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Metz v. Merrill Lynch

November 8, 1994


Before Holloway, McKAY, and Barrett, Circuit Judges.

The opinion of the court was delivered by: Holloway, Circuit Judge.

Former employee brought Title VII action against former employer for pregnancy discrimination. The United States District Court for the Western District of Oklahoma, Robin J. Cauthron, J., entered judgment for employee. Employer appealed. The Court of Appeals, Holloway, Circuit Judge, held that: (1) Title VII claims are subject to mandatory arbitration; (2) action was not precluded from arbitration by section of Federal Arbitration Act (FAA) stating that FAA did not apply to certain employment contracts; (3) employer waived its right to compel arbitration of action; and (4) evidence was sufficient to support finding that broker's termination was result of pregnancy discrimination. Affirmed in part, reversed in part, and remanded.

Defendant Merrill Lynch, Pierce, Fenner & Smith, Inc. (Merrill Lynch) appeals from a judgment for $53,746.67 plus attorney's fees. The judgment was entered in favor of plaintiff Kelli Lyn Metz (Metz) on her Title VII claim of unlawful discrimination and discharge due to her pregnancy. See 42 U.S.C. § 2000e.*fn2 After a bench trial on the Title VII claim, the district court entered findings and conclusions upholding Metz' claim and awarded recovery for her on her claim and attorney's fees. Our jurisdiction rests on 28 U.S.C. § 1291.

On appeal, Merrill Lynch asserts that a change in the law requires a remand for arbitration of Metz' Title VII claim. In the alternative, Merrill Lynch claims the following errors occurred at trial: (1) Metz failed to establish a prima facie case, and even if she did, she did not carry her ultimate burden of persuasion that she was fired because she was pregnant; and (2) the amount of attorney's fees awarded to Metz was excessive. Metz cross-appeals the district court's denial of her claim for lost fringe benefits.


Metz graduated from the University of Oklahoma in December 1982 with a degree in finance. In May 1983 she went to work for Merrill Lynch as a sales assistant, basically a secretarial position, in Merrill Lynch's Oklahoma City office. In January 1984 Metz became a financial consultant, also known as an account executive or stock broker, and held that position until she was discharged on September 12, 1988.

Merrill Lynch measured the performance of its brokers by commissions earned or production. Metz' production was generally lower than that of other brokers with similar lengths of service, but she was recognized as having sufficient production in 1985 and 1986. However, because of poor production, Metz was placed on probation in 1987 and 1988.

In late August of 1988 Metz informed Merrill Lynch's management personnel that she was pregnant. When Metz' immediate supervisor learned she was pregnant, he cautioned Metz that others who had taken maternity leave had not kept up their production upon return to work, or had not returned to work at all. The supervisor also informed Metz that he would decide how to redistribute her accounts during her leave, a deviation from other leaves in which the broker made the decision on how his or her accounts would be treated.

On September 12, 1988, Metz had a heated discussion with her immediate supervisor about a problem with one of Metz' accounts. Shortly thereafter, Metz was fired.

Plaintiffs complaint also included claims brought under ERISA, 29 U.S.C. § 1140, and state common law. Plaintiff voluntarily dismissed those claims after the district court ordered the parties to arbitrate them. Those claims are not before us.


Because the procedural chronology of this litigation is crucial, we will detail its development:

On September 5, 1989, Metz filed a complaint asserting Title VII, ERISA, and state common law claims in the district court. On September 27, 1989, Merrill Lynch made a timely motion to compel arbitration of these claims and to stay the district court's proceedings. The request for arbitration was based on Metz's registration as a broker with the National Association of Securities Dealers (NASD). Metz's registration application, which she signed, contained a clause requiring her to arbitrate all claims or disputes between her and Merrill Lynch.

On March 8, 1990, the district court granted in part and denied in part Merrill Lynch's motion to compel arbitration. The court compelled Metz's ERISA and common law claims to go to arbitration but held, citing Alexander v. Gardner-Denver Co., 415 U.S. 36, 94 S.Ct. 1011, 39 L.Ed.2d 147 (1974), that Title VII claims are not subject to compulsory arbitration. In Alexander the Supreme Court, in a unanimous opinion, stated that "[a]rbitral procedures, while well suited to the resolution of contractual disputes, make arbitration a comparatively inappropriate forum for the final resolution of rights created by Title VII:" Id. at 56, 94 S.Ct. at 1023. Accordingly, the district court declined to compel Metz's Title VII claim to be arbitrated. Merrill Lynch filed a motion for reconsideration, which was denied.

In May 1990 Merrill Lynch, pursuant to 9 U.S.C. § 15 of the Federal Arbitration Act (FAA), which has since been redesignated § 16 by Pub.L. No. 101-650, Title III, § 325(a)(1), Dec. 1, 1990, Stat. 5120, appealed from the district court's March 8, 1990, order denying arbitration of the Title VII claim.*fn3

However on August 15, 1990, Merrill Lynch filed a motion to dismiss that interlocutory appeal because a number of circuits had held that "Title VII claims were not arbitrable." Brief of Appellant/Cross-Appellee at 4 n. 2. *fn4 On August 24, 1990, we entered an order dismissing that appeal. Metz v. Merrill Lynch, Pierce, Fenner & Smith, Inc., No. 90-9166, slip op. (10th Cir. August 24, 1990).

A bench trial was held on June 10 and 11, 1991, and on July 8, 1991, the district court entered judgment in favor of Metz on her Title VII claim for $53,746.67. On August 7, 1991, Merrill Lynch filed a notice of appeal from that judgment pursuant to 28 U.S.C. § 1291. Following the district court's denial on August 7, 1991, of its "Motion for Order Nunc Pro Tune or in the Alternative to Alter or Amend the Judgment", Merrill Lynch on August 16 filed another notice of appeal from the final judgment.

On September 17, 1991, Merrill Lynch filed a Rule 60(b)(6) motion to vacate the judgment due to a change in the law and again sought to compel arbitration of the Title VII claim. This motion was denied by the district court on January 14, 1992. Shortly thereafter, Merrill Lynch made a motion for reconsideration of that ruling, which was denied on January 28, 1992. On January ...

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