FINRA Arbitrators Grant Summary Judgment Against Claimant Employee in Citigroup Racial Discrimination Case

February 29, 2012

In a Financial Industry Regulatory Authority ("FINRA") ArbitrationStatement of Claim filed in January 2011, Claimant Claris alleged that he had been treated less favorably than similarly situated non-African American employees in terms of work conditions and employment privileges. Claimant asserted causes of action for retaliation and discrimination on the basis of race in violation of Title VII of the Civil Rights Act of 1964 and violation of FINRA Rules.  In the Matter of the FINRA Arbitration Between Lloyd Braxton Claris, Claimant, vs. Citigroup Global Markets, Inc., Respondent (FINRA Arbitration 11-00184, February 23, 2012).

Respondent Citigroup generally denied the alegations and asserted various affirmative defenses.

Summary Judgment

In a fairly unusual move, the FINRA hearing Panel granted Respondent Citigroup's Motion for Summary Judgment and dismissed all of Claimant's claims.

SIDE BAR:  In making a Motion for Summary Judgment, one of the parties is typically seeking to short-circuit the judicial/administrative process by demonstrating that there is no compelling need for a trial/hearing because there is nothing of a material nature that remains in dispute. Boiled down to its essence, Motions for Summary Judgment assert that there really is no material disagreement between the parties as to what happened and the trier of fact can simply decide the case based upon what has been presented to date without wasting time and resources with a trial/hearing.

If brought by a Plaintiff/Claimant, such a motion argues that the Defendant/Respondent has not set forth any defenses or explanations that effectively counter the assertions and allegations at issue and the case can be decided "on the papers" or, largely, as presently postured before the adjudicator.  In arguing for such a ruling, you must show that your adversary's position either admits (or fails to deny) the necessary elements required by law or regulation to prove your case.

When the motion is brought by the Defendant/Respondent, the argument presented typically states that there has been a failure to set forth the basic elements necessary to prove the allegations - in essence, stripped down to the bare bones, the claims are little more than speculation unsupported by dates, names, facts, etc; or, even if you accept all the alleged circumstances as true, they do not rise to the level of a tort or breach.

Given that a favorable ruling on a Motion for Summary Judgment has the result of denying the losing party a full day in court, the burden of carrying this request is high and, understandably, the remedy should be granted only after careful consideration.

In granting Respondent Citigroup's Motion for Summary Judgment, the FINRA Arbitration Panel set forth its rationale in several enumerated paragraphs:

3. Claimant has not raised genuine issues of material fact to show that he suffered an adverse employment impact, or that he was treated differently from other employees of a different race. There is no evident basis on which the Arbitrators could find statutory employment discrimination. Respondent has established legitimate, non-discriminatory reasons for the performance ratings issued to Claimant in 2008 and 2009. The Partially Effective rating for 2008 related to an acknowledged compliance violation and for 2009, the Effective rating is not actionable as an adverse employment action.

Bill Singer's Comment:  For Claimant to have prevailed on his claims, this FINRA Panel stated that he needed to show that as a result of the alleged discrimination, that he was adversely impacted in the workplace or treated differently than employees of other races.  More pointedly, the Panel's standard seems to have been that Claimant could not prevail by demonstrating the mere existence of workplace discrimination -  he needed to show that he was personally harmed or treated differently than other employees of different races. It appears that his Panel found that Claimant Claris failed to show that the alleged discrimination manifested itself in some fashion that harmed him personally or caused him to be treated differently.

The Panel provided us with some interesting insights.  First, it considered what seems to have been two annual performance evaluations cited by Claimant as evidence of discrimination.  In considering Claimant's allegations, the Panel noted that Respondent provided "established a legitimate, non-discriminatory reasons for the performance ratings issued to Claimant in 2008 and 2009," and based upon that refutation, the arbitrators likely felt that the burden of proving to the contrary had not been carried by Claimant. Further, as to the two performance ratings, the Panel found that the 2008 "Partially Effective" rating was not discriminatory because it was based, in part, upon a compliance violation that Claimant acknowledged had occurred.  That left only the 2009 "Effective" rating in dispute, which the Panel did not view as negative and, consequently, could not support a claim that it constituted discrimination.

