander on Form U-5.” The parties agreed to hold the FINRA arbitration in late October 2011; however, Ffrench later moved for a continuance of the arbitration hearing, which was granted.

In addition to the FINRA arbitration hearing, Ffrench filed a charge of gender discrimination and retaliation against PwCC with the Equal Employment Opportunity Commission and the Texas Workforce Commission Civil Rights Division. After receiving her “right to sue” letter, Ffrench filed a lawsuit against PwCCF and its parent company in state court, which PwCCF removed to federal district court. PwCCF moved to compel arbitration and stay federal court proceedings, asserting that the same claims are at issue in both the FINRA arbitration case and the federal court case.

Courts follow a two-step inquiry to determine whether parties should be compelled to arbitrate. First, the court must determine whether the parties agreed to arbitrate the dispute. The party seeking to compel arbitration must establish by a preponderance of the evidence that such an agreement exists. Once the court has determined that such agreement exists, the burden shifts to the party opposing arbitration to show either that the agreement is not enforceable or that the subject dispute does not come within the scope of the agreement.

The Federal Arbitration Act (“FAA”) provides a mandatory stay of proceedings in federal district courts when the issue can be referred to arbitration. 9 U.S.C. § 3. However, pursuant to FINRA Rule 13201, claims alleging employment discrimination in violation of a statute are not required to be arbitrated, and may be arbitrated only if the parties have agreed. The court found Ffrench’s signature on her Uniform Application for Securities Industry Registration or Transfer (“U-4 Form”) to be insufficient to constitute such an agreement because this agreement only encompassed “any dispute, claim or controversy that may arise between me and my firm, or a customer, or any other person, that is required to be arbitrated under the rules, constitutions, or by-laws of [FINRA].” The court also found Ffrench’s initiation of FINRA proceedings to be insufficient to constitute an agreement to submit her gender discrimination and retaliation claims to arbitration. Based on Ffrench’s Statement of Claim and the composition of the arbitration panel, the court determined that she only agreed to submit her defamation claim regarding Form U-5 to FINRA arbitration.

Because the court determined that the parties did not agree to arbitrate Ffrench’s gender discrimination and retaliation claims, the PwCCF motion to compel arbitration and stay proceedings in federal court was denied.

Should you have any questions relating to FINRA, arbitration or employment issues, please do not hesitate to contact Attorney Joseph C. Maya in the firm’s Westport office in Fairfield County, Connecticut at 203-221-3100 or at JMaya@Mayalaw.com.

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