Federal Court Denies FINRA Arbitration of NY Life Racism Case

November 18, 2019

Fourteen-year veteran New York Life employee Ketler Bosse was the company's first African-American District Agent. Following his 2016 termination, he filed a Complaint in the United States District Court for the District of New Hampshire ("DNH") against various New York Life entities asserting discrimination and retaliation under 42 U.S.C. § 1981, conspiracy to interfere with civil rights under 42 U.S.C. § 1985, and breach of contract under 42 U.S.C. § 1981 additionally, Bosse asserted state law claims including breach of the covenant of good faith and fair dealing, fraud, wrongful termination, tortious interference with economic advantage, violation of New Hampshire's Consumer Protection Act (RSA 358-A), breach of fiduciary duty, unjust enrichment, quantum meruit, conversion, defamation per quod, and defamation per se. In response to Bosse's federal Complaint, the New York Life entities moved to remand the dispute to arbitration before the Financial Industry Regulatory Authority ("FINRA"), and to dismiss/stay Bosse's Complaint, or, in the alternative, to dismiss Bosse's claim that New York Life conspired to interfere with his civil rights for failure to state a claim. Ketler Bosse, Plaintiff, v. New York Life Insurance Company, New York Life Insurance and Annuity Corp., and New York Life Insurance Company of Arizona, Defendants (Order, DNH, 19-CV-016, Opinion No. 2019) http://brokeandbroker.com/PDF/BosseOrderDNH1901113.pdf (the "DNH Order").

2001 Agent Contract

In 2001, Bosse began working for NY Life as a commissioned agent pursuant to an Agent's Contract authorizing him to solicit individual policies for life insurance, annuity, and health insurance, and for group insurance and annuity. The Agent's Contract did not contain an arbitration provision. 

2004 Partner's Employment Agreement

In 2004, Bosse entered into a Partner's Employment Agreement, which, in part, provided that:

The Partner and New York Life agree that any dispute, claim or controversy arising between them, including those alleging employment discrimination (including sexual harassment and age and race discrimination) in violation of a statute (hereinafter "the Claim"), as well as any dispute as to whether such Claim is arbitrable, shall be resolved by an arbitration proceeding administered by the NASD in accordance with its arbitration rules.

2005 Return to Agent Role

In 2005, Bosse returned to his former role as a NY Life Agent; and, in 2013, he became a NY Life District Agent. Unclear is whether a District Agent Agreement was executed by either party. 

2016 Termination

As explained in pertinent part in the DNH Order:

Bosse was New York Life's first African-American District Agent. The agents he hired were racially diverse. According to Bosse, that racial diversity provoked a strong reaction of racial animus and discrimination from some New York Life associates. As a result, Bosse alleges that the company: failed to process and underwrite insurance applications submitted by Bosse and his agents; engaged in back billing that undermined Bosse and his agents; and "stole or drove away" agents Bosse hired to work in his office. Compl. ¶ 41. Bosse further alleges that the company treated him differently than similarly situated New York Life District Agents who were white, and failed to investigate the disparate treatment complaints he made. 

On January 15, 2016, New York Life terminated Bosse's District Agent Contract, purportedly based on inaccuracies found in the electronic application process related to a particular client. Bosse contends that the termination was retaliatory, that the reasons given by New York Life for termination were pretextual, and that his contract was actually terminated based on racial discrimination. He further contends that, following termination, New York Life defamed him to his New York Life clients, many of whom then ceased doing business with him.

Pages 4 - 5 of the DNH Order

NY Life Seek FINRA Arbitration

In response to Bosse's federal Complaint, NY Life argues that his claims must be dismissed in favor of FINRA Arbitration, as is purportedly required under the 2004 Partner's Agreement. DNH denied the NY Life Defendants' Motion to Compel Arbitration and to Stay the Proceedings, and further denied their Motion to Dismiss. 

A Matter of Survival: the 2004 Partner's Agreement

Initially, DNH sets the table as to whether the 2004 Partner's Agreement governs the dispute and compels remand to FINRA Arbitration:

The Partner's Agreement upon which defendants rely was terminated in 2005 when Bosse transitioned back to an Agent's position. However, the Partner's Agreement is unambiguous in providing that the arbitration clause survives termination of that agreement. Bosse notes that the facts and circumstances that gave rise to this suit occurred over 12 years after the Partner's Agreement expired, while he was working as an independent contractor under two different agreements with the defendants, neither of which included an arbitration obligation. He argues that, even if the arbitration clause "survived termination" of the Partner's Agreement, it cannot reasonably be applied to these claims because they are completely unrelated and unconnected to the Partner's Agreement, and because they arose so long after termination of that contract.