4. Claimant has not shown evidence of a severe and pervasive hostile work environment. On the contrary, the same actors complained of (Pearo and Walsh) (a) wrote complimentary letters regarding Claimant's performance, and (b) continued to supervise and award Claimant salary increases and bonuses, including "Effective" and "Consistently Strong" performance reviews.

Bill Singer's Comment: The FINRA Panel placed the burden of proof of the existence of a hostile workplace on Claimant and found that he had not satisfied his challenge.  The Panel appears to offer an example raised during the hearing in which the conduct of two supervisors (Pearo and Walsh) was negatively cited by Claimant; however, the Panel off-set such allegations by findings that those same individuals had complimented Claimant's performance and awarded him salary increase and bonuses.

5. Claimant has not shown pretext. Claimant admitted in his deposition that he deserved the Letter of Caution. His asserted that it should not have been weighed so heavily in his performance evaluation, but this is a matter of business judgment, and no competent evidence was presented to show that this was discriminatory.

Bill Singer's Comment: As best I can infer, Claimant engaged in some misconduct that resulted in a Letter of Caution being placed in his personnel file (perhaps this was the underlying compliance incident referenced in the 2008 "Partially Effective" rating). Although Claimant acknowledged that the letter was "deserved," apparently, he sought to downplay whatever the underlying issue was and claim that the matter should not have motivated certain negative comments about his performance.

The Panel allowed that supervisors are entitled to exercise reasonable discretion, including the prerogative to decide whether certain events present concerns about an employee's performance.  The fact that Claimant may have disagreed with his supervisors' view of the relative importance of the misconduct did not, in and of itself, prove that the supervisors were wrong or had engaged in racial discrimination - at best, Claimant presented a debatable proposition, but one that did not constitute compelling proof. For Claimant to prevail on this claim, he needed to prove not that the supervisors were wrong in their exercise of discretion but that they had engaged in acts of racial discrimination, which the Panel found had not been shown.

6. The actions complained of relating to Mr. Pearo's conduct were admitted by Claimant to be no different from those actions as to other employees, regardless of race.

7. Claimant has not established a prima facie case of retaliation. He suffered no adverse employment action. His 2010 complaint was made after his reviews of 2008 and 2009.

Bill Singer's Comment: In these two enumerated findings, the Panel dismissed Claimant's allegations about supervisor Pearon because there had been an admission that his cited conduct was uniform in its application to all employees.  That sort of suggest a situation where someone treats everyone like garbage or treats everyone well, regardless of race.  Separately, as to retaliation, the Panel failed to discern any proof.

8. Claimant has not shown the Arbitrators any basis for awarding damages. Indeed, the summary judgment evidence shows (1) that he is unable to prove back pay or front pay damages, and (2) that his personal history of being abused is the cause of his emotional distress with respect to Mr. Pearo's conduct.

Bill Singer's Comment: Finally, the FINRA Arbitration Panel was not convinced that Claimant had demonstratd any compensable harm.  The Panel did not see any proof of damages in the form of past or future compensation, leaving them to formulate a position that suggests even if there were a foul, you haven't shown us any harm.


Let me be clear that in presenting this FINRA Arbitration Panel's explanations of its understanding and application of various laws/regulations, and how it analyzed the various obligations and components of proof, I do not necessarily agree with all of the perceptions or conclusions.  That being said, I appreciate the effort inherent in this thoughtful FINRA Abitration Decision and thank this Panel for providing us with sufficient facts and rationale to offer a meaningful insight into the arbitral process and the calculus by which this specific decision was reached.

Allegations of discrimination are serious issues that are raised daily against many employers by a diverse group of employees.  Given the sordid history of such cases on Wall Street, it is doubtful that we have seen the last of these disputes.  Although this case involved Citigroup, I have recently reported on a high-profile racial discrimination case involving Merrill Lynch, and the lurid details of the Smith Barney "Boom Boom Room" case are not yet ancient history.  Read enough recent cases or wait for more to come and you'll likely see that no securities industry firm is immune, not JP Morgan or Wells Fargo or Goldman Sachs or indie/regional firms - and you can follow this thread right down to the small mom-and-pop operations.

If there is one truly helpful aspect of cases such as Claris, it is that they unfold a roadmap for employer and employee as to what you need to allege, what you need to prove, and how various arbitrators sort through the arguments.  Hopefully, somewhere, there is a similar roadmap explaining to the industry how to avoid these disputes rather than how to merely prevail when they arise.