The Complaint
On March 31, 2005, plaintiffs in Northern California filed a nationwide class-action lawsuit on behalf of female Financial Consultants who alleged that Smith Barney discriminated against them in account distribution, business leads, referral business, partnership opportunities, and sales support. In November 2006, an amended complaint was filed, which added additional plaintiffs from Southern California and Florida, and amplified and clarified the allegations in the complaint to conform with the evidence plaintiffs have obtained through extensive discovery. The suit is brought on behalf of a nationwide class of all female Financial Consultants employed at Smith Barney since August 30, 2003, and a California subclass of all female Financial Consultants employed at Smith Barney in California since June 25, 2003. The case is pending before Judge Phyllis Hamilton, a federal judge with the U.S. District Court for the Northern District of California, in San Francisco.
Litigation Developments
Plaintiffs have had three important successes in the case:
1. Motions to Transfer and Enjoin In response to the plaintiffs' complaint, Smith Barney filed a motion in federal court in San Francisco to transfer the case to a judge in New York City. Smith Barney argued that this case is "related to" Martens v. Smith Barney, a case filed in 1996 in New York against Smith Barney on behalf of female employees in the retail sales, investment banking and capital markets divisions. In addition, Smith Barney filed a motion with the Martens court in New York, asking that court to order that all female Financial Consultants who were employed during the Martens class period (up to February 1, 1999) and who are also part of this case be barred from pursuing their claims in this case in California. Both sides briefed and argued Smith Barney's motion before each court. On September 16, 2005, Judge Hamilton (the San Francisco judge to whom this case is assigned) denied Smith Barney's motion to transfer, explaining that "The Martens case ended seven years ago and all obligations under its settlement agreement expired over two years prior to the filing of this lawsuit. " On October 7, 2005, Judge Koeltl of the Southern District of New York judge (to whom the Martens case was assigned) also rejected Smith Barney's request to prohibit Martens class members from pursuing new claims in this case, pointing out that the class period in the Martens action "predates the beginning of the class period in Amochaev by several years. " Additionally, the Amochaev plaintiffs' claims "are based on new violations of Title VII and California law. " Further, Judge Koeltl ruled that the Amochaev action "is not for a violation of [the Martens] agreement. " This issue is now settled, and the case will proceed in the court in San Francisco.
2. Motion to Compel Relevant Martens Documents As part of the discovery process in this case, plaintiffs requested Smith Barney produce for review certain categories of documents related to a similar gender discrimination lawsuit brought against Smith Barney in 1996. That case, Martens v. Smith Barney, Inc. , settled in 1998, but plaintiffs believe that certain documents related to that case are relevant to the Amochaev case. Smith Barney refused to produce these documents and plaintiffs filed a motion to compel Smith Barney to turn the documents over. Both sides briefed and argued the motion before Magistrate Judge Joseph C. Spero. On October 20, 2006, Magistrate Judge Spero ordered Smith Barney to produce most of the documents that plaintiffs had requested a huge victory for plaintiffs and the class. Plaintiffs counsel believes these documents will: (1) demonstrate a history and culture of inequality toward women at Smith Barney that persists today; (2) enable plaintiffs to ascertain how relevant policies and practices have evolved since that case; (3) assist plaintiffs in understanding Smith Barney's current policies and procedures and how they affect Financial Advisor compensation; (4) educate plaintiffs about the types of gender-related complaints Financial Advisors have raised in the past, the types of policies and practices that led to such complaints, and the procedures put in place (and not put in place) to address such complaints; and (5) identify potential witnesses and other relevant information regarding Retail branch offices where plaintiffs and the proposed class in this case worked.
3. Loan Repayment Arbitration Proceedings The class, if certified, will include many former Smith Barney employees who left the company after August 2003. Plaintiffs' counsel has been concerned that potential class members who are former employees may lose their rights to participate in this case if they leave Smith Barney and are forced to enter into loan repayment arbitration proceedings. Additionally, any class member who joins a new firm that takes responsibility for the repayment of her signing bonus loan could be required to sign a release of future claims against Smith Barney. Plaintiffs brought these matters to Smith Barney's attention. In response, Smith Barney agreed to Plaintiffs' proposal that Smith Barney will not use the failure by a former female Financial Consultant to assert claims of gender discrimination in loan repayment arbitration proceedings as a bar to recovery or participation in this Amochaev litigation. Smith Barney also agreed not to require former female Financial Consultants to release future claims in loan repayment-related settlements. Finally, Smith Barney agreed not to assert that any release of future claims in loan repayment proceedings is a bar to recovery or participation in this case. Class members should note that Smith Barney may still decide to pursue repayment of outstanding loan obligations. This agreement only ensures that women who resolve such issues with Smith Barney will not be required to waive their rights to participate in this class action.
Declarations
We are currently in the process of drafting declarations based on interviews we have conducted with current and former female Smith Barney Financial Consultants. These declarations will be used to establish that the problems we allege in the complaint reflect a pattern and practice of problems at the company, and are not merely isolated examples. The declarations are, therefore, an important component of our case. If you are interested in confidentially sharing your experiences of potential discrimination at Smith Barney, please call Anna Pohl or Lisa Bornstein at (202) 822-5100.
Future Developments
We will continue to update you as the case progresses. |