Page 7 of the DNH Order

As perceived by the Court, the Defendants argued that 2004 Partner's Agreement's :

[A]rbitration clause is so expansive that it literally covers any conceivable dispute that might arise between the contracting parties at any time in the future, and under any set of facts or circumstances. Under that reading, Bosse's current claims would be covered. They are, after all, disputes with New York Life, and they have arisen in time, and both the nature of the disputes and the time of accrual, or assertion, are unimportant given the expansive language used. The language used also excludes any "relatedness" requirement. That is, there are no words used that explicitly limit the clause's application to only those disputes bearing some relationship to or having some connection to the contract in which it is found. The arbitration provision, by its terms, purports to apply to "any dispute, claim or controversy arising between" the parties.

Page 10 of the DNH Order

DNH declined to find the existence of a "valid" agreement to arbitrate because the court viewed the 2004 Partner's Agreement as no longer controlling at the time of Bosse's termination:

Such a broad interpretation, however, is problematic for several reasons. First, as the Supreme Court has noted, "[t]he object of an arbitration clause is to implement a contract, not to transcend it." Litton Fin. Printing Div., a Div. of Litton Bus. Sys., Inc. v. N.L.R.B., 501 U.S. 190, 205 (1991). No reasonable person in either Bosse's position or New York Life's position would have understood the 2004 Partner's Agreement arbitration provision (and survival provision) to require arbitration of any and all future claims of whatever nature or type, no matter how unrelated to the Partner's Agreement, and no matter how distant in the future the claim arose. For example, a reasonable person signing the Partner's Agreement would hardly think that a slip and fall injury suffered by plaintiff on New York Life property 30 years in the future, and 25 years after any work or other relationship terminated, would be subject to arbitration under that particular clause. Defendants' current position - that the Partner's Agreement obligates the parties to arbitrate any and every dispute between them, no matter what it is and no matter when it arises - is unbounded to the point of absurdity. Defendants' proffered construction of the arbitration clause would not only transcend the purpose and terms of the Partner's Agreement, but would operate to deprive employees of all future rights to either a jury trial or court resolution of completely unrelated matters arising generations in the future.

Page 11 - 12 of the DNH Order

The Conspiracy

Among the substantive elements of Bosse's case was his allegation of a conspiracy against him -- as characterized by DNH:

Bosse alleges that James Robbins, New York Life's Director of Operations for the New Hampshire Office, used his position to influence other New York Life employees, including, but not limited to, New York Life Compliance Office and Senior Associate, Nicholas Inglese, past Managing Partner of New York Life's New Hampshire Office, Steven Irish, and others, in a civil conspiracy to intentionally deprive Bosse of his right to equal protection under the law." Compl. ¶ 132. In support of that allegation, Bosse asserts that Robbins, Irish and Inglese: 

(1) delay[ed] processing orders for Mr. Bosse and his new agents who depended on that income; (2) maliciously den[ied] Mr. Bosse advance commissions, thereby taking away his income and livelihood; (3) allow[ed] New York Life agents working out of the New Hampshire office to take clients from Mr. Bosse to give [the white agents] a chance, and/or forcing Mr. Bosse to share his commissions with white agents;" (4) attribute[ed] the credit of hiring new and experienced agents groomed by Mr. Bosse to white agents; (5) causing multiple withdrawals from client accounts without Mr. Bosse's advance knowledge, causing those clients to cut ties with Mr. Bosse; and (6) publicly and privately disparaging or allowing others to publicly and privately disparage Mr. Bosse's diverse ethnic agents, including but not limited to, using racial slurs when referring to them. Compl. p. 3. . . .

Page 18 of the DNH Order

Intracorporate-Conspiracy Doctrine

Defendants assert that Bosse's conspiracy claim must be dismissed for failure to implicate two or more defendants (in contradistinction to his alleged reference to three NY Life employees) -- thus invoking the "intracorporate-conspiracy doctrine," which purportedly establishes that an agreement among agents of a common legal entity when in furtherance of their official capacities, does not rise to the level of an unlawful conspiracy. The gist of that position is that the acts of agents are attributed to a common principal, thus extinguishing the multiplicity of conspirators required to meet that circumstance. 

It is well established that there cannot be a conspiracy of "one," and, as such, the intracorporate-conspiracy doctrine attempts to extend that jurisprudence by invoking the legal fiction that the acts of multiple corporate agents should be attributed to the unity of the corporate entity. Notwithstanding that such a view may, at times, be reasonable, DNH deems the cited doctrine as unsettled on a national level, and declines to apply it. In reaching its decision, DNH notes the recent pronouncement of its parent1st Circuit that:

expressed doubt about applying the doctrine outside the antitrust context. See, Stathos v. Bowden, 728 F.2d 15, 20-21 (1st Cir. 1984) ("We doubt that this 'intracorporate' exception should be read broadly. The cases employing it have rested in large part on precedent drawn from the antitrust field."). On the other hand, however, the court has applied the principle in a case not much different than this one. . .